AUGUSTA — Key Plaza, a prominent downtown building where hundreds of state workers are employed and which was recently on the verge of being foreclosed upon, is out of receivership and back in the hands of its previous owner.

The future of the building appears to have been stabilized now that the state has negotiated a deal to renew its lease there for another 10 years beginning in July of 2018. Officials said the deal is good news for the rest of downtown, especially since about 280 state Department of Health and Human Services employees work there and are a key demographic for downtown businesses.

“Those state workers are certainly an audience that is great for retailers and restaurants and other businesses,” said Michael Hall, executive director of the Augusta Downtown Alliance. “It is an important element, downtown. We’re excited that element is still there.”

Lewis Kerman, of New Jersey, an investor in the 286 Water St. building, confirmed the previous ownership group had re-secured ownership of it Friday, the same day an auction of it, for the fourth time, was scheduled to take place but called off. The previously scheduled auctions were postponed, some at the last minute. Friday’s auction was canceled, not just postponed, indicating a deal had been reached.

“We have the building, we got the building back,” the 71-yer-old Kerman said by phone. “To me, it’s the mainstay of downtown Augusta. The tenants are happy, we’re happy, and I hope you’re happy.”

The building was placed in receivership, meaning a third party oversaw operations there on a temporary basis, after a breach of contract lawsuit was filed by the debt-holder, U.S. Bank National Association, against the ownership group known, among other corporate names, as SRA Augusta SPE LLC, in 2016.

District court records indicate the building’s owners defaulted on a $7.2 million promissory note by not paying money due on the loan at its maturity.

The receivership was dismissed Tuesday, according to court records, which indicate the two parties settled their dispute.

“Naturally we’re thrilled a deal was able to be worked out and the current owner was able to maintain,” possession of the building, Hall said. “We’re creating a downtown of both office workers and downtown residents. It’s great they’re staying.”

The state Bureau of General Service’s Division of Leased Space negotiated a 10-year lease renewal with the owners, with the new lease to begin July 1, 2018, according to David Heidrich Jr., director of communications for the state Department of Administrative and Financial Services.

Heidrich said the leases don’t identify a specific agency as an occupant, “because our space needs are always changing. In the case of the Key Plaza, the DHHS employees in that facility will remain there until construction of the new office building at 109 Capitol Street is completed in 2019.”

The state’s current lease which runs out in June of next year is for 58,000 square feet of space. While the DHHS employees there now are expected to move to a proposed new facility at the former site of the state Department of Transportation maintenance facility, Heidrich said the state could move workers from other departments into the Key Plaza building when the DHHS workers leave.

Heidrich said it was the state’s understanding that its lease agreement would have been honored even if ownership of the building had changed hands.

The property is valued, for tax purposes, at $9 million, according to city assessing records. The 76,500 square-foot building was built in 1988.

Keith Edwards — 621-5647

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Twitter: @kedwardskj