HomeMy WebLinkAboutAgenda - 11-17-2011 - 4ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 17, 2011
Action Agenda
Item No. ~_
SUBJECT: Review of Fire Department Issues Relating to Fire Protection Districts, Fire
Insurance Districts and Fire Tax Districts as Related to Property Insurance
Ratinas
DEPARTMENT: Emergency Services
PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
1) Caldwell Insurance District Map
2) East Orange Insurance District Map
3) County Attorney Memo Dated 9/1/11
4) Caldwell Fire Department Contract
5) Fire Taxing Districts Map
INFORMATION CONTACT:
F. R. Montes de Oca, 245-6100
Annette Moore, 245-2317
Michael Talbert, 245-2153
PURPOSE: To review Fire Protection, Insurance and Tax Districts and their relationship to
property owners' insurance ratings and provide direction to staff.
BACKGROUND:
Fire Protection
In 2009, Eno Fire and Emergency Services, Inc. opened fire station #2 on St. Mary's Road just
south of Pleasant Green Road. The North Carolina Department of Insurance, Office of the
State Fire Marshal, Ratings and Inspections Division, inspected and approved the station,
apparatus and equipment. This approval allowed the Department of Insurance to extend the
East Orange Insurance District, which is now adjacent to the Caldwell Fire Insurance District.
Certain properties in the southeast section of the Caldwell Fire District are over six (6) road
miles from the Caldwell Fire Station located on Guess Road. As a result, those properties were
not in an insurance district, rated as Class 10. Staff worked. with representatives from the
Caldwell Fire Department and the Department of Insurance to identify those affected areas.
Staff also worked with Information Technologies' Geographic Information Systems (GIS)
personnel to identify those parcels in the Caldwell Fire District that are not in the Caldwell Fire
Insurance District and moved those parcels into the East Orange Insurance District, which is a
Class 9 District, thereby allowing those property owners to be inside a rated insurance district.
GIS staff produced a revised map of the East Orange Insurance District, showing those parcels
being added into the East Orange Fire Insurance District. The revised map was approved by
staff from the North Carolina Department of Insurance, Office of the State Fire Marshal, Ratings
and Inspections Division.
2
On April 19, 2011 the Board of the County Commissioners approved the fire insurance changes
and the approved maps were forwarded to the Office of the State Fire Marshal. The Office of
the State Fire Marshal approved the changes which became effective November 1, 2011.
There are approximately 1,156 properties in Orange County located outside of six road miles
from the closest fire station in their fire district and therefore have a fire insurance rating of 10.
Approximately 900 of these property owners could be helped by the realignment of existing fire
insurance districts.
The process of moving a property from one fire insurance district to another to help the property
owner secure a better fire insurance rating can be accomplished, but the result has raised
issues of equal protection and property tax fairness for home owners. The realignment of frre
insurance districts between Caldwell and East Orange was accomplished without any
reallocation of Fire District Tax revenues. This may create legal issues as discussed by the
attached County Attorney's memorandum dated September 1, 2011.
On September 13, 2011 the Board was presented options for changing fire districts to improve
insurance ratings for the 1,156 properties located outside of six road miles from the closest fire
station located in their fire insurance district. The County Attorney's memorandum dated
September 1, 2011 provides a legal opinion for fire protection tax districts, and the available
options are listed below:
1. Realign Fire Insurance District boundaries without changing Fire Tax Districts.
2. Change existing Fire Protection Districts, which would also change the Fire Tax
Districts.
3. Establish one or more Fire Service Districts to replace or overlay existing Fire
Protection Districts which could also change Fire Tax Districts.
Fire Department Contracts
The realignment of the Caldwell Fire Insurance District and the East Orange Fire Insurance
District has raised the question of the status of Fire Department contracts in Orange County.
Most Fire Department contracts were last updated in 1992. Attached is the contract between
the Caldwell Fire Department and Orange County dated May 18, 1992. With a few exceptions,
most all fire contracts are identical to the attached contract for Caldwell Fire Department. The
contract provides for basic fire protection and includes a provision for the Fire Department to
provide budget and financial information to the County in exchange for levying a property tax
rate in the district for the exclusive use of the Fire Department. All contracts renew
automatically each fiscal year on the 1St day of July and continue in effect until terminated by
either party, upon 365 days written notice to the other party.
