The provincial government will spend $250 million to give Revenue Quebec a new home in downtown Montreal.

On Monday Premier Pauline Marois announced the Voyageur bus terminal, which stopped being used as a long-haul bus station in 2011, will be torn down and replaced with a new office tower.

The complex will occupy the land on Berri St. near de Maisonneuve Blvd. adjacent to the as-yet-unfinished Ilot Voyageur further north on Berri.

Marois said it will cost $246 million to construct the new building, and it should be completed within six years.

The new 14-storey-high building will also include ground-level commercial space and warehouse storage.

Once finished Revenue Quebec will move 2,500 employees out of Complexe Desjardins and several other offices scattered around Montreal.

Marois says the new building will save taxpayers $30 million over 30 years.

"It's the right decision because now we are renting, and we will be owners of this building so we will reduce the costs," said Marois. "Even if it is a long period it is a better service for the citizens of Quebec."

Mayor Denis Coderre said he was pleased with the project, and predicted it would be "the beginning of a great relationship."

Upgrading ugly neighbourhood

The provincial government said the new construction will revitalize an area that has been economically depressed since the Ilot Voyageur fiasco that nearly bankrupted UQAM.

"Let's face it, it looks like a wart," said minister for Montreal Jean-Francois Lisée.

In 2005 the university undertook a project to build a new bus terminal that, on its upper levels, would be student housing.

The project was originally supposed to cost $300 million but costs quickly ballooned to $550 million, putting the school on the brink of bankruptcy.

The provincial government was forced to step in twice, first with a $200 million handout, and then to purchase the troubled building outright in 2010.

Earlier this year the building was sold for $45.5 million to Aquilini Construction, which said it would finish constructing housing in the half-completed tower by 2018.