Redmond is looking to develop the former site of Ryan’s Produce at Fifth Street and Greenwood Avenue. (Geoff Folsom/WesCom News Service)

The owners of Grocery Outlet in Redmond are suing the city over parking rights for their customers and employees on an adjacent city-owned lot, which is to be developed as affordable housing.

“If they built that area, that would really undermine the Grocery Outlet from staying in business,” said Ed Fitch, the Redmond attorney who represents Downs Family LLC. The family has owned and operated the midtown store near Fifth Street and Greenwood Avenue since the 1970s, when it was called Redmond Canned Foods.

The Downs family’s lawsuit, filed March 28 against the Redmond Urban Renewal Agency, seeks a judgment declaring that the family is the owner of the northern portion of the city’s property. The family’s claim is based on the concept of adverse possession, which says that someone who uses and maintains property for at least 10 years can become its owner.

Members of the Downs family have been paving, plowing and cleaning a strip of vacant lot just south of the store for decades, Fitch said. The strip of land provides parking for 30 to 40 cars, he said.

“We disagree with the representations in the lawsuit,” said Keith Witcosky, Redmond city manager. Witcosky declined to comment further on the pending litigation.

The city bought the 1.97-acre parcel in 2016 and is preparing to have Central Oregon’s affordable housing agency, Housing Works, build 48 apartments. The apartments would be available to people earning 80 percent or less of the area median income, which is $56,000 for a family of four.

The city provided a $450,000 grant to Housing Works and will loan $2 million of the estimated $13.4 million development cost, according to The Bulletin archives.

The disputed area goes roughly 100 feet into the city’s property, Fitch said. Although Redmond didn’t acquire its land until 2016, the Downs family’s right to park on it vested long before, he said.

“If they had done their due diligence, they would’ve known Grocery Outlet and Redmond Canned Foods had been using this property a long time.”

Adverse possession cases usually crop up in rural areas, where someone has put up and maintained a fence on a neighbor’s property, Fitch said. It’s up to the property owner to keep an eye on what’s happening and challenge it, he said.

Housing Works Executive Director David Brandt said he didn’t know until recently that Grocery Outlet was disputing the city’s use of the property. Housing Works hasn’t signed a purchase and sale agreement yet, but it has designed the two-story building, which will have two parking spaces for each of the 48 apartments.

Housing Works doesn’t have a position on the dispute, Brandt said.

Fitch said he thinks there is potential for compromise, but the city hasn’t been willing to discuss it.

“The city should be supporting them, not trying to derail their business,” he said.

— Reporter: 541-617-7860, kmclaughlin@bendbulletin.com