The nearly 20-year battle over the former federal McIntyre Building in the heart of Portsmouth’s historic downtown will enter a new, and potentially decisive, phase by the end of this month.

The federal General Services Administration has set a “soft-close” of Sept. 27 for its ongoing auction of the 107,000-square-foot building – an auction that as of publication time had attracted only one bid for $5 million, even though the value of the 2.1-acre site in the past has been estimated at $12 million to as high $25 million.

The identity of the loan bidder has not been made public.

One thing is clear: The city of Portsmouth isn’t the bidder, since the City Council voted in July to hire a Washington D.C. law firm, Holland & Knight, to help block the GSA auction and assist the city obtain the property at 80 Daniel St. for free.

City officials also have reached out to members of New Hampshire’s congressional delegation to aid in halting the McIntyre’s sale and turning the keys of the facility over to Portsmouth, as originally outlined 19 years ago under legislation pushed by then-U.S. Sen. Judd Gregg.

“First things first, we need to stop the auction,” Portsmouth Mayor Deaglan McEachern told the Registry Review in a recent interview. “We need to gain control of the property.”

McEachern said that the Sept. 27 end of the ongoing GSA auction will, one way or the other, mark a new phase in the sometimes bitter and tangled fight over who own the long vacant building– and how the site will be redeveloped.

City Hopes for Workforce Housing

If the city obtains control of the facility, McEachern said city officials want to build desperately needed “workforce housing” at the site, perhaps hundreds of units.

He said no preliminary decision has been made on other matters, including what to do with the 91-space parking lot located at the back of the building.

The city has committed itself to redeveloping the site in phases, rather than all at once as previously envisioned, he said.

“We initially tried to take too big a bite out of the apple,” the mayor said of past redevelopment plans. “That was a mistake. We now plan to do it in phases.”

But such a multiphase buildout depends on the city first gaining ownership of 80 Daniel St. – and that’s far from clear at this point.

If the GSA awards the property to the highest bidder it could unleash a number of scenarios, including lawsuits and intensified lobbying efforts in the nation’s capital.

McEachern indicated the latter option – lobbying – might be the city’s best and only course.

“It’s tough to sue the feds,” he said. “We may need the OK of Congress. What we also want to know is why the GSA at one point valued the [property] at $25 million and is now willing to possibly accept something less.”

Shaheen Pushing for Portsmouth

The city is already in a nasty legal fight with local developer Kane Co., one half of the real estate team that the city previously teamed up with to co-develop the McIntyre site.

That public-private partnership collapsed after the two sides couldn’t reach agreement on a redevelopment plan and two successive city councils and mayors were turfed out by different coalitions of voters upset over different aspects of the project. Kane subsequently sued the city earlier this year, and the city has subsequently filed a countersuit against Kane.

Both suits claim the other party has acted in bad faith.

A Kane spokesperson could not be reached for comment about the lawsuits, or whether the company has bid or plans to bid for the McIntyre Building in the ongoing GSA auction.

In statements, members of the state’s congressional delegation would only confirm they’re in contact with city officials in Portsmouth.

The statement from U.S. Sen. Jeanne Shaheen’s spokesman went a bit further, stating that the senator is “advocating on behalf of the city of Portsmouth as the GSA and the city try to reach an acceptable outcome that works for all stakeholders.”

In an email to the Registry Review, Paul Hughes, a spokesman for the GSA, said that the federal agency is “not actively negotiating with the city” on a settlement, though he said the “GSA has kept the city of Portsmouth informed throughout the public sale process.”

He added the agency intends to finish the ongoing auction on its announced soft-close date of Sept. 27.

‘You Can’t Make the Numbers Work’

David Choate, a broker and executive vice president at commercial brokerage Colliers, said the identity of the loan bidder, as of Sept. 14, was a “big mystery.”

Another mystery is why there haven’t been more bidders for such a prime piece of downtown property.

“I suspect it’s because the site is so fraught with uncertainty,” he said. “I suspect people are not bidding because they don’t want to deal with any future [controversy].”

He noted that even if the GSA awarded the building to a private developer, the new owner would still have to iron out a rezoning deal with city officials.

As for the Portsmouth mayor’s tentative plans to turn the McIntyre Building into workforce housing, he said it’s simply not a realistic option due to the high costs involved.

Removing the asbestos alone in the building could end up costing a developer millions of dollars, he said.

The city has “no clue” about how expensive it could get to convert the McIntyre into workforce housing, he said.

“You can’t make the numbers work,” he said.