HomeMy WebLinkAbout1985-03-11 85-139 ORDER85-139
IAS AMENDED)
Introduced by Councilor
CITY OF BANGOR
Qom.) mrhTy Authorizing Solicitation of Proposals Relative to
the Operation of a Cruise Boat on the Penobscot River
By City CowmH of W City ofBanaor.
ORDERED, - ....
THAT
-(1) The City Manager, or his designee, is hereby
authorized to take all action deemed necessary
or appropriate to solicit proposals for the
operation of a cruise boat from facilities
currently owned, or to be acquired, by the
City of Bangor.
city Council
(2) The Riwawaa-6aem45kae is hereby authorized
to review all proposals submitted and to
select the proposal that it deems would serve
the best interests of the City of Bangor.
(3) The City Manager is hereby authorized to
enter into and execute such legal documents
as may be deemed necessary or appropriate to
implement the proposal selected by the Finance
Council
eves4dteee, subject, however, to approval of
the terms and conditions of any such agreements
by the F3 rra e�o�o ii a.-
BY139
Introduced by Councilor Frankel, March 11, 1985
CITY OF BANGOR
(TIRE.) (DrIN", Auth i ing Lee's , Agreement - Penobscot Hay LineupI
By the City CeunaR of the CCW ofBaryvr:
ORDERED,
THAT the City Manager is hereby authorized to enter into a
lease agreement by and between Penobscot Hay Linea, Inc.
and the City of Bangor for the leasingofdock facilities
subject to terms and conditions established and approved
by the Finance Committee in a form approved by the City
Solicitor.
IN CITY COUNCIL
J`
Match 11 1985
Amended by Suletitution.g
85-139
Amended in nuwkmar (2)ih
the first line bydeleting '�•
-
0 R 0 E R
1Tne F C midtt N�
-jj
aaainn The Cdty.:co=il
Title,
,•
Ameed in ine
11
dt
4'by deleting. -.Fide c t ge"
daayc'te caul)
adding y' n
Authorising
.............9......
Lease A 9reemsnt - renoMcot
....................
Coe 1 t 1 a let
commixx ee •• dna eaa c connci ',
Bay Lines,
Inc.
Introduced and fil
ed nby
Councilmen
MEMORAMOUM
March 8. 1985
TO: Bangor City Council
FROM: Tom Russell, Asst.. City Solicitor
RE: Council Order 85-139
Pursuant to discussion at the Finance Committee this
morning, please find enclosed a proposed amendment by substitution
for Council Order 85-139.
to
Enclosure
March 8, 1985
1lfn Bangor City Council -
FVCM: Robert B. Miller, City Solicitor
RB: Proposed Waterfront Oavelolxment
By. MmoraMna datedFebruary g, 1985, Councilor Willey asked me to give
him same direction concerning the following questiore:
(1) �In the event the City of Bangor expends public nnenies
W lease property from Irving Cil for the benefit of
the Mt. Katatxlin, does it violate, anti-trust or
Other laws?
(2) In the event. the City of Bangor expends -p blic monies
to arrange said leasing, and provides preferential
treatment to the Mt. Katandin, does it violate anti-
' trust or 6ther laws?
(3) Went legal requirement or obligation exists for ted
City of Bangor to negotiate a lease between Irving - - -
Cil ani the Mt. KetaMin for the use of said lsoperty,
by the Mt. Katandin?
On March 1, 1985 you received a Mane from John Flynn, City Manager,
iodicatiM that Irving Oil was unwilling to have the Mt. Katandin dock on its
property. 31narefore, the questicv^ that Councilor Willey initially raised
regarding the previously -Proposed arrangemaot became mnot. Boever, sore of the
issues iedirectly relate to the proposed acquisition sol use of the adjacent
property owned by Superior Paper. If ted City is re use public fends to axluin
the Superior Paper property aM then develop it into a docking facility, is the
property being acquired and used for a "public purpose?• W a contractual
erranCeMent with a thiM party to use sed occupy the property violate Federal
anti-trust laws?
