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Special Bd. of Aldermen — 05/20/2019 Page 13

So you don’t need an endowment fund so whatever money is collected here should be thrown into the
construction job. But you cannot ask these architects to make up a $10 million dollar deficiency.

You have people in the Steering Committee talking about maybe cutting an elevator down into stairs or cutting
down one set of stairs into .. two sets of stairs into one set of stairs or maybe the loading dock is a little smaller.
| forgot all the little things you talked about; no way is any discussion going to make up $10 or $12 million
dollars. The problem is that this whole operation started with the suggestion of a budget and | remember
Clarence, he’s not here, he said “let’s vote the people for a vote” because he couldn't get the 2/3 vote for the
bond. It went for a vote, and (inaudible) it’s a $15.5 million dollar job. Now if you add the building, you add the
other $4 million dollars that | just mentioned, the building, the AV and architecture, that’s more than $1.7 if you
add the construction manager. This job is not going to be $10 million dollars over, it’s going to be $14 million
dollars over, maybe $16 million dollars over. You’ve got to start dealing with this. You either stop the project
which | hope you don’t do or you start coughing up some money. You are not going to get all this money in
fact — | understand it’s highly competitive from whoever made the presentation, highly competitive, not
guaranteed that Nashua will get that and no guarantee that you’d get the $5.2 million because you need the
$4.5 plus the 15% none of this is guaranteed. You have to start making a plan. Now it is not impossible for the
City of Nashua to come up with another $10 million. You bond $37.5 million dollars for road construction, you
had contracts for $300 million for the teacher’s contract, $300,000 million. But you have to start dealing with
this, you have to start getting honest with the citizens of Nashua about the true cost of this project. That’s why
| am here so I’m addressing this. Thank you.

Mr. Cummings

Thank you Madam President so | just want to correct for the record a couple of misrepresentations that were
just said a second ago and | don’t want to belabor the point or go too far off the subject here because we are,
after all, here for a very specific resolution and | want to make sure we stay on track for what it is that we are
here to speak on this evening. But we do have the press here and | want to correct for the record some of the
statements that were just made.

First and foremost, this idea that you know the project number being higher and has never been articulated by
me and I’m going to just point up to the slide that was presented to you on December 20" which outlines a
project of something in the order of magnitude of $18 million dollars. So even in December 20" of 2018, we
were talking about a project as high as this. | want to remind you to the fact that you amended the bond back
last fall that would allow you to re-appropriate the New Market Tax Credit money that is some $4 million dollars
in various ways.

Lastly | also want to mention the $18 million dollar figure that was referenced; that was at the start of schematic
design. The conversation further continued where the designers and architects were able to get the building
project at $13.5 million dollars with a charge of dropping the price down to something like $12.5 million. There
is a very clear understanding that we are designing to a budget and we are also making sure that we live with
that $15.5 million dollar commitment that the City of Nashua has authorized us to work toward. And we will do
that, we will not look for additional funds from the City of Nashua beyond that $15.5 million dollars.

I'll just conclude my comments by also saying that the feasibility study developed a concept that is much
different than what is being designed right now. It was a conscious decision by folks when designing this
Performing Arts Center that they wanted to design it appropriately and in the right way. They’ve made a
conscious choice to look at additional elements that weren't part of the feasibility study initially. So with that
being said Madam President, | think I’ve done a pretty good job of correcting the record and making it clear,
except for one last point which is depending on how you define the project. This evening we’ve been talking
about a $19 million dollar project, that is not counting the endowment fund that is being set up. If you count the
endowment funds that are also being set up, that could bring the project up in total of something like $21ish,
$22 million dollars, it really depends on how you define “what the project it is’.

Special Bd. of Aldermen — 05/20/2019 Page 14

And it is a fair point to make as to how high we want to capitalize that endowment fund. We made a
commitment very early on that we would have an endowment fund. | am working very hard to make sure that
we retain money into an endowment fund until this group and the Steering Committee otherwise instructs me
that we can repurpose those funds in a different way. But | haven’t heard that yet so we are still maintaining
that money for working capital, despite the fact and yes | do agree that Spectacle Management has said that
he can run the Performing Arts Center without the need of a subsidy.

But those are conversations that we will have as this project continues to evolve and will be very important as
we are looking at that left-hand side of the project where we are talking about the stewardship of the
endowment fund and the building and the contract with Spectacle Management, which are conversations that
we will have if we are successful later on this summer. Thank you Madam President.

