PORTLAND — The city of Portland might owe the Casco Bay Island Transit District more than $2.5 million in past proceeds and a stake in future revenue from the parking garage at the Commercial Street ferry terminal, district officials say.
The city also might be hindered as it considers selling its share of the 21-year-old garage because it used a $3.5 million federal transportation grant to build the $6 million terminal and garage, ferry officials say.
Ferry officials have asked the Federal Transit Administration to help resolve 10-year-old claims that the city has been shortchanging the cash-strapped district since the terminal and garage opened in 1988.
"It's an issue of fairness," said Donna Rockett, president of the district's publicly elected board of directors, which represents the six islands served by the Casco Bay Lines ferry system.
Ferry officials also say the city shouldn't be charging the district annual rent of $20,000 to $25,000, because the land and wharf space it occupies at the Maine State Pier were part of the city's contribution to the terminal project.
City officials say the district's claims are unfounded, but a recent FTA letter seems to support ferry officials' concerns.
Richard Doyle, the FTA's regional administrator, met with ferry and city officials March 25. He wrote a letter dated June 9 clarifying policies related to the use of federal money to build the terminal and garage.
"Revenue generated from an FTA-funded asset should first be used to pay operating and maintenance costs associated with the asset," Doyle wrote. "Excess revenue beyond that should be returned to the transit operator.
"If the city donated land (for the terminal) as local match," Doyle wrote, "CBITD may erroneously be making lease payments for use of the ferry terminal, which would be contrary to federal requirements."
The FTA has asked ferry and city officials to turn over financial and legal records related to the construction and operation of the terminal and garage before it provides direction on the future use of the facility.
FERRY OFFICIALS CITE LEASE TERMS
In making their case, ferry officials point to a 1985 lease agreement that required the city to establish a maintenance fund for boat replacement and capital improvements to the terminal.
The fund was supposed to receive 50 percent of annual net revenue from the city's share of the garage, which is partly owned by the private company that operates it.
Portland officials say the city's share of the garage nets about $200,000 per year. The city has paid for $150,000 in capital improvements to the terminal since 1988, said Catherine Debo, the district's general manager.
Once the city paid off $1.8 million borrowed to build the garage – which it has, ferry officials say – the lease directed the city to turn over 100 percent of net revenue from the garage to the district. That hasn't happened, Debo said.
The prospect of regular cash flow from an outside source encourages ferry officials, who regularly wrestle with annual budget deficits and controversial fare increases.
Meanwhile, city officials are dealing with bare-bones budgets and the possibility of layoffs and program cuts in the face of dwindling state revenue and an economy in recession.
Gary Wood, Portland's staff attorney, said ferry officials have their facts wrong. He declined to discuss details of the dispute, but he said he plans to issue the city's response to the FTA letter by July 6.
"This is a matter that should be resolved at the local level," Wood said.
Interest in the ownership of and proceeds from the garage cropped up earlier this month, when the City Council's Community Development Committee heard a request to sell the city's share to the private company that operates and...
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