Aldermen, Board of

NON-PUBLIC SESSION JANUARY 24, 2012 The Board of Aldermen and Conservation Commission went into non-public session at 9:00 p.m. Mayor Lozeau I would begin tonight by telling you that the timeline that I mentioned just a moment ago will be completed and will be put on the city website, on the Pennichuck site, so everybody can see the history of everything and how it unfolded because I think it really is important for people to know. Now, I think what I would like to share with the group is what I have offered relative to Parcel F to the developers to see if I could potentially get them to not develop Parcel F. Now I know that it was brought up that why don’t we trade Parcel F for Parcel N. First of all, they were not interested in that. And even if they were, I don’t think I’m interested in that because I am very concerned about the sensitivity of Parcel N as compared to Parcel F because the water reports and all the information we have shows us that Parcel N is actually more sensitive. I know there’s been argument back and forth on whether Parcel F is or is not in the watershed, but it has been determined that it is not in the watershed. So let me tell you what I put on the table. Commissioner MacLaughlin Very quickly, Madam. Who has it been determined by? Mayor Lozeau It has been determined by both the city and by the state in determining the alteration of terrain permit as well as for the planning approval that was received. What I thought would be most effective was to keep in mind that really the developer’s goal is to do the work they do, and the work they do is to develop properties. They go out, they do a pro forma of the site, they determine how many units can be done, they place values on things and what their return is, and knowing that the company involved is one that consistently has a new project ready to go, I thought that we would be in good stead if we could look at other parcels in the city that we might be able to put on the table for discussion. Frankly, I thought it was brilliant of me to offer Mohawk Tannery site to this developer because with the roadway coming through, they are about the same size in acreage. We have somebody right now that we’re meeting with the EPA about clean-up of that site. That site has been looked at before by developers, and I thought that that would be a good opportunity to say why don’t we swap these two sites. There was some interest there and some time was spent looking at that and whether or not they would move forward with it. They were not willing to move forward with that site. The second one I offered as I mentioned earlier there is an agreement in Merrimack across from Heron Cove on the other side that Stabile and Pennichuck have a 50-50 interest in which will soon be the city’s 50 percent interest. I was pretty confident that this group would agree that we prefer not to be a partner in development and so I offered that they could trade our 50 percent in that development rather than Parcel F, which I thought was another really good option. But they looked at that. They were willing to talk about that. They met with the Stabile Companies. They had discussions, I’m not privy to those discussion, and came back and said that they were not willing to do that. One of the things that they cited in both of those circumstances was that neither of those properties were ready to get started as quickly as Parcel F is ready. They have developed an approved site plan and they are really ready to go. I asked if the last thing that they would be willing to consider would be that we bought them out of that deal. And they are willing to consider that. I asked them for a number. They were not willing to give a number. They asked what number we’d be willing to offer. Hence, we’re in this group this evening to have that discussion about what we might offer. Non-Public Session – 1/24/12 Page 2 I can tell you based on my experience doing development that generally when you look at a pro forma, and I’ve just run some numbers based on what I know about the development, they’ve got 85 total units. That’s what they’re looking at developing. Thirty-seven of those are what you would call cottage-style units, if any of you are familiar with the site plan. The sales price of those will average about $269,000 a unit, so you’re looking at a gross of just under ten million. The 48 multi units are probably going to sell around $219,000, so you’re looking at a gross of just over $10 million. So together, you put those two things, you’re about $20.5 million. Developers typically look at a 20 percent. So if you look at any of the applications, for instance they go for grants to the New Hampshire Housing Finance Authority or others, it’s pretty typical that they are looking at a 20 percent return. If you do the math, that’s around $4 million gross before taxes. You divide that by the 85 units, and you are probably talking about $47,000 a unit. If you look at today’s dollars versus a three to four- year cost of build-out and you look at what the cash flow might be – and these are just numbers that I’m running – you’re probably looking at about $3 million, give or take. So their profit on that and assuming that they might discount it because of having the money right away and not having the three to four-year build-out, you’re probably talking $3 million, plus the $2 million that they paid to buy the site. So if you start looking at that and Alderman Sheehan I’m guessing your hand is going up saying haven’t they already figured the cost of land in the profit. Alderman Sheehan No. My point was I thought that because of the percentage of their partnership, that they were only currently into it for $500,000. Mayor Lozeau They’re not into it for much more than $500,000 for what they’ve spent to date, but when you look at this deal, they have a value add to that property and they’d just assume develop it. And if they develop it, just my quick calculation, they are going to be between two and three million dollars in profit at the end of that deal. Alderman Sheehan I don’t deny that. I just know part of the initial purchase price they did not come up with that entire money because it was a partnership with. So they have not fully paid their initial investment. Part of it is ours, and we would stand to also make that potential should we have stayed in with them. Mayor Lozeau Actually I think, Alderman Sheehan, and I can’t confirm this, but I think the final agreement that Pennichuck had with them was to pay the full $2 million and not to parcel it out over the time. Alderman Sheehan Okay. Mayor Lozeau I’m pretty certain that that’s one of the changes that they made in that. Non-Public Session – 1/24/12 Page 3 Alderman Sheehan In what year did they buy the property? Mayor Lozeau Yesterday. Alderman Sheehan No, initially when they set the price. It was back in what? 2005? Mayor Lozeau 2005 is when they started. Alderman Sheehan 2005 land prices versus today, they could probably do a lot better today as well. I think it’s something we need to take into consideration if they are looking for shovel-ready to do a project somewhere else. They could potentially for the same price get 180 units. I do support paying them. I just don’t support them really making an over-the-top profit. I think that this is… Mayor Lozeau I offered sticky. Paying them their cost to date. Alderman Sheehan Thank you. Alderman Donchess What happens to the $2 million? In other words, what was it yesterday or something, they paid Pennichuck $2 million. Today or tomorrow, the city acquires Pennichuck. Where is the $2 million? President McCarthy It’s part of the cash flow of the corporation. Alderman Donchess So the city in acquiring Pennichuck is getting the $2 million. President McCarthy No. The corporation is keeping the $2 million. We own all of the stock, but there’s still arm’s length between the funds of the two entities. We can’t use it for a city purchase. Alderman Donchess But just to get the facts down, just so that I understand it, the $2 million will be in Pennichuck’s bank account when the city acquires Pennichuck? Non-Public Session – 1/24/12 Page 4 President McCarthy Correct. Alderman Pressly Did you think of offering a combined package like paying what they paid and then having a swap of land? Mayor Lozeau I have offered all of the things that I mentioned. Alderman Pressly In combination? Mayor Lozeau I told them that we were really to consider anything that they would come back in combination of those offers. We would consider dollar amounts. That we were willing to consider anything that they would put on table and tell them that we would do it or we wouldn’t do it, but I wanted to be able to bring something back for us to make a decision about it. It makes it difficult when they say: “We’re not going to give you a price.” And that’s why I thought I couldn’t come in here without giving you a sense of that. Alderman Pressly What about since they’ve tossed the ball back to us? What about our making a combined offer such as coming up with what they paid for it, or maybe what’s in the conservation fund? I know you don’t want to hear that, but I know we have $1.8 million in there. Take the conservation fund plus have the Stabile deal or a conservation fund or what they paid for it and then the Tannery land? That’s not that great a deal but it wouldn’t make us go to the taxpayers. Alderman Sheehan My one final question was: Would the City of Nashua be buying Parcel F or would Pennichuck be buying Parcel F with our agreement? Alderman Pressly The city would. President McCarthy I believe the city would have to buy it. Alderman Sheehan Thank you. Alderman Deane Mayor, who are you negotiating with? Non-Public Session – 1/24/12 Page 5 Mayor Lozeau I’ve been speaking with Mr. Slattery, one of the principals. Alderman Deane Just him alone? Mayor Lozeau Just him alone. Mr. Slattery and Mr. Plante, my understanding are the two other individuals. The are the principals to the LLC. Alderman Deane Who are the four principals to the LLC? Mayor Lozeau Those are the two that I’m aware of. I don’t know the answer to if there are other principals. Those are the two that I am aware of. Alderman Deane What’s the total dollar amount? You had gone through a … Mayor Lozeau I was just running …. Alderman Deane …real estate dissertation about everything and you came up … what was your final number of value once you ... of the property … Mayor Lozeau Somewhere between two and three million dollars. I think the high side is $3 million. President McCarthy That was the profit on it. Mayor Lozeau That’s the profit on developing. (Multiple speakers) Alderman Deane And they just closed at? What was the closing amount? Non-Public Session – 1/24/12 Page 6 Mayor Lozeau I believe it was $2 million. Now I can’t tell you for certain whether they paid it all. As Alderman Sheehan was alluding to, one of the early agreements that we saw had the payments not all at one time. But I believe the last one was at one time. Alderman Deane Well you and