City of San Carlos

Council Staff Report

Council/RDA Meeting Date: June 12, 2006

Item Title: Consideration of Amended and Restated Joint Powers Agreement for Fire Services with Belmont-San Carlos Fire Department (currently known as South County Fire Authority)

Recommendation
The South County Fire Authority Board recommends that the City Council of San Carlos and the Board of Directors of the Belmont Fire Protection District (BFPD) approve an Amended and Restated Joint Exercise of Powers Agreement for the Belmont-San Carlos Fire Department in the form attached to this staff report. In addition, the Board asks you to determine whether a joint closed session of the San Carlos City Council and the BFPD Board should be required or merely optional at the start of each round of labor negotiations with the Fire Department’s employees. A resolution is attached by which you may approve the amended JPA.

Fiscal Implications
The City’s 2005-06 General Fund budget for Fire Services includes $4.83 million for the San Carlos 50% share of the costs for operating the South County Fire Authority. In the coming 2006-07 budget, the City Manager has proposed increasing this budget by 2% to $4.9 Million (base budget) and then by an additional $345,000 to $5.245 Million. That budget increase for Fire Services was agreed to by the City Council at the recent Council Budget Study Session.

On February 27, 2006, the City Council took action to continue receiving Fire Services from the proposed Belmont-San Carlos Fire Department (currently known as the South County Fire Authority). This included the current practice of sharing Fire costs on a 50/50 basis with the Belmont Fire Protection District (BFPD) and providing the current level of services until the passage of a proposed Fire Services Assessment revenue measure (see earlier item on tonight’s City Council Agenda).

If the proposed JPA is adopted and if the proposed Fire Services Assessment revenue measure passes, the City of San Carlos would have additional funding to cover the City’s share of the Belmont-San Carlos Fire Department. The City’s cost of the department would also increase due to the new formula included in the amended and restated JPA (from 50/50 to 53% San Carlos, 47% Belmont). The actual amount of the increased revenue and increased expenses to San Carlos will depend on the Fire Department budget and 10 Year Budget Model adopted by the San Carlos City Council, the BFPD Board and the Fire Department Board. (Under the amended and restated JPA, budget adoption requires approval by all three bodies).

Staff notes that this increased 3% cost share (from 50% to 53%) to San Carlos has not been included in the 2006-07 Proposed Budget for the City of San Carlos. Therefore the added cost (currently estimated at $385,000 per year by the South County Fire Finance Staff) will need to be covered either through the proceeds of the proposed Fire Services Assessment revenue measure or through further program reductions and/or revenue measures in the City General Fund budget.

Background
The City of San Carlos and the BFPD are parties to a joint exercise of powers agreement (JPA) which created the South County Fire Authority (SCFA). For the past year, the two parties have been in discussions regarding the future of the Authority. On May 15, 2006 the City Council approved a letter agreement with the BFPD laying a path forward for the Department. In summary, that letter agreement provides for the Authority to be replaced by the Belmont-San Carlos Fire Department under an amended JPA, for the two communities to propose Fire Suppression Benefit Assessments to their property owners to provide funding needed to fund the Department’s essential services and, upon approval of those assessments, to replace the current 50/50 funding formula with a formula that looks to assessed valuation of properties in the two communities, call volume, the number of engine and truck companies in each community, and the number of fire stations and firefighters in each community. In the initial year, that formula will produce a funding split of 53% for San Carlos and 47% for the BFPD.

The attached amended and restated JPA was jointly prepared by San Carlos Special Counsel Joan Cassman, Belmont Special Counsel Michael Colantuono, and Authority General Counsel Jean Savaree. It was presented to the SCFA Board on May 31st. That Board made certain amendments to the attorneys’ draft (shown in redline-strikeout text in the attachment) and unanimously recommended that the San Carlos City Council and the BFPD Board approve the amended and restated JPA. Tonight’s agenda item affords you an opportunity to do so.

