After three months of negotiations, it appears the city and Washington State Ferries are nearing a decision involving a 15-year-old memorandum of agreement (MOA) between the two.

The two options keep being tweaked by WSF and were likely defined even more when the two sides met late yesterday on Bainbridge Island.

David Moseley, WSF’s chief as assistant secretar for the state Department of Transportation, upped the ante a bit this week when ge altered the “water-related only” condition tied to the state’s $2 million offer to the city to drop its claim on an acre of land in the WSF maintenance facility in Eagle Harbor. The latest proposition is $2 million with no strings attached.

“I was surpised to receive that latest offer,” said Councilor Barry Peters. “Our next policy decision is, where to go with it?”

The other option for the city is WSF’s proposal to lease to the city just less than an acre of land located on the west side of the maintenance yard.

Proponents of the land lease have argued that the option is unrealistic because of the land’s narrow configuration, lack of access to water via a pier or boat ramp, and WSF’s reluctance to let a haul-out operator use an available travel lift.

Other problems include WSF’s insistence that only the city can lease the property, ruling out a sublease to a boatyard operator, the length of the lease and the cost of the lease. Moseley’s latest letter said the state would agree to a 20-year lease.

City Councilor Debbi Lester, who has been an advocate for a haul-out facility for many years, said the council’s ad hoc committee (also consisting of Hilary Franz and Peters) would be addressing many of the problematic issues, including nailing down what the market-rate lease rate would be and the possibility of a performance bond issued to a haul-out operator.

Peters, on the other hand, favors using the money option for the purpose of having the water and dock area off Waterfront Park upgraded, featuring a 25-30 boat marina that visitors can use.

Most of the community members who have attended meetings involving the two options overwhelmingly favored the land lease, but WSF’s restrictions have made that alternative impractical.

While most council members may agree that at least some of the WSF money should be used for water-related purpose, at least one council member said the $2 million would help pay some of the city bills, including $1.9 million owed Cashmere Bank. The loan was used to finish the sewer treatment plant upgrade.

But Peters believes the council’s movement toward more fiscal responsibility means that the WSF money doesn’t have to end up in the general fund.

“It will be the council’s decisions, of course, but I hope we devote a substantial portion of it to a water-based project,” he said. “That’s the source of the money so at least some of it should be used for that purpose.”

The city currently is asking for requests for proposals from the community for waterfront uses for either of the options. The council is expected to make a decision on Dec. 8.