PORTLAND – A developer says the city is rushing into an agreement to sell land in Bayside to the Federated Cos. and never properly considered a competing proposal for a University of New England dental school and medical clinic on the property.

David Bateman said he thought his negotiations with Portland were continuing, but the city is going ahead with a deal to sell 3.25 acres, mostly along Somerset Street, to Federated for $2.3 million.

“We were prepared to move forward immediately” with the development, Bateman said.

Bateman said he spoke with Greg Mitchell, Portland’s economic development director, on May 24, the day before the City Council’s Community Development Committee recommended approval of the deal with Federated.

The council will consider that recommendation when it meets Monday night.

Mitchell, who was the city’s chief negotiator on the land sale, told Bateman that the committee would discuss the UNE proposal and a competing offer, but gave no indication that a decision was imminent, Bateman said.

When the Community Development Committee voted for the Federated deal, “that came as a shock,” he said.

Mitchell said the city negotiated with “full transparency,” although updates were provided to the committee in executive session. He declined to discuss specifics of the negotiations.

One member of the committee, John Anton, said the UNE proposal never measured up. The committee’s chair, Cheryl Leeman, said UNE walked away from the negotiations in February, only to return in April when the deal with Federated was nearly complete.

“They were consistently unable to come up with a proposal that met our needs,” Anton said. “UNE had months and months and months to respond. They knew our issues.”

“The turning point for the whole process was when UNE said, ‘We’re done,’ because we couldn’t come to an agreement to their liking,” Leeman said. “Bateman came in late, late, late, after (the deal with Federated) had pretty much already been done.”

Thomas White, UNE’s vice president for communications, said the school had been negotiating with the city since September, and walked away when it appeared the two sides were far apart on details.

But when Bateman was brought in to tackle aspects of the development that weren’t directly related to UNE, the school felt it might be able to work out an agreement, White said.

He said UNE officials felt their proposal had much to offer the city, including an estimated $1.6 million in free or low-cost dental and medical care to low-income residents. He said UNE won’t ask the council to delay action on the Federated deal, but would welcome a new opportunity to present its plans and possibly reopen negotiations.

Bateman said he was brought in because the city was asking UNE to add housing and a parking garage to its plan for a school and a clinic. The university felt a private developer could best handle those aspects of the project.

UNE was proposing a price of $600,000 an acre, $100,000 an acre less than Federated’s price. But Bateman said that wasn’t a final offer and he was still waiting for a response from the city when the Federated deal was announced.

He said UNE was offering to buy only two of the city’s seven lots, with an option on a third, and the development would have made the city’s four remaining lots worth much more than what Federated agreed to pay.

Mark Malone, the commercial real estate broker representing UNE, agreed, saying the presence of the dental school, along with the nearby offices of Intermed, would have made the area a medical hub and likely would have attracted developers to build medical offices.

“From my perspective, the UNE proposal was a no-brainer,” Malone said.

He agreed with Bateman’s contention that the UNE team felt like the rug had been pulled from under it when the Federated deal was announced.

“We had been working on it for several months thinking we were getting places,” he said. “I thought we’d probably get an opportunity to present it to the council or general public.”

Anton indicated that a big sticking point was the fact that UNE’s property would be tax-exempt, because the school is a nonprofit institution. Bateman said the proposed deal would have provided annual payments of about $527,000 in lieu of taxes. White said that figure is probably too high, considering the amount of free or low-cost care the clinic would have provided.

“I need another tax-exempt institution in Portland like I need a hole in the head,” Anton said.

City officials have not calculated how much property tax Federated’s proposal would generate because the plan — retail space on ground floors, parking above and then offices or housing above that — are still general and preliminary.

The deal specifies that if Federated transfers any property to a tax-exempt organization, it will have to make a payment equal to the taxes that would be due, insulating the city from adding tax-exempt property to the rolls.

Bateman has an ally in Peter Quesada, whose Fore River Co. owns key and valuable parcels on adjacent Marginal Way — where Trader Joe’s, the new Walgreens and Planet Fitness are located.

Quesada wrote to the council Thursday, suggesting “that this train be slowed down.”

“The city is prepared (eager, it would seem) to enter into a contract with Federated … shutting out the UNE alternative,” he said. “I respectfully suggest that the council is moving too fast, without any apparent need for the rush, and is most likely about to pick the wrong partner.”

Leeman and Anton said they’re not interested in delaying the deal with Federated.

White said UNE is still looking for a spot for the dental school and clinic. He said UNE would prefer a location in Portland and hopes to find something that offers amenities similar to Bayside.

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]


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