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HomeMy WebLinkAboutAgenda - 03-15-1994-IX-A 1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda SX-/4 ACTION AGENDA ITEM ABSTRACT Itsm No Meeting Date: March 15, 1994 SUBJECT: Orange Grove Fire Department Building Expansion ------------------------------------------------------------------------ DEPARTMENT County Manager PUBLIC HEARING YES NO X ------------------------------------------------------------------------ ATTACHMENT(S) INFORMATION CONTACT Resolution Rod Visser, ext 2300 2/16/94 Letter from Orange Grove VFD TELEPHONE NUMBER 1/27/94 Letter from CCB Hillsborough 732-8181 Excerpt from GCB Credit Manual Chapel Hill 968-4501 County Attorney' s Summary of Public Mebane 227-2031 Hearing Requirements Durham 688-7331 ------------------------------------------------------------------------ PURPOSE: To consider approval of plans by the Orange Grove Volunteer Fire Department: to expand their existing facility through a tax-exempt financing arrangement with a local financial institution. BACKGROUND: The Orange Grove Volunteer Fire Department has indicated its plans to expand their existing station, including the addition of two bays. The project architect' s estimated cost of the expansion is approximately $170,000 - $210,000. Under federal law, volunteer fire departments can qualify for tax-exempt financing of projects such as this by meeting certain qualifications and administrative steps. Two key provisions are the conduct of a public hearing on the matter, and approval of the financing arrangement by the governing board of the jurisdiction with which the fire departments contracts to provide fire service. The Orange Grove VFD Board of Directors has discussed financing of this project with several local banks. CCB has indicated to the Orange Grove Board its interest in arranging a tax-exempt loan as outlined in attachments to this abstract. At the March 1,, 1994 meeting, the Board of Commissioners authorized the Orange Grove VI?D Board of Directors to conduct a public hearing on the proposed building expansion and financing for that project. This public hearing has been scheduled for Monday evening, March 14 at Orange Grove VFD. A report on the results of the public hearing will be provided to the Board of Commissioners at the March 15 meeting. If adopted by the Commissioners, the attached resolution would indicate the Board's approval of the tax-exempt financing arrangement between Orange Grove VI?D and a local financial institution. RECOMMENDATIONa The Manager recommends that the Board adopt the resolution. ORANGE COUNTY BOARD OF COMMISSIONERS A RESOLUTION APPROVING A TAX-EXEMPT FINANCING ARRANGEMENT FOR EXPANSION OF THE ORANGE GROVE VOLUNTEER FIRE DEPARTMENT WHEREAS, the Orange Grove Volunteer Fire Department has represented to the Board of Commissioners that it needs to expand its existing facility; and WHEREAS, the Orange Grove Volunteer Fire Department is unable to pay anticipated project costs entirely with funds on hand; and WHEREAS, the Orange Grove Volunteer Fire Department is able to borrow funds to complete the financing of this building expansion at a favorable interest rate if the loan is approved by the unit of local government with which the fire department contracts to provide fire protection; and WHEREAS, the Board of County Commissioners desires to approve a tax- - exempt financing arrangement between the Orange Grove Volunteer Fire Department and Central Carolina Bank, or another qualified lender; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of Orange County that said financing arrangement is approved. This, the 15th day of March, 1994. 5 3 Orange Grove Volunteer Fire Company ROUTE 3. BOX 316 HILLSBOROUGH, NORTH CAROLINA 27278 February 16, 1994 Rod Vissej� County Matager's office P. O. Box 8181 Hillsborotgh, NC 27278 Dear Mr. V isser, I want to thank you and John Link for helping arrange a public hearing or, March 1 concerning plans to expand our fire station on Orange Grcve Road. With this letter are two exhibits that the Commissioners might want to see: the next-to-last version of our site plan; the current version of our floor plan. We require a public hearing and official County approval of the project in order to qualify for a below-prime interest rate through a (commercial bank. As you may know, we have been interested in expanding our station for several years but have been stymied by the impervious surface requirement in the zoning ordinance. At about the same time that the Commissioners were relaxing the requirement for volunteer fire companies, we were acquiring enough additional acreage to meet the old requirement. Our goal is to add two bays to our station (one for a fire truck, the other for either a rescue vehicle or another fire truck) and to expand the rest of the station to meet the community's needs for the nest twenty years. This entails adding an office, a meeting/triining room, a decon room, and two bedrooms so that we can have personnel on call around the clock. The present status of the project is as follows: We have contracted with CGA, an architectural firm in Chapel Hill, to prepare plans. They are now virtually complete. We lack only a small detail before receiving site plan approval from the Planning Department. We hope to be able to request bids later this month or early in March. We would like to begin construction in the spring and have the project completed before winter. The cost of the project is unknown but estimated to be between $170,000 and $210,000. We have cash reserves of about $90,000 and will commit some of them to the project as a down payment. We will finance the project from a commercial bank. We project I'I , 4 that we can afford loan payments of about $30,000 per year for a , period of 6-8 years. We will not need to increase the fire tax to finance the loan. We have spoken with four commercial lenders in the County and all have been eager to reach an agreement with us. At least one lender has