There are several important issues not addressed in the 1992 contract that would be included in
anew contract with Orange County today, including but not limited to the following:
• A detail description of fire protection services to be provided and standards expected
by Orange County
• The amount of Liability and Workers Compensation Insurance required
• Requirements for an Annual Audit
• The current contract states that "The Fire Department may provide a first responder
program" but it is not required by the contract.
At this time the Fire Department contracts need to be reviewed by the County Attorney and
revised to meet the current expectations of Orange County.
Fire Department Strategic Plan
The Fire Departments are moving forward with a strategic plan for fire protection in Orange
County. The Fire Departments hope to have the Strategic Plan complete and present it to the
Board of Commissioners in time for the FY 2012-13 annual budget. The County was not invited
to be a part of this planning process.
FINANCIAL IMPACT: The discussion of this item has no financial impact on the County.
RECOMMENDATION(S): The Manager recommends that the Board provide direction to staff
as to changes in the status of Fire Protection, Insurance & Tax Districts and new Fire Protection
contracts to be drafted by the County Attorney. Once the Volunteer Fire Departments complete
their Strategic Planning process, it may be prudent to revisit these issues in a comprehensive
manner.
~- - -
- y
N
i -
r
' '~ ~~
- /O:
~'
F
` {
~ .
~
R E
- O
~
y ~0
~~
~~p
P~ -
~ ~
~
`
~ - - - , .
~KEE :
~
y
,~
N
' V -
_ •-
- W A'SR' ~ .
.I -
-
-.
_ ~
- - _ - m -
' Caldwell -_-
~rTT1F RNER (~} FD
RCH RD ;. -
v
~~
aEyR ~
o
o ,
;_- :
y
c~
~
.._~
9
W C9
~ _ G -
~S
N
U
_ - _ ALKERS FAR p
SCHLEYRD
Ceh~
~
/~SU~hcp ~~ to ~
~---[ __,.,.~r,`r~~riweWEastOrangeL~~`/~~
1 ~ / \ ~ ~ 1 ~ Eno2
N.
~~-o~ao~:~.d ~a.ltdweLl
W E
~n urar~~e. t~~st~ic.t
S
1,~ ~ 380• ~ Nlap prepared by Orange County iT-G!S January 6, 2611
Luotlon ~OCL05031fG.'WVC~'aVFpe OlstildafFNe45bcMfe 20/01CWweU_MOdN~ ~mrILMXIY
LEGEND
Fire Stations
Streets
Fire Districts
~~ _ _ ~ Proposed Line
~-- r^-°-
-'~~ Area to East Orange
of
,N .
- ~~~~os:~d~ ~a ~ O~r
vang:e;
w E -_
,S~
c ._
,~„ n 4000. Map prepared by Orange County iT G13 9anuary 6, 201'!
Lay,on ~OCLOSCJIICMNIO'A1F,~ DiaLiWS1Flw l 5(i MM 20701C~tlweq_ModM1eA_~m,,.MXO+
LEGEND
~ Fire Stations
Streets
Fire bistri¢ts
East Orange flb
~ ~ Pro used i.ine
~~~~ P
Area to East Orange
5
~"A,Ch (Y12n~" ~ g
MEMORANDUM
TO: Frank W. Clifton, Jr. County Manager
Cc: Michael Talbert, Interim Assistant County Manager
Frank Montes de Oca, Emergency Services Director
John Roberts, County Attorney
FROM: Annette M. Moore, Staff Attorney
RE: Fire Protection Tax Districts
DATE: September 1, 2011
The County Attorney's Office was asked to provide a legal opinion on the options
available to the County for fire protection tax districts.
