CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: June 10, 2009
SUBJECT/TITLE: Update and Approval of Fire Services Fee
TARGET ISSUE: Financial Viability of the Government

STATEMENT OF ISSUE

In July 2008, the City Commission approved the City to contract with Government Services Group (GSG) for the development of a joint City/County funded fires services fee study. This agenda item provides the recommended countywide fire services fee structure as developed by GSG and requests City Commission approval of Resolution 09-R-10 (Attachment-1) implementing the new rates. A copy of the consultant’s report is included as Attachment-2. Additionally, the City’s existing fire services fee ordinance will have to be amended to reflect the new interlocal agreement. This agenda item provides the amended ordinance (Attachment-3) and requests that a public hearing be scheduled on June 24, 2009.

The City Commission has received a number of updates on the status of the development of an Interlocal
Agreement between the City of Tallahassee and Leon County for the provision of Fire and Emergency Medical Services / Advanced Life Support services. As the City Commission is aware, the City is currently under contract with Leon County for the provision of fire services and this contract was set to expire on June 30, 2009. The interlocal agreement for Advanced Life Support (ALS) services also was set to expire on June 30, 2009. As directed by the City Commission, the City has been in negotiations with Leon County since the fall of 2007, with Commissioner Gillum as the City Commission appointed negotiator for the City and Commissioner Desloge as the County Commission appointed negotiator.

At the last update on February 25, 2009, the City Commission accepted a proposed Interlocal Agreement with Leon County for the functionally consolidated provision of Fire-EMS/ALS Services (Attachment 4). Additionally, the City Commission also approved Approve the Memorandum of Agreement extending the current agreements with Leon County for fire services and Advanced Life Support Services for an additional three months with a new expiration date of September 30, 2009 and a payment from Leon County of $1,608,460 (Attachment 5).

RECOMMENDED ACTION

Introduce and schedule a public hearing on June 24, 2009 on Ordinance 09-O-20 amending the City’s existing fire services fee ordinance to reflect the new interlocal agreement. Adopt Resolution 09-R-10 to amend the fire services assessments and fees effective October 1, 2009 contingent upon passage of Ordinance 09-O-20.

FISCAL IMPACT

Leon County has agreed to pay $1,608,460 for extension of the current agreement through September 30, 2009. Fire assessments and fees will generate on average $28.4 million annually. These revenues in combination with payment in the amount of $2.7 million for Advanced Lift Support services will ensure that the Fire Department is fully funded via city and county revenues for a five-year period.

Raoul A. Lavin, Director, Management & Administration

Anita Favors Thompson, City Manager

For Information, please contact: Ricardo Fernandez (891-8580) or Raoul Lavin, (891-8488).

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

The city is currently under contract with Leon County for the provision of fire services in the unincorporated area through June 30, 2009. The city and county also have an interlocal agreement for the provision of Advanced Life Support (ALS). Under terms of this agreement, Leon County provides funding, training and medical oversight to the City for ALS, which are provided at five incorporated fire stations through the ALS Agreement. This agreement also expires on June 30, 2009. In a letter dated June 13, 2007, the City provided written notice to Leon County of the city’s intent to renegotiate the terms of the existing Fire Services Interlocal Agreement (FSA) and the ALS agreement. Under provisions of the current FSA, the city was required to give such notice to the county within twenty-four months of the contract expiration date of June 30, 2009. However, had the city not exercised this provision, the existing contract would have automatically extended for an additional five year period.

As part of the renegotiation efforts the City Commission appointed Commissioner Gillum as the lead City Commissioner to work with city staff to renegotiate the terms of the FSA and the ALS Interlocal Agreements with the county, with the County Commission appointing Commissioner Desloge as the County Commission’s designee to work with county staff in this renegotiation process. Various updates have been provided to the Commission on the status of the negotiations including updates on April 6, 2008, July 2, 2008, January 14, 2009, and February 25, 2009.

