Portland officials are tweaking a deal to sell the Miss Portland Diner to a restaurateur in the hope of swaying several city councilors who oppose it.

Councilor William Gorham is lobbying his colleagues to put the landmark Worcester Lunch Car in storage until a better proposal comes along. Public Works Director Michael Bobinsky says there's space available at several city-owned locations.

"I say we put it away until we figure out what to do with it," Gorham said Monday. "This is not the right deal for the city."

Michel "Sal" Salvaggio wants to buy the 56-year-old diner on Marginal Way, move it to a city-owned lot down the street and spend $400,000 on an addition that would make it a feature of the Bayside neighborhood.

City councilors dispute whether Salvaggio is right for the deal, especially since an investigation revealed at least one failed restaurant and several outstanding business liens. They also dispute whether $75,000 is enough for the land and the diner, which was given to the city more than a year ago.

The City Council plans a workshop on the diner deal on May 23, followed by a possible vote on June 6. The agreement needs five votes to pass. The council previously voted 4-4 on the contract, with one member absent. A few councilors remain undecided, so the next vote could go either way.

Some councilors say the 6,000-square-foot city-owned lot and an 18,000-square-foot parking easement are prime real estate worth more than the $50,000 that Salvaggio plans to pay. The price of the diner is $25,000.

Other councilors worry about Salvaggio's record as a businessman and want to make sure the land reverts to the city if the diner fails.

"I don't know whether Michel Salvaggio is a good businessman or a bad businessman," said Councilor James Cohen. "I also don't know if it's just a lot of bad luck that surrounds his business ventures."

Some councilors question why an appraisal was never done on the city land and why the city didn't advertise the diner and the land as a package deal that might have attracted more buyers and a lot more money.

"That's primo real estate," said Councilor Cheryl Leeman. "You put that on the market and see what you get."

Gorham points to the recent sale of the 3,260-square-foot lot where the Miss Portland Diner is now located. Developer Theodore West bought it last June for $250,000, nearly $76.68 per square foot.

By comparison, Salvaggio plans to pay $8.33 per square foot for the city lot, which is the site of an unused bus shelter and near the future location of an Amtrak platform.

Gorham, who is a real estate broker, figures Salvaggio should pay at least $330,000. He also believes that land rights for more than 50 parking spaces are worth nearly $1 million, especially when a downtown parking space can cost more than $75 a month.

To address councilors' concerns, Salvaggio has agreed to buy the diner and the land upfront and forgo a three-year lease-to-buy agreement, said Councilor James Cloutier, chairman of the council's community development committee.

Cloutier said Salvaggio also has agreed to pay the estimated $30,000 cost of the sewer and water hookup, which was covered by the city in the initial contract. And the parking easement, which would have applied forever, has been changed to a 20-year contract for which Salvaggio would pay $1 per year, Cloutier said.

Salvaggio didn't respond to a telephone request for an interview Monday.

Cloutier, who is a real estate lawyer, disputes Gorham's figures and stands by the deal he helped to negotiate with Salvaggio.

He said development restrictions on the bus-shelter parcel, such as a future train platform, would have made an appraisal difficult. Those restrictions also affect West's proposal to build student housing and office space on three acres of city land next door.

Cloutier notes that West has agreed to pay $1 million for that parcel, $7.65 per square foot. He said West was willing to pay $250,000 for the current diner parcel because he needed it to complete a larger development deal.

"It's not really comparable," Cloutier said. "If people think land in Bayside is going for $80 a square foot, I wish it was."

originally published online here: http://business.mainetoday.com/news/050510diner.shtml