Agenda Item #6 Council Agenda Report SUBJECT: INTRODUCE AND WAIVE THE FIRST READING OF AN ORDINANCE OF THE CITY OF RIO VISTA ADDING CHAPTER 8.28 ENTITLED LOSS RECOVERY TO TITLE 8 OF THE CITY OF RIO VISTA MUNICIPAL CODE; APPROVE RESOLUTIONS SETTING USER FEES AND ENTERING INTO A CONTRACT WITH FIRE RECOVERY USA MEETING DATE: October 7, 2010 RECOMMENDATION Staff recommends that the City Council of the City of Rio Vista adopt: A. Introduce and waive the first reading of an ordinance of the City of Rio Vista adding Chapter 8.28 entitled Loss Recovery to Title 8 of the City of Rio Vista Municipal Code; B. Resolution No., Setting user fees for fire recovery costs and C. Resolution No., Authorizing the City Manager to enter into a contract with Fire Recovery USA. Both the resolution and the contract shall not be effective until the ordinance is in effect. BACKGROUND The Rio Vista Fire Department (Fire Department) was established to protect life and property from fire through education, prevention, rapid fire attack, and fire investigation. The Fire Department also provides pre-hospital emergency medical care, limited rescue services, hazardous materials response, and response services to any and all natural and man-made disasters. Fire Department staff continue to experience increased demands for emergency response service despite the current recessionary economy. As with all of the other City departments, the Fire Department continues to deal with the prospect of expenditure reductions today and in the foreseeable future. While the City continues to look for ways to cut expenses, it is not feasible to do that and continue to provide our current level of service. To provide a lower level of service is believed not to be in the best interest of our community.
Page 2 City staff has looked at alternatives to generate revenues and believes that we could offset some of our costs associated with emergency response if we were to bill insurance companies for these services that are provided to non-residents of the City of Rio Vista. This has been done in over 50 communities in California including Woodland, Stockton, Oakland, Petaluma and San Bernardino and is currently being considered by the City of Sacramento. Montezuma Fire Protection District has been involved in the program for almost 2 years, has collected in excess of $10,000, and has an 88% collection rate. REVIEW AND ANALYSIS As a general matter, a city may not recover its costs for providing public services. There must be specific authorizing legislation in order to recover costs. One such example is Government Code section 53150, which provides that an intoxicated person who causes an accident is liable for the emergency response expenses incurred by a public agency in response to the incident. There is no specific authorizing state statute that permits the City to recover its costs for emergency responses; nor is there a prohibition. The Legislature has stated that in adopting the statute concerning cost recovery for accidents caused by intoxicated persons, it was not intending to preempt the field in this area. Thus, some cities have adopted ordinances authorizing cost recovery. Staff has received a presentation from a company, Fire Recovery USA, that provides a billing and collection services for emergency response, and currently has over 100 cities and districts under contract. It uses a standardized fee schedule based on rates that are Usual, Customary, and Reasonable (UCR). Fire Recovery USA developed its UCR rates by itemizing costs for a typical response run (from the time a fire apparatus leaves the station until it returns to the station) and surveyed dozens of fire departments nationwide to confirm the figures. These rates are based on actual costs using amortized schedules for apparatus, including useful life, equipment, repairs, and maintenance. Labor rates include an average department s actual expenses, including salaries and benefits. Staff has reviewed its standard fees for fire responses and unlike Fire Recovery USA fees, the City s fees do not include amortization of apparatus, equipment, repairs, and maintenance resulting in fees which do not recover full service costs. Given that Fire Recovery UCR rates are more in line with actual industry costs staff is recommending that Fire Recovery USA Fees be approved. Most insurance companies know that a quick response by a well trained, well equipped fire department results in reduced fire damage, reduced injury severity, and greater prevention of deaths. The end result is less liability resulting in lower costs to the insurance industry. A safer community actually affords its residents lower insurance premiums on their homes and automobiles. If the Council approves the attached ordinance and resolutions, Fire Recovery USA would perform the third party billing and collection services once the ordinance goes into effect. Attached for the Council s consideration is a proposed contract with Fire Recovery USA. The City Attorney has negotiated changes to Fire Recovery USA s standard contract. All of the City s requested changes were accepted by Fire Recovery USA except one.