said that a loan at below prime is possible if we meet certain requirements, one of which is a public hearing on the matter. Should the Commissioners affirm our project, we would like a letter to this effect from John Link. The letter should also attest that: - we are financed by a fire tax levied in our district and that no other fire service covers our district (mutual aid aside) ; - there is a written agreement between the County and Orange Grove Volunteer Fire Co. to provide fire and rescue service to our fire district. A copy should be attached. This letter may be sent to me at the address below. We really appreciate your efforts in helping us secure a low interest loan for this project. It should result in our being able to save the tax payers a significant amount of money. Sincerely, Edward S. Johnso , President orange Grove Volunteer Fire Company 6000 Buckhorn Road Hillsborough, NC 27278 esj\ogvfc\letter.27 t ' 5 C C CENTRAL CAROLINA BANK January 27 , 1994 Ed Johnson, Pres. Orange Grc a Volunteer Fire Company 6800 Orange Grove Rd. Hillsborough, NC 27278 Dear Mr. Johnson: Enclosed Please find the information necessary to qualify for CCB's below market, tax exempt rate should the loan request be approved. I have also enclosed a few examples of the required documentation. I appreciate your timely response regarding the information I requested. Please let me know as soon as possible the exact amount of your loan request and I will take the appropriate steps toward approval. Again, I appreciate you allowing CCB the opportunity to review your company' s financial needs. Sincerely, Robert P. tose Commercial Loan Officer Enclosure RPR/st Post Office Box 780, Chapel Hill, North Carolina 27514, 919/932-2700 6 VOLUNTEER FIRE DEPARTMENT LOANS Because of North Carolina law,CCB can offer below-market, tax-exempt rates (m(:aning that the interest income from such lane accrues to C. R f aepartmenu (VFll). Qualifications In order to qualify for the tax-exempt rate,the loan must meet the following criteria: 1) The political subdivision involved (usually the county) must certify two things: a) That the VFD is a "qualified" VFD within the jurisdiction of the political subdivision,meaning that: The VFD provides fire fighting services in an area which is not provided any other fire fighting services AND The fire fighting services are required by written agreement with the political subdivision; AND b) They approve of the borrowing. This approval cannot be given until a public hearing is held. 2) The VFD must certify that more than 90%of the loan proceeds are to be used for the acquisition, construction, reconstruction or improvement of a firehouse or fire truck used or to be used by the VFD. If this qualification is not met,you can still make the loan. but it must bear a market interest rate. 3) The borrower must be a VFD. Rescue squads,ambulance services,etc. are not eligible for tax-exempt rates. Additional Documentation Required In addition to the usual documentation,you must have the following: 1) A copy of the VFD's articles of incorporation 2) A certificate of good standing from the North Carolina Secretary of State(see page 6 for a sample) 3) A letter from the political subdivision certifying the information in I under"Qualifications" above (page 7) 4) A Certification of Use of Funds (page S). This form i,.i•.aiiable trom Commercial Loan Administration. 5) An Agreement (page 9-10). This is also available from Commercial Loan Administration. 6) A letter pertaining to being a qualified small issuer (page 11). Interest Rate The rate can be either fixed or floating. If it is floating,you will quote the rate as a percentage(for example, 75%or 80%)of prime. If the rate is fixed,you will need to draw the loan with a balloon provision (as you would with any fixed-rate loan). To determine the rate,call Commercial Loan Administration to get the factor used to convert the tax-exempt rate to an after-tax equivalent. CREDIT MANUAL Section 30, Page 5 Revision Date: 8/15/90 7 For Your Information PUBLIC HEARING REQUIREMENTS IMPOSED ON VOLUNTEER FIRE DEPARTMENTS BY THE TECHNICAL CORRECTIONS BILL (HR4333) PASSED BY CONGRESS IN OCTOBER, 1988 In order for vle interest on an obligation (such as a lease/purchase contract) of a qualified volunteer fire department to be exempt from federal income tax, publ c hearing requirements must* be met as follows: 1. The obligation must be approved (prior to execution) by the governor ntal unit with whom the VFD has a written agreement to prov'de firefighting services: This ap roval can be given by: a) the applicable elected representative of the gov rnmental unit (such as a mayor, county board president, etc . ) ; b) the legislative body of the governmental unit; or, c) any other elected official designated by the chief elected official. 2 . Prior to Aonroval, a public hearing must be held. The applicable elected representative or the legislative body of the governmental unit may appoint any person - to conduct the public hearing. It is n! t necessaKy for the legislative body or the elected representative of the governmental unit to conduct the public hearing or to be present, and it is not necessary for a report to be submitted to the legislative body. A vote need not be taken and approval of the public or attendees is not required. 3 . Prior to the public hearing (to give residents of the community an opportunity to express their views) notice must be given. This would generally involve publishing the notice in a newspaper of general circulation in the locality of the governmental unit at least 14 days prior to the hearing. The notice would generally describe the time and place of the hearing, along with a description of the iss a (i.e. , consideration of a lease/purchase contract to acquire an Emergency One fire truck) . This summary represents our interpretation of the law and is not intended to be relied upon by volunteer fire departments or others. Such persons should consult their own tax and legal advisors.