PORTLAND — The city took in nearly $2.3 million on one land deal Monday night, then had to shell out nearly $1 million on another transaction.

The City Council unanimously approved selling seven lots, covering 3.25 acres in Bayside, to the Federated Cos., which plans to develop commercial units, housing, offices and a large parking lot on the land running along Somerset Street.

The council also appropriated $967,000 to cover the settlement of a long-running dispute over the value of easements on city property on the eastern waterfront.

Councilors said the Bayside development will fulfill the city’s vision for the area, which includes housing, retail and offices.

Councilor John Anton noted that the development on Marginal Way, which runs parallel to Somerset Street, has been mostly retail, so the addition of housing, in particular, will add a different element to the area.

Councilors brushed aside complaints made last week by a developer who had been working to develop part of the property with the University of New England, which had hoped to build a dental and health clinic on the site.

The developer, David Bateman, complained that the city seemed intent on selling to Federated Cos. without giving his plan a fair hearing.

On Monday night, Chris O’Neil, representing Bateman, launched a mild protest of the sale to Federated Cos.

“We all waited six years for a buyer, and it seems prudent that you would at least take a look at the other developer,” he said.

O’Neil said the city was looking at the UNE-Bateman proposal “through a veil of prejudice” toward the nonprofit status of UNE, which would make any property it bought exempt from property taxes.

UNE officials noted that the university would have given the city a payment in lieu of taxes and about $1.6 million in free and reduced health care for low-income residents if the city had agreed to sell the property to the school.

Councilors noted that the property, part of which contained scrap metal yards until the city reached an agreement to move them and clear the area for development, had been on the market for six years.

The recession and subsequent decline in retail prices cooled interest in the property, so city officials were clearly happy that Federated offered $700,000 an acre and agreed to contract provisions intended to make sure it builds on the land within two years of getting city permits.

“I think the Community Development Committee (which struck the deal with Federated) bit at the right time,” said Councilor Kevin J. Donoghue.

The $967,000 legal settlement wrapped up six years of wrangling over property that the city bought near the Portland Company on the eastern waterfront in 2003.

The city spent a couple of years trying to work out a deal to clear the easements that the company has had since 1865. It finally took the easements through eminent domain, offering $5,000 to cover the value of the claim on the land.

The company asked for $2 million.

After years in court confirmed that the city did have the right to take the property, a jury in Cumberland County Superior Court was asked to set a value on the easements.

Late last month, jurors said the city owed the company $715,000 plus interest.

The city appropriated the money from an undesignated fund in the budget with a balance of more than $20 million, but officials clearly were unhappy with the ruling.


Staff Writer Edward D. Murphy can be contacted at 791-6465 or at: [email protected]