HomeMy WebLinkAbout3.C. 2007 Budget-Fire Call Billing
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CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
Mark McNeill
FROM: Gregg Voxland, Finance Director
SUBJ: 2007 Budget - Fire Call Billing
DATE: October 5, 2006
Introduction
Does Council want to bill for fire calls in the city limits?
Background
The question of billing for fire calls in the city has been brought up
as another way to generate revenue. The specific instance was car
fires/calls of non-residents, particularly on HWY 169.
Shakopee has not been charging for fire calls in the city except for
false alarms over three per year. The cost of calls in the city has
been paid taxpayers.
Attached is a report from the League of Minnesota Cities addressing the
issue of charging for fire calls in the city. The memo makes several
points for Council to consider;
l. Is charging a fee a better choice than the present arrangement?
2. How aggressive will the city be in collection actions? The city
can certify charges for collection on the tax rolls even if the
recipient of the service owns property in another county in the
state.
3. Charges should be uniform for all calls.
4. will the charge be applied to all types of calls?
5. Billing only "non-residents" could be insurance fraud.
There were 466 "calls" in Shakopee last year. At the rate of $250 that
could generate around $100,000 based on billing 400 calls. If billing
just for "fire" calls, it is estimated that about $30,000 could be
generated. It is anticipated that insurance would cover most of that
cost for the recipient of the service.
Action Requested
Discuss and give staff direction.
Gregg Voxland
Finance Director
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LMC League of Minnesota Cities
145 University Avenue West, St Paul, MN 55103-2044
(651) 281-1200 · (800) 925-1122
L-e- 0/ Minnuol4 Cilies Fax: (651) 281-1299 · TOO: (651) 281-1290
Citi" pmmoting -1Ience www.lmnc.org
CHARGING FOR FIRE CALLS
November 2005
Authoritv to Charge for Fire Calls
For many years, the authority to charge for fire calls has been unclear. However, in 2003,
the Minnesota Legislature passed legislation giving cities express authority to impose fees for
emergency services, including fire protection. A city's ability to charge fire fees involves an
interplay between three statutes. Minn. Stat ~ 415.01, subd. 2, allows cities to charge for
emergency services by passing an ordinance that specifies the amount and manner of the charge.
The exact text is as follows:
A city may exercise the power under sections 366.011 and 366.012 relating to
charges for emergency services only if the city adopts an ordinance authorizing
the manner and amount of charging for those services.
Minn. Stat SS 366.011 and 366.012 apply to towns. Under Minn. Stat S 366.011, a town can
impose fees for fire protection services provided by or contracted for by the town. If the charge
is not paid, the town can use any means available to private parties to collect it or may certify the
unpaid charge with the county auditor for collection with taxes to any real property within the
state. Minn. Stat ~ 366.012 explains the process for certifying charges with the county auditor.
By its terms, Minn. Stat. ~ 415.01, subd. 2 give cities these same powers.
In 2005, the Legislature amended Minn. Stat ~~ 366.011 and 366.012 to specifically give
towns, and thereby cities, the authority to certify the unpaid charge to the auditor of any county
in the state in which the person who received fire protection services owns real property. The
AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER
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county auditor is responsible for remitting to the city all charges collected on behalf of the city.
Therefore, a city can certify unpaid fees regardless of where the property is located in the state.
An important note to remember is that fire services generally include not only fire
fighting, but first responders as well. Any ordinance authorizing fire service charges should
define fire services broadly enough to include both of these activities.
Contractual Issues in Collecting Charges
While this law clarifies a long-standing question about city authority, collecting these
fees may be complicated in some situations by a 1959 Attorney General opinion that applied
contract law to the provision of fire services; the opinion stated that there should be a request for
service before the city has an enforceable claim against the property for reimbursement. 1 When
a homeowner calls the city for services, the homeowner likely agrees to pay the fee, especially if
the city publicizes that it charges a fee.
The situation is less clear if someone other than the property owner contacts the fire
department. Ignoring such fires could be dangerous to nearby property and persons; accordingly,
for public safety reasons a fire department would generally not stand by while a building burns.
