HomeMy WebLinkAboutItem 8.2 DoughertyFireAsset&Liab (2)
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CITY CLERK
File # []3j~[Q]-[1][{l]
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AGENDA STATEMENT
CITY COUNCIL MEETING DATE: April 1, 1997
SUBJECT:
Distribution of Dougherty Regional Fire Authority Assets &
Liabilities
Report Prepared by: Richard C. Ambrose, City Manager
EXHIBITS ATTACHED: None
RECOMMENDATION:
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Ratify the following decisions made by the Dougherty Regional Fire
Authority Board of Directors on February 24, 1997: 1) All
remaining assets (including cash) and liabilities will be distributed
on the basis of Joint Powers Agreement Section 8.1 Termination
and Section 8.3 Disposition of Assets. This distribution will be
based upon the percentages calculated by the Authority's Auditor,
Maze and Associates. 2) Direct Staff to distribute Fire Impact Fees
to the City of origin on a Last In First Out Basis. 3) Authorize the
distribution of all facilities and equipment on the basis of need, with
the lll1lleeded items to be sold.
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FINANCIAL STATEMENT:
The Financial Impact is as outlined below.
DESCRIPTION: In accordance with the decision to terminate fire service
operations by the Authority, the Board of Directors on July 29,1996 approved a scope of work
that included five projects. The projects approved are:
1. Preparation of an income and expense profile.
2. Preparation of an asset profile.
3. Preparation of an asset valuation.
4. Distribution of assets.
5. Obligations of the Authority.
All of the above named projects are in the state of completion relative to requirements of the task
and constraints such as ongoing operations. At this time, the Dougherty Regional Fire Authority
Board of Directors is bringing to the City Council the Distribution of Assets and Liabilities of
the Authority for ratification of actions taken by the Board.
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8.2
ITEM NO.
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Share of Assets and Obligation for Liabilities
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The Authority is required to establish the means by which to distribute the assets and liabilities.
To comply with the requirements of the Joint Powers Agreement, the following steps are required
for implementation.
1. Maze and Associates has prepared a report for Staff that details a number of items that are
being used to prepare various reports related to dissolution of the Authority. Amongst the
items in the report is a compilation of all contributions made by the Cities for maintenance
and operations. The results of that compilation are:
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Contribution
%
San Ramon
Contribution
%
Inception through 6/30/96
$19,299,076
57.97
$13,994.298
42.03
2. Joint Powers Agreement Section 8.1 Termination specifies that obligations of the
Authority are paid based upon the formula outlined in Section 8.3.
3.
Joint Powers Agreement Section 8.3 Disposition of Assets specifies that, "the total
amount of maintenance and operating costs paid by each Member Agency into the fund
during the entire existence of the Authority shall be added together and the percentage with
each Agency's total bears to the whole shall be determined".
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DRFA's Board of Directors carefully considered the issues and approved the following actions:
1. Utilize the total contributions and percentages shown in this item for initial distribution of
operating reserves, upon termination, if any.
2. Utilize the total contributions and percentages shown in this item for payment toward any
liabilities after termination.
3. Retain Maze and Associates to add FY 96-97 results to the total expenditures and
recalculate the percentages as soon as possible after June 30, 1997.
4.
Authorize that once Maze and Associates has submitted new percentages acceptable to the
reformed DRFA Board of Directors that accounts be reconciled and all future payments
be made based on the new percentages.
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Fire Impact Fees
Fire Impact Fees are collected for the provision of Fire Facilities and Equipment. The following
approach has been devised to deal with the distribution of these assets.
1. The Authority currently collects developer fees for purposes of paying for new facilities
and equipment.
2.
The Authority has a record of where all Fire Capital Funds have been generated.
