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<br />remaining $42,000 from the Department's capital reserve, The interest rate for the 5-year note
<br />is 4,27 percent. Estimated annual payments are in the neighborhood of $17,352 per year and
<br />with a projected beginning date of November 2005, The total repayment, including principle
<br />and interest, equals $86,800. It is important to note that these figures may vary slightly
<br />depending upon the actual loan closing date..
<br />The District also has an outstanding tax-exempt loan that the Board of County Commissioners
<br />approved in December 2004, The annual payments associated with that particular loan are
<br />about $36,000 with an estimated pay-off date of January 2010,
<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 22, 2004, the department held a public
<br />hearing regarding the purchase, The Department advertised the hearing in the News of
<br />Orange (Attachment 3 of this abstract). Per the Attachment 4 of this abstract, one district
<br />resident was present at the hearing and a brief description of the land, intended future
<br />use, cost and financing details were presented, The Department did not receive any
<br />written comments from residents of the 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 Commissioners
<br />to acknowledge that, through this financing arrangement, Efland Volunteer Fire
<br />Company, 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 Commissioners must sign the Fire
<br />Service Agreement (Attachment 5) and Certificate of Approval (Attachment 6),
<br />FINANCIAL IMPACT: The department's major revenues consist of County fire district taxes and
<br />fees for service from the City of Mebane, According to .tune 30, 2004 financial statements (the
<br />mast recent information available to the Budget Office), the district received about $190,097
<br />from those two sources, The department had about $195,082 in its bank accounts as of June
<br />30, 2004. As indicated earlier, the Department financed a fire truck in December 2004 and
<br />used $28,164 from its bank accounts as a dawn payment on a fire truck, This left about
<br />$166,918 in the department's bank accounts,
<br />With the property purchase, the department plans to spend $42,000 to make the down payment
<br />on the property leaving about $124,918 in its bank accounts, Funds remaining in the
<br />Department's bank accounts would serve as a reserve that would potentially be used to cover
<br />unanticipated major expenses such as repairs or replacements of other older equipment,
<br />The departments' current year County approved budget totals $181,628. The department's
<br />approved budget for fiscal year 2005-06 includes funds for debt service associated with this
<br />purchase along with previously approved debt. According to the letter from the Board of
<br />Directors President (Attachment 1 of this abstract), the district may require a tax rate increase in
<br />fiscal year 2006-07 to cover approximately $8,000 in debt service payments for the land.
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