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CITY HALL • 211 EIGHTH STR:
SEAL BEACH, CALIFORNIA 90740-
.
(562)431-2527
April 21, 1999
The Honorable Mike Ward
Chairman, OCFA Board of Directors
1 Civic Center Plaza
Irvine, California 92604
Re: Revisions to Equity Adjustments
Dear Mike:
We are extremely disappointed and frankly shocked to receive on April 20th substantial revisions
to the proposed equity adjustments. At this point, it can only be concluded that the equity tables
are a moving target that convey little or any significance to any meaningful definition of equity.
Based on information at the time, Seal Beach City Council on April 12th voted to table the equity
plan and urge the OCFA Board to take further actions to ensure the survivability of the Authority
as a 20-member entity. Obviously, that decision was based upon different information than is
now being presented. Numerous other cities also have based their positions on previous
information. The City of Seal Beach's position took into consideration the impact the equity
plan would have on other member agencies as well as the positions that other agencies have
taken. Now with further discrepancies in data, it draws into question the validity of the positions
taken by all of the member agencies.
For this reason, we believe that the OCFA is not in a position to properly evaluate the equity
study recommendations. We would urge the Ad Hoc Committee to postpone this pending
resolution of these discrepancies and validation of the data to be used. Our position as a non-
impacted city was to receive and file the report and our position remains the same.
I urge your consideration of these concerns.
Your truly,
wn Boyd
Councilmember
Agenda Item N
Pc: Chief Chip Prather
t i
O RANGE COUNTY FIRE AUTHORITY
( PO-,,
Box 86, Orange, CA 92856-9086 . 180 South Water St., Orange, CA 92866-2123
„"n Chip Prather, Fire Chief (714) 744-0400 www.ocfa.org
44/7110161-
'`''
TNORj'Ia'M
April 16, 1999
To: OCFA Boardmembers and City Managers
From: Chip Prather, Fire Chief 1;{)
Subject: Updated Equity Information
Attached for your information are copies of the following updated information which we
provided to the Equity Ad Hoc Committee to assist in their discussions when they meet
next week.
Summary of Actions by Jurisdiction - summarizes actions taken by each jurisdiction on
the equity issue. •
Updated Equity Tables - displays updates and corrections made to the consultant's
original equity schedules and summarizes key changes resulting from the update.
If you have any questions about this information, please contact me at (714) 289-7412 or
Joan Steiner at (714) 289-7426.
CP:et
Enclosures
•
Serving the Cities of:Buena Park•Cypress•Dana Point•Irvine•Laguna Hills•Laguna Niguel•Laguna Woods•Lake Forest•La Palma•Los Alamitos•Mission Viejo•
Placentia•San Clemente•San Juan Capistrano•Seal Beach•Stanton•Tustin•Villa Park•Westminster•Yorba Linda and Unincorporated Areas of Orange County
RESIDENTIAL SPRINKLERS AND SMOKE DETECTORS SAVE LIVES
r.
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
JURISDICTION I DATE ACTION TAKEN
1 HEARD COMMENTS
County of Orange 04/06/99 Excerpts from Minutes of Board of Supervisors meeting
I. Consideration needs to be given to distinguishing between
property tax equity and full cost-recovery for services.
2. Move in the direction of achieving equity through
consistency among the current and future contract
arrangements to achieve OCFA's full cost-recovery goals.
3. Long-term contract incentives may be necessary to
optimize the efficiency of the system, by allowing OCFA
to formulate and implement comprehensive long-term
service plans.
4. Withdrawal of a SFF member from OCFA does not
guarantee that 100% of the member's share of the SFF
property taxes will be transferred to the member. The
Board of Supervisors will consider the financial impact of
a SFF member's withdrawal upon OCFA's ability to
continue providing regional fire services.
5. The governance structure for OCFA should distinguish
between SFF/long-term contract members (10 year or
longer), and short-term contract Members (less than 10
years).
