For over a decade, vacant lots in Portland’s Bayside neighborhood have stood as a symbol of a stalled development project and an ongoing legal battle between the city and the developer, Federated Cos. In 2011, Federated proposed a grand vision for the 3.25-acre site, envisioning four 165-foot apartment towers, 100,000 square feet of retail space, and ample parking. While the project initially garnered support, a group of residents and others raised concerns about its scale and potential conflicts with the city’s comprehensive plan. The city ultimately approved a scaled-down version, but the project never materialized. Instead, the vacant lots have become a stark reminder of what could have been, while the surrounding area has grappled with a growing homelessness crisis. Dozens of tents emerged along the adjacent Bayside Trail, forming one of the largest and most visible homeless encampments in Portland. The encampment was eventually cleared in the spring of 2023, but the vacant lots remain a constant reminder of the failed development and the ongoing court battles that have prevented its transformation. At the heart of the legal dispute is a tangled web of accusations and countersuits. Federated claims the city failed to provide adequate support and breached its contracts, leading to the expiration of project approvals and the denial of a building permit. The city, in turn, alleges that Federated failed to meet its obligations, including providing a required performance guarantee, and accuses the company of breaching a contract related to the construction of a parking garage. In a recent ruling, a federal judge dismissed several of Federated’s constitutional challenges against the city. However, the company has refiled its complaints, including allegations of civil trespassing, multiple contract violations, and a taking of property without just compensation through eminent domain. The city has also filed a countersuit, seeking repayment of $1 million it provided to Federated for the parking garage project. The ongoing litigation has not only stalled the ‘Midtown’ project but has also cost taxpayers nearly $1.2 million in interest on a federal loan for the parking garage that was never built. While the lawsuits drag on, the future of the vacant lots remains uncertain. The city has expressed an interest in developing the site and is open to proposals for allowed uses. However, the ongoing legal battles and the potential for compensation disputes may complicate any future development efforts.
Amidst the legal wrangling, another development project in Bayside is moving forward. Reveler Development has proposed 804 apartments, including 200 affordable units, along with commercial space and public greens. The project is expected to be built in phases over the next 10 years.
As Bayside continues to evolve, the vacant lots that were once slated for the ‘Midtown’ project stand as a poignant reminder of the challenges and complexities of urban development. The ongoing legal battle not only highlights the difficulties in navigating the complexities of large-scale projects but also underscores the need for collaboration and compromise in shaping the future of our cities.
