GREENWOOD TWP- When the Greenwood Town Board discussed options for financing the fire department’s new engine earlier this month, an interest rate hike by the Federal Reserve was not on their radar. But the recent hike in interest rates meant that an earlier decision to look at a lease-purchase for the engine was not the best financial option for the township, and the other financing options may have more favorable terms.
At a special meeting on Sept. 21, the board, on a 4-1 vote, approved the purchase of the engine at a cost not to exceed $835,006. Supervisor Lois Roskoski voted against, asking the board to consider waiting until the March annual meeting to finalize the purchase.
The actual cost of the truck is expected to be $25,000 lower, due to a manufacturer’s discount for prepayment. Truck prices are also scheduled to increase later this fall, the manufacturer told the township.
The truck will be within inches of the same size of the current engine, purchased in 2002, which is at the end of its working lifespan. The truck will be fitted onto an existing International chassis, and it will be built by Pierce Manufacturing. Fire Chief Brian Trancheff said they worked to keep the truck as affordable as possible.
“We looked at our number one engine,” he told the board. “And things that didn’t work well for us we changed, and things that would make it work better as an all-around truck we opted for.” Changes included upgrades to pumping systems and some monitors, he said.
They also opted for as simple a finish as possible, minimizing chrome and other non-functional items.
“The sales rep we worked with didn’t try to upsell us,” Trancheff said. “He put us in a truck that made sense for us, financially and otherwise.” Trancheff said some of the other truck vendors they initially contacted were pushing them to purchase a more expensive truck.
The truck will be mostly a reflective black, with high-visibility green and white accents and striping. The exterior will conform to federal guidelines for truck visibility, he said.
“There is not a lot of chrome,” he said, “and it won’t show scratches from driving down narrow driveways.”
The delivery timeline for the new truck is expected to be around 14-17 months, so as early as late 2027.
Financing options and concerns
Roskoski expressed concerns over financing the truck without explicit approval at the township’s annual meeting. Township residents have committed a total of $400,000 in tax levy money towards fire department equipment, adding $100,000 the last two years, and approved an additional $200,000 for the 2027 levy.
“I think we should wait until March,” she said. “We are investing that money right now.” The board has invested $100,000 of levy money already, and the 2026 tax levy money will be in the township account before the end of the year.”
Roskoski said she had contacted seven township residents, and six expressed concerns over moving ahead right now.
“We are talking about a million dollars,” she said, referring to the cost of the truck plus interest payments.
But other board members were concerned that any delay would not only increase the cost of the engine, but it also would increase the cost of financing.
“In five years, this truck will cost fifty percent more,” Chairman Paul Thompson said.
Supervisor Steve Bradach said the township can pay the financing costs without any additional levy increases. He noted the initial estimate for the truck’s cost was $1.2 million.
“We are saving almost $400,000 with these specifications,” he said.
The meeting had only a few audience members, but all three spoke in favor of moving ahead now.
Both Steve Zaudtke and Dan Carnicom, who had spoken in favor of raising the levy to help fund the truck last March, showed support.
“We need the truck,” said Zaudtke, adding that citizens had stood up to say they supported the purchase.
Roskoski said she was concerned about the possible annexation of a portion of the township by Goodwill Township, which would increase the levy’s tax burden by an estimated 15 percent.
Carnicom said that the Greenwood portion of their property taxes is the smallest portion of their total tax bill.
The fire department also has other equipment needs, including possible major repairs for the main fire boat. Bradach said the levy amount was for fire equipment, not just the new truck.
“I am very fiscally conservative,” he said. “But the government can’t always wait. Once that truck breaks, we can just go to Waschke’s and buy a new one. We have to plan for it. The public doesn’t have all the facts we have. The people I’ve talked to understand. It’s not an easy decision.”
Thompson said that nobody is buying these types of trucks and paying for it up front.
“Everybody is on a payment plan,” he said.
“We haven’t had a replacement plan and now everything is falling apart,” said Roskoski. “We are committing future boards and residents to payments. This is a big decision.”
Bradach noted that such payments mean that everyone currently paying taxes will be benefiting from the new truck.
Roskoski just reiterated that she would feel better if they went to the 2027 annual meeting asking residents for another $200,000 for fire equipment, and that was approved.
Supervisor Craig Gilbert said there was a danger in delaying the purchase. The engine’s pumps are at the end of their expected lifetime, and while they did just pass testing, a pump failure would cost at least $40,000 to repair. And with new truck prices already scheduled to increase in November, the truck itself would cost as much as $50,000 more. The engine they are replacing has an estimated value of $25,000. The department will sell the truck once the new truck is in service.
The other danger, Thompson said, was the fear that interest rates will continue to rise.
“I’m not comfortable thinking that interest rates are going to go down.”
The interest rate for two of the three options the board had looked at earlier this month have inched up, they said. This left the proposal from Frandsen Bank, working with Northland Securities, as the best option, with an interest rate of 5.25 percent.
The board was ready to pass a resolution to go with the financing offer from Frandsen, but needed to confirm that the 5.25 percent rate had not changed.
The debt would be considered a general obligation certificate of indebtedness. The township is intending to borrow $709,649 over a 10-year period. The estimated debt service payments would be around $94,000 a year. The total interest paid would be $221,865.
Paying the bond off over the 10-year period would leave money in the fire department capital equipment fund to pay for other needed equipment and repairs, the board noted.
The financing would be in place in time to qualify for the prepayment discount, Thompson said. He added if the township wishes to pay off the bond earlier, it could be managed to prevent any early payment penalties.
The other bonding company the township had sought a quote from had already raised their rate from 5.4 percent to 5.9 percent this week.
The board was set to hold another special meeting on Monday, Sept. 28 at 6:30 p.m., once the offer from Frandsen was finalized. The board appointed Bradach and Thompson to work with Frandsen and Northland Securities on the proposal.