Interlocal Agreements - Doing It Jointly

By Paul Sullivan, Legal Consultant and Byron Katsuyama, Public Policy Consultant,
Municipal Research & Services Center

Let's face it, money was tight before I-695 was approved; it certainly has not gotten any better since. Government officials at all levels, from the federal government to mosquito districts, are searching for new ways to make limited resources go a little further. One potential strategy already used in many jurisdictions is the use of interlocal agreements, allowing governments to cooperate with one another in the performance of tasks, thus achieving Economies of scale and reducing duplication of effort. The basic assumption is that larger size service jurisdictions make lower per unit costs possible. Economies are achieved either by pooling the resources of two or more jurisdictions to jointly provide services, or by contracting with a single large regional service provider.

Areas of Cooperation

Local governments in Washington engage in a broad array of cooperative endeavors with each other, the state, and other government entities. A review of some of Municipal Research and Services Center files shows, among many others, agreements for building inspections, joint use of school facilities, joint operation of recreation programs and animal control programs and shelters, fleet management, planning and Economic development, emergency dispatch, and marine patrol services. City, county, and state law enforcement officers can use joint firing range facilities. Cities will often look to fire districts for fire suppression and specialized services, such as fire code inspections, water flow testing, and fire investigation. Many agencies look to the state for joint purchasing of supplies. The list, while not limitless, can be as inventive as local government officials can be.

Potential Benefits

In addition to cost savings, interlocal service arrangements can also offer other potential benefits. Improved efficiency can result from specialization where one jurisdiction provides specialized services to one or more neighboring jurisdictions. Coordination in administration and operation may provide greater uniformity of service delivery among neighboring jurisdictions. Joint planning and community development services can provide especially good opportunities in this area. Interlocal service arrangements can also enhance the service capabilities of smaller local governments by allowing them to offer more specialized services to their residents than they could otherwise afford. Special police units, such as bomb squads or swat teams, are a good example.

Doing It Jointly? It Wasn't Always So

Historically, interlocal agreements were not allowed unless there was specific statutory authorization; even though both a county and a city could do something individually, they could not do the task together, without a state statute saying they could. That changed in 1967 with the passage of the Interlocal Cooperation Act, chapter 39.34 RCW. Now, virtually all government agencies may join together to perform tasks. The statute covers any agency, political subdivision, or unit of local government, including special purpose or local service districts, any state or federal agency, political subdivisions of other states, and any recognized Indian tribe. No longer is specific authorization required: if an agency has the power to do something, it may do it jointly with others.

There are also specific statutes authorizing cooperation between governments for specific purposes. For example, RCW 35.92.014 authorizes a city to cooperate with a municipality of a bordering state for the supply of water. RCW 70.95.080 authorizes a county to prepare a plan for a city for inclusion in the joint county-city plan of solid waste management. A county can join with other counties for flood control purposes. RCW 86.13.010. In addition, chapter 39.34 RCW authorizes joint efforts on non-specified projects, thus greatly enhancing the ability of counties, cities, and other jurisdictions to cooperate in joint ventures.

You Can't Do It With Others, If You Can't Do It Yourself

The fact that the Interlocal Cooperation Act allows the joint exercise of power does not itself confer any additional power upon the contracting parties. Thus, one of the first issues to be addressed before entering into an agreement is whether all the parties to the agreement could individually perform the task at hand. In most instances, they can: for example, both cities and counties can purchase equipment and supplies; school and park districts may each provide recreational programs. Not all governments, though, possess the same powers, and some governments, such as towns and special districts, may only perform those tasks for which they have been given specific statutory authorization. So, before proceeding too far with a joint effort, make sure each of the participants would be able to separately perform the task contemplated.

