City of Magnolia sets sights on creating a new fire departmentThe city of Magnolia may be getting its own fire department. After a unanimous vote by Magnolia City Council on March 10, city officials are conducting an internal feasibility study over the next few months to determine the requirements and costs associated with developing a new fire department to serve inside city limits.

Magnolia Mayor Todd Kana said the city’s choice to conduct the study is not a reflection of the existing Magnolia Volunteer Fire Department, which provides fire services to residents in a service area of 180 square miles, but is solely a business decision. A new fire department would allow the city the ability to recapture the full 2 cents of sales tax revenue for future areas annexed into the city limits, Kana said.

Last May, voters in Montgomery County Emergency Services District No. 10 narrowly approved a proposition by 50.63 percent to grant 1 cent of sales tax revenue to MVFD in the interest of increasing fire protection by funding three new stations and additional firefighter positions. As a result of the proposition, the tax rate in the district increased from 6.25 cents to 7.25 cents with 1 cent now alloted to MVFD and the remainder put toward the state.

In future areas annexed by the city, 1 cent of sales tax will be allocated to MVFD while 1 cent will be allotted to the city of Magnolia, and the remaining 6.25 cents goes to the state. Prior to the passage of the proposition, the city of Magnolia was able to capture the full 2 cents of the 8.25 percent state-capped limit for future annexed areas.

“Somehow, public perception of this entire thing has become that we’re disappointed with our current fire protection,” Kana said. “That has absolutely nothing to do with it. [MVFD is] outstanding and nobody would argue that they aren’t great, but there’s much more to [this]. What they did by taking up the extra 1 percent tax around us would just eliminate our ability to ever grow.”

Sales tax revenue

Before the May 2014 election, the city was in the process of annexing a 163-acre parcel across from Magnolia High School along FM 1488 where a 142-acre mixed-use center is planned for development with an H-E-B location as well as a possible home improvement store, movie theater, 12 pad sites and multifamily units, Kana said.

However Kana said the city will now receive just half of the anticipated sales tax revenue from the new development because the annexation was not complete before the election. Kana said he estimates the city could have received an additional $500,000 per year in sales tax revenue from the new retail center.

“When folks look at it, it’s hard to understand, and they say, ‘It’s only a penny [of sales tax revenue],’” Magnolia City Administrator Paul Mendes said. “A penny [equates to] 50 percent of [the city’s] income.”

A rebate deal to reclaim the full 2 cents of sales tax from ESD 10 for the tract was discussed, but Kana said talks did not continue following the election.

“We all sat down at a table, [the ESD officials were] happy, smiling and said ‘yes, we have the ability to give that back to you,’” Kana said. “Especially if we’re bringing services such as hydrants out to an area that aren’t there now. They’re not nearly as willing to discuss that now.”

Since the sales tax proposition took effect Oct. 1, MVFD has received more than $1 million in sales tax revenue from ESD 10. MVFD fire Chief Gary Vincent and ESD 10 board President Robert Buschardt declined to comment regarding the city’s decision to move forward with the fire department feasibility study.

With its own fire department, Kana said the amount of sales tax revenue potentially restored to the city for future annexations would not have a significant impact on the ESD’s budget as a whole, and the MVFD would still operate in the emergency services district.

Should the study find that a new department is not economically feasible, Magnolia will continue to receive service from MVFD, Mendes said.

ISO rating

When determining the insurance rates for a city or outlying area, companies often assess ratings determined by the Insurance Services Office to identify the risk in providing coverage. The ISO system is ranked on a scale from one to 10, with one being the highest rating a fire department can achieve.

Cities with fewer fire resources and slower response times earn lower ratings from the ISO, which can make properties in the area riskier and more expensive to insure, according to Montgomery County fire Marshal Jimmy Williams.

For the feasibility study, Williams said it is important for the city to determine how homeowner and business insurance rates could be affected by implementing a new fire department.

“When folks look at it, it’s hard to understand, and they say, ‘It’s only a penny [of sales tax revenue]. A penny [equates to] 50 percent of [the city’s] income.” —Magnolia City Administrator Paul Mendes

“Currently, [MVFD] is rated at an [ISO] three—the rating means they’re in the top percentage of fire departments across the country,” Williams said. “That gives a pretty good insurance rate to commercial business and homes throughout the area.”

For each number rating, Williams said he estimates an 8 to 15 percent increase or decrease in insurance rates. Should the city develop its own department, officials would have to obtain at least a level three rating to maintain existing insurance rates from MVFD’s ISO rating, he said.

Because of the city’s small size and low number of annual fires within city limits, city officials do not anticipate any difficulties in matching the level of service offered by MVFD, Mendes said.

“Any time you have a community like this you have interlocal agreements,” Mendes said. “We have them with Conroe, The Woodlands, Tomball and ESD 10. If they ever needed us, we’d go help them, and if we ever needed them, we expect that they’d come help us. It’s a force multiplier—it gives you a lot more ability than any one organization could do by themselves.”

Future options

With its own department, the city could become the main provider of fire service for a newly annexed area depending on whether it is within a 5-mile radius of city limits, Mendes said. This would give the city the ability to collect the full 2 cents of sales tax from a newly annexed area, he said.

Within the past few months Mendes said several property developers have shown an interest in annexation into city limits. Future subdivisions, such as the 1,138-acre Legacy Trust and the 6,500-acre Woodard Tract, could add about 5,500 new homes to the city, which could double or triple the population, he said.

“If the city gets big enough over a period of time, it’s going to have to have its own fire department,” Mendes said. “We’ve got a long way to go, but it could happen. Council is very conservative and careful about whatever moves they make when it comes to money.”