ITEM 1_attachment Albertville
Draft Report
Cities of Albertville and Otsego, Minnesota
Shared Fire Services Study
June 1, 2016
1. INTRODUCTION ...................................................................... 2
2. BACKGROUND ....................................................................... 3
3. CURRENT FIRE SERVICES ........................................................ 4
City of Albertville Fire Department ............................................ 4 City of Otsego Fire Protection ................................................. 5
4. JOINT POWERS AGREEMENT ................................................... 7
Process ............................................................................ 7 Initial Matrix of Terms ........................................................... 7 Value of the City of Albertville’s Fire Equipment ........................... 9 Value of City of Albertville’s Fire Station .................................. 10 Joint Powers Agreement – Proposed Terms ............................. 10 Alternatives for Shared Services ............................................ 12
5. CONCLUSIONS AND RECOMMENDATIONS ............................... 14
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Table of Contents
LETTER OF TRANSMITTAL
June 1, 2016
Re: Cities of Albertville and Otsego, Minnesota Shared Fire Services Study
Dear Mr. Nafstad:
Springsted Incorporated was retained to assist the Cities of Albertville and Otsego with a Shared Fire
Services Study. The overall objective of the study was to evaluate the possibility of a joint powers
agreement for shared fire services between the two cities.
The consultant team’s findings are based on our meetings with each City, an analysis of information
provided to us, information drawn from a variety of pertinent documents, reports, and internet resources,
and our experience in assisting local governments develop joint powers agreements. The potential terms
of a joint powers agreement contained in this report for consideration by the two Cities are based upon
our understanding of the terms acceptable to each City and represents what we believe, in our
professional judgment, to be in the long-term and best interest of both Cities.
The consultant team expresses our thanks to you and to the staff in both the City of Albertville and the
City of Otsego for the cooperation and support provided throughout this engagement. Springsted
Incorporated hopes that it will be our privilege to serve City of Albertville and the City of Otsego again in
the future.
I want to thank you for giving us the opportunity to work with you on this study. I hope our services
exceeded your expectations.
Respectfully submitted,
Nicholas R. Dragisich, Executive Vice President
Manager of Consulting Services
Introduction 2
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
1. Introduction
The City of Albertville Fire Department applied for and was awarded a grant
from the State Fire Marshall’s office to contract for a Shared Services Study by
an outside consultant to study and evaluate the possibility of a joint powers
agreement between the Cities of Albertville and Otsego for a joint Fire
Department. The grant specifically required the Shared Services Study to
address options for both cities who each identified difficult issues needed to be
addressed as part of a joint powers agreement (JPA). These issues were
identified to include:
• Determining value of existing assets, including an appraisal of the City
of Albertville Fire Department property, vehicles, and equipment
• Determine the buy-in formulas
• The number of voting members/board representation
• A process for establishing the annual operating and capital budgets
• Dispute resolution
• Timing/location of new facilities
• Otsego Station location
• Ownership of assets, etc.
In addition, the grant required a feasibility study be performed by the
consultant which must include ways to increase efficiency, effectiveness and/or
cost saving methods through voluntary and cooperative shared services and
include possible alternatives for the entities to share fire and rescue services.
Background 3
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
2. Background
The City of Albertville Fire Department has been providing fire and rescue
services to the City of Otsego for approximately thirty years through a contract
for services. As the two cities continue to grow and develop, the working
relationship they have built has led them to explore the possibility of entering
into a JPA that would create a shared Fire Department with representation from
each City.
Springsted Incorporated was retained to assist the two cities in the
evaluation of a joint powers agreement for a joint Fire Department. The
scope of our work included identifying issues that will need to be addressed
as part of any JPA and developing options for each city to consider in
forming the JPA. These issues include:
• Determining value of the City of Albertville’s existing
assets:
o Fire Department property
o Vehicles
o Equipment
• Buy- in formulas
• Board representation and voting members
• Budget process
• Dispute resolution
• Timing/location of new facilities
• Ownership of assets
• Terms of Dissolution of the JPA
In addition, the location of the Otsego Fire Station was to be evaluated with
a specific site recommendation.
