(i> 4 THE CITY OF NASHUA "The Gate City"
,
To: President McCarthy
From: Tim Cummings, Director of Economic Development
Ce: Board of Aldermen - J. Donchess, Mayor, S$. Marchant, Director of Community Development,
K. Kleiner, CoS, John Griffin, CFO, David Fredette, Treasurer
Date: July/2017
Re: Follow on Discussion Relative to the Performing Arts Center (“PAC”)
Now that the budget process has concluded, I am writing to follow up on the discussion that started on
May 2™ relative to the Preforming Arts Center (“PAC”).
Since the May 2™ meeting where at the conclusion of the feasibility study it was recommended that the
city pursue a $15.5M bond (subject to private donations/contributions being raised in advance of releasing
the funds to capitalize an endowment fund to offset the continuing operational support that will be
necessary). I believe it prudent to submit this communication in an effort to keep advancing the dialog on
this initiative.
If you recall a central question or theme arose during the discussion that centered on the body wanting to
better understand the current debt service. To that end, a discussion on this very topic occurred on May
18" where the Board of Aldermen received a comprehensive overview of the current debt service and
obligations as well as some modeling projecting what the anticipated PAC financial obligation could be
and how it could be accommodated.
Essentially, In the FY’18 budget approximately $16.4M is currently being spent servicing the city’s debt
obligations. We anticipate based off of some conservative assumptions that a $15.5 million PAC
translates into an additional $1.0M of new debt to be serviced (it should be noted that not all of the $1.0M
would be absorbed at once, but more likely over a two (2) or three (3) year period). This means the Board
of Aldermen is looking at an increase of approximately $350,000 over a three-ish year period. Needless to
state this bond issuance can be accommodated.
Alternative Funding Sources Available
Putting aside what is articulated above and the figure quoted at the May 2™ meeting there is an
opportunity to potentially drive the cost down. To be clear, everything to date outlines a cost of a bond
issuance of $15.5M bome onto the taxpayers. However, over the last month I have been meeting or
speaking with various tax credit consultants and issuing entities and I believe there is an opportunity to
bring the project cost down by a few million dollars.
Specifically:
- NMTC $3.0M
- Historic $1.0M
- CDFA_ $500K
Conservatively, it appears as though the project costs could come down to between $11M and $13M and I
would use a $3M for budget purposes and therefore you could anticipate seeing a total project cost of
approximately $12M.
