HomeMy WebLinkAboutCC AG PKT 2013-10-28 #FDATE: October 28, 2013
TO: Honorable Mayor and City Council
FROM: Jill R. Ingram, City Manager
SUBJECT: SECOND AMENDMENT TO THE AMENDED OCFA
JOINT POWERS AUTHORITY AGREEMENT
SUMMARY OF REQUEST:
That the City Council adopt Resolution No. 6419:
1. Approving the Orange County Fire Authority's Second Amendment to the
Amended Joint Powers Authority (JPA) Agreement seeking to address the
equity issue;
2. Directing the City Manager to execute the Second Amendment to the
Amended Orange County Fire Authority JPA Agreement (Attachment 1);
and
3. Authorizing the City Attorney to join in supporting the Orange County Fire
Authority's validation action, when filed, seeking to obtain a judicial
declaration of the validity of the Second Amendment to the Amended JPA
Agreement.
BACKGROUND AND ANALYSIS:
The Orange County Fire Authority (OCFA) was formed in 1995 to provide
regional fire protection and related services to the County of Orange and 18
member cities. Subsequent to formation, 5 additional cities have become
members of the OCFA. The original ,.IPA agreement was amended on
September 23, 1999, and renewed in 2010 by the First Amendment to the
Amended JPA. The OCFA currently operates under the Amended JPA
Agreement, as modified by the First Amendment. The term of the JPA is
effective through 2030, though member cities currently have the option to
withdraw in 2020.
OCFA Member Payment Structures
OCFA's member agencies pay for fire and emergency medical services through
two different pay structures. A general knowledge of the two different pay
Agenda Item F
structures is helpful in order to understand the changes that are being proposed
by OCFA for addressing equity.
Sixteen of OCFA's 24 member agencies pay for fire services through the
Structural Fire Fund and 8 members pay through Cash Contracts. The City of
Seal Beach is a Cash Contract member.
The Structural Fire Fund (SFF) is maintained by the County of Orange and was
in place prior to Proposition 13. A fire tax (included in the 1% basic levy) is
collected by the County from property owners in these 16 jurisdictions,
accumulated in the Structural Fire Fund, and then paid to the OCFA for fire and
emergency medical services.
Cash Contract cities were not originally part of the Structural Fire Fund prior to
Proposition 13, and therefore these 8 jurisdictions do not have a fire tax as a
portion of their 1 % property tax levy. Instead, these 8 cities pay for fire services
by contract with OCFA through payments from their general funds. The cash
contract charges are based on the OCFA's annual budget, and include a cap
provision which governs the maximum amount the contract charge can increase
each year.
Renewed Equity Concerns — Structural Fire Fund
For OCFA, equity refers to the extent to which the revenue received from a
member agency bears a reasonable relationship to the cost of service that a
member receives. The OCFA has a long history of studying equity concerns and
has implemented prior actions to address equity through the JPA.
In March 2012, the City of Irvine raised renewed equity concerns to the OCFA
Board of Directors. City representatives indicated that, lacking action to mitigate
their concerns, they intended to exercise their option to withdraw from OCFA in
2020. Furthermore, the City of Irvine initiated a special study to assess the
feasibility of forming an independent fire department. In response, the OCFA
Board of Directors formed an Ad Hoc Equity Committee for the purposes of
studying the equity issues. Guiding principles adhered to during discussions of
potential equity solutions included the following:
• Identify a solution which is feasible within OCFA's financial
framework
• Identify a solution which can be supported by OCFA member
agencies, including Irvine
• Continue providing excellent service to all OCFA members
• Gain long-term organizational stability
The Equity Committee was comprised of four OCFA Board Members, four City
Managers, and a County CEO designee. The Committee met over a period of 18
months, provided direction to OCFA staff for exploration of potential equity
i�
solutions, and ultimately approved a proposed equity model for consideration by
the OCFA Board of Directors and individual member agencies.
