VOLUNTEER COMPANY ASSISTANCE FUND BOARD Report to MSFA Executive Committee August 29, 2010

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1 VOLUNTEER COMPANY ASSISTANCE FUND BOARD Report to MSFA Executive Committee August 29, 2010 The Board met on Sunday, August 15, 2010 at Joppa-Magnolia Fire Station with all but two members present. Others in attendance were Lee Sachs, Asst. Treasurer; Mike Farlow, MSFA attorney; and Dave Lewis, MSFA 1 st. V P. The Board approved Jason Baer as Vice-Chairman, and Pat Bowsor as the Secretary for the Board. The Board also approved the interest rate for the coming year at two (2) percent for loans. Both of these items need approval by the Executive Committee. The main purpose of this meeting was for the Board to review the Board s loan and grant guidelines to bring them in line with new requirements from the State of Maryland and the Department of Defense. The Board also reviewed the check lists for the Companies and the regional representatives to be able to review all applications to ensure they re completed for the Board s review. The revisions are still being completed, and upon completion will be put on the MSFA web site so they are available for member companies to download them when they need them. There are a few minor changes still to be made, however I ve included the current draft for the Executive

2 Committee member s review. There s one additional revision from Mike Farlow, MSFA Attorney, that remains to be added to the revisions. That revision involves the competitive bidding requirement for loan and grant requests, and reads as follows: (competitive bids must be received by the company and forwarded to the VCAFB for review. If the company does not choose the lowest bid, then the company must offer valid justification for seeking a grant or loan for a higher amount. Such justification may include, but is not limited to a record of past performance, ability to presently perform, issues of contractor integrity, the financial and technical resources of the contractor, and whether a responsive bid was provided. Even if justification is provided by the company, the Board reserves the right to base an award on a lower bid). Respectfully submitted, Eugene C. Curfman Chairman

3 PURPOSE: MARYLAND STATE FIREMEN S ASSOCIATION VOLUNTEER COMPANY ASSISTANCE FUND BOARD PROGRAM GUIDELINES The purpose of the Fund is to ensure adequate fire protection and rescue services in the State of Maryland. Loans and grants or both may be made to assist in the purchase or refurbishing of firefighting, ambulance and rescue motorized equipment; to assist in financing the construction costs to upgrade or replace facilities needed to store equipment. A grant or loan awarded under this program shall be used only for purchasing, replacing or improving fire fighting and EMS equipment, and facilities used for housing equipment. 1. Guidelines for Apparatus Loans 1.1 All volunteer ambulance, fire or rescue companies located in the State of Maryland and the City of Baltimore would be considered for a loan application. 1.2 Purchase of new and used apparatus would be considered, provided new and used apparatus pass all Federal, State, and/or County Certifications. 1.3 Suggested maximum loan amounts and loan terms. A. New apparatus financing of up to 75% of the purchase price would be considered not to exceed the following limits: 1. Ladder Truck for a term not to exceed 15 years 2. Squads for a term not to exceed 10 years. 3. Engines for a term not to exceed 10 years 4. Tankers for a term not to exceed 10 years. 5. Special Units, Flood Lights, Air Units and Mini Squad for a term not to exceed 5 years. 6. Ambulances for a term not to exceed 5 years 7. Brush Units for a term not to exceed 5 years. B. Financing for used apparatus would, in general, follow the limits set for new equipment purchases. However, dollar limits and terms would be considered on a case by case basis. 1

