The Fayette County Board of Education agreed Monday to borrow $14 million through tax anticipation loans to help with expenditures until property tax revenues begin to come in later this year.

Arranged as two separate notes, the low bid by SunTrust Bank puts a portion of the loan at 1.05 percent interest and the remainder at 1.00 percent.

“Our request for bid letters requested the ability to access the loan in stages, similar to a line of credit,” said Comptroller Laura Brock, adding that having the loan in those two stages allowed for greater flexibility. “We also requested the ability to pay off the loan, without penalty, prior to Dec. 31.”

The school system as part of the request letter proposed two options. The first was for one non-bank qualified, tax exempt note for $14 million. The second option asked for two separate notes with $8.8 million being non-bank qualified, tax exempt and the second for $5.2 million as bank-qualified, tax exempt.

The board unanimously selected the low bid by Wachovia for Option 2 that carried a 1.05 percent interest rate on the $8.8 million loan and a 1.00 percent rate on the $5.2 million note.

Prior to the vote, Brock told the board that the interest on the $14 million would amount to less than $50,000.

Only three of the 14 financial institutions solicited responded to the request, Brock said. The other two submitting bids were Regions Bank and SunTrust Bank. The SunTrust response for Option 2 carried interest rates of 1.66 percent and 1.45 percent, while the Regions bid came in at 3.41 percent and 2.47 percent.

Brock in her comments noted that the school system borrowed $12.5 million last year, and at a higher interest rate. The board in 2008 borrowed the money from SunTrust Bank. The sum included a $10 million bank-qualified, tax-exempt note at 1.94 percent interest and a $2.5 million non-bank qualified, taxable note at 2.87 percent interest. The interest rate on the full amount in the form of a tax-exempt, non-bank qualified note would have been 2.37 percent.

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