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HomeMy WebLinkAbout88-067RESOLUTION NO. 88- ~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING AND AUTHORIZING EXECUTION AND DELIVERY OF A JOINT POWERS AGREEMENT CREATING THE BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY, AUTHORIZING THE EXECUTION AND DELIVERY OF A LIABILITY RISK COVERAGE AGREEMENT AND THE FILING OF A VALIDATION PROCEEDING AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Santa Aha (the "City') is a municipality duly organized and existing under the Constitution and laws of the state of california (the "State"); WHEREAS, the City is authorized by Part 6 of Division 3.6 of Title 1, Sections 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 omission in the scope of his employment and to insure against the costs of defending such claims; WHEREAS, pursuant to Section 990.4 of the Act the City is authorized to provide insurance by self-insurance which may be funded by appropriations and to establish or maintain reserves for such purposes; WHEREAS, 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 of the City is authorized to make premium payments for such coverage in an amount such Council determines to be necessary to provide such coverage; 411, 412 Resolution No. 88- ~ Page 2 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 created pursuant to chapter 5 of Division 7 of Title 1, Sections 6500 et seq. of the California Government Code (the "Joint Powers Law"), and such pooling of self-insured claims and the risk sharing of losses is not considered insurance subject to regulation u~nder the California Insurance Code; WHEREAS, the City and certain other cities organized under the laws of California having a population in excess of 100,080 (which are referred to below as Participants) propose to form a pooled liability program pursuant to the Act; WHEREAS, in order to implement insurance risk sharing such pooled liability insurance risk sharing program the City and the Participants propose to create a joint powers authority pursuant to the Joint Powers Law, to be known as the "Big Independent Cities Excess Pool Joint Powers Authority' (the 'Authority") by approving and executing a joint powers agreement creating the Authority (the "Joint Powers Agreement"); WHEREAS, the Joint Powers Agreement will authorize the Authority to exercise necessary powers to implement the purposes of the Authority through the Authority's Board of Directors; Resolution No. 88-67 Page 3 WHEREAS, it is anticipated that the Authority will assist the City and the other Participants to obtain self-insurance for liability risks (the "Coverage") through and on the terms set forth in the Liability Risk Coverage Agreement presented to this meeting and on file with the Clerk of the city Council (the "Coverage Agreement") by and among the Authority and other California cities, which initially may include the Cities of Huntington Beach, Oxnard, Pomona, San Bernardino and Santa Aha, california (each of the City and such Cities set forth in this paragraph being referred to herein individually as a "Participant" and collectively as the "Participants"); WHEREAS, this Council proposes to authorize the execution of the Coverage Agreement for the purpose of providing Coverage for the City for the benefit of the City's residents and taxpayers and for the health and safety of the public; WHEREAS, the Participants propose to cause the Authority to authorize the issuance, sale and delivery pursuant to a Trust Indenture (the "Indenture") of insurance program revenue bonds (the "Bonds') payable from revenues of the Authority, including Basic Premium (as defined in the Coverage Agreement) to be paid by the City and the other Participants under the Coverage Agreement, in order to fund reserves initially in an amount 413! . 414 Resolution No. 88-~ Page 4 determined sufficient to pay Settlements (as defined in the Coverage Agreement) when due and to provide the Coverage described in the terms set forth in the Coverage Agreement and in the Memorandum of Liability Coverage attached thereto (the "Memorandum"); 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 insurance market, that it is uncertain whether such liability insurance will be available at a reasonable cost on a consistent basis, thereby exposing the City to self-insuring from available revenues on a year by year basis with the attendant risks of fiscal instability and burdens on its citizens in the event of large liability claims recoveries; 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 or, in certain cases, at any rate, 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; Resolution NO. 88- ~ Page 5 WHEREAS, the City, the other Participants, professional insurance along with a steering committee of in consultation with independent consultants, have formulated a joint risk-sharing insurance program to be administered by the Authority to meet the public entity liability insurance coverage needs of the Participants which will provide the following advantages, among others, to the Participants: (a) eventual funding of a claims payment fund (the "Claims Payment Fund") through an initial deposit from the proceeds of the sale of the Bonds for the dual purpose of providing immediate protection from large claims loss and facilitating eventual access to the commercial reinsurance market, (b) mutual agreement by the Participants to pay annual premium amounts on both a prospective and a retrospective basis calculated actuarially to spread and moderate the cost of claims loss to each Participant, (c) the option to obtain relief from the burden of paying premiums to commercial insurers at levels reflecting the insurers' high costs of underwriting, administration and brokerage fees since the Authority's costs will be limited to reasonable