Union firemen refinance debt

Published 8:17 pm Monday, February 10, 2014

WINTON – With its options limited, members of the Union Volunteer Fire Department (UVFD) have opted to refinance the debt of its capital assets in an effort to continue to serve the residents of their district.

Last year, UVFD pitched an idea to the Hertford County Board of Commissioners to develop a fire tax service district. They were seeking a four-cent tax (based on $100 of property value). A portion of the Union fire district is already taxed, an area previously covered by the Ahoskie Rural Fire Department (who also has a four-cent tax rate). Ahoskie conceded that territory to Union. The Union firemen requested to expand the tax to the other property within their service district.

However, after listening to the pleas of several citizens living in the Union area, the commissioners, in a 5-0 vote, rejected the expansion of the fire tax district.

That left the Union firefighters to find other financial resources to keep the doors open.

“We went out, as a result of asking for a fire tax and not getting it, to look at options of refinancing (the department’s debt associated with annual operations),” said UVFD Chief Jim King.

King said the department chose to go with United Financial of North Carolina, Inc. That new deal comes with a better interest rate, decreasing UVFD’s annual debt service payment from $32,327 to $29,979. It also cuts 10 years off the time that the UFVD will be paying off the loan.

“That saves us roughly $2,350 per year for 20 years,” King said. “We attempted to get this (refinancing package) locally, but had no takers; that’s why we went to United Financial. We found them to be a reputable company, and we wanted you, the commissioners, to be aware of what we are doing.”

King said the annual debt service payments are for a new fire truck and the department’s fire station.

As part of the deal, United Financial forwarded an agreement between the two parties, one that required the signature of the Hertford County Board of Commissioners.

Hertford County Manager Loria Williams noted one issue with the wording of that agreement.

“The last paragraph states that ‘the fire department has made us aware of their intention to acquire new capital assets through a lease purchase transaction with your firm. Please be advised that the county has no objection to this transaction’,” Williams said, reading from the agreement.

“We’re not purchasing anything; what we’ve done is combined the (annual debt service) payments of the one truck and the building,” King said.

“We need a clarification of that statement,” Williams said.

Murfreesboro attorney Chuck Revelle, legal counsel to the county, suggested that a portion of the last paragraph to be changed to “refinance capital assets” instead of “acquire new capital assets.”

“I can’t speak for United Financial, but I don’t see them having a problem with that,” King said. “That’s what we’re doing….refinancing our capital assets, not acquiring new ones.”

The Commissioners voted in favor of that agreement, contingent upon United Financial approving the change noted by Revelle.

Last year, King explained the decision made by the department to seek the establishment of a fire tax district, one that would encompass all of area that the UVFD is responsible to cover. He said the existing fire tax district is only 12-to-15 percent of the total district. That district has been in place for over 20 years.

“That’s why part of the district is now being taxed and others not taxed,” King explained in June of last year when addressing the commissioners.

He added that $29,000 would be generated if the entire Union district was taxed.

King said the department operates on an annual budget of approximately $65,000. In revenue for the current fiscal year, Union received $28,800 from the county, $1,000 in per call money, $7,557 from property owners in the portion of the district already taxed, $3,845 in donations, and $900 from Roanoke-Chowan Community College. The balance comes from several fundraisers the department conducts annually, but King noted the national and state economy has slowed to the point where those events do not generate money they once did.

“We’ve applied for grant funding from anyone and everyone,” King stressed at that time. “We’ve drained our CD’s (Certificates of Deposit); we sold our brush truck because we didn’t want to invest putting a new engine in it.”

King noted the high cost of operating a fire department, from providing insurance coverage on each member, to equipment, building payments, and the required annual tests performed on the trucks, air packs, etc.

Using a home valued at $120,000 as an example, King said the annual fire tax would be $48. But that idea was nixed by the commissioners, leaving the department to seek other ways to find the necessary funds to continue to operate.

About Cal Bryant

Cal Bryant, a 40-year veteran of the newspaper industry, serves as the Editor at Roanoke-Chowan Publications, publishers of the Roanoke-Chowan News-Herald, Gates County Index, and Front Porch Living magazine.

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