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A special meeting of the Board of Aldermen was held Monday, May 20, 2019, at 7:00 p.m. in the Aldermanic
Chamber.

President Lori Wilshire presided; Deputy City Clerk Judith Boileau recorded.
Prayer was offered by Deputy City Clerk Judith Boileau; Alderman Jan Schmidt led in the Pledge to the Flag.

The roll call was taken with 11 members of the Board of Aldermen present; Alderman Gidge, Alderman Klee,
Alderman Clemons and Alderwoman Kelly were recorded absent.

His Honor, Mayor James W. Donchess and Corporation Counsel Steven A. Bolton were also in attendance.
PUBLIC HEARING
R-19-136

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

President Wilshire

| did hear that Alderman Gidge is still under the weather, he is hoping to rejoin us next week. Alderwoman
Klee will not be here this evening and neither will Alderwoman Kelly.

Tonight we have a public hearing on Resolution 19-136 Authorizing the formation of two voluntary nonprofit
corporations under RSA 162-G for the Performing Arts Center. | am going to invite Director Cummings and his
people up. You can give us an overview and introduce your guests as well. Thank you.

Attorney John S. Kaminski of Drummond Woodsum, Niel Cannon, the city’s Finance and Development
Consultant, Director Tim Cummings and Deputy Corporation Counsel Celia Leonard gave an overview of
R-19-136.

Tim Cummings, Economic Development Director

Again, my name is Tim Cummings for the record, | am the Director of Economic Development and thank you
for having me this evening. Joining me | have our tax consultant, our tax attorney, John Kaminski and Niel
Cannon our New Market Tax Credit Consultant and Celia Leonard from our Corporation Counsel’s Office to
help us with the conversation this evening. Thank you all for joining me.

So | did a quick PowerPoint presentation which I’d like to just quickly go through for you in very high level and
then open it up to questions as you may have them. Just a quick refresher and by the way, there is a Memo
with some back up material in your agenda that goes into more detail. This PowerPoint just picks out the
highlights of that communication mainly for the conversation this evening. In that Memo, and by the way there
was a typo, | apologize, it referenced a previous meeting we had as “December 11”, and technically that
meeting was on December 20" of 2018. These slides were all presented to you back then, so this is just a
little bit of a refresher for you.

Essentially, some key elements just to remind you, we are going to be needing a QALICB; QALICB is an
assistant to business corporation or partnership that exists for qualified area. It is referred to as a Qualified
Area Low Income Community Business. We refer to it as the acronym QALICB. The big thing here is the City
of Nashua, a municipal corporation cannot be a QALICB. But we can act as a lessee in the deal structure. So
again, that’s just something we have discussed previously and | wanted to just remind you of that.

Another issue that | wanted to just call out to your attention which is the leverage that we are striving for which
is we would be, for every million dollars we invest, we would be able to leverage 39% gross which yields a net
of somewhere between 25% and 30%. For this conversation we can say 28%. | also want to take a moment
and just remind you all that we are working on projections and modeled numbers; they are subject to change.
By no means is this definitive, but it gives you an idea of what we are looking at from an order of magnitude

Special Bd. of Aldermen — 05/20/2019 Page 2

type of conversation. | say that to you because we are pricing the tax credit at $.85 cents on the dollar; that’s
a good conservative estimate. It is subject to market principles so therefore it may be a little north of that
maybe a little south of that, but that’s a good target for us to be using.

So here it is here again, if we have a net equity of $281,000.00 off of that million dollars, the credit would be
$390,000.00 it would net us $281,000.00 which is approximately a 28% leverage on our debt. So that’s the
idea of the New Market Tax Credit that we are working toward. Some other key elements just to remind you,
compliance period is 7 years for a New Market Tax Credit and we will be working with CDE’s. The CDE’s are
the entities that receive the allocation from the US Treasury, technically the CDFI Fund. They are the entity
that is empowered to go out and place that allocation in various projects and they are critical to making New
Market Tax Credit Projects happen.

