Fire district, city still at odds over insurance

The chairman of the local fire district is insisting that Abbotsford reconsider an offer for the district to insure the city’s public safety building, arguing that the city is legally obligated to let the district insure the building on its own. City officials, on the other hand, are standing firm in their opposition to giving up control of the insurance policy.

At the March 19 meeting of the Central Fire and EMS District, chairman Larry Oehmichen said he is frustrated that city officials will not accept an offer from the district’s insurance provider, MacGillis Insurance Agency, to insure the entire building, which includes the fire hall and the Colby-Abby Police Department, for $3,437 per year.

The city is currently insuring the building at a cost of $5,096 through Spectrum Insurance, with 75 percent of that cost, $3,822, being billed to the district for the fire hall portion of the building. The city pays 25 percent, or $1,274.

If the insurance policy was switched to MacGillis, it would save the district about $1,250 in 2020, and lower the city’s cost by $415 — under the current 75/25 split. However, Oehmichen also believes the district’s share of the building should be less based on square footage values provided by an insurance adjuster and backed up by Marawood Construction, the company that built the facility.

Either way, the total savings would be $1,659 for the city and district.

“This just frickin’ drives me crazy, because I hate wasting taxpayers’ money,” Oehmichen said.

Oehmichen also pointed out that the district’s insurance proposal would cover a loss up to $6.5 million, compared to the $5.1 million currently covered by the city’s policy.

City administrator Dan Grady and Mayor Lori Voss have said they are not comfortable with the district taking over the insurance for the entire cityowned facility. Grady objected to a proposed lease agreement presented by Oehmichen, which states that the city will pay 32 percent of the insurance costs — up from 25 percent — and the district will pay 68 percent (down from 75 percent). If this revised cost split were implemented under the rate, the district would owe $2,337 and the city would pay $1,110. There was also some initial misunderstanding about a clause in the lease stating that the district will pay the city $1 per year in rent. Oehmichen said the district is still obligated to pay the city $1,000 per year for renting the fire hall, and the extra $1 is just so the district can insure the police department portion of the building.

After facing resistance from city offi cials, Oehmichen said he consulted the district’s lawyer, who advised him that the contract between the city and the district makes it clear that the city “shall” lease its fire hall to the district, and the district “shall” provide insurance for the building.

“That means we cannot be dictated on what insurance we’re going to take,” he said. “That means we insure the hall.”

When he asked the attorney what would happen if the city refused to let the district insure the building, Oehmichen said he was told the district could simply insure the building on its own and stop paying its portion of the city’s current insurance policy.

In that case, he said the issue would likely end up in court and a judge would order the city to follow the contract as written.

Oehmichen said he hopes it doesn’t get to that point, and that elected officials can convince the city administrator to re-evaluate the district’s offer.

“I would hope that the council would make Mr. Grady understand that this isn’t something that he dictates, and he doesn’t dictate the percentages,” he said, referring to the breakdown of the building’s insurance cost. Roger Weideman, Abbotsford’s representative on the board, said he’s willing to take the proposal back to city officials so it could be reconsidered. He said the city would be “more than happy” to review the numbers, though he expressed doubt about the city letting the district take over the insurance policy.

“If those figures we gave you before were wrong and these are accurate, well then we’ll adjust them,” he said.

Oehmichen and others on the fire board say the city has nothing to worry about by switching insurance.

Board member Dennis Engel said the arrangement would be similar to how a homeowner with a mortgage must list their bank as an “additional insured” on their homeowners insurance.

“It’s the same situation,” he said.

Ultimately, Oehmichen said Abbotsford’s fire hall should be insured by the district, just like the halls in Colby and Dorchester are.

“Let’s get this uniform,” he said. “Let’s do what the contract says.”

At a March 25 city council meeting, Mayor Voss said Abbotsford taxpayers have a vested interest in the public safety building, and they deserve to have their financial interests protected.

“If something were to happen to our building, that check needs to be written out to the city, not Larry Oehmichen or the fire district,” she said. “They have no vested interest.”

Mayor Voss also made it clear that her priority at this time is dealing with the COVID crisis and keeping local residents and first responders safe.

“Due to what’s going on in the world today, the last thing any of these communities needs is more turmoil, at a time we should all be working together, not tearing more people or interests apart,” she said.

Ald. Jim Weix said the city’s ownership of the building should be the “controlling factor” in who insures the building. Ald. Brent Faber agreed.

“If the fire department would like to buy the building or their section of it, I guess they’re more than welcome,” he said.

Weideman said he would like to sit down with Grady and review the fire district contract on their own before responding to Oehmichen.

Mayor Voss, after talking to someone at Marawood Construction, acknowledged that Oehmichen is right about the need to change the way the city and district split the insurance premium.

“Larry is probably correct on what his numbers are,” she said. “Right now, I suggest we redo our insurance and send him another bill, and give him 30 days to pay.”

Weideman, however, said he wants to hold off on that until the contract is reviewed by the city. He also commented on Oehmichen’s recent remarks about the district possibly not having to buy a new fire truck, and refurbishing the existing vehicles for far less. Weideman said one of the biggest promises of the consolidated fire district was for municipalities to save money on replacing fire trucks that are more than 20 years old, which may not be needed based on what Oehmichen is now saying.

“We were very mislead when this got formed, and that’s something we should take into consideration,” he said.

With Abbotsford owning the newest and largest of the three fire halls, Weideman said the district should be happy with the current arrangement.

“We’ve got one that’s worth quite a bit more, so the district is really getting a good deal from us,” he said.

If Oehmichen continues to push for the district to insure the city-owned building, Grady said the council always resort to a “nuclear option.”

“This city council has the power to do a budget amendment and cut his budget, and there’s nothing he can do about it,” he said. “That’s a power this city council has.”