25E - AGMT - OCFA JOINT POWERS AUTHORITY

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owners in these 16 jurisdictions, accumulated in the Structural Fire Fund, and then paid to the OCFA for fire services. Cash Contract cities were not originally part of the Structural Fire Fund prior to Proposition 13, and therefore these 8 jurisdictions do not have a fire tax as a portion of their 1 % property tax levy. Instead, these 8 cities pay for fire services by contract with the Authority through payments from their general funds. The cash contract charges are based on the Authority's annual budget, and include a cap provision which governs the maximum amount the contract charge can increase each year. Renewed Equlty Concerns — Structural Fire Fund For OCFA, equity refers to the extent to which the revenue received from a member agency bears a reasonable relationship to the cost of service that a member receives. The OCFA has a long history of studying equity concerns and has implemented prior actions to address equity through the JPA. In March 2012, the City of Irvine raised renewed concerns about equity to the OCFA Board of Directors. City representatives indicated that, lacking action to mitigate their concerns, they intended to exercise their option to withdraw from OCFA in 2020. Furthermore, the City of Irvine initiated a special study to assess the feasibility of forming an independent Fire Department. In response, the OCFA Board formed an Ad Hoc Equity Committee for the purposes of studying the equity issues. Ultimately a proposed equity model for consideration by the OCFA Board of Directors and individual member agencies was approved. Proposed Solution — Second Amendment to Amended JPA The proposed solution for addressing the equity concerns is referred to as the Enhanced Hybrid Model. This model would require equity payments to be issued by OCFA to those SFF members deemed eligible under the formula. A Second Amendment to the Amended JPA would be required in order to implement this proposed solution. Key terms included in the proposed Second Amendment include: • Structural Fire Fund agencies contributing more than the average share of the 1% property tax to OCFA will be eligible for equity payments • Eligibility for equity payments will be determined annually, based on a mathematical formula prescribed in the Second Amendment • The City of Irvine may receive additional equity payments if the amount of property tax revenue that OCFA receives from Irvine grows in excess of 3.5% annually • For all agencies except Irvine, a five -year phase -in period will apply for the value of equity payments, in order to ease the impact on OCFA's annual budget • Equity payments will be issued by OCFA using unrestricted sources of OCFA revenue • Structural Fire Fund members and Cash Contract members not eligible for equity payments shall not be required to pay additional contributions to OCFA as a result of the equity payments • Irvine must commit to remain with OCFA through 2030 25E -2