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HomeMy WebLinkAbout55D - RESO JOINT POWERS AGMTREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: FEBRUARY 5, 2019 CLERK OF COUNCIL USE ONLY: TITLE: APPROVED ADOPT A RESOLUTION SUPPORTING THE ❑ As Recommended FOURTH AMENDMENT TO THE ORANGE El E] E]OOrrdinance 1n' Reading 1 $42,558,883 on COUNTY FIRE AUTHORITY OCFA (OCFA) JOINT El Ordinance on 2"a Reading POWERS AUTHORITY AGREEMENT ❑ Implementing Resolution (STRATEGIC PLAN NO. 1, 5) ❑ Set Public Hearing For n (� CONTINUED TO FILE NUMBER CITY MANAGER RECOMMENDED ACTION Adopt a resolution related to the Fourth Amendment to the Orange County Fire Authority (OCFA) Joint Powers Agreement to formalize OCFA's pension liability paydown plan. 2. Authorize the City Manager and Clerk of the Council to execute a fourth amendment to the Joint Powers agreement with Orange County Fire Authority, subject to non -substantive changes approved by the City Manager and City Attorney. DISCUSSION The Orange County Fire Authority (OCFA) was formed in 1995 to provide regional fire protection and related services to the County of Orange and 18 member cities. Subsequent to formation, 6 additional cities have become members of the OCFA. On March 5, 2012, the City entered into a Joint Powers Agreement (JPA) with the Orange County Fire Authority (OCFA) to provide fire services and emergency medical services. OCFA began providing fire and medic services starting on April 20, 2012. Below is a synopsis of the agreement and also for each amendment that has been previously executed with OCFA. OCFA Joint Powers Agreement (JPA): • Term: 20 years (original OCFA agreement executed June 30, 2010) with option to withdraw at each ten-year interval (June 30, 2020 and June 30, 2030) • Current FY 2018/19 Value of Agreement: $40,698,188 plus annual CPI adjustments capped at 4.5%. The following is a forecast provided by OCFA: Fiscal Year I FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 Est. Annual Cost 1 $42,558,883 $44,450,449 $46,442,845 $48,479,520 • Services provided: OCFA shall provide to the City fire suppression, prevention, investigation, emergency medical, rescue and related services, hazardous materials response, community safety, and education services. • OCFA Governing Board: Santa Ana is provided one (1) Director to the OCFA Board of Directors. 55D-1 Fourth Amendment to OCFA Joint Powers Agreement February 5, 2019 Page 2 • JPA divided into two types of member agencies: o Structural Fire Fund - payment via property tax funds transferred directly from OC Tax Assessor o Cash Contract Cities - remit payment based on invoice for services rendered • Santa Ana is a Cash Contract member • Previous JPA Contract Amendments: o Amended Agreement (September 23, 1999) Agreement of membership and JPA terms o First Amended Agreement (July 1, 2010) Established a five-year short fall for Cash Contract Cities, increased the annual cost adjustment to 4.5%/vear. added automatic renewal language for 20 year terms o Second Amended Agreement (February 10, 2014) - Changes to the agreement to allow refund to Structural Fire Fund cities for overpayment o Third Amended Agreement (July 7, 2015) — Changes to the agreement to eliminate alternate Directors to the OCFA Board The original JPA was amended on September 23, 1999, and renewed in 2010 by the First Amendment, which provided for a term that runs through 2030. In 2013, OCFA's members approved a Second Amendment to the Amended JPA, in attempt to address these same "Overpayment" concerns by the City of Irvine; however, the Second Amendment was subsequently invalidated by court judgment. On July 7, 2015, the Santa Ana City Council adopted a resolution related to the Third Amendment to the OCFA Joint Powers Agreement to eliminate alternate Board directors and authorized the City Manager and Clerk of the Council to execute the amendment with OCFA. Following this action, a Third Amendment was approved by OCFA's members, which eliminated alternate Directors to the OCFA Board. On October 25, 2018, the Orange County Fire Authority (OCFA) Board of Directors approved a proposed Fourth Amendment to the OCFA Joint Powers Authority (JPA) Agreement to formalize the OCFA's commitment to its accelerated pension liability paydown plan. Following this action, OCFA is now seeking approval from its member agencies for a Fourth Amendment to formalize the OCFA's commitment to its "snowball" accelerated pension liability