Memorandum

City of Lawrence

Fire Medical

TO:	David Corliss, City Manager
FROM:	Mark Bradford, Fire Chief
CC:	Debbie Van Saun, Assistant City Manager
Date:	April 20, 2007
RE:	Fire Apparatus Replacement Plan

INTRODUCTION

In response to the state of the Fire Medical (FM) fire apparatus fleet, the city manager asked FM management to assess the condition of the existing fleet, identify the necessary apparatus requirements to meet the mission of the department, and to recommend a manageable replacement schedule. The efforts of staff culminated in a comprehensive vehicle study that included a survey of all primary and secondary fire apparatus, an overview of the organizational goals and service demands of FM, a comparative analysis of the fire apparatus replacement programs in other jurisdictions, and a proposed apparatus replacement schedule. There are at least three different life cycles of a fire apparatus: service, technological and economic. There are also immeasurable costs.

The service life is when a piece of equipment is capable of performing its duty. Service life is dependent upon a number of variables.

A unit also has a technological life. Over the years, there has been a move to combine vehicle tasks into fewer units. For example, medic units may still be capable of performing with a rescue component. While older vehicles may still be capable of performing the duty they were designed for, they cannot match the performance requirements new vehicles can. Speed acceleration and breaking ability with both antilock brakes systems, auxiliary braking devices, roll-over protection and compressed fire fighting foam are just a few of the technological advances of modern apparatus. Newer vehicles built to the latest NFPA apparatus standards are simply safer.

The economic life cycle, the third and possibly most important, is the total cost of a vehicle’s expenses over a give period of time. These include depreciation, operating costs, fuel, oil, maintenance repairs, downtime replacement, obsolescence, inventory control and operator training. All these factors come to play when determining economic life. Without annual operating funding to purchase new equipment on a regular basis, the average age of the fleet increases, as does the annual cost of maintaining the fleet. Consequently, more mechanics, more shop space and large parts inventories are needed to maintain the fleet. If these resources are not added, the fleet failure rate will increase and firefighters will begin to lose faith in the reliability of equipment.

BACKGROUND AND SIGNIFICANCE

Following the merger of the LFD and the DCAS in 1996, the role of Lawrence’s fire apparatus in the delivery of emergency services was significantly expanded. In addition to fire protection equipment, fire apparatus were stocked with basic and advanced life support equipment, technical rescue equipment, and hazardous materials response equipment. Many of the department's apparatus had been purchased during the 1980s and 1990s and were not designed to accommodate these additional equipment loads. Some units lacked adequate storage compartments for sensitive equipment such as drug boxes, electronic monitors, and rescue equipment, whereas the combined weight of added equipment exceeded the gross vehicle weight ratings of other units.

In early 2006, concerns about the reliability and serviceability of both primary and secondary fire apparatus began to surface. During this year, numerous equipment failures were identified that required a significant amount of down time and funds to make necessary repairs. In addition, the city's fleet manager reported an increase in maintenance costs and delay in obtaining replacement parts for vehicles that were beyond ten years of age. This delay routinely added to a downtime of five to ten days, and in some cases, in excess of a few weeks.

The survey of the existing fire apparatus indicated that the average ages of primary apparatus have reached fourteen years for engine companies, fourteen years for ladder companies, and twelve years for quint companies. With the exception of the new quint recently purchased, all of our apparatus exceed the National Fire Protection Association's (NFPA) maximum recommended life span by seven to ten years.

The review of FM organizational goals and service demands reflected a change from previous years in the types of services the department was providing. This trend was confirmed by an analysis of National Fire Incident Reporting System (NFIRS) data, which showed that of the total call volume of 8,964 incidents in 2006, 75.97% of those calls were for EMS incidents and 24.03% were fire-related incidents. Based on the organizational goals of the department and the changes in service demands, staff recommends various performance enhancements for future fire apparatus in an effort to improve personnel safety, ensure reliability, and increase operational efficiency. Recommendations include a quint and ladder fleet which provides the greatest efficiency in operations with the minimum number of staff.