Even in these situations, a city could avoid contractual problems by using implied contract
theory. The elements of an implied contract are (1) a benefit conferred by one party to another
(2) appreciation of that benefit by the receiving party and (3) acceptance of that benefit when
retention without payment is inequitable.2 Most citizens have an expectation of fire service if a
city has a fire department. Moreover, a city can show in the vast majority of cases that
preventing property from burning down is a benefit to the property owner.
lA.G. op. 688-a (Oct. 6, 1959).
28 Dunnell Minn. Digest, Contracts S 2.05a (5th ed. 2003).
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Providing Service to Property Outside of the City
Many cities contract with towns or other cities to provide fire protection, requiring the
city fire department to provide service outside ofthe city. These contracts typically authorize
cities to bill the recipient ofthe fire protection service who lives outside the city. Cities have the
authority to use any means available to private parties to collect unpaid charges, regardless of
where the property is located.3 Minn. Stat. S 415.01, subd. 2, also gives cities the ability to
certify for collection with taxes the unpaid fire charges on property located outside of city limits
that is anywhere within the state. This statute states that cities may exercise the "power under
sections 366.011 and 366.012 relating to charges for emergency services.,,4 One of these powers
is certifying unpaid fire charges. With the 2005 amendment, the Legislature did not limit a city's
authority to certify unpaid charges to property within a city's borders.
Different Rate Structures
Fire departments often respond to car fires, sometimes to non-residents of the city, or to
another entity covered by a fire protection contract. Cities have inquired whether they can
charge higher rates for these calls. Unequal fees implicate several constitutional concerns. The
Supreme Court ruled in Mem '1 Hasp. v. Maricopa County, that denial of "basic necessities of
life" impedes the constitutional right to traveLS Fire protection might be a basic necessity and
unequal charges may be a form of denying this basic necessity. Additionally, higher taxes and
more stringent licensing requirements imposed on non-residents have run afoul of both the
Constitution's equal protection and commerce clauses.6 Because of the possible constitutional
3 Minn. Stat. S S 366.011, 415.01, subd. 2.
4 Minn. Stat. S 415.01, subd. 2.
5 Mem 'I Hosp. v. Maricopa County, 415 U.s. 250 (1974) (denying non-residents free non-emergency medical care
violated the right to travel).
6 Metro. Life Ins. Co. v. Ward, 470 U.S. 869 (1985) (taxing non-residents at higher rate than residents violated equal
protection clause); Sta{e.lJ. Kolla, 672 N.W.2d 1 (Minn. Ct. App. 2003) (charging higher state license fee to non-
residents violated commerce clause); 9 McQuillin, Municipal Corporations, S 26.48 (3rd ed. Revised 1995).
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implications resulting from different rates, it is probably preferable to have a uniform policy
when charging for fire calls.
Policv Considerations
Since this law was enacted, several cities have passed ordinances charging fire fees and
more are considering this option. Aside from the concerns mentioned above, cities should
consider the following issues before charging fire protection fees. First, the city should consider
whether charging fire fees is the best choice. Some citizens may argue that the mechanisms for
collecting and enforcing property taxes are already in place and that paying for fire services out
of general revenue may be a better option than charging for fire calls.
Second, the city should decide whether it is prepared to collect charges when the fee is
not covered by insurance. Some insurance policies will only pay if the property owner has an
obligation to the city. If the city only collects fees in limited instances, the insurance company
could argue that the property owner does not really have an obligation to the city. Furthermore,
if the city aggressively attempts to collect fees from persons having insurance but looks the other
way for persons not having insurance, the city could be committing insurance fraud.
Third, if the city decides to charge fire fees, the statutes do not limit the amount of fees a
city may charge. However, as is usually true for city fees, the fee should be reasonably related to
the city's cost in providing the service.
Finally, keep in mind that all fire fee collections belong to the city, not the fire relief
association or fire department, and should.be deposited in the city's accounts.
