MEMORANDUM 03-115

DATE: July 2, 2003

TO: Mayor Cushing / Homer City Council

FROM: Walt Wrede

SUBJECT: Kachemak Emergency Service Area Contract

Attached is a new agreement between the City of Homer and the Kachemak Emergency Services Area. This agreement covers one year (July 1, 2003 through June 30, 2004) with an automatic renewal for one year if both parties are happy. There are several things that are different from the last contract. They are:

• All prior contracts were for six months. This one is for 1 year with a renewal clause
• Prior contracts were based upon a formula. The variables in the formula were the City’s budget for fire and emergency services and an apportionment of the respective certified tax rolls. This new contract is based upon a simple mil rate and the certified borough tax roll for the Service Area, similar to the contract we have with Kachemak City.
• This contract is for the amount of $168,072. This represents a reduction of approximately 13% ($23,000) in the amount the Service Area will pay to the City for its services.

As City Manager, it is always hard for me to accept a reduction in revenues. Many of our costs in the Fire Department are fixed and revenue cuts will have to be made up somewhere. However, I felt that this reduction was justified because it acknowledges that KESA has made very significant strides toward becoming more self sufficient and a full partner with HVFD. This will benefit the entire area. As you may know, KESA has added new equipment, secured funding for a new fire station at McNeil Canyon, and secured funding for two new wells to be used for fire fighting. Finally, I believe these contract changes will improve the City’s working relationship with its neighbors and help to put some of the old antagonisms behind us. This agreement has been approved by the KESA Board and is scheduled to be considered by the Borough Assembly this week.

RECOMMENDATION: Approval