PORTLAND — The Somerset Street development known as “Midtown” is expected to get underway this summer after the city and Federated Cos. closed on the sale of land.

The $2.3 million sale of 3.4 acres of city-owned land in Bayside was announced Monday by city spokeswoman Jessica Grondin.

“We worked hard to ensure that this project also included a number of benefits for all Portland citizens with the creation of $1.5 million of new annual tax revenue as well as the new retail options and public infrastructure amenities,” City Manager Jon Jennings said in a press release.

The city and Miami-based Federated Cos. first reached a sales agreement in 2012. Plans now call for a mixed-use development of 440 market-rate housing units, a parking garage and 87,000 square feet of retail space.

The garage, estimated to cost $9 million, would be paid for by the city. The city will also pay 2/3 of the estimated $3.9 million cost to elevate Somerset Street above the flood plain to accommodate the potential of sea level rise in Bayside and its effects on storm tides.

The city will use U.S. Department of Housing and Urban Development funds and $700,000 in bonds to pay its share of the elevation project.

The Midtown project would extend along Somerset Street from near the intersection with Pearl Street, across from Whole Foods, to Elm Street, near Trader Joe’s.

Moving the project forward has been a contentious process. The original concept called for a development about twice the size of the one now planned, with four towers at 165 feet high and two parking garages.

The first approval by the Planning Board in January 2014 led to opponents suing the city over the zoning amendments allowing the building heights. Developers eventually scaled back plans and the suit was dropped.

The project remained stalled last summer as city officials and Federated partners, including Jonathan Cox, quarreled about needed environmental remediation on the former industrial sites.

Mayor Ethan Strimling said the housing will help the city reach his goal of adding 2,000 new housing units in his first mayoral term.

“With our tight housing market, this will provide some great relief. I look forward to seeing the full build-out of the project,” Strimling said.

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.

Work on the Somerset Street “Midtown” project is expected to begin this summer after the city closed the sale to Federated Cos. The sale was announced Monday.