HomeMy WebLinkAboutBig Independant Cities Excess Pool (BICEP) - 1988-10-01s.
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CITY OF HUNTINGTON BEACH 2K5 JU11122 PH 3: 5�
MEETING DATE: July 3, 2006 DEPARTMENT ID NUMBER: CA-06.296.) `nR
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Council Meeting Date: July 3, 2006
Department I Number: CA-06-296
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYO D CITY COUNCIL MEMBERS
SUBMITTED BY: JENNIFER MCGRAT i y Attorney
ROBERT HALL, Dep ity Administrator
PREPARED BY: JENNIFER MCGRAT , y Attorney
SUBJECT: BICEP: Joint Powers Agency Providing Excess Liability Insurance
Coverage To City
Statement of issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: Shall the Joint Powers Agreement, Memorandum of Coverage,
Bylaws and related Programs of BICEP be amended to provide the Board of Directors with
broader authority to act without Member approval, to permit smaller cities and other public
agencies to join, and to revise the limits of coverage.
Fundinq Source: City pays premiums to BICEP. For 2005/06, the City contributed
$645,804 to BICEP from Account Nofoolora;IL'fhe City payroll represents 22.2% of the
combined payroll of the five Members oI BICEP. The City contributed 25.01% of the
Members' premiums to BICEP for 200 V06, due to the City's loss experience.
Recommended Actions:
2406 --
Adopt Resolution No..3g , which shall:
I . Approve the Amended and Restated BICEP Joint Powers Agreement, and authorize the
Mayor to execute and the City Clerk to attest to the Agreement.
2. Approve the Amended Bylaws of BICEP.
3. Approve the Revised Master Memorandum of Liability Coverage. r-
2765 -2- 6/2012006 11:39:00 AM
REQUEST FOR COUNCIL ACTION
MEETING DATE: July 3, 2006 DEPARTMENT ID NUMBER: CA-06-296
4. Approve the BICEP Liability Program.
5. Approve the BICEP Workers' Compensation Program.
ob
6. Adopt Resolution No. 3 , designating the Deputy City Administrator/Administrative
Services, or his written designee, to serve as the City's representative on the BICEP
Board of Directors.
Alternative Action(s): Reject the Resolution, and provide direction to City Staff regarding
renegotiating the BICEP Operating Documents.
Reject the second Resolution and designate a different Staff position as the City's
representative to BICEP.
Analysis: The Big Independent Cities Excess Pool Joint Powers Authority ("BICEP")
was formed in 1988 in response to the extreme difficulty cities were having in obtaining
liability insurance coverage. The Cities of Huntington Beach, Santa Ana, San Bernardino,
Oxnard and Pomona were BICEP's charter members. Subsequently, the City of Pomona
withdrew and the City of West Covina joined BICEP in October 2003.
Pursuant to Sections 6500, et seq., of the Government Code, public agencies may join
together to form a separate government agency that has such powers as are established in
the joint powers agreement forming the agency. BICEP is such an agency. BICEP is
governed by its Board of Directors. The BICEP Board of Directors is composed of one
individual appointed by each Member Agency.
Further, pursuant to Sections 990 et seq., of the Government Code, the City may insure itself
against tort or inverse condemnation liability, its employees against injury resulting from an
act or omission in the scope of their employment and both against the costs of defending
such claims. Pursuant to Section 990.8 of the Act, the City is empowered to obtain insurance
coverage through a joint powers authority such as BICEP.
Under BICEP's various Memorandums of Coverage, in most years, Huntington Beach is self -
insured for the first, combined $1,000,000 in liability and costs of defense. (The costs of
defense include attorney's fees, expert costs, and consultants.) BICEP then provides
coverage for $1,000,000 to $25,000,000 in liability. Typically, BICEP, itself (through its
Members' contributions), is responsible for the second $1,000,000 in coverage, and then
excess insurance applies for $2,000,000 to $25,000,000.
In order to provide adequate reserves for liability coverage, BICEP issued bonds in 1988 and
entered into certain agreements regarding premiums paid in and the settlements paid out to
bondholders.
In October 2003, BICEP retired the bonds, and with the ratification of the City Councils of
each Member, defeased the bonds in March 2004. With the retirement of this bonded
06 BICEP -3- 6119/2006 4:07:00 PM
REQUEST FOR COUNCIL ACTION
MEETING DATE: July 3, 2006 DEPARTMENT ID NUMBER: CA-06-296
indebtedness, the BICEP Board has been diligently working to revise the Joint Powers
Agreement, Bylaws, Memorandum of Coverage, Liability Program and Workers
Compensation Program (collectively, "Operating Documents") to remove the now
unnecessary and burdensome provisions related to bondholder protection.
With this goal in mind, and in consultation with the Risk Manager and City Attorney of each
Member, the BICEP Board of Directors drafted amended and restated Operation Documents,
intended to fully replace the existing Operating Documents originally entered into in 1988,
with one exception. The exception provides that, for any claims which occurred prior to the
defeasance of the bonds on July 1, 2004, the terms and conditions of the existing Liability
Program would remain in force and effect. Otherwise, on or after July 1, 2006, the rights
and obligations for coverage of any Member of BICEP would be controlled under the new
Operating Documents.
The principal issues addressed in the new Operating Documents are as follows:
Policy issues:
1. Who Can Be A Member. The amended Joint Powers Agreement and Bylaws will
broaden the potential members from only California cities with a population exceeding
100,000 persons, to any "public agency" regardless of minimum population. The intention is
to allow other types of public agencies (e.g., the Los Angeles County Community
Development Commission, or even an out-of-state public agency) and small cities to
potentially join BICEP and to share in the distribution of risk and thereby reduce each
Member's risk as well as administrative costs.
However, other underwriting criteria related to a new member's potential impact on BICEP
coverage, such as a new member's "loss experience", would remain in place and continue to
be applied to any new potential Member. In addition, no Member can be added without the
approval of two-thirds of the Members. The intent is to enlarge membership to share risk, but
not to BICEP's financial detriment.
2. Authori!y Of The Board To Amend Operating Documents. The existing, 1988
Liability Risk Coverage Agreement required a two-thirds vote of the Board of BICEP and a
two-thirds vote of the Members' city councils to make substantive revisions to the Operating
Documents and the terms and conditions of coverage for the Members. This vote of the
Board and ratification by the City Councils was intended to provide protection for
bondholders. However, with the retirement of the bonds, the necessity of returning to all five
City Councils creates inefficiency in responding to conditions in the insurance market.
The proposed Amended Joint Powers Agreement and Bylaws would permit the Board,
without Member approval, to substantially amend the coverage BICEP provides, as well as
the Bylaws. Each Member City continues to protect its individual interests through the City
Council's designation of the representative to the Board. Additionally, the new Joint Powers
06 BICEP -4- 6/1912006 4:07:00 PM
- REQUEST FOR COUNCIL ACTION
MEETING DATE: July 3, 2006 DEPARTMENT ID NUMBER: CA-06-296
Agreement continues to require a supermajority vote of two-thirds to add or expel a Member.
Such controls are a typical and normal means of control found in other joint power pools.
Related to the expanded authority of the Board of Directors is the City's voting representative
to BICEP. In 1990, the City Council appointed Karen Foster to the BICEP Board of Directors
pursuant to Resolution No. 6234. Ms. Foster has since retired. It is recommended that the
Council adopt Resolution No.2
Wappointing the Deputy City Administrator/Administrative
Services, or his written designee, as the City's voting representative in the BICEP Board of
Directors. It is expected that the Risk Manager will typically be appointed as the Deputy City
Administrator's written designee.
3. Revision to Citesoverage. In practice, BICEP performs two functions for the City:
risk sharing among the Members, and a cost-effective means to purchase liability insurance.
Pursuant to the Bylaws, risk sharing is set forth in the Memorandum of Coverage, and the
related Liability Program and Worker's 'Compensation Program. Currently, BICEP provides
liability coverage for claims arising from Bodily Injury, Property Damage, Personal Injury,
Employment Practices and Public Entity Errors and Omissions. The Members are subject to a
"self -insured retention" for the first $1 M of combined damages and costs of defense. The
Members then risk share the second, $1 M, and an excess liability carrier covers the
remainder, to $25M. However, to the extent that excess coverage is unavailable, then the
Members risk share from $1 M to $25M.
The amended Memorandum of Coverage and related Operating Documents would revise
certain existing coverage policies, as follows:
a. The Liability Program will establish new limits to BICEP's coverage at $10
million per occurrence and $25 million annual aggregate for all claims.
(Liabi)ity Program, Section 2.1.3) BICEP's exposure under the existing
operating documents is $25 million per occurrence in each Coverage Period
without any aggregate cap. The effect is to reduce single occurrence
coverage, and to reduce risk sharing if there is no excess liability insurance.
The only exception is the extent to which BICEP covers claims for which
excess coverage is unavailable. One such likely area of where excess
coverage historically has been unavailable is land use and takings claims.
b. Currently, BICEP does not cover "land use claims" and "inverse
condemnation„ claims. The new Memorandum of Liability Coverage would
provide coverage for a land use claim, but not an inverse condemnation
claim. Generally, the distinction between the two is that a land use claim is
for damages to property resulting from the City's adoption of its laws and
regulations, while inverse condemnation involves Physical possession or
damage to property.
2765 -5- 61=2006 3:55:00 PM
M
REQUEST FOR COUNCIL ACTION
MEETING DATE: July 3, 2006 DEPARTMENT 1D NUMBER: CA-06296
Generally, excess liability insurance coverage or reinsurance is not available
for liability resulting from "intentional" City conduct, such as regulating or
physically taking property. Consequently, in the event no commercial
insurance or reinsurance is available for a land use claim, BICEP's coverage
would be limited to $5.0 million per occurrence and $5.0 million per annual
aggregate.
C. Currently, when determining what attorney's fees are included in the City's
self -insured retention, only outside counsel costs are included. This practice
has disadvantaged Huntington Beach since 2003, when the City Attorney
adopted the practice of keeping virtually all litigation in-house.
Under the new Memorandum of Coverage, time spent by in-house counsel
will be charged at $1501hour.
d. The Memorandum of Coverage and the Liability Program may be amended
annually by the BICEP Board to adjust to "market" demands.
e. The Memorandum of Coverage and Liability Program may be entirely
replaced by commercial insurance. This procedure, known as `Reverse
Following Form," suspends the terms and conditions of the Memorandum of
Liability Coverage and accepts a commercial insurance policy form as the
basis for coverage.
In summary, the purpose of these amendments is to promote efficiency in handling
Member's Claims and to provide clarity on the obligations and rights of each Member in
BICEP.
Environmental Status: Not applicable.
Attachment(s):
06 BICEP -6- 6/19/2006 4:07:00 PM
V
ATTACHMENT 1
RESOLUTION NO. 2006-38
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH APPROVING THE AMENDMENT AND RESTATEMENT OF THE
JOINT POWERS AGREEMENT CREATING THE BIG INDEPENDENT
CITIES EXCESS POOL JOINT POWERS AUTHORITY, AND
AUTHORIZING, RATIFYING, AND APPROVING THE RELATED
BYLAWS, MEMORANDUM OF COVERAGE, LIABILITY PROGRAM AND
WORKERS COMPENSATION PROGRAM
WHEREAS, the City of Huntington Beach is a municipal corporation organized and
existing under and by virtue of the constitution and laws of the State of California (the "City");
WHEREAS, the Cities of Huntington Beach, Oxnard, West Covina, San Bernardino, and
Santa Ana are the current Members of the Big Independent Cities Excess Pool Joint Powers
Authority, a joint exercise of powers entity organized and existing under the laws of the State of
California ("BICEP");
WHEREAS, the City Council adopted Resolution No. 5874 in 1988 approving the Joint
Powers Agreement for BICEP, the Liability Risk Coverage Agreement, and various other
actions; and
WHEREAS, each Member of BICEP entered into that the BICEP Joint Powers
Agreement, executed and delivered in and after September 1988, as subsequently amended; and
WHEREAS, BICEP approved and entered into certain operating documents to carry out
the purpose of BICEP to jointly develop and fund programs for comprehensive liability coverage
and other coverages, including but not limited to, the Bylaws, the Liability Risk Coverage
Agreement, a Memorandum of Liability Coverage, and the Trust Agreement, all originally dated
as of October 1, 1989 and subsequently amended from time to time (the "Original Operating
Documents"); and
WHEREAS, BICEP entered into the form of the Original Operating Documents in order
to issue bonded indebtedness in October 1988 to fund the necessary reserves for the
comprehensive liability coverage provided to the Members of BICEP; and
WHEREAS, in October 2003, BICEP, with the subsequent approval and ratification of
the City Council of each Member, determined and approved actions to defease and retire said
bonded indebtedness in March 2004; and
WFiEREAS, BICEP now desires to amend and restate the form of its operating
documents in order to provide clarity and efficiency in providing coverages to its Members, and
to allow the expansion of membership in BICEP to any public agency, as that term is defined in
the California Government Code commencing at Section 6500 et seq.; and
06.29607]
Reso. No. 2004-38
WHEREAS, the City desires to approve, ratify, and confirm in all respects all previous
actions taken by the City or any member of this City Council of this City (the "City Council') or
any other officer or staff member of the City with respect to the foregoing;
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
find, determine, resolve and order as follows:
SECTION 1. The foregoing recitals, and each of them, are true and correct.
