That the City Council direct staff to enter into negotiations with the Los Angeles County Fire Department (LACFD) to renew the expiring agreement for fire protection services and return to Council with the results of negotiations, at which time, Council may elect to approve terms and conditions of a renewed agreement, or direct staff to pursue alternative options for fire protection services.

In February 2005 the City and the LACFD entered into a 10-year fire service contract. In 2014 the City Council approved a 10-year extension of the original agreement, with this term scheduled to end in February 2025. Pursuant to the terms of the original contract and subsequent amendments, LACFD provides fire protection, hazardous materials response, paramedic services and emergency medical treatment, and related services to the City in exchange for an annual fee. Prior to its agreement with LACFD in 2005, the City had provided these types of services to the La Habra community through the City's own municipal Fire Department, which was disbanded once the contract with LACFD commenced.

As noted above, the current agreement extension with LACFD is scheduled to expire in February 2025. The City Council has three options regarding the provision of fire services for the La Habra community:
 

1. Direct staff to attempt to negotiate a renewal and extension of the existing LACFD contract for fire services for a specified term;

 

2. Direct staff to prepare a Request for Proposals (RFP) for fire protection, hazardous materials response, paramedic and emergency medical services, and related services and seek bids from other surrounding municipal and regional fire agencies, including LACFD; or,

 

3. Direct staff to evaluate the feasibility of re-forming, re-staffing and re-equipping an “in-house” municipal fire department.

The City’s adopted budget for the LACFD contract during FY22/23 is approximately $10 million and staff has been advised by LACFD that their estimated contract cost to the City for FY 23/24 will rise to approximately $10.9 million, subject to contractual caps on cost escalation. The annual budget for fire and ambulance services from inception of the LACFD contract through FY 22/23 is as follows:

The budgeted cost of the City’s fire services contract with LACFD (not including ambulance services, which is under a separate contract with CARE Ambulance) has increased by approximately 88% percent over the last 18 years, averaging an increase of approximately 3.8% percent per year. The cost of the contract in FY 23/24 is expected to increase by an additional 6.3 percent, subject to contractual caps on price escalation. It should be noted that, while the City operates its own ambulance service, it contracts for ambulance operators through CARE Ambulance. Since many other cities include the cost of ambulance operations in their overall fire and emergency services budgets, the information in the table above includes the City’s cost for ambulance services in order to provide an overall annual budget for both fire and ambulance services for comparative purposes.

Of the 34 cities in Orange County, only La Habra is served by LACFD. Ten cities (Anaheim, Brea, Costa Mesa, Fountain Valley, Fullerton, Placentia, Huntington Beach, Laguna Beach, Newport Beach, and Orange) operate their own municipal fire departments. The remaining 23 Orange County cities, and the unincorporated portion of Orange County, rely upon the Orange County Fire Authority (OCFA) for fire, emergency, and paramedic/medical services, the cost of which is paid through either special property tax assessments or through separate fire services contracts.

Staff has reviewed the FY 22/23 budgeted cost of fire and emergency services for Orange County cities, analyzed by total cost, per capita cost, and cost per household, as shown in Attachment 1. Based on both a per capita and per household comparison, the City of La Habra’s current budgeted cost for fire/ambulance services is the second lowest in the County per capita and per household. Staff has also compiled historical data on fire/paramedic incident responses, by year, in La Habra since inception of the LACFD fire services agreement, as shown in Attachment 2.

Based on the quality of fire protection services the City has been receiving from LACFD, in conjunction with reasonable annual contract cost increases, it is recommended that the City Council direct staff to enter into negotiations with LACFD to discuss renewal of the expiring agreement for fire protection services at current service levels and cost sharing arrangements. Staff will return to Council with the results of these negotiations, at which time, Council may elect to approve proposed terms and conditions for a renewed agreement, or may direct staff to continue negotiations or pursue alternative options for fire protection services, as outlined in this staff report.

The City’s approved FY 22/23 budget for the LACFD contract is approximately $10 million. The cost of this contract is a General Fund obligation; however, the City does program a small amount of these costs (usually less than $100,000 per year) from Public Safety Augmentation funding, when available.

The current contract with LACFD includes cost sharing arrangements and an “Annual Fee Limitation” provision. During the initial five-year period of the current contract extension, the Annual Fee Limitation was set at 4% per fiscal year, with any overages carried forward to the next year's billing. Beginning in the seventh year of the contract extension, the Annual Fee Limitation is set at an average of the preceding five years percentage increases, plus 1%.  

Assuming that efficient cost containment and effective service provision remains guiding principles for the City Council, staff will continue to focus on these elements in discussions with LACFD, if directed by Council to negotiate an extension of the existing fire services agreement.

The Fire services contract discussion is consistent with the following areas of the General Plan:

FS 1.1 and 1.6 – 1.8
NH 2.3 – 2.6
EP 1.4 and 1.6

It is also consistent with the following City Council Goals and Objectives:

Goal 2, Objective B: Regularly review and evaluate programs, services, and professional agreements to assess effectiveness and identify opportunities for greater efficiencies and cost containment.

Goal 6, Objective E: Build and maintain partnerships and collaborations with other local government agencies, the business community, local non-profit organizations, and the faith-based community.

Goal 7, Objective C: Provide and maintain quality public services for our residents, businesses, and visitors.