The North Carolina General Statutes ("Statutes") authorizes, but does not mandate,
counties to establish and maintain county fire depattments.~ Counties have the authority to
provide financial assistance to incorporated volunteer fire departments and to contract for fire
fighting or prevention services with one or more counties, cities or one or more incorporated
volunteer fire departments.2 Counties also have authority to designate fire districts or parts of
districts and prescribe boundaries for insurance districts.3 The County is not required to provide
fire service equally to all residents in the County.
Several revenue options are available to counties to fund fire service. General property
tax revenues can be used to fund fire service in the entire County or the County can be divided
into special tax districts and a tax levied on the property of individual districts to fund fire
service within that district.4 There are two types of special tax districts: rural fire protection tax
districts and fire service tax districts. The two districts differ in the way they are created and
how they can be altered or dissolved.
Rural fire protection districts
Creation of Rural fire protection districts
A rural fire protection tax district is created in an unincorporated area after receipt of a
signed petition by the Board of County Commissioners (hereinafter refen•ed to as "Board" )of at
Least 35 percent of the resident fieeholders in a proposed district and an election where a majority
of qualified voters in the proposed district vote to allow the county to levy a district tax for fire
protections Fire protection also includes "the levy, appropriation and expenditure of funds for
I N.C.G.S § 153A-233
2 Id.
3 Id.
'~ N.C.G.S. § 153A-149(11) and N.C. Const, Art. V, §2(4)
s N.C.G.S. § 69-25.1
furnishing emergency medical, rescue, and ambulance services to protect person within the
district from injury or death.i6
Once created, a rural fire protection tax district is a separate municipal corporation. The
Board of Commissioners establishes the rate of the district tax each year. The Board of
Commissioners also provides fire protection, to the extent of the taxes collected, by either
contracting for the service, providing the seiwice itself if the county has an organized fire
department, establishing a f r~ department within the district or using some combination of these
methods.?
A rural fire protection disri7et in a single county is governed either by the Board or a
three-member fire protection district commission, which serves at the discretion and under the
supervision of the County Commissioners.8,9 The revenue funds from the disri7ct tax .are
administered by the governing board. The governing board is authorized to enter into contracts
on behalf or the district to purchase property or procure fire protections services.
Altering a Rural Fire Protection District
A ruual fire protection disri7ct may be altered to change the existing boundaries of the
district, abolish it, or increase the maximum tax rate.
1. Increasing the Tax Rate. The procedure is the same as far creating a rural fire
protection district.'o
2. Increasing Territory to Add Unincorporated Area. To increase the territory in an
unincorporated area he governing board must receive a petition from either the owner
or atwo-thirds majority of the owners of the adjoining ten•itory to be included; the
addition must be approved by the board of directors of any corporation furnishing fire
protection to the district, a majority of the board of commissioners must approve the
addition, and a public hearing must he held, t t
3. Increasing Territory to Add Incorporated Area. Municipal and County governing
boards adopt a xesolu#ion.i2
4. Changing Boundary Lines of Districts with Same Rate of Tax. The County may
merge districts or relocate territorial boundaries from one district to another upon
receipt of a petition of the boards of directors of any corporation famishing fire
pro#ection in the district and a public hearing is held. The Board has the authority to
relocate the boundary lines "in accordance with the petition or in such a manner as
the board may seem proper."ts
N.C.G.S. § 69-25.5
$ N.C.G.S. § 69-25.7
9 Since Orange County does not have a Fire Protection Commission, information tvilf be limited to governing
structures used in Orange County.
io N.C.G.S. § 69-25.1
lE N.C.G.S. § 69-25.11(1)
~ZN.C.G.S. § 69-25.11(5)
cs N.C.G.S. § 69-25.11(3)
2
8
5. Changing Boundary Lines of Districts with Different Rates of Tax. The County
may merge districts or relocate territorial boundaries from one district to another upon
petition of two thirds of the owners of the territory involved and after receiving
favorable recommendation of the boards of directors of the corporations furnishing
fire protection to the district and holding a public hearing.14 Additionally, the Board
has the authority to relocate the boundary lines "in accordance with the petition or in
such a manner as the board may seem proper."is
6. Decreasing the Territory of a District. The fire protection district area may be
reduced upon application by the owner or owners of the territory to be removed, the
unanimous recommendation of the corporation furnishing fire protection in the
district, and the approval of the Board.16
7. Abolishittg a Tax District. The County Commissioners may abolish a tax district
upon a petition of 1S% of the resident freeholders in the district and approval in an
election by a majority of the residents qualified to vote.t~
County Service Districts
The County is authorized to define one or more areas within the county to establish a service
district to fund fire protection seivices.~8 A service district within a county is not a municipal
corporation nor does it have any independent authority. The service district is established and
maintained by the county.
