AVFD NEARING FINANCIAL COLLAPSE - The Explorer: Import

AVFD NEARING FINANCIAL COLLAPSE

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Posted: Thursday, November 15, 2001 12:00 am | Updated: 7:46 am, Thu Mar 24, 2011.

With debts greater than all its property tax revenue, the Avra Valley Fire District's finances are in critical condition as its Governing Board and staff search for a lifeline that will keep the district's remaining firefighters paid and stations open.

The district is more than $500,000 in debt, has exceeded its line of credit with Bank of America and last fiscal year spent $150,843 more than it collected, according to an annual financial report.

Trying to slow the bleeding, the district laid off three firefighters from an already skeleton crew. Avra Valley Fire, like many fire districts, has three shifts that each last 24 hours. Before the layoffs, the district had 15 firefighters with five on each shift. Three of them were at station one and two at station two.

The staffing reduction has forced the district to run some fire engines with only one man, though two are considered a minimum standard, Billy Eader, a AVFD firefighter, said.

"We're working with the absolute minimum," Eader, who is also the district's union representative, said.

Payroll has been cut 17 percent and, in addition, the district considered closing one of its two stations, Chief Berry Gerber said.

Avra Valley Fire covers northern Marana and 19 miles of Interstate 10 from Manville Road to Picacho Peak, encompassing about 130 square miles.

Station two, located on the district's southern end at 6301 N. Anway Road, was slated for closing so its fire engine could be sent back to the manufacturer. Though the station is no more than a two-bedroom house surrounded by cotton fields, and costs AVFD little to keep open, return of the fire engine could have brought about $170,000 back as revenue, Gerber said.

The district board however decided to keep Station two open after several Avra West community members spoke out against its closure at a public meeting.

Avra West is located two miles south of Station two and about 15 minutes away from Station one, at 15790 W. Silverbell Road.

While station two was salvaged, it is functioning now with only one firefighter per shift.

"It's terrible. I'm down here by myself, if anything breaks out I'm in a world of hurt," said AVFD Firefighter Steve Raub, who has been with Avra Valley Fire a year.

When a firefighter from station two responds to a structure fire, he cannot do much more than begin spraying it down with water, Eader said. Due to the Occupational Safety and Health Administration's standards, a firefighter cannot leave the engine unless there is another with the truck.

Though the one firefighter is severely limited in what he can do until support comes from other stations, all more than 10 minutes away, it is better than having nothing, many Avra West residents argued.

"As this area is growing, (AVFD is not an agency) that needs to scale back," said Linda Handa, who has lived in Avra West for almost two years. "It doesn't take long for fire to get out of hand."

Four months ago a home in the development burned down even though station two was still operated by two firefighters and responded quickly.

"I know that home down the road went fast, it was just totally destroyed," Handa said.

Now, with only 12 active firefighter positions, Avra Valley Fire is much more reliant on its mutual aid agreement with Northwest Fire and Rescue District, Gerber said.

NWFD's Station 36, 13555 N. Sanders Road, also responds to the southern half of AVFD, Northwest Fire Chief Jeff Piechura said.

In the past, NWFD would respond to calls in that area with one of its own fire engines and one from Avra Valley Fire, Piechura said. Now that AVFD has dropped to single man engine companies, Northwest, though still calling on one of Avra Valley's engines, sends out a second of its own.

"I don't see it as much of a strain to us," Piechura said.

For the Avra Valley firefighters at Station two, the mutual aid agreement with NWFD is vital, Raub said.

"Knowing they're behind us has been a blessing," he said.

Avra Valley Fire Governing Board members and staff said the financial difficulties stem from their residents not paying property taxes.

Pima County Treasurer Beth Ford, however, said that is not accurate. In fact, AVFD's property tax collection is at about 95 percent, which is average for special taxing agencies, she said.

The district fell only $30,000 short of the $532,100 expected from property tax revenue last year, according to an annual report by Robert Schlichting, AVFD's accountant with the firm Frizzel, Senkirk & Company.

Though the boardmembers receive monthly statements from Ford's office, some insist this is a problem generated by the county.

