What Does R-19-136 Do?
¢ Authorizes the City to form up to two (2) voluntary, nonprofit corporations
under the provision of RSA 162-G and pursuant to RSA 162-G:15 ordains
these two new entities as public corporations.
Why is this Important
¢ The City of Nashua cannot directly participate in the NMTC transaction as a
QALICB. Furthermore, the industry prefers municipal corporations to not
be the Senior Leverage Lender.
NASHUA PERFORMING ARTS CENTER
TABLE 2: DEAL DIAGRAM/FLOW OF FUNDS
TOTAL PROJECT COST: $ 19,217,500
"EQUITY": $ (4,517,500)
AMOUNT FINANGED VIA NMTC: $ 14,700,000
CITY OF NASHUA 4 —16.000.000 BOND
$ 4,517,500 | $ 10,482,500 | Debt Sernice PURC HASER
Bervice Payments
NASHUA PERFORMING ARTS CENTER: DEAL STRUCTURE
Bond Proceeds
$ 12,927,250
Bond
Payments
Loan
$ | 12,927,250
Debt Service
Payments
|_-—Ctoan
§ 12,927,250
Debt Service
rayiients
December 20, 2018
NMTC EQUITY
$ 6,132,750
NMTC's
7,215,000
Equity Investment
“QEI"
$ 18,500,000
Deb
Pa
t Service
ments
CUE LOANS Debt Service
Loan"A™: $ 12,927,250 Payments
Loan "B": $§ 6,202,750
§ 18,130,000
NASHUA PERFORMING ARTS CENTER — KEY ELEMENTS OF
NMTC’s
NUMBER 5
Community Development Entities (CDEs) are the key to NMTC
funding. CDEs are awarded credits by the US Treasury. CDE’s
must sub-allocate these credits to worthy projects that meet
program guidelines. Therefore, we must convince 1 or 2 CDEs
that the proposed project has financial strength and results in
positive community impacts.
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!
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 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.
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.
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
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