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The deal is off.

After facing opposition for nearly three months, Trader Joe’s is pulling out of a city-sponsored development in Northeast Portland, and the developer, Majestic Realty Co., is putting its efforts on ice.

The news is a major blow to Vanport Square business owners, who lauded the project for the increased traffic they expected it to bring to their isolated center. But the announcement also is a big coup for the Portland African American Leadership Forum, which is battling gentrification in the area.

“This is a people’s movement for self-determination,” said Steven Gilliam, a member of PAALF, at a press conference at the site on Monday. “Our opposition to this development was and always will be rooted in the broken promises of the past that the (Portland Development Commission) and the city have made. We have from day one insisted that low-income housing be included as part this development. This was not about Trader Joe’s. This was about the displacement of our people from inner Northeast Portland, and the failure of the Portland Development Commission to stop that displacement.”

According to PAALF, more than 10,000 African-American community members in North and Northeast Portland were displaced to the outskirts of the city between 2000 and 2010. The organization now is seeking to create opportunities through development for some of those people to return.

In November, PDC commissioners voted to sell the 1.79-acre parcel (on the northwest corner of Northeast Martin Luther King Jr. Boulevard and Alberta Street) to Majestic Realty for a discounted price of $502,160. The property’s appraised value of $2.87 million was based on its potential to accommodate mixed-use housing, but Majestic doesn’t develop housing.

Instead, it proposed constructing two retail buildings totaling 20,000 square feet, and surface parking for 100 vehicles. The vacant site previously failed to attract much interest from developers since Vanport Square was constructed in 2008.

Trader Joe’s did not respond to requests for comment, though it did issue a succinct statement through its director of public relations, Alison Mochizuki.

“Given negative reactions from the community – about our arrival, we will not be opening a store in the area,” Mochizuki stated. “We open a limited number of stores each year, in communities across the country. We run neighborhood stores and our approach is simple: if a neighborhood does not want a Trader Joe’s, we understand, and we won’t open the store in question.”

Majestic also declined to comment beyond a prepared statement, saying that it has decided to take a “time out” from the project so that the PDC and the community at large can discuss some of the “larger issues” at hand.

Adam Milne, the owner of Old Town Brewing Co. – one of the 16 businesses at Vanport Square – declined to comment on the news, but issued a prepared statement.

“Today is a disheartening day,” he stated. “The promise of a few blocks of walkable retail was the main reason the small businesses of Vanport Square risked everything to locate on MLK. Trader Joe’s would have been so good for our neighborhood. There aren’t any winners today. Only missed tax revenue, lost jobs, less foot traffic, an empty lot and a boulevard still struggling to support its local businesses.”

In a similar joint statement from Portland Mayor Charlie Hales‘ office and the PDC, the city said it respects the decision made by Trader Joe’s and Majestic, but considered it a loss for Northeast Portland. On Friday, the PDC announced that it would take steps to improve its communication with the community, such as creating a citizen work group to direct future city investments and forming a project-specific community benefits agreement. Shawn Uhlman, spokesman for the PDC, said the city intends to stick to those plans, though it’s not certain yet when and how.

Another casualty of the development’s derailment is Colas Construction. On Friday, the minority-owned company had been named by Majestic as its general contractor for the $8 million project. Shortly after receiving word of Majestic’s choice, Andrew Colas, the company’s president and second-generation owner, said similar opportunities don’t come along often. He said his company’s selection would ensure that other minority-owned and women-owned businesses would be able to participate.

During Monday’s press conference, media questioned PAALF members about how their efforts had resulted in a lost opportunity for Colas Construction. Gilliam replied that PAALF’s efforts were never about one company, but about mitigating displacement. He added that Trader Joe’s pulling the plug didn’t disqualify Colas, or other minority-owned firms, from competing for future work on the site.

“I think the demands we’re making, if honored, will help address some of the structural racism in our community that undermine the wealth, and the individual success of specific businesses, like Colas,” said Rachel Gilmer, director of PAALF’s Leadership Academy, a training program.

PAALF called for public account of all tax increment financing dollars spent in the Interstate Corridor Urban Renewal Area to date; creation of a legally enforceable community benefits agreement to ensure that employment opportunities go to members of the area’s African-American community; and creation of a Vanport small business assistance fund to help support the 16 small businesses at Vanport Square while community members develop a new plan for the adjacent site.

PAALF expects that process to progress over the course of several community visioning sessions, and is slated to announce the time and location of the first meeting on Tuesday.