"We were having some financial problems with the county not supporting us with enough money to operate," Board member John Yacks said.

Others said it was a communication problem.

"It was a series of misunderstandings from the county on through," Boardmember Harold Young said.

However, AVFD's budgets for the past two fiscal years, obtained by the Northwest EXPLORER, show the district has been spending more than it has been collecting in taxes and fees.

The budget for fiscal year 2000-2001 had Avra Valley Fire receiving $440,000 from charges for service. The charges were for ambulance and firefighting services AVFD provides outside its district.

Avra Valley Fire only managed to collect $274,499 under that category. Gerber blamed the $150,000 shortfall on poor collection rates for its ambulance service.

The district drew $798,448 in revenue during last fiscal year and spent about $950,000. Fiscal year 1999-2000 had left the district with another shortfall of more than $60,000.

Combined, Avra Valley has a negative balance of $217,774 in its account with Pima County, according the AVFD's annual report.

Avra Valley Fire has managed to pay its bills until now by taking money out on its line of credit with Bank of America. All property tax-based agencies in Pima County have a line of credit that is used to pay expenses during "dry seasons," Ford said.

Property taxes are paid to the county twice a year, once in November and again in April. The periods in between payments are called dry seasons because there is little revenue coming in.

All money borrowed on the line of credit is supposed to be paid back by fiscal year's end, June 30, Ford said.

At the end of last fiscal year, AVFD had $274,000 outstanding on its line of credit, Gerber said.

Avra Valley Fire could not pay Bank of America back, he said, because of its massive shortfall in the operating budget. On top of what AVFD already had outstanding, it borrowed another $50,000 to pay expenses in August, exceeding its overdue line of credit by $25,000, Gerber said.

"They have a serious cash flow situation," Ford said.

This situation is one the district staff was made aware of in the monthly reports her office provided, she said.

Gerber and some of the boardmembers have argued that the reports are too "jumbled" for them to understand.

"The way those sheets (are organized) everyone had skipped over it," Yacks said.

The district's fund balance was located in the bottom corner of one of the back pages, he said.

"That hadn't been done with the former county treasurer. All of a sudden, there we were, we were blind-sided by it," Yacks complained.

Ford responded that the treasurer's office designed its form for the fire districts and that it has a staff member who deals only with these agencies if there were any questions.

Schlichting suggested this might be a problem of the boardmembers not being trained in reading AVFD's financial statements.

"Some people understand (budgets), some don't. Some people care, some people don't," Schlichting said.

District resident Debbie Nottingham attended the latest board meeting and said the members did not seem to be working with all the information.

"You could sense that when they were talking amongst themselves that they were confused," she said.

After district staff was notified that the district had exceeded its credit line, the board's approved budget was replaced with a "working" budget, Gerber said.

Their second budget included the reduction in payroll and a smaller projection of charges for service, he said.

This year's budget originally projected that the district would receive $404,000 in charges for service, though district staff knew that category had fallen short in previous fiscal years. The new projection was reduced about $100,000 from the original, Gerber said.

The full impact these cuts will have on Avra Valley Fire's deficits cannot be known until fiscal year's end, when all the property taxes have been collected.

AVFD does not budget a contingency fund, though state law mandates they do, and therefore each year the district spends more than it receives in tax revenue, according to the district's budgets.

Avra Valley Fire has also already maxed out its tax rate at $3 per $100 of a property's assessed value, so the district board cannot levy a tax increase to fund debt elimination. State law caps all fire district property tax rates at $3.

Gerber said AVFD has completed negotiations with Bank of America and has been granted an extension on its line of credit. However, Gerber could not elaborate on how much more Avra Valley Fire could borrow or when the bank expected to be paid back, adding that nothing had been put "on paper."

Bank of America Loan Representative Gillian Braidenbach declined to comment on the status of their negotiations with AVFD.

"They are in conversations and that's all I can say," Braidenbach said.

Gerber said he hoped to pay off the debt with Bank of America during the next two or three years.

Whether Avra Valley Fire will be able to pay any of its debt, including bonds for the purchase of equipment, without drastic cuts is still in question.

