Council approves State School sewer agreement, where city gets reimbursed by developer

LACONIA — Despite a plea from the planning board chair to postpone the vote, the city council unanimously approved an assumption agreement with Pillsbury Realty Development for the Winnipesaukee River Basin Program sewer system. The city will be reimbursed for payments from the developer.

“The City has to pay for capacity that comes from Laconia and flows into the WRBP system,” City Manager Kirk Beattie wrote in an email on Friday. “We will be assuming the capacity from the State School property (which was the State of NH). The reimbursement for the cost will come from the development, making our assumption of the capacity net neutral.”

Beattie said, at the council meeting Oct. 26, this was agreed to through a memorandum of understanding approved by council last year, but he wanted to reaffirm this with new members.

According to the meeting documents, on June 23, 2025, the city council voted 5-0 to enter into the agreement with Pillsbury Realty Development LLC. One of the items agreed upon was the assumption of rights and obligations to the WRBP sewer system at the Laconia State School property.

Pillsbury is currently negotiating a purchase-and-sales agreement with the State of New Hampshire for the property.

The memo states the property falls within the WRBP, and has an existing and dedicated sewer capacity allocation separate from that currently held by the city for other property.

Following the acquisition of the property, the memo states the parties will work together to facilitate the transfer of the property’s allocation to the city.

According to the memo, the developer will agree to contribute to costs associated with WRBP membership to the extent costs aren’t offset by user fees generated by the project. The developer will fund the cost of the connection to any sewer pump station, and install sewer infrastructure to accommodate the project’s maximum capacity at full build-out. It adds the developer would give the city the option to pay for any increase in cost to install additional infrastructure.

Beattie said the agreement was negotiated between the attorneys of all involved, including the state, Pillsbury, and the city.

“So, we’re not in a position where we’re on the hook for money that we shouldn’t be on the hook for,” Beattie said.

Beattie said if there were specific questions, he could get further, as it was brought to the council early enough. It was moot after a unanimous vote.

Ward 2 Councilor Bob Soucy asked Beattie if there was an idea of the cost the city could incur, and Beattie said, “the cost should be none.”

“We’re not paying for the build out,” Beattie said. “We’re not footing the bill for the build out. If the amount of capacity is more than what they have for property onsite that can pay those bills, Pillsbury would be the one paying for that.”

Councilor Mike Conant (Ward 6) asked if there is a compelling reason the agreement needs to be signed off before closing the sale, and Beattie said the city has been advised to get it done beforehand.

“Our attorney and the state, they would like this as part of the closing,” Beattie said. “It’s been trying to work out that way for a while. This has been going on now for quite a long time, this piece here.”

Mayor Mike Bordes said the sale is “close,” with Beattie saying it is “a couple meetings away.”

Prior to the discussion, Doreen Richards — chair of the planning board and Ward 1 resident — asked council postpone the vote, or approve it on several conditions, including getting the developer’s cost commitment in writing.

“In plain terms, this agreement makes the city responsible for the State School property’s share of the regional sewer system, the WRBP,” Richards said. “The city would take over the sewer capacity, the bills, and the infrastructure obligations, known and unknown, and release the state from future claims.”

She made clear she supports the Laconia Village concept proposed by Pillsbury for the property, but asked the council to consider several aspects before voting. Richards understands the cost prorations depend on a closing date, and she questioned who pays before a build out. She said the staff report shows no fiscal impact, but until homes and businesses connect, there will be less user fees.

She added WRBP bills are expected to rise 5% to 7% a year, and the 2025 memo states the developer covers the cost user fees don’t offset. She wanted to make sure the agreement would be enforceable in this case.

The sale of the State School property was expected to close at the end of August, but has been held up since a suspicious fire there on June 14. An environmental study is needed to move forward. Beattie confirmed in an email to The Daily Sun the fire and clean up that followed delayed the closing, and the latest information he had was the closing would happen “within the next two months.”

After the sale, Pillsbury plans to build a “mixed-use gateway” along Parade Road through phase I.

Richards questioned what condition the onsite sewer was in, noting the report after the fire has not yet been completed.

She said since the agreement only takes effect at closing, which hasn’t happened, “waiting costs you nothing.”

After a brief discussion, council voted 6-0 to approve the agreement.