Alderman Sheehan have been working on this, right? Mayor Lozeau Well, we’ve had conversations… Alderman Deane Ya. Mayor Lozeau …like I have with many of the board members that are concerned and interested about it because she’s a party of the confidentiality agreement. Alderman Deane Yup. No, I understand that. Mayor Lozeau We’ve all been trying to stop it anyway that we can. Alderman Deane I’m just trying to … Mayor Lozeau Within reason I should say. Alderman Deane Pardon me? Mayor Lozeau I said within reason. I mean I have to tell you that if the company is looking at, if they do the numbers similar to the way that I just described, and they decide that it’s a $3 million profit to them, and they expect a $5 million buy-out for this, I can’t support that. I don’t think that’s in anybody’s best interest for that parcel of land. I brought it here because there’s conservation funds, city funds. Maybe somebody can think of something that I haven’t thought of. Non-Public Session – 1/24/12 Page 7 Alderman Deane How I’m looking at it, I guess, you can look at it like this or how I’m looking at it. Once it’s developed, it’s over. Mayor Lozeau I agree. Alderman Deane So that’s what people have to think. I mean that’s what you have to think. Once they go and develop it and build on top of it, it doesn’t matter any longer. Mayor Lozeau I agree. Alderman Donchess They are in the driver’s seat. Mayor Lozeau Of course. Alderman Donchess I don’t disagree with the kind of figures you’d get on it. That sounds like the kind of thing they’d be looking for. Maybe $2 million, maybe I’m a little low, like you said. But I think about where the $2 million went, which is to Pennichuck. I get that’s a separate entity, but this is adjacent to Pennichuck land. Pennichuck does have $2 million which Pennichuck wouldn’t otherwise have if the sale didn’t go through, and last meeting Mayor Lozeau mentioned that because of the decline in interest rates, the bonds were sold at a 4.09 percent rate rather than a 6 percent rate or even higher the rate that was contemplated at the time the purchase took place or the time the purchase was agreed to and approved, leading in a rough sort of way to 60 or 80 million dollars of extra revenue that was not expected of Pennichuck over the next 20 years. Pennichuck has the ability to borrow. Why can’t Pennichuck buy this parcel for the $2 million that they already have and 2 or 3 million dollars more? President McCarthy I’m going to ask Alderman Wilshire to take the chair for a minute so I can answer your questions. Alderman Donchess I’m not sure that they can do it, but I would like your thoughts on that subject. Vice President Wilshire presides President McCarthy The crux of the problem is this: Twenty years ago the land was removed from the holdings of Pennichuck Water Works and moved to Southwood. At that time, the PUC actually had to approve of that transfer and conclude that the land was not necessary to the water supply, and they did that based on the Sasaki Report. The problem we have is right now there is $2 million of cash, which I think is actually on the Southwood balance sheet. So that part of it we probably could actually have Southwood buy the land back and hold it, and Non-Public Session – 1/24/12 Page 8 that would probably be fine. Anything else the problem is going to be we have no revenue to pay it back, and we can’t get revenue out of the water rate because the PUC will not allow us to put that land back into the rate base after they approved removing it because it was unnecessary. So anything that is done over and above the $2 million, I think would have to come out of the city’s side of things. We don’t want to do it out of those bonds because those taxable bonds at 4.09 percent. If the city is going to do it, we can get a rate that’s closer to two percent for the money we have to borrow. So we would want to do it as just general obligation bonds to the city. The problem is you’re still looking at two to three million that the city’s got to come up with which, by the way, is extremely high price for conservation land compared to what we have paid in the past. This would come out to well over $100,000 an acre by the time we pay the $5 million. Our typical price has been between $10,000 and $15,000 that we’ve spent on parcels as recently as last year. It’s a big number, and I don’t see any way that we could get that $3 million in buy-out paid for out of the water rate. That would have to come out of Nashua’s tax rate in order to make that work. Alderman Donchess But you’re thinking $2 million could be contributed by Southwood because it’s on their books at the present time. President McCarthy I think they could buy the land back. They are not regulated by the PUC. That simply requires action of the board of directors of Southwood. Alderman Sheehan Directed to Alderman McCarthy then. We have a couple of other deals I’ve heard tonight with Southwood for Merrimack. Could those be bundled? The profit of the buy-out of our 50 percent for those – could that be applied, keeping it all under the Southwood name? President McCarthy Southwood is pretty much, other than the opinion of the shareholder, is pretty much free to do whatever it wants with its land holdings. If we wanted to do that with some of Southwood’s holdings, you can do that. What we can’t do is get cash out of Southwood other than the $2 million that’s there from the sale of that parcel. Alderman Pressly If we took the $2.2 million that Pennichuck could possibly put in, the $1.8 million from the Conservation, that brings it $4 million. President McCarthy There’s $2 million that is what was paid for the land. Alderman Pressly Oh, okay. I thought it was… Well that then brings us to $3,800,000 Non-Public Session – 1/24/12 Page 9 Mayor Lozeau These numbers are all approximate. Alderman Pressly Okay. But that gives us $3,800,000. Might there be a parcel of land that the city owns that’s not of comparable size, but it’s ready to be built? Could the rest be made up with a trade of land within the city boundaries? President McCarthy Other than the land that is held by Southwood, the city doesn’t have much in the way of land. Alderman Pressly It would have to be small parcels. President McCarthy If we had land that was developable that we didn’t need for something else, we’ve sold it. Alderman Pressly Well then go back to the tannery, the ideas that the Mayor had, as an equal trade. If nobody else is planning to do anything in the tannery, they would do that for the difference. Mayor Lozeau I even talked about some of the surplus property from the Broad Street Parkway. Alderman Pressly Okay. Mayor Lozeau We might have some of those that will be available that we actually want developed into housing on Pine Street and some of the wooded areas, especially if we’re considering some action with Bronstein. And still, there was not… Alderman Pressly But they asked us to make the offer. So they want the negotiation to start here. I think that’s what I heard. Mayor Lozeau Well they said to me: “We’ll consider a number if you want to give us a number.” I think I’ve exhausted all the land thoughts with them. They are not interested in those. I will be happy to bring back anything you want. I actually asked them if they would like to attend this evening so that we could have a discussion and try to …. Non-Public Session – 1/24/12 Page 10 Alderman Pressly If they would get back what they paid, plus a million eight, plus other land to be developed of some combination of some amount, I think that’s a reasonably good deal for them. Alderman Deane They didn’t think so. Alderman Pressly But did you offer that? Did you offer them a package like that where they’d get back what they’ve invested, they would have immediate profit of $1.8 million and then they would still have some land that they could apply their trade on. Mayor Lozeau No, I did not offer that. Alderman Pressly Well, I mean, we’ve got to be creative. Mayor Lozeau I’ve tried to be creative, but I also have to Alderman Pressly I know you did. Mayor Lozeau I also have to do something that I’m willing to support. And as much as I understand the emotional interest in at least saving the last piece for Nashua, I am not willing to do that at any cost. I’m not willing to empty the conservation fund for it. I don’t have an objection to being involved in Southwood and putting the $2 million back on the table. I don’t object to that. Alderman Pressly Maybe we should ask the conservation people how they would feel about that. Maybe a portion of it. I know you have other dreams in mind, and I appreciate it. We’d like to buy all of them. Do we have any new current use? Is there any replenishment of the conservation fund on the horizon? Commission MacLaughlin Thank you. I’m very glad to say this: “Madam Chair.” I don’t know personally that I would advocate draining the balance of the conservation fund down to zero. I don’t want to be remembered that way. Some contribution toward the current protection of Parcel F having helped lead the cause to where we are right now, I think is probably a fair suggestion. But since we have a quorum of the commission here, and they’ve made their time available to be here tonight, I would like to perhaps just have each commissioner just react to that suggestion. Non-Public Session – 1/24/12 Page 11 Alderman Pressly Could they comment with the total or a portion. I mean if a million were given, what they would be wiling to put into it. Commissioner Trivilino First I think we need to address what an intangible that I think possibly is the vision of North Concord Street LLC. I doubt very much they are interested in developing little parcels of the Tree Streets or in the Tannery area, which would probably be affordable workforce housing, which we desperately need in this city. What they are interested in is a nice, pretty, manicured, well groomed, upscale, over 55 development that they can sell the homes for very high prices and make a lovely high profit margin on. I don’t think there is any way you will probably convince these people to do anything in the Tree Streets or the Tannery. That is the sense I get. I would very low to entirely drain the Conservation Fund, very low. I agree with Chairman MacLaughlin, a contribution, a portion, whatever. I agree with the Mayor that if the only way to do this would be to totally drain the Conservation Fund then I would not be in favor of it. Given the degradations of Pennichuck over the decades, I think it is extremely important to preserve this last parcel of land if it is possible, strictly from an ecological and environmental and wildlife corridor point of view. Any little bit of the Pennichuck Watershed, and according to the map on the DES, it is in, this parcel is in the Pennichuck Watershed, it’s extreme southeast border, it is not in the Supply Brook sub-watershed. Jim Petropolus at the Planning Board hearing made that very clear, it is watershed land, it is not sub-watershed land, it is also outside of the Water Supply Protection