Council forced to delay fire truck purchase until financing is set
A possible kink in the city’s plan to pay for a new fire engine resulted in the Cairo City Council tabling action on awarding a bid for the new vehicle.
The 2015-2016 operating budget includes $450,000 for a fire truck and $60,000 for equipment.
Cairo City Manager Chris Addleton had proposed financing the purchase and paying the debt with Special Purpose Local Option Sales Tax revenue earmarked for public safety equipment.
However, Council Finance Committee Chairman and Councilman James H. (Jimmy) Douglas questioned the legality of that proposal.
“I don’t remember if the SPLOST referendum authorized us to borrow money to pay for capital outlay specified in a bond issue and repaid with SPLOST funds,” Councilman Douglas stated.
City Attorney Thomas L. Lehman said he would have to research the matter, but he said, “I don’t recall it saying anything about borrowing money.”
Douglas contends it would not be permissible to pay the financing of the purchase of the new fire engine with sales tax proceeds if it was not authorized in the referendum.
“We’re not issuing a bond,” the city manager said and Douglas responded, “but you’re borrowing money and planning to pay it back with SPLOST funds. If it’s not in the referendum I don’t think you can do that.”
The city attorney said if the council was anticipating borrowing money it should have included that provision in the referendum language.
The bids produced by Cairo Fire Chief Bill Schafer ranged from $520,000 to $448,000 for a custom fire engine and from $452,000 to $400,000 for a commercial fire engine.
Chief Schafer and the city manager were recommending accepting the low bid of $448,000 from Rosenbauer for a custom fire engine. The city’s existing ladder truck is a Rosenbauer fire apparatus and the fire chief reports good service from that truck.
“How long are the bids good for?” Councilman Ernest Cloud asked.
Chief Schafer said he would contact the bidders for a 30-day extension so that the financing questions could be resolved.
“We’re not killing your truck chief, we just have to figure out how we’re going to pay for it,” Cloud said.
Councilman Douglas also questioned the practicality of paying for the chassis once it is delivered to the manufacturer in order to save $8,000.
“I can tell you from experience we’ve had to sue to get money back on a fire truck that was never delivered. We’re taking a big risk. The company may be worth a billion dollars today, but in six months it could be bankrupt. We don’t have to make a decision to pay the $200,000 for the chassis at this time, but it concerns me about paying for it and it sitting somewhere else,” Douglas said.
Councilman Bobby Gwaltney asked if the city would need to insure the chassis if it is prepaid for before the delivery of the fire truck to Cairo.
The city manager said the fire chief should find out if the city takes title to the chassis once it is paid for. “We need ownership if we pay the $200,000 for the chassis,” Addleton said.
Chief Schafer said it was his understanding that the chassis is insured by the vendor until the fire engine is delivered here or picked up by city personnel. Councilman Douglas requested the fire chief verify that if the city prepays for the chassis. The council finance committee chairman also said that if the purchase was being financed the city would be required to have the chassis as collateral.
The fire truck was tabled until the next meeting, which will be Aug. 10.