DeSoto County, FL. FY 2017 Fire Rescue Non Ad Valorem Assessment Study. Revised Final Report. Revision Date: July 18, 2016.

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1 FY 2017 Fire Rescue Non Ad Valorem Assessment Study Revision Date: July 18, 2016 Prepared By:

2 Burton & Associates 200 Business Park Circle, Suite 101 St Augustine, Florida Phone (904) Fax (904)

3 July 18, 2016 Ms. Mandy Hines DeSoto County Administrator 201 E. Oak St Arcadia, FL Re: FY 2017 Fire Rescue Non Ad Valorem Assessment Study Dear Ms. Hines: Burton & Associates is pleased to present this of the Fire Rescue Assessment Study that we have conducted for The County. The revisions in this report reflect budgetary adjustments and corrections to exemption codes as discovered prior to the Assessment adoption process, but after the original Final Report was issued. We appreciate the fine assistance provided by you and all of the members of County staff who participated in the analysis. If you have any questions, please do not hesitate to call me at (904) Very truly yours, Michael E. Burton President Burton & Associates 200 Business Park Circle, Suite 101 St Augustine, Florida Phone (904) Fax (904)

4 TABLE OF CONTENTS SECTION 1. INTRODUCTION OBJECTIVE AND SCOPE STUDY PROCEDURES CURRENT FIRE RESCUE ASSESSMENT RATES METHODOLOGY... 3 SECTION 2. CALCULATION OF NET REVENUE REQUIREMENT BUDGET ALLOCATION PROJECITON OF NET REVENUE REQUIREMENT SECTION 3. CALCULATION OF FIRE RESCUE ASSESSMENTS ASSESSMENT PROPERTY CLASSIFICATIONS CALLS FOR SERVICE ANALYSIS APPORTIONMENT OF NET REVENUE REQUIREMENT ASSESSMENT ROLL AND PROPERTY DATA ANALYSIS ASSESSMENT RATE CALCULATIONS SECTION 4. SUMMARY OF RECOMENDATIONS SECTION 5. FY 2017 FIRE RESCUE ASSESSMENT ROLL SECTION 6. SECTION 7. APPENDIX A APPENDIX B Burton & Associates 200 Business Park Circle, Suite 101 St Augustine, Florida Phone (904) Fax (904) mburton@burtonandassociates.com

5 FY 2017 Fire Rescue Non-Ad Valorem Assessment Study 1. Introduction SECTION 1. INTRODUCTION This report presents the results of an analysis to develop an updated Fire Rescue Non-Ad Valorem Assessment Program for DeSoto County, Florida (the County). The County currently imposes Fire Rescue Assessments based upon the 2003 Assessment Study performed by Government Services Group, Inc. This study intends to update the Fire Rescue Assessment program using current property, cost and calls for service data. The term Fire Rescue as used in this study refers to the twenty-four hours per day, seven days per week service for fire suppression provided by the County to properties located within its limits, including first responder service. This study was conducted by Burton & Associates, a firm that specializes in providing rate and assessment consulting services to local governments. 1.1 OBJECTIVE AND SCOPE The objective of this study is to update the existing Fire Rescue Non-Ad Valorem Assessment Program resulting in assessment rates that will recover the full cost requirement of providing Fire Rescue service to properties within the County limits for FY 2017 and subsequent years in proportion to the benefit received from the Fire Rescue service provided by the County. SCENARIO ANALYSIS CITY OF ARCADIA Within the County is the incorporated City of Arcadia ( the City ). In 2006 the City entered into an Inter-local Agreement with the County for the merger of Fire Rescue and EMS services. The agreement sets forth conditions of the merger, including provisions for phasing in the merger and ongoing financial obligations. The City currently pays the County for Fire Rescue services with a Non-Ad Valorem Assessment program for City properties, as well as the contractual amount as defined in the Inter-Local Agreement. It is our understanding that the City is considering adoption of the Fire Rescue Assessments calculated in this study commissioned by the County. At the time of this, the decision as to whether the City will impose the Fire Rescue Assessments calculated in this report has not been made. As requested by the County, this study will utilize all parcels within DeSoto County (incorporated or unincorporated) in order to property allocate the costs and required revenues for Fire Rescue services Countywide. 1

6 FY 2017 Fire Rescue Non-Ad Valorem Assessment Study 1. Introduction 1.2 STUDY PROCEDURES The study first identifies the full Fire Rescue cost requirements for Fiscal Year (FY) 2017 that recognizes the high level of service traditionally provided by the County. This was accomplished by first allocating the full FY 2016 County Fire Department budget between Fire Rescue and EMS services as required by Florida state statute. At the time of this study, the FY 2017 County Fire Department budget had not yet been created, as such the FY 2016 budget was projected to identify the preliminary FY 2017 budgeted costs. We also projected annual cost requirements for providing Fire Rescue service in each year of a multi-year projection period from FY 2017 through FY This was accomplished through several interactive work sessions with County staff to confirm allocation parameters, cost escalation rates and the projected capital improvement plan. The projection of costs through FY 2021 calculates the necessary annual adjustments to the Fire Rescue Assessments in order to maintain 100% cost recovery through the projection period. This phase of the analysis is used to calculate the maximum assessment rate that could potentially be adopted alongside the FY 2017 assessment rates. The maximum assessment rate is intended to provide the County with the means of adjusting the Fire Rescue Assessments in future years in order to maintain 100% cost recovery without having to undergo the special notification and hearing procedures instituted for initial assessment adoption, methodology updates or rates adoption beyond the current maximum adopted rate. The FY 2017 Fire Rescue service Net Revenue Requirement identified in the budget allocation and projection process was then apportioned to each property class based upon National Fire Incident Reporting System (NIFRS) calls for service data provided by the County s Fire Department. The FY 2016 Certified Fire Rescue Non-Ad Valorem Assessment Roll (the FY 2016 Roll) was used as the primary data source for assigning assessment units to each parcel. Several property and structure databases provided by the Property Appraiser were utilized to assign units where data was not complete in the FY 2016 Roll. The full parcel property database was used to identify all current property, including exempted and excluded parcels that were not billed assessments in FY Property classifications were based upon the Property Use Codes for each parcel as maintained on the Property Appraiser s database. Once the allocation to property classes was complete, the Fire Rescue Assessment rate structure was developed and specific Fire Rescue Assessment rates for each property class were developed, the results of which are presented herein. 2