Here is the deal structure we presented to you back on December 20", and | wanted to point this out to you
because we ended the conversation right here at “master tenant” and | point that out to you because as this
conversation evolves, we are developing the governing structure for this transaction. But ultimately it had
everything that we had discussed previously; we were what we were referring to as an intermediary lender
here is now what we are referring to as a senior lender and here is the QALICB. But this was also modeled on
a little bit higher numbers, we were looking at netting around $5.2 off of New Market Tax Credit of $7.2. We
have now advanced this model a little bit further and this an updated model for today’s conversation where we
are actually looking to net about $4.2 million. All these numbers are in your handout, but essentially it’s the
same thing that we discussed previously. The City of Nashua has a bond, we would push part of the bond
through to a senior leverage lender; the senior leverage lender would put it into an investment fund with the
CDE. The CDE would create this sub-CDE investment fund structure. The equity investor, which is our private
sector money, would come in on the other side, and we would push it all down into the QALICB. There would
be some money from the City of Nashua that would go down into the QALICB directly. Then the City would be
the Master Tenant, as we previously discussed.

Here is where the deal structure has updated a little bit and | do want to take a moment and just let you know
that this is a working concept over here, we are still working through some various issues. The reason we are
here before this evening is really just to authorize these two structures in red, and that’s what the Resolution
explicitly speaks to. But we will be coming back before you if all goes according to plan to bring, hopefully in
one night, one Resolution, one omnibus type of legislation, this structure right here that we are discussing this
evening.

So you have the Master Tenant and then what ultimately will be over here is another entity that | would suggest
would be substantially similar to wnat we have in place right now for the Hunt Building, the Hunt Library. And
that entity would be charged with overseeing Spectacle Management as well as the building itself. And then
there is another entity which is the 501(c)3 which in theory would have the endowment fund and that would be,
it cannot be the same two entities, to be clear. But it would be a fourth entity to place the funds that we would
be raising for that endowment.

Very quickly, what does R-19-136 do? It authorizes the City to form up to two voluntary non-profit corporations
under the provisions of RSA 162-G pursuant to RSA 162-G15, it ordains these two entities as public
corporations. Why is that important? The City of Nashua cannot directly participate in the New Market Tax
Credit transaction as a QALICB. Furthermore, the industry the prefers municipal corporations to not be a
Senior Leverage Lender.

We are doing this now in an effort to be in good position to act expediently for these Community Development
Entities. We want to be able to move quickly so they can place their New Market Tax Credit allocation; project
readiness is a key to being successful. So just a couple additional pieces of context for this conversation this
evening, the entities we are talking about the QALICB and Senior Leverage Lender; they are specific entities
being created for a sole purpose. And they are only to be executing their one function whether that is to be the
QALICB and actually manage the development of the building itself for the sake of the New Market Tax Credit
transaction or the Senior Leverage Lender which is an entity basically to lend into the project.

Special Bd. of Aldermen — 05/20/2019 Page 3

These entities will terminate after the compliance period ends for the New Market Tax Credit and they are not
permanent. But they are essentially needed to effectuated the New Market Tax Credit transaction that we’ve
been discussing for a while now. What I’ve shown you and what has been developed by our consultants is a
tried and true deal structure that has been vetted by CDE’s and this is a very consistent way of putting these
deals together. This is just a higher level overview of the same deal structure that | had put together to help
put this document together.

So with that Madam President I’d like to turn it back to you. | just wanted to give you a brief overview of the
Resolution that’s before you this evening.

President Wilshire
Thank you Director Cummings. Does anyone here have questions?
Alderman Jette

| noticed in the Resolution there’s a proposed initial membership of the Board of Directors and it is a lot of the
same people that are on the same, on both Boards, but not all of them. Is there a reason for that?

Mr. Cummings
Yes I'll actually have our tax counsel speak to that.

Attorney John S. Kaminski of Drummond Woodsum

It’s important for New Market’s Tax Credit purposes that the two entities not have a common majority control.
So we’ve got 5 member boards on both of these corporations; two people overlap, three do not. Just so that
we don’t have a common majority control, that’s what the tax opinion writers are going to be looking for when
we do the transaction.

Alderman Jette

Thank you.

President Wilshire

When we speak, could we please give our names so that the transcriptionist knows, that was John Kaminski.
Alderman Laws

How excited am | right now about this process.

Mr. Cummings

So if | may Madam Chair. We don’t know but | did receive an article today where the US Treasury is quoted as
saying they are going to be looking to make announcements in the month of May. So sometime in the next
two weeks, fingers crossed, we will hear. But just because an announced is made by no means is that a
guarantee that we are going to be receiving an allocation. But we are working very closely with handful of
CDE’s and we remain very hopeful.

Alderman Laws

Just to clarify, if we don’t get these, the whole project dies?