Buena Park 02/23/99 Excerpts from April 12, 1999, letter from Mayor Mauller
and City Manager Beaubien
• City does not recommend implementing equity
adjustments on the basis that equity is not possible
because of Proposition 13.
• Does not support long term membership recommendations
without cost controls
• Supports one standard method for charging cash contract
cities.
• Does not support forcing all members to transfer assets.
Cypress 04/12/99 Excerpts from Minutes of City Council
1. No equity adjustments be imposed on SFF recipient cities.
2. No SFF donor cities receive cash payments to their
respective general funds as a result of any equity
adjustments.
3. A uniform model for costing fire service be developed and
utilized for existing contract cities so that contracted for
units of service be allocated/charged in a consistent
manner.
4. Contract cities be required to enter into agreements with a
minimum term of five years and a minimum two-year
Page- I
04/15/99
F.
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
JURISDICTION DATE ACTION TAKEN
HEARD COMMENTS
notice period prior to withdrawal.
5. New contracts include a provision for an annual increase
limit that is similar to the annual average increase of the
structural fire fund, or some alternative acceptable
measure so that contract cities are able to reliably
anticipate annual increases to fire service costs.
6. Any city that provides notice of intent to withdraw for the
Fire Authority immediately forfeits its seat on the Board
of Directors pending negotiations regarding
transition/asset allocation.
7. New cities interested in contracting for services be
required to fully fund the cost of providing fire services.
Existing cities experiencing new land development be
required to fully fund the cost of providing fire services in
areas of growth.
8. A methodology be developed to place funds in an OCFA
trust fund for provision of additional fire services,
facilities, resources, or equipment during budget surplus
periods to be used on a proportional basis no behalf of
donor cities.
Dana Point 02/23/99 Excerpts from March 3, 1999, letter from Mayor Netzlev
• Strong desire to keep the provision of fire services on a
regional basis.
• Each city in the Fire Authority should be contributing their
fair share into the regional system.
• Limiting adjustments to 2% per year provides a formula
for ultimately bringing the recipient agencies to equity.
• Agree that the five-year membership term and the three-
year withdrawal notice was necessary to provide consistent
fire services. One option - membership on Board of
Directors limited to those agencies who execute a five-
year contract, others would relinquish seat on Board.
Irvine 04/13/99 Excerpts from Report from City Manager Brady and
actions taken by City Council
1. Support Simplified Model 2A and the implementation of
the 5% Annual Equity Adjustments commencing July 1,
2000.
2. Support the use of City refunds/Credits for local fire
protection and related services.
3. Support longer-term contracts and withdrawal notification
requirements.
Page-2
04/15/99
I
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
JURISDICTION DATE ACTION TAKEN
HEARD COMMENTS
4. Support consistent contract terms and full company cost
allocation for all Cash Contract members.
La Palma 03/02/99 Receive and file.
Laguna Hills 03/23/99 Excerpt from Minutes of City Council and letter April 8t
1999, letter from City Manager Channing
The city supports the recommendations to treat all members
the same and implement simplified method Option 2A.
1. Any money identified for a rebate to the donor members
should be held as a credit in their name for a period of five
years or until the equity analysis was updated. After that
time, if the donor member's status had not changed, the
accumulated funds could be allocated for a fire-related
benefit to that member, or to the agency as a whole, upon
approval of the Board of Directors.
2. Require longer term contracts and withdrawal notification.
3. Consistent contract terms and full company cost allocation
for all Cash Contract Members.
4. Use of an equity study to determine general and special
assessments.
Laguna Niguel 03/16/99 Excerpts from March 17, 1999 letter from Mayor
Goodman
• The City Supports Simplified Model 2A and the
implementation of 2% annual equity adjustments for
under-funded and over-funded members commencing in
July 2000.
• The City would like to see any refunds or credits to
Laguna Niguel be limited to fire related purposes.
• The City supports longer-term contractual commitments to
the Fire Authority and longer advance notice periods prior
to member withdrawal. The consultant has suggested 5-
year minimum contract terms, and 3-years prior notice of
intent to withdraw. The City believes that these
recommendations are reasonable.
