CITY COUNCIL: Report concerning Provision of Fire Services

TO: MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: INTERIM CITY ADMINISTRATOR
SUBJECT: PROVISION OF FIRE SERVICE

INTRODUCTION
On April 28, 2011, a Town Hall Workshop was held in the City Council Chambers to receive the presentation of a report entitled, “Fire Service Alternatives,” by former Public Safety Director George Rawson (Rawson Report). At that workshop, presentations also were made by Andrew
Miller, Fire Chief of Monterey, Pacific Grove and Carmel, and Cal Fire Unit Chief Rick Hutchinson. After reviewing the video of this meeting, and other distributed materials, it appears that this Workshop provided a great deal of useful information to the Council and the public.

In the recent past, Carmel has organized the provision of fire service in a number of different ways. For several years it was a stand-alone department with its own Chief and operating officers. Operationally, it was a part career, paid call and volunteer fire department. Then it contracted with a neighboring fire district for management/chief services before placing the Department under the administration of a Public Safety Director. In 2005 the City approved a contract for fire administrative services, including Chief services from Pacific Grove. At the same time, the City’s Public Safety Director continued to provide certain administrative functions.

In 2008 the City entered into an agreement with the City of Monterey for interim fire administration (Chief) and duty chief services. This agreement has been in place since then and has been extended by mutual consent until December 31, 2011. In the current discussion this has been referred to as the City of Monterey Headquarters Model.

In 2009, the City Council directed staff to identify certain service alternatives for providing fire service and to provide Council with a detailed analysis of each option. That was the purpose of the April 2011 report. The purpose of this report is to further evaluate pertinent issues in providing fire service to the City and make recommendations on how the City should proceed in providing this service.

DISCUSSION
SERVICE LEVEL MAINTENANCE. One of the excellent points made by a member of the public during the April Workshop was that the current level of fire service should be maintained, especially continuing the excellent response times for fire events and medical emergencies. Obviously, this can only occur if the Fire Department response is from the Carmel-by-the-Sea Fire Station.

The City is fortunate since it is only a little over one square mile in size. The limited distance in responding to a call for service results in excellent response times. The National Fire Protection Association (NFPA) recommends a response time standard of five minutes, or less, 90% of the
time.

Unfortunately, many California cities do not meet this standard. In Carmel, however, most fire responses are within three to four minutes. The ambulance response is less.

The following shows Carmel-by-the-Sea’s superior station coverage compared to other selected cities in the State which enables excellent response times by the Carmel Fire Department.

Chart I
Fire Station Coverage in Selected California Cities
City Square Miles (land) No. of Stations Fire Station Coverage (sq. mi.)
Anaheim 50.5 11 4.59
Huntington Beach 31.6 8 3.95
Fullerton 22.2 6 3.70
Ventura 21.12 6 3.52
Orange 23.1 8 2.89
Santa Barbara 21.1 8 2.64
Monterey 8.466 3 2.82
Pacific Grove 2.815 1 2.82
Carmel 1.08 1 1.08

Obviously, because of their size, most of the cities in this chart have larger fire station coverage areas than the cities on the Monterey Peninsula. Still, the out-of-area cities provide excellent fire service with satisfactory response times. The point is that, as good as the fire service is in these other cities, Carmel-by-the-Sea has a significant advantage in providing fire service, since it has very limited station coverage. This allows for a rapid first response to a fire or medical
emergency.

RECOMMENDATION No. 1.
IT IS RECOMMENDED that a fire unit (engine) be maintained 24/7 at the Carmel-by-the- Sea Fire Station.
STAFFING. Staffing the Carmel-by-the-Sea Fire Department currently includes three full-time fire fighters per shift for its fire engine. This is so-called 3 – 0 staffing. The crew routinely consists of a Fire Captain, Fire Engineer and Fire Fighter. They are certified full-time fire fighter emergency medical technicians (EMTs). This follows the 2007 CityGate report recommendation which pointed out that 3 – 0 staffing is the minimum needed for effective emergency response.

This level of staffing is superior to past service levels when the Department responded with two full-time fire fighters with a paid-call fire fighter or volunteer rounding out the crew. The Department has evolved with not only consistent 3 – 0 fire crew staffing, but with programs and processes that have enhanced the level and consistency of training, professionalism and esprit de corps within the fire ranks.

RECOMMENDATION No. 2
IT IS RECOMMENDED, that regardless of the fire service option selected by the City Council, a minimum of three career fire fighters/EMTs be available for emergency response 24/7.

BUILDINGS/EQUIPMENT. One of the significant improvements made to the Carmel-by-the-Sea Fire Department over the past few years has been the replacement of outdated apparatus and equipment. Besides the new ambulance purchased for Carmel Regional Fire Ambulance (CRFA), the City bought a 2009 Type-1 fire engine and a 2010 heavy-duty utility vehicle. This means that the 1988 and 2000 fire engines are in reserve status. Several pieces of new equipment have been obtained, mostly using grant funding. The City also owns the fire station. The point is that, regardless of the fire service option implemented by the City Council, the City should retain ownership of its buildings, engines, vehicles and other equipment. This will provide the City more flexibility to transition to another organizational structure in the future, if this ever becomes necessary.

RECOMMENDATION No. 3
IT IS RECOMMENDED that, regardless of the fire service option selected by the City Council, the City retain ownership of its buildings, engines, vehicles and other equipment.

OPTIONS
The City has several options in providing service to the community. These options, such as a stand-alone department, a Joint Powers Authority, merger with another agency or a headquarters model are explored in the following sections.

STAND-ALONE DEPARTMENT. The City has had its own stand-alone fire department in the past. In today’s economy, however, it is difficult to support not only the fire fighters who respond to fires and medical emergencies 24/7 but also the chief officers (Fire Chief, Battalion or
Operations Chiefs, Fire Marshal) needed to oversee and administer departmental operations. The Rawson Report estimated that it would require a full-time Fire Chief, two additional chief officers, part-time fire marshal and clerical support along with nine fire fighters to establish a stand-alone department. Adding these chief and clerical support positions would increase the Fire Department’s annual budget by an estimated $575,000.