At the last update, Commissioner Gillum provided a proposed interlocal agreement as well as the agreement by both parties to implement a countywide fire services fee. The major tenets of the interlocal agreement reflect a model for the functional consolidation of Fire-EMS/ALS services to the community, and include:

· Service Enhancements including the addition of one Firefighter/ Emergency Medical Technician per shift in each of the rural fire stations for a total of 18 new positions. Current staffing levels in these stations are two personnel per shift. The increase in staffing will create a safer and more effective environment on emergency incidents. Additionally, it will allow the water tankers responding from those stations to be available for response at all times while two personnel remain available for medical responses. Current staffing configurations require that the water tanker remain out of service, in the station, when the assigned personnel are responding to a medical emergency. Increased staffing levels also create flexibility in the deployment of ambulances. Ambulances that are currently deployed in the unincorporated area at all times may be deployed within the city limits with initial response to medical calls being provided by the TFD personnel in those areas.

• A full commitment to the integrated and coordinated deployment of the operational resources of Fire and EMS through the establishment of the new joint dispatch function.
• Establishment of an Administrative Management Committee (AMC) consisting of the City Manager and County Administrator that will make recommendations on policy to both governments. The AMC will also have responsibility for the hiring and firing of the Fire Chief and EMS Chief to ensure optimal operational and logistical coordination and greatest resource efficiency of the system are achieved (County Administrator and City Manager, both to hire, either to fire).
• Co-location of Fire and EMS command at the proposed new joint dispatch facility.
• The continued utilization of the most highly effective performance models to continue to improve upon the unique service delivery of both Fire and Emergency Medical Services.
• The continued utilization of management practices and most efficient staffing patterns for the individual services to provide for the greatest ability to contain costs into the future.
• The honoring of existing collective bargaining agreements, continued utilization of Chapter 175, F.S. pension funding, and continued use of FRS benefits for EMS.
• The incorporation of an agreement on the provision ALS (mirroring the terms of the existing ALS agreement).
• The establishment of a dedicated source (fire services fee) to fund all assessable costs associated with providing fire services countywide and utilizing either the uniform method of collection or the City’s utility billing system for collections. The county, prior to this agreement, has never fully implemented the fire services fee, leaving a gap in full-cost recovery by the City. This agreement provides for full-cost recovery over the contract period.

As the new interlocal agreement becomes effective October 1, 2009, the City Commission also approved an extension of the current contract with a payment from Leon County for the additional quarter totaling $1,608,460.

Proposed Fire Services Rate Structure & Preliminary Rates

The City began the fire services assessment program in 1999 and updated the rates as a result of a second fire service fee study in 2005. Historically the city approved rates for five-year periods with the intent of conducting rate studies prior to the end of the five-year period. The city's current rate structure has been in place since 2005 and a new rate study would have been conducted prior to 2010 to ensure recovery of fire operating costs from the rates. As the current rate structure is not recovering the cost of fire services, it was anticipated that increases in the existing rate would be required.

As a result of negotiations between the city and county, and working closely with GSG, the proposed rate structure calls for the establishment of two distinct service delivery zones. Zone 1, the core area boundary, is based upon parcels being located within five miles of two fire stations. Zone 2 includes all parcels outside Zone 1 within Leon County. The two zones have been identified due to the level of response. Parcels within five miles of two stations receive service from secondary responding units with minimal response time increases. Therefore, if the primary responding station is engaged in another emergency or additional equipment is required, the responders from the secondary station will arrive with minimal delay. Parcels in Zone 2 do not have a secondary fire station within five road miles and may have extended response times from secondary units. Therefore, if the primary responding station is engaged in another emergency, the time to arrival of a secondary unit may be in excess of typical response times to the area.

The following map provides an illustration of the zones.

Five –Year Budget for Development of Rates

In order to develop the rate structure, GSG and city staff developed a five-year budget for fire services. Various assumptions were utilized in the development of the base budget including:

• A 3% annual inflationary factor was applied to all personnel and operating account expenditures.
• Debt service costs were included for the Fire Department’s portion of the joint dispatch facility (Administrative Offices) as well as for a potential future fire station co-located at the joint dispatch facility.
• Collection costs associated with the City assuming billing functions for the City and County were included in the base budget.
• An assumption of a 95% collection rate was included in the budget.
• Funding for vehicle replacement was augmented to reflect future replacement needs.
• The costs associated with expanding staffing at the rural fire stations was included in the base budget.
• Equipment costs related to accomplish a virtual dispatch for joint dispatch operations was included.

Based on these assumptions, the five-year average assessable budget totals $29,711,351.