7 FY 2017 Fire Rescue Non-Ad Valorem Assessment Study 1. Introduction 1.3 CURRENT FIRE RESCUE ASSESSMENT RATES The County currently imposes a Fire Rescue Assessment program based upon a study performed by Government Services Group in Table 1 below presents the current Fire Rescue Assessment rates as adopted and assessed in FY TABLE 1 FY 2016 FIRE RESCUE ASSESSMENT RATE SCHEDULE Property Use Unit Type FY 2016 Rate Residential per Dwelling Unit $77.00 Hotel/Motel/RV per Room/Space $6.00 Vacant/Lot per Parcel $30.00 Property Use: All Non-Residential Building Square FY 2016 Footage Unit Type Rate <1,999 per Building/EBU $ ,000-3,499 per Building/EBU $ ,500-4,999 per Building/EBU $ ,000-9,999 per Building/EBU $ ,000-19,999 per Building/EBU $1, ,000-29,999 per Building/EBU $3, ,000-39,999 per Building/EBU $4, ,000-49,999 per Building/EBU $6, ,000-59,999 per Building/EBU $7, ,000-74,999 per Building/EBU $9, ,000-99,999 per Building/EBU $11, >100,000 per Building/EBU $15, METHODOLOGY The development of a Non-Ad Valorem Assessment to fund Fire Rescue services requires that the services and facilities for which properties are to be assessed confer a special benefit upon the property burdened by the special assessment. Simply stated, there must be a logical relationship between the services and facilities provided and the benefit to real property assessed. In addition to the special benefit requirement, the costs associated with providing the services and facilities must be reasonably apportioned to the properties that receive a benefit from Fire Rescue service in proportion to the benefit received. Therefore, the recommended Fire Rescue Assessments calculated in this study were developed such that the costs incurred by the County in providing Fire Rescue service will be recovered through assessments to properties in proportion to the benefit received by the demand for service as reflected in the calls for service from each respective property class. This part of the report describes the assessment methodology used to develop the Fire Rescue Assessments. The first section discusses relevant Florida Law regarding Special Non-Ad Valorem Assessments, followed by sections discussing how Florida Law has been applied to the 3

8 FY 2017 Fire Rescue Non-Ad Valorem Assessment Study 1. Introduction determination of special benefit and the apportionment of the annual revenue requirements of the Fire Rescue Assessment to benefitting properties SUMMARY OF RELEVANT FLORIDA LAW GOVERNING SPECIAL ASSESSMENTS This section discusses relevant Florida Law regarding special non-ad valorem assessments as it relates to the County s proposed Fire Rescue Assessment program. The discussion covers how Florida law relates to special benefit and proportional benefit. Special non-ad valorem assessments are a revenue source available to local governments in Florida to fund capital improvements as well as operations and maintenance expenses for essential services such as roads, drainage, Fire Rescue services, utilities, etc. Florida case law has established two requirements for the imposition of a non-ad valorem special assessment. These two requirements have become known as the two-pronged test. They are 1) the property assessed must derive a special benefit from the improvement, service or facilities provided, and 2) the assessment must be fairly and reasonably apportioned among the properties that receive the special benefit. In considering special benefit, the following question must be considered, Can a special benefit be derived from Fire Rescue service by all properties within the County to meet the first prong of the two pronged test, even if all properties are not improved and/or do not receive calls for service?. The answer is yes, based in part upon the Florida Supreme Court determination in Fire District No. 1 of Polk County v. Jenkins, a sufficient special benefit is derived by the availability of fire services to justify the imposition of the special assessment. Also, in Meyer v. City of Oakland Park, the Court upheld a sewer assessment on both improved and unimproved property, stating that the benefit need not be direct or immediate but must be substantial, certain and capable of being realized within a reasonable time. Also, In City of Hallendale v. Meekins, the Court indicated that the proper measure of benefits accruing to property from the assessed improvement was not limited to the existing use of the property, but extended to any future use which could reasonably be made PROPORTIONAL BENEFIT It is well settled under Florida law that local governments are afforded great latitude regarding legislative determinations of special benefit and reasonable apportionment of costs (as evidenced by the Florida Supreme Court finding in City of Boca Raton v. State of Florida), that the apportionment of benefits is a legislative function, and that legislative determinations as to benefit and apportionment will be upheld unless the determination is arbitrary that is, if reasonable persons may differ as to whether the land assessed was benefitted by the local 4

9 FY 2017 Fire Rescue Non-Ad Valorem Assessment Study 1. Introduction improvement, the findings of the City officials must be sustained. In City of Boca Raton v. State of Florida, the Florida Supreme Court also determined that the manner of the assessment is immaterial and may vary, as long as the amount of the assessment for each tract is not in excess of the proportional benefits as compared to other assessments on other tracts. Accordingly, while any number of methodologies may be available for a given service or improvement, the community imposing the assessment is at liberty to select the methodology which provides the best fit in terms of local needs and circumstances SPECIAL BENEFIT THE FIRST PRONG OF THE TWO PRONGED TEST Based upon discussions with County staff about the extent and nature of the Fire Rescue Services provided, we have concluded that all developed parcels within the County receive a special benefit from the Fire Rescue Services provided by the County. A map of the County was provided by County staff and is presented on the following page and shows the fire stations distributed throughout the County. 5