Currently, the city does not have a heavy rescue vehicle. The vehicle that had been used for this purpose was a used fire 1983 fire truck. During the spring of 2006, the vehicle had a complete engine failure. Currently, we are attempting to transport the most critical components of the departments confined space equipment in open flat bed trailers until a replacement vehicle can be acquired. The remainder of the confined space equipment is stored on the apparatus floor until it can be transported by other means. A replacement vehicle was requested in the FY 2007 Budget; however, no funding was obtained.

The proposed fire apparatus replacement schedule was structured to promptly improve the condition of FM fleet during the first five years, and ensure long-term reliability and serviceability of the fleet through regular apparatus replacement during later years with the ultimate goals of (a) replacing quints and aerial ladders every ten years including seven years of primary service and three years of secondary service, and (b) replacing heavy rescue vehicles, tenders, and hazardous materials vehicles every twelve years including ten years of primary service and two years of secondary service.

Why do fire trucks respond to emergency medical calls – The answer is quality of care!

Fire engines are sent to medical emergencies for one of two reasons:

· The severity of the medical emergency requires more personnel than the assigned medic unit can provide; or

· The closest medic unit is not available and the closest fire engine is sent with the next closet available medic unit in order to arrive at the scene of the emergency as quickly as possible.

Fire and Medical departments nationwide are expected to deliver fast and effective service once they arrive. This requires us to target a response that is accurate based on previous task analysis of what medical procedures must be performed upon our arrival.

When a resident calls 9-1-1 for an ambulance, a medically trained emergency dispatcher must quickly answer and establish a conversation with the caller in order to classify the severity of the medical problem. This time-sensitive phone conversation involves one trained dispatcher and one un-trained citizen, generally under a high level of stress. The goal of this phone conversation is to, within seconds, match the identified medical problem with the correct medical response to provide care.

No one truly knows how severe the emergency call really is until they arrive on the scene. For safety and survival, we work from a premise that it is better to be safe and send apparatus than sorry that we don’t have the personnel on scene to take care of the situation. A medic unit is staffed with a paramedic and emergency medical technician. This staffing allows a medic unit to handle a majority of the routine medical calls with no assistance. Depending on the severity, a fire engine with a medically trained crew is sent to provide needed assistance to the medics on the ambulance. The medics on the fire engine help reduce the time it takes to assess a patient and prepare them for transport to a medical facility. They also provide a level of safety for the personnel on the ambulance and to the patient by assisting with removal of large patients or patients in tight quarters. The fire engine often remains on the scene for assistance, but is available to respond to another emergency if another emergency call comes in. A common misconception is that fire trucks are sent on all medical calls, when in fact; in 2006 fire trucks were only needed to assist on 44.39% of all medical calls.

All our personnel are cross trained and generally switch between riding a fire engine and a medic unit on a regular basis. The fire engine crew can provide a similar level of care as the ambulance with the exception of transport. Many times, given the call volume for our department, simultaneous calls may be received which means that our ambulances are committed to a medical emergency. In these situations, one of our fire apparatus can arrive more quickly to begin life saving care. When a life-threatening condition occurs, such as sudden cardiac arrest or severe allergic reaction, minutes, even seconds make the difference. The fire engine crew can respond and begin treatment to prepare the patient for transportation before an ambulance arrives. The medics on the fire engine are capable of completing these tasks because of the equipment in place on each fire engine.

The option of stripping firefighters off fire engines and taking an alternate vehicle, on a regular basis, to supplement medical calls will ultimately lead to a delay in service when a fire call is received as well as delaying response to a medical emergency while transferring necessary protective clothing and gear to another response vehicle. Fire engines are not static; they move throughout the community on a regular basis and at all times must be necessary to respond with an adequate crew to safely handle a fire incident.

