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CC 2023-02-28_12a Supplemental 2 MEMORANDUM TO: City Council FROM: Whitney McDonald, City Manager SUBJECT: Supplemental Information Agenda Item 12.a. – Receive an Update Regarding the Five Cities Fire Authority (FCFA) Wind-Down Process and Organizational Assessment DATE: February 28, 2023 Attached is updated presentation slides from consultant, Baker Tilly for the above referenced item. cc: Assistant City Manager/Public Works Director Administrative Services Director City Attorney City Clerk City Website (or public review binder) Andy Belknap, Managing Director Rick Haydon, Project Manager Larry Waterhouse, Special Advisor Bob Leland, Special Advisor Michelle New, Consulting Manager Five Cities Fire Authority Analysis of Fire Services February 28, 2023 1 Presentation Overview –Areas of Focus Project Overview Observations & Recommendations Service Level & Staffing Analysis Fiscal Analysis Alternative Models 2 OCSD’s Withdrawal from FCFA Assumes Divestiture Which is Unlikely by June 30, 2023 •On 1/11/2023, the OCSD Board authorized the divestiture application, and it was received by LAFCO on 2/6/23•LAFCO will do an independent evaluation of the impact of divestiture and possible County operations / alternatives•County decision on service is discretionary and Board of Supervisors action will be required•LAFCO’s decision on divestiture is also discretionary and will take 6 to 12 months to process 3 Engagement Objectives Baker Tilly was engaged by the cities of Arroyo Grande and Grover Beach to analyze fire services provided by the Five Cities Fire Authority (FCFA) to: 1.Provide an assessment of the financial impacts of the departure of the Oceano Community Services District (OCSD) from the FCFA, 2.Provide staffing and fire service options to the FCFA, and 3.Provide options to address the financial gap created as a resulting of OCSD’s withdrawal from the FCFA as well as a new governance structure. 4 Project Deliverables •Forecast model for FCFA, Grover Beach and Arroyo Grande Shows impact of different staffing and cost allocation scenarios on each entity •Written Report Observations on operations, including staffing recommendations with and without OCSD Discuss alternative fire service models Recommendations on governance and fiscal sustainability 5 Comprehensive Review Baker Tilly interviewed: •City Managers •OCSD General Manager •FCFA Command Staff •Firefighter Union leadership •Former FCFA Board Members •LAFCO Executive Director •City Finance Directors •County Fire Chief Documents reviewed included: •JPA agreement and amendments •Citygate Associates' Special District Fire Protection Study •Strategic planning fire study documents •Budgets and CalPERS actuarial report •Calls for service/call volume data •Various FCFA operational documents •Insurance Services Office (ISO) reports 6 Major Interview Themes •FCFA personnel take great pride in the service they provide and are passionate about enhancing service levels •Everyone, which included board members, city management, command staff, and floor personnel all were concerned about funding •The departure of OCSD is a concern from a fire service delivery perspective and from a funding standpoint •There is a low level of collaboration on fire operations between FCFA and member agencies •According to floor personnel, organizational stress has caused low morale •Continued consolidation of fire resources from neighboring agencies makes the most sense rather than having two stand-alone City departments 7 Observations and Preliminary Recommendations 8 Overall Observations •Recent annual financial contributions from participating agencies have not sufficiently financed the total operational costs of the FCFA •The need for an ongoing dedicated revenue stream to fully finance the operational and capital costs of the FCFA is paramount •Calls for service for the existing service population are consistent with industry standards; however, public service (non-emergent) calls represent 40% of total calls, which is relatively high •The FCFA faces numerous operational challenges resulting in personnel feeling stressed •The divestiture or deactivation of OCSD fire service responsibility will not be a simple or quick matter to resolve 9 •NFPA sets standards for fire suppression, emergency medical operations, and special operations through NFPA 1710 Requires four-person response units with a total of 17 personnel required for structure fires •FCFA does not meet this standard with its current deployment model However, most small and rural agencies do not 10 National Fire Protection Association (NFPA) Standards Observations on the Current Operation Aside from not meeting NFPA 1710 standards, Baker Tilly also observed: •Inconsistent staffing levels on all units •OCSD Engine 3 is only staffed about 33%of the time •Suppression personnel and battalion chief schedules do not align,creating operational and administrative challenges •Program management and oversight is delegated to floor personnel •Fire prevention is not supported at an acceptable level •Inadequate resources are devoted to training, especially high-risk/low frequency scenarios •Communication systems need upgrading (station alert system, phone