State relists Laconia property for sale after $21.5M deal falls apart
Apr. 23—CONCORD — State officials are looking for another buyer for the former Laconia State School property after the firm that agreed to purchase it for $21.5 million missed its third extension to close the deal.
The state Department of Administrative Services placed the property "back on the market" early Tuesday morning.
"The property is being sold as-is in its current condition, with all faults. The majority of the structures are uninhabitable and require demolition, making this a true redevelopment opportunity in one of New Hampshire's most attractive markets," the marketing notice said.
As in the initial process, the state reserves the right to negotiate with someone who makes a favored proposal and may cancel the marketing of the property at any time, officials said.
Gov. Chris Sununu said he is confident the state can make a quick turnaround to another firm now that the deal with Legacy at Laconia LLC has fallen through.
"The opportunity to redevelop the Laconia State School property into a vibrant economic and community center is immense," Sununu said in a statement.
"The hard work has already been done to prepare the property for sale. I remain optimistic that another buyer will see the opportunity, and when they come knocking, we stand ready to move quickly."
The runner-up in the bidding for this project has said it can move forward with a proposal.
The firm, Hawthorne Development Corp., had offered the state $12.5 million for the 220-acre parcel overlooking Lake Winnisquam.
Administrative Services Commissioner Charlie Arlinghaus said the state is asking all firms to make fresh offers, including those that participated in the first round.
"The possibility of this unique property in this amazing location being back on the market has generated a remarkable amount of interest," Arlinghaus said.
"I think the next chapter of this story promises to be something good for the state and great for Laconia. I'm excited about the possibilities."
The state has reissued a full notice of offering, with no deadline to submit proposals.
Robynne Alexander, the lead agent for Legacy at Laconia LLC, faced a series of problems with other development projects, which included failing to pay property taxes on time and bankruptcy of another project.
The state Bureau of Securities Regulation said it has opened an investigation into the project's past finances.
Legacy at Laconia developers won over city officials and the state with a massive development plan that included 1,260 housing units, a hotel, conference center, retail space and other amenities.
Soon after winning the competition, the principals told the city and the Lakeshore Regional Development Planning Commission that it was paring back the scale of the project.
The Executive Council originally approved the contract by a 3-2 vote.
Gatsas was skeptical
Councilor Ted Gatsas, R-Manchester, was the project's most vocal critic, continuing to express doubt that the deal would ever close.
Sununu said he was not hopeful that Alexander and her team could secure new financing after a previous commitment letter expired weeks ago.
Laconia Mayor Andrew Hosmer said he is confident the property one day will be back on the tax rolls.
"I'm feeling disappointed that we are at this point, but what I am optimistic about is there are a number of lessons to be learned over the past couple of years," Hosmer said.
"It isn't really just about the dollar amount offered for the project. It is the developer's ability and skill set to complete the project as promised. That's what I think is so critical in this."
Hawthorne Development Corp. had proposed using the property to produce solar and geothermal power.
The partners included Harvey Construction in Bedford and Shanti Energy of Nashua.
Hosmer said the cost and availability of labor and materials could influence the next offers.
Meanwhile, the need for affordable housing in the city remains high, he said.
"The development of this property is a priority of the city," Hosmer said.
Executive Councilor Joe Kenney, R-Wakefield, said he believes the project will come to fruition.
"We knew this was a very complicated transaction, but I believe there's still a lot of interest in developing this property," Kenney said.
A law passed in 2021 gave the governor's office authority to oversee the sale of the property, which had remained underused since the state school for the developmentally impaired had closed three decades earlier.
For a time, the state built and opened a medium-security prison, but that too was closed in 2009 once a larger prison was built in the North Country city of Berlin.
