City of Portsmouth, New Hampshire 2022 - 2024 City Council, 11 Mar 2023

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From YouTube: 3.11.2023 City Council Special Meeting

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3.11.2023 City Council Special Meeting

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Good afternoon, all right now awesome, okay, um welcome everyone. I will wait.

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A motion to come out of non-public and to seal the minutes is that moved. Second.

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All in favor aye aye any opposed. uh I will now uh ask val to call the roll.

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Mary cochran here assistant mayor kelly, here councilor tabor, here, council denton.

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Here councilor moreau here, councilor bagley here, council lombardi here council of blaylock here.

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Councilor cook here well present your honor. Thank you valerie, um so welcome everyone.

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um Today, uh saturday, uh slightly unusual to have a meeting um on a saturday, I called this meeting.

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uh Because of uh the the upcoming uh check-in with the gsa on monday uh to here legal advice,.

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Which we did uh in non-public uh and to act upon legal advice? I will now um ask our city attorney.

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To give a synopsis of where we are, we will then uh vote um uh to act on that legal advice.

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um And so attorney morale, oh um and I and I see that there was um some confusion on public.

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Comment, there's not going to be public comment uh today. uh There will be opportunities on monday.

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um The council meeting, if not sooner, uh based on uh what happens on monday.

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So um we are going to have a meeting with the gsa on monday. As you all know, our deadline is.

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Fast approaching for march 31st, and um where we are at this point is we believe we are at.

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An impasse with our development partners, so um by way of background and to update you.

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All as much as I can the terms of the settlement agreement that we have that was signed last april.

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Require both sobo square, michael caine to and the city to work in good faith to develop the.

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Community plan or a plan of substantially similar to the community plan at the mcintyre site.

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Through the monument program with the national park service and gsa, so the settlement agreement.

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Itself, while it resolved a lawsuit, is actually a binding contract on both parties. So we are.

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Legally bound to negotiate in good faith under the terms of that settlement agreement.

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That's a legal term of art, subject to a lot of interpretation for specific contact conduct, but.

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In simplified terms, it really just requires the city and sobo square to act reasonably to with.

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The purpose of going forward and developing this project so since april of 2022, when the.

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Settlement agreement was signed, the city has been working, I think, as you know, on a weekly basis with.

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Staff and our development partners in good faith to develop the plan known as the community plan.

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It took much longer than expected to get to that 50 percent design schematics in order to.

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Put together the cost of construction, the expected revenue and put that in a document called a pro.

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Forma we obtain the pro forma from our development partners in november of last year, which outlined.

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The anticipated construction costs the anticipated revenues from the project in terms of rents, leases.

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Etc- and um it also indicated a split in costs- you know what the developer would be putting into this.

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Project what the city would be putting into the project. um As you know, we came back in january and.

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Asked for an appropriation in order to obtain expert financial advice and a review of those.

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Construction costs that were presented to us by sobo square, michael kane, our financial advisors.

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And our construction experts have examined the costs of construction. They've examined the.

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Sort of underlying presumptions um behind the the numbers for the expected revenue for the for the.

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Project and um we are at a place where we believe we have changed those numbers substantially.

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However, in order to go forward um with an nps application with an application.

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To the national park service, we need to be able to resolve some critical differences.

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That we have with sobo square in regards to our development agreement and be able to move forward.

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Negotiating the ground lease our contribution agreement and the application itself so.

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um What we haven't made clear previously is that um really, since we asked for our extension at.

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The end of last year, when we asked for gsa to give us an extension to the end of march.

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We have been under the threat of litigation from sobo square in terms of asking for that extended.

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Period of time to review those financial figures and it's why it's one of the reasons why there's.

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Not been more public information available, it's a delicate legal situation for the city.

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We've continued to go on negotiating with our city staff, our development team and soba square.

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um To look at the plan to examine how the plan, how that plan in particular, would.

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Be constructed whether there were different ways, just quote: unquote: value engineer that.

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Project to reduce the construction costs, which would reduce the city's contribution and we've.

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Worked with our financial expert to look at different ways in which we could increase the.

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Revenue stream that would come from the project, which again would reduce the city's contribution.

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um In the first development plan that we had dating back.

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Prior to the lawsuit, the city was not contemplated to be a contributor to the development.

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It's in the settlement agreement from the lawsuit that requires us to make a financial.

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Contribution to this project, it doesn't say how much it doesn't define those terms.

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It just says that it's anticipated the city would make some contribution to this project.

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And that's in the settlement agreement, um which you can read it's on it's online.

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So um there's a difference in terms of how we negotiate going forward and we want sobo square.

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To agree in our development agreement and our groundlings that they would share in the.

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Revenue with profits from this development because we're contributing to the cost of the development.

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Also in the prior development agreement that was actually signed and executed, there were a number.

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Of provisions that laid out what would happen in the event that the project didn't go forward.

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What we're going to call termination rights and in those termination rights it would allow the city.

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um To be done with this project with sobo square, if the national park service or gsa.

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um Did not agree to go forward if they don't like the plan if they.

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um Because they don't believe it fits in their historical um requirements for the.

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Property, if they don't like the financial plan, because they don't believe it's.

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um Is a substantial public benefit? You know, there's a number of reasons why this could.

