PORTLAND — The Midtown mixed-use development on Somerset Street is expected to take a leap forward this week when developers file their first building permit application.
“We are moving forward with the garage in the short term, and it has a retail component,” spokesman Patrick Venne said Monday.
Venne, a local attorney working for property owners Federated Cos., said the developers expect to file the application for the structure at the corner of Chestnut and Somerset streets this week.
The garage represents the most expensive city commitment to develop the land it sold to Federated in June 2016 for $2.4 million; the deal also required the city to fund $9 million of the garage construction. City documents show it will pay $378,000 this year of $7.8 million on debt service for a loan from the U.S. Department of Housing and Urban Development.
The payment is due Aug. 1, and payments will increase to a peak of $899,000 due Aug. 1, 2027. The final payment of $887,800 is due Aug. 1, 2028.
On July 13, Economic Development Director Greg Mitchell said the building-permit process should also trigger work to elevate Somerset Street above flood level – anywhere from a few inches to about 2 feet.
“The intent was, the street project would be done at the same time. From a practical mobilization standpoint, the two are tied together,” Mitchell said.
The city is obligated to pay $2.7 million of the $4 million cost to elevate the street, but the project is also expected to cost more than the 2013 estimate. The city share of funding uses a $667,000 HUD loan, a $333,000 HUD grant, $1 million in Bayside tax increment finance funds and the remainder in new city debt.
How to share the costs beyond $4 million will need to be resolved by the city and developers.
When approved by the city Planning Board in March 2015, the Midtown development called for more than 440 market rate apartments spread across four buildings, the 840-space garage, and 91,500 square feet of retail space on 3.44 acres.
The city sold the land, formerly a scrap yard, to Federated for $2.4 million in a deal that closed in June 2016. A month before, the City Council approved amendments to the purchase and sales agreement which defined a “Guaranteed Project Portion” of at least 180 apartments and 50,000 feet of retail space to go with the garage.
If developers “have not reached the commencement of the ‘Start-up Phase,’” within two years of the city disbursing $1 million in funding, the city has an option to repurchase the garage lot.
Within three years after requisitioning $1 million in city funds, developers are required to complete the Guaranteed Project Portion or pay the difference between current tax revenues and the anticipated tax revenues from development. Those payments could be required for 17 years.
“The garage is intended to serve the entire neighborhood, it has always been the goal,” Mitchell said Tuesday.
Development on the acreage has been a protracted process dating to the first sales agreement in 2011.
In January 2014, the planning board approved a site plan for a complex with four, 165-foot towers providing 650 market rate apartments and 1,100 parking spaces. The approval brought a lawsuit against the Portland City Council for approving the zoning that allowed the building heights, and eventually, developers reduced the scale of the project and the suit was dropped.
After the approval of the smaller plan in 2015, the city and Federated did not agree on how to pay for cleaning up the site, and eventually settled on Federated shouldering the cost with a $50,000 credit from the city.
An attorney working with developers said he expects a building permit for the Midtown parking garage at Somerset and Chestnut streets to be filed this week.