ITEM 6.3 Final Report- Shared fire services studyFinal Report
Cities of Albertville and Otsego, Minnesota
Shared Fire Services Study
June 17, 2016
Current Fire
3. Current Fire Services
City of Albertville Fire
Department
The City of Albertville Fire Department is a well -established department thg
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 Kall,
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
Sp ri no ssted
Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Current Fire Services
City of Otsego Fire Protection
In addition, they have the necessary turn -out gear, hoses, air packs and other
equipment needed for their firefighting and life-saving operations.
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.
t i tt S e Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Joint Powers
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.
S p f i n g s t y d Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
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Joint Powers Agreement 9
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.
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Years In Service
The value of the 2011 Ford 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 based on information related to the cost of each unit provided by the
City of Albertville. The table below shows the estimated value for each vehicle
and in total.
Spf !I`1g5eed Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Joint Powers
Value of City of Albertville's
Fire Station
Joint Powers Agreement -
Second Matrix of Proposed
Terms
Equipment
Value at end
of 2015
2011 Ford 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
The values determined above only include the vehicle chassis and do not
include the equipment and appurtenances that were subsequently added to the
chassis.
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 timing and location of the Otsego Fire Station was removed from the scope
of services by the City of Otsego because it would have only recommended a
location for a Fire Station within the fire district covered by the Albertville Fire
Department. The Otsego City Council believed it is important to include the
entire city in any Fire Station Location study to ensure the best locations for the
entire City are determined.
The City of Albertville was agreeable to this concept.
Subsequent discussions both within each City and between the Cities attempted
to resolve these differences with the proposed terms of a .IPA. However, after
this second round of discussion there remained some differences in the
agreeable terms as shown in the matrix on the following pages.
Springsted
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Joint Powers Agreement 14
Joint Powers Agreement -
Proposed Terms
Additional discussions were held with each City in an attempt to resolve the
differences with the proposed terms of a JPA. Discussions with the City of
Albertville took place on June 6, 2016 and discussion with the City of Otsego
were held on June 13,2016. The proposed terms are listed below with areas of
disagreement noted.
Board Representation
There remains a small difference of opinion on board representation. The
Albertville City Council supports a board with either four or six members with
equal representation from each city. The Otsego City Council prefers to limit
the board to four members with equal numbers appointed from each City. Both
agree that an impartial mediator would be selected to break tie votes.
Board Authority
The board will have full authority to oversee the operations of the Joint 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
The City Councils differ in how to continue operating the Joint Fire Department
in the event a budget cannot be agreed upon by the two City Councils. The
Albertville City Council would prefer that the Fire Department would 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. The Otsego City Council would prefer that operating costs at the
most recent approved budget level and funding for previously purchased but not
fully paid for capital equipment of the Fire Department will continue to be
funded under the current formula until a new budget is approved by both City
Councils.
Fire Stations
Some level of difference remains in how to fund and operate fire stations. The
Albertville City Council's position is that each City builds and owns its own
Fire Station. Operating costs would be paid by the Joint Fire Department, but
capital costs (repairs) associated with the Fire Hall would be the responsibility
of each individual City, not the Joint Fire Department. They also believe the
location of the new Fire Station in the City of Otsego should be approved by the
Joint Fire Board.
The Otsego City Council position is that each City builds and owns its own Fire
Station(s). Each City is responsible for the operating costs and capital costs of
their Fire Station(s). Until the City of Otsego builds its fist Fire Station, the
operating cost of the City of Albertville Fire Station will be an operating cost of
the Joint Fire Department with the costs shared under the operating cost
formula. They support the Joint Fire Board having input into the location of the
City of Otsego Fire Station, but the final decision will be made by the City of
Otsego.
r e s_ Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Joint Powers Agreement 15
City of Albertville 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 shrike 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:
City of Otsego's Total taxable tax capacity
(Otsego's total taxable tax capacity + Albertville's total taxable tax capacity)
Albertville's share of cost:
City of Albertville's Total taxable tax capacity
(Otsego's total taxable tax capacity + Albertville's total taxable tax capacity)
Capital Asset Costs
The cost of new capital assets will be shared based on taxable tax capacity using
the operating cost formula.