system, Motorola Radio platform upgrade) 11 Observations on the Current Operation (continued) •There is a lack of maintenance support from partner agencies for vehicles/apparatus •There are no replacement funds for apparatus replacement•Departmental policies and procedures are minimal•Station 3 (Oceano) has many deficiencies (no office space for necessary administrative work and inadequate living quarters)•There are no separate facilities for female firefighters at any stations•With the loss of OCSD funding and an accompanying reduction in staff, FCFA will not be able to fill Master Mutual Aid requests, resulting in decreased reimbursement revenues•Given their limited resources and operational challenges, FCFA personnel is to be commended for the services they provide the community 12 Preliminary Operational Recommendations Conduct a Community Risk Assessment and Standards of Coverage and adjust staffing to meet service area, community risk, and call volume Hire an additional battalion chief and place all battalion chiefs on shift schedules consistent with floor personnel Contract for fire marshal and fire inspection services, or fill those positions with FCFA employees Develop an inventory of all mission-critical equipment and apparatus, and establish an asset replacement schedule and fund it Develop a comprehensive operations policy and procedures manual 13 Preliminary Operational Recommendations (continued) Restructure the governing board and create a five-person board, two from each city (an elected official and city manager) and one mutually agreed-upon board member; Fire Chief to report to one or both City Managers Assess the feasibility of a parcel tax or Mello-Roos assessment to help finance FCFA operational and capital costs Discuss with CalFire representatives the cost for providing fire prevention and suppression services and/or enter into discussions with City of Pismo Beach representatives to expand the current regional fire authority model Work on resolving and strengthening interagency relationships and collaboration Develop either an agreement to contract-back fire service for the Oceano area or create a fourth amendment to the JPA, thereby allowing OCSD to continue to be part of the FCFA until LAFCO can render a divestiture decision 14 Service Level & Staffing Analysis 15 Current Fire Suppression and Prevention Operation The current operation consists of 26.5 full-time equivalent employees (FTEs): •22 FTEs in a three-company deployment, with two three-person companies and one two-person company (on "B" shift only)•4.5 FTEs in administration/ management including two battalion chiefs 16 CURRENT A/P/T Arroyo Grover 3rd 4th Total Chief 1 1 Admin 1.5 1.5 Fire Marshal 0 Prevent Spec 0 EMS Coord 0 Batt Chief 2 2 Captain 3 3 3 9 Engineer 3 3 1 7 Firefighter 3 3 6 Total 4.5 9 9 4 26.5 A/P/T=Administration/Prevention/Training Station Companies Fire Chief's Recommended Staffing Plans •Both plans significantly enhance staffing levels, adding a fourth company (three- person), and augmenting administration, training, and fire prevention staffing: Plan A adds 22 FTE over the next six years Plan B adds 24 FTE over the next four years 17 FY22 Act FY23 Bud FY24 Est FY25 Est FY26 Est FY27 Est FY28 Est FY29 Est Plan A $6,771 $6,880 $9,069 $10,034 $11,608 $11,709 $12,316 $15,410 Plan B 6,771 6,880 10,152 10,874 11,904 14,729 15,051 15,591 TOTAL FCFA COST ($ in 000) Baker Tilly Alternative Staffing Plans •Baker Tilly developed several staffing plans that were variations on Plan A, including the following: A-3 (if OCSD stays) reduce the third company to two persons, add a battalion chief, fire marshal & part-time inspector (net add of 5 FTE from current, total of 31.5)* A-4 (same as Plan A-3) except contracts for fire marshal and inspection services (net add of 3.5 FTE, total of 30)* A-5 (if OCSD leaves) same as A-4 except delete the third company leaving two three-person companies (net reduction of 2.5 FTE, total of 24)* *based on fire chief’s plan to increase clerical to 2 FTE’s in FY 2025 18 Calls for Service Show Moderate Growth •Average annual growth in calls from Arroyo Grande and Grover Beach was 3.58% from 2012 to 2021 Figures from 2022 are not yet audited 19 Comparisons Within the Region 20 1 The FCFA calls for service are from 2021; calls for 2022 have not yet been received. 2 Third station is unstaffed. Agency Population Area (SqMi) Fire Stations 2022 Calls for Service Staffing Model FCFA w/ OCSD (Plan A-4)1 38,154 9.65 3 3,957 Two three -person companies and one two-person squad/engine FCFA w/o OCSD (Plan A-5)1 31,000 8.15 2 3,326 Two three -person companies Pismo Beach 8,000 13.5 2 2,487 Two two-person companies Atascadero 30,500 26.13 2 3,453 Two three -person companies Lompoc 43,800 11.67 2 4,201 Two three -person companies and one two-person rescue squad Paso Robles 31,759 18.9 3 2 4,290 Three three-person companies Fiscal Analysis 21 Key Factors Influencing Fiscal Impact First, determine if OCSD remains—at least until LAFCO action and transition to new fire service, as this affects staffing needs Next, determine the future staffing configuration for FCFA, since this is the main cost driver Cities must meet that cost and maintain an adequate reserve for FCFA (forecast assumes 10% reserve) Should OCSD remain -determine eligibility for SAFER and FEMA grants (a temporary, not permanent, reduction in the amount paid by cities for adding floor personnel) Update basis for allocating costs between cities Determine OCSD unfunded liability and equipment/debt contributions upon leaving FCFA (estimates not included in model) 22 Fire Service Comparison Costs 23 •Compares forecasted FCFA costs with nearby agencies •Pismo Beach operates under a CalFire contract at a lower level of fire staffing than the other agencies Generally is two-person staffing,but under Amador Plan one crew is a state asset available on demand for wildfires, and when unit is in Pismo Beach its cost is subsidized by CalFire in exchange•Paso Robles has higher staffing level, larger fire prevention staff Higher City Contributions Will Be Required Even at Lowest Staffing Level •Chart shows impact if contributions continue to be held flat Cost continue to rise Without OCSD, revenues will drop by $1.1 million Total revenues reflected by dotted red line (contributions plus other revenues such as strike team reimbursements) Vacancy savings, state reimbursements,other revenue, and O&M savings are reasons FCFA has not already run deficits•Absent new FCFA funding, the contributions from member agencies will have to increase to fill the gap FY 2024 and FY 2025 expense based on Plan A-5, which is a lower staffing level to reflect loss of OCSD service area; gap worsens with other staffing plans 24 Parcel Tax or Mello-Roos Assessment Option •Parcel tax or a Mello-Roos assessment would provide a dedicated funding source for FCFA, but requires 2/3rds voter approval Timing of vote is an issue as higher contributions are needed starting FY 2024, and there is a lag time getting onto next property tax bill •Of the 29 statewide parcel tax ballot measures placed on the November 2022 ballot by local agency, 14 were successful (8 renewals and 6 new) •In lieu of obtaining a dedicated funding source, the options would be for each city to (a) find their own additional revenue source(s) or (b) make substantial reductions to their other general fund expenditures Reducing fire service levels or contracting with CalFire could lower FCFA costs and thus the contributions required of the member agencies 25 FCFA Forecast Based on staffing Plan A-4, two three-person/one two-person companies 26 Staffing increases from current 26.5 FTE to 30 FTE Arroyo Grande Forecast Based on staffing Plan A-4, two three-person/one two-person companies 27 Updated property & sales tax projections 2/24/2023 FCFA Forecast Based on staffing Plan A-5, two three-person companies 28 Staffing decreases from current 26.5 FTE to 24 FTE Arroyo Grande Forecast Based on staffing Plan A-5, two three-person companies 29 Updated property & sales tax projections 2/24/2023 Alternative Models for Consideration 30 •Modify FCFA staffing based on call volume to include: Plan A-4 (to cover the Oceano service area): two three-person companies and one two- person unit, plus a battalion chief and contract for fire marshal and inspection services Plan A-5 (to only cover the two cities): two three-person companies, plus a battalion chief and contract for fire marshal and inspection services•Contract Service Model •Contract with CalFire•Regional Consolidation (long-term) Revised FCFA Governance Structure 31 Adjust the FCFA governance structure to a five-person board consisting of an elected official and city manager from each City and one mutually agreed-upon board member which could consist of either: a rotating member of the public; the San Luis Obispo County Fire Chief; a San Luis Obispo County Administrative Office representative; a rotating member of the Board of Supervisors from Districts 3 and 4; or consider exploring other member alternatives •Fire Chief to report to one or both of the City Managers In Summary Operationally - •Conduct a Community Risk Assessment and Standards of Coverage to determine the appropriate staffing to meet the service area, community risk, and call volume; •An additional battalion chief is warranted, and place all battalion chiefs on shift schedules to align with floor personnel; •Need to provide more fire prevention/inspection services to the community and increase the training resources for existing personnel; •Develop an asset replacement schedule and sufficiently fund it; and •Expand the governance structure and have the Fire Chief report to one or both City Managers. 32 In Summary Financially – •Previous financial contributions from participating agencies were not sufficient to cover operational costs; •There is a need to increase financial contributions from participating agencies regardless of whether OCSD stays in the Authority; •Once a level-of-service has been determined for the OCSD, the cost to contract -back fire services will need to be identified; and •A new ongoing dedicated revenue source to finance the operational and capital costs of the FCFA is needed. 33 Thank you! Andy Belknap|andy.belknap@bakertilly.com Rick Haydon|rick.haydon@bakertilly.com Larry Waterhouse|larry.waterhouse@bakertilly.com Bob Leland|bob.leland@bakertilly.com Michelle New|michelle.new@bakertilly.com Questions and Comments 34