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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