AUGUSTA — Maine State Housing Authority is leaving downtown Augusta and bringing its 165 employees with it, once the lease expires for its prominent building overlooking the city’s riverfront.

But the quasi-independent state agency isn’t leaving Augusta, as it has purchased a vacant building at 26 Edison Drive, where it plans to make extensive renovations to turn it into its new headquarters.

Also known as MaineHousing, the agency has made its home at the 353 Water St. building for more than two decades. The owner of the building and local officials hope a new tenant will move in soon after the agency moves out in 2020, and help fill the void left by that many workers no longer being downtown for their workday.

Downtown businesses are likely, at least temporarily, to be impacted by the loss of potential customers working downtown.

“It is unfortunate to lose what has been such an important downtown presence and has certainly contributed to the success of businesses there,” said Keith Luke, deputy director of development services for the city. “It will be interesting to see how that property is developed. I think it is unlikely to remain vacant for long.”

Jason Gall, who manages the building that is owned by his father, Ed Gall, said he’s already shown the building to a couple of potentially interested parties. He said his family’s company, which owns several other major properties in Augusta, will consider other office space tenants. But the company would also consider, if there is interest from tenants, converting it to a residential property, he said.

“We hope to back-fill the building, whether it will be another office use or perhaps residential, we’re not sure yet,” Jason Gall said. “Obviously we hate to see a vacant building. It could be converted into residential housing, we would consider that, though the best use for it is probably office space. We’ll have to see where things are when the lease term expires.”

He said the market for office space, especially larger spaces in Augusta, is a bit soft now.

Michael Hall, executive director of the Augusta Downtown Alliance, said currently there is a waiting list for high-end residential units downtown indicating the demand for such units is there, and the MaineHousing building “sits along a beautiful stretch of the Kennebec River with views of Memorial Bridge,” and could make for an attractive spot for condominiums.

“It’s really up to the landlord and what direction he’d like to take it in,” Hall said of the type of tenants which could be a good fit for the building. “On a personal level, I think the building would make great market rate housing, particularly condos, due to the magnificent river views and easy access to the (Kennebec River) Rail Trail.”

The rail trail, a recreational trail that extends from Augusta through Hallowell and Farmingdale to Gardiner, has an entrance at the end of MaineHousing’s large parking lot off Water Street.

Hall said while downtown proponents hate to see anyone, especially an organization with 165 employees, leave the downtown neighborhood, he is confident that downtown Augusta is becoming more of a destination spot than it has been in the past. Many MaineHousing employees, Hall said, will still likely come downtown and patronize shops and restaurants even after their workplace moves to Edison Drive, which is just off Western Avenue and just over 2 miles away.

Peter Merrill, interim director and a 23-year employee of Maine State Housing Authority, said downtown Augusta, and the building they’ve leased there, has been a great location for the agency and its employees but officials determined MaineHousing could buy and own a building for about the same cost it is now leasing space.

“We analyzed the cost of renting, and the cost of ownership, and they were about the same, maybe favored a bit toward ownership,” Merrill said. “Given those two choices, you’d rather be your own landlord than someone else’s tenant. Ultimately, we concluded 26 Edison Drive is the best option for us. We’re happy to be staying in Augusta.”

Merrill said he and other employees will miss the Water Street spot but Edison Drive will have positive aspects, as well.

“There are certain things we’ll miss a lot, being on the river is wonderful, you look out the windows at the eagles, watch the sturgeon jump, and access to the rail trail is wonderful,” he said. “Downtown Augusta appears to finally be getting a bit of forward motion, which is good to see.”

He said the new site, for which MaineHousing paid $1.6 million, is adjacent to woodlands where there are walking trails, has easy access to Interstate 95 nearby and, at about 65,000 square feet, the two-story building has much more space than their current headquarters, where he said space is tight.

“It’s probably twice as big, it has more space than we need, currently,” Merrill said of 26 Edison Drive. “Nevertheless, it was the best deal available.”

MaineHousing plans to have extensive renovations done to the building, which previously has served as processing space for a bank and was more recently leased to Maine Revenue Services. Renovations to the brick building which sits just a few feet off Edison Drive and has a large parking lot behind it, will include the addition of many new windows.

Merrill said employees will be involved in designing the building and selecting its amenities, and were involved in the process of selecting the new location.

Luke said the renovations planned at the now-vacant building are a positive for the city.

“We’re enthusiastic about them investing in a property that has been in need of attention for about 15 years now,” Luke said. “That’s a major positive. I think they’ve found a great new home.”

As a governmental entity, Maine State Housing Authority is exempt from being required to pay property taxes to the city. However Merrill said the agency has already expressed a willingness and discussed, with city officials, making a voluntary payment in lieu of taxes or other payment in some form to the city, in recognition of the benefits the agency gets from the city, while also acknowledging its tax exempt status.

The 26 Edison Drive property is assessed, by the city for tax purposes, at $2.1 million. It was built in 1967, according to city records.

Gall said there are no hard feelings about MaineHousing leaving and they’ve been great tenants at the four-story building.

“I think they just decided they needed more space and needed their own building,” he said. “It’s a nice space and they’ve done a nice job keeping it up, they’ve maintained it very well. I think the next tenant will be very happy.”

Keith Edwards — 621-5647

[email protected]

Twitter: @kedwardskj

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