State prepares to sell land it bought for Route 111 project: Two prime Windham properties are on the list
August 10, 2008
Eagle Tribune
The state is planning to sell 71 acres of land originally taken to build the new Route 111 in Salem and Windham.
The properties to be sold include two homes on Elizabeth Lane in Salem valued between $358,000 and $359,000, small lot corners, and even a site along Route 28 now being eyed for a new CVS store in Salem.
But whether two of the largest state-owned properties in Windham should be sold in today’s soft real estate market is something still up for debate.
Those two are 11.7 acres once owned by Delahunty Nursery, bought by the state in 2003 for $3.4 million, and 28.3 acres of a nearby golf course, purchased in 2000 for $3.7 million.
Both are lots prime for development — just off Interstate 93 and zoned for professional office space, according to town officials. Windham town assessor Rex Norman said the town’s tax revenue from the golf course site could possibly double or triple, depending on what is eventually built there.
The state typically will buy either parts or entire lots of property when expanding roadways, depending on how a new road will impact nearby landowners, according to William Oldenburg, an administrator with the state Department of Transportation.
“A lot of it is a matter of trying to be fair,” he said. “None of them asked for the project. They didn’t ask for the impact. … We’re trying to give them a fair deal … but also we realize we’re the stewards of taxpayers’ money.”
Most of the lots in Salem are much smaller, with the exception of one site along Route 28 that’s under consideration for a new CVS store, according to Salem planning director Ross Moldoff.
Not all lots are valuable
Many of the 26 surplus properties might not be very useful to anyone, with the exception of abutters wanting to expand their lots, Oldenburg said. Zoning restrictions could bar these smaller lots, which vary from 0.1 to 0.5 acres, from being developed.
It all depends on the shape, nearby infrastructure and location of the property, according to Christopher Goodnow, a commercial real estate consultant in Salem.
Windham Selectman Charlie McMahon has been pushing the state to sell the land in his town as quickly as possible.
“They own every significant parcel that is currently zoned for economic development,” said McMahon, who is also a state representative. “That’s the fact of the matter.”
McMahon said Windham needs to broaden its tax base because the town is building a new high school.
The state DOT has agreed to seek a number of market analyses from real estate experts once they’ve picked agents for the sale of the two Windham properties later this month. Price estimates for the properties may come in the next two or three months.
Depending on those analyses, a legislative committee will decide whether to move ahead. But Oldenburg, the DOT administrator, said he is sure the sale will go forward sooner rather than later.
A key factor in the decision to sell now was the calls from McMahon, asking on behalf of the town to sell the land, he said.
Oldenburg acknowledged the state has discussed whether selling the property now is a good idea, given the drop in property values because of the problems of the real estate market. He said real estate agents likely will want to sell the land promptly so they can make their commission.
Timing of sale matters to town
Ultimately, whether to sell now or hold onto the land until the market recovers rests with the state’s Long Range Capital Planning and Utilization Committee. Once that committee gives the OK to sell, the towns have the first option to buy.
“That’s why we go back to the Long Range Committee and see the offers,” Oldenburg said. “If they’re too low, we may hold onto them.”
That may not sit well with McMahon.
“We need a broader property tax base to meet our needs, and the days of not having a reasonable economic tax base, as opposed to a home tax base, are, frankly, over,” McMahon said.
But state officials and legislators said they have a responsibility to try to break even or make a profit on such valuable properties.
“I appreciate Charlie’s position, but, by the same token, we’ve spent a significant amount of money and we shouldn’t take a loss,” said Sen. Lou D’Allesandro, D-Manchester.
Profits from selling surplus land go back into the state’s Highway Fund to offset the cost of repairing roads and bridges, according to Oldenburg.
D’Allesandro, a Long Range Committee member, said the state has a fiscal responsibility to make sure it doesn’t take a loss.
No estimates have been made yet on how much the state expects to get from reselling the properties taken for the road expansion project.