Special Bd. of Aldermen — 05/20/2019 Page 4

Mr. Cummings

Not necessarily. The City would have to raise $4 million dollars in private money or somehow other way come
up with a funding source. But think to your point this New Market Tax Credit is essential to closing the gap in
this project.

Alderman Caron

It’s just acomment. This group that because they are two committees, should that have come to Personnel or
is it because it is a short-term group of people for a section of the PAC project? Just a question.

Mr. Cummings
If | may | am going to ask Deputy Corporation Counsel Celia Leonard to answer that.

Celia Leonard, Deputy Corporation Counsel

Oh sure, this is Celia Leonard, Deputy Corporation Counsel. This isn’t a traditional committee for the City
because it really is naming incorporators for a non-profit under another statute, under the 292, there’s a 1 in
there somewhere, | never know if it’s 291, yeah 2921. So by naming them in the Resolution, we figured that
would allow the board to then refer internally however they saw fit but it does terminate, these organizations
will terminate after their compliance period is done. So it is distinct from other things that the City has done
before.

Alderman Caron

Yes thank you, great clarification. The question has come up as to why, so | appreciate that thank you. Not
that | need more work.

Alderman Lopez

So just to start, nothing dies unless we let it. So if we did run into a problem with the CDF, | can’t even
remember the initials anymore, if we do run into the New Market Tax Credit issue, these two structure are not
necessarily relevant to the City doing an individual or like its own fundraising system or any other strategies,
that correct?

Mr. Cummings
That’s correct.

Alderman Harriott-Gathright

| think I’m still struggling a little bit with the non-profits. So in short terms, what or how would you separate the
two.

Mr. Cummings

This is essentially going to be a non-profit created to own the project; this is going to be a non-profit created to
finance the project or to lend into the project. Very simple.

Alderman Harriott-Gathright

Ok so if | was donating, which one am | donating to, the top one?

Special Bd. of Aldermen — 05/20/2019 Page 5

Mr. Cummings

This one over here.

Alderman Harriott-Gathright

The one over there in the white?

Mr. Cummings

Yep, this one is the non-profit charitable organization which would be the 501(c)3, | mean of course these
groups probably would be happy to take your money but you wouldn’t get your tax deduction | think you’d be
looking for.

Alderman Harriott-Gathright

Ok that’s my question.

Mr. Cummings

So I’m being obviously glib with that answer but the relationships that we’ve developed with City Arts Nashua,
the Fiscal Agent for City Arts Nashua is really speaking to this organization over here.

Alderman Harriott-Gathright

Ok thank you that clarified it for me.

Alderman Dowd

So we already have an established organization that can accept private funds for this project?
Mr. Cummings

Yes.

Alderman Dowd

Good answer.

Alderwoman Melizzi-Golja

And | guess to follow up on that, the legislation that we are having the Public Hearing on, is just the non-profits
in red?

Mr. Cummings
Correct.

Alderwoman Melizzi-Golja

Not the ones in the lower right hand corner, so there’s 4 of them, but only 2 are with the legislation.

Special Bd. of Aldermen — 05/20/2019 Page 6

Mr. Cummings

So if | may Madam President, that’s actually a great segway to just call your attention to the communication
that was in the agenda where Attorney Leonard put together an additional document that kind of outlines; and
this was done at this body’s request at our December 20" meeting. You wanted to get a high level overview
and by no means is this 100% it is subject to change, but it gives you an idea of the various approvals that will
still be forthcoming by the body to effectuate the transaction that we are working toward. The goal that | would
like to work towards is to try to get these all bundled into one document so we can have one conversation later
on this summer to make it as expedient as possible. But nonetheless these are the various differing elements
that are still going to be necessary to move this forward. We are here this evening really to once again show
the CDE’s that we are very serious about this project and that we are doing everything we can to put the best
foot forward.

Alderman Tencza
Can | just ask the two non-profits that we are talking about tonight, the two that are up there in red, will they
have any relevance after this conversation on New Market Credit Tax Credits after the 7 year period or we will

be essentially be able to get rid of those? Then the two that will stand are entities C and D that you have on
the right side of your graph?

Mr. Cummings

That’s correct, you are understanding the graph appropriately.

Alderman Tencza

Ok. If | could just clarify maybe, so these two that we are setting up, are really just kind of pass-through non-
profits for the purpose of accepting the money or in accepting the bond proceeds to therefore transfer into the

project and then have the project up and running. Then the rest will then be managed by the two non-profits
that are left?

