SOUTH PORTLAND — Negotiations between the city and a potential tenant for for the former National Guard Armory have apparently reached the final stage.

But whether an agreement will be reached remains unclear. Both sides are expressing frustration with the length and direction of the talks, and it is now being suggested that the film production center proposed for the building cound wind up in Scarborough.

For nearly two years, the city has been working with Cape Elizabeth resident Eric Matheson, who wants to establish a sound stage for shooting movies, TV shows and commercials in the building on Broadway at Waterman Drive.

The city has held meetings and forums on the topic, and has changed the property’s zoning.

But they have been unable to negotiate a lease. And there are signs that the two sides have reached an impasse.

The City Council discussed the lease again in a closed session Wednesday night. On Thursday morning, City Manager Jim Gailey said the city is still working on the proposal, “one last time.”

“Over the last year of negotiations the council has done a great job in trying to strike a balance between a fair lease to the tenant and being accountable to the taxpayer,” Gailey said. “As in any negotiations each party is trying to get the best deal.”

Councilor Tom Blake said the council has set a “timely” deadline for Matheson’s group to respond to the latest lease offer, but couldn’t provide details about the confidential negotiations.

“We’re not going to drag this out,” said Blake, who indicated councilors still support the concept.

But Matheson said the city, in previous lease proposals, has not been responsive to concerns raised by his investors, who asked to attend Wednesday’s session, but were not invited.

Matheson said the city wants a share of the profits from all of the businesses on the site – film studios and associated professions, such as photographers and management companies – while requiring the investors to accept all liability for building, which has suffered from years of neglect since the city purchased it in 2006. 

Matheson said he was embarrassed to present three previous leases that contained those provisions to his investors.

Mayor Rosemarie De Angelis on Wednesday she is becoming frustrated that the negotiations have dragged on so long.

De Angelis, who originally supported buying the armory in U.S. Bankruptcy Court for $650,000, said she is ready to look at other potential uses.

“I’ve become less excited every time we’ve met in executive session,” she said. “I’m ready to look at other ventures. I think they’re out there.”

Matheson, a film industry technician, said his investors are also looking at other options.

They have expressed interest in building a sound stage on Route 1 in Scarborough, he said, where a track of land has already received planning approval from the town.

“The town of Scarborough would go for this in a minute,” Matheson said.

But that prospect would be personally disappointing for Matheson, who expressed a fondness for the armory.

“I’m not going to toss anything aside,” he said of the negotiations with South Portland. “My heart has been in this project for a long time.”

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net

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