Town of Harpswell

P.O. Box 39 Harpswell, ME 04079

Harpswell Select Board Action Regarding Negotiations with Harpswell Oceanic Center November 1, 2012 Whereas, the Harpswell Town Meeting on March 20, 2011 voted to adopt the following article: Art. 14 To see if the Town will vote to authorize the Board of Selectmen to enter into a multiyear lease, for business purposes, of Town-owned property at Mitchell Field. Said lease, not to exceed 30 years, shall be with a person or entity licensed to do business in Maine and shall be located within that portion of Mitchell Field proposed for inclusion in the Marine Business District. The lease shall carry such terms and conditions as the Board of Selectmen deems to be in the best interests of the Town. Recommended by Selectmen Soon after, Harpswell Oceanic Center, Inc., (HOC) met with the Board of Selectmen (Town) seeking an option to lease the entire 10.8-acre Marine Business District for both non-profit and commercial marine aquaculture uses. After finding that Selectmens authorization did not include an option to lease, HOC revised its request to seeking a long-term lease. For more than a year, the Town, in close association with its designated negotiator, held extended negotiations with HOC. The guiding precepts: an arms-length agreement on basic lease terms at market rates and conditions consistent with the perceived risks of the overall transaction. Therefore, the Board of Selectmen, on November 1, 2012, adopts the following statement of findings and conclusion as its position on the status of negotiations with the Harpswell Oceanic Center: Findings The Board of Selectmen (the Town), as a group and through its designated negotiator, acting in good faith, has conducted negotiations to achieve agreement on terms and conditions of a lease with the Harpswell Oceanic Center (HOC) for the use of the Mitchell Field Marine Business District; During negotiations HOC was informed by the Town of several critical issues regarding terms and conditions of the lease that had to be resolved before negotiations could continue; HOC responded with certain terms and conditions of its own and HOCs response was reviewed in detail by the Towns legal counsel;

Telephone (207) 833~5771

Fax (207) 833~0058 E-mail harpswell@town.harpswell.me.us

The Town, at this time and based on the specific advice of its legal counsel, cannot accept the terms and conditions proposed by HOC for the following reasons:
1.

The Town determines that it is not in the best interests of the Town to accept terms and conditions that would allow the Master Lease to be subordinated to any lender to either HOC or to any sub-lessees. In the event of an uncured default, the Town would be confronted with making loan payments or the loss of its property, a risk it is unwilling to take.

2. The Town determines that, to insure against potential defaults, in which Town-owned land could be lost to creditors and/or agreed rents would not be paid, it is not in the best interests of the Town to accept terms and conditions that would not allow the Town to approve subleases entered into by HOC. 3. The Town determines that, to insure against potential defaults in which Town-owned land could be lost to creditors and agreed rents would not be paid, it is not in the best interests of the Town to accept terms and conditions that would not allow the Town to approve the transfer of ownership of subleases entered into by HOC. 4. The Town determines that it is not in the best interests of the Town to accept terms and conditions under which the principal officers of HOC would not be held personally liable for any misrepresentations, fraud, or environmental problems that may arise from its business, since HOC, unlike well-established businesses, has virtually no corporate assets. Conclusion Therefore, the Town concludes that at this time, because HOC is unable to agree to the nonnegotiable items as listed above, there is no basis on which to continue negotiations and no further negotiations are currently planned.

Telephone (207) 833~5771

Fax (207) 833~0058 E-mail harpswell@town.harpswell.me.us