The next major steps in the process of reframing the Belmont-San Carlos Fire Department for the future are the adoption of a budget for the coming fiscal year (which will also require action by this Board) and the presentation of assessments to property owners in the two communities. Under the JPA provided here, each Member Agency must propose the fire assessments before August 15, 2006 (JPA Section 6.1).

Discussion
Although the amended and restated JPA is largely self-explanatory, a few provisions bear mention here.

• The “Funding Effective Date” (JPA Section 1.1 at page 2) is the point at which the funding formula shifts from the current 50/50 arrangement to the formula attached to the JPA as Exhibit C. The SCFA Board amended the language at the May 31st meeting to ensure that the funding formula would change no later than 45 days after the two measures are approved. In hindsight, the drafting at the May 31st Board meeting on this point resulted in a somewhat complicated sentence. The meaning of that section is as follows: The “Funding Effective Date” is the earlier of (i) the date assessments are due under an assessment imposed by the Belmont-San Carlos Fire Department (which is not expected to occur); (ii) the second of the two dates that assessments are first due under assessments imposed separately by the District and San Carlos (which may be the same day and should be within a few days of one another). The last phrase of the definition, however, requires that the Funding Effective Date occur, even if assessment bills are not yet due, no later than 45 days after the second of the two assessments to be approved has been approved. If either or both assessments fail, the Funding Effective Date will not occur.
• Section 2.3 states that the effective date of the new JPA will be July 1, 2006.
• Section 2.4 states that the JPA must continue to exist (on paper at least) until any debts the Department incurs are paid. This language is necessary boilerplate to allow the JPA (with approval of the District and San Carlos) to borrow, such as a truck financing lease, for example. Continued service by the Department is not the same thing as legal existence of a paper entity, however, and the District and San Carlos can withdraw from the agreement as provided in Section 3.3 even while the paper entity remains in technical existence to pay off its debts.
• Since the May 31st SCFA Board meeting, Special Counsel for San Carlos has raised the issue as to whether the words “and the Members” should be deleted in this provision. This phrase could raise the question as to whether, upon termination, the Member Agencies may assume some responsibility for the debts of the Department, which no one intends. So long as the drafting history and intent as to this Section is clear that the reference here to “Members” means only that prior to termination, the Members must be current in their obligations to the Department, but Members are NOT responsible for the obligations of the Department, the current language is fine.
• Section 3.2(c) is an essential, if boilerplate, provision that provides that the District and San Carlos are not responsible for the debts, liabilities and obligations of the Department; these are legally distinct entities. Section 3.2(d) requires the Department to indemnify the District and San Carlos from any liabilities arising from Department activities, and reinforces this point.
• Section 3.2(f) requires the District and San Carlos to review the JPA not less than every four years.
• Section 4.1(d) authorizes, but does not require, the San Carlos City Council and the BFPD Board to appoint an alternate Boardmember of the Department to serve when a Boardmember is absent.
• Section 4.2 states the “major decisions” of the Department which require the consent of the San Carlos City Council and the BFPD Board. These include annual budgets, labor agreements, the issuance of debt, a change in service levels mid-year over those reflected in an approved budget, and admission of another City to the JPA.
• Under Section 4.8, Belmont’s Finance Director and Treasurer will continue to play those roles for the Department. Under Section 4.11, Belmont will continue to provide finance and human resources services to the Department. Under Section 5.1, San Carlos will continue to provide office space to the Department. All of these relationships can be revisited in the future at the request of either community or the Department, without need for an amendment to the JPA.
• Section 4.10 provides that the Department’s Board will hire, fire and supervise the Fire Chief rather than the City Managers of Belmont and San Carlos. The City Managers retain a consulting role under this section with respect to “major decisions.”
• Section 5.5 states that the number of fire stations will remain at the present number of two per community and that changes in stations and service delivery are major decisions requiring the consent of this City Council and the BFPD Board.
• Section 6.1 – In this section, the Agreement states that the Department or Members will propose a measure or measures before August 15, 2006. But it is not clear exactly what must happen before the August 15th deadline. What does "propose" mean in this context? Special Counsel for Belmont has suggested that “propose” means the time at which assessment ballots are issued. But pursuant to the most recent timetable, such an interpretation would leave less than 5 days of “breathing room” since the ballots are not scheduled to go out until August 10th. The purpose of this bullet discussion is to clarify and confirm in the contract negotiation record that “propose” means the dates on which the agencies approve the Resolution of Intent, which are scheduled to occur on July 24 and 25.
• Article 7 is new and provides rudimentary dispute resolution provisions. Section 7.1 requires San Carlos and the BFPD to negotiate their differences in good faith. Section 7.2 provides means to address ties that may arise in the Department’s 4-member Board. If a tie vote occurs, the maker of the motion may withdraw his or her motion. If he or she does not, then any member of the Department’s Board may require the Department to implement one or more of three tie-breaking processes: (1) the matter can be reagendized for Board discussion; (2) the Board can attempt to resolve the tie for 60 days or any shorter period the Board agrees upon; or (3) the matter can be referred to the District and San Carlos for resolution. Any Boardmember can require any one or more of these options to be pursued. If all three were to be invoked by one or more Board members in a given dispute, then all three options would be pursued in the order they are stated here: reagendizing for Board discussion, Board resolution efforts, and referral to the City Council and the BFPD Board.
• Article 8 governs labor relations and requires a choice of the City Council. Section 4.2 makes the approval of a labor agreement or MOU a major decision regarding a recommendation from the Board to Belmont and San Carlos and approval by the City Council and BFPD Board. Section 8.3 of the JPA, as proposed by the union which represents the SCFA’s rank and file employees, requires that the negotiation of each MOU (which might be every few years if multiple-year labor agreements are reached, but might be as frequent as annually if one-year MOUs are relied upon) begin with a joint closed session of the San Carlos City Council and the BFPD Board.
• The SCFA Board received legal advice and advice from its labor relations staff that this may not be a good idea. It may make negotiations cumbersome and could expose the Department to charges of bad faith negotiations if it made a proposal before convening a joint closed session or if it fails to make a timely proposal due to difficulties in quickly convening such a session. The SCFA Board did not resolve whether this provision should be mandatory (using the word “shall” in the third line of Section 8.3) or optional (using “may”). The SCFA Board referred this question to the San Carlos City Council and the BFPD Board. In order to avoid a need for a further SCFA Fire Board meeting on this subject, staff recommends that the City Council agree that this provision may be optional but direct that it be mandatory if the City Council is so inclined and if the BFPD Board also agrees that it should be so. If the two legislative bodies are not committed to these joint closed sessions, staff recommends against requiring them, as there can be serious legal problems if this provision appears in the JPA and the joint closed sessions do not occur.