Because of the nation’s economic downturn, cities throughout the state have taken steps to flatten and streamline their organizations. In the area of fire service, a significant number of cities and special fire districts have partially or totally integrated fire services. In some cases Joint Powers Authorities (JPAs), like Pleasanton/Livermore or Daly City, Pacifica and Brisbane, have been created. Some combinations involve contractual relationships and include small jurisdictions (Del Mar, Solana Beach, Encinitas, and the Rancho Santa Fe Fire District), or some may include large jurisdictions (the cities of Anaheim, Fullerton, and Orange are studying a fire merger). Others may only combine chief officers (Lemon Grove, El Cajon, La Mesa). That is the approach taken by Carmel-by-the-Sea, first receiving Chief/administrative services from an adjacent fire district, and then contracting for chief officer services from Pacific Grove, followed by Monterey after Pacific Grove Fire merged with Monterey.

It is clear that for financial reasons, cities throughout the state have shared or merged services, either partially or completely. But some of these efforts also have been driven by the need to provide more efficient and effective operations. It is difficult with a single station department to effectively provide the backup, second in response (1), overtime reduction strategies, training, and equipment inventory with the same effectiveness as a multiple station system. Therefore, both financial and, in some cases, operational reasons have encouraged agencies to combine their fire service operations.

A further point is that, if Carmel Fire were an independent department, there would be a need to eventually replace its 1988 reserve engine at an estimated cost of $400,000. If, however, Carmel Fire were part of a larger system with backup engines, there would be the ability to reduce from
two reserve engines to one reserve engine for the Carmel station and surplus the engine. This would avoid a future major capital outlay expense.
(1) “Second in” is the response by a second fire unit to a structure fire.

RECOMMENDATION No. 4
IT IS RECOMMENDED that the City should not select a stand-alone fire department option.

JPA. There are several fire service options available to the City of Carmel-by-the-Sea. A Joint Powers Authority (JPA) is not one of them since a recent effort to create a JPA among the six Monterey Peninsula cities was unsuccessful. It is not expected that this option will be seriously
considered any time in the near term based on this relatively recent action.

MERGER OR PARTIAL MERGER. The other options involve contracting out with the City of Monterey or Cal Fire for full or partial integration of fire service. In response to a Request for Quotes both the City of Monterey and Cal Fire submitted proposals earlier this year that would provide full integration of Carmel Fire into the operations of either agency. Also, Cal Fire offered the cost of a headquarters service option, which involves only providing chief officer and other administrative services to oversee Carmel fire operations. The City now contracts with Monterey for headquarters services, although it has received significantly more than that level of service without additional cost. That contract was extended by administrative agreement through December 31, 2011.

Rawson Report. The attached Rawson Report compared and evaluated the two full integration proposals. On pp. 3 – 5 of that report a chart is presented entitled, “Comparative Analysis of Fire Service Options,” comparing the two full-service integration options, along with a stand-alone alternative, across 16 factors. Regarding the Cal Fire and Monterey full-integration models, and using this chart as a guide, it appears that either agency can effectively provide fire service to Carmel, with identical station staffing levels with three fire fighters assigned to an engine, and the same response times operating from the Carmel Fire Station. If there is an emergency response to a structure fire, there is the same response of personnel and equipment to the incident. Both offer to provide administrative services related to human resources and financial management as it relates to fire services. In comparing the two proposals many of the factors evaluated in the Rawson Report are the same, or nearly the same.

The chart also lists several advantages to the Monterey proposal. Since a chart tends only to summarize comparative factors in the service offered by these two agencies, a more complete discussion of the points on the Rawson chart are outlined in the following paragraphs. This report
will attempt to clarify these statements while at the same time further the analysis of how fire service should be provided in Carmel-by-the-Sea.
In no particular order, the Rawson Report makes the following points:

• The City of Monterey has no liability for retiree medical benefits compared to Cal Fire’s unfunded retiree medical obligations.

Comment: Cal Fire representatives indicate that there is no cost of unfunded liability for retiree medical benefits since Cal Fire as a state agency pays only actual annual costs. They are assessed by CalPERS for this benefit on a pay-as-you-go basis. So there would not be an
immediate cost impact or liability to the City for this unfunded liability. On the other hand, this pay-as-you-go process administered by CalPERS has been publicly criticized as building up a substantial, ever-increasing, unfunded liability among state agencies. In one public comment, Controller John Chiang reported that the unfunded gap for public retiree health benefits grew by $8.1 billion between 2009 and 2010. In the event this unfunded liability were charged by PERS to the respective state agencies, similar to charges they assess against cities, there would be a substantial cost increase to these state agencies.

While not mentioned in the Rawson Report, but related to the issue of CalPERS coverage, Monterey’s two-tiered retirement system provides a less expensive plan of 2% @ 50 for new firefighters while Cal Fire’s less expensive plan is 3% @ 55 for entry level fire fighters.

Monterey fire fighters also have agreed to increase their PERS employee contribution from 9% to 12% for the next three years, while Cal Fire employees have increased their employee contribution from 6% to 10% with no time limit. Because Cal Fire’s new plan for new employees is more expensive, the long-term cost basis for future retirement expenses appears
to be higher for Cal Fire compared to the City of Monterey.

• The Rawson Report indicates that there is the uncertainty of the state system where fire employees can be transferred in and out of the Carmel and local area at any time, while Monterey staff is viewed in the report as more stable.

Comment: Cal Fire commits not to arbitrarily reassign Carmel personnel to other parts of the state. Its intent is to maintain staff stability in Carmel. In Cal Fire, fire fighters have rights to their position and cannot be supplanted by longer tenured staff.

One concern related to this point of the Rawson Report is that when there is a major fire requiring a statewide response, Cal Fire must draw on its staff first before drawing on the resources of cities. So when there is a major statewide fire, Cal Fire resources will be pulled out of the area before local resources are requested. Cal Fire, however, will still be
contractually obligated to maintain service in Carmel. In any case, a local agency like the City of Monterey, will be better able to control which staff resources will be sent in response to a major fire.

