PORTLAND – Questions are being raised about which vessels should be allowed to a use a public ship terminal scheduled to open in 2006 as the operator of a high-speed ferry service says it’s thinking about expanding to Portland.

Scotia Prince Cruises, owner of the Scotia Prince ferry, is demanding that no other ferry service to Nova Scotia be allowed to use the $16.5 million Ocean Gateway terminal. The owner says he has a written commitment from the city that his boat would be the only international ferry at the new terminal.

But Bay Ferries Ltd., owner of the high-speed Cat ferry that runs from Bar Harbor to Nova Scotia, argues that the city should not limit the users and future revenues of a publicly funded terminal.

City officials are caught in the middle, torn between longtime loyalties, tough financial choices and questions about whether granting the Scotia Prince exclusive use of the terminal is even legal. Millions of dollars in state and federal grants for Ocean Gateway could be put in jeopardy if the terminal, or any part of it, is being built for the exclusive use of one business.

The city must make a formal decision, perhaps in the next month or two, as it prepares a long-term lease with Scotia Prince.

Matthew Hudson, owner of the Scotia Prince, said he has an agreement written in 2000 that says Portland will not lease pier space to any competing international ferry service. In return, Scotia Prince will not set up service in any other New England port.

Hudson said he never would have bought the ferry in 2000 without such an agreement. The exclusivity clause has been in the Scotia Prince agreement with the city since 1969 and has never been challenged.

But Bay Ferries wants to expand and thinks Ocean Gateway would be a good home. The city hopes to break ground on the terminal this year.

The Cat would be able to make the trip from Portland to Yarmouth, Nova Scotia, in four to five hours, which is about half the time it takes the Scotia Prince.

Donald Cormier, Bay Ferries’ vice president of operations and safety management, said any facility in Portland that’s publicly funded should be available for more than one user.

City officials must consider the ramifications of it all. For now, the city is preparing a long-term draft lease agreement with Scotia Prince Cruises that includes a promise of exclusivity – at least for now.

“The issue is whether or not we want to honor an agreement that has existed here for many years,” City Manager Joe Gray said.

Officials are also trying to determine whether federal highway and transportation funds dedicated to the project could be jeopardized because of legal restrictions against financing projects for a single business.

Of the $16.5 million allocated for the project, $15.5 million is from federal and state grants.

Clouding the issue is a $100,000 contribution that Hudson made in November to a charity set up by Portland’s mayor, and political contributions he made to city councilors.

Hudson insists there were no financial motives for the gifts, and city officials say the money has no bearing on their business relationship with the company.