Page 3 The City Attorney requested that the indemnification section be changed to provide that Fire Recovery USA would indemnify the City for any claims made based upon an argument that the services provided by Fire Recovery USA are not statutorily authorized or are otherwise unlawful. Fire Recovery USA takes the position that it enhances a practice the City may have otherwise done on its own and will not take on the risk that its billing practices are not lawful or authorized under state law. Fire Recovery USA will not sign the agreement with the proposed language included although it did enter into an agreement with another city with this language included. With the proposed language included, if the City were to be sued by someone who argued that the billing practices were not authorized under state law, Fire Recovery USA would have been required to defend the City in such a case and to pay for such defense. Without it, the City does not have the same protection. While the City Attorney does not believe that cost recovery for fire services is unlawful, the concern arises because there is not a state statute that specifically authorizes this type of cost recovery. If the City contracts with Fire Recovery USA, City staff would not have to expend much time in managing the program. Fire Recovery s billing process is very simple and requires very little time to generate the paperwork to establish a claim. When the Fire Department is called to the scene of an emergency, it performs the necessary services and then completes a one-page form capturing all of then information needed for Fire Recovery to bill the insurance company. If the insurance company is not known then the bill is sent to the individual with instructions to forward it to their insurance company. If the individual is not insured, then the claim is dropped; and recovery is no longer pursued. When the claim is paid to Fire Recovery by the insurance company, Fire Recovery USA retains 20% of the proceeds for their services and forwards the remaining 80% to the City. Fire Recovery currently claims that it has over a 70% recovery rate. Fire Recovery USA provides fire departments with their UCR standardized billing rates and/or allows fire departments to adopt their own fee schedule. Staff has been informed that departments using the Fire Recovery USA UCR rates get their claims processed and paid quicker, with a higher rate of return because their fees were not challenged. Staff has compared Fire Recovery USA s UCR rates with those that could be charged with our current fee schedule and determined that the UCR rates are in line with the actual costs of providing services. One concern expressed is that billing insurance companies will cause insurance rates to rise. Staff understands that most insurance companies forecast the cost for these claims; however, individual cities lack the time and resources to bill or collect these fees and those insurance funds are never tapped. In addition, increasing rates would require the individual companies to file an extensive cost report with the State Insurance Commissioner. If an individual is determined to be at-fault for the emergency or accident the Fire Department responds to, the individual s premium may or may not be adjusted based on a variety of factors. This adjustment would occur whether this program is in place or not. As far as staff is aware, there are no other providers of a similar service in California and putting such a service out to bid would not result in any proposals. There are two providers who perform similar services, one in Texas and one in Washington DC. However, it is unlikely that these companies would submit proposal.
Page 4 It is not anticipated that the residents of Rio Vista would be billed under this program. Only those who do not reside within the City limits of Rio Vista would be billed. If the circumstances associated with an incident are unclear and the responsible party is impossible to be determined, for any reason, then staff has the ability to not forward the information to Fire Recovery, and therefore billing would not occur. Staff is recommending approval and waiving the first reading of the attached Ordinance with adoption of the ordinance on October 21, 2010. Also for the Council s consideration is the agreement with Fire Recovery USA and a resolution adopting the fees to be charged. FINANCIAL CONSIDERATION Fire Recovery USA charges no upfront costs and is compensated for its services from a portion of the money it collects on behalf of the City. Fire Recovery USA keeps 20% of the fees collected and returns 80% to the City. A survey of the responses in 2009 indicates that the City could have billed for approximately $25,000 and with a 70% recovery rate, we would have generated $17,500 and netted $14,000 after paying the 20% split to Fire Recovery. ALTERNATIVES Do not adopt the ordinance and seek other options to offset expenses and/or generate revenue. Adopt the ordinance and investigate if there are other billing options. Fire Chief City Manager Attachments: Ordinance Adding Chapter 8.28 to the Rio Vista Municipal Code concerning Loss Recovery Resolution(s) Agreement between the City of Rio Vista and Fire Recovery USA
