'Legacy' team's plan for State School would cost $700 million to develop

LACONIA — After several delays, it has made it clear to the team hoping to purchase the sprawling parcel overlooking both lakes Opechee and Winnisquam: April 22 is the date to “put up or shut up,” according to Charlie Arlinghaus, director of Administrative Services for the state.

A spokesperson for Legacy at Laconia, the name of the team pursuing this development, expressed optimism that the $21.5-million financing package would be secured by the deadline, though it was still a work-in-progress as of this writing.

City leaders, though they have previously criticized the governor’s handling of the process, said development of the largely unused property could present a major milestone in the city’s history, offering both badly needed housing in the present, as well as a economic activity that would continue to drive the city’s growth for years to come.

However, recent media reports have painted developer Robynne Alexander’s track record as worrisome, with tax liens, lawsuits, foreclosures and financial investigations all currently following in her wake.

The property

The 220 acres of land, known as the former Laconia State School, has an layered past. Once farmland, it was repurposed in the early 1900s as a place for the state to house people for whom their families couldn’t provide care. The “NH School for the Feeble Minded,” as it was originally called, first opened in 1903, and at times housed more than 1,000 people. The facility closed in 1991, and accounts from those who saw life behind its secure borders describe harsh, unsanitary and undignified conditions.

Those buildings still stand on the property, though in various states of degradation — some look as though they could be rehabilitated, while others are missing windows and have collapsed roofs.

Until the state decided to market the property, the property held a much smaller population in a “designated receiving facility” operated by the Department of Health and Human Services. This facility, now relocated, was used to securely house individuals who had been accused of serious crimes, but deemed incompetent for prosecution.

Still operating on the property is a critical part of the state’s emergency communications infrastructure, one of two 911 dispatch hubs in the state. A lease has been negotiated to allow this operation to continue onsite.

Many of the old buildings on the property are beyond salvage, said Scott Tranchemontagne, spokesperson for Legacy at Laconia. “Some are downright dangerous,” he said, but, “we will save the ones we can. ... We’re hoping to save a half-dozen or more.”

The plan

Tranchemontagne said “discussions have been positive” regarding the effort to secure funding to purchase the property — Alexander, principal of Legacy at Laconia, was the winning bidder for the right to purchase the property, as her offer was about double the next-highest bid. The transaction was supposed to close in March, the latest in several supposed closing dates, dating back to September of last year. Technical complications delayed earlier closings, but the March date was pushed off because Legacy’s lender had put an expiration date of Feb. 28 on the loan, and declined to extend the financing package into March.

Tranchemontagne said “all focus is on trying to lock down funding for the acquisition,” by the Monday, April 22 deadline set by the state.

While the $21.5 million has proven challenging to drum up, that’s only a skinny fraction of the total cost of the ambitious development project, which Tranchemontagne said is estimated to cost a total of $700 million.

If that plan is followed, it would indeed be a significant development, with a lasting impact not only on Laconia but also the region: 1,260 residential units, including a mix of workforce apartments, more luxurious abodes, and house lots. There is space intended for restaurants and retail, health care facilities, senior care facilities, a performance venue, and a four-story resort hotel, the first of its kind in the region as it would be “barrier-free” and fully accessible, including to guests with mobility challenges, Tranchemontagne said.

But such a large development wouldn’t materialize overnight.

“The important thing for your readers to understand is how these projects are built over time,” Tranchemontagne said, adding it could be nearly decade before the last element of the plan is completed.

Funding would come in waves, with the success and revenue of each phase helping to further the next one. The funding for the first wave is being sought as part of the initial loan, Tranchemontagne said. Rather than seeking just the purchase price, he said Legacy is attempting to acquire a loan or line of credit good for $40 million, which would include funding for initial construction and infrastructure work — roads, mainly — none of which would generate revenue but which would be necessary to begin the more profitable elements of the project.

“We would start with demolition, take out the dangerous, most dilapidated buildings,” he said.

The demolition and infrastructure could take 2.5 years, he said, after which the “vertical” construction could finally begin. The first areas to be built would be nearest Parade Road, including commercial and retail spaces. Once those are built, attention would move back into the property, in phases, including some of the living spaces, then the resort hotel, then the memory care facility, and so on.

“All of these components, over time, you’re probably looking at at least five years, after the couple of years of demo and infrastructure,” Tranchemontagne said. “This is a long-range development.”

Planner’s perspective

Rob Mora, director of the city planning department, said Legacy’s plan is “ambitious and has the potential to bring many benefits to the city,” especially as it proposes bringing a broad mix of uses. It will be complex, though.

