By BOB MARTIN
Eagle Times Staff
The Sullivan County Commissioners held a special meeting on Aug. 9 where they accepted the Tax Anticipation Note bid by Claremont Savings Bank, after there was an error in the bid with Bar Harbor Bank and Trust, who was previously selected.
“They made a mistake with their bid and asked to retract it,” said County Manager Derek Ferland. “We had another bid on the table and they were really close anyway, so we went with that.”
Ferland said it was unclear what happened with the bid error, and the county has a longstanding relationship with Bar Harbor Bank and Trust, so it was most likely just an oversight.
The bid that came in by Claremont Savings Bank was a difference of one percentage point on the non-taxable portion of the TAN.
There was one other bid from Mascoma Bank, but they did not have a rate for the taxable portion, making it incomplete. Claremont Savings Bank was the only other eligible bid to choose from, and the commissioners unanimously voted it in.
“Now we treat this like a line of credit,” Ferland said. “In order to make it through until December when property tax revenues come in from the towns, whatever we need between now and then is what we use as the source. As soon as we get the property tax money in December, we pay off the note.”
The overall TAN amount is $8 million, but County Manager Derek Ferland said this is an amount the county can use but will then need to pay back.
“Ideally we don’t use all of it,” he said. “The bid was structured with a tax-exempt portion and a taxable portion. That’s all driven by IRS rules, which bond counsel helps us with. The portion of the $8 million that is taxable and non-taxable is dictated by cash flow projections.”
He said bond counsel ran numbers for them and $5.1 million of this and the remaining balance is taxable. This is why there were different interest rates, as the banks get a break by providing this to government institutions. Claremont Savings Bank had about 5.875% for taxable and 7% for taxable.
“We will draw it down every month and continue to evaluate our cash flow,” he said. “As we have bills we have to pay, the treasurer will draw down funds so we can cover those bills.”
