PORTLAND – The City Council will decide Monday whether to give a $2.8 million tax break to the owners of Cumberland Cold Storage so they can transform the 19th-century warehouse into a headquarters for Pierce Atwood.

The proposal until recently seemed poised for quick approval. But a new controversy has emerged that could threaten the deal.

At issue is what happens if the City Council in the future relaxes the zoning to allow for more nonmarine development.

In the current proposal, the building’s owner, Waterfront Maine, would reserve the ground floor of the five-story brick building for marine use and set aside the wharf’s berthing area for fishing boats — as required by current zoning rules aimed at preserving a working waterfront.

The rest of the building — which is now being used for self-storage — would be converted to office space for Pierce Atwood, a law firm with 175 employees.

As part of a separate effort, however, a group of waterfront property owners has been trying to ease the restrictions against nonmarine development. Its proposal would allow half of the ground floor and half of the berthing space to be used for nonworking waterfront activities.

The City Council is expected to take up that issue later this year.

At its meeting last month, the Community Development Committee voted unanimously to recommend the tax break for Waterfront Maine. But it added one condition — that the ground floor and berthing area be reserved for commercial marine use for the 20-year term of the tax break.

Councilor John Anton, who proposed the condition, said the tax break is justified in part because the current zoning diminishes the site’s revenue potential.

“I am confident supporting a subsidy to offset the burden of the restrictions,” he said.

But when Waterfront Maine officials, who did not attend the meeting, heard about the condition, they told city officials that they would cancel the project unless the condition is removed.

Councilor Cheryl Leeman, who chairs the committee, plans at Monday’s council meeting to submit an amendment that removes the condition.

Leeman in an interview on Wednesday said that in hindsight that her original vote to support the condition was a mistake.

The tax break for Waterfront Maine can be justified by the huge cost of converting a the old warehouse into class A office space, and zoning issues have nothing to do with it, she said

“It’s kind of straight up common sense,” she said. “It’s abundantly unfair, in essence, to spot zone piece of property because they are getting a (tax break). “I’m not sure it would pass legal muster, either.”

Officials of Waterfront Maine could not be reached for comment.

Greg Mitchell, the city’s economic development committee, said he doesn’t want to weigh in on the debate because it’s a policy matter for the council to decide.

However, he said $12 million project is only possible because of the involvement of one large tenant, Pierce Atwood. The city for years has wanted to see the site developed, he said, and this project presents a rare opportunity, especially during the current economic climate.

According to the proposed deal with the city, Waterfront Maine would give the city $2.7 million in property taxes over 20 years — about half the amount of money it would pay the city without the tax break.

Pierce Atwood, which has nothing to gain financially from future zoning changes, has not taken a position on the issue. However, the law firm has threatened to leave the city if the project doesn’t move forward.

If Waterfront Maine takes advantage of zoning changes to get more revenue from nonmarine tenants, the city should be refunded a portion of the tax break, Anton said.

Unless that arrangement is spelled out in the terms of the tax break deal, he said, he will vote to reject the proposal on Monday. He said he’s not sure how much support he will get from other members of the council. In the past, Anton’s positions on land-use policy have carried weight on the council.

Anton said he’s not going to be influenced by Waterfront Maine’s threat to walk away from the deal.

“If it becomes an ultimatum — a deal breaker — it’s not gong to change my position,” he said.

 

Staff Writer Tom Bell can be contacted at 791-6369 or at

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