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Primary Drivers of Required Rate Increases

Major Cost Drivers are associated with expenditures on required Capital Projects

¢ Current and future required capital project investments are substantially increasing

annual debt service costs:
¢ Annual Debt Service is projected to increase from $5.1 million in FY2020 to $8.4 million in FY2025 (10%
average annual increase)

¢ Annual Operation and Maintenance expenditures are projected to increase at a modest rate of 3 percent
per annum during same period

¢ Rate Increases are the only stable source of revenue available for cover the growing
debt service costs:

¢ Almost all projected revenue is generated by User Fees
— In FY 2020, 94% of Wastewater Revenues were derived from retail user fees
— Asmall amount of Wastewater revenue are collected through Sewer Permit fees

Hazen 7

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compliance~as—directed,_th e-_Code—Offieial_meay—cause—such—warnings_te—be~filed
without-further action.

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heed-of the-Code-EnforcementDepartment-Citations-shall-specify the reasor—fer-the
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DFees-for-citations.

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costs incurred by the City in-obtaining abatement of conditions-which-cause-the-issuanee
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freel paid-witheut-future recover-or-otheraction againstthe City; its-ofhicial employees
eragents:

3. In Part II “General Legislation”, Chapter 182 “Housing Standards”, Article IV
“Enforcement”, “Section 26, “Violations and penalties,” by deleting the struck-through
language and adding the new underlined language as follows:

Any person who shall violate any provision of this chapter shall, apon conviction thereof,
be punished as provided in § 1-12 of the City Code subjeet-te-a-fine-of net-lessthan-$25
ner-more-than-$1-00-atthe-diseretion-of the-court. Every day @ violation continues after
due notice has been served in accordance with the terms and provisions of this chapter
shall be deemed a separate offense.

This legislation shall take effect following its passage.

Planned Future Major Capital Expenditures

¢ More than $52 million in upcoming required capital investments from FY2020-
FY2025:

Pump Stations Rehabilitation (Phase 1 and Phase 2): $10.86 million

CMOM Plan: $5.20 million

Sewer Infrastructure Program: $30.40 Million

Wastewater Treatment Primary Tanks Upgrades: $3.90 million

Phosphorus Removal and Storage Facility: $1.00 million

¢ Wastewater Plant Booster Stations: $0.80 million

Nashua Capital Funding Strategies to Minimize Ratepayer Impacts

¢ Nashua employs a mix of financing strategies to minimize ratepayer impacts:

¢ Maximize use of Federal and State Financing Loan Programs to lower debt service costs
¢ The City will access low interest SRF financing as much possible (2% interest rate as of 2019)
— CMOM Program and Pump Stations are being financed through SRF
— Other Projects will be financed through a mix of Bond issuances and SRF financing
¢ Fund smaller capital projects through cash where practical.
¢ Maintain capital equipment reserve fund to reduce year to year rate impacts.

¢ Stringently manage operation and maintenance costs to keep annual cost increase to
inflation growth.

Integrated Planning Framework: Reducing future costs

¢ Nashua is currently developing an Integrated Plan Framework (IPF) to comply

with its Consent Decree with the US Environmental Protection Agency:

¢ Prioritizes capital projects that best address the most pressing system needs as
determined by Nashua using City-developed criteria.

¢ Defers capital projects that are determined to confer fewer benefits for similar investment
costs.

¢ IPF smooths the “cost curve” and can mitigate future rate increases.

Conclusions

¢ Planned rate increases cover the costs to finance the capital investments that are required
to comply with regulatory mandates and to maintain the high level of services provided by
the City to its ratepayers.

¢ Despite the increases, Nashua’s sewer charges in 2023 will still be lower than its peer
utilities charge in 2020 and well below the 2018 NH State Average Household Quarterly Bill.

¢ Nashua rates are and will remain affordable to all major household income brackets based
on EPA’s 2 percent affordability metric.