Proposed Solution — Second Amendment to Amended JPA
The proposed solution for addressing the equity concerns is referred to as the
Enhanced Hybrid Model. This model would require equity payments to be issued
by OCFA to those SFF members deemed eligible under the formula. A Second
Amendment to the Amended JPA would be required in order to implement this
proposed solution. Key terms included in the proposed Second Amendment
include:
• SFF agencies contributing more than the average share of the 1%
property tax to OCFA will be eligible for equity payments;
• Eligibility for equity payments will be determined annually, based on
a mathematical formula prescribed in the Second Amendment;
• The City of Irvine may receive additional equity payments if the
amount of property tax revenue that OCFA receives from Irvine
grows in excess of 3.5% annually;
• For all agencies except Irvine, a five-year phase-in period will apply
for the value of equity payments, in order to ease the impact on
OCFA's annual budget;
• Equity payments will be issued by OCFA using unrestricted sources
of OCFA revenue;
• SFF members and Cash Contract members not eligible for equity
payments shall not be required to pay additional contributions to
OCFA as a result of the equity payments; and
• Irvine must commit to remain with OCFA through 2030
In addition to approving the above terms in the form of the Second Amendment,
the OCFA Board of Directors approved two additional actions at its
September 26, 2013 meeting:
1. Direct OCFA staff to pursue the delivery of in-kind services for agencies
impacted by the five-year phase-in; and
2. Authorize OCFA staff and General Counsel to commence a validation in
the Orange County Superior Court to obtain a judicial declaration of the
validity of the Second Amendment.
These actions will be pursued following approval of the Second Amendment by
OCFA's individual member agencies, which is required by two-thirds of the
members in order to become effective (16 of OCFA's 24 member agencies).
ENVIRONMENTAL IMPACT:
There is no Environmental Impact related to this item.
LEGAL ANALYSIS:
The City Attorney has reviewed this item.
Validation Action
The concept to pursue a validation action resulted from a recommendation made
by the OCFA's City Managers. The court validation process would determine the
validity of using unrestricted revenue sources in the OCFA's budget for issuance
of equity payments back to member agencies; and if the JPA amendment is
determined to be valid, future challenges to the legality of the amendment would
be precluded.
OCFA's General Counsel has advised that the appropriate time for submittal of
this request to the court is after the Second Amendment to the Amended JPA
becomes an enforceable contract, which is upon approval by 2/3 of OCFA's
individual member agencies. In addition, OCFA's General Counsel indicated that
member agencies may authorize their City Attorney to join in supporting the
OCFA's validation action, if desired.
FINANCIAL IMPACT:
There is no financial impact related to the approval of the Second Amendment to
the OCFA Joint Powers Authority Agreement.
The City of Seal Beach, as a Cash Contract member, is not eligible for equity
payments and shall not be required to pay additional contributions to OCFA as a
result of the equity payments to eligible members.
There are numerous benefits to be achieved with this proposed equity solution:
• Keeps all OCFA members together
• Provides long-term organizational stability
• Addresses the equity concerns presented by the City of Irvine
• Achieves financial feasibility within OCFA's financial framework
• Protects SFF and Cash Contract members not eligible under the
formula from financial impacts
=1
RECOMMENDATION:
That the City Council adopt Resolution No. 6419:
Approving the Orange County Fire Authority's Second Amendment to the
Amended Joint Powers Authority (JPA) Agreement seeking to address the
equity issue;
2. Directing the City Manager to execute the Second Amendment to the
Amended Orange County Fire Authority JPA Agreement (Attachment 1);
and
3. Authorizing the City Attorney to join in supporting the Orange County Fire
Authority's validation action, when filed, seeking to obtain a judicial
declaration of the validity of the Second Amendment to the Amended JPA
Agreement.
SUBMITTED BY:
Attachment:
A. Resolution No. 6419
B. Second Amendment to Amended Joint Powers Authority Agreement
Page 5
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL
APPROVING A SECOND AMENDMENT TO THE AMENDED
ORANGE COUNTY FIRE AUTHORITY JOINT POWERS
AUTHORITY AGREEMENT MODIFYING THE JOINT FINANCING
OF FIRE SERVICES WITH NO FINANCIAL IMPACT ON SEAL
BEACH AND AUTHORIZING THE CITY ATTORNEY TO JOIN |N
AVALU0A7lON ACTION REGARDING THE AMENDMENT
RECITALS
A. The Orange County Fire Authority (OCFA) was formed in 1995 to
provide regional fire protection and related services ("Fire Services") 0o the
County of Orange and 18 member cities, and the City ofSeal Beach (^Sao|
Beach") is an original member of the Joint Powers Authority Agreement (JPA).
Subsequent ho formation mf the DCFA.5 additional cities have become members
of the OCFA.
