HomeMy WebLinkAboutAgenda - 12-10-2013 - 6e 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: December 10, 2013
Action Agenda
Item No. 6-e
SUBJECT: Approval of Financing Arrangement and Fund Balance Appropriation for
Orange Rural Fire Department No. 1, Inc. to Purchase a Replacement Fire
Truck
DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y/N) No
Services
ATTACHMENT (S): INFORMATION CONTACT:
Attachment 1. Letter from Orange Rural Clarence Grier, (919) 245-2151
Fire Department No. 1,
Inc. Board of Directors
President
Attachment 2. November 14, 2013 Public
Hearing Notice
Attachment 3. November 14, 2013 Public
Meeting Notes
Attachment 4. Fire Service Agreement
Attachment 5. Certificate of Approval
PURPOSE: To approve a request from Orange Rural Fire Department No. 1, Inc. to enter into
a financing arrangement to purchase a fire truck, authorize the Board of Commissioners' Chair
to sign the appropriate documents related to the financing arrangement, and appropriate
$70,000 from the District's County-held fund balance.
BACKGROUND: In the attached letter (Attachment 1) addressed to Orange County Budget
Office, Jeff Roberts, President of the Orange Rural Fire Department No. 1, Inc. indicated the
department's intent to purchase a replacement fire truck. The department will purchase a 2014
Sutphen Engine to replace its current 1987 LTI truck. The President confirmed that the
department went through a competitive bid process and awarded the bid to Sutphen
Corporation.
According to Attachment 1, the purchase price of the truck totals $490,251. The Department's
Board of Directors agreed to borrow up to $375,000 from CommunityOne Bank and to pay the
remaining $115,251 from the Department's capital reserve. The interest rate for the 5-year note
is 3.29 percent with monthly payments of $6,790. The total repayment, including principal and
interest, equals $407,400. It is important to note that these figures may vary slightly depending
upon the actual loan closing date.
2
Section 147 of the Internal Revenue Code of 1986 outlines specific steps that must occur when
a tax supported fire department enters into a financing arrangement:
• Conduct a public hearing — On November 14, 2013, the department held a public
hearing regarding the purchase. The Department advertised the hearing in The News of
Orange (Attachment 2). Per Attachment 3, no members of the public were present at the
hearing and the Department did not receive any written comments from residents of the
district.
• Obtain approval of the "applicable elected representatives" — In accordance with
Section 147, the Board of County Commissioners must approve the District's plan to
enter into the debt arrangement. This approval does not create liability on the part of
Orange County nor does it make the County responsible for the repayment of any debt
assumed by the fire district. The approval provides a mechanism for the BOCC to
acknowledge that, through this financing arrangement, Orange Rural Fire Department
No. 1, Inc. is pledging use of the District's tax dollars to repay the loan. In order to
comply with this IRS requirement, the Chair of the Board of Commissioners must sign
the Fire Service Agreement (Attachment 4) and Certificate of Approval (Attachment 5).
FINANCIAL IMPACT: The department's major revenues consist of County fire district taxes
and fees for service from the Town of Hillsborough. According to the district's June 30, 2013
financial statements, the district received about $1,442,734 during fiscal year 2012-13 from
those two sources. The department had about $500,250 in its bank accounts as of June 30,
2013. Funds remaining in the Department's bank accounts would serve as a reserve that would
potentially be used to cover unanticipated major expenses such as repairs or replacements of
other older equipment.
In addition to requesting that the Board of Commissioners approve the financing arrangement
for the replacement of the fire truck, the District also requests that Commissioners approve an
appropriation of $70,000 from the its County-held fund balance to purchase equipment to help
outfit the truck. Should the Board approve the District's request to appropriate $70,000,
approximately $16,000 would remain in the department's County-held unassigned fund
balance.
RECOMMENDATION(S): The Manager recommends that the Board-
1. Approve a request from Orange Rural Fire Department No. 1, Inc. to enter into a
financing arrangement with CommunityOne Bank to purchase a fire truck;
2. Authorize the Board of Commissioners' Chair to sign the appropriate documents related
to the financing arrangement; and
3. Appropriate $70,000 from the District's County-held fund balance for the purposes
outlined in the Financial Impact above.
Attachment 1 3
Orange Rural Fire Department
P.O. Box 1511 • Hillsborough,NC 27278
919-732-7911 •www.orfd.net
Paul Laughton
Orange County Budget Office
P.O. Box 8181
Hillsborough,NC 27278
Dear Paul:
It is the intent of the Orange Rural Fire Department to purchase a replacement fire engine.The
engine will replace a 1987 LTI.The total amount of the truck is $490,251.67. The Orange Rural
Fire Department has funds set aside from the sale of the 1987 truck in the amount of$58,500 that
will be used to help offset the purchase of the new truck. We will also take$59,000.00 from the
budget that was ear-marked for the new truck purchase.The Orange Rural Fire Department
would also like to request$70,000.00 from our unassigned fund balance to purchase equipment
to help out fit the truck.
We have been pre-approved for a loan in the amount of$375,000 from Communiyt One. The
term of the loan will be five-years with an interest rate of 3.29%. We are also in a USDA grant
process with Piedmont Electric for an interest free loan. If awarded,we would be funded through
the grant process with a zero percent interest. We have been approved for this grant through
Piedmont Electric but are awaiting approval from the USDA. We anticipate that by the time
delivery of the truck takes place that we will know for sure if we have been awarded.
