Taking out a mortgage on the Idyllwild Fire Station for capital projects — and salaries and benefits — may be in the future of the Idyllwild Fire Protection District.
The IFPD Finance Committee discussed the idea at its Wednesday, Aug.19, meeting and decided to explore possible terms — interest rate, length and payments — in the next month. The committee will review the option in September and may make a recommendation to the IFPD Commission for its September meeting.
During the discussion of how the loan funds would be used, Committee Chair Nancy Layton said cash is needed because two new ambulances were purchased with cash rather than loans. However, that cash, about $90,000, was available from the 2014-15 operating funds. Even with this unplanned expense, IFPD estimated it ended the year with a $35,000 net surplus and did not need to use any of its $200,000 reserve.
The explanation shifted to using the additional cash to strengthen cash flow, but loan repayment burdens cash flow. Layton also said building reserves is a goal, “which we can’t do with the skinny budget in 2015-16.”
Fire Chief Patrick Reitz endorsed the need for building the district’s reserves after the recent engine fire took Brush Truck 621 out of service for nearly two weeks.
“It’s important that reserves and budget are prepared to handle catastrophic failures as we had with the brush truck,” he stated. “It’s not easy to handle more than $32,000 in expenses this early in the year.” The district also paid another $7,000 for other maintenance work, for a total of $39,000.
Committee member Sue Weisbart addressed possible capital improvement projects, which will be necessary, but that haven’t been discussed at the committee meetings. Station improvement projects include replacing the apron (concrete) outside the bay doors and the shingle siding on the building. She also suggested installing a solar facility on the station’s roof to help mitigate electric cost.
Other uses for the funds the committee bandied about included new protective equipment for the firefighters and a special laundry machine to remove potential toxins from the firefighters’ clothing, as well as operating expenses.
The operating expenses, for which the district might use the loan, include the unfunded liability for retiree benefits (excluding pensions IFPD funds through CALPERS). Earlier this year, a financial consultant estimated this might cost the district about $40,000 annually.
Also, Reitz suggested the loan funds would help supplement salaries. “We want to restore staff to whole and work toward parity with other departments,” Reitz told the committee.
One reason the committee will consider a mortgage on the station is the inability to find a lender willing to loan the amounts the district is seeking, according to Calvin Gogerty, committee member. Earlier this year, they could not find a lender willing to provide just the $90,000 for the ambulances.
“Further, this approach would substitute for individual loans [on separate assets],” he said. His subcommittee will prepare the report for the committee’s September meeting.
Earlier, the committee discussed the financial reports, which Rob Dennis prepares, and its role overseeing IFPD’s finances. Going forward, the committee intends to take a more active role reviewing the budget progress during the year.
“The Finance Committee is directed to review the monthly financial; but we’re not asked to do the bookkeeping,” Layton told her colleagues. “But it’s frustrating to work with the reports being given to us.”
Committee members then agreed on the reports, such as the budget expenditures and revenues, compared to the estimated totals for the fiscal year, which it needs to see at its meetings in order to advise the commission at its meeting the next week. The committee also expects any errors to be corrected before the next month’s meeting.
Layton announced the committee would hold a special meeting at 2 p.m. Monday, Aug. 24, to review the final financial reports for 2014-15 and the first month of fiscal 2015-16.