SCHENECTADY — The new reality of downtown rental rates is hitting home for the agency that helped build up the downtown’s real estate value.

The executive board of the Downtown Schenectady Improvement Corp. will vote this morning on whether to put the agency in debt for years to buy a permanent home. The meeting will be at 8 a.m. at the DSIC’s Jay Street office.

The Downtown Schenectady Improvement Corp. has been house-hunting this fall, despite having little money for such a big purchase. It had no real choice in the matter — the agency was taken by surprise when its new landlord, the Galesi Group, announced that every office tenant in Center City had to leave to make room for renovations.

That meant DSIC had to come up with the funds to buy or rent somewhere else — a search that was rather shocking at first. DSIC had been paying a special rent of $1 per square foot at Center City, far below market rate.

“It was a special deal negotiated long ago,” said DSIC Executive Director Jim Salengo. “Any place we move, we were getting into the real world.”

After some searching, he has recommended that the agency buy 137-143 State St., the building next to the former Northeastern New York Girl Scout Council office.

The building would cost $137,500. The sale price represents roughly $40 per square foot, 40 times the cost of DSIC’s price at Center City.

The agency will also have to take out a mortgage, incurring interest, and will make a payment in lieu of taxes agreement, Salengo said.

“We’ll pay whatever the taxes are, as a PILOT. We just want to be a good citizen to the downtown,” he said.

The cost of ownership is so high that some downtown business owners say the agency should rent property elsewhere instead. But Salengo said his recommendation is the cheapest option.

“Honestly, every other space we looked at would require so much fit-up cost. Really rough spaces,” Salengo said. “This was the most cost-effective option.”

He was handicapped by one factor: He didn’t consider buildings that might become prime retail space. He wanted to leave those, he said, for businesses.

Despite the cost, he is enthusiastic about the new building. It would be 50 percent bigger, he said, and includes an open space that could be used for large meetings.

“It would be much more efficient. It’s already set up as an office space,” he added, noting that the building has a lobby, unlike the current DSIC office, which is somewhat cramped.

“And it has a kitchen area,” Salengo said. “We have to do everything in the bathroom sink right now.”