AGENDA #4a

 

BUDGET WORKING PAPER

 

TO:                  W. Calvin Horton, Town Manager

 

FROM:            Daniel Jones, Fire Chief

 

SUBJECT:       Fire Protection Funding for UNC and State Properties

 

DATE:             April 28, 2004

 

 

This budget working paper describes the inadequacies of State funding to the Town of Chapel Hill for the fire protection of UNC and other State properties.  Alternative funding approaches are outlined and their impact on established Fire Department needs identified.

 

BACKGROUND

 

The University represents considerable fire and emergency services exposure risk that must be addressed with Fire Department planning and resources.  These include: multiple large crowd venues, mid and high rise dormitories, chemical and research laboratories, historical and high value properties, multiple high square footage properties, hazardous materials storage, high density occupancies, high density development, multiple special events, access issues, and specialty occupancies.  None of these risks are common to communities of 50,000 population size, thus creating a big city set of fire protection issues to be addressed with small town resources.

 

The University and Hospitals have contributed to several specific “projects” in the past few years relative to fire protection costs.  In 1996, the two organizations split the cost of a $300,000 fire pumper to compensate the Town for the high cost of an aerial truck.  In 2000, the University contributed $30,000 and the Hospitals $20,000 towards the total purchase price of $100,000 for five thermal imaging cameras.  In 2004, the University and the Hospitals agreed to split the cost of an $110,000 mini fire pumper to be used in parking decks and at special events.  These “one time” specific project contributions by the UNC and UNC Hospitals Administrations are very much appreciated by the Town.  These individual efforts have helped with particular needs but do not address regular, ongoing and broader resource needs.

 

The inventory of regular services provided to the UNC and UNC Hospitals campuses by the Chapel Hill Fire Department includes:  fire suppression emergency response (including hazardous conditions, investigations and property salvage situations), basic rescue response, emergency medical first responder services, advisory building plan review for fire protection items, advisory for fire lane designations, special event planning and standby, permitting for pyrotechnics and safety standby for same, fire operations liaison for Kenan Stadium command, advisory review of disaster or emergency plans, advisory to Office of Student Affairs on safety and Greek Community issues, fire cause and origin investigations, pre-fire plan development for key University and Hospitals structures and participation in UNC Hospitals’ safe community program.

 

DISCUSSION

 

The Fire Department has identified a need for additional staffing along with improvements in technology applications.  Much of the need for the eighteen new firefighter positions identified by the Fire Chief can be attributed to the growth of the University.  The Town could commit to directly applying any additional funding provided by the State to address these needs.  The most obvious discrepancy in our funding is the disparity between the percentage of the Fire Department budget (16%) provided by North Carolina State government for the provision of fire protection of the UNC Campus and UNC Hospitals and the actual service demand (26%, 3-year average).  The State legislature is responsible for any potential remedy of the funding deficiency for fire protection of the campus and State-owned buildings.  The formula of compensation for the provision of this critical service should be changed or revised for a more equitable distribution of funds.

 

We recently surveyed the 12 fire departments around the State that receive the most State fire protection compensation and found that most do not believe they are adequately compensated for the level of fire protection that they provide or need to provide.  Of the departments that responded, 62% reported that the level of State compensation was inadequate for the property protected or the service demand represented by the State properties in their jurisdiction.  The larger departments appear less impacted by the funding due to the fact that the size of their organizations and the percentage of budget impacts are minimal; however, the smaller fire departments (i.e. Asheville, Boone, and Wilmington) have greater issues with the inadequate funding due to the total percentage that the State funding represents or should represent in their budgets.  Of the responding departments, Chapel Hill suffers the greatest funding disparity.

 

FUNDING OPTIONS

 

We have identified several possible options to address this inadequacy of State fire protection funding:

 

Ø      The first option would be to apply the same formula used during the last update of the fund in 1997.  That was based on protected building values and according to our calculations would be a factor of .0004 applied to the replacement value of buildings on State property.  Using the current volumes provided by the University and the Hospitals this would be approximately $3,668,000,000 up from the $2,165,007,000 in 1997.  Multiplied by the factor .0004 that option would create a reimbursement to Chapel Hill of $1,467,200 or a 73% increase in the revenue.  The difference would pay for 12 of the 18 firefighters needed.

 

Ø      A second option would be to base fire protection payments on the previous three-year average of service demand for fire protection of these properties.  When current State payments are applied to the ratio of service demand provided by the Fire Department to the campus there is an obvious disparity.  Combined, the UNC campus and UNC Hospitals have represented an average of 26% of the service demand over the past three years.  Applied to the requested Fire budget, that would mean a State share of $1,382,728 against the total.  This option would create a 63% increase in the revenue and would pay for 10 of the 18 firefighters requested.

 

Ø      The third option would be to consider the ratio of property value for the State-owned UNC campus and UNC Hospitals complex versus the tax value of the remainder of the community.  The current property value of the Town, according to the Planning Department, is $3.75 billion; the current insurance value of the UNC campus is $3.21 billion and UNC Hospitals properties is $458.5 million.  Applied as a percentage split of total fire protection cost based on property values, the share for the University when compared to the property value of the Town would be 49%.  Applied to the proposed Fire Department budget, the share for the State to cover the University would be $2,659,499.  This would pay for all 18 of the requested firefighters with $882,247 left over to address other needs such as fire apparatus replacement, additional fire inspectors, new technology acquisition, communications upgrades and facility renovations.

 

RECOMMENDATION

 

That the Town of Chapel Hill appeal to our State Legislative delegation to consider revising the State Fire Protection Fund in the 2004-05 budget by adjusting the formulas to the current building values as represented in the first option above. The fire protection funding disparity between the State of North Carolina and the Town of Chapel Hill has created an unreasonable burden on the tax paying citizens of Chapel Hill.  This disparity is also creating a strain on fire protection resources because of the need to match growth and keep pace with emergency services technology.  We believe the North Carolina State government, the University of North Carolina and UNC Hospitals have an obligation to address this issue of public safety.  A reasonable method of funding fire protection services must be addressed before future growth of these institutions creates an even wider disparity in funding.