paydown plan (Exhibit 1) with a passage of a resolution of the City Council (Exhibit 2) supporting such action. In order to become effective, the Fourth Amendment must be approved by at least two-thirds (e.g., 16 of 24) of the member agencies' governing bodies. As of January 22, 2019, the following 14 member agencies have approved resolutions in support of the Fourth Amendment: City of Aliso Viejo City of Buena Park City of La Palma City of Laguna Hills City of Laguna Woods City of Los Alamitos City of Mission Viejo City of Rancho Santa Margarita City of San Juan Capistrano City of Stanton City of Tustin City of Villa Park City of Westminster City of Yorba Linda OCFA's Accelerated Pension Paydown Plan At its meeting of September 26, 2013, the OCFA Board of Directors adopted an accelerated pension liability paydown plan, otherwise known as the "snowball" plan. The snowball plan calls for the OCFA to accelerate payment of its unfunded pension liability more quickly than the 55D-2 Fourth Amendment to OCFA Joint Powers Agreement February 5, 2019 Page 3 timeframe required for payment by the Orange County Employees Retirement System (OCERS), thereby saving future interest costs and improving the funding status of the OCFA's pension plan. Since the plan was adopted, the OCFA's unfunded pension liability has steadily declined from $473.8 million to $400.6 million, and the funding status has consistently improved from 65% to 79%. Per OCERS' actuary, OCFA is on track to achieve an 85% funding level by December 2020, and has achieved interest savings to date totaling $18.3 million. City of Irvine's June 13 Proposal and June 27 Notice of Withdrawal On June 13, 2018, the City of Irvine provided a proposal to the OCFA requesting, among other proposal elements, that OCFA commit to a pension pay down strategy. On June 21 and June 25, the OCFA responded to the City's proposal reiterating its commitment to OCFA's accelerated pension liability paydown plan, in addition to other commitments made by OCFA regarding proposed service enhancements. On June 27, 2018, the City provided OCFA with a Notice of Withdrawal seeking the initiation of good faith negotiations. OCFA desires to retain Irvine as a member agency, and OCFA staff will continue to negotiate in good faith, as requested by Irvine. At the same time, OCFA desires to continue progress on the commitments made in its June 21 and June 25 responses to the City. The OCFA is hopeful that, with these continued actions honoring its commitments, the City will elect to rescind its Notice of Withdrawal. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #1 — Community Safety, Objective #5 (Provide high quality Police and Fire/Emergency Medical Services response within the City of Santa Ana). FISCAL IMPACT There is no fiscal impact associated with this action. The proposed fourth amendment to the JPA to accelerate payment of its unfunded pension liability will not affect the total costs for fire services charged to the City of Santa Ana by OCFA. The total charges for Fiscal Year 2018/19 includes a base service charge, vehicle replacement and station maintenance costs. The base cash contract service charge calculation excludes accelerated payments for OCFA's unfunded liabilities, which accrued prior to Santa Ana becoming a member of OCFA. In the event of termination or expiration of the agreement with OCFA, the City is required to pay OCFA the amount of the unfunded pension liability that had accrued during the term of the Agreement. This would be payable upon separation. The City would be required to pay 50% of the cost to calculate such an amount would have 15 years to make the necessary payments with interest assuming a rate of return assumed by OCERS as its return of investment. This provision survives termination or expiration of the Agreement. An actuary study will be required in order to determine the value of the unfunded liability associated with the former Santa Ana Fire Department employees. The unfunded liability may fluctuate over time based on market conditions, benefit changes and disability retirements. Exhibits: 1. Fourth Amendment to the Amended Orange County Fire Authority Joint Powers Agreement 2. Resolution 55D-3 55D-4 FOURTH AMENDMENT TO AMENDED JOINT POWERS AUTHORITY AGREEMENT ORANGE COUNTY FIRE AUTHORITY This Fourth Amendment ("Fourth Amendment") to the Amended Joint Powers Authority Agreement is made and entered into by and between the following public entities (collectively referred to as "members"): Aliso Viejo, Buena Park, Cypress, Dana Point, Irvine, La Palma, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, and Yorba Linda (collectively referred to as "Cities" and individually as "City") and the County of Orange (referred to as the "County"), each of whom is a member of the Joint Powers Authority, Orange County Fire Authority ("the Authority"). This Fourth Amendment requires the approval of two thirds of the members to go into effect, and it shall be effective when approved by a sixteenth member. RECITALS WHEREAS, the Authority presently provides fire protection, prevention and suppression services and related and incidental services (collectively, "Fire Services") to Cities as well as to the unincorporated area of the County and State Responsibility Areas ("SRA"); and WHEREAS, the County and several of the Cities entered into a Joint Powers Authority Agreement to form the Authority as of February 3, 1995, pursuant to the provisions of Article 1, Chapter 5, Division 7, Title I (commencing with Section 6500) of the Government Code of the State of California ("Joint Powers Statutes"); and WHEREAS, pursuant to the Joint Powers Statutes the members are authorized to jointly provide for the methods of the provision of Fire Services, including the method of financing the provision of Fire Services; and WHEREAS, on September 23, 1999, the members entered into an amended Joint Powers Authority Agreement ("1999 Amended Agreement") which superseded all prior agreements between the members and is incorporated herein by reference; and EXHIBIT 1 1328404.2 1 55D-5 WHEREAS, pursuant to the 1999 Amended Agreement the members provided for the provision of Fire Services and the joint financing of Fire Services; and WHEREAS, on July 1, 2010, the members entered into the First Amendment to the Amended Joint Powers Agreement ("First Amendment") which amended several provisions of the 1999 Amended Agreement; and WHEREAS, on April 20, 2012, the City of Santa Ana joined the Authority and became a party to the 1999 Amended Agreement and the First Amendment; and WHEREAS, on November 18, 2013, the required number of member agencies approved the Second Amendment to the Amended Joint Powers Agreement ("Second Amendment") which amended several provisions of the 1999 Amended Agreement. However, a final court judgment subsequently invalidated the Second Amendment, so the Second Amendment became, and remains, inoperative; and WHEREAS, on July 14, 2015, the required number of member agencies approved the Third Amendment to the Amended Joint Powers Agreement ("Third Amendment") to eliminate alternative Board Directors; WHEREAS, the Amended Joint Powers Agreement, as amended by the First Amendment and Third Amendment, is referred to herein as the "Amended Joint Powers Agreement And Its Operative Amendments"; WHEREAS, the members wish to adopt this Fourth Amendment to the Amended Joint Powers Agreement And Its Operative Amendments to formalize the OCFA's commitment to its "snowball" accelerated pension liability paydown plan on the terms and conditions set forth herein. NOW THEREFORE, the members agree to amend the Amended Joint Powers Agreement And Its Operative Amendments as follows: 13284042 2 55D-6 AGREEMENT 1. Article IV of the Amended Joint Powers Authority Agreement And Its Operative Amendments is amended to add Section 7, to read as follows: 7. Payments to Reduce Unfunded Pension Liability. A. Except as provided in subsection C, the OCFA Board shall appropriate funds in its budget annually consistent with, or greater than, the budgetary payments called for in the "snowball" accelerated pension liability paydown plan approved by the OCFA Board of Directors on September 26, 2013, and amended on November 19, 2015, November 17, 2016, and March 23, 2017. B. Payments will be greater than those appropriated in the OCFA's budget annually when triggered by a Net General Fund Surplus (per the Financial Stability Budget Policy). Payments from the "Net General Fund Surplus" are hereby deemed as derived from revenues received by overfunded structural fire fund cities as determined by the equity calculation required under Article IV, Section 4 — Equity. C. Appropriations and payments required by subsection A and B may be reduced to the extent the Board determines, by vote approved by two-thirds of the Board, is necessary to address a fiscal hardship. 