• Consider Equity Adjustments for Donor Cities at the End
of Fiscal Year
• Use Equity Study to Determine General and Special
Assessments.
• Consistent Contract Terms and Full Company Cost
Allocation for all Cash Contract Members. In the event
that consensus cannot be reached on a uniform method for
equity adjustments, the City supports moving toward
Page-3
04/15/99
a
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
JURISDICTIONDATE ACTION TAKEN
I HEARD COMMENTS
consistent contractual terms and full company cost
allocation for all Cash Contract members.
Lake Forest 03/16/99 Excerpts from March 30, 1999, letter from Mayor Peter
Herzog
• Approve Model 2A as the preferred method for
determining the equity share for all members.
• Approve using a 10% variance factor in equity
calculations and implement a 2% annual equity
adjustment.
• Review the equity status of members once every five
years.
• Approve a five-year minimum contract term and a three-
year notice for withdrawal.
• Approve added fees for under-funded members requiring
expanded services.
Los Alamitos 04/12/99 Excerpts from minutes of City Council
Suggestions and alternatives:
• yGive cities options on the level of service, starting with a
base level of service
• Membership contracts between 5 and 10 years
• Terminations notices of 2 to 3 years
• A 10% variance is reasonable
• Move toward equity at 2% a year
• Differentiation in levels of service
Mission Viejo 03/15/99 Excerpts from March 15, 1999, letter from Mayor
Butterfield •
Recommendation #1 - That the OCFA Board of Directors
acknowledge that serious inequities exist in the distribution of
its service costs and resolve to address those inequities
gradually but meaningfully.
Recommendation #2 - That the OCFA Board of Directors
offer the services of the Authority in two ways, that is, by
membership in the Orange County Fire Authority and by
contract with the Orange County Fire Authority.
Recommendation #3 - That contract costs be calculated
uniformly and consist of current company costs updated to
include a full and fair share of the OCFA overhead burden.
Recommendation #4 - That the OCFA Board of Directors
adopt Policy Option 2 in which a uniform cost-to-serve
methodology for valuing the services received by all OCFA
members would be established based on factors such as risk,
Page-4
04/15/99
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
JURISDICTION DATE ACTION TAKEN
HEARD COMMENTS
consumption, assessed valuation, and population; that the fee
for all members be calculated on this basis; and that all
members pay—whether in structural fire fund dollars, general
fund dollars, or some combination of both —based on this
uniform calculation.
Recommendation #5 - That the Fire Authority require of its
members a longer-term commitment, on the order of nine
years.
Recommendation #6 - That the terms of membership in the
Fire Authority be staggered so that they do not all commence
and expire at the same time.
Placentia 04/20/99 Discussed on 04/06/99 rescheduled for 04/20/99
San Clemente 04/21/99 Discussed on 04/07/99 rescheduled for 04/21/99
San Juan Capistrano 04/06/99 Excerpts from letter from Mayor Greiner
1. Existing contributions from Structural Fire Fund cities do
not need to be modified.
2. Contract for services with Cash Contract cities should be a
minimum of 5 years.
3. A standard method for calculating costs should be
developed for all Cash Contract cities.
4. The Authority should live with-in the financial resources
generated from the Structural Fire Fund and the Cash
Contract cities.
Seal Beach 04/12/99 Excerpts from April 12, 1999, letter from Mayor Yost
1. There should be a minimum 5 -7 year commitment to
maintain a seat on the Board.
2. Receive and file the Equity Report.
3. A future needs assessment based on growth and
population increases should be completed.
Stanton 04/13/99 Excerpts from April 14, 1999, letter from City Manager
Matz
1. Opposed implementation of the Equity Study
recommendations.