4 C. Financing for rehabs would be considered provided the rehab extends the unit s useful life. Terms for financing rehabs would be up to 5 years and the dollar limit would be considered on a case by case basis. D. Utilities, chief vehicles and other vehicles of similar nature would not be eligible for financing under this program. 1.4 Repayment schedule for apparatus loans would be monthly, quarterly, semi-annual, annual payment standards and have County approval as appropriate. A. Evidence of a competitive bid process is not required under this program. B. Refinancing of existing loans on apparatus would not be considered. Exceptions to the prohibition on refinancing would be considered in situations where lose of the apparatus is imminent without the refinancing and the use of the program funds is justified. C. A loan may not be spent to replace or repair eligible items to the extent that insurance proceeds are available for those purposes. 2. Guidelines for Loan Financing Fixed Assets (Buildings). 2.1 Applications would be considered for establishing or renovation of facilities that house fire fighting equipment, ambulance or rescue vehicles. 2.2 The amount of the loan for establishing or renovating a facility made to eligible companies shall not exceed 50% of the total cost of establishing or renovating facilities. The eligible company shall show that it has available 20% of the total project cost of the facility. A second lien position will be considered provided total combined loans to value do not exceed 80%, in addition to the previously stated criteria. The eligible company shall present an estimated construction cost for the project from a reliable engineering or architectural firm. 2.3 Proceeds of the loan shall be used only for construction and shall not be used for land acquisition, payment of fees for design, planning, and preparation of application or any other cost not directly attributable to construction. 2.4 Proceeds of the loan shall not be used for construction of any portion of the building that would be used primarily for fund raising activities Requirements for new or renovated facilities must include at least the following: A. A heated station of adequate size and construction for the housing of apparatus and equipment. B. The company must have a suitable means of receiving an alarm of fire and alerting company membership. C. Must meet all requirements and codes of the Federal, State and local jurisdiction, including the local firemen s association s standards. D. All new construction must have a sprinkler system. E. Renovated facilities must have a sprinkler system if practical. F. Loan term not to exceed 30 years. 2

5 3. Guidelines for the Loan Application Process. 3.1 All applications must be prepared in accordance with the Volunteer Company Assistance Fund Board ( Board ) guidelines. Failure to comply with Board guidelines may be cause for rejection of the application. The Board may reserve the right to correct minor errors or irregularities in the application. 3.2 An original application must be provided to the Board. Financial statements must be completed and provided, along with the completed application, for the two fiscal years immediately prior to the fiscal year in which the application is made. 3.3 Each applicant must also submit IRS Form 990, for each year presented on the financial statements. If the company has audited financial statements, the audited financial statement for the two fiscal years immediately prior to the fiscal year in which the application is made shall be included with the application. 3.4 In addition to financial statements submitted with the application, applicants must agree to supply monthly, quarterly, and/or annual financial statements as may be required. 3.5 A completed Non-Discrimination Certificate must be provided along with the completed application. 3.6 The President and/or the Treasurer, and the designated and appropriate substitute as accepted by the Chairman that can speak on behalf of the company will be required to attend the meeting(s) referring to their application. The company representative or representatives should be prepared to answer questions about the apparatus or facility to be financed as well as financial and operations questions related to the company. 3.7 Applications are valid for six (6) months from the date of the submission unless otherwise determined by the Board. 3.8 On or before August 1 of the fiscal year the loan was granted the Volunteer Company shall submit to the Secretary of the Board the financial statement of the volunteer company for the previous fiscal year or the year in which the loan was received, whichever is more recent. 3.9 On or before August 1 of the fiscal year the loan was granted, the Volunteer Company must submit documentation to the Secretary of the Board the actual expenditures for the Loan. 3

6 4. Prioritization of Loan Requests 4.1 It is the intent of the Volunteer Company Assistance Fund to be managed in a prudent and fiscally responsible manner and that the loans are extended to companies that can demonstration the ability to repay the loan in accordance with the loan terms. Within that context, the priority for receiving the loans will be established based on need as determined by the Board and availability of funds. 4.2 Replacement of equipment will have priority over buildings and replacement of existing equipment will have priority over new service. Further, priority consideration would be given to those companies that would have more difficulty obtaining financing from other sources than companies that could more easily obtain financing from other sources. The Board would also consider refinancing only in order to prevent an event of default. 4.3 The following criteria will be considered in all cases to help prioritize loan account requests for equipment replacement. A. Vehicle age B. Vehicle condition C. Vehicle mileage D. Pump test results (if applicable) E. Ladder test (if applicable) F. Maintenance costs incurred to keep vehicle in service G. Proximity of next due units (if applicable) 4.4 Prioritization guidelines for equipment loan requests: A. First priority would be single engine companies or single unit EMS/Rescue companies where the unit needs to be replaced. B. Second-priority is replacement of first line fire, rescue, or EMS apparatus. C. Next priority is replacement of second line fire, rescue or EMS apparatus. D. Next priority will be specialized units. 4