Collection Mechanism

Fire Services Fees will be collected through the city's utility bill mechanism or through a non-ad valorem assessment on the property tax bill. For county residents currently not on the city's utilities, the intent is that property owners will be sent a quarterly bill for fire services. If these customers do not pay the fee by the end of the fiscal year, the county will place the outstanding amount plus the following year’s amount, i.e. two years worth of fees, as a non ad valorem assessment on the property's tax bill. The county is responsible for at least 95% of anticipated revenues, whether or not these fees are collected from the customers. The cost of billing county customers has been factored into the rates. If annual shortfalls occur in the fire services fund, the Administrative Management Committee comprised of the City Manager and County Administrator shall determine if fire services reserve funds should be released to address the deficiency. If fire services reserve funds are not adequate to cover any shortfalls, the Administrative Management Committee may make recommendations on how to address the shortfall and may authorize that a new rate study be undertaken.

Rates

The following table provides a summary of residential and multi-family rates within each zone. The City’s current rates for fire services fee are $156 annually for single family residential, $84 annually for multi-family, $0.20 per square foot for commercial, and $0.04 per square foot per industrial. The following table provides the proposed rates by zones. For single-family customers in Zone 1 and inside the incorporated city limits, the preliminary fee would be $179 annually, or an increase of $23 per year. For single-family customers in Zone 2 and inside the incorporated city limits, the fee would be $161 annually, or an increase of $5 per year. For multi-family customers in Zone 1 and inside the incorporated city limits, the fee would be $125 annually, or an increase of $41 per year. For multi-family customers in Zone 2 and inside the incorporated city limits, the fee would be $43 annually, or a decrease of $41 per year.

Annual rates for commercial, industrial and non-governmental institutional are based on square footage tiers.

These rates will generate an average of $24.6 million annually in revenues. The recommended fees for governmental units should also generate an average collection of $3.8 annually in revenues. Proposed fire services rates will recover approximately 85% of fire operation expenditures. As the City Commission is aware, the courts have indicated that fire services assessments cannot be utilized to fund medical services. All costs associated with the provision of emergency medical services were removed and not included in the base budget utilized for the development of rates. To this end, under the current proposed interlocal agreement Leon County will provide payment to the city of approximately $2.7 million to cover the costs associated with the provision of medical services by the fire department. It is both parties’ intent that the next rate study will look at both fire services and medical services when developing future rate structures.

Amendment to Existing City Fire Services Fee Ordinance

As a result of the approved interlocal agreement and the move towards a functional consolidation of Fire and EMS services, the City’s existing ordinance will have to be amended to reflect the new agreement as well as changes to the structure of the rates. Attachment-3 provides a copy of the revised ordinance. A public hearing will have to be held prior to approval of the changes. We are requesting that the public hearing be scheduled for June 24, 2009.

OPTIONS

Option 1: Introduce and schedule a public hearing on Ordinance 09-O-20 amending the City’s existing fire services fee ordinance to reflect the new interlocal agreement. Adopt Resolution 09-R-10 to amend the fire services assessments and fees effective October 1, 2009 contingent upon passage of Ordinance 09-O-20.

Pros
· Approving the proposed rates will provide for a fully funded joint fire services operation allowing for cross-training opportunities.
· Enhanced staffing in county stations.
· Safer and more effective operations.
· Flexibility in deployment of ambulances.

Cons
· No contract after September 30, 2009, and the potential for two separate fire operations in Leon County would exist.
· City could continue to fund deficiency in fire services.
· No funding for additional position and current staffing levels in the unincorporated area will result in an ISO rating decrease under current ISO rating standards.

Option 2: Do not adopt Resolution 09-R-10 and direct staff to work with Leon County and GSG to develop an alternate funding mechanism. Do not approve the scheduling of a public hearing for Ordinance 09-O-20.

Pros
· Delays fee increases to future date.

Cons
· New rate structure may not be developed in time for implementation on October 1, 2009 and the City would have to negotiate a contract extension with the County for the continuation of fire services in the unincorporated area.
· City would have to look at continuing to subsidize the fire department for city related costs as existing fees are not fully recovering cost of the fire department.

Option 3: Provide alternate direction.

ATTACHMENTS

Attachment 1 Resolution 09-R-10
Attachment 2 GSG Consultant Report
Attachment 3 Ordinance 09-O-20
Attachment 4 Approved Interlocal Agreement Regarding the Provision of Fire Rescue & Emergency Medical Services
Attachment 5 Approved Memorandum of Agreement – Contract Extensions