Currently it is being prolosed that the City of angor acquire the
Superior Paper Company property, demolish the building, and participate in its
redevelcpnent of the property for a docking facility. Use of the facility would
W nntracted, on an exclusive or nnmexclusive basis, with a. private tour boat
operator.
_2_
It is my understanding that there is a possibility that comnuwty
Wvelepnent funds may be used as a part of the transaction. H that is the
case, in addition to any restrictfone that may ho imp sed by nonsticutional
Provision
State las. ths project will also be subject to Conmunity
Article IV, Part 3, Section I of the Maine Constitution prohibits the
state and its political subdivisions from raising tares for any pn¢poaes other -
than public purposes. this doctrine is known as the •public purpose doctrine"
and has lag been a part of the State's constitutional law.
"2b be constitutionally valid, taxation at either
the state or local level moat be for a puhlic
Fa'pose. E.g., CrOM att V. City of Portland, 150
Me. 217, WI A.2d 841 (19547; OOppinion of the
.justices, 152 Me. 440, 131 A.2d 411957). A
corollary of that proposition is that the
expenditure of public fins must be for a public
purpose. Maim State Mousim Authority V.
Capsitors 2kust Co., 218 A.2d 699 (Ma. 19]1).•
Crnmm� Luse v. Stale, 455 A.2d 1, 15 (Me. 1983).
the question of whether the expenditure of public conies for the
acquisition and demolition of the Superior Paper property is fon a "public
purpose" most be answered initially by the City Cou oil, and later by the courts
— if challenged. See Cnmm Cause at 16. Discussions with the City 9gineer
indicate that the proposed use of the property would be used essentially for
Mat might be considered either recreational purposes or for purposes of serving
a public transportation or commerce coed, thus attracting mote people to Bangor
and serving to enhanoa the economy of the community. Such uses come, in my.
opinion, within the broad para maters of existing statutory legislation
authorizing the raising or appropriation of municipal fads.
30 M.R.S.A. 5 5106(4) provides that a municipality may raise or
appropriate money:
(4) providing real estate and personal proparty
for rWt tfmal vurm . (Mmphasls
supplied).
Use of fwds for the assistance of transportation or commerce in the form of
Public works projects is authorized under 30 M.R.S.A. 5 5103 which provides:
A municipality may raise or appropriate money:
1. Parks and construction [moiec[s. Providing
for public buildings, ways, bridges, parks,
public places, severs and drains; . . .
(Mnphasis. supplied).
-3 -
Municipal construction end operation of M es or piers for use by the
public is crnaon along the Maine coast. Statutory aulority for the acquisition
Of private property for such purposes is found in 23 M.R.S.A. 5 2801 Mich
states:
Tpwns may!AZ out oublOC canon landim6 and
may alter or dvscont-inueic—saTa
All procedures shall be in substance the same
as is provided by law in the case of tcwn _
ways. (avasis supplied).
Authority for the expenditure of fords for such purposes is fowl in 30
M.e.S.A. 5 5108(2) Mich provides:
A municipality may raise or appropriate money:
(2) Authorized by Is Rnwiding for any
operations autnorized by law Mich, by
.. their nature, require the expenditure of
moneY.
In summary, it is my opinion that the City Council may ose public fords
to acquire the Superior Paper property and redevelop it for public docking
facilities.
Prelusive use of publicly owned property by private third parties is
discussed in Common Cause v.State, supra. In Casson Cause there was an
'agreement between�y of ibrtland, one State of Maim and Seth Iron Pnrks
for the development of a dry dock facility and the Maim State Pier. As a part
Of the tramaction the City was to acquire certain land adjacent m the pier
property and lease it, with the pier itself, to piw. The stated purpose of the
project was to increase the flow of commerce in Sbrtland, enhance amployment
opportunities, and to improve the ecomey of the State.
The Plaintiffs in Carron Cause contended that irrespective of the stated
purposes, in situations Mem tMm a a proposed arrangement for a ose of the
property to be acquired for a nonpublic purpose, i.e.. the exclusive use by a
private entity, and where the development and operetim only iMirectly benefits
the public through the provision of employment opportunities, the castitutioml
public purpose test was not being met. T1s Court analysed the oontractual
arragame t between the State, the City of lbrtland, and path Iron Wrks, and
COmlndad that there were obligations on the part of both sides Mich served the
ends of all parties.