Current Fire Services 4
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
3. Current Fire Services
City of Albertville Fire
Department
The City of Albertville Fire Department is a well-established department that
services the City of Albertville and portions of the City of Otsego. The
Department includes thirty paid-on-call firefighters and three reserve
firefighters. Each member is trained and state certified to a minimum
requirement of Firefighter I and II and Minnesota State Emergency Medical
Services Regulatory Board Certified as First Responder or EMT. The Fire Hall,
built in 1999, has 5,580 square feet of garage space for the storage of fire
equipment and 2,160 square feet of office and training space.
City of Albertville Fire Hall
The Fire Department’s major equipment includes:
• 2011 F250 pickup
• 2016 Chevrolet Tahoe Command Vehicle
• Gator ATV
• 1999 IHC 4900 Ambulance Rescue Truck #5389
• 2002 Spartan Ladder Truck
• 1995 IHC Tender
• 2006 Spartan Midship Pumper
Current Fire Services 5
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
In addition, they have the necessary turn-out gear, hoses, air packs and other
equipment needed for their firefighting and life-saving operations.
City of Otsego Fire Protection
The City of Otsego contracts for fire protection services from three adjoining
cities including Albertville, Elk River, and Rogers. The City of Elk River
currently provides fire protection to the eastern portion of City which includes
the largest area of the City currently developed. The City of Rogers provides
fire protection to a small section in the southeast corner of the City. The City of
Albertville provides fire protection to the western portion of the City containing
some areas with development and large undeveloped areas. The areas served by
each of these adjoining cities is shown on the map provided on the following
page.
Current Fire Services 6
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
City of Otsego, Minnesota Fire Districts
Joint Powers Agreement 7
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
4. Joint Powers Agreement
Process
The process of developing the terms of a mutually acceptable JPA involved a
meetings with each City individually and a joint meeting with the administrative
staff of the two cities. The first meeting was with the consultant team and the
City of Otsego on March 22, 2016. A similar meeting was held on April 4,
2016 that included the consultant team and the City of Albertville. A joint
meeting with the administrative staff of each City and the consultant team was
held on May 16, 2016. The terms that were reviewed and discussed included:
• Board representation
• Board authority
• Voting
• Budget process
• Buy in of the City of Albertville’s current assets
o Fire Department equipment
o Fire Department property
• Timing/location of new Fire Station
• Dispute resolution
• Support functions
o Accounting
o Payroll
o Human resources
o Insurances
o Purchasing
o Communications
o Legal
o Annual audit
o Other
• Cost allocation formula
o Operating
o Capital
• Dissolution
The initial meetings with each City individually provided an opportunity for the
City Councils and their administrative staff to discuss and consider their
position on, concerns with, and acceptability of each these terms. The
consultant team offered possible solutions to the above list of terms for
inclusion in the JPA based on their experience and research of similar JPA’s for
fire services.
Initial Matrix of Terms
After meeting with each City individually, a matrix was developed to show the
areas of agreement and disagreement on the potential terms of a JPA. The
matrix from the first round of individual meetings showed some disagreements
in the following areas:
• Board representation
• Board authority
• Operating cost formula
• Dissolution
The specific differences in these four areas as well as areas of agreement are
shown in the matrix on the following page. The areas of disagreement are shaded.
Joint Powers Agreement 8
Cities of Albertville and Otsego, Minnesota -Shared Fire Services Study
JPA Term Otsego Albertville
Board Representation • 7 total (2 from each City, 1 based on tax base, 1
based on population,1 impartial)
• Equal representation from each City
• 3/3 would have a majority of each council on
board and 1 impartial to break ties
Board Authority
• Budgets approved by each City Council
• Board hires and fires employees
• Board develops C.I.P.
• Board sets preliminary budget
• Goes to City Council for comments
• Annual increases of 3% or 5-year average of
change in American City and County Municipal
Cost Index whichever is higher would need no
City approval
• Board hires and fires employees
• Board develops C.I.P.
Fire Stations • Each City builds and owns its own Fire Station • Each City builds and owns its own Fire Station
Fire Department Assets
• Been in cooperative arrangements for 30 year.
• How much of Otsego's contributions were used to
pay for assets in the past?
