CC 2023-06-13_11a Amended and Restated FCFA JPA_PP Pres
consideration of approval of amended and restated jpa for fcfa; appointment of representatives to the board of directors; agreements between fcfa and ocsd regarding short-term fire &
emergency services and ongoing calpers liabilities; draft fcfa fy 2023-24 budget
6/13/2023
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Pursuant to the terms of the Third Amendment to the current JPA, OCSD exiting the FCFA following the failed parcel tax measure proposed by OCSD in June 2022
The period between certification of the June 2022 election results and June 30, 2023, is defined as the wind-down period
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Background
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Work Program Elements of Wind-Down:
Determination as to distribution of equipment and physical assets by October 1, 2022 (effective June 30, 2023)
See Attachment 4
Estimate as to distribution of debt, employment liability, pension/PERS and other post-employment obligations by February 1, 2023 (effective June 30, 2023)
See Attachment 3 for a contract addressing OCSD’s ongoing liabilities to the FCFA
Estimate as to the distribution of all other assets by March 1, 2023 (effective June 30, 2023)
The OCSD will be entitled to a 19.6% share of the FCFA’s general fund balance remaining on June 30, 2023, according to the FCFA’s audited financials. It is estimated that this amount
will be approximately $280,000.
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Background
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OCSD has submitted an application to the Local Agency Formation Commission (LAFCo) to divest itself of its fire and emergency service powers effective June 30, 2023
OCSD requesting the County of San Luis Obispo take over fire and emergency service responsibilities to the Oceano community
Requires all of the parties to the divestiture application (County, OCSD and LAFCo) to approve a plan of service
Due to timing, FCFA has been requested to continue providing services to Oceano during the LAFCo process and a short-term service agreement has been prepared to address ongoing service
through June 30, 2024
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Background
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October 2022, consultant, Baker Tilly, conducted an organization assessment of the FCFA to assist in the evaluation of service delivery needs and options, as well as cost estimations
February 28, 2023, City Council received a presentation from Baker Tilly summarizing its recommendations as well as anticipated costs of service
Full written report presented to City Council on April 25, 2023
The financial analyses completed by Baker Tilly have been used by both Arroyo Grande and Grover Beach to prepare their FY 2023-25 Biennial Budgets
Findings used to develop a new proposed JPA between the cities of Arroyo Grande and Grover Beach that will govern the FCFA following the OCSD’s exit
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Baker Tilly Assessment
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A draft Amended and Restated JPA for the FCFA was presented to City Council on April 25, 2023, along with the final Baker Tilly report and a discussion of potential terms for a short-term
service contract between FCFA and the OCSD
City Council expressed support for the Amended and Restated JPA as drafted and received and filed the final Baker Tilly report
Amended and Restated JPA modeled after
Central Marin Fire Authority, operating in the City of Larkspur and the Town of Corte Madera (Central Marin)
Central County Fire Department, operating in the cities of Burlingame and Hillsborough (Central County) and providing contract service to the City of Millbrae
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Amended and Restated JPA
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Governing Board
Two representatives from each city council, which may include the mayors;
Chair and Vice Chair positions will be held by one representative of each City for a term of one year;
A rotational schedule for the Chair and Vice Chair will be established by Board bylaws or other FCFA policy;
At least quarterly meetings of the Board;
Any action of the Board requires the affirmative vote of at least one member of the Board from each City.
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Amended and Restated JPA Key Terms
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Executive Management
A Management Committee made up of the City Manager of each City will be responsible for the executive management of the FCFA;
The Fire Chief will report to the Management Committee, which will be responsible for hiring the Chief;
A Chief Executive Officer (CEO) will be responsible for carrying out the direction of the Management Committee and act as signatory on items requiring approval of the Committee, such
as contracts. The CEO will be the City Manager who is from the city holding the position of Board Chair and will rotate on the same schedule as the Board Chair.
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Amended and Restated JPA Key Terms
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Dispute resolution – New dispute resolution provisions added requiring mediation and, if mediation is not successful, arbitration of any disputes that cannot be resolved informally.