Alderman Dowd

Just one quick thing, the last 7 school projects going back 16 years we have never spent a significant amount
of our contingency money; it was always carried forward into the next project. So you have contingency for the
unknown unknowns and we’ve been pretty good at making sure that we know what we need to know.

President Wilshire

Thank you. | am going to just finish the Public Hearing. Anyone here that wishes to give testimony in
opposition to R-19-136.

Testimony in Opposition

Mr. Teeboom Since I’m the only member of the public here | will locate for the next turnaround. Mr.
Cummings and | appreciate what Cummings does | already said | think he does a good job managing things.
He does a terrible job estimating things. | have a Memorandum here holding in my hand and it says in his
Memorandum it’s the only published memorandum ever presented by Mr. Cummings. “Construction costs
$11.5 million dollars. The bond adds up to $15.5 and the assumption was if you have a $4 million dollar
endowment fund to subsidize operation of the Performing Arts Center; $4 million was not going to be spent on
construction. So $11.5 million dollars is on the record. You are now facing a project of about $20 to $22
million dollars. So you can go from $15.5, you are $7 or $8 million dollars off, even if you spent the entire
endowment fund against construction, you are $7 or $8 million dollars off. | think this Board ought to ask Mr.
Cummings to present some spread sheets the next time he makes a presentation not so much arm waving as
specifically on the figures. Because this Board is going to have own up, you know, you have all these
investment things and maybe this leveraging thing and all the financial stuff is funny money.

Some of you have to get this from the architect, because it’s funny money. You have to ask Mr. Cummings,
and he is perfectly capable of doing this, he’s a capable guy. Come up with a detailed spread sheets, take the
information presented by the architects. He can talk to them in private about how D&A comes to and how
much the insurance comes to. And you have Harvey Construction, if you estimate a very competent estimator,
they do all the work for the schools. You can ask Harvey Construction to come before you instead of Mr.
Cummings who is basically not a financial guy, he’s the development director. His job is to promote things.
Get Harvey in here. Harvey is the one estimate this job that’s why you are paying them over $400,000.00 or
$500,000.00 for and get them to give you details of how the construction goes forward, what happens to the
$4.5 million dollars that comes in, if private money doesn’t come in, how low can you go before you no longer
have a 750 viable seat theater? My God guys, you are elected to do your job. Do your job. Thank you.

Special Bd. of Aldermen — 05/20/2019

Testimony in Favor - None
Testimony in Opposition - None

ADJOURNMENT

MOTION BY ALDERMAN O’BRIEN TO ADJOURN
MOTION CARRIED

The meeting was declared adjourned at 7:51 p.m.

Attest: Judith Boileau, Deputy City Clerk

Page 15

Overview

R-19-136

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.

-4-

An increase in interest expense from 2014 to 2015 of approximately $0.8 million
is primarily due to the increased financed amounts for capital projects.

Pre-tax loss for the fourth quarter increased from $1.6 million in 2014 to

$2.2 million in 2015 due to an increase in interest cost associated with the
financing of capital projects, as well as the increase in operating expenses, offset _
by the higher year-over-year revenues.

The pre-tax loss for the year increased from $1.2 million in 2014 to $2.0 million
in 2015 due to overall increased operating and interest expenses, offset by higher
revenues.

Dividends paid to the sole shareholder in both 2014 and 2015 were consistent
with, and were paid pursuant to, the CBFRR structure provided for in the New
Hampshire Public Utilities Commission’s Order approving the City’s ownership
of the Company.

Income Tax Expense in the current year reflects the tax treatment for the
Municipal Acquisition Regulatory Asset, which is not deductible for tax purposes.
Therefore, the year-to-date results reflect a tax provision of approximately -15%
of pre-tax income compared to the statutory tax rate expense of 39.6%.

Earnings Before Interest, Taxes, Depreciation and Amortization increased in the
fourth quarter from $2.6 million in 2014 to $2.7 million in 2015 due to higher
revenues, offset by operating expense variations (excluding depreciation and
interest),

Earnings Before Interest, Taxes, Depreciation and Amortization for 2015
increased slightly over 2014 by approximately $0.2 million, again due to higher
revenues earned year-over-year, offset by operating expense increases, excluding
depreciation and interest expenses.

NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF NMTC’s

NUMBER 2

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

QE! 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/$1.00. 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.