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Leon County
Board of County Commissioners Cover Sheet for Agenda #1 May 27, 2025 |
| To: | Honorable Chairman and Members of the Board |
| From: | Vincent S. Long, County Administrator |
| Title: | Consideration of Rate Adjustments to the Five-Year Fire Rescue Assessments and Fees |
| Review and Approval: | Vincent S. Long, County Administrator |
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Department/Division Review and Approval: |
Ken Morris, Assistant County Administrator |
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Lead Staff/ Project Team: |
Roshaunda Bradley, Director, Office of Management and Budget Brandy Furbee, Budget Manager |
Statement of Issue:
This item seeks Board consideration of rate adjustments to the five-year fire rescue assessments and fees to provide sufficient funding, based on expenditure increases identified by the City of Tallahassee and reviewed by a professional third-party consultant, for fire rescue services in the unincorporated area of Leon County for the remainder of the five-year study period (FY 2028). This item also provides a proposed resolution for the Board’s consideration to mitigate expenditures and rate increases by initiating the formal conflict resolution process provided by Interlocal Agreement.
Fiscal Impact:
This item has a fiscal impact. The imposition of the adjustments to the fire rescue assessments and fire rescue services fees would be effective October 1, 2025, and generate an additional $2.6 million annually in the unincorporated area for a total of $14.2 million in each of the remaining three years. While the Board may wish to accept the rate increase for the remainder of the five-year study period, initiating the conflict resolution process with the City may delay or mitigate increases to the assessment rates.
Staff Recommendation:
Board Direction.
Report and Discussion
Background:
This item seeks Board consideration of rate adjustments to the five-year fire rescue assessments and fees to provide sufficient funding, based on expenditure increases identified by the City of Tallahassee and reviewed by a professional third-party consultant, for fire rescue services in the unincorporated area of Leon County for the remainder of the five-year study period (Attachment #1). This item also provides a proposed resolution for the Board’s consideration to mitigate expenditures and rate increases by initiating the formal conflict resolution process provided by Interlocal Agreement.
The County and City have a long and mutually beneficial history of contracting for the provision of fire rescue services in the unincorporated area of the County and EMS ambulance services countywide. In 1988, the County began contracting with the City for fire rescue services in the unincorporated area through an interlocal agreement. In 2009, the first fire rescue assessment study was adopted and implemented in FY 2010 by Interlocal Agreement to uniformly charge properties for fire rescue services in both the City and unincorporated areas of the County. The assessment rates are imposed for a five-year period to provide consistency and certainty to taxpayers, and revenue assurances for the provision of high-quality fire rescue services. The stability of the assessments is a product of mutually agreed upon components, cost estimates, and professional third-party rate development to ensure the financial methodology and legal requirements.
Pursuant to Section 125.01(1)(d), Florida Statutes (F.S.), counties are authorized to provide fire protection services. Consistent with Section 125.01(1)(r), F.S., and Chapter 7, Article IV of the Leon County Code of Laws, fire rescue services are funded through a fire rescue assessment imposed by both the County and City to residential, commercial, and industrial/warehouse properties, and a fire rescue services user fee is charged to government properties. The fire rescue assessments levied in the unincorporated area are collected, and except for a small portion of funding for the Volunteer Fire Departments, are required to be remitted to the City to pay for fire rescue services provided in the unincorporated area of the County (please note, although there is a distinction between special assessments and user fees, for ease of reference the term “assessment” may be used throughout this item for the charge to all properties).
The assessment rates are developed as part of a joint study by a third-party consultant to be considered and adopted by the Board and City Commission. The funding of fire rescue services through a dedicated assessment is a common approach used by numerous cities and counties throughout Florida. This funding method is legally defensible as it directly ties the cost of the service to the property benefiting from the service. This method of assessment also ensures funding transparency to the taxpayer, while providing a dedicated consistent revenue source to fund this critical service.
