HomeMy WebLinkAboutAgenda - 11-18-2008 - 4qORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 18, 2008
Action Agenda
Item No.
SUBJECT: Approval of Financing Arrangement for Orange Grove Volunteer Fire
Company, Inc. to Purchase a Fire Truck
DEPARTMENT: Budget, Emergency Services PUBLIC HEARING: (Y/N) No
ATTACHMENT (S): INFORMATION CONTACT:
Attachment 1. Correspondence from
Orange Grove Fire Company, Inc. Board of
Directors President
Attachment 2. November 3, 2008 Public
Hearing Notice
Donna Coffey (919) 245-2151
Frank Montes de Oca, (919) 245-6140
Attachment 3. Notes from November 3,
2008 Public Meeting
Attachment 4. Fire Service Agreement
Attachment 5. Certificate of Approval
PURPOSE: To approve, in accordance with Section 147 of the Internal Revenue Code of 1986,
a request from Orange Grove Volunteer Fire Company (OGVFC), 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 arrangements.
BACKGROUND: This is atime-sensitive item. The cost quoted to OGVFC for the fire
truck will increase by $9,000 after November 28, 2008.
In Attachment 1, Linwood Futrelle, President of the OGVFC, outlines the department's intent to
purchase a fire truck. The new 2000-gallon tanker will replace a 1983 model 1250-gallon
tanker. The department went through a competitive bid process. The department received two
bids with the bid award going to US Tanker Fire Apparatus, Inc. in Burlington, Wisconsin. The
cost of the truck totals $226,886.
Volunteer fire companies are required to obtain Board of County Commissioner approval of
such purchases only when they use tax-exempt debt financing to pay for purchase. Fire
departments are not mandated to obtain Board of County Commissioner approval when making
purchases that do not require debt financing. Orange Grove Plans to debt finance $193,000 of
the truck cost with the remaining $33,886 coming from available fire department monies.
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. OGVFC has completed
the required steps to comply with Section 147.
Conduct a public hearing - On November 3, 2008, the department held a public
hearing regarding the purchase. The Department advertised the hearing in the News of
Orange (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.
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, OCVFC 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).
It is important to note OCVFC has collaborated, over the last five months, with three other fire
companies in the County to replace older fire trucks. Representatives from each district have
made Orange County Emergency Services and Budget directors aware of their purchase
intentions. The collaborative efforts have resulted in departments purchasing comparable trucks
and equipment thereby improving their efforts to provide mutual aid to neighboring departments.
In December 2008, a separate but similar agenda item will come to Commissioners for approval
of financing arrangements for Cedar Grove, Little River and Orange Rural Fire Companies. As
of the date of this abstract, these departments have not completed the IRS required steps.
Quoted costs of fire trucks for these districts are good through December 2008.
FINANCIAL IMPACT: According to the letter of request from Mr. Futrelle, the purchase price of
the truck totals $226,886. The Department's Board of Directors agreed to borrow $193,000
from Cardinal State Bank in Hillsborough, and to pay the remaining $13,886 from the
Department's capital reserves as well as $20,000 from their County-held fund balance. The
interest rate for the 6-year note is 3.9 percent with projected annual payments of $33,500. The
total projected repayment, including principal and interest, equals $195,200. These figures may
vary slightly depending upon the actual loan closing date.
The district does not anticipate needing a tax rate increase in order to have funds to repay the
loan.
RECOMMENDATION (S): The Manager recommends the Board of County Commissioners:
1. Approve Orange Grove Volunteer Fire Company, Inc. entering into a financing
arrangement to purchase a fire truck;
2. Appropriate $20,000 from the department's County-held unappropriated fund balance;
3. Authorize the Board of Commissioner Chair to sign the appropriate documents related to
the financing arrangement.
Orange Grove
Linwood Futrelle
6800 Orange Grove Road
October 29, 2008
Donna Coffey
Budget Director
Orange County
Deaz Donna,
President -Board of Directors
Hillsborough, NC 27278
919-967-5858
Enclosed aze the appropriate documents as requested for the Board's agenda.
Orange Grove Fire Volunteer Fire Company, Inc. wishes to purchase from US Tanker Fire
Apparatus, Inc: a 2000 gallon tanker to replace a 1983 1250 gallon tanker. Cost of the unit will
be $226, 886. This replacement has been listed in our budget documents for the past several
yeazs and.is a long planned upgrade. The unit-being replaced has become a maintenance
problem due to its age.
