SOUTH PORTLAND — Port Harbor Marine Inc. will pay a lot more in the future to lease the city-owned Spring Point Marina under a new 30-year agreement approved Wednesday night by the City Council.
The city acquired the former Navy shipbuilding site from General Electric Co. in 1978 under a government project agreement that requires the land to remain in public ownership and use forever. In 1980, the city entered into a 40-year lease with Port Harbor Marine, which is owned by the Soucy family.
Annual rent will increase from about $65,000 to more than $250,000 on five acres of land off Breakwater Drive and six acres of docking area on Casco Bay.
Councilor Claude Morgan, a member of the city’s negotiating team, explained why the rent has been low for decades, why the city can’t sell the property to Port Harbor and why rent will go up substantially in the years ahead.
“Kudos to the Soucy family, the clan, and your workers for taking such a huge gamble on a blighted property and converting it into a world-class marina,” Morgan said. “As a fiduciary responsibility to the citizens of South Portland, we need to be asking market price and the Soucys recognize this.”
Rob Soucy, president of Port Harbor Marine, publicly thanked the council following its 6-0 vote.
Soucy said Thursday that the new lease will give his company the stability it needs to make business decisions and remain healthy for years to come. The seawall that rims the 250-slip marina needs major repairs and the Planning Board last week approved Port Harbor’s plan to build a new restaurant where Joe’s Boathouse was located.
“We felt the new lease was fair or we couldn’t have agreed to it,” Soucy said. “It’s going to be different to write that first (larger) check when the new lease starts. But knowing that we’re going to be there for a while is great for all of us, including our employees and our customers.”
The marina operator and boat dealership has about 70 full-time employees, including 50 in South Portland, with satellite stores in Kittery, Rockport, Holden and Raymond, where the company operates a marina on Sebago Lake. In 2015, it was recognized as one of 75 Best Places to Work in Maine by the Maine State Council of the Society for Human Resource Management.
The new lease, negotiated over the last two years and four years before the existing lease runs out, substantially modifies the structure of future rent payments, said Assistant City Manager Josh Reny, who led the city’s negotiating team. Current rent is calculated as a percentage of gross sales in addition to a base rent of $20,000. In recent years, the rent has been about $65,000 per year.
The two parties agreed that in the remaining four years of the current lease, the rent will be set slightly higher than rent received in the most recent year, Reny said. For the rent year beginning May 1, 2016, rent will be $70,000, and will increase by $5,000 each subsequent year through 2020.
Under the new lease, rent will be based on a fair market rent appraisal that valued the property at $2.87 million and arrived at a yearly rental rate of $250,000 in 2014. The city’s negotiating team agreed to a base rent calculation of $256,500 as of May 1, 2016. That figure will be subject to an annual inflation escalator, based on the Consumer Price Index, with an annual escalator of at least 1 percent but no more than 3 percent.
At that rate, by May 1, 2020, the base rent will be about $267,000 to $289,000, depending on the rate of inflation over the next few years, and will continue to increase each year after through the end of the lease, which expires May 1, 2050.
The city also agreed to rebuild the entrance road from Breakwater Drive at a cost of $20,000 to $25,000 and give a $100,000 rent credit in 2020 to offset the cost of certain capital improvements to be done by Port Harbor Marine, including dredging of the docking area.
Kelley Bouchard can be contacted at 791-6328 or at:
kbouchard@pressherald.com
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