Growth forces all of us in the emergency response business to look at the way we serve our citizens. Does our current emergency response model line up with the needs and expectations of the community? Do our performance indicators give us a sense of how to make necessary improvements? No public safety employee can ever be too confident with our current model of response. Listening to feedback and avoiding agendas are skills that are crucial to ensure the needs of our community are being met. Lawrence is a modern cosmopolitan city with varied levels of diversity. Our challenge is to meet that diversity – externally with our response and internally as an organization. Our “cradle to grave” service defines our response which reflects the needs of our community. We must continue to meet those needs.

ANALYSIS AND RECOMMENDATIONS

One of the most important capital assets of the city and department is a fleet of reliable automotive fire apparatus. Firefighters depend heavily on the performance capabilities of these vehicles when delivering emergency services to protect life, property, and the environment. In order to maximize firefighter capabilities and minimize their risk of injuries, it is imperative that fire apparatus be equipped with the latest safety features and operating capabilities. If these services are to be provided without interruption, fire apparatus must be maintained in superior operating condition and should be promptly replaced when adequate performance levels can no longer be assured.

Replacing fire apparatus is a necessary, yet costly, expenditure of public funds. Today’s purchase price of modern fire apparatus can exceed $1,000,000 and depends largely on the type of apparatus and the systems and ancillary equipment specified. We realize the need to purchase multiple units during a single fiscal year can place a severe financial burden on any municipality. Accordingly, fire apparatus replacement should be a carefully planned process that is conducted at regular intervals.

It is a generally accepted fact that fire apparatus, like all types of mechanical devices, have a finite life. Replacement intervals should be based on the estimated effects of variables such as usable life cycle (cost per mile, excessive breakdowns) part availability, outdated safety features/technology (ABS, interlocks, anti-lock brakes and rollover protection), new fire fighting tools and systems (compressed air foam systems), compliance with emission standards, quality of the original builder, age, use, and maintenance costs (Commission on Fire Accreditation International, 1997). Replacement intervals should also account for the time required to prepare bid specifications, conduct bid processes, and construct and deliver apparatus. The problem that prompted this research was the fire apparatus replacement intervals of FM were based exclusively on the estimated effects of age on the useful life span of fire apparatus. This practice failed to take into account other variables that affect the useful life span of fire apparatus.

In order to mitigate these issues, FM has developed the following recommendations as part of the fleet management plan:

· Develop a comprehensive data collection and management program to improve the quality and quantity of fire apparatus data for analysis and forecasting purposes. The data targeted by this program should include total mileage, annual mileage, annual unit activity (emergency responses), total engine hours, annual engine hours, annual maintenance costs, annual maintenance costs per mile, and downtime for maintenance and repairs. Additional information that should be collected on each apparatus includes unit number, city identification number, vehicle identification number, year of manufacture, name of manufacturer, manufacturer's contract or shop order number, description of unit type, description of performance features of major systems and equipment, and date of last performance test. Furthermore, the time required to prepare bid specifications, conduct bid processes and award contracts, and construct and deliver fire apparatus should be routinely tracked.

· Recommended collection methods for quantitative data include the review of fleet maintenance computerized vehicle records and maintenance billing reports, review of annual NFIRS data, and direct observation of vehicle odometers and hour meters. Recommended collection methods for qualitative data include the review of city capital asset inventories, fleet maintenance computerized vehicle records, construction specifications, and direct observation of apparatus specification plates.

· Establish computerized and hard copy records for each apparatus in the FM fleet. Scanned copy files should be compiled to store printed copies of records and any other documentation that is not suitable for computerized storage (e.g. fire pump and aerial ladder test certificates).

· Develop a program to assess the operating condition of essential components, systems, and equipment of each apparatus on an annual basis. This program should also assess how well each apparatus meets the mission requirements of the department. Essential components that should be assessed include cab and body assemblies, the drive train, and braking, suspension, and electrical systems. Systems and equipment that should be assessed include fire pumps, foam systems, water tanks, aerial devices, and ancillary systems such as on-board electrical generators, scene lighting systems, hydraulic and pneumatic rescue systems, mobile air compressors, and cascade systems. Mission requirements that should be assessed include the ability of the apparatus to effectively meet both service and operating demands.

