Posted: Jul 12, 2012, 6:36 PM
Join Date: Feb 2006
Lawsuit claims Portland Development Commission killed Centennial Mills proposal to benefit agency's board chairman
Published: Wednesday, July 11, 2012, 8:00 PM Updated: Thursday, July 12, 2012, 6:06 AM
Brad Schmidt, The Oregonian
Officials at Portland's urban renewal agency are considering two proposals for their off-track Centennial Mills project while fighting a related lawsuit accusing them of killing the original plan to benefit the agency's board chairman.
A Multnomah County judge is expected to decide this month whether to dismiss the $1.7 million lawsuit, filed against the Portland Development Commission by a spurned California developer.
Shaheen Sadeghi has accused the PDC of breach of contract and claims that PDC officials sandbagged his proposal -- to redevelop the mill site into a food hub -- to eliminate competition with a similar, nearby project, the James Beard Public Market.
Sadeghi claims agency officials reversed course in 2011, after three years of negotiations, to benefit PDC board Chairman Scott Andrews. Andrews is president of Melvin Mark Properties, and his father-in-law is the chairman of the Melvin Mark Cos.
A Melvin Mark division separate from Andrews' is behind a deal for the public market and an office tower that Multnomah County approved last month for the west side of the Morrison Bridge.
Sadeghi alleges that PDC officials killed his proposal "to eliminate competition with the Morrison Bridgehead project in which Chairman Andrews has a significant and personal economic interest," according to his March 26 amended lawsuit.
Andrews declined to comment. An attorney representing the PDC said in court documents that the accusation is "irresponsible and completely without merit."
The lawsuit complicates efforts to move forward on a new concept for Centennial Mills, a site along the Willamette River in Northwest Portland. City leaders want the property to provide office space for industries such as software or sports apparel companies, not the food concept they embraced back in 2008.
But under any scenario, renovations will take years and require taxpayer money beyond the $13 million already spent since the city acquired the site in 2000. And with a new mayor taking office in January, the PDC could get new marching orders.
Negotiations for Centennial Mills fell apart in spring 2011, when city officials told Sadeghi that he had about three months to revise his proposal to include vast amounts of office space. Both sides had been operating under a nonbinding memorandum of understanding, not a formal development agreement.
Sadeghi first sued in November but a judge dismissed his breach-of-contract claims. Sadeghi told The Oregonian this week that he plans to keep fighting, even if his amended lawsuit is kicked out.
"If you change your mind, you pay for it," Sadeghi said of the PDC. "You don't burn the developer who came in and invested in the community's dream."
Sadeghi said his initial lawsuit didn't make accusations against Andrews because he simply hoped to recoup expenses without "getting into a huge can of worms."
But Sadeghi said he decided to exercise "all of the legal rights that are available to us" after the PDC hired Portland's Ball Janik law firm to fight the lawsuit.
Sadeghi called Melvin Mark "the chairman's company," referring to Andrews, and asked rhetorically, "You're telling me you wouldn't be concerned?"
In court documents, the PDC's attorney wrote that Sadeghi has "attempted to fabricate some supposed connection" between the projects "based simply on the coincidental fact that certain events had overlapping dates."
City officials hope to move forward on Centennial Mills despite the lawsuit.
An evaluation committee is privately weighing two proposals, one from the Portland team of Venerable Development and Harsch Investment Properties, the other from Seattle-based Daniels Real Estate. Agency spokesman Shawn Uhlman declined to say whether a recommendation has been made.
Daniels Real Estate has pitched a scaled-back version of its 2008 proposal, which included about 400,000 square feet of housing and 169,000 square feet featuring retail, office and a hotel.
Venerable and Harsch recommended 80,000 square feet for employment, 71,000 square feet for retail and 42,000 square feet for apartments. Venerable, which also competed in 2008, also called for 36,000 square feet of a use that PDC redacted from records obtained by The Oregonian through the state's public records law.
"Bluntly stated," Venerable Development wrote in a presentation to the PDC, "this is a high risk project that as currently planned, may be far from financial viability and will require substantial redesign and value engineering in order to viable."
-- Brad Schmidt