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  2. Board Of Aldermen - Minutes - 11/24/2020 - P8

Board Of Aldermen - Minutes - 11/24/2020 - P8

By dnadmin on Sun, 11/06/2022 - 22:51
Document Date
Tue, 11/24/2020 - 00:00
Meeting Description
Board Of Aldermen
Document Type
Minutes
Meeting Date
Tue, 11/24/2020 - 00:00
Page Number
8
Image URL
https://nashuameetingsstorage.blob.core.windows.net/nm-docs-pages/boa_m__112420…

Special Board of Aldermen 11-24-2020 Page 8

Director Cummings

Thank you. So now I’d like to pivot and ask John Kaminski who is our New Market Tax Credit Counsel to
start the legal overview. And | am now sharing my screen, hopefully everyone can see it. | am going to
pull up a similar type diagram that was just shown but it’s going to have a little nuance to it to make sure we
are very clear on the legal aspects of this transaction. John?

John Kaminski, Attorney

Madam President, Members of the Board of Aldermen, it is my pleasure to be here with you this evening.
You may remember | was with you some time ago when we first were discussing this transaction, you
approved the creation of the two corporations. | do a fair amount of New Market Tax Credit transactional
work and am happy to be working with the City and the City team in putting together this transaction. And |
imagine by now you are asking yourself, “Why the devil is this so complicated”. And | think the answer is
that we are taking a program that the Federal Government created for the purpose of providing subsidies
and providing incentives to businesses to be located in distressed communities and we are adapting it and
using it to help serve municipal purposes so we need to create a business entity and create a business in
order to take advantage of this program.

| have to say that this transaction is not totally unique, I’ve worked on other transactions, representing other
municipal entities to utilize the credit. And the transaction you see is a typical New Market Tax Credit
structure that has evolved as people have used the law since the New Market Tax Credits were enacted by
the Federal Government back in 2001. So, this is a fairly standard transaction. | think one way to think
about this transaction is that it takes place in three phases. The first Phase is the Acquisition and
Financing Phase that Niel talked about and we are going to talk about more this evening. The second
Phase is the Operational Period of 7 years after we close in December on the New Markets Tax Credit
transaction there will be a 7-year period through December of 2027 in which we will need to be in
compliance with all the Federal requirements for the New Market Tax Credit Transactions. And then the
third Phase is what happens after the 7-year period.

| want to spend some time which you this evening talking about each of these three Phases because | think
it's important as you consider the Omnibus Resolution before you and potentially approving this program.
The Acquisition and Financing phase as Niel has gone over for you this evening, involves the various loans
and other transactions between the City’s entities, 201 Main Street Financing, Impact, and 201 Main Street
Real Estate. All of these three entities are affiliates of the City. We had to create Impact Corp. which is a
New Hampshire Business Corporation to serve as the location for the business that’s going to be financed
with the New Market Tax Credit money. Impact Corp.’s business is leasing property. It is in the business
of developing the site at 201 Main Street and leasing it to the City. So, the facility will be constructed and
equipped under the plans that the City has evolved over the last several years.

The City will then have a 25-year lease of the facility and will have a 5-year renewal option on the facility.
The purpose for this lease is to demonstrate that the Impact Corp. has an ongoing business. We can’t
simply have a business that lasts for 7 years and qualify for the New Market Tax Credits, we have to have a
business that is a long-term operational potential in front of it. So, we demonstrate that Impact Corp. has a
business going on and that enables us to qualify for the New Market Tax Credits. The investors, Mascoma
in this case, in New Markets Tax Credit transactions, have some requirements that they be assured that
they are going to get the credits and that everything is going to operate appropriately over the 7-year period
of time and that they will not incur any unanticipated environmental problems. All of these things are baked
into the program for Impact Corp. but the investors require that the City as the sponsor of this transaction,
guarantee the obligations of Impact Corp. to operate appropriately over the 7-year period of time and
guarantee construction completion and that there will be no unanticipated environmental liabilities. And you
will see that in one of our Omnibus Resolutions.

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Board Of Aldermen - Minutes - 11/24/2020 - P8

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