City Council Staff Report - Consider Increasing San Carlos Share of Fire Costs (January 8, 2007)
City of San Carlos Council Staff Report
City Council Meeting Date: January 8, 2007 Item Title: Consideration of Changes to the Funding Formula Specified in the Amended and Restated Exercise of Joint Powers Agreement for the Belmont-San Carlos Fire Department
Recommendation As deemed appropriate by City Council.
Fiscal Implications The Belmont-San Carlos Fire Department (BSCFD) is currently funded by a monthly contribution from the City of San Carlos General Fund and property taxes collected for Fire Suppression Services in the Belmont Fire Protection District ($5.7 Million in the current year, $5.985 Million in 2007-08) in addition to other departmental revenues and grants. At the present time, the BSCFD 2006-07 Budget is $11,375,951 and the contributions by the two agencies are shared on an equal basis so that each agency pays $5,267,467 towards Fire Department services.
Belmont representatives on the BSCFD Fire Board have expressed an interest in amending the JPA to change the funding formula paid by each agency for Fire Department services starting in the new fiscal year. The fiscal impact of such a proposed amendment depends on what factors are considered in such a revised formula (Use of Fire Services, Cost of Fire Department, Population and Parcels).
In December, the BSCFD Fire Board discussed a number of alternative funding formulas. All of these would divert General Fund revenues from both cities each year ($60,000 per year from San Carlos and $20,000 per year from Belmont). The proposed formulas also envision reinstating fees for Mandated Fire Inspection services to specific properties (primarily business and rental properties). The result in these changes varies from a reduction in Fire Service costs to the City of $180,000 per year (Current 50/50 formula plus Fees and General Fund Transfer) to an increase of $279,992 per year (Lieberman 1 formula using Number of Parcels and Fees and General Fund Transfer).
To the extent that these fees are not resumed and the General Fund transfers are not made, the impact of the revised formulas on San Carlos would be greater. The result in the revised formulas without fees and the General Fund transfers varies from no change in the Fire Service costs to the City (Current formula and Grassilli formula) to an increase of $699,992 per year (Lieberman 1 formula using Number of Parcels only).
An increase in net General Fund contributions for Fire Department services from San Carlos would likely require reductions in police, and parks and recreation funding levels to accommodate it.
In addition, it should also be noted that any formula adjustment may impact the City’s share of the Department’s other costs including unanticipated budget overages in the current and future years, settlement of personnel and worker’s compensation claims and costs and currently known unfunded liabilities, currently estimated at more than $16 million, if applied retroactively (e.g., a 3% different in cost shifted to San Carlos would mean 3% of $16 million or $480,000).
Background The City Council adopted a motion to work with the Belmont Fire Protection District as equal partners to further the Belmont-San Carlos Fire Department (BSCFD) at its regular meeting of November 27, 2006. The BSCFD Fire Board of Directors met on Wednesday, November 29, 2006 and discussed options for the Department in the wake of the recent assessment district tally.
During this meeting the Belmont representatives to the Fire Board indicated an unwillingness to continue working as equal partners under terms of the current Joint Powers Agreement (JPA) beyond June 30, 2007. Belmont representatives further suggested that Belmont intended to submit a letter prior to the end of calendar year 2006 to dissolve the JPA as of June 30, 2007, unless San Carlos agreed to implement a 53/47 formula (i.e., whereby San Carlos would contribute 53% of the Departments’ cost, or $385,000 per year more than current costs based on the current Fire Department budget.)
As previously reported, the JPA that was adopted by a unanimous vote of both the San Carlos City Council and the Belmont City Council sitting as the Belmont Fire Protection District in June 2006 provides for an equal 50/50 cost formula where each City pays half of the cost of the department’s expenses after departmental revenues and grants are deducted.
Extension of the JPA At the City Council meeting of December 11, 2006, the San Carlos City Council adopted two resolutions that would extend the time by which a notice to dissolve the BSCFD JPA on an expedited (less than 18 month) time frame could be given. Both resolutions extended the deadline for such a notice from December 31, 2006 to June 30, 2007.