Creation of a Fire Service District
To create a service district the board of commissioners must first consider all of the
following:
1. The resident population and population density of the proposed district;
2. The appraised value of the property subject to taxation in the proposed district;
3. The present tax rates of the county and any city or special district tax in which the
district or any portion is located;
4. The ability of the proposed district to sustain additional taxes; and
5. Any other matters the board believes to have a bearing on whether the district
should be established.t9
The Board may then establish a service district if, upon information and evidence it
receives, it finds that all of the following apply:
1. There is a demonstrable need for providing the service in the distr7ct;
2. It is impossible or impracticable to provide those services on a countywide basis;
3. It is economically feasible to provide the proposed services in the district without
unreasonable or burdensome atmual tax levies; and
~a N.C.G.S. § 69-25.11{4}
is Id.
t6N.C.G.S. § 69-25.11(2)
~~ N.C.G.S. § b9-25.10
'$ N.C.G.S. § 153A-301
~9 N.C.G.S. § 153A-302(a)
3
9
4. There is a demonstrable demand for the proposed services by persons residing in
the district 20
The Board of Commissioners must then hold a public hearing on the proposed creation of
the service district.21 Prior to holding the public hearing the Board of Commissioners shall have
prepared a map of the proposed district, a statement showing that the proposed district meets the
standards provided above, and a plan for providing the service to the district sa
Altering a Fire Service District
1. Increasing the Tax Rate in Service Districts. There is no maximum district tax
rate. Taxes are combined with the ad valorem tax rate as provided in N.C.G.S.
§ 153A-149(c) and the Board may levy a tax na more than the combined rate of
$1.50 on the one hundred dollars "appraised value of property subject to
taxation," unless approved by a majority of the voters.
2. Increasing Service District Boundaries. The area to be included in the service
district must be contiguous to the district and "at least one eighth of the area's
aggregate external boundary coincident with the existing boundary of the district"
and the area requires the service.23 The Board may also increase the area of the
service district with one hundred percent of the real property owners in the district
petition the Board a4 The Board is also required to hold a public hearing and
prepare a report that includes a map of the affected area, a plan far delivering
services and a statement indicating they have met the statutory standard.
3. Changing Service District Boundaries. The Board may by resolution change
the boundaries between two adjoining fire service districts. s The board may
initiate the change on its own or landowners may petition far a change. The
Board is required to hold a public hearing, to prepare a report that includes a map
of the current and proposed boundaries, a statement indicating the boundaries
adjoin one another and the districts have a similar purpose, a plan for providing
service, and the effect the change in the amount of taxable property will have on
the ability of the district to provide services.26
4. Decreasing Service District Boundaries. The statute only authorizes reduction
in service districts after annexation. When territory within a service district in
annexed by a municipality, that territory ceases to be a part of the service
district 27
5. Abolishing Service Districts. A service distric# may be abolished upon a
showing that there is "no longer a need for a pan~ticular service district and that
there are no outstanding bonds or notes." The Board is required to hold a hearing
prior to adopting a resolution abolishing a district.
z° N.C.G.S. § 153A-302(al)
z' N.C.G.S. § 153A-302(c)
zz N.C.G.S. § 1S3A-302(b)
z3 N.C.G.S. § 1S3A-303(a)
za N.C.G.S. § 153A-303(b}
ss N.C.G.S. § 1S3A-304.3(a)
z6 N.C.G.S. § 1S3A-304.3(b)
Z' N.C.G.S. § 1S3A-304.1(a}
4
10
Conclusion
The Statute provides that the Board have broad discretion with which to fund f re services
with taxes. Currently, Orange County funds fire services by dividing the County into rural fire
protection tax districts. The Board is the governing boac~d for each rural fire protection districts.
