Borrego Sun - Since 1949

A brilliant example of community collaboration to benefit Borrego taxpayers and emergency services happened in Borrego over the past three months. The Borrego Sun began investigating the critical financial situation of the Borrego Springs Fire Protection District (BSFPD). A group of concerned citizens formed a committee to help with the District’s severe money problems, and through hours of research and outreach to the community, brought forth a better alternative to raising property taxes for the District. The District’s Firefighters Association, and the Board of Directors, said they “Would do what the community wanted.” And to their credit, they did!

At the June 9, Zoom monthly meeting, the BSFPD Board voted to set in motion the process to dissolve the District and transition emergency paramedic response and fire suppression services to the San Diego County Fire Protection District (SDCFPD) managed by a contract with CALFIRE.

“The June meeting of the BSFPD is a day to remember,” stated Bruce Kelly, who brought together the “Steering Committee” of community advocates, with the original intent of placing a property tax increase for the District on the November ballot, but ended up getting a better alternative: Consolidation with the County Fire District with improved services, increased salaries for firefighters/paramedics, and capital replacements, including aged out vehicles, without increasing local taxes.

San Diego County District 5 Supervisor Jim Desmond declined to get involved in decisions regarding emergency services in Borrego, repeatedly stating that he would help once the community decided which alternative it preferred.

In a response to the Borrego Sun on the Board’s decision, Supervisor Desmond stated, “I have said from the beginning, I support what the residents of Borrego Springs would like to do in regards to fire protection. With this clear mandate, I am happy to work with the community through the LAFCO and Board of Supervisors’ process.” Supervisor Desmond is currently chair of the Local Agency Formation Commission (LAFCO).

At the District’s last meeting before the summer break, the five-member Board approved two motions: dissolving BSFPD and being absorbed into SDCFPD.

The first motion (passed unanimously) directed Chief John Hardcastle and the Board’s attorney to request from LAFCO an application for dissolution of the BSFPD.

The second motion (also passed unanimously) appointed Board Chairman, Bradley Tidwell, and Board member, Fred Jee to represent the Board on an “Ad Hoc Negotiations Committee.”

The process, which will be overseen by LAFCO, commences with an audit of BSFPD assets; preparation by the County of proposed Terms and Conditions; negotiation of the Terms and Conditions between the County’s fire district, BSFPD, Firefighters Association Local 4160, and LAFCO.

If the Board of BSFPD approves the Terms and Conditions after negotiations, then it will request a certificate of filing from LAFCO, after which the Commission will hold a “Protest Hearing” in Borrego Springs to give residents that oppose dissolution the opportunity to comment. Thereafter, if the Board of Supervisors approves the Terms and Conditions, a transition period will begin. The overall process by LAFCO is expected to take 6 – 9 months.

SDCFPD Fire Chief, Tony Mecham, estimated that it might take 10 – 12 months.

Chief Hardcastle and the Board invited Fire Chief Mecham and staff, along with LAFCO’s analyst and attorney to participate in the June Board meeting. Chief Mecham opened by saying that no matter the outcome, the two districts would continue to be good neighbors. He then summarized the highlights of the County’s proposed offering, followed by an explanation of the dissolution and reorganization process working through LAFCO. Chief Mecham also explained how the BSFPD employees are transferred to CALFIRE through the State Personnel Board as part of the LAFCO process.

According to Kelley, “Chief Mecham was asked a number of questions by Board members about the impact of the transition upon BSFPD staff, current reserve funds, capital improvements, future fire service-related taxes in Borrego Springs, and how the County Fire District would support services in Borrego Springs. Chief Mecham provided complete and persuasive responses to virtually all issues.”

When Board members indicated they had no more questions, Chairman Bradley Tidwell called for a motion. Paul Reisman made the motion to direct Chief Hardcastle to request an application for dissolution. Fred Jee seconded the motion, which passed unanimously. Then, a second motion was passed to appoint Chairman Tidwell and Jee to represent the Board on the Ad Hoc Committee that will negotiate the Terms and Conditions of the transition.

Also serving on the Negotiations Committee are Chief Hardcastle, Chief Mecham, and two others appointed by Chief Mecham. Chief Mecham emphasized a collegial process of sitting down together in person, working collaboratively, talking over all the points, a process of trust, and good two-way communication.

Chief Mecham told the Borrego Sun, “The County of San Diego looks forward to working with the Borrego Springs Fire District and the Community of Borrego to ensure that a seamless transition of Fire and Paramedic Ambulance service occurs.

