The former E. Perry Iron & Metal scrapyard on Lancaster Street in Portland is the location of a planned housing development by Redfern Properties. Derek Davis/Portland Press Herald

One of Portland’s most prolific housing developers in recent years is planning to build another project — this time in the city’s Bayside neighborhood on the site of a former scrap metal recycling company near Whole Foods Market.

But financing challenges and escalating economic uncertainty may keep Redfern Properties from building the $150 million project anytime soon, said Jonathan Culley, managing partner.

Redfern this month posted predevelopment plans on its website for the Kennebec Block — a project consisting of at least two apartment buildings with over 500 market-rate and workforce units on a parcel bounded by Lancaster, Pearl, Kennebec and Chestnut streets.

The neighborhood has been targeted for housing for over a decade, but few projects have materialized and Culley has yet to submit a formal proposal for the Kennebec Block project.

Redfern purchased the 1.5-acre property at 115 Lancaster St. for $6.8 million last May from the former E. Perry Iron & Metal Co., according to city tax records. The company, which had operated for more than a century, shut down in October, Culley said.

Each building would have 12 stories and meet existing zoning requirements, Culley said. Parking would be provided at the nearby parking garage on Chestnut Street, which has 450 spaces and would be operated in partnership with Redfern, he said.

Redfern also has proposed the seven-story, 325-unit Tavata project at 165 Washington Ave., which won Portland Planning Board approval in February despite concerns that it would provide only 11 parking spaces.

But Culley’s concerns about financing that project have increased, and now he says both Tavata and Kennebec Block are on hold until circumstances change, including the city’s requirement that 25% of the apartments be workforce housing units.

“The economic uncertainty of federal policy right now makes everything more challenging,” Culley said Monday. “We would either need interest rates to drop significantly or we would need some relief from the city’s inclusionary zoning ordinance.”

An artist’s rendering of several apartment buildings developer Redfern Properties wants to build at the site of a former scrap yard in Portland’s Bayside neighborhood. Courtesy of Redfern Properties

For the $80 million Tavata project, 82 units would have to be deed-restricted as workforce housing, meaning they would be considered affordable for people making up to 80% of the area’s median income, which currently is $89,250 for a single person.

The rest would be priced for people making 80% to 100% of the area’s median income, with rents between $1,700 and $2,250 for a one-bedroom.

If developers don’t want to include workforce housing in a project, they can pay $182,830 for each declined unit to the city’s housing trust fund, which supports affordable housing initiatives. The workforce housing requirement applies to projects with 10 or more units.

Culley said Redfern’s private investors understand that the Bayside property is a long-term project and are “able to be patient.”

Redfern recently added more than 500 apartments on the downtown peninsula between The Casco – the tallest building in Maine – and Nightingale — the former Mercy Hospital building. Both are market-rate properties.

Culley said reducing the workforce housing requirement from 25% to the previous rate of 10% likely would make both projects financially viable. He said he hasn’t asked city officials to consider the reduction, but he has heard it’s being discussed.

Portland’s Bayside neighborhood, which includes several former scrapyards, has been targeted for housing projects for over a decade. Derek Davis/Portland Press Herald

The former E. Perry Iron & Metal property is the second former scrapyard to be targeted for housing development. The other was the former New England Metal Recycling company on Somerset Street.

The Midtown project called for building 800 market-rate apartments in four 165-foot towers with 100,000 square feet of retail space and ample parking. The developer and the city have been locked in legal battles since the $85 million project fell apart in 2018.

The city’s spokesperson didn’t respond Monday to a request for information about the status of those legal battles or any proposals to reduce workforce housing requirements.

Portland officials worked for years to move the scrapyards out of Bayside because many viewed them as eyesores. A feasibility report issued in April 2000 called scrapyards “the single most inhibiting factor to the successful redevelopment of Bayside.”

Alan Lerman, owner of E. Perry Iron & Metal, withstood the pressure for more than 25 years.

“It kind of baffles me,” Lerman said in 2004. “The city advocates recycling. That’s what we do, and they’re trying to get rid of us.”