1) For purposes of this section, "fiscal hardship" shall refer to a substantial reduction in OCFA anticipated revenue and/or a significant increase in anticipated expenses that are beyond the reasonable control of the OCFA Board. 2. This Fourth Amendment amends the 1999 Amended Agreement And Its Operative Amendments, and except as specifically amended herein, the 1999 Amended Agreement And its Operative Amendments shall remain in full force and effect. [SIGNATURES ON FOLLOWING PAGES] 13284042 3 55D-7 Dated: ATTEST: Norma Mitre Acting Clerk of the Council NOTICE TO CITY TO BE GIVEN TO: City Manager City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Phone: (714)647-5200 Fax: (714)647-6954 APPROVED AS TO FORM: SONIA R. CARVALHO CITY ATTORNEY By: v fi J hn M. Funk Assistant City Attorney Dated: 1-30-19 CITY OF SANTA ANA STEVEN A. MENDOZA Acting City Manager (Signatures Continued on Page 221 21 55D-8 jmf 1/30/19 RESOLUTION NO. 2019 -XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE FOURTH AMENDMENT TO THE ORANGE COUNTY FIRE AUTHORITY AMENDED JOINT POWERS AUTHORITY AGREEMENT AND AUTHORIZING EXECUTION THEREOF BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: WHEREAS, the Orange County Fire Authority (OCFA) is a California Joint Powers Authority that was formed in 1995 to provide regional fire protection and related services to the County of Orange and its member cities; and WHEREAS, the original Joint Powers Authority Agreement was superseded by an "Amended Joint Powers Authority Agreement" ("Amended JPA Agreement") entered into by the member cities on September 23, 1999; and WHEREAS, the Amended JPA Agreement has been further amended three times, in 2010, 2013, and 2015; and WHEREAS, a final court judgment subsequently invalidated the Second Amendment, so the Second Amendment became, and remains, inoperative; and WHEREAS, the City of Santa Ana became a member of.the OCFA in 2012, is a party to the Amended JPA Agreement and all prior amendments thereto, and is represented on the OCFA Board of Directors by a Director selected by the City Council; and WHEREAS, the OCFA Board has approved the attached "Fourth Amendment to Amended Joint Powers Authority Agreement" to formalize OCFA's commitment to its "snowball" accelerated pension liability paydown plan, and has requested that the governing bodies of OCFA's member agencies, including the City Council of the City of Santa Ana, consider and approve such amendment as attached. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Santa Ana does hereby: Approve the "Fourth Amendment to Amended Joint Powers Authority Agreement" as proposed by the OCFA and attached herein, and EXHIBIT 2 Resolution No. 2019 -XXX Page 1 of 2 5501-9 2. Authorize the City Manager and Clerk of the Council to execute the "Fourth Amendment to Amended Joint Powers Authority Agreement'. ADOPTED this 5s' day of February, 2019. Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney 11"By: Yw ✓ JOV M. Funk Assistant City Attorney AYES: Councilmembers: NOES: Councilmembers: ABSTAIN: Councilmembers: NOT PRESENT: Councilmembers: CERTIFICATE OF ATTESTATION AND ORIGINALITY I, NORMA MITRE, Acting Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2019 -XXX to be the original resolution adopted by the City Council of the City of Santa Ana on , 2019. Date: Resolution No. 2019 -XXX Page 2 of 2 Clerk of the Council City of Santa Ana 5501-10 FOURTH AMENDMENT TO AMENDED JOINT POWERS AUTHORITY AGREEMENT ORANGE COUNTY FIRE AUTHORITY This Fourth Amendment ("Fourth Amendment") to the Amended Joint Powers Authority Agreement is made and entered into by and between the following public entities (collectively referred to as "members"): Aliso Viejo, Buena Park, Cypress, Dana Point, Irvine, La Palma, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, and Yorba Linda (collectively referred to as "Cities" and individually as "City") and the County of Orange (referred to as the "County"), each of whom is a member of the Joint Powers Authority, Orange County Fire Authority ("the Authority"). This Fourth Amendment requires the approval of two thirds of the members to go into effect, and it shall be effective when approved by a sixteenth member. RECITALS WHEREAS, the Authority presently provides fire protection, prevention and suppression services and related and incidental services (collectively, "Fire Services") to Cities as well as to the unincorporated area of the County.and State Responsibility Areas ("SRA"); and WHEREAS, the County and several of the