“As for the ‘negotiations’, we will meet with the BSFPD Ad Hoc to discuss general terms and conditions. At these meetings the Brown Act will not apply. However, the terms of these discussions will be presented at a public BSFPD meeting. We will certainly solicit community input and share the Terms and Conditions. Many of these are legal items that must be in the resolution.

“Deputy Chief Ty Davis will be working with Chief Hardcastle. We hope to draft Terms and Conditions within 30 days. I will need to work with John (Chief Hardcastle) and others to make sure we are very transparent with the community. We are open to anyone providing us guidance on how we keep the community informed,” he added.

LAFCO is the state governmental unit tasked with regulating all city and special district jurisdictional changes, and as such it would need to formally approve the consolidation now being contemplated between Borrego FPD and County FPD. This includes setting appropriate terms and conditions to any approval – which may be proposed by the subject agencies, plus LAFCO’s own preferences. The transfer and assignment of liabilities is typically the most pertinent topic that goes into negotiating between the subject agencies and, or establishing terms and conditions by LAFCO.

In August 2020, Borrego’s Fire District had an unfunded, accrued, actuarial pension liability to CalPERS of $1.8 million. The Board refinanced the, then, current CalPERS liability with a bank for a total financing cost over 20 years of $2,748,771. Thus, the County would presumably also agree to relieve the residents of paying off that liability.

The Board apparently allowed financial advisors to add $100K to the placement with a bank as compensation. The Board’s stated reason for refinancing was to minimize cash flow payments.

Chief Hardcastle responded to the Sun’s inquiry, regarding the loan, stating, “The Fire District was already making payments to CalPERS (as required) upon the unfunded liability. CalPERS charges 7% interest with a minimum payment amount that fluctuates every year. The bank loan is for a fixed 4.5% interest with a fixed payment schedule. The money that was already being utilized to pay CalPERS was shifted to pay the loan.

A summary of the financing options from the District, show that even though CalPERS was charging 7% interest, the total loan repayment was $208,000, compared with the cost of the 20-year bank loan at $408,000.

About the loan, Keene Simonds, LAFCO’s executive officer observed, “I will offer up the opinion that refinancing pension debt to pay less now, but more later is a clear sign of fiscal distress for an entity whose expenses-to-revenues ratio is getting tighter. The District saying they need the cash flow, seems to confirm this opinion.

“Borrego FPD’s accrued pension liabilities don’t go away even if the District ceases to exist. In the absence of these debts being paid off in full, they remain on the books and would be assigned by LAFCO to one or more other governmental agencies – like County FPD as the successor agency to the underlying services,” Simonds added

Linda Haddock, although not a BSFPD member of the Board at the time the loan was taken out, believes that the transaction was positive. “The debt that was owed to CalPERS was not new and its conversion to a debt with a fixed rate of 4-5% versus a variable of 7-8% in 2020, when rates in general were lower than they are now with expectations to go higher as well, in hindsight, is looking to be a very good and fortuitous decision by the Chief and the board. One that should be a positive versus a negative to the negotiations with CALFIRE.”

Simonds final comments to the Sun, was a reminder that should a proposal come forward from the subject agencies and get approved by LAFCO, “We should keep in mind that protest proceedings would apply and could – if enough landowner and/or voters file objections – lead to a formal election among registered voters in Borrego to determine if the consolidation goes forward.”

In the end, and in the beginning, the process and proponents of both alternatives deserve congratulations for presenting facts in a transparent manner, acknowledging the financial realities, and allowing the community to decide how to ensure and finance better lifesaving and fire protection services.

The research, leg work and meetings with the community by the “Steering Committee are to be commended. Beginning with the idea of placing a ballot measure to increase local taxes to shore up the District, in relatively a few months, the group, advised by Kelley, found a better alternative, and presented it to the residents to consider the new facts about consolidation with the County, and to express their opinions. After presentations at numerous meetings, the straw poll offered attendees by the Steering Committee showed 98% support for going with the County Fire District to 2%, opting to raise taxes to stay with the local District.

The Steering Committee was able to show it would take a 6-fold increase in local taxes to only meet some, but not maximize the benefits the County Fire District offered.

Kelley praised the group for their work saying, “Clearly the information and community opinion influenced the Borrego Springs Fire Board,” adding that “Chief Hardcastle and the Board deserve kudos for putting community interest before self-interest. It could not have been easy to decide to dissolve our District, which has a proud history, and to eliminate their positions on a Board.”