Portland Shells Out $15M To Take Back Failed Housing Project Land

Portland officials struck a $15 million deal to reclaim three barren lots, marking the end of a stalled housing plan that sat idle for 15 years.

The deal stops the legal battles over the 3.5-acre Somerset Street site, clearing the way for fresh building plans. "The settlement agreement is a significant step towards getting the land developed and creating much-needed housing during Portland's current housing crisis," said Russell Pierce, the city's attorney, according to the Press Herald.

Back in 2013, Federated Companies pitched the "Midtown Project," four tall towers stretching 165 feet up, meant to hold 800 units and shops covering 100,000 square feet. When neighbors pushed back, builders cut the size by half in 2015.

Things fell apart in 2018. Federated missed key permit deadlines, and their approvals expired. Three federal court battles followed.

The city burned through $25,000 each month on lawyers. Councilor Sarah Michniewicz put it plainly: "It's going to seem to the public like a big chunk of money, and it is, but it's what needs to happen, and it does create a valuable opportunity."

In 2021, Portland seized one plot through eminent domain for just $10 after finding deed limits made it worthless. The other spots cost $13 million, though Federated bought all three for only $2.3 million five years earlier.

A planned $15 million garage sparked fierce debates. The city secured $8.1 million in federal money and paid Federated $1 million for garage plans. Officials rejected the builder's last-minute permit try in late 2018.

With this deal done, Federated can't sue Portland again. New builders have started sniffing around the site, eyeing spots for homes and parking.

Today, weeds push through cracked concrete where barriers block empty lots. Officials want new homes built that match the first big plans from a decade ago.