• City to review how much of Otsego's
contributions have gone into assets
Appraisal of the City of
Albertville’s Equipment • Acceptable as a basis for payment • Acceptable as a basis for payment
Dispute Resolution • Mediation • Mediation
Payment for Support Functions • OK as part of cost allocation formula
• OK as part of cost allocation formula
• City to review costs to include all into formula
Operating Cost Formula
• Market value not so good
• Tax capacity not as good
• Lots of agricultural property which is important
in cost sharing formula because it requires little
or no fire protection
• Should value of tax exempt land be included in
cost sharing formula?
• Based on tax capacity
• Ag land already has reduced tax capacity - Ag
property classified as 2a tax capacity rate is
1.00%
• Commercial-Industrial classified as 3a tax
capacity rate is 1.5% of first $150,000 and 2.00%
over $150,000
Capital Asset Costs • Equal cost sharing • Based on tax capacity same as operating budget
Dissolution • Assets divided on costs paid
• Minimum 2 year notice
• Assets divided on costs paid
• Minimum 5 year notice
• Special legislation to convert into fire district if
desired or if irreconcilable differences between
cities
Joint Powers Agreement 9
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Value of the City of Albertville’s
Fire Equipment
Valuing the assets of the Albertville Fire Department presented a challenge
because we were unable to locate an experienced appraiser of fire equipment in
the State of Minnesota. Some of the appraisers we contacted indicated they
value the equipment based on photographs. One appraiser we contacted, Paul
Batista, who is the owner of Fire Trucks Plus in Rancho Cucamonga, California,
advised us that a reasonable value could be estimated using a depreciation curve
he developed and which has been published on the FireRescue 1 website. We
also researched other depreciation curves for fire equipment including those
developed by the United States Bureau of Economic Analysis. All of these
depreciation curves provided similar values based on estimated asset lives of
approximately 20 years.
We decided to use the depreciation curve developed and recommended by Paul
Batista to estimate the value of the Albertville fire equipment excluding the
2011 F250 pickup and the 2016 Chevrolet Tahoe Command Vehicle. The
depreciation curve is shown in the chart below.
The value of the 2011 F250 pickup and the 2016 Chevrolet Tahoe Command
Vehicle were determined based on the Kelly’s Blue Book private party values.
The total estimated value of the equipment was estimated to be $477,732. The
table below shows the estimated value for each vehicle and in total.
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Va
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a
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P
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Years In Service
Depreciation Rate
Joint Powers Agreement 10
Cities of Albertville and Otsego, - Minnesota Shared Fire Services Study
Value of City of Albertvill’se
Fire Station
The initial scope of work included valuing the City of Albertville’s Fire Station
to determine what portion the City of Otsego should pay the City of Albertville
for this asset. However, in our initial meeting with the City of Otsego they
indicated they would prefer to build and pay the total cost for a new fire station
in the City of Otsego for the joint Fire Department and not pay for a portion of
the City of Albertville’s Fire Station. Their reasoning was that if each City
owned its own fire station it would enable them to have the option of combining
it with other City-owned facilities like a community center. In addition, in the
event of dissolution of the joint fire department, each City would have its own
fire station and these assets would not need to be divided.
The City of Otsego requested that the location of the fire station to be built in
Otsego be eliminated from the scope of work as they need to consider their
options in terms of what the building configuration will include.
The City of Albertville was agreeable to this concept.
Joint Powers Agreement -
Proposed Terms
Subsequent discussions both within each City and between the Cities have
attempted to resolve these differences with the proposed terms of a JPA as
stated below for each City’s consideration:
Board Representation
Either four of six members with equal numbers appointed from each City. An
impartial mediator would be selected to break ties
Board Authority
The board will have full authority to oversee the operations of the Fire
Department including:
• Hiring and firing employees
• Developing capital improvement program
• Developing preliminary budget for consideration by the two
City Councils
• Developing operational policies and other policies as needed
In the event a budget cannot be agreed upon by the two City Councils, the Fire
Department will continue to be funded under the current formula at a level that
Equipment
Value at end
of 2015
2011 F250 20,800$
2016 Chevrolet Tahoe Command Vehicle 41,850$
Gator ATV 8,262$
1999 IHC 4900 Ambulance Rescue Truck #5389 45,374$
2002 Spartan Ladder Truck 160,912$
1995 IHC Tender 9,595$
2006 Spartan Midship Pumper 190,940$
Total 477,732$
Joint Powers Agreement 11
Cities of Albertville and Otsego, - Minnesota Shared Fire Services Study
results in no reduction in the current level fire protection services until a new
budget is approved by both City Councils
Fire Stations
Each City will build and own its own Fire Station. The operating costs will be
the responsibility of the Joint Fire Department. The location of the Otsego Fire
Station will be determined in the future based on a number of factors yet to be
established by the City of Otsego.