If you have any questions,please feel free to contact me at 919-732-7911.
Sincerely,
Qa 64(_-,)ov
Jeff Ro erts,President
4
Attachment 2
WEDKI A-Y—MIRM 30,2013•Big
Is
ght PUBLIC NOTICE
f
us- Public Notice is hereby given that
the Orange Rural Fire Deparrrient
.nse No.i inc.will meet on Thursday,
D days November 14,2013 at the fire de-
upon Partment located at 206 S.Chorton what are
:king St.,Hillsbof6ugh,NC 27278 at 6:00
ie court p.m.,in a public'headng pursuant to
the requirements.of section 147M �
13. of the Internal Revenue Code of j
1966,as amended,on a proposal
Lauri-M. that the buyer dkei.into a term.loan
�ournsel, under the`Code`in order totinahce
'Plaintiff the acquisition of equipment.The 1o0kln V)
•n,PLLC equipment to be financed consists 0
id Street of a Fire Tntck(the equipment)and
C 27705 will be located at the firehouse in
HiilsborOUS.h;NG.To fine nce'the rxidz
2013 costs of such equipment and to;pay
costs and expenses incidental to
the financing;the Buyer proposes
.Part- to enter into a tern loan a&eiient
its of in the maximum aggregate principal
;aldwell amount of 5385,000.00 The Buyer
will be requiredjo*Oay all expenser.
,day, of operating,maintaining;and insur-
ig Vil ing the project and to pay all taxes on
ire De- the EquipmehL The payments'due
u pursuant to the term loan agreement i1t.Qd
ided will be payable.and secured by a se- iste�
curl int to S35%.
meets tY Brest Lien.:on the equipment above-here rnehtioned.AN persons b �,
from interested may appear and be at said ;3�
nt time and pe or may file written
1uW comments with the department prior
ire to itie Hearing set forth herein above,
the November 12,2013.by order of the
Ict Orange Rural Fire Department No.
the 11hc.
October 30,2013
11T CREATIVELY INSPIRED >f
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TECHNICALLY EXECUTE?
-WiYi-CAS." 919-723.3383 %Arwvi.SLifrrnjtde-nef
C St.,Chapel Trill,NC 2'1514,3.25 acres,$#61.
ive 1 t ii Noureddine 526 N Scotswood Bl-Vd.MUsbor-
ough,to Kerwin B.Mack,,526 North ScotswoodBlvd.,
ancy Hillsborouu�h,p 1001107,.052 acres,$980. i
45 SharonI?auiA,17 Arrowhead Drive,Brups icb bf
0.1'011 to John W.Larson,386 Londin Cir,'St.Paul;MN
55119,p92148,1 lot,$15.
Fine Corporate Enterprises LLC,121 North Columbia
LL, St."Chi Pel 1-1ill,NC 27511 to Beatrice H:--%irorks aan,
3oz E 1.5 Guilford Collete Road Jainestowu,NIC 27282,6.27
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Attachment 3 5
Orange Rural Fire Department
Public Hearing
11/14/2013
Attending:Jeff Roberts, Chief Cabe
Call to Order at 6:00 by Jeff Roberts
Public meeting to discuss the purchase of a new truck.
There were no citizens present.
Adjourned at 7:00
6
Attachment 4
Fire Service Agreement
This agreement, dated this day of , 20 , by and
between Orange Rural fire Department No. 1, Inc., a body corporate organized
under the Laws of the State of North Carolina, the ("Fire Department'), and
Orange County, a body politic, -the ("Political Subdivision").
WHEREAS, Fire Department is a not for profit organization duly authorized for
the purpose-of providing firefighting services in an area within the jurisdiction of
the Political Subdivision; and,
WHEREAS, the parties wish to enter into an agreement setting forth the area and
duties of the Fire Department.
NOW THEREFORE, the Fire Department and Political Subdivision do hereby
agree as follow:
1. Political Subdivision recognizes that Fire Department provides firefighting
services to the hereafter generally described area or areas:
2. The area in which Fire Department has primary firefighting responsibilities
(area of responsibility) is Orange Rural Fire District.
3. Political Subdivision shall not be liable or responsible for the conduct and
activities of Fire Department.
IN WITNESS WHEREOF, the parties have had this agreement executed by duly
authorized representatives thereof.
Orange Rural Fire Department No. 1, Inc.
By
Name
Title
Orange County
By
Name
Title
. 7
Attachment 5
Certificate o rova
Approval of Chief Elected Official of
Orange County
I, ,Chair of the Board of
County Commissioners of Orange County, pursuant to the Internal
Revenue Code of 1986, as amended (the "Code") hereby approve,
authorize the entering into by Orange Rural Fire Department No. 1 ,
Inc. a commercial loan by CommunityOne Bank for the amount of
$375,000 to finance a fire engine truck to be located in Hillsborough,
NC 27278.
Execution of this document in no way creates liability on the part of
Orange County and Orange County is not responsible for the
repayment of any loan pursuant hereto.
By:
Title
Date