In April 2023, the Board approved both the results of a fire rescue assessment study (2023 Fire Assessment Study) (Attachment #2) and a Sixth Amendment to the 2009 Interlocal Agreement Regarding the Provision of Fire and Emergency Medical Services (Interlocal Agreement) (Attachment #3), and implemented the updated rates for residential, commercial, industrial/warehouse, and government properties. The rates went into effect on October 1, 2023, and were based on the City’s estimated costs at that time to provide fire services for the next five years (FY 2024 – FY 2028).
On January 14, 2025, the County received a letter from the City by certified mail providing notice that the current assessment rates were not expected to be sufficient for the remaining three years of the study period and attributed the need to adjust the assessment rates due to non-payment for services by Leon County Schools and the adoption of new collective bargaining agreements for firefighters. The City proposed quickly engaging a consultant to begin a financial review of the Fire Services Fund and initiating a study to identify sufficient assessment rates to fully fund fire protection services for the next three years. Upon receipt of the letter, County staff immediately engaged the County Attorney’s Office and scheduled meetings with City counterparts to gather additional information and assess the potential use of the Fire Services Reserve Fund.
The fire assessment rates are based on the average assessable costs over a five-year period. The flat assessment rates provided in the consultant study are designed to generate surplus revenues in the early years of the five-year study period to offset projected increased costs in the latter portion. Surplus revenues are deposited into the Fire Services Reserve Fund to support fire services and avoid increases to the assessment rate during the five-year period. The Interlocal Agreement provides several processes for the County Administrator and City Manager to address these fluctuations in revenues and/or expenditures and utilize the Fire Services Reserve Fund during the five-year study period as follows:
If the County Administrator and City Manager are unable to reach a mutual agreement on the level of sufficient funding for fire rescue services, they may seek guidance from and/or provide recommendations to their respective elected governing bodies to resolve the matter. In addition, the Interlocal Agreement allows for either party to initiate a formal conflict resolution process with prescribed steps and timelines to resolve disputes including mediation and ultimately binding arbitration.
Approximately one week prior to the City Commission’s budget workshop on February 12, 2025, the published agenda materials prematurely advised the City Commission that the City had already contracted with a consultant “to conduct a formal review of the current rates.” In response, the County Attorney sent a letter to the City Attorney advising that the consent of both the City Manager and County Administrator is required to conduct a new Fire Assessment Study pursuant to the Interlocal Agreement. At that time, County and City staff were still conducting due diligence on the projected revenues and expenditures related to fire services and exploring options to delay or mitigate assessment rate increases.
The internal review of the City’s planned expenditure increases, described further in the Analysis section, are well beyond the typical inflationary costs projected in the five-year study period and include new costs that were not contemplated in the 2023 Fire Assessment Study. The City projected the need to increase the fire assessment by an estimated 20-25% in FY 2026, which will be the third year of the five-year assessment. Given the significant financial impact of the estimated increase to residents, the County tasked the professional consultant with conducting a financial review of TFD’s recent and out-year budgets including whether an increase in the assessment rates is warranted. The objective of the review was to align fire assessment revenues with planned expenditures, identify costs that should not be paid from the fire assessment, and identify any new expenditures which were not contemplated in the current five-year rates. And finally, the County tasked the consultant with providing an analysis of available Fire Service Reserve Funds that could be utilized to offset any potential rate increases.
The 2023 Fire Assessment Study was performed by Government Services Group which is now part of Accenture LLP (Accenture), an industry leader in the development of assessment and fee studies throughout Florida. Accenture was contracted to conduct the formal review on behalf of the City and County. The results of the consultant review, as described in the Analysis section, determined that increasing the rates is necessary based on TFD’s planned expenditures, effective October 1, 2025 (FY 2026). If approved, the rates will remain in effect for the remainder of the five-year term. If the Board does not accept the City’s cost increases and the consultant’s corresponding adjustment to the assessment rate to align revenues with TFD expenditures, the Board may provide direction to initiate the conflict resolution process provided in the Interlocal Agreement. The Analysis section provides a proposed resolution on cost mitigation strategies that can be formally addressed with the City to reduce the increased costs and delay and/or mitigate adjustments to the assessment rate.
