City of San Carlos

Council Staff Report

Council/RDA Meeting Date: June 12, 2006

Item Title: Report on Proposed Fire Services Assessment and Multi-Year Fire Services Budget Model

Recommendation
The Staff recommends that the City Council receive this report on the proposed Fire Services Assessment and the Multi-Year Fire Services Budget Model. The Proposed Fire Services Assessment is scheduled to be back for future City Council action.

Fiscal Implications
There are no fiscal implications to tonight’s report on the Proposed Fire Services Assessment and the Multi-Year Fire Services Budget Model. When this item returns to the City Council for consideration and action, the potential passage of the Proposed Fire Services Assessment by the Property Owners of San Carlos would provide additional funding for the City’s Fire Service needs.

Background
In March, the City Managers of San Carlos and Belmont authorized the firm of Muni Financial Services to begin work on a Fire Services Assessment Engineer’s Report as the first step in a Proposed Fire Services Assessment in both communities. Their action was ratified by the South County Fire Authority Board later that month.

The Engineer’s report was presented to the Fire Board at their last meeting held on May 31, 2006. The Board discussed the report at that meeting along with the Multi-Year Fire Services Budget Model and agreed to discuss the matter again prior to each agency taking action on the Proposed Fire Services Assessment.

The Workings of a Fire Services Assessment
A Fire Services Assessment is levied on property owners in a community; in this case the property owners of the City of San Carlos for eligible Fire Suppression service costs. The amount of the assessment is based on the amount of revenue the City desires to raise each year, the number of parcels in each land use category and the relative “special benefit” that each property type would receive. This calculation is done by an Assessment Engineer. In recent years, the cities of Pacifica and Millbrae have proposed and adopted Fire Services Assessment measures using this process.

Once the amount of the assessment has been calculated and approved by the Governing Body, the City Council can then adopt a resolution of intent to bring the question of the proposed assessment to the property owners. This is done through a mail ballot and a protest hearing process, much as San Carlos has done in the past through projects such as the Pulgas Creek Drainage Improvement project, two Downtown Beautification Projects and the recent Industrial Road Improvement Project.

In the ballot and protest hearing process, property owners receive ballots and can cast votes that are weighted in the amount of the proposed assessment (i.e. the higher the potential assessment amount, the more votes the property owner is given). On the date of the protest vote hearing, the City Clerk will tally the votes. If there is a majority vote in favor of the assessment proceeding, it moves to Step 2 in the process. If there is a majority opposed to the proposed assessment, it fails at that point. In Step 2 of the process, the governing body (in this case the San Carlos City Council) must also vote to hand bill the property owners for the amount of the assessment (year 1) and then place the assessment on the property tax rolls (years 2 through 10). The hand billing step in this proposed assessment is due to the timing of the proposed measure which would be potentially adopted after the property tax billing deadline for 2006-07.

Review of Muni Financial Services Engineer’s Report
The Engineer’s report is a required first step in setting the amounts of a Proposed Fire Services Assessment that could be considered in each community. The report is based on national fire statistics from the National Fire Protection Association (NFPA) as well as service call and fire loss data from South County Fire Authority. (A copy of the Engineer’s Report for San Carlos is attached to this staff report).

Using these statistics, the Assessment Engineer calculates the average property loss by property use category on a national basis (Table 3), the average loss per structure fire per category on a national basis (Table 4), the possible San Carlos property loss by category using these averages (Table 5), the average property loss in San Carlos per structure fire (Table 6), San Carlos fire service call data from 2002-05 (Table 7), a weighting of the Assessment Factors (Table 8). A Fire Suppression Assessment Budget (Table 9), assignment of the budget to the seven land use categories in San Carlos (Table 10) and a list of proposed Fire Assessment Rates to raise the budget figure (Table 11).

Staff also requested that the Assessment Engineer provide the Fire Assessment Rates in San Carlos for additional budget figures ranging from $1 Million to $2.25 Million. This information is shown in the report on the pages that follow Table 11.

The Assessment Engineer also provided a comparable analysis of Fire Services Benefit for the Belmont Fire Protection District as well as an alternative analysis that substitutes square footage data for unit date for Commercial Units in Belmont. The latter analysis only affects the commercial unit assessment amount since the benefit amounts by category remain fixed.

Budget Estimates & Multi-Year Budget Model
As you will note from the information in Table 11 and the additional tables that follow, the main variable that determines the level of the Proposed Fire Services Assessment for each type of property is the Fire Agency’s budget for the 10 year period that this proposed assessment is to cover. To address that question, Staff worked with the South County Fire Authority finance staff on a 10 Year Budget Model Excel spreadsheet which is attached.

The budget model asks for an assumption about annual revenue growth (set at 3%), optional items the two cities and the Fire Board may wish to fund from the proposed assessment (described here as “shopping cart” items) and an option for San Carlos to cover the difference between paying today’s 50/50 formula and the new 53/47 formula in the new JPA from assessment proceeds. Once these assumptions and optional items are entered into the spreadsheet, the “F9” calculate key is used to recalculate the budget model and the needed assessment level in each City is determined.

The Fire Board has a copy of these materials and the spreadsheet multi-year budget model and it has now been provided to the City Council as well. Staff believes that this will be a key tool in facilitating the discussion going forward as the Fire Board and both cities consider and ultimately approve a 10 year budget spending plan. Once that has been done, we will have the amount needed to raise for the proposed fire assessment.

Key Dates for the Proposed Fire Services Assessment
In the months ahead, there are several key dates to keep in mind as we move through the Fire Services Assessment process. They are:

• Muni Financial Prepares Resolution of Intent for Both Cities – July 3rd thru 7th
• San Carlos City Council Adoption of Resolution of Intent – July 24th
• Belmont Fire Protection District Board Adoption of Resolution of Intent – July 25th
• Community Outreach Begins – July 26th
• Assessment Ballots Mailed – August 10th
• San Carlos Assessment District Protest Hearing – September 25th
• Belmont Fire Protection District Protest Hearing – September 26th
• San Carlos City Council Adopts Resolution Authorizing Assessment – October 9th
• Belmont Fire Protection District Board Adopts Resolution Authorizing Assessment – October 10th

Distribution of the Report to the Public
Consistent with past practice, copies of this Council Staff Report and the attachments were made available on the City’s Web Site, eMailed via the eNotify system to subscribers of the City Council Agendas and Minutes and Fire Services in San Carlos eMail lists, made available for public review at the City Clerk’s Office and the San Carlos Library and available to local reporters covering the City of San Carlos.

Alternatives