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Fire Services Fiscal Review
MESSAGE FROM THE CITY MANAGER
In October 2016, the City Council authorized the release of a Scope of Work to conduct a Fire Services Fiscal Review. This webpage will be a repository of any information collected and actions taken regarding the effort.
HISTORY AND OVERVIEW
The effort first began in 2013/14 when the Town sought out data for its Local Municipal Services webpage. The Local Municipal Services webpage is designed to inform residents about the various services and service providers they use as residents of the Town. When preparing the webpage, an issue arose related to the property tax revenue received by the Fire District from Atherton residents. It was thought that perhaps revenues could have outpaced the cost to provide fire services to the community. The District’s 2016/17 Budget reflected 8,547 Calls for Service in 2015. The map of each call with the Town’s boundary superimposed is shown below (the underlying call image is from the District's 2016/17 Budget Document) (PDF).
The image reflects that the bulk of calls for service from the Fire District are provided to areas outside of the Town of Atherton.
After publishing the webpage, the Town sought separately to clarify the data with the Fire District and asked the District for more detail. Over the intervening time, there was correspondence back-and-forth via email and ultimately, a formal request for data and a formal response from the District (PDF). As part of the District’s response, the District had recently updated an analysis of their property tax revenue from the various jurisdictions within their District. The District had their consultant, MuniServices, extract the data for Tax Rate Areas within Atherton (PDF). That Report provided in summary that the District receives $11.8 million a year in property tax revenue from the residents of the Town of Atherton (after ERAF). The Report also identified that Atherton was responsible for 31.7% of the District’s total property tax revenue - the County making up 15.6%, Menlo Park 47.1% and East Palo Alto, 5.6%. While the Town made up 31.7% of the District’s revenue, Atherton residents make up 8% of the District’s population of 90,000 and potentially a lesser amount of calls for service as shown in the map above.
The Council wanted to know with more specificity, what the costs were to provide services to Atherton residents. In response to this question, the District advised that they did not collect data in that way and were unable to provide a detailed answer. Acknowledging that response, but still seeking an answer to the query, the Council directed that staff put together a scope of work to get at the data they were seeking. The District advised that while they would not be actively participating in the Study itself, they would continue to provide whatever information they had available via their website.
The Study, ultimately completed, focused on three areas:
First, what revenue does the District receive from property taxes from Atherton residents? That question was essentially been answered by the District. The purpose of the question was to determine the actual amount of property taxes that the District receives solely from Atherton residents.
Second, what are the actual costs for services received by Atherton residents? To get to that data, the consultant extracted the cost of services attributable to the Town and its population and land use demographic. Because the District serves multiple independent agencies within its own District boundaries, they do not segregate services (or data) by jurisdiction. The District provides services District-wide. As a result, the consultant parsed the data by jurisdiction to the maximum extent possible, inclusive of any overhead and special services provided by the District, District-wide. For example, while the Town only has 1 Fire Station within the Town’s boundaries, the residents are actually serviced by 5 or more Stations using the “closest unit” model of response. The consultant looked at the community as a whole and segregated out those costs from all Stations attributable to the Town.
Data from the District was provided for calls for service from October 2015 to October 2016 (PDF). During this year period, there were 517 calls, the call breakdown is as follows:
|Incident Type||# of Calls||%|
|Fire Response (cooking fire, property fire, vehicle fire, grass fire, etc.)||8||1.54%|
|Rescue & EMS (medical assist, EMS, vehicle accident) - note: the District assists but does not transport||242||46.80%|
|Hazardous Condition (no fire - power lines, short circuits, gas leak, etc.)||16||3.09%|
|General Service Call (water problem, smoke/odors, animal rescue, public assist)||103||19.92%|
|Good Intent Calls (cancelled enroute, no incident found, etc.)||55||10.63%|
|False Alarm/False Calls||93||17.98%|
Third, to allow residents to get a true comparative, the consultant was tasked with a third task of determining what the cost of services would be if the Town itself were responsible for providing the services independent of the District. It is anticipated that this cost would likely be more than the cost of services provided by the District due to economies of scale.
The City Council has been clear that the intent of the analysis was not to consider providing services independent of the Fire District; nor is the Town seeking to gain any additional revenue share. At this stage, the intent was data gathering.
However, if after the results, the District and Town are able to identify different service levels or service needs for the Town and have a conversation about how to address those needs, that would be a positive outcome. Also, if the residents of the Town wish to address the issue in some other way, the Council would be participants in those conversations as well.
