State Auditor report brings Richland fire dispute to light

RICHLAND — An annual examination of the city of Richland from the Iowa State Auditor’s Office revealed an array of confusing or missing paperwork governing the municipal fire department between July 1, 2020 and June 30, 2021.

The town in Keokuk County has a fire protection service which is chartered by the city, but is run as a 501(c)(3) nonprofit entity, a status that makes it legally separate from the municipal government, according to the report.

That setup is unusual in itself, with the document saying it was “unclear” how the department attained such a status without approval from the city council. While 501(c)(3) organizations are common in fire department fundraiser management, such groups seldom operate fire protection services themselves.

The annual report advised against such an approach, saying it was legally murky.

“Organizations established as 501(c)(3) nonprofit corporations are typically created to further charitable pursuits, not to provide a service or act as a vendor in providing a service such as fire protection,” the document reads. “It is unclear whether a nonprofit organization can be established for the noted purpose or whether the nonprofit organization is afforded the same immunities in providing the service as a government.”

The audit found a tangled web of local government responsibilities surrounding the fire department. The city of Richland owns the fire station building and pays for its utilities, but does not contribute to a fire protection fund. It does pay for workers’ compensation and liability insurance, according to the report.

The surrounding townships have a property tax levy to pay for fire protection. That revenue is funneled through Richland Township, which owns titles and insurance for all but two fire department vehicles. Those two vehicles are loaned from the state DNR, through the city.

Few of these responsibilities have a paper trail. Auditing staff said there was no intergovernmental agreement formally arranging fire protection between the city, its department, and the protected townships. Such a document is called a 28E agreement, named after its defining chapter of state code.

“It is unclear whether the Richland Township provides any or all of these tax dollars directly to the Nonprofit Fire Department or simply uses them to purchase items in support of the Nonprofit Fire Department,” the auditor’s report said.

With no such documentation, Richland’s fire protection service is effectively governed by an informal understanding that townships pay into a fire protection fund managed by Richland Township, the city pays for workers’ compensation and some other costs, and the donor-funded nonprofit fire department handles the bulk of its own expenses, rarely sending a bill to elected officials.

Disagreement over physical exams caused confusion, sides blame one another

Both department and city officials said they had struggled to see eye to eye for years. The resulting lack of communication was likely a major factor in issues now flagged by the audit report.

City Council Member and Mayor Pro Tem Alisa Tolle said the city was aware of trouble, but that the audit report gave newfound clarity to the matter.

“The findings aren’t a complete shock, they’re kind of, basically, solidifying the issues we’ve been coming across and trying to sort out,” Tolle said. “People just didn’t want to hear what was being said.”

Much of the confusion stems from an informal meeting between township trustees, firefighters and the mayor, circa 2015, although none involved could provide an exact date.

In that meeting, Fire Chief Mitch Ehrenfelt claims that Mayor Thomas Hoekstra directed the fire department to distance itself from the city. Two Richland Township trustees who were present for it said they walked away with the same understanding.

“After that, the (township) trustees told me to see how other departments did it, and this is how it was done,” Ehrenfelt said. “There’s no cookie-cutter setup. All of them are set up a little different, but in the same general manner of doing a business like this, trying to run it like a business.”

Hoekstra, however, said his words were taken out of context.

He claimed the remark was an offhand comment telling firefighters the city couldn’t pay for their workers’ compensation if volunteers refused to submit physical exam information confirming their fitness to serve.

“I flippantly said to them, ‘You guys need to go on your own, if you’re not going to be compliant with our policy, we can’t have you,’” Hoekstra said. “If the insurance compliance isn’t there … our insurance provider could say, ‘We’re not paying the claim.’ That’s where I made that comment. I shouldn’t have said it that way, but I said it.”

Relations between the city and department went downhill from there, as firefighters remained unwilling to cooperate with the city’s requests for physical exams, and instead transitioned from a municipal department into a 501(c)(3) organization.

The city continues to provide workers’ compensation, but says it can’t keep that up without the tests, which its provider, Iowa Municipal Workers’ Compensation Association, (IMWCA) requires for firefighters before they begin duty, and at least once every five years thereafter.

“You are reminded that any volunteer fire department candidate must submit a physical BEFORE they begin any training or are ‘appointed’ to the department,” said a 2018 email from then-City Clerk Somer Greiner, sent to Ehrenfelt. “We are requesting a roster of the department and assurances from you that compliance with the IMWCA is being honored.”

On June 19, 2018, the spat led city council members to vote in favor of suspending Ehrenfelt as fire chief for, “The dereliction of duty in enforcing the city’s compliance to the code of Iowa and its mandated liability coverage for the members of the Richland Fire Department,” according to minutes from the meeting. The vote was 4-0, with one member abstaining.