Pespondiy to the situation, the Court stated:
Plaintiffs are correct in their basic premise that
the agreement has the effect of creating a subsidy
to Aid out of Public funds.
Althoalh a public subsidy is involved, certain
features of the Portland pmject set this case apart
fraz any prior Maine case or advisory opinion
involving public subsidy of a private enterprise.
Ilha iroject is unique in its potential for
extensive,, long-term, favorable ewnonic impact; in
the detailed arrangements under Mich a large
privata industry has teen committed to loon temp
obligations in support of a major Industrial
development; and in the expert testimony at trial,
terdiigto show that the project will improve
comarce ai create jobs, generating sufficient ton
revenues to repay the state's investment.
After reviewing prior decisions of the law Court dealing with the public
purpose issue, the C stated:
we do net abandon the longstanding requirement that
taxation and spending be for a public purpose. It
is well settled that a public g rpose is the
hallmark of legislation that is 'for the benefit of
the people' 'within ao meaning if the legislative
p rs clause.
G¢ inquiry into xtather the lortland project is
for a public pure ea must proceed uneecurtered by
any need to determine Nether the assisted project
would meet the requisites for authorization of
amment domain.
the question remains, however, Methar the
legislature has exceeded its power to tax and spend
by subsidizing an activity that does not confer
some form of direct benefit on the public. In
other words, may an indirect benefit t the economy
of the state ever constitute a public purpose to
validate a subsidy to private enterprise?
' -5-
The chief indirect benefit predicted for the
Portlaml project will consist of the jobs
providel by the project itself add the ecavnic
ripple effect' of introducing new husiness into
the state. No Maine case has held as yet that
public spexding to stimulate the ecoenny Or
create jobs has a public purpose."
Yet, as this Court as consistently recognised,
the concept of public purpose Is not static.
'What could not be deems] a public purpose a
centuty ago, my, because of changed ecom is a l
industrial mMitions, he such today. laws which
were entirely adequate to secure public welfare
than say be inadequate to acoamplish the same
results row.' (citation emitter) . This
Court'has aigrwsi public expenditures — ani,.
order the relatsi-'public-use' doctrine,
exercises of eminent d in — that might not
have passed muster in earlier times.
N other jurisdictiona, it is widely accepted
that economic development is'a public pminre.
Tb he sure, there is some merit in a blanket rule that
ignores direct economic tenefits. Such a role, by
fOCUSiW on More easily measureahle direct benefits such
as rental Payments or public use, would help insure that
the public gets its ninnies' worth for its irmestment.
Moreover, the rule helps avoid the risk of approving
transactions sponsored by legislators who may have been
uxduly donated by the private enterprise.
But these COmerne can be met without the drastic remedy
of ignoring allindirect economic benefits. Ultimately,
in examining the constitutionality of a tar or spending
-6 -
measure, the Court should focus on Mather 'the plan
threatens a detriment to the public Mich outweighe the
benefit that could have been anticipated.' Note, npra.,
59 Columbia paw p h w at 647. In such a weighing, both
direct and iMiroct benefits are relwast. Accomibgly,
se now hold that LMirect economic benefits ma W taken
intra Lata enation n . Itagg wlstMr pub nendirg W
the s[ateTa pest fied`�Aiphae3s suppi ieJ,
In conclusion, the Common Cause care seems to stand fox: the proposition
that under constitutional 'p lyse' limits governmental bodies may enter
into co[eenmts with private third parties for the occupancy of publicly owsred
property Maze public needs are being served and where the legislative body has
first detemins! there are sufficient inJirent econonic benefits W the
community fran the arrangement.
MTI�T ISS A:
The Seco i guestion raised by Councilor Willey was whether any kirxt of
contractual arrangement with a cruise operator at the facility could result in
the City being held liable for violation of Federal anti-trust laws.