SECTION 2. The amended and restated Joint Powers Agreement, attached as Exhibit 1,
is approved in substantially the form presented at this meeting. The Mayor is hereby authorized
and directed to execute, and the City Clerk to attest to and deliver the Joint Powers Agreement.
SECTION 3. The following amended and restated Operating Documents of BICEP are
hereby approved and the Original Operating Documents shall no longer be in force and effect in
accordance and as provided in these new Operating Documents:
(a) the Amended Bylaws (attached as Exhibit 2);
(b) the Memorandum of Liability Coverage (attached as Exhibit 3);
(c) the Liability Program (attached as Exhibit 4);
(d) the Workers' Compensation Program (attached as Exhibit 5).
SECTION 4. The Mayor, the City Cleric, the City Attorney, and any other proper officer
of the City are hereby authorized and directed, jointly and severally, to do any and all things and
to execute and deliver any and all documents necessary or proper for carrying out the actions
contemplated by this Resolution or any of the documents referred to herein.
SECTION 5. Any document, the execution of which by the Mayor, the City Clerk, the
City Attorney, or any other proper officer of the City is authorized by this Resolution, shall, in
the absence or inability to act of such officer, be executed by any authorized designee of such
officer, such authorization to be given in writing.
SECTION 6. All actions previously taken by this City Council and by the officers and
staff of the City with respect to the matters addressed by this Resolution are hereby approved,
ratified, and confirmed in all respects.
SECTION 7. This Resolution shall immediately take effect from and after its date of
adoption.
2
06-296/2573
Reso. No. 2004--38
PASSED AND ADOPTED by the City Council of the City of Huntington Beach 2t a
regular meeting thereof held on the 3,A_ day of _ Jules_ _ _ , 2006.
GGc,
lr�� �-
Mayor
REVIEWED AND APPROVED: PPROVE AS TO FORM:
C ty Admi strator ty Attome Cv Zpto(.
INiT K ROVED:
Deputy City Administrator
. "TIATED AND APPROVED:
4 -A"It''v YWCAII'-
C ty Attorney I 142vl�
3
06.296J2577
V
EXHIBIT 1
JOINT POWERS AGREEMENT
THE BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
This Agreement is executed by and -among those public agencies, duly organized
and existing, which are parties signatory to this Agreement. All such public agencies,
hereinafter called Members, shall be listed in Appendix A, which shall be attached
hereto and made a part hereof.
RECITALS
WHEREAS, Articles 1 through 4, Chapter 5, Division 7, Title 1 of the California
Government Code (commencing with Section 6500 et seq.) (hereinafter the "Joint
Powers Law") permits two or more public agencies by agreement to jointly exercise
powers common to the contracting parties; and
WHEREAS, a joint powers authority was formed pursuant to the Joint Powers
Law by the execution of the Members of that certain Joint Pourers Agreement Creating
the Big Independent Cities Excess Pool Joint Powers Authority (the 'Original
Agreement"); and
WHEREAS, the Members desire to amend and restate the Original Agreement to
continue to join together for the purpose of sharing risk, jointly purchasing liability
insurance and other coverages and related programs that exist, or to be determined in
the future.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
"Authority" shall mean the Big Independent Cities Excess Pool Joint Powers Authority
created by the Original Agreement and continued by this Agreement.
"Board of Directors" or "Board" shall mean the governing body of the Authority.
"Coverage(s)" means the liability coverage to be provided under a Memorandum of
Liability Coverage, and any other areas of coverage including but not limited to,
property, workers compensation, etc., as determined and approved by the Board.
"Executive Committee" shall mean the Executive Committee of the Board of Directors of
the Authority.
"Fiscal Year" shall mean that period of twelve months which is established by the Board
of Directors or the Bylaws as the fiscal year of the Authority.
luinl Powers Agreerrwnl
5-31-06
"Government Code" shall mean the Califom-a Government Code, as it may be
amended from time to time.
"Insurance" means commercial primary or excess insurance or reinsurance.
'Member(s)" means any public agency as the term "public agency" is defined by Section
6500 of the Joint Powers Law, which includes, but is not limited to, any federal, state,
county, city, public corporation, public district of this state or another state, or any joint
powers authority formed pursuant to the Joint Powers Law by any of these agencies
which has executed this Agreement and has become a member of the Authority.
"Risk Management Program(s)" means those programs of risk sharing, Insurance, and
risk management services created by Authority to provide Coverage to each Member.
ARTICLE 2
PURPOSES
This Agreement is entered into by the Members to amend and restate the Original
Agreement in order that they may jointly continue to develop and fund Coverage
including but not limited to such programs as risk sharing, excess insurance, the
purchase of reinsurance, and the provision of necessary administrative services. Such
administrative services may include, but shall not be limited to, risk management
consulting, loss prevention and control, centralized loss reporting, actuarial consulting,
claims adjusting, and legal defense services.
All such purposes shall be accomplished through a joint exercise of powers by such
public agencies, pursuant to this Agreement, to be administered by a separate legal
entity, the Big Independent Cities Excess Pool Joint Powers Authority.
Upon execution of this Agreement by two-thirds (213rds) of the Members, the Original
Agreement shall no longer be in force and effect.
ARTICLE 3
PARTIES TO AGREEMENT
Each Member, as a party to this Agreement, certifies that it intends to and does contract
with all other Members as parties to this Agreement and with such other public agencies
as later may be added as parties to this Agreement.
ARTICLE -3
TERM
This Agreement shall become effective when executed and returned to the Authority by
each Member. The Authority shall promptly notify all Members in writing of such
effective date. This Agreement shall continue in effect until terminated as provided
herein; provided that the termination of this Agreement with respect to an individual
3oint Aowus Ag mment
5.31-06
.Member, upon its withdrawal or expulsion from membership in the Authority, shall not
operate to terminate this Agreement with respect to the remaining Members; and
provided further that this Agreement shall continue in effect so long as any obligations
of the Authority are outstanding.
ARTICLE 5
THE AUTHORITY
Pursuant to the Joint Powers Law, there is hereby created and continued a public entity
separate and apart from each party hereto, to be known as the "Big Independent Cities
Excess Pool Joint Powers Authority," with such powers as are hereinafter set forth.
ARTICLE 6
POWERS OF THE AUTHORITY
(a) Powers. The Authority shall have all of the powers common to its Members and
all additional powers set forth in the Joint Powers Law and other statutes applicable to a
joint powers authority created hereby, and is hereby authorized to do all acts necessary
for the exercise of said powers. Such powers include, but are not limited to, the
following:
(1) To make and enter into contracts.
(2) To incur debts, liabilities, and obligations and to encumber real or personal
property.
(3) To acquire, hold, or dispose of real or personal property, contributions and
donations of real or personal property, funds, services, and other forms of assistance
from persons, firms, corporations, and govemment entities.
(4) To sue and be sued in its own name, and to settle any claim against it.
(5) To receive and use contributions and advances from Members as
provided in Government Code Section 6504, including contributions or advances of
personnel, equipment or property.
(6) To invest any money in its treasury that is not required for its immediate
necessities, pursuant to Government Code Section 6509.5.
(7) To employ agents and employees.
(8) To receive, collect and disburse moneys.
(9) To develop and implement Risk Management Programs, including but not
limited to the purchase of excess insurance and reinsurance, to pay claims under
Coverages provided by the Authority.
Joint Po%vs Agrccnvnt
S-31 116
(10) To finance in accordance with applicable laws, by means of the issuance
of bonds or other instruments of indebtedness, self-insurance reserve funds necessary
or convenient for the implementation of this Agreement.
(11) To exercise other reasonable and necessary powers in furtherance or
support of any purpose of the Authority or power granted by the Joint Powers Law, this
Agreement or the Bylaws of the Authority.
(b) Restrictions on Powers. Pursuant to and to the extent required by Government
Code Section 6509, the Authority shall be restricted in the exercise of its powers in the
same manner as the City of Oxnard is restricted in its exercise of similar powers:
provided that, if the, City of Oxnard shall cease to be a Member, then the Authority shall
be restricted in the exercise of its power in the same manner as the City of Santa Ana.
ARTICLE 7
BOARD OF DIRECTORS
(a) Composition of Board. The Authority shall be governed by the Board of
Directors, which shall be composed of one director representing each Member,
appointed by the Member's City Council or Governing Board and serving at the pleasure
of such City Council or Governing Board. The City Council or Governing Board of each
Member shall also appoint an alternate director who shall have the authority to attend,
participate in and vote at any meeting of the Board when the director is absent. A
director or alternate director shall be a member of the City Council of the City or
Governing Board of the public entity which appoints such director or alternate director,
or an official or staff person of the Member which such director or alternate director
represents. Any vacancy in a director or alternate director position shall be filled by the
appointing Member's City Council or Governing Board, subject to the provisions of this
Article. Immediately upon admission of a new Member pursuant to Article 16, such
Member shall be entitled and required to appoint a director and alternate director.
(b) Termination of Status as Director. A director and/or alternate director shall be
removed from the - Board of Directors upon the occurrence of anyone of the following
events:
(1) the Authority receives written notice from the appointing Member of the
removal of the director or alternate director, together with a certified copy of the
resolution of the City Council or Governing Board of the Member effecting such
removal;
(2) the withdrawal or removal of the Member from the Authority:
(3) the death or resignation of the director or alternate director,
(4) the Authority's receipt of written notice from the Member that the director
or alternate director is no longer qualified as prov ded in subsection (a) of this Article.
Joint Yowm AgTmrncn1 4
5.31.06
(c) Compensation. Directors and their alternates are not entitled to
compensation. The Board of Directors may authorize reimbursement of expenses
incurred by directors or their alternates.
Jd) Powers of Board. The Board of Directors shall have the following powers and
unctions:
(1) Except as otherwise provided in th7s Agreement, the Board shall exercise
all powers and conduct all business of the Authority, either directly or by delegation to
other bodies or persons.
(2) The Board shall form an Executive Committee, as provided in Article 10.
The Executive Committee may exercise all powers or duties of the Board except
adoption of the Authority's annual budget.
(3) The Board may form, as provided in Article 11, such other committees as
it deems appropriate to conduct the business of the Authority or it may delegate such
power to the Executive Committee in the Bylaws or by resolution of the Board. The
membership of any such other committee may consist in whole or in part of persons
who are not members of the Board; provided that the Board and the Executive,
Committee may delegate decision -making powers and duties only to a committee
whose membership is comprised by a majority of directors or their alternate. Any
committee not so constituted may function only in an advisory capacity.
(4) The Board shall elect the officers of the Authority and shall appoint or
employ necessary staff in accordance with Articles 9 and 12.
(5) The Board shall cause to be prepared, and shall review, modify as
necessary, and adopt the annual operating budget of the Authority. Adoption of the
budget may not be delegated.
(6) The Board shall receive, review and act upon periodic reports and audits
of the funds of the Authority, as required under Articles 13 and 14 of this Agreement.
(7) The Board shall have such other powers and duties as are reasonably
necessary to carry out the purposes of the Authority.
ARTICLE 8
MEETINGS OF THE BOARD OF DIRECTORS
(a) RReciular Meetin s. The Board of Directors shall hold at least three 3 regular
meetings eayear, a Board of Directors shall fix by resolution or in the yaws the
date upon which, and the hour and place at which, each regular meeting is to be held.
(b) Ralph M. Brown Act. Each meeting of the Board of Directors,
including without limitation a regular, adjourned regular, and special meetings shall be
called, noticed, held, and conducted in accordance with the Ralph M. Brown Act,
Section 54950 et seq. of the Government Code.
(c) Minutes. The Authority shall have minutes of each regular, adjourned
regular, and special meetings kept by the Secretary. As soon as practicable after each
Joint Powxrs Agreemcnt
5-31-06
meeting, the Secretary shall forward to each Board member a copy of the minutes of
such meeting.
(d) Quorum. A majority of the members of the Board is a quorum for the
transaction of business. However, less than a quorum may adjourn from -time to time.
A vote of the majority of a quorum at a meeting is sufficient to take action unless
otherwise provided in the Bylaws.
(e) Voting. Each member of the Board shall have one vote.
ARTICLE 9
OFFICERS
The Board shall elect a President and Vice President from among its members at its last
meeting of each Fiscal Year. Each officer shall assume the duties of his office upon
election. If either the President or Vice President ceases to be a member of the Board,
the resulting vacancy shall be filled at the next regular meeting of the Board held after
the vacancy occurs or at a special meeting of the Board called to fill such vacancy. In
the absence or inability of the President to act, the Vice President shall act as President.