District, etc., etc., via the Sasaki Report. But as watershed land that sits on an aquifer, you have a drift aquifer and then the granite aquifer under it, it is important to our drinking water supply. It is by no means disconnected and irrelevant. I do not wish to see the fund completely drained. I think that would be foolish. On the other hand, if it is allowed to be developed, I think the development activity what with bulldozers and dump trucks and backhoes and steam shovels and whatnot, a great deal of destruction will happen; buffers will be destroyed, the bog will be contaminated, there is just no way to avoid that. I guess we do what we can do with what we have. Chairman MacLaughlin Can we just solicit the views of the other Commissioners before we… Commissioner Gallagher Thank you. Alderman Pressly is correct, currently there is approximately $1.8 million in the Conservation Fund, but you may not be aware of some challenges that we are going to face as well as challenges that we are facing as a Conservation Commission, which I think you need to understand before we start off bring up those funds. The Conservation Fund is funded by land use change tax. Nashua is pretty built out. We are in the process; we have requested that the Planning Department provide us with estimate of revenue that we can expect to see in the Conservation Fund in the years to come. We have not received that analysis back yet. We are also facing two potential issues, the first with HB1512, which will abolish the municipality support land conservation and HB1515 to upend local control of lands in conservation, which in essence would keep conservation commissions in place but would remove the land use change tax component therefore defunding conservation commissions across the state. These are things that are being heard right now in Concord. We do not know the outcome of them. The Mayor was before the Conservation Commission in the beginning of 2011, and she shared with us her vision of really just finally getting to a point where we can tell the citizens what great conservation land we have Non-Public Session – 1/24/12 Page 12 in this city and to help identify what passive forms of recreation each particular parcel has to offer; bird watching, hiking, biking, whatever the case may be. In doing our due diligence to determine how to best start that, we have identified the Lovewell Pond and the Terrell piece to start. A Trail Committee has been established and that work has begun. But as a Conservation Commission, we also have lists of properties that are attractive to us that we would consider, but in order to be good stewards of the land we already own, what this Commission does not have and has not had in the past is a working budget as to what the cost is to sustain the lands that we already have for passive recreation. If we go into and do all of this work with the Trail Committee and we start to advertise here are the different conservation lands that we have, here are the appropriate uses for it, there is going to become an inherent cost in upkeep to keep those places safe and viable for the public. At this point, my personal opinion is that this is a city issue and not a conservation issue. This was not brought before the Conservation Commission originally, it was deemed not to be appropriate. It was determined, as the Mayor said, by both the City and the State not to be the watershed so I see this as a piece of land that we certainly should, we certainly should conserve. We should keep it if we can; however, my personal belief is that this has been somewhat of a City created issue and therefore should be handled through the City. Thank you. Commissioner Gillespie I’m not in favor of using the Conservation Fund for this purchase. I think the price is much too high for that piece of land. There may be some alternative where you could develop part of that piece and still maintain or protect the bog and the portion of the watershed that feeds Pennichuck Brook. That may be an option that somehow you can negotiate using part of that land for development and part will remain as protection. I would not want to put dollars from the Conservation Fund into that. Vice-President Wilshire Thank you. And I will call on Alderman Chasse who has been very patient. Alderman Chasse Thank you. Vice-President Wilshire You are welcome. Oh, I’m sorry. Alderman Chasse Did you want to speak too? I will wait a little longer. Commissioner Overby I think that we have been given enough information on Parcel F to make the confirmation that it is an important piece of conservation land that needs to be preserved. I think we have enough collective minds around this table to come up with a negotiation that will probably look favorable to the current owner of that parcel. I think the development of this particular parcel would be detrimental to our watershed, anybody can look at it. Those are my thoughts on it. Thank you. Non-Public Session – 1/24/12 Page 13 Alderman Chasse I think we’ve got to back up a little bit here. The name of the game is they said they want a number. Who cares where we get the money. What we’re looking at right now is a number to give to them. If we say $2 million, they may say no. We may have to come back and say then we’ll give you $2.5 million or $3 million. At some point we’re going to say: “That’s it. It’s done. Go build it.” But it’s not about where we are going to get the money. It’s not about taking it from the conservation commission or anything. It’s give them a number. That’s what they want. Give them that and nothing else. Now, I’m willing to say to the mayor, let’s start off at $2 million, nothing more. If they say no, I’ll even give you the power to go up to $2.5 million and Beazer or $2.5 million and something else. If they get to $3 million, come back and call us all back together and then we can go from there. That’s my feeling. They want a number. Just give them a number and let’s see what they are going to do. We might get lucky. They might say yes, but don’t hold your breath on that one. Alderman Donchess I have a few points. First of all in essence, I agree with Paul. They should be given a number. We have to find out what they wouldn’t sell it for. That’s number one. And we’re never going to get that unless we offer them something. I’m skeptical of the report that the Sasaki or whoever it is that said it’s not part of the water supply. Pennichuck hired them. They were looking for a conclusion to be able to develop. They got that conclusion from their expert which is usually what happens. When you hire an expert, they give you what you’re looking for. That’s what you pay them for. So just having heard some of the commissioners here and talking to some people who walk this a lot, it’s hard to believe this has nothing to do with the water supply. I think the city has to seriously consider buying this thing because people have various reasons for opposing and supporting this acquisition. But one of the main reasons, a significant reason for people supporting this is they want to make sure that there is no further development in the watersheds. So what happens if the city lets this go? The ultimate result is the city pays $150 million in part to stop development in the watershed but in the course of it didn’t negotiate the deal that would have stopped the development and in the end the city buys and there’s no land left to develop anyway and the $2 million ends up in Southwood. Now to me that’s not a very good conclusion. The city is paying out $150 million. On top of that kind of money, we’re talking relatively small dollars. Now again, and I know this is the past, I think it’s naïve to think that the city didn’t have a lot of bargaining strength in paying this kind of money. And, there were certain conditions they could have potentially insisted on. But putting that aside, now that that’s all done, I think we’ve got to think about buying it. We’ve got to get a number from them. I just disagree a little bit with Paul’s number. If we’re going to seriously engage them in negotiations, if we offer only $2 million, which is what they paid for the parcel, they are going to see that as no offer at all. Right? So assuming we could use the $2 million from Southwood, I think we have to offer at least two and a half. We have to try to bring them down as much as we can. Maybe we offer them two and a half. That’s $500,000 more. They are never going to take that number, but we need them to respond with their number to see where we are. Alderman Cookson I agree with the previous two speakers. I think there’s a lot of good thought going into each of your comments. I think we also realize that the person who provides the number first loses and that’s one of the things that we need to be concerned about it. But you are right. We need to put a number out so we can ultimately get what they are thinking about and determine whether it’s reasonable or not. Alderman Donchess I think if they weren’t in the driver’s seat here, they having wanting money, we would say: “Well, look. You got to give us an asking price.” But since they have the right to develop at this point, and we’re the ones that want to buy it, we have to unfortunately take the first step. Non-Public Session – 1/24/12 Page 14 Alderman Cookson I agree, so let me continue my thought. I believe, and I’m cautious about this comment, I believe there’s a board of directors meeting of Pennichuck this Saturday in Merrimack. Alderman Pressly Friday. Alderman Cookson Is it Friday? Thank you. I know that we want to remain at arm’s length. We don’t want to have any political influence on this board of directors. But I think that as we have this new entity that, and you’re serving on that committee, I would hope that there would be some expression during that board of directors meeting as you establish your goals for the coming year and how you want the corporation to function that there would be some sort of conservation component to that. And I’m not sure how quickly they could mobilize and progress things through this new board of directors, but is there the opportunity to utilize this new board of directors, the new interim CEO, and establish what it is and they establish how they would like to operate, one of those being conservation and being a good neighbor with the City of Nashua and perhaps providing some, in addition to the $2 million in funding that we’re already ear-marking for this as part of Southwood’s ledger, is there an opportunity for them to contribute additional funds to be seen as a good neighbor of the watershed? So that would be my comment. Again, I express that with caution because I know that we, as a board and the sole shareholder, do not want to influence how they operate as a board and as a corporation, but I would hope at some point in time that Pennichuck would realize the importance that they have in the community and they would step up and be a good neighbor to Nashua. Alderman Tabacsko I just wanted to comment back on the earlier discussion, and I wanted to