B. The original JPA was replaced by the Amended Joint Powers
Authority Agreement (1090 Amended Agreement) in 1909. which was
subsequently amended in 2010 by the First Amendment to the Amended JPA
Agreement.
C. OCFA member agencies pay for fire and emergency medical
services through two different pay shucturea, and thus members have been
grouped into one of the following categories depending on their pay structures:
"Cash Contract members" or Structural Fire Fund (SFF) members. Seal Beach |u
n Cash Contract member.
D. The OCFA has periodically studied the extent \o which the revenue
received from a member agency bears reasonable relationship to the cost of
service that a member receives, especially the amounts paid bySFFmembers.
In N1mnch 2013. SFF member City of Irvine renewed its concerns about such
equity issues.
E. !n response, the DCFA formed anAd Hoc Equity Committee for the
purposes cd studying such equity iaaues. Guiding principles adhered to during
discussions of potential equity solutions included the following:
• Identifying asolution which is feasible within OCFA'afinancial
framework; and
• Identifying a solution which can be supported byOCFAmember
agencies, including Irvine; and
• Continuing to provide excellent service ho all OCFA members; and
• Gaining long-term organizational stability.
F. The Committee has recommended that the JPA be amended to
resolve the equity |uauo. without increasing the annual samioa charges to Cash
Contract members, including Seal Beach.
G, Any amendment ho the JPA requires approval from two-thirds ofthe
members in order 8o become effective (1Gn/{]CFA`a24 member agencien).
Resolution Number 8410
NOW THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY
RESOLVE, FIND AND DETERMINE A8FOLLOWS:
Section 1. The City Council hereby approves the Second Amendment
to the Amended Orange County Fire Authority Joint Powers Agreement ("Second
Amendment") and authorizes and directs the City Manager to execute the
Second Amendment on the City's behalf.
Section 2. The City Council hereby authorizes the City Attorney to join
in o validation action brought by the Orange County Fire Authority to obtain e
judicial declaration of the validity of the Second Amendment.
PASSED, APPROVED AND ADOPTED by the Seal Beach Qty Council at e
regular meeting held on the 28th day of October , 2013 by the following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
STATE 0F CALIFORNIA )
COUNTY OFORANGE SS
CITY OF SEAL BEACH }
|. Linda Ouvina, Qty Clerk of the City of Seal Beach, do hereby certify that the
foregoing nunu|uUon is the original copy of Resolution Number _8419_jon 8|e in
the office of the City Clerk, passed, approved, and adopted by the City Council at
a regular meeting held on the _ 28tl__ day of October 2013.
City Clerk
JOINT POWERS AGREEMENT
This Second Amendment ("Second Amendment") to the Amended Joint Powers
Authority Agreement is made and entered into by and between the following public
entities (collectively referred to as "members"): Aliso Viejo, Buena Park, Cypress, Dana
Point, Irvine, La Palma, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Los
Alamitos, Mission Viejo, Placentia, Rancho Santa Margarita, San Clemente, San Juan
Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, and
Yorba Linda (collectively referred to as "Cities" and individually as "City") and the
County of Orange (referred to as the "County"), each of whom is a member of the Joint
Powers Authority, Orange County Fire Authority ("the Authority"). This Second
Amendment requires the approval of two thirds of the members to go into effect, and it
shall be effective when executed by a sixteenth member; provided that if a sixteenth
member has not executed this Second Amendment by June 30, 2014, then it shall be
void and shall not go into effect.
RECITALS
WHEREAS, the Authority presently provides fire protection, prevention and
suppression services and related and incidental services (collectively, "Fire Services")
to Cities as well as to the unincorporated area of the County and State Responsibility
Areas ("SRA"); and
WHEREAS, the County and several of the Cities entered into a Joint Powers
Authority Agreement to form the Authority as of February 3, 1995 pursuant to the
provisions of Article 1, Chapter 5, Division 7, Title I (commencing with Section 6500) of
the Government Code of the State of California ("Joint Powers Statutes"); and
955601.1 1
WHEREAS, pursuant to the Joint Powers Statutes the members are authorized
to jointly provide for the methods of the provision of Fire Services, including the method
of financing the provision of Fire Services; and
WHEREAS, on September 23, 1999, the members entered into an amended
Joint Powers Authority Agreement ( °1999 Amended Agreement ") which superseded all
prior agreements between the members and is incorporated herein by reference; and
WHEREAS, pursuant to the 1999 Amended Agreement the members provided
for the provision of Fire Services and the joint financing of Fire Services; and
WHEREAS, on July 1, 2010, the members entered into the First Amendment to
the Amended Joint Powers Agreement ( "First Amendment ") which amended several
provisions of the 1999 Amended Agreement; and
WHEREAS, on April 20, 2012, the City of Santa Ana joined the Authority and
WHEREAS, the members wish to amend the 1999 Amended Agreement and the
First Amendment as set forth below to modify their joint financing of the Fire Services to
promote financing equity among the members, to preserve the existing membership, to
better assure future revenues that will continue to support the provision of high quality of
Fire Services throughout the Authority's service area, and retain all other unamended
terms of the 1999 Amended Agreement and First Amendment.