The President shall preside at and conduct all meetings of the Board. The Board may
appoint such other officers as it considers necessary and as provided in the Bylaws.
ARTICLE ZO
EXECUTIVE COMMITTEE
The Board shall establish an Executive Committee of the Board which shall consist
solely of members selected from the membership of the Board. The composition and
the terms of office of the members of the Executive Committee shall be provided in the
Bylaws of the Authority. The Executive Committee shall conduct the business of the
Authority between meetings of the Board, exercising all those powers as provided for in
section (d)(2) of Article 7, or as otherwise delegated to it by the Board.
ARTICLE 11
COMMITTEES
The Board may establish committees as it deems appropriate to conduct the business
of the Authority or it may, in the Bylaws or by resolution, delegate such power to the
President. Members of committees shall be appointed by the Board or the President,
as the case may be. Each committee shall have those duties as determined by the
Board or the President, as the case may be, or as otherwise set forth in the Bylaws.
Each Committee shall meet on the call of its chairperson, and shall report to the
Executive Committee and the Board as directed by the Board or the Executive
Committee, as the case may be.
Joint Powers Ag ccmcnt 6
5-31.06
ARTICLE 12
STAFF
(a) Principal Staff. The following staff members shall be appointed by and serve
at the pleasure of the Board of Directors:
(1) General Manager/Secretary. The General Manager/Secretary shall administer
the business and activities of the Authority, subject to the general supervision and policy
direction of the Board and the Executive Committee; shall be responsible for all
minutes, notices and records of the Authority; and shall perform such other duties as
are assigned by the Board and Executive Committee.
(2) Treasurer. The Treasurer shall te appointed as provided in the Bylaws
and pursuant to Government Code Section 6505.5 or Section 6505.6, as these sections
may be amended from time to time. The duties of the Treasurer are set forth in Article
13 of this Agreement.
(3) Controller. The Controller shall be appointed as provided in the Bylaws
and pursuant to Government Code Section 6505.5 or Section 6505.6. as these sections
may be amended from time to time. The duties of the Controller are set forth in Article
14 of this Agreement.
(b) Other Staff. The Board, the Executive Committee or the General
Manager/Secretary shall provide for the appointment of such other staff as may be
necessary for the administration of the Authority.
(c) Compensation. The General Manager/Secretary, Treasurer, the Controller
and any other members of the staff or employees of the Authority shall be compensated
in such manner as shall be approved by the Board as permitted by applicable law.
ARTICLE 13
RESPONSIBILITIES FOR FUNDS AND PROPERTY
(a) Duties of Treasurer. ' The Treasurer shall perform all duties as required under the
Joint Powers Law including:
(1) Receive and receipt for all money of the Authority and place it in the
treasury of the treasurer so designated to the credit of the Authority.
(2) Be responsible, upon his or her official bond, for the safekeeping and
disbursement of all Authority money so held by him or her.
(3) Pay, when due, out of money of the Authority held by him or her, all sums
payable on outstanding bonds and coupons of the Authority.
Joint Powers Agrcemrnt 7
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(4) Pay any other sums due from the Authority from Authority money, or any
portion thereof, only upon warrants of the public officer performing the functions of
Controller who has been designated pursuant to the Bylaws.
(5) Verify and report in writing on the first day of July, October, January, -and
April of each year to the Authority and to each Member to this Agreement, the amount
of money he or she holds for the Authority, the amount of receipts since his or her last
report, and the amount paid out since his or her last report.
(b) Authority PropeM. Pursuant to Government Code Section 6545.1, the General
Manager/Secretary, the Treasurer, and such other persons as the Board may designate
shall have charge of, handle, and have access to the property of the Authority.
ARTICLE 14
ACCOUNTS AND RECORDS
(a) Annual Budget. The Authority shall an-ivally adopt an operating budget
pursuant to Article 7(d)(5) of this Agreement.
(b) Funds and Accounts. The Controller of the Authority shall establish and
maintain such funds and accounts as may be required by good accounting practices
and by the Board. Books and records of the Authority in the hands of the Controller
shall be open to inspection by authorized representatives of the Members at all
reasonable times. The Authority shall adhere to a standard of strict accountability of all
funds as set forth in the Joint Powers Law.
(c) Controllees Regort. The Controller, within one hundred twenty (120) days after
the close of each Fiscal Year, shall give or cause to be given a complete written report
of all financial activities of such Fiscal Year to the Board and to each Member.
(d) Annual Audit. The Authority shall provide for a certified, annual audit of the
accounts and records of the Authority which audit shall conform to generally accepted
auditing standards. When such an audit of the accounts and records is made by a
Certified Public Accountant, such report shall be filed as a public record with each of the
Members and with the county auditor in which each of the Members is located. Such
report shall be filed within six (6) months of the end of the Fiscal Year under
examination. Costs of such audit shall be considered a general expense of the
Authority and included in the term "administrative costs."
ARTICLE 15
MEMBER RESPONSIBILITIES
Each Member shall have the following responsibilities:
(a) To appoint its director and alternate director to, or remove its director and
alternate director from the Board as set forth in Article 7.
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5-31.06
M
(b) To consider proposed amendments to this Agreement as set forth in Article 24.
(c) To make contributions in the form of membership premiums, assessments, fees
and fees, if any, in accordance with the Bylaws Gnd as determined by the Board, for the
purpose of defraying the costs of providing the annual benefits accruing directly to each
party from this Agreement.
(d) To provide to the Authority such other information or assistance as may be
necessary for the Authority to cant' out the Risk Management Programs as determined
by the Board.
ARTICLE 16
NEW MEMBERS
With the approval of two-thirds (213rds) of a'I current members of the Board, and
compliance with all requirements of the Bylaws cf the Authority and of the Joint Powers
Law, any qualified public agency may become a party to this Agreement. The date that
the applying public agency will become a Member shall be determined by the Board.
ARTICLE 17
DISSOLUTION AND DISTRIBUTION OF ASSETS
This Agreement may be terminated and the Authority dissolved by the written consent
of two-thirds (213rds) of all Members; provided however, that this Agreement and the
Authority shall continue to exist for the purpose of disposing of all claims, the distribution
of assets, and any other functions necessary to conclude the affairs of the Authority as
provided in the Bylaws of the Authority.
ARTICLE 13
WITHDRAWAL OF MEMBER
A Member may withdraw from membership in the Authority in accordance with the
procedures and the conditions as provided in the Bylaws of the Authority.
ARTICLE 19
EXPULSION OF MEMBER
A Member may be expelled from membership in the Authority by a two-thirds (213rds)
vote of all members of the Board in accordance With the procedures and the conditions
as provided in the Bylaws of the Authority.
Juint Powers Agreement 9
3-] 1-06
ARTICLE 20
OBLIGATIONS OF AUTHORITY
The debts, liabilities and obligations of the Authority shall not be the debts :liabilities and
obligations of each Member. Any Member may separately contract or assume
responsibility for specific debts, liabilities, or obligations of the Authority.
Pursuant to Section 895.2 of the Government Code, the Members may be jointly and
severally liable for any liability which is imposed by any law for injury caused by a
negligent or wrongful act or omission occurring in the performance of this Agreement. In
the event that such liability arises out of a negligent or wrongful act or omission with
respect to a Risk Management Program, the Members hereby provide, pursuant to
Section 895.6 of the Government Code, that such liability shall be bome by the
Members participating in such Risk Management Program in the same proportion as
administrative expenses of the Risk Management Program are allocated among such
participating Members at the time the liability is determined. In the event a Member is
held liable upon any judgment for damages caused by such an act or omission and
makes payment in excess of its proportional share, as determined in the preceding
sentence, such Member is entitled contribution from each of the Members which have
not paid their proportional share. -
ARTICLE 21
LIABILITY OF BOARD OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS
The members of the Board of Directors, officers and committee members of the
Authority shall use ordinary care and reasonable diligence in the exercise of their
powers and in the performance of their duties pursuant to this Agreement. They shall
not be liable for any mistake of judgment or any other action made, taken or omitted by
them in good faith, nor for any action taken or omitted by any agent, employee or
independent contractor selected with reasonable- care, nor for loss incurred through
investment of Authority -funds, or failure to invest.
No director, officer or committee member shall be responsible for any action taken or
omitted by any other director, officer or committee member. No director, officer or
committee member shall be required to give a bond or other security to guarantee the
faithful performance of his or her duties pursuant to this Agreement.
ARTICLE 22
BYLAWS
The Board shall adopt Bylaws consistent with this Agreement which shall provide for the
administration and management of the Authority.
Joint Pourrs Agreement 10
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ARTICLE 23
NOTICES
The Authority shalt address notices, billings and other communications to a Member as
directed by such Member. Each Member shall provide the Authority with the address to
which communications are to be sent. Members shall address notices and other
communications to the Authority, at the office address of the Authority as set forth in the
Bylaws.
ARTICLE 24
AMENDMENT
This Agreement may be amended at any time by vote of two-thirds (213rds) of the
Members, acting through their City Councils or Governing Boards, and compliance with
any requirements of the Joint Powers Law. Any amendment of this Agreement shalt
become effective upon receipt by the Authority of notice of the approval of such
amendment by the City Councils or Governing Boards of two-thirds (213rds) of the
Members and satisfaction of any requirements of the Joint Powers Law.
ARTICLE 25
SEVERABILITY
Should any portion, term, condition, or provision of this Agreement be decided by a
court of competent jurisdiction to be illegal or in conflict with any law of the State of
California, or be otherwise rendered unenforceable or ineffectual, the validity of the
remaining portions, terms, conditions, and provisions shall not be affected thereby.
ARTICLE 26
PROHIBITION AGAINST ASSIGNMENT
No Member may assign any right, claim or interest it may have under this Agreement.
and no creditor, assignee or third party beneficiary of any Member shall have any right,
claim, or title to any part, share, interest, fund or asset of the Authority.
ARTICLE 27
AGREEMENT COMPLETE
This Agreement constitutes the full and complete agreement of the parties. There are
no oral understandings or agreements not set forth in writing herein.
ARTICLE 28
FILING OF NOTICE OF AMENDMENT
The General Manager/Secretary of the Authority shall file a notice of this Agreement
within 30 days of its effective date with the office of the California Secretary of State, as
Joint Towers Agrccmcnt t
5-31-06
V
required by Government Code Section 6503.5. Upon any change in membership, the
General Manager/Secretary shall file a notice of such change of membership within 10
days of its effective state with the Secretary of State and with the county clerk of the
county in which each Member is located, as required by Government Code Section
53051.
IN WITNESS WHEREOF, the undersigned party hereto has Executed this Joint Powers
Agreement on the dated indicated below.
DATE: —July 0-40 2006 CITY OF Huntington Beach_
BY:
Dave Sullivan
ITS: Mayor
ATTEST:
CITY CLERK
BY: Q§iqJ -
Joa L. Flynn
A90
APPROV AS TO FORM:
CITY ATTORNEY
B
4f rro
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EXHIBIT 2
V
AMENDED BYLAWS
OF THE
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
ARTICLE 1
DEFINITIONS
The definitions of terms used in these Bylaws shall be the same as those contained in the Joint
Powers Agreement CJPA Agreement") creating the Big Independent Cities Excess Pool Joint
Powers Authority, hereinafter called BICEP, unless otherwise expressly provided herein.
1.1 "Board" means members of the Board of Directors of BICEP; provided that Members that
do not participate in a given risk sharing layer(s) shall not be entitled to vote on any action with
respect to those risk sharing layer(s) and any references in these Bylaws to a majority or specified
percentage of the Board shall be deemed to mean a majority of the affected Members of the
Board.
1.2 "Charter Member" means the Member cities that formed BICEP in September 1988 which
are Huntington Beach, Oxnard, Pomona, San Bernardino and Santa Ana.
1.3 "Coverage" means the liability coverage provided in the Memorandum attached as Exhibit
A hereto and incorporated herein by reference, and any other areas of coverage including but not
limited to, property, workers compensation, etc., as determined and approved by the Board.
1.4 "Coverage Period" means each year co -extensive with the Fiscal Year for which a Member
pays premiums for Coverage, unless and as amended by the Board.
1.5 "Fiscal Year" means from July 1 in each calendar year to June 36 of the next calendar year
unless later amended by the Board.
1.6 "Insurance" means commercial primary or excess insurance or reinsurance.
1.7 "Member" means any public agency as the term "public agency" is defined by Section 6500
of the Joint Powers Law, which includes, but is not limited to, any federal, state, county. city,
public corporation, public district of this state or another state, or any joint powers authority formed
pursuant to the Joint Powers Law by any of these agencies which has executed this Agreement
and has become a member of the Authority.
1.8 "Memorandum" means the BICEP Memorandum of Liability Coverage set forth in Exhibit A
hereto and incorporated herein by reference.
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05-31-06
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1.9 `Risk Management Program" means those programs of risk sharing, Insurance, and risk
management services created by BICEP to provide Coverage to each Member.