Analysis:
The fire assessment rates are developed as part of a joint study by a professional third-party consultant to be considered and adopted by the Board and City Commission. For the provision and continuity of high-quality fire rescue services supported by a flat assessment rate over a five-year study period, the City provides the consultant with out-year budget assumptions and projected expenditures for the Tallahassee Fire Department (TFD). The 2023 Fire Assessment Study provided the basis for the current assessment rates adopted by the Board for the five-year study period (FY 2024 – FY 2028). The fire rescue assessments levied in the unincorporated area are collected, and except for a small portion of funding for the Volunteer Fire Departments, are required to be remitted to the City to pay for fire rescue services provided in the unincorporated area of the County.
On January 14, 2025, 15 months into the current five-year fire services assessment, the City notified the County that the revenue generated from the fire services assessment will not be sufficient to continue to provide fire services at the current service level and recommended an early review of the rates. On February 12, 2025, the City projected the need to increase the fire assessment an estimated 20-25% by FY 2026 which will be the third year of the five-year assessment.
As described earlier in this item, the County and the City engaged Accenture to prepare a formal financial review of the Fire Service Fund including an analysis of TFD’s planned expenditure increases. Based on the financial information provided by the City, the consultant determined that a 22% increase in assessments is necessary for residential and non-residential properties in the unincorporated area to accommodate the planned increase in expenditures for the remaining three years of the five-year assessment period. The consultant review also includes the methodology used to calculate the rates and compares the current and proposed rate adjustment by property type and assessable zone. Additional information is provided in this analysis for the Board’s consideration of a proposed resolution to mitigate some of the planned expenditures and 22% rate increase. This would require the Board to initiate the conflict resolution process, as described in more detail later in this item, which may require mediation and ultimately binding arbitration.
The following section provides the consultant’s recommendations for the remainder of the five-year assessment term based on TFD’s planned expenditures.
Proposed Rate Adjustments for the Remainder of the Five-Year Period
To calculate the rates, the consultant first determines the portion of the TFD budget that is “assessable.” Costs in the budget associated with the provision of fire services only, less any offsetting revenues the TFD may receive, are assessable. For example, TFD costs to provide Advanced Life Support (ALS) services and fire protection at the airport and to conduct inspections would be paid by other revenue sources and have not been included in TFD costs for purposes of developing the revised rates.
The study contemplates establishing a level rate using the updated assessable budget based on increased costs provided by the City and the call volume analysis conducted in the 2023 Fire Assessment Study. The portion of the TFD budget that is assessable is an average of $62.9 million annually for the next three years. Of this amount, the unincorporated area of the County is responsible for approximately $14.2 million or 23% of the budget.
The methodology used in the study is consistent with previous fire rescue assessment studies. The study uses two distinct service zones, each with their own rates. The two service zones are based on proximity to core stations. Core stations are defined as stations that are within five road miles of two other stations. Given this definition of “core station”, properties are then assigned to either Zone 1 or Zone 2:
While the City and unincorporated area of the County have both Zone 1 and Zone 2 categories, properties in Zone 1 are primarily in the City, while properties in Zone 2 are primarily in the unincorporated area of the County. Assessable costs are allocated between the two zones based on calls for service identified in the 2023 Fire Assessment Study.
To calculate the assessments, the fire rescue costs are allocated to the different categories of property (residential, commercial, industrial/warehouse, and governmental) based on the historical demand for services. The recommended assessments for each Zone and category are provided in Table #1. Based on the updated expenditures provided by the City and the consultant’s review of the assessable costs, the consultant recommends all rates to increase by approximately 22% for the remainder of the five-year period (FY 2026 – FY 2027).
