Submerged: Battle over land under the Maine State Pier has ripple effect for Portland
One year after the city chose Portland developer Olympia Cos. to transform its Maine State Pier, the pier sits untouched along the city’s waterfront, stymied by an ongoing debate over who owns its submerged lands and abandoned by Olympia, who said it could not raise money to pursue the $100 million project until the ownership dispute is settled.
The pier project is among the foremost waterfront development efforts in the history of Maine’s largest city, and the outcome of a lawsuit over ownership of related lands, some Portland city councilors say, will influence development in the city beyond the pier itself.
Development of the Maine State Pier is back on the Portland city council’s agenda for the first time since the council voted last month to halt negotiations with Olympia. Discussions at a council workshop Dec. 15 likely will include whether to sue the state over the disagreement that sunk the development deal. But while all of
that talk has centered on the roughly 20 acres around the pier, there’s another 40 acres of prime waterfront real estate in that parcel in dispute. If the city takes the state to court, the verdict would affect not only the pier but future development along all 60 acres. Those acres are the largest single parcel of developable land along Portland’s busy Commercial Street.
“My advice is to settle it once and for all,” said city attorney Gary Wood. Some councilors have said the lawsuit isn’t necessary because other developers — like N.H.-based Ocean Properties, which lost the pier deal to Olympia last year — are comfortable with moving forward before the title issue is resolved. Wood, however, said the city has a strong case and would be best served by an official ruling.
This land is your land, or is it our land?
The nearly 90-year-old pier juts out from the Portland peninsula from the east end of Commercial Street on a seven-acre parcel considered a vital component of the city’s waterfront redevelopment opportunities and its ability to capitalize on cruise ship traffic. Portland holds a lease from the state on the property at no charge through 2036 and Portland officials say the pier and the land under it came into the city’s possession as part of a 1980s development deal. They have a deed, but the state questions the document’s language regarding submerged lands and the legislative authority of the state officials who signed it. If the deed is ruled invalid, the parcel would default to state ownership.
The state limits submerged land leases to 30 years, far short of the 75 years the city offered and Olympia said it needed to secure financing and realize a return on its investment.
At-large City Councilor John Anton has voiced support for the suit, while some of his colleagues question whether it’s necessary. The outcome will affect future development of valuable property the city rightfully claims, he said.
“My interest in it isn’t solely about the Maine State Pier development,” Anton said. “Living with unresolved things is nuts.”
Anton believes the worst possible outcome is that the courts back the state and the city has to limit development to 30 years, maintaining the status quo. “Why should the city consent to the diminishment of the value of a property it believes it owns?” he said.
Councilor Cheryl Leeman, who chairs the council’s community development committee, agreed. “It’s a much bigger issue than just the Maine State Pier,” she said.
The only way to resolve the issue is to get a court ruling, which Leeman is confident would favor the city, she said.
Mayor Jill Duson said she’ll make up her mind after talking with city attorneys. The lawsuit and the pier project can be dealt with individually, she said, and the state’s 30-year submerged land leases elsewhere in Maine have not prohibited development.
“The submerged land lease issue is not an impediment to our going forward,” she said.
The submerged land lease program began in 1975 to allow the state to authorize private use of lands held in public trust, said Dan Pritchard, who supervises the Department of Conservation program. The state now holds 2,000 leases and easements totaling 270 acres; the pier and Ocean Gateway Terminal plus their berthing spaces are the largest, at a combined 27 acres.
Precedent provides little insight into how the case might proceed. Portland and state officials are aware of no other municipality in Maine that has ever claimed ownership of property under a state submerged land lease.
The developer the city had chosen for the spot had planned to build a hotel, retail and office complex on the pier and surrounding property. Losing bidder Ocean Properties Ltd., which wants another go at the project, also proposed a hotel and office building on or near the pier, and space for parks.
Olympia was unwilling to pay the $500,000 for traffic studies, permitting and other due diligence outlined in their preliminary contract until the city and state decided who owned the submerged lands. Ocean officials, on the other hand, say the lease dispute wouldn’t hinder their plans because they can fund the project up front.
Bob Baldacci, a consultant for the Portsmouth, N.H.-based Ocean and the governor’s brother, reiterated the company’s interest in the pier. Ocean told Portland officials to come calling if negotiations ever broke down, he said. Awarding the project to Ocean, one of the country’s biggest hotel developers, would prove a sobering development for many who rallied local support for its Portland-based competitor.
“We always knew that no matter who was selected, that the ultimate proposal would be vetted,” by the community and city officials, Baldacci said.
City attorneys are preparing the suit and await the final go-ahead from city councilors. Even if all progresses smoothly, a ruling from the Superior Court would take months, said city attorney Wood. That’s if the full council decides to move forward with the suit. Meanwhile, Ocean Properties is ready to jump in, at a time when many are anxious to line up a deal before the economy sours even further.
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