California fire departments can use fire mitigation fees, also known as development impact fees, as an effective tool to raise funds for expanding their fire protection and emergency medical response systems. These fees can fund construction and expansion of fire stations, training centers, and administrative buildings, acquisition of fire engines, ambulances, and other vehicles, and major equipment purchases.
We have identified the following best practices for implementing and managing fire mitigation fee programs. These practices help ensure that the fee captures the full cost of public facilities and the department maximizes its fee revenues, as intended by the California Mitigation Fee Act.
Start Early: Implementing or updating a fire mitigation fee program can take anywhere from six to twelve months, so it is crucial to begin early, especially since program updates are infrequent and your staff may not have gone through the process.
Understand Your Facilities: Fire mitigation fee programs should include:
Facility Design Costs: When developing planned facilities list, don’t forget to include building design costs, such as architect and engineer fees.
Facilities Inventory: To ensure that fees fully capture your department’s facility costs, maintain a detailed facilities inventory. We often see programs that only include buildings and apparatus, leading to funding shortfalls. Properly documenting and including your equipment costs can raise hundreds of thousands of dollars for your department.
New Station Equipment: Equipping a firehouse is expensive. Don’t forget to include all necessary equipment, such as furniture and appliances, lockers, medical cabinets, etc.
Dynamic Fee Structure: Consider service demand factors, such as building heights and sizes, and implement appropriate fee categories or surcharges.
Annual Inflation Adjustment: Since it usually takes years between fee program updates, make sure that your fee ordinance includes an automatic annual inflation adjustment. This will help keeping up with the rising construction and apparatus costs.
Administrative Surcharge: Fire mitigation fee programs can collect an administrative surcharge (2-4% is typical) to cover the costs of nexus studies, periodic reports, and record keeping.
Financing Costs: Financing (such as bonds, bank loans, apparatus and equipment leasing, etc.) significantly increases your facility costs. Costs of issuance and interest can be included in the fee program.
Interagency Cooperation: Fire districts rely on cities and counties to adopt mitigation fees on their behalf. Engage with your partner agency staff and elected officials early. Invite them to meetings with the nexus study consultant and keep them updated on the progress. The more feedback and buy-in you achieve early on, the easier the approval process will go.
Proper Notices and Documentation: The law is clear on the deadlines and process for public hearing notices, as well as what documents need to be made available to the public. Violating these requirements leads to program adoption delays and potential legal challenges.
Community Outreach: Ensure community support through proactive communication with residents and businesses. Keep them up to date on your department’s successes, challenges, and initiatives. The more they appreciate your services, the more support you will have for your fee program.
Proper Accounting: Consistent and thorough recordkeeping is essential for accounting, reporting, and future fee program updates. Keep fee revenue separate from all other funds and only use it for intended purposes.
Utilize Technology: Leverage technology, such as online payment portals and digital record management systems, for efficient fee collection, record-keeping, and reporting.
Staff Training: Provide proper training to your staff involved in fee collection and reporting. Ensure they understand the purpose of the program and can clearly explain it to customers.
Reporting Requirements: California law requires annual and 5-year reports for mitigation fee programs. Missing these requirements can lead to having to refund the fees. Have systems in place to properly capture, document, and present the required information.
Program Materials: Develop clear program materials, post them on your website, and have paper copies available at the counter. It is a legal requirement and a good business practice.
Program Updates: Mitigation fee programs must be updated at least every eight years. More frequent updates may be required if your service area is experiencing significant development, your facility needs change, or due to State law revisions.
Ridgeline Municipal Strategies, LLC helps fire protection districts with financial planning and financing for facilities and equipment, including bond issuance, private placements, USDA loans, and equipment leasing.
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