Portsmouth, Developer Trade Lawsuits

The city of Portsmouth and the developer it had signed a deal with to revitalize a former federal office building in the city’s downtown are back at it in court. 

The competing lawsuits trade blame on who is responsible for the failure of the public-private partnership to turn the former post office and Thomas J. McIntyre federal building into a new anchor for the city. The development process became a political hot potato that saw two successive mayors and city councils tossed out by voters in recent years.  

The project collapsed earlier this year when the federal General Services Administration formally rejected the Portsmouth attempt to buy the property for $1 under a disposal process for landmarked buildings, saying the city had failed to file an application by the June 2022 deadline.  

The Portsmouth Herald first reported the lawsuits. 

“Developer’s true motivations have revealed themselves — namely enhancing its own revenues while causing the city to shoulder an undue portion of the economic burden,” created by the planned redevelopment, the city’s lawsuit claims. 

The development team, a joint venture of Boston’s Redgate and Portsmouth’s own The Kane Co., had earlier sued the city when city councilors and the previous mayor hired a design firm to create a smaller redevelopment proposal known as the “community plan.” That suit was dropped after the city and Redgate/Kane agreed on a $2 million settlement that would see the community plan go forward. 

“Having realized that the Community Plan will cost it much more than it wants to pay, the city in bad faith engineered and announced the ‘impasse’ that did not exist, purposely causing the federal government to terminate the city’s opportunity to acquire the Property for a dollar. This has doomed the project and breached the City’s binding Settlement Agreement with the Developer,” the Redgate/Kane lawsuit contends.  

The developers’ lawsuit claims the “community plan” would have required $46 million in public subsidies, an amount the city refused to pay. The city claims developers sought an $80 million public subsidy and accused Redgate/Kane of having inflated construction cost estimates.