A Florida-based development company that has tried for years to build hundreds of residential apartments in Portland’s Bayside neighborhood has closed on its purchase of city-owned land needed to complete the project.

The Federated Cos. formally purchased more than 3 acres of vacant city-owned land along Somerset Street, where it plans to build about 440 market-rate apartments. The six-story development, called “midtown,” also will include 92,000 square feet of ground-floor retail space and an 850-vehicle parking garage.

The $2.3 million sale is the most significant milestone for the project, which has been more than five years in the making and hampered by a lawsuit and a contentious public planning process. It also comes as the city is experiencing a shortage of housing that is driving up rents.

The city confirmed the sale Monday and City Manager Jon Jennings said the sale closed Friday.

“I know it’s been a long time coming,” Jennings said in an interview. “I’m sure there were plenty of doubters – both external and internal – as to whether this was ever going to happen. But from my perspective, city staff worked incredibly hard to get this finished, get it completed in the best interest of the city. We’re very pleased this is where we are.”

It’s unclear when construction will begin. Jonathan Cox, founder and chairman of the Federated Cos., did not return an email or phone message Monday afternoon.


The city is reviewing a permit application for the parking garage, said Greg Mitchell, the city’s economic development director. Federated plans to do “continuous construction,” putting up one building at a time until all four are completed, he said.

Although most people agree that the city needs more housing units, some in the industry warned that the window for new construction may be closing. Fifty-three apartments are being built at 59 Anderson St.; 132 apartments are being built at the former site of Joe’s Smoke Shop on Congress Street; and 63 units are being built at the corner of York and High streets.

While hundreds of units of housing are being built, construction costs are on the rise, primarily because of a lack of workers in the building trades.

While Federated may have anticipated an increase in housing demand when it introduced its project in 2011, the developer may have missed its opportunity to capitalize, said Brit Vitalius, president of the Southern Maine Landlord Association.

“It’s potentially more risky,” Vitalius said. “They had the foresight at the beginning, but they may be one of the last ones in. And the last project in the cycle may have a less auspicious ending.”

Bayside residents have long hoped that midtown would be a boon for the neighborhood, at the center of Portland’s social services, including soup kitchens and homeless shelters. They’re still hopeful that the project will come to fruition.


“Although it’s been a long process to date, we are really looking forward to the revitalization of Somerset Street,” Steve Hirshon, president of the Bayside Neighborhood Association, said in a written statement. “The addition of hundreds of new residents in our neighborhood will bring more eyes on the street, creating a safer and thriving 24/7 community.”

The most recent delay stems from the developer trying to meet the conditions on its most recent site plan approval, which occurred in March of 2015. Those 22 pages of conditions had to be met for the developer to close on the sale, get permits and begin construction.

The city entered into a sales contract with Federated in 2011 for the land bounded by Somerset, Elm and Pearl streets, and the Bayside Trail. Two years later, the City Council increased the building height limits from 105 feet to 165 feet. In 2014, the Planning Board approved a master development plan for up to 850 units of housing on the site, as well as a site plan for a 15-story residential tower with 235 market-rate units.

A group called Keep Portland Livable, which emerged as an opponent to the tall buildings, filed a lawsuit. Rather than defend the project in court, Federated agreed to scale back the development. Federated also agreed to build the four, six-story buildings in one phase, rather than in phases over the next decade.

Despite the compromise, the project has still had a bumpy ride through City Hall. The Planning Board was critical of the new project design, approving it reluctantly.

Last summer, Federated asked the city to consider allowing the company to build hotel rooms instead of housing units. The developer cited the long planning process and the influx of new housing developments that had been approved and gotten underway. That inquiry prompted the city to declare the purchase and sale agreement to be expired, which in turn prompted Federated to threaten to sue the city.


The city announced later in 2015 that an agreement was reached for the developer to move forward with a housing project.

Last month, the council voted to make minor modifications to the sales contract by eliminating a requirement that midtown participate in the city’s (now suspended) Park and Shop program and requiring Federated to build certain buildings, including the garage.

The council also eliminated the city’s right to buy back the property in which any housing is built, because it was complicating Federated’s efforts to secure financing. The city would have the right to buy back the property on which the garage is to be built.

The project, estimated to cost $75 million, includes $12 million in subsidies, some of which will go toward street improvements. The city will spend roughly $11 million – $8.2 million to repay a loan plus an estimated $2.8 million in interest – to help build the parking garage.

Randy Billings can be reached at 791-6346 or at:


Twitter: @randybillings

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