Fire Department Assets
The City of Otsego will compensate the City of Albertville for value of the
current assets of the Fire Department based on the current funding formula less
any amounts previously paid for by the City of Otsego. The assets will be
valued based on original costs less depreciation using the schedule prepared by
Springsted. The City of Otsego capital contributions will be valued at their
depreciated level using the same formula to be consistent with the value of City
of Albertville’s contributions.
Dispute Resolution
Any disputes that cannot be resolved between the Cities will be submitted to
mediation. The Cities will select a mediator acceptable to both Cities. In the
event they cannot agree, each City will present the names of three potential
mediators. From these, five names shall be selected by lot. Each City will then
alternately strike a name until only one name remains. This person will be the
mediator. The City to strike the first name will be selected by the flip of a coin.
Payment for Support Functions
The City that provides support functions to the Joint Fire Department will be
compensated for these support services. A cost allocation of these services will
be made to include all direct and indirect costs associated with providing the
support. The costs will be part of the Joint Fire Department annual budget.
Initially, the City of Albertville will provide these support services.
Operating Cost Formula
Costs will be shared based on the total taxable tax capacity in the two Cities
with each City’s share determined by their portion of the combined total taxable
tax capacity.
Otsego’s share of cost:
Otsego’s Total taxable tax capacity
(Otsego’s total taxable tax capacity + Albertville’s total taxable tax capacity)
Albertville’s share of cost:
Albertville’s Total taxable tax capacity
(Otsego’s total taxable tax capacity + Albertville’s total taxable tax capacity)
Joint Powers Agreement 12
Cities of Albertville and Otsego, - Minnesota Shared Fire Services Study
Capital Asset Costs
The cost of new capital assets will be shared based on taxable tax capacity using
the operating cost formula.
Dissolution
A five-year notice will be required for either City to withdraw from the Joint
Powers Agreement. Assets will be divided based on the amount each City
contributed to their acquisition.
Alternatives for Shared
Services
The State grant received by the City of Albertville requires that the study
include possible alternatives for the cities to share fire and rescue services. The
alternatives that exist would include alternatives other than a joint powers
agreement between the two cities as well as alternative ways each City could
provide fire services.
Alternative to shared fire services between the two Cities would include either
the current contractual arrangement or some variation that would define how the
contract would change as the two communities grow and develop. The
continuation of the current contractual arrangement does not appear to be the
most favorable for the City of Otsego because it does not allow them any
control or direct input into the management and operation of the Fire
Department. The JPA they are currently contemplating gives the City of Otsego
a say directly into the management and operation of the Fire Department. This
is particularly important based on the projected growth of their City.
Another alternative would have the City of Otsego start its own Fire Department
and enter a mutual aid agreement with the City of Albertville which would
provide for back-up and enable them each to have a somewhat smaller
department as they could draw on each other’s resources when needed. This
alternative would also allow them to share some equipment reducing each of
their capital costs. However, this alternative would be more costly than either
the current contractual arrangement or the JPA as it would require duplicating
administrative and equipment costs and would eliminate the benefit of a larger
pool of potential paid-on-call firefighters.
The City of Otsego could consider contracting for all its fire services from either
the City of Elk River or the City of Rogers since they both provide fire
protection to portions of Otsego. This option would leave Albertville to bear the
entire cost of its Fire Department which would place a greater financial burden
on its taxpayers. In addition, it could reduce the available pool of potential
paid-on-call firefighters as those in Otsego would be more likely to enlist with
the Fire Department that protects their City. A contract with Elk River or
Rogers would also not allow Otsego any direct input into the Fire Department
management and operations. That could only come about through a JPA with
one of them. In either case, Albertville is left orphaned and would incur
significant cost increases to operate its Fire Department.