- ARTICLE II -
OPERATIONAL ITEMS AND GOVERNANCE
2.1 Term. The Term of these Amended Bylaws shall commence on the date of approval
by the Board as provided in Section 2.3 and shall continue until later amended by the
Board or dissolution of BICEP as provided herein.
2.2 Amendment of Bylaws. These Bylaws may be further amended at any time by a two-
thirds (213rds) vote of all members of the Board. Following adoption of amendments. the
General Manager shall prepare and distribute a revision of the Bylaws to all Members.
2.3 Effective Date. These Bylaws shall go into effect immediately upon adoption by the
Board as provided herein.
2.4 Election of Officers. The Board shall elect the President and the Vice President from
among the members of the Board. For each Fiscal Year, the officers shall be elected in the
following manner:
2.4.1 At the last regular meeting of each Fiscal Year, the Board shall elect officers as
required by the JPA Agreement and these Bylaws for the upcoming Fiscal Year. All
terms of office shall be for one year. The officers shall begin serving terms upon the
beginning of the fiscal year immediately following the election.
2.4.2 Each Board member may place themself or another Board member in nomination for
each office.
2.4.3 Each Board member shall cast one vote for the candidate of his/her choice for each
office.
2.4.4 The Board may remove an officer at any time. A vacancy in any office, due to death,
resignation, removal, disqualification, or any other cause, shall be filled by election of
the Board.
2.5 Duties of Officers.
2.5.1 Duties of the President.
The President shall preside at and conduct all meetings of the Board and perform all duties
as provided in these Bylaws or delegated by the Board. The immediate Past President shall
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05-31-06
serve as an ex officio member of the Executive Committee for a term of one (1) year, and as long
as he or she remains a member of the Board.
• . 2.5.2 Duties of Vice President.
In the absence of the President, the Vice President shall perform all duties assigned to the
President by these Bylaws or by the Board.
2.6 Appointment and Duties of Treasurer.
The Board shall appoint the Treasurer as provided in Section 6505.5 or Section 6505.6 of the
California Government Code. The duties of the Treasurer shall be those specified in JPA
Agreement, in Section 6505.5 or 6505.6 of the California Government Code, and in accordance
with the laws applicable to any out-of-state Member. The Treasurer shall monitor and oversee the
deposits and investments of BICEP's funds by the General Manager and perform other duties as
specified by the Board.
2.7 Appointment and Duties of Controller.
The Board shall appoint the Controller as provided in Section 6505.5 or Section 6505.6 of the
California Government Code. The duties of the Controller shall be those specified in the JPA
Agreement, in Section 6505.5 or Section 6505.6 of the California Government Code, and in
accordance with the laws applicable to any out-of-state Member.
2.8 Appointment and Duties of General Manager.
By a majority vote of all members, the Board shall appoint a General Manager to conduct the day-
to-day operations of BICEP. The General Manager shall perform those duties as delegated and
authorized by the Board, including but not limited to, keeping minutes of the Board meetings, and
keeping and maintaining all of the records of BICEP.
2.9 Establishment of Committees
2.9.1 Executive Committee. There shall be an Executive Committee of the Board of
Directors which shall consist of not less than four (4) members, exclusive of any current
immediate Past President serving as an Ex Officio Executive Committee Member. Two of the
members of the Executive Committee shall be the President and the Vice President of the Board.
The other members of the Executive Committee shall be elected by the Board. The President, or
the Vice President in histher absence, shall serve as the Chairperson of the Executive Committee.
2.9.2 Subject to approval of the Board, the President shall appoint any other committees
and determine the committees' structure, charge, size and membership. Committees may be
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0531-06
3
IN
established to consider any matter within the jurisdiction of BICEP. Committees shall operate
according to the policies adopted by the Bcard and shall submit their reports and
recommendations to the Board. The chairperson of a committee shall be a member of the Board
or an alternate director. `
2.10 Board Meetings
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05-31-0s
2.10.1 Regular Meetings.
A. Time Meld. Unless otherwise changed by a majority vote of the
Board, regular meetings shall be held as required to conduct the business of BICEP,
not less than three (3) times in each Fiscal Year.
B. Business to be Transacted. At any meeting, the Board may
transact any business within its powers, and receive reports of the operations and
affairs of BICEP.
C. Notice. Written notice ("Notice") of each regular meeting of the
Board shall be delivered to each director -and/or alternate director at least fourteen
(14) days in advance of the meeting. Delivery of the Notice may be accomplished in
electronic form. The Notice shall include a proposed agenda and shall specify;
(i) The place, date and hour of the meeting.
(ii) Those matters whi-.h are intended to be presented for action by
the Board.
D. Inclusion of Items in Regular Meeting Agenda. Within three (3)
calendar days of receipt of the Notice which includes the proposed agenda. any
director or alternate director may cause an item to be included in the agenda for the
upcoming Board meeting by delivering to the President or the General Manager a
written request, which may be in electronic form, to include such item in the agenda.
2.10.2 Special Meetings.
A special meeting of the Board may be called at any time by the President or by a majority
of the directors subject to the requirements for 24-hour written notice to the directors and/or
alternate directors and to requesting representatives of the media. The notice of a special
meeting shall specify the time and place of the meeting and the business to be transacted.
No other business shall be considered at the meeting. A member of the Board may waive
notice as provided in Section 54956 of the Government Code and in accordance with the
laws applicable to any out-of-state Member. Notice of the calling of any special meeting
4
WE
shall be posted as provided in said Section 54956 and in accordance with the laws
applicable to any out-of-state Member.
2.10.3 Adjourned Meetings.
The Board may adjourn any regular or special meeting to a time and place specified in the
order of adjournment, whether or not a quorum has been established. if a quorum is not
established, no business other than adjournment may be transacted. A copy of the order
for adjournment shall be posted.
2.11 Alternate Director.
The alternate director appointed by a Member as its alternate representative on the Board may
attend and participate in any meeting of the Board and, in the absence of the director, may vote in
any meeting of the Board as the representative of the Member.
2.12 Quorum and Voting Requirements.
A majority of the Members shall constitute a quorum for the transaction of business. -Ail actions of
the Board shall require the affirmative votes of a majority of the Members present at a meeting
duly held at which a quorum is present unless otherwise expressly provided herein. Each
Member shall be entitled to cast only one vote.
2.13 Brown Act Compliance.
Notwithstanding anything herein to the contrary, all meetings shall be held in strict compliance
with the Ralph M. Brown Act (California Government Code Section 54950 et seq.), as it may be
amended from time to time, and in accordance with the laws applicable to any out-of-state
Member.
2.14 Robert's Rules of Order.
All meetings of the Board, its Committees or other bodies of BICEP shall be conducted in
accordance with Robert's Rules of Order, provided that in the event of a conflict, these Bylaws or
applicable state law shall supersede and control.
2.15 Authority to Sign Documents.
The Board may authorize any officer, staff member, or agent of BICEP to execute any contract in
the name of and on behalf of BICEP, and such authorization may be general or specific in nature.
Unless so authorized, no officer, staff member or agent shall have any power to bind BICEP by
contract.'
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5
2.16 Offices.
BICEP's principal office for the transaction of business is located at 1100 S. Flower Street, Suite
2100, Los Angeles California 90015. The Board may change the location of the principal office
from time to time. The Board may establish one or more subordinate offices at any place or places
where BICEP is qualified to do business.
ARTICLE III
FINANCE
3.1 Budget.
Prior to the last Board meeting in a Fiscal Year, the General Manager shall submit to the Board a
proposed general budget for the next Fiscal Year. That budget shall include revenues and
expenses with beginning balances. Revenues are to be broken down by operating revenues and
interest income. Expenses are to be broken down by operating expenses,
professional/contractual services plus pool coverage and claim expense. The budget shall
provide information for the three prior Fiscal Years, the budget and projected budget for the
current Fiscal Year, and the proposed budget for the upcoming Fiscal Year. The Board shall
review and adopt the budget no later than at the last meeting of the Board in each Fiscal Year.
3.2 Delegation.
The General Manager shall manage all expenditures, subject to control of the Board. The
General Manager and Treasurer shall have power to transfer funds within the total detailed budget
to meet unanticipated needs or changed situations. Such action shall be reported to the Board at
their next meeting.
ARTICLE IV
NEW MEMBER REQUIREMENTS
4.1 Conditions to providing Coverage to a New Member.
BICEP may provide Coverage to any new Member(s) which is not currently a Member under
these Bylaws, subject to the following conditions:
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05-31-06
4.1.1 The new Member shall be a public agency as defined in Section 6500 of the
California Government Code.
4.1.2 The public agency shall have a full-time risk management employee, or subject to
the unanimous approval of the Board, shall have either: (i) a risk management
0
professional or (H) otherwise must be able to demonstrate a sound risk management
program.
4.1.3 The public agency shall have an active loss control program.
4.1.4 Anew Member's participation in a coverage program of BICEP shall be subject to an
actuarial study of loss experience to compare with current Members to see if the
new Membees participation would adversely affEct the actuarial soundness of a
BICEP program.
4.1.5 The recommendation of BICEP's insurance broker.
4.1.6 Submission of reasonably required information including but not limited to, audited
financial statements, underwriting data. claims and loss reports.
4.2 Acceptance of New Member.
Acceptance of a new Member shall be approved by a vote of two-thirds (2/3rds) of all current
Members of the Board.
4.3 Condition to Acceptance.
Acceptance of a new Member shall be subject to the approval and execution of the Joint Powers
Agreement, as it may be amended from time to time, by such Member's governing body and
agreement to be bound by these Bylaws.
ARTICLE V
COVERAGE ACCEPTANCE:
5.1 BICEP hereby agrees to provide the Coverage to each W.amber, and each Member hereby
agrees to accept the Coverage, in accordance with these Bylaws and upon the terms and
conditions set forth in the Memorandum and/or Insurance purchased for Members in accordance
with each Risk Management Program in which a Member participates.
5.2 The Board shall annually determine each type of Risk Management Program which BICEP
may provide for Coverage, or for a portion of Coverage. to the Members. Each such Risk
Management Program shall provide for appropriate levels of s3lf-insured retention, risk sharing
and the purchase of Insurance from a commercial insurer or reinsures, as determined and
approved by the Board. The Board may determine to suspend the Memorandum and accept the
policy of Insurance as the basis for liability coverage by the approval of a "reverse following form.'
5.3 Coverage provided to each Member is expressly conditioned on that Member's payment of
applicable premiums related to the Risk Management Program in which the Member participates.
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7
ARTICLE VI
DISSOLUTION OF BICEP
6.1 BICEP shall continue until dissolution as determined by a two-thirds (213rds) vote of the
entire Board. The JPA Agreement and these Bylaws shall continue in force and effect for
purposes of disposing of all claims, payment of all expenses related to such dissolution, including
but not limited to, insurance company payroll audits, claims adjustment costs, financial auditing
expenses, accounting costs, investment services expenses, required official dissolution notices to
various parties, attorney costs and any other related necessary expenses, and the distribution of
remaining assets of BICEP.
6.2 The distribution of remaining assets of BICEP upon dissolution shall be in accordance with
the terms and conditions for distribution as provided in the Risk Management Program in which a
Member participates.
6.3 The Board is vested with all powers of BICEP for the purpose of concluding and dissolving
the business affairs of BICEP.
ARTICLE VII
WITHDRAWAL BY MEMBER
7.1 Conditions to Permitting Withdrawal of a Member from Coverage. On and after July 1,
2005, BICEP shall permit a Member to withdraw from Coverage subject to the following
conditions:
7.1.1 A Member shall not be in default of any of its obligations to pay any premium as
provided herein and pursuant to a Risk Management Program.
7.1.2 Notice to Withdraw.
(a) A Charter Member shall provide written notice to BICEP of its intent to
withdraw no less than six (6) months preceding the upcoming renewal date of Coverage. A
non -Charter Member may not withdraw for a period of t)irty-six (36) months commencing
from the date of admission to BICEP ("Initial Term'). After the Initial Term, a non -Charter
Member shall provide written notice to BICEP of its intent to withdraw no less than six (6)
months preceding the upcoming renewal date of Coverage; except, however, a non -
Charter Member may provide such 6-month notice prior to the end of its Initial Term, which
withdrawal shall take effect on the next immediate renewal date of Coverage.
(b) Any Member may withdraw from a Risk Management Program which is non -
risk sharing by providing written notice no less than ninety (90) days preceding the
upcoming renewal date of such non -risk sharing Coverage.
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7.1.3 A Member shall have paid all fees ar.d expenses incurred by BICEP as a result of
such withdrawal.
7.1.4 A Member's withdrawal shall be effective on the first day of a new Coverage Period.
7.2 The distribution to a Member of assets of BICEP upon withdrawal shall be in accordance
with the terms and conditions for such distribution as provided in the Risk Management Program
in which a Member participates.
7.3 A Member that is not participating in any Risk Management Program shall be deemed to
have withdrawn from BICEP.
