Many Nashua citizens have lost confidence in our city officials’ ability to handle FUNDING complex municipal projects transparently. One recent project even questioned whether the city has complied with NH State laws. This project was the Performing Arts Center (PAC). The result has been a loss of confidence in City Hall and a more costly new Arts Center seriously lacking citizens’ support.
In 2017, the City put a nonbinding referendum on the Ballot, which required 50+1% votes to pass. The PAC passed by 155 votes, with five Wards opposing construction. The construction guaranteed maximum price was exceeded, and the City’s acceptance of Federal money contorted the financial commitment into an unexplainable mess with the City creating three shell companies conceived to deceive, as evidenced by the chaotic deal diagram. Take a quick look; there will be a test at the end!
Large municipal projects like the PAC are often bonded. When that happens, State laws (RSA 33:3) (RSA 33:3-a) require the public to be notified of bond hearings, and the resolution language specifies exactly how the bond money will be used. Should the City (in this case, Nashua) decide to change the amount or purpose of the spending, the Board of Aldermen must approve the change through another public hearing and an amended bond resolution.
Nashua did not comply with the State laws for the Arts Center bond resolutions. Before the bonds were sold, the plans were developed, and the city purchased the former Alex shoe store for $2,006,000 as the Center’s home. The Bond Resolution (a different resolution from the construction/architect/purchase bond resolution) to buy the shoe store stated, “The purchase price of said land and buildings shall be two million dollars ($2,000,000) to be paid from bond proceeds.”
The City Treasurer wrote emails (obtained through an RTK request) reminding the Mayor, CFO, City Attorney, and Director that when the PAC bond was sold, the money for the architect fees and the building sale had to be subtracted from the PAC bond money to comply with State law.
August 26, 2024, I attended a public bond hearing and asked questions about the legality and commitment to follow a bond resolution’s language. City leaders confirmed that if the language in the resolution on the money spending was to be changed, it must be brought before the Board of Alderman for approval. In other words, you can’t switch around the use of the money in a legally binding bond resolution. But the City did just that with the PAC Bond.
Background
After several years of wrestling with this project, city leaders realized they needed more money so they applied for Federal money through a tax credit program and closed this deal on December 17, 2020, seven months after COVID hit. The City needed to form three shell corporations and failed to tell the Public and their hand-picked Boards how they were to operate these shell companies and how the public could hold them accountable.
Before December 17, 2020, the Nashua Center for the Arts was a fully public project. After the signing of thousands of pages of Federal contracts and agreements, it was no longer a public project. By November 24, 2020, the City made a private deal (emails are redacted) with Mascoma Bank to add a third shell company, NPAC Corp., to this federal transaction. This private corporation would receive all the taxpayer money to build the Center.
Once this happened, the previously board-approved resolution that specified how the money would be spent, changed without notifying the Board to authorize the changes or the public to weigh in. The money for the architect’s plans and site purchase was never refunded from the bond money. Instead, all the bond proceeds were sent to the private corporation, NPAC Corp., for 100% construction costs.
On December 17, 2020, NPAC Corp. and the Mayor signed a reimbursement agreement, but only to reimburse the architect fees from a private loan ($9.55M) made by Mascoma Bank, not the bond proceeds. The City money to purchase the Alec’s Shoe Store site was never reimbursed to the City.
This abuse of public funds and possible fraud happened under the cover of COVID, the absence of a watchful press, and a sheltered public. When our local government is up to no good, citizens need effective state agencies to take these matters seriously. Our goals must be aligned. New Hampshire needs qualified agencies who work with the public to root out public corruption. Mayor Donchess is encouraging more NMTC projects in Nashua and is ready to go down this road again. “One and Done” should be the City’s motto for this federal scheme.
