Talk of joint Maine State Pier deal raises questions
Was Olympia ready to “walk away” for cash?
By Chris Busby
To the outside observer, last year’s debate over the future of the Maine State Pier appeared to be a cutthroat contest between The Olympia Companies and Ocean Properties, two developers pitching competing mega-projects worth upwards of $100 million.
But behind the scenes, concerted efforts were made to get the two bidders to join forces and develop the area together. According to Ocean Properties executive Bob Baldacci, a deal was nearly sealed shortly before the Portland City Council first voted – and deadlocked – on the question of which bidder to negotiate with last September.
The newly elected city council narrowly endorsed Olympia’s plan last month, but Baldacci’s account of previous discussions concerning a joint deal calls Olympia’s commitment to the project into question.
Then-Councilor and current Mayor Ed Suslovic lobbied hard to get the two companies to combine forces last fall. Baldacci said initial attempts to do so “went nowhere, but out of courtesy to Ed Suslovic, we said we’d again make that effort.
“So I went to [Olympia president and CEO Kevin Mahaney] and Kevin told me at the time that he really wasn’t wedded to the project and he would, for ‘X’ amount of dollars, agree to walk away,” Baldacci continued.
Mahaney did not respond to The Bollard‘s request for comment.
“We went back to Mr. Suslovic at the time and told him, ‘Listen, councilor, Mahaney just wants an amount of money and [he’ll] walk away. Is that really what you want to see accomplished here?'”
Baldacci said Suslovic “continued to push for a deal,” so talks between the companies continued “to the point where there was an agreement worked out,” Baldacci said, and plans made for a “joint venture announcement.”
That agreement not only involved what Baldacci called “a significant amount of money” for Olympia, but also a pledge that Olympia would not sue the city over its handling of the pier redevelopment process, which it had previously threatened to do if Ocean Properties was chosen as the preferred bidder.
Baldacci said Ocean Properties was still waiting for Mahaney to give the deal a final OK when the council voted and deadlocked on the matter in mid-September. Suslovic was considered the key “swing vote” for Olympia that put the process on hold until Election Day. The prospect of a joint deal apparently fizzled out during that period.
Suslovic confirmed the substance of his discussions with Baldacci, but said he could not verify the details of talks between the two developers. “I wasn’t in the room,” he said. Suslovic added that Mahaney had his own version of those discussions, but that, again, he could not verify the veracity of either account.
“I wasn’t about to play mediator on this,” said Suslovic. “I felt that would be somewhat inappropriate to do. But if the two of them could come up with an agreement, I felt that would be in the city’s best interest.”
Suslovic said he does not feel that Olympia’s commitment to the project is in doubt given Baldacci’s assertions. He noted, however, that it’s possible Olympia will not be the only company involved in the pier’s redevelopment when and if the project begins.
“The reality is, any time you enter into something like this, there’s always the possibility that the players may change,” Suslovic said. “Market forces may do that… It’s not uncommon for the plan to change over time [and] also the players.”
Indeed, even at this stage, there’s little clarity or agreement on how the Maine State Pier and surrounding waterfront property will be developed.
The prospect of building a so-called “megaberth” at the Ocean Gateway marine passenger terminal just east of the Maine State Pier turned the pier process on its head shortly before the vote to negotiate with Olympia. Olympia has pledged to build the extra-long dock for cruise ships at Ocean Gateway, but doing so significantly changes the role of the Maine State Pier, making it a secondary, rather than primary docking site for cruise ships. Under that scenario, major portions of Olympia’s initial proposal for the pier could change.
Olympia also faces what many consider to be huge regulatory hurdles that threaten to complicate, alter or nix elements of their proposal, like the plan to build a luxury hotel and retail shops atop the publicly owned pier.
There’s been preliminary discussion of allowing Olympia to build the project in phases. For example, some city officials have suggested the company may be allowed to build an office building and park on public waterfront land in the first development phase, in order to give the city time to figure out how the rest of the area should and can be developed.
A phased approach creates the prospect that only a portion of Olympia’s redevelopment plan will be realized. “I think it would be a tragedy for the city if they were allowed to develop this project in pieces at a time,” said Baldacci, brother of Gov. John Baldacci. “This is not about an office building and a park. This is about [redeveloping] the Maine State Pier.”
“I definitely, from the beginning, felt we were looking for development of the entire pier site,” said Councilor Nick Mavodones. “I’d be very sorry if we lost what the original intention was.”
Mavodones said concerns about regulatory issues seem to be prompting talk of building the project in phases. The zoning and other regulatory conflicts inherent in Olympia’s plan were among the reasons Mavodones did not support the company’s proposal last fall.
The council’s Community Development Committee meets later today to begin discussing how negotiations with Olympia will proceed. Suslovic appointed Mavodones to serve on that committee during its work on the pier issue, because committee member Jim Cohen is recusing himself from the discussions due to his law firm’s work for Olympia.
A full council workshop session on the city’s negotiation process is scheduled to take place next Monday.