City Commission Explores Fire Equipment Acquisition & Funding Options

City Commission Explores Fire Equipment Acquisition & Funding Options

During Monday's City Commission Meeting, commissioners engaged in discussions centered on a resolution declaring the necessity to obtain firefighting equipment. The resolution proposes the issuance of general obligation bonds by the City of Salina to fund the acquisition, with authorization granted to publish the Notice of Intent.

In 2022 and 2023 Strategic Planning sessions with the City Commission, a strong emphasis was placed on prioritizing long-term financial planning. Responding to this directive, the City Manager and Finance staff acquired software to facilitate tracking the City's Capital Improvement Planning. This initiative led to the creation of a 10-year Capital Improvement Plan Project, involving a comprehensive inventory and prioritized listing of capital items slated for replacement over the next decade by various city departments.

Utilizing the software, the City Manager and Finance team developed a financing plan, presented to the City Commission during the July 3, 2023, study session. The 10-year Capital Improvement Plan included the replacement of Fire Apparatus as part of the lease financing option due to the city's financial constraints. The financing plan proposed covering annual payments from sales tax.

After analyzing financing options with the City's Financial Advisor and Bond Counsel, it was determined that issuing General Obligation Bonds for a maximum period of 10 years presented the most cost-effective option. This option is estimated to be approximately 1.75% or $1M less expensive than a capital lease over the financing term.

On November 27, 2023, the City of Salina Fire Department presented a plan for the replacement of seven firefighting apparatus to the City Commission.

Legal Framework:
The City's authority to issue General Obligation Bonds for fire equipment purchases is derived from K.S.A. 12-110c. This statute mandates the publication of a Notice of Intent for bond issuance, requiring publication in the official City newspaper for two consecutive weeks. If a protest petition, signed by at least five percent of the qualified electors, is filed within 60 days after the last publication, an election must be held for voter approval. Absent such a petition, the City can proceed with bond issuance.

Publication and Protest Period:
With approval to publish the Notice of Intent secured at the meeting, publications are scheduled for December 1st and December 8th. The 60-day protest period will commence after December 8th.

Contingency Plans:
In the event of a protest, the City Commission has the option to either hold an election or explore alternative funding sources. Staff would then recommend the capital lease option, involving bids from relevant financial institutions.

The Equipment:
The proposed General Obligation Bonds are intended to fund the replacement of firefighting apparatus as outlined in Resolution 23-8169. Notably, this resolution neither commits the City to purchase nor awards bids to specific vendors. Instead, it initiates the necessary process to authorize bond issuance at the appropriate time.

Fiscal Note:
The acquisitions, totaling $11,655,428, are included in the 2024 10-Year Capital Improvement Plan. This figure encompasses financing costs, intended to be covered by General Obligation Bonds paid with sales tax. In the event of a protest, staff will recommend an alternative funding approach.

Recommendation and Approval:
Staff and bond counsel recommend project authorization at $9.5M, including a 5% contingency. This total aligns with the Fire Department's anticipated request at a future meeting. The motion to approve Resolution No. 23-8169, providing project authorization for fire equipment acquisition at a cost not to exceed $10M, and authorizing the issuance of general obligation bonds, was unanimously approved (5-0). The motion was amended from the original $9.5M to account for potential increases in equipment costs.

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