administrative costs, 415 416 Resolution No. 88- ~ Page 6 (d) the option to obtain relief from the commercial insurers' rights under excess liability policies to force claim settlements which are payable primarily in each case from the Participant'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 Participants, and (f) actuarially-determined premium payments calculated to provide amounts in each year necessary to maintain the claims Payment Fund at an actuarially sound level and therefore sufficient to reserve against the incurred losses of the Participants; WHEREAS, this Council hereby further determines that the Participation Premium (as defined in the Coverage Agreement) to be paid in each year by each Participant, including the City, as provided for and upon the conditions set forth in the Coverage Agreement will be payable only upon the condition of the receipt of the consideration represented by the insurance protection to be provided in such year under the Coverage Agreement, but in the event that such protection is so provided in any year such Participation Premium will be a binding obligation of the City payable from legally available moneys; Resolution NO. 88- ~ Page 7 WHEREAS, this Council hereby further determines that the obtaining of the insurance protection and services provided for under the Coverage Agreement is essential in the preservation and fostering of the health, safety and property rights of the citizens of the City and from time to time the lack of availability of reasonable commercial public entity liability insurance to local governments generally in the State of California and to the City in particular constitutes a public emergency; WHEREAS, it is necessary and in the interest of the citizens of the City to establish, through the execution of the Joint Powers Agreement and the Coverage Agreement and sale of the Bonds, and maintain through pro rata contributions of each Participant, including the City, a debt service reserve fund therefore, in order to establish adequate reserves to permit the Bonds to be marketed at the lowest possible interest rates; WHEREAS, this Council hereby determines that it is reasonably expected that the cost of funding and maintaining such reserve fund will be more than offset by the anticipated benefits and economies to be realized by the pooling of risks and losses pursuant to the Coverage Agreement; 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 Resolution No. 88-~ Page 8 prohibit any county, city and county, city, township, or other political corporation or subdivision of the State from joining with other such agencies in providing for the payment of workers' compensation, unemployment compensation, tort liability, or public liability 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"; WHEREAS, Premium consideration of the Agreement and by the shall be paid by the City in Coverage offered by the Coverage Memorandum 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 Coverage Agreement); this Council hereby agrees and determines that such Premium payments represent the fair market value of the Co.verage; in making such determination, consideration has been given to the initial costs of establishing the pooled insurance program, the unavailability of affordable commercial liability insurance to to time, the insurance in Participants other Participants' the City and to other Participants from time anticipated costs of commercial liability the future, the obligations of the under the Coverage Agreement (including the agreement to share the risk of costs Resolution No. 88-~ Page 9 imposed by liability claims to the City), the obligation of the Authority to provide insurance 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; WHEREAS, the City receives benefit from the sharing of risk of costs imposed by liability claims under the terms of the Coverage Agreement during each Coverage Period; the assessment of Pure Premium is the means by which such risk-sharing is implemented; and the procedure established in the Coverage Ageement for the calculation, adjustment and assessment of Pure Premium is hereby determined to be fair, just and reasonable as a means of such risk-sharing; WHEREAS, Section 52511 of the California Government code provides that "[a] local agency may bring an action to determine the validity of its bonds, warrants, contracts, obligations or evidences of indebtedness pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code City proposes to bring such an other Participants to validate of Civil Procedure" and action together with the the Participants' the obligations under the Coverage Agreement, and proposes to authorize legal counsel to conduct such proceedings; 419 Resolution No. 88-~ Page 10 WHEREAS, the City has previously adopted a resolution approving the execution and delivery Of a joint powers agreement meeting the Authority, authorizing the execution and delivery of a liability risk coverage agreement and filing a validation proceeding and certain other conditions in connection therewith, on the basis that the Authority's pooled liability insurance program initially would consist of at least seven participating cities; WHEREAS, it is now expected that the Authority's pooled liability insurance program will initially consist of five participating cities and, accordingly, reapproval by the City of agreements and actions relating to the program is required; WHEREAS, it is expected that the Agreement will be effective, and the Authority's risk sharing pooled liability insurance program implemented thereby will commence, as of October 1, 1988; WHEREAS, it is expected that the Bonds will be subsequently issued on or about January 1989 but that the proceeds of the Bonds may be used to provide Coverage to the Participants from October 1, 