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HomeMy WebLinkAboutRFA 2015-10-14 Item 2 - Finance Committee Proposal Memorandum To: Regional Fire Authority Annexation Steering Committee Members From: Moira Carr Bradshaw Date: October 9, 2015 Subject: Finance Committee Proposal On Wednesday, October 14, the Finance Committee will present the Steering Committee with a proposed financial package that accompanies annexation into the Kent Fire Department Regional Fire Authority (the “Kent RFA”). Generally, the proposed financial package would raise sufficient revenue to enable the Kent RFA to provide the Tukwila community with fire and emergency medical services at existing and/or better service levels. The proposal includes sufficient funding for not only the annual operating cost of the Kent RFA post- annexation, but also a schedule and financing plan for a 20-year capital improvement plan by the Kent RFA that features the replacement of three of the Tukwila fire stations, the remodeling of the fourth Tukwila fire station, and ensures adequate reserves for scheduled replacement of apparatus and equipment. There are three components to the proposed financial package: 1. Operating Budget The Kent RFA and the City of Tukwila Fire Department have provided operating budget projections for 2015, so as to provide the Steering Committee with an “apples to apples” comparison of the costs of providing fire and emergency medical services by each entity to the Tukwila community. This information was originally presented in July, and is being updated based upon actual amounts expended by the City of Tukwila Fire Department in 2015. 2. Capital Budget The City of Tukwila has four fire stations, three of which need to be replaced, and on-going apparatus and equipment replacement needs. A needs summary of the four fire stations is below. As part of the proposed financial package, the Kent RFA has incorporated both the cost for building and maintaining the City’s fire stations—including a proposed schedule for 7 Page 2 of 6 construction and/or renovation—as well as the costs attendant to maintaining and timely replacing the City’s current inventory of equipment and apparatus. The Kent RFA’s philosophy for funding capital is to set money aside each year to build a reserve, and to then pay for capital needs from that reserve fund. In contrast, the City’s philosophy for financing major capital needs is to utilize bond proceeds or via a ‘pay-as-you- go’ approach, using general fund money as needs arise. The differences in approach for funding capital account for the increased cost projected for fire services under the Kent RFA model. Because of the difference in funding models and the budgeting approaches between the two organizations, a uniform “equivalent property tax levy rate,” will be shown on a cost comparison worksheet. 3. Revenue Proposal Kent RFA, as a statutory taxing authority, obtains revenue via two main sources—general purpose property taxes and a user fee, known as a Fire Benefit Charge (“FBC”)—while receiving limited additional funding from grants, contract payments and development impact fees. The Kent RFA property tax rate is capped at $1.00 per $1,000 of assessed value, while the FBC is assessed on structures within the City, and calculated via a complex algorithm that takes into consideration building size, types of use, as well as the structure’s fire risk and projected needs for service. Of note, the FBC is weighted against those who receive more in fire protection services (e.g., large structures and high fire-risk structures), thereby allocating costs more heavily to those who utilize the services. Further, the FBC is solely applied to improvements to real property, giving tax relief to owners of vacant land. A description of the basics of the FBC is attached. The Kent RFA funding model relative to the operating and capital costs projected for the City by both the Kent RFA and the City of Tukwila anticipate a deficit in funding over the next 20 years. The proposed financial package posits that the City would cover the deficit with fire impact fees from a contractual agreement and anticipated new development, along with two initial payments of $565,000 in 2016 and 2017. Summary The Finance Committee acknowledges that this proposal only reflects part of the overall financial impact of the decision a community member faces as it considers joining the Kent RFA. This proposal shows the cost to the Tukwila taxpayer for service from the Kent RFA and the budgetary impact on and revenue package for the Kent RFA. The Tukwila City Council began discussions during a September 15, 2015 work session on the long term financial health of the City, and the potential benefits to the City from a variety 8 Page 3 of 6 of revenue options, including potential trade-offs that can result from annexation into the Kent RFA. This discussion involves not only the long term operating cost of the City but also the capital projects that are part of the City’s long range needs. Those discussions are ongoing and should result in budgetary options available to the City as a result of the annexation. Finance Committee: Tukwila Councilmember Dennis Robertson, Tukwila City Administrator David Cline, Tukwila Interim Fire Chief Chris Flores, Tukwila Deputy Finance Director Vicky Carlsen, Tukwila Project Manager Moira Bradshaw, Kent Fire Department RFA Chief Jim Schneider, KFDRFA Captain Larry Rabel, KFDRFA Finance Manager Margaret Martin. 9 Page 4 of 6 Tukwila Fire Station Capital Summary Relocate Fire Station 51 - 444 Andover Park East (Constructed 1973) Station 51 should be replaced for 2 reasons: The station is in a poor response location to serve the southern portion of the City. In an agreement with Segale Properties, land for a station is dedicated for a relocated station at the intersection of S. 180th Street and Southcenter PY. The move will put the new station above the Green river floodplain; provides opportunity to increase size of current facility, which is undersized for its current uses; and allows a new public safety facility that will meet and exceed minimum construction standards. Reconstruct Fire Station 52 – 14475 59th Avenue S. (constructed 1971) Upgrades of many aspects of the building are recommended such as mechanical - energy components; safety - seismic components; and overall size. The structure (and possibly the site) is not conducive to efficient expansion. Remodel Fire Station 53 – 4202 S 115th Street (constructed 1995) No immediate needs other than basic maintenance such as paint and wood repair. Potential need to expand in future due to growth in Manufacturing Industrial Center. 10 Page 5 of 6 Reconstruct Fire Station 54 - 4237 S 144th Street (constructed 1961) Reconstruction to enlarge storage space and apparatus bay in size and height, which is not easily accomplished because of construction type - (concrete masonry. Station does not meet minimum standards for fire stations including seismic events. See pages 1-33 to 1-47 for more details on the condition of the facilities on the City’s web page at this link: http://www.tukwilawa.gov/mayor/facilitiesstudy/Phase%202%20Facility%20Assessment.pdf Attachment: Fire Benefit Charge Basics 11