The difference in the two resolutions was that one established a rolling 6 month termination period and the second specified a fixed date (December 31, 2007) for the termination date regardless of when the notice to dissolve was received. The City Council authorized the Mayor to sign either of these resolutions based on the action taken by the Belmont Fire Protection District at their meeting on December 22, 2006.
On December 22, 2006, the Belmont Fire Protection District adopted a resolution that established a rolling 6 month termination period that could be adopted up to June 30, 2007. The following day, Mayor Davids signed the San Carlos City Council resolution that activates that option and it was delivered to the Belmont Fire Protection District.
Discussion of Alternatives to Current Funding Formula On December 13, 2006, the BSCFD Fire Board held a meeting to discuss the request by the Belmont representatives for a change in the 50/50 funding formula for the Fire Department. At the meeting, some initial proposals were discussed for revised funding formulas and then the staff of both agencies was asked to develop a spreadsheet model of the proposals for discussion at a subsequent Fire Board meeting on December 19, 2006.
Attachment “A” is the spreadsheet model that resulted from this staff work and the discussions at the December 19, 2006 Fire Board meeting. In general terms, the funding proposals use some or all of these factors: · Use of Fire Services (measured by Fire Call Volume) · Cost of Fire Department (measured by number of Fire Stations, Fire Companies and Fire Suppression Employees) · Population and Property (measured by Population, Assessed Valuation and Number of Parcels)
At the December 19, 2006 Fire Board Meeting, the Fire Board recommended that consideration be given to added fee revenue in all of the funding models rather than just the model proposed by Council Member Grassilli at their prior meeting. This has the effect of redirecting $80,000 in General Fund Revenue from the two Cities ($20,000 per year in Belmont, $60,000 per year in San Carlos) as well as the reinstatement of fees for Mandated Fire Inspections ($83,000 per year in Belmont and $120,000 per year in San Carlos) to the Fire Department. This has the effect of reducing each City’s annual contribution to the Fire Department. It also offers the potential of additional funding for the department if these fees are raised from partial recovery ($203,000 per year if currently authorized fees are resumed) to full recovery (estimated by the Fire Department at $600,000 - $700,000 per year at the current budget level). Staff would note that if the recommended General Fund transfers and reinstated fees are not made, this would increase the net cost of Fire Department operations to San Carlos by a substantial margin.
Here is a comparison of how the various funding formula proposals would impact the two cities. Note that the numbers are based on the current Fire Department budget, and would increase in future years based on actual expenses.
Comparison of Net Cost to Agencies – Excluding Fees & General Fund Transfer Method | Belmont Cost | Bel % | Belmont Diff | San Carlos Cost | SC % | San Carlos Diff | Current | $5,267,467 | 50.0% | 0 | $5,267,467 | 50.0% | 0 | Grassilli | $4,951,419 | 47.0% | -$316,048 | $5,267,467 | 50.0% | 0 | Grocott 2 | $5,172,473 | 49.1% | -$94,994 | $5,362,461 | 50.9% | +$94,994 | Grocott 3 | $5,077,828 | 48.2% | -$189,639 | $5,457,106 | 51.8% | +$189,639 | Lieberman 2 | $5,023,886 | 47.7% | -$243,581 | $5,511,048 | 52.3% | +$243,581 | Grocott 1 | $4,996,126 | 47.4% | -$271,341 | $5,538,808 | 52.6% | +$271,341 | Rev Measure | $4,968,367 | 47.2% | -$299,100 | $5,566,567 | 52.8% | +$299,100 | Lieberman 1 | $4,567,475 | 43.4% | -$699,992 | $5,967,459 | 56.6% | +$699,992 |
Click here to read Part 2 of the City Council Staff Report on Consider Increasing San Carlos Share of Fire Costs (January 8, 2007)
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