The proposed site of the “Midtown” project remained covered by weeds in January. The would-be developer is now suing Portland, accusing the city of failing to meet its contractual obligations. Ben McCanna/Staff Photographer
Portland is being sued by the company that sought to develop the $85 million “Midtown” project in the city’s Bayside neighborhood, a project that would have been built on land that was once occupied by industrial scrap yards along Somerset Street.
The Federated Cos. filed a 78-page complaint in U.S. District Court in Portland on Friday, according to court documents.
Federated is seeking breach-of-contract damages exceeding $75,000 in addition to interest, costs and attorneys’ fees, court documents state. The company’s attorney, Allison A. Economy, clarified that figure by saying the $75,000 is merely a threshold amount required in federal court filings.
“Federated’s actual damages are estimated to be in the eight figures,” Economy, said in an email Monday night.
Portland City Manager Jon Jennings is named in the lawsuit as the defendant. Jessica Grondin, the city’s spokeswoman, did not respond to an email late Monday evening seeking comment on the court filing.
However, in January, Portland officials expressed exasperation over the stalled Midtown development partly due to the bill for interest on a federal loan the city took out to cover part of the cost of a parking garage.
“This is by far the most frustrating project during my tenure,” Jennings said.
Federated also is frustrated with the stalemate, said Economy, a partner with Rudman Winchell in Bangor.
“The city has been default of its contractual obligations since at least October 2014 and while Federated has attempted on numerous occasions over the years to settle this dispute, its patience has been exhausted,” Economy said in her email. “Federated’s distrust of the way business has been handled by past and present city officials weighed heavily in its decision to file suit.”
Economy accused the city of not being willing to engage in any meaningful or timely negotiations to resolve the disagreement out of court.
According to court documents, the Federated Cos. has spent nearly a decade and invested “millions upon millions of dollars in vain, developing plans for a vibrant mixed-use development project,” that was consistent with Portland’s Comprehensive Plan. A court appeal filed in 2014 resulted in a settlement that called for a more modest plan featuring 450 residential units, nearly 100,000 gross square feet of ground-floor retail space, and parking for more than 800 vehicles.
“As the project shrunk in size, the city’s support for it correspondingly lessened, and the temper of the city’s interactions with Federated noticeably changed,” the complaint states. “In what would become a significantly detrimental pattern of ‘bait and switch’ … the city ultimately abandoned Federated, its longstanding partner, and left the developer in the lurch.”
Federated’s complaint alleges that the city inflicted millions of dollars of damage on the company “through its years-long pattern of imprudence and obstruction.”
“The results have been nothing short of catastrophic for Federated and, equally and unfortunately, the public at large,” the complaint states.
When it was first proposed in 2011, the company’s proposal called for up to 850 housing units spread across seven high-rise apartment towers. But the project was delayed for years by local opposition and a citizens’ lawsuit. A scaled down version of the project was finally approved by the Portland Planning Board on March 3, 2015.
Federated waited until early 2018 to file for a building permit to begin construction of the first phase of the project, an 840-vehicle parking garage. But the city denied the building permit, claiming that Federated failed to pay more than $80,000 in traffic mitigation and other costs.
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