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Special Bd. of Aldermen — 03/6/2018 Page 11

it’s like the Downtown Improvement Committee. It’s a very similar model to our Downtown Improvement
Committee and again it would be a similar type of governance process. What would come back before the
Board of Aldermen would be an amendment to the plan and that amendment would articulate how the differing
financial plan would work and what projects would be expended or spend money on. Then it would be the
committee that would have to actually execute on the project.

Alderman Dowd

Just one other follow up that just came to mind. Did we already address any environmental pollution agency
concerns about working in this area?

Director Cummings

So I’m going to defer to Director Marchant. My understanding is that was part of the plan that was developed
this summer.

Director Marchant

It certainly was. It was some of the biggest concerns that we got from the public was the invasive species and
the inability to access the river and the lack of maintenance. The city with its partner with the Cottonmill
development actually did a lot of invasive removal also with some other funding sources in the past 3 to 5
years but because of the lack of maintenance, it’s all completely grown back again. The point this time is to do
it right and to be ready to maintain it because we have a dedicated funding source. We are on a very limited
budget and we have so many resources and it’s very hard for the city to get to all of our resources. That is a
huge part of the plan and it’s a huge part of what we’ve heard from the public about what was most important
to them. As far as other contamination, or cleanup, or issues, there are no other known ones at this time and
we’ve worked with all of our property owners along the river depending on whatever they’re doing at any point
to take care of things.

Alderman O’Brien

Thank you Madam Chair. | think this is perfect for this particular area. This is a part of the city that’s a
diamond in the rough that really needs it. My personal walking many of the surrounding areas on it, I’ve seen
some of the investment we’ve put in it unfortunately some the beer cans and trash that’s on there but | think
once the people see the investment that we’re putting into it will be good. My question is on the TIF itself.
Have there — which | support don’t read between the lines but I’m saying have there been communities that
revoked the TIF and is there a procedure to that? In case something unforeseen in the city’s future is there a
failsafe to that?

Director Cummings

Yes absolutely. That’s a great question. Madam Chair and through you to the Board. 1) The body can pull
back and revoke the TIF at any time for moving forward except for funds that have been already obligated. If
you issue a bond and you have debt service, you’re going to need to maintain that until your debt service runs
out. You can with free and clear cash money if you will you can eliminate your TIF at any point in time.

To the second part of the question which is a really important one and one | have taken some time to study is
the best practice is one should invoke if you are going to adopt a TIF. The reason why you should do that is
because there can be waste. There can be abuse and not to name names but | think the Chicago if you were
to do any research has proven out that fact that without adopting some best practices you can get into some
real trouble. One best practice — you want to leverage your private sector dollars. So you want to see and
develop a certain ratio. Maybe it’s 10 to 1. For every $10 the private sector invests, maybe you do $1 of public
investment. That is just an example. By no means do you have to follow that metric but you want to leverage

Special Bd. of Aldermen — 03/6/2018 Page 12

private sector development. You also want to make sure you have a development agreement in place. You
don’t want to be doing anything on the wish, and the hope, and prayer that if you build it they will come. That is
something that can get communities into trouble. | can tell you here locally in the State of New Hampshire, the
City of Concord has done an excellent job actually of developing some best practices and some rules that they
live by. | would suggest that we would emulate those types of rules to ensure that we do things on the up and
up. The last part is making sure we have accurate and clear reporting. That would be really important to me so
everyone knows exactly how the TIF dollars are being used in the community.

Alderwoman Melizzi-Golja

First of all Director Cummings and Director Marchant thank you for this evening. | think it’s really important to
remember why April 1* is so important in terms of capturing the most we can. When | had raised my hand, it
was while Alderman Dowd was asking questions and | was just going to ask you to basically summarize what
is on the last page of the memo you gave us regarding how the TIF is administered and when and how it can
be dissolved basically for people who are listening. | think in responding to Alderman Dowd and responding to
Alderman O’Brien you have done that. | think it’s important that anyone who is watching this evening or who
listens in the next week or so understands what we’re about to do and that it will have its own advisory board
but they will be reporting back to us. As you indicated, it can be dissolved once the obligations are met. Could
we have this attached to the minutes so people can also reference this for this meeting? Thanks.

