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HomeMy WebLinkAbout90-90 - Independent Cities Risk Management Authority- :% RESOLUTION NO. 90-90 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, AUTHORIZING AND APPROVING THE CITY'S ADMITTANCE TO MEMBERSHIP WITH CERTAIN OTHER CITIES IN THE INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY, AUTHORIZING EXECUTION AND DELIVERY OF AN AMENDED LIABILITY RISK COVERAGE AGREEMENT AND TRUST AGREEMENT, APPOINTING REPRE- SENTATIVES 1O THE ICRMA GOVERNING BOARD AND TO THE LIABILITY RISK MANAGEMENT OaMMITTEE, DELEGAT- ING CERTAIN FUNCTIONS UNDER SUCH AGREEMENTS TO THE CITY'S REPRESENTATIVES ON THE ICRdA GOVERNING BOARD, AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH. WHEREAS, the City of Costa Mesa, California (the "City"), is a munici- pality duly organized and existing under the Constitution and laws of the State of California (the "State"); and WHEREAS, the City is authorized by Part 6 of Division 3.6 of Title 1, Section 990 et seq. of the California Government Code (the "Act") to insure itself against tort or inverse condemnation liability, to insure its employees against injury resulting from an act or emission in the scope of his employment and to insure against the costs of defending such claims; and WHEREAS, pursuant to Section 990.4 of the Act, the City is authorized to provide insurance by self-insurance which may be funded by appropria- tions and to establish or maintain reserves for such purposes; and , pursuant to Section 990.6 of the Act, the cost to the City of such self-insurance is a proper charge against the City and therefore the City Council is authorized to make premium payments for such coverage in an amount this Council determines to be necessary to provide such coverage; and WHEREAS, pursuant to Section 990.8 of the Act, the City is empowered to obtain insurance coverage through a joint powers agreement with other local public entities, and such pooling of self-insured claims and the risk sharing of losses is not considered insurance subject to regulation under the California Insurance Code; and WHEREAS, the Independent Cities Risk Management Authority (the "Pro- vider") is a joint exercise of powers agency which has previously estab- lished a program to assist the cities of Alhambra, Arcadia, Azusa, Baldwin Park, Bell, Colton, Culver City, Downey, E1 Monte, Glendora, Hawthorne, Hermosa Beach, Huntington Beach, Indio, Inglewood, Lynwood, Manhattan Beach, Monrovia, Monterey Park, Redondo Beach, San Fernando, South Gate, Vernon, West Covina, and Whittier, California (each individually a "Pro- videe" and collectively the "Providees"), which cities are members of the Provider, to obtain self-insurance for liability risks (the "Coverage") through and on the terms set forth in the Liability Risk Coverage Agreement dated as of January 1, 1987, as amended by the First Amendment thereto dated July 1, 1987, by and among the Provider and the Providees; and WHEREAS, the City proposes to become a member of the Provider and to execute the above-mentioned Liability Risk Coverage Agreement, as amended by the First Amendment thereto and as further amended by the Second Amend- ment to the Liability Risk Coverage Agreement dated as of July 1, 1990 (as amended, the "Agreement"), in the form presented to this Council, thereby becoming an Additional Providee under the Agreement and providing Coverage for the City for the benefit of the City's residents and taxpayers and for the health and safety of the public; and WHEREAS, as a prerequisite to becoming a member of the Provider, it is necessary that the City approve by resolution, the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes dated August 13, ;6q 1986, as amended by the Independent Cities Risk Management Authority Amend- ment to Joint Exercise of Powers Agreement for Insurance and Risk Manage- ment Purposes dated May 13, 1987, and as further amended by the Independent Cities Risk Management Authority Amendment to Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes dated April 18, 1990 (as amended, the "Joint Powers Agreement"), and the By -Laws for the Risk Management Committees that the City intends to join; and WHEREAS, the City has conclusively determined following investigation that either public entity liability insurance coverage is not available to the City from commercial insurers or from any other source or that such insurance is not available at a reasonable cost; and WHEREAS, the City has further determined, based upon the advice of independent professional insurance consultants familiar with the cyclical nature of the reasonable availability of coverage in the commercial insur- ance market, that it is uncertain when such liability insurance is expected to became available at a reasonable cost, thereby in the interim exposing the City to self-insuring from available revenues on a year -by -year basis with the attendant risks of fiscal instability and ruinous burdens on its citizens in the event of large liability claims recoveries; and WHEREAS, this Council hereby further determines that the periodic unwillingness of the commercial insurance market to provide primary or excess public entity liability insurance to local governments at reasonable rates mandates that the City seek not only an immediate solution but also a long-term permanent solution to this problem which will in future years free them from exposure to the vagaries of commercial insurance cycles; and WHEREAS, the Providees, in consultation with independent professional insurance consultants, have formulated a joint risk -sharing insurance pro- gram administered by the Provider to meet the public entity liability insurance coverage needs of the Providees which provides the following advantages, among others, to the Providees: (a) immediate funding of a claims payment fund (the "Claims Payment ]]] j Fund") for the dual purpose of providing immediate