HomeMy WebLinkAboutN.B. 2 O C FIRE PROTEC 01-06-92TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: RONALD A. NAULT, DIRECTOR OF FINANCE
SUBJECT: FORMATION OF ORANGE COUNTY FIRE PROTECTION DISTRICT
RECOMMENDATION:
1. Receive and file the Draft Final Report, Phase I, "An
Evaluation of Financial Feasibility for an Orange County Fire
Protection District."
2. Adopt Resolution No. 92-1 agreeing to participate in the
formation of an Orange County Fire Protection District.
DISCUSSION:
The relationship between the Orange County Fire Department; the
Structural Fire Fund Cities; and the Cash Contract Cities* has
changed significantly since the Fire Department's formation in
1980. At the time of formation, the population served by the
department was equitably split between 51 percent County and 49
percent cities. As of January, 1991, the population has shifted
heavily in favor of cities, 83 percent vs the County at 17 percent.
Recognizing that the service impact of the County Fire Department
was increasingly expanding outside the unincorporated area, the
County, with cooperation from the Structural Fire Fund and Cash
Contract Cities, contracted for the preparation of a full
evaluation of current service levels and.a long term organization
and financing plan.
In August, 1989, the County completed the Orange County Fire
Department Master Plan which included a projection of future fire
service requirements, an analysis and projection of future
financial resources, and an evaluation of the equity features of
the existing funding program. As a result of this Master Plan
process, a number of issues were identified by the contract cities
serviced by the Orange County Fire Department, including the
following:
*Structural Fire Fund Cities have a separate Ad Valorem Tax rate, in addition to their basic levy, that
generates revenue that stays with the County to pay for fire services. Cash Contract Cities are under contract
— with the County to make quarterly cash payments to pay for fire services.
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.ATE:
DECEMBER 9, 1991
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: RONALD A. NAULT, DIRECTOR OF FINANCE
SUBJECT: FORMATION OF ORANGE COUNTY FIRE PROTECTION DISTRICT
RECOMMENDATION:
1. Receive and file the Draft Final Report, Phase I, "An
Evaluation of Financial Feasibility for an Orange County Fire
Protection District."
2. Adopt Resolution No. 92-1 agreeing to participate in the
formation of an Orange County Fire Protection District.
DISCUSSION:
The relationship between the Orange County Fire Department; the
Structural Fire Fund Cities; and the Cash Contract Cities* has
changed significantly since the Fire Department's formation in
1980. At the time of formation, the population served by the
department was equitably split between 51 percent County and 49
percent cities. As of January, 1991, the population has shifted
heavily in favor of cities, 83 percent vs the County at 17 percent.
Recognizing that the service impact of the County Fire Department
was increasingly expanding outside the unincorporated area, the
County, with cooperation from the Structural Fire Fund and Cash
Contract Cities, contracted for the preparation of a full
evaluation of current service levels and.a long term organization
and financing plan.
In August, 1989, the County completed the Orange County Fire
Department Master Plan which included a projection of future fire
service requirements, an analysis and projection of future
financial resources, and an evaluation of the equity features of
the existing funding program. As a result of this Master Plan
process, a number of issues were identified by the contract cities
serviced by the Orange County Fire Department, including the
following:
*Structural Fire Fund Cities have a separate Ad Valorem Tax rate, in addition to their basic levy, that
generates revenue that stays with the County to pay for fire services. Cash Contract Cities are under contract
— with the County to make quarterly cash payments to pay for fire services.
Page 2
Formation of Fire Protection District
December 9, 1991
0 The need for more City involvement in fire service
policy, budget and operational decisions;
o The need to assure cost controls and a long-term and
stable funding source for regional fire protection
service; and
o The need to address financial equity within the
Structural Fire Fund.
After completion of the County's Master Plan, the contract cities
formed a steering committee to further study the plan and explore
alternatives that may better serve the current demographic make up
of the Fire Department service area. While the cities are very
satisfied with the level of service provided by Orange County,
there are concerns regarding two issues: (1) cost allocation and
financial inequities between and among the County and cities, and
(2 ) the inability of cities to participate in the governance of the
Fire Department.
After a preliminary review of Fire Department organizational
alternatives, the cities felt that their concerns could best be
addressed through the creation of a Fire Protection District
pursuant to state law. The cities engaged Shannon Associates, a
Sacramento -based consulting firm, to evaluate financial feasibility
and other issues related to the formation of a district. Their
Draft -Final Report, Phase I, is attached.
The Draft Final Report sets forth the following key findings and
conclusions:
o It is financially feasible and.practical to form a fire
district if all current contract cities and the County
participate.
0 The new district would receive 100 percent of Structural
Fire Fund Property Tax, including Special District
Augmentation Funds, if the district assumes all fire
services currently provided to the cities.
o Absent basic decisions to reduce or defer costs and/or
increase revenues, the Fire Department budget will face
deficits over the next seven years. This will occur
whether service is provided by the County or a new fire
district.
0 The current Cost Allocation Plan is no longer equitable
and should be revised.
