The company developing a Wal-Mart Supercenter is now negotiating with Wal-Mart to purchase the existing store site on Payne Road.

KGI Properties, a partnership between Great Island Development of Boston and Koffler Group of Providence, has been in discussions with Wal-Mart for the past several months, according to Ben Devine, principal of KGI Properties. Nothing has been finalized yet.

“We’ve proceeded quite far along,” he said, adding that some logistics still need to be worked out. “It’s an asset on their books. They are a retail chain, not a real estate company.”

What will happen at the site also has not been finalized, but several redevelopment scenarios are under discussion, according to Devine. These range from using the current facility to razing it and building new.

Devine believes there is a market for additional retail space, especially given the popularity of the Maine Mall and the low vacancy rate in the area.

“The Maine Mall has been so successful,” he said. “Nationally, it is a proven area for retail.”

If an agreement were reached then KGI would take the title after the new Wal-Mart is completed, likely several months after the new facility is opened to the public, Devine said.

The redevelopment of existing Wal-Mart was a big issue for the Planning Board when it approved the Scarborough Gallery this summer. Scarborough Gallery is a development between Spring Street and I-295 slated to contain a 212,000-square-foot Wal-Mart Supercenter and a 138,000-square-foot Lowe’s this summer.

As part of the approval, the board specified that Wal-Mart must reappear in 18 months and provide an update on development of the existing store property.

The board also said it could require additional cosmetic work at the site or allow an extension if Wal-Mart is close to finding a new tenant. If Wal-Mart does not appear, then the town may levy fines against it ranging from $100 to $2,500 per day.

Work on the development, which borders Mussey Road, I-295 and Spring Street across from the existing Wal-Mart, will start this week. Devine said workers will begin by clearing the land off Mussey Road for an access road.

Site work will continue into the winter. Beginning this spring the bulk of the development will occur. Work is expected to finish in the summer or fall of 2006.

It is unclear when the construction of the Lowe’s or Wal-Mart will begin, but company representatives have said it will take between eight and 10 months to complete each building.

The Scarborough Gallery will create about 500,000 square feet of retail and restaurant space. It will cost $60 million and is expected to create 700 jobs, Devine said. It is one of the largest retail projects in the state.

The total parcel is about 80 acres. KGI will develop about half of that and the remainder will be placed in permanent conservation. In addition, KGI has purchased 58 acres of land along the Nonesuch River that will be deeded to the Scarborough Conservation Trust and will be preserved in its natural, undeveloped state.

At this point no other companies have agreed to move into the new development, but KGI is in discussions with a number of national restaurants and small retailers, Devine said. This is not unusual and typically the negotiations with smaller tenants would occur after the anchor stories have been completed. Most of these potential tenants are new to the Maine market, he said.

Included with the project is some $4 million in traffic improvements, including a road that will traverse the entire property from Mussey Road to Payne Road.

“The traffic upgrades should help ease the current traffic congestion in the area, which is good news for Scarborough residents as well as shoppers and commuters coming to the Maine Mall area from South Portland or Cape Elizabeth,” Devine said.

KGI, which owns property throughout New England and in New York, is currently working on a Wal-Mart and Lowe’s in Sanford. Great Island Development is now in the process of developing a Stop and Shop Supermarket in Kennebunk. That project is involved in litigation.

A drawing of the new Wal-Mart Supercenter.