SOUTH PORTLAND — After more than a year of negotiations, the City Council Wednesday night unanimously approved a new market-rate lease for Port Harbor Marine, which operates Spring Point Marina.

The July 6 council meeting and public hearing was also one of City Manager Jim Gailey’s last meetings before he leaves the job July 22, and he took the opportunity to announce that the fiscal year 2017 tax rate is 11 cents lower than expected.

Rather than $17.81 per $1,000 of assessed property, the rate that took effect July 1 will be $17.70. The 30-cent increase over the last fiscal year means the owner of a home valued at $300,000 will see an increase of only $90 in fiscal year 2017, rather than $123.

Gailey, in a message to councilors, said the total valuation came in “slightly higher than we anticipated, which lowered the tax rate by 5 cents.” Also, the Business Equipment Tax Exemption rate was higher than expected, which reduced the tax rate by an additional 6 cents.

Under the new marina lease that begins May 1, 2020, and extends to 2050, rent paid by the Soucy family, owners of the marina, will be based on a fair market appraisal.

The city will also contribute $100,000 to Port Harbor in 2020 to offset the cost of capital improvements, such as dredging and replacing fuel pipes, and to rebuild the entrance road to the marina from Breakwater Drive, the cost of which is estimated to be between $20,000 and $25,000.

The agreement is significant for South Portland largely because since the city acquired the blighted, nearly 5-acre former shipbuilding site at 1 Spring Point Drive, through an agreement with the U.S. Department of the Interior and the state Bureau of Parks and Recreation, the rent has not been subject to inflation or market-based adjustment.

The decision comes in the wake of final approval received by the Soucys from the Planning Board last month to replace the former Joe’s Boathouse restaurant, which closed last November, with a new, two-story, 7,200 square-foot restaurant. The use of a new restaurant was approved by the board after being OK’d by the council in March.

The plan is to replace the existing one-story building, which is 4,600 square feet, with a 100-seat restaurant that would serve food from 11 a.m.-10 p.m. and offer bathroom and laundry facilities for marina customers, according to the Planning Board application. The restaurant will be a collaboration between with Port Harbor Marine and Laura Argitis, owner of the Old Port Sea Grill in Portland.

The whole of the marina property was leased to the Soucy family under a 40-year lease in 1980, and has been transformed into a “world-class marina,” Assistant City Manager Josh Reny said.

The rent has been calculated as a percentage of gross sales added to a base rent of $20,000, which, for at least the last 10 years, has totaled around $65,000 – a figure that was “quite reasonable a few decades ago,” Reny said.

But the “city’s share of the revenue growth from annual sales has not kept up with inflation,” he said in a memo to the council.

The new lease sets a fixed rent that escalates with inflation, based on the Consumer Price Index, with a capped increase of no more than 3 percent each year, and no less than 1 percent.

However, during the four years remaining on the lease, the rent will be higher – base rent will be set at $70,000, with a $5,000 increase each year through 2020. It was estimated that in 2020, the base rent will be somewhere between $267,000 and $289,000, depending on inflation.

“As a fiduciary responsibility to the citizens of South Portland, we need to be asking market price, and the Soucys recognize this,” Councilor Claude Morgan said.

“This has been an extremely amicable approach to the lease. Everybody is a winner here – the Soucys will get to maintain their world-class marina (and) the community maintains the benefit. What we’re essentially doing is changing the remunerative scale, and we are bringing it, out of responsibility, from a low rent to a market rent,” Morgan said.

“Kudos to the Soucy family and your workers for taking such a blighted property and converting it into a world-class marina,” he continued. “There’s so much history here. The transformation is nothing short of remarkable.”

Port Harbor Marine President Rob Soucy, who operates the business with his brothers Marc and Mike, and whose father, Bob, began revamping the property nearly 40 years ago, thanked the council “for putting your trust in us.

“On behalf of my family, my brothers, my dad – this was his vision, obviously our crew members, thank you very much.”

Farewell to Gailey

Also Wednesday, city department heads expressed their admiration for Gailey, who has been the city manager for the last nine years, and has worked for the city for nearly three decades.

Gailey announced his resignation in June after accepting the position of assistant county manager for Cumberland County.

Finance Director Greg L’Heureux, speaking on behalf of his colleagues, said before Gailey became the manager, departments essentially operated as separate entities.

“Departments more or less worked autonomously,” L’Heureux said. “Jim pulled departments together and created an atmosphere (of) working for a common purpose.”

Gailey possesses “all the qualities of a good leader,” L’Heureux said. “He has exemplary character, is focused, determined, does the right thing. He motivates everyone to give his or her best, and also stays in excellent contact with all of us department heads.”

Gailey’s native roots in South Portland and his knowledge of the city “cannot be overlooked or overvalued,” L’Heureux continued. His departure “will leave an enormous void for the city.”

Alex Acquisto can be reached at 781-3661 ext. 106 or aacquisto@theforecaster.net. Follow Alex on Twitter: @AcquistoA.

South Portland city councilors unanimously approved a new lease agreement Wednesday night with Port Harbor Marine, which operates Spring Point Marina. The lease runs through 2050, and will ensure rent paid by the marina is tied to inflation. (Courtesy Russ Lunt)