7 5. Loan Review and Approval Process 5.1 The Board shall review each loan request received by a volunteer company in accordance with the stated criteria. 5.2 The Board shall recommend to the Executive Committee the approval or rejection of each loan request. 5.3 The Executive Committee may agree or disagree with the Board s recommendation. A. If the Board recommends to the Executive Committee that a loan request be rejected and the Executive Committee agrees, the Association shall promptly send a written notice to the volunteer company stating that the request has been rejected. An appeal process for the companies, should their application be rejected the Executive Committee, is set forth is Section 6. B. If the Board recommends to the Executive Committee that a loan request be approved and the Executive Committee Agrees, the Association shall submit the loan request to the State of Maryland Board of Public Works ( Board of Public Works ) for approval 6. Appeal Process for Loans 6.1 Volunteer Companies requesting a loan may appeal the decision of the Association. The Board of Public Works decision is final and cannot be appealed. A. A volunteer company requesting a loan may appeal to a panel comprised of the President of the MSFA, the State Fire Marshal s, and the Chairman of the Fire and Rescue Education and Training Commission. B. The decision of the appeals panel to reject the application shall be final and not subject to further review. C. A decision of the appeals panel to approve the application shall be submitted to the Association for submission to the Board of Public Works. 7. Event of Default on Loans 7.1 The Board will follow prudent underwriting standards when considering a loan; each loan must be secured by a Security Interest Filing (SIF) on vehicles or a Deed of Trust (DOT) on real estate, which, in the event of default, would facilitate the repossession and liquidation of the collateral to satisfy the debt. However, the Board will not consider repossession if the company demonstrated a viable going 5

8 concern. All due consideration will be given for the company s ability to repay the loan. Should a company be unable to make its loan payments in a timely manor, the following guidelines have been established. A. The company would be requested to review its situation and current financial condition with the Board. If applicable, recommendations would be made to assist the company. B. In conjunction with corrective actions to be taken by the company, the Board could restructure the loan payments to meet the company s available cash flow. C. Work with the local county association to provide assistance, which could include a reallocation of William L. Amoss Fund monies. 8. Guidelines for Apparatus Grant 8.1 All volunteer ambulance, fire, or rescue companies located in the State of Maryland and the City of Baltimore, would be considered for a grant application. 8.2 Purchase of new and used apparatus would be considered, provided new and used apparatus pass all Federal, State, and/or County Certifications. 8.3 Suggested maximum grant amounts. A. Apparatus grant limited to 70% of the purchase price would be considered B. Grants for used apparatus would, in general, follow the limits set considered on a case by case basis. C. Grants for rehabs would be considered provided the rehab extends the unit s useful life. Terms for financing rehabs would be up to 5 years and the dollar limit would be considered on a case by case basis. D. Utilities, chief vehicles and other vehicles of similar nature would not be eligible for Grants under this program. 8.4 Three competitive bids must be submitted with the application. 8.5 Refinancing of existing loans on apparatus would not be considered. Exceptions to the prohibition on refinancing would be considered in situations where loss of the apparatus is imminent without the refinancing and the use of the program funds is justified. 8.6 Volunteer Company must make a good faith effort to obtain money from its local Government. For each request for a grant from the Fund, the Volunteer 6

9 Company must document that they have applied for money from its local government and was denied, either wholly or partly. 8.7 A grant may not be spent to replace or repair eligible items to the extent that insurance proceeds are available for those purposes. 9. Guidelines for Grant for Fixed Assets (Buildings). 9.1 Applications would be considered for establishing or renovation of facilities that house fire fighting equipment, ambulance or rescue vehicles. 9.2 The amount of the grant for establishing or renovating a facility made to eligible companies shall not exceed 50% of the total cost of establishing or renovating facilities. The eligible company shall show that it has available 30% of the total project cost of the facility. A second lien position will be considered provided total combined loans to value do not exceed 70%, in addition to the previously stated criteria. The eligible company shall present an estimated construction cost for project from a reliable engineering or architectural firm. 9.3 Proceeds of the grant shall be used only for construction and shall not be used for land acquisition, payment of fees for design, planning, preparation of application or any other cost not directly attributable to construction. 9.4 Proceeds of the grant shall not be used for construction of any portion of the building that would be used primarily for fund raising activities. 9.5 Requirements for new or renovated facilities must include at least the following: A. A heated station of adequate size and construction for the housing of apparatus and equipment. B. The company must have a suitable means of receiving an alarm of fire and alerting company membership. C. Must meet all requirements and codes of Federal, State and local jurisdiction, including the local firemen s association standards. D. All new construction must have a sprinkler system. E. Renovated facilities must have a sprinkler system if practical. 7

