One of Westbrook’s largest employers intends to leave the city and relocate to South Portland when its lease at One Riverfront Plaza expires in early 2016.

Disability RMS, a disability insurance provider that employs about 350 workers, had been trying to renegotiate its lease for months but failed to reach an agreement with the property’s New Jersey-based owner, according to a Westbrook official.

The prospect of a significant loss of jobs in Westbrook prompted a reaction from Westbrook officials, who insisted they did everything possible to prevent Disability RMS from leaving.

Since 2006, Disability RMS has occupied 125,000 square feet in the four-story office building alongside the Presumpscot River.

Matt Gilligan, president of Disability RMS, notified the city Friday of the company’s plans to leave, and that it had found alternative space at the SouthBorough Office Park in South Portland, Westbrook Assistant City Administrator William Baker said.

Baker said the departure is a major blow to city officials, who had worked diligently to help negotiate a new lease agreement between the landlord and tenant. Ultimately, that effort failed, he said Saturday.

In a city-issued news release, Gilligan described the planned relocation as a “business and financial decision” that had nothing to do with Westbrook, which he described as a great place to do business.

Westbrook officials often tout the city as a more business-friendly and inexpensive alternative to Portland.

According to the release, Gilligan asked to meet with city officials, including Mayor Colleen Hilton, on Friday to deliver the bad news.

“The city of Westbrook is extremely disappointed to be losing Disability RMS, which has been a great corporate partner, an important presence in our downtown and of course a major employer in the city,” Hilton said in the release.

City officials said they learned in October that Disability RMS had been struggling to renegotiate the lease with its landlord, Pendleton Westbrook LLC, based in Hackensack, New Jersey, and that the company had begun looking at alternative space.

The city went to unusual lengths to bring the parties together, including flying staff to New Jersey to meet with the landlord, Baker said.

“It is important for the Greater Westbrook business community to understand the effort the city of Westbrook made to keep this from happening,” he said. “Westbrook believes that a private landowner in South Portland was in a unique position to offer financial incentives to (Disability RMS) that could not be matched by the New Jersey-based landlord.”

Baker said the city has been in touch with Pendleton Westbrook to begin the process of filling One Riverfront Plaza with new tenants.

“We remain optimistic for the future of our downtown and this building in particular, and expect to have this building fully occupied and bustling before February of 2016,” he said.

Christopher Hall, CEO of the Portland Regional Chamber of Commerce, agreed that Westbrook is likely to bounce back from the economic loss.

“Clearly, Westbrook is on an aggressive path toward business expansion and prosperity, and I have no doubt they will recover from this setback and prosper,” he said.

Founded in 1993, Disability RMS provides underwriting, risk assessment and management services for disability and other types of insurance. According to the company’s website, it has $350 million in premiums and 40,000 claims under management.

J. Craig Anderson can be contacted at 791-6390 or:

canderson@pressherald.com

Twitter: jcraiganderson