The state has reached an agreement with Salt Lake City to build an office building in south downtown, the first major building to be built in Salt Lake City's ailing central business district since 1986.

Gov. Norm Bangerter and Salt Lake Mayor Palmer DePaulis have scheduled a press conference for next Wednesday to jointly announce that the new office for the state's Department of Economic Security will be built on Block 53, which is bordered by State, Second East, Third South and Fourth South streets.State Facilities Manager Neal Stowe confirmed that the city and the state have made final arrangements for the office complex. He would not, however, provide details of construction plans until the Wednesday press conference.

"I would prefer, really, not to comment on it with respect to the governor," he said.

But during negotiations with the Salt Lake Redevelopment Agency, Stowe said the state hoped to build a 150,000-square-foot, $11 million office building at the site, next to the state's Heber Wells Office Building.

The building could be three to seven stories high, depending upon its final design. Construction could begin this spring after the state sells $11 million to $13 million in bonds, Stowe said during negotiations with the city.

Two sites, one at 340 S. Second East and the other just west of the Heber Wells Building on Third South Street, were the subject of city-state negotiations, city Development Services Director Craig Peterson said.

Peterson said he didn't know which site would be announced as the actual location for the building.

Currently, office space for Economic Security, which administers Job Service and other programs, is scattered throughout the city. Consolidating them under one roof would increase efficiency and reduce costs, Stowe has said.

To attract the state into the city's downtown, the city will spend $2.5 million in federal grant money recovered from the settlement of the Select Telephone Technology fraud case to build a parking complex, Peterson said.

"As part of the package, we would help the state solve its parking problems by appropriating $2.5 million of (Urban Development Action Grant) repayment to go toward the construction of a parking structure on Block 53," Peterson said.

A parking facility would serve the Employment Securities and Heber Wells buildings as well as provide non-government parking space, Peterson said.

In an out-of-court settlement involving the U.S. Department of Justice and defendants in the Select Telephone Technology fraud case filed by Salt Lake City, the city was able to keep $2.5 million in Urban Development money.

Under the settlement agreement, the money must be used for economic development projects, city officials said. The project fits that criterion since it will aid downtown redevelopment efforts, city officials said.

Ground breaking on the building will mark the first major office building construction downtown since the Eagle Gate Plaza and Office Tower was opened in October 1986.

City officials envision a government-judicial complex in south downtown, a concept embraced by the Regional/Urban Design Assistance Team, a group of urban planners who studied the downtown in June.

The Employment Securities Building would complement the Heber Wells building, the nearby City-County Building and a judicial complex in the area now being discussed by the state Administrative Office of the Courts.

During negotiations, the city offered as inducements the parking structure on Block 53 or free land on Block 49 at Third South and Second West. The state also considered building the offices at its Redwood Road campus.