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

Alderman Lopez

Yes, thanks.

Alderwoman Kelly

My next question is for Mr. Cannon, | wanted to know about the competitiveness, | know that other places are
competing and have you ever seen someone not take a project?

Mr. Cannon Oh yeah, it has become a very competitive program. And first of all we don’t of those CDE’s that
currently have an allocation from February 2018 round, every one we have talked to says — we are fully
committed, but we know that’s not true. They all say that. So | could get a call, the applications for the next
round are in June so you can theoretically, and it has happened to me, get a call in May saying — well we
thought we were fully absorbed but now we need you because we need to fully deploy our credits before we
submit our next application to the US Treasury, because if we are not fully deployed we don’t look good. So
that is a chance to get existing money that is sitting in there now. But we are really putting our efforts on this
next $3.5 billion dollar round that is going to be announced this February.

We have had plenty of discussions with Mascoma Community Development Entity up in Hanover, they have
indicated an interest. This is still pretty big, it might require another one. But there are others, as | said before,
we are going to target about 12, there is one in Maine, one in Massachusetts and there are some others in the
northeast that we might try to get and there are some others out west that we may try, that have particular
comfort in investing in downtowns. So it is going to be competitive. | will just leave it at that. | think it is going
to happen. And | hope we get it in this round.

President Wilshire

Are you all set Alderman Kelly?
Alderwoman Kelly

Good for now, thank you.
Alderman Jette

| have several questions. In the middle there, the Investment Fund blue box. | can’t read that too number but
it looks like $19 million something.

Mr. Cannon $19,060,000.00.
Alderman Jette

So does the fact that this, you know the resolution talks about borrowing $15.5 million. Does this violate that it
any way?

Attorney Bolton

No, no, no. The Resolution always contemplated borrowing $15.5 and raising at least $4 million dollars from
elsewhere, we are even talking about borrowing less and raising more. But no, the authorization for what we
are going to borrow through bonds, this is perfectly compatible.

R-16-040
Endorser: Alderwoman Mary Ann Melizzi-Golja
AUTHORIZING THE MAYOR AND CITY TREASURER TO ISSUE BONDS NOT TO EXCEED
THE AMOUNT OF ONE MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($1,650,000)
FOR THE SPIT BROOK ROAD FIRE STATION 3 BUILDING RENOVATIONS

R-16-041

Endorsers: Mayor Jim Donchess

Alderman June M. Caron

Alderwoman Mary Ann Melizzi-Golja
RELATIVE TO THE TRANSFER OF $25,000 FROM DEPARTMENT 159 — OTHER PUBLIC
SAFETY, ACCOUNTING CLASSIFICATION 54 —- PROPERTY SERVICES, HYDRANT FEES TO
DEPARTMENT 109 — CIVIC & COMMUNITY ACTIVITIES, ACCOUNTING CLASSIFICATION 56 —
OUTSIDE AGENCIES FOR THE PURPOSE OF DONATING TO THE NASHUA ASSOCIATION
FOR THE ELDERLY

R-16-042
Endorser: Mayor Jim Donchess
ESTABLISHING POLLING TIMES FOR THE STATE PRIMARY ELECTION ON SEPTEMBER 13,
2016 AND THE STATE GENERAL ELECTION ON NOVEMBER 8, 2016

R-16-043
Endorsers: Mayor Jim Donchess
Alderman-at-Large Lori Wilshire
Alderwoman Mary Ann Melizzi-Golja
RELATIVE TO THE ACCEPTANCE AND APPROPRIATION OF $63,648 FROM THE
DEPARTMENT OF HOMELAND SECURITY INTO FIRE GRANT ACTIVITY “FY2015
ASSISTANCE TO FIREFIGHTERS GRANT”

NEW BUSINESS — ORDINANCES
O-16-013
Endorser: Mayor Jim Donchess
INCREASING THE COMPENSATION OF ELECTION OFFICIALS
PERIOD FOR GENERAL PUBLIC COMMENT
REMARKS BY THE MEMBERS OF THE BOARD OF ALDERMEN

Committee announcements:

ADJOURNMENT

Special Bd. of Aldermen — 12/20/2018 Page 13
Alderman Jette

Ok thank you. To the right of the Investment Fund, there’s another number there in that top box.

Mr. Cannon Yes that is $6.132750 which is .39% of the $18.5 and the $18.5 is the qualified equity investment
which you see right there, that’s 18.5. So 39% of that is that number, I’m sorry, that number the $7.2 that is the
amount of credits. And 85% of this is the $6.1 which is the cash equity injected into the fund.