NOW THEREFORE, the members agree to amend the 1999 Amended
Agreement and First Amendment as follows:
955601 .1 2
AGREEMENT
1. Article IV, Section 3, Subdivision A shall be amended to read as follows.-
A. Structural Fire Fund; Cash Contract Cities. County receives
Structural Fire Fund property taxes ("SFF") from the unincorporated area and from
properties located within the following member Cities: Irvine, Dana Point, Laguna Hills,
Laguna Woods, Laguna Niguel, La Palma, Mission Viejo, San Juan Capistrano, Villa
Park, Yorba Linda, Cypress, Los Alamitos, Lake Forest, Rancho Santa Margarita, and
Aliso Viejo. These cities and the County together make up the "SFF Jurisdictions." On
behalf of the cities from which the County receives SFF, and the unincorporated area,
County shall pay all SFF it receives to the Authority to meet budget expenses and fund
reserves in accordance with the County's normal tax apportionment procedures
pursuant to the California Revenue and Taxation Code and the County's tax
apportionment schedules. The member Cities which the County does not receive SFF
are Santa Ana, Stanton, Tustin, Buena Park, Placentia, Westminster, Seal Beach, and
San Clemente (collectively, "Cash Contract Cities").
2. Article IV, Section 4 shall be deleted in its entirety and replaced with the
following new Section 4:
4. Equity., The following calculations and actions shall be performed
by the Authority each fiscal year:
A. Over-Funded Structural Fire Fund (SFF) Jurisdictions,
(1) The total estimated property tax revenue levied and
allocated to the Authority, prior to accounting for delinquencies, and including
secured, unsecured, nonoperating utility (SBE), and homeowner's exemptions
shall be determined ("Total SFF Revenue Figure"). For the FY 2012113 this
amount was stated as $179,768,901.52 in the Auditor-Controller Report titled
955601.1 3
"A T68AD -73 Orange County Auditor Controller Accumulation of Combined Prior
Year Levy and Current Year ATl" as the "Total SFF Revenue Figure. "
(2) The total Assessed Value, net of successor agency
former project area incremental value, for all SFF jurisdictions shall be
determined (the "Total AV Figure "). For the FY 2012/13 this amount was stated
as $155,506,390,761 in the Auditor - Controller report titled "AT04VC -74 Orange
County Auditor Controller District Values Used to Set Tax Rates" and was
identified as the "Total L &I (Land and Improvements), Total Secured and
Unsecured Value for the Orange County Fire Authority Total Jurisdiction."
(3) The Total AV Figure shall be multiplied by 1% (the
basic levy tax rate) to determine the total value of the 1 % basic levy for all SFF
Jurisdictions for the fiscal year (the "SFF Basic Levy Figure "). For reference, in
FY 2012/13, this calculated figure was $1,555,063,907.61.
(4) The Total SFF Revenue Figure shall be divided by the
SFF Basic Levy Figure for the same fiscal year and expressed as a percentage.
The resulting percentage shall be referred to as the "Average SFF Rate" for the
fiscal year. For reference, in FY 2012/13 the Average SFF Rate was 11.56 %.