Legal Counsel – FCFA Board may retain legal counsel to represent the FCFA. It is anticipated that the FCFA will retain independent legal counsel in the near future.
Retention of Existing Terms – A number of existing terms from the current FCFA JPA have been carried forward, including:
Personnel and Administration – All FCFA employees will continue to be deemed employees of Arroyo Grande, utilizing the City’s current CalPERS contract. Arroyo Grande will continue to
provide administrative services to the FCFA, the cost of which will continue to be reimbursed by the FCFA.
Ownership and Maintenance of the Fire Stations – The cities will continue own and maintain the fire stations within their respective jurisdictions.
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Amended and Restated JPA Key Terms
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Exhibits – Current exhibits to the JPA have been updated and revised:
Exhibit A, Administrative Services – Updated to add a description of IT services, which have been and will continue to be provided by Arroyo Grande, and to remove the previous description
of legal services to the FCFA.
Exhibit B, Funding Formula – Updated to include a revised cost sharing structure that excludes the OCSD. Under the new proposed formula, all costs are proposed to be split 58/42, with
Arroyo Grande responsible for 58% and Grover Beach responsible for 42%.
Exhibit C, Inventory of Equipment – Revised to include the current list of equipment and apparatus that are owned separately by either Arroyo Grande or Grover Beach.
Exhibit D, Map of FCFA Service Area – The map of the FCFA’s service area has been revised to include the city boundaries of Arroyo Grande and Grover Beach only.
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Amended and Restated JPA Key Terms
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Agreement is now ready for approval by the City Council. It is recommended that the City Council direct that the Amended and Restated JPA be formally executed on June 22, 2023, when
it is anticipated that the new FCFA Board will be convened for its first meeting and will approve the service agreement with the OCSD.
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Amended and Restated JPA
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It is recommended that the City Council appoint two members to the FCFA Board of Directors, as required under the Amended and Restated JPA.
If desired, Council may also appoint an alternate to serve in the event that one or more appointed City representatives to the FCFA Board are unavailable to attend a meeting.
The City Council Handbook will be revised in the coming months to address changes to the FCFA Board as well as other revisions related to changes to the Arroyo Grande Tourism Business
Improvement District Advisory Board.
Recommend the new FCFA Board convene on June 22, 2023
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Appointment of Representatives
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First agreement in Attachment 2 is a short-term fire and emergency service agreement that will enable the FCFA to continue to serve the community of Oceano through June 30, 2024.
Key terms of this agreement include:
OCSD shall pay $1,150,000 for service for the one-year term, paid quarterly;
The agreement may be extended beyond the one-year term subject to the following requirements:
The cost of service during any extension will be no less than the actual cost of service in the amount or formula determined by FCFA that is presented to the County of San Luis Obispo
for purposes of evidencing Oceano’s proportionate share of the actual cost of service;
Any extension will be negotiated by the parties beginning three months prior to the conclusion of the initial term of the agreement
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FCFA Agreements with OCSD
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Key terms of this agreement include:
Termination:
Either party may terminate during the initial term by providing 120 days’ written notice;
If the OCSD is delinquent on any payments, the FCFA may terminate the agreement immediately;
The Agreement will terminate if LAFCo makes a final decision on the OCSD’s divestiture application within the initial term and if that decision would legally preclude the OCSD from participating
in the agreement;
Use of OCSD property:
The FCFA will serve Oceano from Stations 1 and 2 in Arroyo Grande and Grover Beach beginning in July 1, 2023;
The FCFA will retain the ability to use the apparatus bay at Station 3 in Oceano for storage, as well as OCSD’s well site no. 8 for training purposes, at no cost to the FCFA.
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FCFA Agreements with OCSD
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Second agreement in Attachment 2 addresses the OCSD’s ongoing obligations for its share of the FCFA’s post-retirement (CalPERS) liabilities.