10 FY 2017 Fire Rescue Assessment Study 1. Introduction 6

11 FY 2017 Fire Rescue Assessment Study Section 1. Introduction In considering special benefit, it is important to consider that the County maintains its Fire Rescue resources at a level that provides a response readiness condition to respond to calls for service throughout the County at relatively equal levels of service. When needed, responses are made to calls for service without discrimination as to the property type, size, location within the County, or any other factors specific to the property requiring the service. Therefore, all developed properties receive a special benefit from the County s Fire Rescue service. The special benefits provided to all improved parcels by the availability of Fire Rescue Service provided by the County include: Availability of immediate response to fire, First responder medical aid to protect the life and safety of occupants, Containment of liability for emergency incidents on the subject parcels and the spread of fires to other property, Enhanced property value, and Enhanced marketability of property. Therefore, the first prong of the two pronged test (the property burdened by the assessment must derive a special benefit from the service provided by the assessment) is met because all developed properties in the County receive a special benefit from the County-wide Fire Rescue service provided by the County FAIR APPORTIONMENT THE SECOND PRONG OF THE TWO PRONGED TEST In considering the assessment methodology, the second prong of the two pronged test requires that the costs of the assessment must be fairly and reasonably apportioned among the properties that receive the special benefit. The Fire Rescue services apportionment methodology used in this study allocates assessable costs on the basis of the demand for Fire Rescue services by classes of real property use as identified on the real property assessment roll prepared for the levy of ad valorem taxes. First, the assessable Fire Rescue costs are allocated among real property use categories based upon the historical demand for these services (cost apportionment). This demand is identified by examining the past three years of fire incident/calls for service data as reported by DeSoto County, FL to the State Fire Marshal s office. Second, the costs attributed to each property class are apportioned among the parcels on a per dwelling unit basis for Residential uses, a per room/space basis for Hotel/Motel/RV Park uses, a square footage basis for Non- Residential uses, and a per parcel/lot basis for vacant parcels (parcel apportionment). 7

12 FY 2017 Fire Rescue Assessment Study Section 2. Calculation of Net Revenue Requirement SECTION 2. CALCULATION OF NET REVENUE REQUIREMENT This section presents the basis and results from the calculation of the FY 2017 Net Revenue Requirement (NRR) that will fund 100% of the costs for Fire Rescue services for the County. The NRR will be the basis for the FY 2017 Fire Rescue Assessment calculations presented in Section 3 of this report. In addition to the FY 2017 NRR, this section also presents the projection of costs through FY 2021 in order to identify the assessment rates necessary to fully fund Fire Rescue services throughout the projection period. 2.1 BUDGET ALLOCATION Florida case law requires that the imposition of a special assessment for fire services may only fund Fire Rescue services and first response rescue services. A Fire Rescue Assessment may not fund Emergency Medical Services (EMS), including transportation (Florida Supreme Court opinion in City of North Lauderdale v. SMM Properties). As such, the adopted FY 2016 budget of the County Fire Department has been examined and separated into two categories: costs related to EMS, and costs related to Fire Rescue services and first response rescue services ALLOCATION METHODOLOGY The budget allocation was accomplished in several meetings with County Administrative, Finance and Fire Department staff. In these meetings we identified the allocation criteria to separate all costs into EMS and Fire Rescue services. Items within the budget were allocated between EMS and Fire Rescue using the following allocation criteria: ADMINISTRATIVE FACTOR The Administrative Factor was derived by creating a ratio between EMS personnel and total Fire Rescue personnel that the County staffs at all stations on an average shift. The percentage was then applied to appropriate line items for cost allocation. The Administrative Factor is based on the type of vehicles at each County fire station and the number of personnel staffing the vehicles on an average shift. To operate the three fire stations throughout the County, the County staffs a total of 17 positions on an average shift. Of the 17 positions, 10 positions are assigned to rescue vehicles and 7 positions are assigned to fire vehicles. Thus, the Administrative Factor for the County is the ratio of 7 positions (devoted to fire vehicles) to 17 total staff positions on an average shift. Or 41.2% for Fire Rescue services and 58.8% for EMS. Table 2 below details this allocation. 8

13 FY 2017 Fire Rescue Assessment Study Section 2. Calculation of Net Revenue Requirement TABLE 2 ADMINISTRATIVE FACTOR - STATION STAFFING Staff per Shift Assigned to Total Staff Fire Vehicles Rescue Vehicles per Shift Station Station Station Total Administrative Factor: 41.2% 58.8% Fire Rescue EMS PERSONNEL FACTOR In order to more accurately allocate full staff costs from the FY 2016 budget, a blend of Direct and Administrative Factors were applied to each position type to create a blended Personnel Factor. This Personnel Factor was then applied to all Personnel line items in the FY 2016 Budget. Table 3 below presents the calculation of the Personnel Factor. TABLE 3 PERSONNEL FACTOR Staff Type Total Wages Count Allocation Factor % Fire % EMS $ Fire $ EMS Paramedic/Firefighter $ 2,373, Administrative 41.2% 58.8% $ 977,281 $ 1,395,913 EMT/Firefighter $ 355,562 6 Direct Fire 100.0% 0.0% $ 355,562 $ - Captain Paramedic/Firefighter $ 207,210 2 Administrative 41.2% 58.8% $ 85,329 $ 121,881 Lt. Paramedic/Firefighter $ 705,679 8 Administrative 41.2% 58.8% $ 290,599 $ 415,080 Deputy Chief $ 101,997 1 Weighted Personnel 47.7% 52.3% $ 48,623 $ 53,374 Public Safety Chief $ 111,178 1 Weighted Personnel 47.7% 52.3% $ 53,000 $ 58,178 Medical Director $ 21,508 1 Direct EMS 0.0% 100.0% $ - $ 21,508 Life & Safety Inspector $ 71,644 1 Direct Fire 100.0% 0.0% $ 71,644 $ - Office Manager $ 49,564 1 Weighted Personnel 47.7% 52.3% $ 23,628 $ 25,936 Administrative Assistant $ 41,288 1 Weighted Personnel 47.7% 52.3% $ 19,682 $ 21,606 $ 4,038, % 52.3% $ 1,925,348 $ 2,113,477 OPERATIONAL FACTOR The Operational Factor was based on the percentage of total calls related to fire that were received by the County Fire Rescue Department. The call percentage was then applied to certain budgeted items that are best allocated by this Operational Factor. To develop the Operational Factor, the County Fire Rescue Department provided call/incident volume data from calendar years 2013 through During the calendar years of 2013 through 2015, there were a total of 9,882 calls received by the County Fire Rescue Department, of which, 9