Another related concern is that to the extent Carmel fire fighters find state employment undesirable and incompatible with their career goals, some current employees likely will retire or attempt to move to another municipal fire agency. This will deplete the number of fire
fighters with a unique knowledge of Carmel.

• The City of Monterey, as with most cities, is able to subject new hires and those seeking promotion to a comprehensive background and psychological evaluation, while Cal Fire is not.

Comment: Unfortunately, Cal Fire has not been able to obtain successful state legislation to require pre-employment background checks. It has been trying to establish a universal EMT requirement for fire fighters which would allow the agency to “back door” employment checks through the EMT certification process. These are criminal history checks based on State EMT employment regulations. Due to Cal Fire’s commitment that all fire fighters assigned to Carmel are EMTs, all personnel assigned to Carmel under their proposal would receive this level of background check.

• There is support for a contract with the City of Monterey by the Monterey and Carmel fire associations as well as the employees representing CRFA.

Comment: This support has proven in other agency consolidations to be critical to the success of any merger effort.

• The potential is created to share other municipal services with Monterey.
Comment: A merger with Monterey would further other efforts at shared services especially in support services such as finance and human resources. This would further the efforts of Pacific Grove, Monterey, and Carmel in working together to better serve their citizens.

• Because of the current contract, most of the critical implementation steps to achieve the transition to a unified service have already been accomplished with Monterey, but not with Cal Fire.

Comment: It is true that there is already a substantial integration of the Monterey and Carmel Fire Departments under the current contract. An informal understanding with the Carmel fire fighters regarding their MOU has been achieved. Currently, there is no contract for any level of service to build upon with Cal Fire.

• Because of the current contract Monterey fire fighters have been backfilling during Carmel Fire’s responses resulting in their familiarity with Carmel, compared to Cal Fire which has not had that exposure.

Comment: Because of the substantial integration of the two departments, Monterey fire fighters have had significant exposure to the unique characteristics of Carmel-by-the-Sea.

Other factors in the Rawson Report mention “control over service levels and costs” and “financial risk” as a plus for Monterey and that Carmel would “likely (have) somewhat more influence over costs than (the) state model.” On the other hand, members of the public have expressed a concern that, in effect, there would be less control in contracting with Monterey,
since its city charter was amended to provide for “compulsory and binding arbitration” for public safety when there is an unresolved dispute regarding salaries and other benefits.

The concern with compulsory, binding arbitration is that a third party beyond the control of the City could adversely influence the level of salaries, and hence the future costs of fire services. It should be recognized, however, that the level of salaries and benefits for state employees, such as those working for Cal Fire, are determined through statewide negotiations. In effect, the results of those negotiations are also beyond the control of the City since the ultimate decision of those salary and benefit levels are negotiated by separate third parties, namely state officials and labor leaders in Sacramento. In either alternative, there is the potential that a third party beyond the control of the City could adversely influence future fire costs.

In any case, if there is an undesirable result in either process which is beyond the control of the City, Carmel will have the option to change or withdraw from the service contract with whichever agency is selected to provide fire service.

Other Considerations. There are other factors which should be evaluated besides those addressed in the Rawson Report. The major ones are discussed in the following paragraphs.

Existing Contract. While the comparison chart addresses most of the important issues in analyzing how Carmel should offer fire service in the future, there are other crucial factors which need to be assessed. First, as will be discussed later in more detail, both proposals will cost less than the current cost of the City providing fire service. The Cal Fire proposal for total merger, however, is less expensive than the Monterey proposal.

Second is the important consideration of how fire service currently is being provided. Is it being provided successfully? Are there problems with that service which need to be addressed? Is there an argument for making a change based on the quality of fire service currently provided to the
community?

Obviously, this review process before the City Council does not involve two competing agencies bidding for this assignment for the first time with no previous involvement or experience with Carmel Fire. Simply put, the City of Monterey has been deeply involved in providing fire service in Carmel and Cal Fire has not. If Monterey’s oversight and operation of Carmel Fire, operationally integrated with CRFA, has been a mistake, then Carmel should look for another provider. If not, Carmel is already partnering with an excellent provider. This is not to say that Cal Fire would not provide good, satisfactory service. The point is that the move to the integration of Monterey and Carmel Fire from a one-station system to a five-station system has been under way for some time. Carmel Fire has already become part of this larger system of fire response.

This partnership has achieved several beneficial results. These achievements are identified in the following paragraphs. In terms of facilities and equipment, with the support of the City Council, there have been a number of successes including:

• Of the total number of fire hydrants in Carmel it was discovered a few years ago that 40% were inoperable. After initially disclaiming responsibility, Cal Am Water was successfully pressured to repair these fire hydrants within a year.

• Fire operations were maintained while operating out of tents for eight months while the Carmel fire station was being remodeled, including a seismic retrofit.

• It was determined that the fire load at Mission Trails Park was too large and steps were taken to substantially reduce that fuel load through removal.

• Apparatus was improved by replacing an unsafe, out-of-date Telesquirt (1975), a Type-3 fire engine (1977) and a problematic light rescue unit.

• Added were a 2009 type-1 fire engine, and a 2010 heavy-duty utility, with 1988 and 2000 fire engines in reserve.

• A new ambulance was purchased by the City for CRFA.

• While not yet accomplished, and a benefit that could possibly also be attributed to Cal Fire as well if a merger occurred with that agency, being part of a larger system will enable Carmel Fire to surplus one of its three fire engines. If Carmel were a stand-alone department, the 1988 reserve engine would need to eventually be replaced at a cost of an
estimated $400,000, but that cost will be avoided as part of a larger fire system.

• Tools were replaced including an out-of-date “jaws of life,” and a state of the art selfcontained breathing apparatus air compressor, both grant funded. A natural gas emergency generator was replaced with one fueled by diesel. Grants were also obtained for mobile data terminals placed on all apparatus, new mobile and portable radios, physical fitness equipment placed at the station and an Auto Pulse. Of particular note is the Auto Pulse, an electronic CPR machine which has saved at least two lives in Carmel. In addition, steps were taken to replace all of the out-of-date fire maps with a digital mapping system. These improvements, along with pursuing the above listed grants, were initiated under the
guidance of, and accomplished by Monterey Fire.