Alderman Jette

So I’m wondering | think I’ve seen the master plan is to continue the riverwalk to the east side of Main Street.
Right now the riverwalk goes on the north side of the river and by Peddler’s Daughter. | thought the plan was
to loop the riverwalk around so that it came back across the south side of the river and to the east of Main
Street all the way to where there’s a walkway right at the dam there behind the library. It seems like a glaring
omission to my eye. I’m wondering why.

Director Marchant

So that was one of the phases of the riverfront plan. The riverfront plan was broken down into four sections
and this was the third section. The focus of this portion of the TIF is to start with that piece between the Main
Street Bridge and the Broad Street Parkway to focus the funds there, to get us started, to walk not run like Tim
said, to see if we can focus on that piece and from there to potentially with success add on this area absolutely
which has a different feel. A little bit of different improvements involved here and then also to do the first
section which is closer to Mine Falls Park as well. So we were just focusing on this middle section for the initial
TIF.

Chairman Wilshire

It’s possible that we could take this all up at the committee meeting all this debate on the TIF. You can
continue Alderman Jette but | think it might be more appropriate to take all this up at the committee after the
hearing. Is that all right?

Alderman Jette

Okay. | guess I’m unclear. Are we not asking questions now?

Chairman Wilshire

We can continue with the questions | just want to put it out there that there’s a meeting after the public hearing
to discuss the whole TIF.

Special Bd. of Aldermen — 03/6/2018 Page 13
Alderman Jette

Is there anyone from the public here to speak?

Alderwoman Melizzi-Golja

If | may | guess for new members of the Board, typically a public hearing is a presentation to give information
and then we ask members of the public who may be here to speak in favor of or against very similar to what
happens at Planning Board and Zoning. Then the hearing is closed and that’s our time to go into whatever
meeting. Sometimes it’s a full Board of Aldermen meeting. Sometimes it’s another committee meeting to then
ask questions. | think that’s what Alderman Wilshire was talking about not to end questioning but to talk about
the appropriateness of what we’re doing because at some point on her script it says as for statements for those
in favor and opposed and then if there are none to close the public hearing and go into the meeting. | think it
was just the procedure she was talking about.

Alderman Jette

Since | don’t see anyone from the public here, so whether | ask the questions now or in the next phase of this,
that’s up to you | guess Madam Chair.

Chairman Wilshire

| think we’re going to continue with the public hearing and then turn this over to the Planning and Economic
Development Committee. That's what you’re having your meeting on, right?

Alderwoman Melizzi-Golja
Correct.
Chairman Wilshire

Is that okay with everyone? | think really what we’re doing is opening this up for the whole committee but we
want to move along with the public hearing. With that said, | think what I’m going to dois...

Director Cummings

Thank you Madam Chair. | just want to note for the record because we are in a public hearing and this is just
more of a housekeeping item, | would like the record to reflect that we properly notified all stakeholders as per
the RSA including the Board of Education and the County Commissioners. So | just want to make sure that
that’s on the record.

Chairman Wilshire

Very good. Thank you. What l’m going to do is I’m going to open this public hearing up to the public. Anyone
here who might want to give testimony in favor?

Special Bd. of Aldermen — 03/6/2018 Page 14

Testimony in Favor — None

Anyone want to give testimony in opposition?
Testimony in Opposition — None

Testimony in Favor — None

Testimony in Opposition — None
ADJOURNMENT

MOTION BY ALDERWOMAN MELIZZI-GOLJA TO ADJOURN
MOTION CARRIED

The meeting was declared adjourned at 8:04 p.m.

Attest: Patricia D. Piecuch, City Clerk

3/6/2018

Tax Increment Financing Presentation

Presented By:

Tim Cummins

Director of Economic Development
_ City of Nashua

Sarah Marchant
Director of Community Development
City of Nashua

What Is TIF...

+ Established In the 1970s in N.H.
* RSA 162-K Enabling Statute

+ Captures all property tax revenues generated by new development
within a TIF district to fund projects (capital/operating costs)

* Please Memo

Overview of the General Concept

How It works....