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Not be approved, or if we take too much time in getting to the bottom line, with our application.

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So our settlement agreement from our development agreement from the last.

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um Round had those termination rights clearly stated in them, we've been going back and forth.

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With sobo square, their attorneys and our outside counsel, in terms of keeping those termination.

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Rights in the settlement agreement at the moment um that has been an unsuccessful, so we've come.

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To the point here, where we're approaching march 31st- and um we believe that we are at an impasse.

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We don't want to terminate the process, we want to keep going forward in good faith and.

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Try to get through this impasse, but we are at a basic standstill right at the moment without.

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Being able to agree on the termination rights or the potential revenue sharing for this project.

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Now, given that gsa has been holding on to the mcintyre site for many many years awaiting us to.

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Purchase it through the monument program, we feel compelled. We need to tell gsa. uh What's going on.

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But the negotiating team did not want to do that without advising council and having the council.

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Give us direction in terms of a vote to go forward in how to proceed. So that is that's. Why we're here.

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That's what we've discussed that's at least it's much as I can tell you publicly what.

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We've discussed um this is an incredibly complex project and highly unusual really for a public.

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Entity to engage in such a public-private partnership of you know that is so extensive.

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It requires a lot of patience. It requires a lot of assistance from experts for the city staff.

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um And it requires a lot of legal experts to ensure that the city continues to.

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You know work in good faith and abide by the terms of the settlement agreement that.

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We entered into almost a year ago, and that is our goal so for that purpose.

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um We do have some proposed motions for for the council to go forward and to give.

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Us specific direction on how to proceed monday with our meeting with general services, the gsa.

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Then I'm willing to answer any questions from the council council tabor. Thank you, mayor.

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Would it be fair to say that, uh had we been able to resolve the legal issue and the sharing.

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Of revenue issue, we wanted to have a public hearing and show the public a pro forma and.

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um As you say, some designs substantially similar to the community plan, but with some.

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Compromise modifications that that was that was our intent. That's always been part of our timeline.

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That we've anticipated, you know when we get to the point where we have some agreement, that we.

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Could present what has happened? The designs, the redesigns, the different modifications of.

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Those designs that could be possible- and you know the different price range that that would.

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Mean you know adding this piece means you add this much money taking this piece away means you take.

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Away this much money, we've gotten to the point where we could define all of those pieces for.

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The public and present them to you with the actual designs- and that was always in our timeline to do.

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um Way in advance of submitting an application.

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And uh would it be fair to say, would it be accurate to say that in this process we've.

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Discovered the tax revenue could be as much as 860 000 a year from the private value of the property.

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uh And that we made great progress uh if the public accepts some of these design adjustments.

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Great progress in getting the cost to something: that's manageable, that is fair to say, we're very.

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Encouraged and through the help of our financial experts, we do believe there's a way to work. This.

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Project have it completed and have it be feasible for the city in that it would be a substantial.

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City benefit public benefit, but nonetheless, would it be fair to say that we, in spite of now.

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Contributing to the project financially, which was not in the original 2017 council version,.

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We are not where we want to be with the development agreement and termination rights.

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And we're not where we want to be with sharing revenue in the future. The long-term future.

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That's correct um and have you had a chance.

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To draft a motion based on the council sentiment that we had yes, I have two motions.

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So mayor, would that be the next step? Why don't we um let's hear the two motions that were drafted.

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uh In the direction of the council and then we'll continue uh the discussion I'll wait to call the.

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uh Well, let's get through both and then we read through both and then we'll call for the first.

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Motion we'll continue the discussion and then we'll vote on that and vote on the second. So the.

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City attorney, could we hear both of the motions, so the first motion is a request to find that.

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The city is at an empaths with sobo square, michael caine, in our interpretation of the requirements of.

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The settlement agreement regarding key provisions of the development agreement and the ground leaves.

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The second motion is asking the city council to provide authority to the negotiating team.

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To advise the gsa that the city is at an impasse with sobo square slash, michael caine,.

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Oh wait. The first motion so moved. Second, any further discussion on the first motion.

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Thank your honor. All of the city councils I have served on have been acting in good faith with.

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Our development partner to obtain the mcintyre building through the historic monument program.

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And just because we have reached an impasse, we are still going to continue to act in good faith.

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With our development partner to obtain the building through the historic minor program.

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Any other discussion, any other questions.

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All in favor aye any opposed the city attorney. Will you please uh read the second motion sure.

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Provide authority to the negotiating team to advise gsa.

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Is that an impasse with sobo square michael king so moved? Second, any discussion.

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I'd like to just thank the city attorney and the council for everybody came out today.

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um Well, it's not exciting uh to be at impasse. It's important that this is a council decision.

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To declare that we are at an impasse, and also for us, as a council, to direct city staff to.

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Tell the gsa that we are at an impasse. I am an optimistic person. I am a hopeful person.

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um But those that are deciding whether or not to continue on with this process need to know this.

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So that they can help facilitate as best they can counselor when will be informing the gsa of this.

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If this motion passed that would be monday at noon time, we have a meeting all scheduled. Thank you.

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So the motion on the floor, all in favor aye any opposed.

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An opposed the way to motion to adjourn second.