NORTH TOPSAIL BEACH — A coastal town just over the Pender County border received approval for its latest project financing, with interest rates lower than anticipated.
READ MORE: N. Topsail to demolish fire station, build anew with up to $8M loan
North Topsail Beach is in the midst of demolishing one of its two fire stations due to its uninhabitable conditions; firefighters are currently working out of a nearby rental property. A new, spacious, more resilient building will be erected in its place.
Estimated to cost $5.6 million, the replacement fire station at 3304 Gray St. will be a two-story building more than double the current size, leaving room for growth. To pay for the demolition and construction, North Topsail Beach is covering the expense with installment financing. It released a request for proposals to banks and received three by Dec. 13.
Two proposals came from Truist and PNC Bank, but the most favorable rates were offered by JP Morgan Chase at 3.79% interest. The town agreed to enter a contract with JP Morgan at its Jan. 2 meeting for 1.2% lower than the town anticipated; it’s part of a 15-year tax-exempt loan.
“I was elated to see that, especially within the environment we’re in right now with rates,” town manager Alice Derian said at the January meeting.
Instead of paying out $7.8 million over 15 years, as estimated by Derian, North Topsail will dole out $7.3 million, with a half-million-dollar savings in interest. The town will pay $373,333 in principal costs for 15 years, with $1.7 million in interest.
Tuesday, the Local Government Commission approved the town’s financing. $6.1 million is estimated for construction costs with $497,311 set aside for contingency.
Alderman Rick Grant said in January the 3.79% interest rate is similar to the fire tax it receives from Onslow County, making the added interest payments essentially covered.
In December 2022, an interlocal agreement between North Topsail and Onslow County allocated 3 cents of the county’s ad valorem tax to the town’s fire protection services. The town receives about $471,000 annually.
“Thank you, county,” Grant said. “They’re paying for the fire house.”
Derian said at the January meeting, the town will close on its financing next week.
Prior to the LGC’s approval, North Topsail already had $15.5 million in debt and a tax rate of 48 cents per $100 valuation. Derian said she does not anticipate a tax rate increase with the additional debt.
The last time North Topsail requested debt approval from the LGC was in October 2022 for its special obligation bonds to pay off beach nourishment loans.
In November, North Topsail awarded a construction contract for the fire station demolition and rebuild to lowest bidder WB Brawley Corporation with a base bid of $6 million.
In addition, North Topsail approved two alternate parts of the projects: for spray acoustic insulation and a standing seam metal roof, totaling $102,689.
Plans were designed by Becker Morgan Group Inc. with civil engineering Paramounte Engineering. Once complete, the first story will be allocated to staff quarters, including a day room, kitchen and eating area, four two-person bunk rooms, lockers, showers and storage. A second story will consist of meeting space, offices and an exercise and training room.
The town has looked to replace the fire station since it initiated a feasibility study in 2016. It’s considered various alternatives to replace the aging structure, such as building a combined public safety building. Buying a new piece of land was also on the table, but ultimately it made the most financial sense to demolish the current station and rebuild.
The northern fire station is in better condition and Derian said the town has allocated funds the last two years toward renovations to ensure it remains in good condition.
Demolition of the Gray Street fire station is expected to begin in early February.
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