2. Rejected Policy Option #1 and adopted the following
•
position with regard to cash contract cities.
a) Continue to calculate charges for the four
original cash contract cities using current
contract cost and limiting annual adjustments
to annual percentage change in the cost of fire
department operations.
b) Continue to calculate charges for the three
Page-5
04/15/99
S
OCFA EQUITY
• ACTIONS TAKEN BY JURISDICTION
JURISDICTION DATEACTION TAKEN
HEARD l COMMENTS
cities that joined OCFA since 1994 utilizing
current methodology which is to apply
OCFA's standard average company costs rates
to the resources that were assumed from the
cities by OCFA.
c) Take no action to revise OCFA Company Cost
upward for existing contract members.
3. Rejected Policy Option #2, making no adjustments
based upon equity as defined in the Final Equity
Study.
4. Adopted the following with regard to Policy Option#3
a) Establish a minimum five-year membership
term for OCFA cash contract members, with a
corresponding cap on the maximum annual
contract adjustment which may be applied to
the contract member.
b) Require a one-year advance notice prior to
withdrawing from OCFA.
c) Retain status quo regarding existing cash
contract city members' ownership and funding
of assets such as fire stations and apparatus.
5. Recommend that OCFA prepare a policy for
application to future contract members which includes
updated company costs, the ownership of assets such
as fire stations and apparatus by OCFA, and funding
for the replacement of assets.
Tustin 04/05/99 Receive and file.
Villa Park 03/23/99 Excerpts from March 24, 1999, letter from Mayor Bell
1. Support and endorse the concept of regional fire protection
services and emergency medical response by the OCFA.
2. Support the recommendations contained in the Final
Report on Equity and the adoption of policy options 2A
and 3
• Policy Option 2A
10% variance factor/equity model 2A
2% annual equity adjustment
Review equity status every 5 years
• Policy Option 3
5 year minimum contract term
3 year advance notice for withdrawal
Annual cost adjustments in addition to equity changes
Page-6
04/15/99
OCFA EQUITY
ACTIONS TAKEN BY JURISDICTION
•
JURISDICTION I DATE ACTION TAKEN
_ HEARD COMMENTS
Additional fees for under-funded members that require
expanded services
3. Support earmarking of SFF contributions in excess of a
member's equitable share for future fire protection service
within that member's geographic area.
4. Endorse and actively support the maintenance and
expansion of the Reserve Firefighter Program as a
valuable and essential part of the regional system of fire
protection services.
Westminster 01/11/99 March 22, 1999, letter from City Manager Vestal
The Westminster City Council reviewed and discussed the
OCFA Equity Study at their January 11, 199 study session.
At that time the Council directed the City's representative on
the OCFA Board to vote no and reject the Equity Study. The
Council also directed City staff to work with OCFA staff to
develop an alternate plan to work with contract and fire fund
cities to locate possible alternative financing and operating
structures. There has been no change in the City Council's
position since that time.
Yorba Linda 02/02/99 Receive and file.
•
Page-7
04/15/99
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The Davis Company
r
MICHAEL DAVIS
JAMES D. WILLIAMS
FAX MEMORANDUM
TO: Sally Beavan FROM: Amy per Mike Davis
FAX:714-744-0531 PAGES (including cover): 1
DATE: April 14, 1999 SUBJECT: OCFA Revisions to Table 2A
We have reviewed your revised Table 2A and generally find the methodology to be the same as
was developed in our final report. We note that there are changes in the overfunded/underfunded
status of numerous members,we assume this is a result of updating the underlying values
(population, assessed value, current taxes or fees).
Since your worksheet does not include the adjustments that were made for the underlying values,
we cannot of course,validate the numerical conclusions that have been reached however,the
methodology that you are using does appear to be the same as was constructed for the previous
analysis.
Please let me know if you have any questions. If you would like for us to validate the conclusions,
please send us the population, assessed values, and compensation raw data and we will run it
through our spreadsheets.
Once we have the raw data, it would take us approximately 5 working days to complete the
analysis.
N
555 University Avenue,Suite 116,Sacramento,CA 95825 916.567.9510 TEL 916.567.9540 FAX
11150 Santa Monica Blvd.,Suite 200,Los Angeles,CA 90025 310.473.1457 TEL 310.473.3962 FAX
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