The 2012/13 calculation is as follows:
$179,768,901.521$1,555,063,907.61 = 0.115602
(5) A "Jurisdictional SFF Rate" shall be determined for
each SFF Jurisdiction as follows:
a. The total property tax revenue allocated from all tax
rate areas in the SFF Jurisdiction to the Authority,
prior to accounting for delinquencies, and including
secured, unsecured, utility (SBE), and homeowner's
exemptions, but excluding revenue on successor
955601.1 4
agency incremental value in tax rate areas assigned
to former redevelopment agencies, shall be
determined ("Jurisdictional SFF Revenue Figure"). By
way of example, for FY 2012/13 this determination
would be made by (1) taking, for each tax rate area in
the SFF Jurisdiction, the total assessed value of the
tax rate area as reported in the Auditor Controller
TRA Summary Detail Reports for the secured,
unsecured, SBE, and homeowner's exemptions, (2)
multiplying the total assessed value by 1 %, and (3)
multiplying the product by the Authority's share of the
general levy tax rate in the tax rate area as stated in
the "Auditor Controller Report A T68AH71 Section 99
Factor Report by TRA," which would yield property tax
revenue allocated from that tax rate area to the
Authority. This calculation would be made for all tax
rate areas within the SFF Jurisdiction, and the results
would be added together to yield the Jurisdictional
SFF Revenue Figure.
b. The total Assessed Value, net of successor agency
former project area incremental value (AV), for the
SFF Jurisdiction shall be determined (the
"Jurisdictional AV Figure").
c. The Jurisdictional AV Figure shall be multiplied by 1 %
to determine the total value of the 1 % basic levy of
the SFF Jurisdiction for the fiscal year (the
"Jurisdictional Basic Levy Figure").
I. The Jurisdictional SFF Revenue Figure shall be
divided by the Jurisdictional Basic Levy Figure for the
955601.1 5
same fiscal year and expressed as a percentage.
The resulting percentage shall be referred to as the
"Jurisdictional SFF Rate" for the fiscal year.
(6) For those SFF Jurisdictions whose Jurisdictional SFF
Rate is greater than the Average SFF Rate ("the Over-Funded SFF
Jurisdictions"), a Jurisdictional Equity Adjustment Payment ("JEAP") shall be
calculated using the data sources cited above and the following formula:
(Jurisdictional SFF Rate x Jurisdictional AV Figure x 0.01) — (Average SFF Rate x
Jurisdictional AV Figure x 0.01)
(7) The JEAPs calculated in subdivision (6) shall be paid
by the Authority in two equal payments in December and April each fiscal year,
provided that the Authority has received its distribution of property tax revenues
in or before such months.
(8) The JEAP payments in subdivision (6) shall be made
according to the following phase-in schedule:
Fiscal Year
Irvine
Other Jurisdictions
FY 2013/14
100%
0%
FY 2014/15
100% (a)
25%
FY 2015/16
100% (b)
50%
FY 2016/17
100%
75%
FY 2017/18 and thereafter
100%
100%
a, The timing of payment for FY 2014/15 will be
dependent on the Authority's Adopted Budget. If the General Fund is
balanced in the Adopted Budget (Operating Revenues are equal to, or
greater than, operating expenses), then 100% of the calculated JEAP will
be paid to the City of Irvine as identified by the above schedule. (For
purposes of this Agreement "Operating Revenues" includes Unrestricted
General Fund Revenues and SFF revenues. If the General Fund is not
955601.1 6
balanced, as defined above, then 25% of the calculated JEAP will be paid
to the City of Irvine in FY 2014115, and the remaining 75% will be paid to
the City of Irvine no later than FY 2016/17. This delayed payment, if any,
will be paid in addition to calculated JEAPs due and payable in the
subsequent fiscal year(s) and shall not include interest.
b. The timing of payment for FY 2015116 will be
dependent on the Authority's Adopted Budget. If the General Fund is
balanced in the Adopted Budget (operating revenues are equal to, or
greater than, operating expenses), then 100% of the calculated JEAP will
be paid to the City of Irvine as identified by the above schedule. If the
General Fund is not balanced, as defined above, then 50% of the
calculated JEAP will be paid to the City of Irvine in FY 2015/16, and the
remaining 50% will be paid to the City no later than FY 2017/18. This
delayed payment, if any, will be paid in addition to calculated JEAPs due
and payable in the subsequent fiscal year(s) and shall not include any
interest.
(9) Neither Cash Contract Cities nor SFF jurisdictions
that are not determined to be Over-Funded SFF Jurisdictions by these
calculations shall receive any JEAP, nor will they be required to make additional
payments to the Authority due to these calculations. Annual service charges for
Cash Contract Cities shall not be increased as a result of the JEAPs paid
pursuant to this Section 4.