Model Ordinances
. Ordinance A: This is the basic model ordinance. The city will use all
practical and reasonable means to. collect the unpaid charge and may certifY
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the amount to the auditor in any county in which the service recipient owns
real property.
. Ordinance B: The city charges the town or other city, rather than the
individual, for fire services pursuant to a Fire Protection Contract. The fees
would have to be specified in the Contract.
S
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ORDINANCE NO.
AN ORDINANCE ESTABLISHING FEES
FOR EMERGENCY PROTECTION FIRE SERVICES
[Ordinance A: The basic model ordinance.]
THE CITY COUNCIL OF THE CITY OF , MINNESOTA DOES
ORDAIN :
SECTION ONE: PURPOSES AND INTENT
.This ordinance is adopted for the purpose of authorizing the City of to
charge for fire service as authorized by Minn. Stat. SS 366.011, 366.012, and 415.01.
SECTION TWO: DEFINITIONS
(A) "Fire service" means any deployment of fire fighting personnel and/or equipment to
extinguish a fire or perform any preventative measure in an effort to protect equipment,
life, or property in an area threatened by fire. It also includes the deployment of fire
fighting personnel and/or equipment to provide fire suppression, rescue, extrication, and
any other services related to fire and rescue as may occasionally occur.
(B) "Fire service charge" means the charge imposed by the City for receiving fire service.
(C) "Motor vehicle" means any self-propelled vehicle designed and originally manufactured
to operate primarily upon public roads and highways, and not operated exclusively upon
railroad tracks. It includes semi trailers. It does not include snowmobiles, manufactured
homes, all terrain vehicles, or park trailers.
(D) "Fire protection contract" means a contract between the City and a town or other city for
the City to provide fire service.
(E) "Mutual aid agreement" means an agreement between the City and a town or other city
for the City's fire department to provide assistance to the fire department of a town or
other city.
SECTION THREE: PARTIES AFFECTED
(A) Owners of property within the City who receive fire service.
(B) Anyone who receives fire service as a result of a motor vehicle accident or fire within the
City.
(C) Owners of property in towns or cities to which the City provides fire service pursuant to
a fire protection contract.
SECTION FOUR: RATES
[insert rate schedule]
SECTION FIVE: BILLING AND COLLECTION
(A) Parties requesting and receiving fire services may be billed directly by the City.
Additionally, if the party receiving fire services did not request services but a fire or
other situation exists which, at the discretion of the fire department personnel in charge
requires fire service, the party will be charged and billed. All parties will be billed
whether or not the fire service is covered by insurance. Any billable amount of the fire
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charge not covered by a party's insurance remains a debt of the party receiving the fire
service.
(B) Parties billed for fire service will have _ days to pay. Ifthe fire service charge is not
paid by that time, it will be considered delinquent and the City will send a notice of
delinquency.
(C) If the fire service charge remains unpaid for 30 days after this notice of delinquency is
sent, the City will use all practical and reasonable legal means to collect the fire service
charge. The party receiving fire service shall be liable for all collection costs incurred by
the City including, but not limited to, reasonable attorney fees and court costs.
(D) If the fire service charge remains unpaid for 30 days after the notice of delinquency is
sent, the City Council may also, on or before October 15 of each year, certify the unpaid
fire service charge to the county auditor in which the recipient of the services owns real
property for collection with property taxes. The county auditor is responsible for
remitting to the city all charges collected on behalf ofthe city. The City must give the
property owner notice of its intent to certify the unpaid fire service charge by September
15.
(E) False alarms will [or won't] be billed as a fire call.
SECTION SIX: MUTUAL AID AGREEMENT
When the City fire department provides fire service to another fire department pursuant
to a Mutual Aid Agreement, the billing will be determined by the Mutual Aid Agreement.
SECTION SEVEN: APPLICATION OF COLLECTIONS TO BUDGET
All collected fire charges will be city funds and used to offset the expenses of the City
fire department in providing fire services.
SECTION EIGHT: EFFECTIVE DATE
The ordinance shall become effective
Passed by the Council this day of ,
Mayor
Attested:
Clerk
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ORDINANCE NO.
