A new purchase and sales agreement between the city and Federated Cos. is expected to lead to groundbreaking for the “Midtown” project on Somerset Street by the end of the year. Credit: David Harry | The Forecaster

PORTLAND — Midtown is on again.

Groundbreaking for the $85 million mixed-use project on Somerset Street is expected to begin by the end of the year, City Manager Jon Jennings said in an Oct.14 press release.

The city and developers Federated Cos. negotiated a new purchase and sales agreement, in effect until Feb. 29, 2016.

“Getting the Midtown project back on track has been a priority of mine since even before I assumed city manager duties,” Jennings said.

The new agreement also transfers the cost and obligation of cleaning up the city-owned land in Bayside to Federated. The city will credit $50,000 to the $2.4 million purchase price after the work is done.

The city will still pay $9 million for construction of a parking garage and two-thirds of the $4 million cost to elevate Somerset Street above floodplain level.

With plans for 445 housing units in three, six-story buildings, a seven-story parking garage, and 90,000 square feet of retail space, Midtown would extend 3.5 acres along Somerset Street, almost from Whole Foods Market to the parking lot at Trader Joe’s.

The Planning Board approved a scaled-down site plan in March. But by mid-June, developer Jonathan Cox of Miami-based Federated Cos. and city Economic Development Director Greg Mitchell were at odds over the direction of the project, the purchase and sales agreement and its provisions.

The original site plan, approved in 2014, was challenged in Cumberland County Superior Court, leading to Federated reducing the scope of the project.

On Oct. 15, plaintiff Peter Monro praised the new agreement.

“We applaud the new city leadership’s directness, tenacity, and goals in negotiating this revised settlement based on the urban planning compromise reached by Keep Portland Livable a year ago,” Monro said.