PORTLAND — A verbal agreement between neighbors and developers could ease tensions over development on Stevens Avenue.

The compromise to reduce the number of housing units at the proposed McAuley Woods comes as developers of the Somerset Street site known as Midtown face a potential legal fight with the city.

John Thibodeau, who with Bobbi Cope has organized opposition to a zoning change on 17.5 acres of land at 605 Stevens Ave., confirmed Tuesday that he, Cope and developers Sea Coast Management have agreed to a cap of 249 housing units on the land containing Catherine McAuley High School and the former St. Joseph’s Convent.

Kevin Bunker of Sea Coast said Monday the developers will also reduce the amount of land to be rezoned as a higher density R5A zone, although those details have to be worked out.

“We hope the politics becomes more palatable,” Bunker said, after the City Council postponed a vote to rezone portions of the property until July 6.

The housing units would still include 88 inside the former convent, with 66 earmarked as affordable housing. The reduction in units by about 70 will affect construction on land bordering Baxter Woods and now used as McAuley athletic fields.

Sea Coast has a purchase agreement for the land with Rhode Island-based Sisters of Mercy of the Americas Northeast Community. The developers have offered McAuley a 25-year lease to remain on the property.

Thibodeau said fewer housing units will help, but he and other neighbors also want the woods protected and more of the fields preserved.

“We look forward to working on this in the site and master plan process,” he said.

Bayside dispute

The compromise on McAuley Woods was reached as Miami-based Federated Cos. and city officials have disagreed on whether the company’s agreement to buy the city-owned land on Somerset Street in Bayside has expired.

Patrick Venne, the Midtown senior project manager, on Monday said the dispute arose when the company sought an opinion on how it might change the mixed-use project to include two hotels. The change would eliminate 180 housing units in the buildings planned as Midtown 1 and Midtown 4.

Developers received conditional approval in March for the project, which had already been scaled back after a court challenge from abutters.

Venne said the May 21 letter was a “soft request” based on changes to the housing market and the lack of Central Maine Power infrastructure needed to service residences in the area.

In response, city Economic Development Director Greg Mitchell on June 18 informed Federated principal Jonathan Cox the sales agreement had expired and the change of use would require starting over with a Planning Board site plan review.

Mitchell said the expiration was discovered by the city corporation counsel’s office as part of the review of the possible change of use. Venne said Tuesday the claim there is no valid agreement has eclipsed questions of change of use for the property.

“We never filed a formal application, and we are left with a city staff saying your contract has expired and you have no right to the site,” he said.

Because Federated has not obtained all needed permits or received the city contribution for the parking garage it agreed to build for $9 million, Venne said the agreement is still valid and pending.

Federated is left with no option but to litigate in order to enforce its rights and receive the clarity city staff and management is unable or unwilling to provide,” Cox said in a June 19 response to Mitchell.

“We consider your letter of June 18th a breach of our contract to buy the subject property and intend to proceed with the same in mind as we protect our legal interests to this site,” he said.

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

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