14 FY 2017 Fire Rescue Assessment Study Section 2. Calculation of Net Revenue Requirement 2,274 calls were identified as fire or first response as defined by the National Fire Incident Reporting System. Therefore, based on the call volume data, the Operational Factor for Fire Rescue related calls is equal to 23.0% (2,274/9,882) and the Operational Factor for EMS calls is equal to 77.0% (7,608/9,882). DIRECT ALLOCATION To the extent that certain line items could be allocated directly between EMS and Fire Rescue services, direct allocations were made. WEIGHTED EXPENSES For items that did not have a direct relationship of cost based upon the factors described above, a weighted expense factor was applied. The weighted expense factor is the function of the total cost allocations that were assigned one of the factors listed above. The bottom-line dollar allocation was used to identify the weighted percentage ALLOCATION RESULTS The result of the line item FY 2016 budget allocation is presented in Schedule 1 of Appendix A at the end of this report. The final allocation shows that of the $5,235,023 total FY 2016 budgeted costs, $2,412,886 or 46.1% is allocated to Fire Rescue; and $2,822,157 or 53.9% is allocated to EMS. 2.2 PROJECTION OF NET REVENUE REQUIREMENT In order to calculate the FY 2017 Net Revenue Requirement (NRR) for Fire Rescue services, the allocated FY 2016 Fire Rescue budget was projected on a line item basis using cost escalation factors identified by County staff. The projected Capital Improvement Program and allocations for Capital items were also provided by County Staff, and as such the Fire Rescue allocated Capital items were included in the budget projection. Schedule 2 of Appendix A presents the line item projection of the allocated Fire Rescue budget, and Schedule 3 of Appendix A details the projected Capital Improvement Program. For the purposes of projecting the assessment Net Revenue Requirement, an annual average Capital Improvement cost was utilized. Schedule 3 of Appendix A details the development of the annualized CIP cost. The projected budget was then used to develop the Net Revenue Requirement (NRR) to be allocated amongst the property classes for the FY 2017 Fire Rescue Assessment calculations. In each year of the projection period, offsetting revenues from other sources were deducted from the previously identified expenditure requirements. In addition, a 2% cost covering Tax Collector 10

15 FY 2017 Fire Rescue Assessment Study Section 2. Calculation of Net Revenue Requirement Expenses for administering of the Non-Ad Valorem Assessment bills, and a 5% allowance for contingency and non-collections was included to determine the annual assessment revenue requirement. In the first year of the projection period (FY 2017), the estimated costs for administering the First Class mailing notices of the Assessment adoption were included. The final projection Fire Rescue Net Revenue Requirement for FY 2017 FY 2021 is presented in Table 4 below. The Net Revenue Requirement in FY 2017 is the 100% Cost Recovery or Maximum Allocated costs for the assessments calculated herein. TABLE 4 PROJECTION OF FIRE RESCUE NET REVENUE REQUIREMENT Fire Expenditures by Category FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Personnel Services $ 1,948,077 $ 1,955,624 $ 1,963,283 $ 1,971,057 $ 1,978,948 Operating Costs $ 175,475 $ 177,732 $ 180,023 $ 182,348 $ 184,709 Capital Improvements $ 440,000 $ 440,000 $ 440,000 $ 440,000 $ 440,000 Other Non-Operating Costs $ 132,472 $ 132,472 $ 132,472 $ 132,472 $ 132,472 Total Fire Expenditures $ 2,696,024 $ 2,705,828 $ 2,715,778 $ 2,725,878 $ 2,736,129 Plus: Assessment Notice Mailing Costs (1) $ 10,000 $ - $ - $ - $ - Plus: Tax Collector Costs (2) $ 49,190 $ 49,489 $ 50,006 $ 50,526 $ 51,049 Plus: Allowance for Non-Collection and Contingency (3) $ 122,975 $ 123,722 $ 125,014 $ 126,315 $ 127,623 Net Expenditures for Assessment $ 2,878,189 $ 2,879,038 $ 2,890,798 $ 2,902,718 $ 2,914,801 Less: Charges for Services $ (8,105) $ (8,105) $ (8,105) $ (8,105) $ (8,105) Less: Miscellaneous Revenues $ (39,425) $ (39,425) $ (39,425) $ (39,425) $ (39,425) Less: Grants $ (300,257) $ (300,257) $ (300,257) $ (300,257) $ (300,257) Less: City Contract $ (70,910) $ (56,820) $ (42,730) $ (28,640) $ (14,550) Net Revenue Requirement for Assessment $ 2,459,492 $ 2,474,431 $ 2,500,280 $ 2,526,291 $ 2,552,464 (1) - Assessment Notice Mailing Costs are estimated by County Staff, these costs are only imposed in the first year of the new Assessment Program (2) - Estimated at 2% of Net Revenue Requirement (3) - Estimated at 5% of Net Revenue Requirement 11

16 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments SECTION 3. CALCULATION OF FIRE RESCUE ASSESSMENTS This section presents the results of the Fire Rescue Assessment calculations and our recommendations based upon those results. 3.1 ASSESSMENT PROPERTY CLASSIFICATIONS This assessment study will utilize the County s current Fire Rescue Assessment property classifications as the basis for all apportionments to property classes. The only adjustment made was to separate the current property class of Commercial/Institutional into two classes, Commercial/Institutional and Industrial/Warehouse properties thus increasing the number of property classes to five property classes. As such, the property classifications utilized in this study are as follows: Residential Hotel/Motel/RV Park Commercial/Institutional Industrial/Warehouse Vacant/Lot 3.2 CALLS FOR SERVICE ANALYSIS The costs identified in this study are apportioned to property categories based upon an analysis of the calls for service data provided by the County Fire Department. The call/incident data identified the number and type of calls made by County Fire Rescue and EMS vehicles for a period of January 1, 2013 December 31, The call/incident data is extracted from the National Fire Incident Reporting System (NIFRS). The data field containing the type of call/incident was used to separate calls determined to be for EMS, and those that are Fire Rescue or First Responder. Only non-ems calls were used for the apportionment of the Fire Rescue Assessments. Schedule 1 of Appendix B presents the full list of unique call/incident types in the data set provided by the County, and the identification of incident type as being either Fire Rescue or EMS for the assessment calculations. The call data represented 9,882 calls over the three year time period. Of these calls, 2,274 were identified by incident type as Fire related, 7,608 were identified as EMS. Beyond identifying the call/incident type, we then allocated the Fire calls using property types as coded in the call data. Schedule 2 of Appendix B presents each unique property use code in the 12