· Develop a survey form to guide personnel through an objective assessment of specific items associated with the categories of essential components, systems, equipment, and mission suitability. Each apparatus should be surveyed by at least five personnel: three representing FM and two representing the City's fleet maintenance facility. The results of each survey should be referenced when evaluating apparatus for possible replacement.

· Continue the cooperative program to test the performance of apparatus equipped with fire pumps or aerial devices on an annual basis, or whenever major repairs are performed. This program should be in strict accordance with NFPA apparatus standards. FM should continue to contract with a bonded and certified third-party testing firm to perform all tests on aerial devices, due to the safety and liability issues involved. However, qualified FM personnel may conduct tests of fire pumps with a minimal investment in testing equipment.

· Perform a statistical analysis of the apparatus data resulting from the data collection and management program at the end of each fiscal year. This analysis should include descriptive statistics to measure central tendencies and variations in historical data, a time series analysis to identify any trends in historical data over a period of years, statistical process control calculations of data to establish parameters within which apparatus should conform, correlation analysis to test the relationships between the data, and a regression analysis to project possible changes in the data in the future if any relationships are found to be statistically significant. All analysis should focus on the stratification of apparatus data according to unit type such as primary and secondary, engines, ladders, and quints.

· Use descriptive statistics to describe apparatus data at any given time. Time series, correlation, and regression analysis should be used to support planning efforts for fire apparatus replacement. Statistical process control calculations of maintenance cost per mile data, along with the results of the operating condition assessments, should be examined to determine which apparatus should be recommended for replacement. With each passing year more data will be collected, which will improve the overall accuracy of replacement recommendations.

· Continue to educate city management, city commission members, civic leaders, and citizens on the fire apparatus needs of the department. Informative presentations should be developed illustrating the condition of fire apparatus and the obvious issues necessitating replacement. The need for performance features should be justified and the reasons for the high cost of purchasing fire apparatus should be explained.

Current Vehicle Use and Service Life

Apparatus	Year	Age	Life Expectancy	Purchase Price	Current Value	Maintenance Cost to Date	Points	Status
Quint 3	1996	11 years	10 years	$419,509	$123,500	$121,916	38.71	Primary
Quint 4	1992	15 years	10 years	$419,322	$47,500	$153,247	49.42	Primary
Quint 2	1994	13 years	14 years	$407,829	$114,000	$142,770	42.26	Primary
Quint 1	2006	--	10 years	$695,271	--	--	--	Primary
Engine 5	2002	5years	10 years	$399,231	$142,500	$33,274	23.97	Primary
Engine 6	1987	20 years	10 years	$146,953	$23,750	$64,448	53.43	Secondary
Engine 7	1987	20 years	10 years	$146,953	$23,750	$56,578	49.70	Secondary
Ladder 2	1986	21 years	10 years	$378,640	$42,750	$106,748	50.71	Secondary
Ladder 5	1998	9 years	10 years	$607,000	$85,500	$98,607	27.38	Primary

Apparatus Replacement Points
Under 19 points	Excellent
20-25 points	Good
26-19 points	Qualifies for replacement
30 points and above	Needs immediate consideration

Recommended Fire Apparatus Replacement Plan

There are five options available when considering a replacement plan:

1. Purchase the apparatus outright.

2. Lease the apparatus for seven years and turn it in at the end of seven years.

3. Lease the apparatus for seven years and then purchase it at the end of seven years.

4. Lease the apparatus for ten years and then turn it in at the end of ten years.

5. Lease the apparatus for ten years and then purchase it at the end of ten years.

The following chart shows an example of the cost associated with each of these options. Of these options, the best choice appears to be leasing the equipment and turning it in at the end of the lease term. The second best choice is to purchase it outright. The worst option of the three is to lease the equipment and then purchase it at the end of the lease. For example, using the Pierce 100’ apparatus figures, we save over $86,000 by leasing for seven years compared to purchasing outright. If we were to lease for seven years and then purchase, we would lose a little over $216,000. It is also interesting to note that the 7 year leases on both pieces of equipment are the only ones where we have a positive return (we save money: $86,000 on the 100’ quint and $25,000 on the 75’ quint).

