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HomeMy WebLinkAboutAgenda - 06-02-2004-5cORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 2, 2004 Action Agenda Item No. 5 - e, SUBJECT: Approval of Financing Arrangement for Orange Grove Rural Fire Department to Purchase a Replacement Fire Truck DEPARTMENT: Budget PUBLIC HEARING: (Y/N) No ATTACHMENT (S): Attachment 1. Letter from Orange Grove Rural Fire Department Board of Directors Chairperson Attachment 2. May 20, 2004 Public Hearing Notice Attachment 3. Fire Service Agreement Attachment 4. Certificate of Approval INFORMATION CONTACT: Donna Dean 245-2151 TELEPHONE NUMBERS: Hillsborough Chapel Hill Durham Mebane 732-8181 968-4501 688-7331 336-227-2031 PURPOSE: To approve a request from Orange Grove Fire Department 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: During last spring's budget planning process, Orange Grave Fire Department outlined its plans to replace a 1983 fire truck sometime during the next two fiscal years. Due to the age of the truck, it required constant, and often times costly, maintenance and upkeep. In the attached letter addressed to the Orange County Board of County Commissioners Chair, Mr, Linwood Futrelle, President of the Orange Grove Fire Department confirmed the department's intent to proceed with the planned purchase (Attachment 1 of this abstract). According to the letter, the purchase price of the truck totals $290,704. The Department's Board of Directors agreed to borrow $250,000 from Central Carolina Bank and Trust and to pay the remaining $40,704 from the Department's capital reserve. The interest rate for the seven- year note is 3,9 percent. Annual payments total $40,869 and are scheduled to begin in late FY 2003-04, The total repayment, including principle and interest, equals $286,080, Section 147 of the Internal Revenue Cade 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 10, 2004, the department held a public hearing regarding the purchase, The Department advertised the hearing in the Chapel Hill Herald (Attachment 2 of this abstract). No residents were present at the hearing and the Department did not receive any written comments from residents of the district, z • 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 far 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 Grove Fire Department is pledging use of the District's tax dollars to repay the loan. In order to comply with this IRS requirement, Mr, Futrelle's letter requests the Chair of the Commissioners sign the Fire Service Agreement (Attachment 3) and Certificate of Approval (Attachment 4), FINANCIAL IMPACT: The department's major revenues consist of County fire district taxes. According to .June 30, 2003 financial statements completed by the Department, the fire district received about $180,069 from fire district taxes, The department had about $77,098 in its bank accounts as of .June 30, 2003, As indicated earlier, the department plans to spend $40,704 out of its bank accounts to make the down payment on the truck leaving about $36,394 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, The departments' current year County approved budget totals $186,998, The department's requested budget for fiscal year 2004-05 includes funds for debt service associated with this purchase, The Department has not requested a tax rate increase to cover the payments, RECOMMENDATION (S): The Manager recommends that the Board of County Commissioners approve the Orange Grove Fire Department's purchase of a replacement fire truck and authorize the Board of Commissioner Chair to sign the appropriate documents related to the financing arrangement, rI J/rc ~sw,n.~"~ Orange Grove Volunteer Fire Company Linwood Futrelle 6500 Orange Grove Road Linwood@unc edu April 22, 2004 Barry Jacobs Orange County Commissioners P.O. Box 8181 Hillsborough, NC 27278 RE: Orange Grove Volunteer Pire Company Dear Barry, President - Board of Directors 1 fillsba ouglr, NC 27?7S 919-967-5858 I am writing on behalf of the Orange Grove Volunteer Fire company. We have purchased a new Ferrara pumper, replacing a 1983 unit that no longer met our needs. The total cost of the new unit was $290,704. We borrowed $250,000 from Central Carolina Bank on a seven year note at .3.9% We pushed this purchase forward one year to take advantage of historic low interest rates. The payments on the loan were incorporated into our anmtal budget with no increase in our district tax rate and will not cause any service reductions. I am working with the county budget office to see all legal and fiscal requirements are met. CCB would like a certificate of approval signed by "Chief Elected Official of Orange County" This would certify that that we are an approved "fire district" and have authority to borrow the money. This in no way creates any liability on the part of Orange County nor will the county has any responsibility for payment on the loan. Please feel free to contact me if you need more information. Linwood(ci)unaedu or 919-962-5265.. Sincer Li ood Futrelle President -Orange Grove Board 'q ~~t~f,~.s,,~_ AFFIDAVIT OF PUBLICATION State of North Carolina County of Orange Donna B. Minor being duly sworn says that she is the Principal Clerk of The Durham Herald Co., Inc., publishers of The Chapel Hill Herald, a newspaper published in and of general circulation in said County, and that a notice of which the annexed is a true copy, was published in said newspaper one time on the 26th day of April, 2004. ;~ Principal Cler%l?~I< ~_~ Sworn to and subscribed before me this 26th day of April, 2004. Q.C. ~~'/YniC./ Nota P blic My commission expires December 16, 2006. Durham County, North Carolina ~IM3 _'~~i~ c w P4~J~''• w ~i0~~ G ~. ~~~ar~~Rn~~~~ ,~~~- ~ 5 C~ Fire service Agreement This agreement dated this day of , 2004 by and between Orange Grove 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 and rescue services in an area within the jurisdiction of the Political Subdivision, and, WFIEREAS, 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 follows Political Subdivision recognizes that Fire Department provides firefight and rescue services to the generally described area. 2. The area in which the Fire Department has primary firefighting responsibilities (area of responsibility) is the Cane Creek Fire District. (Orange Grove). 3. Political Subdivision shall not be liable or responsible for the conduct and activities of the Pire Department.. IN WITNESS WHEREOF, the parties have had this agreement executed by a duly authorized representative thereof. Orange G ov olunteer Fir C m .-- BY: , Name: Linwood Futrelle Date: Orange County. BY: Name: Date: /'/~/~~~~T ~'~ '~~ Certificate of Approval Approval of Chief Elected Official of 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 Orange Grove Volunteer Tire Company a commercial loazi by Central Carolina Banlc for the amount of $250,000 to finance a fire Pumper huclc to be located at 6800 Orange Grove Road, 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