¢ Nashua is developing an IPF to further reduce the rate impacts of its required capital
investments.

Board of Aldermen 12-08-2020 Page 20

Alderwoman Lu
| apologize, | thought | knew.

Attorney Bolton

A “yes” vote if it prevails will cause the Resolution to be back before the Board with a motion to override the
veto in order. A “no” vote, if that were to prevail would not allow further consideration of this Resolution and
the veto would stand.

Alderwoman Lu

Thank you.

(Roll Call Resumes)

A viva voce roll call was taken which resulted as follows:

Yea: Alderwoman Kelly, Alderman Dowd, Alderman Caron, Alderman Clemons,
Alderman Tencza, Alderman Schmidt, Alderman Laws, Alderman Cleaver,

Alderman Harriott-Gathright, Alderman Wilshire 10
Nay: Alderman Lopez, Alderwoman Lu, Alderman Jette 3
Abstain: Alderman O’Brien 1

MOTION CARRIED

MOTION BY ALDERMAN TENCZA TO OVERRIDE THE MAYOR’S VETO OF R-20-088 AS AMENDED,
BY ROLL CALL

ON THE QUESTION

President Wilshire

The motion is to override the Mayor’s veto as amended, further discussion? Alderman Schmidt?
Alderman Schmidt

Thank you, Madam President. | have gotten very many letters concerning this, very many people are
saying, we love the Fire Department, we honor their service, they deserve this raise. I’ve heard that so
many times. But! am also hearing that the one segment that the Mayor has pulled out to say this is unfair,
most people are saying that the Mayor has this right, different options should be made at this point. | know
this is late in the game and | apologize, | have not been involved in any of the two years’ worth of
discussion over this. | haven’t been involved, | don’t even know the history before that because | know
many times the firemen were set aside in favor of trying to deal with something that was urgent. | don’t
think we should set aside the raises, | think the raises are past due and | know that there is no way we
should ever even look at that part of it.

| am wondering if this part can be set aside and replaced with something at this point. I’d leave this
question up to our Corporate Counsel because | do not know if at this point in time we could simply make
that change, we could get the firemen what they need now and we could make sure that the health
insurance portion isn’t going to continue to (inaudible) us. So may | ask that question of our Attorney?

Board of Aldermen 12-08-2020 Page 21
President Wilshire
Yes.

Attorney Bolton

If the Mayor’s veto is allowed to stand, what is vetoed from the contract is the provision that (audio cuts
out).

Alderman Schmidt

Oh my goodness, have we lost him?
President Wilshire

| think so.

Alderman Lopez

That was terrible timing.

Alderman Schmidt

Not now, seriously, | need an answer. Oh no.

Alderman Harriott-Gathright

Sometimes those things happen when you really need it to move on.
President Wilshire

Yeah.

Alderman Schmidt

Yeah I’m in a really tough spot at this point.
Attorney Bolton

Hello?

Alderman Schmidt

There he is.

President Wilshire

There he is, ok?

Attorney Bolton

If the veto is upheld, what remains of the contract is everything, all of the raises except those that are
contingent upon the percentage of firefighters taking the high deductible plan. That 1% is part of what is
vetoed. Also gone is the section that writes into the contract the $3,000.00 payment for the family or two
person plan or the $1,500.00 payment toward the single person, high deductible plan.

Board of Aldermen 12-08-2020 Page 22

Now that is in effect been offered aside from the contract but it is not currently in the expired contract and
the veto would take it out of this contract. What would stay is the same situation vis-a-vis health plans as
had been for the last several years the case that it’s the choice between the HMO Plan, the POS Plan or
the High Deductible Plan. The cost of living adjustments or annual wage increases except for those that
are contingent on percentage of firefighters taking the high deductible plan; those wage increases would be
there. The firefighters would then have the option, the Union would have the option of accepting that
contract as is or going back and negotiating further. | believe the Mayor has indicated that if further
negotiations were to take place, he would find acceptable that additional 1% in exchange for the Union
accepting the plan that makes changes to the HMO co-pays and deductibles and puts into the contract the
incentive payments for the high deductible plan. So it’s possible that would be negotiated and the entire
wage increase would be realized. Long explanation, | hope I’ve made sense.