TIF Assessed Vaiue (AV) Over Project Life

Assessed Value (AV)

Hypothetical An Exaggerated Example

* “Original” or Base value = $3,000,000

* Post Project Value = $50,000,000

* Increment or “Captured Value” = $47,000,000

* Tax revenue on $3,000,000 “Original” value = $60,000 (s20 x Rate)
* Tax revenue on increment = $940,000

* $60,000 to General Fund

* $940,000 to Captured In the “TIF”

Nashua Riverfront
Tax Increment Finance District

Revoleprent Promcam & Financing Plan
esr 2018

ean vet THF Pa eh

3/6/2018

NASHUA DOWNTOWN
RIVERFRONT
DEVELOPMENT PLAN
FINAL REPORT

ioe dnonden

Camenunity Developenent Obeion

Prepared by Haleorsan Desk
Auapont 2007

Six BIG ideas for
Nashua’s Riverfront

ep oeeopea aetonres on $
fronts oct me och coaans ecb

RECREATION A GREEN SPACE

Specifically.... Nashua’s Riverfront TIF
Potential ~~ TIF Projects 2% wit hae
We will be implementing the Riverfront Plan...

Riverwalk

Greeley House
Lighting

Fountains

Boat House/dock
Plaza(s) & Courtyards
Screening of Substation
Bicycle Connections

We will need to come back before
you to amend the document to do
anything specific project

neta $ as RIVERFRONT beeen
NASHUA, NEW HAMPSHIRE =

Questions....

SPECIAL BOARD OF ALDERMEN
MARCH 6, 2018
7:00 PM Aldermanic Chamber
PRESIDENT BRIAN S. MCCARTHY CALLS ASSEMBLY TO ORDER
PRAYER OFFERED BY CITY CLERK PATRICIA D. PIECUCH
PLEDGE TO THE FLAG LED BY ALDERMAN TOM LOPEZ

ROLL CALL

PUBLIC HEARING
O-18-006

EXPANDING THE TAX INCREMENT FINANCING DEVELOPMENT DISTRICT UNDER
RSA 162-K AND NRO 295-11, ESTABLISHED BY O-03-171 AND REPLACING THE
TAX INCREMENT FINANCING DEVELOPMENT PROGRAM AND FINANCING PLAN
ADOPTED BY R-03-197 AND R-04-58

Testimony in Favor

Testimony in Opposition

Testimony in Favor

Testimony in Opposition

ADJOURNMENT

A special meeting of the Board of Aldermen was held Thursday, March 1, 2018, at 7:00 p.m. in the
City Hal Auditorium.

President Brian S. McCarthy presided; Legislative Affairs Manager Susan Lovering recorded.

Prayer was offered by Legislative Affairs Manager Susan Lovering; Alderman Patricia Klee led in the Pledge to
the Flag.

The roll call was taken with 13 members of the Board of Aldermen present; Alderman Wilshire and Alderman
Lopez were recorded absent.

Mayor James W. Donchess and Corporation Counsel Steven A. Bolton were also in attendance.
COMMUNICATIONS

From: Brian S. McCarthy
Re: Special Board of Aldermen Meeting

There being no objection, President McCarthy accepted the communication and placed it on file.
PRESENTATION

Assessment Update Presentation

Mayor Donchess

Thank you Mr. President and thank you all for coming. Before we begin let me introduce some of the people
that you’re not used to seeing. From KRT, we have Ken Rodgers, President, and Bob Tozier, Vice President.
They will be speaking to you in a few minutes. Jon Duhamel back here is the City Chief Assessor. Of course
you know John Griffin who is the CFO. These are some of the people who've been involved in analyzing the
situation that | will give you the overview. I’m going to explain the overall situation where | think we are and
then KRT will undertake to explain more of the details regarding the proposed or the required re-evaluation.

Let’s begin with the legal requirements. Steve Bolton has been involved with this — the City Attorney — over
this entire time so he can of course answer any legal questions. Under the Constitution of the State of New
Hampshire and you see the provision of the Constitution on the slide and pursuant to a Statute that backs it up
passed by the legislature, every community in New Hampshire is required to reassess all property in the city
every five years. Nashua last did a re-evaluation in 2013. So 2018 is our year. As we began to approach this,
we began to communicate with the Department of Revenue Administration which is in charge of all of the
property taxation in the State of New Hampshire, in charge of the entire assessment and evaluation process.
We wanted to communicate to them for the reasons that I’m going to explain and we began with the idea that
we would like to take some additional time beyond 2018 to complete an assessment.