3. Effective June 30, 1996, the Authority had on hand $121,208 in Fire Capital Funds.
4. It is estimated that the Authority will collect $207,000 in new funds for FY 96-97.
5. The Joint Powers Agreement is silent as to this issue.
DRFA's Board of Directors considered the distribution of these funds and given the nature of the
funds and the purpose for which they are collected. The Board adopted a policy that these funds
should return to the City of origin, and any funds remaining should be distributed on a Last In
First Out basis.
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If this approach is accepted by the City, then the results would be as follows, subject to
verification of order received:
Funds on Hand
Dublin
San Ramon
6/30/96
FY 96-97 est.
TOTAL
$25,028
$106.200
$131,228
$96,180
$100.800
$196,980
Distribution of Property and Equipment
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The distribution of property and equipment is somewhat more complex because the Joint Powers
Agreement did not anticipate the situation before us today. The omissions in the agreement and
the scope of work before the Authority caused the need for an implementation method. The
following methods were approved by the Board for handling the distribution of property .
1. Staff has identified 4756 personal property items available for distribution.
2. Assets have been valued in a range from $644,232 to $2,719,596 depending upon the
methodology used.
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3.
Land and buildings and Authority acquired items are considered separately from the
personal property transferred to the Authority when it was formed.
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4. JPA Section 8.3 Disposition of Assets, provides that assets acquired by the Authority
during its existence and still on hand, be distributed based upon percentage of contribution
and appraisal value.
5. JPA Section 8.3 Disposition of Assets, provides that real property conveyed from the
Cities to theJPA be returned directly to the Cities without valuation or charge. Staff
considers land and buildings to be the real property in this instance.
6. JPA Section 6.3(c) Capital Acquisition Costs. of Special Services. Bond Expenses,
provides that when new equipment is purchased or facilities are constructed, or real
property purchases, the Legislative Bodies will determine the method of disposing of such
assets upon termination.
7.
JPA Bylaws Section 4.1D, provides that the Management Committee may determine what
personal property is not needed and the method of disposal.
Staff considered the various approaches to disposing of the assets of the Authority and the
approach Staff found the most appropriate distribution, relies upon the premise that: "the
Dougherty Regional Fire Authority has historically served a set of citizens and that those same
citizens should benefit without penalty from the distribution of assets". If this premise serves as
the basis for asset distribution then the distribution should be based upon the needs of those
citizens.
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Based upon the needs approach, the Management Committee is prepared effective June 30, 1997,
subject to ratification by the City Councils to:
a.
Declare all property, within its control, surplus property.
b. Distribute to the City of San Ramon (for transfer to San Ramon Valley Fire
Protection District) all vehicles, tools, equipment and supplies, on hand and
available, necessary to serve its newly acquired service area. This equipment will
be declared to have no value.
c.
Distribute to the City of Dublin (for use by the Alameda County Fire Protection
District) all vehicles, tools, equipment and supplies, on hand and available,
necessary to serve the City. This equipment will be declared to have no value.
d.
All remaining vehicles, tools, equipment and supplies on hand and available will
be offered for sale to agencies in this order:
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1.
Alameda County Fire Protection District and San Ramon Valley Fire
Protection District.
Cities of Dublin and San Ramon.
Other governmental agencies.
2.
3.
The price and ultimate destination for these items will be recommended by the
Authority Fire Chief and approved by the Management Committee.
e. All remaining vehicles, tools, equipment and supplies on hand and available on
June 30, 1997 will be sent to auction.
The proceeds of the sale of these assets will be distributed in accordance with the provisions of
the Joint Powers Agreement.
In addition to the vehicles, tools, equipment and supplies currently owned by the Authority, (the
Authority owns land, buildings and improvements) there is a need to consider distribution of
assets .
The Board of Directors has given consideration to the issues surrounding the distribution of land,
buildings and improvements and it believes that the organizers of the Authority intended that items
of this namre remain in use at no expense to the Cities. DRFA's Board of Directors adopted a
policy that a needs based approach be taken, and that land, buildings and improvements be
distributed to the Cities where they are located at no cost, excepting any transfer costs and fees,
which will be born by the City receiving the property.
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