Until just 6 years ago municipalities hal always considers! themselves,
along with the States, immune from anti-trust liability unler the -State Action
U.Ytrim^. samciated by the United States Supreme Court in Parker v. ffiwn, 317
U.S. 341 (1943). In two cases, to wit City of lafayette v. Wuisiana Pear c
-Light m., 435 U.S. 389 (1978) aM Common![ytore CO. V. City of
Boulder, 455 U.S. 40 (1982) the Supreme Court narrowede inw
the avallable W
the states ana municipalities. she lossOftotal anti-trust inanity spsrM
the nation's municipalities W seek legislative relief, On October 24, 1984
President Reagan signed a bill Mich prohibits all monetary damages Eros
municipalities or their employees fur anti -that violations. flee ar, the oew
I" does rot bar injunctive relief or the award of attorneys fees. M a result
municipalities still have W be conscious of the issue and take reasonable
precautima to avoid violations.
Use of the frustrating problems in dealing with the issue is the
unsettle] state Of the law en local government anti-trust liability. Its
current legal test for local government anti -cost immnity is Mether action by
the goverment or its officials is arducted pursuant to a "clearly, articulated
and affirmatively expressed state policy' in situations Mere anti-canpetitve
actions are taken in lieu of free canpetition. nus, when the City enters into
situatione of granting expressed or implied exclusive rights W use publicly
owned facilities, the first questim is Nether the arra gement bas Man
specifically autWrized by the State Legislature.
As we have soon above municipally -owned wharves are clearly authoriza!
by State statute. However, the granting of exclusive rights W use or operate
them is not. Therefore, there isn't a'clearly articulated a J affiruatively
expressed state policy" authorizing such exclusive arrangements. In my opinion,
the granting of exclusive rights to any facility should be avoided if at all
possible. If there is an unequivocal determination by the Council that an
_I -
exclusive rights agrement wind best serve the needs of the public and there is
no other way to mast yoir objectives (regardless of the desires of the operator)
ahathere has been a testing of the free market to get the best arrmgmient
possible, you may enter into such an axrangawnrt with proper controls.
The bast way to test the free market is to go through a bidding
process. m uy opinion, before contracting out the occupancy of the facilities,
the Council should solicit proposals for the reuse of the property using
objective selection criteria. The criteria should not be developed by any
prospective bidders or other interested private parties. The selection
procedure should follow our normal bid proceiures of advertising for bids,
giving a reasonable opportunity to prepare ml submit proposals, aha a neutral
review of any proposals submitted. In addition, the selection process should
avoid closed meetings with any of the parties involved, ahj other emduct by the
CoMcil and the staff that would give the appmranm that the City was in any
way giving unfair a aantage to one interested party over otbsra. CnOO the bids
en
have ber 'vel, an awan! based upon the bid criteria should he made.
Another concern is the granting of long-term lease or mane ssim
scrmle ants which will serve to tie up the property for the foreseeable
future. A judgment has to he male as to the needs for continuity of service she
giving the operator an opportunity to gain back his investment and make a
reasonable profit. lwwevar, arbitrary lcnptemm agreements are red flags to
those whn wish to seek local liability for anti-trust violations.
In conclusion, it is my recaawrwatim that ex greased or implied
azclusive arrangmrents he avoidal if at all possible. Regardless of the
arrmganent, the City should first go through a bidding process. Finally, all
agreanents should be tailoredto the needs of the -City, aha lmg-term contracts
should be avoided.
ExisT �
As sow of the meabers of the Council may reneeher, when Frahc yens
originally proposed to operate a cruise servim on the River, sumiler issws
At that time, the City sent through a solicitation process. Ultinately
Mr. Foss was awarded a contract authorizing him certain mor -exclusive rights to
UW the existing municipal docking facility for limited psrd s of the year.
Ise teen of that contract goes t1axgh to the Fall of this year, with a
COMitiowl option to renew for three additional years. If any manber of the
Council would like to review the agraawnt, please call oe.
R.R.M.
to
m:City Manager
City Engineer
Rol MCAay