By Rich Pollack
In what might seem like déjà vu, Highland Beach’s Financial Advisory Board has been tasked with reviewing the town’s 2016 contract with Delray Beach for fire and rescue services.
The Town Commission’s decision to review the contract to make sure it is reasonable and to examine possible alternatives came after Commissioner Peggy Gossett-Seidman expressed concerns that the agreement could saddle the town with large expenses until it ends on Sept. 30, 2026.
“I did the math and I looked into the potential cost over the next five years and it added up to a surprisingly high amount,” Gossett-Seidman said. “I feel the town and its residents are not prepared for this.”
Gossett-Seidman first raised questions about the fire contract during discussions of the fiscal 2019-2020 budget during which Highland Beach will pay Delray Beach $4.47 million for fire and rescue services.
That number reflects a $214,700 increase over the previous year, or about a 5% increase.
The increase comes after an estimated 8% increase the previous year.
According to numbers provided by the town at Gossett-Seidman’s request, Highland Beach will pay Delray Beach a total of $48 million over the course of 10 years, assuming the rate increases 5% a year for the next six years.
That number would rise to $51.6 million if the rate increased by 8% a year for the next six years.
“I don’t know where we would get this money, except to raise taxes,” she said.
But other members of the commission, who agreed that another look at the agreement is warranted, did not seem alarmed.
“I understand that it’s a lot of money, but providing fire rescue and police services, those are expensive items,” said Commissioner Evalyn David.
Vice Mayor Greg Babij, who chaired the Financial Advisory Board before being appointed to the commission earlier this year, believes that increases in property values could offset the increases in fees for fire rescue services without the town’s having to raise the tax rate.
Babij said the town’s taxable property values went up about 5% last year and have averaged increases of about 2.2 percent over the past 10 years.
“If property values go up 2.5 percent, holding the millage rate constant, about $250,000 in additional revenue is generated,” he said. “A 2.5 percent increase in property values roughly offsets a 5% increase in the fire contract.”
Others have pointed out that the increase in Delray Beach’s fee could potentially be lower than 5% under the terms of the contract.
Town Manager Marshall Labadie says that under the agreement, the fees Delray Beach charges Highland Beach are tied to actual costs.
“The numbers have to match their true costs,” he said. “If they have a 3% to 5% labor cost, we have a 3% to 5% labor cost.”
Highland Beach pays an additional administrative fee.
“The contract is pegged to Delray’s cost of providing the service,” said Town Attorney Glen Torcivia, who was part of the team that negotiated the agreement.
Torcivia told commissioners that prior to the contract’s signing, town officials looked at a variety of alternatives, ranging from joining a once-proposed barrier island fire district to having services provided by Palm Beach County Fire Rescue or another nearby municipality.
Boca Raton was not interested in providing the service, and having service provided by Boynton Beach was not practical, nor was the idea of a barrier island fire department. Having the county provide fire rescue services would be too expensive, Torcivia said.
In its request to the Financial Advisory Board, commissioners asked for a review of alternatives as well as a review of the agreement.
“The contract was the best that could be done at the time because there were no alternatives,” said board member Doug Hillman, who believes that a periodic review of the contract is a good idea.
“We should on occasion always be looking for alternatives,” he said.
The request from the current commission is similar to one that came to Financial Advisory Board in July 2018. At the time, commissioners asked the board to study the feasibility of creating a Highland Beach Fire Department.
“The conclusion was that it wasn’t obvious that Highland Beach could easily re-create the standalone department at a reasonable cost,” Babij said, adding that the board recommended the town hire an outside consultant if it wanted to go forward with a standalone department.
In raising questions about the agreement, Gossett-Seidman questioned the legality of the long-term contract and whether the town met conditions of its charter, which requires a referendum before the town can spend more than $350,000 on any one project.
Torcivia, after a lengthy review, concluded the agreement was lawful.
For her part, Gossett-Seidman says that because the contract for fire services is a huge expense, it’s important to review it periodically.
“We need to take a fresh look at the contract and our options on behalf of our residents,” she said. “It just needs a hard look, and we would be remiss if we don’t.” Ú