A police investigation into a local restaurateur has quelled some, but not all, concerns about his plan to buy the Miss Portland Diner.

Deputy Chief William Ridge found that Michel "Sal" Salvaggio has no criminal history or bankruptcies, although state fire marshals investigated a suspicious fire at his Falmouth home in 1998 and he has had a few business failures.

Ridge interviewed several people who are familiar with Salvaggio and his former restaurants at the city-owned Riverside Golf Course and in Westbrook. Few would speak on the record and none offered proof of wrongdoing.

"I obtained a number of insinuations of wrongdoing," Ridge wrote in his report to the City Council. "No one that I spoke with had firsthand knowledge . . . nor could any of them identify someone who did."

Ridge's report will come into play when the council reconsiders Salvaggio's lease-to-buy proposal on Monday.

The council reached a split decision on Salvaggio's proposal one month ago, after hearing charges that it was a sweetheart deal that would be bad for taxpayers and unfair to other restaurant owners. The council voted 4-4 on the three-year contract, which needed five votes to pass.

Mayor Jill Duson, who ordered the investigation and initially voted against the diner deal, says Ridge's 15-page report helped her "feel more comfortable" about selling the landmark diner on Marginal Way to Salvaggio.

However, Salvaggio's past business troubles, including a long list of current and past liens, prompted Duson to make sure that the lease-to-buy proposal includes language to protect the city, its property and its interest in the up-and-coming Bayside neighborhood.

"In case the business goes south, I want to make sure the city isn't hung out there," Duson said Tuesday.

Duson called for the investigation after city officials received several unsolicited complaints about Salvaggio. He agreed to cooperate in the probe, but he declined to comment on Ridge's report.

City officials have been working for more than a year to keep the diner in Bayside. The former owner, Randall Chasse, gave the 56-year-old diner to the city in March 2004, after he failed several times to sell it.

Councilor James Cloutier, chairman of the community development committee, which recommended Salvaggio's proposal, said nothing in Ridge's report surprised him or would lead him to change his recommendation.

"Our agreements are designed to protect the city, whether we like (Salvaggio) or not," Cloutier said. "Obviously, we hope it goes well for him."

The report describes Salvaggio's financial wrangling with Peoples Heritage Bank between 1991 and 1995. He owed the bank $1.3 million and wanted to borrow another $100,000 to renovate Michel's Restaurant in Westbrook. He had already spent $50,000 of the anticipated loan when the bank refused to extend his credit.

Salvaggio told Ridge that he was forced to sell the business in 1995 to pay his debt.

In the mid-1990s, Salvaggio operated a restaurant in Portsmouth, N.H. He told Ridge that the building was seriously damaged in a storm in 1996 and his insurance failed to cover the necessary repairs. The mortgage holder eventually foreclosed on the property and sold it at auction.

Shortly afterward, Salvaggio decided to sell his home on Mountain Road in Falmouth because he owed Gorham Savings Bank $175,000 on the primary mortgage and another lender $350,000 on a second mortgage. Salvaggio told Ridge that the property was under contract and his family had moved out when it was seriously damaged by a fire in 1998.

State Fire Marshal Kenneth Grimes told Ridge that the fire was set with an accelerant. Investigators were unable to locate Salvaggio for more than two weeks after the fire. When they did interview him, Salvaggio had burned hands and singed hair.

Salvaggio told investigators that the injuries happened during an accident with a gas grill.

Grimes told Ridge that the District Attorney's Office decided there was insufficient evidence to charge Salvaggio with arson. Salvaggio's insurance company paid the remainder of his mortgage but refused to pay the full value of his policy. Ridge said Salvaggio denies any involvement in the fire.

Salvaggio wants to move the diner to a city-owned lot on the north side of Marginal Way, across from the Whole Grocer natural foods store. The 6,000-square-foot lot is the site of an unused bus-stop shelter.

Salvaggio would pay $1 per year to lease the 48-seat diner and the city-owned lot. He would have a three-year option to buy the diner for $25,000 and the lot for $50,000. Salvaggio said he plans to spend $350,000 to $400,000 on the diner project.

originally published online here: http://pressherald.mainetoday.com/news/local/050427salvaggio.shtml