AUGUSTA – A quasi-state authority that borrows money on behalf of hospitals and higher education facilities voted Friday to ask for bids from financial advisors who could recommend ways of saving money.
At the urging of state Treasurer Bruce Poliquin, the Maine Health and Higher Educational Facilities Authority voted to seek bids from independent financial advisors who would compete for a short-term contract to review recent bond sales. The advisor would be expected to examine whether the cost of issuing the bonds could be lowered.
“It would be prudent to scrub this and see where we can save money,” said Poliquin, a member of the authority’s board because of his position as state treasurer.
In particular, Poliquin questioned legal, travel and meal expenses related to closings on bond sales. He provided information that showed 2010 expenses related to a $108 million bond sale on behalf of 24 borrowers. Included in the underwriter’s fee was about $2,000 for travel and nearly $4,000 for meals.
More than once, he questioned a dinner for a closing in New York in June that cost $3,400.
As he did earlier this month at the Municipal Bond Bank, Poliquin questioned Robert Lenna, who serves as executive director of both groups, about the need for him and an assistant to fly to New York for closings and for dinners that are part of the trip.
Lenna said because that closing involved 24 loan agreements, he felt it was important to go in person to review all of the documents. He said it’s a practice that dates back 40 years.
“I want to be sure each and every one of those documents is in place when we do the closing,” he said. “So five years from now, when the IRS audits the sale, I know everything was there.”
He said that if closings were held in Augusta, the facilities authority would likely incur additional costs to pay for attorneys and others to fly to Maine. And he said the current cost of travel and meals is a small fraction of the cost of the bonds.
“The amount of cost as a percentage is less than one-tenth of 1 percent here,” he said. “The savings would be in the hundreds of dollars.”
He later said that the $3,400 meal for the closing was attended by 23 people.
Poliquin said it’s difficult for board members to parse out all of the costs related to closings, and he pushed for an outside look at the numbers.
Lenna said he feels the board is adequately experienced to review the numbers and it is part of his job to watch the bottom line.
“Corporate boards don’t spend time worrying about whether somebody paid too much for dinner,” he said. “If you want to spend $20,000 or $30,000 to hire a financial advisor to find places to save a few thousand bucks, that’s fine by me.”
Poliquin said the authority is different from a corporate board. “This is a body created by the Legislature,” he said. “There is a lot of public trust here. This is a public entity.”
The 12-member board, which includes eight gubernatorial appointees and four state government representatives, later voted to require Lenna to issue a request for proposals from financial advisors.
Poliquin’s motion included a request to bring in three advisors for interviews with the board, then decide whether to hire one.
MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at:
scover@mainetoday.com
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