| think, and correct Ken and everybody can correct me if I’m wrong if I’m incorrect at all, but in general there
are kind of three approaches that we could take. We could simply kind of do a statistical upgrade based upon
the equalization rations that we have and | will explain what those are. A very minimal just kind of up the
valuations. Number two, we could take a more middle course to engage experts and take up a very thorough
look at a statistical upgrade where individual classes of property are examined and all sales are reviewed and
a much more thorough job is done. Or number three, we could do a full measure and list which is to engage a
firm like KRT not only to kind of look at all of the sales on paper and proceed with the process that will be
described to you but physically inspect all the properties in the city. The last time we had a full measure enlist
in Nashua was in 1991 and it was implemented in 1992 under very adverse circumstances because at that
time in 1990 there had been a very serious severe real estate recession — depression really. Public service
went bankrupt. Almost all the banks in Nashua either went under or were taken over. We saw huge declines
in property values particularly in condos and in commercial values just before the re-evaluation took place.

Special Bd. of Aldermen — 02/27/2017 Page 2

In any event what we did was as a result from some of the impacts we think the re-evaluation could have, we
approached the DRA and we asked whether we could have additional time in order to do a full measure enlist
for the first time in 27 years to physically inspect all the properties in Nashua. We think still that if we want to
capture all the value we have particularly in the commercial properties that would be the best way to proceed.
However, they first | think KRT talked with them in general then we met with them and what they told us is
absolutely not. What they want is this thing to be done this year pursuant to as they call it “statutory and
constitutional duties” even if we were suggesting we would do the most thorough job possible. They’re not
willing to grant any extensions. You see on the screen in front of you and in your packet a copy of a letter that
they sent us. Now the letter is less blunt than they were in person where they basically said look we’ll sue you
next week if you tell us you’re not going to do this. They said they would go to the Board and Land and Tax
Appeal, seek an order, and then seek an order out of the Superior Court to order the city to proceed.

Based upon that, we engaged further in discussions with KRT who have a lot of expertise in this area who are
only one or two entities that can work with the software that we have in the assessment area and they can
explain the details of that. A highly professional firm that we have confidence that can do a good job. So we
began to talk to them about how we might proceed. | will go further through the slides and kind of explain to
you the issues we see and why we need to proceed in a very thorough and professional manner and why we
think it’s very important that we undertake the approach since we’re being forced to do this undertake the
approach that | am suggesting. The main problem being that residential values — and you'll see some of the
specifics — have gone up significantly in the last five years. We think on average that residential properties
have gone up at least 25 percent in value. The good news there is that many people their homes are worth
$50,000, $60,000, $70,000, $80,000, even $100,000 more than they were five years ago. The issue that’s
created for the city and for our residential property owners our homeowners is that commercial values may not
have gone up as much. In fact, some of the statistics I'll show you suggest definitely not. Therefore when
values are taken from lower levels to 100 percent, it will result in a shift of property taxes from commercial and
industrial to residential property owners.

To kind of understand the way the system works, we have there is the concept of an equalization ratio. This is
a pretty technical definition and you can see it on the screen that’s given by the DRA. What it really means is if
in a category of property let’s say single family homes, the average home is worth 125 percent — if the average
home is assessed at $100,000 but if that average home is actually worth $125,000 on average across a broad
category of single family homes, the equalization ratio is .8 or 80 percent meaning that the assessment is 80
percent on average of the actual fair market value which means if you’re at 80 percent if you go to 100 percent,
the assessments will on average go up 25 percent. Justa little more background. The equalization ratio is
intended to result in all properties being treated relatively the same in the sense that if a new house is built
today and it has a value of $250,000 and sells for $250,000, you will not be on the rolls at 250. It will be put on
the rolls at 80 percent of real value. It will be put on the rolls at 200 so that it is treated the same as pre-existing
houses which on average are an 80 percent of value.

