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PURPOSE: Amending the Administrative Officer ordinance

ENDORSERS: Mayor Jim Donchess
COMMITTEE
ASSIGNMENT:
FISCAL NOTE: None.
ANALYSIS

This legislation updates and amends the City’s ordinance in the Land Use chapter relative to the
Administrative Officer.

Approved as to form: Office of Corporation Counsel

By:

Date:

A special meeting of the Board of Aldermen was held Tuesday, November 24, 2020, at 6:05 p.m. via
teleconference.

President Lori Wilshire presided; City Clerk Susan K. Lovering recorded.

Prayer was offered by City Clerk Susan K. Lovering; Alderman David C. Tencza led in the Pledge to the
Flag.

President Wilshire

As President of the Board of Aldermen, | find that due to the State of Emergency declared by the
Governor as a result of the COVID-19 pandemic and in accordance with the Governor's Emergency
Order #12 pursuant to Executive Order 2020-04, this public body is authorized to meet electronically.

Please note that there is no physical location to observe and listen contemporaneously to this meeting,
which was authorized pursuant to the Governors Emergency Order. However, in accordance with the
Emergency Order, | am confirming that we are:

Providing public access to the meeting by telephone, with additional access possibilities by video or
other electronic means:

To access Zoom, please refer to the agenda or the City’s website for the meeting link.

To join by phone dial: 1-929-205-6099 Meeting ID: 87407660212 Passcode: 672586

The public may also view the meeting via Channel 16.

We previously gave notice to the public of the necessary information for accessing the meeting, through
public postings. Instructions have also been provided on the City of Nashua’s website at www.nashuanh.gov
and publicly noticed at City Hall and the Nashua Public Library.

If anybody has a problem accessing the meeting via phone or Channel 16, please call 603-821-2049 and
they will help you connect.

In the event the public is unable to access the meeting via the methods mentioned above, the meeting will
be adjourned and rescheduled. Please note that all votes that are taken during this meeting shall be done
by roll call vote.

Let’s start the meeting by taking a roll call attendance. VWhen each member states their presence, please
also state whether there is anyone in the room with you during this meeting, which is required under the
Right-To-Know Law.

City Clerk Lovering called the roll and asked them to state the reason he or she could not attend, confirmed
that they could hear the proceedings, and stated who was present with him or her.

The roll call was taken with 15 members of the Board of Aldermen present: Alderman Michael B. O’Brien,
Sr., Alderman Patricia Klee, Alderman Richard A. Dowd, Alderman June M. Caron, Alderman Benjamin
Clemons, Alderman, Alderman David C. Tencza, Alderwoman Elizabeth Lu, Alderman Ermest Jette,
Alderman Jan Schmidt, Alderman Brandon Michael Laws, Alderman Skip Cleaver, Alderman Linda Harriott-
Gathright, Alderman Wilshire. Alderwoman Shoshanna Kelly and Alderman Lopez arrived after roll call.

Special Board of Aldermen 11-24-2020 Page 2

Mayor James W. Donchess, Corporation Counsel Steven A. Bolton, Celia Leonard, Deputy Corporation
Counsel and Tim Cummings, Economic Development Director were also in attendance.

ROLL CALL

Alderman O’Brien

| am present, | can hear the proceedings and | am alone.
Alderman Klee

| am here, | can the proceedings, | am alone.
Alderman Dowd

Yes, | am present, | can hear everyone and | am alone.
Alderman Caron

Yes, | am here, | am alone and | can hear everyone.
Alderman Clemons

| am present, | can hear everyone and | am by myself.
Alderman Tencza

| am present, | am alone and | can hear everyone.
Alderwoman Lu

| am here, | am alone and | can hear you.

Alderman Jette

| am here, | am alone and | can hear the proceedings.
Alderman Schmidt

| am present and | am alone in the room.

Alderman Laws

| am here, | can hear you and nobody is here but my fiancé.
Alderman Cleaver

| am here, | am alone and | can hear the proceedings.
Alderman Harriott-Gathright

| am present, | can hear everyone and | am in the room alone.

Special Board of Aldermen 11-24-2020 Page 3
President Wilshire
| am here, | can hear everyone and | am alone.

Susan Lovering, City Clerk

You have 13 in attendance.