AN ORDINANCE ESTABLISHING FEES
FOR EMERGENCY PROTECTION FIRE SERVICES
[Ordinance B: The city charges the town or other city, rather than the individual, for fire
services, pursuant to a Fire Protection Contract.]
THE CITY COUNCIL OF THE CITY OF , MINNESOTA DOES
ORDAIN:
SECTION ONE: PURPOSES AND INTENT
This ordinance is adopted for the purpose of authorizing the City of to
charge for fire service as authorized by Minn. Stat. ~~ 366.011, 366.012, and 415.01.
SECTION TWO: DEFINITIONS
(A) "Fire service" means any deployment of fire fighting personnel and/or equipment to
extinguish a fire or perform any preventative measure in an effort to protect equipment,
life, or property in an area threatened by fire. It also includes the deployment of fire
fighting personnel and/or equipment to provide fire suppression, rescue, extrication, and
any other services related to fire and rescue as may occasionally occur.
(B) "Fire service charge" means the charge imposed by the City for receiving fire service.
(C) "Motor vehicle" means any self-propelled vehicle designed and originally manufactured
to operate primarily upon public roads and highways, and not operated exclusively upon
railroad tracks. It includes semi trailers. It does not include snowmobiles, manufactured
homes, all terrain vehicles, or park trailers.
(D) "Fire protection contract" means a contract between the City and a town or other city for
the City to provide fire service.
(E) "Mutual aid agreement" means an agreement between the City and a town or other city
for the City's fire department to provide assistance to the fire department of a town or
other city.
SECTION THREE: PARTIES AFFECTED
(A) Owners of property within the City who receive fire service.
(B) Anyone who receives fire service as a result of a motor vehicle accident or fire within the
City.
(C) Owners of property in towns or cities to which the City provides fire service pursuant to a
fire protection contract.
SECTION FOUR: RATES
[insert rate schedule]
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SECTION FIVE: BILLING AND COLLECTION
(A) Parties requesting and receiving fire services will be billed. directly by the City of
within _ days of the fire service. Additionally, if the party receiving fire
services did not request services but a fire or other situation exists which, at the discretion
of the fire department personnel in charge requires fire service, the party will be charged
and billed. All parties will be billed whether or not the fire service is covered by
insurance. Any billable amount of the fire charge not covered by a party's insurance
remains a debt of the party receiving the fire service.
(B) Parties billed for fire service will have _ days to pay. If the fire service charge is not
paid by that time, it will be considered delinquent and the City will send a notice of
delinquency.
(C) Ifthe fire service charge remains unpaid for 30 days after this notice of delinquency is
sent, the City will use all practical and reasonable legal means to collect the fire service
charge. The party receiving fire service shall be liable for all collection costs incurred by
the City including, but not limited to, reasonable attorney fees and court costs.
(D) If the fire service charge remains unpaid for 30 days after the notice of delinquency is
sent, the City Council may also, on or before October 15 of each year, certify the unpaid
fire service charge to the county auditor in which the recipient of the services owns real
property for collection with taxes. The county auditor is responsible for remitting to the
city all charges collected on behalf ofthe city. The ~ity must give the property owner
notice of its intent to certify the unpaid fire service charge by September 15.
(E) False alarms will [or won't] be billed as a fire call.
SECTION SIX: MUTUAL AID AGREEMENT
When the City fire department provides fire service to another fire department pursuant
to a Mutual Aid Agreement, the billing will be determined by the Mutual Aid Agreement.
SECTION SEVEN: BILLING PROCEDURE FOR_FIRE PROTECTION CONTRACTS WITH
TOWNS OR OTHER CITIES
When the City fire department provides fire service to another fire department pursuant
to a Fire Protection Contract, the billing will be determined by the Contract.
SECTION EIGHT: APPLICATION OF COLLECTIONS TO BUDGET
All collected fire charges will be city funds and used to offset the expenses of the City
fire department in providing fire services.
SECTION NINE: EFFECTIVE DATE
The ordinance shall become effective
Passed by the Councilthis day of ,
Mayor
Attested:
Clerk
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