10 10. Guidelines for the Application Process for Grants 10.1 All applications must be prepared in accordance with the Volunteer Company Assistance Fund Board ( Board ) guidelines. Failure to comply with Board guidelines may be cause for rejection of the application. The Board may reserve the right to correct minor errors or irregularities in the application An original application must be provided to the Board. Financial statements must be completed and provided, along with the completed application, for the two fiscal years immediately prior to the fiscal year in which the application is made Each applicant must also submit IRS Form 990, for each year presented on the financial statements. If the company has audited financial statements, the audited financial statement for the two fiscal years immediately prior to the fiscal year in which the application is made should be included with the application In addition to financial statements submitted with the application, applicants must agree to supply monthly, quarterly, and/or annual financial statements as may be required A completed Non-Discrimination Certificate must be provided along with the completed application A representative, or representatives, preferably the President and/or the Treasurer, from the company will be required to attend the meeting(s) referring to their application. The company representative should be prepared to answer questions about the apparatus or facility to be financed as well as financial and operations questions related to the company Applications are valid for six (6) months from the date of the submission unless otherwise determined by the Board On or before August 1 of the fiscal year the loan was granted the Volunteer Company shall submit to the Secretary of the Board the financial statement of the volunteer company for the previous fiscal year or the year in which the loan was received, whichever is more recent On or before August 1 of the fiscal year the loan was granted the Volunteer Company must submit documentation to the Secretary of the Board the actual expenditures for the Loan. 11. Prioritization of Grant Requests 11.1 It is the intent of the Volunteer Company Assistance Fund to be managed in a prudent and fiscally responsible manner and that a GRANT be extended to companies that can not demonstrate the ability to repay a loan. Within that 8

11 context, the priority for receiving the grant will be established based on need as determined by the Board and availability of funds The availability of funds for Grants to the Volunteer Company Assistance Fund Board is Capped at a total amount of $250,000 per Fiscal Year for all grants Replacement of equipment will have priority over buildings and replacement of existing equipment will have priority over new service. Further, priority consideration would be given to those companies that would have more difficulty obtaining financing from other sources than companies that could more easily obtain financing from other sources. The Board would also consider refinancing only in order to prevent an event of default The following criteria will be considered in all cases to help prioritize grant account requests for equipment replacement. A. Vehicle age B. Vehicle condition C. Vehicle mileage D. Pump test results (if applicable) E. Ladder test (if applicable) F. Maintenance costs incurred to keep vehicle in service G. Proximity of next due units (if applicable) 11.5 Prioritization guidelines for equipment grant requests: A. First priority would be single engine companies or single unit EMS/Rescue companies where the unit needs to be replaced. B. Second-priority is replacement of first line fire, rescue, or EMS apparatus. C. Next priority is replacement of second line fire, rescue or EMS apparatus. D. Next priority will be specialized units. 12. Review and Approval Process for Grants 12.1 The Board shall review each grant request received by a volunteer company in accordance with the stated criteria The Board shall recommend to the Executive Committee the approval or rejection of each grant request The Executive Committee may agree or disagree with the Board s recommendation. A. If the Board recommends to the Executive Committee that a grant request be rejected and the Executive Committee Agrees, the Association shall promptly send a written notice to the volunteer company stating that the request has 9

12 been rejected. An appeal process for the companies, should their application be rejected by the Executive Committee, is set forth is Section 6. B. If the Board recommends to the Executive Committee that a grant request be approved and the Executive Committee Agrees, the Association shall submit the loan request to the State of Maryland Board of Public Works ( Board of Public Works ) for approval C. Upon approval by the Board of Public Works the volunteer company will be notified of the requirements to close on the grant. 13. Appeal Process for Grants 13.1 Volunteer Companies requesting a grant may appeal the decision of the Association. The Board of Public Works decision is final and cannot be appealed. A. A volunteer company requesting a grant may appeal to a panel comprised of the President of the MSFA, the State Fire Marshal s, and the Chairman of the Fire and Rescue Education and Training Commission. B. The decision of the appeals panel to reject the application shall be final and not subject to further review. C. A decision of the appeals panel to approve the application shall be submitted to the Association for submission to the Board of Public Works. Revised March 10, 2008 Revised August 29, 2010 (If presented to the Executive Committee) 10