PORTLAND — City Councilors on Monday girded themselves for the potential $7 million loss of state aid reimbursements to the city’s General Assistance program.

“I don’t think we can afford to pick up what the state won’t pay for,” Councilor Jill Duson said in a workshop session that followed the regular City Council meeting and a 2 1/2-hour executive session.

Councilor Jon Hinck said the closed-door meeting covered the ongoing lawsuit against the state Department of Health and Human Services over changes to its General Assistance reimbursement policies, and a potential second lawsuit.

In public discussion, councilors decided against creating a memorandum of understanding on leasing space in the Portland Ocean Terminal to the New England Ocean Cluster House, and approved an after-hours entertainment license for A Space for Grace at 1 Marginal Way.

The General Assistance discussions will continue as the Finance and Public Safety, and Health and Human Services committees look into state audit results alleging the city failed to consider financial assets of at least 13 long-term residents of homeless shelters.

The Public Safety Committee, chaired by Councilor Ed Suslovic, will discuss an action plan to address the audit allegations on Tuesday, March 10.

The Finance Committee, chaired by Councilor Nick Mavodones Jr., will discuss financial implications of state policy changes on Thursday, March 12. The discussion will require postponement of a planned public hearing on implementing a new citywide minimum wage.

“I could find no evidence of the reckless mismanagement the city is accused of,” Suslovic said. “At best, what I see is changing interpretation by state officials.”

On Tuesday, Mayor Michael Brennan was to address a joint hearing of the Legislature Appropriations and Health and Human Services committees on the proposed General Assistance changes in Gov. Paul LePage’s biennial budget. Brennan said the changes would cost the city $5 million to $7 million annually.

Cluster coming?

In the workshop preceding the meeting, Soli DG President Patrick Arnold sought a memorandum of understanding between the city and the New England Ocean Cluster House to be announced at a March 17 reception where state officials and ambassadors from the U.S. and Iceland will hear about the venture’s progress.

But the memorandum, which laid out a framework for negotiating a lease for 29,000 square feet at the Portland Ocean Terminal, will not be announced. Councilor Kevin Donoghue, chairman of the Housing and Community Development Committee, said he would like to take up lease discussions on March 25.

Arnold said there are 18 parties interested in the venture, announced in October 2014. An initial goal is to market lobster shells because they contain chitin, which can be used in health and beauty products.

The essence is interaction, even if entrepreneurs are not primarily marine related, Arnold said.

Arnold said he wanted to show some kind of commitment from the city to the plans, and begin renovations in the terminal before next winter. Mavodones noted the council does not typically sign memorandums, even if the proposed July 15 date to reach a lease agreement is reasonable.

Grace’s space

The after-hours license at A Space for Grace drew most the attention in the 50-minute council meeting, as State Street resident Steven Scharf objected to the nonprofit operating a bottle club beyond city oversight.

Scharf and Suslovic cited the applicant’s intent to welcome “patrons who have been drinking earlier in the evening to have ample time to sober up before driving home” as troubling.

Ballou Poppas of A Space for Grace admitted the application was poorly phrased, but assured councilors “we are not based on alcohol at all, it is not why we are there.”

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