Residential Property Assessments
Table #1 shows the current and proposed residential fire rescue services assessments for Zone 1 and Zone 2 in the unincorporated area of the County. The assessment is established per residential unit, whether the unit is a detached single-family residence or a multi-family dwelling unit. All residential units are charged the same assessment within the designated service area or zone.
Table #1: Current and Proposed Residential Fire Assessments
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# of Units Unincorporated |
Current Assessment |
Proposed Assessment |
Annual Increase |
Monthly Increase |
% Increase |
|
Zone 1 |
7,848 |
$245 |
$300 |
$55 |
$4.58 |
22% |
|
Zone 2 |
32,927 |
$223 |
$272 |
$49 |
$4.08 |
22% |
The current rates have been in place since FY 2024. If approved, the consultant’s proposed rates are calculated to fully cover assessable costs over the remainder of the five-year term. As shown in Table #1, the rate increase for Zone 2, which represents the largest number of properties, would be $49, the lowest increase for any of the categories.
Non-Residential Property Assessments
Like residential properties, the 2023 Fire Assessment Study established rates for non-residential properties based on call volume distribution per zone and category. Non-residential property assessments are levied for commercial and industrial/warehouse categories. Attachment #4 provides a detailed analysis of the specific rates for each non-residential category to account for increased costs in TFD’s assessable budget. Table #2 provides the proposed rate changes for the non-residential categories in the unincorporated area.
Table #2: Unincorporated Non-residential Current and Proposed Fire Assessment Changes
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|
Zone 1 |
Zone 2 |
||
|
# Properties |
% Change |
# Properties |
% Change |
|
|
Commercial |
380 |
22% |
537 |
22% |
|
Industrial/Warehouse |
125 |
22% |
213 |
22% |
As reflected in Attachment #4, the changes to the non-residential categories vary greatly by zone and category. The specific rates shown are tiered by the square footage of the building, with smaller square footage buildings paying less than larger buildings. Like residential properties in the unincorporated area, most of the businesses in the unincorporated area are in Zone 2. Overall, non-residential properties in the unincorporated area will see average increases of 22%.
Governmental Fee/Assessment
The study continues to recommend levying a fire rescue assessment on governmental property. The proposed fire rescue assessment is $0.326 per square foot. This is an increase of $0.059 per square foot. According to the study, the total assessment to provide fire services to governmental property, including state buildings, university buildings, etc., is $7.4 million. Most of the governmental property is located within the City limits; $249,000 will be billed to governmental properties located in the unincorporated area of the County.
The total revenue to be collected by imposing all the recommended new rates in the unincorporated area is $14.2 million annually, which is further detailed in the next section.
Revenue Summary
Table #3 provides a summary of the total revenue generated from the fire rescue assessment for both the current and proposed rates. As shown in the table, most of the revenue is derived from residential payers. This is a direct result of residential properties accounting for most of the calls and receiving the most benefit for fire rescue service in the 2023 Fire Assessment Study which supports the legal requirements to impose these assessments. As reflected, adopting the new rates will fully fund the expenditure increases for fire rescue services through FY 2028.
Table #3: Unincorporated Area Fire Assessment Revenue
|
Category |
Current Revenue |
Proposed Revenue |
|
Residential |
$9,268,600 |
$11,315,946 |
|
Commercial |
$1,946,072 |
$2,379,420 |
|
Industrial/Warehouse |
$219,839 |
$268,739 |
|
Governmental |
$203,829 |
$248,870 |
|
Total Assessment Revenue |
$11,638,340 |
$14,212,975 |
Pursuant to Section 197.3632(4)(a) and (b), F.S., a public hearing is required to levy the assessment utilizing the uniform method for the levy, collection, and enforcement of non-ad valorem assessments (the “Uniform Method”). Annually, the Board conducts public hearings to adopt the fire rescue services, stormwater, and solid waste disposal assessment rolls. These public hearings are typically conducted in July of each year, which allows for the non-ad valorem assessments to appear on the TRIM (Truth-In-Millage) notices sent to property owners in August. This year, the assessment rolls will be presented for Board approval at the July 8, 2025 meeting.
