PORTLAND — The Portland City Council voted Wednesday night to help subsidize an out-of-state developer’s plans to build a $38 million mixed-used project in the Bayside neighborhood.

The final vote on the Maritime Landing development financing plan was 8-1 with councilor Cheryl Leeman opposed.

Leeman said she supported the project because it would bring hundreds of new residents to Bayside, but said she had issues with the way the parking garage component would be paid for.

Under the agreement, the city would sell 3.25 acres of land off Somerset Street to the Federated Companies for $2.2 million.

The city would also provide Federated, which has offices in Miami and Boston, with a $9.07 million grant to help it pay for construction of a $15 million, 700-space parking garage.

Of that $9.07 million, $8.2 million would come from a low-interest loan from the U.S. Department of Housing and Urban Development. The city would be responsible for repaying the loan and an estimated $2.8 million in interest using property tax revenues.

In return, the city would get 200 parking spaces in the garage, the promise of 40 new jobs, 176 new housing units and a project city officials hope will stimulate more development in Bayside — a neighborhood that has been saddled for years with vacant buildings and scrap metal yards.

“Just imagine the infusion of several hundred people into this area,” said City Councilor Kevin Donoghue. “As a whole, I think this project is fantastic.”

The city on July 1, 2011, entered into a purchase and sale agreement with Federated for the Somerset Street parcel. It took the city more than a year to negotiate the terms of what city officials are calling a partnership.

Earlier this month, the council’s Housing and Community Development Committee voted 3-1 to recommend approval of the $8.2 million loan to Federated.

Phase one of the Maritime Landing project, a 700-space parking garage with 41,000 square feet of ground level commercial space, and two residential towers with as many as 176 housing units, would take three years to complete.

There is no timeline or estimated cost of the second phase, which calls for 250 to 268 two-bedroom apartments and 180 to 196 one-bedroom units.

If both phases are completed, a total of seven towers would be built on Somerset Street, on the block between Somerset and Marginal Way — effectively creating a wall of buildings between downtown Portland and Interstate 295.

Preliminary sketches submitted to the city by Federated indicate those towers could be as tall as 12 stories or 158 feet. By comparison, the 10-story Intermed building on Marginal Way is 135 feet tall.

“There’s no doubt that the scale of this project is unprecedented, and will have an impact on the peninsula as well as the Portland skyline,” Patrick Costin said. Costin is president of The Portland Society of Architects. “All eyes will be on it.”

The Society hasn’t decided whether to take a position on the project — the developer has not yet submitted final design plans.

The project will now have to go through the standard Planning Board review process, which will include neighborhood meetings, before it is brought before the board for site plan review.

Greg Mitchell, the city’s economic development director, said the towers would most likely require modifications to the Bayside zone’s height restrictions.

The towers would feature market rate rental apartments, according to Mitchell — in the range of $1,300 to $1,700 a month.

Leeman was the only councilor to voice concerns about the project. She said the city wasn’t receiving enough benefit in return for what it was giving to the developer.

“They paid a little over $2 million for the property and we’re giving back $9 million. It’s a great deal. Who wouldn’t take it. That’s where I have a problem. This is an incredible deal for the developer,” Leeman said.

The City Council also voted to authorize the city’s purchase of the former Portland Shellfish Co. on Waldron Way for $1.9 million. The facility will be used by the Portland School Department to accomodate a new central kitchen. The city appropriated $3 million in 2010 for the acquisition.

Staff Writer Dennis Hoey can be contacted at 791-6365 or at:

dhoey@pressherald.com