Some Key Issues

Of course, local officials must also determine whether a proposed interlocal service arrangement makes sense from a policy perspective. Officials will need to consider several key issues:

• Can the offering government provide services at the quantity and quality required, and at a lower cost than using in-house staff or another alternative delivery approach?
• Will the agreement result in cost-effective service delivery? It will be necessary to thoroughly evaluate each proposal to determine cost-effectiveness.
• How will contract costs be calculated? The methodology for determining costs is of key importance and should be closely reviewed for accuracy, completeness, and fairness.
• Will the agreement result in any additional administrative costs, such as for record keeping, staff to monitor contract performance, or other overhead costs? If so, these costs should be included in the feasibility analysis.
• Initial participation may often result in short-term cost increases, but may eventually lead to long-term cost savings. Estimates of cost-effectiveness should take into account the potential for savings over the long-term.

What Should The Agreement Look Like?

When contracting with another governmental entity to perform for your jurisdiction a service or activity that each may perform, such as the purchase of supplies and equipment, the interlocal agreement should address "the powers, rights, objectives, and responsibilities of the contracting parties." RCW 39.34.080. However, no particular form of agreement is required.

Where the interlocal agreement provides for joint or cooperative action of the parties, RCW 39.04.030 requires that the agreement address the following elements:

• Duration;
• Organization or composition and the nature of its separate legal or administrative entity, if one is created (and, if a separate entity is created, the powers delegated by the parties to that entity);
• Purpose or purposes;
• The manner by which the undertaking will be financed, and how its budget will be established and maintained;
• The method by which the agreement may be terminated and its property disposed of; and
• Any other necessary and proper matters.

If a separate entity is not formed, the agreement must also specify:

• Provision for an administrative or joint board responsible for administering the undertaking and, for a joint board, how the participating agencies will be represented on the board; and
• The manner by which real and personal property will be acquired, held and disposed of.

How Is An Interlocal Agreement Adopted?

For cities or towns, the agreement must be approved by the council. Approval by a county requires action by its board of commissioners or council, as the case may be. For other participating agencies, the agreement should be approved by their governing body. Approval can be effected through passage of an ordinance, adoption of a resolution, or by any other action authorized by law. Once the agreement has been approved, it must be filed with the county auditor before it can go into effect. (It is no longer required that the agreement be filed with the city clerk or secretary of state.)

Some Special Considerations

One common area of interlocal cooperation is in purchasing. If a city or county seeks to "buy off" another entity's contract (commonly called "piggybacking"), it should enter into an interlocal agreement with that government before bids are sought. RCW 39.34.030(5) provides that no agreement "shall relieve any public agency of any obligation or responsibility imposed on it by law." While the obligation or responsibility may be performed through operation of the agreement itself, it obviously can no longer be performed once the purchase is complete. For example, if a city has special bidding requirements for the purchase of equipment, it cannot buy off the county's contract, unless the county satisfied those requirements in its bidding process. The only way one government can assure itself that it has satisfied its own responsibilities, unless the "purchasing" government has the same bid requirements, is to reference those responsibilities in the interlocal agreement and make sure they are followed in the operation of the agreement.

Although not limited to the operation of interlocal agreements, a government should make sure that, by having a responsibility performed by another, it is not violating a civil service rule or labor agreement. For example, if a city's public works collective bargaining agreement requires certain tasks be performed by union employees, there could be a grievance or unfair practice charge if the city were to contract out some street maintenance duties to the county.

Poorly drafted agreements that do not adequately define expected service levels and contractor responsibilities are common problem areas that can cause friction between participating jurisdictions. Are there sufficient back-up service options available in the event of service disruption? Clearly drawn contract specifications regarding service levels and quality will go a long way toward avoiding these problems.

Finally, personnel dislocations may sometimes be involved and will require sensitivity to employee concerns and planning for how such dislocations will be handled.

The Future

Governments at all levels should consider whether the public would be better-and possibly more cheaply-served through joint efforts. From a political standpoint, the public may be appreciative of governments working together rather than bickering with or suing one another. As far as interlocal cooperation goes, the future is now.

Copies of interlocal agreements are available at the Municipal Research Web site, www/mrsc.org/contracts, or by contacting MRSC at (206) 625-1300.