Consistent with the Uniform Method, any increase in the assessment for residents paying on their tax bill requires a first-class mail notice to be sent to said property owners in the unincorporated area at least 20 days before the hearing to inform them of the proposed increase, and the date and time of the public hearing. In addition, any adjustments to the assessment rates must be reflected in an amendment to the Interlocal Agreement.
Review of TFD Expenditure Increases
This section provides information on TFD expenditures contemplated in the 2023 Fire Assessment Study which have grown beyond the projected inflationary cost estimates for the five-year study period, and new costs identified by the City that were not contemplated in the 2023 Fire Assessment Study or agreed to by the County. These distinctions are important because the five-year study includes agreed upon costs including new staffing, salaries, and construction costs which helps provide certainty to taxpayers and revenue assurances for the provision of high-quality fire rescue services.
The flat assessment rates are designed to generate surplus revenues in the early years of the five-year study period to offset projected increased costs in the latter portion. Surplus revenues are deposited into the Fire Services Reserve Fund to support fire services and avoid increases to the assessment rate during the five-year period. The Interlocal Agreement provides several processes for the County Administrator and City Manager to address these fluctuations in revenues and/or expenditures and utilize the Fire Services Reserve Fund during the five-year study period.
In early 2025, the City attributed the need to adjust the assessment rates to non-payment for services by Leon County Schools and the adoption of new collective bargaining agreements for firefighters. Prior to FY 2021, Leon County Schools paid the fire services fee charged to government properties. In FY 2021, Leon County Schools concluded that it was not legally obligated to pay the assessment and ceased payment. The 2023 Fire Assessment Study acknowledges the legal position and recent history of non-payment by Leon County Schools which the City estimates to be a $1 million annual loss in revenue.
The assessment rates for the 2023 Fire Assessment Study were calculated by the consultant based on the projected TFD budgets for FY 2024 through FY 2028 as provided by the City at that time. Over the five-year period, assessable TFD expenditures were projected to grow by $6.7 million (14%) to $54.2 million in FY 2028. The City’s latest projections estimate expenditures to rise by nearly $18 million (38%) over the same period to more than $65 million. Given the imbalance of revenues and expenditures, the City is seeking to utilize the Fire Services Reserve Fund in the current fiscal year (year 2 of the 5-year study) to support fire services and, under the current rates and planned expenditures, will exceed the capacity of the reserve fund in FY 2026.
TFD expenditures contemplated in the 2023 Fire Assessment Study which have grown beyond the projected inflationary cost estimates for the five-year study period include firefighter compensation under the latest collective bargaining agreement, construction costs for a new fire station, and the expansion of another fire station once construction documents are finalized. Expenditures identified by the City that were not contemplated in the 2023 Fire Assessment Study include a new City initiative to improve TFD’s insurance rating and an unbudgeted debt service payment which are now included in the consultant’s proposed assessment rate increases.
Collective Bargaining: $4.3M through FY 2027
The City and the Tallahassee Professional Fire Fighters International Association of Fire Fighters Local 2339 (IAFF) were scheduled to begin a new collective bargaining term on October 1, 2023, which would have aligned with the start of the current five-year fire assessment period. However, negotiations with the City stalled in 2023 and the IAFF requested a one-year bridge agreement. In December 2023, the IAFF declared an impasse on the bridge agreement which was later resolved through a Special Magistrate process. In February 2024, negotiations commenced on new bargaining agreements for both bargaining units (supervisory, and rank and file). On October 16, 2024, the City Commission approved the new collective bargaining agreements with the IAFF on wage and pension adjustments for the three-year period covering FY 2025 – FY 2027.