Alderman Jette

And does the City have any liability for that $7 million?

Mr. Cannon No.

Alderman Jette

No.

Mr. Cannon No.

Alderman Jette

Ok.

Mr. Cannon The City is not the borrower, it’s a tenant.

Alderman Jette

Down at the bottom to the right City of Nashua, going back the other way — lease payments. Just for
clarification my understanding is that the operator Spectacle is not going to pay us anything?

Mr. Cannon Yes that is correct.

Alderman Jette

So where do the lease payments come from that we are going to pay back.

Mr. Cannon From the tax payers of City of Nashua who have to pay off that bond. You are just going to circle
down and come back up again. That’s what makes this a really strong project. Remember the video we saw
and he kept talking about “be open and honest and show your financial statements”. The lender here is the
City of Nashua — one step away. This deal, okay I'll show you the City of Nashua’s books and the credit rating
and everything else, what else do you want? It’s as simple as that.

Alderman Jette

So the lease payments that the City would be paying back up are equivalent to the payments that the City
would be making on the bond without all of this?

Mr. Cannon Exactly, exactly. That is why the City has to be the Master Tenant.

Special Bd. of Aldermen — 12/20/2018 Page 14
Alderman Jette

And one last question if | could, where does the possibility of getting tax credits from Community Development
Finance Authority work into this?

Mr. Cummings

It doesn’t to be very clear. This is a whole separate process, this is a New Market Tax Credit Program. What
you are referencing right now is a State level, CDFA tax credit program and it is completely separate initiative
and strategy that will be undertaken above and beyond this.

Alderman Jette

So whatever money we might get from there and whatever money we might get from private donations are in
addition to this $19 million in the investment fund.

Mr. Cummings

You are very close. What | would suggest to you is it in addition to the $5.2 million. So yes and so surprise,
early on I’ve been saying — oh we are going to raise about $4 million dollars in New Market Tax Credit money;
what is being modeled, not definite is it looks like we are getting $5.2. So yes | always was very conservative
in talking to you about this, because | would rather come in under than be wrong.

Mr. Cannon Imagine another box over here full of dollars and an arrow that goes there, that’s where anything
else goes into the project.

Mr. Cummings
That’s right.

Mr. Cannon But it doesn’t get funneled through the system, and the reason you can’t funnel, you can funnel it
through the system, whether it be additional bond money or the CDFA money which | have done a lot of
projects with, it goes through the system, it goes into the intermediary lender who might have several sources
of funding and then into the system. The reason here is we don’t want this number to be greater than $18.5
because if we start to approach $20 million dollars, it is not going to be competitive. That is a big project. Most
CDE’s get an allocation of about $60 million, we’d be asking for 1/3 of the total allocation if we got the $20
million. So we are sort of fixing it at $18.5.

Mr. Cummings

So if | could just to finish up, so that $5.2 on top of that would be if we are lucky $2.5 and that is where the
CDFA tax credit would come in, so $5.2 plus $2.5.

Alderman Jette
With what we are looking at here, so this looks like it would raise all the money we would need to build the

Performing Arts Center and the additional tax credit money, the additional private donations could be used
possibly to pay the lease payments that would go back up here and pay off the bond.

Mr. Cummings

Special Bd. of Aldermen — 12/20/2018 Page 15
| don’t Know actually, | would have to run the calculations on that. | learned my mistake last time around. An

idea was floated and it sounded reasonable at the time, | would have to go back and look and do my due
diligence and tell you whether that could actually be done or not. | don’t know.

Attorney Bolton

| don’t think advertising that we are just trying to raise money to make the bond payments is the way to raise
money.

President Wilshire

Are you all set Alderman Jette?
Alderman Jette

Yes thank you.

Alderwoman Melizzi-Golja

Yes, Attorney Bolton | would agree with you. A couple of things, first of all Director Cummings as we were
talking about the contract | was thinking also the operator needs to be 7 years just so we have stability across
that 7 year time line and | think that is important for the Performing Arts Steering Committee to hear so people
are all thinking in the 7 year time frame moving forward and understanding the importance of that.

To Director Cummings, | did not coach Alderman Lopez, but Director Cummings and | have had conversations
about the importance of all of us benefiting from everyone’s questions because we all look at this with a little
bit of a different background experience.

And | just want to say and Mr. Cannon | don’t know if this has been shared with you or not but | almost threw a
tantrum to make sure this meeting happened, because your words to my ears, it needs to be open and we
need to understand what we are doing. And we were asked to vote on a piece of legislation without this;
although some of us had done research, we hadn’t had this discussion. That being said, in looking at the
timelines you’ve presented us with, it seems to me that once we get that letter of commitment, then a whole lot
of balls are going to start being juggled. That is when we should all anticipate a lot of information coming our
way for us to process and to make some votes on.

