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Town manager warns TD Bank may call loans; commission to seek term sheets and counsel
Summary
Town staff reported that promissory notes include a call/put option and that one underground loan requires two remaining payments; staff said TD Bank could call a larger loan in December 2026 and that the town is working with Synovus and other lenders for term sheets and possible refinancing.
Town staff told the commission that the town's promissory notes include a mid‑option (put/call) that gives the bank the right to call loans and that TD Bank has signaled plans that could result in a call.
Town manager (speaker 7) said the town had not found the previously reported verbal requirement tying loan rates to deposit relationships in the written loan documents and that bank representatives told the town on March 14 that "if the town remains with TD Bank with their deposit account, they will not call the loans." The manager said that, after deciding to move operating accounts for better returns and service, the town had been told a bank could exercise a put option.
The manager outlined the near‑term exposure: the smaller underground loan has two remaining payments due 04/01/2026 and 04/01/2027 and will be covered by assessments and reserves, while a larger loan could be called in December 2026. Staff said they have met Synovus and the town's financial consultant and expect preliminary term sheets in the near future and recommended hiring bond counsel and benchmarking multiple offers.
Commissioners asked for clarity on interest-rate comparisons and terms; staff said they have not yet received term sheets from prospective lenders and cautioned against assuming unverified numbers circulated informally. "We don't have all the answers in terms of what it's going to be," the town manager said, noting the town will seek term sheets and bond counsel before deciding to refinance.
What was said: - Town manager: "The promissory notes that were signed by the town do include what we call mid option, which is the ability for the bank to call the loans." (staff report) - Manager: "If the town remains with TD Bank with their deposit account, they will not call the loans." (remarks describing bank statements to staff) - Staff: the smaller loan carries a current rate in the low single digits (exacts provided in packet for existing notes); proposed replacement terms are not yet available.
Next steps: staff will solicit term sheets from Synovus and other lenders, hire bond counsel, and return to the commission with proposals and a recommendation if and when formal offers are available. No refinancing decision was made at the meeting.
Fiscal context: staff reported the town budgets for general planning services and other operating items; the loan service issues were presented as informational so the commission could prepare for potential calls and refinancing that could affect the town's budgeting in the coming fiscal year.
