Funding the Kent Fire Department RFA

RCW 52.26.230 Compliance Hearing 1

Funding the Kent Fire Department RFA

Compliance with RCW 52.26.240Using Taxes and Fire Benefit

Charge

October 3, 2012

RCW 52.26.230 Compliance Hearing 2

Kent Fire AuthorityFBC Funding System

$1.50 Tax$1.00 Tax

Levy

FBC Assessment

(Size, Use & Risk)

Total Annual Fire

Assessments

October 3, 2012

SPECIFIED IN RCW 52.26.240REDUCED TAX LEVY + FIRE BENEFIT CHARGE

RCW 52.26.230 Compliance Hearing 3

Assessed Value Source for Levy

October 3, 2012

RCW 52.26.230 Compliance Hearing 4

FBC Data source

October 3, 2012

Structure Size

Use & Value

RCW 52.26.230 Compliance Hearing 5

FBC Basics

• Benefit charge capped:

– Cannot exceed 60% of “Operating” budget• 2012 Fire Benefit Charge was:

–39% of the Preliminary Operating Budget

October 3, 2012

RCW 52.26.230 Compliance Hearing 6

FBC Exemptions• Facilities used for religious worship or education

– 100% exemption• Low income Seniors and Disabled

– Same as tax exemptions (up to 75%)• Annual household income of $35,000 or less• Retired because of physical disability and have an income of

$40,000 or less• Must qualify through King County 206-205-5759

• Agricultural uses– 75% exemption for those structures for the growing of

crops/livestock• Vacant Land and structures less than 400 sq ft.October 19th 2011

RCW 52.26.230 Compliance Hearing 7

Determining Annual FBC Amount

• Calculated by:– Determining Expenses

– Subtract revenue sources other than FBC

– Balance equals FBC revenue needed

– Add 1% for King County

Item Amount

2012 Expenses $33,313,961

Less levy revenue ($14,759,990)

Less other revenue ($5,337,390)

FBC revenue needed $13,216,581

Total 2012 FBC Revenue Request

$13,050,700

October 3, 2012

RCW 52.26.230 Compliance Hearing 8

Apportionment of FBC

• RCW 52.26.180 Benefit charges.– (2) A benefit charge imposed must be reasonably

proportioned to the measurable benefits to property resulting from the services afforded by the authority.

October 3, 2012

9

Apportionment of FBC• Categories Used to Apportion

– Size of structure• As determined by King County Assessor

– Category of structure• One and two family residential• Mobile homes• Multi-family homes• Commercial buildings

– Response size needed• Firefighters needed

– Risk of structure• Hazardous materials or uses

– Discounts• Built in protection and alerting

• FORMULA =– Square Root of Area X 18 X Category x Response x Risk x Discount

October 19th 2011

RCW 52.26.230 Compliance Hearing 10

Fire Ratings and Insurance CostsLeague of Minnesota Cities 2010

Ratings & Effect on Insurance Fire Service Savings• Homes in Kent Fire service

area– 35,355

• Value of rating to homes– $1,072 – $670 = $402– $402 x 35,355 = $14,212,710

Kent = Fire Class 3Covington = Fire Class 4/3

October 3, 2012

RCW 52.26.230 Compliance Hearing 11

•Total Fire Insurance Savings

Based UponKent Fire Department Fire Rating

Homes $14,005,278

Apartments $5,865,180

Commercial $2,866,789

Total $22,740,247October 3, 2012

RCW 52.26.230 Compliance Hearing 12

Value of Benefit of Fire Department

• Direct Fire Insurance Benefit $22,740,247• Estimated EMS Benefit $12,000,000• Fire Prevention $Value Added• Fire Investigations $Value Added• Public Education $Value Added• Accredited Agency Status $Value Added• Cares Program $Value Added• Emergency/Disaster Services $Value Added• Technical Rescue Services $Value Added• Property & Life loss without FD $Value Added • Estimated Benefit $34,740,247 PlusOctober 3, 2012

13

Value of Benefit of Fire Department

• Total Estimated Value of Benefit exceeds:

$34,000,000

• Benefit exceeds cost of FBC by: $19,000,000

• Benefit covers 97% total 2011 Budget

October 3, 2012 RCW 52.26.230 Compliance Hearing

RCW 52.26.230 Compliance Hearing 14

Establishing the FBC

• FBC Considerations– Levy Revenues– Other Revenues– Capital Needs from Levy Revenues– Percentage of FBC to Operating Budget– Effect on taxpayer

October 3, 2012

15

Levy Revenue Trend2011 Tax from A/V$15,515,718.00

2012 Tax from A/V$14,759,990

October 3, 2012RCW 52.26.230 Compliance Hearing

2013 Tax from A/V$13,943,050

RCW 52.26.230 Compliance Hearing 16

Levy Revenue Trend

• 2011 Tax from A/V $15,515,718.00• 2012 Tax from A/V $14,759,990.00• 2013 Tax from A/V $13,943,050.00

