By Ann McCreary
Bids from contractors for construction of a new fire station will be opened by Okanogan County Fire District 6 commissioners at their next regular meeting on April 13.
At their meeting Monday (March 9), district commissioners approved sending the fire station project out to bid. They also authorized applying for a loan of up to $2.5 million to fund the proposed new fire hall.
In discussions about the fire hall in recent months, commissioners have said they won’t know if they can afford to build the 12,000-square-foot station until bids for the project are received.
Architect George Watson said his firm developed an estimated budget that projects the project would “come in at $2.3 million to $2.4 million, at the max.”
“We’re hoping it’s going to come in lower,” said Commissioner Jerry Palm.
District officials had hoped to pay for the new fire hall through an increase in property taxes, but their effort to pass a levy lid lift was rejected by district voters in last November’s general election.
So commissioners decided to continue with plans to build the new fire hall using funds within the district’s budget, a decision that has prompted questions and concerns from some community members during the past three months.
Commissioners are hoping to borrow up to $2.5 million through a program offered by the Washington State Treasurer’s office, which has previously provided loans to the district to purchase fire trucks.
Fire Chief Don Waller said a loan application to the treasurer’s office would be submitted within the next month. The loan would also include refinancing a $300,000 bank loan that the district took out to purchase the 5-acre property on Horizon Flats, where the district proposes building the new fire hall.
“We’re not committed to borrow any money,” said Commissioner Darold Brandenburg after the vote to authorize an application for the loan.
“This is just the application,” Palm noted.
Commissioners decided bids for the construction job must be submitted by 2 p.m. on April 13, and the bids will be opened at the 7 p.m. meeting.
During a public comment period, some residents questioned whether the district can afford to finance the new station, referring to a financial analysis conducted in January for the district by valley resident Charles Ryan, who has a background in financial consulting.
The financial analysis found that borrowing $2.5 million was feasible based on an interest rate of 3.25 percent from the treasurer’s office. Ryan concluded that borrowing that amount would result in a negative cash flow from 2015-2018 and the district’s cash reserves would be significantly reduced.
In presenting his conclusions about borrowing that amount to commissioners, Ryan said “there’s a difference between feasibility and prudence … I’d do something smaller.”
Ryan said Tuesday (March 10) that interest rates have increased since he did his analysis in January, and a loan through the treasurer’s office is likely to be closer to 3.75 percent.
“That would add about $7,000 per year,” which would translate to a negative cash flow of about $81,000 and could deplete cash reserves to about $143,000 by 2018. His analysis projected cash reserves of about $380,000 at the end of this year.
The higher interest rate “is not a killer … but you’re going to burn through your reserves,” Ryan said.
“The fire staff will have to become very careful planners, cash managers,” Ryan said. “They seem to have managed their operating costs pretty darn well … and people should give them credit for that. But we don’t know what next year’s expenses are going to be.”
In other business, commissioners said they were unaware that the district was required to submit annual financial reports to the Washington State Auditor’s office. The district received a management letter this month following a routine audit, noting that the district has not been filing the financial reports as required by state law.
Commissioners said two staff members would attend a training session this month to learn how to file the required reports.
Commissioners also renewed three-year contracts for Fire Chief Don Waller and Assistant Chief Cody Acord.