Mr. Cummings

Correct.

Testimony in Favor

Fred Teeboom | think | am the only member here tonight and you’ve got a two hour meeting scheduled so
we'll take a little bit of time. My name is Fred Teeboom and | live at 24 Cheyenne Drive in Nashua. | have a
few questions and I'll make some comments and I’m done. |’m glad you put the deal diagram Mr. Cummings
and I’m trying to figure out first of all the need for two non-profits. Now the left on top collects the money and
the bottom operates the venture? Could you explain again what these two red positions mean?

Mr. Cummings
Thank you Madam President, | am actually going to defer to Niel Cannon on this.

Niel Cannon, the city’s Finance and Development Consultant,

Yes you need two organizations as we said earlier, two different governing bodies not directly overlapping
because you can’t, number one, you can’t have organization A lending to itself. And number two, the City
cannot own, under the Statutes, cannot be the beneficiary of the project except indirectly. So you need
Organization A which is not identical to B to make the loan; then you need Organization B which is not identical
to A to receive the proceeds of the loans and execute a Master Lease with the City of Nashua.

Special Bd. of Aldermen — 05/20/2019 Page 7
Mr. Teeboom Something about transferring the property to $2 million dollar building to one of these
corporations?

Mr. Cannon

One of these corporations, the QALICB, Organization B will purchase the building the building for $2 million
dollars.

Mr. Teeboom How can the City of Nashua by the Master, it will no longer own the buildings.

Mr. Cannon

That’s the point. It will be a tenant of the QALICB.

Mr. Teeboom_ Ok so Nashua is going to be a tenant.

Mr. Cannon

Because it cannot own the building and take advantage of this program.

Mr. Teeboom Ok that’s the lower left, | still don’t quite understand the upper left red.

Mr. Cannon

The upper level becomes the lender. The bond proceeds are passed on to that lender, called the Senior
Leverage Lender and it makes the loan into an investment fund and where it is combined with the equity
investment by the New Market Tax Credits buyers and forced down through a sub-CDE into loans to the

QALICB.

Mr. Teeboom The loans? What loans are we talking about? $2 million dollars is donated apparently to this
loan entity?

Mr. Cannon

There are two loans, one is for $4.2 million dollars, which is the New Market Tax Credit amount and one is for
$10.4 million which is the amount of the bond that goes into Organization A.

Mr. Teeboom Where does that come from?
Mr. Cannon

Bond proceeds.

Mr. Teeboom What, the bond proceeds?
Mr. Cannon

The bond proceeds are $15 million dollars. Of that $10.4, a little more than $10.4, let’s call it $10.5 goes into
the Senior Leverage Lender, which is Organization A.

Mr. Teeboom | thought that Cummings that had written a Memo which | have been hounding him for a long
time where he claimed that the construction funds were $11.5 million. The building has already been paid for.
There’s architectural fees, so you take the $15.5 million dollar bond, you subtract the $2 million dollars already

Special Bd. of Aldermen — 05/20/2019 Page 8

spent and you spend another million, $1.7 | think already spent or allocated to the architecture firm, that is not
down to $10.4. How did you come up with the $10.4 million?

Mr. Cannon

The total project cost is over $19 million.

Mr. Teeboom ’ll get to that a minute. I’m talking how did you come up with the $10.4 million?
Mr. Cannon

That is the portion of the bond that we can get really difficult here, but we made a decision, | forced this on Tim,
that the Qualified Equity Investment that we thought we were competitive to get, was $15 million dollars. That’s
the most we thought we could get. So in order to get that, it requires that we put $10.4 million dollars through
the system and the balance of the project cost goes directly, the $4.5 goes directly down the side and into the
QALICB.

Mr. Cummings

If | may. What! believe is being also discussed here is a cash flow issue and what we are doing is we are
actually putting in money for the sale of the property, that $2 million dollars, which the City would get paid back
at closing. But we are taking the opportunity while we can to leverage those funds. So you have items like
that and you have items like soft costs, which are all on top of the building costs which are going to be in
excess of $15 million dollars when it’s all in, the total project. But what we are doing is we are leveraging $10
million dollars for our benefit to yield something in the range of about 28% leverage. That is essentially what
we are trying to do here. That other differential of that $10 million for this conversation let’s just keep it simple
and say it’s $5, we will be pushing it down in through to the QALICB and that is what we are referring to as our
equity investment which is how you yield that 19ish figure that we just mentioned.