Page 3
Formation of Fire Protection District
December 91 1991
o There are outstanding asset transfer issues with the
County that require resolution, and may affect financial
feasibility of a new fire district.
o A Fire Protection District has broad flexibility in the
financing of fire and emergency medical services, and the
creation of service zones to meet different demands and
requirements.
City Staff supports the decision of the Study Committee to pursue
the Fire Protection District option and are satisfied with the
conclusion presented by the consultant. The recommendation to
continue to participate in the district formation is based on the
following:
o A district will provide the cities with proportional
representation on the governing board and permit formal
participation in key decision-making areas such as
adoption of operating and capital budgets, level of
service and staffing determinations, etc.
o A district is the only alternative that will preserve 100
percent of Structural Fire Fund Property Tax and Special
District Augmentation Funds for continued support of the
fire service.
o A district will provide maximum flexibility to meet and
finance fire and emergency medical service demands in the
future.
o It is more likely that financial equity issues can be
addressed and resolved through a district with City
representation on the governing board than through the
current or alternative organizational arrangements.
The Cash Contract Cities are presently pursuing a contractual
arrangement with the steering committee that will allow for price
stability for a short term; approximately 3-5 years; contractual
influence on the involvement of the district; and an important
opportunity to participate in the financial equity issues.
The City of Tustin's continual participation in the fire district
formation provides the most cost effective alternative and maximum
flexibility available at the present time. By remaining a Cash
Contract City, we will have a 3-5 year window of opportunity to
"change" our minds and pursue alternatives to the district on our
own before we are forced to make a major long term commitment to
the district.
Page 4
Formation of Fire Protection District
December 9, 1991
Sufficient funds have been previously appropriated to cover the
City's proportionate share of Phase II of the district formation.
Ronald A. Nault
Director of Finance
RAN: 1s
Attachment
w f rmat i on. oO
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RESOLUTION 92-1
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN
SUPPORTING AND AGREEING TO PARTICIPATE IN THE FORMATION
OF AN ORANGE COUNTY FIRE PROTECTION DISTRICT AND
RESOLUTION OF APPLICATION FOR THAT CHANGE OF ORGANIZATION
WHEREAS, the service area and financial structure of the
range County Fire Department has dramatically changed since its
inception in 1980, growing to a program that now includes 16
ontract cities comprising 83 percent of the total population
erved by the County department, and
WHEREAS, the 1989 Orange County Fire Department Master Plan
raised concerns regarding the cities' inability to control rising
costs and service levels, and the financial inequities inherent in
he current system, and
WHEREAS, a Steering Committee of County and City
representatives recommended in May, 1991, that organizational
alternatives and funding strategies, including a Fire Protection
District, be studied for the future, and
WHEREAS, the Local Government Reorganization Act of 1985
(Government Code Section 56000 et al.), and the Fire Protection
District Law of 1987, were deemed necessary largely in response to
need for greater flexibility in the organization and financing of
rocal fire services, and
WHEREAS, the recently completed Evaluation of Financial
easibility for an Orange County Fire Protection District concluded
hat a fire district will be practical and feasible to achieve,
mong other things, the following goals:
Retain a regional approach to fire services to realize
economies of scale and continue with the present, excellent
service:
Provide equal agency representation on a governing board,
regardless of participant size, to address cost, expenditure,
equity and service level issues;
Provide a mechanism for future additions/deletions of agencies
to the district; and
Provide continued use of mechanisms for development fee
programs, and/or development agreements, for fire stations and
capital equipment requirements.
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NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
The City of Tustin agrees to participate in the steps
necessary to pursue formation of an Orange County Fire
Protection District, with boundaries to include the cities of
Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake
Forest, La Palma, Los Alamitos, Mission Viejo, San Juan
Capistrano, Villa Park and Yorba Linda, and the County
unincorporated area, including but not limited to the
following:
a. Accept the findings included in the November, 1991 report
entitled An Evaluation of the Financial Feasibility for
an Orange County Fire Protection District;
b. Develop, as a cash contract City, a pro forma contract
with the proposed fire district limiting rate adjustments
to a predetermined formula for a two -to -five-year period
immediately following district implementation;
C. Financially participate in Phase II implementation of the
fire district study;
d. Participate in City/County negotiations of key fire
district issues, including but not limited to the
following.
Transfer of assets from the County to the district;
Sale of fire headquarters property;
Cash contract and unincorporated area fire service cost
calculations;
- Make-up of the Fire Protection District's Governing
Board;
Transfer of liabilities from the County to the District;
Legislative changes.
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PASSED AND ADOPTED this 6th day of January , 1992.
Richard B. Edgar
Mayor
ATTEST:
Mary Wynn
City Clerk
City of Tustin
STATE OF CALIFORNIA)
COUNTY OF ORANGE) SS
CITY OF TUSTIN)
CERTIFICATION FOR RESOLUTION NO. 92-1
Mary E. Wynn, City Clerk and ex -officio Clerk of the City
Council of the City of Tustin, California, does hereby
certify that the whole number of the members of the City
Council is five; that the above and foregoing Resolution
was duly and regularly passed and adopted at a regular
meeting of the City Council held on the 6th day of
January, 1992 by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
a:resolutn.ocf
Mary E. Wynn, City Clerk
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