Orange County NC Website
2 <br /> Section 147 of the Internal Revenue Code of 1986 outlines specific steps that must occur when <br /> a tax supported fire department enters into a financing arrangement: <br /> • Conduct a public hearing — On November 14, 2013, the department held a public <br /> hearing regarding the purchase. The Department advertised the hearing in The News of <br /> Orange (Attachment 2). Per Attachment 3, no members of the public were present at the <br /> hearing and the Department did not receive any written comments from residents of the <br /> district. <br /> • Obtain approval of the "applicable elected representatives" — In accordance with <br /> Section 147, the Board of County Commissioners must approve the District's plan to <br /> enter into the debt arrangement. This approval does not create liability on the part of <br /> Orange County nor does it make the County responsible for the repayment of any debt <br /> assumed by the fire district. The approval provides a mechanism for the BOCC to <br /> acknowledge that, through this financing arrangement, Orange Rural Fire Department <br /> No. 1, Inc. is pledging use of the District's tax dollars to repay the loan. In order to <br /> comply with this IRS requirement, the Chair of the Board of Commissioners must sign <br /> the Fire Service Agreement (Attachment 4) and Certificate of Approval (Attachment 5). <br /> FINANCIAL IMPACT: The department's major revenues consist of County fire district taxes <br /> and fees for service from the Town of Hillsborough. According to the district's June 30, 2013 <br /> financial statements, the district received about $1,442,734 during fiscal year 2012-13 from <br /> those two sources. The department had about $500,250 in its bank accounts as of June 30, <br /> 2013. Funds remaining in the Department's bank accounts would serve as a reserve that would <br /> potentially be used to cover unanticipated major expenses such as repairs or replacements of <br /> other older equipment. <br /> In addition to requesting that the Board of Commissioners approve the financing arrangement <br /> for the replacement of the fire truck, the District also requests that Commissioners approve an <br /> appropriation of $70,000 from the its County-held fund balance to purchase equipment to help <br /> outfit the truck. Should the Board approve the District's request to appropriate $70,000, <br /> approximately $16,000 would remain in the department's County-held unassigned fund <br /> balance. <br /> RECOMMENDATION(S): The Manager recommends that the Board- <br /> 1. Approve a request from Orange Rural Fire Department No. 1, Inc. to enter into a <br /> financing arrangement with CommunityOne Bank to purchase a fire truck; <br /> 2. Authorize the Board of Commissioners' Chair to sign the appropriate documents related <br /> to the financing arrangement; and <br /> 3. Appropriate $70,000 from the District's County-held fund balance for the purposes <br /> outlined in the Financial Impact above. <br />