protection from large J claims loss and facilitating eventual access to the commercial reinsurance market, (b) mutual agreement by the Providees to pay annual premium amounts on both a prospective and retrospective basis calculated actuarially to spread and moderate the cost of claims loss to each Provides, (c) relief from the burden of paying premiums to commercial insurers at levels reflecting the insurers' high costs of underwriting, administra- tion, and brokerage fees since the Provider's costs will be limited to reasonable administrative costs, (d) relief from the commercial insurers' rights under excess liabil- ity policies to force claim settlements which are payable primarily in each case from the Proaidee's self-insurance funds, (e) access to the commercial reinsurance market in future years when commercial reinsurance is available at rates deemed favorable by the Pro- videes, and (f) actuarially -determined premium payments calculated to provide amounts in each year necessary to maintain the Claims Payment Fund at an r actuarially sound level and therefore sufficient to reserve against the incurred losses of the Providees; and J WHEREAS, the Participation Premium (as defined in the Agreement) to be paid in each year by the City provided for and upon the conditions set forth in the Agreement is payable only upon the condition of the receipt of the consideration represented by the insurance protection to be provided in such year under the Agreement, but in the event that such protection is so provided in any year such Participation Premium will be a binding obli- gation of the City payable from legally available moneys; and A, WHEREAS, this Council hereby determines that obtaining insurance protection and services provided for under the Agreement is essential in the preserving and fostering the health, safety, and property rights of the citizens of the City and the lack of availability of reasonable commer- cial public entity liability insurance to local governments generally in the State of California and to the City in particular constitutes a public emergency; and WHEREAS, it is necessary and in the interest of the citizens of the City that there be established and maintained through pro rata contribu- tions of each Providee, including the City as an Additional providee, a debt service reserve fund, in order to establish adequate reserves for maintenance of the Claims Payment Fund previously established through the sale of Certificates of Participation (the "Certificates") by the Provider; and WHEREAS, this Council hereby determines that it is reasonably expected that the cost to the City of participating in funding and maintaining such reserve fund will be more than offset by the anticipated benefits and economies to be realized by the City by pooling of risks and losses pursu- ant to the Agreement; and WHEREAS, by execution of the documents authorized hereby and by participation in the Coverage program administered by the Provider, the City will not be obligated directly with respect to any debt service obli- gation, but certain participation fees in such program will be applied by the Provider to payments due with respect to the Certificates; and WHEREAS, Article 16, Section 6 of the Constitution of the State regarding lending of public credit or funds, provides in relevant part that such Section "shall not prohibit any county, city and county, city, town- ship, or other political corporation or subdivision of the State from joining with other such agencies in providing for payment of workers' campensation, unemployment compensation, tort liability, or public liabil- ity losses incurred by such agencies, by entry into an insurance pooling arrangement under a joint exercise of powers agreement, or by membership in such publicly owned nonprofit corporation or other public agency as may be authorized by the Legislature"; and WHEREAS, Premium (as defined in the Agreement) shall be paid by the City in consideration of the Coverage offered by the Agreement and the sharing of the risk of liability for claims associated with the pooled self-insurance program during each Coverage Period (as defined in the Agreement); this Council hereby agrees and determines that such Premium payments represent the fair market value of the Coverage; in making such determination, consideration has been given to the initial costs of estab- lishing the pooled insurance program by the original Providees, the unavailability of affordable commercial liability insurance to the City and to the Providees, the anticipated costs of commercial liability insurance in the future, obligations of the Providees under the Agreement (including existing Providees' agreement to share the risk of costs imposed by liabil- ity claims to the City), the obligation of the Provider to provide insur- ance services, the benefits resulting from capitalization of a pooled insurance program (including the prospect of access to the commercial liability reinsurance market) and the other benefits therefrom which will accrue to the City and the health and safety of the general public; and WHEREAS, the City receives benefit from sharing the risk costs imposed by liability claims under the terms of the Agreement during each Coverage Period; the assessment of Risk Premium and Supplemental Risk Premium is the means by which such risk -sharing is implemented; and the procedure estab- lished in the Agreement for the calculation, adjustment, and assessment of Risk Premium and Supplemental Risk Premium is hereby determined to be fair, just, and reasonable as a means of such risk -sharing; and WHEREAS, pursuant to the Joint Powers Agreement and the Risk Manage- ment Committee By -Laws, the City shall by resolution, appoint a member of the City Council of the City to the Governing Board of the Provider (the "Governing Board") and an alternate to act in the absence of such Council A Member and shall