EDITOR’S NOTE: This is another in an occasional series of stories examining 50 years of Nashua business. Stories and multimedia pieces will focus on Milestones, Hidden Assets, and Economic Engines in the city’s business community.

NASHUA – Two votes by the Board of Aldermen last month to secure a city field and a conservation easement on north Nashua land called “Parcel F” may close the book – once and for all – on a rocky history of Pennichuck Corp. land development in the city.

For decades, the water company cashed in by making deals with area developers, turning raw land into real estate. Those deals yielded commercial properties that added to the tax base and high-end homes. It gave the city a new middle school and new two lane highway.

However, the development bred resentment among conservationists in the city that still flourishes.

Take, for example, the aldermanic discussions around Parcel F – perhaps the last raw, developable piece of Pennichuck-owned land in Nashua – which at times were tense and almost hostile.

“If there’s any lesson to be learned, I think it would be to make sure that negotiation of this magnitude has multiple points of view, that you make sure you include the people that really worked on this during real time,” Alderman-at-Large Barbara Pressly said, prior to the vote, in which she was the lone naysayer.

More than a year of controversy clouded the 33-acre property being developed into a senior housing complex called Hayden Green. It was sold to developer North Concord Street Properties LLC for $2.2 million in the midst of public outcries, concerned about the watershed, on Jan. 23, two days before the city acquired the water company and its subsidiaries for $152 million.

But most hard feelings about Parcel F began with the dozens of Pennichuck land sales that came decades before.

And many of the sales were hailed as good news for the city.

“The city has significantly benefited from economic development throughout Amherst Street and the Southwood Corp. property and even the residential developments have all been things that have expanded the tax base, covered the cost of growth in the city,” said Mayor Donnalee Lozeau. “The problem becomes – you wonder at what cost. I think that’s what people reflect back on.”

Today, under a new administration after the city’s purchase, Pennichuck has a new focus on conservation, CEO John Patenaude told The Telegraph earlier this year.

“We’re not here to sell land,” Patenaude said. “It’s a change in philosophy, it’s a change in the business. … We’re here to service our customers and sell water, to provide water.”

History

Pennichuck – originally Pennichuck Water – was established in 1852, and is older than the city, which was established a year later.

In the 1920s, it built up a 2,000-acre arsenal of watershed intending to protect 26 square miles around the Pennichuck Brook, and acquired land through bank foreclosure, tax sales and resident gifts.

But a 1980s study by Sasaki Associates of Watertown, Mass., determined that Pennichuck could spare all but 500 of those acres – and sell 75 percent of its land for development – without harming the local water supply.

The report was important to Pennichuck’s preparations for adhering to the federal Safe Drinking Water Acts of 1974, 1977 and 1979 that required the company to build a $7.5 million water treatment plant.

“What drove the land sales was the requirement from a federal government about adding a certain area of protection in your water supply area,” Lozeau said, “if you didn’t have a certain amount of protection, you had to build a treatment plant. If that wouldn’t have happened, they would’ve maybe felt not so compelled to raise the money.”

In light of the report, the Public Utilities Commission approved Pennichuck taking 1,500 acres out of its regulated holdings at the prices it paid for the land and transferring them to real estate arm Southwood Corp. for $34,000.

The 500 acres to be kept undeveloped were “buffer zones” around water supplies, ranging from 100 feet around Pennichuck Pond to 300 feet for most of the brook, to 500 feet for the main supply pond on the Nashua-Merrimack line.

In 1984, Pennichuck Corp. was formed, overseeing its two new subsidiaries: Pennichuck Water Works and Southwood. At the time, sitting Nashua Mayor Maurice Arel ended his seven-year term leading the city and took a job heading the reorganized water company.

“A lot of this was happening outside the city’s knowledge,” recalled Alderman-at-Large Jim Donchess, who won a special runoff election to take over as mayor when Arel left for Pennichuck. “That opened up a lot of land.”

From then on, until the early 2000s, Southwood profited from what was once identified as watershed, and in many of the deals, included itself in partnerships with the local developers, such as John Stabile.

Company officials have said Southwood was a partner to ensure watershed development was environmentally responsible.

In 1996, another Safe Drinking Water Act signaled a call to stop building, saying any undeveloped, forested, watershed land, regardless of its proximity to the Pennichuck Brook, should not be developed.

