PORTLAND — The state has signed a contract to consolidate local offices of the Department of Health and Human Services and the Department of Labor in a building to be constructed in South Portland, near the Portland International Jetport.

Capping weeks of public outcry over a recent decision to move the offices from current locations in the Bayside neighborhood, the state on Jan. 2 agreed to a 30-year lease it claims will save more than $23 million over current DHHS and DOL rents, according to a press release.

The agreement with developer ELC Management calls for the state to rent 75,000 square feet of space in the building planned on Jetport Drive, at an initial cost of $19 per square foot, or about $1.4 million annually. The rent will gradually increase over the lease term, reaching $27 per square foot, or about $2 million annually, in 2045.

The state now pays almost $29 per square foot to lease more than 50,000 square feet of office space for DHHS at 161 Marginal Way. Lease rates for more than 20,000 square feet of DOL offices at 175 and 185 Lancaster St. are more than $19 per square foot, according to documents sent with the press release.

Also included in the cost savings estimates are a lease for almost 10,000 square feet of DHHS offices at 1037 Forest Ave., which currently cost almost $15 per square foot.

Lease projections for the current sites anticipate lease rates approaching $54 per square foot in 2045 at 161 Marginal Way, more than $17 per square foot at 1037 Forest Ave., and $26.63 per square foot at the Lancaster Street offices. The projections are based on annual 2.12 increases in lease rates.

Negotiations with ELC will save the state $9.4 million over the developer’s original proposal for the consolidation projection, which would have netted savings of about $14 million over the current rents, according to H. Sawin Millett Jr., commissioner of the state’s Department of Administrative and Financial Services.

“This is a good deal for the taxpayers of Maine, and it consolidates two agencies into one, providing Mainers resources and services which are easily accessible,” Gov. Paul LePage said in a prepared statement.

Four proposals were submitted for the consolidation project. In addition to the Jetport proposal, two bids called for Portland locations, one using the current Bayside buildings and the other a site at 222 St. John St. Another bid proposed a building in South Portland’s Brickhill neighborhood.

In October, the state selected the bid by ELC, which is headed by Eric Cianchette, a financial supporter of LePage and conservative causes in Maine.

Critics say the state’s scoring process was flawed, and that any financial savings of the ELC bid are outweighed by the burden the new location places on DHHS and DOL clients, many of whom live near the current offices and do not have cars or perhaps bus fare.

In December, developer Tom Toye, who submitted the losing Bayside bid, sued the state over the contract award, claiming it and the subsequent appeal process were “arbitrarily capricious.”

Officials including state Senate President Justin Alfond, D-Portland, and Mayor Michael Brennan have also protested the state’s decision.

“This is the wrong move for Maine,” Alfond said at a press conference last month, noting that the Jetport location would require Portland residents to travel 40 minutes on a Metro bus, making 36 stops along the way.

Last week, Alfond repeated his opposition.

“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 said in a statement.

“The bottom line is that he could make other choices. Gov. LePage could choose a location that best serves the interest of Mainers and saves taxpayers money. Instead, he has dug in his heels.”

Staff writer David Harry contributed to this report. William Hall can be reached at 781-3661 ext. 106 or [email protected]. Follow him on Twitter: @hallwilliam4.

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