PORTLAND – The City Council on Monday approved a $2.8 million tax break to transform a blighted 19th-century warehouse on the city’s waterfront into the new headquarters for Maine’s largest law firm.

The vote was 8-1, with Councilor John Anton voting against the tax break.

Councilors said the project will generate additional tax dollars for the city and spur redevelopment of the waterfront.

Pierce Atwood, now located at One Monument Square, had threatened to move its headquarters to South Portland if the deal fell through, explaining that the renovation would have been too expensive without the tax break.

Some critics said the threat amounted to “blackmail,” and others said the tax break wasn’t justified because the project would not bring new jobs to the city.

But Councilor Cheryl Leeman said the law firm’s employees spend a lot of money downtown and it is crucial to keep those employees in the city.

“It doesn’t matter that they are moving from one part of town to another,” she said. “They could move out of town. That is huge.”

Built a century and a half ago to store rum and molasses, the five-story Cumberland Cold Storage building is among the largest, oldest and tallest buildings on the city’s waterfront. It is located on Cumberland Wharf, between Union Wharf and the Portland Fish Pier.

But the building’s owners for decades have struggled to find a modern use for it. Its windows are filled in with cement. Most recently, it has been used as a self-storage facility.

Without a tax break, the $12 million renovation project would generate more than $200,000 in tax revenue for the city annually. Because of the council action Monday, however, the city will receive about half that amount annually for the next 20 years. After that, the building’s owners will pay full taxes.

In all, the city will get $2.7 million in new tax revenue during the 20-year period, and the building’s owner, Waterfront Maine, will get a tax break worth $2.8 million.

There was some disagreement among councilors Monday over zoning rules designed to protect the working waterfront.

As required by current zoning, Waterfront Maine for now plans to reserve the ground floor of the five-story brick building for marine use and set aside the wharf’s berthing area for fishing boats. The upper four floors would be converted to office space for Pierce Atwood.

As part of a separate effort, however, a group of waterfront property owners has been trying to ease restrictions against nonmarine development in the entire central waterfront zone. Its proposal would allow half the ground floor and a portion of the berthing space on each wharf to be used for noncommercial vessels.

The City Council is expected to take up that rezoning issue this summer.

Anton said the tax break for Waterfront Maine is justified in part because current zoning diminishes the site’s revenue potential.

But if the council does change the central waterfront zoning allowing Waterfront Maine to lease a portion of the ground floor to nonmarine tenants, then the value of the tax break will exceed the public benefit, Anton said.

No matter how the central waterfront zoning changes in the future, Anton said, the ground floor of the Cumberland Cold Storage building should be reserved for marine use as long as its owner is getting a tax break from the city.

“I just want to tighten up the deal to make sure we get what we paid for,” he said.

Christopher Flagg, vice president of Waterfront Maine, said he was pleased by the council’s vote.

“The project will bring the Old Port and the waterfront together and show that commercial development and the working waterfront can work in tandem,” he said.

The Planning Board tonight is expected to vote on the project’s site plan and decide how much parking must be provided. Pierce Atwood plans to lease 70 of the 165 parking spaces the city owns on the nearby Portland Fish Pier at the current market rate of $80 per month.

 

Staff Writer Tom Bell can be contacted at 791-6369 or at: [email protected]