AUGUSTA — A proposal to consolidate multiple state agencies into leased space within a mile of the State House could have a big effect not just on how those state agencies deliver services, but on the city itself.

Local officials view the proposal’s shift from being a state-owned, to a state-leased, property as a positive because that means the building owner would pay property taxes to the city. But they fear negative consequences if state agencies are relocated to the new site from existing leased space in Augusta, particularly Key Plaza in the heart of the city’s downtown.

However, both Sen. Roger Katz, R-Augusta, and City Manager William Bridgeo said they’ve received informal assurances from state officials that the state would reoccupy Key Plaza with other state agencies if the state Department of Health and Human Services moves out.

“A potential downside is if the consolidation of offices from other buildings in the city, most prominently the Key Plaza downtown, were to cause those buildings to go dark, it would have an adverse impact on how they’re taxed and have a dramatic impact on downtown Augusta,” Bridgeo said. “I’ve had a couple of conversations with people at the state who say their strategy would be to backfill leased space in downtown Augusta with other agencies, that they’d need that space. But nothing is confirmed.”

The state’s lease for 58,000 square feet of space in Key Plaza expires in June 2018.

The state’s request for proposals to provide 225,000 square feet of office space it would lease does not specify which state agencies would move to the building, which would be required to accommodate 1,400 employees and provide 1,300 parking spaces.

David Heidrich, spokesman for the state Department of Administrative and Financial Services, said a number of agencies now in leased space and state-owned space could occupy the proposed consolidated offices. He said determining who the occupants are will depend upon the lease agreements the department negotiates with the owners of properties where those agencies are located now.

Katz said he has received assurances from Gov. Paul LePage’s administration the intent is not to leave Key Plaza empty, and if DHHS were to leave that site, it would seek to relocate other, smaller state agencies there.

“Hopefully that’s the case, because Key Plaza has an impact on the whole riverfront area,” Katz said Friday.

Three companies submitted proposals in response to the state’s request for new office space within a mile of the State House. Bidders were KNG Holdings LLC, of Gardiner, which is owned by members of the family that also owns Pine State Trading in Augusta, Hallowell and Gardiner; Opechee Construction Corp., a New Hampshire-based firm that has built at least one other building leased to the state in Augusta previously; and Eastern Impact, LLC of Portland.

One of those bidding companies, Opechee Construction Corp., would partner with Peter Anastos, a Maine hotelier, to build an office building on Capitol Street on the former site of a Department of Transportation maintenance facility the state has sought to sell since 2014. Anastos has the 9-acre property under contract to buy it from the state for $1.3 million, plus the department’s cost of removing underground storage tanks on the vacant site.

Anastos, who was appointed by Gov. Paul LePage to the Maine State Housing Authority, has placed $50,000 in earnest money down on the property, and he has until March 13 to complete environmental and property title checks, after which he must close within 30 days, according to Dale Doughty, director of DOT’s Bureau of Maintenance and Operations.

Doughty said others might be interested in the property if Anastos chooses not to buy it before his contract runs out. He said the agreement between Anastos and the transportation department is not tied to any specific future use.

Anastos confirmed in the past week by email that he is partnering with Opechee and that its proposal would be to construct a building at the former transportation department site at 109 Capitol St.

Nick Alberding, managing partner of Pine State Trading, said KNG Holdings is owned by him and his cousins Keith and Gena Canning.

He said they are “excited about the opportunity” provided by the request for proposals but declined to reveal the location of their office space proposal submitted to the state.

Pine State Trading has a large property, where it now has offices and warehouse space, on the Augusta-Hallowell line. That property appears to be within a mile of the State House. The Augusta portion of the property totals 8.3 acres, assessed at $3.9 million, according to the city assessor’s office. Part of Pine State’s property extends into Hallowell.

Both Anastos and Alberding declined to discuss details of their proposals, citing the state’s sealed bidding process.

The people behind the third bidder, Eastern Impact LLC, and where it would provide the office space sought by the state, largely remains a mystery. A Portland attorney listed as the registered agent for the LLC, in a state Bureau of Corporations database, said he could not comment but would contact officials with the firm to see if they would. Inquiries sent through the firm’s website have not generated a reply.

Heidrich said the contents of the three firms’ submissions would be kept confidential by the state until one of them is selected, at which time they will become public.

He said the department hopes to complete its scoring of the proposals by the end of March.

Regardless of which firm and location is selected, the project could have a major effect on the city.

The state’s request for proposals notes the 225,000 square feet of space could be either new or renovated space. It would be big, at about twice the size of The Home Depot and almost as big as the Central Maine Commerce Center.

“It’s big, at 225,000 square feet and 1,300 parking spaces, so it’s a huge proposal with obvious consequences, plus and minus,” Bridgeo said. “There are a whole bunch of issues with a complex of that size and scope that would end up needing to be vetted by the Planning Board and City Council, particularly if a zone change is necessary.”

Such a large project and influx of workers to a single site would affect traffic and other development surrounding the site, Katz said.

Heidrich said the state required the space to be within a mile of the State House so the state can gain economic and operational efficiencies by having agencies close to the core of state government. He said it is also a convenience factor for people conducting business with state government.

He said the proposals would be evaluated by a review team and ranked. The company with the top ranked proposal or, if the scoring is close, proposals, would be invited to negotiate with the state

He noted the state can reject all the proposals if they don’t meet the requirements of the request for proposals or they would not benefit the state economically.

Katz and Heidrich noted leasing space was not the LePage administration’s first preference. The original plan was to build a state-owned office building in Augusta, but legislators did not include LePage’s proposal to borrow $112 million to renovate state-owned properties and build a building to consolidate state agencies in the state budget. Instead, legislators reduced that amount to $23 million, so the administration put out the request for proposals for leased space.

Keith Edwards — 621-5647

[email protected]

Twitter: @kedwardskj

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