When Five Cities Fire Authority formed in 2010, it was an effort to cut costs for Arroyo Grande, Grover Beach and Oceano, and consolidate firefighting operations for the closely aligned cities — joining forces, so to speak, to provide better, less expensive fire service to the majority of the area.
Nine years later, the authority faces an uncertain future now that budgeting woes have city leaders debating how the department should be funded — or if it should just be disbanded.
The authority’s biggest participant, Arroyo Grande, is eying the latter.
In a staff report released Friday, Arroyo Grande City Manager Jim Bergman recommend the city leave the joint fire department — which could effectively disband the entire organization — in favor of forming its own fire department and later inviting only Grover Beach to join forces again.
“Staff feels compelled to recognize the impact of increasing costs to the budget and established council priorities and feels it is imperative to move to a more cost-effective approach in the short term,” the staff report reads.
“This is probably, arguably, one of the most important conversations any community can have,” Bergman said in a phone interview with The Tribune on Monday. “What I’m trying to do is get people to understand what situation we are in, the solutions we’ve been looking for and hopefully, solutions we are trying to achieve.”
The Arroyo Grande City Council will consider the recommendation at its meeting Tuesday night.
Why would Arroyo Grande leave the authority?
The reasons for potentially leaving the authority stem from the joint department’s funding formula and increasing expenses as it transfers from volunteer firefighters to full-time.
The current funding formula for the department calls for Arroyo Grande to pay for 47 percent of the authority’s expenses, Grover Beach 34 percent and Oceano Community Services District 19 percent, according to the staff report.
For Arroyo Grande, this translated to roughly $2.5 million in 2018.
In recent years, the Fire Authority expenses have also increased as it transitions from volunteer firefighters to full-time firefighters, and as its equipment aged and needed to be replaced.
In 2019, the authority’s annual budget was $5.3 million. That is expected to increase to $6.8 million by 2023, according to Five Cities Fire Chief Steve Lieberman.
Lieberman said the new funding is essential to fully staffing the authority’s three stations and bringing its equipment up to date.
“It’s a regional model that is working,” Lieberman told The Tribune in a phone interview Monday. “It’s just that costs over time go up, and we had a funding model that wasn’t set up to sustain that.”
Because of this, representatives of the three cities and the Five Cities Fire Authority met and approved a memorandum of understanding in May 2018 that gave them time to figure out how exactly it wanted to continue to divvy up the expenses.
The memo gave the cities until April 1 of this year to come up with a new agreement; if they were unsuccessful by that date, the memo stipulated that any of the participating cities could withdraw from the authority and/or the organization could be disbanded.
During that time, representatives developed a formula that would up Oceano’s piece of the bill to 23 percent, and lower Arroyo Grande and Grover Beach’s, according to the staff report.
There was one problem though: Could Oceano afford it?
Oceano budget woes
The Oceano Community Services District currently receives $987,362 in property tax revenue from the county — 97 percent of which is used for fire operations, according to the report. Upping its portion of the bill would push expenditures over its already tight budget.
One option for increasing funding to the CSD includes a $150-per-year parcel tax increase for Oceano property owners. Bergman said this option would be difficult because the tax would have to be passed with two-thirds approval.
If a tax measure were to be pushed and then fail, it would delay the agencies from figuring out other funding options until after an election in 2020, according to the report.
The county could also choose to step in and take over the CSD’s fire service, and staff the Oceano Fire Station with two full-time firefighters, according to a November 2018 county report on fire services in unincorporated areas. If it chose to do that, it would absorb all of the CSD’s fire funding to pay for the station staffing and operations.
On Monday, Lieberman said the Fire Authority would be open to working with the county to continue serving Oceano.
“We would love to work with the county on how can we help Oceano stay in the authority and afford it,” he said.
Bergman said as far as he was aware, the county has not yet expressed an interest in pursuing that option.
“We are kind of stuck here,” Bergman said. “We pride ourselves on trying to work together with our neighbors, but the numbers just didn’t work.”
Oceano CSD General Manager Paavo Ogren declined to comment on Arroyo Grande’s withdrawal discussions, saying he first wanted to hear what the Arroyo Grande and Grover Beach city councils decide to do.
“I do believe it is important to for me to state that the OCSD Board of Directors has expressed support for the Five Cities Fire Authority on numerous occasions and the direction I have been provided from the board is consistent with the hope for continuing services from the Fire Authority,” he added in an email to The Tribune.
What happens next?
The fate of the authority is now in the hands of the governing boards of its three member agencies.
Arroyo Grande’s City Council will debate the issue on Tuesday night, and Grover Beach is expected to talk about it at its meeting March 4. The Oceano Community Services District will have until April 1 to make a decision.
If the council does decide to leave the Fire Authority, it would go about creating an independent fire department.
That could cost roughly $2.6 million, according to Bergman’s staff report.
Grover Beach could also be invited to help form a new joint fire department between the two cities, Bergman said.
“Everyone knows a stand-alone fire department in the city is going backwards,” he said. “It’s really a transition step.”
Bergman’s staff report did not recommend allowing Oceano to partake in a new joint authority with Arroyo Grande and Grover Beach.
Though his staff report has recommended leaving the authority, Bergman said his ideal, perfect-world solution would be one where all the agencies can continue to work together.
“What we are trying to show is right now we have some options — but the best option is we all work together,” Bergman said. “This is the last-ditch effort; it shows people this is real, this could happen.”