According to the City’s latest budget materials, the fiscal impact of the one-year bridge agreement (FY 2024) and the new three-year collective bargaining agreement (FY 2025 – FY 2027) is estimated to be an additional $4.3 million over what was contemplated in the development of the current five-year assessment rate. Insufficient funding is available through the Fire Services Assessment to support these additional expenditures, and the estimated fiscal impact does not include additional positions forecasted in the latest TFD staffing plan to support a new fire station, the expansion of another fire station, or a new Strategic Plan Goal adopted by the City Commission to enhance TFD’s insurance ratings. Each of these issues are addressed separately in this section.
Construction Costs: Additional $17M for Fire Station #17; $10M+ for Fire Station #15; $2.6M for Personnel and Equipment
The 2023 Fire Assessment Study includes funding for the construction of Fire Station #17 on Lake Bradford Road and the expansion of Fire Station #15 on Bannerman Road. According to the City, the estimated cost to construct Fire Station #17 has doubled from $17 million in 2023 to $34 million in 2025. The initial estimate was provided to the consultant before the construction documents were finalized and did not include furniture, fixtures, or equipment costs. The City anticipates breaking ground on Fire Station #17 this summer so it can be operational by the end of FY 2026. The expansion of Fire Station #15 is in the planning phase and the initial $10 million cost estimate has not been revised since 2023. The City plans to break ground at Fire Station #15 in late FY 2026, to be completed in FY 2027. The growth in capital costs for Fire Station #17 is well beyond the typical inflationary costs projected in the five-year study period and warrants further consideration of cost mitigation strategies to reduce the impact of assessment increases.
Both fire stations will require funding to support personnel, equipment, and facility operating costs. According to the City, the hiring and training of personnel associated with these two capital projects began earlier this year, well in advance of the start of construction. The FY 2025 budget calls for the hiring of 12 Full Time Employees (FTEs) with an additional 24 FTEs planned for FY 2026. The estimated cost increase for the 24 FTEs and equipment is $2.6 million in FY 2026.
The capital project costs and associated staffing needs have escalated since the five-year study. Since the City has already issued debt for the construction of Fire Station #17 and hired a portion of the firefighters planned for the new station, the Board may want to consider initiating the conflict resolution process to encourage the City to utilize minimal staffing levels upon completion of Fire Station #17 and to phase the expansion of Fire Station #15 to limit new FTEs until the new five-year assessment period (FY 2029). Due to rising costs in 2015, minimum staffing levels were similarly utilized for the initial opening of Fire Station #16 until the implementation of the next Fire Assessment Study and approval of a new assessment rate to support the full operating costs.
Insurance Services Office (ISO) Rating: $8.5M through FY 2028
On January 15, 2025, the City Commission held its annual retreat and adopted a Strategic Plan Goal to improve the TFD’s ISO rating from ISO 3 to ISO 2. The ISO rating system evaluates a community’s fire protection capabilities which may impact insurance premiums for residential and commercial properties. Lower ISO ratings can reduce insurance costs for homes and businesses in a community through greater investment in staffing levels, training, equipment, fire prevention initiatives, and proper water availability and pressure. To achieve an ISO 2 rating in accordance with the City Commission’s 2025 Strategic Plan, the City finds that a minimum of 26 new FTEs will be needed beginning in FY 2026 in addition to funding for training programs and equipment.
By FY 2027, ISO would be invited to audit TFD operations and programs to determine whether an ISO 2 rating is warranted. At the time of this writing, the City is still analyzing any potential insurance cost savings for homes and businesses. The 26 new FTEs and equipment are projected to cost an additional $4.5 million in FY 2026 and $8.5 million over the next three years. These costs were not contemplated in the current five-year assessment and should not be included in any calculation of a new assessment rate for the remainder of the five-year period.
