EAST PROVIDENCE — East Providence’s loan application with Webster Bank for Tax Anticipatory Notes or “TANs” has been approved, City Finance Director Malcolm Moore informed the Budget Commission at its meeting Thursday afternoon, Dec. 13.
Webster Bank loan officer James Ryan, who appeared at the commission’s Nov. 29 meeting to discuss the topic, made Mr. Moore aware of its decision during the interim.
The Commission, in turn, gave Mr. Moore and the city authority to seek an initial $10 million in TANs, which will likely be needed to meet operating costs sometime in December or early January of 2013.
As an amendment to the approval resolution, the commission required the city to seek “no more than $22 million” total in TANs for Fiscal Year 2013, ending on Oct. 31, 2013.
The terms of the loan are similar to that of previous TANs issued by Webster Bank to East Providence. It will be a draw-down account, meaning the city will have access to the money when needed instead of taking the entire amount in one lump sum.
That is key to paying interest on the loan, the rate of which is likely to be around 3.35 percent. East Providence’s improved current fiscal standing and future forecast will cut roughly a quarter-percent off the interest rate it paid on TANs borrowed through Webster last fiscal year. Mr. Moore said he was told by Mr. Ryan the final rate will not be determined until the city begins to draw off the loan.
East Providence annually needs to seek TANs due in large part because its fiscal year does not match up that of the state. That situation is likely to change sometime in the future after voters approved a City Charter amendment last month, which gives the Budget Commission, in the near term, and the City Council, down the road, the ability to change the fiscal calender to run concurrently with the state’s.