HomeMy WebLinkAboutAgenda - 06-26-2007-4xORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: June 26, 2007
Action Agenda
Item No. ~- -,° _
SUBJECT: Approval of Financing Arrangement for Efland Volunteer Fire Company, Inc. to
.Purchase a Fire Engine Truck
DEPARTMENT: Budget PUBLIC HEARING: (Y/N) No
ATTACHMENT (S):
Attachment 1. Letter from Efland
Volunteer Fire Company, Inc. Board of
Directors President
Attachment 2. May 14, 2007 Public
Hearing Notice
INFORMATION CONTACT:
Donna Coffey 245-2151
Attachment 3. Notes from 5/14/07 Public
Meeting
Attachment 4. Fire Service Agreement
Attachment 5. Certificate of Approval
PURPOSE: To approve a request from Efland Volunteer Fire Company, Inc. to enter into a
financing arrangement to purchase a fire truck and authorize the Board of Commissioner Chair
to sign the appropriate documents related to the financing arrangement.
BACKGROUND: In the attached letter addressed to the Orange County Budget Office, Ronnie
McAdams, Chairman of the Efland Volunteer Fire Company, Inc., indicated the department's
intent to purchase a new fire truck (Attachment 1 of this abstract). Mr. McAdams confirmed that
the department went through a competitive bid process and awarded the bid to Ferrara Fire
Apparatus, Inc. of Holden, Louisiana. Projected delivery date for the truck is July 2007.
According to Attachment 1, the purchase price of the truck totals $205,000. The Department's
Board of Directors- agreed to borrow $105,000 from Branch Banking and Trust Company
(BB&T), and to pay the remaining $100,000 from the Department's capital reserves as well as
$40,000 from their County-held fund balance. The interest rate for the 5-year note is 4.23
percent with monthly payments of $1,944.65. The total repayment, including principle and
interest, equals $116,679. It is important to note that these figures may vary slightly depending
upon the actual loan closing date.
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 May 14, 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 the 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, 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 4) and Certificate of Approval (Attachment 5).
FINANCIAL IMPACT: The department's major revenues consist of County fire district taxes
and the district's investments .earnings. According to June 30, 2006 financial, statements, the
district received about $188,715 from those two sources. The department had about $300,130
in its bank accounts as of June 30, 2006, which included checking, savings, and certificates of
deposits. As indicated earlier, the department plans to spend $60,000 out of its bank accounts
to make the down payment on the truck leaving about $240,130 in its bank accounts. 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.
RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners:
1. Approve Efland Volunteer Fire Company, Inc.'s purchase of a fire truck;
2. Appropriate $40,000 from the department's unappropriated fund balance; and
3. Authorize the Board of Commissioner Chair to sign the appropriate documents related to
the financing arrangement.
Efland Volunteer Fire Department
PO Box 39
Efland, NC 27243
April 13, 2007
Orange County Budget Office
PO Box 8181
Hillsborough, NC 27278
Re: Accumulated Fund Balance
As Chairman of the Board of Directors of Efland Volunteer Fire Co., Inc.
I am requesting that $40,000 of the June 30, 2006 fund balance be released to
our fire department as soon as possible. This money will be used to offset the
cost of a new pumper/tanker, which we are in the process of ordering and expect
to accept delivery on in July of 2007. This truck has a contract price of
$205,000.00 which we plan to pay for with the fund balance, accumulated
reserves and a loan for the balance of $105,000. This truck will supplement our
truck inventory and be in place when the new substation is completed in 2008.
Because the well being of the citizens of the Efland fire district, as well as
the safety of the fire fighters, is of the utmost importance to the Board of
Directors, we respectfully request the fund balance for the purchase of the
pumper/tanker. By receiving the fund balance, the amount of the loan necessary
to pay for the balance of the truck will be reduced. This will enable the
department to continue to run on a solid financial base with their regular
operating budget.
Thank you for your time and considerations to this matter.
Sincerely, l -:,,,~
Ronnie L. McAdams, Sr.
Chairman, Board of Directors
Efland Volunteer Fire Co., Inc.
Public l~T~oticc
Public Notice is hereby given that the Efland Volunteer
Fire Company; Inc. will u~eet on Monday, May 14, 200'7: 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 Lessee enter into aLease-Purchase agreement aiid'~
the ."Code" in order to finance. the acquisitiou.of:::~ .:
equipment. The equipment to be financed consist of.a ,
Fire Engine (the "Equipment") and: will be located ai~the
firehouse in Efland, NC. To finance the costs of such
equipment and to pay costs and expenses iucidental•to.tlie
financing ,the Lessee proposes to eater into the Lease-
Purchase:agreement in the maximum aggregate,;prncipai
amount of $105,000.00. The Lessee will be required to
pay all expenses of the operating, maintaining, and insur-
ing the Project and to pay all taxes on the Equipment. The
rental payment due pursuant to the Lease-Purchase' agree-
ment will be payable and secured by a security interest
lien of the Equipment, above here mentioned. 'A persons
interested. iriay appear and be at said time and place or
.may file written comments with the department prior to
the hearing sat forth herein above, 5/1.4/07. By order of
• the Efland Volunteer Fire Company, Inc., March ~19, 2007
5
May 14, 2007
Efland Volunteer Fire Co., Inc.
P® Box 39, Efland NC 27243
Public Notice Meeting
May 14, 2007
Attending: Peter D. Hallenbeck, Assistant Chief
Call to Order: P. Hallenbeck, 7:30 PM
Public meeting to discuss the purchase of a new Engine. There were no other
people present.
Adjourned at 8:00 PM
Peter D. Hallenbeck
Assistant Chief, Secretary
Efland Volunteer Fire Co, Inc.
~P
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 Efland 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
Orange County
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. a commercial loan by Central Carolina Bank for the
amount of $105,000 to finance a fire tanker truck to be located 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