ARTICLE Vill
EXPULSION OF MEMBER
8.1 Conditions to permitting expulsion of a Member from Coverage. BICEP may expel a
Member from Coverage subject to the following conditions:
8.1.1 A Member shall be in default under these Bylaws, the Memorandum. or a Risk
Management Program and shall have failed to cure such default in accordance with the provisions
of Article X, below;
8.1.2 The Board, by not less than two-thirds (213rds) vote of the Members, excluding the
Member in default, shall have approved such expulsion and written notice of the final action of
expulsion shall have been given to the Member not less than sixty (60) days preceding the
effective date of such expulsion;
8.2 In the event that BICEP elects to expel any defaulting Member, subject to the conditions
described and in the manner provided in Section 8.1 hereof. the Member nevertheless agrees to
pay to BICEP all cost. losses or damages howsoever arising or occurring as a result of such
default. In no event shall expulsion waive or release such defaulting Member from its ongoing
obligations assumed during its years of participation in BICEP prior to the effective date of
expulsion.
8.3 The distribution to a Member of assets of BICEP upon expulsion shall be in accordance
with the terms and conditions for such distribution as provided in the Risk Management Program
in which a Member participates.
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ARTICLE IX
INDEMNIFICATION AND DISCLAIMER
9.1 Indemnification Covenants. Each Member hereby agrees to indemnify and save
BICEP and all other Members and their respective officers harmless from and against all claims,
losses and damages, including legal fees and expenses, arising out of such Member's breach or
default in the performance of any of its obligations under these Bylaws, the Memorandum, and a
Risk Management Program.
9.2 Disclaimer. BICEP MAKES NO WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, AS TO THE ADEQUACY OF THE COVERAGE FOR THE NEEDS OF
ANY OR EACH OF THE MEMBERS.
ARTICLE X
DEFAULTS AND REMEDIES
10.1 Defaults. The following shall be an event of default under these Bylaws and the term
"Event of Default" shall mean, whenever it is used in these Bylaws with respect to a Member, any
one or more of the following events:
10.1.1 Failure by a Member to pay any premium or various adjustments or
allocations required to be paid hereunder;
10.1.2 Failure by a Member to observe and perform any covenant, condition or
agreement on its part to be observed or performed herein or otherwise with respect hereto;
10.1.3 The filing by the Member of a case of bankruptcy, or the subjection of any
right or interest of the Member under these Bylaws to any execution, garnishment or attachment,
or adjudication of the Member as a bankrupt, or assignment by the Member for the benefit of
creditors, or the entry by the Member into an agreement of composition with creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the Member in any
proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under
any similar act which may hereafter be enacted;
10.1.4 Failure to fully comply with the terms and provisions of the Memorandum or a
Risk Management Program.
10.2 Notice of Default. BICEP shall give written notice of the Event of Default ("Notice of
Default") to the Member in default, specifying the Event of Default complained of by BICEP, in the
time periods as provided in Section 10.3 below. Failure or delay in giving such notice shall not
constitute a waiver of any Event of Default, nor shall it change the time of default.
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10.3 Right to Cure Default. The Member whose acts or omissions to act constitute an Event
of Default as defined in Section 10.1 shall be entiVed to cure, correct, or remedy such Event of
Default, if (i) such defaulting Member commences and thereafter diligently pursues the curing of
said Event of Default within thirty (30) days of receipt of a Notice of Default, as defined in Section
10.2. and (ii) such defaulting Party fully completes such cure, correction or remedy within thirty
(30) days of receipt of said Notice of Default, or, in the event that the Event of Default is not
curable within said thirty (30) day period), within such additional period as is reasonably necessary
to cure said Event of Default; provided that such additional period shall not in any event exceed
ninety (90) days without the Board's consent. In the event Member reasonably and in good faith
contends that it will take more than ninety (90) days to cure the Event of Default, the defaulting
Member and Board shall meet and confer in good faith and determine whether additional time is
required to cure the Event of Default, and, if so, the Board shall extend the time to cure the Event
of Default. Notwithstanding anything to the contrary in this Section, if the Event of Default consists
of a Member's failure to timely discharge its monetary obligations to BICEP, then the Member in
default shall cure any such default within ten (10) days of receipt of a Notice of Default.
10.4 No Remedy Exclusive. Unless otherwise expressly provided in these Bylaws, the
Memorandum, or a Risk Management Program, the rights and remedies of BICEP are cumulative,
and the exercise by BICEP of one or more of such rights or remedies shall not preclude the
exercise by it, at the same or different times, of any other rights or remedies for the same default
or any other default.
10.5 Agreement to Pay Attorneys' Fees and Expenses. In the event any party to these
Bylaws should default under any of the provisions hereof and the nondefaulting parties should
employ attorneys or incur other expenses for the collection of moneys or the enforcement of
performance or observance of any obligation or agreement on the part of the defaulting party
contained herein, the defaulting party agrees that it will on demand pay to the nondefaulting
parties the reasonable fees of such attorneys and such other expenses so incurred by the
nondefaulting parties awarded to the nondefaulting parties by a court of competent jurisdiction.
10.6 No Additional Waiver -implied by One Waiver. No waiver by BICEP of any breach of these
Bylaws or any provisions of these Bylaws shall be deemed to constitute a waiver of any preceding
or succeeding breach of the same or any other provision of these Bylaws. Any failures or delays
by BICEP in asserting any of its rights and remedies as to any default shall not operate as a
waiver of any default or of any such rights or remedies. Delays by BICEP in asserting any of its
rights and remedies shall not deprive BICEP of its right to institute and maintain any actions or
proceedings which it may deem necessary to protect, assert or enforce any such rights or
remedies.
eyla -s
05-31-06
I
ARTICLE XI
APPLICABLE STATE LAW
11.1 The laws of the State of California shall govem the interpretation and enforcement of these
Bylaws. In the event of a conflict between California laws and an out-of-state Member's state law,
California law shall control; except however, notwithstanding any provision to the contrary, these
Bylaws shall not be construed to alter or change any applicable limitations to liability, e.g., caps on
liability judgments, more stringent claim requirements, or other immunities, applicable under the
state law of an out-of-state Member to such Member. To the extent that another state's laws do
not conflict with California laws as referenced herein, the other state's laws also apply. The
Members agree that any legal actions and proceedings to resolve any dispute under JPA
Agreement, these Bylaws or any Risk Management Program shall only be brought in the Superior
Court of the State of California.
ARTICLE XII
COMPANION DOCUMENTS
12.1 All Exhibits referred to in this Agreement are incorporated herein by such reference and
made a part hereof. -
Bylaws
OS31-06
12
EXHIBIT 3
V
BICEP MASTER IIF.AIORANDUI<I OF LIABILITY COVERAGE
This MEMORANDUM provides pooled risk sharing among the MEMBERS of the Big Independent
Cities Excess Pool Joint Powers Authority ("BICEP") pursuant to Government Code sections 990.8 and
6500, et seq.
In consideration of the MEMBER's payment of the premium, BICEP and the MEMBER agree as
follows:
SECTION I -- COVERAGES
BICEP will pay those sums on behalf of the COVERED PARTY for COVERED ULTIMATE NET
LOSS that the COVERED PARTY becomes legally obligated to pay as DAMAGES by reason of
liability imposed by law or assumed under a COVERED INDEMNITY CONTRACT because of
BODILY INJURY, PROPERTYDAMAGE, PERSONAL INJURY, EMPLOYMENT PRACTICES,
LAND USE CLAIM, or PUBLIC ENTITY ERRORS AND OMISSIONS caused by an
OCCURRENCE.
In the event there is no coverage for a LAND USE CLAIM through commercial insurance or
reinsurance, any coverage under the Memorandum for LAND USE CL.AI]XI shall be limited per
Member to S5.0 million per occurrence and S5.0 millior, per annual aggregate.
BICEP will pay DEFENSE COSTS incurred within the COVERED ULTIMATE NET LOSS.
SECTION II — DEFINITIONS
Capitalized words and phrases have the special meanings given in this Section.
1. AGENCY -- means any council, commission, agen--y, district, authority, board or similar public
entity under the MEMBER's direction or control or on which the MEMBER's governing board
sits as the governing body.
This Definition excludes an airport or hospital board or commission, regardless ofhow such body
is denominated.
2. AIRCRAFT -- means an operational vehicle designed for the transport of persons or property
principally in the air.
3. AUTOMOBILE -- means a self-propelled land motor vehicle and/or trailer or semi -trailer,
including any attached machinery or equipment, designed for travel on public roads and subject to
motor vehicle registration.
4. BODILY INJURY -- means physical injury, emotional distress, sickness, or disease sustained by a
person, including death resulting from any of these at any time.
03-05-06
5. CLAIM -- means a claim presented pursuant to Government Code section 910, et seq., and!or
demand, action, suit, or administrative proceeding against a COVERED PARTY to recover
DAMAGES caused by an OCCURRENCE.
G. COVERED PARTY -- means:
a. BICEP;
b. The MEMBER;
c. The MEMBER's EMPLOYEES;
d. The MEMBER's AGENCIES;
e. With respect to any AUTOMOBILE owned by a COVERED PARTY or leased or hired for
use by or on behalf of a COVERED PARTY, any person while using such AUTOMOBILE
and any person or organization legally responsible for the use thereof, provided its actual use
is with the permission of the MEMBER. However, the following arc not COVERED
PARTIES:
i. Any person or organization, or any agent or employee thereof, operating an
AUTOMOBILE sales agency, repair shop, service station, storage garage, or public
parking place with respect to an OCCURRENCE arising out of the operation thereof,
including road testing and delivery; or
ii. The owner or any lessee, other than the COVERED PARTY, of a leased or hired
AUTOMOBILE or any agent or employee of such owner or lessee;
f. Any person or entity holding a certificate of coverage duly issued by BICEP, as limited
therein ("ADDITIONAL COVERED PART i"). An ADDITIONAL COVERED PARTY is
not covered for claims arising from the ADDITIONAL COVERED PARTY's sole negligence
or for claims by another COVERED PARTY.
This Definition 6 excludes a joint powers agency, or anyperson or entity actingpursuant to a joint
powers agreement, other than an EMPLOYEE, unless the agcncy or agreement is added by
endorsement to this MEMORANDUM.
7. COVERED INDEMNITY CONTRACT -- means an agreement pertaining to the MEMBER's or
its AGENCY's routine governmental operations that incidentally requires either of them to defend
or indemnify another party for BODILY INJURY, PROPERTY DAMAGE or PERSONAL
INJURY to a third party caused by an OCCURRENCE.
8. COVERED ULTIMATE NET LOSS --means an amount by which ULTIMATE NET LOSS
exceeds the SELF -INSURED RETENTION, but not exceeding the LIMIT OF LIABILITY, and
which this MEMORANDUM covers.
9. DAM -- means any artificial barrier, together with appurtenant works, which:
as-05-06 2
a. Is 25 feet or more in height from the natural bed of the stream or watercourse; or
b. - Has an impounding capacity of 50 acre-feet or more.
No structure specifically exempted from jurisdiction by the State of California Department of
Water Resources, Division of Safety of Dams shall be a DANNI, unless such structure is under the
jurisdiction of any agency of the federal government.
10. DAMAGES —means money damages, and includes attorney fees, costs and interest awarded
against the COVERED PARTY.
This Definition excludes any demand, action, suit or petition for restitution, disgorgement and any
non -monetary remedy or relief, including equitable relief, injunctive relief, administrative relief,
administrative mandamus, or declaratory relief and any attorney fees, costs and interest based
thereon.
This Definition also excludes attorney fees, costs and interest based on a contractual provision
not failing within the definition of I1.7. COVERED INDEMNITY CONTRACT.
11. DEFENSE COSTS -- means reasonable attorney fees, costs and expenses incurred by the
COVERED PARTY for the adjustment, investigation, defense or appeal of CLAIM.
This Definition includes City Attorney Office fees, but excludes the MEMBER's claim
administration expenses.
However, attorney fees shall not exceed the rates specified in the LIABILITY RISK
MANAGEMENT REQUIREMENTS, unless the BICEP Board of Directors authorizes a higher
rate.
This Definition excludes the attorney fees, costs and interest that a COVERED PARTY incurs in
coverage or other disputes with BICEP.
12. EMPLOYEE -- means a pastor present elected or appointed official, employee or volunteer of the
MEMBER or its AGENCY acting within the scope of his or her employment with, or duties for,
the MEMBER or AGENCY.
13. EMPLOYMENT PRACTICES —means a COVERED PARTY's employment practices, policies,
acts or omissions that lead to an EMPLOYEE's CLAIM for harassment, wrongful termination,
wrongful employment, failure to hire or promote, retaliation, unlawful discrimination or violation
of civil rights.
14. DIVERSE CONDEMNATION —means a CLAIM by any person or entity under the California or
United States Constitutions alleging that the MEMBER or its Agency has taken or damaged real,
personal, tangible or intangible property for public use through any means without payment of
just compensation.
