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New Swimming pool for Grove

The American of Vinita, Oklahoma

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The Grove Economic Development Authority met this Tuesday to discuss the promissory note bids that had been received concerning the payment of the new pool construction in Grove. Rick Smith of Municipal Finance Services, who has helped with the city's financing for many years, was present and went over the bids that had been received.

There was a total of three bids from three local banks: The Bank of Oklahoma, Grand Savings Bank, and The Bank of Grove. Grand Savings offered a 4.99% interest rate, The Bank of Grove offered 4.3%, and The Bank of Oklahoma came in lowest with an interest rate of 3.47%. The GEDA unanimously voted to accept the bid from The Bank of Oklahoma.

The total dollar value on the note is around 1.4 million dollars. The interest rate of 3.47% is a fixed rate and will need to be paid in 15 years which puts the total monthly payment at around $10,000 and the total interest that will be accrued will be around $418,000, a relatively low amount considering the high value of the note. The payment can be made with any legally available funds from the city and the city will not be required to provide any collateral, meaning that this is basically a "moral" agreement.

Although there is no legal recourse for the bank to take if the city does not make payments, it will do as Rick Smith put it "irreparable harm" to the city, meaning that failure to make payment will essentially hurt the city's credit and prevent future attempts at acquiring loans.

Rick Smith also commented that the bids received from the local banks were lower that he had estimated. "I expected to receive rates from 4.5% to 5%. The bid placed by the Bank of Oklahoma is one the better rates that I have seen."

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Original Publication Date: January 21, 2010

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