BANGOR – City councilors on Monday unanimously approved a letter of agreement allowing Penn National Gaming Inc. to move forward on its plans to buy the Holiday Inn-Civic Center and Main Street Inn, both on the south side of Main Street across the street from Bass Park.

Penn National, which on Friday will open a temporary slots facility called Hollywood Slots at Bangor just up Main Street, plans to demolish the inns and a couple of houses behind them to make way for a new, larger, permanent gaming complex, which will include an attached parking garage, Penn National spokesman Eric Schippers said Monday in a telephone interview.

If all goes according to plan, the new complex will be open by the fall of 2007.

“This is really a win-win for everybody involved,” Councilor Dan Tremble said during a special council meeting at City Hall.

The hotel properties are among the few commercially zoned properties both large enough to accommodate Penn’s proposed 1,500-square-foot permanent facility with attached multilevel parking garage and within the allowed 2,000-foot radius of Bangor Raceway.

Though a financial report posted last week on Penn’s Web site pegged the cost of the permanent facility at $71 million, it was not clear how much of that total was connected to property acquisition costs and how much would be spent on construction.

Because the state’s slots law prohibits Penn from owning its gaming property here, the site will be purchased by Penn and conveyed to the city, which will lease it back to Penn, as is the case with the temporary site at the former Miller’s Restaurant on Main Street.

Tremble said that Larry Mahaney, who owns the Holiday Inn and negotiated a purchase option on Main Street Inn to provide Penn adequate space for the permanent facility, should be commended for brokering the deal, which will allow the city to keep using Bass Park while allowing Penn to “jump-start” work on its permanent facility.

Mahaney did not attend Monday’s meeting and could not be reached for comment.

Council Chairman Frank Farrington credited City Manager Edward Barrett, City Solicitor Norman Heitmann and Finance Director Debbie Cyr for being “instrumental in keeping these negotiations going.”

Michael Crowley, who was council chairman when the word “racino” first was uttered in Bangor, was among those on hand to witness Monday’s historic event.

He said that, based on earlier projections, revenue from slots could help the city raise the $40 million to $50 million it would cost to build a new auditorium within about 15 years – without the city having to take out loans. It also would spur other development along Main Street and the waterfront area, he said.

Though city officials hoped the final agreement would be ready in time for Monday’s special council meeting, the attorneys involved were still fine-tuning the agreement, which has proved time-consuming because it involves three separate legal documents totaling 70 pages, Barrett said Monday.

Whether the new development agreement will require a hotel, as the original version did, remains the subject of negotiation, Schippers said.

While the letter of agreement city councilors approved sets a Nov. 30 deadline for hammering out the final documents, Penn National had a deadline of Monday for closing on the purchase of two smaller parcels owned by Mahaney, at a cost of $180,000, and making a $300,000 nonrefundable deposit on the rest of the land.

If the city and Penn National fail to close the deal by the end of this month, the city will abate Penn’s two years’ worth of lease payments, or $180,000, on the city facilities it is using at Bass Park, home of Bangor Raceway, according to city documents related to the deal.

“We’re obviously very pleased that this councilor order was passed,” Jon Johnson, general manager of Penn’s Bangor operations, said after Monday’s meeting.

‘”It allows us to meet some contract [obligations] as well as to continue to work toward resolution on the permanent site location,” he said.

Though plans on file with the city call for building the complex at Bass Park, Penn has been exploring, at the city’s request, its site options in an effort to minimize disruption of activities and events at Bass Park, including the Bangor State Fair, parking for the American Folk Festival and annual basketball tournaments.