Key terms of this agreement include:
The FCFA will prepare an actuarial analysis each year identifying the estimated liabilities of the FCFA, from which the OCSD’s obligation will be calculated until the obligations are
fully paid.
The OCSD may pay its share of the FCFA’s CalPERS obligations on a yearly basis, based on the yearly actuarial analysis, or as a lump sum.
The OCSD’s share of the FCFA’s CalPERS obligations will be offset by its share of the FCFA’s assets as of June 30, 2023. The assets include:
The OCSD’s proportionate share of the FCFA fund balance as of June 30,2023, as determined by the FCFA Treasurer based on the audited financial report for FY 2022-23; and
The OCSD’s proportionate ownership share of the FCFA’s physical assets as of June 30, 2023, which equals $278,109.
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FCFA Agreements with OCSD
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On May 23, 2023, Staff presented the City’s FY 2023-25 preliminary budget
Draft budget presumes that the FCFA’s FY 2023-24 budget will reflect the projected costs included in the final Baker Tilly report, shown in Table 13 and reproduced below:
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City’s Biennial Budget
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The City’s draft budget presumes that the FCFA’s FY 2024-25 Budget will reflect the projected costs included in the final Baker Tilly report, shown in Table 19 of that report and reproduced
below:
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City’s Biennial Budget
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As the draft FCFA FY 2023-24 Budget is anticipated to increase the City’s contributions to the FCFA by more than $10,000, it is recommended that the City Council review and consider
providing direction to the City’s representatives on the FCFA Board regarding the budget consistent with the City Council Handbook
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Draft FCFA FY 2023-24 Budget
Unlike presentations of the FCFA’s proposed budgets in prior years, this year’s discussion is being held with the City Council before the FCFA Board has reviewed and provided preliminary
direction regarding the FY 2023-24 budget due to the anticipated adoption of the Amended and Restated JPA and creation of a new FCFA Board.
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Draft FCFA FY 2023-24 Budget (Attachment 5) recommends approx. $8.7M in expenditures as shown in Table 1 below:
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Draft FCFA FY 2023-24 Budget
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Reflects recommendations of Baker Tilly’s A-4 staffing plan
Key budget assumptions:
Two 3-person companies, one 2-person company, and 1 additional battalion chief
OCSD payment totaling $1,150,000
Estimated Salary Assumptions
Contract for a Standards of Cover and Community Risk Assessment study
Upgrades to the Station Alerting system at Stations 1 & 2
Replacement Extrication Equipment
Replacement Fleet Vehicle
Reduction in the Debt Service budget in FY 2023-24 compared to estimates provided by Baker Tilly based on financing that will be secured closer to the completion date of equipment
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Draft FCFA FY 2023-24 Budget
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The estimated fund balance at the end of FY 2023-24 is $792,513 or 9.06%.
The Baker Tilly study suggested that the new Board establish a fund balance policy of 10%.
The Amended and Restated JPA requires the FCFA to adopt a budget by April 30th in order to provide sufficient time for the two cities to include their respective contribution amounts
in their own budgets.
This timing provision is new to the Amended and Restated JPA and will be followed in future budget years.
The Amended and Restated JPA does require the FCFA Board, once the Amended and Restated JPA is approved, to meet within 30 days of that approval to consider the agency’s initial budget.
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Draft FCFA FY 2023-24 Budget
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Approve the Amended and Restated Joint Exercise of Powers Agreement for the FCFA (with direction to transmit the approved Joint Exercise of Powers Agreement consistent with State law)
with a formal execution date of June 22, 2023;
Appoint two members of the City Council to the FCFA Board of Directors and potential alternate(s);
Consider the two proposed agreements between the FCFA and the OCSD regarding short-term fire and emergency response services and ongoing postemployment liabilities of the OCSD to the
FCFA, which will be proposed for approval by the FCFA Board of Directors; and
Review and provide direction to the City’s representatives on the FCFA Board of Directors regarding the draft FCFA Fiscal Year 2023-24 Budget
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Recommendation
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