New buyer for Laconia site offers $10.5M, would have two years to close

Michael Kettenbach, principal owner of Pillsbury Realty Development in Londonderry, will pay $10.5 million for the Laconia property under the deal announced Friday. (Alan MacRae | New Hampshire Bulletin)

This story has been updated

The state has chosen a new buyer for its 217-acre former Laconia State School property. The $10.5 million cash offer is about half what the state’s prior buyer offered but ultimately could not deliver.

But a sale is not imminent, and this deal wasn’t what an advisory committee of state and local officials recommended or Gov. Chris Sununu preferred. That’s in large part because while the offer price was higher than others the state received, the buyer would have about two years to close.

It would be another lengthy wait for the state and Laconia, which saw a prior $21.5 million offer from Robynne Alexander of Manchester fall apart in April, nearly 16 months after the state chose her over other developers.

Executive councilors, who must approve a buyer, got their first look at a new proposed purchase and sale agreement with Michael Kettenbach, principal owner of Pillsbury Realty Development in Londonderry, Thursday afternoon. At their meeting Friday morning, they tabled the proposal, with some councilors wanting more time to review it.

If councilors ultimately approve a deal with Kettenbach, he would have two years to back out if he was unable to obtain permits for his proposed development.

Under the terms of the proposed agreement, Kettenbach would pay the state $500,000 in “earnest money” deposits. If he walked away from the deal within six months, he’d get that money back. After that, the state would keep it.

Department of Administrative Services Commissioner Charlie Arlinghaus said Friday the state received five offers from four developers after reposting the property in April.

Three proposals came with lower cash offers and agreements to close within a few months. The advisory committee and governor favored those because they’d close the deal sooner and have more certainty of being paid, Arlinghaus said. He declined to say how much those developers offered.

Kettenbach was one of two developers who offered the state more money in exchange for a longer closing period and the opportunity to back out of his plans were not approved.

Following the meeting, Councilor Joe Kenney, whose district includes Laconia, said he voted to table the proposal to give Laconia city officials time to consider it, especially since it wasn’t their top choice. He said he also needs time to answer questions, which include whether the developer will preserve some of the site and take into account what kind of development the city wants.

“The reality is if we don’t match up the right developer with the city of Laconia, then this is another pointless exercise,” Kenney said. “Right now for me, I believe that is an unknown.”
In a statement, Sununu said he brought this proposal forward even though it wasn’t the advisory committee’s choice, because it had enough council support.

“There was a bid that moved the project more quickly and was supported by the City of Laconia, Councilor Joe Kenney, and recommended by the selection committee,” Sununu said. “Feedback from some of the executive councilors made it clear that it did not have the support it needed to pass. Today’s option clearly had a lot more support, so in the interest of moving the process forward as quickly as possible, I brought it forward.”

Arlinghaus declined to release the details of Kettenbach’s mixed-use development plan and Kettenbach did not return a message. He and Pillsbury Realty Development are developing 600 acres in Londonderry as a mixed-use site with housing and retail.

“Everybody’s intention is to get to a point two years from now where we close,” Arlinghaus said. “But that doesn’t mean there’s not a lot of uncertainty and permitting and all of that.”

The state would net $9.97 million after it paid the brokerage firm that oversaw the sale $525,000.

Laconia Mayor Andrew Hosmer was hopeful Friday that the deal would close and Kettenbach would use part of the property for housing. But the two-year closing and the failure of Alexander’s proposal has left him cautious.

“What are the long-range plans and does this developer have the ability to fulfill promises and secure the necessary funding to take on a project that is incredibly expensive,” Hosmer said. “We need affordable housing now. Two years from now, that’s two years we go without that housing.

The site, which sits near downtown Laconia and abuts a state park, presents several challenges.

There are nearly 30 dilapidated buildings on the property left behind by the state school, which houses people with intellectual disabilities, and the former minimum-security prison the state built on the site.

It also needs a new water and sewer system. The cost of the project and Alexander’s finances challenges proved too much for her and her team.

Her proposed development included a mix of housing, retail, and assisted living.

She had never developed something as large, and the Bulletin’s 18-month investigation revealed serious concerns about her finances. She has been sued by multiple investors, is facing her third foreclosure , and has a history of failing to pay property taxes on time.

In April, the Bulletin reported that Alexander was under investigation by the Bureau of Securities Regulation , an agency charged with protecting investors against fraud.