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HomeMy WebLinkAboutCity Council - 5874 RESOLUTION NO. 5874 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH 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 Huntington Beach ("City" ) is a municipality duly organized and existing under the Constitution and the laws of the State of California ( "State" ) ; The City is authorized by Part 6 of Division 3 .6 of Title 1, Sections 990 et seg. , of the California Government Code ( "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; 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; 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; 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 1 - 5874 Chapter 5 of Division 7 of Title 1, Sections 6500 et seq. of i the California Government Code ( "Joint Powers Law" ) , 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; The City and certain other cities organized under the laws of California having a population in excess of 100,000 (which are referred to below as "Participants" ) propose to form a pooled liability insurance risk sharing program pursuant to the Act; In order to implement 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" ( "Authority" ) by approving and executing a joint powers agreement creating the Authority ( the "Joint Powers Agreements" ) ; 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; It is anticipated that the Authority will assist the City and the other Participants to obtain self-insurance for liability risks ( "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 ( "Coverage Agreement" ) by and among the Authority and other California cities, which may include the Cities of Fullerton, Garden Grove, Huntington Beach, Oxnard, Pomona, Sacramento, - 2 - 5874 San Bernardino and Santa Ana, 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" ) ; 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; The Participants propose to cause the Authority to authorize the issuance, sale and delivery pursuant to a Trust Indenture ( "Indenture" ) of revenue bonds ( "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 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 ( "Memorandum" ) ; 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 at a reasonable cost; 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 when such liability insurance is expected to become available at a 3 - 5874 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 burdens on its citizens in the event of large liability claims recoveries; 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; The City, along with a steering committee of the other Participants, in consultation with independent professional insurance 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 ) immediate 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 restrospective basis calculated actuarially to spread and moderate the 4 - 5874 cost of claims loss to each Participant, (c ) 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, (d) 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; The 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 5 - 5874 moneys; 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 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; 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 therefor, in order to establish adequate reserves to permit the Bonds to be marketed at the lowest possible interest rates; 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; 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, 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 liabiltiy, or 6 _ 5874 public liability losses incurred by such agencies, by entry into an insurance pooling arrangements under a joint exercise of powers agreement, or by membership in such publicly-owned non profit corporation or other public agency as may be authorized by the Legislature" ; Premium shall be paid by the City in consideration of the Coverage offered by the Coverage Agreement and by the 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 Coverage; 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 the City and to other Participants, the anticipated costs of commercial liability insurance in the future, the obligations of the Participants under the Coverage Agreement ( including the other Participants ' agreement to share the risk of costs 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; The City receives benefit from the sharing of risk of costs imposed by liability claims under the terms of the 7 - 5874 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 Agreement 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; 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 of Civil Procedure" and the City proposes to bring such an action together with the other Participants to validate the Participants ' obligations under the Coverage Agreement, and proposes to authorize legal counsel to conduct such proceedings; and All acts, conditions andthings 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; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows; 8 - 5874 SECTION 1 . Declaration of Council . This Council hereby specifically funds 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 Joint Powers Authority by and among the City and other cities, which may include the cities of Fullerton, Garden Grove, Huntington Beach, Oxnard, Pomona, Sacramento, 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 (or City Administrator ) 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 . Edward H. Thompson is hereby appointed the City' s representative to the Authority and Robert J. Franz 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 Coverage Agreement . SECTION 3 . Liability _ Risk Coverage Agreement . The form of Liability Risk Coverage Agreement, with an effective 9 - 5874 date of its date of execution, between the City and other California cities, which may include the Cities of Fullerton, Garden Grove, Huntington Beach, Oxnard, Pomona, Sacramento, San Bernardino and Santa Ana, California, as Participants and the Authority, as the provider of liability insurance thereunder , presented to this meeting and on file with the Clerk of the City Council is hereby approved. The Mayor, City Manager (or City Administrator ) 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 t which the judgment of Authority, on or after the date on A Y. 7 9 validation referred to in Section 4 hereof becomes final, said Liability Risk Coverage Agreement in substantially said form, with such changes therein as such officer may require to approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4 . Validation Proceedings . The Mayor, City Manager (or City Administrator) 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 representative 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 Coverage Agreement and the Bonds and to do any - 10 - 5874 and all things and to execute and deliver any documents which 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 I Agreement. SECTION 6 . Further Actions . Officers of the City Council and the Mayor , City Manager (or City Administrator ) 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, Coverage Agreement and Indenture. Such actions heretofore taken by such officers are hereby ratified, confirmed and aproved. END OF PAGE 11 - 5874 SECTION 7 . Effective Date. This resolution shall take effect immediately upon its passage. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the .�»Qf day of 41 1988 . MaeD --` " ATTEST: APTO FORM: City Clerk C ' t Atto ey l.�. 5-tie 2s-- REVIEWED AND APPROVED: INITI D AN VED: J City Administrator Director Ad inistr ive SerNices be - 12 - 5874 Res. No. 5874 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, ALICIA M. WENTWORTH, the duly elected, qualified City i Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of more than a majority of all the members of said City Council at a regular meeting thereof held on the 2nd day of - May 19 88 by the following vote: AYES: Councilmen: Kelly, Green, Finley, Erskine, Mays, Winchell, Bannister NOES: Councilmen: None ABSENT: Councilmen: None � ✓IJ City Clerk and ex-officio Clerk of the City Council of. the City of Huntington Beach, California 5874