HomeMy WebLinkAboutAgenda - 11-05-2007-4kORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 5, 2007
Action Agenda
Item No. ~ - K
SUBJECT: Approval of Tax-Exempt Financing Arrangement for Efland Volunteer Fire
Company, Inc. to Construct a New Fire Substation
DEPARTMENT: Budget PUBLIC HEARING: (Y/N) No
ATTACHMENT (S):
Attachment 1. Letter from Efland
Volunteer Fire Company, Inc. Board of
Directors President
Attachment 2. Map of Parcel
Attachment 3. October 11, 2007 Letter
from Orange County Planning and
Inspections Department to Greg Andrews,
Re :Efland Fire Department Construction
Project
Attachment 4. Public Hearing Legal
Notice
Attachment 5. Fire District's Minutes
from September 26, 2007 Public Meeting
Attachment 6. Fire Service. Agreement
Attachment 7. Certificate of Approval
INFORMATION CONTACT:
Donna Coffey 245-2151
Mike Tapp 245-3030
PURPOSE: To approve a request from Efland Volunteer Fire Company, Inc. to enter into atax-
exempt financing arrangement to construct a new fire substation and authorize the Board of
Commissioner Chair to sign the appropriate documents related to the financing arrangement.
BACKGROUND: On September 20, 2005, the Board of County Commissioners approved atax-
exempt financing arrangement for Efland Volunteer Fire Company, Inc. to purchase land with
the intent to build a second fire station on the site. In the attached letter addressed to the
County Budget Office, Ronnie L. McAdams, President of the Efland Volunteer Fire Company,
Inc. confirmed the department's intent to proceed with the construction project (Attachment 1 of
this abstract).
The property, located on Highway 70 across from Hancor Corporation, offers direct access to
both Highway 70 and Frazier Road (Attachment 2 of this abstract is a tax map of the property).
Prior to the purchase of the land, members from the Efland Fire Department worked with the
County's Fire Marshal, and staff from the Planning and Inspections and Environmental Health
departments to ensure that the 19-acre site met regulations and requirements necessary for
future construction of the substation. On October 11, 2007, the Orange County Planning and
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Inspections Department issued a contingent approval to the fire department for construction of
the new facility (see Attachment 3 of this agenda abstract).
Three building contractors responded to the Fire Department's construction bid solicitation, and
THD Construction of Efland submitted the lowest construction price of $352,000 for the
approximately 1,900 square foot facility. The Department's Board of Directors agreed to borrow
$310,000 from Branch Banking and Trust (BB&T) Bank to finance the construction and to pay
the remaining $42;000 from the Department's capital reserve. The interest rate for the 20-year
(to be re-priced after 12-years) note is 4.62 percent. Estimated annual payments total $24,080
per year and with a projected beginning date of December 1, 2008. The total repayment,
including principal and interest, equals $447,014. It is important to note that these figures may
vary slightly depending upon the actual loan closing date.
As noted earlier, the District also has an outstanding tax-exempt loan that the Board of County
Commissioners approved in September 2005 for the purchase of the land. The annual
payments associated with that particular loan are approximately $17,352 with an estimated pay-
offdate of December 2010.
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 September 26, 2007, the department held a public
hearing regarding the construction. The Department advertised the hearing in the News
of Orange (Attachment 3 of this abstract). Per the meeting minutes provided by
representatives from the fire department (Attachment 4 of this abstract), no District
residents were present at the hearing. 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 Commissioners
to acknowledge that, through this financing arrangement, Efland Volunteer Fire
Company, 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 Commissioners must sign the Fire
Service Agreement (Attachment 5) and Certificate of Approval (Attachment 6).
FINANCIAL- IMPACT: The department's major revenues consist of County fire district taxes and
fees for service from the City of Mebane. According to June 30, 2007 financial statements (the
most recent information available to the Budget Office), the district received about $224,958
from those two sources. The department had approximately $388,500 in its bank accounts as
of June 30, 2007.
Related to the construction costs, the department plans to spend $42,000 to reduce the amount
of the loan, leaving about $346,500 in its bank accounts. In addition, according to the letter from
Mr. McAdams, the Department may ask the Board of County Commissioners to increase the
district's property tax rate beginning in fiscal year 2008-09 to cover the cost of the annual debt
payments related to construction of the new facility. The current year tax rate equals 4.225
cents per $100 valuation.
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Funds remaining in the Department's bank accounts would serve as a reserve that the
Department could use to cover unanticipated major expenses such as repairs or replacements
of other older equipment.
RECOMMENDATION (S): The Manager recommends that the Board of County Commissioners
approve the tax-exempt financing arrangement for Efland Volunteer Fire Company, Inc. to
construct a new substation and authorize the Board of Commissioner Chair to sign the
appropriate documents related to the financing arrangement.
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October 23, 2007
Efland Volunteer Fire Co., Inc.
PO Box 39, Efland NC 27243
Orange County Commissioners
Donna Dean, Budget Director
Orange County Budget Office
P.O. Box 8181
Hillsborough, NC 27278
Dear Madams and Sirs:
The Efland Volunteer Fire Department Board of Directors would like to
construct a fire substation on the 19 acres purchased in 2005. The building
address is on Highway 70 West, Efland, NC and is located across from the
Hancor plant on U.S. 70W
The total cost of the substation will be $352,000. We intend on financing
$310,000. This money would be financed with a 20 year note at around 4.62
percent. At 12 years, the balance of $158,053.50 could be re-financed or paid
off. Payments are estimated at $24,080.05 annually. The total repayment cost
would be around $447,014.10. The variability in these numbers would be from
slight changes in the interest rate based on the closing date. We are budgeted
for the payments in this fiscal year: We may require a tax rate increase of
around $24,000 to 35,000 per year to assist with paying this loan and possibly
building a fund to pay off the balance at twelve years.