EQUIPMENT

COST

10 YEAR ANNUAL PAYMENTS

10 YEAR PAYMENTS EXTENDED

DIFFERENCE FROM PURCHASING OUTRIGHT

10 YEAR BALLOON

TOTAL COST

TOTAL DIFFERENCE FROM PURCHASING OUTRIGHT

Pierce 100’

$962,138.00

$106,331.89

$1,063,318.90

$101,180.90

$204,514.74

$1,267,833.64

$305,695.64

Pierce 75’

$810,844.00

$92,532.03

$925,320.30

$114,476.30

$135,055.73

$1,060,376.03

$249,532.03

EQUIPMENT

COST

7 YEAR ANNUAL PAYMENTS

7 YEAR PAYMENTS EXTENDED

DIFFERENCE FROM PURCHASING OUTRIGHT

7 YEAR BALLOON

TOTAL COST

TOTAL DIFFERENCE FROM PURCHASING OUTRIGHT

Pierce 100’

$962,138.00

$125,114.28

$875,799.96

-$86,338.04

$302,984.80

$1,178,784.76

$216,646.76

Pierce 75’

$810,844.00

$112,168.24

$785,177.68

-$25,666.32

$200,082.56

$985,260.24

$174,416.24

Turn-in Lease Option

Advantages:

· Turn in lease offers the ability to terminate program with payoff.

· Reduced maintenance cost – newer apparatus warranties covering different components from one to 10 years (lifetime on tanks).

· Does not increase bond debt.

· Takes advantage of new technology for both safety and innovation.

· Allows better standardization of apparatus increasing safety, improving training and operations efficiency.

· Maintenance is more standardized and cost goes down due to reduced apparatus age.

· Overall less cost per year, predictable annual expense.

· Improved residual value.

· Apparatus that might be termed a “lemon” can be replaced.

· Independent front suspension increases safety and brake life.

· Side Roll Protection System – traffic deaths are the second leading cause of firefighter fatalities, and 60% of all traffic fatalities involve a roll.

· NFPA 1901 Annex D recommends refurbishment of any apparatus built prior to 1991 and then the unit should be placed in reserve after the refurbishment.

Disadvantages:

· No ownership

· Variable debt

Proposed Replacement Schedule for Fire Apparatus

The initial phases of the apparatus replacement program would be implemented during Fiscal Years 2007 through 2009, and involves the accelerated purchase of three to five apparatus each year to replace those units that had become unreliable, unserviceable, or obsolete. During this time, seven units would be replaced, which accounts for nearly half of FM primary and secondary fire apparatus fleet and a total capital outlay of approximately $4.9 million. It is projected that subsequent years would involve the purchase of fewer units each year until the planned replacement intervals for each type of apparatus were met.

Fire Apparatus Construction Life Cycle – Example

This example illustrates the typical process and time needed to construct a piece of fire apparatus.

Potential Funding and Financing for Fire Apparatus Replacement

Due to an out-of-balance housing and retail/manufacturing market, the city's ability to raise additional revenue is severely limited. As a result, the city is often forced to assume debt to finance improvements in infrastructure and replacement of capital assets. If city management is to be successful in improving the financial position of the city, the practice of replacing multiple capital assets during a single fiscal year must be avoided in the future. Proper planning based on objective projections of useful life span will ensure that capital assets such as fire apparatus are replaced at reasonable intervals, without straining the fiscal resources of the city during any single budget cycle.

