AUGUSTA — The former MaineGeneral hospital campus on East Chestnut Street has its first tenant, though it will only be occupying a small section of the large old hospital building.

The University of Southern Maine’s Muskie School of Public Policy will lease the 10,000 square-foot brick Haynes building just behind the former main hospital building, and 2,000 square feet of space for classrooms in the main building, according to the owner and developer of the site, Dirigo Capital Advisors.

Kevin Mattson, president of the firm, said there has been a lot of interest from potential tenants for the 317,000-square-foot former hospital building across the Kennebec River from the capital city’s downtown.

He said the company is in discussions with a couple of different tenants and “If it all works out, by the end of the year, it’ll be 50 percent (leased out) at least.”

He said the redevelopment of the property is going faster than he expected.

The Muskie School is based at USM’s Portland campus but also has offices in leased space in Augusta in the Central Maine Commerce Center in north Auguata off Civic Center Drive. Those Augusta operations, but not the entire Portland-based school, will move to the Haynes Building.

Another tenant already at the Commerce Center, is expected to expand into the space the Muskie School will vacate there. Mattson leads the group that owns both properties.

The school will be the first tenant in what Mattson, his partners and city officials hope will be a major redevelopment of the former hospital site into new uses.

The building was most recently used by MaineGeneral as administrative offices.

He said the Muskie School will move on or about July 1. Construction to renovate the space for the school is underway now.

City officials welcome the development at the three-story Haynes building, which was built in 1910 as the nurses’ quarters for hospital.

“The Muskie School will be coming to that facility, so that’s a big piece of news, I think,” said Mayor William Stokes. “It’s good to get tenants in there.”

Mattson, in a video posted on YouTube announcing the deal, which closed Tuesday, says it is a “tremendous win-win for the city of Augusta and USM.”

“It’s on the old MaineGeneral campus, which is really the east side downtown,” Mattson said. “So, we couldn’t be happier with this. I think it’s an example of what downtown development can be, in luring businesses back to the center of the city. So we’re very excited to welcome USM to what will be a very large, growing complex of businesses.”

The move, from the Muskie School’s perspective, was an economic one, as the school had more space than it needed at the commerce center, according to Judie O’Malley, assistant director of public affairs for USM.

Mattson said Friday the five-year lease deal for the Muskie School is for $14 a square foot, which would be $168,000 a year.

Mattson said the school’s move from the Commerce Center to the smaller space it will occupy soon could save USM around $100,000 a year.

The Muskie School focuses on public policy and has undergraduate and graduate degree programs in geography and anthropology, community planning and development, public health and public policy and management. In Augusta, according to USM’s website, the Muskie School has 80 staff members who provide research, technical assistance and training, as well as instruction and policy analysis and research, to state government and others.

MaineGeneral closed the hospital in November, when it opened the regional Alfond Center for Health in north Augusta.

MaineGeneral is leasing back about 50,000 square feet of space in the former hospital, but isn’t occupying the space yet. Mattson said the first phase of MaineGeneral’s move of some functions back into the old building will take place in October, when it will use 20,000 square-feet of space.

Mattson anticipates the redevelopment of the East Chestnut Street property will be similar to the redevelopment of the Commerce Center from a former computer chip manufacturing plant into offices for multiple entities, which took about five years. The hospital redevelopment is going faster than that, he said.

Keith Edwards – 621-5647 kedwards@centralmaine.com Twitter: @kedwardskj