17 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments NIFRS data, and the application of the property categories to each code as utilized in this study. Of the 2,274 calls identified as Fire related, 1,661 were calls to real property and specific property uses. The remaining 613 calls were to non-real property or non-specific property and were therefore excluded from the apportionment analysis. The remaining 1,661 calls were assigned to the assessment property classifications. Table 5 below illustrates the assignment of calls to the property categories identified in the previous subsection. The percentages identified in the Fire Calls to Real Property are used to allocate the FY 2017 Net Revenue Requirement to each property class. TABLE 5 FIRE CALL ALLOCATION BY PROPERTY TYPE ALL FIRE CALLS Property Classification # of Fire Calls % of Calls Residential % Hotel/Motel/RV % Commercial/Institutional % Industrial/Warehouse % Vacant % Non-Specific % Total 2, % FIRE CALLS TO REAL PROPERTY Property Classification # of Fire Calls % of Calls Residential % Hotel/Motel/RV % Commercial/Institutional % Industrial/Warehouse % Vacant % Total 1, % 3.3 APPORTIONMENT OF NET REVENUE REQUIREMENT The next step in the Fire Rescue Assessment calculation is to allocate the Net Revenue Requirement amongst the property classes. This is done by utilizing the allocations of Fire calls to real property as identified in the previous section. Featured below, Table 6 contains the apportionment of the Net Revenue Requirement to the identified property classes. 13

18 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments TABLE 6 APPORTIONMENT OF FY 2017 NET REVENUE REQUIREMENT Property Class % Allocation $ Allocation Residential 58.8% $1,446,673 Hotel/Motel/RV 1.7% $41,460 Commercial/Institutional 24.2% $595,253 Industrial/Warehouse 2.9% $71,075 Vacant 12.4% $305,030 Total 100.0% $2,459, ASSESSMENT ROLL AND PROPERTY DATA ANALYSIS The basis for creating the FY 2017 Assessment calculations and associated assessment roll is the County s FY 2016 Certified Fire Rescue Assessment Roll (the FY 2016 Roll) and the full property parcel database as provided by the DeSoto County Property Appraiser. The property database identifies 20,672 parcels within the incorporated and unincorporated areas of the County. Each parcel was assigned a property classification for the assessment calculations based upon the property use category assigned by the Property Appraiser. Schedule 3 of Appendix B presents each property use code and the assigned assessment class by code EXEMPT AND EXCLUDED PROPERTIES Certain parcel types are exempt by State statutes or case law from non-ad valorem assessments such as this Fire Rescue Assessment. Other parcels are typically excluded from such assessments because they receive no benefit from Fire Rescue Services, such as lake bottoms, marshes, and other property types that will likely never develop. The excluded properties are identified by the property use codes contained in the Property Appraiser s database. These excluded properties are contained in the schedule of property use codes in Schedule 3 of Appendix B. This study has assumed the required exemptions for City, County, State, Federally owned properties. In addition, newly required exemptions for Agricultural properties are included and described in subsequent sections. Religious and non-profit properties are exempt from Fire Rescue Assessments by County decision in the existing assessment program, and therefore are continued to be assumed exempt in this study. The exempted parcels are included in the cost apportionment, but will not be billed an assessment. The unrecovered revenue will be funded through the County General Fund or other sources. In order to identify the exempt parcels, the exemption codes assigned to each property by the Property Appraiser were utilized. Schedule 4 14

19 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments of Appendix B contains a list of all uniquely identified exemption codes and the exemption status for each code applied to this study PROPERTY CLASSIFICATION AND ASSESSMENT UNIT IDENTIFICATION The specific methodology and underlying assumptions for the parcel apportionment within each category of property use is generally described in this section. The apportioned costs to each property category are divided amongst the assessment units by category to create the Assessment Rate. Table 7 below presents each property classification and the associated Assessment Unit used in creation of the Assessment Rate. TABLE 7 PROPERTY CLASSIFICATION AND ASSESSMENT UNITS Property Class Residential Hotel/Motel/RV Commercial/Institutional Industrial/Warehouse Vacant/Lot Assessment Unit Per Dwelling Unit Per Room/Space Per Building within each Buiding Square Footage Tier Per Building within each Buiding Square Footage Tier Per Parcel/Lot ROLL AND PROPETY DATA ANALYSIS This study utilized the FY 2016 Certified Fire Rescue Assessment Roll (the FY 2016 Roll) as the primary data source to identify the number of Assessment Units per parcel. The FY 2016 Roll was relied upon as the primary data source because it is based upon a mature assessment program and as such, the units assessed to parcels have been verified and refined over substantial amount of time. While the FY 2016 Roll contains data for all parcels that were charged a Fire Rescue Assessment in FY 2016, the assessments calculated herein must involve all parcels that would be exempt but otherwise allocated to create the rates themselves FY 2017 PARCEL ASSESSMENT UNIT IDENTIFICATIONS The following steps were taken in order to populate all assessment units for the FY 2017 Assessment Rate calculations: 1. All parcels exempt, excluded or otherwise located within the County were identified by the full parcel database. 2. For all parcels that received a Fire Rescue Assessment in FY 2016, the assessment units were identified via the FY 2016 Certified Fire Rescue Assessment Roll. 15

