The Downtown Windsor Business Improvement Association is afraid the city core will lose 400 federal jobs.
Public Works and Government Services Canada is planning to issue a request for proposals for lease space somewhere other than the Paul Martin Building on Ouellette Avenue.
Larry Horwitz, chairman of the downtown BIA, said business owners are expressing their concerns to him.
He said there is a fear they could go move to the county or to a different city.
"By sending out the tendering process, there's a huge worry within the businesses downtown that the economic change that's happening in the core, with the university and the college and the students and professors and staff that are coming downtown, could be stopped and could be terribly affected," Horwitz said.
Horwitz wrote a letter to the Minister of Public Works and Government Services Canada.
He's suggesting any request for proposals stipulate that the jobs must remain in Windsor and in the core.
He said the move would be a blow to the core and could cost the city hundreds of jobs.
"They shop downtown. They are a huge part of the core. Now, all of a sudden, we have the concept of a tender going out ... the location of the jobs, the 400 jobs that are located downtown, could end up in London or the county."
Horwitz has also talked with Essex MP Jeff Watson, who said he'll look into the situation.
Mayor Eddie Francis and councillors were hoping to enter into an agreement with the federal government to lease space to the ministry in a new city hall to be built by 2017.
A spokesperson for the minister said there was never any deal and that the city can bid on the request for proposals.
Monday night council will discuss plans to move ahead with a new city hall.
"To be clear there was never a deal with the City of Windsor. In fact, the City never filed a formal proposal at all nor did it even express a formal interest in the building until December 2013 notwithstanding that it was invited to do so in March 2013," Minister Diane Finley's press secretary Marcel Poulin said in media release. "[T]he informal proposal from the City did not constitute a sound business case."
Ottawa recently announced it's going to sell the building.
Windsor West NDP MP Brian Masse said federal officials from both the federal government and the city should return to the table to figure out if there's a way to salvage the mayor's original plan.