Albertville and Otsego have been working together on fire services for over 30
years. The proposed JPA provides a framework for long-term benefits for both
Cities that other alternatives simply cannot match, at least in the near term. A
joint powers agreement between the two Cities will strengthen the fire
protection their citizens receive and will also enable them to consider expansion
of these services through future arrangement with neighboring fire departments
Joint Powers Agreement 13
Cities of Albertville and Otsego, - Minnesota Shared Fire Services Study
to create an even greater regional fire service if that is determined to be
desirable and economically beneficial.
Conclusions and Recommendations 14
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
5. Conclusions and Recommendations
This study was undertaken to assist the Cities of Albertville and Otsego in
evaluating a potential JPA for shared fire services. The intended result was an
outline of the major terms of a JPA that would be acceptable to both Cities and
that would provide a framework for the drafting of the legal document. The
following conclusions and recommendations were determined as a result of this
study.
1. The Albertville Fire Department has been providing fire and rescue
services to the City of Otsego for approximately thirty years through a
contract for services. The two cities have a well-established working
relationship that simplifies the transition into a JPA.
2. The City of Albertville Fire Department is a well-established
department that services the City of Albertville and portions of the City
of Otsego.
3. The total estimated value of the City of Albertville’s Fire equipment
was estimated to be $477,732.
4. The City of Otsego will build and pay the total cost for a new fire station
in the City of Otsego for the joint Fire Department and not pay for a
portion of the City of Albertville’s Fire Station.
5. The potential terms of a joint power agreement could include:
a. Board representation will consist of either four of six members
with equal numbers appointed from each City. An impartial
mediator would be selected to break ties.
b. The board will have full authority to oversee the operations of
the Fire Department including:
i. Hiring and firing employees
ii. Developing capital improvement program
iii. Developing preliminary budget for consideration by the
two City Councils
iv. Developing operational policies as needed
In the event a budget cannot be agreed upon by the two City
Councils, the Fire Department will continue to be funded under
the current formula at a level that results in no reduction in the
current level fire protection services until a new budget is
approved by both City Councils
c. Each City will build and owns its own Fire Station. The
operating costs will be the responsibility of the Joint Fire
Department. The location of the Otsego Fire Station will be
Conclusions and Recommendations 15
Cities of Albertville and Otsego, - Minnesota Shared Fire Services Study
determined in the future based on a number of factors yet to be
established by the City of Otsego.
d. The City of Otsego will compensate the City of Albertville for
value of the current assets (other than the Fire Station) of the
Fire Department based on the current funding formula less any
amounts previously paid for by the City of Otsego. The assets
will be valued based on original costs less depreciation using
the schedule prepared by Springsted. The City of Otsego’s
capital contributions will be valued at their depreciated level
using the same formula to be consistent with the value of City
of Albertville’s contributions.
e. Any disputes that cannot be resolved between the Cities will be
subject to mediation. The Cities will select a mediator
acceptable to both Cities. In the event they cannot agree, each
City will present the names of three potential mediators. From
these, five names shall be selected by lot. Each City will then
alternately strike a name until only one name remains. This
person will be the mediator. The City to strike the first name
will be selected by the flip of a coin.
f. The City that provides support functions to the Joint Fire
Department will be compensated for these support services. A
cost allocation of these services will be made to include all
direct and indirect costs associated with providing the support.
The costs will be part of the Joint Fire Department annual
budget. Initially, the City of Albertville with provide support
services.
g. Operating costs will be shared based on the total taxable tax
capacity in the two Cities with each City’s share determined by
their portion of the combined total taxable tax capacity.
h. The cost of new capital assets will be shared based on taxable
tax capacity using the operating cost formula.
i. A five-year notice will be required for either City to withdraw
from the Joint Powers Agreement. Assets will be divided based
on the amount each City contributed to their acquisition.
The Cities of Albertville and Otsego have been working together on fire services
for over 30 years. The proposed joint powers agreement provides a framework
for long-term benefit for both Cities that other alternatives simply cannot match,
at least in the near term.
The conclusions and recommendations contained in this report are based, in
part, on information provided to Springsted Incorporated by the Cities of
Albertville and Otsego.