SOUTH PORTLAND — City taxpayers will get a break, and the shows will likely go on at Mad Horse Theatre, as a result of council action and discussion at a combined meeting and workshop Monday night.

City Manager Jim Gailey said his anticipated fiscal year 2014 property tax rate of $16.85 per $1,000 of assessed value will likely be reduced to $16.70 as a result of the state biennial budget enacted by the Legislature.

The tax rate is a 1.2 percent increase above the current $16.50. Nine cents of the 15 cents cut from Gailey’s anticipated rate is the result of the School Department shifting $300,000 in Maine Department of Education subsidies to the city’s Secondary Schools Facilities Reserve fund.

The money will be used for construction costs at South Portland High School. It required council approval to accept and allocate the additional revenue.

The School Department received $5.5 million, or $889,000 more than expected in state aid this year. The remainder of the subsidy will be used in the fiscal year 2015 budget because using it this year would require a new budget referendum.

Councilors Jerry Jalbert and Patti Smith praised School Board members for their unanimous July 8 vote to allocate the funding, and said it was also a relief to know next year’s school budget deliberations could begin with almost $600,000 in hand.

The meeting also marked the return of former City Councilor and Mayor Claude Morgan to municipal government, with appointments to the Board of Appeals and the Greater Portland Public Development Commission.

Morgan served one term as councilor, from December 2005 through November 2008, including a year as mayor in 2007. He was nominated to the Board of Appeals by Mayor Tom Blake after a chance meeting where Morgan said he was interested in serving, Blake said.

Councilors Monday also discussed a new lease for the Mad Horse Theatre Company, plans to add 20 housing units at South Portland Housing Authority property on Landry Circle off Westbrook Street, and reviewed the schedule for upcoming workshops.

Included in the review was setting next Monday, July 22, for a discussion of traffic patterns in Knightville. After last year’s council decision to make a block-long stretch of Ocean Street between E and D streets one way northbound, Blake called for the workshop discussion and traffic study. The workshop begins at 6:30 p.m.

A full council vote on a five-year lease for Mad Horse is expected Aug. 5, City Manager Jim Gailey said Tuesday. In a workshop presentation Monday night, councilors said the theater is a good fit in what was once the Hutchins School, at 24 Mosher St.  in Ferry Village.

Former Councilor David Jacobs, president of the Mad Horse board, asked councilors to consider extending the lease as soon as possible because it is set to expire next April, in the midst of the show season.

Mad Horse used the former school for rehearsals and storage space before getting permits and a lease amendment allowing live performances last fall.

“Mad Horse took a leap of faith crossing the bridge,” Jacobs said about shifting performances from Portland to the former school. Ensuring shows will go on for the next five years is a key part of regaining Portland audiences, while expanding the theatre’s base in the city and Cape Elizabeth, he said.

Lease terms call for $900 monthly rent for the first 24 months and $1,000 monthly rent for the last 36 months. Mad Horse will also be required to spend $3,000 annually on maintenance and upkeep, and will rent the third floor to a building supervisor. The lease will also be amended to better fit the Mad Horse fiscal year, which begins July 1.

Councilors also supported plans by the South Portland Housing Authority to sell seven buildings containing 20 apartments to the nonprofit South Portland Housing Development Corp. for $1.95 million.

Sale proceeds will fund the construction of 20 new units of senior housing at the SPHA Landry Circle site. Executive Director Mike Hulsey said five units would be created in the space of the old SPHA offices and the additional 15 units would be in three buildings.

Construction may not begin until next spring. Hulsey was seeking a favorable letter from city officials for the necessary federal Department of Housing and Urban Development permits.

The proposed project was endorsed by Blake, who said Landry Circle holds a reputation as the best public housing development overseen by SPHA.

Once sold to the development corporation, the units in areas such as Willard Square will be put on the market for private sale. Hulsey said tenants affected by sales to private buyers would, if necessary, receive housing vouchers.

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.