Debt Refinancing: $2.5M
In FY 2023, after the City provided the consultant with the TFD’s out-year budget assumptions to determine the five-year average assessment rates, the City refinanced existing debt related to fire services which resulted in an annual unbudgeted debt service payment of approximately $500,000, or $2.5 million over the five-year assessment period. The refinancing will realize long-term savings but neither the consultant nor the County were aware of this refinancing and unanticipated expenditure.
In the first two years of the current assessment period, approximately $1 million has been allocated for this debt service payment. The annual debt service payments are included in the consultant’s proposed assessment rate increases for the remainder of the five-year period. These costs were not contemplated in the current five-year assessment and should not be included in any calculation of a new assessment rate for the remainder of the five-year period.
If the Board does not accept the City’s cost increases and the consultant’s corresponding adjustment to the assessment rate to align revenues with TFD expenditures, the Board may provide direction to initiate the conflict resolution process described in the next section.
Proposed Resolution
The Interlocal Agreement provides a formal conflict resolution process which must be initiated by a written dispute notice detailing the concerns or objections of the aggrieved party. If the Board does not accept the City’s cost increases and the consultant’s corresponding adjustment to the assessment rate to align revenues with TFD expenditures, the Board may provide direction to initiate the conflict resolution process provided in the Interlocal Agreement. This would require the County to provide a written “Dispute Notice” to the City which describes the nature of the dispute and the proposed resolution, if any, to reconcile the dispute. The conflict resolution process includes prescribed steps and timelines to resolve disputes including mediation and ultimately binding arbitration. This process could last approximately six months if each step provided in the 2023 Interlocal Agreement is fully exhausted.
In order to facilitate discussions with the City while ensuring the provision of fire rescue services in the community without disruption, the following position statements are provided for consideration should the Board initiate the conflict resolution process:
It is important to note that the conflict resolution process poses a financial risk to the County should an arbitrator rule in favor of the City and due to the County’s statutory noticing and public hearing requirements to levy a non-ad valorem assessment. First-class mail notices are scheduled to go out in mid-June to the new properties being added to the assessment roll for fire services in the unincorporated area. These notices must be sent at least 20 days prior to the July 8th Public Hearing to inform residents of the proposed assessment, and the date and time of the Public Hearing. As required by Florida Statutes, the County must adopt a non-ad valorem assessment roll at a public hearing when the fire rescue service assessment is levied for the first time on an individual property or when the amount of the assessment is increased by the County. Florida Statutes also requires the assessment roll to be certified to the Tax Collector by September 15. The County generally adopts non-ad valorem assessment rolls at the July Board meeting, which is the last scheduled Board meeting until September 16, 2025, after the statutory deadline to adopt a non-ad valorem assessment roll.
If arbitration results in the City’s favor after mid-August and finds that the County must pay for its share of the TFD budget, the County will not be able to meet the statutory notice and public hearing requirements by September 15th to increase the assessment rate. The County would be responsible for providing funding to the City without the ability to impose an increase in the Fire Services Assessment until the next fiscal year (FY 2027). If the conflict resolution process is completed prior to mid-August and requires a rate increase, a special meeting and public hearing would be scheduled prior to September 15th. If the conflict resolution process is completed and does not require a rate increase, no Board action will be required.
In addition, while the County imposes the Fire Services Assessment in the unincorporated area to support fire rescue services, it is also important to note that the City similarly agrees to impose the EMS MSTU to support countywide ambulance services. The City and County agree to these financial commitments through the Interlocal Agreement and the City similarly accepts the County’s budget projections related to the imposition of the MSTU within the City limits at the rate requested by the County.
Conclusion and Next Steps
The provision of fire rescue services in the unincorporated area of the County is a paramount public purpose for the County. The County has previously determined that fire rescue services for the unincorporated area shall be provided by the TFD. Pursuant to the Interlocal Agreement, the County is obligated to pay for its share of the TFD budget in accordance with the 2023 Fire Assessment Study for the provision of fire rescue services in the unincorporated area.