The following chart lists the grants which have been obtained through the efforts of Monterey Fire including the item(s) purchased and the amount of the grant.
CHART II
RECENT GRANTS OBTAINED TO SUPPORT THE CARMEL FIRE DEPARTMENT
ITEM GRANT (DATE) AMOUNT
Self-contained Breathing Apparatus Compressor FEMA FIRE ACT (2007) $35,000
Auto Pulse FIREMANS FUND (2009) 24,000
Thermal Imaging Camera; Chain Saw;
Stair Chair; Weight Equipment FIREMANS FUND (2010) 15,987
Jaws of Life OFFICE OF TRANSPORTATION (2006) 8,000
Portable (21) and Mobile (8) Radios FEMA FIRE ACT (2006) 17,500
Mobile Data Terminals FEMA FIRE ACT (2008) 13,652
Saws, Chargers, Flares, Batteries, etc. OFFICE OF TRANSPORTATION (2008) 4,566
TOTAL $128,705
The guidance of Monterey Fire has been important in obtaining new equipment, successfully obtaining grant funds, and attending to crucial facility issues. More importantly, with the support of the City Council, Carmel Fire has evolved into a more professional fire fighting force. The
Department has moved to staffing the City’s engine company with three full-time, career fire fighters. There has not been a need for paid-call fire fighters in Carmel for nearly three years.

This means that a cohesive team of career fire fighters has been created. They operate with uniform policies, training, and operational schedules as part of a larger fire operation. All fire apparatus in the larger system use the same tools at the same location on the apparatus, facilitating
a significant improvement in efficiencies at an emergency response when often seconds count. The medic fire fighters in CRFA also have been partially integrated into the overall system.

Informally, a Carmel Fire Captain oversees both fire and ambulance operations each shift. Further, with five fire fighters responding to a fire (three on the engine and two in the ambulance), the Fire Department is able to attack the fire using “2 in, 2 out”. This technique maximizes fire fighting capability as well as fire fighter safety.

In addition, all Monterey fire fighters have received orientation training with Carmel Fire and often work out of the Carmel Fire Station. Further exposure to Carmel has been achieved when Monterey responds as backup at a Carmel fire or other emergency. As pointed out during the budget process this back-up response also has been used to eliminate unneeded overtime expense.

Over a five-year period with Pacific Grove and now Monterey, incremental steps have been taken to make the Monterey-Pacific Grove-Carmel system fully and seamlessly interoperable. While full integration has not been fully achieved, the City is receiving much more than the service provided by a Headquarters Model.

Employee Perspective. Another factor in considering contracting for fire service or merging with another agency is the perspective of Carmel Fire’s most valuable resource, its fire fighters. Most often the success or failure of any merger is contingent upon the cooperation of employees in
assuming their roles in bringing their knowledge of Carmel and fire fighting skills to the community.

In connection with Monterey’s and Cal Fire’s proposals to the City, Carmel fire fighters, CRFA fire fighters who may become Carmel employees, and the City of Monterey fire fighters all support merger with Monterey Fire. They feel that the current leadership of Monterey Fire has changed Carmel Fire to a much more professional, highly trained, better equipped, integrated fire operation. They have all received standardized training with the unique geographical layout of Carmel, the fleet of apparatus, and emergency equipment and tools to effectively respond to fires and medical emergencies within Carmel.

While Carmel fire fighters benefit the City with their skills and knowledge about the City, they are also concerned that their compensation, benefits and work schedules would be adversely impacted if there was a merger with Cal Fire. While Cal Fire indicates that current City fire fighters would retain their current level of compensation in the Cal Fire pay grade system, the City fire fighters conclude that it would take a number of years for the state pay range to catch up to their current pay rate. This disparity is presented in Cal Fire’s “Fact or Fiction” slide show at the April 28th workshop. So, while their pay would not be reduced, their perception is that it could remain static for a period of years.

A further concern is the length of the duty week. This would be a major change in working conditions for City fire fighters migrating from a 56-hour duty week in Carmel to a 72-hour duty week with Cal Fire. Because of their support for merger with Monterey Fire, Carmel fire fighters have publicly indicated that they will forego an 8.75% salary increase due last January under the terms of an MOU which has now expired. The savings of foregoing this raise is $70,000 calculated through August 15, 2011.

Regardless of any MOU provisions, there is strong support by the Carmel fire fighters to continue the merger with Monterey. It is important that Carmel fire fighters fully support any proposed merger with Monterey. That will be the key to the success of any merger. It should be noted that most all of the steps necessary for effecting a merger with Monterey already have been accomplished. While a formal meet-and-confer process has been not been undertaken, there is unofficial agreement by Carmel fire personnel with the proposed contract language affecting their salaries and working conditions. Basically, they are willing to accept the current
MOU between the City of Monterey and their fire fighters.

Station Location/Backup Response. One of the points made on behalf of Cal Fire is that two of its Cypress fire stations are closer to the Carmel Fire Station (Rio Road, 1.3 miles, and Carmel Hill, 2.1 miles) than the closest Monterey station (Station #1, 3.8 miles). The point is that there is a potential for a faster backup response from these two stations than could be provided by Monterey Fire. In fact, a graphic provided by Cal Fire in its proposal indicates that the driving time from these two stations is less than from Monterey #1. Driving time, however, is not response time. In fact, Monterey County Dispatch Center records indicate that Monterey Fire often responds as backup before any of the Cal Fire units arrive.

Cal Fire has had an issue with its dispatch functions. It is in the process of hiring additional dispatch staff so that night time dispatch can transition from an “asleep” to a fully “awake” operation. In any event, the normal standard for “the second unit in” is nine minutes or less 90% of the time. Both agencies should be able to more than meet this standard.

Regarding the response from a Duty Chief to supervise a major incident, the Rawson Report indicates a response time of 10 minutes for each agency. During 2010-11, however, the average response time in Monterey was eight minutes.