get on the record that I, too, share the concerns expressed by the members of the conservation commission about draining that fund. I would be very hard pressed to support a plan that called on using more than a very small token of that money. I do like the idea that was brought up by Commissioner Gillispie because it seems that you very quickly run out of negotiating room and you very quickly get to a point in cost here. Once you get past that initial $2 million and you start adding, you’re really up to $3 million. Now you’ve paid $5 million for a piece of property. I think that the time and effort might be better spent on negotiating a more environmentally friendly development than a complete buy-out. So for whatever that’s worth, that’s my opinion. Thank you. Alderman Moriarty To pay $5 million for property to somebody who all they had to do was sign a piece of paper and sign another piece of paper would be ludicrous. But at the same token, as the uneducated financier, it would appear that if all you had to do was sign a piece of paper and sign another piece of paper, that a 50 percent return of investment for a week’s work is not too bad. So it would be nice to get some - Mayor, I agree with your numbers in the long run, but there’s risk involved. There’s time, there’s cost of money and there’s risk. All kinds of things. They may very well, realistically, accept a low number. A $2.5 million number or something. We don’t know. But we would need somebody that could advise us. I certainly wouldn’t be willing to propose draining the conservation funds. That’s crazy. Hopefully we’ve got people who are good with numbers and maybe there is a way to use the purchase price of bond money to come up with this to pay for it because philosophically speaking had we known about this in the first place, the property would have been part of the original purpose. So naturally it lends itself to think that the money to purchase it would be the money that you would have purchased it in the first place which is the bond purchase to acquire Pennichuck. Non-Public Session – 1/24/12 Page 15 President McCarthy Before I comment, a question for the mayor. Have we talked to them about an expanded conservation easement around the bog and maintain the buffers bigger as a compromise? Mayor Lozeau I have talked to them about some of our concerns. I put together a map because I thought some of you might want to see if it shows where we have conservation piece now, where the Hayden Green part is, the easement that we have from them for the football area so they couldn’t develop and what the buffers are now. So there’s a 500-foot buffer area on the supply pond, 300 on the water supply protection district, and then in addition there’s an 80-foot somewhere on this. I’m seeing it right in front of me. I also looked at the topography and that sort of thing, and I’ve asked them about the idea that Commissioner Gillispie and Alderman Tabacsko seem to like because I thought that was a good suggestion too. What about develop all of them? What about you just do the multi unit right behind Lillian’s Motel. I could probably get over that. And they’re frankly more interested in the elderly development part which goes out into the parcel near the tank. When we did the subdivision around the water tank, that’s already been taken out and included additional buffers as well. The topography, I don’t know if people realize because I didn’t realize it right away, initially – here’s the Pennichuck treatment plant, let’s say, and here’s Parcel F. It’s like a 30-foot difference between the two. It’s not this smooth site that you might think it is when you look at a map. When you see that way up there, because initially one of the things that I thought about with Parcel F is it seemed silly to me that the property that Pennichuck owns in the city, there’s only two of them: Will Street and there’s Concord Street site. So over the next 100 years if Pennichuck needs to expand, it would seem kind of natural that Parcel F would be a good expansion area seeing they have a huge water tank there. But then you realize that there 30 feet. It’s not this natural expansion. So that took a little wind out of the sail in discussions. I did offer, and I do think that the Board of Directors of Pennichuck and Southwood would not have a whole lot of heartburn turning around that purchase price money again and being the same as they were before we started. But you take that $2 million, as somebody was saying, and you add what they’ve spent to date, now you’re at probably $2.5 million. And then, where do you go from there? Parcel F started as a 165-acre site originally. It started at 165 acres. Thirty acres were determined to be critical. Eighty acres were used for a buffer. That left a remaining 55 acres that could be used. That 55 acres turned into 33 acres. When you take out our easement and the subdivision, now it’s closer to 29 acres, give or take. And so now we’re down to this one little piece that if I turn it that way, it looks like a dinosaur. But when you look at that, if we could get them to… I don’t know if we’re ahead by saying we’ll put some money on the table for the multi-family and let you develop the elderly because I think we’re more interested in not developing the elderly than the multi-family. So the number gets high really, really quickly. And when you’re down to 29 acres, is that really where we want to put these resources? When you look at the conservation parcel we already have and some of those other things, is it really worthwhile or is our biggest driver here the fact that we don’t want to see the last piece of the Nashua land gone. Many of you in this room have watched me for the last four years. I think I’m a pretty good negotiator. Bringing the Pennichuck deal and the way that we did, we did it together, but I left this room many times with some leeway to negotiate. Frankly, part of me can’t help but.. Alderman Pressly, you say, curious about the timing. I think awful about the timing. Alderman Pressly No. It’s terrible. Mayor Lozeau Here we are tomorrow trying to celebrate a remarkable achievement and this is hanging over our heads. Part of me wants to say back early on when they talked about looking at this parcel and I said to them: “Don’t even think about selling that if you want to be talking to us.” I thought that was the right thing to do then. And it held it up. If I would have known it would come home to roost a day before we were here, I don’t know that I would have felt the same way. And then the issue about the public would have happened years back and this Non-Public Session – 1/24/12 Page 16 discussion wouldn’t be taking place tonight. But at every juncture where I had an opportunity to say don’t do it, I did. I was hoping that when the market changed that the purchase price of $2 million was going to seem ridiculous and that the developer wasn’t going to want to go forward. There were provisions in this agreement that have penalties. People kept moving forward, and it’s really unfortunate. When I negotiated to get the closing date out to February 20, I thought I was again operating in our best interest to be able to try to stop this and keep negotiating. It didn’t occur to me that it would be a couple of days before. And I think that that’s really, I mean I can’t think of a word that I want to see on the record that I feel about what has happened here. I think what we have to collectively agree to is – and I don’t disagree we have to give them a number, obviously. That’s why I’m here. I didn’t feel I had the authority to throw a number out, right? But I do think we ought to also know some idea of where the source of that money is. If this was just a matter of make whole the purchase price and the dollars that you spent, that would have been done by now. And they are in the driver’s seat. That’s clear to all of us. It’s just where is our breaking point and who is going to pay for that to save a piece of land that while it’s the last piece may not be the most critical piece in all of the ownership because I look at some of the Merrimack land and the 450 acres that we’re going to be responsible for and many of them are way more critical than this parcel that’s left, what’s left of Parcel F here tonight. I think we ought to talk about that. And one more thing I’ll throw on the table is the aquatic resource mitigation dollars, the ARM fund dollars. Two million dollars that were put in that fund because of the airport project that I intend to try to apply for conservation of some of the other land which has been discussed with the conservation commission in a non-public session. If this plan qualified, I’d be asking for that money for this piece. But it doesn’t meet the standards for that money. So every rock that I could turn over for what we could put on the table here, I’ve tried to do. So if you want to give me a number that you want to get behind, I’ll bring it. I’ll do that. I just don’t think it should be at any cost. I really don’t. I don’t know what else I can say. President McCarthy The whole point I wanted to make, I actually agree with virtually all of the commissioners about the conservation fund. While I would be willing to support spending some money out of there to buy out some of the rights and get better protection for the important resources on that property, I can’t see spending the fund down to zero. I think Commissioner Gallagher’s point about using the money to create a fund for stewardship of the existing land, that is something we’ve tried to do some of over a number of years as we acquired more and more conservation land. I think that is an absolutely essential thing to do. I certainly don’t want to drain the fund. I did want to talk a little bit about back to the issue of whether the land - the land is clearly in the Pennichuck Brook watershed. The water that falls on it runs out into the Pennichuck Brook and then into the Merrimack. I do not believe that it is in the water supply sub watershed. It is some 30 to 40 feet lower than the surface of supply pond if you just go look at the topographic maps. And our water is taken not from subsurface acquifers but from Harris Pond which is - I ‘m sorry, I meant the surface of Harris Pond. We no longer use supply pond which is somewhat lower in the chain. So it is substantially below any of the acquafers that contribute to the water that we actually drink, most of which is actually pumped from the Merrimack and just allowed to silt out in Bowers and Pennichuck and Harris ponds anyway. And that’s not just from the Sasaki Report. There are other reports that we have seen. I believe the Rizzo Report reached the same conclusion. There was some recent engineering that we’ve seen in the course of this application that says the same thing. So I think that’s going to turn out to be the case. I would love to preserve the bog and as much of the buffer around it as we can, but I think there is an issue of cost here. I was thinking a little further about the money issue. I think we’re