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Dan Holladay's alleged request for campaign funding becomes part of impending lawsuit over stalled construction project

A developer in Oregon City is striking back against Mayor Dan Holladay with an intent to sue the city for the elected official's alleged slanderous statements and attempted under-the-table dealmaking.

COURTESY PHOTO - After 244 apartments were constructed in the Clackamette Cove project's first phase behind the Oregon City Shopping Center, 370 units of housing are envisioned between Agnes Avenue and the Clackamas River Trail as part of the second phase of the project.  Oregon City officials said in November they didn't know about a recent sheriff's auction of the majority share in a major urban-renewal project and used alleged fraud as partial justification to terminate their contract with developer Ed Darrow. With unanimous votes by the Urban Renewal Commission, city officials are in the midst of severing their deal with Darrow. Phase 1 of Clackamette Cove project built by Grand Cove LLC was beset with delays since 2006 and a more than $118,000 fine from the state DEQ.

As part of a June 12 tort claim, Darrow reported that Holladay approached him at a 2014 open house, when Holladay was campaigning for election as mayor, and whispered to Darrow, "Write me a check." Darrow said he was surprised and offended by the request and immediately turned around and walked away without answering or commenting.

Darrow said he then reported the incident to three people: his attorney, the project architect and a local citizen. Dan Fowler, the former OC mayor who hosted the open house, ended up giving the Holladay campaign a $1,545.80 in-kind contribution, and other Oregon City developers donating to the campaign included $1,000 from Icon Construction, $500 from the Oregon Home Builders PAC and $250 from Rossman Landfill owner Scott Parker, according to secretary of state records.

In his June 12 letter to Oregon City officials, Darrow asks whether his rebuke of Holladay's request for money led Holladay to slander Darrow and his business. Holladay declined to comment on the letter, referring questions to the city attorney; Darrow has given the city 30 days to respond before filing a lawsuit for "monetary damages" on a project his team has reportedly invested $7.8 million. As an alternative, Darrow has demanded a reinstatement of the development agreement.

City Manager Tony Konkol alleged that the developers "induced" the Urban Renewal Commission on Oct. 2 to approve an amendment to a public-private development agreement extending the required completion date of items related to the project. Oregon City officials had "limited if any confidence that Mr. Darrow could perform his functions," Holladay said at the Nov. 25 meeting.

In his tort claim, Darrow respond directly to the mayor's "function" comment, outlining various actions he and the development team have taken at the request of the city, including drawing up master plans and constructing the project's first phase.

"Holladay personally exceeded his authority in perpetrating this injustice and did not and does not understand his 'function,'" Darrow wrote. "He further does not understand the legal and ethical limits to his autocratic, malicious slander and irresponsible actions."

Darrow's comments came as the city's other elected officials have been discussing possible sanctions against Holladay for the mayor's recent statements in definance of stay-at-home orders and in response to the killing of George Floyd.

According to a document from the sheriff's office, Darrow paid $25,000 on Oct. 9 during a foreclosure sale to claim ownership of his former development partner's 60% interest in the project. Exactly a week prior, Darrow said that his business partner was still "making a legitimate effort to move the project forward by obtaining an extension" of the development agreement with the Urban Renewal Commission.

New public sidewalks and a traffic circle near Agnes Avenue were constructed in 2016 as part of a 244-apartment complex that sold for $69 million last year. The complex includes 12,000 square feet of live/work office space and recreational facilities behind the Oregon City Shopping Center.

With a planned 370 units of housing, the second phase of the project was envisioned between Agnes Avenue and the Clackamas River Trail that Darrow hoped would be worth $135.7 million. He had been hoping for 23,200 square feet of public retail space there, along with 6,700 square feet for the residents' community/fitness centers. Oregon City purchased the Cove property for $2 million in 2005 and has invested another $3.2 million in public-private partnerships to develop it.

For the project's second phase, $50,000 of the Urban Renewal Commission's payment went to an environmental mitigation plan for the Cove, and the city had been planning to reimburse the developer up to $695,000 for other qualifying expenses if 11 preconditions were met.

This article has been updated to indicate Grand Cove LCC built Phase 1 of the Clackamette Cove project.

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