Carmel Regional Fire Ambulance Authority (CRFA). As mentioned earlier, ambulance service is provided in Carmel-by-the-Sea by CRFA. It serves the City from the fire station with two paramedic fire fighters per shift. CRFA is a joint powers authority initially consisting of the City and the Carmel Valley Fire District. This District has been absorbed by the Monterey County Regional Fire District. The JPA is scheduled to dissolve in December.

The City Council has given staff direction to move toward including the six medic fire fighters as City employees with the City taking complete control over providing ambulance service. A question has been raised how merger with either Monterey or Cal Fire will impact that service.
Basically, there should be no difference in the provision of fire or ambulance service if the City took over the ambulance service as a direct provider. Both Monterey and Cal Fire point to flexibility in providing this service. They both indicate that they would administer the ambulance
service based on any direction given by the City through a contract for service.

As discussed above, Monterey Fire has already informally integrated the Carmel ambulance operation into the Department’s day-to-day service, providing oversight and supervision on fire calls. If a complete merger occurred with Monterey Fire, it is anticipated that ambulance service
will become a separate division of the Fire Department. This would occur during a year-long transition period during which the MOU, operations and organizational structure for providing ambulance service would be addressed. In any case, the level of this service would not be
diminished.

Cost. Another area where the two proposals provide a benefit to Carmel is the element of cost.

As can be seen in the following chart, both proposals would reduce the expense for fire service to the City of Carmel-by-the-Sea, with the Cal Fire proposal the most cost effective. It should be noted that the Rawson Report outlined the projected costs for both agencies over a five-year
period. For ease of analysis the cost of fire service in the 2011-12 City budget plus the proposals from Monterey and Cal Fire are presented in Chart III. These figures do not include the subsidy the City provides CRFA.

CHART III
Projected 2011-12 Fire Costs
Agency Cost Savings Difference between Mont/Cal Fire
City of Carmel $2,077,312
City of Monterey $1,928,541 ($148,771)
Cal Fire $1,801,437 ($275,875) ($127,104)
Note #1: The cost for the City of Carmel fire budget is based on the City’s adopted 2011-12
budget, not the projected cost in the Rawson Report. The costs for Monterey and Cal Fire are based on the proposals of these two agencies as presented in the Rawson Report.

Note #2: Carmel fire fighters are willing to forego an 8.75% salary increase due last January if merger with Monterey occurs. This expense is calculated at $70,000 through August 15, 2011.

This expense would be avoided by contracting with the City of Monterey.
As can be seen from this chart, an agreement with Monterey in 2011-12 would result in an annual savings of $148,771 and contracting with Cal Fire would result in an annual savings of $275,875. This includes one-time payouts for vacation and sick leave in the amount of $85,000 under the
Monterey proposal and $107,142 for Cal Fire after which these respective savings will increase.

Through 2012/13-2015/16, the difference between Cal Fire and Monterey ranges from $147,458 - $202,959 per the Rawson Report. The projected expense increase for both agencies is relatively flat, except that Monterey increased its costs because of a known increase in its PERS rate.
The major reason for this difference in savings between the two proposals is that Cal Fire uses a 72-hour duty week and Monterey a 56-hour duty week. This enables Cal Fire to cover the Carmel station with eight rather than the current nine fire fighters. The difference in cost, then, is roughly the equivalent of the salary and benefits for one fire fighter.

While this provides a current lower cost basis for the Cal Fire proposal, the City Council should be aware that there is a question over how long this lower cost basis can be maintained. In the recent past, for example, the statewide Cal Fire IAFF (International Association of Fire Fighters) nearly negotiated a 56-hour duty week which would have changed the cost basis for the CalFire proposal. Because of current economic conditions, a change in the duty week is not expected to be successfully negotiated in the near or mid-term. In the long term, however, there will be a renewed
effort to negotiate a change in hours since the 56-hour duty week, or less, is the standard for the fire service.

Another issue is the pressure at the state level for PERS to charge the unfunded liability for retirement medical benefits to state agencies which would include Cal Fire. Also, there will be higher costs for Cal Fire over time. The new entry level pension plan for Cal Fire uses a more expensive formula than Monterey (3% @ 55 vs. 2% @ 50).

The issue is that, if the cost of the Cal Fire contract reaches an undesirable point due to one or more of these factors, the City may need to consider other fire service alternatives, such as contracting with Monterey or joining a JPA (Joint Powers Authority) if one becomes viable at that point in time. It might be more difficult, however, to move back to a Carmel fire operation, since the City’s employees will have either become State employees, retired, or moved on to another municipal agency.

HEADQUARTERS MODEL. While not evaluated in the Rawson Report, there was discussion at the Workshop regarding the potential of retaining either of the two agencies providing “headquarters” service which would include administrative and support fire services to the City.

This is basically what Monterey is providing currently to the City, although as discussed earlier the level of service has been more substantial than a strictly “headquarters model” level of service.

In identifying the cost of “headquarters” services from the two proposals, it appears that Monterey would be less expensive. Cal Fire’s proposal (p. 25) indicates that the cost in 2011-12 for the “headquarters model” would be $252,686. Imbedded in Monterey’s proposal (p. 6) the cost of
“headquarters” support is $179,103. This is reflected in the following chart.

CHART IV
Projected 2011-12 Costs of Headquarters Model
City of Monterey $179,103
CAL FIRE $252,686
Difference $73,583
Headquarters Model vs. Full Merger. An important question is whether there are advantages to a full merger compared to the headquarters model. One issue is whether the City would lose control over fire services with a full merger compared to the headquarters model where fire fighters would
still be City employees. The City, however, will still have direct contractual control over the level of fire services as is the case with dozens of other cities throughout the State. The question is whether or not there are benefits to the City of full merger besides cost savings and operational efficiency.

One advantage of full integration compared to the “headquarters” model is that all of the finance, human resource, labor negotiations, benefits administration, worker’s compensation, risk management, and insurance will be handled by either Monterey or Cal Fire. This will remove this
work load and resulting cost from the City.