also appoint, for each Risk Management Committee in which the City participates, a representative and an alternate to act in the absence of such representative; and WHEREAS, all acts, conditions, and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the consummation of the transactions authorized hereby do exist, have happened, and have been performed in regu- lar and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such transactions for the purpose in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COSTA MESA AS FOLLOWS: SECTION 1. Declaration of Council. This Council hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the City, and that the statements, find- ings, and determinations of the City set forth in the preambles above and of the documents approved herein are true and correct. SECTION 2. Joint Exercise of Powers Agreement. The City does hereby approve and agree to abide by all of the terms and conditions of the Joint Powers Agreement and of the By -Laws of the separate Risk Management Commit- tees in which this City participates. The City does hereby join with the cities of Alhambra, Arcadia, Azusa, Baldwin Park, Bell, Colton, Culver City, Downey, E1 Monte, Gardena, Glen- dora, Hawthorne, Hermosa Beach, Huntington Park, Indio, Inglewood, Lynwood, Manhattan Beach, Monrovia, Monterey Park, Redondo Beach, San Fernando, South Gate, Vernon, West Covina, and Whittier, California, as well as the cities of E1 Segunda and Upland, which have applied to become members of the Provider and the Prwider's Liability Risk Management Committee. The City does hereby join with the other members of the Provider in accepting the insurance quotations of the Provider. SECTION 3. Liability Risk Coverage Agreement. The form of Agreement presented to this meeting and on file with the Clerk of the City Council is hereby approved. The persons indicated in Section 7 hereof are hereby authorized and directed, for and in the name and on behalf of the City, to execute, acknowledge, and deliver to the Provider, said Agreement in substantially said form, with such changes therein as such persons may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. Trust Agreement. The form of Trust Agreement (the "Trust Agreement") dated as of January 1, 1987, as amended by the First Amendment to Trust Agreement dated as of July 1, 1987, and as further amended by the Second Amendment to Trust Agreement dated as of July 1, 1990, among the Provider, the Prwidees, the Additional Proaidees, and the Seattle -First National Bank (the "Trustee"), presented to this meeting and on file with the Clerk of the City Council, is hereby approved. The persons indicated in Section 7 hereof are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Provider and the Trustee said Trust Agreement in substantially said form, with such changes therein as such persons may require or approve, such approval to be conclu- sively evidenced by the execution and delivery thereof. SECTION 5. Attestation and Seal. The Clerk of the City Council is hereby authorized and directed to attest the signature of the authorized signatory, and to affix and attest the seal of the City as may be required or appropriate in connection with the execution and delivery of the Agree- ment and the Trust Agreement. SECTION 6. City Representatives. Pursuant to the Joint Powers Agree- ment and the By -Laws of the Provider's Liability Risk Management Committee, the following individuals are appointed as the City's representatives, are I authorized to exercise all powers available to then in their appointed capacities, and are directed to keep this Council informed on a timely basis of their activities as City representatives to the Governing Board and Liability Risk Management Committee: (a) Mary Hornbuckle , a member of the City Council of the City, is hereby appointed as the City's representative to the Governing Board; (b) Edward Raya , the Risk Manager of the City, is hereby appointed as the City's alternate representative to the Governing Board to serve as the City's representative in the absence of the primary member noted in Section 6(a) above; (c) Mary Hornbuckle Mayor of the City, is hereby appointed as the City's representative to the Provider's Liability Risk Management Committee; (d) Edward Raya the Risk Manager of the City, is hereby appointed as the City's alternate representative to the Provider's Liabil- ity Risk Management Committee, to serve as the City's representative in the absence of the primary member noted in Section 6(c) above. SECTION 7. Further Actions. Members of the City Council, the Mayor, Mary Hornbuckle and Edward Raya , the City's delegates to the Governing Board, and any other officer or official of the City authorized by the Mayor, are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate, carry out, give effect to, and comply with the terms and intent of this resolution, the Agreement, the Trust Agreement, and the Joint Powers Agree- ment. Such actions heretofore taken by such officers are hereby ratified, confirmed, and approved. SECTION 8. Effective Date. This resolution shall take effect immedi- ately upon its passage. PASSED AND ADOPTED this 3rd day of December, 1990. ATTEST: City Clerk ott e City of sta Mesa STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF COSTA MESA ) Mayor otUthe City of Costa Mesa I, EILEEN P. PHINNEY, City Clerk and ex -officio Clerk of the City Council of the City of Costa Mesa, hereby certify that the above and fore- going Resolution No. 90-90 was duly and regularly passed and adopted by the said City Council at a regular meeting thereof, held on the 3rd day of December, 1990, by the following roll call vote: AYES: COUNCIL MEMBERS: Hornbuckle, Genis, Buffa, Glasgow, Humphrey NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of the City of Costa Mesa this 4th day of December, 1990. �Ccity Clerk io Cleof of the City Council of the City of to Mesa . _g't