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HomeMy WebLinkAboutCity Council - 5929 RESOLUTION NO. 5929 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING AND AUTHORIZING EXECUTION AND DELIVERY OF A JOINT POWERS AGREEMENT, A LIABILITY RISK COVERAGE AGREEMENT AND FIRST AMENDMENT THERETO, AND THE FILING OF A VALIDATION PROCEEDING AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Huntington Beach (the "City" ) is a municipality duly organized and existing under the constitution and laws of the State of California (the "State" ) , and 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; and 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; 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 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; and 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 seg. , of the California Government Code (the "Joint Powers Law" ) , and such pooling of _1_ 5929 self-insured claims and the risk sharing of losses is not considered insurance subject to regulation under the California Insurance Code; and 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; and 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" (the "Authority" ) by approving and executing a joint powers agreement creating the Authority (the "Joint Powers Agreement" ) ; and 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; and It is anticipated that the Authority will assist he 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 and First Amendment thereto presented at 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 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" ) ; and _2_ 5929 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; and 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 i fund reserves initially in an amount determined sufficient to pay I Settlements (as defined in the Coverage Agreement ) when due and to i provide the Coverage described in the terms set forth in the Coverage Agreement and in the Memorandum of Liability Coverage attached thereto (the "Memorandum" ) ; and 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; and 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, -3- 5929 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 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. 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 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 cost of underwriting, administration and brokerage fees since the Authority's costs will be limited to reasonable administrative costs, D. The Option to obtain relief from the commercial insurer 's rights under excess liability policies to force claim settlements which are payable primarily in each case from the _4_ 5929 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; and 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 monies, and 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; and It is necessary and in the interest of the citizens of the _5_ 5929 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; and 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; and 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 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 non-profit corporation or other public agency as may be authorized by the Legislature" , and 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 -6- 5929 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 from time to time, 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; and 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 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; and 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 -7- 5929 Participants to validate the Participants ' obligation under the Coverage Agreement, and proposes to authorize legal counsel to conduct such proceedings; and The City has previously adopted a resolution approving the execution and delivery of a joint powers agreement creating 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; and 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; and 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; and 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; and 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 debt service on the Bonds, will be required on or prior to the date of issuance of the Bonds; and All acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been -8- 5929 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: 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 Joint Powers Authority by and among the City and other cities, which may include the cities of Huntington Beach, Oxnard, 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 Administrator and Deputy City Administrator 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 _9_ 5929 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 Liability Risk Coverage Agreement (including the First Amendment to Liability Risk Coverage Agreement) . SECTION 3 . Liability Risk Coverage Agreement . 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 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 Administrator and Deputy City Administrator are hereby authorized and directed, for and in the name and on behalf of the City, to execute, acknowledge and deliver to the Authority, said Liability Risk Coverage Agreement ( including the First Amendment to Liability Risk Coverage Agreement) in substantially said form, with such changes therein as such officer, in concert with the City Attorney, may require to approve, such approval to be conclusively evidenced by the execution and delivery thereof . SECTION 4 . Validation Proceedings. The Mayor, City Administrator, Deputy City Administrator, City Attorney 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 -10- 5929 Participants and representatives of Brown and 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 things and to execute and deliver any documents which such officers and staff, along with the City Attorney, 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 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 Administrator, Deputy City Administrator, City Attorney , and any other officer of 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 -11- 5929 Agreement ) and Indenture. SECTION 7. Effective Date. This resolution shall take effect immediately upon its passage. RESOLUTION NO. 5874 and all other RESOLUTIONS in conflict herewith are hereby repealed. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof, held on the I9th day of September , 1988 . Mayor ATTEST: APPROVED AS ORM: 2 City Clerk R- City Attorney APPROVINITI ING DEPARTMENT: APPR S ? N NT: eputy City min strato / City 4dministrator Director, Co munity Develo 5929 -12- Res. No. 5929 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly appointed, qualified City 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 at least a majority of all the members of said City Council at a regular meeting thereof held on the 19th day of September 19 88 by the following vote: AYES: Councilmembers: Kelly, Green, Finley, Mays, Winchell NOES: Councilmembers: Erskine, Bannister ABSENT: Councilmembers: None City Clerk and ex-officio C k of the City Council of the City of Huntington Beach, California 5929