President Wilshire

Thank you. Also in attendance is Mayor Donchess and Corporation Counsel Steve Bolton.

COMMUNICATIONS - None

R-20-094

Endorsers: Mayor Jim Donchess

Alderman-at-Large Lori Wilshire
Alderman Richard A. Dowd
Alderman Linda Harriott-Gathright
Alderman Skip Cleaver
Alderman-at-Large Michael B. O’Brien, Sr.
Alderman Thomas Lopez
Alderman Patricia Klee
Alderman-at-Large Ben Clemons
Alderwoman-at-Large Shoshanna Kelly

OMNIBUS RESOLUTION REGARDING NEW MARKETS TAX CREDIT TRANSACTION FOR
THE PERFORMING ARTS CENTER

MOTION BY ALDERMAN O’BRIEN TO RECOMMEND FINAL PASSAGE BY ROLL CALL
ON THE QUESTION

President Wilshire

Alderman Lu?

Alderman Lu

Yes, I'd like to suggest that we have some presentation on this?

President Wilshire

Sure, we have Director Cummings here, Director Cummings, would you care to address this?

Tim Cummings, Director of Economic Development

Yes, thank you, Madam Chair. So, for the record, Tim Cummings, Director of Economic Development. | am
going to share my screen now if that’s alright with the body. What you see before you is a Memo | put
together this afternoon which basically is more of an orientation than anything else. The substance of the
material has already been provided to you, so this really is just to help organize my thoughts. With that
being said, Madam President, thank you for making time this evening for a Special Board of Aldermen
meeting. | know you guys have been having a lot of these meetings; time is of the issue and you'll hear
about that in a few moments.

Special Board of Aldermen 11-24-2020 Page 4

Technology-wise this evening, just to set the stage, | am going to be sharing my screen for the most part
this evening. At one point | am going to stop sharing my screen; Niel Cannon is going to share his screen
when he speaks and then he’ll be handing it back over to me. | say that to everyone so logistically you can
just become acclimated to that. When we are done speaking, I'll bring down my shared screen as quickly
as possible so we can have the full context of everyone for participation purposes. So, with that being said,
Madam President, | am sharing my screen here and | am just going to quickly read this to you. Again, an
overview: A New Market Tax Credit is a Federal Financial Program that aims to stimulate business and
real estate investment in low income communities through a Federal Tax Credit. The program is
administered by the US Treasury Departments, Community Development Financial Institutions Fund known
as CFI and allocated by and through Community Development Entities known as CEE’s.

Early on we anticipated using the New Market Tax Credit as a tool for the benefit of the Performing Arts
Center Project. In 2018 and 2020 a Comprehensive Tax New Market Credit 101 type briefings were
provided by our Development and Finance Consultant, Niel Cannon who is on this call with us this evening.
During the briefings, Niel explained in detail how the program works. R-20-094 which is the subject of
tonight’s conversation is an omnibus piece of Legislation that provides multiple authorizations necessary for
the City to proceed with the New Market Tax Credit. The structure before you is pretty simple, pretty
standard deal structure; ultimately, however, every New Market Tax Credit transaction is unique and may
require certain nuances tweaks. A New Market Transaction is like a multiple dial lock, that you need to
align the dials to unleash its potential.

The following describes how we are aligning the dials to make the program work for us as we are a
Municipal Corporation. And why are we doing this? As you all know, there is a $4 million-dollar
requirement for non-Nashua tax dollars to be contributed to the project in order for it to proceed. The New
Market Tax Credits afford us this opportunity to proceed now, because the New Market Tax Credit
Transaction will net to us $2.446 million coupled with local philanthropic donations of $1.553 million. We
achieved the $4 million-dollar requirement that needs to be satisfied. Needless to say, we had a unique
condition placed upon us and it calls for a unique solution. The chart beside you outlines the sources and
the amounts that achieves that $4 million dollars that | referenced.

