The Portland City Council voted Monday night to spend $15 million in order to open the door for future development on three vacant Bayside lots that were set to be converted to housing more than a decade ago.
A development originally proposed in 2013, known as the “Midtown Project,” would have included 800 market-rate apartments spread across four towers with 100,000 square feet of retail space but was quickly scaled back in response to a challenge in 2014.
The project reportedly never was able to get off the ground due largely to the three federal court cases that were resolved by this week’s $15 million settlement.
In 2018, the entire Midtown Project seemed to fall apart as the development company missed key permitting deadlines and the City’s site plan approvals for the project expired.
“The settlement agreement is a significant step towards getting the land developed and creating much needed housing during Portland’s current housing crisis,” Russell Pierce, the City’s attorney, said in a memo to the Council regarding the $15 million payment.
According to a memo sent to the City Council by City staff, the City has spent about $25,000 per month in legal fees on litigation surrounding the property.
One of the three lots involved in the project, known as Lot 6, was seized by eminent domain in 2021 and, after it was appraised as effectively worthless, the City paid developers only $10 for the land. The other two lots were found to have a value of about $13 million.
When land is seized by eminent domain, governments are required to pay property owners a fair market value.
Federated Companies, the developers behind the now-defunct project, had originally purchased all three plots of land for $2.3 million five years earlier.
This 2021 seizure prompted Federated Companies to sue the City for “taking without payment of just compensation,” arguing that the City was acting with “flagrant, willful, intentional and wanton disregard” for their Constitutional rights.
The other two lawsuits that were settled by Monday’s $15 million payment had stemmed from alleged breaches of contracts, one filed by Federated Companies and the other by the City of Portland.
“It’s going to seem to the public like a big chunk of money, and it is, but it’s what needs to happen, and it does create a valuable opportunity,” said Councilor Sarah Michniewicz.
WROR reported that as a result of the $15 million settlement, Federated Companies cannot sue the City of Portland again on the same grounds.
The City has indicated that new developers are already showing interest in putting a mixed-use project on the land, according to reporting from the Portland Press Herald.