Mr. Teeboom Let me understand something, the $4.5 million is your New Market Tax Credit money. Now I’m
really confused. | don’t know where the $10.4 comes from and now he says that there are $2 million dollars
from the building that you are going to deed over to this corporation and then generate a loan. Now if you
deed over the building how do you generate the loan unless this corporation takes a loan on the building. Is
that what you are talking about.

Mr. Cannon

That’s exactly what we are talking about.

Mr. Teeboom Alright so why didn’t you say so? So you expect the City, nothing to smile about, that’s the first
I’ve heard of this one. So as | understand it, you take the building, deed it over to this corporation, whatever.

Mr. Cannon

Sell it to the corporation.

Mr. Teeboom | can’t, the numbers, you know, QBR don’t mean anything to me because you are going to take
the building, deed it over to the corporation and they are going to borrow against it, $2 million. How does that
$2 million become $10.4 million.

Mr. Cannon

They are going to borrow $14 million against it. $14,700,000.00 against it.

Special Bd. of Aldermen — 05/20/2019 Page 9
Mr. Teeboom Against the building?

Mr. Cannon

Against the building as improved. Yes.

Mr. Teeboom $14 million dollars against a $2 million dollar building, who is going to do that loan?

Mr. Cannon

No, no no, the building when improved will be valued at ...

Mr. Teeboom Oh when it’s improved.

Mr. Cannon

When it is improved.

Mr. Teeboom Oh OK you didn’t make that clear, so when it is the Performing Arts Center you figure you’re
going to have $14.7 million dollars against that building.

Mr. Cannon
We are going to have that plus the $4.5.

Mr. Teeboom So the $4.5 is the market... ok so now it becomes clearer to me. Alright and the purpose of
that lower red one again?

Mr. Cannon

It is the owner of the building and borrower.

Mr. Teeboom And then what is the purpose of the top left?

Mr. Cannon

It’s the lender.

Mr. Teeboom The lender, let me understand that one. The top left guy owns the building.
Mr. Cannon

No.

Mr. Teeboom Who owns the building?

Mr. Cannon

Who’s on first? I’m sorry, Entity B which is the bottom of the diagram, the bottom one is the borrower and also
the building owner.

Mr. Teeboom Ok then why do you need the top red guy?

Special Bd. of Aldermen — 05/20/2019 Page 10
Mr. Cannon

Thanks Tim for leaving me out here like this. Because we need an entity to make the loan and we don't, the
regulations discourage the City from being that lender. So the City receives bond proceeds of $15 million
dollars. It is going to make a loan to Entity A who is going to pass that through to the investment fund. The
investment fund is going to combine that loan proceeds with equity investment of $4.9 million dollars which is
39% of $15 million at $.85 cents a dollar, to total that up. And then they are going to push that down to the
Sub-CDE in the amount of $15 million after they take out their fees; the Sub-CDE is going to take out their fees
and lend $14,700,000.00 to the bottom entity. The total project cost is $19.2. So the rest of that, the balance of
that, $19.2 minus $14,700,000 is $4.5 and that’s coming down directly to the QALICB.

Mr. Teeboom From the New Market Money?

Mr. Cannon

No from the City of Nashua.

Mr. Teeboom_ Where is that additional $4.5 million coming from then?

Mr. Cannon

$4.5 plus $10,482,500.00 - $4.5 plus $10.5 equals $15 million which is the amount of the bond.

Mr. Teeboom Haven't we already spent quite a bit of money on that bond? Haven’t we already paid for the
building with that bond? How did we buy the building.

Mr. Cummings
Cash.

President Wilshire
Cash.

Mr. Cannon

In this instance your QALICB is going to, with the proceeds of the loan is going to buy the building from the
City, the City is going to receive $2 million dollars.

Mr. Teeboom They are going to get $2 million dollars back OK. Awfully complicated. What is your target for
the New Market Tax Credit, what do you hope to get for the New Market Tax Credits?

Mr. Cummings

We are looking to net $4.2 million, again | just want to caution everyone that these are project modeled
numbers and they are subject to change but that’s what we are currently looking at.

Mr. Teeboom That’s after the 15% fee?
Mr. Cummings
That’s net so that is after the fees.

Mr. Teeboom So you expect to get about $5. Something million.