Funding:

· Sin tax

· Dedicated sales tax

· Development Impact Fees

Financing:

· Purchase new GO bonds

· Loan/lease from the manufacturer

· Loan/lease from a commercial lender

· Combination

Financing Options – Memo provided by Ed Mullins

To: Debbie Van Saun, Assistant City Manager

From: Ed Mullins, Finance Director

Date: October 16, 2006

Subject: Fire Apparatus

In deciding whether to purchase, lease, or lease/purchase the equipment one of the major factors is the life of the equipment. If the equipment is estimated to last a number of years past the lease period it will likely be better to purchase. I also think that we will take better care of the vehicle if we know it has got to last a long period of time and we are the actual owners. If we don’t expect the vehicle to last significantly longer than the 7-10 year time period, leasing may be a good option. However, since the current vehicles are from 10-20 years of age it might make more sense to purchase the new vehicles.

Another factor is the cost of capital. The rates quoted in this example imply a 4.4% rate for 7 years and a 4.7% rate for 10 years. The city recently issued a 12 year bond with an average rate of 3.9%. Purchasing the vehicles is likely the least cost of the options, even if we issue debt. If we decide to lease/purchase the vehicles, I would recommend that we do a request for proposal for a master lease. This would likely be at a lower rate than the manufacturer and provide us the flexibility to do more vehicles and not tie ourselves to a manufacturer. If we are doing a lease, we would likely have to obtain financing from the manufacturer in order to obtain the trade-in value.

In any case, to avoid a large spike in debt or lease payments, it would seem that a good option would be to replace one vehicle a year for the next five or six years and develop a better replacement strategy at that time. Those pieces of equipment in a secondary role should not get the usage of the first line equipment and should last longer. If we replace numerous vehicles at once, we face the likelihood of having the equipment need replacing at the same time in the future.

We should also considering budgeting a transfer in the Fire Department budget to the Equipment Reserve Fund to cash finance the purchase of future vehicles. While we may not be able to cash finance all of the vehicles needing replacement, we could target the replacement of some of the fleet in future years. An incentive may be to transfer a portion of the unspent Fire Department budget each year to the Equipment Reserve Fund for future vehicle or equipment purchases.

I hope this information is helpful. Let me know if you have any questions.

Fire Apparatus Comparative Analysis

The comparative study of the fire apparatus replacement practices of other jurisdictions was conducted during a training seminar for metro Kansas City fire departments. Included in this survey were the Kansas cites of Olathe, Leawood, Lenexa, and Merriam. It also included the Missouri cities of Independence, Kearney, Grandview and Southern Platte County. This study revealed that, with one exception, years of service was the predominate factor for replacing apparatus. One community, Lenexa, utilized a system similar to that utilized in Lawrence and is, in fact, based upon the same program.

What To Do With Apparatus That Are Replaced

The current total value of our apparatus fleet, as evaluated by a dealer who specializes in used fire apparatus, is $451,207. We recommend that, as apparatus are replaced, they be sold through the City Garage’s vehicle sales process. As a department incentive, we recommend that the proceeds from such sales be made available to the department for new vehicle funding.

Capital Improvements

New fire medical stations constructed as the City expands services will need to purchase a new quint apparatus. Because of the time it takes to actually get a new apparatus constructed and ready for service this purchase may need to be completed on or before ground breaking.

Secondary Fleet

Primary fire apparatus are newer, fully staffed and available on a 24 hours basis. They are fully functional and equipped and are the first to be dispatched on all emergency calls.

Secondary fire apparatus are older and have served as primary apparatus for a number of years. They are fully functional and equipped like primary apparatus and will be used to fill in for any primary apparatus that are unavailable (for any reason). These apparatus are placed in primary service on regular basis with off duty firefighters when large fires occur or when the number of emergency calls deplete primary fire resources and are needed to adequately protect the community.

Ratio of Primary Apparatus to Secondary Apparatus

Our ratio of primary to secondary apparatus is a factor that is regularly evaluated based on experience. This ratio is currently appropriate for ladders, but the engine/quint ratio should be increased by one to handle our current fleet status as well as providing adequate apparatus for members called back to handle large incidents or provide continuing coverage to citizens.

Ladders Current 1:1 Future 1:1

Engines/Quints Current 5:2 Future 5:3