Breaking ground
 | Nothing's happened yet at the Maine State Pier. What's the next step for the controversial $100 million project?

Portland is finally making headway on its ambitious Maine State Pier project, but not without drawing fresh criticism. Nine months after it tapped The Olympia Cos. to redevelop the waterfront property, the Portland City Council on Aug. 18 approved a development roadmap for the company. â&Copy;
The most recent achievement comes after last year’s protracted deliberations among council members. The council deadlocked while trying to select one of two competing developers for the pier redevelopment, which is seen as critical in driving the waterfront’s rehabilitation and serving as a gateway for cruise ship passengers. And as the council inches forward on the project, there are still lingering questions on whether they chose the right developer. Now, some critics are lambasting the city’s negotiators for what theyâ&Copy; say are lenient deelopment terms for Olympia and a failure to draw up a more lucrative deal for Portland.â&Copy;
The preliminary agreement will lead in 60 to 90 days to a legal contract that lays out a three-year timeline for Portland-based Olympia to acquire permits, complete studies and pay the city periodic security deposits as a guarantee against dropping out of the projected $100 million project. By 2011, if all goes well, Olympia will break ground.â&Copy;
The proposed development has not changed much from the original plan pitched by Olympia last year, and will include retail shops, a hotel, an office building and a park. But the city at its recent meeting voted to remove the so-called “megaberth” — to accommodate super-sized cruise ships — from Olympia’s obligation, stirring some doubts about Olympia’s financial hardiness. Also drawing fire at the Aug. 18 council meeting was the city’s decision to waive rent for 20 years, allowing Olympia time to pay off an $18 million bond it will seek from the Finance Authority of Maine to cover the pier’s repair. â&Copy;
Another unknown at this point is whether the city will have to wage a legal battle with the state to lease the lands underneath the pier to Olympia for 75 years. Olympia says it needs at least a 75-year lease to attract investors. â&Copy;
Despite this, Councilor Cheryl Leeman, who was a member of the negotiating team with City Manager Joseph Gray and Portland attorney James Broder, says she believes Olympia will pull through. “They are very committed; I have been sitting across the table from them for months,” she says. “This will be a signature project, and I can’t imagine anyone not wanting it and not wanting to do it right.”â&Copy;
The city, too, has a big stake in getting this right. The pier, once it’s developed, will not only be a prominent harbor-side facility, but will also generate between $900,000 and $1.2 million in annual taxes. The city will start to collect $1.4 million in rent in year 21, which will increase annually by 2% for the next 55 years.â&Copy;
Councilor Dan Skolnik, however, was not mollified by these terms. He was the only council member to vote against the term sheet at the Aug. 18 meeting and called the agreement “one heck of a sweetheart deal” that would deprive the city of about $7 million in rent. â&Copy;
Brian Hanson of Maine Business Brokers in Portland told councilors at the meeting that the pier is one of Maine’s most valuable properties, and that the city’s negotiating team should have been more “arrogant” and leveraged the prime location to strike a better bargain. â&Copy;
But other councilors defended the decision to waive rent for two decades, saying instead of the city taking responsibility for bond payments to cover the pier’s repair — as was originally planned last year — it was removing itself from any financial responsibility.â&Copy;
In defending the decision to scrap the megaberth, Broder explained that the council removed the $7 million piece from the pier redevelopment project partly because it would have been difficult for Olympia to finance it. Broder also said the megaberth site is already permitted, and work there could start more promptly, possibly by another developer, without waiting through the long delay Olympia faces applying for permits. “It’s a better way to move the megaberth forward,” he said.â&Copy;
Land battleâ&Copy;
By 2011, Olympia will have been jumping significant hurdles for four years to redevelop the pier. After edging out Portsmouth, N.H.-based Ocean Properties last fall, it seemed to be in clear waters until a state Legislative committee in March rejected a proposed bill to extend the pier’s lease from 30 years to 75 years. Broder says the city from the start has maintained that it acquired the land underneath the pier when it purchased the facility from the state in 1981. â&Copy;
However, Dan Prichard, who supervises Maine’s submerged land program for the Maine Department of Conservation, says it is unclear whether the deed includes the land, and that it would be unusual if the state had in fact sold submerged lands. “The concern is that submerged lands are held in trust for the public, and 30 years is a good amount of time for public lands to be held in private interest,” he says.â&Copy;
The dispute between city and state has not shaken Olympia, according to company spokesman Sasa Cook. “We believe the city and state can come to an amicable agreement,” he says. â&Copy;
But while Olympia might be confident the city and state can extricate themselves from their squabble, it is not bothering to quell worries about the project’s funding. Cook says it’s premature to talk about potential investors. Broder however, says, “I expect there will competition among financiers to finance the thing. But that won’t be decided until a lot more detail is developed by the developer.”
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