Unique constraints, speaking of unique solutions, we also have some unique constraints when dealing with
the New Market Tax Credit. One of these constraints is time. From the very beginning we outlined that time
is going to be of the essence which does not lend itself toward our unique Government structure. We
would need to adapt this to this condition and this omnibus does just that. If you recall, we outlined that
once a CDE decides to make a Quality Equity Investment, known as a QEI, we would need to move
expeditiously. A second issue is the evolving nature of the deal structure, which means that as we look to
align the dials, new issues and details arise which must be addressed. The varied documents are typically
evolving all the way up until closing and this body is accustomed to seeing set deals with a handful of
documents. The omnibus addresses a dynamic and multi-part deal structure of the New Market Tax Credit
transaction by employing a typical tool that other municipalities use which is to seek approval to allow for
the overall effectuation of the deal and empowers the professional staff in administration to execute based
upon details and overall concepts.

So, my request this evening is two-fold. Tonight, | ask for favorable consideration and our recommendation
in order to proceed with the New Market Tax Credit Transaction with a favorable approval of the omnibus
addition to that, | am requesting a verbal report at your regularly scheduled Board of Aldermen Meeting just
following this meeting for final passage of R-20-094. With that being said, Madam President and through
you to the body, this evening, we have put together a small presentation that | would like to go through; and
the team that has been working on this so Celia Leonard and me, we’ve been working hand in hand on this,
Attorney John Kaminski who is with us this evening, is our outside New Market Tax Credit Counsel. And
then Neil Cannon, our Development and Finance Professional along with Andy Prolman our local Real
Estate Attorney is here with us this evening. Each one of those individual members will speak this evening
on the various parts of the deal that they are involved with.

Special Board of Aldermen 11-24-2020 Page 5

We have been working on this avenue of the financing plan for well over 3 years and as of recently we
have been working on this twice a week on closing coordination calls, in order to meet our deadline of
December 15™ which is why | am asking for this special consideration. So, tonight’s Agenda, we are going
to start will Niel Cannon, he’s going to go through the flow of funds which have already been provided to
you, but | am going to stop sharing my screen; | am going to ask Niel to share his. After Niel speaks, then
John Kaminski and Celia Leonard are going to present exactly how we are going to execute the deal and |
believe John Kaminski will be leading off that conversation and handing it off to Celia. | will begin sharing
my screen again at that point and then rounding things out with have Andy Prolman who will talk about the
Real Estate matters relative to this transaction. So, if | may, Madam President, | am going to stop sharing
my screen and ask Niel Cannon to pull up his so we can actually get into the details of how the transaction
will commence.

President Wilshire

Thank you, Director Cummings.

Director Cummings

Thank you.

President Wilshire

Mr. Cannon?

Niel Cannon

Thank you. | think it’s up now, can everybody see it?

President Wilshire

Yes.

Mr. Cannon

What | do is | take my Zoom screen and move it down to the lower right-hand corner so we can see this
whole thing. So, thank you for the opportunity to present tonight and I'll be short and as quick as possible.
Before | start, | just want to say that it’s been a real pleasure working with your municipal staff. | have been
working with Tim for close to 3 years on this. Over the last year or so, a lot with Celia and, of course, with
your finance staff. | want to say if it wasn’t for their confidence and their patience in dealing with these rules
as well as in dealing with me, it wouldn’t be going so smoothly. So, with that said, I’d like to start by asking
you to focus on this top box which | just lost — | don’t know what happened with it. | am going to try to bring
it up again.

Alderwoman Kelly

Alderman Wilshire, while we are waiting | just wanted to say that I’m here.

President Wilshire

Thank you, Alderman Kelly.

Alderwoman Lu

Excuse me, Alderman Wilshire?

Special Board of Aldermen 11-24-2020 Page 6
President Wilshire

Yes?

Alderwoman Lu

| just wanted to ask is this the sheet of paper that we all received today? Perhaps we are all looking at it?
President Wilshire

I’m not sure everyone has one.

Alderwoman Lu

Ok.

Mr. Cannon

Ok we are back, I’m sorry. Can we all see it?

President Wilshire

Mr. Cannon

Mr. Cannon

| apologize for that. So, I’d like you to look at the top box here, which basically shows the sources of funds
as well as the uses. And very simply, there’s 3 sources; there’s your $21 million-dollar bond; there’s the
$2.446 million-dollar New Market Tax Credit Equity, which is what this is all about. And there’s a donation
of $1.5 million dollars and change from the Nashua Community Arts. That totals $25 million. The uses are
without getting into the detail, is a total development budget for the building itself including acquisition of the
land of $22,550,000.00 and for furnishing and fixtures, this is special equipment audio/visual, stage lighting,
etc., of $2.45 which brings you to your total. So, given that | want to talk a little bit about how this works in
terms of this project. As you all know, because we’ve talked about it before, as many of you know, the New
Market Tax Credit Program is an incentive for communities or individuals to invest in distressed
communities. And a distressed community is a census track which meets certain criteria. The Census
Tract in Downtown Nashua that this project is located in is the most distressed census tract in the State.
So, it is eligible.