Revenue 2011-2013 -($1,572,668.00)

Overall Decrease of 11% from 2011

October 3, 2012

RCW 52.26.230 Compliance Hearing 17

Other Revenue Trend

Budget YearOther

RevenueDistrict 37 Revenue

Valley Med Revenue Safer Revenue

Total Other Revenue

2011 $6,971,551 $1,847,353 $575,000 $206,000 $4,549,198

2012 $5,692,047 $100,000 $630,000 $80,000 $4,882,047

2013 $5,834,075 $0 $550,000 $400,000 $4,884,075

$1,947,353.00 $1,755,000 $686,000 Plus 7.4%

Total non-sustainable revenue $4,388,353.00

3 year Average $1,462,784.33

October 3, 2012

RCW 52.26.230 Compliance Hearing 18

Capital Trends

• Preliminary proposal includes $512,000.• Current focus only on life cycle replacement of

equipment.• No dedicated capital to accommodate future

growth.– Mitigation Fees cover minimal capital

• $150,000 collected last 3 years

October 3, 2012

RCW 52.26.230 Compliance Hearing 19

FBC Revenue Trend

Budget Year

Taxes Assessed FBC Assessed

Total Taxpayer Assessment

Tax Payer Change

Purchasing Power

Purchase Power Loss

2011 $15,515,718 $12,311,981 $27,827,699 0.000% $27,827,699 $0

2012 $14,759,990 $13,050,702 $27,810,692 -0.061% $26,778,915 $1,048,784

2013 $13,943,050 $14,617,197 $28,560,247 2.632% $26,178,322 $1,649,377

October 3, 2012

RCW 52.26.230 Compliance Hearing 20

Proposed FBC

October 3, 2012

2013 Operating Expenses $34,432,962Proposed Capital $512,000

Total Revenue Request $34,944,962Less 98% levy revenue -$13,464,156

Less 98% New Construction -$62,870

Less other revenue -$5,834,075

Less vacant positions -$420,000

Less 2012 carry over -$839,000

FBC Revenue Needed $14,324,861

Collection Shortfall $292,336

2013 FBC Revenue Request $14,617,197

RCW 52.26.230 Compliance Hearing 21

FBC Basics

• Benefit charge capped:

– Cannot exceed 60% of “Operating” budget• 2013 Fire Benefit Charge is:

–42% of the Preliminary Operating Budget

October 3, 2012

RCW 52.26.230 Compliance Hearing 22

Ratio of FBC by Property Type

• Residential (>35,000 properties) = 65%– Single Family Homes = 53%– Multi-Family = 12%

• Commercial (1353 properties) = 35%Total Apportioned = 100%

– 2011: 60% Res, 40% Com– 2012: 63% Res, 37% Com

October 3, 2012

RCW 52.26.230 Compliance Hearing 23

Effect of Current FBC Calculations

October 3, 2012

RCW 52.26.230 Compliance Hearing 24

Residential ComparablesTax + FBC

Home Size 2011 Fire Cost

2012 Fire Cost 2013 Fire Cost CPI Comp@8.6%

1,330 $291 $280 $282 -11.8%

2,070 $376 $366 $376 -8.6%

3,066 $503 $500 $513 -6.3%

3,988 $655 $664 $690 -3.6%

6,350 $966 $1003 $1025 -2.8%

October 3, 2012

RCW 52.26.230 Compliance Hearing 25

Commercial ComparablesTax + FBC

Square Feet

2011 2012 2013 CPI Comp@8.6%

365,040 $45,807 $42,038 $43,922 -12.9%

135,300 $18,559 $19,310 $20,421 +1.4%

55,800 $10,674 $10,839 $11,228 -3.4%

18,220 $2,330 $2,377 $2,602 +3.1%

6,456 $2,158 $2,123 $2,163 -6.6%

2,265 $658 $682.19 $702 -2.0%

October 3, 2012

RCW 52.26.230 Compliance Hearing 26

Apartment ComparablesSq. Feet 2011 2012 2013 CPI Comp

@8.6%+/- Per Unit per

month

7,984 $1,417 $1,441 $1,515 -1.7% 8/$0.77

28,980 $5,213 $5,473 $5,760 +1.8% 24/$1.00

90,539 $20,578 $21,073 $22,123 -1.1% 96/$0.91

167,422 $32,801 $35,858 $37,593 +6% 175/$0.83

257,634 $55,483 $58,204 $66,243 +10.8% 300/$2.23

381,722 $73,387 $74,373 $84,317 +4.4% 337/$2.70

October 3, 2012

RCW 52.26.230 Compliance Hearing 27

Questions

October 3, 2012