The Portland City Council will hold a public hearing on Wednesday on a proposal to reclaim by eminent domain vacant land in Bayside that was part of the defunct Midtown project, so the city can proceed with building a parking lot on the site. .
In exchange for the land, the city plans to pay three LLCs with an interest in the approximately 6,300 square foot parcel for just $10 each, citing an appraisal that claims Lot 6, 59 Somerset St. has ” a negative fair market value”. .”
The proposed foreclosure comes as the town becomes embroiled in a lawsuit over the failed redevelopment of 3.25 acres along Somerset Street into housing and commercial space. This $85 million project collapsed in March 2018, after seven years of work and three years after approval, when Florida-based developer Federated Cos. failed to obtain permits and approvals from its sitemap have expired.
The lawsuit, which accuses Portland of breaching its contract — a charge the city strongly denies — is ongoing, despite two court-ordered settlement conferences in May and June.
Although approvals for the project have expired, Portland taxpayers are continuing to pay interest on an $8.2 million federal loan to help fund public parking at the site. By July, the city had paid more than $784,000 in interest, including nearly $633,000 in interest for the garage, according to the city’s chief financial officer.
Russell Pierce, an attorney with Portland law firm Norman Hanson & DeTroy who was hired to handle the prominent estate case, said the ongoing legal battle will not impact the city’s ability to recover the land.
“The litigation will continue; but the litigation does not deprive the city of its sovereign right and responsibility to reclaim the land for the public purposes of building a parking lot,” Pierce said in an email. “Without disclosing the substance of the settlement negotiations, which I am not permitted to do under the rules of the court, I can tell you that the City believes that we have fully explored in good faith all possible avenues of resolution and made extraordinary efforts to seek a resolution.”
The city advanced Federated and/or its affiliates $999,999 to facilitate construction of the garage, according to the sentencing order.
Nor Jonathan Cox, president of Federated Cos.; Patrick Venne, of Redwood Development Consulting; nor did the attorneys representing them in their case against the city respond to email requests for comment or interviews last week.
Councilman Nicholas Mavodones said it’s rare for Portland, or any municipality, to invoke eminent domain. He recalled that the city used it years ago to grab land off Congress Street to build a new road to the airport.
Mavodones said he planned to back the proposal on Wednesday, noting it was “primary” to previous councils to build a garage at Bayside to accommodate the future housing and retail development. And he doesn’t necessarily see the garage as being in conflict with the city’s climate goals, which call for reduced carbon emissions from vehicles.
“I think it’s warranted and I plan to support it,” he said. “There will always be a need for parking in town. Personally, I don’t consider it as contradictory as these (climate) goals. Housing could be built there and some additional businesses.
Eminent domain allows a municipality to seize private property for public use. It is typically used to acquire land to build public facilities, such as schools or fire stations, or to accommodate infrastructure projects, such as operating utility lines or building new roads. Often, municipalities threaten to use eminent domain to force a voluntary sale. And when invoked, it can produce a strong public reaction, often ending up in court.
When seizing land by eminent domain, a municipality must pay the owner a fair market value.
In this case, the city plans to pay three LLCs — two controlled by Federated Cos. and one called Redwood Development Consulting, which holds a ground lease — just $10 each for the property. The city’s sentencing order states that an appraisal conducted by the city determined that the land has “negative fair market value considering the encumbrances on the property and the restrictions governing its development.”
“The payments of ten dollars ($10.00) … therefore exceed the condemnation value that must be paid by law for the taking of eminent domain of the noted interests in Lot 6,” the order reads.
The Press Herald requested a copy of the assessment, but did not receive the 147-page document until Friday afternoon.
Based on past instances, valuations in eminent domain cases can vary widely.
When the city seized eminent domain property easements near the eastern waterfront in 2005 to facilitate the construction of a public road and parking garage, the city’s assessment claimed that the easements were not worth than $5,000. However, an appraisal conducted by the owners claimed they were worth close to $2 million. The dispute ended in court, which decided after six years of wrangling that the city should pay $795,000 plus interest.
Pierce said Maine law specifically allows municipalities to invoke eminent domain to seize property to build parking garages and that those parking garages can generate revenue for a municipality.
The lack of structured parking has been identified by city officials as a barrier to development over the years, including the city’s new vision for Bayside, adopted in 2000.
“The Legislature has made the need for parking facilities a public necessity,” Pierce said, “and reducing traffic congestion and parking problems is a priority and a policy throughout Maine – Portland’s parking constraints in are an example.”