Selectmen to keep existing shorefront leases, but inclined to deny new ones

The Board of Selectmen appeared to agree this week with representatives of Lake Ridge on Meredith Bay and the Grouse Point Club that their existing leases of state-owned shorefront on Lake Winnipesaukee should not be terminated. Town Manager Carol Granfield sounded the board on the issue at a Monday workshop, in anticipation of reporting to a legislative commission studying issues arising from leasing state-owned land on the shores of public waters.

The commission was established last year by House Bill 710, sponsored by Representative Alida Millham (R-Gilford) in response to mounting concern about the impacts of increasing waterfront development. Its 18 members are drawn from the Legislature, state agencies, environmental groups and general public and includes representatives of municipalities with leased shorefront and current leaseholders. Granfield, who was appointed to the commission by the New Hampshire Municipal Association to represent cities and towns with state-owned waterfront.

In 1994 the Legislature granted property owners — both individuals and associations — whose lots are separated from the shore only by railroad right-of-ways the opportunity to lease the state-owned frontage. Land may be leased for five years, with an option to renew, at a cost of $25 per linear foot per year. The leased land may not be put to a commercial use. The law took precedence over another statute requiring the state to first offer any property for sale or lease to the municipality in which it is located.

In 2006 the issue became the source of growing controversy as state agencies, environmental groups, and local officials began expressing concern at the environmental impacts of increasing shoreline development while some legislators questioned the benefit of relinquishing a public asset, especially for a fraction of its market value.

Lake Ridge leases 1,351 feet of state-owned shoreline and Grouse Point 280 feet in two separate leases. Earlier this year, when Grouse Point's leases expired, they were renewed for only one year pending the recommendations of the commission and any action by the Legislature. The leases at Grouse Point are due to expire again in July and August this year while Lake Ridge's lease runs until March 2009.

In sounding the Selectboard, Granfield said that the commission was still gathering information, but indicated that "there is some thought to grandfathering current leaseholders."

Attorney Stephan Nix, representing Lake Ridge, told the board that when the railroad lines were laid out in the middle of the 19th century, the state took property by eminent domain and transferred it to the Boston and Maine Railroad. However, he said that the state took easements, leaving ownership of the underlying property with its original owners, some of whom had rights to repossess their property if the railroad did not use it.

In the 1970s, when the Boston and Maine Railroad ceased operations, Nix said that the Legislature authorized the Public Utilities Commission to condemn its property to preserve the railroad corridors. The state appointed a guardian ad litem to represent the interests of the original owners and their successors and took the property. Nix said that the legitimacy of the proceedings was questioned, but never resolved. "It never reached the Supreme Court," he said.

Nix explained that the legislation authorizing the state to lease its shorefront to abutting landowners was enacted in 1994 to legitimize their use of the frontage, where some had constructed docks.

Chris Kelly, a realtor also representing Lake Ridge, stressed that if the lease was terminated, the properties at Lake Ridge would lose value and the town would forfeit property tax revenue. "The developer invested to provide 19 slips as part of the common area of the project, as a parking spot for their boats," he said, adding that the slips were sold to the homeowners, not retained by the developer.

Kelly recalled that the first 16 lots in the development sold within 28 hours at prices between $125,000 and $250,000 and that boat slips traded for between $60,000 and $75,000. When the next 20 lots were marketed in 2005, selling prices ranged from $218,000 to $300,000 while slips sold for $100,000.

Kelly estimated that if the lease was terminated and the amenity lost, "it is conservative to believe that the value of the homes would fall by ten-percent, which would represent a loss of almost $40,000 in revenue to the town.

Phil McGowan said that the impact of terminating the leases at Grouse Point, where there are 34 slips and a mooring field would be similar.

The Selectboard appeared persuaded to recommend that existing leaseholders be grandfathered. "We need to be careful not to take way property rights," said Bob Flanders, "or to diminish the value of property."

Chairman Frank Michel referred to statute authorizing the leases, emphasizing that it prescribes that leases may be renewed "provided that the use of the leased property has and will remain noncommercial and private, payments have been made by the lessee according to the lease, and the activity of the railroad remains at approximately the same level or lower." He said that "those who have played the game fair, bowed and curtsied and obeyed all the rules should not be penalized."

On the other hand, the board appeared equally inclined to agree with Flanders that granting future leases was "problematic," especially on Lake Waukewan, the source of the municipal water supply.

Selectman Colette Worsman, who could not attend the workshop, expressed her opposition to new leases in a statement that Michel read into the record. She said that any future leases would be contrary to safeguarding water quality, which was the Selectboard's highest priority.

Miller Lovett, Peter Brothers and Michel also expressed reservations about granting new leases.

The commission has calculated that in Meredith and Laconia there are 9,400 feet of state-owned shoreline on Lake Winnipesaukee and another 1,345 feet in Meredith and New Hampton on Lake Waukewan that could be leased. Although leases currently require a minimum of 75 feet of frontage, a change to the Comprehensive Shoreline Protection Act, effective April 1, will increase the minimum frontage for a lot to 150 feet.

The New Hampshire Department of Transportation, which manages the railroad corridors, estimates that in light of existing patterns of shorefront property ownership, there is potential for only 15 additional leases on Lake Winnipesaukee in Meredith and Laconia and for only five on Lake Waukewan in Meredith and New Hampton.

"This is worthy of another workshop," said Michel, suggesting that the board seek advice from the Conservation Commission and John Edgar, director of community development.

"The Board of Selectmen should definitely take a firm position," Flanders declared.