okay, but let me just alert you to the fact that when we go out to bond stuff if we want to borrow money, bond counsel wants to understand what value we’re putting in it. We can’t borrow operating money. We have to borrow something for a long term improvement. It occurs to me that buying out developers’ rights to land is not something of tangible value that has – it’s an edgy question. Other communities have done it. I can tell you that a lot of conservation in New Hampshire has been the buy-out of development rights and that’s articles that go on warrants and get spent. I don’t know if anybody has ever gone to bond for that and whether you can get a clean opinion out of bond counsel, that’s something we’d have to think about if we wanted to do it. I believe that anything beyond the $2 million that’s in Non-Public Session – 1/24/12 Page 17 Southwood’s coffers right now would require making that understanding. I do not see anyway we can do this out of the water bonds because of their nature and the way that they were floated. I’m not sure that I would support it because they have an interest rate that is substantially higher. If we’re going to do it, it makes more sense to issue general obligation bonds and not let some of the bonds that are authorized. The debt we’ve incurred is what we need to do the purchase. If we were to borrow anything else, it’s a separate borrowing and we’d be better off to do that with non-taxable GO bonds if we’re going to do it. So if you want to think about it, let’s think about that. Back to the number, these guys are into this for $2.5 million to start with. While we all want to think that everybody’s nice guys, the alternatives that are on the table for them are: go forward with what you’re doing and make $5 million in the course of a few years or be a nice guy and leave most of that on the table and sell us the land back for a little more than you have invested in it. They are both nice guys, but I don’t know if they are that nice. So, I think we’re going to have to have a number that’s substantially larger than $2.5 million to catch their interest. Alderman Sheehan I think I have an idea that wouldn’t require bonding. I’ve heard a lot tonight about Nashua wanting to save the land. I know I got interested because of the building as well. I wasn’t all worked up but I did get involved. I did do petitions. I did do a story for UNH. I think that’s the thing we need to keep in mind when we’re thinking about how do we pay for this. So, the $2 million that’s in Southwood would be a given. And they haven’t just signed a piece of paper. They’ve had plans done. They’ve been to meetings. They have a lot of time and money spent to be ready to be shovel-ready, so I do appreciate that. Nashua wanted the land saved, and I think that’s the part we have to look at. In our agreement, we have spent money already to acquire Pennichuck. We have also planned to pay ourselves back with that money from Pennichuck. So I don’t know if they’d look at a graduated payback structure based on that, but crunching the numbers, being if they have 27 or 33 acres that are buildable, they’re looking at the fact that they are into it for between $60,000 and $75,000 an acre. They can do better than that now. They can do much better than that. So, I think it would be an opportunity to leverage them getting a better access. I mean I get phone calls from people from Clovelley at least once a week talking about accidents or near accidents or how hard it is for them to get in and out. And I’ve gone back and looked at their planning approvals to make sure that everything is the way it’s suppose to be, but it’s a state road. If we’re having trouble now, it’s going to get worse. And where they are talking about doing it, is going to still have that same hill issue. I think that their businessmen. They want to make a profit. They have done some work, and I can appreciate that. But I think that if we looked at $2 million from Southwood and maybe five hundred from the conservation commission, because I don’t think it should be wiped out either, but then look at offering something back on a yearly basis as we do our payback. Maybe a series of three years. But I do think we need to come back with a number, and I think Alderman Cookson got it part right. The first person who speaks after a number is the person who loses. So you put your number out and then you wait. And the first person who speaks is usually the one that’s going to.. So if the number is not out, that’s the first thing that has to happen. I think maybe look at financing it so we’re not using bonds. But we started this and we spent the money to save the land, and I think that’s where the money ought to come from. So if we’ve already planned on paying ourselves back, that’s where some of the money could come from potentially and not be bonded. President McCarthy Just so we’re clear on the payback of the city’s money. The PUC would not allow us to pay ourselves back out of what we use to acquire. They would not allow us to recoup the cost of the bond if we paid ourselves back out of the bond. The arrangement that’s in the settlement agreement is that we will be paid back out of excess revenues at the end of the year if there is a profit at Pennichuck Corporation for what’s returned from the subsidiaries. There’s no guarantee of that. As Pennichuck will tell you, if it rains a lot in June and July then we’re not likely to have that. So, if we enter into an agreement based on that, we have to have some other way to pay it back in the event that that money doesn’t materialize on a yearly basis. Non-Public Session – 1/24/12 Page 18 Alderman Vitale Listening to this and knowing a few things, I can’t imagine that they are going to accept the $2 million. I think that we should give them a number. We should work on where it is coming from, but as was mentioned before, maybe something that was logical and have them do partial development as a backup plan where they do the houses and not the elderly because I certainly wouldn’t want the elderly done and then they come to us and see if they could get reduced taxes because it’s elderly housing. But I wonder if that’s not something that we should look at as part of the offer too besides just a number. I keep going back and I remember the high school property, and our ability to buy it at one time. As soon as they did that little bit of work on it, look at how much more that we had to pay for that property. Although they haven’t done work-work on this yet, they have put time into it. And even though it’s not a house being built at this point, that’s how I look at it. That high school property we could have got for both …audio inaudible…. They just did a little bit of work and all of a sudden the amount we had to pay was a lot more. President McCarthy presides. Alderman Dowd Sitting back and listening to everybody’s comments, it appears that everyone sort of desires that we buy this land, but the thing that concerns me is why are we buying? What’s the benefit to the city? And you have to balance that against the cost. I agree at this point in the negotiation with the people who partly own it, you are going to have to come up with a number and present it to them if you have any option whatsoever of buying it. But …audio inaudible… is something that you’re going to have to balance against the benefit to the city, short term and long term, versus the situation we currently have with the city budget. I have no problem with coming up with a number. I’m just not comfortable right now as to what the number is or the source of the funding is. Thank you. Alderman Pressly The mayor referenced my use of the word “curious.” I chose that word because I have no idea what their motive is. But the timing of this, right the day before your big event tomorrow, I think is really a slap in the face of the citizens. That was our goal all along during this ten years to do that, so I would like us to explore every possible avenue, and I’m suggesting that we start with what Alderman Cookson suggested to see if the new Board of Pennichuck would entertain the idea of this being their first effort of restoring and creating conservation land which is one of the goals that I know that they indicated, many of them did when we interviewed them, would like to do with it. I think we should at least try that first and then have a backup number to offer them. At least to start with finding out. It’s sort of a shame to do it at your first meeting on Friday, but to see if they would entertain the idea of having them negotiate and have it be Pennichuck protected land and not our conservation land, but have them actually buy it back. Alderman Donchess To me, Pennichuck could justify buying this. I mean it’s close enough to the water supply that they could. They could probably get an extra vote to back it up. But, I was thinking about what, Mr. President, you had said about the development rights just in terms of thinking where money could come from. I think when you buy development rights, you’re sort of leaving the land in the ownership of the first owner and you’re just buying off their ability to develop. Here, we’re really buying a piece of land. We’re only talking the price and analyzing it in terms of what profit they might make. So here I think we are buying land, therefore, it is a long term. Non-Public Session – 1/24/12 Page 19 President McCarthy I was making the comment based on the fact that the purchase is probably split between two entities of the city and Southwood Corporation. The city would have to buy out the development rights while Southwood would be the one that wound up owning the property. Alderman Donchess Why couldn’t you have joint ownership? President McCarthy You probably can. Alderman Pressly I guess a question to the mayor: How do you feel about approaching Pennichuck and encouraging them to consider this one of their first steps in conservation? We could probably generate a real crowd to show up at their meeting to support that or to help them make that decision. I think it might be a really great way for them to start. Mayor Lozeau From time to time, Alderman Pressly, people make the right decision without having to have a crowd show up because they represent the people they listen to, but I guess as I said, I don’t really think the issue is whether or not Pennichuck board and the Southwood directors would be willing to put the $2 million on the table. I think we ought to start assuming that that is likely. I think the bigger problem is to find out what’s above that $2 million and where that’s going to come from. So I don’t necessarily see the first meeting that should be something taken up. I think what’s important for the first meeting is for them to be made aware of the concerns about that parcel, what’s on the table about that parcel, some of the discussion that’s taken place here about that parcel so that when the time comes, they are not surprised that they have never heard about it themselves, which I don’t think would be the case with