🔴 City attorney Susan Morrell said that both sides could not agree on construction cost estimates and revenue projections

🔴 Agreement is needed to submit an application to the GSA for the McIntyre Building

🔴 The city will meet with the GSA next week to learn the next steps


The city of Portsmouth and its McIntyre Building project development partner remain at an impasse, and missed the final deadline to submit an application to the General Services Administration.

During a special meeting of the City Council Friday, city attorney Susan Morrell said that both sides could not agree on construction cost estimates and revenue projections in the developer's cost pro forma.

There was some progress before the impasse.

"We have not reached an agreement on those terms despite our efforts," Morrell said. "There was an adjustment to the cost of construction based on a couple of different variations of the community plan. We do agree on those costs," Morrell said.

Developer Redgate/Kane also agreed to termination rights sought by the city as part of the Development Agreement at the last minute. However, it "adamantly" rejected a profit sharing plan in line with the city's financial contribution to the project, according to Morrell.

"We have not made sufficient progress on the pro forma or on parts of the ground lease that would reflect revenue sharing and potential profit sharing. Without the ground lease agreement and the pro forma agreement we cannot submit an application to the National Park Service," Morrell said.

Councilor Josh Denton compared the pro forma to the ground rules of the negotiation that would allow talks to move forward.

"Without the ground rules we could not come to an agreement and we reached an impasse in good faith and unfortunately an application was not submitted by the deadline of today despite all of our good faith efforts throughout the years," Denton said.

Portsmouth city attorney Susan Morrell (L) speaks to the Portsmouth City Council 3/31/23
Portsmouth city attorney Susan Morrell (L) speaks to the Portsmouth City Council 3/31/23 (City of Portsmouth)
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What's Next for the Project?

Residents who spoke during the public comment were not happy with where the project stands, and how much has already been spent.

"We are mired in a money pit and I think it is time to say enough," one resident said. "I really think we're in going in the wrong direction and I would hope we have a definitive statement from the city council saying 'no more.'"

Esther Kennedy said that perhaps it is time for the council to end its partnership with Redgate/Kane, and consider buying the property outright.

"I hope maybe we don't go for the waiver and say 'thank you for being part of this' but it's time to move on and we truly look at the public benefit of that property. It was taken by the federal government. Let's give it back to the people, for the people," Kennedy said.

Former city council member Peter Whelan urged Mayor Deaglan McEachern to take the same action he did when his council negotiated with Redgate/Kane and end their relationship. He suggested taking on a new development partner for what he called a 75-year marriage.

"Show some leadership, you're on the committee you know what Michael Kane is about. You know how he negotiates. Jettison this partnership immediately. Stop the bleeding. The GSA may do it for you. This council, you own it now," Whalen said.

During the meeting, Morrell said the GSA told the city during an earlier meeting that it does not see a "clear path forward", and will likely not grant another extension. They will meet with city representatives next week to discuss the next steps.

Contact reporter Dan Alexander at Dan.Alexander@townsquaremedia.com or via Twitter @DanAlexanderNH

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