Search

Special Bd. of Aldermen — 05/20/2019 Page 11

Mr. Cummings

Correct.

Mr. Teeboom Well one more question, | thought the RSA that this whole scheme is based on, with these two
corporations that you are forming was for low income areas. Is that incorrect.

President Wilshire
That's true.
Mr. Teeboom Well since when is downtown a low income area.

Mr. Cummings

Thank you so | wanted to clarify that the RSA was not created for low income areas, what | believe you are
referring to is the New Market Tax Credit Program specifically which is created for low income areas. And | will
actually defer to Niel Cannon who can speak to this very specific point.

Mr. Cannon

Really negative but something really positive, but negative. The downtown Nashua census track which is the
sub-city areas upon which eligibility for New Markets is based; there are 104 census tracts in the State eligible
for New Markets; this one ranks the 104" worst. It’s the worst census track in the state in terms of percent of
median family income versus the State average. The worst, 104" out of 104.

Mr. Teeboom So this qualifies.

Mr. Cannon

So this qualifies because it is severely distressed, that’s the whole purpose of this project, to attract people to
spend money downtown.

Mr. Teeboom | know that’s the purpose of the project, but | didn’t know it was a low income area.
Mr. Cannon

Oh it is.

Mr. Teeboom So the median income area in downtown, what is the number?

Mr. Cannon

It's something like $23,000.00.

Mr. Teeboom That’s about 40% or 50% for a single person.

Mr. Cannon

That’s 30% of the State Median.

Mr. Teeboom 30%, yeah that’s low income. Ok well that’s the questions | have, now let me make my
comments. You know | have not been against the Performing Arts Center, | prefer to have it at Court Street

Special Bd. of Aldermen — 05/20/2019 Page 12

but that battle was long ago lost to put it at a deferred location. The problem that | have and | am not going to
comment on this whole subject, is there is a Memorandum from Tim Cummings who said the construction
costs and | have a copy of it with me in case somebody says “that didn’t apply”. I’m holding it right here in my
hands. Construction costs for this job is $11.5 million dollars. He added $2 million dollars for the building; $1
million dollars for visual; $1 million dollars for architecture. So basically $11.5 million dollars to build this new
construction.

Well there’s finally the Steering Committee finally posted the minutes, it took a while, and on 6 March there is a
notation in the minutes and | read most of them, not all of them, but | caught that one. Mr. Cummings says that
the project is going to cost us between $18 million and $19 million dollars. That is the first time that has ever
been announced by Mr. Cummings. You may recall that | have mentioned many times here that the Fennessy
Construction Company working with Webb on the original design of the 550 seat theater estimated the project
to be $16.4 million dollars. The $16.4 million dollars included 33% in overhead costs and inflation costs and
contingency costs, and insurance cost and bonding cost. Well guess what? Last week the architects met with
the Steering Committee, Mr. Laws was there, and Ms. Melizzi-Golja was there, | don’t know who else, oh Mr.
Cummings was there, and Mr. Dowd was there.

Alderwoman Melizzi-Golja

And President Wilshire.

Mr. Teeboom And President Wilshire was there and guess what? The architect announced that the cost of
this project for the 750 seats which you need, I'll get to that in a minute, the project cost was announced to be
$18 million dollars, not including soft costs, which are typically D&A, bonds, insurance, profit and contingency.
You can ask Mr. Dowd who runs the School Construction Projects, typically, and I’ve been involved with the
School Construction, | think the contingency and all the rest, the hard costs, are typically 25% to 30%. Let’s
give it20%. But they also mentioned inflation costs because the project hasn’t started and what they call a
new cost called tariff costs because of Trump’s very expensive tariff costs. So if | add to that $18 million
dollars and that includes by the way $1 million dollars not for the theater but a $1 million to fix the roads and
the street and pull the transformer over and the utility poles and all the rest of the stuff outside the theater. If
you add 30% D&A which | think is the more reasonable number for something of this size, you got $23.5
million dollars. If our low ball D&A costs, and inflation costs, tariff costs, contingency costs, bond cost and
insurance cost, then the project is going to cost $21.5 million dollars. Construction, not counting the architects,
not counting the building and not counting audio-visual, so you have a disparity here, let’s take the $21.5
million dollars against the $11.5 million dollars of the original estimate of $10 million dollars deficiency. So now
you are trying to do is make up $10 million dollars with the combination, not the hocus pocus you are talking
about but the $10 million dollars made up with New Market Tax Credits and private contributions. So | do have
a question, how many private contributions have you collected so far, not counting New Market Tax Credits?

Is there a number?

President Wilshire
Director Cummings do you have a number?

Mr. Teeboom Nobody knows a number, my assumption is zip or close to it. | know, I’ve raised money for the
Memorial and it was four years of agony and it didn’t cost anywhere near this kind of money. So how are you
going to make up this deficiency of $10 million dollars, maybe as high if the D&A is 30% or for Fennessy 33% it
is going to be $12 million dollars. Now if somebody on this Board will begin to address what the City of
Nashua is going to do in case you can’t make up the deficiency of $10 or $12 million dollars. Start getting
realistic. I’m not against the Performing Arts Center. | don’t think you can start turning these architects into
magicians because they are trying to create a 750 seat theater, why? So there’s no endowment fund required
because the operator called Spectacle Management says that they will operate this place for 3 years and
guarantees it in writing without any subsidy, after 3 years maybe they do require a subsidy but right now
there’s no subsidy.

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.

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!