Distribution of the Report to the Public
Consistent with past practice, copies of this Council 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

1. Approve the draft Amended and Restated Joint Exercise of Powers Agreement for the Belmont-San Carlos Fire Department (Dated May 31, 2006) as recommended by the South County Fire Authority Board of Directors.
2. Approve the draft Amended and Restated Joint Exercise of Powers Agreement for the Belmont-San Carlos Fire Department (Dated May 31, 2006) as recommended by the South County Fire Authority Board of Directors with modifications desired by the City Council.
3. Reject the proposed amended and restated JPA and give direction to staff.
4. Continue the item.
5. Provide the Staff with alternative direction.

Respectfully submitted by:

Brian Moura
Assistant City Manager

Approved for submission by:

Mark Weiss
City Manager

Attachments:

1. Proposed Amended and Restated Joint Exercise of Powers Agreement for the Belmont-San Carlos Fire Department (Dated May 31, 2006) (PDF or Flash Paper , 368 Kb)
2. Letter of Agreement Regarding Continuation of South County Fire Authority (Dated May 3, 2006) (PDF or Flash Paper , 2.8 Mb)
3. Current Joint Exercise of Powers Agreement (JPA) for South County Fire Authority (Dated July 3, 1979) (PDF or Flash Paper , 742 Kb)
4. Resolution Approving the Amended and Restated Joint Exercise of Powers Agreement for the Belmont-San Carlos Fire Department (PDF or Flash Paper , 10 Kb)