The would-be developer of a shuttered Old Town Chinatown hotel filed a lawsuit Thursday against the city of Portland seeking $237,373 because the real estate deal fell apart.

Developer David Gold blames city leaders for undercutting his proposed project by allowing the Right 2 Dream Too homeless camp to set up shop across the street, at the corner of West Burnside Street and Fourth Avenue.

Gold reached a deal in 2011 to buy the city-owned Grove Hotel from the Portland Development Commission and renovate it into an Asian-themed hostel. But the deal didn't go forward and city leaders selected a new hotel project led by developer Bob Naito.

In the lawsuit, filed in Multnomah County Circuit Court, Gold's attorney claims that Commissioner Dan Saltzman said the city would take enforcement action to remove the homeless camp and developers should proceed with due diligence to redevelop the property.

But the suit claims that Commissioner Amanda Fritz or another city employee directed the Bureau of Development Services to abandon enforcement action.

As a direct result of the homeless camp's existence, the expected value of the finished project plummeted $900,000 and Gold couldn't secure funding to go forward, according to the suit.

Gold's Grove Hostel Property LLC claims that Portland didn't enforce zoning violations, breached its contract and negligently and fraudulently misrepresented its plans. Gold's company is seeking money for feasibility studies, engineering studies, architectural fees and other costs tied to the project, plus attorney fees.

"We're just looking to recoup our out-of-pocket expenses," Gold said Friday. "Nothing more."

Gold said he's disappointed the standoff is heading to court. Gold said he has no problem with the Right 2 Dream Too camp being at the location, or efforts by the Portland Development Commission to make the deal happen.

He said he faults the city for allowing the homeless camp to keep operating after reportedly saying enforcement action would follow.

"I can't see why individuals should suffer because the city, shall we say, got creative with zoning laws to change the rules of the game," he said.

A city attorney didn't immediately respond to a request for comment. Officials generally don't comment on pending litigation.

The Portland Tribune first reported the lawsuit.

This marks the second time in four years that a scorned developer has sued the PDC over a failed deal. In 2011, the would-be developer of Centennial Mills sued the PDC for $1.7 million, alleging that officials sabotaged the deal in part to benefit the proposed James Beard Public Market.

The PDC ultimately paid out $200,000 and waived repayment of about $480,000 in taxpayer loans.

-- Brad Schmidt

503-294-7628

@cityhallwatch