The Portland City Council will hold a closed-door meeting Monday to discuss a long-delayed plan to build hundreds of residential apartments in Bayside.

The meeting will deal with the “city’s legal rights and duties” regarding the sale of 3½ acres of city-owned land on Somerset Street to Florida-based developer Federated Cos., according to the city’s website.

City Manager Jon Jennings said Federated Cos. has requested some minor modifications to the sales agreement, but he could not provide specifics because it’s part of a negotiation. If the changes are made, the sale could close by the end of May, he said.

“There’s some cleanup that has to happen with the agreement,” Jennings said. “It’s nothing like a change to the purchase price or anything like that.”

The council could vote on the proposed changes May 16.

The council approved an agreement in 2011 for Federated to pay the city $2.3 million for the land. The city informed Federated last June that its agreement expired on May 27, prompting the developer to threaten a lawsuit. However, the city issued a news release in October announcing the project was on track and would break ground before the end of 2015.

The groundbreaking never happened, and there has been little discussion of the project since.

Greg Mitchell, the city’s economic development director, said in an April 19 email that the city and Federated were expected to close on the transaction by the end of last month. Mitchell said at the time that Federated still had a valid purchase-and-sale agreement.

In recent weeks, the Portland Press Herald has not been able to get detailed information from the city or the developer about what specifically is holding up the $105 million project, which would be the largest housing development in the city’s history.

“The city is working with Federated to finalize (the project’s) Planning Board conditions of approval, (its) license/easement requirements along with issuance of the (project’s) building permit for the parking garage,” Mitchell said in the April 19 email.


As of Friday afternoon, the city had not provided the newspaper with a list of which conditions have been met and which are still outstanding, something requested April 19.

Jonathan Cox, founder and chairman of Federated Cos., has been equally vague. Cox said in a March 1 email that the transaction would close “upon satisfaction of the remaining outstanding entitlement conditions.” He declined to provide details.

When asked to comment on the progress, Cox said he was meeting with a contractor April 19 and continued to work toward resolving undisclosed issues with the city. “Out of respect to the city (as a governing body, and separately as the seller of the land), and in light of our ongoing negotiations, I cannot expand on my previous statement at this time,” he said.

On April 25, the City Council approved several licenses and easements needed to move the project forward, but there was no public discussion of the changes or the status of the project. Meanwhile, Federated is now marketing the residential portion of the project for sale to another development company.

Cox said in an email that this is not unusual for large-scale developments. He said it was not a sign that developers lacked the financing needed to move the project forward. Federated is simply exploring its options, he said.

“The joint venture options that we are considering all contemplate the outside party acting as the general partner, and facilitating the development and management of the multifamily, and our role being confined to that of a limited partner, whereby we provide the capital necessary to facilitate the development of the project,” Cox said in the March 1 email, a statement that he resent Saturday in response to a question about the purpose of the council’s closed-door meeting Monday.

“This approach, only one of many being considered, is very ordinary given the project specifics,” Cox added in the March 1 email.

Last November, the Press Herald reported that Federated was seeking tax credits through the state’s New Market Capital Investment program, a 4-year-old program that provides investors with income tax credits if they invest in businesses in low-income communities. In December, the company announced that it was dropping its bid to receive the $2.9 million tax break.


The city has been working with Federated Cos. on the “midtown” project for more than five years.

It all began back in June 2011, when the council voted unanimously to sell 3½ acres of land on Somerset Street to Federated Cos. for $2.3 million.

In September 2012, the council voted to award Federated Cos. $9 million to help build a parking garage. Of that, $8.2 million was a loan to be repaid by the city, plus an estimated $2.8 million extra in interest. At the time, Mitchell estimated that the 650 to 800 market-rate apartments would rent for $1,300 to $1,700 a month.

The project took a significant step forward in April 2013, when the council voted to increase the maximum building heights from 105 feet to 165 feet. The vote came after a contentious public process, during which some residents and a group calling itself Keep Portland Livable argued that the buildings were out of character with the area and would negatively affect views of the Portland skyline.

Nearly a year later, the Planning Board approved a master plan to redevelop the property in several phases over a 10-year period. The project would have produced 650 to 850 market-rate housing units in four towers, 100,000 square feet of retail, and two parking garages with 1,100 parking spaces.

The January 2014 vote also included site plan approval for the first phase of development: a 15-story, 165-foot-tall residential tower with 235 market-rate units, 44,000 square feet of retail space and a 705-vehicle parking garage.

The following month, however, Keep Portland Livable filed a lawsuit seeking to block the development and arguing that the project did not conform to the city’s zoning rules.

The appeal was put on hold that October after Federated Cos. agreed to reduce the size of the buildings to six stories and build out the whole project in one phase. The project also was scaled back to include one structured parking lot for 850 vehicles. And the amount of housing was cut roughly in half to include 440 units, while the retail space was scaled back slightly to about 92,000 square feet.


What was once a $105 million project had now been scaled back to about $75 million. The Planning Board approved the new design in March 2015, despite concerns about the changes.

By June, the project was once again on shaky ground. After Federated Cos. inquired about possibly building hotels and reducing the number of residences to 260 units, the city declared the purchase and sale agreement null and void, prompting the developer to threaten a lawsuit against the city.

Federated was outraged that it had invested more than $2 million into a project that had been in the pipeline for five years and still didn’t have its building permits. While its project was on hold, a boom in market-rate housing development for the first time in decades was threatening the viability of the plan.

Federated also expressed concerns about being able to meet the conditions placed on the project.

On Oct. 14, the city issued a news release announcing that the city and Federated Cos. had reached a deal that would allow the project, with no hotels and at least 440 units of housing, to move forward. Officials said the project would break ground by the end of 2015.