Developers of 220-acre property cut number of homes by 30%

A development team that’s offered the state $21.5 million for the former Laconia State School campus says it’s on track to close in September but has reduced its proposed housing by 30 percent. (Screenshot)

Developers behind the ambitious, and at times contentious, redevelopment of the former Laconia State School say they are on track to buy the 220-acre property from the state in September — for $21.5 million.

But they’ve scaled back their plans considerably.

The Legacy by Laconia team has cut the number of new housing units by nearly 30 percent, from almost 1,800 to about 1,260, according to new numbers provided to the Bulletin. The biggest decrease is in senior living, from 590 spaces for independent and assisted living and memory care to 195, according to new estimates from Scott Tranchemontagne, a spokesperson for Legacy by Laconia.

The Bulletin learned Monday that the senior care portion of the project is no longer being led by Jonathan McCoy. The Bulletin reported in December that McCoy had lost his own senior living facility in a 2017 bankruptcy, amidst allegations he had misappropriated money. McCoy declined to comment this week about his departure from the Legacy by Laconia team.

As proposed, the Laconia development — which also includes a hotel, 200,000 square feet of retail space, pools and mini-golf — was projected to generate between $22 million and $24.4 million in property taxes annually. It is unclear how the elimination of nearly 530 housing units could affect that.

Meanwhile, Legacy by Laconia announced publicly for the first time on Friday that it intends to use a federal tax deferral program to raise $250 million of the estimated $400 million project costs. That includes the $21.5 million the team offered the state for the property, which sits near downtown Laconia and overlooks two lakes.

Laconia Mayor Andrew Hosmer said Monday that city officials are working closely with the developers and were aware they had eliminated nearly 530 units, including multifamily homes and townhouses in addition to senior apartments.

“I’d rather have it at a 1991, has made headlines since Gov. Chris scale that they can reasonably complete,” Hosmer said.

“So if they’ve scaled it back and increased the likelihood it will be taken through completion, then I can completely understand that.”

‘No indication’ of problems

The sale of the Laconia property, which housed a prison after the school closed in had no large-scale development experience, was being sued by an investor on Sununu changed state law in 2021 to give himself the authority to sell it without the traditional state oversight.

The state received four offers for the property, ranging from a request that the state donate the site for community sports fields to multiuse development proposals, each with a unique focus. The state chose the highest offer, $21.5 million, from a team led by Robynne Alexander of Manchester.

The Bulletin reported that Alexander a separate project, and had a history of tax liens.

Alarmed, Laconia city officials urged Sununu and the Executive Council to hold off accepting Alexander’s offer and pushed back when the state said they had vetted her credentials and chosen her.

The council voted 3-2 in December to allow the Department of Administrative Services to negotiate a purchase and sales agreement with Alexander. Commissioner Charlie Arlinghaus said Friday that negotiations are going well and he expects to close with Alexander in September.

“There is no indication we have any problems,” he said.

The proposed development still includes a resort and activities such as swimming, a dog park, glamping or fancy camping, and a ropes course that are accessible to people with disabilities, Tranchemontagne said. The plans also include an urgent care clinic, child care facility, fast food and gas station sites, and recreation trails open to the public.

The development team reduced the number of housing units after an updated analysis of the Lakes Region housing and tourism market, he said.

The hotel will now have 200 rooms, not 250. There are fewer townhouses, 62 instead of 350. But there are more condos, 144 instead of 108, he said. The number of workforce apartments is up too, he said, from 120 to 320. The team estimates it will take five years to complete the project.

“We looked at the market and demand for senior living in that area and some of the initial estimates were a bit high,” Tranchemontagne said. “So we adjusted those and on the other hand have vastly increased the number of workforce housing, which we think is a big benefit for the area. Every developer trying to develop housing hears, ‘We are desperately short on workforce housing.’” Just over 19 percent of Granite Staters are over 65, according to the U.S. Census, making it among the country’s 10 oldest states. Still, Tranchemontagne said the team’s analysis showed less demand than expected for new senior housing in the Laconia area.

“I would say there may be other parts of the state that need more senior housing, obviously,” he said. “Our market analysis indicates that, in this part of the state, we didn’t need as much as we estimated.”

Legacy at Laconia’s proposed $400 million development at the former Laconia State School includes housing, a hotel, pools, trails and mini-golf. (Screenshot)

Partners interested

Hosmer said he was disappointed there isn’t even more workforce housing. He recalled the team proposing 500 units at one point.

The elimination of 30 percent of the housing units was not reflected on Legacy by Laconia’s new website for investors that launched Friday. Tranchemontagne said the team is in the process of updating it.

According to the site, Legacy by Laconia is offering investors an Opportunity Zone tax break incentive that was created by the federal Tax Cuts and Job Acts of 2017. The program is intended to boost economic development in economically distressed areas by offering investors a deferral on capital gains taxes.

The Laconia property is located in one of 27 areas in the state designated as an “opportunity zone,” according to the New Hampshire Department of Business and Economic Affairs.

According to Alexander Fries, a department spokesperson, the governor nominated areas of the state for the designation and the U.S. Department of Treasury approved them.

Hosmer said he’s pleased the team has said it intends to start by rebuilding the sewer and water system and removing derelict buildings. City officials have expressed concerns the team would focus its initial efforts on building a gas station and convenience stores along the property’s road front and risk abandoning the rest of the site.

Tranchemontagne said Alexander has heard from well-known hotel groups and regional banks interested in partnering on the project. He said raising money through private investors will not only reduce the cost of borrowing money but also make the project a safer bet for banks to consider.

“The more we looked into opportunity zones, the more it became clear that it’s a viable source of funding,” he said. That gives us private equity raised. Banks want to see a certain amount of private equity and then they are more comfortable talking construction loans.”

This story was originally produced by the New Hampshire Bulletin, an independent local newsroom that allows NH Business Review and other outlets to republish its reporting.