The Board contracts for fire services with ten volunteer corporations and two municipal fire
departments to furnish fire services to a specific Mural fue protection tax district. There are
several revenue options available to Board to provide fire service to residents in the County. The
Board could keep the current rural fire protection distr7cts, create fire service districts or a single
countywide fire service district in the unincorporated areas, or have a hybrid of both rural fire
protection and fire service districts.
~-
NORfiFi CAROI,iNA .
CONTRACT AND AGREEMENT
ORANGE COIINTY _
THIS CONTRACT AND AGREEMENT, made and entered into this the
1.9th day of ~~Y . 1992, by and between the~COUNTY of
ORANGE, hereinafter referred to as County and the
CALflWELL FIRE. DEPARTMEI~{T , Inc . , for the protection of the
CALDldELL Fire District, hereinafter referred to as
Fire Department;
W I T N E S S~E T H•
THAT WHEREAS, North Carolina General Statutes 69-25.5
provides that counties may provide for fire protection in- a fire
district by contracting with an incorporated nonprofit volunteer or
community fire department; and
WHEREAS, the
CALDI~~ELL
Fire District is a
special. tax district created pursuant to Chapter 69 of the North
Carolina General Statutes; and.
WIiEREAS, the CALDWELL Fire Department is
a nonprofit coxporatian~orgar~ized for fire protection purposes; and
WHEREAS, County has elected to provide fire protection and
fire prevention services and optional first responder services
authorized by North Carolina General. Statutes 6925.7 (hereinafter
"services "), within the boundaries of the CALOWELL
Fire District, .by contracting with Fire Department
to provide services; and
WHEREAS, Fire Depaxt~tent has the ability to provide and is
willing to be the contract provider of services within the•boundaxy
of the CALD1dELt Fire District; and
11
.~
2
WHEREAS, County levies and collects the taxes and is
responsible far appropriating said funds far the use of the
citizens in CALD'~tELL Fire District; and
WHEREAS, County desires to establish a renewable contract
to enable Fire Department to make long-range plans;
NOW, THEREFORE, in consideration of the mutual covenants
and premises herein contained, the parties hereto contract and
agree as follows:
` 1. Each fiscal year, the County will cause to be levied
a special tax not exceeding Z5 cents ($a.15) per one hundred
dollar valuation of all real and personal property subject to
taxation in the CALD'vdELL Fire District unless
othex~tise li~tited by law andfor a vote of the people; and will
collect said tax as apart of the ad valorem tax collections of
the County. The amount levied annually shall be based on a tax
rate approved by the Board of County•Commissioners following
review of the needs projected in the budget estimate submitted to
the County•by.the Board of Directors of the Fire Department.
2. That a special revenue fund shall be maintained for
each fire district by the County for funds collected as a result
of said special tax in which fund appropriations will be'based on
the budget estimates approved by the County Commissioners.
IInappropriated amounts remaining in the revenue fund shall be
carried over to the next fiscal year for fire department use.
12
13
3
3. That all appropriations established by the County
Commissioners will be remitted to the Fire Department in quarterly
payments by the 15th day of the first month of each quarter for
the first three quarters beginning in July and ending on March 31,
and the final quarterly payment will be made based on the County
Finance Director's estimate of overall tax collections through the 1
fiscal year end not to exceed the appropriation amount. Ali late
listing penalties and interest on delinquent taxes associated with
collections will be retained•by the County as cast of collections.
~4. The Fire Department shall provide the necessary
equipment, personnel, and other resources as determined by the
North Carolina Department of insurance, Fire and Rescue Service
Division, and the Insurance Service Office for all property
located within the CRLDt~JELL Faze
District, will strive to achieve and maintain at least a 9S
insurance rating, and will furnish services free of charge to all
persons and individuals within the District.