B. Additional Equity Adjustment for SFF Revenue from the City of
Irvine. The following calculations and actions shall be performed by the Authority each
fiscal year:
(1) Beginning with Fiscal Year 2013/14, the City of Irvine
shall receive an additional JEAP equal to the amount, if any, that the
955601,1 7
Jurisdictional SFF Revenue Figure for the City of Irvine, net of the JEAP payment
calculated in Section 4.A(6), exceeds that year's corresponding annual Not -To-
Exceed amount ( "NTE ") as set forth in Section 4.B(2) below.
(2) The NTE for Fiscal Year 2013/14 shall be the amount
of base SFF revenue that the Authority received from properties located within
the City of Irvine jurisdiction in the Fiscal Year 2012/13, which was $59,635,863,
plus 3.5 %. The NTE shall increase each fiscal year by 3.5 %. The NTE for each
fiscal year from 2013/14 to 2029/30 for the City of Irvine is therefore as follows:
FY 2013114 SFF Revenue NTE:
FY 2014115 SFF Revenue NTE:
FY 2015116 SFF Revenue NTE:
FY 2016117 SFF Revenue NTE:
FY 2017118 SFF Revenue NTE:
FY 2018119 SFF Revenue NTE:
FY 2019120 SFF Revenue NTE:
FY 2020121 SFF Revenue NTE:
FY 2021122 SFF Revenue NTE:
FY 2022123 SFF Revenue NTE:
FY 2023124 SFF Revenue NTE:
FY 2024125 SFF Revenue NTE:
FY 2025126 SFF Revenue NTE:
FY 2026127 SFF Revenue NTE:
FY 2027128 SFF Revenue NTE:
FY 2028129 SFF Revenue NTE:
FY 2029130 SFF Revenue NTE:
$59,635,863 X 1.035 = $61,723,118
$61,723,118 X 1.035 = $63,883,427
$63,883,427 X 1.035 = $66,119,347
$66,119,347 X 1.035 = $68,433,524
$68,433,524 X 1.035 = $70,828,697
$70,828,697 X 1.035 = $73,307,701
$73,307,701 X 1.035 = $75,873,471
$75,873,471 X 1.035 = $78,529,042
$78,529,042 X 1.035 = $81,277,558
$81,277,558 X 1.035 = $84,122,273
$84,122,273 X 1.035 = $87,066,553
$87,066,553 X 1.035 = $90,113,882
$90,113,882 X 1.035 = $93,267,868
$93,267,868 X 1.035 = $96,532,243
$96,532,243 X 1.035 = $99,910,872
$99,910,872 X 1.035 = $103,407,753
$103,407,753 X 1.035 = $107,027,024
(3) In any fiscal year in which the Jurisdictional SFF
Revenue Figure for the City of Irvine, net of the JEAP calculated in Section
4.A(6), is greater than the NTE provided in Section 4.B.(2), the excess revenue
shall be paid to the City of Irvine as an additional JEAP.
955601.1 8
(4) Payment of this additional JEAP shall be made by the
Authority to the City of Irvine in two equal payments in December and April of
each Fiscal year, provided that the Authority has received its distribution of the
SFF in such months.
(5) Neither Cash Contract Cities nor SFF jurisdictions
other than Irvine shall receive any additional JEAP as described in this Section
4.B., nor will they be required to make additional payments to the Authority due
to these calculations or payments. Annual service charges for Cash Contract
Cities shall not be increased as a result of the JEAPs or additional JEAPs paid
pursuant to this Section 4.
C. Sources of JEAP Funds; Remedies; Amendment.
(1) Payments of JEAPs shall be made to the Over -
Funded SFF jurisdictions from unrestricted revenues of the Authority (the
"Unrestricted OCFA General Fund Revenues ") provided that the use of said
Unrestricted OCFA General Fund Revenues is not prohibited by any Federal or
State law or regulation nor would the use violate the terms or restrictions
contained in any grant or other agreement restricting the use of the designated
revenue sources. For purposes of clarity, JEAPs shall be paid from the annual
service charges paid by the Cash Contract Cities as well as from other non -
property tax sources of unrestricted funds. SFF are restricted funds and shall not
be used to pay JEAPs. No Cash Contract City annual service charges shall be
increased to pay JEAPs.
