Letter: All things considered, I still would have favored National Bank
I attended the August 3rd council meeting and would like to comment on what transpired regarding the agenda item requesting approval for the Finance Director to sign a loan contract financing $543,000 (Wastewater Division Sewer Vacuum/Jetter Truck and Camera Van).
Included in the council packet was information for each bank considered for the loan contract. The Town Manager made the presentation to the council and recommended US Bank which came in with 1.55 percent interest rate for the 5 year loan. US Bank also has a prepay penalty of 3 percent.
Council Member Carol German stated she favored National Bank's 1.61 percent with no prepay penalty and she would prefer to support local business. The .06 percent difference is minuscule. Council Member Jackie Baker agreed. And the Town Manager followed up by saying that he and the Finance Director had the same discussion but ultimately the recommendation to US Bank was based on the lower interest rate. The Town Manager agreed that the interest rate differential is so small the decision could have gone to either bank.
Council Member Robin Whatley made the motion for US Bank because, she said, of the lower interest rate. I heard gasps from the attendees behind me as I was sitting in the front row. Brad Gordon stated that any surplus would probably go to CIP and not this and he would go with the lower rate. I looked at Mayor Charlie German and expected that he would take a leadership role and make a case for National Bank, a bank with local presence. Mayor Charlie German, Vice Mayor Bruce George voted to approve the motion along with Council Members Robin Whatley, Brad Gordon and Jesse Murdock. The vote was 5-2 in favor of US Bank. Jesse Murdock stated she wanted on record her vote was based on the lower interest rate. Perhaps she heard the audience gasps?? At no time did Mayor Charlie German ask for input from the attendees, only last month during the candidate forum did the Mayor state that he would like to see more public input. I could only shake my head in silence.
Do the math! I used 2 different loan calculator websites, both returned the same result. After 5 years the interest on the 1.55 percent US Bank rate is $21,663 and the 1.61 percent National Bank rate is $22,513 interest. The difference over 5 years is $850 or about $170 per year. Don't misunderstand me, I'm all for saving money. The $170 is about 50 cents a day or 2.26 hrs of the Town Managers time. Probably most people who live in Camp Verde have spent that much or more in a year's time shopping in Camp Verde versus Cottonwood or elsewhere. And more importantly, National Bank has local presence while the closest branch for US Bank is in Prescott.
I left the meeting very disappointed and with the knowledge that most likely there were other issues at play that had nothing to do with the facts.
Update: On Monday August 8th, I spoke with Finance Director Michael Showers who told me that the overriding factor in his decision to recommend US Bank was the possibility of an escrow fee from National Bank if the funding of the transaction was not completed by September 7th. The specifics of this was not presented or discussed during the council meeting as being a significant factor and the estimated fee amount was not mentioned. Also, I received an email from Michael Showers responding to my question about Brad Gordon's statement that any surplus would probably go to CIP. The Finance Director replied that leftover proceeds are generally applied to the first payment.
On Wednesday, August 10th, I spoke with Lee Davis, the Commercial Loan Officer for National Bank. He stated the escrow fee is minimal, typically a couple hundred dollars.
Knowing this, I would still have favored National Bank.