20 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments 3. For all properties that did not receive a Fire Rescue Assessment in FY 2016, we utilized the Building/Structure database provided by the Property Appraiser to identify any Residential dwelling units or Non-Residential square footage that were otherwise not included or exempt in the FY 2016 Roll. 4. For any property identified as Industrial/Warehouse based upon Schedule 3 of Appendix B, all units that were otherwise identified as Commercial/Institutional use in the FY 2016 Roll were separated to the new Industrial/Warehouse category. 5. Any remaining property that did not contain Residential dwelling units or Non-Residential square footage based upon the criteria above was categorized as Vacant, regardless of property use code, and therefore assigned one vacant parcel unit SPECIAL CONSIDERATIONS FOR AGRICULTURAL PROPERTIES The State of Florida recently passed CS/SB 1164: Special Assessments on Agricultural Lands. The law defines the special requirements as follows: Notwithstanding any other provision of law, a municipality may not levy special assessments for the provision of Fire Rescue services on lands classified as agricultural lands under s unless such property contains a residential dwelling or nonresidential farm building, with the exception of an agricultural pole barn, provided the nonresidential farm building exceeds a just value of $10,000. In order to accommodate these new rules, we have adjusted the units identified in the FY 2016 Certified Fire Rescue Assessment Roll using the following parameters: 1. Agricultural parcels were identified by utilizing the property database s Agricultural Exemption Status field. If a parcel contained the Agricultural Exemption, it was identified as an Agricultural Parcel for the purposes of these adjustments. 2. Vacant Agricultural Parcels will be treated as exempt pursuant to the new law. 3. If an Agricultural Parcel contains Residential Dwelling Units identified from the FY 2016 Roll, the parcel was charged the Residential Assessment Rate per Dwelling Unit. 4. If an Agricultural Parcel contains non-residential structures, these were categorized in the Commercial/Institutional class. 5. The building/structure file provided by the Property Appraiser was utilized to identify the structure value of all Non-Residential structures on the parcel. If a structure value was less than $10,000, it was excluded from the calculation. 6. The sum total of the remaining structures not identified as an agricultural pole barn was compared against the total Non-Residential square footage units assigned to the parcel 16

21 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments by the FY 2016 Roll. The lesser of the calculated square footage based on the building/structure file and the existing assessment units was utilized as the Commercial structure square footage for the parcel RESIDENTIAL DWELLING UNITS The following assumptions support findings that parcel apportionment applied in the Residential Property Use Classification (including single-family, condominiums, duplexes, triplexes, apartment complexes, cooperatives, mobile homes etc.) is fair and reasonable. The size or the value of a single family home does not determine the scope of the required Fire Rescue response. The potential demand for Fire Rescue services is driven by the existence of a residential parcel. Apportioning the assessed costs for fire rescue services attributable to the residential property use category on a per dwelling unit basis is required to avoid cost inefficiency and unnecessary administration and is a fair and reasonable method of parcel apportionment based upon historical call data. For purposes hereof, the term "dwelling unit" shall mean a building, or portion thereof, which is lawfully used for residential purposes, consisting of one or more rooms arranged, designed, used, or intended to be used as living quarters for one family only, including a mobile home HOTEL/MOTEL/RV PARK UNITS In accordance with Section , Florida Statutes, which mandates that the County treat Recreational Vehicle Park property as Commercial property or the same as Hotel/Motels for nonad valorem special assessments levied by the County; it is fair and reasonable to treat each space within the Recreational Vehicle Parks as a billing unit like Hotel/Motel rooms. For these parcels, the total number of (1) Hotel/Motel rooms/units and (2) RV spaces available for rent were identified by the FY 2016 Roll COMMERCIAL/INSTITUTIONAL AND INDUSTRIAL/WAREHOUSE UNITS To assess the amount of special benefit equitably amongst parcels within the Commercial/Institutional and Industrial/Warehouse (Non-Residential) categories, it is necessary to relate each property s proportional special benefit to the special benefits of all other properties within this category. A weighted method of apportionment known as an Equivalent Benefit Unit (EBU) was used, in which the building square footage category of < 1,999 was assigned 1.0 EBU, representing 1,000 square feet, and all other building square footage 17

22 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments categories were proportionately weighted (assigned an EBU) based on the beginning square footage of each building square footage range. For parcels containing Non-Residential development exceeding 100,000 square feet, the last tier or 100 EBUs were assigned to the parcel. This assumption is related to the fact that the demand for Fire Rescue services may diminish at the outer limit of structure size. Additionally, the fire flow capacity anticipated at the fire scene under the level of service provided by the assessable costs limits the benefit provided to a structure beyond a certain size. Therefore, it is fair and reasonable to place a cap on the square footage classification of benefited buildings within the Non-Residential property categories. The County s current Fire Rescue Assessment structure identifies the maximum building square footage of 100,000 square feet, as such we have retained this cap in the current analysis. Table 8 identifies square footage tiers and assigned EBU by tier for Non-Residential property categories broken out by building square footage. TABLE 8 NON-RESIDENTIAL PROPERTY SQ FT TIER AND EBUs Property Use Categories Commercial/Institutional Industrial/Warehouse Building Square Footage Unit Type EBUs <1,999 per Building 1 2,000-3,499 per Building 2 3,500-4,999 per Building 3.5 5,000-9,999 per Building 5 10,000-19,999 per Building 10 20,000-29,999 per Building 20 30,000-39,999 per Building 30 40,000-49,999 per Building 40 50,000-59,999 per Building 50 60,000-74,999 per Building 60 75,000-99,999 per Building 75 >100,000 per Building 100 The following assumptions support findings that the parcel apportionment applied in the Non- Residential categories is fair and reasonable: The assessment of Non-Residential structures based upon square footage is fair and reasonable for the purposes of parcel apportionment because the demand for Fire Rescue availability and the resources expended in combating an actual fire event vary in proportion to the size of structures and improvements within benefited parcels. 18

