Oakley City Council Contemplates Utility User Tax to Assist Fire District

On Tuesday, the Oakley City Council received a report from City Staff on the possibility of a ballot measure to help raise funds for the East Contra Costa Fire Protection District.

The information was created by City Staff and presented by City Manager Bryan Montgomery after noting the City of Brentwood was anticipating discussing a Utility User Tax (UUT). The Item was a discussion item only and no action could be taken.

Under a UUT, items such as electricity, water, telecommunications could be taxed at a certain percentage of the gross bill to go fund the East Contra Costa Fire Protection District–the city is hoping to raise between $2.4 million to $2.6 million to open a second fire station and staff it.

“We are in a unique scenario because we have an independent body that provides services to the city with its own board, funding sources, and what is being contemplated now is how the cities and county as independent agencies supports the fire district,” explained Montgomery. “The district has attempted on two occasions to seek the revenue it needs in a parcel tax and a benefit assessment. Those were not successful. As a purist in public policy, I am somewhat doubtful of the prudence of the why is the public policy of one agency taking the role of another when that agency was unable to recover the resources it needs from its residents that other agencies would do and ask the same question.”

Montgomery explained in the County and State of California, fire services are not a city function except in Richmond, El Cerrito, and Pinole, these are services by fire districts.

“It’s customary throughout the state that fire services is provided by Districts,” says Montgomery.

He highlighted that the ECCFPD receives nearly all its revenue (97%) through the 1% property tax and due to Prop 13 in 1978, it was a rural area with a small percentage of just 7% of the 1% going to fire.

“Frankly this was wholly inadequate to fund a professional fire operation and we are coming to know this as we continue to research and search options,” says Montgomery.

Montgomery noted that compared to the fire District, Oakley receives less than 7% of the 1% which is less than the fire District while the county portion of Oakley receives 12% of the 1%.

The unincorporated county pulls in about 17%.

“There is a very serious structural problem with the flow of funding intot he district,” says Montgomery.

The District has an area trying to cover 250-square miles with funding for just for 3-stations. Currently, the ECCFPD has four stations because it was able to secure funding from the City of Brentwood, City of Oakley and the County.

“I wish all residents would understand the problem better. We all have our busy lives and have things going on but the crisis mode that the District is in unfortunately only felt by those who need those services,” said Montgomery. “So you pray to god its not you, your family, neighbors, loved ones, but on a daily basis, we have families who are being placed at risk and these services are not being provided at levels they are needed for members of our community. It’s just the reality of it.”

He further highlighted the lack of support for funding.

“The lack of support for funding measures might have rational in some peoples mind, but the fact the district needs money is a given. I can’t believe there can be an argument there among any party,” said Montgomery.

Montgomery further highlighted the Ad-Hoc Task Force was formed led by the City Manager of Brentwood to find a short-term funding source to open a 4^th station which has now been done, but noted its temporary and will close June 2017. The second recommendation was an updated Master Plan—also completed. Finally, a proposal would come forward to bring new revenue to the District on the November ballot.

Montgomery explained that the Master Plan calls for 9-stations while the district currently has only 3-staitons. The Master Plan calls for 2-stations in Oakley at a cost of $2.6 million annually per station. The Master Plan calls for $16 million in additional revenue to meet the plan.

Long Term Funding Options include a Parcel Tax (2/3 requirement), Benefit Assessment (Legal Challenges), Property Tax Reallocation (not realistic or adequate), and Utility User Tax (could be 50% + 1)

Montgomery noted that from time-to-time you hear a plan for Property Tax Reallocation which he dismissed.

“I don’t think I can say it any more emphatically that it’s not realistic nor is it adequate,” says Montgomery. “Could it provide some assistance, where would it come from? It’s a zero sum game because 1% is 1% so if the thought is moving more money to the fire district, it would have to come from somebody else and most likely someone else is not going to agree to that. So I hate to be so abrupt but for those who I have met with and those you have spoken with who have this hope frankly it’s not realistic at all.”

Montgomery explained the Utility User Tax which would be a 50%+1 passage if structured properly. He says it’s a percentage over the gross bill which you are charged. In Oakley, it would generate a little over $600,000 for every 1%.

He further highlighted that if the City of Oakley obligated for the full cost of two new stations it would be at a cost of $5.2 million.

A UUT of around 8.5% to 9% with contingency would be needed.

According to recent polling, a UUT of 6.5% had less than 40% support.

“This is a very rare and unusually spot for cities,” says Montgomery. “We are asking the residents to supplement a separate district for resources. The reality is the other agency is not able to make it happen so the question becomes who is going to make it happen.”

Montgomery noted that they do know that based on the polling, the county is not prepared to act so the unincorporated area appears that they will not have a measure before them.

The City of Brentwood is seriously considering supporting a UUT Tax.

