BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 239 (Hertzberg) - Local services: contracts: fire protection services. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 23, 2015 |Policy Vote: GOV. & F. 5 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 28, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- SUSPENSE FILE. AS AMENDED. Bill Summary: SB 239 would require written approval from a local agency formation commission (LAFCO) before a public agency can contract for fire protection services outside its current service area. The bill would prescribe a public process for approving a fire protection reorganization contract, including a requirement that, prior to submitting an application to the LAFCO, a public agency must obtain written consent to the proposal from each affected public agency and the recognized employee organization representing firefighters of both the existing and proposed service providers, and conduct a public hearing. Fiscal Impact (as approved on May 28, 2015): Unknown increased General Fund costs to the Department of SB 239 (Hertzberg) Page 1 of ? Forestry and Fire Protection (CAL FIRE), likely in the low hundreds of thousands annually, to comply with specified administrative requirements prior to contracting with local agencies for fire protection services. CAL FIRE currently has 115 contracts with local agencies for full fire protection services, and the contracts typically have a duration of three years. It is likely that all of those contracts would meet the criteria in the bill requiring LAFCO approval. For illustrative purposes, if CAL FIRE incurred additional costs of $10,000 to extend 38 fire protection contracts in a year through the LAFCO process, annual administrative costs would be $380,000. It is likely that CAL FIRE would incur higher costs to assess the impacts of contracts for larger service areas. Unknown, potentially significant impact on CAL FIRE fire protection costs (General Fund). Currently, CAL FIRE provides over $50 million in contracted reimbursements to counties for fire protection services in "state responsibility areas," and the state is provided with over $300 million in contracted reimbursements from local agencies for CAL FIRE to provide a variety of fire protection services to cities, counties, and fire protection districts. These contracts must be mutually beneficial and cost-effective. To the extent this bill discourages or prevents contracting for fire services, both CAL FIRE and local agencies could experience increased costs to provide fire protection. Background: Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act, delegates the Legislature's power to control the boundaries of cities and special districts to local agency formation commissions (LAFCOs). The Act authorizes a city or county to provide new or extended services by contract or agreement outside its jurisdictional boundaries if it receives written approval from the LAFCO in the affected county. This requirement does not apply to contracts or agreements solely involving two or more public agencies where the public service to be provided is an alternative to, or substitute for, public services already being provided by an existing public service provider and where the level of service to be provided is consistent with the level of service contemplated by the existing service provider. Existing law authorizes cities and fire protection districts to SB 239 (Hertzberg) Page 2 of ? enter into contracts with counties to provide fire protection services within a local agency's jurisdiction. In addition, cities, counties, and districts can enter into cooperative agreements with CAL FIRE to provide fire protection services. CAL FIRE currently has 149 contracts with a value of over $300 million to provide a variety of fire protection services to local governments (Schedule A Agreements), ranging from dispatch services to full service fire protection. CAL FIRE typically enters into an average of two new contracts each year to provide local fire protection services; the contracts typically have a duration of three years and must be mutually beneficial. CAL FIRE also has 6 contracts with counties with a value of over $50 million to provide wildland fire protection in State Responsibility Areas on behalf of the state (Contract County Agreements). Proposed Law: SB 239 requires a state or local public agency to obtain a LAFCO's written approval to provide new or extended services under a fire protection reorganization contract. Specifically, this bill would: Define a "fire protection reorganization contract" as a contract or agreement that for the exercise of new or extended fire protection services outside a public agency's current service area that does either of the following: o Transfers responsibility for providing services in more than 25% of the service area of any public agency affected by the contract or agreement. o Changes the employment status of more than 25% of the employees of any public agency affected by the contract or agreement. Require that a request submitted to LAFCO for approval of services provided under a fire protection reorganization contract be made as follows: o For a non-state public entity, by the adoption of a resolution of application by the legislative body proposing to provide those services outside the agency's current service area. o For a state public entity, the director of the agency must initiate the application proposing to provide these services outside its current service area, and have SB 239 (Hertzberg) Page 3 of ? the application approved by the Governor. Prohibit the legislative body of a public agency or the director of a state public agency from submitting an application to LAFCO unless both of the following occur: o The public agency obtains and submits a written agreement validated and