The Orange County Fire Authority Board of Directors Thursday night approved an agreement to absorb the Santa Ana Fire Department, bringing the regional fire agency closer to taking responsibility for fire protection in the county's second largest city.
Should the City Council approve the agreement, the Fire Authority could be providing fire services by April 6, according to contract documents.
Santa Ana leaders asked for a fast-tracked fire services proposal as they scrambled to deal with a projected $30-million budget deficit for the next fiscal year. The Fire Authority compiled its proposal in six weeks, a process that usually takes four months.
Under the agreement, the city would pay OCFA $33.7 million annually for fire services and be able to shave $10.5 million off its current budget, according to an OCFA proposal.
Much of the savings would come from decreased staffing. The OCFA requires a daily staffing level of 48 firefighters, while the city's fire department staffs 63 firefighters daily. The extra firefighters will be assigned to positions now vacant at OCFA.
The contracting of fire services is one of the cornerstones of Santa Ana's effort to climb out of its budget hole. Deals with police and service employees will save the city another $10.7 million. However, some of those cuts, like deferred payout of police overtime costs, are only temporary.
Some board directors expressed anxiety about the city's ability to make good on its payments. It's no secret that the city is facing cash-flow problems, and the directors wanted assurance that the OCFA would be protected should the city fail to pay.
"I'm very sympathetic to Santa Ana's position. I'm also very mindful that this is a business decision for OCFA," said board director Carol Gamble, who is also a Rancho Santa Margarita councilwoman.
Recognizing that the agency would absorb a city that is in a precarious financial position, OCFA officials built unprecedented protections into the agreement. Under the terms, the city will pay month by month for services and by Sept. 30 obtain either a bond worth one month's payment or put one month's payment into an escrow account.
If the city couldn't make a payment, the OCFA could draw from the escrow account or cash in the bond. The city would then have to restore the advance payment within 30 days.
Gamble said she wanted the agreement turned into an offer contingent upon a study of the city's bonding ability. She also suggested that city put the service payments for July through September into an escrow account.
Responding to Gamble, agency Fire Chief Keith Richter said that the city has a slim cash flow through the end of the fiscal year.
"We recognize the fact that their cash flow right now is difficult. They're working through the end of this fiscal year to preserve whatever reserves they have," Richter said.
"There is no doubt there is risk involved in taking on a city with financial difficulties, but I think the protections we've crafted into the agreement is above and beyond what we've done with any other city."
The directors decided not to take up Gamble's proposal and approved the agreement as is. Gamble and Director Chad Wanke voted no on the agreement. Directors Pat Bates and Sam Allevato were absent.
— ADAM ELMAHREK