(2) If a legal challenge is brought challenging this Second
Amendment, the JEAPs shall continue to be calculated as provided in this
Second Amendment. The Authority shall open a separate account into which the
JEAPs shall be deposited, which shall bear interest at the same rate as the
Authority's other authorized investments. The Authority shall, provide an
955601.1 9
accounting to the Over-Funded SFF Jurisdictions upon each JEAP deposit. The
JEAPs so deposited into this account shall remain there until the resolution of the
legal challenge. If this Second Amendment remains valid after the resolution of
such legal challenge, all of the funds accumulated in such account shall be paid,
with accrued interest, to the Over-Funded SFF Jurisdiction(s) and the Authority
shall provide an accounting therefore.
(3) The City of Irvine may, notwithstanding Article VII,
Section 1 of the 1999 Amended Agreement as amended by the First Amendment
and this Second Amendment, withdraw from the Authority by transmitting written
notice of its withdrawal to the Clerk of the Authority. Such notice shall provide at
least two years' notice of the withdrawal, but the notice period may be more than
two years, at the City of Irvine's discretion. The withdrawal shall be effective
upon the expiration of the notice period in the notice of withdrawal, although in no
case may the City of Irvine withdraw before June 30, 2020. This withdrawal
provision applies to the following situations only: (1) a final judgment is entered
declaring this Second Amendment to be void or otherwise affects a material term
of this Second Amendment and the time in which to appeal such final judgment
has passed; (2) the members approve any modification to this Second
Amendment which the City of Irvine does not vote to approve; (3) there is a
change in state legislation which prevents or reduces the payment of JEAPs to
the City of Irvine as prescribed by this Second Amendment; or (4) the Authority
materially breaches this Second Amendment. This provision shall not be
interpreted to limit the remedies otherwise available to the City of Irvine if the
Authority otherwise fails to make payment of the JEAPs when it is authorized to
do so under this Second Amendment.
(4) This Second Amendment can only be amended if
approved by two-thirds of the members of the Authority.
955601.1 10
3. Article Vll, Sections I.A. and B. are deleted in their entirety and replaced with
the following:
A. Term. Cities shall be members of the Authority for a 20 -year term
commencing July 1, 2010. For Structural Fire Fund cities, the initial 20 -year term shall
begin on July 1, 2010 and end on June 30, 2030. For a Cash Contract City, the first 20-
year term shall begin on July 1, 2010, only upon the consent of such City. Cash
contract Cities that do not give such approval by June 30, 2010 shall give notice of
withdrawal to the Clerk of the Authority by June 30, 2010, to be effective July 1, 2010.
Failure to provide such notice shall be deemed that City's consent to a 20 -year term,
beginning July 1, 2010 subject to the ability to withdraw after the first ten years as set
forth in Section B. below.
B. Subsequent Terms. Twenty -year membership terms shall
automatically renew, on the same terms and conditions as the prior term, and with the
same cap in effect in the last year of the prior term, except under the following
circumstances:
(1) Any City may give notice of withdrawal by transmitting written
notice of such withdrawal to the Clerk of the Authority prior to July 1 of the second to
last year of every ten -year interval of a twenty -year term (e.g., for the first ten -year
interval, notice must be given by July 1, 2018 to withdraw by June 30, 2020).
(2) Notwithstanding the preceding subsection (13)(1), in exchange for
the JEAPs described in Article IV, Section 4, the City of Irvine shall not have the option
to withdraw in 2020, except as provided in Article IV, Section 4(C)(3), or if the number of
withdrawing Cash Contract Cities in 2020 reduces the unrestricted general fund
revenues of the Authority to the point that the JEAPs can no longer be made. In the
event that the number of withdrawing Cash Contract Cities in 2020 reduces the
unrestricted general fund revenues of the Authority to -the point that the JEAPs can no
longer be made, the City of Irvine will be notified in writing by the Authority of this
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condition as soon after July 1, 2018 as practicable, and in no event later than January 1,
2019. In that event, the City of Irvine will be able to withdraw in 2020 by providing
written notice of such withdrawal no later than July 1, 2019. For purposes of clarity, the
City of Irvine shall have the option to withdraw in 2030 and every ten years thereafter by
4. This Second Amendment amends, as set forth herein, the 1999 Amended
Agreement and the First Amendment and except as specifically amended herein, the
1999 Amended Agreement and the First Amendment shall remain in full force and
effect. To the extent there is any conflict between this Second Amendment and the
1999 Amended Agreement and First Amendment, the terms and conditions contained in
this Second Amendment shall control.
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