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C’dale fire weighs options for capital improvements

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By John Colson

Sopris Sun Staff Writer

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The Carbondale fire department is considering whether to ask voters in November to authorize borrowing up to $10.5 million to pay for deferred capital improvement projects over the next 25 years or so, in light of the fact that otherwise the district’s tax rate will drop at the end of this year.

At a meeting on Feb. 8, the board of directors for the Carbondale & Rural Fire Protection District agreed to further explore the idea, after a presentation from the district’s bond counsel, Wes Bradish of RBC Capital markets, who indicated the district could seek voter approval for a new bond issue, but keep the property-tax rate, or mill levy for bonded indebtedness, right where it is today.

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Property taxes make up the bulk of the district’s annual income, supplemented by fees paid to the district’s ambulance service and other relatively minor sources of income.

According to Bradish, the district should consider a two-track solution to its ongoing fiscal difficulties — refinance bonds first issued in 2004 (and refinanced once already, in 2007), and then ask district voters for authority for a bond issue of up to $10.5 million next fall.

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The refinancing of the old bonds, Bradish said, would be at a more favorable interest rate for the district, and could save the district $30,000 per year for a total of about $210,000 over the remaining seven years before the bonds can be retired.

“Now could be a good time to refinance those bonds,” Bradish told the district’s directors last week, adding later that in general the district has “been really good to your taxpayers” over the years, lowering the tax rate to correspond with retirement of bonded indebtedness at different points in the district’s history.

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In response to a question from director Carl Smith, however, Bradish indicated that the board could either lower its tax rate, as it has in the past, to reflect the savings from refinancing, or it could use the $30,000 in annual savings in its capital budget.

“You could use it essentially for pay-as-you-go capital options,” he said.

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Among those capital needs, according to Fire Chief Ron Leach, are:

• The replacement of fire trucks, ambulances and other district vehicles as they age;

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• Building a maintenance facility for the district’s fleet next to the original fire station on Meadowood Drive in Carbondale, which is estimated to cost around $1 million;

• Building a training structure, also close to the fire station, estimated to cost about $1 million;

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• And building an addition to the fire station to house a backup generator, needed to provide power to the buildings in the case of an extended power blackout in the area.

The district also is examining its need for affordable housing for district personnel, Leach said.

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“Most of our paid people don’t live in Carbondale,” Leach explained, noting that perhaps half of the paid personnel live in other communities such as New Castle, Silt and Rifle because of the high cost of living in the Roaring Fork Valley.

But, he said, the housing question is not at the top of the fire board’s to-do list, for now, as the board works on ways to pay for more immediate capital improvement needs.

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On top of the savings from refinancing, Bradish said at the board meeting, the district could issue new bonds for, say, a 25-year term, which he said could be paid down over time without raising the district’s present mill levy for bond repayment, which stood at 1.815 mills as of Dec. 30, 2016, representing only part of the district’s overall property-tax rate (7.653 mills) that covers  operations, pension funds and other aspects of the department’s activities.

A “mill” equals $1 in taxation for every $1,000 in the assessed valuation of real property. A tax increase of 1.75 mills would add roughly $70 to the annual property tax bill of a residential property assessed  at $500,000, according to a calculation offered by local planning consultant Mark Chain, who worked with the district on a 2015 tax election and other matters.

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The total annual revenues of the Carbondale & Rural Fire Protection District rose from just shy of $2 million in 2015 to a projected figure of just over $3 million for 2017, according to budget documents available online at (click on Menu, then About Us, then Board of Directors to get to the budget documents).

This surge in income has been due largely to a voter-approved, two-year property tax increase approved in 2015, when the district asked voters for authority to increase the property tax rate by 1.75 mills, on top of its then-current rate of 5.903 mills, to make up for revenues lost as a result of the Great Recession.

The 2015 tax hike was limited by a “sunset clause” of two years, meaning the overall tax rate is to return to its previous level of 5.903 mills after 2017 ends unless conditions change.

Leach said on Feb. 14 that, while it is very likely the district will move forward with refinancing its bonded indebtedness to save on its annual debt payments, it is not certain whether the district board will go to the voters for funds in November.

If the voters are asked for further bonding authority, Leach said much more discussion is needed to determine how much money to ask for.

When asked if the district is interested in holding onto the 1.75-mills tax hike from 2015, due to expire at the end of this year, Leach replied, “Absolutely, otherwise we’d be going backwards.”

But he conceded that the board may not want to seek reauthorization of the full 1.75 mills, particularly if the district sees a rise in the assessed valuations of residential and commercial property, which would mean increased revenue by itself. If property values increase sufficiently to bring in significant additional income, he said, the district may not need to seek to keep all of the 2015 rate increase.

But, he said, all of these issues will be the topic of discussions at future fire board meetings, as the district’s elected board members try to work their way through the complexities of funding a large fire district.

Published in The Sopris Sun on Feb. 16, 2017.