HomeMy WebLinkAboutOC Fire Authority Agreement - Memo 6- 2014ILI I My us] 49A."10
To: Mayor and City Council, Date: June 17., 2014
From: David Cavazos <__ ... .... ... . ... . .
City Manager i"4z
Subject: Orange County Fire Authority Agreement
On March 5, 2012, the City entered into a Joint Powers Agreement (JPA) with the Orange County
Fire Authority (OCFA) to provide fire services and emergency medical services. OCFA began
providing fire and medic services starting on April 20, 2012. Below is a synopsis of the agreement
and also for each amendment that has been executed with OCFA.
OCFA Joint Powers Agreement (JPA):
• Term: 20 years (original OCFA agreement executed June 30, 2010) with option to withdraw
at each ten-year interval (June 30, 2020 and June 30, 2030)
• Current FY 2014/15 Value of Agreement: $36,801,698 plus annual CPI adjustments capped
at 4.5%. The following is a forecast provided by OCFA:
F sea ear
Est. Annual Cost
2015/16
$37.6M
201,6/1
$38.4M
_._20I7,/,,T$_
$38.8M
t
$39.6M
Est. Annual Increase
239%
1.99%
1.16%
1.99%
• Services to be provided: OCFA shall provide to the City fire suppression, prevention,
investigation, emergency medical, rescue and related services, hazardous materials response,
community safety, and education services.
• OCFA Governing Board: Santa Ana is provided one (1) Director to the OCFA Board of
Directors.
• JPA divided into two types of member agencies:
• Structural Fire Fund - payment via property tax funds transferred directly from OC
Tax Assessor
• Cash Contract Cities - remit payment based on invoice for services rendered
0 Santa Ana is a Cash Contract member
• IPA Contract Amendments:
* Amended Agreement (September 23, 1999) Agreement of membership and JPA terms
* First Amended Agreement (July 1, 2010) Established a five-year short fall for Cash
Contract Cities, increased the annual cost adjustment to 4.5%/year, added automatic
renewal language for 20 year terms
* Second Amended Agreement (February 10, 2014)- Changes to the agreement to allow
refund to Structural Fire Fund cities for overpayment
• Security Bond: OCFA required a bond equal to one month's payment as an assurance of
payment in the event of the City's inability to make payment. Current bond value: $2,908,980
earning 0.20% interest and held by Grandpoint Bank, a financial institution agreed upon by
both agencies.
• The security bond is held in a Santa Ana escrow account that provides access to the
funds to OCFA if the City does not make a monthly payment. As of March 2012 the
City's general fiord cash balance was $6.9 million. The projected cash balance at the
end of June 2014 is $34.8 million, roughly 5 times the value when OCFA required that
provision. The City has a process in place to ensure OCFA's monthly payments are
made. The City has not hissed or been late on any payments since the agreement
started.
• On June 11, 2014, the City Manager and staff met with the Finance and Budget
Committee of OCFA to present the City's improved financial outlook and requested
that the bond provision be eliminated. The Committee unanimously approved the
request and will make the recommendation to the full board at the June 26, 2014
OCFA Board of Director's Meeting. Funds will be returned to the Risk Management
Fund.
• Termination of Agreement Provision:
o The City entered into the OCFA JPA two years into a 20 year service contract (ending
June 30, 2030). If the City chose to terminate the agreement the first opportuunity to
withdrawal would be on June 30, 2020. A two year notice is required to be submitted
no later than July 1, 2018 in order to exit in 2020. Thereafter the next termination
opportunity would be in 2030, with a notice required in 2028.
o Pension Liability Clause - In the event of termination or expiration of the agreement
with OCFA, the City is required to pay OCFA the amount of the unfu ded pension
liability that had accrued during the term of the Agreement. This would be payable
upon separation. The City would be required to pay 50% of the cost to calculate such
an amount would have 15 years to make the necessary payments with interest
assuming a rate of return assumed by OCERS as its return of investment. This
provision survives termination or expiration of the Agreement.
• An actuary study will be required in order to determine the value of the
unfirnded liability associated with the former Santa Ana Fire Department
employees. The unfunded liability may fluctuate over time based on market
conditions, benefit changes and disability retirements.
• Prior to partnering with OCFA, the City's Fire Department annual PERS
payment was $4.9M.
Please let me know if you have any questions. Thank you.
cc: Jorge Garcia
Robert Cortez