23 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments The separation of Non-Residential buildings into square footage Tiers and assignment of EBUs is fair and reasonable for the purposes of parcel apportionment because: (1) the absence of a need for precise square footage data within the ad valorem tax records maintained by the property appraiser undermines the use of actual square footage of structures and improvements within each improved building as a basis for parcel apportionment; (2) the administrative expense and complexity created by an on-site inspection to determine the actual square footage of structures and improvements within each improved parcel assessed renders this alternative impractical; (3) the demand for Fire Rescue availability is not precisely determined or measured by the actual square footage of structures and improvements within benefited parcels but more appropriately by order of magnitude differences in structure size as represented by ranges of square footage; and (4) the classification of buildings within square footage Tiers and EBUs is a fair and reasonable method to classify benefited parcels and to apportion costs among benefited structures that create similar demand for the availability of Fire Rescue services. The fire flow capacity anticipated at the fire scene under the level of service provided by the assessable costs limits the benefit provided to a structure beyond a certain size. Therefore, it is fair and reasonable to place a cap on the square footage classification of benefited buildings within the Non-Residential property use categories VACANT PROPERTY UNITS For all parcels that do not contain developed structures identified by either the FY 2016 Roll or the full property and structure database provided by the DeSoto County Property Appraiser, an assumption of 1 vacant unit was assigned per parcel MIXED USE PROPERTY UNITS For Non-Residential parcels that contain a Residential dwelling unit, the number of dwelling units located on the parcel was multiplied by the Residential per dwelling unit charge to compute the parcel s residential Fire Rescue Assessment. This assessment was then added to the parcel s Non- Residential Fire Rescue Assessment IDENTIFIED ASSESSMENT UNITIS Following the assumptions and data points listed within this section, we have identified the following unit counts per property class that will be used to divide the costs allocated to each property class for the Assessment Rate calculations: 19

24 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments TABLE 9 ASSESSMENT UNITS PER PROPERTY CLASS Property Class Assessment Unit Total Allocated Units Residential Dwelling Unit 12,735 Hotel/Motel/RV Room/Space 3,710 Commercial/Institutional EBU 4,151 Industrial/Warehouse EBU 860 Vacant Parcel 8, ASSESSMENT RATE CALCULATION FULL COST RECOVERY RATE CALCULATION To calculate the FY 2017 Fire Rescue Assessments we utilized the apportioned costs and total units per property classification as identified in the previous sections of this report. The amount of assessable costs allocable to each property class was divided by the number of assessment units identified in each property class to compute the Fire Rescue Assessment to be imposed against each parcel. To remain consistent with the existing Rates, the calculated FY 2017 Rates are rounded to the nearest whole dollar. Table 10 below presents the calculated FY 2017 Fire Rescue Assessment Rates at full (100%) cost recovery, as well as a comparison of the existing FY 2016 Assessment Rates: TABLE 10 FY 2017 ASSESSMENT RATE CALCULATION Property Category % Allocation of NRR $ Allocation of NRR Allocated Units Unit Type Assessment per Unit FY 2016 Assessment $ Change % Change Residential 58.8% $1,446,673 12,735 Dwelling Unit $ $77.00 $ % Hotel/Motel/RV 1.7% $41,460 3,710 Room/Space $11.00 $6.00 $ % Commercial/Institutional 24.2% $595,253 4,151 EBU $ $ $ % Industrial/Warehouse 2.9% $71, EBU $83.00 $ $ % Vacant/Lot 12.4% $305,030 8,456 Parcel $36.00 $30.00 $ % Total 100.0% $2,459,492 Table 11 below provides the calculated rates as applied to each property category, including the full range of Non-Residential property tiers and EBUs. 20

25 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments TABLE 11 FY 2017 FIRE RESCUE ASSESSMENT RATE SCHEDULE - FULL COST RECOVERY Property Use Unit Type Calculated Rate Current Rate $ Change % Change Residential per Dwelling Unit $ $77.00 $ % Hotel/Motel/RV per Room/Space $11.00 $6.00 $ % Vacant/Lot per Parcel $36.00 $30.00 $ % Property Use: Commercial/Institutional Building Square Footage Unit Type EBUs Calculated Rate Current Rate $ Change % Change <1,999 per Building 1 $ $ ($12.00) -7.7% 2,000-3,499 per Building 2 $ $ ($23.00) -7.4% 3,500-4,999 per Building 3.5 $ $ ($40.00) -7.4% 5,000-9,999 per Building 5 $ $ ($57.00) -7.4% 10,000-19,999 per Building 10 $1, $1, ($114.00) -7.4% 20,000-29,999 per Building 20 $2, $3, ($227.00) -7.4% 30,000-39,999 per Building 30 $4, $4, ($340.00) -7.3% 40,000-49,999 per Building 40 $5, $6, ($453.00) -7.3% 50,000-59,999 per Building 50 $7, $7, ($566.00) -7.3% 60,000-74,999 per Building 60 $8, $9, ($679.00) -7.3% 75,000-99,999 per Building 75 $10, $11, ($849.00) -7.3% >100,000 per Building 100 $14, $15, ($1,132.00) -7.3% Property Use: Industrial/Warehouse Building Square Footage Unit Type EBUs Calculated Rate Current Rate $ Change % Change <1,999 per Building 1 $83.00 $ ($72.00) -46.5% 2,000-3,499 per Building 2 $ $ ($143.00) -46.3% 3,500-4,999 per Building 3.5 $ $ ($250.00) -46.2% 5,000-9,999 per Building 5 $ $ ($357.00) -46.2% 10,000-19,999 per Building 10 $ $1, ($714.00) -46.2% 20,000-29,999 per Building 20 $1, $3, ($1,427.00) -46.2% 30,000-39,999 per Building 30 $2, $4, ($2,140.00) -46.2% 40,000-49,999 per Building 40 $3, $6, ($2,853.00) -46.2% 50,000-59,999 per Building 50 $4, $7, ($3,566.00) -46.2% 60,000-74,999 per Building 60 $4, $9, ($4,279.00) -46.2% 75,000-99,999 per Building 75 $6, $11, ($5,349.00) -46.2% >100,000 per Building 100 $8, $15, ($7,132.00) -46.2% 21

