Search

Special Bd. of Aldermen — 12/20/2018 Page 19

Mr. Cummings

Well one | want to make sure the Steering Committee has a full conversation about this process and have
them make a recommendation as to how they would like to see it unfold. | would like to make sure that this
body is comfortable with that and then also the Mayor. | mean those are the 3 big stakeholders that need to
come together to make sure that they are all in agreement with how this is structured.

Attorney Bolton

| want to say | am going to be a proponent of now making this any more complicated than it has to be, so
another 2 non-profit entities with separate Board of Directors who all have a say where every nickel gets spent,
and contracts with the City and arguments over who does what is not what | am looking forward to.

Alderman Gidge

Well it will work if it works it is really good | mean so much money made by so many people we get a little of it.
Not doing much research you can see that question, is there anything like we say sign on the dotted line,
where would be an extra charge, where could we be charged more? A bank? The bought/sold, there is
something that ...

Mr. Cannon | can suggest two areas. One of the options of avoiding extra non-profits is to use existing entities
even State—wide entities can be the lender, the intermediary lender. And maybe an existing entity to be the
QALICB. | am sure if we did that, there would be a fee, if we were to bring in a State-wide non-profit to be the
lender and pool the money and just you know, is it a reasonable fee? Maybe it works; but those are the kind
of things, that’s why those boxes aren’t there because we are talking about it, we are looking for the way to do
it. There is always something, but remember you are dealing with yourself, so it’s not at the last minute the
bank is going to come in and say — you forgot the $70,000.00 fee for originating a loan. You are originating the
loan. So | don’t think there are going to be a lot of surprises here. | think by the time, | was told by the
construction manager that they will have a guaranteed maximum price with what, by mid-March or the end of
March?

Mr. Cummings

Yes by mid-March.

Mr. Cannon So! mean you will have a pretty well locked in budget by then.
President Wilshire

All set Alderman Gidge?

Alderman Gidge

Yes thank you.

Alderwoman Melizzi-Golja

Thank you. Attorney Bolton, I’m with you keep it simple. | guess my only and again my antenna went up about
non-profit being a non-profit is because | think we need to have a discussion sooner rather than later about that
endowment non-profit because | think people need to understand what the difference and that one non-profit is
just leasing the building are our lease payments are going to them and how that is flowing through. And
basically after 7 years that like goes away.

Special Bd. of Aldermen — 12/20/2018 Page 20
Mr. Cannon_ It’s up to you.

Alderwoman Melizzi-Golja

Right but | mean it could go away in 7 years?
Mr. Cannon It could.

Alderwoman Melizzi-Golja

And where the endowment is going to stay there. So | think that is the box | think there needs to be a
discussion about and | know that Chairman Lannan invited members of the Steering Committee to come this
evening; | hope they are home watching. Because | think that’s an important discussion and that we need to
get that box up there just because we are getting ready to go out and have a Capital Campaign and that
people need to understand that that money is not going into the non-profit that is Entity A. That it is maybe
Entity B. So that is my only priority and my concern coming out of this discussion. | am comfortable with the
rest of this.

Alderman O’Brien

Thank you. | would just like to say to Mr. Cummings that if your objective and your position with the City is to
look at different ways to fund projects and everything else, you hit the game on this one. | think this is
something that | can see where Alderman McCarthy was very interested in coming up with a new way to take
this type of money. But you explained a lot about it tonight and | think a lot of us, at least | do, did read your
December 11" Memo as much as | could understand it, but | did read it.

So the thing is, what would you like out of us tonight, what is the second half of the deal here? Would you like
direction from the Board to continue on forward?

Mr. Cummings

My understanding was tonight was a presentation and really just wanted to inform everyone, | want you to feel
comfortable with this. | want you to know that | am available whenever you would like to discuss this further. |
would like to have this presentation at least 2 or 3 more times with the various groups that | mentioned
previously and then ultimately the big thing is to know that there will be resolutions filed either at once or in
sequential order, multiple ones, that will need to receive the majority vote of this Board to execute on this
program. There is more to come on that but that is ultimately what we are working toward.

Alderman O’Brien

Follow up? If you so wish and | am sure other Aldermen, I'll speak for several here, when that time comes for
resolutions please come to see us, because | think the whole thing the tax payers have spoken, they would like
to see the Arts Center and this seems like a very viable funding project. It seems to be very modernized:
looking at several communities such as from up north Berlin to Keene in the west and everybody has done it
so this isn’t a new idea so | feel very comfortable with this. Thank you.

Alderman Jette

Just for clarification Mr. Cannon when Alderman Tencza asked you about what the City had to do during the 7
year period, you said pay the loans and | heard an ‘s’ there. You are talking about paying the bond?

Mr. Cannon No I’m sorry, | should say pay the rent which pays the loans.

Special Bd. of Aldermen — 12/20/2018 Page 21
Alderman Jette

The loans, but you used the ‘s’ again.

Mr. Cannon There are 2 loans, remember there is a Loan A and a Loan B? Loan B is in the amount, the
reason there is two is because Loan A is the amount of the net bond proceeds and Loan B is the amount of the
Tax Credit Equity and at the end of the 7 years, Loan B is forgiven. You still have to pay down Loan A which is
whatever the balance is on the bond at that time.

