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County Commission votes to terminate fire contract with Reno Fire Department based on financial analysis

By ThisIsReno

SUBMITTED NEWS RELEASE

In a vote of four to one (Commissioner Kitty Jung dissenting), Washoe County Commissioners acting as the Board of Fire Commissioners of the Truckee Meadows Fire Protection District today voted to give notice of its termination of the Interlocal Agreement for Fire Services with the Reno Fire Department effective June 30, 2012. Per the existing contract’s terms, termination notice must be received one year prior to a termination date.

Acting as the Truckee Meadows Fire Board, Washoe County Commissioners took action in 2000 to contract with the City of Reno Fire Department to provide fire service in the Truckee Meadows Fire Protection District (TMFPD). For the past two years, both the Commissioners and the Joint Fire Advisory Board (JFAB) comprised of elected officials from both Washoe County and the City of Reno, have met to address multiple issues that impact the cost of fire operations. Washoe County currently pays $11.3 million annually to the Reno Fire Department toward the delivery of fire services for the TMFPD. Financial analysis has shown that this funding is not sustainable given on-going property tax revenue reductions in that fire district’s service territory, and will continue to result in declining ending fund balances.

In today’s presentation, Fire Services Coordinator Kurt Latipow provided information as requested by the Commissioners at their May 24, 2011 meeting. Specifically, Mr. Latipow reported:

  1. that an independent review of TMFPD’s financials for the 2011-12 fiscal year was conducted and, in general, confirmed previous financial analysis;
  2. a request that Reno’s International Association of Fire Fighters Local 731 review the current staffing levels and consider 3-person staffing flexibility (request denied);
  3. both county and city staff continued to meet in an attempt to achieve consensus on points of disagreement in the proposed agreement but consensus was not reached resulting in substantial financial impacts on the TMFPD which accelerate the draw down of fund balance and potentially lead to destabilization.

At the Board’s request, Mr. Latipow prepared and presented four alternatives for consideration of future fire operations. The four alternatives were:

  1. Alternative 1: Reno/TMFPD new interlocal alternative with current 4-person engine staffing. Based on proposal received from City of Reno. Analysis shows this alternative is not financially sustainable due to contract terms.
  2. Alternative 2: TMFPD standalone current 4-person engine staffing. Analysis shows this alternative is not financially sustainable due to current economic recession and impact upon property tax revenues.
  3. Alternative 3: TMFPD standalone 3-person engine staffing. Analysis shows this is the only alternative that is financially sustainable for the long term.
  4. Alternative 4: Reno/TMFPD existing interlocal agreement with one-year extension and one-year transition term. Assumes TMFPD will remain with RFD through June 30, 2012 with final termination on June 30, 2013. Analysis shows this alternative is not financially sustainable in the long-term.

Latipow’s report stated that, “Based on the cost benefit analysis and projections provided by the District’s financial consultant, the only alternative that maintains the District in a financially stable condition is the alternative 3 in which the TMFPD withdraws from the Interlocal Agreement, modifies its current 4-person engine company staffing to allow the ability to down staff to 3-person engine company staffing, per shift for five fire stations. This alternative assumes regional parity for the employees except for potential former TM staff returning to TM from Reno who will be retained at the Reno pay rate per the Interlocal Agreement.” The report also states that there will be an approximate $600,000 to $700,000 in start-up costs to re-establish the District.

Alternative 3 would result in an operating surplus of nearly $1.3 million in FY 2011-12, with surplus declines in FY 2012-13 and 2013-14 due to projected further decreases in property tax revenues. TMFPD financial consultant Mary Walker informed the Board that Government Financial Accounting standards specify two-months worth of fund balance for fire operations, and the current interlocal agreement with Reno Fire Department has resulted in continuous declines of TM’s fund balances and has brought it perilously low threatening the viability and sustainability of the District.

The Board directed Latipow to prepare a notice of termination of the Interlocal Agreement for the Chairman’s signature and transmit it to the City of Reno. They also directed him to return to the Board on August 9th with a proposed strategic plan based on alternative 3 which would include but not be limited to:

  1. objectives describing major activities to be accomplished;
  2. detailed task list for each objective;
  3. timelines for the accomplishment of objectives;
  4. identification of interdependencies between objectives and/or tasks;
  5. identification of the party(s) responsible for the accomplishment of objectives and tasks;
  6. review of financial data provided by financial consultant;
  7. other critical considerations necessary to complete the transition and enable the TMFPD to assume all operational and administrative functions of the District no later than July 1, 2012.

In making their decision, the Board noted the decision to terminate the contract with the RFD was made based on the financial analysis presented to them today. They noted that while the region has saved approximately $13 million as a result of the interlocal agreement between TMFPD and RFD, current economic conditions make the current and proposed contract financially unsustainable and could lead to the fire district’s demise. The Board praised county staff and RFD Chief Michael Hernandez for their commitment to try to develop solutions and providing fire services to our region. The Board encouraged Chief Hernandez and other stakeholders to join the County in pursuing regionalization of future fire services.