SALEM — Even with a newly inked long-term tax agreement, the city and Dominion could soon find themselves back at the negotiating table — this time to talk real estate.
The city hopes to embark on a $20 million Salem Wharf development project, a major economic initiative intended to attract cruise ships, whale-watch boats and fishing vessels and bring a wave of new consumers to downtown Salem.
The problem?
Dominion owns the Blaney Street lot where the wharf would sit and leases it to the city for $1 a year.
Company officials say they'd prefer a long-term lease over a straight-up sale.
And that's where the city faces an uphill battle.
If the city is going to inject millions of dollars — much of it state money — into a massive redevelopment project, local officials want the city to be in total control of the site.
"I think that's the key issue," Mayor Kim Driscoll said. "If we're going to make a major investment, especially if we're relying on state grants to do that, something short of ownership is hard, but we're open to exploring what that might look like."
Dominion officials, however, said yesterday they haven't completely ruled out the idea of selling.
"It's not exclusively off the table," said Dan Weekley, an official at Dominion. "But we've really not had that sit-down kind of conversation saying, 'What will it take?'"
Weekley said there has been discussion of a 10-year lease.
Gary Courts, the managing director for Dominion New England, said he suspects both sides will start talking about the land immediately.
For Dominion, the land provides a buffer for the Salem Harbor Station power plant, which also relies on coal delivery from ships that pass by the property.
"We have a hesitancy about locking ourselves into a long deal when we're focused on running a power plant," Courts said. "We're comfortable with the way the property is now."
Driscoll, meanwhile, was optimistic.
"Both sides definitely want to try and find a way to get a long-term agreement in place," she said. "We're open to looking at how else we might be able to enter into an agreement that provides us with long-term control."
"They've shown every desire to work with us," state Rep. John Keenan said. "If there's another vehicle, whether it's a 99-year-lease ... I would think we would do that."
Some observers thought the city might try to work the purchase of the Blaney Street lot into the tax negotiations, possibly offering to buy the property in exchange for some kind of tax break.
But Driscoll said combining the two issues would have complicated negotiations, especially while city officials try to put together next year's budget.
"We needed to get it done," Driscoll said. "We're setting our tax rate next week, so we needed to get it finalized."
So where does the city go from here?
George Atkins, president of the Salem Partnership, a local business lobby, said he's confident Driscoll and Dominion will be able to work something out eventually.
"I have great confidence in the mayor's ability to negotiate this," Atkins said. "And I know secondly, Dominion is aware this is important to the community. I think those two factors will eventually win out.
"An argument to Dominion is, 'Look, you're not only doing the community a service here, but you're allowing the community to develop additional resources, which obviously relate to the tax rate of the community,'" Atkins said.
Russ Vickers of the Salem Partnership said he doesn't think it's a question of money. After all, the value of the land may not be much compared to the sheer size of Dominion, which reported total assets of $39.1 billion last year.
"They're not negotiating price," Vickers said. "I believe they're trying to find another basis for which to rationalize the sale of the land.
"In general, I don't think power companies like to sell land they own. ... But for the right long-term mutual benefit, I think they'd think it was a good trade."
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