Results of recent polling on a UUT Tax

If the Oakley City Council is willing to consider a UUT Tax for the November ballot, it would need to move quickly to meet the August 9 meeting deadline.

“The fire district would be best entity to solve this problem,” says Montgomery referring to his public policy soap box. “They could apply something uniformly across the District. What might happen is the City of Brentwood might adopt a pass if the voters support a tax which will be at a certain level. The City of Oakley if we proceed at some level, maybe different than Brentwood level and the county would have no tax on the ballot. All to support a District that is a system wide operation.”

Montgomery called a District wide solution “more fair” and “effective” but did not appear the fire district is not prepared to act for a Parcel Tax or Benefit Assessment.

Mayor Kevin Romick noted that tonight the City was only looking for direction, not looking to solve the problem.

Councilwoman Vanessa Perry said that the only choice was the Utility Tax.

“This District is a district, not one city and the county. Being that it’s a district, we can’t just sit by and not take action. Brentwood is expected to go with the UUT, I hope they do because it’s a wise choice. I think we need to do that as well,” said Perry. “As far as the Parcel Tax and Benefit Assessment failing, I think that had to do with outreach and education. I think at least for me, I thought its fire, who is not vote for that. Who is not going to support it. Now that we have seen that its failed, we have to do all that we can.”

Perry explained that people are now seeing that there is no coverage at times.

“I live in Summer Lakes; they are not going to get to me for 30-40 minutes. My house is gone,” stated Perry. “My neighbor’s house is gone. It’s going to be devastated and we are starting to see it play out.”

She further highlighted although the District has the Knightsen fire station now, if they do nothing then it goes away next summer.

“As City leaders, we need to do everything in our power to help city residents and I think that decision is moving forward with a UUT and that is the only viable option we have right now,” said Perry.

Councilman Randy Pope, who also serves on the fire board, noted that the polling showed the more people who knew about the UUT tax the less they liked it.

“It’s an uphill battle for the Utility User Tax,” said Pope. “If we were to pass it then we tie it to stations geographically located in Oakley. I understand the District is a regional thing because you can’t fight fires with three engines, the big picture solution is consolidation with East Contra Costa Fire consolidating with Contra Costa County Fire because we are going across the borders daily.”

Pope noted that it’s a big problem and they were “morally obligated to do something” saying that the State of California has not looked at Property Tax Allocations in four-decades.  Meanwhile he brought up how residents are now seeing insurance increases.

“I would like to know how much it would cost us to put this on the ballot, I would love to give the voters a chance to weigh in on this. But I am concerned with how successful it may be,” said Pope. “I would also ask the city to work with the fire district on updating the impact fees for new development and add a fire assessment on all new construction similar to what we have to lighting and landscape and police assessments to give the fire a little bit for every new house that is built in the District.”

He further explained that they will have a second station build when “Shea adheres to their obligation” and they would work to find a way to staff that station. He is suggesting a 4% UUT tax then increase to a 4.5% when another is built.

Montgomery estimates that the cost could be as little as $15,000 to place a UUT on the ballot based on the large amount of items on the ballot.

Mayor Romick stated that the city should go with a 5% UUT and drop the telecommunications because with power, water you can regulate yourself to use less whereas cell phones people have no control over rising costs.

“I would try to get rid of the telecom because that is going to be the part that will people will notice the most and we will get the most rebellion,” said Romick. “I would not have any escalators in this because people will vote no one this… we are sort of the last resort for any type of revenue enhancements for the District. The struggle is to educate the community. Education is one thing but changing minds is another.”

Romick said it was “critical” that we add to the stream to meet the needs of tomorrow of the Fire District.

Montgomery further highlighted that they had to look at what voters were willing to pass not what they wanted them to pass referring to Oakley being able to pass $2.4 million under Romick’s plan—although they need $2.6 per station.

“If the voters would support a 7-8% UUT, then we should do that, but that is not the case,” explained Montgomery. “The Fire District would not say no to our $2.4 million.”

Perry asked about how to get another station and after Montgomery explained possibly going back to voters and the growth; she stated she preferred 6% UUT.

Pope stated they should make it as simple as possible without an escalator and include a sunset.

“Our goal should make the percentage number as small as possible and we do that by including as many utilities as possible,” explained Pope. “We don’t have sewer listed in here which is another avenue to tax because it would further dilute the impact on any one utility. The more we hit the smaller hit each one hits. “

Pope stated that if the cost is $15,000, the City had no choice but let the voters choose.

Mayor Romick said he agreed with Councilman Pope that if its on more utilities it shrinks the number across the board and that should be the direction of somewhere between 4-6%.

“I think staff should give us lots of options to pick or choose,” said Romick.

Perry was concerned that with lots of options the council needed to understand they had to make a decision on August 9.

The Council provided direction to staff to bring back options on a Utility User Tax at the August 9 City Council meeting.