RESOLUTION NO. A RESOLUTION OF THE CITY OF RIO VISTA AUTHORIZING THE CITY MANAGER TO SIGN AN AGREEMENT WITH FIRE RECOVERY USA CONCERNING FIRE RECOVERY COSTS, WHICH WILL BE EFFECTIVE ON THE SAME EFFECTIVE DATE AS ORDINANCE NO. WHEREAS, the City of Rio Vista Fire Department responds to calls for service for motor vehicle accidents, hazardous materials spills, fires, emergency medical calls, and other related incidents, and the volume of these calls increases each year; and WHEREAS, the Fire Department has investigated different methods to maintain a high level of quality of emergency service capability throughout times of constantly increasing service demands; and WHEREAS, the City desires to enter into an agreement with Fire Recovery USA, which provides billing and collection services for cities and fire districts; and WHEREAS, the City of Rio Vista desires to recover the expenses relative to these emergency responses to non-residents; and WHEREAS, given the City s existing budget shortfall and the likelihood of continued budget shortfalls, it is imperative that the City take steps to recover its costs for the provision of emergency services to persons who are not taxpayers of the City of Rio Vista. NOW, THERFORE THE CITY COUNCIL OF THE CITY OF RIO VISTA DOES HEREBY RESOLVE that it authorizes the City Manager to enter into an agreement with Fire Recovery USA, attached hereto as Exhibit A, and that such agreement shall go into effect unless and until Ordinance No., which adds Chapter 8.28 to the Rio Vista Municipal Code, takes effect. PASSED, APPROVED, AND ADOPTED this seventh day of October 2010 by the following roll call vote: AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS ATTEST: Carolyn Parkinson, MMC Interim City Clerk of the City of Rio Vista
RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA ADOPTING USER FEES FOR THE DELIVERY OF FIRE AND RESCUE SERVICES, PERSONNEL, SUPPLIES, AND EQUIPMENT TO THE SCENE OF MOTOR VEHICLE ACCIDENTS AND OTHER INCIDENTS WHEREAS, the City of Rio Vista s Fire Department provides emergency services to Rio Vista s residents and visitors and responds to calls for service for motor vehicle accidents, hazardous materials spills, fires, emergency medical calls; and WHEREAS, maintaining an effective response time by the Fire Department decreases the costs of incidents to insurance carriers through timely and effective management of emergency situations, saving lives, and reducing property and environmental damage; and WHEREAS the City Council of the City of Rio Vista introduced and intends to adopt an ordinance allowing it to establish and recover user fees for the delivery of fire and rescue services, personnel, supplies, and equipment present used or at the scene; and WHEREAS, the rates are those that are usual, customary, and reasonable and include services, personnel, supplies and equipment and only apply to persons who do not reside within the City of Rio Vista. NOW, THEREFORE BE IT HEREBY RESOLVED that the City Council of the City of Rio Vista hereby adopts the fee schedule attached hereto as Exhibit A and finds that the fees are reasonable and customary. BE IT FURTHER RESOLVED that this Resolution shall not take effect unless and until Ordinance No., An Ordinance of the City Council of the City of Rio Vista Concern Cost Recovery for Emergency Services Response and Adding Chapter 8.28, Entitled Loss Recovery, to Title 8 of the City of Rio Vista Municipal Code takes effect. PASSED, APPROVED, AND ADOPTED this seventh day of October 2010 by the following roll call vote: AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS ATTEST: Carolyn Parkinson, MMC Interim City Clerk of the City of Rio Vista
EXHIBIT A HOURLY USER FEES FOR ACCIDENT/INCIDENT RESPONSE MOTOR VEHICLE INCIDENTS Level 1 - $435.00 Provide hazardous materials assessment and scene stabilization. This occurs almost every time the fire department responds to an accident/incident. Level 2 - $495.00 Includes Level 1 services as well as clean up and material used (sorbents) for hazardous fluid clean up and disposal. This fee applies if the fire department has to clean up any gasoline or other automotive fluids that are spilled as a result of the accident/incident. Level 3 CAR FIRE - $605.00 Provide scene safety, fire suppression, breathing air, rescue tools, hand tools, hose, tip use, foam, structure protection, and clean up gasoline or other automotive fluids that are spilled as a result of the accident/incident. Level 4 - $1,800.00 Includes Level 1 & 2 services as well as extrication (heavy rescue tools, ropes, airbags, cribbing etc.). This fee applies only if the fire department has to free/remove anyone from the vehicle(s) using any equipment and does not apply if the patient is simply unconscious and the fire department is able to open the door to access the patient. This level is to be billed only if equipment is deployed. Level 5 - $2,200.00 Includes Levels 1, 2, & 4 services as well as Air Care (multi-engine company response, mutual aid, helicopter). We will bill at this level any time a helicopter is utilized to transport the patient(s). Level 6 Itemized Response: Billing will include itemized rates per apparatus, per personnel, plus products and equipment used. HAZMAT Level 1 - $700.00 Basic Response: includes engine response, first responder assignment, perimeter establishment, evacuations, set-up and command. 82462.00010\4774587.2 1