If you have any questions contact myself or Assistant Chief Peter
Hallenbeck.
Thank you,
Ronnie L. McAdams, President
Efland Volunteer Fire Co, Inc.
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This map contains parcels prepared for th a Inve nlory of real property within
Orange County, and Is oomplled from reoord ed deed, plats, and other pubilo
re oords and data. Users of this map are hereby notified th at the aforementioned N
pub tic primary Information souroes should 6e oonsu Hed for ve rifloatton of the
inlorm atlon oontained onthis map. The oounty and Ifs mapping oo mpanles assume
no legal respons lbllily for the Information co nta In ed on this map.
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ORANGE COUNTY PLANNING & INSPECTIONS DEPARTMENT
Craig N. Benedict, AICP, Director
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Current Planning Division ~~ + ~ '~ 306E Revere Road
(919) 245-2575 ~z ~, ~ P O Box 8181
(919) 644-3002 (Fax) ~,° Hillsborough,
www.co.orange.nc.us '~~<<h ~ar~~~°' North Carolina, 27278
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October 11, 2007
Mr. Greg Andrews
THD Construction, Inc.
P.O. Box 536
Efland, NC 27243
Re: Efland Fire Department
PIN: 9835-60-0981
Dear Greg:
Staff has reviewed your application for the new Efland Fire Department building to be located on
US Highway 70 in the Cheeks Township.
Your project is APPROVED contingent with .the following conditions:
1. Any lighting to be provided in the future on the site shall obtain a zoning permit to verify
compliance with the Orange County Lighting Standards as set forth in Section 6.31 of the
Zoning Ordinance. Once an electrical permit is approved, all lighting plans shall be
maintained in accordance with the zoning approval.
2. A Type E Landscape Buffer (75-feet width) shall be installed or maintained along US 70
West as shown on the approved site plan. .
3. Signage has not been shown on the site plan; therefore, no signage is approved at this
time. Prior to the installation of any signage, a signage, plan shall be reviewed and
approved by this office.
4. All erosion control measures shall be adhered to until erosion control inspectors give
final approval that the site is properly stabilized.
5. .The NCDOT office in Graham shall approve all driveway construction prior to issuance
of zoning approval for a Certificate of Occupancy of the site.
As we discussed, you may wish to move the septic field to an alternate location on the
northern end of the property. Prior to grading for the alternate location you will need to
contact erosion control with your intentions and to determine their requirements. Also, you
will need to submit a revised site plan to this office for review and approval. Staff will work
with Environmental Health to have the site plan amended in accordance with the new
location.
It has been a pleasure working with you on this project. I will forward a copy of this '
approval letter to Donna Dean, Budget Director, for her use in working through the financing
authorization for this project.
If you have any questions about your project, please call the Planning Department at
245.2575 Monday -Friday from 8:00 AM until 5000 PM. Thank you.
Sincerely,
Robert P. Davis, AICP
Current Planning Supervisor
Xc: File
Donna Dean, E-mail
O
Public Notice
PUBLIC NOTICE IS HEREBY GIVEN that the Efland Volunteer Fire
Company, Inc (the "Department") will meet on Wednesday September 26,
2007 at the Volunteer Fire Department located at 3900 U:S. 70 West,
Efland, NC., 27243 at 7:30 p.m., in a public hearing pursuant to the
requirements of section 147(f) of the Internal Revenue Code of 1986, as
amended, on a proposal that the Department enter into a Construction Loan -
Mortgage agreement under the "Code" in order to finance the construction
of a firehouse substation (the "Substation"). To finance the costs of the
Substation and to pay costs and expenses incidental to the financing, the
Department proposes to enter into the Construction Loan -Mortgage in the
maximum aggregate principal amount of $310,000.00. The Department will
be required to pay all expenses of the operating, maintaining, and insuring
the Substation and to pay all taxes on the Substation. The Construction
Loan -Mortgage payments due pursuant to the financing agreement will be
payable and secured by a security interest lien on the Substation above here
mentioned. All persons interested may appear and be at said time and place
or may file written comments with the department prior to the hearing set
forth herein above, 9/26/07. By order of the Efland Volunteer Fire
Company, Inc Sept 30, 2007.
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Sept 27, 2007
Efland Volunteer Fire Co., Inc.
PO Box 39, Efland NC 27243
Public Notice Meeting
Sept 26, 2007
Attending: Peter D. Hallenbeck, Assistant Chief
Call to Order: P. Hallenbeck, 7:30 PM
Public meeting to discuss financing. the new fire substation. There were no other
people present.
Adjourned at 7:35 PM
Peter D. Hallenbeck
Assistant Chief, Secretary
Efland Volunteer Fire Co, Inc.
I~
Fire Service Agreement
This agreement, dated this day of , 20 , by and
between Efland Volunteer Fire Company, 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.
Efland Volunteer Fire Company, Inc.
By
Name
Title
Orange County
By
Name
Title
u
I, chairman 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 Efland Volunteer Fire
Company, Inc. atax-exempt commercial loan by XXXXXX Bank in
the amount of $XXXXXX to finance the construction of a new fire
substation on a 19 acre tract of land (Orange County parcel
number 10757 located in on Highway 70 across from Hancor,
Corporation in Efland, NC 27243).
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