Friday, November 14, 2008

Beg, Borrow and Steel

Next month, we will sign a contract for the purchase of a new fire truck. The reason is very simple: if we don’t do it now, we can expect to pay 20 % more (NFPA standards) next year for the same truck and another 20% in 2010 (emissions standards). More than likely, you can add another 7% for increased material costs as well.

Our budget this year will be $87,000. The truck that we are purchasing will be a triple threat. It will have four-wheel drive, a bumper mounted monitor, rescue sides, foam, a 650 gallon water tank and on board generator. It will be a Class A pumper. Price will be $300,000!

Because our newest engine is a 1998, we will not qualify for a FIRE Act grant. Believe me, we have tried and gave up two years ago. In Illinois, we have a Zero Interest Fire Truck Loan program. More than likely, we will be “too well off” to qualify for that. So, we will either finance through the apparatus builder or the local bank, depending on interest rates. We will probably go with the local bank, though.

How do we afford it? How can we afford not to? If we do it now, we will be able to meet payments while bumping up our tax rate 4.99% per year. That way, we don’t have to have a Truth in Taxation hearing or request a referendum to raise taxes. We have two fundraisers each year, so we can still purchase necessary replacements for PPE and loose equipment. We can even hold some money back for new truck purchase. We have been fortunate to obtain grants for new SCBAs, turnout gear and a new thermal imaging camera. We also charge for services to out-of-district users.

We have no secret for purchasing during these hard economic times. We have always watched our funds very carefully, made every dollar count and have provided our fire district with outstanding volunteer fire and rescue services. We prepare a five year plan, stick to it and have the public’s support. With this new truck purchase, we will retire a 1969 unit. We have one, outstanding loan on the rescue truck, but we own everything else, including the building.

Debt can be a killer! When I was chief of the department, we were told that we didn’t have any money, but we didn’t have any equipment either. It left one to scratch one’s head!

In summary, you have to look five years down the road, plan for purchases foreseen and unforeseen, avoid debt by “living within your means”, take advantage of discounts by group purchasing, apply for the grants that are out there, bump the tax rate to the maximum that the laws allow and charge non-residents.

We have to think like a taxpayer. Come to think of it, we are!
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3 comments:

  1. O.K. this is too sad or too funny depends on how you look at it. I was in Denver for the Fire Rescue International Trade show as part of the I.A.F.C. conference held during August. I took a pic of a fire truck from SPARTAN....IT WAS NO KIDDING 2 FUNNY.... A cab pointing in both directions with the pump and hose bed cut out...you could not tell which direction the unit was going cause it Looked the Same as if it could go in both directions at once. I wonder if Spartan knows something we don't. I will try and get the pic scanned and up on "The Table". It just rocked me when I had a look at it. It could just very well be the future...in a funny not so funny way...Hats off to the fellow who did the chasis work....nice

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  2. Every year since the FIRE Act was enacted, the budget to it has been cut back.
    Every year, the rules change concerning the "grading" of applications. Every year, the rules change on what types of trucks get higher priorities.
    Consequently, it is a moving target that we are trying to hit.
    It's almost as if bureaucracy is trying to frustrate us to the point where we will just give up.
    Personally, I enjoy watching all of the money go to departments who can't afford trucks because all of their money goes to salaries and benefits.
    And out here, because our truck isn't twenty years old, we can't even apply, even though it's a crap shoot every time the door goes up at the station.

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  3. if someone is telling you that you should expect a 20% increase for 2009 NPFA compliance issues on your new rig, you should be talking to someone else!!! 20% of an estimated $300,000 rig is $60,000!!! Most published commented by the apparatus experts are predicting an overall cost increase to comply with the revised NPFA regulations to be $6-12,000. And this can be revised downward if you plan on providing sme of the equipment yourself (i.e. AED, road cones, safety vests)maybe by transferring existing equipment from an older rig to this new one.

    No one is quite sure yet what the 2010 EPA-required emissions changes will cost per chassis. There are a lot of numbers being batted around. Some folks predict the demise of the mass-produced commercial chassis (like an International, Freightliner, Peterbilt, etc.) for fire apparatus while others feel that the cost of low-volume "custom" chassis apparatus produced by several independent manufacturers (i.e. Spartan, E-one, KME, Pierce, Seagrave, HME, Sutphen) will feel the greatest impact in cost since they are having to adapt a limited selection of engines and then design a compliant exhaust/emissions system to work with that chassis. The mass-produced commercial chassis will have those cost amoritized over a wider volume of "standardized" chassis so each individual buyer will not feel an vastly increased cost. The Europeans have been using "commercial" chassis for years that are adapted for fire service use.

    As for financing your new rig, consider a lease-purchase. There are several methods to consider that may best suit your budget situation. And don't take the offer from the fire apparatus manufacturer as your only option. Make independent lease-purchase firms and the apparatus manufacturers all offer "optional" lease-purchase financing. Have your department's financial/legal advisor review the submissions for "weasel words" that may not reflect the true terms or coss of the lease-purchase. Never, Never, Never let a builder submit their only pricing with their "financing" as the only price to consider.

    There have been recent articles about vehicle financing in both Fire and EMS magazines. You may want to search the web for some of those articles- very informative advice.

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