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HomeMy WebLinkAbout1985-03-11 85-138 ORDER' 85-138 Introduced by Councilor Frankel, March 11, 1985 CITY OF BANGOR (TITLE) (DrheT,. --- Authorizing fes'-zhase of Property_- 150 Front. Street By the aft Chewed! of the City of Bang"; ORDERED, THAT the following actions are hereby authorized relative to the property located at 150 Front Street (Assessors Map 43, Lot 391 1.. The Director of Planning and Community Development have the property appraised. 2. The Finance Committee approve the offering price for the purchase of the property with the determination of the offering price to be based on the appraisals of 'fair market value. 3. Upon acceptance of the offering price by the owner, the Director of Planning and Community Development acquire the property on behalf of the City of Bangor. 4. After the acquisition of the property by the City, structures on the property be demolished and cleared. IN CITY COUNCIL Merck 11, 19&5 Amend by deleting paragraph Passed Paeea Amended. Depatf City Clerk 85-138 ORDER Title, Authorizi,g Wrchaee of eroperty.... ..................... 150 Front Street ...................................... Introduced and filed by P. !✓.W9A.4R!C.. ...... - councilman ryyy, OrA, 3 6 C,, .C.. vl, . Y March 8, 1985 TO: Bangor City Council MCM: Robert Z Miller, City Solicitor m: yrop a waterfront Cevelgment By MertnraMw dated February 7, 1985, Councilor Willey asked me to give him some direction concerning the following questlons: , (1) In the event the City of Bangor experts public monies to lease property frou Irving Oil for the benefit of the Mt. Katandin, does it violate anti-trust or other laws? (2) In the event the City of Bangor expands pw lic monies to arrange said leasing, and provides preferential treatment to the Mt. KataMin, does it violate anti- trust or other laws? (3) Mat legal requirement or obligation exists for Ire City of Bangor to negotiate a lease between Irving Oil and the Mt. KataMin for the use of said property _ by the Mt. KataMin? On March 1, 1985 you received a Mery from Tort Flyna,.City Manager, indicating that Irving oil was u Uling-to'love the Mt. KataMin dock on its property: ThOrefors, the questions that Councilor Willey initially raised regarliM the previously -proposed arrangement became moot. Mp or, ansa of the issues indirectly relate to the propesed acquisition and use of the adjacent Property owned by Superior Paper. If the City is in use public funds to anpnire the Superior Paper property and tten develop it into a dockingfacility, is the property being acquired and Used for a "public �se?" Would a contractual arrangement with a third party to use and «orgy the property violate Federal anti-trust laws? Currently it is being proposed that the City of Bogor acquire tee Superior Paper Cvapany property, demolish the building, and participate in tie redevelopneM of the property for a docking facility. Use of the facility would be contract d, on an exclusive or non-exclusive basis, with a private tour beat operator. -2 - It is my understanding that there is a possibility that Community Rrvelolment funds may he used as a part of ths transaction. If that is the case, in addition to any restrictione that may be imposed by constitutional provision or Rate law, the project will also be subject on cmmmity mveloprent Regulations. Article N, Part 3, Section 1 of the Maine Co,nmtitation prohibits the Stam and its political sutdivisione from raising taxes for any p Closes other than Puhllc purposes. This dOC rine is Imam az the •puhlic p¢pose doctrines and has long been a part of the Smm•s constitutional law. 'Tb be constitutionally valid, taxation at either the state or local level must he for a public papose. E.g., Cromatt v. City of lbrtland, 150 Me. 217, 101 A.2d 841 (1954); opinion of the Justices, 152 Me. 440, 131. A.2d A04 (19571: A arnl5-ary'af that pminsition is that the expenditure of public funds must be for a pihlic purpose: Maine State Fkxming Authorit v. OepoaimrS Trust Co., 278 A.2d 699 M. 1971). - Casson Cause v. State, 455 A.2d 1, 15 (Me. 1983). Ths question of whether ton expenditure of public monies for the acquisition and demolition of the Superior Paper property is for a -public pspose" must be answered initially by the City Council, and later by the courts — if challenged. See Comae Cause at 16. Discussions with the City Engineer indicate that the prnpsed use of the property would be used essentially for what might ne considered either recreational purposes or for purptaes of serving a public transportation or umnerce nerd, thus attracting mom people to Bangor and serving m onhanre the eoocony of the community, Such uses core, in my -..opinion, within tha broad parameters of existing statutory legislation authorizing the raising or appropriation of municipal funds. 