the majority of them. I think the discussion here is what beyond that $2 million is this group willing to be talking about. Alderman Pressly What I’m saying is would they consider? Does Southwood have its own budget? Does it have other monies in there? Would they be willing to spring for paying a higher price than they just sold it for in order to conserve it? President McCarthy They have no other assets. There’s some land. Alderman Pressly Southwood? President McCarthy Ya. The money that they have made has been returned to the parent corporation primarily for payment of dividends. Non-Public Session – 1/24/12 Page 20 Alderman Pressly Okay. I think I understand that, but what I’m saying is they do have money. They don’t have money? Mayor Lozeau I don’t believe that they have; I don’t think Southwood Corp. is sitting on a few million dollars. Alderman Pressly How about Pennichuck Corp? Would they have the ability? Would they be inclined to buy it, themselves, and have it be their first effort to demonstrate that they are going to start saving the land and doing whatever they can to protect the land and the watershed land? Mayor Lozeau At the first meeting, Alderman Pressly, one of the items on the agenda is going to be the finances and looking at the budget and the state of the corporation. I don’t want one of the first things I say to be: “Let’s look at this budget and see how much you’re willing to spend out of it.” And asking them to make a decision under those circumstances I think is wrong. I think they need to look at what the health of the company .. we’ve not even completed due diligence the way most of us would want to do if we were buying something because we haven’t had unfettered access to everything and an unlimited supply of resources to … Alderman Pressly I totally agree with that. Mayor Lozeau Okay. Alderman Pressly That’s why I’m saying this is a situation that we’re in. But it seems to me that could conceivably be one of the options. I don’t know how long it would take for them to understand this and consider it, but I think it’s worth exploring. Mayor Lozeau I’m not saying that it’s not worth exploring, Alderman Pressly. I think what we’re going back and forth on is whether their first meeting is an appropriate time to bring it in and expect them to make a decision. I don’t think it is. Alderman Pressly I didn’t ask you to do that. Mayor Lozeau Okay. Alderman Donchess If we hit them with a number, that will buy a little time so it doesn’t have to come up at the first meeting. Non-Public Session – 1/24/12 Page 21 Mayor Lozeau I certainly understand that, Alderman Donchess. I’m not through with this. (Inaudible - multiple speakers) I know, but I’m still looking for a .. President McCarthy Could we perhaps have a meeting where the Chair recognizes speakers. Mayor Lozeau …audio inaudible… Alderman Donchess Sorry. I started it. President McCarthy I let it go for awhile. Alderman Chasse I’m willing right now: $2.5 million. Let’s go out, give them that number because I want to see what they are going to say. Then we can figure out how we’re going to fund it after. But I’d like to get an answer. They may say yes and surprise us all, or they may come back and say: “No, I want $5 million.” “You want $5 million?” and we might just say: “Well that’s it; case closed.” But I’d like to get something back from them. Open the doors, get the negotiation going. Alderman Deane I think with the math that was done by the Mayor and by Alderman Sheehan and what we had looked at what had - being a shovel-ready project that she alluded to and the value of the property - now with the approvals and everything else, $2.5 million they are going to say have a nice day. Let’s be realistic. I think what it boils down to is we have to look at how many plus acres is left? Thirty? Mayor Lozeau It’s just under 30, I think, for the …audio inaudible… Alderman Deane So we’re looking at 30 acres. We’ve got $2.5 million into 30 acres of land right now. That’s what we have to look at. Mayor Lozeau Exactly. Alderman Deane I guess if you look at the bigger picture, Mayor, when we went out to the way Parcel F used to be and what’s left of it, and the benefit of what’s been left undisturbed, I guess it’s not a bad thing. But have you heard of any Non-Public Session – 1/24/12 Page 22 timeline of when they plan on putting a shovel into the ground? Are they talking spring time? Have they submitted plans and permits? Have they got their permits and everything released? Mayor Lozeau I believe that they are willing to still honor the February 20th date that we had a resolution for. Alderman Deane The February 20th date. You’ve been discussing this with them. Do they seem as though they’re frustrated dealing with the city on this? We’re not holding them up with moving forward at all, right? Does it seem like they are going to when spring breaks that they are going to start this project? President McCarthy They do have their subdivision approvals. Mayor Lozeau They do. Alderman Deane Right, they have that, but, I mean… Mayor Lozeau They have all of their approvals. They are ready to go. Alderman Deane Your dealings with them, are they talking about breaking ground in the spring? Mayor Lozeau Yes. Alderman Deane They are. Mayor Lozeau And just so we’re clear, in case I didn’t make it clear, I went out on a limb and offered them the $2.5 million already. Unidentified Speaker Okay. There we go. Mayor Lozeau They paid the $2 million, and they are about $500,000 in. I thought if I made you whole, can we be done? Non-Public Session – 1/24/12 Page 23 Alderman Deane Don’t tell me they took it. Mayor Lozeau Shockingly, if they did I don’t think I’d be here tonight. I don’t think we can start with a make-whole number. Alderman Chasse Why did it take you so long to say that? Mayor Lozeau I think I did say it. Alderman Sheehan She led with this. President McCarthy She did. Alderman Chasse Then offer them three. I’d like to find out what they are looking for. If they are looking for five then we have a big decision to make. But you’ve got to give them a number, and 2.5 was a no. So now you got to decide. You going up to 3 or are you going to stop at 2.5 and case closed? Mayor Lozeau Frankly, I don’t have to decide. We have to decide. I am willing to go out there and do things, but I know the parameters in which some of you have some expectations that I’ll come back and at least get your temperature. That’s why I asked conservation commission to come in tonight as well because I think they have the same stake in this discussion. Alderman Deane I too, I don’t support taking a dime out of conservation fund. I just look down the road. I’m not a big conservation person, although in my time on this board I have supported all the conservation property that we’ve purchased. I look back at that and I think for good reason I think it was the thing to do. We look at the money, and now that we own this property as was alluded to earlier, yak we’ve gone out there and put some 4 x 4’s in the ground with little signs on it, but we own a vast amount of property now and we’ve got to start thinking down the road what we’re going to do with it. That fund is not going to keep replenishing itself as we well know. The city is pretty much built out. The bottom line is we have to look at the 30 acres that’s left. You’ve offered $2.5 million for it. As much as I’d love to see the city take the property, we’ve got to come up with what we’re going to pay per acre because at that point it’s just out of control. The funding is another issue, but I think you would have a hard time borrowing money. Tell bond counsel we’re buying this parcel and by the way we paid like ten times what the property is really worth. I think even the $3 million they wouldn’t accept. I don’t think they will accept anything. You would have to give them something outrageous and I’m not prepared to do that. It’s too bad it happened, but I’m of the opinion that the property is going to be developed. Non-Public Session – 1/24/12 Page 24 Alderman Melizzi-Golja Thank you. I agree with Alderman Deane. I really don’t want to take money from the conservation money. I think that as Commissioner Gallagher stated earlier, we have the property and we know we need to do things to maintain it. That’s just not money I think we should be spending. But I also feel that $3 million probably isn’t going to do it, and we really need to think about what’s realistic here. We can offer them some huge number, and they may say yes and then we are going to be like “eww”. So, I think we really have to weigh it because I look at that map the mayor has and her dinosaur is a very small piece of what that parcel really is. So I think we really need to weigh how important that piece is and what we’re willing to pay for it and then try to figure out where we are going to get it while maintaining the other funds we have in the city. Commissioner Gallagher Thank you. I know we tend to relive this every time we talk about it. I think we need to step back. Let’s remove emotion from it. If the conservation commission were to come to you tomorrow and asked to purchase 30-acre parcel for $3 million, we would be run out of here in two seconds. It would get very little comment. We would be brushed aside, and you would be on to normal business. I understand what has happened. The city in my mind failed in its due diligence process to identify this and act during the negotiations stage. We are now left to deal with that. I don’t think it’s a deal breaker. I think the purchasing of Pennichuck outweighs this particular parcel. We certainly have a number of concerned citizens who have done a tremendous amount of work on their own time and they are to be commended for that. I would certainly like to sit here and suggest that we preserve that. I think it’s worth being preserved. When I made my comment the last time, I don’t believe that conservation funds should be used. I take my conservation commissioner hat off and I come here as a citizen and I say do not spend that money. I cannot justify as a taxpayer of Nashua to spend that kind of money on this particular piece of property. Is it a pristine wetland that we need to preserve? The answer is no. So, we know that $2 million, $2.5 million has been offered. That’s been declined. The next logical step would be $3 million. We already know again if using that example if we came in asking for $3 million for 30 acres, what would, if it were a different parcel, what would your reaction be? I understand and I appreciate the opportunity to participate in the debate here, but it seems fairly simple. If we’re going to offer a number, the only responsible thing is to know where that money is coming from. You cannot float a number without being fiscally responsible and knowing where that money stands. Thank you. Alderman Donchess May I ask a question of the Mayor? Just in terms of the nuts and bolts of the negotiation, did you actually say 2.5 million dollars? Did you actually articulate that number to them? Mayor Lozeau