“Such a large-scale project requires significant planning, engineering, analysis and review. It will also entail expanding city services, which cannot happen overnight. Projects of smaller scale often take up to a decade to complete.”

Facing the development team are some “significant” challenges, Mora said, “with issues such as drainage, traffic, infrastructure and phasing being crucial to address. Overcoming these issues is vital for the success of the project and the community.”

The project will have a leg-up in some areas, Mora added, due to some of the environmental studies that have already been done to prepare the property for sale.

The benefit of such a project would be significant and long-lasting, Mora said.

“Laconia is a beautiful city with much to offer. This project has the potential to attract more families and businesses to the area, providing opportunities that may not have been available before,” Mora said. “Whether visiting for the lakes or attending a festival or show, people tend to fall in love with the city. This project could add to that feeling and help create a brighter future for Laconia.”

Cause for concern

Such a project would also be a landmark accomplishment for Alexander, who has never built anything to this scale. In fact, her track record to this point has ample evidence to fuel doubters, such as Executive Councilor Ted Gatsas (District 4), who has long criticized Gov. Chris Sununu’s decision to award her the bid.

Recent reporting by the NH Bulletin has uncovered liens against properties in Manchester for unpaid taxes, litigation by former business partners, a pending foreclosure of a property she owns in Gilford, and, most recently, an active investigation by the state Bureau of Securities Regulation involving Alexander.

City Manager Kirk Beattie said there is a risk whenever a developer takes on such a large project. “What we do not want to have happen is for a project to start, and fall through, leaving a wonderful piece of property partially developed. Certainly, there is a concern with funding such a costly project, and with the apparent difficulty securing the needed funding to purchase the property, there is some concern for being able to fulfill the development plan.”

Beattie noted there are more people part of this development in addition to Alexander.

“The team that Legacy has built is experienced, many of whom we have worked with on other private developments, which has given us some confidence regarding the potential success of the development,” Beattie said.

He declined to comment on reports of actions against Alexander in other parts of the state, noting Laconia has policies to handle tax delinquency.

Beattie estimated Legacy’s plan, if fully completed, would generate between $8 and $10 million in new tax revenue — about 15% of the $51.3 million that was raised in taxes throughout the entire city last year.

Mayor's view

Such an increase in the city's tax base would be balanced against the increased costs to the city, said Andrew Hosmer, Laconia's mayor. "Tax revenues would increase significantly, but there would be significant increases in the budgets across the city," he said, specifically referring to additional public works and school district spending, needed to care for the new roads and additional students the project would bring.

Much more important would be the housing, specifically hundreds of units affordable to working families, included in the proposal, and that's why Hosmer said he would be "disappointed" if the deal ends up falling through.

"All of that housing that the developer has promised, we desperately need that right now," Hosmer said.

He took issue with the "haphazard" process that has brought the land transaction to this point.

Hosmer said the process started off well, with a team of experts formed in 2017 to create the Lakeshore Redevelopment Planning Commission, only to have their work short-circuited by Sununu in 2021. In that year, Sununu inserted language into legislation pegged to the state budget for 2022-23 to give himself and the Executive Council the ability to sell the property.

In Hosmer's view, that change was for the worse.

"The process that the Lakeshore Redevelopment Commission was following was systematic, pragmatic, thoughtful and insightful, and relied on a lot of experienced people who had worked on similar projects that were working on this for free," and whose work "enhanced" the value of the property, through studies of the buildings and lands, and analyses of its marketability.

"They weren't allowed to finish their work before the governor decided he wanted to take over the process. All of a sudden the priorities shifted dramatically, the Lakeshore Redevelopment Commission thought about the future of the property, not just the potential sale price," Hosmer said. "When they were sidelined, the priority flipped: Sell it for the maximum dollar amount, who cares what happens to this in the future."

Similarly, the Lakeshore Redevelopment Planning Commission had been an active partner with the city, while the state has left Laconia "on the outside looking in," Hosmer said.

"What's going on today is inextricably intertwined with the process that started 2.5 years ago," Hosmer said. "It didn't have to be that way, we were moving in the right direction."

Even so, Hosmer said "there's a lot to like" about Legacy's proposal, especially the amount and diversity of housing it would provide. Should Legacy fail to secure financing by the state's deadline, he said another developer could use Legacy's plan as a starting point.

"This could be done," Hosmer said. "We just need to find the right people."

He said, however the Legacy deal resolves, Laconia's professional staff has shone throughout the process, in being responsive, helpful and thorough partners to the developers.

"I'm particularly proud of the work our men and women did. As a great community, we're going to do that again if there's a second bidder," Hosmer said. "That's who these people are."