Merging with another district is an option that boardmembers and staff have openly discussed, Gerber said. Northwest Fire, the largest fire district in Arizona, is the district they would prefer to link up with, he added.

"There's been hopes for a long time for us, since we run mutual aid with Northwest Fire that we might merge," Raub said.

NWFD, on the other hand, is not warming to the idea of taking over an ailing district.

"We certainly would not merge (with AVFD)," Piechura said.

While it would not be Piechura's decision, he said he would advise the NWFD board that a pay for service agreement with the Avra Valley area would be preferable should AVFD dissolve.

If Avra Valley Fire continues to spiral deeper into debt, dissolving the district could prove difficult, said Bill Whittington, a Flagstaff attorney who represents several Arizona fire districts.

In order for a fire district to dissolve, state statute mandates that 10 percent of the district's population sign a petition requesting that the board chairman call for an election to do so.

If the measure is approved by the residents in a general election and there are debts, all the district's assets must be used to pay them.

If a dissolved district has outstanding bonds, then the tax rate is left in place until they are paid off.

Though AVFD's largest debts are not in bonds, if the district assets do not cover its debt with Bank of America, whether the tax payers would be required to make up the difference is still unknown, Whittington said.

"I don't think it has been addressed in Arizona yet," he said.

The only AVFD residents that have been informed the district is in serious financial peril are those who live in Avra West and only them because of their close proximity to station two.

Avra Valley firefighters sent a letter to those who live in Avra West that their fire station might be closing. Six families from the development attended the next board meeting, where the topic was discussed, said Nottingham, who lives in Avra West.

"I was overwhelmed by the lack of response," she said.

Despite Nottingham's disappointment, the residents were successful in pressuring the board to keep station two functioning, if only with one person.

"I've never heard of a fire station dropping to one man," said Delbert Hammer, an Avra Valley resident for five years. "The community is going to start fighting against them to do something."

While several residents said they wanted to take action against the closing of Station two, they were not informed that Avra Valley Fire is $500,000 in debt.

The reason they didn't know is because the firefighters, who are their only real access to district information, were not told.

Neither Eader, Raub nor AVFD Capt. Ken Rhein knew how large Avra Valley Fire's debts were or what the district is doing to solve the problem.

"That's the biggest problem is that things have been very quiet," Raub said. "(Gerber) stays pretty quiet, he doesn't give up much information."

Eader said the situation is not that extreme and that some information is available upon request.

"They're as open as they can be, they don't ever refuse to answer questions," Eader said.

Avra Valley firefighters earn about $22,000 a year, one of the lowest starting salaries for firefighters in Arizona. While the neighboring Northwest Fire's new hires are starting for $7,500 more.

"Turnover was on the rise some before the layoffs hit," Eader said.

The district, because of its rural setting and small size, has historically had trouble retaining its recruits, he said, but that since the budget trouble surfaced almost all the firefighters are looking at exit as the best option.

"At one point in time all of them have mentioned it," Eader said. "I'm kind of stretched in two directions right now. I personally am not going anywhere for at least another year."

While the budget situation is enough to make Avra Valley Fire staff nervous about their future with the district, Raub said there is more to it than that.

"Morale? There is no morale," he said. "I just know that, for whatever reason, we're barely keeping the doors open."

One firefighter has left since the layoffs in August, Eader said, and one of the district's paramedics might be leaving as soon as December.

AVFD refills its ranks with a list of reserve firefighters, but that list has only eight names left on it, Eader said.

Northwest Fire begins the first of three large-scale hirings in January, with nine firefighters to be picked up and Eader said he knows of at least three AVFD crew members applying for those positions.

"Rural/Metro and Northwest are the two big ones we've lost people to," he said.

While the budget is what the boardmembers and staff are working on now to keep AVFD afloat, personnel matters also threaten to capsize the district.

"(Morale's) not the greatest, laying people off and eliminating positions and you're not going to have the best of morale," Rhein said. "There is nothing I can do about it."

Despite the sense of urgency expressed by other district firefighters, Rhein, who has worked at Avra Valley Fire since 1990, said he has no immediate plans to leave the district.

"I'm probably the minority," he said. "Most people are looking."

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