But that still allowed plenty of time for Pennichuck to make dozens of development deals in the city: among them, the Marriott Hotel paid $1.5 million for its land in Southwood Corporate Park; the state paid $1.3 million for land off Somerset Parkway for a Park and Ride facility; Corning Lasertron took a 56-acre Westwood Corporate Park lot for $5 million.

“Through the ’70s and through the ’80s to probably about 1989, there was a lot of development pressure in the city,” Donchess said.

Nashua grew rapidly, he added, and development was often controversial.

“It caused problems,” said Donchess, who served as mayor until 1991. “The school population was growing. There was a lot more people. Having nothing to do with Pennichuck, what used to be virgin land was now being developed.”

Meanwhile, residential development boomed; Southwood earned $11,500 each time a house sold in Heron Cove in Merrimack. It partnered with Stabile on four of his six residential developments on former Pennichuck land.

“The stuff that’s closest to the Pennichuck ponds is residential,” Donchess said. “That came later and kind of gradually.”

Prior to the growth marked by the 1980s, major neighborhoods such as Harris Road and Timberlane Drive in the southwest quadrant of the city, didn’t even exist yet, he added.

The development of Pennichuck land provided only a small piece of the puzzle that built out Nashua in the ’80s.

“There was so much going on,” Donchess said, highlighting debate around the regional mall – now the Pheasant Lane Mall – and Digital, as two significant economic stimulators at the time. “Certainly some of the things that they helped with was jobs, but at least at the time, there were many contributors to job growth in the Nashua area. And Pennichuck development, I’d say, was a small part of it.”

Ultimately, Southwood sold as much as 1,000 acres in Nashua and Merrimack that were deemed developable without harming the region’s drinking water.

“When I look at development, I look at Amherst Street and think a lot of that development could have taken place, but been less impactful,” Lozeau said. “Ultimately, I think the majority of it would’ve been developed anyway.”

Developments built away from the region’s water supply – such as the Marriott Hotel and Dartmouth-Hitchcock – didn’t pose problems to the city’s drinking water.

“The land off Amherst Street, there are industrial buildings there that I’m sure are responsible for helping to create jobs for decades,” Donchess said. “Southwood Park, there were jobs created there. There’s a hotel. There’s a cancer center. That is not particularly close to the ponds, and I think that was the right thing to do.”

It’s the land closer to the watershed that should have been preserved, officials say.

“You look at Amherst Street, where you can see the water right up against the roadway and you say, ‘OK, maybe that wasn’t a good idea,’ ” Lozeau said.

Over time, as Pennichuck continued to sell off land inching closer to the Pennichuck Brook, it prompted a push from city officials and residents to stop the development in order to protect Nashua’s drinking water in the 1990s.

After city legislation to support wetlands protection failed by a single aldermanic vote, a citizens group launched a petition and secured a special election referendum in 1991 that created land conservation codes to establish buffers between watershed areas and developments.

“Pennichuck was officially neutral on the issue of whether the city would enact wetlands protection,” Donchess said, “but the development community was definitely opposed to it.”

And in 1998, aldermen approved a water-supply protection ordinance to establish a special district surrounding the Pennichuck Brook watershed.

All projects near the watershed since the codes went into effect, including Hayden Green, have required specific city planning authorizations.

New direction

With fresh management and a new board of directors at its helm, Pennichuck has a new approach to land deals.

For example, this year, the board accepted a 14-acre conservation easement on Parcel F from North Concord Street Properties.

Combined with the 3-acre conservation easement that the city accepted from the development company in November, more than half of the 33-acre tract will be protected, Lozeau said.

“Now you’ve got a board in place that understands that protecting the resource and keeping it long into the future is really the reason they even exist,” said Lozeau, who began a two-year term on Pennichuck’s board when the city acquired it in January. “I don’t think you’re going to have the same idea about profit and publicly traded and having a real estate arm in the same way.”

“I think part of that is there’s just not much left anyway,” she added, referring to land still owned by Southwood.

Southwood’s remaining 408 acres are in Merrimack.

PUC approval isn’t required for Southwood land to be sold, though local and state officials regulate the buffer zones on property developments that could drain into the water supply.

“I think the pressure might not be so much from developers as it may be from the elected officials,” Lozeau said of the Merrimack land, “because the elected officials may look at some of those parcels and think economic development, tax base. I think that might be more of the conversation.”

Still, the Pennichuck board wants to conserve some of that land permanently.

“I think people today understand the lessons from yesterday,” she said.

Maryalice Gill can be reached at 594-6490 or mgill@nashua
telegraph.com. Also, follow Gill on Twitter (@Telegraph_MAG).