Baltimore officials decided to pay $300,000 to relocate a tugboat company from Fells Point’s Recreation Pier because the moving costs were “extraordinary,” the city’s housing commissioner said Wednesday.

Moran Towing Co., the tugboat company located on the city’s Recreation Pier, will relocate to 1820 S. Clinton St. in Canton, after the city and a developer agreed to pay the company $300,000 each to cover relocation expenses.

Details of the company’s relocation were revealed at Wednesday’s meeting of the city’s spending panel, the Board of Estimates, where the board voted to authorize city funds to pay for the company’s move.

Walter Horton, the city’s chief real estate officer, questioned whether the city should have to pay anything to relocate the company to make way for a proposed Aloft hotel, which would be built by developer J. Joseph Clarke and H&S Properties Development Corp..

“The LDA obligates the developer to make payments for all costs…We’re wondering why we need to be making payments,” Horton told the board, referring to a January 2008 land disposition agreement between the city and the developers.

Baltimore Housing Commissioner Paul Graziano responded by describing a “back-and-forth” between Moran and the developers that met with “extreme challenges,” and said the city had to pay half the cost of relocating the tugboat company to be fair to all parties involved.

“This spring, I personally got involved in sitting down and mediating [this issue],’ he said. “We wanted to make sure we treated them fairly and didn’t, frankly, drive [Moran] out of the city.”

Graziano described Moran’s 20-year lease on the pier as “below market,” and said that an appraiser hired by the tugboat company had determined the remaining eight years on the lease to be worth $1.47 million.

“We alternatively looked for a solution to relocate [Moran] permanently from the pier and not have a huge out-of-pocket expense,” he said. “We agreed to split the cost with the developer because these were extraordinary … costs that we never contemplated.

The city will pay the relocation fees out of the $350,000 sale price of the pier.

In 2004, Clarke, who is the husband of City Councilwoman Mary Pat Clarke, won a contract to develop the city-owned pier as a 152-room hotel.

The city discounted the $8.9 million cost of the property, which sits on a prime waterfront location in Fells Point, because it said at least $8 million of work needed to be done to stabilize the pier, which sits on rotted pilings and is structurally unsound.

In 2005, Clarke added H&S, which developed the city’s swanky Harbor East neighborhood, as a majority partner on the project.

But Moran’s lease on the property, signed in 1998, has impeded the development project for more than a year and a half.

On Wednesday, Paul Swenson, vice president of Moran and general manager of the Connecticut-based company’s Baltimore office, said he was pleased that the ordeal was over, but declined further comment.

The developers are expected to complete the purchase of the pier within 30 days. The tugboats and the company offices are expected to move to Canton by the end of the winter.