Fire Impact Fee Nexus Study by the Fire District
The issues were further complicated in 2015 when the District completed an Impact Fee Nexus Study and sought to have Atherton, Menlo Park, East Palo Alto and the County adopt the Study and thereby impose a new fee on Atherton residents. The District itself could not impose the fee so each respective jurisdiction was required to impose the fee on behalf of the District. Because the Town would be adopting the Impact Fee Nexus Study independently and vouching for its analysis of need, more data was required to validate the need to impose fees on Atherton residents when the question of property taxes versus cost of services was still unanswered.
Responses to the Town's Request for Proposal were due at 4 pm on March 31. The Town received 4 bid responses:
Staff reviewed the proposals and recommended Matrix Consulting Group to the City Council at the April 19 Council Meeting. The Council awarded the professional services agreement to Matrix Consulting Group and a Kick-Off Meeting was held on May 10.
Project Leads for Matrix Consulting Group were:
Matrix Consulting Group hosted initial meetings with the Town and the Fire District to begin gathering data. Matrix began with data collection, interviews, and development of a baseline descriptive profile. Following data collection, Matrix conducted an operational analysis, to include support services, of the current fire response network. Following the operational analysis, Matrix conducted a financial analysis and developed options for fire service delivery.
Tasks 1 through 3 were completed and the completed report was part of the Agenda Item below for January 17, 2018. Matrix completed Tasks 1 through 3 of the Study on budget at $49,500. On March 21, the Council authorized the completion of a Task 4 for the Project. Matrix completed Task 4 for the Project on budget at $13,500. The Task 4 Report was presented to the CIty Council on July 18. On January 22, 2019, the Council held a joint meeting with the Fire District to review the entire report.
Following that meeting, the City Council Ad Hoc Subcommittee met with representatives from the Fire District to discuss next steps and possible ways that the Town and District could collaborate on projects that would address the equity issues raised by the Town.
Discussions and Next Steps
The Town put together a list of opportunities (Attachment 2 to the October 2 Staff Report linked below), that could be discussed by the subgroup. These opportunities were identified as Partnership Opportunities with the Menlo Park Fire Protection District. The intent of the list was to identify those areas of partnership that would assist with mitigating the equity issues raised in the Matrix Study between the cost of fire services and the revenue provided to the District by Atherton residents. A meeting was set for July 23, 2019.
On July 22, the District advised that they had discussed the issue(s) with the Board of Directors and that they would like to explore 5 possible partnership areas. These areas were:
- Emergency Management Services
- A Joint EOC or MAC (at Fire Station 1)
- Communications Infrastructure – Atherton’s Communication Tower
- LRAD and joint community notification systems
- UAS/Drone Agreement
The subgroup met on July 23 to discuss the Town’s list of partnership opportunities as well as the District’s list. The Town Subcommittee advised that aside from Item No. 3 - Communications Infrastructure, the items on the partnership list seemed to be a part of the District’s underlying mission of support for communities within the District itself and were not Atherton-specific; therefore, the items did not go toward addressing the equity issue identified by the Town via the Matrix Study. The District advised that following Board discussion, it was made clear that the District believed that any partnership opportunity offered to one of its sub-jurisdictions should be offered to all and therefore the District must be prepared to do so. Therefore, only those partnership opportunities that were within the District’s basic mission were considered. The Town’s list was largely dismissed in favor of the District’s more focused list.
The Town’s Subcommittee expressed disappointment that the District did not wish to address the equity issue and expressed that the Subcommittee would have to report back to the Council and suggest next steps. The Subcommittee also noted that since the Town’s initiation of concerns of equity, the Fire District has expanded their service model through the acquisition of new facilities, new vehicles, development of a regional fire academy, and enhancement of wages and benefits for fire personnel.
The Town, Council, and Council Subcommittee spent at least 5 years working with the District to identify and solve an equity issue between the cost to provide fire services to Atherton residents and the revenue provided to the District by Atherton residents. As of FY 2015/16, the property tax revenue provided by Atherton residents to the Fire District totaled $11.8 million and can be expected to rise each year based on Assessed Valuation. Projected forward at a conservative rate of 3%, the revenue could be expected to be $13.3 million or more for FY 2019/20. The cost of services based on the District’s FY 2016/17 Operating Budget were estimated at $4.6 million. Projecting forward aggressively at 5% per year, that cost could be expected to be approximately $5.3 million.
