The City Commission authorized the issuance of debt service to pay for an Aerial Ladder Fire Truck up to $1,400,000 in the FY 2021 Budget Appropriations in the Fire Safety Fund (260).
The City of Helena is an eligible local government unit to participate in the INTERCAP program defined under 17-5-1604 MCA to finance the acquisition of equipment. Total cost of the Fire Truck is $1,323,089. The Board of Investments has agreed to loan $810,000 to the City of Helena for a term of ten (10) years. The City will pay for the balance ($513,089) of the fire truck from cash reserves in the Fire Safety Fund (260).
The INTERCAP Loan program is a variable rate low interest loan program where interest rates are adjusted by the Montana Board of Investments on February 16th of each year. Current interest rates are set at 1.65% through February 16, 2022.
Interest and principal payments are due semi-annually on February 15th and August 15th.
The City's Finance Department has reviewed the cash balance forecast of the Fire Safety Fund (260) and has determined the fund can sustain the debt service payments for the ten (10) year life of the loan which are estimated to be between $85,000 and $95,000 each year (subject to change with variable rates).
The loan payments are guaranteed with General Fund revenues, and the loan is guaranteed with a security interest in the asset (Fire Truck) being financed. The City is obligated to enforce its rights to receive and collect all such taxes and revenues (within the limits of the Property Tax Limitation Act) or reduce expenditures to insure the prompt payment to the Board of Investments.
The City has ordered the Truck and made the cash outlay in order to receive the discount of $67,589 from the total purchase price. Expected delivery is approximately 18 months. |