City of San Carlos

City Council Staff Report

Council Meeting Date: February 15, 2006

Item Title: Update on Options for Fire Services in San Carlos

Recommendation

Staff recommends that the City Council discuss and provide comments to the City Staff on this update on options for Fire Services in San Carlos. Staff anticipates returning to the City Council with a recommendation for Fire Services once several items have been explored further.

Fiscal Implications

The City’s 2005-06 budget for Fire Services includes over $4.8 million for the City of San Carlos 50% share of funding the South County Fire Authority. At this time, the City has a number of options for Fire Services. They range in cost from $3.94 Million per year (CDF Staffed with contract Fire Truck Services) to $5.79 Million per year (South County Fire Authority is reconstituted, costs are reallocated based on an Assessed Valuation formula).

The Council’s ultimate decision and action on providing Fire Services in San Carlos will be a key part of the City’s budget discussions this year due to the ongoing budget shortfall in the City General Fund.

To the extent that the Council elects to spend more money for Fire Services, they will need to either:
a) make that up through additional General Fund program cuts (68% of the General Fund’s expenses are in the Police, Fire and Parks & Recreation budgets) or
b) obtain property owner approval of a new revenue source for Fire Services such as a parcel tax (2/3 vote required for passage) or a property based fire service assessment (majority vote required for passage, based on Assessed Valuation).

Background

This is the 12th meeting that the City Council has held on the topic of Fire Services since December 2004 when notice was given by the Belmont Fire Protection District to dissolve the South County Fire Authority and a similar notice was adopted by San Carlos at the recommendation of the City Attorney to protect San Carlos’ position in this matter. The City Council last met on the topic of Fire Services in San Carlos on January 13, 2006. At that time, the Council voted to participate in the 2x2 Committee process with the Belmont Fire Protection District to explore options to reconstitute the South County Fire Authority (see accompanying Staff Report).

Prior to that time, the Council held 3 meetings during the months of October 2005 and November 2005 to discuss Fire Service Options for San Carlos in the coming fiscal year which begins on July 1, 2006. Copies of the Council Staff Reports for these discussions and videos of these discussions and the 7 earlier reports to Council on the Fire Service Options for San Carlos process are available on the City Web Site.

Developments Since The Last City Council Meeting

Since the last City Council Meeting held on this topic (January 13th), the following items are worthy of note:

• Two meetings of the 2x2 Committee to reconstitute South County Fire Authority were held with a third meeting planned for Thursday, February 16th at 10:00 a.m., if needed. This schedule will keep the process on track to meet the February 18, 2006 deadline for a decision set by Belmont.
• A Fire Board subcommittee of San Carlos Council Member Bob Grassilli and Belmont Fire District Commissioner Coralin Feierbach was appointed to meet with County Supervisors Hill and Gordon to discuss the shortfall in reimbursement for the Hazardous Materials Team staffed by South County Fire Authority.
• Updated proposals for Fire Services in San Carlos were received from the City of San Mateo and the California Department of Forestry (CDF).
• A meeting with the staff members and attorneys from San Carlos, Belmont and South County Fire that are working on items relating to the wrap-up of South County Fire Authority at the end of June.
• That process continues with wrap-up cost estimates and a list of wrap-up items expected soon.
• The City of San Mateo offered both cities the potential of contracting for Fire Truck Services as an additional option to contracting for all Fire Services from their City.
• Earlier this week, Chief Lowden introduced the concept of a “cross staffed” company that would perform both Engine and Truck Company services as a new option that should be studied.

Staff plans to continue to work with these individuals as the review of the Fire Services options for San Carlos moves forward. We are now 14 months into the 18 month timeline of this project. Fire Chief Lowden has indicated that we will be able to transition to a new method of Fire Services to start on July 1, 2006 if a decision is made by both agencies by mid-March. We continue to work towards that time deadline.

Overview of Options for San Carlos

With the withdrawal of Menlo Park Fire Protection District and the City of Redwood City Fire Department from this process, the City of San Carlos has 4 Fire Service Options available. In relative order of cost they include:

• Contract for Fire Services with California Department of Forestry (CDF)
• Contract for Fire Services with the City of San Mateo (available to San Carlos if the Belmont Fire Protection District also selects this option)
• Reforming a City of San Carlos Fire Department
• Reconstituting the South County Fire Authority

These fire service options are very similar to those being considered by Belmont. On page 2 of a staff report from earlier this week, Belmont’s Interim City Manager described their fire options as:

• “A Standalone City of Belmont Fire Department.”
• “Retaining the South County Fire District in a reconfigured joint powers authority in accordance with terms and conditions negotiated by the Belmont representatives to the South County Fire Board.”
• “Contract for Services with the City of San Mateo Fire Department.”
  

Fire Service Levels Being Studied

Consistent with our earlier discussions, we are continuing to explore ways to obtain Fire Services that would include 2 Fire Engine companies with Paramedic Coverage plus Fire Truck Service. This level of service would be an increase over the current level of Fire Service in San Carlos which features 1 ½ Engine Companies and ½ Truck Company as well as Paramedic coverage at the Downtown Fire Station.

In the case of the proposals from the City of San Mateo and CDF, this would involve either compensation for 25% of a fire truck company (City of San Mateo proposal) or a shared Fire Truck Company from CDF. As noted above, since the two formal proposals have been received, two new concepts for Truck Service have been advanced to both agencies. They involve contracting for Fire Truck Services separate from a complete Fire Services package (San Mateo option) or “cross staffing” one Engine Company as a combined Engine/Truck Company (proposed by Fire Chief Lowden on Wednesday). We intend to explore both of these concepts further as they apply to the 4 Fire Service options available to San Carlos.

Relative Costs of Each Option

To aid with the 2x2 Committee discussions, both Chief Lowden and I developed cost estimates that show the relative magnitude of costs for the different Fire Service options available to the two agencies. A copy of Chief Lowden’s analysis and my spreadsheet is attached for the Council’s information and review. The spreadsheet has been updated to include a new estimate from Belmont on the cost of a City operated Fire Department ($5.21 Million) and a revised estimate of the HIA Revenue option.

Current Liabilities of South County Fire Authority

Staff believes that any recommendation – and final decision by the City Council – should only be undertaken after reviewing the impact of the current liabilities of South County Fire and how they would be addressed by the potential partner Fire Agencies. The key items in this area include:

• PERS Retirement Costs
Currently estimated at up to $13.5 Million, further review is needed to determine how this figure would be affected by the 4 Fire Service Options. An actuary with expertise in PERS matters has been retained to help analyze this item.

• Workers Compensation Costs
Outstanding claims and insurance costs will need to be quantified. This figure could be in the $400,000 - $900,000 range.

• Retiree Medical Costs
South County Fire employees who retire with a PERS retirement benefit are eligible for retiree only medical coverage. An amount to cover this cost in the future would need to be set aside by both agencies.

• Outstanding Fire Truck Lease
The lease to purchase Fire Truck T-13 has been refinanced several times and is now in a deficit position. The cost to resolve this item could be in the neighborhood of $200,000.

• Other Costs
South County Fire Authority also has some additional unfunded costs that need to be explored.

Staff will continue to work with the Belmont and South County Fire Authority staff to analyze these items. We hope to have more detail and analysis of each in the weeks ahead.

Submitted by:

Brian Moura
Assistant City Manager

Approved by:

Mark Weiss
City Manager

Attachments:
1. Fire Service Option Comparison (PDF or FlashPaper , 8K)
2. SCFA Continuation; Cost Distribution Alternatives (PDF or FlashPaper , 50K)