Because if | am understanding this properly, that is when that non-profit that is going to actually operate the
building, that we will be paying our lease payments to needs to be established and everything else that needs
to be set up to make this move forward. So that is kind of nice to know because the Performing Arts Center
Committee has some other work to do around contracts and design. So while we are waiting for this to happen
we have other work to do. But | am anticipating 3 to 4 months we will then really have to be hitting the road to
get some of these decisions made. And again, recommendations and input from the Performing Arts Steering
Committee but the decisions being made here.

| do have one question and | guess this is questions that have been asked of me and | guess this is where my
not fully understanding this and | think wrapping my head around it a maybe a little bit more now. But it sounds
to me when we talk about non-profit we are almost talking 2 non-profits. When this legislation was put together
we were talking about a non-profit that was going to have about a $4 million dollar endowment that was going
to be used there as a safety or a cushion. We weren't looking at New Market Tax Credits yet as being part of
the private money. So it appears to me that in going down the New Market Tax Credit route, which | am fine
with, and this all makes sense to me and | do believe that it happens like in 24 hours; this is an established
process. It is not something we are inventing. But there are now the two endowments and | guess | just need
a little more clarity as to what money is going where, which | think goes to Alderman Jette’s question because

Special Bd. of Aldermen — 12/20/2018 Page 16
and | am reading the legislation and | am appreciating the wording more here because it is saying that — will let
the bond at such time the Mayor has determined the private funds, including the New Market Tax Credits total
at least $4 million dollars.

So | am interpreting that as saying after we pay the fees we get that $1.52 or whatever it is, and that goes
towards buying down the bond or not. Ok so is that going into this endowment because it is private money.

Mr. Cummings
| just want to clarify, when you say “endowment” you are talking about the original concept?

Alderwoman Melizzi-Golja

Right.
Mr. Cummings
If | may.

Alderwoman Melizzi-Golja

And that’s where ... excuse me, that’s where | need the clarification because we have been talking non-profit
for so long meaning the endowment and now we are talking a totally different kind of non-profit entity that is
going to hold the lease on this building that we will be paying for the building through our tax dollars.

Mr. Cummings

If | may? Thank you. So you are absolutely correct and | am going to .. so this is evolving right? Sol am
going to need direction from the Steering Committee and from you all as to how you would like this to be
structured but essentially what you are talking about is what we will refer to here is Entity A. We have originally
always been talking about it being a non-profit, technically it could be an LLC and more to come, but yes there
will be an Entity A and for this conversation we will say it is a non-profit. And then it will be closely aligned with
this entity right here, which again we will call a non-profit but that will be Non-Profit B or Entity B. They will be
independent but very closely aligned with one another. We will need to have agreements with all of these
organizations, keep in the back of your mind, there’s talk about a list of resolutions that is going to be another
document that we are going to need approval to enter into is that.

Then a third non-profit over here, yet to be created, that will have in theory $2.5 million dollars if you will from
the private sector or $2.5 million of bond proceeds here could go down into that box here, doesn’t go through
the system. We could capitalize that endowment fund at a certain figure; originally we were anticipating $4
million dollars, | don’t think that is necessary. My opinion on this has evolved to somewhere around $2 million
is all that is necessary. So if you wanted to capitalize an endowment of $2 million over here and then that, now
this is what might be interesting to see evolve and | don’t necessarily think we should get into this conversation
this evening, but it is an idea | want to float to you.

The Master Tenant then would sub-lease to that non-profit and then that non-profit would then lease to
Spectacle Management and then that non-profit would have that, for this conversation, $2 million dollars. You
could have an orderly flow if you wanted to. If you didn’t want to do that and you wanted to do it another way,
we can absolutely do it that way and you can have a direct relationship as well. But hopefully | am answering
you questions, you are going to need at least 3 additional entities, one of those e entities won’t actually have
anything to do with this system other than originally when we conceived this project we knew we wanted to
have some sort of endowment fund or reserve for the project.

Special Bd. of Aldermen — 12/20/2018 Page 17

Alderwoman Melizzi-Golja

Yeah thank you and I’m sorry if | added to everyone’s confusion but | was counting non-profits and where the
arrows were going and I’m like — wait the definition has evolved. So | guess just clarify for me that $5.2 and |
understand that private money so | understand how that is being captured and how that is reflected in the
legislation we just passed. So where is that going and again is that being used in any way to reduce that
because at one point and | don’t see it up and |’m sorry my eyes are tired.