A disadvantage with the “headquarters” model relates to personnel issues. With two different employers and two different sets of personnel rules and regulations, there is the risk associated with employer/employee relations as it relates to discipline, processing grievances and other disputes which could lead to potential litigation. A fully integrated model avoids this risk of administering two different sets of personnel rules and provides better administration of the fire function.

The other advantage of complete merger is that full integration of fire operations will be achieved. While substantial integration of fire service has already been achieved with Monterey beyond the
current headquarters model contract, combining the two departments will make that integration complete. This means that the City will have 100% access to all additional fire personnel and equipment of Monterey Fire. The City will have total administrative support from the City of Monterey for the fire service including finance, human resources and benefits administration, records management and mandated reporting, recovery of hazardous materials mitigation costs and false alarm billing, fire safety inspections of all state-mandated occupancies, and assistance in
arson investigations. This, in turn, will reduce administrative workload on City of Carmel-by-the- Sea staff.

Finally, full integration has been successfully accomplished between Pacific Grove and Monterey. It is understood that this integration has been beneficial to both cities.

RECOMMENDATION No. 5
IT IS RECOMMENDED that Carmel Fire be fully merged with Monterey Fire.

SUMMARY OF RECOMMENDATIONS
It is recommended that at a minimum Carmel maintain a fire engine 24/7 at the Carmel Fire Station staffed by a crew of three career fire fighters and that the City retain ownership of its buildings, apparatus, equipment and tools. (See Recommendations # 1 – 3).

It is recommended that the City not provide fire service through a stand-alone fire department due to its higher cost and lack of operational efficiency. (See Recommendation #4).

It is recommended that Carmel Fire be fully merged with Monterey Fire rather than using the current “headquarters” model. (See Recommendation #5). While this alternative is more expensive than the one submitted by Cal Fire, it is less expensive than the City’s current cost of providing fire service using 2011-12 as a base year.

As the report suggests, there are several reasons to support Recommendation No. 5. These include:

• Monterey is already satisfactorily overseeing and administering Carmel Fire and its staff, apparatus and equipment operating as part of a five-station system. CRFA medic fire fighters have informally been integrated into this operation. In many respects an operational merger with Monterey already has been achieved.

• The current provision and level of service with the City of Monterey, administering a nearly integrated fire service model, is well received in the community, with no complaints received from the citizens.

• Where other agencies have merged with Monterey Fire, satisfaction has been expressed with the service provided.

• A number of successes in Monterey’s oversight of Carmel Fire have been achieved related to inoperable fire hydrants, the fire station remodel and seismic retrofit, reducing fire load at Mission Trails Park, replacing outmoded fire apparatus with new vehicles, and obtaining several grants to obtain up-to-date emergency equipment and tools.

• There will be a cost savings by avoiding the MOU obligation to the Carmel fire fighters.

• Through the integration of Monterey and Carmel operations, Carmel policies have been modified to reduce overtime expense.

• Monterey fire fighters have already become familiar with Carmel, often providing backfill staffing for the Carmel station and providing a backup engine when the Carmel engine is out on a call or as “second in” in connection with a call for service.

• Support by the Carmel, Monterey and CRFA fire fighters has been expressed for the merger. The support of the affected employees has been critical in the success of other fire services mergers.

• The potential for future cooperation and shared services with Pacific Grove and Monterey would be enhanced.

• Potential cost avoidance of an estimated $400,000 by avoiding the expense of replacing the 1988 reserve engine.

• The uncertainty of Cal Fire’s long-term costs (duty week reduction, unfunded retiree medical expense, 3% @ 55 pension plan for new hires)

• Even with the diligent efforts of Cal Fire there is a concern over Carmel fire fighters temporarily being relocated out of the area due to station assignment transfer, or during a major state-wide fire emergency since the initial drawdown of firefighting personnel would be from Cal Fire personnel.

If the City Council accepts these recommendations, staff will work with Monterey and the City Attorney to develop an agreement for review and possible adoption at the Council’s October meeting. This could be achieved by modifying the current Monterey contract. This will include developing the MOU with the local chapter of IAFF which will be the basis for the agreement.

TO: MAYOR McCLOUD AND COUNCIL MEMBERS
THROUGH: HEIDI BURCH, INTERIM CITY ADMINISTRATOR
FROM: GEORGE E. RAWSON, DIRECTOR OF PUBLIC SAFETY (RET.)
DATE: APRIL 17, 2011
SUBJECT: FIRE SERVICE ALTERNATIVES
_______________________________________________________________________
INTRODUCTION:
This report is a response to Council’s request for additional information relating to fire service alternatives for Carmel-by-the-Sea. The report outlines different service model options, and is intended to facilitate preliminary discussion and public input. Upon receipt and public discussion of this report, Council will determine what next steps should be taken before final deliberations commence on this important aspect of public safety. It should be noted this report focuses on alternative models of how fire protection services can be administered, and does not
include the Carmel Regional Fire Ambulance component.
BACKGROUND:

At the March 25, 2009 special Council meeting, staff presented a report and requested policy direction regarding fire service options. The City Administrator and Public Safety Director presented an overview of service levels and costs associated with two options: (1) a stand-alone City fire department, and (2) a fire service contract with the City of Monterey.

Subsequent to further discussion and public comments, Council directed staff to conduct a more in-depth analysis of all viable future fire protection service options to include other contract alternatives and a multi-jurisdictional fire service Joint Powers Authority.

A five-year historical perspective concerning Council actions and meetings is included as additional background information. Refer to Attachment A.

FIRE SERVICE OPTIONS:
Over the past 10 years Carmel-by-the-Sea (“Carmel”) has discussed multiple fire service delivery options. Pursuant to Council direction in 2009, staff has studied and conducted extensive analysis of the following alternatives:

Stand Alone City Fire Department – an independent City fire department with minimally necessary staffing to include a full-time Fire Chief, two additional chief officers, 3-person fire engine staffing, one part-time fire marshal, and clerical support. This option provides the most
direct control of services and associated costs, but provides significantly fewer personnel and equipment resources than either the JPA or contract options. Cost of this alternative is estimated to be $2.5 to $2.6 million annually each year of the first five years. This option also poses an increased risk of staffing shortages as a result of multiple employee absences, injuries, or position vacancies due to the significantly smaller workforce than the other alternatives. There is also an administrative capacity impact as this option requires city hall to oversee all personnel and administrative support functions to keep the stand alone fire department staffed.

