City of San Carlos

Council Staff Report

Council/RDA Meeting Date: July 24, 2006

Item Title: Consideration of Resolutions Initiating Proceedings for the Annual Levy of Fire Suppression Assessments Starting in the 2006-07 Fiscal Year to Fund the Belmont-San Carlos Fire Department

Recommendation
The San Carlos Fire Board Members (Mayor Grocott and Council Member Grassilli) recommend that the City Council adopt the attached resolutions to call for property owner balloting on the imposition of the proposed Fire Suppression Assessment. The resolutions set the proposed assessment at the level of $99/year for single family residential units in accordance with direction from the City Council at the Council’s meeting held on July 10, 2006.

Fiscal Implications
The proposed cost to the City for the formation of the Fire Suppression Assessment would be $21,735 and includes all direct expenses related to the printing and mailing of the Proposition 218 required notices and ballots to property owners affected by the proposed assessment. The costs show do not include the cost of “hand billing” (estimated at $18,735 -$20,000) which will be necessary if the City wishes to receive funds from the assessment during this fiscal year. In addition, should the City decide to conduct an opinion poll of the property owners related to this assessment, the additional cost to the City would be $13,000 to $15,000. This decision could be made by the City later in the process. The total cost of formation and opinion polling ($34,735 - $36,735) services may be included in the levy of the assessment assuming the proposed assessment is approved by the voters. If the measure is not approved, ballot costs ($14,735) and survey costs ($13,000 - $15,000) would be made up by the City’s General Fund.

If the proposed Fire Suppression measure were to be passed by property owners in San Carlos and then implemented by vote of the City Council, it would raise $1,268,527 per year, most of which ($1,206,000) would be available to fund Fire Suppression costs as follows:

Item Funded	Annual Cost
Cross Staffed Truck Service	$511,608
“OPEB” Retiree Medical Program Costs (Pay Over 20 Years)	$204,050
Replacement Fund for 4 Fire Engines	$138,123
Building Replacement Fund	$106,678
10% Operating Reserves for Fire Department	$81,493
Light Vehicle Replacement Fund	$13,867
Subtotal	$1,055,819
JPA Revenue Adjustment ($385,680)	$150,181
TOTAL	$1,206,000

If the Fire Suppression Assessment is approved by the property owners and governing bodies of both agencies (City of San Carlos City Council and Belmont Fire Protection District Board) will also trigger a new funding formula for the joint fire department (moving from a 50%/50% contribution in each agency to 53% San Carlos and 47% Belmont Fire Protection District). A portion of this increased cost to San Carlos ($150,181 per year) will be covered by the proposed Fire Services Assessment. The balance amount (which will vary each year) will need to come from the City General Fund. Staff would propose to deal with the balance amount that would be due this year if the assessments pass and are implemented in both agencies through a mid-year budget adjustment to the General Fund.

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 Fire Board later that month. The Engineer’s report was presented to the Fire Board at their meeting held on May 31, 2006. The Fire Board discussed the report at a special meeting on Friday, June 30th and established recommended Fire Services Assessment levels for both agencies. The proposed assessment, the amount proposed to be raised in San Carlos and the potential use of those funds was discussed by the City Council at its July 10th meeting. At that meeting, the Council set the rate of the proposed Fire Suppression Assessment at $99 per year for Single Family Residents and the Assessment Amounts for other categories were set using that figure as the benchmark amount.

Discussion of Need & Legal Authority
The City provides fire protection services throughout the boundaries of the City of San Carlos. As a result of increasing demands being placed on the City, the cost of providing fire suppression services, budget cuts resulting from flat revenue growth in most of the City General Fund where fire services are funded and the desire on the part of the City Council to enhance the level of fire protection services within the City, the City’s Fire Board representatives are recommending that the City Council initiate proceedings for the imposition of a Fire Suppression Assessment pursuant to the provisions of Government Code Section 50078 et. Seq. and California Constitution Article XIIID (“Proposition 218”).

The Code provides for the formation of an assessment and for the levy and collection of assessments by the County of San Mateo for the City of San Carlos to generate sufficient revenue to pay for fire suppression services, and equipment. The draft Engineer’s Report estimates that the proposed assessment would generate $1,206,000 in net proceeds to the City of San Carlos annually for Fire Suppression Services and Equipment.

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 (scheduled for the July 24th City Council Meeting) to bring the question of the proposed assessment to the property owners. This is done through a mail ballot (scheduled to be mailed on August 10th) and a protest hearing process (scheduled for the September 24th City Council Meeting), 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 15). The hand billing 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.

Tonight’s Action by the City Council
The City Council has been presented with a Draft Engineer’s Report (the “Report”) related to a proposed Fire Suppression Assessment pursuant to the provisions of Title 3, Division 1, Part 1, Article 3.6 of the California Government Code (see attached copy). This report identifies all properties that benefit from the fire suppression services provided by the Belmont-San Carlos Fire Department for the City of San Carlos; outlines the benefits conferred on these properties, and in compliance with the State Constitution determines the assessments to each property based on the proportional benefit received by each property when compared to all properties within the service area of the City of San Carlos.

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 for Fire Suppression calls within the City of San Carlos during a specified period in the report. The comprehensive analysis within the Report uses national and local data to derive a benefit nexus to establish assessments to each property use classification to fund the proposed budget, as defined within the Report.

In compliance with Proposition 218, the property owners of the affected properties must approve the Fire Suppression Assessments outlined in the Report prior to the imposition of such assessment. The City Council must set a time and place to conduct a Public Hearing on the Fire Suppression Assessment and each property owner must be mailed out a Notice and Ballot at least 45 days prior to the scheduled Public Hearing.

Before the City Council tonight are four Resolutions related to the Ballot proceedings and the proposed Fire Services Assessment. Collectively, the Resolutions initiate the proposed Fire Suppression Assessment, approve the Draft Engineer’s Report, declare the City Council’s intent to conduct a property owner balloting, set a time and place for a Public Hearing, and approve procedures applicable to these proceedings. The Fire Board members recommend approving the resolutions in order to conduct a property owner balloting on the imposition of the proposed Fire Suppression 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:

• 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 Assessment District Protest Hearing – September 26th
• San Carlos Adopts Resolution Authorizing Assessment – October 9th
• Belmont 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

1. Continue the current funding and service levels of the Belmont-San Carlos Fire Department
2. Seek alternative revenue sources, such as a Parcel Tax levied on property owners, which would require a 2/3 vote of registered voters
3. Provide the Staff with alternative direction.
   

Submitted by:

Brian Moura
Assistant City Manager

Approved by:

Mark Weiss
City Manager

Attachments

1. Resolution to Preliminarily Approve the Engineer’s Report for the Fire Suppression Assessment (PDF or FlashPaper , 12Kb)
2. Resolution Adopting Procedures Relating to the Assessments Ballots (PDF or FlashPaper , 15Kb)
3. Resolution Initiating Proceedings for Proposed Levy of Fire Suppression Assessments (PDF or FlashPaper , 11Kb)
4. Resolution Declaring Intent to Conduct Property Owner Balloting on Matter of New Assessment (PDF or FlashPaper , 14Kb)
5. Draft Engineer’s Report – Proposed City of San Carlos Fire Suppression Assessment (PDF or FlashPaper , 166Kb)