The amount of the Tax Credit available to investor is 39% of the qualified equity investment. Now the
Qualified Equity Investment which you see here is $9.75 million. We tried, Tim and |, for more than a year
to make like that $15 million, so that the number, you know, we were talking about $5 or $6 million dollars
and add up see equity. But unfortunately, we couldn’t get an allocation any greater than this. It’s for
several reasons, number one) Mascoma which is the only CDE that serves New Hampshire exclusively did
not have an allocation from US Treasury. Number two) the market for these things is very competitive and
when you go outside of New Hampshire asking for a CDE to make an allocation to do a project inside New
Hampshire, the first they do is they look at New Hampshire’s statistics and say, “you are too well off, you
have a median family income way about the national average, so we are not going to spend money there”.
Well, that’s too bad. They are very macro oriented rather than micro oriented.

So anyway, if you take that number of $9,750,000.00, the Tax Credit 39% of that or $3.8 million dollars
which is this number right here. So, for an investor to get that credit, he has to buy it from us because we
don’t want it. We want to raise cash. So, we effectively are selling him that credit, the $3,802,500.00 for
$.76 cents on the dollar, which is another number that’s gone way, way down because of the Tax Act of
2017, COVID and other issues. But we did well.

Special Board of Aldermen 11-24-2020 Page 7

The nationwide average right now is $.70 cents, we’ve got $.76. So, we are going to take it and run. So, if
you multiply the $.76 cents times 3.8 you get the $2,889,900,00. That’s cash in at the top of the deal from
the equity investor before we start taking fees out. So, if we look at this number down here, again the
$9,750,00.00, | want to focus at what’s in the shade are first, because that’s the New Market Deal. If we
look at the $9,750,000, b which is what we have been allocated, we have to raise to get $9,750,000.00
down here, which is here, we have to raise $9,998, 750.00 because we got fees to pay for $248,000. So,
the difference between this, this less this equals this over here, the $7 million. So, between a loan from
201 Main Street Financing Corp. which is most cases is a bank but this case because it is municipal
finance, it’s an entity that has been created under 152-G and you guys created it. That loan which is the
portion of your bond goes into the investment fund box. In addition, the $2,889,000.00 goes into that box
and $248,000.00 which is about 2.5% in fees, are taken out. Then they make the Qualified Equity
Investment which is the whole key to this New Market jargon and qualifies us for the deal.

Their investment into a subsidiary of Mascoma Community Development established solely for the
purposes of this deal. Mascoma Community Development is the managing partner of 14, or 15, or 16 or 17
of these sub CDE’s, we call sub-CDE’s. Again, there’s another fee paid to them so the $975 is reduced to
this and they make a loan to, in this case, Impact Corp. which is, go all the way down here. Impact Corp is
an entity that is an affiliate entity of 201 Main Street, which is another 162-G with a separate governance
than the 162-G created up here. So, we now have $9.555 million dollars in Impact Corp. in the form of
loans. Well that’s not going to cover the whole deal is it? That’ not enough, but it’s how we got

$2,446, 150.00 into it, that’s the important thing. How do we finance the balance of the deal, the stuff that’s
outside the gray area? That’s not a good term, “gray area” | should use a different color.

But the way we finance the balance and | think this is the stuff that Celia and John are going to get into
because it involves transactions that you have to authorize. Well, number one) we are going to take $13
million dollars, the balance of the bond, the $21 million dollars less the $7, I’m sorry this number here is
wrong, this is the right number, | don’t know how that happened. $13,891,000.00 which is this plus this
equals $21 million. We are going to take that and we are going to make a grant to 201 Main Street
Corporation, which is the non-profit 162-G entity that you created. At the same time, Nashua Community
Arts is going to donate $1.5 million dollars into 201 Main Street Real Estate Corp. So now, 201 Main Street
is going to have $15,445,000.00 in the bank for a couple of seconds at least. What are they going to do
with it? Number one) they are going to make a capital contribution of $12,995,000.00 the QALICB
Borrower, which is Impact Corp. which owns the building.

