Finance Board Reviews Hook & Ladder Project Funding

By John Voket

“We’re getting into some uncharted territory.”

That was one of the first comments from Town Attorney David Grogins as he came before the Board of Finance January 9 to begin reviewing implications of changes to a critical public safety project — the construction of a new Hook & Ladder headquarters — from donated land on Sugar Street to a town-owned parcel directly adjacent to the fire company’s current berth behind Edmond Town Hall.

Currently, Newtown’s Capital Improvement Plan (CIP) is still earmarking $1.5 million in three $500,000 installments to help the volunteer company pay down the mortgage Hook & Ladder will require to complete a contemporary facility to replace its dangerously deteriorating headquarters on Main Street.

While an initial plan to build the firehouse on a donated parcel behind the police headquarters on the corner of Main and Sugar Streets is all but dead as a result of the company failing to gain required environmental and land use variances, a subsequent site has apparently been identified, according to First Selectman Pat Llodra.

She told the finance board that fire company representatives are planning a full presentation on the updated plan, and will field questions during a special meeting of the Board of Selectmen January 19.

Mrs Llodra said that while Hook & Ladder gears up for that meeting, she has encouraged members overseeing the project to concurrently approach the town’s land use and building departments to assess the feasibility of, and requirements for, completing the new firehouse behind Edmond Town Hall.

Town officials have yet to see any new plans, and fire company officials have not revealed them yet, but the site is presumably in the area of a lower parking area at the far rear of the Edmond Town Hall property.

The issue of funding capital support for the new fire station was high on the list for finance board members this week because it was originally part of a larger bond offering that town Finance Director Robert Tait is planning for early February.

But after discussing some of the known ramifications, and confirming that the money would not be required imminently to get the planning phase started if all parties approve the new site, the board and Mr Tait agreed to temporarily remove that earmarked $500,000 from the upcoming bond initiative.

Unresolved Issues

Some of the unresolved issues addressed by the finance board, first selectman, and town attorney will have to be clarified in due time. Those issues include any exposure to the town either legal or practical, in the unlikely event Hook & Ladder defaults on its mortgage while the volunteer fire company, a not-for-profit corporation, still owns the building.

Officials remain concerned that since the new firehouse site is on town land, and will receive a substantial portion of its underwriting from taxpayer dollars, that the facility would revert to town ownership if the organization the building houses becomes defunct.

Finance Board Chair John Kortze suggested that if the current version of the project is approved, Hook & Ladder would share a similar status as the Edmond Town Hall and the Booth Library, in that the facilities still receive town funding. That, he said, would require the fire company to “show us what’s going on financially.”

Mr Grogins, Mrs Llodra, and the finance board then reviewed the variety of ways the town might be exposed to covering other expenses if the project or the company itself falters. Mr Grogins said that one option would make Newtown a grantor on the deed to the building.

They also discussed what would happen if the building is completed, and at some time within the remaining mortgage period, the company vacated the facility. Mrs Llodra said that the town could fashion an agreement with Hook & Ladder similar to the land lease with the Newtown Youth Academy at Fairfield Hills.

She said language in the legal document could spell out that a similar use would be required if the building fell into the hands of the town. Although there might not be a strict legal requirement for the town to absorb the new firehouse, Mr Grogins said that in that unlikely situation, the town would still have a “practical liability.”

“If I’m a lender, and the agency can’t achieve the level of donations to sustain itself, then the town is going to have to step in to make good,” Mr Grogins said.

Mrs Llodra said even if Hook & Ladder built its headquarters on that new site without town capital funds, she would still want to see the town step in if there were any suspicions that the fire company was in trouble.

“It’s a public safety issue,” she said. “We have to be willing to step in and bail out our emergency services. And that amount of money is significant enough to want to protect it.”

Wait And See

At that point, Mr Tait suggested removing the firehouse piece of the February bonding initiative, and postponing any finance board authorization on the specific bonding resolution for Hook & Ladder. That would effectively pause any requirement to secure the bonding next month, as well as authorizing its spending for that purpose.

“We can appropriate once we have all the facts,” Mr Tait said. And if the fire company fast-tracks the project to begin before the next anticipated bond offering in February of 2013, the finance director said he could take the funding, whether it is $500,000, $1 million, or the entire $1.5 million, from the town’s fund balance, and then replenish that money from the bonding next year.

The only potential loss would be the interest on that amount in the fund balance for the period between the appropriation and the bonding.

“It’s important for any lender to know that the town has approved the $1.5 million for this project,” Mr Tait told The Bee after the meeting. But pending the January 19 presentation, and determining the feasibility to build on the new site, the finance board was within its prerogative to delay a decision on that resolution.

Mrs Llodra also reminded the finance board that the new site comes with additional spending requirements to renovate and expand the new areas of the rear Edmond Town Hall parking area, and to demolish the old fire station once and if the new facility is completed.

She estimated those additional projects would cost in excess of $600,000, although Mrs Llodra said that was a highly preliminary estimate.

Finance board Vice Chair Joe Kearney said he would not be comfortable continuing serious discussion on the fire station underwriting until the board and taxpayers had a complete understanding of all primary and related costs to see Hook & Ladder into a new headquarters.