Facing Financial Woes, N.C. Dept. Asks For Take Over

March 29--DURHAM -- County officials have been asked to take over one of the seven volunteer fire departments that operate outside the city of Durham, because the department can no longer make ends meet.

Directors of the Bethesda Volunteer Fire Department wrote the county Feb. 28 to say they had voted to dissolve their nonprofit and hand off to the county responsibility for day-to-day operations.

County Commissioners are scheduled to begin the transition process Monday, when they receive a briefing on the proposal.

Assuming the plan holds, "for all intents and purposes the governance of the department will be taken over by the county but the public won't see a difference" in operations, County Manager Mike Ruffin said. "It'll be the same high quality of services [delivered] by essentially the same personnel."

The Bethesda department is responsible for answering fire calls in a large swath of eastern and southeastern Durham County, including portions of RTP, that remain outside the city limits.

Money for its operation has come primarily from a special, district-only property tax that's capped by law at 10 cents per $100 of assessed value.

As part of the transition, the county would set up a new service district, using its own state-granted authority, that would in essence replace Bethesda's. It would have identical boundaries, but wouldn't have the same tax rate. Ruffin and his staff figure the new tax rate will start at 13 cents per $100 of assessed value.

But they figure property owners will be better off even with the higher rate because the takeover will eliminate the risk of staffing cutbacks that would spark increases in their insurance premiums.

The department employs 19 full-time firefighters and a group of part-timers that adds up to the equivalent of 11 more full-timers.

With the handoff, the full-timers would become county employees, and the county would convert the part-time positions into their full-time equivalents.

County officials say the existing tax-rate cap hurt Bethesda because the makeup of its service district forced it to function like a city fire department, with the same capabilities and equipment.

The department's nonprofit filings show that it ran a $214,536 deficit in fiscal 2010-11, the most recent year for which its tax filings are widely available. It took in $2.2 million and spent $2.4 million.

Its revenue base in addition to the proceeds of the district tax included money from two city governments -- Durham and Raleigh -- that were paying for services rendered or compensation for having annexed land in the Bethesda district.

Ruffin said the loss of a "fairly sizeable contract" with Raleigh contributed to the department's financial issues.

The fiscal 2010-11 tax filing indicated that Raleigh that year paid the Bethesda department $249,370 -- a figure that in practical terms made it the department's second-largest funding source, behind only Durham County.

Bethesda's chief, Robert Andrews, declined comment on the situation Thursday. He referred questions to the county's public-affairs staff.

The Feb. 28 notification letter from the Bethesda board to the county was signed by board President Marshall Ross. In it, he said it was clear the nonprofit was in a "critical operational status and could "only continue to operate for a short period of time."

By setting up the new tax district, Ruffin's government aside from eliminating the present tax rate cap will also be insulating taxpayers in the rest of Durham County from having to pick up a share of Bethesda's bills.

That in essence preserves the status quo where there are no countywide "property tax dollars involved with the operation," Ruffin said.

The county will take on and refinance the department's debts, a move that should halve interest payments on them from a prospective $160,000 a year to about $82,000.

The plan is to secure a conventional loan using the department's equipment and property as collateral. But by virtue of the county government's size and AAA credit rating, "we'll get a better interest rate" than Bethesda's nonprofit would, Ruffin said.

Copyright 2013 - The Herald-Sun, Durham, N.C.