So now between this contribution of $12,995 and the $9,555 we have the total, we go up here, total
$22,550 that’s needed to build the building and acquire the land. After 201 Main Street makes that capital
contribution it’s going to have $2,450,000.00 left over. Going back up again, that’s the cost of the
equipment, you see it here, $2,450,000.00. So, Impact, | should say more than just equipment, FF&E,
specialty stuff mostly including seating, by the way, including this portable seating, that 201 Main Street will
purchase and lease to the City of Nashua which is the Master Tenant. And in conjunction with that, which
is sort of outside the deal, the City signs an Operator Agreement with Spectacle Management and has a
Trustee established to oversee the programming and the deals of this agreement.

| think that covers it. Tim, do you want me to take questions now or do | just let you go?

Director Cummings

Thank you, Neil, Madam President if | may, | would suggest that we hold questions until the end. What I’d
like to do is ask Niel to turn off the sharing of his screen so | can share my screen, if | could, Madam
President.

President Wilshire

Sure.

Special Board of Aldermen 11-24-2020 Page 8

Director Cummings

Thank you. So now I’d like to pivot and ask John Kaminski who is our New Market Tax Credit Counsel to
start the legal overview. And | am now sharing my screen, hopefully everyone can see it. | am going to
pull up a similar type diagram that was just shown but it’s going to have a little nuance to it to make sure we
are very clear on the legal aspects of this transaction. John?

John Kaminski, Attorney

Madam President, Members of the Board of Aldermen, it is my pleasure to be here with you this evening.
You may remember | was with you some time ago when we first were discussing this transaction, you
approved the creation of the two corporations. | do a fair amount of New Market Tax Credit transactional
work and am happy to be working with the City and the City team in putting together this transaction. And |
imagine by now you are asking yourself, “Why the devil is this so complicated”. And | think the answer is
that we are taking a program that the Federal Government created for the purpose of providing subsidies
and providing incentives to businesses to be located in distressed communities and we are adapting it and
using it to help serve municipal purposes so we need to create a business entity and create a business in
order to take advantage of this program.

| have to say that this transaction is not totally unique, I’ve worked on other transactions, representing other
municipal entities to utilize the credit. And the transaction you see is a typical New Market Tax Credit
structure that has evolved as people have used the law since the New Market Tax Credits were enacted by
the Federal Government back in 2001. So, this is a fairly standard transaction. | think one way to think
about this transaction is that it takes place in three phases. The first Phase is the Acquisition and
Financing Phase that Niel talked about and we are going to talk about more this evening. The second
Phase is the Operational Period of 7 years after we close in December on the New Markets Tax Credit
transaction there will be a 7-year period through December of 2027 in which we will need to be in
compliance with all the Federal requirements for the New Market Tax Credit Transactions. And then the
third Phase is what happens after the 7-year period.

| want to spend some time which you this evening talking about each of these three Phases because | think
it's important as you consider the Omnibus Resolution before you and potentially approving this program.
The Acquisition and Financing phase as Niel has gone over for you this evening, involves the various loans
and other transactions between the City’s entities, 201 Main Street Financing, Impact, and 201 Main Street
Real Estate. All of these three entities are affiliates of the City. We had to create Impact Corp. which is a
New Hampshire Business Corporation to serve as the location for the business that’s going to be financed
with the New Market Tax Credit money. Impact Corp.’s business is leasing property. It is in the business
of developing the site at 201 Main Street and leasing it to the City. So, the facility will be constructed and
equipped under the plans that the City has evolved over the last several years.

The City will then have a 25-year lease of the facility and will have a 5-year renewal option on the facility.
The purpose for this lease is to demonstrate that the Impact Corp. has an ongoing business. We can’t
simply have a business that lasts for 7 years and qualify for the New Market Tax Credits, we have to have a
business that is a long-term operational potential in front of it. So, we demonstrate that Impact Corp. has a
business going on and that enables us to qualify for the New Market Tax Credits. The investors, Mascoma
in this case, in New Markets Tax Credit transactions, have some requirements that they be assured that
they are going to get the credits and that everything is going to operate appropriately over the 7-year period
of time and that they will not incur any unanticipated environmental problems. All of these things are baked
into the program for Impact Corp. but the investors require that the City as the sponsor of this transaction,
guarantee the obligations of Impact Corp. to operate appropriately over the 7-year period of time and
guarantee construction completion and that there will be no unanticipated environmental liabilities. And you
will see that in one of our Omnibus Resolutions.

