In a unanimous vote on May 24, the Arroyo Grande City Council accepted the changes the OCSD wanted to a proposal the city had drafted with its neighbor Grover Beach. Grover Beach also agreed to the OCSD’s suggestions.
The two cities are trying to figure out what the future of fire services could look like given that the OCSD left the FCFA due to a lack of funding. The OCSD will officially stop being a member of the FCFA on June 30.
The proposal sets terms for contractual fire services in the OCSD until the Local Agency Formation Commission (LAFCO) approves the community services district’s application to officially relinquish its responsibility to provide fire services to its community. Following the LAFCO process, the OCSD hopes that San Luis Obispo County will eventually step in to provide fire services.
Arroyo Grande Councilmember Lan George said at the May 24 meeting that there’s “light” at the end of the long tunnel of discussions that were set into motion when the OCSD decided to exit the FCFA last year.
“I would like to move forward in good faith … so that when the divesture does occur, the county, LAFCO, Oceano can say, ‘Hey, let’s move forward with a plan to contract fire services with the Five Cities Fire Authority,’” she said.
Accepting the OCSD’s suggested terms means the new proposed contract will expand in duration from nine months to a year. Contracting those fire services will now cost the OCSD $1.15 million compared to the initially drafted $1.2 million. The district will have to pay an equivalent prorated monthly cost should the contract extend beyond 12 months.
Despite added costs to the cities, the Arroyo Grande City Council acknowledged that all parties are running out of time to set a new FCFA contract given that the OCSD’s June 30 exit date is looming and that the LAFCO process is expected to take roughly 12 to 18 months to complete.
An amended and restated joint powers agreement—that sets the terms and funding formula governing the FCFA—must be approved on June 13. That approval will set the new FCFA board on June 19, which will now be formed by two representatives each from Arroyo Grande and Grover Beach.
The board’s first order of business will be to approve two contracts with the OCSD—the limited term contract for fire services and an agreement on the OCSD’s ongoing California Public Employees Retirement System (CalPERS) liabilities to FCFA employees. Under the old joint powers agreement, the two cities and the OCSD are responsible for paying their share of post-retirement benefit obligations incurred by the FCFA for the time that the agency was a member.
Arroyo Grande City Manager Whitney McDonald told the Sun prior to the May 24 meeting that the OCSD will have to continue to pay this unfunded liability even after it leaves the FCFA.
“It is anticipated that Oceano will either pay for its share of the ongoing payments that the FCFA makes for its [unfunded liabilities] each year until the total obligation is paid off, or it pay off this obligation as a lump sum payment,” she said, noting that the lump sum was estimated to cost “approximately $1.56 million.”