Joint Powers Authority – establishing a Joint Powers Authority (JPA) to provide shared governance of a multi-jurisdictional fire agency. This option has been vigorously pursued with five other Peninsula cities over the past year; however this initiative has stalled and is not considered a viable option for the near term. It is also important to note that a state agency such as CAL FIRE cannot be a direct participant in a local Joint Powers Authority, and it would likely be very difficult to transition to a local JPA model under a CAL FIRE contract.

Fire Service Contract – The City receives contractual fire protection services from another fire agency. Staff has consulted with other local fire agencies relative to this option, including Monterey County Regional Fire District, the City of Monterey, and CAL FIRE.

Monterey County Regional Fire District has indicated it is impractical to provide contract fire services to Carmel. The City of Monterey and CAL FIRE have expressed an interest in providing contractual fire services. Both agencies have submitted preliminary information and are prepared to submit formal contract proposals for staff and Council consideration.

Both Monterey and CAL FIRE offer a broad range of services, including administrative services for overall program planning and management, budgeting, training, purchasing, development and building plan review, building and occupancy inspection, use permit administration and inspection, fire investigation, records management, and administration and management of existing department-level programs. These two options would maintain existing Carmel engine staffing, emergency incident management, and immediate response to all fire, emergency medical and related calls for service while preserving existing response standards.

The City of Monterey proposes amending its current fire administration and emergency incident management agreement with Carmel-by-the-Sea to include full fire protection services. Monterey currently provides contractual fire services to Pacific Grove, Sand City, the Presidio of Monterey, and Carmel, and their contract model integrates all resources into a single unified system available to all of their contract partners.

CAL FIRE currently provides contractual fire services to Pebble Beach Community Services District and Cypress and Carmel Highlands Fire Districts on the Monterey Peninsula, and their local contract model also integrates the resources of three fire districts into a single unified
system.

Either contract option would involve transfer of employment of incumbent full-time fire personnel to the selected contract provider (Monterey or CAL FIRE), ideally without loss of compensation. Depending on which option the council prefers, additional details concerning terms and conditions of employment, compensation, transfer of leave time, seniority, and related
labor issues will require that the City “meet and confer” with the Carmel Professional Firefighters Association regarding the impacts of the proposed contract. Subsequent to the meet and confer process, a transitional labor agreement will need to be finalized prior to contract implementation.

As mentioned earlier, a major advantage of the contract model is that it will allow Carmel administrative staff to redirect their time to other duties based on the contracting agency assuming responsibility for all fire administrative functions relating to Human Resources, Labor Negotiations, Finance, Worker’s Compensation, Insurance, and Risk Management.

Following is a comparative analysis of the stand alone model and the two fire service contract options:
Comparative Analysis of Fire Service Options
FACTOR STAND ALONE CAL FIRE MONTEREY
Emergency response standard (first unit on scene)
Response time is 3 to 5 minutes on 90% of calls.
Response time is 3 to 5 minutes on 90% of calls.
Response time is 3 to 5 minutes on 90% of calls.
Emergency response standard (structure fire)
1 engine, 1 ambulance, and 1 chief officer (6 personnel).
4 engines, 1 aerial apparatus, 1ambulance and 1 chief officer (min. 18 personnel)
4 engines, 1 aerial apparatus, 1 ambulance and 1 chief officer (min. 18 personnel)
Availability of qualified chief officer for incident command
City establishes criteria for availability.
Available within 10 minutes of Carmel at all times.
Available within 10 minutes of Carmel at all times.
Station staffing 1 engine company with 3 personnel; backfill with off-duty personnel as available.
1 engine company with 3 personnel; will backfill Carmel station when Carmel engine is committed.
1 engine company with 3 personnel; will backfill Carmel station when Carmel engine is committed.
Fire Inspection services
As established and funded by City.
Contract offers dedicated inspection staff plus on-duty engine crew
Contract includes inspection services by Monterey Fire Prevention staff.
Control over service levels and costs
Most control over service levels and costs.
City determines service level desired; no control over state personnel salary & benefits costs.
City determines service level desired in collaboration with Monterey; somewhat more influence on costs than state model

FACTOR STAND ALONE CAL FIRE MONTEREY
Governance / local control
City retains the most control with this option.
State/local government partnership subject to state’s oversight authority. Local area CALFIRE Unit Chief has authority to tailor fire protection proposal to meet Carmel standards.
Local city to city partnership building on existing relationships and agreements. Fire Chief has track record of being responsive to Carmel standards.
Capability to share other local City services
Not applicable None Significant potential to share other municipal services
Workforce stability City has full control of employees; historically very stable workforce.
State agency with employees recruited throughout state; ability to transfer in and out of Carmel and local area at any time.
Majority of fire staff lives within Monterey County and is heavily involved in local activities; may result in lower turnover rate than state model.
Financial risk
More costly than contract alternative; city retains most control of costs with this alternative.
State budget uncertainties do exist.
City maintains right to pay costs for level of
fire services city desires.
Proven local government partnership; likely
somewhat more influence over costs than state model.
Existing liability for retiree medical benefits
None CAL FIRE’s share of State’s unfunded retiree medical obligations not included in proposal;
Retiree benefit calculated on basis of state employee service; city years of service excluded from benefit calculation.
None
Ease of implementation; sustainability
Likely more complex than contract model.
Proven experience with implementing contracts. May result in longer implementation period due to collective bargaining process yet to be completed.
Proven local contract partnerships; many of
the required implementation steps have been completed to
minimize transition period; likely quickest implementation.
Labor support Carmel Firefighter’s Association does not support this model.
Unknown, however CAL FIRE firefighters union has previously opposed CAL FIRE contracting with Pacific Grove.
Monterey and Carmel fire associations fully support this alternative.