1988; WHEREAS, execution and delivery of a First Amendment to Liability Risk Coverage Agreement and a First Amendment to Trust Indenture, establishing the specific terms of the Bonds and the obligations of the Participants relating to Resolution No. 88-~ Page 11 debt service on the Bonds, will be required on or prior to the date of issuance of the Bonds; 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 execution of the Joint Powers Agreement and the Coverage Agreement as authorized hereby do exist, have happened and have been performed in regular 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 execute the Joint Powers Agreement and the Coverage Agreement, in the manner and upon the terms herein provided; NOWt THEREFOREv BE IT RESOLVED BY THE COUNCIL OF TEE CITY OF SANTA ANA 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, findings and determinations of the City set forth in the preambles above and of the documents approved herein are true and correct. SECTION 2. Joint Powers Agreement. Pursuant to Section 6502 of the Joint Powers Law, the Joint Powers Agreement creating the Big Independent Cities Excess Pool 421 Resolution No. 88-~ Page 12 Joint powers cities, Oxnard, Authority by and among the City and other which may include the cities of Huntington Beach, Pomona, San Bernardino and Santa Ana, california, presented to this meeting and on file with the Clerk of the City Council, and the joint exercise of the powers common to the contracting parties thereunder, are hereby approved. The Mayor, City Manager and Finance Director are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver such Joint Powers Agreement. Jeff Stevens is hereby appointed the City's representative to the Authority and Edward J. Cooper is hereby appointed the City's alternate representative to the Authority. Such representative and alternate representative are each hereby authorized to take all actions necessary and appropriate to implement the purposes of the Joint Powers Agreement and the Liability Risk Coverage Agreement (including the First Amendment to Liability Risk Coverage Agreement). SECTION 3. Liabilit~ Risk Coverage Asreement. The form of Liability Risk Coverage Agreement (including the First Amendment to Liability Risk Coverage Agreement) between the City and other California cities, which may include the Cities of Huntington Beach, oxnard, Pomona, San Bernardino and Santa Aha, California as Participants and the Authority, as the provider of liability insurance 423 Resolution No. 88-~ Page 13 thereunder, presented to this meeting and on file with the clerk of the City Council is hereby approved. The Mayor, city Manager and Finance Director are hereby authorized and directed, for and in the name and on behalf of the City, to execute, acknowledge and deliver to the Authority, (including Agreement) therein as said Liability Risk Coverage Agreement the First Amendment to Liability Risk Coverage in substantially said form, with such changes such officer may require to approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. Validation ~roceedin~s. The Mayor, City Manager and Finance Director and any other officer or official of the City authorized by the Mayor are hereby authorized and directed to participate and cooperate to the fullest extent practicable with the Authority, the other Participants and representatives of Brown & Wood, San Francisco, california ("Special Counsel"), which firm is proposed to be retained by the Authority as legal counsel with respect to the issuance of the Bonds and validation proceedings and which retention is hereby approved by this Council, in the conduct of validation proceedings regarding the Liability Risk Coverage Agreement (including the First Amendment to Liability Risk Coverage Agreement) and the Bonds and to do any and all 4 24 Resolution No. 88-67 Page 14 things and to execute and deliver any documents which such officers and staff may deem necessary or advisable in connection therewith. 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 said Coverage Agreement. SECTION 6. Further Actions. Officers of the City Council and the Mayor, City Manager and Finance Director 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 the sale, execution and delivery of the Bonds by the Authority and otherwise to carry out, give effect to and comply with the terms and intent of this resolution, the Bonds, the Joint Powers Agreement, Liability Risk Coverage Agreement (including the First Amendment to Liability Risk Coverage Agreement) and Indenture. Such actions heretofore taken by such officers are hereby ratified, confirmed and approved. 425 Resolution No. 88-67 Page 15 SECTION 7. Effective Date. This resolution shall take effect immediately upon its passage. PASSED AND ADOPTED this 19th day of September, by the following vote: AYES: Acosta, Griset, Hart, May, McGuigan, Pulido, Young NOES: None ABSENT: None 1988, (SEAL) ATTEST: ~,~n{ce C. Guy, clerk Patricia A. McGui§an, Mayor Pro Tem M E-""-'"~- J ~COOPER CITY A-'fl'ORN EY CLERK'S CERTIFICATE I, Janice C. Guy, Clerk of the City Council of the City of Santa Aha, hereby certify as follows: The following is a full, true and correct copy of a resolution duly adopted at a regular meeting of the City council of said city duly and regularly and legally held at regular meeting place thereof on September 19, 1988, of which meeting all of the members of the City Council of said city had due notice and at which a quorum was present. I have carefully compared the same with the original minutes of said meeting on file and of record in the Clerk's office and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes. Said resolution has not been amended, rescinded since the date of its adoption, now in full force and effect. modified or and the same is Dated: September 19 , 1988 [Seal]