Citing irresistible interest rates, the city of Claremore has committed to a $10 million sales tax revenue note.
The terms of the loan, as presented to Claremore city council by John Wolff, include a 1.25% fixed interest rate and a 14 year term.
“This is note, with sales tax revenue as collateral,” explained Mayor Bill Flanagan. “It didn’t increase sales tax, it’s just pledging what’s already on the books as collateral.”
“This process started last year. There was a 2019 revenue note that was approved in the amount of $10M to address some capital needs and projects,” said acting City Manager John Feary. “We got a fantastic interest rate set this year. This $10M is obligated for capital improvement projects as water, wastewater water, sewer, electrical, just as the previous was.”
“It was economical based on the rate we got to move forward with this,” said Wolff. “It’s a fixed rate of 1.25 percent ...compared to last October when we were at a 1.69 percent. So this is a great rate. You cannot pre-pay it at any time but at a 1.25 percent fixed, I don’t know why in the world you would want to pre-pay on this particular note.”
Flanagan asked how long the city has to utilize the funds.
“Within the first six months you have to commit yourself to at least six percent of the total amount. You don’t have to have expended any money but you have to commit it,” Wolfe said. “They would like you to have spent 100 percent of it in three years.”
Outside of the meeting, Flanagan explained: “Last year we borrowed $10 million, this year another $10 million all for capital improvements on. We have to spend all of it in three years or provide a good reason why we didn’t do it. They don't want you to borrow the money and sit on it. But our purpose is to get these projects done and get other projects moving.”