Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Borrowing topic
No spam. Unsubscribe anytime.
Council awards $3 million tax anticipation note to Franklin Savings Bank at 4.98%
Summary
The council approved a tax anticipation note (TAN) program and awarded the low bid to Franklin Savings Bank at 4.98% to provide short-term cash flow until property tax collections begin in September.
The Ellsworth City Council awarded a $3 million tax anticipation note (TAN) to Franklin Savings Bank at an interest rate of 4.98 percent, accepting staff’s recommendation after comparing bids from multiple local banks.
Finance Director Nate Moore explained the TAN is a short-term borrowing mechanism the city uses each fiscal year to cover expenses while it awaits property-tax receipts in the fall. He said the city solicited bids from eight local banks and received six offers; last year the city borrowed under a TAN and paid about $75,000 in interest on the amount drawn. Moore recommended Franklin Savings Bank because the quoted rate and credit terms best fit the city’s needs while keeping funds within local banking relationships.
Councilors asked whether a TAN operates like a line of credit; Moore confirmed TANs function similarly and are repaid when tax collections are received. The council moved and approved the recommendation to award the TAN to Franklin Savings Bank at 4.98 percent.
The finance director noted the final interest dollar amount will depend on the actual draw date and the amount borrowed; staff will execute the borrowing and report the final drawn amount and interest expense to the council as usual.
