Image courtesy of Redgate/Kane
The team working to convert a former federal office building in downtown Portsmouth into a mixed-use development has thrown in the towel on negotiations and is resuming its lawsuit against the city for breach of contract.
Portsmouth’s The Kane Co. and Boston developer Redgate had originally suspended their lawsuit in April 2020 to allow for both sides to try and come to an agreement. The suit was originally filed after city elections brought a new mayor and many new City Council members to power who ran on opposition to a Redgate-Kane proposal to redevelop the city’s McIntyre Federal Building, and who voted to reject a ground-lease deal with the development team that would have allowed the project to move towards securing private financing. The Redgate-Kane team had been selected by the prior mayor and City Council, and had signed a development agreement with the city.
“The Portsmouth City Council has done a disservice to this community with its actions, its indifference, and its complete failure to act in the best interests of Portsmouth,” Michael Kane, president and CEO of The Kane Co., said in a statement. “The Council’s reckless decision to breach our agreement has been compounded over the past 18 months by their disregard for the deep commitment of Redgate Kane to redevelopment of downtown Portsmouth. Regrettably, resuming this litigation is our only recourse.”
In the face of the new city leaders’ opposition, Redgate sought to negotiate changes to make the design meet the company’s original profit and income targets for the project, set when the development agreement was signed. But during the last year, Portsmouth officials had brought in a new architecture firm to conduct a fresh round of public consultation and craft a new, less-dense design. Redgate-Kane had said the resulting design was financially infeasible.
“Unfortunately, the McIntyre Sub Committee never informed our development team of their departure from the agreed upon direction and never included us in their design process,” Kane said. “Additionally, the Sub Committee and their urban planner never consulted the body of information that the Developer had produced in the two plus years of design.”
The Kane Co. statement maintains that it “was and is still willing to proceed” with the new design if Portsmouth officials sign a new “Project Restart Agreement,” which it gave to the city in September after negotiations with the City Council subcommittee handling the McIntyre project. The city did not respond to the proposed agreement, Kane claims, leading to the decision last month to restart the lawsuit.