That decision was temporarily rescinded on July 2 the same year, according to other meeting minutes. On Aug. 6, 2018, council members voted to keep Ehrenfelt as chief “until the fire department review and analysis is completed by Callahan Consultants,” which the city hired to help resolve the disagreement. The same consultant would eventually mediate another fire department dispute in Brighton in 2022 and ‘23.

Callahan’s review did not lead to major policy changes or end the animosity in Richland, but Ehrenfelt did remain in his position after its completion.

While the department brought in a mobile physical exam clinic in 2021 and provided the relevant info and a roster to the city shortly after, City Clerk Susan Carroll said she had not received an updated member list or exam results since then.

Ehrenfelt said the volunteers saw physicals as an unnecessary ask and a strain on the city budget. He said the city should seek an alternative provider without the requirement.

“Everybody in the department agrees, physicals are good, they’re good for everybody, but … nobody should tell you, ‘You have to do something to be a volunteer,’” he said. “We spend a lot of time here anyway, and when we’re jumping though more hoops, it’s hard to keep guys here anyway. It’s hard to keep a good group, and the more stuff you make them do, the more hoops you make them jump through, the more control they want over them, guys don’t like that.”

In interviews, each party accused the other of refusing to come to the table, despite both saying they were eager to negotiate themselves.

“It’s sad that it’s at this point, but it didn’t happen overnight,” Alisa Tolle said. “I hope people can not feel the emotional pull on it, and just look at the realistic, the big picture … We all need to get along and work together, which is difficult at times.”

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Proposed solutions lack middle ground

While both the fire department and city leaders have ways they’d like to see state audit complaints addressed, those plans are quite different.

The state auditor’s office suggested that the city consult an attorney to determine the legality of a 501(c)(3) fire department. If no issues arise, auditors recommended getting a fire protection agreement in writing as soon as possible.

“If the arrangement is proper, the City and each Township should enter into a formal, written agreement with the Nonprofit Fire Department to clearly identify the roles and responsibilities of each party,” the report said. “The role of the Rural Fire Board should also be clarified, including how this Board was established and its legal purpose.”

Ehrenfelt said he was in talks with townships to establish a fire board with representation for each local government paying into a fire protection fund, potentially with higher-paying parties holding more seats.

He said the board would make expenditure decisions using the taxpayer dollars levied for fire protection, and would welcome membership for the city if it started paying into said fire protection fund. The department’s nonprofit would still control its own donor-filled accounts.

“Everyone that contributes tax dollars into it would have a say in how it’s run, how our budget’s run,” Ehrenfelt said. “We’d go to them with our annual budget, they’d approve it because that’s their tax dollars that we’re spending … everybody that pays in has representation, not just one group that takes somebody else’s money.”

A “Rural Fire Board” already exists and meets annually to determine the nonprofit fire department’s budget, according to the audit report. Its existence is entirely informal, however.

“It is not clear how the Rural Fire Board was established as there is no documentation supporting the Board as a legal entity,” the report said. “According to city personnel, there are 28E agreements between the four townships (Richland, Clay, Black Hawk and Dutch) and the Rural Fire Board. However, these agreements could not be located and, accordingly, we were unable to verify their existence.”

Ehrenfelt added that he hoped to keep operating the department as a 501(c)(3) nonprofit, saying it was the most efficient option.

“It’s easier to take that money and run it as a business,” he said. “Since we’ve started this, it moved us forward. We’re looking for the best insurance, and getting the best deals on what we’re paying for. But we are more well-insured on our equipment and our people than we ever were in the past.”

The city, however, is skeptical of that approach. A similar proposal was shot down in Brighton during its own fire dispute, with critics arguing that it would put tax dollars in the hands of officials not elected by those taxpayers. Those opinions were held by many Brighton City Council Members, despite then-Washington County Attorney John Gish’s opinion that such a setup would be legal.

Tolle said the city would consider enacting a fire protection levy and signing onto a 28E agreement with townships, but was hesitant about allowing a fire board with decision-making power beyond the city council’s.

She said returning the fire department to a city-governed operation — as required by Richland’s municipal code — was also a priority.

“My rough idea is that the city fire department stays a city fire department,” she said. “It doesn’t go off, we don’t sign a 28E agreement to provide our own fire service from our own fire department … if (townships) want to solicit fire protection from us, they can do that. If they don’t want us, they can go to Packwood.”

The Mayor Pro Tem said physicals were likely to remain a requirement as well.

“The thing that sticks out in my head is, it’s a volunteer fire department,” Tolle said. “If you do not like the fact that you have to take a physical, then you don’t have to volunteer … we’re not trying to run the fire department, we’re just trying to be compliant.”

Comments: Kalen.McCain@southeastiowaunion.com