Agenda - 11-18-2008 - 4q - Laserfiche WebLink

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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.