But Oldenburg said it’s unlikely the state will break even. “We impacted them with a road project,” he said. “We also limited the access to them, so we’ve diminished their value. With what we’ve paid for them, we don’t anticipate getting 100 percent of our money back.”
Norman, Windham’s assessor, doesn’t wholly agree the property values have been diminished. With the Delahunty property, drivers will only be able to take a right turn into and exiting the property. An access road has been built for drivers who want to turn left from the new road, after they pass a median.
The golf course property will be inaccessible from the new Route 111. It’s less clear what impact that will have on the property value, Norman said.
When the state bought that property eight years ago, it was zoned as commercial land that allowed for a grid of retail stores or restaurants, Norman said. The state’s purchase price was based in part on what could possibly be built there.
“The state must have bought that concept because they paid what they paid for it,” he said.
Zoning change could hurt price
That zoning changed around 2003 when planning officials decided to rezone the property for professional and technology-related businesses. The change restricts the nursery and golf course sites from retail use, and lowers the property value, according to Norman.
Moldoff, Salem’s planning director, said some private landowners are savvy when it comes to maximizing their property values before it comes time to sell it to the state.
“People do things to try to increase the value of land,” Moldoff said. “We had one guy come in with a request for a subdivision. They were getting the subdivision because it improved the value of land dramatically. Interesting things happen to the land market when a highway like this is planned.”
Goodnow, the real estate consultant, said if Windham wants to maximize its tax base with that property, it may be time to reconsider their zoning change. He said the current zoning for the two properties in Windham restrict the property value.
“It’s (zoned as) professional, high-tech commercial,” he said. “You can’t do retail, you can’t do more than 65 percent as a warehouse.”
“I want to get the most tax revenue out of a post-development project in some reasonable time frame, but a reasonable time frame is three to seven years,” Goodnow said. “The state could go out now and sell it to people. … But I’m not sure the state’s goals and town’s goal jibe.”
Oldenburg said buyers generally will approach town planners about what kind of development might be allowed on the land before making an official offer to the state. Once the legislative planning committee accepts an offer, it has to be finally approved by the governor and Executive Council.
Surplus property from Route 111 project
Parcel number%original property owner%original size (in acres)%current size
108%Beautage LLC (golf course property)%28.84%28.36
111%State of N.H.%0.60%0.60
128%Gail Realty Trust (Delahunty Nursery)%12.33%11.70
134%Helen M. McPhillips%1.47%0.30
136%Nick D. Katsoulis%1.11%0.59
139%CMC Realty Trust%5.88%0.28 on left of the road, 4.24 on the right
142%Evelyn F. Morley Revocable Trust%2.40%1.36 on left of the road, 0.50 on right
152%CMC Realty Trust%11.77%.04 on the left of the road, 5.50 on right
153%CMC Realty Trust%5.51%2.8
206%CMAB Associates LLC%0.54%0.46
209%E.G.D. Realty%0.31%0.10
210%Rogers, George, Robert and Dennis%0.46%0.35
222%Shirley E. Pivovar%3.7%0.47 on the left of the road, 0.19 on the right
225%Jarosky, Joseph Jr.%9.0%3.26 on the left of the road, 0.55 on the right
237%Marjorie J. Harris%0.41%0.35
238%Frank H. Galeucia%0.38%0.19
259%Merrill Family Trust%11.20%3.43
268%Garmine and Maureen Contrada%1.06%0.53
257D%Dana and Margaret Dumont%1.19%0.68
257E%William and Janet Choquetle%1.18%0.43
257F%Kenneth R. Foster and Kimberly Ford-Foster%1.26%1.04
257G%Lance and Lynne Dampier%1.05%0.56
267A%Giles Gagnon%1.48%1.0
267B%Giles Gagnon%1.20%.55
267C%Giles Gagnon%0.53%0.21
319A%Giles Gagnon%1.38%0.52
Source: N.H. Department of Transportation