TO:	HONORABLE MAYOR AND CITY COUNCIL	FROM:	Dale E. Foster Acting Fire Chief
SUBJECT:	Extension of Agreement for Fire and Emergency Response Services with Santa Clara County Central Fire Protection District	DATE:	June 2, 2003

RECOMMENDATION

Approval of the Tenth Amendment to the Zone 1 fire protection agreement with the Santa Clara County Central Fire Protection District (Central Fire), extending the term of the agreement until November 18, 2003, at no cost to the City over the revenue received under the agreement.

BACKGROUND

The City and Central Fire entered into the above agreement, commonly called the “Zone 1 Contract”, for a twenty-five year term beginning August 16, 1977. The agreement has been amended over the years primarily to reflect changes in the area served, but also to track changes in how fire service is funded and to clarify the roles of the agencies with respect to inspections and investigations.

The current agreement was to expire August 15, 2002 but was amended to extend the agreement through June 30, 2003. A further extension to November 18, 2003 will allow the City and Central Fire the additional necessary time to negotiate a new agreement.

Under the current agreement, the City provides full-service fire and emergency response services in specific, identified unincorporated areas that are in the sphere of influence of the City. The City also does fire inspections and fire cause/arson investigation as part of the agreement. Central Fire currently pays the City over $4 million per year for services under this agreement. Payment for inspection and fire prevention service is capped under the current agreement at the County's fee schedule.

The payment to the City has increased from around $2 million in 1977. The payment for fire and emergency response services is a calculated amount that is essentially the combined taxes for fire service received for all of the County parcels, plus the addition of state “bailout” funds that keep the Central Fire District “whole” after Proposition 13 dramatically reduced property taxes in 1978. Central Fire also has Zone 1 agreements with the cities of Santa Clara and Milpitas, although the number of parcels is very small.

While the number of parcels protected has decreased from 17,500 to 14,300 as a result of annexation, an increasing assessed valuation has resulted in a doubling of the contractual payment. These parcels are generally within the urban service area and sphere of influence of the City. It would be quite inefficient for two separate fire jurisdictions to provide services in these areas.

ANALYSIS

Fire Staff has met with Central Fire to discuss the scope and language for a new agreement. Staffs of both agencies agree that renewal of the “Zone 1” fire services contract is in their mutual best interest. Both parties also believe that the services provided and the compensation is equitable and this agreement provides improved emergency response services to the community.

Staffs of both agencies also agree that a new contract would be preferable to simply making a long-term extension of the term of the existing contract, in order to update functional and legal language.

The negotiations process for a new agreement with Central Fire will primarily discuss operational aspects of the agreement among the fire departments. There will also be discussions to include language regarding service levels and formulas for compensation calculations.

Discussions will include City of San Jose Finance and Budget personnel for all fiscal issues, the Attorney's Office for legal issues and discuss past audits with the City Auditor.

SUMMARY

The goal is to develop a fair and equitable new contract that serves the best interests of both parties. There are no identified areas of contention. It is the desire of both parties to continue a mutually beneficial relationship that provides the best service possible for the community.

There are a number of key issues that will be a part of the contract negotiations, including the following:

1. Compensation is a subject to be discussed. We understand that the County “passes through” all revenue related to the parcels serviced under the agreement.
2. Changes in County revenue could be an issue if the State changes the way Fire Districts are funded or if a “redistribution” of revenue is necessary to balance the State budget.
3. Service level demands will be evaluated to determine if the compensation is equitable or reasonable for the service delivered.
4. Liability issues will be reviewed and evaluated based on changes in the law or as a result of court decisions.
5. Inspection fees and inspection service levels will be reviewed.
6. The County EMS agreement does not appear to be an issue, but we will continue to look at this area.

PUBLIC OUTREACH

There has been no public outreach.

COORDINATION

The recommendation for this extension has been coordinated with the City Attorney’s Office and with Central Fire. The negotiations for the final agreement will also be coordinated with the City Finance Department, City Budget Office, City Attorney's Office and the City Auditor, and the agreement will come back to Council for approval in November 2003.

COST IMPLICATIONS

The City receives over $4 million in revenue per year under the agreement and there are no real increased costs in providing the services.

CEQA

Not a project.

Dale E. Foster

Acting Fire Chief