executed by each affected public agency and recognized employee organization representing firefighters of the existing and proposed service providers consenting to the proposed change of organization. o The public agency conducts an open and public hearing on the resolution. Require that a resolution of application be submitted with a fire services reorganization contract plan that includes all of the following: o A total cost estimate for providing new or extended services. o The estimated cost of the new or extended services to customers. o An identification of existing service providers and the potential fiscal impact to the customers of those existing providers. o A plan for financing the exercise of the new or extended services. o Alternatives for the exercise of the new or extended services. Require that a public agency to contract for an independent comprehensive fiscal analysis for submittal with the application that reviews and documents the following: o The costs to the applicant public agency during the three years following the effective date of a fire protection reorganization contract, including all direct and indirect costs, and a review of specified cost comparisons for similar service areas to reasonably determine expected costs. o The revenues of the applicant public agency during the three years following the effective date of contract with another public agency to provide a new or extended service. o The effects on the costs and revenues of any affected public agency, including the applicant public agency, during the three fiscal years that the new or extended service will be provided. SB 239 (Hertzberg) Page 4 of ? o Any other information and analysis needed to support the findings that a LAFCO must make to approve services under the contract. Require the clerk of the public agency or the director of a state agency to file a certified copy of the resolution of application with the LAFCO executive officer. Require the LAFCO executive officer to determine whether the application for approval is complete and acceptable within 30 days of receipt, as specified. Require the LAFCO to approve, disapprove, or approved with conditions a fire protection reorganization contract following a public hearing on the proposal. Prohibit the LAFCO from approving the application unless it determines the public agency will have sufficient revenues to carry out the fire protection reorganization contract, but allows for conditional approval on the concurrent approval of sufficient revenue sources, as provided. Prohibit the LAFCO from approving the application unless it makes findings of all of the following: o The proposed exercise of new or extended services outside a public agency's current service area is consistent with the Cortese-Knox-Hertzberg Act. o The commission has reviewed the comprehensive fiscal analysis. o The commission has reviewed the testimony presented at the public hearing. o The proposed affected territory is expected to receive revenues sufficient to provide public services and facilities and a reasonable reserve during the three fiscal years following the effective date of the contract or agreement between the public agencies to provide a new or extended service. Specify the manner in which a LAFCO executive officer must SB 239 (Hertzberg) Page 5 of ? provide public notice for the hearing to review an application for approval of a fire protection reorganization contract, and require the LAFCO to hear and consider all written and oral testimony by any affected local agency, county, or interested person. Staff Comments: This bill is intended to ensure that contracts to extend fire protection services outside of a public agency's jurisdiction are thoroughly and independently examined in a public process that provides increased transparency and oversight. SB 239 requires a public agency to have an independent fiscal analysis of a proposal for a fire protection reorganization contract to assess the costs and revenues of the public agency are sufficient to carry out the contract over a three-year period. As such, this bill ensures the cost-effectiveness of contracts that are approved through the LAFCO process. As part of the public process required by this bill, however, public agencies must have the consent of recognized firefighter organizations in both the existing and proposed service areas prior to submitting an application to LAFCO for approval of a fire protection reorganization contract. This provision reduces a public agency's autonomy to make service delivery decisions, and may present barriers that prevent contracting for fire protection in some cases, or result in increased contracting costs in others. Author amendments (as adopted on May 28, 2015): Proposed author's amendments would do the following: Require approval of CAL FIRE contracts by the Department of Finance instead of the Governor. Require written notice to be provided to each affected public agency and firefighter employee organization, including a copy of the full contract proposal. Require the application submitted to LAFCO to also include all of the following: o Enumeration and description of the new or extended fire protection services proposed to be extended to affected territory. o The level and range of new or extended fire SB 239 (Hertzberg) Page 6 of ? protection services. o An indication of when the new or extended services can feasibly be extended to the affected territory. o An indication of any improvements or upgrades to structures, roads, sewer or water facilities, or other conditions the public agency would impose or require within the affected territory if the contract is completed. Clarify that the bill does not abrogate a public agency's responsibilities under the Brown Act. Make a specified legislative finding. Make numerous technical changes. -- END --