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CC 2019-06-11_08c Supplemental No. 1MEMORANDUM TO: CITY COUNCIL FROM: JAMES A. BERGMAN, CITY MANAGER SUBJECT: SUPPLEMENTAL INFORMATION DATE: AGENDA ITEM 8.c. – JUNE 11, 2019 CITY COUNCIL MEETING CONSIDERATION OF FIVE CITIES FIRE AUTHORITY JOINT POWERS AUTHORITY AGREEMENT SECOND AMENDMENT JUNE 10, 2019 Attached is a correction to the Second Amendment to the Five Cities Fire Authority (FCFA) Joint Exercise of Powers Agreement. In Item 3 – Fiscal Year 2019/2020 of the original amendment, there was an error in Oceano’s funding contribution amount. The amount stated in the original document was $1,062,383 but it should be $1,138,148. The difference between the two amounts is the change from the original funding formula to the transitional funding formula. The contribution amounts for Arroyo Grande and Grover Beach were both appropriately calculated using the transitional formula. Total Fiscal Year 2019/20 contributions are as follows: Arroyo Grande $2,580,955 Grover Beach $2,015,115 Oceano CSD $1,138,148 Total $5,734,218 cc: City Attorney City Clerk Administrative Services Director Five Cities Fire Chief Public Review Binder "Strategic Plan" Scenario Amended Budget Proposed Budget Variance ACT ACCOUNT NAME 2017 2018 Unaudited 2019 2020 2021 2022 2023 REVENUES 4301 INTEREST 3,490$ 6,732$ 700$ 700$ -$ 700$ 700$ 700$ 4422 ARROYO GRANDE FIRE REIMBURSEMENT 2,241,766 2,223,604 2,523,661 2,580,955 57,295 2,736,199 2,934,446 3,030,944 4428 FEMA REVENUE - - 4443 GROVER BEACH FIRE REIMBURSEMENT 1,417,661 1,608,407 1,798,108 2,015,115 217,007 2,134,935 2,287,946 2,362,425 4444 OCEANO FIRE REIMBURSEMENT 779,965 873,719 987,362 1,138,148 150,786 1,205,842 1,292,289 1,334,368 4458 STATE GRANT - - - - - - - 4491 SAFER GRANT - - - - - - - 4462 LOCAL GRANT 29,719 11,859 - - - - - - 4726 FIRE IMPACT FEES 4,101 4,205 3,000 3,000 - 3,000 3,000 3,000 4729 FIRE-FIRST RESPONDER SUPPORT 22,228 22,712 21,000 21,300 300 21,600 21,900 22,200 4730 STRIKE TEAM REIMBURSEMENT 186,322 243,899 - - - - - - 4803 SALES-EQUIPMENT/MATERIALS 12,700 - - - - - - 4807 EXPENSE RECOVERY 42,776 39,844 9,000 96,250 87,250 - - - 4816 PROCEEDS FROM DEBT ISSUANCE 554,275 - GRAND TOTAL REVENUES 5,282,303$ 5,047,681$ 5,342,830$ 5,855,468$ 512,638$ 6,102,277$ 6,540,282$ 6,753,637$ ProjectionActual FIVE CITIES FIRE AUTHORITY BUDGET For the Fiscal Year Ending June 30, 2019 9 1 SECOND AMENDMENT TO FIVE CITIES FIRE AUTHORITY JOINT EXERCISE OF POWERS AGREEMENT This Second Amendment to the Five Cities Fire Authority (“FCFA”) Joint Exercise of Powers Agreement, dated June 7, 2010 (“JPA”) (“Second Amendment”), is made and entered into as of July 1, 2019, by and between the cities of Arroyo Grande and Grover Beach, and the Oceano Community Services District (“Oceano”), which are hereinafter referred to as “Party” and “Parties.” WHEREAS, on June 7, 2010, the Parties entered into a JPA pursuant to Section 6500 et seq. of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, for the purpose of allowing the Parties to share a combined fire department in order to provide efficient and economical fire protection services; and WHEREAS, in or about May of 2018, the Parties executed a Memorandum of Agreement Amending the FCFA JPA (“First Amendment”) in order to provide an opportunity for the Parties to meet and confer for the purpose of considering amendments to the JPA including, but not limited to, modifications to the funding formula contained in Exhibit B of the JPA (“Funding Formula”), the provisions regarding member withdrawal, and future staffing levels beyond Fiscal Year 2018/19; and WHEREAS, the First Amendment required the Parties to agree upon amendments to the JPA by April 1, 2019 or the JPA would terminate as of December 31, 2019; and WHEREAS, in March of 2019, the Parties executed an extension of the First Amendment, which extended the time for the Parties to mutually agree upon JPA Amendments to October 1, 2019; and WHEREAS, the parties have met in good faith and now desire to amend the JPA. NOW THEREFORE, in consideration of the mutual covenants and conditions set forth herein, the Parties agree as follows: 1. Recitals. The above recitals are true and correct and incorporated herein. 