Councilors lay groundwork for $1M fire truck

By Marc Robertson - Editor | July 17, 2024

“We were not anticipating this”

At a price of more than $900,000 plus additional expenses, purchase of a fully equipped truck for the Cotulla Volunteer Fire Department may only be possible through a shared agreement with the county government.
Cotulla city councilors agreed Thursday evening, July 11, to approve a resolution that makes it legal for them to divert bond revenue funds into the municipal general account for reimbursement if they should agree to buy the truck in September.
Later that night, they agreed to further investigate options for financing the vehicle.
At the heart of the discussion between councilors, city administrator, city attorney, a financial consultant and representatives of both the Cotulla VFD and the La Salle County fire brigade was whether adding a million-dollar fire truck to a shared fleet would help lower the community’s overall insurance rates.
According to Administrator David Wright last week, a meeting with La Salle County Judge Leodoro Martinez III resulted in questions over whether the city of Cotulla benefits from being served by a volunteer fire department as well as a fully paid county fire brigade, the La Salle Fire Rescue, which has fire trucks and ambulances at stations in Cotulla and Encinal, and all of whose firefighters are certified as paramedics.
“We discussed the insurance rating, commonly known as the ISO, that dictates the amount that people have to pay for their home coverage,” Wright said. “There are issues that affect the ISO, and equipment is a major factor in that.”
“There are also issues that hurt the ISO, making peoples’ insurance costs higher,” the city administrator said. “A lower ISO also means the community is more attractive to new business development.
“There is a suggestion that having the volunteer fire department may negatively affect the ISO,” Wright added, “and we disagree with that.”
Wright told councilors that he believes improving the service provided by the volunteer fire department – including upgrades to its fleet and equipment – should help lower the ISO by offering residents and businesses enhanced fire response service.
“How do we boost the VFD as an asset and help reduce the ISO? One solution is to have another fire truck,” the city administrator said.
Wright’s suggestion triggered talks on a service agreement between the Cotulla VFD and the La Salle Fire Rescue.
County Assistant Fire Chief Gilbert Martinez indicated the La Salle Fire Rescue is open to an agreement if the arrangement improves service and helps lower insurance rates.
“With the amount of businesses and hotels we have, we must have three fire trucks and a ladder truck,” Martinez said. “If you purchase a new one, you would need three to four firefighters in that unit.”
Wright acknowledged that firefighters may be housed in or behind the city VFD station in a residential trailer such as those offered to cities and counties by the Federal Emergency Management Agency (FEMA) in the years after Hurricane Katrina struck the Gulf Coast.
“The city will have a meeting on whether to split $903,000 for a vehicle between the city and the county,” Wright said. He admitted to councilors last week that the proposal is a steep one for the municipal government despite its hopes for an enhanced volunteer fire department.
“I have great concern over the financial condition we are in,” the city administrator said. “We will have to take out a loan. We may have to raise property taxes to make it happen.
“We were not anticipating this,” Wright said. “A fire truck helps the community, businesses, and the ISO, but there is a price to pay.”
Assistant Chief Martinez said his research has found that the base price for a full-size fire truck is $729,000 and the price for a fully equipped vehicle exceeds $900,000. One provider, he said, has a fully equipped vehicle listed at over $1.2 million.
“We have talked the price down quite a bit,” Martinez told the council.
“The vehicle is in stock,” Wright said. “It is a five-year wait for another one.”
Cotulla VFD Chief Johnny Gomez said a full-length fire truck of approximately 40 feet will not fit in the department’s station on North Main Street. Wright said the city will have to address alterations to the building if such a vehicle is added to the fleet.
Councilors acknowledged that the expense of upgrading the building will further raise the overall cost of improving the volunteer fire department.
Martinez told councilors that the community’s most recent ISO rating, which dates to 2016, stands at 5.5.
“How much lower is it going to drop?” Councilor Manuel Rodriguez asked.
“It’s possible to go down to 2.5,” the city administrator said.
Mayor Sandra Luna said she believes the purchase may represent progress for Cotulla in a way that ultimately helps economic development.