I did. I said… Alderman Donchess And their answer was we need more. Mayor Lozeau No. Their answer was it’s a project ready to develop. Our pro forma shows that its value is greater than the $2 million we paid and the $500,000 or so that we’ve put into it. Non-Public Session – 1/24/12 Page 25 Alderman Donchess Well of course a fundamental principle is you never negotiate against yourself. We’re sort of in a position where we really need a number from them and to go up is a sign of weakness. To move from 2.5 to 3 without getting a number from them kind of says they’ve got us on the run. So is there any way we get back together with them and say look, there’s some interest in buying this. I told them we offered you two and a half. I know that’s not enough, but I need a number from you. I think I can get more money but I’m negotiating against nothing. I mean I have no idea from you. It may illicit a number, but it might not. I don’t know. It’s 2.5 given the extra $500,000 which isn’t really realized at the beginning. It’s not much of an offer but it is still a sizeable amount of money. It would help to get a number from them, even if it was $5 million. It’s like a car. The guy says he wants ten, that doesn’t mean he won’t take six. So, what do you think? Do you think you could get a number of him? Mayor Lozeau I understand the philosophy of positional bargaining and what that means. The 2.5 only came as a result. I started with don’t buy the property and we’ll make you whole for what you spent. That’s where I started. When he’s looking at buying the property, I know that I’ve at least going to pay him back what he spent to buy the property. So whether you said $2.5 million in the same vain way you’ve described, it didn’t play out like that where I went, well 2.5. Well wait, let me move that up. What I had said to him is I know that there’s an interest in buying the property. They know there’s an interest in buying the property. There’s been discussions about that in multiple settings. When he made aware that he was going to have to close because he was going to be traveling, I said: I’ve got to tell the board that you’re going to be doing that. And so I’m going to send out a letter and make them aware, and I’m going to give all the information that I can in the letter. I’m going to ask them to go into non-public, and I’m going to talk to them to find out how much interest there really is in moving forward. And then when that discussion is done, I’d like to sit with you and talk further about this. He knows that we’re going to come back and say I need a number from you. I started with that. I said you know it would be easier if I could go in with a number and have some discussion around something real and not what we assume or what we make up which is why I went to the trouble of giving you some idea of what the pro forma probably looks like that he has. So you had some idea of where I think their thinking. Having said that, I still will go back looking for a number, but it will be helpful for me as we discussed more than once during the Pennichuck discussion to have some idea of where you’re willing to go too which is why we got into the discussion about minutes being opened or closed. Because if you still want me to negotiate on this then I would suggest we don’t want to open the minutes. If you don’t then I would suggest that we do open the minutes. But as of tomorrow, you will be able to see and you may have a better understanding of the purchase and sale and what it all means and that might help us. I don’t know how much, but it would be helpful for me again. Commissioner Trivilino I just wanted to say that I agree with Mike. I don’t want to see a significant expenditure from the conservation funds. In answer to Alderman Dowd’s question about how significant and the benefit to the city, apart from preserving a bog which is Kettle Bog, I believe, therefore a significant natural feature. There aren’t too many of them around especially in an urban area like this. One of the major benefits to the city is not paving anymore permeable vegetated surface in the City of Nashua because we have so little. When you pave things over, paving leaches toxic substances into the ground which no matter where they are, they get into a water system sooner or later. Paving reflects heat which causes all kinds of atmospheric disturbances when it is combined with a whole lot of other reflected heat from all the other paved over surfaces. But I understand the financial logistics and the intricacy, the ins and outs of how this has all come about. But just paving over more of Nashua’s very scarce permical surface will be a distinct disservice to the city. If it has to be, it has to be but there will be consequences. If not in our lifetimes then down the role lot of other reflected heat from all the other paved over surfaces. But I understand the financial logistics and the intricacy, the ins and outs of how this has all come about. But just paving over more of Nashua’s very scarce permical surface will be a distinct Non-Public Session – 1/24/12 Page 26 disservice to the city. If it has to be, it has to be but there will be consequences. If not in our lifetimes then down the road. Alderman Deane I’m going to move to authorize the mayor to offer to the LLC $3 million for the property. MOTION BY ALDERMAN DEANE TO AUTHORIZE THE MAYOR TO OFFER $3 MILLION ON THE QUESTION Commission Gillespie I want to just remind the board here that this piece of property is not in the watershed. By determined by the DES, it is not in the public drinking water supply. The bog also carries the 40-foot buffer on the city plans for wetlands. There is an existing 40-foot buffer. The engineer’s plans for this property, which I have not seen all or many of, apparently show actually improvement in water quality and a reduction of water infiltration into the ground based on their groundwater drainage system which is actually an improvement with their existing plan. Those plans could be modified somewhat, there could be even large improvements. Thank you. Commission MacLaughlin Thank you, Mr. President. I don’t know that the majority of the aldermen are available of the testimony by Hayden Green only expert that spoke back in July at that hearing wherein the citizens were ignored that he could not with definitive expertise tell us how deep the water table is. He suggested that they could do a drawing and do a test drill or boring here and there throughout the site but there were no expert testimonies as to how far down they could go. So if you take these three acres and you start building 33 homes and two large motel unit buildings, whether at the front or the back of the property, you don’t know how deep down you can dig safely via necessary foundations and basements and all of those things. Then you’re not really sure of exactly what it is you’ve got. And that was the whole point of the conservation commission persisting in its effort to bring this to where it really is. Not all the questions that were asked ever got answered. Certainly not all the experts were in the room and the developer’s own expert could not definitively answer what questions were asked. That is the basis for the concern for this property. We just heard Commission Gillespie say it is not part of the watershed. You have heard me and Commissioner Trivilino state emphatically that it is. It is our belief that it is. We’ve got a divided opinion here. So we don’t really have the full answer. We heard from the mayor earlier that two sources had indicated DES, being one, and the issue of the AOT, which we feel is wrongly issued based on incomplete testimony and incomplete answers to questions that could not be answered that they feel is not an essential part of the watershed either. But we don’t definitively know that. We heard that the property sits a little higher relative to where the water tank is and where the water treatment facility might be. We have testimony that it sits a little lower. It is an uneven piece of ground. We are not talking about a rock pile here. We’re talking about a key component of the Pennichuck Brook system. If we weren’t certainly the commission, the majority of it anyway, would not have consistently pushed this to where it is. We voted twice unanimously. Once in a regular meeting not too long after the planning commission took the vote in July and then again when we were forced under threat of litigation to vote again. We maintained our original position. So, I think what we have to understand here is this is not throwing money down a hole. This is an investment in preserving something that is very, very important. Speaking of due diligence, the city is just as of tomorrow completing a sale of the Pennichuck Company without having done due diligence of some of the property around the supply pond. The citizens in their research, they did it for us. There are over 12 natural springs that are flowing freely, and there’s algae covering the top of it. There’s signs of illegal dumpings, illegal cuttings and all sorts of materials that we’re not going to be very pleased to learn about when that due diligence gets completed. Part of the persistence of all this was perhaps Pennichuck could have done some of the clean up before the cost of doing so had to be born by a city-owned company. Get prepared. There is going to be an issued. So the thing is whether the Non-Public Session – 1/24/12 Page 27 developer is willing to downsize the project being it permits or permits given really under threats of litigation, especially if the parcel … this is a sound thing for the city to pursue. Here we are. Let’s get the will, let’s have the drive, let’s make an offer and see what’s possible. Thank you. Commission Gallagher In regard to Alderman Deane’s motion, I’d like a little bit of understanding of where the $3 million might come from. It’s $2 million from the Southwood piece and $1 million from the city and how the city might President McCarthy That is to be determined once we get to a point where we are ready to make an offer, I suspect. Mayor Lozeau Although it doesn’t relate to the motion, I just need to say, Chairman MacLaughlin, the city did do its due diligence on the environmentals. I understand that the conservation commission members may not know that because of what we’ve done, but we have done them. And members of this board have reviewed that information. It was done by a third party that we hired to do this work. It’s not something that we could talk about in public settings and probably then not be able to talk about it tonight, but I don’t think they’ll undo the deal tomorrow, but I don’t want you to think that we did not do due diligence on the environmentals because we did. A Viva Voce Roll Call was taken, which resulted as follows: Yea: Alderman Wilshire, Alderman Melizzi-Golja, Alderman Chasse Alderman Moriarty, Alderman Donchess, Alderman Tabacsko, Alderman Sheehan, Alderman Deane, Alderman Vitale, Alderman Craffey, Alderman Pressly, Alderman McCarthy 12 Nay: Alderman