2. Strategic Plan. The Parties agree to fund the following priorities of the five-year Strategic Plan, which was adopted by the FCFA Board of Directors in 2017 for the Fiscal Year 2019/20 budget: Continued transition to Career Firefighter position with hiring of three (3) full-time positions to be assigned to the Grover Beach fire station. 3. Fiscal Year 2019/2020. Each Parties’ contributions for funding the Fiscal Year 2019/20 FCFA Budget shall be: A. City of Arroyo Grande $2,580,955 45.01%______________ 2 B. City of Grover Beach $2,015,115 35.14%______________ C. Oceano Community Services District $1,138,148 19.85%______________ 4. Funding Formula. A. The Funding Formula contained in Exhibit B to the JPA is hereby amended and replaced in its entirety as set forth in Attachment 1 to this Amendment. All references in the JPA to Exhibit B shall now refer to Attachment 1. B. For Fiscal Year 2019-20, a transitional formula is used to determine the funding contributions specified in Section 3. This transitional formula modifies component 3 of the Funding Formula related to fire stations to reflect current staffing levels. This transitional formula may be used for the subsequent Fiscal Year 2020-21 as noted in Section 5B. C. The Funding Formula will be reviewed by the Jurisdiction every three years in the month of January, commencing 2023. 5. Ballot Measure. A. Oceano agrees to undertake the legally required procedures to place a special tax on the March 2020 ballot in accordance with Government Code Section 61121. Oceano will seek a special tax amount sufficient to enable Oceano to be able to fund its share of the Funding Formula taking into account the priorities of the Strategic Plan as determined by the Five Cities Fire Authority Board of Directors. B. If the March 2020 Oceano ballot measure does not pass and Oceano is unable to fund its share of the Funding Formula, by operation of this Second Amendment and subject to the Wind Down Period (identified below), Oceano will automatically and without further action cease to be a member of the JPA on June 30, 2021. The time between when the County Clerk Recorder concludes that the 2020 Oceano ballot measure has failed and June 30, 2021 will be known as the “Wind Down Period.” Oceano agrees that should it no longer be a member agency of the FCFA, the cities of Arroyo Grande and Grover Beach may continue to operate under the trademark name of Five Cities Fire Authority with no further rights of Oceano to that name. Should the March 2020 ballot measure fail, the funding obligations set forth in Section 3 above for the Fiscal Year 2019/20 FCFA Budget, shall be the same in Fiscal Year 2020/2021. 3 6. Wind Down Period. A. During the Wind Down Period, the Parties shall establish the distribution of assets currently owned and/or in the possession of the JPA, including but not limited to major pieces of apparatus and capital equipment, which will allow Oceano to maintain sufficient apparatus and capital equipment in order to establish an independent fire service and will allow Arroyo Grande and Grover Beach to continue to operate as the FCFA. B. During the Wind Down Period, the Parties will establish the obligations of the Parties to pay future obligations that were incurred by the FCFA prior to April 1, 2020, including, but not limited to the following: a. Lease payments on Engine 2 and 3; however, the Parties mutually agree and understand that as a result of the dissociation and/or withdrawal of Oceano or any other Party, no Party will be obligated for future payment lease obligations for any Engine that does not remain in the custody, control, and possession of that Jurisdiction. b. Withdrawal and/or dissociation of Oceano or any other Party shall not absolve such Party of liabilities arising out of the participation in the JPA incurred in the ordinary course of business. The Parties mutually agree and understand that as a