Within the area of assessments, DRA creates many different categories of property - single family homes,
condos, multi-family dwellings of four units or less, apartment complexes, and then various categories of
commercial property — industrial property, shopping mall type property. So there are a number of different
categories. To simplify the situation and we have and make it easier to kind of get an overview, we have
categorized the properties in Nashua in two basic areas — residential meaning single-family homes, condos,
and small apartment buildings — you know a couple of units, and then commercial values which include
everything else — shopping malls, multi-family complexes, industrial buildings, strip malls, and everything else.
If you look at the next slide, it shows you the approximate value of the approximate assessed value of these
two basic categories of property as they currently exist. If you look to the left, the light blue column you will see
that right now on the books we have residential property valued at about $5.3 billion. That is at an equalization
ratio the ER of about 80 percent. In other words, on average these residential properties are assessed at
about 80 percent of real value. Again on the left of this first side, the dark blue column shows you the
commercial and industrial properties with all together have a total assessed value of about $3.2 billion for a

Special Bd. of Aldermen — 02/27/2017 Page 3

total of about $8.5 billion. There are many more categories of property within the commercial and industrial
really than there are in the residential. There are several categories of property in the residential basically but
in the commercial/industrial, there’s a much more wider variety of property. It’s all sort of grouped. Some of
these categories may be kind of different equalization ratios than others.

| should have said at the beginning that these equalization ratios are only approximate because they’re based
upon sales which have occurred in the last so-called qualified sales which have occurred in the last year.
There are many residential sales that occur. So you’ve got a significantly larger group of data points to look at.
In the commercial and industrial area especially within the subcategories, there might be a handful or even
only one sale. For example in the area of residential apartment complexes, | think I’m correct in saying there’s
only been one significant sale in the last year. That was not qualified.

Qualification is another concept that is used in determining equalization ratios. For various reasons, the DRA
suggests that sales can be disqualified between relatives, or if a government entity is involved, and there’s like
20 different reasons for disqualification. A disqualified sale doesn’t necessarily mean that it wouldn’t be
considered in determining in a process like we’re asking KRT to do. It wouldn’t necessarily be disqualified and
determined in kind of looking at the market. Atleast in the context of the equalization ratio, it is disqualified. In
terms of the commercial and industrial equalization ratio, it is disqualified. In terms of the commercial and
industrial equalization ratio, we’re dealing with a relatively small number of sales with some having been
disqualified. The actual commercial values as compared with assessments might be something different than
this. Based upon what we’re looking at, we have a 90 on average across the commercial properties, we have
about a 93 percent equalization ratio. Meaning the average commercial property based upon the qualified
sales that have taken place is assessed at about 93 percent of its actual value.

If we use those equalization ratios and now move to the right and we upgrade the two categories of properties
to 100 percent, the $5.3 billion of property in the residential sohere increases to $6.6 billion. The good news
being there’s a $1.3 billion value out there that our homeowners possess that didn’t exist five years ago. So
people’s homes are worth a lot more. If we use this 93 percent equalization ratio and take the commercial
property to 100 percent, we only come up with $3.4 billion. On the left, you can see that the residential
property is about 62 percent of the entire value of the city. This is under current assessments and the
commercial property is 37 and change almost 38 percent of the current values — the total amount of the current
values. Were these equalization ratios simply applied to the property that exists, the residential property would
go to 66 percent of total value because it’s going up more based on these equalization ratios, based on the
scant number of sales, the preliminary view, but based upon the 93 percent equalization ratio for commercial.
Residential would climb to $6.6 billion which would then be 66 percent of the total value and commercial and
industrial although it would climb in terms of total value not as much so it would go down to 34 percent. The
relative split between residential and commercial would change.

What does this mean in terms of property taxes collected? We're just giving you a hypothetical on the next
page which is 6 of 14. $200 million is roughly what we collect. We collect a little bit more than that but it is a
good round number for analysis. Currently if we’re collecting $200 million based upon the values that we have
on the books, as | said, 62.4 percent or $125 million roughly is being collected from residential property
taxpayers. Whereas on commercial and industrial, nearly 38 or about $75 million is being collected from
commercial and industrial taxpayers. From the page before, you remember that we upgraded the properties
based on the equalization ratios. On that upgrade sort to speak, residential went to 66 and commercial went to
34 percent of the entire pie. Based on those new values because residential is now 66 percent not 62 on the
same $200 million, $132 million rather than $125 million would be collected from residential and $68 million
rather than $75 million would be collected from commercial and industrial. So what does that mean? It would
mean a shift of $7 million off commercial and not residential based upon the required adjustment in
assessments that the State is imposing.

What do we need to do? We think in reviewing a number of the commercial sales that have taken place that
we may not be capturing all of the commercial values that really exist in the marketplace. We need to make