Despite having a hefty surplus, or fund balance, on hand, Mount Airy officials are taking the loan route to acquire a new fire engine for the city costing $561,720.
But that’s not the whole story with the fund balance, based on the fact the municipality has identified $11.6 million in such big-ticket items, or capital needs, which are looming over the next few years and could pretty much wipe out those savings.
“It is our (staff) recommendation this is the best thing for the city,” Interim City Manager Darren Lewis said Thursday night when the Mount Airy Board of Commissioners approved a borrowing plan for the fire truck.
The board had decided in January of last year to rely on that option with the arrival of the vehicle still months away, which Lewis said Thursday will aid Mount Airy’s cash-flow situation.
Under the loan agreement, the city government will borrow the $561,720 for a period of 10 years for the purchase of a 2022-model engine from Atlantic Coast Fire Trucks in Denver, a community in Lincoln County.
The money is to be loaned at a fixed rate of 2.31%, with the first payment to occur next Oct. 1 and continue on the same date for the ensuing decade — with the interest cost totaling $69,740. The lender was identified as REV Financial Services.
Fire Chief Zane Poindexter said the new truck is undergoing finishing touches in Denver and will be delivered to Mount Airy in February.
Poindexter has said that the Mount Airy Fire Department has a mostly aging fleet, including two 1995 Sutphen fire trucks and a 2000 American LaFrance.
But then-City Manager Barbara Jones said last year when outlining the needs that the public shouldn’t think the existing fire trucks are unreliable in emergencies, with which the fire chief agreed.
“We would not put an unsafe fire truck on the road,” he stressed.
Lewis states in a memo to council members that the plan now calls for replacing the fire vehicles every 10 years depending on the maintenance service log for individual trucks. “If a truck is 10 years old and we have had minimal or no issues, we will not recommend replacing the vehicle at that time.”
Fund balance targeted
The new fire engine was included on the list of capital improvements totaling $11.6 million over five years which officials were eyeing a year ago at this time.
Capital needs involve expenditures generally exceeding $10,000 which are related to buildings, infrastructure projects and equipment for city government operations, including vehicles.
The fire engine was considered a need for the shorter term in the five-year plan, along with new automated garbage trucks (added in 2021), a dump truck for the city’s public services/streets unit ($160,000), a leaf machine ($120,000), police patrol vehicles ($115,749), a police vehicle used for vice investigations ($26,250) and a truck for Reeves Community Center ($35,000).
A report last month on the municipality’s annual audit by an out-of-town firm showed that the city’s available fund balance stood at roughly $12.6 million as of June 30 — money that may be used for any purpose without restrictions. It grew by nearly $1.7 million from the same date in 2020.
However, Lewis pointed out that this result was not as rosy as might seem, being somewhat artificially created partly due to rolling over major expenditures to the next fiscal year and the freezing of 13 employee vacancies.
Lewis suggested that this delay eventually will create a major funding challenge that might strain the available fund balance.
As of December — only about midway through the 2021-22 fiscal year — around $1.3 million already had been committed from that revenue source.
That included allocations related to the ongoing redevelopment of the former Spencer’s textile complex, downtown projects and a new grapple truck costing $185,000. The Surry Arts Council also was designated to receive $400,000 for a new facility now under construction near the Mount Airy Public Library.
And the commissioners dipped into the fund balance again on Thursday night when taking separate action on other capital needs, involving the acquisition of the dump truck and leaf machine mentioned in the five-year capital plan
They agreed to appropriate a total of $280,000 from that source to pay for those items.
Source: https://www.mtairynews.com
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