result of the dissociation and/or withdrawal of Oceano or any other Party, all Parties will remain obligated to pay future FCFA employment related obligations incurred prior to June 30, 2021, including but not limited to pension/PERS, accrued fringe benefits etc. c. During the Wind Down period, the FCFA will perform an unfunded actuarial accrued liability analysis to calculate Oceano or any other dissociating and/or withdrawing Parties’ share of unfunded PERS liability, which will be due to the remaining JPA Parties or the City of Arroyo Grande should the JPA be dissolved. d. During the Wind Down Period, the Parties will meet and confer in good faith in regards to the distribution of assets and liabilities as follows: a. A determination as to the distribution of equipment and physical assets by October 1, 2020 (effective June 30, 2021). b. An estimate as to the distribution of debt, employment liability, pension/PERS and other post-employment obligations by February 1, 2021 (effective June 30, 2021). c. An estimate as to the distribution of all other assets by March 1, 2021 (effective June 30, 2021). e. The parties mutually agree and understand that any liability related to unresolved claims or litigation existing prior to June 30, 2021 will remain the obligation of all Parties whether remaining members of the FCFA or not. f. Prior to October 1, 2021, the Parties shall complete a post-dissociation reconciliation of all assets and liabilities incurred prior to June 30, 2021. Any party owing funds shall pay such funds to the other immediately upon 4 determination. The parties agree to cooperate in completing this post closing reconciliation. 7. Effect of Amendment. All other provisions of the JPA shall remain unchanged and in full force and affect. To the extent there is inconsistency between this Amendment and the JPA, the terms of this Amendment shall control, including but not limited to JPA Sections 6.B, 8.B(3), and 17. 8. Counterparts. This Amendment may be executed in any number of counterparts and by the Parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 9. Severability. If any part of this Amendment is found to be in conflict with applicable laws, that part will be inoperative, null and void insofar as it is in conflict with any applicable laws, but the remainder of the Amendment will remain in full force and effect. 5 IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed by their proper officers hereunto duly authorized. CITY OF ARROYO GRANDE CITY OF GROVER BEACH ________________________ _______________________ Caren Ray Russom, Mayor Jeff Lee, Mayor ATTEST: ATTEST: ________________________ _______________________ Kelly Wetmore, City Clerk Wendi Sims, City Clerk APPROVED AS TO FORM: APPROVED AS TO FORM: ________________________ _______________________ Heather K. Whitham, City Attorney David Hale, City Attorney OCEANO COMMUNITY SERVICES DISTRICT ________________________ Linda Austin, President ATTEST: ________________________ By: APPROVED AS TO FORM: ________________________ Jeff Minnery, District Counsel 6 ATTACHMENT 1 FUNDING FORMULA Should the ballot measure pass, effective July 1, 2020, the Parties shall bear the costs of the Five Cities Fire Authority according to the following formula, to be calculated every three years when the budget is prepared. If the ballot measure fails, the funding will be in accordance with Section 5.B of this Second Amendment. 1. 33.33% of costs shall be assessed among the Parties in proportion to the population of each Jurisdiction as most recently determined by the U.S. Census and any intervening estimates prepared by the California Department of Finance when the Fire Chief prepares each annual budget. 2. 33.33% of costs shall be assessed among the Parties in proportion to the number of annual service calls, calculated on a three-year rolling average in each Jurisdiction as most recently determined when the Fire Chief prepares each annual budget. 3. 33.33% of costs shall be assessed among the Parties in proportion to the number of fire stations located in each Jurisdiction.