The St. Francis and Bethel fire departments will merge to form the Rum River Fire District after the St. Francis City Council approved a series of transition agreements at its Dec. 15 meeting.
The council considered five items related to the creation of the new district, which will officially begin operations Jan. 1. The council unanimously approved the fiscal agent agreement and passed the remaining transition items on 4-1 votes, with Council Member Amy Faanes dissenting over concerns related to asset valuation, control and long-term liability.
The first item was a resolution transferring the city’s Public Employees Retirement Association Statewide Volunteer Firefighter pension assets to the new district.
Fire Chief Dave Schmidt said the transfer moves pension assets, records and liabilities to the district and is required by PERA to ensure firefighters experience no loss of service credit or benefits during the transition.
The resolution does not change benefits, service credits or pension obligations, Schmidt said.
“This is simply a procedural piece that PERA requires for us moving forward,” Schmidt said. “The fire board will also have to reciprocate the receivership of the pension fund.”
Faanes asked whether the city would continue its former $500-per-firefighter contribution.
City Administrator Kate Thunstrom said the city would no longer make the contribution directly, while Schmidt said the district would continue the elective contribution.
The council next approved a fiscal agent agreement designating St. Francis to manage financial services for the new district.
Thunstrom said the agreement allows the city to assist with budgeting, audits and expense processing, while financial decisions and authorizations would come from the district and Schmidt.
Faanes asked how long the arrangement would last. Thunstrom said the agreement establishes an initial five-year term with automatic renewal.
“The district would meet to let us know and give us that heads up, because we want to be responsible with them for the final audit,” Thunstrom said. “But it is for an initial five years.”
Thunstrom said the agreement cannot be modified without approval from the St. Francis City Council and the district board. Bethel does not have authority over the fiscal agent agreement.
The council then considered a shared space user agreement governing the district’s use of the city-owned fire station.
Thunstrom said the agreement outlines responsibilities related to maintenance, insurance, indemnification and access. Because the city owns the building, the space cannot be divided or assigned separate access.
Faanes questioned the agreement’s 99-year term. Thunstrom said the city retains the ability to terminate the agreement if needed.
“If they were to move out, we would do the same steps and go through the process of ending this agreement, and Council would then be in a vote and the board would be in a vote,” Thunstrom said.
City Attorney Travis Lutz said the term is standard contract language when agreements cannot be indefinite and is intended to allow the arrangement to continue unless formally dissolved.
Faanes asked how assets would be handled if either city withdrew. Thunstrom said the Joint Powers Agreement addresses that issue and includes a five-year dissolution clause.
Faanes expressed concern about the scope of assets being transferred.
“In looking at the assets that we are essentially donating to a third party, to a contractor, that’s pretty scary,” Faanes said. “That’s a pretty big list. And I noticed that there wasn’t any estimated value on anything on that list.”
Faanes said she believed the assets represented at least $3 million in taxpayer-funded equipment.
Schmidt said transferring ownership to the district shifts liability away from the city and ensures equipment remains available to serve residents in both communities.
“The taxpayers are still going to bear the fruit of their purchases for supporting and facilitating and operating the fire department,” Schmidt said. “The equipment’s not going anywhere. It’s not leaving either city.”
Mayor Mark Vogel said the district is not a traditional third-party contractor but a joint entity governed by representatives from both cities.
Council Member Joe Muehlbauer said he raised similar concerns with staff and said language in the agreement addressed issues such as overnight use of the facility.
The council also approved an agreement transferring fire department equipment to the new district.
Thunstrom said the agreement covers nearly all equipment, with the exception of one truck purchased through a federal block grant.
Faanes again raised concerns about the lack of estimated values for major equipment.
“We know how much we paid for things, and I’m not saying every little flashlight, but the big items — the fire apparatus and the turnout gear — I think we could have put some sort of dollar figure on it,” Faanes said.
Schmidt said insurance requirements already include assessed values for major assets and said those valuations can be shared so the city retains documentation.
Thunstrom said both the city and the district will remain insured through the League of Minnesota Cities under the same policy structure.
Schmidt said all fire equipment depreciates over time, particularly turnout gear, which often expires before its anticipated service life.
The final item was an employment separation and transition agreement, along with the Joint Powers Agreement.
Thunstrom said the agreements transfer employees, capital improvement funds and public safety responsibilities to the new district, while preserving sick leave and vacation benefits.
Schmidt said district employees will receive district-specific email addresses, continue working with Metro Inet as the information technology vendor, and operate under a district-managed website.
Faanes asked whether employee vetting and facility access standards would change. Schmidt said access to city facilities is limited to command staff and that hiring standards remain unchanged.
Vetting includes criminal background checks, drug and alcohol screenings and psychological evaluations, Schmidt said.