26 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments REVENUE NEUTRAL RATE CALCULATION In order to provide the County with an apples to apples comparison of their existing rates, we have calculated rates to provide the same amount of assessment revenue billed in FY Table 12 below contain the assessment calculations on a revenue neutral basis. TABLE 12 FY 2017 ASSESSMENT RATE CALCULATION - REVENUE NEUTRAL TO FY 2016 ASSESSMENT (77% COST RECOVERY) Property Category % Allocation of NRR $ Allocation of NRR Allocated Units Unit Type Assessment per Unit FY 2016 Assessment $ Change % Change Residential 58.8% $1,113,938 12,735 Dwelling Unit $87.00 $77.00 $ % Hotel/Motel/RV 1.7% $31,925 3,710 Room/Space $9.00 $6.00 $ % Commercial/Institutional 24.2% $458,345 4,151 EBU $ $ $ % Industrial/Warehouse 2.9% $54, EBU $64.00 $ $ % Vacant/Lot 12.4% $234,873 8,456 Parcel $28.00 $ $ % Total 100.0% $1,893, BILLED REVENUE ANALYSIS While the full cost FY 2017 Net Revenue Requirement is apportioned to all non-excluded properties, exempted property is included in the apportionment but cannot be billed/assessed. Table 13 below presents the estimated net billed assessment revenue for each scenario, less exemptions. Table 13 also presents the allocation of revenue from unincorporated County properties vs. incorporated properties residing in the City of Arcadia. TABLE 13 FY 2017 ASSESSMENT REVENUE ESTIMATES Full Cost Recovery Revenue Neutral Residential $ 1,446,673 $ 1,113,938 Hotel/Motel/RV $ 41,460 $ 31,925 Commercial/Institutional $ 595,253 $ 458,345 Industrial/Warehouse $ 71,075 $ 54,728 Vacant/Lot $ 305,030 $ 234,873 Total Billed Revenue $ 2,459,492 $ 1,893,808 Shortfall for Exempted Properties $ (451,678) $ (347,792) FY 2017 Net Billed Assessment $ 2,007,814 $ 1,546,016 FY 2016 Billed Assessment $ 1,539,067 $ 1,539,067 $ Change $ 468,747 $ 6,949 Revenue Allocation - County vs. City Properties County $ 1,496,170 $ 1,152,051 City $ 511,644 $ 393,965 Total $ 2,007,814 $ 1,546,016 22

27 FY 2017 Fire Rescue Assessment Study Section 3. Calculation of Fire Rescue Assessments MAXIMUM ASSESSMENT RATES The County may adopt a continuing assessment for future years that can be designed to maintain the cost recovery percentage, with the actual annual adjustments to be determined by the County Commission based upon need as determined by updating the financial management plan in subsequent years. If the County wishes to adopt a maximum Assessment Rate at the time of adoption of this Study, we have identified the maximum rate based upon the five-year projection shown in Table 14 below. TABLE 14 PROJECTION OF FIRE RESCUE NET REVENUE REQUIREMENT Fire Expenditures by Category FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Personnel Services $ 1,948,077 $ 1,955,624 $ 1,963,283 $ 1,971,057 $ 1,978,948 Operating Costs $ 175,475 $ 177,732 $ 180,023 $ 182,348 $ 184,709 Capital Improvements $ 440,000 $ 440,000 $ 440,000 $ 440,000 $ 440,000 Other Non-Operating Costs $ 132,472 $ 132,472 $ 132,472 $ 132,472 $ 132,472 Total Fire Expenditures $ 2,696,024 $ 2,705,828 $ 2,715,778 $ 2,725,878 $ 2,736,129 Plus: Assessment Notice Mailing Costs (1) $ 10,000 $ - $ - $ - $ - Plus: Tax Collector Costs (2) $ 49,190 $ 49,489 $ 50,006 $ 50,526 $ 51,049 Plus: Allowance for Non-Collection and Contingency (3) $ 122,975 $ 123,722 $ 125,014 $ 126,315 $ 127,623 Net Expenditures for Assessment $ 2,878,189 $ 2,879,038 $ 2,890,798 $ 2,902,718 $ 2,914,801 Less: Charges for Services $ (8,105) $ (8,105) $ (8,105) $ (8,105) $ (8,105) Less: Miscellaneous Revenues $ (39,425) $ (39,425) $ (39,425) $ (39,425) $ (39,425) Less: Grants $ (300,257) $ (300,257) $ (300,257) $ (300,257) $ (300,257) Less: City Contract $ (70,910) $ (56,820) $ (42,730) $ (28,640) $ (14,550) Net Revenue Requirement for Assessment $ 2,459,492 $ 2,474,431 $ 2,500,280 $ 2,526,291 $ 2,552,464 (1) - Assessment Notice Mailing Costs are estimated by County Staff, these costs are only imposed in the first year of the new Assessment Program (2) - Estimated at 2% of Net Revenue Requirement (3) - Estimated at 5% of Net Revenue Requirement Using the Net Revenue Requirement of the maximum year (FY 2021), the Maximum Assessment Rates at full cost recovery for the projection period are presented in Table 15 below. TABLE 15 5-YEAR MAXIMUM ASSESSMENT RATE CALCULATION - FULL COST RECOVERY Maximum Assessment per Unit Calculated FY 2017 Assessment Property Category % Allocation $ Allocation Allocated Units Unit Type Residential 58.8% $1,501,359 12,735 Dwelling Unit $ $ Hotel/Motel/RV 1.7% $43,028 3,710 Room/Space $12.00 $11.00 Commercial/Institutional 24.2% $617,755 4,151 EBU $ $ Industrial/Warehouse 2.9% $73, EBU $86.00 $83.00 Vacant/Lot 12.4% $316,561 8,456 Parcel $38.00 $36.00 Total 100.0% $2,552,464 23