15. LAND USE CLARI--mcans any CLAM, other than for DIVERSE CONDEMNATION', arising
out of the enactment ofany zoning ordinance, specific plan, general plan, or similar regulation or
use or improvement of real property, and the granting, denying or the conditional granting of a
03-05-06
discretionary entitlement in the use of real property such as but not limited to, a conditional use
permit or variance.
16. LIABILITY PROGRAM -- means the BICEP Liability Program, dated , or any
later amendment or revision that the BICEP Board of Directors approves.
17. LIABILITY RISK MANAGEMENT REQUIREMENTS -- means Exhibit A to this
MEMORANDUM, or any later amendment or revision that the BICEP Board of Directors
approves.
18. 1,11MIT OF LIABILITY -- means B10EP's LLMIT OF LIABILITY per OCCURRENCE for the
MEMBER in the amount specified in Item 4 of the Declarations, and includes DEFENSE
COSTS. One LIMIT OF LIABILITY for all coverages applies collectively to the MEMBER, its
AGENCIES, its EMPLOYEES and any COVERED PARTY under Definitions 6.e. and 61
19. MEMBER —means the public entity approved and admitted into BICEP and named in Item 1 of
the Declarations .
20. MEMORANDUM -- means this BICEP Mastcr Nlemorandum of Liability Coverage and any
endorsements attached to it.
21. MEMORANDUM PERIOD —means the period stated in Item 3 of the Declarations.
22. NUCLEAR MATERIAL -- means Source Material, Special Nuclear Material, or Byproduct
Material. Source Material, Special Nuclear Material and Byproduct Material have the meanings
given to them by the Atomic Energy Act of 1954 and any law amendatory thereto.
23. OCCURRENCE -- means:
a. With respect to BODILY INJURY or PROPERTY DAMAGE, an accident or event, including
continuous or repeated exposure to substantially the same conditions or course of conduct,
that results during the MEMORANDUM PERIOD in BODILY INJURY or PROPERTY
DAMAGE neither expected nor intended from the standpoint of the COVERED PARTY;
b. With respect to PERSONAL INJURY (other than BODILY INJURY), EMPLOYMENT
PRACTICES and PUBLIC ENTITY ERRORS AND OMISSIONS, an offense described
in the Definitions of those terms that results in DAMAGES during the MEMORANDUM
PERIOD.
24. PERSONAL INJURY -- means DAMAGES cau3ed by or arising out of one or more of the
following:
a. False arrest, detention or imprisonment, malicious prosecution or abuse of process;
b. Wrongful entry or miction;
c. Publication or utterance of material that slanders or libels a person or organization or
disparages a person's or organization's goods, products or services, or infringement of
Q3-05-06 4
copyright, title or slogan, or oral or written publication of material that violates a person's
right of privacy,
d. Discrimination, other than EI STLOYMENZT PRACTICES, based upon race, religion,
nationality, national origin, color, creed, sex, sexual orientation, handicap, disability, age or
employment or violation of civil rights;
e. Assault and battery.
25. POLLUTANTS -- means any solid, liquid, gaseous, or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids, alkalis, chemicals, silt, airborne particles or fibers,
mold, fungus, waste, or electromagnetic Feld. VFaste includes materials to be discarded or be
recycled, reconditioned or reclaimed.
This Definition excludes potable water, agricultural water, water furnished to commercial users,
or water used for fire suppression.
26. PROPERTY DAMAGE -- means:
a. Physical injury to tangible property, including all resulting loss of use of that property; or
b. Loss of use of tangible property that is not physically injured.
27. PUBLIC ENTITY ERRORS AND OMISSIONS —means any misleading statement, or any actor
omission of a COVERED PARTY, whether by misfeasance, malfeasance or nonfeasance, that
results in a CLAIM against the COVERED PARTY.
This Definition excludes BODILY INJURY, PROPERTY DAMAGE, PERSONALINJURY, and
EMPLOYMENT PRACTICES.
28. SELF -INSURED RETENTION —means the amount stated in Item 5 of the Declarations that the
MEMBER must pay for each OCCURRENCE for judgments, settlements and DEFENSE
COSTS. A single SELF -INSURED RETENTION applies collectively to the MEMBER, its
AGENCIES, its EMPLOYEES, and any COVERED PARTY under Dclinitions 6.e and 61.
Payment by valid and collectable insurance or other coverage available to the MEMBER, its
AGENCIES, its EMPLOYEES, ora COVERED PARTY under Definition 6.e shall applyaga:nst
the SELF -INSURED RETENTION.
29. ULTIMATE NET LOSS -- means the sums for which the MEMBER is liable as DAMAGES
either by adjudication or by compromise after making proper deduction for all recoveries and
salvages and includes DEFENSE COSTS.
30. WATERCRAFT —means an operational vehicle in excess of 27 feet designed for the transport of
persons or property principally on the water.
03-05-06
SECTION III -- DEFENSE AND SETTLEMENT
f . BICEP shall have the right but not the duty to participate at its own expense in the defense of any
CLAIM against a COVERED PARTY that BICEP determines will likely result in a COVERED
ULTIMATE NET LOSS.
2. After the amount of the SELF -INSURED RETENTION has been exhausted by payment of
judgments, settlements and DEFENSE COSTS, BICEP shall reimburse the COVERED PARTY
for any further DEFENSE COSTS within the LIMIT OF LIABILITY even if the allegations
against the COVERED PARTY are groundless, false or fraudulent.
3. Notwithstanding the above, BICEP shall not have the obligation to defend or reimburse the
DEFENSE COSTS of an EMPLOYEE if the MEMBER determines under California Government
Code section 995.2(a) that the EMPLOYEE is not entitled to a defense. BICEP shall, however,
reimburse DEFENSE COSTS if a court determines that the MEMBER has an obligation to pay
them.
4. A COVERED PARTY shall not settle a CLALM for an amount in excess of the MEMBER's
SELF -INSURED RETENTION without the consent of BICEP's Board of Directors.
BICEP shall not settle a CLAILM without the MEMBER's consent. However, in the event a
MEMBER does not give its consent to accept a bona fide monetary settlement offer, BICEP's
liability shall be limited to the amount that BICEP would have paid in such settlement if.
a. Such settlement demand exceeds the MEMBER's SELF -INSURED RETENTION by
$500,000; and
b. The Member shall have expended or incurred $250,000 or more in DEFENSE COSTS.
G. BICEP shall not be obligated to pay any CLAIM or reimburse DEFENSE COSTS alter the LD111T
OF LIABILITY over the SELF -INSURED RETENTION has been tendered for settlements and/or
DEFENSE COSTS or has been exhausted by payment of judgments, settlements and/or
DEFENSE COSTS.
SECTION IV — MEMBER'S SELF -INSURED RETEh'TION
AND BICEP'S LIMIT OF LIABILITY
1. BICEP's liability to a COVERED PARTY as the result of any one OCCURRENCE is only the
COVERED ULTIMATE NET LOSS.
2. For the purpose of determining the SELF-DJSURED RETENTION and LIMIT OF LIABILITY,
all DAMAGES arising out of continuous or rcpcatzd exposure to substantially the same general
conditions or course of conduct shall be considered as arising out of one OCCURRENCE during
the first applicable coverage period.
03-as-06 6
v
SECTION V -- COVERAGE PERIOD AND TERRITORY
The coverages stated in Section I of this MEMORADUM apply. to DAMAGES caused by an
OCCURRENCE anywhere in the world during the MEMORANDUM PERIOD.
SECTION VI — EXCLUSIONS
This MEMORANDUM does not apply to any CLAW for or arising out of:
i . Contamination of the environment by POLLUTANTS introduced at anytime, into, under or upon
land, the atmosphere, or any watercourse or body of water or aquifer. This exclusion applies
whether or not the contamination is introduced into the environment intentionally or accidentally
or gradually or suddenly, and whether or not the COVERED PARTY or any other person or
organization is responsible for the contamination.
`Contamination" includes any unclean, unsafe, orunhealthful condition, eitheractual orpotential,
which arises out of the presence in the environment of any POLLUTANT whether permanent or
transient.
"Environment" includes land, bodies of water, underground water or water table or aquifer, the
atmosphere, and any other natural feature of the earth, whether or not altered, developed or
cultivated.
This exclusion does not apply to:
a. Any discharge, dispersal, seepage, migration, release or escape of POLLUTANTS that meets
all of the following conditions:
It was accidental and neither expected nor intended by the COVERED PARTY. This
condition would not serve to deny coverage for a specific incident where such
discharge, dispersal, seepage, migration, release or escape of pollutants was a result of
an attempt by the COVERED PARTY to mitigate or avoid a situation where
substantial third party bodily injury, PROPERTY DAMAGE or PERSONAL INJURY
could occur;
ii. It was demonstrated as having commenced on a specific date during the term of this
MEMORANDUM;
iii. Its commencement became known to the COVERED PARTY within twenty-one (21)
calendar days and was further reported to the person responsible for risk management
at the MEMBER within a reasonable time frame;
iv. Its commencement was reported in writing to BICEP within sixty (60) calendar days of
becoming known to the person responsible for risk management at the MEMBER; and
03-05-0(
v. Reasonable effort was expended by the COVERED PARTY to temfinatc the situation
as soon as conditions permitted.
However, nothing contained in this provision shall operate to provide any coverage
with respect to:
(1) Any site or location principally used by the COVERED PARTY or by others on
the COVERED PARTY's behalf, for the handling, storage, disposal, dumping,
processing or treatment of waste material;
(2) Any fines or penalties;
(3) Any clean up costs ordered by the superfund program, or any federal, state or
local governmental authority. Flowever this specific exception shall not serve to
deny coverage for third party clean up costs otherwise covered by this
MEMORANDUM simply because of the involvement of a governmental
authority;
(4) Acid rain;
(5) Cleanup, removal, containment, tre fitment, detoxification or neutralization of
POLLUTANTS situated on premises the COVERED PARTY owns, rents or
occupies at the time of the actual discharge, dispersal, seepage, migration, release
or escape of said POLLUTANTS; or
(6) Water pollution caused by oil or its derivatives.
b. DAMAGES caused by heat, smoke or fume from a hostile fire. 'Hostile fire" means one that
becomes uncontrollable or breaks out where it was not intended to be;
c. Firefighting activities, including training fires, or intentional ignition of fires for the purpose
of limiting a fire, or to the discharge of POLLUTANTS for the purpose of controlling a fire;
d. Police use of mace, oleoresin capsicum (O.C. or pepper gas), or tear gas;
e. Need abatement, tree spraying or sudden and accidental sewer backups.
f. Use of chlorine for domestic water, swimming pools or other routine sanitation.
2. Governmental orders, directions or requests that the COVERED PARTY test for, monitor, clean
up, remove, remedy, contain, treat, detoxify or neutralize POLLUTANTS.
3. A governmental unit or other third party's loss or expenses, including attorney fees, for efforts to
monitor, clean up, remove, remedy, contain, trace. detoxify or neutralize POLLUTANTS.
4. Hazardous properties of NUCLEAR MATERIAL.
5. DAMAGES (unless arising out of liability for EMPLOYMENT PRACTICES) to:
03-05-06 8
ME
a. An EMPLOYEE within the course and scope of his or her employment caused by the
MEMBER, its AGENCY or its EMPLOYEE.
b. An EMPLOYEE's spouse, child, parent, broth=r or sister resulting from the acts or omissions
of the EMPLOYEE within the course and scope of his or her employment by the MEMBER
or its AGENCY. _
This exclusion does not apply, however, to the MEMBER or its AGENCY's liability under a
COVERED INDEMNITY CONTRACT.
5. The liability of any MEMBER to its AGENCY, or the AGENCY to the NIEMBER.
7. Liability of a COVERED PARTY to its own past or present employer.
S. Liability of a COVERED PARTY under Definition Ge to another COVERED PARTY.
9. Workers' compensation or disability benefits law or any similar law.
14. Use or operation by or on behalf of the MEMBER as respects:
a. Any hospital.
b. Any healthcare provider because of his or her professional arts, errors or omissions.
This exclusion does not apply to:
i. Paramedics, emergency medical technicians, medical examiners, technicians,
phlebotomists or nurses, but only when in employ of the MEMBER or its AGENCY; and
ii. Occupational physical examinations, tuberculosis testing and immunization conducted at
the direction of the MEMBER or its AGENCY.
c. Any clinic or infirmary that has:
i. Overnight facilities; or
ii. That performs invasive surgery of any [rind, or
d. Any pharmacy operated by or for the MEMBER or its AGENCY.
11. Rupture, bursting, overflow, seepage, or release o: failure to release water from any DAM.
12. Punitive or exemplary damages, or damage multiples such as double or treble damages awarded
pursuant to statute or law.