Alderman Jette

So Loan B after 7 years gets forgiven but during the 7 years we have to make payments on it?

Mr. Cannon Well the payments, no it is interest only and interest equals 0. For tax purposes and everything
else, it has got to sit there because you have to be obligated to perform before it can be forgiven. So it sits
there for 7 years.

Alderman Jette

Ok but when you say we have to pay interest only but the interest is 0, so we are not paying anything.

Mr. Cannon You are paying, usually there is a servicing fee that is paid on that loan and it represented as a
percentage of that loan. We are going to pay all of that upfront because we don’t want the rent to be different
from the bond payment. So that is all going to be capitalized, it is in the budget.

Alderman Jette

Ok so just for clarification, during the 7 year period?

Mr. Cannon Effectively zero.

Alderman Jette

Ok thank you. Director Cummings, | want to give you a chance to clarify because you said and I’m sure you
didn’t, when you said that originally we were talking about $4 million but you think $2 million would suffice, you

are not talking about the $4 million that is required to be raised prior to the bond being issued, | just want to
give you a chance to clarify that in case anyone listening hears that and thinks that is what you meant.

Mr. Cummings

Thank you, no what | was referencing explicitly was the $4 million dollars for an “endowment fund”. $4 million
dollars of private money needs to be raised period. That is understood, my point is though originally when this
was conceived, and the resolution as originally passed made is explicit that $4 million dollars for operating
costs or an endowment was necessary. At this point in time, a $4 million dollar operating reserve or
endowment would be unnecessary and | think you could have something much lower than that.

Alderman Jette

Ok but again the $4 million that has to be raised has not changed?

Special Bd. of Aldermen — 12/20/2018 Page 22

Mr. Cummings

No to be able to move this project forward and actually go to construction, $4 million dollars of private money,
cash, needs to come in to this deal. How we are getting there, in this scenario, as I’ve outlined this equity
investor, for this conversation let’s say it is GE will commit to $7.2 million which we will eventually ultimately
see $5.2 in cash. That is above the $4 million dollar threshold of private money coming in to this deal.
Alderman Jette

Thank you.

Mr. Cummings

One last comment that I’d like to make; one last comment just to make sure it is on the record, this has been
vetted by bond counsel, this has been vetted with attorneys here within the City; we are working in tandem with
everyone and everyone is comfortable with the concepts and the deal structure as outlined.

Alderwoman Melizzi-Golja

| guess just to kind of think about next steps, we just wait to hear you’ve got a commitment? | mean the work
now it is on your side and we wait to get a commitment and then things will start moving again and we will be
required to do some things. And if there is any change in this other than talking about the endowment that
we’ve been talking about that is capturing the private donations raised locally, that may be moving but that is
going to be separate from this at this point?

Mr. Cummings
That’s right.

Alderwoman Melizzi-Golja

| just wanted clarification so everyone is really clear about timelines.

Mr. Cummings

The only other additional comment I'll make is in preparation to that, | will be going out and making sure that a
PR or Public Awareness Campaign occurs a couple times, a few times to make sure everyone is well aware of
this as we move forward so it is to no surprise for everyone.

Alderwoman Melizzi-Golja

Thank you.
Alderman Dowd
Motion to Adjourn.
President Wilshire

Well first we would like to thank our consultant for being here and we appreciate all the time and the
explanation he gave.

Special Bd. of Aldermen — 12/20/2018

PUBLIC COMMENT - None
REMARKS BY THE ALDERMEN - None

ADJOURNMENT

MOTION BY ALDERMAN DOWD TO ADJOURN
MOTION CARRIED

The meeting was declared adjourned at 8:45 p.m.

Attest: Patricia D. Piecuch, City Clerk

Page 23

NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF NMTC’s

NUMBER 1

Assisted business must be a corporation or partnership that exists in a qualified
area. This is called at Qualified Area Low Income Community Business or
“QALICB”.

This means that the City of Nashua cannot be a direct beneficiary of the
program, but it can participate as a Lessee of QALICB property.

NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF NMTC’s

NUMBER 2

The amount of the tax credit is 39% of Qualified Equity Investment
(“QE!I”). So, for example:

QEI Amount: $1,000,000
Credit Amount @ 39% = $390,000

The credit can be sold to an investor in order to raise cash (equity) for
the project. Current Pricing is estimated at $.85/S1.00. Therefore:

$390,000 in credits sold at $.85 = $331,500 in equity for the project.

NUMBER 3
There are fees involved! Generally, these reduce the value of the NMTC by about 15%.

Proceeds from Sale of Credits: $331,500

Fees @ 15%: ($49,725)

NET EQUITY: $281,775
The key is LEVERAGE!

$281,775 (28%) leverages $718,225 (72%) in debt.

NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF
NMTC’s

NUMBER 4

There is a 7 year compliance period. After that, any
restrictions on the transaction go away!

NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF
NMTC’s

NUMBER 5

Community Development Entities (CDEs) are the key to NMTC
funding. CDEs are awarded credits by the US Treasury. CDE’s
must sub-allocate these credits to worthy projects that meet
program guidelines. Therefore, we must convince 1 or 2 CDEs
that the proposed project has financial strength and results in
positive community impacts.