Manchester aldermen OK $3M bond for cleanup of new Millyard hotel siteBy PAUL FEELY
New Hampshire Union Leader
September 05. 2018 9:46AM
MANCHESTER — Aldermen voted Tuesday to approve issuing a $3 million general obligation bond as part of an amended agreement with the developer behind a new Millyard hotel, to be used to help cover cleanup costs associated with contaminated soil at the site.
The amended agreement was approved last month contingent upon passage of the bond resolution this week by the Board of Mayor and Aldermen.
On Tuesday, aldermen were informed a fourth amendment to the existing purchase and sale agreement with the city had been proposed by Peter Flotz, managing member of Bedford Lot Venture LLC and the developer behind plans to build a Tru by Hilton hotel. The new amendment states the developer is willing to reimburse the city for the interest on the bond.
Under the terms of the amended agreement, the city will issue a $3 million general obligation bond, to be released monthly to Bedford Lot Venture LLC for site cleanup work. Bedford Lot Venture LLC will then make annual payments to the city of $150,000 each year — plus an amount equal to the interest paid by city on the bond during the immediately preceding year — beginning on the first anniversary of either the closing on the general obligation bond or the start of construction on the site.
After the third anniversary of the issuance of a certificate of occupancy, Bedford Lot Venture LLC can repay its obligations in whole or in part without penalty or premium.
The amended agreement also states that beginning April 1, 2020, and continuing through 2029, Bedford Lot Venture LLC will pay the city a minimum of $475,000 comprised of property taxes assessed on the hotel and parking deck, along with the $150,000 mentioned above. If the assessed taxes come in at less than $475,000, Flotz’s company is to make up the difference.
To ensure the work is done, the city will hold a $3 million letter of credit until a certificate of occupancy is issued for the hotel, and a written statement is received from the city’s public works director that the parking deck and surface parking lot have been “substantially completed.” At that time, the value associated with the letter of credit drops to $1.5 million and declines an additional $150,000 each time Flotz makes a payment.
“If an interest payment is missed, then we can draw on the letter of credit?” asked Ward 5 Alderman Tony Sapienza.
“Simply put, yes,” said attorney Susan Manchester of Sheehan and Phinney, representing Flotz at Tuesday’s meeting. Flotz was unable to attend Tuesday’s meeting because of a prior commitment, according to a memo submitted to board members.
The amended agreement passed on a majority vote Tuesday night, with only Ward 9 Alderman Bill Shea opposed.
Plans call for a 116-room hotel and a parking garage for 254 vehicles to be built at the lot near North Commercial and Spring streets. According to Flotz, the project is “burdened with significant unusual costs that are directly attributable to the site,” and is appraising at $18 million — despite the $23 million price tag.
When several aldermen voiced their displeasure with the amended agreement prior to voting on it last month, Flotz said he had initially hoped to use New Markets Tax Credits to assist with cleanup costs.
“We expected, and hunted down for a year and a half, New Markets Tax Credits,” Flotz told aldermen last month. “We were expecting $6 million to come into the project that we would not have to pay back. That was our cushion for the site conditions.”
Flotz previously told the aldermen he was made aware of contaminants in the soil at the site in November 2016, when he was given a memo by the city’s brownfields consultant on the topic. He said his firm was pursuing funds to clean up the site through the New Markets Tax Credit program, in which developers sell tax credits allocated by the federal government for projects in low-income areas. But when the U.S. Treasury on Feb. 13 allocated $3.5 billion for the program, New Hampshire was not one of the recipient states.