Cities entered into a Joint Powers Authority Agreement to form the Authority as of February 3, 1995, pursuant to the provisions of Article 1, Chapter 5, Division 7, Title I (commencing with Section 6500) of the Government Code of the State of California ("Joint Powers Statutes"); and WHEREAS, pursuant to the Joint Powers Statutes the members are authorized to jointly provide for the methods of the provision of Fire Services, including the method of financing the provision of Fire Services; and WHEREAS, on September 23, 1999, the members entered into an amended Joint Powers Authority Agreement ("1999 Amended Agreement") which superseded all prior agreements between the members and is incorporated herein by reference; and 1328404.2 1 55D-11 WHEREAS, pursuant to the 1999 Amended Agreement the members provided for the provision of Fire Services and the joint financing of Fire Services; and WHEREAS, on July 1, 20101 the members entered into the First Amendment to the Amended Joint Powers Agreement ("First Amendment") which amended several provisions of the 1999 Amended Agreement; and WHEREAS, on April 20, 2012, the City of Santa Ana joined the Authority and became a party to the 1999 Amended Agreement and the First Amendment; and WHEREAS, on November 18, 2013, the required number of member agencies approved the Second Amendment to the Amended Joint Powers Agreement ("Second Amendment") which amended several provisions of the 1999 Amended Agreement. However, a final courtjudgment subsequently invalidated the Second Amendment, so the Second Amendment became, and remains, inoperative; and WHEREAS, on July 14, 2015, the required number of member agencies approved the Third Amendment to the Amended Joint Powers Agreement ("Third Amendment") to eliminate alternative Board Directors; 1. WHEREAS, the Amended Joint Powers Agreement, as amended by the First Amendment and Third Amendment, is referred to herein as the "Amended Joint Powers Agreement And Its Operative Amendments"; WHEREAS, the members wish to adopt this Fourth Amendment to the Amended Joint Powers Agreement And Its Operative Amendments to formalize the OCFA's commitment to its "snowball" accelerated pension liability paydown plan on the terms and conditions set forth herein. NOW THEREFORE, the members agree to amend the Amended Joint Powers Agreement And Its Operative Amendments as follows: 1128404.2 2 5501-12 AGREEMENT 1. Article IV of the Amended Joint Powers Authority Agreement And Its Operative Amendments is amended to add Section 7, to read as follows. 7. Payments to Reduce Unfunded Pension Liability. A. Except as provided in subsection C, the OCFA Board shall appropriate funds in its budget annually consistent with, or greater than, the budgetary payments called for in the "snowball" accelerated pension liability paydown plan approved by the OCFA Board of Directors on September 26, 2013, and amended on November 19, 2015, November 17, 2016, and March 23, 2017. B. Payments will be greater than those appropriated in the OCFA's budget annually when triggered by a Net General Fund Surplus (per the Financial Stability Budget Policy). Payments from the "Net General Fund Surplus" are hereby deemed as derived from revenues received by overfunded structural fire fund cities as determined by the equity calculation required under Article IV, Section 4 — Equity. C. Appropriations and payments required by subsection A and B may be reduced to the extent the Board determines, by vote approved by two-thirds of the Board, is necessary to address a fiscal hardship. 1) For purposes of this section, "fiscal hardship" shall refer to a substantial reduction in OCFA anticipated revenue and/or a significant increase in anticipated expenses that are beyond the reasonable control of the OCFA Board. 2. This Fourth Amendment amends the 1999 Amended Agreement And Its Operative Amendments, and except as specifically amended herein, the 1999 Amended Agreement And its Operative Amendments shall remain in full force and effect. [SIGNATURES ON FOLLOWING PAGES] 1328404.2 3 55D-13 CITY OF SANTA ANA Dated: By: ATTEST: Norma Mitre Acting Clerk of the Council NOTICE TO CITY TO BE GIVEN TO: City Manager City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Phone: (714) 647-5200 Fax: (714)647-6954 APPROVED AS TO FORM: SONIA R. CARVALHO CITY ATTORNEY By: ✓ I J hn M. Funk Assistant City Attorney Dated: 1-30— 1 9 STEVEN A. MENDOZA Acting City Manager [Signatures Continued on Page 22] 21 55D-14