PORTLAND – Plans to redevelop the city-owned Maine State Pier have hit a snag because a state agency is disputing the ownership and use of submerged lands beneath the pier.

Two companies have submitted competing $90 million plans to redevelop the 85-year-old pier and adjacent land with mixed-use developments that include hotels, restaurants and offices.

But in a letter sent to a city attorney in March, a Conservation Department official disputed the city’s ownership of submerged lands underneath the pier. The letter further said the development plans may conflict with state laws that aim to protect the public use of waterways.

“I think there is a real and valid concern that some elements of the development proposals under consideration are inconsistent” with state law, wrote Dan Prichard, director of the Bureau of Parks and Lands’ Submerged Lands Program.

City Attorney Gary Wood maintained that the city owns the submerged land. Wood met with Prichard and other Conservation Department officials last week and hopes to work out a compromise that addresses their concerns.

“We do not agree with [Prichard’s] interpretation of [what the city] purchased or with an overly narrow interpretation of what uses are allowed on the pier,” Wood said.

Prichard said a compromise may be possible, but made no promises.

At the center of the debate is the Maine State Pier on the Portland waterfront, which has become a financial liability to the city and is in need of repair. The City Council rezoned the property last year to allow commercial development with an emphasis on marine uses and public access.

In March, two competing proposals for the property were unveiled. Besides commercial development, both proposals also include cruise ship berthing, parks and public access.

A City Council committee is now reviewing the alternatives and is expected to make a recommendation in June.

One of the proposals comes from The Olympia Cos., which is based in Portland and headed by Kevin Mahaney, who won a silver medal for sailing at the 1992 Summer Olympics in Barcelona, Spain.

The other developer is Ocean Properties Ltd. of Portsmouth, N.H., whose team includes former U.S. Sen. George Mitchell and Robert Baldacci, brother of Maine Gov. John Baldacci.

For the Department of Conservation, the issue is 1981 legislation that transferred pier ownership from the state to the city as part of a deal that brought BIW to Portland.

The legislation failed to specifically name submerged or underwater land as part of the transfer. However, the city’s 1982 deed to the pier includes “all submerged lands.”

Prichard’s letter and related documents were obtained by the Portland Press Herald after the paper filed a request for information under the Maine Freedom of Access Act.