30 M.R.S.A. 5 5106(4) pmvides'that a municipality may raise or appropriate money: (4) V-Mdim real estate and personal property for recreationai purp sas. (Emphasis sulvlr� Use of funds for ins aSSiststCe of transportation or crnnrerce in the Eons of public works projects is authorized under 30 M.R.S.A, 5 5103 which provides: A municipality may raise or appropriate money: 1. Yazka and oxns[ruction ects. Providing for public buildings, wZro. br dges, pa �, public Place ,.sewers and drains; . . . (FmphasiS supplied). -3 - Municipal construction ell operation of wharves or piece for was, by the public is Carmel along the Maine coast. Statutory auhority for the acgwisition a private ProPe[ty for such purposes is fount in 23 M.R.S.A. S .2801 which states: Towns may lav out pchlic Emir... r cannon SaMims ant MY alter cr drsantrhue seed i as . . All procalures shall be in wbstance the since . as is provided by law in the case of tam ways. (Wphasis Srppiied). Authority for the expenditure of funds for such purposes is fow in 30 M.R.S.A. §5108(2) which providea: A municipality may raise or appropriate money: (2)tivtlgrized by law. Providing for any operations authorized by lav which, by their nature, require the expenditure of Morey. in sunnary, it is my opinion that the City Council may use public fulls ro acquire the Superior Paper property and redevelop it for public docking facilities. b clmia use of Publicly owned property by Private third parties is discussed in fomes cause v.State, supra. In moon Cause there as an agrearenc becwaen the City or onrclea , the Staca of Mairw and Math rich Wrks for the development of a dry dock facility ant the Maine State Pier. Aa a part of the transaction the city was to acquire certain lard adjacent to the, pier property ant lease it, with the pier itself, tc,S The -stated purpose of the Project as to inczease. the flow -of co merce in Rbrtland, enhance enployment Oppartunities, and to improve the emnony of the State. Mae Plaintiffs in (limon Cause conmPloj that irrespective of the stated pnsposes, in situations where there is a proposed arrangerent for a use of the Property to be acquired for a nonpublic plr m, i.e., the exclusive use by a private entity, sal where the developnent ant Operation only inlireccly hamfits the public through the provision of erployment opportmities, the coo titutional public purpose test as not being not. The Court analyzal the contractual arrmge ent between the State, the City of Portland, and Bath Iron Works, and concluded that there were obligations Co the part of both sides which served the ells of all parties. Responding to the situation, the Court stated: Plaintiffs are correct in their basic premise that the agreerent has the effect of creating a subsidy to BM out of pdalic finds. Although a public subsidy is involved, certain features of the Portland project set this case apart fron any prior Maine case or advisory opinion involving leblic subsidy of a private enterprise. Its, project is unique in its potential for extensive, long-term, favnrable emmenic impact; in the detailed arrangements wrier a ich a large private industry has beam casnitted to lcterm obligations "insupport of a major industrial development; ani in the expert testiatoy at trial, tending to show that the project will improve cosnerce ani create jobs, generating sufficient tax revenues to repay the state's investment. - Mtar reviewing prior decisions of the iaw must dealing with the public Purpose issue, the (bort stated: mt do not abadon the longstanding requirement that taxation ai spending be for a pblic papnse. It is wall settled that a public purpose is the hallmark of legislation that is 'for the benefit of the people' 'within tle meaning if tha legisietive- paers clause. Our inquiry into whether the Portlai project is for a public purpose must prom i unencmnnbered by any need to determine whether the assisted project would meet the requisites for authorization of eminent domain. The question remains, I er, w ether the Legislature has exceaded its power to tax ani spei by subsidising an activity that does not confer some form of direct benefit on the public. In other words, may an iMirect benefit to tie ecomny of the state ever constitute a public purlose to validate a subsidy to private enterprise? The chief indirect benefit predicted for the Portland project will consist of the jobs provided by the project itself and the economic 'ripple effect' of introducing new business into the state. MO Maine case has held as yet that public spending to stimulate the ecoxiay or create jobs has a public purpose. Yet, as this Court as consistently recognized, the concept of public purpose is not static. 'What could not be deemed a public purpose a century ago, may, because of changed economic and industrial conditions, be such today. Laws Which were entirely adequate to secure public welfare than may he inadeguate to accomplish the some results row.' (citations onitted) . "is Court has approved public expenditures — and, under the related -'public -use' dcotrine, exercises of eminent domain — that might not have passed muster in earlier times. In other jurisdictions, it is widely accepted that economic development is a public porpose. 1b be sure, there is sous merit in a blaniat rule that ignores direct economic be efits. Such a rule, by focusing on more easily measureable direct benefitssuch-- as rental payments or public use, would help insure that the public gets its monies worth for its investment. Moreover, the rule helps avoid the risk of approving transactions sponsored by legislators who may have been unduly donated by the private enterprise. got these concerns can be met without the drastic rasely of ignoring all indirect economic benefits. Ultimately, in examining the constitutionality of a tax or spending -6 - measure, the Court should focus on Mether 'the plan threaten a detriment to the public which outweighs the benefit that mull have been anticipated.' Nota, suwa., 59 ColuMia Law Raview at 647. In such a weighing, both direct and i 91st