Fairfax Good thing the city of Fairfax has two fire stations, because Station 33 along Fairfax Boulevard has reached the end of its useful life cycle. So City Council has decided to move forward with lease financing to fund its replacement.
Addressing the Council members at a recent meeting, City Fire Chief John O’Neal said the design of the existing building doesn’t meet the modern-day needs of the Fire Department, since it was originally built for a single-engine company.
“This station lacks space for adequate equipment storage and room for ready-reserve apparatus, currently housed off-site,” he said. “A new facility would increase the operational readiness of the Fire Department, plus improve the safety and health conditions and quality of life for the staff.”
A FEASIBILITY STUDY was completed in March, and $1 million total to fund the design and architectural drawings for this project was included in the City’s FY ’16 and FY ’17 CIP budgets. Specifics about what the station replacement entailed were discussed during the Council’s June 10 retreat.
City staff then returned to the Council members on June 27 to provide them with a detailed, lease-financing plan for the work. Total cost – including demolition of the old building, as well as design, engineering and construction of the new one – is estimated at $9.6 million.
“Davenport & Co. [the City’s financial advisor] said lease financing would be the most cost-effective for the City,” said Finance Director David Hodgkins. “And by doing so, we’d be able to lock into the interest rate for 20 years [and save money if this rate later increased]. But we could also refinance, at certain points, if the interest rate dropped.”
But Councilwoman Janice Miller was skeptical. “If we [instead] use general-obligation bonds [to fund this project], we wouldn’t have to use the station or the land as collateral, right?” she asked.
“Correct,” replied Hodgkins.
Councilwoman Ellie Schmidt then asked about the public-input process. “There would be public hearings on the lease bid or to approve the financing, itself,” explained Hodgkins. “But there is no requirement for a referendum.”
Councilman Michael DeMarco then made a motion that the Council adopt the resolution approving a lease-financing plan to replace the fire station. “We entrust the city manager and finance director to do the lease financing,” he said. “And waiting puts us at a higher interest-rate risk.”
“We’re still afforded the opportunity to have a public hearing,” said Councilman Jeff Greenfield. “And, long term, this will save the taxpayers money.”
“The City needs to replace Fire Station 33; we’ve been talking about it for five or six years,” said Miller. “My preference is to go to bond in November 2018. There’s no justification to rush forward with the funding for this project. In the past few years, interest rates have gone down.”
She stressed that, when it comes to funding large projects, Fairfax has traditionally done so via bonds, and not lease financing. “And the construction schedule would be the same [either way],” said Miller. “We could have the construction drawings done by the time of the bond referendum, and construction could start in spring 2019.”
Furthermore, she said, “I don’t like using City property as collateral for borrowing money. Usually, cities use their good faith and tax base as collateral. So I’ll be voting no on this funding resolution.” Voicing similar concerns, Schmidt also voted against it.
However, with Councilmen DeMarco, Greenfield, Jon Stehle and Dan Drummond all voting yes, the resolution passed, 4-2. According to the proposed schedule, project bids are expected to be posted and reviewed between January and March 2019.
A CONTRACTOR should be selected by that spring. The new fire station is anticipated to take 18 months to build and to become operational somewhere between September and December of 2020.