Page 2 Level 2 - $2,500.00 Intermediate Response: includes engine response, first responder assignment, hazmat certified team and appropriate equipment, perimeter establishment, evacuations, set-up and command, Level A or B suit donning, breathing air and detection equipment. Set-up and removal of decon center. Level 3 $5,900.00 Advanced Response: includes engine response, first responder assignment, hazmat certified team and appropriate equipment, perimeter establishment, evacuations, first responder set-up and command, Level A or B suit donning, breathing air and detection equipment and robot deployment. Set-up and removal of decon center, detection equipment, recovery and identification of material. Disposal and environment clean up. Includes above in addition to any disposal rates of material and contaminated equipment and material used at scene. Includes 3 hours of on scene time - each additional hour @ $300.00 per HAZMAT team. PIPELINE INCIDENTS / POWER LINE INCIDENTS (Includes, but not limited to: Gas, Sewer, Septic to Sewer, and Water Pipelines) Level 1 - $400.00 Basic Response: includes engine response and first responder assignment, perimeter establishment, evacuations, first responder set-up and command. Includes inspection without damage or breakage. Level 2 - $1,000.00 Intermediate Response: includes engine response, first responder assignment, and appropriate equipment, perimeter establishment, evacuations, first responder set-up and command. May include HAZMAT team, Level A or B suit donning, breathing air and detection equipment. Supervise and/or assist pipeline repair. Level 3 Itemized Claim Charges Advanced Response: includes engine response, first responder assignment, and appropriate equipment, perimeter establishment, evacuations, first responder set-up and command. May include HAZMAT team, Level A or B suit donning, breathing air and detection equipment. Supervise and/or assist pipeline repair of intermediate to major pipeline damage. May include set-up and removal of decon center, detection, recovery and identification of material. Disposal and environment clean up. FIRE INVESTIGATION 82462.00010\4774587.2
Page 3 Fire Investigation Team - $275.00 per hour. Includes: Scene Safety Investigation Source Identification K-9/Arson Dog Unit Identification Equipment Mobile Detection Unit Fire Report The fee begins when the Fire Investigator responds to the incident and includes logged time only. FIRES Assignment - $400.00 per hour, per engine / $500.00 per hour, per truck Includes: Scene Safety Investigation Fire / Hazard Control This will be the most common fee and will apply almost every time the fire department responds to an incident unless due to individual circumstances such fee is not warranted due to the particular pay level of the responding personnel and/or the products used, in which case the fee will be based on an itemization of the particular persons who responded and the itemized cost of products used. WATER INCIDENTS Level 1 Basic Response: includes engine response, first responder assignment, perimeter establishment, evacuations, first responder set-up and command, scene safety and investigation (including possible patient contact, hazard control). This applies almost every time the fire department responds to a water incident. Billed at $400 plus $50 per hour, per rescue person. 82462.00010\4774587.2
Page 4 Level 2 Intermediate Response: includes Level 1 services as well as clean up and material used (sorbents), minor hazardous clean up and disposal. This fee applies if the fire department has to clean up small amounts of gasoline or other fluids that are spilled as a result of the incident. Billed at $800 plus $50 per hour, per rescue person. Level 3 Advanced Response: includes Level 1 and Level 2 services as well as D.A.R.T. activation, donning breathing apparatus and detection equipment. Set up and removal of decon center, detection equipment, recovery and identification of material. Disposal and environment clean up. Includes above in addition to any disposal rates of material and contaminated equipment and material used at scene. Billed at $2,000 plus $50 per hour per rescue person, plus $100 per hour per HAZMAT team member. Level 4 Itemized Response: includes itemized rates per trained rescue person, plus rescue products used. BACK COUNTRY OR SPECIAL RESCUE Itemized Response: includes itemized rates per apparatus per hour, per trained rescue person per hour, plus rescue products used. CHIEF RESPONSE This includes the set-up of Command, and providing direction of the incident. This could include operations, safety, and administration of the incident. Billed at $250 per hour. MISCELLANEOUS Engine billed at $400 per hour. Truck billed at $500 per hour. Miscellaneous equipment billed at $300. 82462.00010\4774587.2