When residents across Pearland’s extraterritorial jurisdiction call 911 for fire or ambulance service, the city responds. But after an attempted annexation fell apart in March, the City Council put the ETJ on notice: Come up with a plan to pay, or face losing this service by the end of 2018.
In November, two ballot measures will give those residents the chance to create emergency services districts to do just that. But even if Emergency Services Districts Nos. 4 and 5 are approved, Pearland taxpayers could end up subsidizing fire coverage until annexation becomes a possibility again, city leaders said. That is because ESDs, by design, have a limit on how much revenue they can collect, and neither of the proposed districts can fully cover the estimated cost of service.
“Essentially we are giving voters the option to choose to be subsidized, because there is no way the ESD will cover the full cost of service,” said Council Member Adrian Hernandez, who was one of two votes against the creation of ESD 5.
For ESD 4 residents, the district is their only option for partnering with the city, but residents in ESD 5 have alternatives, officials have said. Both ESDs are expected to enter into contracts with the city to continue service, but as independent agencies, they could pose new challenges for city officials.
The subject of ESDs are new territory for Pearland, which has been providing fire protection to its ETJ with the understanding that it would eventually be annexed.
“If I were to write a solution for this, this would not be the solution we would come up with,” Council Member Trent Perez said as the council debated resolutions consenting the districts to go to a vote. “Annexation was the best solution.”
Unlike Brazoria County’s three other emergency services districts, which cover hundreds of thousands of acres, the two proposed for Pearland’s ETJ are much smaller, with ESD 5 at under 1,000 acres and ESD 4 at 6,400 acres.
After the council voted to require payment for fire protection, Commissioner Stacy Adams said he immediately met with city staff and began to discuss options.
“It became clear then that an ESD was the way to go,” Adams said.
Unfortunately, Adams said, residents in the ETJ were unaware of Pearland’s decision, so a grassroots effort had to get up and running quickly.
“It was up to the residents there—it’s not driven by me or the county. They had to get the petitions to get it started,” Adams said.
That is when Jeff Brennan, a friend of Adams who has lived in the ETJ for 18 years, and others gathered 140 signatures to put ESD 4 on the ballot.
“I know that this is needed. It’s not for my benefit,” Brennan said. “There are several neighbors and people in the ETJ who are elderly and will need EMS service more than others.”
Disparate sections of Pearland’s ETJ are grouped under ESD 4, but almost 240 residents in the Silverlake subdivision—which was not part of the November annexation—filed a separate petition to create ESD 5.
“We wanted fair representation,” said Dax Philbin, an attorney for Municipal Utility Districts Nos. 2 and 3, which comprise the proposed ESD. “We would be bringing the bulk of the tax dollars, but we wouldn’t even be guaranteed a seat at the table [in ESD 4].”
This neighborhood, which has over 2,000 homes, could yield almost as much revenue as ESD 4, despite being one-sixth the size.
However, city leaders questioned the need for ESD 5, because MUDs 2 and 3 can negotiate for fire protection—as MUDs 6, 16, 20 and 21 have done—or it could have joined ESD 4. Under pressure from citizens calling for a democratic process, the City Council reluctantly allowed the measure to move forward in a 5-2 vote Aug. 27.
“I don’t think another governmental body is going to be a benefit to y’all or the city,” Perez said in opposition to the proposal.
Emergency services districts at work
If approved, the Commissioner’s Court will appoint a board of five members who reside in the district. The board in turn will negotiate service rates with the city or other agencies, and will be able to set a property tax rate to pay for those services.
Unlike a MUD, an ESD has a cap on its tax rate—$0.10 for every $100 in valuation. That means both proposed districts have a ceiling on how much they could pay.
Based on a financial model presented by Joel Hardy, special projects and grant administrator for the city, the cost of serving both ESDs is more than $2.1 million, but the combined potential revenue—not including possible overhead costs—is less than $1.5 million. City Manager Clay Pearson acknowledged the gap, but told the council, “The fact is, we’re absorbing 100 percent right now.”
Until another arrangement is made, Pearland taxpayers continue covering the full cost in the ETJ, Hernandez said.
And it will be over a year before the city sees any revenue, city staff said. If the districts are created, the city will not be able to collect any fees until a contract is set, and a contract cannot be set until the district has a budget, which in theory would not be until January 2020.
Moreover, an annual payment of $130,000 from Brazoria County to offset fire protection costs will end next year, Adams said, further shifting the burden to Pearland taxpayers, who do not have a say in whether the ESDs get created.
“If we put it to our citizens, I’m not sure they would vote yes to keep subsidizing them,” Hernandez said.
By consenting to the election, the council put the decision into the hands of voters; now officials must wait until Election Day.
“We’re here to provide any additional clarification to anyone from the MUDs or the ESDs,” Hardy said. “We have to wait until the ESDs are formed, then we can engage in a negotiation with them.”
Negotiations could be complicated, because existing fire service agreements the city has with MUDs rely on a variety of rate structures, ranging from a portion of a sales tax to a per-household monthly fee of $5 in one case. The city is also in talks with MUDs 21 and 22 to establish a new rate, as residents there have raised concerns that Fire Station No. 6, built specifically to serve the area, has never been staffed.
Meanwhile, officials said service will continue as long as there are firm, documented efforts to partner with them.
“We will continue to provide service, whether they go with us or not in the end,” Pearland Fire Chief Vance Riley said.