Laconia property sale delayed again, Sununu says clock is ticking on financing

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Mar. 13—CONCORD — The state Executive Council agreed Wednesday to another delay in the $21.5 million sale of the former Laconia State School property to a Manchester development group, but Gov. Chris Sununu said the state soon will impose a deadline for alternative financing to be secured or will seek other buyers.

Sununu said it would be irresponsible for the state to pull out at this point on a project that's been in the works for 18 months and could include up to 1,900 housing units, a convention center and hotel complex.

"If we determine there is no path forward, then we will just move on and will go on to another buyer," Sununu said. He said a financing deadline for the project will be set in the coming weeks.

Administrative Services Commissioner Charles Arlinghaus said he heard late Monday afternoon from lawyers of Legacy at Laconia LLC that the project's lender financial commitment expired at the end of February without renewal.

Arlinghaus said it's "possible but improbable" the development team can secure alternative backing before the council's next meeting on March 27.

At its last meeting, Arlinghaus had told the council the deal would close on Wednesday.

In a related development, the council voted, 4-1, to approve two leases in the event of the sale going through that would allow the Department of Safety and the Lakes Region Mutual Fire Aid Association to keep operating the state's 911 Call Center in the Dwinnell Building on the property for at least the next two years.

Attorney General John Formella stressed these contracts didn't put the state at any risk if the sale were to fall through because the state would still own the property and the leases would be null and void.

Councilor Ted Gatsas, R-Manchester, voted with the minority in the 3-2 vote of December 2022 that granted the development group the right to negotiate with the state for a purchase and sale and he opposed the leases.

"How much longer are we going to let them dance?" asked Gatsas, who joined the council's State House meeting on Wednesday by phone while he was on vacation in Aruba.

Sununu said declining these contracts could jeopardize the developer's final attempts to get alternative financing.

"If the financing (community) sees that the state is not passing this and showing the full commitment to sell, I would be fearful we would be blamed for scaring the financing away," Sununu said.

Executive Councilor Joe Kenney, R-Wakefield, who represents Laconia, praised Arlinghaus and the Lakeshore Regional Planning Development Commission for securing all the permits necessary for the sale to occur should the final financial hurdle be cleared.

"There is a tremendous amount of value that has gone to this point and we need to keep this going in a positive direction," Kenney said.

Third delay

This is the third delay in closing for this development group that has faced its share of controversies prior to becoming the lead buyer of the 220-acre, former Laconia State School property.

Sununu said rising interest rates and the inflationary market could have spelled trouble for the project as they have for other large-scale construction efforts.

As governor, Sununu made the sale of the parcel a priority despite skepticism about it at the State House.

In 2021 he signed a state law that ended 20 years of discussion but produced little action in efforts to redevelop the parcel since a federal lawsuit had led to the closure of the former school for the developmentally disabled in January 1991.

Sununu said regardless of what happens with the development deal, the state is moving forward with plans to build a new 911 center on nearby state land in Laconia.