SOUTH PORTLAND — City officials will soon begin negotiating to extend Port Harbor Marine’s 40-year lease of land and water rights at Spring Point Marina, triggering a public review of the city’s largest waterfront lease holder and one of its largest employers.

Described by some as a “sweetheart deal,” the original lease, which runs through April 2020, requires Port Harbor Marine to pay the city at least $30,000 in annual rent or 1 percent of overall marina rental fees and sales. The percentage excludes boat sales but includes rental fees paid by Joe’s Boathouse Restaurant, which is located at the marina.

In the last 14 years, Port Harbor Marine’s yearly rental payment for nearly five acres of land and six acres of docking area hasn’t risen much above $65,000.

City officials acknowledge that the Soucy family has invested millions of dollars into the property over the last three decades, converting it from a former World War II shipbuilding site into a bustling, 250-slip marina with help from a federal grant. Still, both sides agree that the lease terms are about to change significantly.

“We would love to keep it the way it is, but we understand that’s not reasonable,” said Rob Soucy, 47, president of Port Harbor Marine. “The lease has to make sense for us and for the city.”

Soucy, a South Portland resident, owns the business with his brothers Mike Soucy, 42, director of operations, and Marc Soucy, 41, director of sales. They sought a lease extension several years before the agreement runs out because they hope to establish some certainty in a business that is buffeted regularly by Casco Bay and the economy.

“We really want to know what the future holds for us if we’re going to continue investing in this company,” Rob Soucy said. “The sooner the better for us. We want to get at least another 20 years because a lot of the improvements we make have a life span of 20 to 30 years.”

Port Harbor Marine has spent more than $7 million to build and upgrade the marina over the years, Soucy said, and more repairs and improvements are necessary to keep up with the constant assault of salt water and extreme weather conditions.

Lease negotiations are expected to start in May, said Jon Jennings, assistant city manager and economic development director. Any agreement would go before the City Council for a public review and vote.

APPRAISAL AMOUNT CONFIDENTIAL

City officials began preparing for the talks more than a year ago, when they hired a firm to appraise the marina. Jennings declined to release appraisal documents while lease negotiations are pending.

The land and two-story industrial shed where Port Harbor Marine’s showroom, store, workshop and offices are located are owned by the city and valued at $2.3 million, according to city tax records. The company was assessed for $21,300 in personal property taxes last year, as well as $4,400 in property taxes on the restaurant building, which is valued at $255,700.

The city’s negotiating committee is headed by Jennings and includes Greg L’Heureux, finance director; Elizabeth Sawyer; assessor; Rick Towle, waterfront director; Melissa Linscott, a city councilor; and Tom Coward, a former councilor.

Jennings also declined to discuss the city’s strategy going into negotiations, other than to say that city officials will be seeking higher rental payments and an escalator clause to allow regular increases.

Since 2001, Port Harbor Marine’s annual lease payments have increased gradually based on the marina’s income, from a low of $55,413 in 2002 to a high of $65,067 in 2011, adding up to $841,067 over the last 14 years, according to L’Heureux.

The Soucy brothers bought the business from their father, Bob Soucy, in 2007. He and a partner won the bid for the city’s proposal to develop a public marina on land formerly owned by General Electric Co. They started the project in 1980 with at least $425,000 from the federal Land & Water Conservation Fund, $200,000 of their own money and as much as $800,000 in tax-exempt industrial revenue bonds, according to the lease.

“My understanding is that the property was in very, very rough shape and the Soucy family invested a great deal to make the property what it is today,” Jennings said. “The city appreciates that.”

The use of federal money to develop the public marina would make it difficult for the city to ever sell it, Jennings said.

Through the years, Port Harbor Marine has upgraded the buildings, docks and services offered at Spring Point Marina, including berths that can accommodate yachts as long as 200 feet. Boat sales, however, are the most significant part of the business. Boating Industry Magazine has listed the company among the top 100 recreational boat dealers in the United States and Canada for the last several years, ranking as high as No. 5.

“We’re a boat dealership, first and foremost, sales and service,” Rob Soucy said. “Nobody needs what we sell. Thank goodness they want it.”

SOME SAY SWEETHEART DEAL

Port Harbor Marine started expanding beyond Spring Point Marina in 1993, when it purchased 104 of 121 slips next door at the Breakwater condominium’s marina and began managing that facility. It has satellite stores in Kittery, Rockport, Holden and Raymond, where the company operates a marina on Sebago Lake.

Today, Port Harbor Marine has more than 70 full-time employees – about 40 of whom live and work in South Portland, Soucy said. About half of his workforce has been with the company for more than a decade, in part because it offers competitive pay and benefits. The Soucy family is also well known for sponsoring community programs and events, such as donating $15,000 to install an ice rink for the city’s Winterfest.

Soucy said he has heard people call the marina’s lease a sweetheart deal, and he admits it might look that way more than three decades after his father took a chance on the city’s proposal. But it took a lot of hard work to make that deal pay off. The Soucy brothers grew up working on the docks, and they were expected to go to college and prove themselves worthy of taking over the business that Bob Soucy built.

“Thirty-five years ago, signing that long-term lease, there was no guarantee,” Soucy said. “It could have been successful or not. The city has been very good to us and we try to give back. I think we’ve done more than a lot of people expected. This is our livelihood. This is all we know.”