HomeMy WebLinkAboutAgenda - 09-19-2007-4fORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 19, 2007
Action Age~a
Item No.
SUBJECT: Approval of Financing Arrangement and Fund Balance Appropriation for
Orange Rural Fire Department No. 1, Inc. to Purchase a Replacement Fire
Rescue Truck
DEPARTMENT: Budget PUBLIC HEARING: (Y/N) No
Attachment 1. Letter from Orange Rural
Fire Department No. 1, Inc. Board of
Directors President
Attachment 2. September 6, 2007 Public
Hearing Notice
Attachment 3.. Notes from 9/06/07 Public
Meeting
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 rescue truck, authorize the Board of Commissioner
Chair #o sign the appropriate documents related to the financing arrangement, .and appropriate
$40,000 from the District's. County-held fund balance.
BACKGROUND: In the attached letter addressed to the Orange County Budget Office, John
Forrest, President of the Orange Rural Fire Department No. 1, Inc. indicated the department's
intent to purchase a replacement rescue truck (Attachment 1 of this abstract). The department
will purchase a 1992 Simon-Duplex/Saulsbury Rescue Truck to replace its current 1983 truck.
According to Attachment 1, the purchase price of the truck totals $200,000 (a comparable new
truck costs approximately $625,000). The Department's Board of Directors agreed to borrow up
to $180,000 from CommunityOne Bank and to pay the remaining $20,000 from the
Department's capital reserve. The interest rate for the 5-year note is 4.220 percent with monthly
payments of $3,333. The total repayment, including principal and interest, equals $199,980. It
is important to note that these figures may vary slightly depending upon the actual loan closing
date.
ATTACHMENT (S): INFORMATION CONTACT:
Donna Coffey 245-2151
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.
2
o Conduct a public hearing - On September 6, 2007, the department held a public
hearing regarding the purchase. The Department advertised the hearing in the News of
Orange (Attachment 2 of this abstract). Per Attachment 3 of this abstract, no residents
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 Commissioners
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 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, 2006
financial statements (the most recent financial statement available at this time), the district
received about $1,042,661 during fiscal year 2006-05 from those two sources. The department
had about $590,382 in its bank accounts as of June 30, 2006. 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 County Commissioners approve the financing arrangement for the
replacement of the fire rescue truck, the District also requests that Commissioners approve an
appropriation of $40,000 from the its County-held fund balance. In an effort to reduce the
overall amount of outstanding debt the department has, the District wishes to pay-off an existing
$80,000 loan on a tanker truck. In order to retire that debt, the District plans to use $40,000
from the district's County-held fund balance plus $40,000 from its built-up capital reserves to
pay off the loan. Should the Board approve the District's request to appropriate $40,000,
approximately $12,000 would remain in the department's County-held .unappropriated fund
balance.
RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners:
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. rescue truck;
2. Authorize the Board of Commissioner Chair to sign the appropriate documents related to
the financing arrangement; and
3. Appropriate $40,000 from the District's County-held fund balance for the purposes
outlined in the Financial Impact section of this agenda abstract.
rage ~ura~ Fire ~t.
P.O. Box 1511 Hillsborough, AiC 27278
919-732-7911 www.orfd.org
August 20, 2007
Donna Dean, Budget Director
Orange County Budget Office
P.O. Box 8181
Hillsborough, NC 27278
Dear Donna:
The Orange Rural Fire Department Board of Directors would like'to request $40,000.00
~~ -from our unappropriated fund balance to be used to pay off an existing loan for a tanker
truck so that we can purchase a replacement rescue truck. This truck will replace a 1983
rescue truck.
The total cost of the rescue truck is $200,000.00. We have applied a deposit of
$20,000.00, which will leave us financing $180,000.00. The remaining balance on the
tanker lease is approximately $80,000.00. We intend to pay the other $40,000.00 from
our Capital Reserves account so that we will only carry one truck loan. We will have the
same budgeted line item "debt service" this fiscal year for the rescue truck.
If you have any questions, please do riot hesitate to give me a call at 919-732-7911.
Thank you,
~,.
~~`
'ohn Forrest, President
~(7range Rural Fire Department
Public Notice
Public Notice is hereby given that the Orange Rural Fire Department No. 1 Inc. will meet
on Thursday, 9/6/2007 at the fire department located at 206 S. Churton Hillsborough, NC
27278 at 7:OOpm, 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 buyer enter into a
term. loan under the "Code" in order to finance the acquisition of equipment. The
equipment to be financed consists of a 1992 Simon-Duplex/Saulsbury Rescue Truck and
will be located at the firehouse on Hillsborough, NC. To finance the costs of such
equipment and to pay costs and expenses incidental to the financing, the Buyer proposes
to enter into a term loan agreement in the maximum aggregate principal amount of
$180,000.00: The Buyer will be required to pay all expenses of the operating,
maintaining, and insuring the project and to pay all taxes on the Equipment. T'he
payments due pursuant to the term loan agreement will be payable and secured by a
security interest Lien on the Equipment 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, 8/22/2007. By the order of the
Orange Rural Fire Department No. 1, Inc.
Orange Rural Fire Department
Public Notice Meeting
9/6/2007
Attending: Jeff Roberts, Treasurer, Jim Rodgers, Member
Call to Order at 7:OOpm
Public meeting to discuss the purchase of a 1992 Simon-Duplex/Saulsbury Rescue Truclc.
There were no other people present.
Adjourned at 7:20
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 far profit organization duly authorized for
the purpose of providing firefighting services in a.n 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.
ey
Name
Title
Orange County
By
Name
Title
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 Orange Rural Fire
Department No. 1, Inc. a commercial loan by CommunityOne Bank
in the maximum aggregate principal amount of $180,000 to finance
a fire rescue 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