Alderman Schmidt

It helped thank you. Someone mentioned a sidebar agreement. Is that something that we could do without
having to veto this portion of the contract?

Attorney Bolton

No. But! don’t know exactly what it is you’re speaking of. What is often referred to as a sidebar
agreement, supplementary agreement, when you have a collective bargaining agreement in effect, but
circumstances arises where you want to deal with a smaller portion of the employer/employee relationship
by a separate usually much smaller and discreet agreement, that’s often called a sidebar. At this stage it is
possible for the Board of Aldermen to amend its Resolution approving the cost items. So you could
approve some of them, all of them, you could state your position that you approve some of them, others
you don’t approve of in their current form, but you would approve if they were altered in certain ways and
those ways would be what you all agreed on. And again, the Union would have the option of accepting that
or going back and continuing to negotiate.

Alderman Schmidt

So at this point, unless we delay this vote until two weeks from now, unless we delay this vote, it is stand
up for the veto or pass it as itis. Those are the only choices we have at this point. | can’t have any input
from the fire union that could tell me that they would be willing to negotiate something like that?

Attorney Bolton

It would be outside of the normal procedure of this Board but | suppose if the Board wanted to hear
something from those members of the Union or those Union Officials, which are here, that would be up to
the Board. As | said, you do have the option of making an amendment to the Resolution that you passed
and the Mayor vetoed in part. | agree with you or | think | agree with your sense that it would be difficult for
you to do that. | also think it’s sort of difficult to try to have the Board of Aldermen undertake negotiations
with the Fire Union in this forum.

Alderman Schmidt
Thank you.
President Wilshire

You're all set Alderman Schmidt?

Board of Aldermen 12-08-2020 Page 23
Alderman Schmidt

No, not really. Would it be possible for someone who was in the negotiating team with the Fire Union to
speak to my question or is that right out at this point?

President Wilshire
Without objection from the Board, we could do that. No one objects to that? We could ask Chief Rhodes?

Chief Rhodes, Nashua Fire Department

Good evening, | think to that question president Wholey is here. And to all due respect to President Wholey
he would be best to answer that question and if you would indulge him a little bit. Tom has been thrust into
this position fairly recently back in July. So the procedure may be a little off but | think if you would allow
Tom to speak to this, | think he could shed some light on the subject.

President Wilshire

Mr. Wholey?

Mr. Wholey

Good evening Madam Chair, Board of Aldermen. | hope | can speak on the subject again. If | can just
answer question is that what we are looking for?

President Wilshire

Yes.

Mr. Wholey

Ok so it is a cohesive document, this Collective Bargaining Agreement, so if you shoot down an item at this
time, it needs to go back to the table. When you come to the CBA like this, we have members that could
have voted on any provision inside that contract and we can’t say if the majority of our Union wanted that
incentive or that line item. I’ve talked to our legal side, our legal attorney, he said it’s a cohesive document
like | repeated and it is not divisible by Law. We will go back to the bargaining table, I’ve expressed that as
my concern, | took over as Union President in July and it is now December and | stand before you, looking
to get this contract passed. So that’s our stance the International Association of Firefighters, our third
district president who represents New England has been in touch with Washington and if they found that
this way going on and we are stepping outside of Collective Bargaining which is our right, then they will
step in too. So | just want to stress that it’s not an option.

President Wilshire

Alderman Tencza?

Alderman Tencza

Thank you, Madam President. And | would hope and maybe Corporation Counsel can clarify this, is this

something that we have to vote on tonight or else the Mayor’s veto stands so essentially if we don’t vote on
it tonight this provision will be annexed from the contract right now, correct?

Attorney Bolton

You could table it and take it up at your next meeting.