Dowd, Alderman Caron, Alderman Cookson 3 MOTION CARRIED Mayor Lozeau Based on this evening’s discussion, I just want to make sure that I have a clear sense of a few things. Based on what we have talked about this board is willing to let me go back and work some more on combinations of things and dollar amounts that don’t exceed the $3 million to see if I might be able to cut back on the size of the development or any kind of combination of things. Is that about right? Is there anybody that doesn’t think that’s correct? Alderman Deane As long as you don’t give away the street department. Alderman Chasse You offered them $2.5 million. Now take all the rest of the stuff off the table first. I want to see their number. If we say $3 million and they come back and say $5 million, then we might be able to negotiate with the Beazer property or something else or work something out. Alderman Sheehan Non-Public Session – 1/24/12 Page 28 They already own Beazer. Alderman Chasse I want to see their number. That’s it. Thank you. Mayor Lozeau Again, just so I’m clear. I’m just asking because this could be a weekly thing over the next few weeks of bringing you back and saying okay, this is what they said. Now do you want me to go back and do something else. I’m asking for some parameters which I can operate. I understand negotiations. I understand that if I put a number on the table, there’s an expectation that they will put a number on the table. I get that. If they come back with a $5 million number, I’d come back and say they said $5 million. I’m not going to support that. But my point is: Is there some other flexibility that I might be able to come back to you and say I’m thinking I should offer this. I think maybe they will go with that. If you don’t want me to do that. Alderman Chasse No. That’s just me. That’s just my feelings because I want to see their number. If they come back with $5 million, I guarantee you I will not support it. That’s a guarantee. I will say that right now. But, I want to see their number. If it’s workable, ya. We can talk about it. Then we come back and we could say, well work something out. But if they come back and say $10 million, you know that we won’t have to meet again. I guarantee it. Alderman Deane Mayor, I thought you stated earlier that they weren’t really interested in the other parcels. So do you think, with your opinion of working, negotiating with them, do you think increasing the dollar amount by $500,000 is going to make them interested in some of the parcels that you’ve already offered them? Or, have you offered them parcels and cash? Mayor Lozeau No, not really. I’ve just … Alderman Deane You did a straight flip Mayor Lozeau Right. Alderman Deane … of this parcel or that. Mayor Lozeau And they have consistently said to me we’ll consider anything you’d like. Alderman Deane Hee-hee, ha-ha, right? Non-Public Session – 1/24/12 Page 29 Mayor Lozeau Well it just seems to me, I don’t want the tail wagging the dog, and I don’t want to be running around in circles but I feel like it might be worthwhile to look at trying to have a smaller development with some money to see if that might work without additional parcels. Looking at their site and seeing if we can make it smaller in some way. Alderman Deane Buy some of the units before they’re built? Mayor Lozeau Exactly. Something like that so instead of a 85-unit development, maybe it’s a 50-unit development. I don’t know. I’m just asking if you’re willing to let me have that discussion in conjunction with dollars. But I thought that you were so I was just… Alderman Deane I look at it like this. We’ve approved the $3 million. Somebody has to negotiate. There has to be, I think, some leeway to sit down with those people because it would kind of crazy coming back here. We’d be meeting every night of the week. It sounds to me like what you want to do is shrink down. Well, you’ve attempted to negotiate a parcel swap and none of that has gone anywhere. So the increase of $500,000 isn’t going to change the land swap, but now you think that probably your best case would be the development would go forward but we downsize it further away from the edges of the property. Alderman Donchess I agree with Alderman Chasse. The first thing is to get a number from them. We’ve got to get the parameters down. If we start talking about a lot of other things, who knows what is going to happen. Let’s get a number and go from there. If we have to meet every night. The point is to try to get the best deal possible. And to do that you’ve got to take the negotiations step-by-step. I agree with him, Alderman Chasse. Offer $3 million and get a number. Alderman Vitale When you were talking about switching properties and those other properties weren’t shovel-ready, we didn’t do the say $2 million just to shrink the size of the development as it stands now? Mayor Lozeau No. Alderman Vitale So that could still be something that you might think of doing? Mayor Lozeau I’m just trying to find other options. It’s very obvious to me. I get it. I get getting a number. All I’m trying to say to you is after I get the number, if you could trust my judgment, I might be able to move to the next step. That’s all I’m asking. If you don’t want me to do that, I’m perfectly happy to come back and you they would or they Non-Public Session – 1/24/12 Page 30 wouldn’t give me a number and what that might be. I’ve been entrusted with your trust before. I think I haven’t blown it. Alderman Vitale I just wanted to Mayor Lozeau I understand Alderman Vitale I was just saying if we think approximately $2.5 million would make them whole, it seems kind of like a little bit over the top to make them whole and I don’t know maybe straight to the development but … I know there’s people who have come in spoke on the part of the development that didn’t like if it went in, we knew all that part and we know the part that the last …audio inaudible… tax stuff on the elderly housing and all that. I trust your judgment. Alderman Wilshire I agree. Ideally, I’d like a number. But I don’t know that that is going to happen so I’d like to give the mayor some leeway and have her come back to us saying they are willing to do this, this and this. Not just come back and say well they didn’t want the 300. It’s not likely they’re just going to come right out and say okay, well our number is $300,000 or our number is $350,000. It’s not likely they are going to do that from the sounds of the current talks that are going on. So, I’m willing to give the mayor some leeway to find out what exactly it is that might work for us. Alderman Tabacsko I agree completely with Alderman Wilshire. I think we’ve learned that we, or at least me personally, I don’t want to be involved in the actual negotiations, but I do expect the mayor to bring back whatever it is to take to get towards the goal we all seem to agree on. The one thing we seem to agree on is that if we can’t stop the development all together, how can limit it, and what is the cost of any of that. If it’s an exploratory conversation that has to take place then you’ve got an extra $500,000 in your pocket at this time to try to find that out. Good luck. Commission Overby I have faith in mayor’s judgment in the negotiation process. I personally would like to see Parcel F left whole. I have seen enough. I know that this board has not seen the presentations that the conservation commission has seen. The parcel has gone under some careless, reckless dumping and it is not being paid attention to by Pennichuck when it was owned by them. The drainage off of the apartments has gone down into the bog area. There needs to be some type of monitory on that area if it was to be kept whole. How this shakes down is in the careful hands of our mayor and I wish you all the luck. Thank you. Alderman Craffey Thank you, Mr. President. I trust the mayor’s judgment. Three million dollars gives them a 20 percent return. That’s usually what they would expect on a project. But I do trust your judgment. I do agree with the previous speakers, Alderman Tabacsko, Alderman Vitale. I mean and Alderman Wilshire, sorry. You do a good job in negotiations. You’re a tough negotiator, so I do trust your judgment. Non-Public Session – 1/24/12 Page 31 MOTION BY ALDERMAN WILSHIRE THAT THE BOARD OF ALDERMEN SEAL THE MINUTES OF THE NON-PUBLIC SESSION BY ROLL CALL UNTIL SUCH TIME AS THE MAJORITY OF THE BOARD VOTES THAT THE PURPOSE OF THE CONFIDENTIALITY WOULD NO LONGER BE SERVED A viva voce roll call was taken which resulted as follows: Yea: Alderman Wilshire, Alderman Dowd, Alderman Melizzi-Golja, Alderman Chasse, Alderman Caron, Alderman Moriarty, Alderman Donchess, Alderman Tabacsko, Alderman Sheehan, Alderman Deane, Alderman Vitale, Alderman Craffey, Alderman Cookson, Alderman Pressly, Alderman McCarthy 15 Nay: 0 MOTION CARRIED MOTION BY ALDERMAN GILLESPIE TO SEAL THE MINUTES UNTIL THE CAUSE FOR THE SEALING IS NO LONGER NEEDED SECONDED BY COMMISSIONER GALLAGHER A viva voce roll call was taken which resulted as follows: Yea: Commissioner Trivilino, Commissioner Overby, Commissioner Gallagher, Commissioner MacLaughlin, Commissioner Gillespie 5 Nay: 0 MOTION CARRIED MOTION BY ALDERMAN WILSHIRE TO COME OUT OF THE NON-PUBLIC SESSION AND RETURN TO THE JOINT MEETING OF THE BOARD OF ALDERMAN AND THE CONSERVATION COMMISSION A viva voce roll call was taken which resulted as follows: Yea: Alderman Wilshire, Alderman Dowd, Alderman Melizzi-Golja, Alderman Chasse, Alderman Caron, Alderman Moriarty, Alderman Donchess, Alderman Tabacsko, Alderman Sheehan, Alderman Deane, Alderman Vitale, Alderman Craffey, Alderman Cookson, Alderman Pressly, Alderman McCarthy 15 Nay: 0 MOTION CARRIED MOTION BY COMMISSION GALLAGHER TO COME OUT OF NON-PUBLIC SESSION SECONDED BY COMMISSIONER TRIVILINO A Viva Voce Roll Call was taken, which resulted as follows: Yea: Commissioner Trivilino, Commissioner Overby, Commissioner Gallagher, Commissioner MacLaughlin, Non-Public Session – 1/24/12 Page 32 Commissioner Gillespie 5 Nay: 0 MOTION CARRIED The Board of Aldermen and Conservation Commission came out of non-public session at 10:28 p.m. MOTION BY ALDERMAN DONCHESS TO ADJOURN Commission MacLaughlin I believe the conservation commission wishes to adjourn. President McCarthy The conservation commission needs to adjourn. Alderman Pressly I would like to speak to them before they leave. MOTION WITHDRAWN Alderman Pressly I just have an announcement about tomorrow that I think you will be interested in, and that has to come up next so if you would just hang around until you hear what is going on. You can adjourn, but would you just stay here for the announcement? I think you might be interested. MOTION BY COMMISSIONER GALLAGER THAT THE CONSERVATION COMMISSION ADJOURN MOTION SECONDED BY COMMISSIONER GILLESPIE A Viva Voce Roll Call was taken, which resulted as follows: Yea: Commissioner Trivilino, Commissioner Gillespie, Commissioner Gallagher, Commission Overby, Commissioner MacLaughlin 5 Nay: 0 MOTION CARRIED The Conservation Commission adjourned at 10:30 p.m.