“That rating is why HEB and Walmart and others won’t come in,” the mayor said, referring to major retail and grocery businesses being dissuaded from expanding into Cotulla while property insurance rates are high. “We are looking at progress, and there are things that we need to put in place for that to happen.”
The mayor said later that she hopes a fire truck will be stationed west of the Union Pacific rail line in Cotulla, as trains blocking grade crossings may prevent a county truck stationed at Martinez Park from reaching a west-side emergency in a timely manner.
VFD Chief Gomez was hesitant to put his support behind a high-dollar debt for the city in the purchase of a new fire truck, although he agrees that a fire truck stationed on North Main Street may contribute to lower emergency response times.
“Who is going to benefit from an ISO rating?” Gomez asked the council. “Taxes are going to go up. Low-income families are having to pay taxes. You can get a new tanker truck for $430,000. The county doesn’t have any [water transport] tenders to fight brush fires. A refurbished truck is more affordable than a new one.”
“We have the personnel ready to man that engine,” Assistant Chief Martinez said of any vehicle added to the VFD fleet in a shared operations agreement with the county. He also said he does not believe a water tank truck will help the city qualify for a lower ISO.
Financial consultant Robert Tijerina told councilors the city may have difficulty in financing the purchase of a used fire truck. A new truck or a former demonstration model, he said, could be financed in a joint agreement with the county government. If the council agrees to make a downpayment on a new vehicle, he said, the money may be reimbursed from bond revenues through the resolution passed at the July 11 meeting.
“We need instruction on how to move forward,” Wright told the council. “This vehicle is purchased through the Texas Buy Board. It is the lowest price we are going to get on this truck.”
“If you approve this in September,” Tijerina said of taking out a loan by selling certificates of obligation, “you get the bond money thirty days later and lock in the interest rate.”
Wright reminded councilors that any agreement with La Salle County government is contingent upon a vote by the commissioners.
“If this fails at commissioners’ court, it dies there,” the city administrator said.
Tijerina also gave councilors opportunities to put a stop to the plan before they commit to a loan for a new fire truck. At any point in the process before the bond sale is agreed upon, he said, the project can be stopped dead.
Councilors agreed unanimously on a motion by Mary Koraleski that the city take the next step towards the financial commitment, having learned from the financial consultant that the loan may be as low as $515,000 if the county agrees to share the cost of the new truck.
Tijerina said interest rates of approximately 5.5 percent are currently available but that the city should consider angling for a lower rate.
Cotulla’s current property valuation stands at a little over $248 million, and the current debt burden carried by the city government puts the property tax rate for that debt service at 43.47 cents on the $100 of appraised value.
“Property values increase by twelve percent,” Tijerina said last week. “We don’t know the final valuation for 2025 yet.”
The city will be required to pay $117,000 annually over the five-year period of the loan for the fire truck if the cost is shared with the county.
Councilors have until September 5 to decide whether to proceed with the plan.
“This can come to a complete stop if someone gives you a truck before September 5,” Tijerina said, “or if the council decides not to do it. But we won’t know until September 4 which bank will give us the lowest interest rate.
“You are not approving the debt here, or to raise the tax rate, or to purchase the truck,” the financial consultant told councilors before they cast their votes to order the administrator to continue with the process.
Councilors have yet to learn how much additional property tax revenue will be required to meet the debt obligation.
At its present level of revenue, based on property taxes and sales tax reimbursement from the state of Texas, the city of Cotulla will not be able to assume additional debt. Property valuations delivered by the end of 2024 will determine whether the city may earn additional funds without raising the tax rate, although the city administrator has indicated that the Texas Water Development Board (TWDB) will be hesitant to grant a loan to Cotulla next year for vital water utility upgrades and wastewater treatment plant improvements if the city cannot demonstrate its liquidity.
On the table for the utility upgrades is a potential $20 million award to Cotulla, of which only $6 million will need to be repaid, if the TWDB grants the full available amount to the city.