The Matrix Study identified options for consideration should the Town desire to move forward. Those options are:
- Tax Agreements
- Special Legislation
Based on the results of the Study and subsequent conversations with the District, it is unlikely that a tax agreement could be negotiated and further unlikely that Special Legislation would be supported. The only option remaining would be to explore further options around detachment by meeting with LAFCO. Meeting with LAFCO does not mean that the Town will ultimately detach from the Fire District and be required to provide alternative services via contract or its own fire department; however, such meetings would begin more formal conversations around detachment should the Town desire to move forward with the option.
Following discussion on October 2 at the Study Session, the Council directed the Subcommittee to meet with LAFCO to discuss the Town's options moving forward.
- October 2, 2019 - Study Session of the City Council - Discussion and Direction on Next Steps
- January 22, 2019 - Joint Meeting with Fire Distict - Discuss Matrix Report – Fire Services Review (Complete Report)
- July 18, 2018 - FIRE SERVICES FISCAL REVIEW – REVIEW TASK 4 RESULTS; PROVIDE STAFF WITH FEEDBACK AND DIRECTION ON NEXT STEPS
- March 21, 2018 - FIRE SERVICES FISCAL REVIEW – REVIEW TASK 4 PROPOSAL; DISCUSS MOVING FORWARD WITH TASK 4; AND, IF APPROPRIATE, APPROVE THE SCOPE OF WORK AND AUTHORIZE STAFF TO MOVE FORWARD WITH TASK 4
- February 21, 2018 - FIRE SERVICES FISCAL REVIEW – PROVIDE REVIEW, FEEDBACK AND DIRECTION ON NEXT STEPS
- January 17, 2018 - FIRE SERVICES FISCAL REVIEW – PROVIDE REVIEW, FEEDBACK AND DIRECTION ON NEXT STEPS
- October 19, 2016 - Review of Scope of Work for a Fire Services Fiscal Review and Authorization to Release a Request for Proposal
- April 19, 2017 - Approval of a Budget Amendment and Award of Consultant Services Agreement to Matrix Consulting Group for the Fire Services Fiscal Review
- January 17, 2018 - Fire Services Fiscal Review - Provide Review, Feedback and Direction on Next Steps
- February 21, 2018 - Fire Services Fiscal Review - Provide Review, Feedback and Direction on Next Steps
- March 21, 2018 - Fire Services Fiscal Review - Review Task 4 Proposal; Discuss Moving Forward with Task 4; and, if appropriate, Approve the Scope of Work and Authorize Staff to Move Forward with Task 4
- July 18, 2018 - Review of Fire Services Fiscal Review Task 4 and Discussion on Next Steps
- RFP - Fire Services Fiscal Review (PDF)
- RFP - Attachment 1 - Fire District Staff Report (PDF)
- RFP - Attachment 2 - Alarm Data - 10/1/15 - 10/1/16 (PDF)
- MPFPD CAFR June 30, 2015 (PDF)
- November 4 Letter to City Manager from Fire Chief - Data Collection (PDF)
- Map - Tax Rate Areas - Parcel Level (PDF)
- Tax Rate Area Spreadsheet (PDF)
- Fire Board Committee Liaison Assignments - 10/18/16 (PDF)
- Notes from the Fire Services Fiscal Review Subcommittee Meeting - 10/11/16 (PDF)
- LAFCO - Preliminary/Working Draft Document of Surrounding Agency Cost of Fire Services (PDF)
- HDL Atherton Assessed Values FY 2016/17 - 10/6/16 Email (PDF)
- Property Tax Revenue - Atherton - MPFPD (PDF)
- MPFPD FY 2016/17 Budget (PDF)
- Muni-Services Presentation - MPFPD - 2/16 (PDF)
- Fire District Board Agenda - 9/20/16 (PDF)
- Board Meeting Staff Report - 9/20/16 (PDF)
- Board Meeting Attachment - A (PDF)
- Board Meeting Attachment - B (PDF)
- Board Meeting Attachment - C (PDF)
- Board Meeting Attachment - D (PDF)
- Board Meeting Attachment - E (PDF)
- Board Meeting Attachment - F (PDF)
- Board Meeting Attachment - G (PDF)
- Board Meeting Attachment - H (PDF)
- Mayor's Letter to Fire District - 10/7/16 (PDF)
- Board Response to Atherton Correspondence - 10/7/16 (PDF)
- Fire Services Fiscal Review Study FINAL - January 9, 2018 (PDF)
- Fire Services Fiscal Review Staff Report to City Council - January 17, 2018 (PDF)
- Letter to Atherton Community - Fire Services Fiscal Review - January 18, 2018 (PDF)