State signs lease agreement to move state offices from Portland to South Portland

Posted Jan. 02, 2014, at 2:18 p.m.
Last modified Jan. 02, 2014, at 4:48 p.m.

AUGUSTA, Maine — State officials on Thursday signed a 30-year lease with a South Portland company to relocate two high-traffic state offices to that city from Portland, a move that will save the state $23.4 million over the next 30 years.

After requesting bids for proposals for shared office space for the Department of Health and Human Services and the Department of Labor, the state in October chose a proposal by ELC Management, a company spearheaded by Eric Cianchette.

ELC’s plan is to build a new “Cumberland County Regional Office” near the Portland International Jetport in South Portland. Bids by other developers and landlords, including a management company that holds the current lease for DOL’s offices on Portland’s urban peninsula, were rejected.

That landlord, Tom Toye, has filed a lawsuit against the state, arguing that a “flawed” bid selection process hurt his company.

The relocation effort became politically charged when advocates for the poor, as well as legislative Democrats and Portland Mayor Michael Brennan, lobbied Gov. Paul LePage ’s administration to keep the agencies in Maine’s largest city.

They say relocation to South Portland will make it harder for the region’s neediest residents to access vital services, especially for those without a car. DHHS’ current location on Marginal Way in Portland is located near many other service centers, including soup kitchens and homeless shelters, just a few blocks from the city’s public transportation hub. The new location is a 70-minute roundtrip bus ride from downtown Portland and isolated from other services for the poor.

Mark Swann, executive director of Preble Street, a nonprofit service provider for the homeless and the poor, located in Portland, said he was “disappointed.”

“Contrary to what many people may think, it is incredibly difficult to be poor and try to navigate the systems of care set up to help people, and this move will make it that much harder,” he said. “Pure and simple, this will hurt people, not help them.”

Finance Commissioner Sawin Millett, whose department includes the agency that handles state leases and contracts, has said transportation concerns are not insurmountable, and the company that run’s Portland’s METRO service has said it will “work with whatever happens.”

Millett also pointed out that the deal with ELC is a big money-saver for the state, which is currently paying about $30 per square foot in the Marginal Way office building. The original ELC bid promised savings of around $14 million, but the state realized even more in the final lease agreement.

“Our tough negotiations since the bid was awarded provided for more than $9.4 million of additional savings over the bid price,” said Millett in a written statement.

The additional savings were negotiated mostly by hammering down the price per square foot in exchange for a lease of 30 years, rather than the 20-year contract in ELC’s original bid, said Jennifer Smith, a spokeswoman for the Department of Administrative and Financial services.

The lease will provide the state with 75,000 square feet of space for DHHS and DOL, at a cost of about $54.5 million. While it will cost about $2.3 million more over 30 years for the Labor Department to rent space in South Portland, rent for DHHS will be about $25.7 million less than the agency currently pays for its offices in Portland on Marginal Way and Forest Avenue.

Millett and LePage say the consolidation will make it easier for Mainers to access services provided by both agencies, and it will help welfare recipients more easily interface with Labor services such as the Career Center.

Under the terms of the lease, the rate per square foot in the first three years will be $19. That rate will increase over the 30-year term but will max out at about $27 — still less than the state currently pays at Marginal Way.

“Our administration looks forward to serving Mainers at this new location and continuing to help people identify services and programs that are most helpful and offer training and assistance to successfully transition people from welfare to a career they enjoy,” LePage wrote in a statement.

Senate President Justin Alfond, D-Portland, said that LePage could have chosen a better location, one that saved money but was also easily accessible. Instead, Alfond said, the governor “dug in his heels.”

“I am disappointed that Gov. LePage is continuing to ignore the will of our community and the needs of the tens of thousands of Mainers in Cumberland County,” he wrote in a written statement to the BDN. “The bottom line is that he could make other choices.”

According to the lease agreement, construction of the new, consolidated office will begin no later than mid-April. The state expects to move in by March 2015.

Follow Mario Moretto on twitter at @riocarmine.

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