5. That all funds paid to the Fire Department by the
County shall be used exclusively by the Fire Department to provide
services within said District, and to gay other legitimate
expenses. The Fire Department may provide a first responder
program, if it is provided under the guidelines provided by Orange
County Emergency Management and under the direction of the
Emergency Medical Services Medical Director to provide basic
emergency medical care to citizens within the fire district.
..
14
4
6. The Fire Department shall operate in compliance with
all applicable state and Local laws and regulations including the
Local Emergency Planning Committee Hazardous Materials Training
requirements and North Carolina Fire Incident Reporting System,
for which reports sha13 be submitted to the Fire Marshal's Office
on a monthly basis. The Fire Department further agrees to
annually file with the Fire Marshal's office a current list of its
Board of Directors and a roster of its-members with addresses,
telephone numbers, social. security numbers; an annual training
report; and a list of fire apparatus including pump and tank size,
and specialized fire suppression equipment, no later than July 31..
7. The County may inspect all books and accounts of the
Fire Department at any time, upon reasonable notice. The Fire
Department will present to the County within 90 days of the close
of each County fiscal year (July 1-June 30), an accounting of how
public funds have been expended on the forms provided by Orange
County Finance Department.
8'. The Fire Department will comply with County budgeting
procedures and other procedures provided for by State Law and
agrees to submit annual budget estimates and a supporting letter
of request for a proposed tax rate signed'by the Berard President -
upon approval by the Board of Directors of the Fire Department.
The Emergency Management Office will provide the standard forms
used by county departments for presentation to the Board of
Commissioners, in accordance with established County budget -. ,
15
5
t
tiEaetables. The Fire Department will use standard line items far '
accounting devised or consented to by the County Finance Office,
9. The Fire Department will file with the County Fire
Marshal a true copy of the Articles of Incorporation, existing
Bylaws, Standard Operating Procedures, and any changes made
thereto from time to time. Further, the Fire Department agrees to
amend and adopt its charter and bylaws as necessary to meet all
minimum legal requirements for a North Carolina nonpxofit~
corporation, as allowed in G.S. 55A-1 through 55A-43, with or
without voting iuembers which charter and bylaws have provisions
enabling citizens of the community to have input•in the affairs of
the corporation at least at an annual meeting as desribed by
G.S. 55A-34 and vesting in the Board~of Directors the authority to
manage the affairs of the corporation.
l0. This contract shall renew automatically each fiscal
year on the 1st day of July, and shall continue in effect until
terminated by either party hereto; upon three hundred sixty five
days (365'written notice to the other party. Any contracts
hetween the County and the Fire Department now in effect, with
respect to the subject matter contained herein, are superseded
upon the effective date of this contract.' '
11. This contract was written with the Taws of the State
of North Carolina in mind. It shall be construed consistent with
and interpreted pursuant to the laws of the State of.North
Carolina. ~ ..,
~,
5~
. _
IN TESTIM{?NY WEiEREOF, the County has caused this
instrument to be executed by the chairman of the Board of County
Commissioners and attested by the Clerk to the Board of County
Commissioners, and the Fire Department has caused this instrument
to be signed in i.ts name. by its President, attested by its
Secretary, and its corporate seal hereto affixed, all. by order of
its Board of Directors duly given.
ORANGE COUNTY BOARD OR COMMISSIONERS
BY: V V .~ vv `~ - -. -- l
(Chair]
ATTEST;
1 rk j ,
(Fire gepartmentj,
(President, Board of Directors]
ATTEST:
~Secretaryj
16
'-
. ~,
Fire Taxi
~. ng pis triets A T rq ~HMEN r s
Vo
U
~'
a
c~,1
m
~t Fi~. `~1
e Station Lo
cations Rate
taxing~~~ namcated In tlhe {j bel {s,
~e
- -~. ~ s~
-S
~~
REA~TER
CH (14` HILL
TERN ~
LE
N
~ } inch ~ 3 mAts
~•' 0
Q"a 3
n4e Cq~nty plants Miits
GIS Map preR'9rey ~ man ~ ~~ ~~~$ Ol1 ent