SOUTH PORTLAND — The South Portland City Council voted Tuesday to spend $1.5 million to protect a parcel of land as open space, but councilors acknowledged the decision comes with a financial risk to the city.
The council Dec. 22 agreed to purchase the 6-acre property known as the piggery, with an agreement that a developer who wishes to build on part of the property will pay the city back $900,000.
The property is off Broadway, between Sawyer Street and the Willard Square neighborhood. It is one of the largest undeveloped parcels in South Portland. Some neighbors have resisted attempts by owner Quirino “Skip” Lucarelli to develop it as soon as February 2021.
To buy the land, the city needs just over $1 million from its undesignated fund balance, bringing the remainder to just over 9%, or $9 million.
Assistant City Manager Joshua Reny said the purchase won’t prevent the city from paying its bills, but having a surplus in the fund usually means there will be a buffer against unexpected expenses. Reny said money from the undesignated fund often gets rolled into the following year’s budget to pay for capital improvement purchases or the city’s tax rate stabilization fund to offset tax increases during difficult times.
“In good years, we can do that sort of thing,” Reny said.
Concerns about spending too much of the city’s undesignated funds prompted Finance Director Greg L’Heureux to caution against approving the purchase. L’Heureux said bond agencies prefer to see more money in the city’s coffers. While L’Heureux did not say the decision would impact the city’s bond rating, the depletion of the city’s surplus could be a factor in the future.
“This one really does, in my mind, pose a serious financial risk to the city,” he said.
L’Heureux noted that economic fallout from the COVID-19 pandemic means officials need to accommodate losses in local, state and federal revenues when producing the 2021 spending plan. Now, L’Heureux fears the city may be in the same predicament during the budget season next year, and will have no surplus to fall back on.
“It’s just less money that can be used to lessen the burden of the property tax base,” he said.
Developer Dan White, owner of HW Land Co., plans to buy the land from Lucarelli for $1.5 million. City Manager Scott Morelli said White has agreed to work with the city to protect 4.1 acres of the Piggery property for $600,000.
The problem, Morelli said, was that White’s purchase agreement with Lucarelli expired Dec. 23, the day after the meeting. He’d have to buy the property by the end of that day or Lucarelli would move on to other interested developers. But White has barely begun the process of getting planning board approval, and can’t secure financing to buy the property until he gets the approval, Morelli said.
Under the proposal, the city would, with the council’s approval, essentially buy the property for $1.5 million on White’s behalf, with White promising to buy the portion he wants to develop back from the city for about $900,000, once approved by the planning board.
The council voted 5-0 to approve the purchase, with Councilors Deqa Dhalac and Katelyn Bruzgo absent.
Councilors acknowledged the risk, but said it was worth it to ensure that the property’s natural beauty would be protected.
“Given the history of this property and its importance to the entire community, we must go through with this,” said Councilor Katherine Lewis.
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