13. The COVERED PARTY's actual fraud, corruption, or actual malice.
14. The COVERED PARTY's "willful act", as used H Insurance Code Section 533.
03-05-06 9
15. PROPERTY DAMAGE to:
a. Property owned by the COVERED PARTY;
b. Property rented to or leased to the COVERED PARTY where the COVERED PARTY has
assumed liability for damage to or destructian of such property, unless the COVERED
PARTY would have been liable in the absenc: of such assumption of liability; or
c. AIRCRAFT or WATERCRAFT in the COVERED PARTY's care, custody or control.
16. Operation of any transit district, transit system, or public transportation system owned or operated
by the COVERED PARTY, except any transit system operating over non -fixed route systems
such as "dial -a -ride;' senior citizen transportation, or handicapped transportation.
17. Ownership, maintenance, loading or unloading, use or operation of any AIRCRAFT, airfields,
runways, hangars, buildings or other properties in connection with aviation activities. However,
in connection with airfields, runways, hangars, buildings or other properties in connection with
aviation activities, this exclusion shall not apply to those areas open to the public for the purpose
of entering, leaving, or using the airport facilities, including parking lots and garages. "Loading"
and "unloading" of AIRCRAFT as set forth above shall not apply to paramedics, nurses or
emergency medical technicians.
This exclusion applies only to the coverages for BODILY INJURY and PROPERTY DAMAGE.
18. Failure to supply or provide an adequate supply of gas, water or electricity when such failure is a
result of the inadequacy of the COVERED PARY's facilities to supply or produce sufficient gas,
water or electricity to meet customary and expected demand.
19. Eminent domain, condemnation proceed in s, regulatory takings or INVERSE
12
CONDEMNATION, by whatever name called.
This exclusion shall not apply to physical injury to tangible third -party property, including
resulting IOSS of use of that property.
20. Benefits payable by a COVERED PARTY under any employee benefit plan (whether the plan is
voluntarily established or mandated by statute).
This exclusiondoes not apply, however to liability of COVERED PARTY for failure to secure
such benefits from a third party provider.
21. Refund of taxes, fees or assessments.
22. Remuneration or financial gain to which the COVERED PARTY was not legally entitled.
23. Willful violation of a penal code or ordinance committed by or with the knowledge or consent of
the COVERED PARTY.
24. Estimates of probable costs or cost estimates being; exceeded or faulty preparation of bid
03-05.06 10
specifications or plans, including architectural plans.
25. Failure to perform, or breach of, a contractual obligation, except for liability:
a. That would be imposed in the absence of the contractual obligation;
b. Assumed under any COVERED INDEMNITY CONTRACT.
26. The Employee Retirement Income Security Act of 1974 (ERISA) and any law amendatory
thereto, or any state statute or common law rule which imposes fiduciary duties and
responsibilities with respect to employee benefit programs.
27. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
28. War, whether or not declared, civil war, or revolution or any act or condition incident to the
foregoing, except for a MEMBER's response to such acts or conditions.
29. The purchase, sale, issuance and holding of securities, including but cot limited to bonds.
30. A lockout, strike, picket line, replacement or similar actions in connection with labor disputes or
labor negotiations.
This exclusion does not apply to the coverages for BODILY INJURY and PROPERTY
DAMAGE.
31 The cost of modifying any building or property in order to make said building or property more
accessible or accommodating to any disabled person in compliance with the Americans with
Disabilities Act (Public Law 101-336) or similar state law.
SECTION VII — CONDITIONS
The following are conditions precedent to coverage under this MEMORANDUM:
I. Premium and audit:
a_ The MEMBER shall pay the Deposit Premium designated in the Declarations, and any further
premium that the LIABILITY PROGRAM requires.
b. BICEP may examine the MEMBER's books and records that relate to the subject matter of
this MEMORANDUM at any reasonable time until ten (10) years after the final termination
ofcoverage under this MEMORANDUM or until all knm%m claims noticed under paragraph 3
below have been closed, whichever occurs last.
2. Inspections:
BICEP shall be permitted, but is not obligated to, inspect the MEMBER's property and operations
at any reasonable time. Neither such right to make inspections nor the making thereof. nor any
03-05-06 11
k)
report thereon, shall constitute an undertaking, on behalf of or for the benefit of the MEMBER or
others, to determine or warrant that such property or operations are safe.
3. Duties in the event of an occurrence or claim:
The COVERED PARTY shall have the duty:
a. In the event of an OCCURRENCE that falls within the LIABILITY RISK MANAGEMENT
REQUIREMENTS, to give written notice as soon as possible to BICEP with reasonably
obtainable information about the time, place and circumstances thereof, and the names and
addresses of the involved COVERED PARTIES and witnesses.
b. If a CLAIM is made or legal action brought against the COVERED PARTY that falls within
the LIABILITY RISK MANAGEMENT REQUIREMENTS, to forward to BICEP every
demand, notice, summons or other process received by the COVERED PARTY or the
COVERED PARTY's representative.
c. To cooperate fully with BICEP in the investigation and defense.
d. Upon BICEP's request, to assist in enforcing any right of contribution or indemnity against
any person or organization that may be liabl_ to the COVERED PARTY because of an
OCCURRENCE with respect to which coverage is afforded under this MEMORANDUM,
e. To attend hearings and trials and assist in securing and giving a%idence and obtaining the
attendance of witnesses.
f. To comply with BICEP's LIABILITY RISK MANAGEMENT REQUIREMENTS.
4. No voluntary payments:
The COVERED PARTY shall not, except at its own cost, voluntarily (that is, without BICEP's
approval) make any payment, assume any obligation or incur any expense, including DEFENSE
COSTS, after it has exhausted its SELF -INSURED RETENTION.
5. Bankruptcy and insolvency:
Bankruptcy or insolvency of the COVERED PARTY shall not relieve BICEP of any of its
obligations hereunder. Nor shall the bankruptcy or insolvency of the COVERED PARTY
increase BICEP's obligations hereunder.
G. Other coverage:
Insurance or other coverage available to the COVERED PARTY for a CLAL1Z (whether on a
primary, excess or contingent basis) shall be primary to, and shall not contribute with, this
Memorandum's coverage; except that this provision shall not apply with respect to the excess
insurance purchased specifically to be in excess of this Memorandum, or to insurance or
reinsurance which is intended to provide the remainder of the LIMIT OF LIABILITY stated in the
Declaration.
03-05-06 12
7. Duration of an occurrence:
An OCCURRENCE with a duration of more than one htEh•1ORA1*.'DUNt PERIOD shall be
treated as a single OCCURRENCE arising durin3 the MEMORANDUM PERIOD when the
OCCURRENCE began.
8. Endorsements to the MEMORANDUM:
Notice to any agent or knowledge possessed by any agent or by any other person shall not affect a
waiver or change in any part of this MEMORAI\DU14 or stop BICEP from asserting any right
under the terms of this MEMORANDUM, nor shall the terms of this MEMORANDUM be
waived or changed, except by endorsement issued to form a part of this MEMORANDUM.
9. No third party beneficiaries:
Nothing in this MEMORANDUM is intended to make any person or entity, other than a
COVERED PARTY, a third party beneficiary of the coverage that this MEMORANDUM
provides.
This MEMORANDUM confers no coverage or Eenefits on any person or entity other than a
COVERED PARTY; no person or entity other than a COVERED PARTY shall have the right to
bring a legal action against BICEP, without its consent, to determine BICEP's obligations to a
COVERED PARTY under this MEMORANDUM.
10. Subrogation:
BICEP shall be subrogated to the extent of any payment hereunder to the COVERED PARTY's
rights of recovery thereof, and the COVERED PARTY shall do nothing after loss to prejudice
such right and shall do everything necessary to secure such right. Any amount so recovered shall
be apportioned as follows:
a. The expenses of all such recovery proceedings shall be paid before any reimbursements are
made. If there is no recovery in the proceedings conducted by BICEP, then BICEP shall bear
the expenses thereof.
b. The highest layer of coverage shall be reimbursed first and, if there be sufficient recoveries,
then the next highest layer, until all recoveries are used up.
11. Assignment of interest:
Assignment of interest under this MEMORANDUM shall not bind BICEP unless approved by the
BICEP Board of Directors.
12. Drop down exclusion:
BICEP's LIMIT OF LIABILITY shall not be increased for any reason, including, but not limited
to, the refusal or inability of the COVERED PARTY to pay the SELF -INSURED RETENTION
or by the refusal or inability of any underlying insurer or j oint powers authority to pay, whether by
reason of insolvency, bankruptcy, or otherwise.
03-05-06 13
v
13. Separate limits:
If two or more MEMBERS are jointly or jointly and severally liable for the same CLAM or
OCCURRENCE, a separate SELF -INSURED RETENTION and LLtiSIT OF LIABILITY applies
collectively to each MEMBER and its AGENCIES, its EMPLOYEES and any COVERED
PARTY under Definition 6.e.- _
14. Severability:
This MEMORANDUM uses the term COVERED PARTY severally and not collectively, so that
it applies separately to each COVERED PARTY as if it were the only COVERED PARTY.
However, this provision shall not increase a MEMBER's SELF -INSURED RETENTION or
BICEP's LWIT OF LIABILITY.
15. Interpretation:
a. This MEMORANDUM does not provide insurance so that the rule that all ambiguities must
be construed against an insurer does not apply. This MEMORANDUM shall be construed
according to the principles of contract law, giving full effect to the intent of the MEMBERS
and DICEP's Board of Directors in adopting it.
b. This MEMORANDUAri shall be interpreted w ithout regard to the drafter. Its terms and intent,
with respect to ti-:e rights and obligations of any COVERED PARTY or BICEP, shall be
interpreted and construed on the express assumption that the MEMBERS and BICEP
participated equally in its drafting.
16. Law governing the MEMORANDUM:
This MEMORANDUM shall be governed and construed in accordance with the laws of the State
of California.
17. Cancellation:
This MEMORANDUM may, with respect to any MEMBER, be cancelled by BICEP on ninety
(90) days' notice either for the then -current MEMORANDUM PERIOD or, in the event of
expulsion, permanently upon the occurrence of the events and under terms set forth in the
LIABILITY PROGRAM[.
19. Named Member:
The MEMBER first named in Item I of the Decla.-ations is authorized to acton behalf of itself, its
AGENCIES, its EMPLOYEES, and any COVERED PARTY under Definitions 6.e and 6.f with
respect to giving and rcceiving Notice of Cancellation and for receiving any return premium that
may become payable under this MEMORANDUM. That MEMBER is also responsible for the
payment of all premiums.
03-05-06 14
L449
EXHIBIT "A" TO BICEP MEMORANDUM OF COVERAGE
BIG INDEPENDENT CITIES EXCESS POOL
LIABILITY RISK MANAGEMENT REQUIREMENTS
1.0. DEFINITIONS. The Definitions in the BICEP MASTER MENIORANDLJNI OF
COVERAGE (MEMORANDUM) apply to capitalized words in these Liability Risk Management
Requirements ("Requirements").
2.0. MEMBER's RISK MANAGER. Each MEMBER shall have and maintain a full-time risk
management employee, or subject to the unanimous approval of the Board, shall have either: (i) a
risk management professional, or (ii) otherwise must be able to demonstrate a sound risk
management program.
3.0. LOSS PREVENTION PROGRAM. Each MEMBER shall maintain a loss prevention
program, and shall act upon all recommendations of BICEP concerning the reduction of unsafe
conditions and the correction of policies or practices that are likely to lead to CLAIMS.
4.0. RECORDS.
4.1. The MEMBER shall furnish an annual audited financial statement to BICEP.
4.2. The MEMBER shall maintain individual claim files containing the Documentation
specified in Section 9.3 for all CLANS for the preceding ten (10) fiscal years. The files
shall be referenced and stored for retrieval by City Claim Number.
4.3. The MEMBER shall maintain a computer -generated spreadsheet showing the
following information by columns for all CLAINIS in the ten (10) preceding fiscal years:
• City Claim No.
• BICEP Claim No. [If any]
• Claimant
• City Department
• Loss Date
• Claim Date
• Description
• Current Status
• Amounts Reserved
• Amounts Paid
• Date Closed
4.4 The MEMBER shall submit copies of the above records to BICEP as directed by its
03-05-06 15
General Manager or its duly constituted committees.
5.0. DEFENSE ATTORNEYS AND FEES.
5.1. The MEMBER shall use qualified defense attorneys experienced in litigating the type
of CLAIM at issue.
5.2. BICEP retains the right to associate its attorneys with the MEMBER's attorneys in the
defense of any case that the BICEP Board of Directors determines has DAMAGES exposure
that will likely exceed the MEMBER's SELF-PSURED RETENTION. This right of
association extends to petitions for relief from the claim filing requirements.
5.3. The MEMBER shall contract to pay outside defense attorneys a reasonable rate for the
type of CLAIM at issue, not to exceed S250 an hour, unless the BICEP Board of Directors
authorizes a higher rate which determination shall consider the usual, customary and
reasonable rate for the complexity of the CLAW at issue.
5.4. If the MEMBER elects to defend a CLAIM through its City Attorney Office, BICEP
will credit $150 an hour or the MEMBER's actual cost (as demonstrated by the MEMBER),
whichever is greater, as DEFENSE COSTS for services in defense of a CLAIM. The City
Attorney Office shall maintain hourly time records.
