By Todd Hagen and Jeanne Vogt

Providing fire and emergency services is a core responsibility for Minnesota cities, but doing so affordably is an ongoing challenge.

The costs of delivering fire protection and emergency medical services (EMS) continue to rise — whether for equipment, facilities, daily operations, or personnel. At the same time, cities are struggling to consistently staff these critical departments.

To meet these demands, many communities are turning to partnerships with their neighbors through contracts, shared service models, or joint powers agreements (JPAs). These partnerships offer efficiencies of scale and help spread fixed costs across a larger tax base. However, they can also introduce complications and reduce local control.

A new tool: Fire protection districts

In 2021, Minnesota Statutes, section 144F.01 was amended to give political subdivisions the authority to establish fire protection districts (FPDs), building on existing statutory authority for EMS districts. Fire districts can levy property taxes directly, offering a new level of financial sustainability.

Two or more political subdivisions — cities, townships, or counties — can form an FPD through resolutions passed by their governing bodies. A city may also join an existing fire district using the same process. Notably, FPDs are not required to be geographically contiguous.

Before a fire protection district is formed, the member jurisdictions must adopt an agreement outlining how assets and liabilities, excluding general obligation debt, will be divided if the district is dissolved. Like a joint powers agreement, this agreement may also define how the FPD’s levy is distributed among the participating political subdivisions. If not specified, the default method is to spread the levy based on the tax capacity of each jurisdiction’s taxable property. Under a traditional joint powers agreement, there is typically a formulaic approach to assessing costs to members, which can include metrics such as number of service calls, population, and other measures based on the unique circumstances of the service area.

Governing structure and representation

Fire protection districts are governed by a board composed of elected officials from each participating jurisdiction. Each member is appointed by their local governing body. The proportionality of board representation is established in the founding resolution and can be changed later through an amendment to the district’s charter or bylaws. Members should check with their insurer to see if the member is covered by their existing coverage or if additional coverage is needed by the fire protection district.

Financial and administrative benefits

Fire protection districts can offer several financial and operational advantages compared to traditional shared-service models. Those benefits include:

General taxing authority. When used prudently, this funding method provides the most durable source of revenue for a governmental jurisdiction. There is some risk with respect to unpaid property taxes, which would otherwise be absorbed by member jurisdictions under the joint powers agreement or shared services models.

General obligation borrowing authority. Under a joint powers agreement, member jurisdictions may independently issue bonds or obligations. Often, the largest jurisdiction issues debt, and the remaining members contribute toward repayment. This model can present some burdens on the largest entities and introduce budget complications for members contributing to debt service payments. A fire protection district can issue debt directly with its own general obligation pledge. Even if a member withdraws or the district dissolves, all participating jurisdictions remain responsible for property tax levies tied to outstanding debt. Borrowing by an FPD does not require a referendum or the consent of member governments, although each FPD board member is expected to act in the best interests of their jurisdiction.

Centralized administration. The administrative responsibilities of a joint powers agreement are typically spread unevenly, most often being absorbed by the largest jurisdiction’s staff. Fire protection districts provide centralized leadership, finance, and operations. This can improve organizational efficiency and support more sustainable staffing models.

Considerations and timeline for formation

Creating a fire protection district requires careful planning, outreach, and a shared commitment among participating jurisdictions. Expect the process to span several months or more. Local governments must be aligned on goals, responsibilities, and the workload required to move the concept forward.

A key deadline to keep in mind is July 1, which is when a newly established district must be organized and certify its levy to the county auditor for taxes payable the following year. Any timeline for FPD formation should work backward from this date.

No one-size-fits-all model

Fire protection and EMS districts are not the right solution for every community. Some cities will find success through other means. What matters most is that local governments carefully assess all options and choose the path that allows for the most effective and efficient delivery of critical services, while adapting to the changing landscape of public safety and fiscal responsibility.

Todd Hagen is a senior municipal advisor and Jeanne Vogt is a senior fiscal consultant with Ehlers (ehlers-inc.com). Ehlers is a member of the League’s Business Leadership Council (lmc.org/sponsors).