Amending the JPA
The JPA can only be amended by mutual agreement of the two Cities.
i` li Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Joint Powers Agreement 16
Alternatives for Shared
Services
Fire District Areas
The Albertville City Council supports the concept that the Fire Department
service areas in each City covered by the JPA cannot be reduced. The Otsego
City Council is not supportive of this restriction.
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; however, the division of assets will not result in
either City having a dysfunctional Fire Department.
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.
Alternatives 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.
A third alternative would be for the two Cities to have special legislation
enacted creating a fire district under statute. That would provide for shared fire
services similar to the JPA being contemplated. However, it would also remove
the elected City Councils from control of the fire services as control would pass
to the directors of the fire district. This concept was not viewed favorable by
the two cities as a starting point.
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
S e �r i [ r q sted Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Joint Powers Agreement 17
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
to create an even greater regional fire service if that is determined to be
desirable and economically beneficial.
4 Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Conclusions and Recommendations 18
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.
However, after several meetings there remains some differences in the position
of each city on some of the terms.
The study following conclusions were found as a result of this study.
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.
The total estimated value of the City of Albertville's Fire vehicles was
estimated to be $477,732. This value is for the chassis and does not
include any equipment or appurtenances added to the chassis.
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.
The terms of a potential JPA which are agreeable to each city include:
City of Albertville Fire Department Assets - 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.
Dispute Resolution - 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.
3. Payment for Support Functions - The City that provides support
functions to the Joint Fire Department will be compensated for these
Sp r 1 n g s t :e d Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Conclusions and Recommendations 19
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.
4. Operating Cost Formula - 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.
5. Capital Asset Cost - The cost of new capital assets will be shared based
on taxable tax capacity using the operating cost formula.
6. 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.
7. Amending the JPA - The JPA can only be amended by mutual
agreement of the two Cities.
The terms of a potential JPA where some disagreement remains include:
1. Board Representation -There remains a small difference of opinion on
board representation.
a. The Albertville City Council supports a board with either four or six
members with equal representation from each city.
b. The Otsego City Council prefers to limit the board to four members
with equal numbers appointed from each City. Both agree that an
impartial mediator would be selected to break tie votes.
2. Board Authority —there is agreement on the authority of the board as it
related to overseeing the operations of the Joint Fire Department. 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
The City Councils differ in how to continue operating the Joint Fire
Department in the event a budget cannot be agreed upon by the two
City Councils.
a. The Albertville City Council would prefer that the Joint Fire
Department would continue to be funded under the current formula
at a level that results in no reduction in the current level of fire
protection services until a new budget is approved by both City
Councils.
b. The Otsego City Council would prefer that the Joint Fire
Department operating costs at the most recent approved budget
level and funding for previously purchased but not fully paid for
capital equipment of the Fire Department would continue to be
p r i n g 5 to d Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study
Conclusions and Recommendations 20
funded under the current formula until a new budget is approved by
both City Councils.
Fire Stations — Some level of difference remains in how to fund and
operate fire stations.
a. The Albertville City Council's position is that each City builds and
owns its own Fire Station. Operating costs would be paid by the
Joint Fire Department, but capital costs (repairs) associated with the
Fire Hall would be the responsibility of each individual City, not
the Joint Fire Department. They also believe the location of the
new Fire Station in the City of Otsego should be approved by the
Joint Fire Board.
b. The Otsego City Council position is that each City builds and owns
its own Fire Station(s). Each City is responsible for the operating
costs and capital costs of their Fire Station(s). Until Otsego builds
its first Fire Station, the operating cost of the Albertville Fire
Station will be an operating cost of the Joint Fire Department with
the costs shared under the operating cost formula. They support the
Joint Fire Board having input into the location of the City of Otsego
Fire Station, but the final decision will be made by the City of
Otsego.
4. Fire Department Service Areas
a. The Albertville City Council's supports the position that Fire
Department service areas in each City covered by the JPA cannot be
reduced.
b. The Otsego City Council supports Fire Department service areas
could be modified in the future.
The Cities of Albertville and Otsego have been working together on fire
services for over 30 years. The proposed joint powers agreement will provide a
framework for long-term benefit for both Cities that other alternatives simply
cannot match, at least in the near term. While there are still some terms that the
City's differ on, these can be resolved in the development of the JPA.
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.
S p r i n g s t e d Cities of Albertville and Otsego, Minnesota - Shared Fire Services Study