Agenda - 11-05-2007-4k - Laserfiche WebLink

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2 Inspections Department issued a contingent approval to the fire department for construction of the new facility (see Attachment 3 of this agenda abstract). Three building contractors responded to the Fire Department's construction bid solicitation, and THD Construction of Efland submitted the lowest construction price of $352,000 for the approximately 1,900 square foot facility. The Department's Board of Directors agreed to borrow $310,000 from Branch Banking and Trust (BB&T) Bank to finance the construction and to pay the remaining $42;000 from the Department's capital reserve. The interest rate for the 20-year (to be re-priced after 12-years) note is 4.62 percent. Estimated annual payments total $24,080 per year and with a projected beginning date of December 1, 2008. The total repayment, including principal and interest, equals $447,014. It is important to note that these figures may vary slightly depending upon the actual loan closing date. As noted earlier, the District also has an outstanding tax-exempt loan that the Board of County Commissioners approved in September 2005 for the purchase of the land. The annual payments associated with that particular loan are approximately $17,352 with an estimated pay- offdate of December 2010. 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 September 26, 2007, the department held a public hearing regarding the construction. The Department advertised the hearing in the News of Orange (Attachment 3 of this abstract). Per the meeting minutes provided by representatives from the fire department (Attachment 4 of this abstract), no District residents were present at the hearing. 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 5) and Certificate of Approval (Attachment 6). FINANCIAL- IMPACT: The department's major revenues consist of County fire district taxes and fees for service from the City of Mebane. According to June 30, 2007 financial statements (the most recent information available to the Budget Office), the district received about $224,958 from those two sources. The department had approximately $388,500 in its bank accounts as of June 30, 2007. Related to the construction costs, the department plans to spend $42,000 to reduce the amount of the loan, leaving about $346,500 in its bank accounts. In addition, according to the letter from Mr. McAdams, the Department may ask the Board of County Commissioners to increase the district's property tax rate beginning in fiscal year 2008-09 to cover the cost of the annual debt payments related to construction of the new facility. The current year tax rate equals 4.225 cents per $100 valuation.