The company behind a former redevelopment project in Portland’s Bayside neighborhood is suing the city over its decision to foreclose part of the site by eminent estate without offering what it claims is fair payment.
Federated Cos., Which the city selected in 2011 to develop 3.25 acres of municipal land on Somerset Street, filed a lawsuit Thursday in Portland US District Court. The lawsuit alleges that the town violated both Maine and federal law with its decision to seize the “Lot 6” parcel by eminent domain at 59 Somerset St. and pay only $ 10 each to three companies in limited liability for property.
The city’s actions “reflect a blatant, willful, intentional and indiscriminate disregard for the rights of plaintiffs under the United States Constitution and the Constitution and laws of the State of Maine,” says the lawsuit, which includes also Redwood Development Consulting as complainant. He accuses the city of two counts of “taking without payment of just compensation” under Maine law and federal law.
“The city believes the new lawsuit to be without merit, as the city has complied in all respects with the law governing the eminent domain in taking the Somerset Street land for a long-standing and legitimate public purpose,” the city said. City spokeswoman Jessica Grondin in an email Monday. “The take was also consistent with the city’s vision and planning for the Bayside area, planning that has not changed and dates back to the 2000 Bayside Vision documents.”
The lawsuit comes as a federal judge also ruled to dismiss a related lawsuit in which Federated accused the city in 2019 of breach of contract for “a pattern of recklessness and obstruction for years” around the $ 85 million project. of dollars.
Grondin said the two sides had agreed to drop the earlier lawsuit to focus on the issue of the eminent estate and the development of the Somerset lot without the distraction of earlier claims, including claims against former managing director Jon Jennings, which were rejected by the court with prejudice.
“The city’s decision to take our property without compensation amounts to theft,” said Patrick Venne, attorney for Federated and Redwood Development, in a statement. “This blatant attempt to avoid the execution of our various agreements by taking possession of the underlying ground, while the matter was the subject of active litigation, will ultimately be considered an abuse of power.
“These actions greatly expand our claims against the parties involved, and our decision to withdraw the previously filed complaint was, in part, prompted by recent actions by the city. More litigation is coming, and these recent events have greatly simplified the presentation of our case and our path to full and complete recovery of our considerable damages. “
The city originally chose Federated to develop 3.25 acres of municipal land on Somerset Street in 2011. Its initial site plan, which included around 800 housing units in four 165-foot towers, was approved in January 2014, but contested. in court by a group called Keep Portland Livable.
Federated scaled back the project to settle the lawsuit and received its site plan approvals in March 2015 to construct three four-story apartment buildings and a parking garage at 59 Somerset St. The developer closed the property in June 2016, by paying the city $ 2.2 million. , and had three years from receipt of its site plan approvals to apply for and obtain building permits before that approval expired.
That deadline passed in March 2018, a month after the city said it denied Federated an application for a building permit because Federated had not paid more than $ 80,000 in traffic mitigation and other fees. costs and had not issued the required performance guarantee.
In its August 2019 lawsuit, Federated said it had invested millions of dollars in the mixed-use development project – but as the size of the project shrank, the city’s support shrank, which ultimately resulted in leads to contractual failures, expiration of project approvals and denial of building permit. application.
In September, city council voted unanimously to approve the seizure of the parcel of Lot 6, 59 Somerset St. and to pay each of the limited liability companies $ 10 for the land, citing an assessment that the lot had a “negative fair market value.” “
The city had received a loan from the US Department of Housing and Urban Development as part of the original project to help build a public parking lot at the site, a factor that was cited by councilors in their decision. Although approvals for the project expired, Portland taxpayers continued to pay interest on the $ 8.2 million federal loan. As of July, the city had paid more than $ 784,000 in interest, including nearly $ 633,000 in interest for the garage, according to the city’s finance director.
“It’s not something that we do a lot,” Mayor Kate Snyder said at the September meeting. “There was a commitment (for a parking garage) made to the community whether you were a board member or not. I look forward to keeping this commitment.
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