Cazdinal State Bank of Hillsborough will finance the purchase at 3.9 percent for 6 years. Our
proposal is to use $20,000 from our fund balance and the fiords we budgeted for the Federal
grant matching portion of the Assistance to Fire Fighter. Grant we applied for, but did not
receive.
This unit will be a matching unit to ones being purchased by Efland, Cedaz Grove and
Hillsborough. It will increase our initial response water by 37% (1250 gal to 2000 gal)
increasing fire fighter safety by having more water available initially. It will improve our ability
to provide mutual aid to our neighboring departments by having more water available.
This purchase dose not and will not necessitate a tax increase on our district tax.
Please let me know if I need to attend the boazd meeting or provide more information.
Sincerely,
Inwood Futrelle
President, Orange Grove Fire Company, Inc.
Volunteer Fire Company
Orange Grove
" Volunteer Fire Company
Linwood Futrelle
6800 Orange Grove Road
October 29, 2008
Donna Coffey
Budget Director
Orange County
Hillsborough, NC 27278
Dear Donna,
Presidern -Board of Directors
Hillsborough, NC 27278
919-967-5858
The Orange Grove Volunteer Fire Company, Inc. request that $20,000 from our reserve fund be
transfer to our bank account as soon as possible.
We are purchasing a new 2000 gallon tanker and the money is required for the down payment
on this purchase.
We -have in our budget, a matching amount for the Federal grant we applied for ($14,000),
however we were turned down, making Orange Grove responsible for the entire amount of this
purchase..
We are planning to finance $193,000 of the $227,000 purchase price. This purchase has long
been projected in our budget planning documents and will not require a tax increase to pay for.
Cardinal State Bank in Hillsborough has offered to finance this purchase for six years at 3.9
percent. We will submit these documents shortly. Our public hearing is scheduled for
November 3~.
Our goal is to award the purchase order by November 20~'.
Sincerely
Linwood Futrelle
President, Orange Grove VFC
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C7
News from Alamance, Caswell and Orange County, North Cazolina
PUBLIC NOTICE Public Notice is hereby given that the Orange Grove Volunteer Fire
Company, Inc. will meet on Monday, November 3, 2008 at the Orange Grove Fire
Station located at 6800 Orange Grove Road, Hillsborough, N.C. 27278 at 7:00 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 Purchaser enter into a Purchase
agreement in order to finance the acquisition of equipment. The equipment to be financed
consists of a Fire Tanker (the Equipment) and will be located at the Orange Grove Fire
Station in Hillsborough, N.C. To finance the costs of such equipment and to pay costs
and expenses incidental to the financing, the Purchaser proposed to enter into a loan
agreement in the maximum aggregate principal amount of $235,000. The Purchaser will
be required to pay all expenses of the operating, maintaining and incurring the Project and
to pay all taxes on the Equipment. The payment due pursuant to the Purchase agreement
will be payable and secured by a security interest lien of the Equipment above here
mentioned. Any 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
11/03/08. By order of the Orange Grove Volunteer Fire Company, Inc., October 20,
2008.October 22, 29, 2008
Orange Grove .
Volunteer Fire Company
Linwood Futrelle
6800 Orange Grove Road
November 4, 2008
Public Meeting Notice
11-03-2008
~v.
President - Boazd of Directors
Hillsborough, NC 27278
919-967-5858
Attending -Linwood Futrelle -President -Orange Grove Fire Company,
Call to order: Linwood Futrelle @ 7 PM
Public meeting to discuss the purchase of replacement tanker.
No one came to express any opinions.
Adjourned @ 7:30 PM
Submitted:
Linwood Futrelle
President
Orange Grove Volunteer Fire Company, Inc.
7
Fire Service Agreement
This agreement, dated this day of , 2008, 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 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 Grove 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 Grime Voly~tger Fire Company, Inc.
Bycl
Name ~ i u w ~ ~K~ d~t ~~
Title f -~-S %d ~ - /3~u~ . ~z;D~~,
Orange County
By
Name
Title
O~
is
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 Fire
Company, Inc. a commercial loan by Cardinal State Bank Company
for the amount of $193,000 to finance a fire tanker truck to be
located in Orange Grove, NC.
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