The water-saving faucets and low-flow toilets were meant to be in place this month for Mississippi Avenue Lofts' planned grand opening, but a bankrupt contractor and a nasty court battle have delayed the launch of the once-controversial condo project.

The man hired to build it—Lake Oswego general contractor Michael Purcell—declared personal bankruptcy in December and closed his construction company, Gray Purcell, early this year. That left the highly visible project in limbo for months, 90 percent complete and $2.5 million over budget.

Now, the developers accuse Purcell of intentionally underbidding and diverting funds from Mississippi Avenue Lofts—one of about a half-dozen high-profile projects citywide left incomplete and in deep financial woes when the contractor folded.

"Many developers and subcontractors have had their financial lives ruined by Mike Purcell's business practices," says developer Randy Rapaport. "Some are reluctant to speak on the record because it is embarrassing and painful."

Purcell did not respond to repeated requests for comment for this story. His attorney, Jeffrey Wong, declined comment.

Last week, for the first time since Feb. 11, construction resumed on the 56,000-square-foot Mississippi Avenue Lofts. For five months, work on the four-story building was abandoned while prospective owners for many of its 32 condo units fled. The grand opening, originally scheduled for this summer, has been pushed back to November.

Bill Jackson, one of the project's three developers, says the building will be completed to a LEED Gold rating standard—a measure of sustainability by the building industry. Solar panels on the roof could push the rating to LEED Platinum, making it the second U.S. building of its kind to attain that rank.

"This has always been intended as a truly precedent-setting project. We want to finish the job," Jackson says.

But after the most recent troubles, he's uncertain whether the project will ever make a profit.

The building generated controversy from the start. Neighbors opposed it as an infill eyesore in the Mississippi Historic District, delaying its construction for nearly a year. Meanwhile, the cost of materials soared.

But until Gray Purcell flamed out in February, the project was on track and Gray Purcell was recognized as the leading local contractor for sustainable infill projects. The company had also been hired to build the bside6 building at Southeast 6th Avenue and Burnside Street, Rapaport's Clinton Condominiums at Southeast 26th Avenue and Division Street, and the SunRose building at Southeast 28th Avenue and Burnside Street, among others.

But observers say Gray Purcell overreached. As its troubles mounted, the company pushed the original 10-month building schedule on Mississippi Avenue Lofts to more than two years. Purcell's bankruptcy filings show his debts piling up, and developers claim Purcell was passing money from one project to the next to stay afloat.

When the company went under in February, 22 of the units in Mississippi Avenue Lofts had been sold into escrow. Now, all but two of those bids have been abandoned, and developers have dropped asking prices ofmost units by at least $10,000,Jackson says.

More problems for the project have cropped up in Multnomah County Circuit Court, where three subcontractors have sued the developers for thousands in unpaid bills. Jackson says a deal finalized with Albina Community Bank on July 13 covers all the project's debts and allows work to be completed by this fall.

Meanwhile, in federal court, Purcell's bankruptcy filing seeks to write off $103,000 he says he owes Mississippi Avenue Lofts. The developers challenge this, saying Purcell intentionally underbid the contract, diverted their payments and walked off with a $422,000 loan.

The developers say Purcell's debt is not protected by bankruptcy because he gained the money by "false pretenses, false representations or actual fraud." The case is not yet scheduled for a hearing.

Despite the harsh words in court, Jackson declines to criticize Purcell personally.

"Mike Purcell was doing what he could do to keep his business going," Jackson says. "We're disappointed that things turned out as they did."


PastaWorks market opened in the ground floor of Mississippi Avenue Lofts in February. Two other retail spaces in the building remain vacant.