AUGUSTA — The Planning Board, following more than three and a half hours of debate Tuesday night, approved a controversial proposal to build two new office buildings on Capitol Street near the State House, despite concerns the design isn’t worthy of such a prominent location.

The developer of the project, meanwhile, warned before the vote that financing for it is “fragile” and could fall apart if the project can’t move in a timely manner.

The proposed project includes two new buildings, one a large, three-story 104,000 square foot building that would be leased to the state for offices, the other a 26,000 square foot building that would be leased to the Maine Public Employees Retirement System, as well as, originally, a 675-space parking lot, at the former site of the state Department of Transportation’s maintenance facility at 109 Capitol St.

Board members voted 6 to 1 late Tuesday to approve the project, but made that approval contigent on the developer coming back to the board to discuss the exterior design of the larger of the two buildings before construction.

Board member Alison Nichols made the motion, approved by the board, attaching multiple conditions to the board’s approval including that the developer pay a traffic impact fee, and come back to the board within three months with potential alternate exterior presentations of the building which will be closest to the State House and occupied by state workers, including versions of a different color than the currently white proposal, and a version that more closely matches the nearby Cross State Office Building, for the board to consider.

Some board members, and other city officials and residents, said they believe the Capitol area deserves a better, more attractive design.

“I think we can do better,” said board member A. Delaine Nye, who cast the dissenting vote. “This needs to be worked on a great deal more before we can approve it.”

Board member Tom Connors, however, said he believes the state needs more parking than it has now, and that he, for one, likes the design of the proposal.

Board member Peter Pare said the board needs to give the developer input on what it is the city wants in the project. Otherwise, he said, it would be like expecting someone to give you a painting that you’d want to hang in your living room, without saying what you want in the painting.

Claiborne Williams, a principal at FD Stonewater, developer of the project, said it is a thoughtful balancing act the company put a great deal of time and effort into creating.

Williams said demanding add-ons and an increased “wow factor” in the project could jeopardize it. He said financing for the project is “fragile” and if they don’t act in a timely manner it could fall apart.

He said the state made a huge effort to be fiscally responsible by capping how much it will pay to lease the building at $19 per square foot.

In July, when the developer first brought the project to the Planning Board seeking a major development permit, the board voted to table the proposal and multiple board members said it was aesthetically lacking, and that such a prominent spot should have a more attractively-designed facility upon it.

In response, and after consulting with city staff, representatives of developer FD Stonewater modified the proposal, adding a small park with a short walking path, benches, trees and grass, at the corner of Capitol and Sewall streets, in a spot which originally included more parking spaces.

The new plan reduces the total number of parking spaces for the two buildings from 675 to 619, with 45 of the spots being eliminated from the corner of Capitol and Sewall streets.

A small amount of additional green space was also added between the two buildings and the use of retaining walls was decreased in the revised plan for the 10.5 acre site.

The original proposal drew written criticism which was submitted to the Planning Board, including an email from resident Cheryl Clukey, who said the facility looks like a prison and “is awful and so unattractive for such a prominent location and also part of the Capitol complex.”

Brian Kent, an urban designer from Litchfield, who has worked as a consultant for the city in the past, criticized both the original and revised proposal, and submitted what he described as a “better plan” which would put the larger building at the corner of Sewall and Capitol streets, with parking behind it where, he said, it would be better screened from view. He wrote that the project, even as revised, does not meet good urban design standards, is not pedestrian-friendly, and does not comply with the neighborhood compatibility standards of the city’s Land Use Ordinance. He said Tuesday he sympathizes with the developer because they were limited by the state to a per square foot lease cost of about $19, which limits the project, and said the Governor and state Legislature should appropriate more money for the lease to get a better building.

Williams said the company’s proposal reduces the amount of pavement compared to what is on the site now, and adds greenspace, landscaping and areas for people to walk. He said the company is very proud of the design. He said it is meant to fit in with the surrounding buildings.

“We increased landscaping and greenspace where we can,” Williams said. “We’re certainly trying to be good partners and neighbors with the adjacent neighbors.”

Mayor David Rollins said while the city appreciates the state having the project built and owned by a private developer, and thus not exempt from property taxes like it would be if built and owned by the state, the proposed design is not adequate for such a significant location.

Board members in July also expressed concern the two buildings could bring too much traffic to surrounding streets.

The developer has since provided the city with a copy of a traffic study it submitted to the state Department of Transportation to obtain a traffic movement permit.

The traffic study indicates the 521 new employees projected to use the site, compared to the number of employees there previously, would generate an average of 1,780 “trips” to and from the site on weekdays — 276 of them in the morning hour of peak traffic and 253 in the evening hour of peak traffic.

Lionel Cayer, city engineer, said the additional traffic is bound to lead to some traffic delays, noting, “when you add trips, you’re going to add delay, that’s just a fact of life.”

Cayer and Matt Nazar, development director, both recommended the developer be required to pay a traffic mitigation fee which, based on a formula the city has used in previous projects of $175 per new trip, would total $39,000.

Nazar said the money would be used to study and make changes to the city’s traffic control system which was meant to coordinate signal changes on surrounding major streets including Western Avenue and Sewall and Capitol Streets.

He said the system was put in after Augusta Crossing was built, but that it hasn’t really worked in at least a few years.

The developer plans to demolish the large old green DOT buildings and build office space it will lease to the state, which plans to move workers from other buildings in Augusta to the new offices.

State workers would occupy the larger of the two buildings, which would be built on the lower portion of the lot, closer to the State House complex.

David Heidrich Jr., communications director for the state Department of Administrative and Financial Services, said about 520 state employees would move into the new building when it is completed, which is projected to be by July 2019. He said the vast majority of employees moving there work for the Department of Health and Human Services, most of whom now work at state owned office buildings at 221 and 242 State St.

Heidrich said on Tuesday that the project represents an opportunity for the city to get a vastly improved site, is well-designed and efficient, and he encouraged the board to approve it as proposed.

Keith Edwards — 621-5647

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Twitter: @kedwardskj