Gloucester Marine Terminal LLC, which opened Cruiseport last spring with a formal dinner prepared and served to a "who's who" crowd in the upstairs restaurant, is facing possible sanctions for adding tables downstairs.
City Council, which spurred the investigation into Cruiseport operations, concluded informally Tuesday that using the lower level as a restaurant violates the special permit issued to the company in 2004.
Under the terms of the permit, which includes references to architect's renderings of the project — lauded widely as a sign of new life on a waterfront coping with less commercial fishing — the restaurant was to be limited to the upper floor, a wide function hall adjacent to the kitchen.
Below, the dock-level room was designed and projected to be reserved for processing cruise passengers through customs and homeland security, but with only a handful of cruise ships last year, the lower level was underused until it was adapted with a bar, tables and service from the restaurant above.
Lawyers for the company argued that the expansion of the restaurant to the lower level was consistent with the permit and definition of a cruise terminal.
Building Inspector William Sanborn and chief counsel Linda Lowe disagreed, and told the council they believe the use of the lower floor as a second level of restaurant service put the owners in violation of the permit.
After lawyers for Frank Elliott, the public face and minority partner in the business, challenged the finding and announced Elliott's unwillingness to seek a modification of the permit that would eliminate the problem, the council tabled the issue until May to allow time for talks and cooler heads.
Acting as conciliator, Councilor Jason Grow urged discretion and delay and advised Elliott subtly that he did not have the votes to win a showdown.
"No one wants to put Mr. Elliott out of business," said Councilor Sharon George. "But we're at a stalemate, and we need a meeting of the minds."
Council President Bruce Tobey, who chastised Sanborn for lax enforcement of the Cruiseport permit during Sanborn's reappointment hearing in February, said the enforcement action was required to engender "trust" as the city seeks to encourage more economic development around the waterfront.
Tobey also said he worried about Cruiseport morphing into a "mega-restaurant."
Using the permit, Elliott and his partners, including James Davis, owner and chairman of New Balance Shoe Co., put back into use a central piece of the inner harborfront, with new wharves for the iconic schooner Adventure, as well as commercial fishing boats.
Meanwhile, they were constructing Cruiseport as part of the city's push to grab a portion of the fast-growing inshore cruise business, which is seasonal, and even at full development was never assumed to be capable of producing enough revenue to support the project by itself.
For that, Gloucester Marine Terminal came to depend on the upstairs function hall and now upstairs and downstairs restaurant. Elliott has said the function business was very successful, but the restaurant, Port of Call, which has had multiple managers, was less so.
Elliott and Tobey have a long, tense history with each other, dating to Tobey's years as mayor which extended through most of the 1990s. Tobey acknowledged friction with Elliott stems from a harbor redevelopment effort that went off course.
While denying their past was connected to the current impasse, Tobey recalled that he "helped (Elliott) acquire the (Cruiseport) property so he could build a herring plant for a factory ship that turned into a casino cruise boat."
Tobey said he recalled debating casino cruise boats with Elliott on Emily Rooney's "Greater Boston" program on WGBH-TV in 1999.
Tobey said he learned from that experience the importance of enforcing waterfront agreements.
Beyond that, Tobey declined to discuss Elliott, a former longshoreman and something of a polarizing figure who quieted many critics by delivering Cruiseport to the city as promised and then bringing cruise ships to the harbor, first in the fall of 2006 and then again last year.
His lawyers said four more cruise visits are scheduled for this year.
Elliott let his legal team speak for him at the council hearing, and did not return phone calls yesterday.
"Why are you trying to put roadblocks in front of him?" asked Joseph Ciaramitaro, co-owner of Capt. Joe's lobster and seafood business on East Main Street. Ciaramitaro wondered at the fine distinction the council was trying to draw to find Elliott in violation of his permit.
To Grow, the same effort reminded him of a "Clintonian definition of a restaurant."
Councilor Joseph Ciolino, who has praised Cruiseport for its contribution to the economy, interjected efforts at finding a compromise that would allow the facility to stay in business and satisfy the requirements of the special permit.
Answering a question from Ciolino, chief counsel Lowe said it would be simple and advisable to modify the special permit to authorize the use of the terminal as a two-floor restaurant.
"There's some liberty to take the kind of action you're suggesting," she said.
The groundwork for the council's inquiry into Cruiseport was laid in the Planning and Development Committee, whose chairwoman, Jackie Hardy, also was responsible recently for pressing Jim's Bagel and Bake Shop to comply with the precise terms of a special permit for its still only partially finished drive-through section.
Sanborn said he would not issue a cease and desist order to Cruiseport unless directed by the council, which agreed to take the issue off its table on May 13.
Mayor Carolyn Kirk said she was concerned that the council was getting tied up in "a gray area" of law.
"We need to be business-friendly," she said.
She used a similar phrase to explain her decision to demote the chairman of the Licensing Board after it briefly decided to hear complaints against Elliott from a former employee who questioned his integrity.
Richard Gaines can be reached at rgaines@gloucestertimes.com.
