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NASHUA PERFORMING ARTS CENTER: DEAL STRUCTURE

Bond Proceeds
$ 12,927,250

Bond
Payments

Loan
$ | 12,927,250

Debt Service
Payments

|_-—Ctoan

§ 12,927,250

Debt Service

rayiients

December 20, 2018

NMTC EQUITY

$ 6,132,750

NMTC's

7,215,000

Equity Investment
“QEI"
$ 18,500,000

Deb
Pa

t Service
ments

CUE LOANS Debt Service
Loan"A™: $ 12,927,250 Payments
Loan "B": $§ 6,202,750
§ 18,130,000

Master Lease

Lease Payments =
Debt Service

NASHUA PERFORMING ARTS CENTER

TABLE 2: DEAL DIAGRAM/FLOW OF FUNDS

TOTAL PROJECT COST: $ 19,217,500
"EQUITY": $ (4,517,500)
AMOUNT FINANGED VIA NMTC: $ 14,700,000
CITY OF NASHUA 4 —16.000.000 BOND
$ 4,517,500 | $ 10,482,500 | Debt Sernice PURC HASER

Bervice Payments

SENIOR LEVERAGE LENDER Loan
10,482,500 INVESTMENT FUND
SS : : EQUITY INVESTOR
NON-PROFIT "A" Annual Interest eee oe ol $ 4,972,500
I Payments LOAN + NMTC EQUITY $ 15,455,000 NMTCc: $ 4,972,500
UPPER TIER FEES: $ (455,000)
$ 15,000,000
NMTG‘s
$ 5,850,000
Additional Bong Proceeds
$ 4,517,500
QE! Interest Payments

$ 15,000,000

Principal Payments

Sub-CDE
QEI: $ 15,000,000
FEES: $ (300,000)
Projected dollar amounts are $ 14,700,000
estimates and subject to change
based on credit pricing and final deal
structure. QLICI Loans Interest Payments ee
Loan "A": $ 10,482,500
Loan "B": $ 4,217,500
$ 14,700,000 NON- NMTC GOVERNANCE
NON-PROFIT
M Le
QALICB/OWNER a City of Nashua CHARITABLE
— nease Payments = ¥ ORGANIZATION FOR
NON-PROFIT "B Debt Senice MasteryTenant FUND-RAISING
y $ 4. o8 Entity D
EQUITY/GRANTS 23.5% Operating Agreement
Additional Bond Proceeds: $ 4,517,500
+ v
Operator Board of Trustees
bpectatcle Managemen Operating Oversight
Entity C

What Does R-19-136 Do?

¢ Authorizes the City to form up to two (2) voluntary, nonprofit corporations
under the provision of RSA 162-G and pursuant to RSA 162-G:15 ordains
these two new entities as public corporations.

Why is this Important

¢ The City of Nashua cannot directly participate in the NMTC transaction as a
QALICB. Furthermore, the industry prefers municipal corporations to not
be the Senior Leverage Lender.

¢ We are doing this now in an effort to be in a good position to act
expediently. Community Development Entities (“CDEs”) want to be able to
move quickly and place their NMTC allocations. Project readiness is a key
factor in being an attractive project.

Additional Context

¢ These two entities are not permanent and are only being created to
effectuate the transaction. They will cease to exist after the seven
year NMTC compliance period concludes

¢ They are single purpose entities with 1 prescribed function

¢ Their roles and responsibilities will be prescribed in various closing
documents

Bond Purchaser

City of Nashua
SXX.XM (equity)
SXX.XM (Grant)

“Leveraged Lender”

SX.XXM Loan

SX.XM equity

Governance Structures

1. - Nonprofit (RSA 162-G)

2. - Nonprofit (RSA 162-G)

3.— Board of Trustees Entity

4. - 501 c. 3 Entity (Endowment)

CDE/Investment Fund
SX.XM_ Lev Lender
SX.XM NMTC Investment

High Level Overview
of Deal Structure

Equity Investor (“Private Entity”)
SX.XXM NMTC Credit
SX.XX Net NMTC Capital

SXX.XX Total

S$ XX

S - XX (fees/expenses)

S$ XX.XM
“QALICB”

S X.XM Governance Type:
S XX.XM
S XX.M

1

City of Nashua
“Master Tenant”

501 ¢.3 Entity

4 *Please note this is not part of the city’s
municipal structure & is on this slide for
accuracy and transparency purposes

Board of Trustees

Operator

Spectacle Management

NMTC Governance
Transaction

Local Governance
Not-necessary for
NMTC Transaction

Unaudited Cash Flow Statement

Cash Flow on a GAAP basis for the fourth quarter of 2015 as compared to the fourth quarter of

2014, and the year-to-date 2015 versus 2014, are as follows:

($000’s)

