AUGUSTA – State Treasurer Bruce Poliquin asked pointed questions Friday about meal and travel expenses incurred by the executive director of the Maine Municipal Bond Bank, a quasi-state agency that borrows money on behalf of cities and towns across the state.
At a special board meeting at bond bank headquarters in Augusta, Poliquin asked Executive Director Robert Lenna why he and others flew to New York last fall and spent $4,000 on meals and $4,600 for four people to spend two nights in a hotel.
Lenna was in New York when the bond bank borrowed $80 million on behalf of 29 cities and towns.
Poliquin asked Lenna why he couldn’t conduct closings in the bond bank conference room in Augusta and get take-out from the Wendy’s down the street.
“I don’t eat at Wendy’s,” Lenna said. “You are absolutely wrong and I resent the implication that I’m somehow wasting money.”
The two men had a tense back-and-forth for several minutes as Poliquin pressed Lenna on the expenses.
“I think when you have an entity that is created by the Legislature, you folks have to preserve the public trust,” Poliquin said. “When you are borrowing money on behalf of those 29 towns, you have an obligation to make sure you are doing it the cheapest way possible.”
Lenna said the meal and travel costs are built into a flat $6.10-per-bond charge from the bond underwriters, which won’t change based on expenses. Also, he said, that flat charge doesn’t affect the interest rate, which is the most important factor for cities and towns.
“It is a miniscule amount of money and it has no impact on the cost to the local borrower,” he said. “It provides a substantial benefit to the local borrower because the team of people who are working together to make sure we get the lowest cost are working together to do it. One of the ways to get that team to function is to go spend a couple of hundred bucks on a dinner.”
Lenna said the bond bank has a AAA rating and has been a responsible borrower of money for years.
The bond bank was created by the Legislature in 1972 and helps cities, towns, school systems, water and sewer districts and other governmental entities get access to low-cost loans.
Details on the expenses requested by Poliquin show that $1,186 was spent on Oct. 26 at Il Tinello, an Italian restaurant, and that $2,589 was spent the next day at Smith & Wollensky, a steakhouse.
The bond bank works with Wells Fargo and Morgan Keegan to negotiate bond sales on its behalf. The travel and meal expenses are built into a per-bond price that the companies have agreed to charge the bond bank as part of a three-year agreement. A breakdown of the underwriter’s expenses shows that travel and meals is 6 cents out of the $6.10-per-bond price.
The discussion about travel and meal expenses came during an overview of the way the bond bank borrows money. The bank conducts negotiated sales through Wells Fargo and Morgan Keegan, but Poliquin wants the board to consider changing to a competitive sale process.
In some instances, competitive sales for highly rated agencies such as the bond bank are cheaper than negotiated sales, said June Matte, a financial manager who is a consultant to Poliquin in the treasurer’s office. The treasurer’s office conducts closings in-house, using FedEx to send documents back and forth, said Deputy State Treasurer Barbara Raths.
Poliquin asked the five-member board to consider hiring a financial manager to compare the cost of a negotiated sale to a competitive sale for the next round of fall bonds. His motion was rejected on a 3-2 vote, but board Chairman Steve Crockett said he would be willing to “look at it over the next few months.”
The spring sale is scheduled for later this month, and Lenna said he plans to go to New York for the closing.
“I’m OK with you going to New York,” said board member Lloyd LaFountain, a former Democratic lawmaker who is superintendent of the state Bureau of Financial Institutions. “But I think it’s important you control the cost.”
MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at:
scover@mainetoday.com
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