FACTOR STAND ALONE CAL FIRE MONTEREY
Familiarity with local structures and needs
Carmel firefighters are well-acquainted with Carmel’s unique characteristics.
Current Carmel firefighters remain assigned to the CFD as CAL FIRE employees. However, they have future discretion to transfer anywhere in the State. New staff must be trained on Carmel’s unique characteristics.
Carmel and Monterey Firefighters currently conduct joint training and are familiar with Carmel’s unique characteristics.
Termination of Fire Services Agreement
Not applicable 12 months’ termination notice required; no fiscal liability for transferred leave balances upon termination.
12 months’ termination notice required; payment for unpaid transferred leave balances due upon termination.
Employee Preemployment background investigation
All employees hired and promoted are subject to comprehensive background and psychological evaluation.
No agency specific requirements for preemployment background checks, but criminal history checks are performed pursuant to State EMT employment regulations.
All employees hired and promoted are subject to comprehensive background and psychological evaluation.

FISCAL IMPACT:
The current Carmel budget for fire expenses is $1,818,185. This includes $162,000 for the Monterey fire administration contract but excludes the recurring annual $82,000 fire apparatus lease costs and the Carmel Regional Fire Ambulance subsidy.

The stand alone City fire department model is estimated to cost $2.6 million for the initial year, and would total nearly $13 million over five years. Refer to Attachment B, “Cost Comparison” spreadsheet for additional fiscal detail relative to both options.

The contract model, depending on which contractor is chosen, is estimated to cost $1.8 to $1.92 million for the initial year, and would total to $8.68 to $9.55 million over five years. These estimates include first year one-time unfunded liability (vacation, sick leave) payments to certain Carmel Fire employees in accordance with previous Memoranda of Understanding. These onetime costs vary depending on the contractor agency’s personnel rules relative to maximum leave balances.

It should be noted that a labor agreement between the Carmel Professional Firefighters Association and the City provided for an 8.75% pay increase effective December 31, 2010 that has yet to be implemented. If such an increase were to be implemented, the costs associated will be reflected in the final cost proposal. If a contract option is ultimately selected, Carmel will be required to make one-time unfunded liability (vacation, sick leave) payments

SUMMARY:

In summary, the stand-alone model is more costly and provides substantially fewer personnel and equipment resources versus the JPA or fire service contract alternatives. Although the JPA model is a promising alternative, the ability to implement this option in the near future makes
this an impractical alternative at this time. It is recommended the city focus on contract fire services as the preferred alternative while maintaining the option to participate in a fire services JPA in the future.

Carmel-by-the-Sea Fire Service Cost Estimate Comparison
FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 5-Year
OPTION #1: STAND ALONE MODEL Total
Salary & Benefits1 $ 2 ,282,479 $ 2 ,340,101 $ 2,411,138 $ 2,418,776 $ 2,420,298
Materials & Supplies $ 1 47,056 $ 1 49,997 $ 152,997 $ 156,057 $ 1 59,178
One-Time Costs (Recruiting, vehicles, equip.) $ 1 75,000
TOTAL2 $ 2 ,604,535 $ 2 ,490,098 $ 2,564,135 $ 2,574,833 $ 2,579,476 $ 1 2,813,077

OPTION #2: MONTEREY FIRE CONTRACT
Contract $ 1 ,720,396 $ 1 ,727,255 $ 1,783,594 $ 1,800,268 $ 1,810,699
Materials & Supplies $ 1 22,380 $ 1 24,828 $ 125,947 $ 128,466 $ 1 31,035
Sick/Vac Leave payoff3 $ 8 5,765
Total2 $ 1 ,928,541 $ 1 ,852,083 $ 1,909,541 $ 1,928,734 $ 1,941,734 $ 9 ,560,633

OPTION #3: CAL FIRE CONTRACT
Contract $ 1 ,579,852 $ 1 ,587,893 1,589,022 1,611,643 1,614,898
Materials/Supplies $ 1 14,443 $ 1 16,732 119,067 121,448 123,877
Sick/Vac Leave payoff3 $ 1 07,142
Total2 $ 1 ,801,437 $ 1 ,704,625 1,708,089 1,733,091 1,738,775 $ 8 ,686,017
1 Salary projections assume PERS increases but no pay raises for 5 years.
2 Total excludes CRFA subsidy and leases
3 One time sick leave payout plus excess vacation cap payout per MOU
gr 4-17-11

Attachment A
Historical Background Information
Fire Protection Services

Following is a summary of public meetings and Council direction regarding future fire services for Carmel:

2005: Council approved a contract to receive fire administrative services from Pacific Grove.

2005: The cities of Pacific Grove, Monterey and Carmel initiated informal discussions of a consolidated fire service delivery system.

2007: Council approved a contract with the City of Monterey to provide “Duty-Chief” services.

This agreement came at a timely opportunity to implement, model, and evaluate the feasibility, effectiveness, and efficiency of a consolidated fire command staff.

2007: Council participated in a joint City Council meeting with the Monterey and Pacific Grove City Councils to receive a consultant’s report regarding feasibility of consolidating fire services.

The report concluded that consolidation of the three city fire departments was both fiscally and operationally feasible. After the presentation, the three City Councils formally received the report with the understanding that once they had a chance to digest the information the City Managers and Fire Chiefs would bring back recommended next steps for Council’s consideration.

2008: Council approved a new contract for interim fire administration and Duty Chief services from Monterey.

2009: The Monterey County Mayors Association encouraged the City Managers to explore opportunities for achieving enhanced efficiencies through shared fire services. Monterey Peninsula Mayors, City Managers/Administrators, District Presidents and Managers, and Fire Chiefs subsequently met to discuss the opportunity to create a Peninsula-wide Fire Joint Powers Authority (JPA).

2009: Council received a staff report asking for policy direction regarding future options for fire protection services. After discussion and public input, the Council directed staff to identify viable fire service alternatives and provide Council with a detailed analysis of each option.