Quarter Ended Year-to-Date
December 31, December 31, December 3!, December 31,
2015 2014 2015 2014
Operating Activities:
Net Income (Loss) $ (2,473) $ (2,236) $_(2,.292) $ (1,775)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,132 1,664 6,804 6,426
Provision for Deferred Taxes 244 633 294 606
Other 9 2 (24) 2
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 2,030 1,576 129 (195)
(Increase) Decrease in Inventory 53 29 90 18
(Increase) Decrease in Other Assets (831) (2,317) 550 (1,124)
Increase (Decrease) in Accounts Payable 23 (158) (152) 557
Increase (Decrease) in Other Liabilities 1,145 3,506 1,166 2,833
Net Cash Provided by (Used in) Operating Activities _ 2,332 2,699 6,565 7.348
Investing Activities:
Purchases of Property, Plant & Equipment,
including the Debt Component of AFUDC (5,215) (3,405) (13,866) (8,585)
(Increase) Decrease in Restricted Cash/Investments (5,436) (40,301) 20,328 (40,273)
Change in Deferred Land Costs - : (4) :
Net Cash Provided by (Used in) Investing Activities (10,651) (43,706) 6,458 (48.858)
Financing Activities:
Borrowings (Repayments) on Line of Credit - (3,166) - (1,966)
Payments on Long-term Debt (16,849) (637) (42,485) (3,036)
Contributions in Aid of Construction 117 37 133 78
Proceeds from Long-term Borrowings 23,730 48,695 28,098 49,935
Debt Issuance Costs (95) (1,018) (232) (1,275)
Dividends Paid (71) (69) (278) (277)
Net Cash Provided by (Used in) Financing Activities 6,832 43,842 (14,764) 43.459
Increase (Decrease) in Cash and Cash Equivalents (1,486) 2,835 (1,741) 1,949
Cash and Cash Equivalents at Beginning of Period 2,732 152 2.987 1,038
Cash and Cash Equivalents at End of Period $_1,246 $..2,987 $ _L246 $ 2987

SPECIAL BOARD OF ALDERMEN

MAY 20, 2019

7:00 PM Aldermanic Chamber

PRESIDENT LORI WILSHIRE CALLS ASSEMBLY TO ORDER PRAYER
OFFERED BY CITY CLERK PATRICIA D. PIECUCH
PLEDGE TO THE FLAG LED BY ALDERMAN JAN SCHMIDT
ROLL CALL
PUBLIC HEARING
R-19-136

AUTHORIZING THE FORMATION OF TWO VOLUNTARY NONPROFIT
CORPORATIONS UNDER RSA 162-G FOR THE PERFORMING ARTS CENTER

Testimony in Favor

Testimony in Opposition

Testimony in Favor

Testimony in Opposition

ADJOURNMENT

| THE CITY OF NASHUA

Office of Economic Development

"The Gate City"

To: Lori Wilshire, President of the Board of Aldermen

From: Tim Cummings, Director of Economic Development
Ce: Members of the Board of Aldermen
Date: May 15, 2019

Re: Operational Issues Surrounding New Market Tax Credit (“NMTC”) Program

Purpose

This communication is being presented to help organize and provide background information in an effort
to help outline some of the more specific and nuanced details of the New Market Tax Credit (“NMTC”)
transaction.

Background

If you recall, a communication was provided to the Board of Aldermen on December 1 1, 2018, which
gave a high level overview of the deal structure. Since that meeting the City has procured an Attorney
who specializes in structuring New Market Tax Credits transactions and he has further helped us refine
our concept.

As the deal diagram shows the City of Nashua is creating two entities (and ultimately three). R-19-136
creates two of the three entities and in a follow on piece of legislation as outlined in the “Anticipated
Approval Document” additional legislation will be forthcoming.

What Does R-19-136 Do
Authorizes the City to form up to two (2) voluntary, nonprofit corporations under the provision of RSA
162-G and pursuant to RSA 162-G:15 ordains these two new entities as public corporations.

Why is this Important
The City of Nashua cannot directly participate in the NMTC transaction as a QALICB. Furthermore, the
industry prefers municipal corporations to not be the Senior Leverage Lender.

We are doing this now in an effort to be in a good position to act expediently. Community Development
Entities (“CDEs”) want to be able to move quickly and place their NMTC allocations. Project readiness is
a key factor in being an attractive project.

What is a QALICB

A QALICB is typically a single purpose entity (meaning it has 1 function) and is defined by the IRS as a
Qualified Active Low Income Community Business where substantial portion (defined as at least 40%) of
the services preformed are within a Qualified Low Income Community (““QLIC”).

What is the Sr. Leverage Lender
In finance it is a way to describe debt that has a superior position than other forms of debt that may be
issued or involved in a transaction. In this instance it is a single purpose entity with a sole purpose to

execute on providing the financing for the NMTC transaction. This debt will take priority over other debt
and be in a superior position.

What is RSA 162-G

RSA 162-G allows the City acting directly or through a voluntary non-profit corporation to foster and
encourage the development of business within its boundaries. RSA 162-G creates a vehicle allowing
municipalities to participate in business activities such as real estate development and financing. The
legislation before you names the specific incorporators who will petition the state to form the non-profit
entities that are integral to the city’s ability to get the NMTC. Lastly, by going through this process the
entities will be afforded certain privileges such as being exempt from taxes.

Additional Context

These two entities are not permanent and are only being created to effectuate the transaction. They will
cease to exist after the seven year NMTC compliance period concludes, which necessitates the need for
entity number “C”, which is not contemplated in R-19-136 and will be brought forward once a NMTC
allocation has been secured. Essentially, entity C in working concept will be substantially similar to the
Hunt Memorial Building Board of Trustees, which is the body empowered by the city to oversee the Hunt
Building. In this case it will be the entity to oversee the building and the service contract of the operator.
Lastly, entity D would not have any affiliation with the City of Nashua directly, but would be a separate
501 ¢.3 entity created to administer the endowment fund to support the Performing Arts Center and can be
thought of as like a “friends” group similar to a “Friends of the Library” group or a “Friends of the Senior
Center” group.

Thank you for your kind attention to this matter. Please do not hesitate to contact me if I can be of any
assistance.

Attachments

Updated Deal Diagram

Letter from Attorney John Kaminski Dated April 17, 2019
Anticipated City Approval Document