"With an independent negotiator, we extract ourselves from the process and look at the numbers," Councilman Steve Mensinger said.

The firefighter associations already had an offer on the table at that point: to pay into their pension accounts for three months while the city studied a proposal to outsource their jobs to the Orange County Fire Authority, a regional agency that serves Irvine, Santa Ana and 21 other cities.

Pension costs, however, are a political lightning rod. In 2010 the firefighters agreed to pay 5% of their earnings into their retirement fund — roughly $500,000 in total savings to the city annually — in exchange for a two-year extension of their contract through 2014.

But the payments were set to expire in November 2011. Mayor Pro Tem Jim Righeimer railed against that agreement, which he called a raw deal for the city.

The council balked at the offer to extend payments for three months, beginning in October, and insisted the association agree to pay through the end of the contract.

With the stalemate, the payments expired, and the firefighters reverted to paying 1% of their earnings into their pensions. Labor supporters criticized the council for its obstinacy and the forgone $500,000.

"The council majority refused an offer of half a million dollars in order to allow politicians ... to accuse us of refusing to work for a solution," Costa Mesa Firefighters Assn. President Tim Vasin wrote in a March commentary for the Daily Pilot.

Meanwhile, the fire associations endorsed one of the OCFA proposals. While it could save the city $2 million annually, it could also mean better compensation for the firefighters, who would likely be hired by OCFA. Council members, though, believed they could wring more savings while maintaining control of the department.

Enter Arnold. He was gathering data behind the scenes and analyzing the OCFA proposal: Could the city make some of the changes itself?

As this was happening, the city's civilian employees agreed to a second pension tier in February 2010. New planners, clerks and other general workers would be hired under a less-generous retirement formula.

An earlier version of this story said that Costa Mesa’s civilian employees agreed to a second pension tier in 2012. They actually agreed to the pension tier in 2010, but the plan did not take effect until 2012.

About a month later, the fire associations came to the council with an offer to also create a second tier, Mensinger said, in exchange for job security through 2017 and an extension of the contract beyond the 2014 term.

Since the contract was not expiring for more than two years, the associations weren't obligated to make a deal. But they recognized the outsourcing risk and thought they could win some concessions while the council had less leverage.

The council rejected the full contract extension, but "we saw the job security as a reasonable request," Mensinger said. That was when they laid out a request to end minimum staffing.


Restructuring plan

By April, Arnold was honing his restructuring plan, which council members said could save millions. Citing that prospect, the council voted to keep the Fire Department in-house instead of contracting with OCFA.

"I think we need to talk to our organization and resolve the issues that we have and solve the problem," Councilwoman Wendy Leece said at the time.