The fire assessment rates are developed as part of a joint study by a professional third-party consultant to be considered and adopted by the Board and City Commission. For the provision and continuity of high-quality fire rescue services supported by a flat assessment rate over a five-year study period, the City provides the consultant with out-year budget assumptions and projected expenditures for TFD. The 2023 Fire Assessment Study provided the basis for the current assessment rates adopted by the Board for the five-year study period (FY 2024 – FY 2028). The fire rescue assessments levied in the unincorporated area are collected, and except for a small portion of funding for the Volunteer Fire Departments, are required to be remitted to the City to pay for fire rescue services provided in the unincorporated area of the County. Similarly, the City accepts the County’s budget projections related to the imposition of the MSTU within the City limits at the rate requested by the County.
On January 14, 2025, 15 months into the current five-year fire services assessment, the City notified the County that the revenue generated from the fire services assessment will not be sufficient to continue to provide fire services at the current service level and recommended an early review of the rates. TFD expenditures contemplated in the 2023 Fire Assessment Study have grown beyond the projected inflationary cost estimates for the five-year study period, and new costs identified by the City that were not contemplated in the 2023 Fire Assessment Study or agreed to by the County. These distinctions are important because the five-year study includes agreed upon costs including new staffing, salaries, and construction costs which helps provide certainty to taxpayers and revenue assurances for the provision of high-quality fire rescue services.
The County and the City engaged Accenture to prepare a formal financial review of the Fire Service Fund including an analysis of TFD’s planned expenditure increases. The consultant was tasked with reviewing TFD’s recent and out-year budgets including whether an increase in the assessment rates is warranted. The objective of the review was to align fire assessment revenues with planned expenditures, identify costs that should not be paid from the fire assessment, and identify any new expenditures which were not contemplated in the current five-year rates. Based on the financial information provided by the City, the consultant determined that a 22% increase in assessments is necessary for residential and non-residential properties in the unincorporated area to accommodate the planned increase in expenditures for the remaining three years of the five-year assessment period.
While the Interlocal Agreement provides several processes for the County Administrator and City Manager to address modest fluctuations in revenues and/or expenditures during the five-year study period, the Fire Services Reserve Fund is insufficient to support TFD’s projected expenditures for the remaining three-year period. Based on the results of the review and TFD expenditure data provided by the City, the consultant recommends a 22% rate increase for all property categories, effective October 1, 2025, to align revenues with planned TFD expenditures for the remainder of the five-year assessment period through FY 2028 (Options #1 – #3).
Should the Board object to these expenditure increases and/or new TFD expenditures that were not contemplated in the five-year study, this item provides a proposed resolution on cost mitigation strategies that can be formally addressed with the City to reduce the increased costs and delay and/or mitigate adjustments to the assessment rate. This would require Board guidance to initiate the conflict resolution process as provided in Option #4. The items identified in this analysis for the conflict resolution process are for expenditures that have greatly exceeded the costs provided in the five-year assessment study and new costs that were not agreed upon or contemplated in the current five-year assessment. These expenditures should not be included in any calculation of a new assessment rate for the remainder of the five-year period.
If arbitration results in the City’s favor after mid-August and finds that the County must pay for its share of the TFD budget, the County will not be able to meet the statutory notice and public hearing requirements by September 15th to increase the assessment rate. The County would be responsible for providing funding to the City without the ability to impose an increase in the Fire Services Assessment until the next fiscal year (FY 2027). If the conflict resolution process is completed prior to mid-August and requires a rate increase, a special meeting and public hearing would be scheduled prior to September 15th.
As is customary, the County is scheduled to adopt non-ad valorem assessment rolls at the July 8th Board meeting for new properties in the unincorporated area subject to the Fire Services Assessment. The first-class mail notices are scheduled to go out in mid-June at the current assessment rate.
Options:
Or
Recommendation:
Board Direction
Attachments: