SOUTH PORTLAND – After a months-long delay, the city of South Portland and representatives from Fore Rivers Soundstage are back negotiating a lease agreement that would allow the group to convert the city-owned National Guard Armory building on Broadway into a film and television soundstage.

Councilors met in executive session during Monday’s City Council meeting to work out the details in reaching a lease agreement with Eric Matheson to construct and operate a soundstage in the vacant building.

“We are reconvening on the previous lease we presented the group. It has taken some time, probably longer than the city would have liked,” City Manager Jim Gailey said prior to the meeting. “If all goes well, I think we will have a good lease that meets both groups’ needs in front of the City Council in the near future.”

Matheson, a Maine native and a veteran of the film industry, said the two sides are close to an agreement.

“The lease hasn’t been signed as of yet,” he said. “But we’ve reached a lot of agreement. It’s been really positive. Right now we are just ironing out some of the smaller stuff. Things are progressing nicely. Everyone seems to be in agreement.”

Gailey said the last time the groups met in executive session was in late April or early May. The city had hoped to have the lease agreement done by the beginning of July, but negotiations fell off in the summer months, in part, Gailey said, because of the poor economy’s impact on the film industry in Maine.

Negotiations have now picked up, however, and Gailey said they have reached a point where he cannot proceed without City Council approval.

City Councilor Tom Blake said in July that he would like to see the agreement with Matheson’s group to be similar to the one the city reached with Mad Horse Theatre regarding the theater company’s use of the former Hutchins School building in Ferry Village. In 2009, Mad Horse signed a five-year lease with the option to buy the building at the end of the lease.

The former Maine National Guard building, located at 682 Broadway, has largely sat empty in recent years. The state sold the site to the Museum of Glass and Ceramics for $550,000 in 2002, but the museum went bankrupt in September 2005. The city outbid the Children’s Theatre of Maine and purchased the property for $650,000 in 2006. The building, which is in disrepair, is worth $266,000 and the property is worth $461,000, according to assessing records.

The building had been discussed as the site for a new city hall, but that plan did not get the support of the City Council and many city residents.

In November 2009, 2.7 acres around the armory was rezoned from residential to a conditional zone that would allow Matheson’s group to turn the building into a film and television soundstage. Gailey said that zone would revert back to its original state if the soundstage plans don’t materialize by Dec. 31, 2011.

Matheson’s goal is to construct a 10,000-square-foot soundstage and 17,000 square feet of office space in the building.

To do so, Matheson said, would take a lot of work because the building is not heated and the roof needs some work.

“There is a tremendous amount of work that needs to be done,” he said. “Until we have a solid lease signed, I can’t even begin talking with my investors.”

Once everything in place, however, Matheson, whose film credits include work on such movies as “Amistad,” “Cider House Rules,” “The Crucible” and “Empire Falls,” imagines the work would not take long.

“It is going to move fairly quickly,” said Matheson. “I’d say within a year we will have a working organization.”