PORTLAND — The Maine Port Authority will take over operations at the city-owned International Marine Terminal, following approval Monday of a lease agreement by the City Council.

The initial lease to the MPA is three years. The authority is expected to concentrate on capital improvements at the dilapidated terminal, including demolishing the main building. There are options in the agreement to extend the lease as many as 30 more years.

The MPA will pay the city the lesser of $120,000 or one-third of net revenues for the first three years. After that, the rent will be $120,000 a year plus an annual escalator based on the Consumer Price Index, or one-third of the MPA’s gross revenue.

The council Community Development Committee approved the agreement April 8. On Monday, the council gave the lease agreement unanimous support.

City Manager Joe Gray said the state is much better equipped to manage the IMT and solicit shipping opportunities. The MPA will be responsible for all legal and financial responsibilities at the terminal and is expected to make improvements that will attract freight and container shipping businesses.

The IMT is on West Commercial Street, next to the Casco Bay Bridge. It was home to the Scotia Prince ferry and later the CAT, until that vessel moved east to the new Ocean Gateway.

The council on Monday also approved licensing for the new restaurant Grace to open at the former Chestnut Street Church. The license hearing brought out a group of residents from neighboring Chestnut Street Lofts, who said they were concerned the restaurant might play loud music late into the night.

The neighbors suggested the city place restrictions on Grace’s entertainment license. The council, however, determined the city had steps in place to deal with excessive noise, including bringing the applicant back in for a license review.

Grace is being opened by Anne and Peter Verrill, owners of the Foreside Tavern on Route 1 in Falmouth.