Town board approves bonding for new fire engine

GREENWOOD TWP- The town board here, on Monday, approved bonding of $718,000 to pay for a new fire engine. The board had approved the purchase of the new vehicle last week but wanted more information on financing options before deciding how to pay for it.
The township has rarely, if ever, approved such a long-term debt agreement, which does obligate township taxpayers to repay the cost in future years, and it didn’t agree this time without some pushback.
Former town chair Mike Ralston submitted written comment to the board, saying it was problematic for the board to enter in long-term debt without cash to secure that debt.
“It was not long ago that an organized citizen group reduced yearly levies to $0.0,” Ralston wrote. “That could easily happen again, and levies would be reduced to levels that could put the township into financial difficulties.”
The years the township levies were greatly reduced were at a time the township’s reserve fund was about three times the annual spending of the township. Back in the mid-2010s, the township had reserves of over $1.2 million, far above its annual spending of around $360,000. The reduction in the levy gradually drew down the township’s reserves to a level more typical of other townships.
Despite such concerns, Monday’s vote was 4-0 to move forward with the debt issuance. Supervisor Lois Roskoski was absent from the special meeting after she had voted against the truck purchase the week before. She had asked the board to wait until the next annual meeting for further resident approval. But other board members noted that residents had approved increasing the levy the past several years, to start putting aside money for the new truck, and were confident that residents were in support of the purchase.
State law does allow a township to pursue such a loan agreement without township resident’s approval, since the amount is less that 0.25 percent of the estimated market value of the township.
The board noted Ralston’s concerns, and some have agreed the possible loss of some of the northern sections of the township would impact the township’s tax base.
“I understand the Catch 22,” wrote Ralston. “If you wait, the truck will cost more, so purchase now. Or wait and raise substantial cash to reduce any financing issues. Tough choice.”
The general obligation certificate of indebtedness is for a ten-year term, but the township does have the ability to pay off the bond early, without any penalties, a move that would decrease the amount of interest owed. The township has already set aside $100,000 towards the purchase of the $818,000 truck. The township will be receiving an additional $100,000 in levy dollars dedicated to the truck purchase by the end of this year. Residents also approved an increase in the levy of an additional $200,000 in 2027 to be put towards fire department equipment needs. This would give the township the ability to pay off almost half the truck by the time it is delivered, sometime late in 2027 or early in 2028. Estimated delivery time for the truck is 14-17 months.
The interest rate on the bond did increase to 5.65 percent, up from the initial estimate of 5.25 percent offered by Frandsen Bank and Northland Securities last month. Even with the increase in rate, the offer is still the lowest cost, said Supervisor Steve Bradach. The town board had considered three different offers for purchase.
The total interest to be paid, if the township takes 10 years to pay off the bond, would be $239,281. This is a $17,416 increase in the interest cost, or $1,714 per year, due to the rise in the benchmark federal funds rate announced in late September. By electing to prepay for the new truck by bonding, the township did qualify for a $25,000 discount off the final cost of the truck.
The first payment on the truck is not due until fall 2027. Whether or not the board will choose to put down the entire $400,000 in levy payments set aside for fire department equipment is a decision the board will need to make. Board members have noted the department has other equipment needs in the upcoming years, including some larger repairs to fire boat one (including new engines and electrical work).