Securing funding to purchase a new vehicle through AFG

Securing funding to purchase a new vehicle through the Assistance to Firefighters grant program is something a number of us hope for every year.

In 2011, AFG received approximately 5700 applications for vehicles and funded a little over 300. That’s about 5 percent and indications are that for 2012 that number will be even lower.

The reason for this is AFG is limited in the number of vehicle awards it may make by Congress. The legislation authorizing the program stipulates that no more than 25 percent of its funding may be awarded for apparatus’.

In 2012, AFG was funded at $285,625,000, meaning about $71.5 million was available under the apparatus category. Sounds like a lot of money and it is until you look at it closely.

If you divide it out on a state-by-state basis, you have approximately $1.5 million per state. Now, that number doesn’t look so large anymore. It equates to an aerial piece and a couple of engines and, wait, we still haven’t factored in any of the EMS requests for new ambulances.

When we get that dreaded “Dear John letter” from FEMA, we all try to analyze our application to determine why this happened. Sometimes there is nothing wrong with our application or the narratives we submitted. Sometimes, it is just a case of numbers.

If your request to replace your 25-year-old engine didn’t make it to peer review,  now you may have some idea why.

While we are on the subject of AFG apparatus grants, there are a few questions that departments continue to raise even though the program guidelines haven’t changed much since its inception.

One question is, “The price of our new engine came in higher than the estimate we used for our application can we take out a loan to finance the balance?” The answer is yes, but you may not, absolutely not, encumber the title of the AFG funded vehicle. In other words you can take out a loan for the difference but you cannot use your new vehicle as collateral. You may use another vehicle, your station or any other asset your department owns, but you cannot use the vehicle funded by the AFG grant. To the surprise of some, this has been a provision of AFG since it began.

Another question that arises often is, “Our vehicle grant was funded so what are we allowed to do with our old vehicle?” The answer to this is very simple – it cannot, under any circumstance, be used for emergency response either by your department or sold to another fire department to respond to alarms. It can be sold to a private individual, a salvage dealer, given to a museum, used for construction purposes or farm or nursery use. If your department continues to respond this vehicle on alarms or if it sells or gives it to another department for response purposes, your department will be found in default and be forced to pay back the amount of your grant.

Another issue that has caused some confusion is pre-payment and performance bonds. A performance bond is used to protect your department’s investment if it is going to advance any money to a manufacturer for a new vehicle.

The bond ensures that your department’s funds are not lost if the manufacturer fails to deliver your vehicle. A performance bond is recommended by FEMA but not required. On the other hand, a pre-payment bond is required by FEMA if the grantee plans to advance any federal funds to the manufacturer. This is to safeguard the federal funds against loss if the manufacturer goes out of business or fails to deliver the vehicle. Also, the grantee must include in their vehicle purchase contract specific performance requirements and penalties for noncompliance with the requirements. Pre-payment bonds have been a requirement of the AFG since 2009.