Developer sues Portland over city's pending seizure of failed Midtown site
Photo / William Hall
A view of Lot 6, one of four that comprise the site of the failed Midtown project, looking southeast.
The Florida developer that once hoped to build a sprawling $85 million retail and housing complex in Portland’s Bayside neighborhood is suing the city over its attempt to regain ownership of some land for the project.
The Federated Cos., which struck a deal in 2011 with Portland to develop what was to be branded "Midtown" on 3.25 acres of blighted, city-owned property, filed suit last week in U.S. District Court for Maine. The complaint accuses the city of violating federal and state law by taking a 1.04-acre parcel without just compensation.
In August, the Portland City Council began considering whether to seize the parcel at 59 Somerset St. by eminent domain, and on Sept. 8 voted unanimously to approve a condemnation order.
At issue is the value of Lot 6, as the parcel is known, and that value may depend on the lot's neighbors.
Lot 6 one of four that were to make up Midtown, encompassing 450 housing units in high-rise towers, nearly 100,000 feet of retail space and an 800-vehicle parking garage. After some Portland residents mounted opposition to the project, it ultimately fell apart in a sea of legal disputes. Meanwhile, the four adjacent lots have remained undeveloped, and the city holds $9 million in federal financing to fund a much-needed parking structure on Lot 6.
Federated purchased the four properties for a total of $2.3 million in 2016. A January appraisal conducted for the city estimates that together they’re worth over $13.5 million, although Federated contested that finding.
The value of Lot 6, without the other parcels, was negligible, according to the city, which agreed to pay $10 for it.
Lot 6 has a deed restriction that requires it to include parking among other possible uses. Under the restriction, which runs until 2046, the garage must have at least 700 spaces and 30,000 square feet of retail space, and result in the creation of at least 40 jobs.
“Without Lot 6, the remainder of Federated’s project site is worthless as presently designed,” the suit’s complaint reads. “The Condemnation Order does not contemplate the interests of [Federated] or compensation for the taking of such interests.”
But the city claims it’s acting properly and for the public’s good.
“The city believes the new suit is meritless, as the city complied in all respects with the law governing eminent domain in taking the Somerset Street lot for a longstanding and legitimate public purpose,” city spokeswoman Jessica Grondin said in a statement Tuesday. “The taking was consistent also with the city’s vision and planning for the Bayside area, planning that has not changed and that dates as far back as the 2000 Bayside Vision documents.”
Patrick Venne, attorney for Miami-based Federated, also issued a statement, saying, “The City’s decision to take our property without compensation is tantamount to theft. This blatant attempt to avoid performance under our various agreements by taking possession of the underlying land, while the matter was subject to active litigation, will ultimately be seen as the abuse of power that it is.
“These actions substantially expand our claims against the parties involved, and our decision to withdraw the previously filed complaint was, in part, driven by the City's recent actions. Additional litigation is forthcoming, and these recent events have dramatically simplified the presentation of our arguments as well as our path to a full and complete recovery of our extensive damages.”
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The City encumbered this site with an agreement that it claims deflated the value of the property to less than zero, but the thing is that that same agreement was in place when the developer purchased this site for significant money back in 2015. And, the city condemned that same agreement when they took the lot back recently, rendering their decision absolutely indefensible.
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