You had talked about $12.something and it seemed to me like we got there by taking that $5.2 from something,
I’m sorry.

Mr. Cannon That’s ok. When we decided that the current estimate project cost is the $18.130 ok in order to
get that down to the bottom, the other, the fixed number here was $18.5 we are not going to go above $18.5 in
terms of a QE! because we want to be competitive. So in getting up to the top here we had to push $18.5, net
$18,130 and pay the fees so we knew what we had to raise here, $19,060 — now when we take the fees off
we've got the $18.5. We know that what the credits are going to be on the $18.5 and the difference between
this and the $18.5 just happens to be the $12. That’s where it comes from, so yes, we are reducing the bond
from $15.5 to $12.something. And we are paying for a bigger project.

Alderwoman Melizzi-Golja

And Mr. Cannon, the reason | wanted that clarified is because very early on and certainly all of understand that
our knowledge of all of this has grown and will continue to grow and evolve. There was conversation about the
New Market Tax Credit being used to reduce the bond. So that’s the question I’ve had sent to me. Ok if it is
going into that third endowment or that third non-profit that Director Cummings was talking about then is it
impacting the bond?

Mr. Cannon It is not going into a third endowment, it is reducing the bond from $15.5 to $12.something.

Alderwoman Melizzi-Golja

That is what | wanted to be clear, because that is what people originally understood, but when we did this
piece of legislation last week there were concerns that it wasn’t going where it is going so | wanted to clarify
that. Thank you.

Alderman Tencza

So the $18.5, the QEI that are up there, that figure is based more on what you are looking for for the New
Market Tax Credit and not necessarily any quote that you have about construction costs for the project right
now, correct

Mr. Cannon If you did the math, that QEI it is almost $18.7 but we decided we did not want to go there.

Alderman Tencza

Ok but | guess my point is you got to the $18.5 not because a contractor or someone has told you these are
what the construction costs are going to be?

Mr. Cannon Exactly.
Alderman Tencza

That was just more based on what you thought you could get?

Special Bd. of Aldermen — 12/20/2018 Page 18

Mr. Cannon Right, right.
Alderman Tencza

Ok just so people are clear about that. And then the other question | have is just about the 7 year compliance
period because | think that it is a little confusing because of the project we are doing, | think people might
interpret that as the project has to be economically viable for 7 years but clearly the library in Keene is not
making money for the town right unless they have excessive overdue fees or something like that.

So what is the criteria that the City is going to be judged against, what are our obligations for those 7 years for
that loan.

Mr. Cannon You just pay the loan.
Alderman Tencza
So that is it.

Mr. Cannon You have some reporting requirements, but primarily it is to pay the loan. The 7 year compliance
period effects more when New Market Tax Credits are used to assist an operating business. So if General
Motors was a recipient of New Market Tax Credit financing, it has to do all kinds of assurances that 80% of its
labor force will remain in that qualified area for the 7 year period and all kinds of other stuff. But when you use
it for real estate, the borrowers of QALICB has no employees, just like any other real estate deal: it is usually
an LLC or a partnership, it doesn’t really have any employees. So there is really no 7 year compliance issue
for this project, other than it takes 7 years to pay out the tax credits to the investors and your leases will have
to be at least 7 years. And any option, if the City wants an option to buy the property after 7 years, it would
have to be after 7 years, basically buy it for the balance of the debt, because it is paying off the balance of the
debt.

Alderwoman Kelly

If | could for a moment go back to the non-profits, at the risk of getting very complicated, would you be able to
include that in your flow chart and kind of where they fit in wnen you update that?

Mr. Cummings

Yes but | need direction, it is not on here now because | have yet to hear consensus strong enough to actually
tell me how the community would like it structured. | have heard differing opinions and part of this to some
degree, we all have to keep in the back of our mind, President McCarthy who was a big champion of this isn’t
here now and so he was involved at the very beginning of the structuring of this. He was actually part of the
selection team that brought Niel on board. So with him passing now, we kind of took a pause, and now we are
kind of re-starting again and trying to re-orientate ourselves and so trying to make sure we satisfy all of the
differing stakeholders who are involved in this project is a yeoman’s effort and President McCarthy did a great
job at that.

| wasn’t very sure yet how to actually illustrate it. So once | get a better thought of how the community wants it
structured, consensus-wise, | absolutely want to put it on to this flow chart.

Alderwoman Kelly

What do you see as the steps to getting to that consensus?

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.