LACONIA — Imagine selling 200 acres of Lakes Region waterfront for $500,000.

That is what two members of the state's Long Range Capital Planning and Budget Committee believe would be the net gain for New Hampshire residents if the state agreed to go ahead with the sale of the former Laconia State School.

“It makes absolutely no sense to sell that property now,” said Sen. Jim Rausch, R-Derry.

He and state Rep. Gene Chandler R-Bartlett, also a committee member, have become outspoken opponents of the sale of the land, which was floated more than a year ago by members of the Senate Budget Committee and remains out there as a sale possibility.

The property was used for more than 80 years as a home for people with developmental disabilities. The state ended that practice in the 1980s, then used the site for a medium-security prison for almost a decade. Six sexual offenders are housed there now. Most of the aging brick buildings in the core of the property are not being used.

About a year ago, when the Legislature was searching for ways to raise revenue, it passed a bill to sell the tract for $10 million. The state offered Laconia the option to buy the property for that price by July 1 of this year. The city made a counteroffer of $2.16 million — in line with state and city appraisals — but that was rejected.

Under the legislation, Belknap County gets second dibs on the property at fair-market value. It has until Aug. 15 to exercise its option, and if it declines, the legislation directs the state to put out requests for proposals from the public.

Former Laconia Mayor Matt Lahey, who has been working to secure the property for the city, believes $2 million is a reasonable price and would be a good deal for the state.

In addition to aging buildings, the site could contain asbestos, lead paint and other hazardous materials. Cleanup costs have yet to be determined.

He said the state would be ineligible for federal Brownfields cleanup aid because it was the original polluter, but the city could apply for that money.

The Belknap County commissioners are expected to meet Wednesday to discuss whether they are interested in acquiring the land, but it's Lahey's understanding they are going to take a pass, seeing no immediate use for the tract.

City Manager Scott Myers added that the county has said it supports Laconia getting the tract.

When the cost of relocating the six sexual offenders is considered, Rausch said, little would be left for state coffers. Relocation is expected to cost about $1.5 million, he said.

“I just believe we haven't considered the long-term considerations for future generations of the state if we sell,” Rausch said. “And particularly now in the absolute worst real estate market.”

Chandler is also not ready to part with the parcel. “It's just too valuable a piece of land,” he said.

The city would not have any immediate plans for the property, Myers said, but residents attending hearings on the idea and city councilors have voted that it would be in the city's best interests to gain control over the property.

Lahey said he is still hopeful about a deal with the city. He said no developer would “touch it with a 10-foot pole,” given the potential for hazardous waste cleanup.

Chandler said if the state could get $10 million for the land, that might be a different story. But he said short of that, it's not a good deal.

“Somewhere down the road, the state will need a big parcel of land. For the money we are talking, it makes no sense,” Chandler said.

ptracy@unionleader.com