Special Board of Aldermen 11-24-2020 Page 9

The acquisition in financing is done through a complex set of documents that are designed to meet New
Market Tax Credit requirements, investor requirements and to achieve the ability of tax counsel, myself
included and Mascoma’s National Counsel included to give a tax opinion to Mascoma that the transaction
qualifies for the New Market Tax Credit. So that’s Phase One, that’s the acquisition and financing Phase.

Second is the Operational Phase during 7 years after the closing of the financing. During this period of
time, the project needs to continue to be operated, continue to be an active business. Spectacle
Management is going to be managing the project during that period of time. You don’t see the funds flow
during that period of time on this chart, but what’s going to happen is that the City is going to pay rent to
Impact Corp. under its lease and (audio cuts out) lease are going to find their way back to the City in the
form of repayment of debt because the City has made this $7 million dollar loan and also find their way
back to the City because any rental funds that are paid to Impact Corp. in excess of what Impact Corp has
for debt service and costs, will be distributed back up to the City through 201 Main Street Real Estate.

During the Operational Phase there will also be some reporting obligations, the Impact is going to need to
file reports with Mascoma so that Mascoma can demonstrate to the Federal Government that everything is
being done appropriately. There are some community benefits obligations as well, that the project be
providing benefits to the community through the existence of the Performing Arts Center and attendance at
events and things of that nature. That’s the second phase.

The third Phase is what happens at the end of the 7-year New Markets Tax Credit compliance period. After
7 years, there is no longer a requirement to continue to comply with the requirements of the New Markets
Program. Unfortunately, the IRS does not allow us to simply today enter into a binding contract, it says
after 7 years we erase the slate completely clean and undo all of this, were that life were so simple.

Instead what has evolved is a system where Mascoma has a document that is called a Put Option.
Mascoma can Put its interest in the Impact Investment fund the yellow box at the top, Mascoma being the
equity investor shown to the right there. Mascoma has the ability to put its interest in the investment fund to
201 Main Street Financing Corp. the City’s affiliate for $1,000.00. At that point, if Mascoma chooses to Put
201 Main Street pays Mascoma $1,000.00 and Mascoma is out of the deal completely. Notice | use the
word, if Mascoma chooses to put, because they are the ones that have the option at that point in time.

What has happened over time in the industry, is that equity investors almost always want to get out of
transactions at that point, they have received all their bargained for benefits, there’s nothing left for them in
the transaction, other than have to continue to report this on their tax return and their financial statements
and it becomes an administrative burden to them. So basically investors, the expectation is, although there
can’t be an assurance of it, that they will Put after the end of the 7 years. And you might say, well what
happens if they don’t? Suppose that Mascoma doesn’t Put. Well if they don’t Put, then 201 Finance
Corporation has what’s called a Call Option. 201 Real Estate Finance Corporation can elect to purchase
Mascoma?’s interest in the investment fund at the fair market value of that interest at that point in time. Fair
market value at that point in time is going to be very small because they’ve already gotten all the economic
benefits out of the transaction. So, one way or the other, there is the ability to at least wipe the Mascoma
part of this screen clear and have every entity that remains be the City or a City affiliate. And after the
interest and investment fund is acquired, the City can, at that point in time, opt to retain some or all of the
aspects of this structure or simplify it. That will be dictated at that point in time, 7 years out by tax,
business, and other considerations that the City can evaluate after the end of 7 years but at that point in
time, everything will be back in the control of the City.

So that’s sort of an overview of the transaction, an overview of the three Phases and an overview of the
documentation that will be signed in this transaction which is very typical of New Markets deals as they are
done nationally. And at this point, | think | am going to turn it over to Celia Leonard, who will go over the
Omnibus Resolution and link the approvals that you are being asked to give tonight to the provisions of the
transaction. And certainly, | too, am available to answer any questions when the question and comment
time arrives.