benefits are relevant. A Oji gly, Ws now hold that Indirect economic benefitspay be taken inm consideration in aecadinq wTather c spwa= M the state is iustified. (llmphasis suppl ed) In conelusiw, the Common Cause care seem to stand for the proposition that Under emstitutional "p 6u 3 c�iwrpose• limits governmental belies may enter into agreements with private thirl parties for the occupancy of publicly omni Isoperty where public needs are being serval and Mere the legislative holy has first detenminred there are sufficient indirect economic benefits to the community from the arrangement. Mol -FRUST ISS0E The second question raised by Councilor Willey vas Metter any kind of contractual arrangement vitt a cruise operator at the facility could result in the City being held liable for violation of Federal anti-trust lass. Until just 6 years ago municipalities h9 always considered ttamselves, along with the States, bmune from anti-trust liability under the "State Action Dxtriw" asUnCiahNi by the United States Suiaere Court in parker v. Sasso, 317 U.S. 341 (1943). In ton owes, to Wit: City of Lafayette v. noufsiana Power 6 light bo., 435 U.S. 389 (1978) and Comwity C m mtiwm Co. V. city Braider, 455 U.S. 40 (1982) the SupreeB �Urt narmmN the umunity available to OF states and municipalities. 0be loss of total anti-trust immmity spurred the nation's municipalities to seek legislative relief. Oo botcher 24, 1984 President Reagan signed a bill Mich prohibits all monetary danages from municipalities or their employees for anti-trust violations. Noaver, the new I" does not bar injunctive relief or the award of attorneys fees. Aa a result municipalities still have to be conscious of the issue and take reasonable precautions to avoid violations. One of the frustrating problems in dealing With the issue is the unsettled state of the law on local government anti-trust liability. The current legal test for coal goverment anti-trust immunity is Mether action by the government or its officials is m UCted pursuant to a "clearly articulated sol affirmatively expressed state policy" in situations Mere anti-cmIWtitve actions are taken in lieu of free competition. ahus, Men the City enters into situations of granting expressed or implied exclusive rights to use publicly owned facilities, the first question is Mather the arrangement has been specifically authorizol by the State legislature. As we have seen above numicipally-owed Marves are clearly autboriz9 by State statute. Nnxever, the granting of exclusive rights to use or operate than is not. Therefore, there isn't a "clearly articulated and affirmatively, expressel state policy" authorizing such exclusive arrangements. In my opinion, the grunting of exclusive rights to any facility should be avoidel if at all possible. If there is an unequivocal determination by the Council that an _7- exclusive rights agreement would best serve the needs of the public and there is no other way to meet your objectives (regardless of the desires of the operator) and there has been a testing of the free uurket to get the best arregment possible, you may enter into such an arrangement with proper controls. The best way to test the free market is to go through a bidding process. In my opinion, before contracting out the occugency of the facilities, the Council should solicit proposals for the reuse of the property using objative selection criteria. the criteria should net he develops by any prospective bidders or other interested private parties. the selection procedure should follow our normal bid procedures of advertising for bids, giving a reasonable opportunity to prepare and submit proposals, and a neutral ZaVieW of any proposals submitted. In addition, the selection process should avoid closed meetings with any of the parties imiolvs, and other rcnduct by the Council ani the staff that would give the appearance that the City seain any way giving unfair advantage to one interested party over otters. Croce the bids have been rereived, an award based upon the bid criteria should be made. Another concern is the granting of long-tem lease or concession arrarganents Mich will serve to tie ug the property for the foreseeable future. A judgment has to be made as to the needs for continuity of service and giving the operator an opportunity to gain back his investment and make a reasonable. profit. Rowever, arbitrary long-term agreements are red flags to those who wish to seek local liability for anti-trust violations. In conclusion, it is W recanresation that expressed or implied exclusive arringe ants be avoided if at all possible. Regardless of the aera�anen[, the City should first go through a bidding process. Finally, all agreemmrta should be:. tailors to the needs of the City, ss long-tars mntrects should be avoided. EXISTING CCNUVACr As sora of the manbers of the Council may rmianber, Men fcauk Foss originally POOP sed to operate a CrUeSs service on the Riva, sunilar issues arose. At that time, the City went through a solicitation process. ultimately Mr. Fess was awards a contract authorizing him certain non-exclusive rights to use that existing municipaldocking; facility for limits periods of the year. The teen of that contract goes through to the Fall of this year, with a conditional option to renew for three additional years. If any .member of the Connell would like a ravras the agreement, please call me. R.F.M. ho oce City Manager City Engineer -. dbd mcmy