A development company out of California claims it sank $1.7 million of its own money into planning, developing and consulting for a big renovation project at Centennial Mills, a set of undeveloped buildings in Portland, Oregon.
But a lengthy negotiation process for the project fell through in June of this year, leaving the company, LAB Holding, to incur those expenses. The company now seeks $1.7 million from the Portland Development Commission in a recent contract dispute introduced to court.
Negotiations for the project began in 2008 when both sides developed a memorandum of understanding -- which is a non-binding agreement -- that the company would develop the buildings into the destination for healthy restaurants, an organic food market and other local businesses.
With no concrete agreement in place, and negotiations ongoing, the Portland Development Commission informed the development company on March 28 of this year that the support for the project had dwindled. The vision for the building suddenly changed from being food-centric to being centered on office space. The head of the PDC also said they needed commitments from tenants to fill at least half of the building in order to move forward.
Arguing that the initial vision had remained for several years, the development company asked the PDC to reimburse them for their expenses. The PDC responded that while the company would not have to pay back the publicly funded money they received in the form of grants and loans, they would not cover the expenses.
The buildings remain undeveloped.
Source: The Oregonian, "Portland Development Commission sued for $1.7 million over Centennial Mills," Brad Schmidt, Nov. 18, 2011