5.5. The BICEP Board of Directors may periodically revise the rates in sections 5.3 and 5.4
to reflect prevailing attorney hourly rates.
5.6. The MEMBER may select, subject to BIC EP's approval, an alternative method of
accounting for DEFENSE COSTS, such as the resource allocation method.
6.0. NOTICE OF CLAD#S AND OCCURRENCES.
6.1 As soon as practicable, the MEMBER shall provide BICEP with written notice of any
CLAIM or OCCURRENCE that the BICEP MEMORANDUM covers or potentially covers,
if.
• The MEMBER reserves the CLALM or OCCURRENCE in an amount at least
equal to 50% of the MEMBER's SELF -INSURED RETENTION or $500,000,
whichever is less;
• The CLAIM or OCCURRENCE has a potential DAMAGES exposure at least
equal to 50% of the MEMBER's SELF -INSURED RETENTION or $500,000,
whichever is less;
• The CLAIM or OCCURRENCE involves paralysis, brain damage,
dismemberment, or death; or
• A single OCCURRENCE results in two or more CLAWS that, in the aggregate,
are reserved at, or have a potential DAMAGES exposure at least equal to 50% of the
MEMBER's SELF -INSURED RETENTION or S500,000, whichever is less.
0;-05-06 16
M
N
6.2. The reserves and estimates of potential DAMAGES exposure in Scction (.1 above
shall include the MEMBER's potential exposure to claimant's attorney fees, costs, and
prejudgment interest, if applicable.
7.0. CLAIMS ADMINISTRATION AUDIT.
7.1. The BICEP Board of Directors shall select a claims auditor.-
7.2. Utilizing the Liability Claims Quality Control Guidelines in section 9 below, the
auditor shall conduct a claims administration audit once annually, or more open at the
discretion of the BICEP Board of Directors, particularly iC
• There is an unusual fluctuation or increase in the MEMBER's claims experience or
number of claims;
There is a change of liability claims administration firms; or in-house
claims./litigation management; or
• The M EM B ER is new.
7.3. Within sixty (60) days of receipt of the audit report, the MEMBER shall respond to
any recommendations and shall either outline in writing a program for corrective action or
explain why the MEMBER should not be required to follow the recommendations.
8.0 ACTUARIAL STUDY. The BICEP Board of Directors shall obtain an actuarial study
performed by a Fellow of the Casualty Actuarial Society annually, or more often if indicated. Based
on the actuarial recommendations, BICEP shall maintain Reserves and the MEMBER shall make
funding contributions equal to or exceeding the "Projected Ultimate Losses" shown in the actuarial
report.
9.0. LIABILITY CLAIU[S QUALITY CONTROL GUIDELINES
9.1 The MEMBER will:
• Conduct investigation within thirty days of the MEMBER's knowledge of the
CLADS, including taking statements from participants and witnesses.
+ Develop information regarding liability issues, including immunities, comparative
negligence, joint tortfeasors, and joint and several liability.
• Develop information on damages, including property damage, nature and extent of
bodily injury and emotional distress claims, medical costs, and economic damages
such as wage loss, lost profits and loss of goodwill.
• Obtain and review contracts that maybe in effect relating to specific accidents,
such as hold harmless and indemnity agreements, additional insured requirements,
other applicable insurance policies and joint powers agreements with other public
entities.
o3-os-o�i 17
V
• Obtain defective products and/or other evidence, and hold if at all possible or at
least locate where such products are being held and obtain product information for the
file.
• Utilize experts appropriately in cases
• Maintain membership in Claims Index Bureau; provide the Bureau with updated
indexing information as applicable; and make inquiries on claims when an index
match occurs.
• Arrange appraisals for damaged property.
• Timely report to BICEP and all insurers that potentially provide insurance
coverage.
9.2. Tort Claim Requirements. The MEMBER shall give all notices (pertaining to claims
insufficiency, returning late claims, claims rejections) in accordance with applicable law.
9.3. Documentation:
9.3.1 The MEMBER shall establish reasonable reserves based upon facts knonn,
within thirty (30) days of receipt of investigative report, with expenses included. The
reserves shall reflect the MEMBER's potential exposure to claimant's attorney fees,
costs and interest, if applicable. The MEMBER shall monitor reserves for adequacy
throughout the life of the CLAIM and modify them as needed.
9.3.2. The MEMBER shall maintain a claim file on each CLALtii against the
MEMBER or its EMPLOYEE.
9.3.3. The claims files shall contain documentation necessary to support the
decisions made with respect to disposition of CLALMS.
9.3.4. Photos, diagrams, plans, contracts, medical and law enforcement reports,
reports of investigation, attorney reports and other relevant documents shall be
deposited in the claim file in a timely fashion.
9.4. Requirements for Written Reports from MEMBER's defense attorney after the
MEMBER has placed BICEP on notice of a CLALM or OCCURRENCE.
9.4.I. The MEMBER shall provide its outside defense attorne)�s) with copies of the
attached (a) BICEP Defense Attorney Reporting Requirements and (b) BICEP
Litigation Plan and Budget.
9.4.2. The MEMBER has the responsibility of ensuring that its outside defense
attorney(s) complies with BICEP's reporting and budgeting requirements.
9.4.3 If the City Attorney Office serves as lead defense attorney, it shall provide
BICEP with the Preliminary Evaluation described in Section I of the attached BICEP
Defense Attorney Reporting Requirements. Otherwise the City Attorney Officc will
03-05.06 is
be required only to copy BICEP with its 'internal status and evaluation reports.
9.4.4. These requirements apply regardless of whether or not there is a coverage
controversy between 1310EP and the ME MBER.
9.5. DEFENSE COSTS.
9.5.1. Upon giving notice to BICEP of a CLAW or OCCURRENCE, the MEMMBER
shall require its outside defense attorney(s) to provide the BICEP Claims
Administrator with copies of monthly billings for attomey fees and other DEFENSE
COSTS.
9.5.2. The MEMBER's risk manager or claims manager shall keep a current ledger of
payments of outside attomey(s) fees and other DEFENSE COSTS, and shall provide
it to BICEP's Claims Administrator upon request.
9.5.3. The City Attorney Office will not be required to submit a monthly record of
DEFENSE COSTS. However, it must keep a current record documenting them.
9.6. Settlement
9.6.1. Once the MEMBER gives the notice required by section 6 of the
Requirements, BICEP shall have the right to negotiate a settlement directly with the
claimant or plaintiff, subject to the MEMBER's approval of the settlement.
9.6.2. The MEMBER's defense attorney(s) shall provide BICEP with fully executed
releases, settlement agreements and, when appropriate, court endorsed copies of
dismissals and satisfactions of judgment.
10.0. DEFAULT.
10.1. No MEMBER that substantially complies with these Requirements may be found in
default.
10.2. BICEP shall furnish the MEMBER with written notification of the MEMBER's
failure to comply with these Requirements.
10.3. The MEMBER shall furnish a written response outlining a program for corrective
action, or showing that it has substantially complied with these Requirements, within thirty
(30) days ofreceipt of B10EP's notification.
10.4. if BICEP approves corrective action, the MEMBER shall implement the approved
program within sixty (60) days of notice of such approval.
10.5. Failure to cure noncompliance pursuant to sections 10.1 through 10.4 shall constitute
an event of default in accordance with the LIABILITY PROGRAM.
10.6. The MEMBER may appeal any notice of default to the BICEP Board of Directors.
03-05-06 19
[Member's Let,erhead]I
[Date]
[Attorney with Firm Name /Address]
Dear
Re: [Case Name, Court Number, and Bicep Claim Number]
BICEP DEFENSE ATTORNEY(S) REPORTING REQUIREMENTS
Our City is a member of the Big Independent Cities Excess Pool (BICEP), a governmental
"Joint Powers" risk sharing; pool that provides excess coverage to its member cities. BICEP directly
covers its member cities, and may also purchase commercial excess liability insurance or
reinsurance for them.
We have placed BICEP on notice of the referenced claim. Pursuant to agreements between
BICEP and our City, BICEP will monitor the claim and may take an active role in overseeing the
claim, litigation and settlement negotiations in cooperation with the City and you as its defense
attorncy(s). Depending on the amount of potential darr_ages, commercial excess liability insurers or
reinsurers may also become involved.
Under the agreements between BICEP and the City, you must adhere to the following
reporting requirements. Your reports, marked "Confidential Attorney Client Communication,'
should be addressed to the City with copies to BICEP and, if applicable, commercial excess liability
insurers or reinsurers and monitoring counsel.
1. PRELIMINARY EVALUATION.
Within ninety (90) days of notice to BICEP of the claim or occurrence, your firm shall
submit a letter to the City captioned "Preliminary Evaluation" and containing the following
information under separate headings:
• Brief Description of the Case. [A sentence or short paragraph will do.]
• Procedural History
• Trial and Settlement Conference Dates
• Statement of Facts
Applicable Immunities
• City's Liability
• Plaintiff's Comparative Fault
• Comparative Fault or Other Liability of Third Parties
• Indemnification or Insurance Available liom Other Parties
• Damages
• Litigation Cost Estimate
• Settlement DemandslOffcrs
1 Revise format to correspond to public agency
03-05-06 20
Evaluation and Recommendations
2. LITIGATION PLAN AND BUDGET.
Along with the Preliminary Evaluation, your firm shall complete and return the attached
Litigation Plan and Budget.
3. SUMMARIES OF COURT PROCEEDINGS AND DISCOVERY.
Your firm shall provide the City with timely letter reports of court proceedings, depositions
and written discovery. These letters shall comment on the significance of any new developments.
4. PRETRIAL EVALUATION.
Within sixty (60) days of the trial date, and one week before any settlement conference, your
firm shall provide the Member City with a letter report captioned 'Pretrial Evaluation" that contains
an update on the topics noted in Section 1.
5. SETTLEMENT OFFERS AND DEMANDS.
Your firm shall immediately communicate all settlement demands and offers to the City,
BICEP's General Manager, BICEP's Claims Administrator, and when applicable, commercial
excess insurers and monitoring counsel. The Member City shall not enter into a settlement that
requires payment from BICEP's pooled funds without BICEP's consent.
6. COPIES TO BICEP AND COMMERCIAL EXCESS INSURERS.
Your firm shall direct copies of the reports in Sections 1 through 5 to BICEP's General
Manager and BICEP's Claims Administrator, and to any excess insurers whose layers of coverage
maybe affected by a settlement or judgment. When requested, your firm shall also copy the reports
to any monitoring attorney for BICEP and/or its excess insurers.
Copies to BICEP should be directed as follows:
13ICEP General Manager
Gregory Spiker
Ken Spiker & Associates
1100 South Flower Street, Suite 2100
Los Angeles, CA 90015
BICEP Claims Administrator
Craig Schweikhard
Gregory Bragg & Associates, Inc.
P.O. Box 3544
Ventura, CA 93006-3544
These BICEP representatives may request you to add others to the circulation of your
reports.
Thank you for your attention to the above.
Very truly yours,
[Title]
03-05-06 21
BICEP LITIGATION PLAN & BUDGET
To- Craig Schweikhard
Gregory Bragg & Associates, Inc.
P.O. Box 3544
Ventura, CA 93006-3544
Case Name:
BICEP Claim No.:
Law Firm:
Firm Attorney:__
Phone:
Address:
Damages Exposure:
Case Summary:
FEES AND COSTS TO DATE:
Attorney Fees to Date:
Costs to date:
S
II. PREDISCOVERY (Identify and list under earl. heardingj
Case Evaluation/Preliminary Research
Estim. hrs. @ hour
03-05-06 22
Estimated Fees
S
v
Drafting Pleadings Estimated Fees
Estim. hrs. @hour S
III. DISCOVERY (Identify and list under each heading)
A. Fact Investigation:
13. Witness Interviews:
Estim. hrs. @ hour S
Estim. hrs. @ hour S
C. Witness Preparation for Deposition:
Estim. hrs. @ hour S
D. Taking Depositions:
Estim. hrs. @hour S
E. Defending Depositions:
Estim. hrs. @ hour S
F. Drafting Discovery:
Estim. hrs. @ hour S
03-05-00 23
0
G. Discovery Responses: Estimated Fees
Estim. hrs. a hour S
H. Evaluation of Discovery:
Estim. hrs. @ hour S
IV. MOTIONS (Identify and list under each heading)
A. Procedural:
Estim. hrs. C hour S�
B. Discovery:
Estim. hrs. hour S
C. Summary Judgment:
Estim. hrs. a hour S
D. In Limine:
Estim. hrs.— @ hour S�
E. Other:
Estim. hrs. hour S
03-05-06 24
M
V. PRETRIAUTRIAL (Identify and list under each heading) Estimated tees
A. Court Conferences:
B. h4ediation/Arbitration:
Estim. hrs. C hour S
Estim. hrs. C hour S
C. Trial Preparation:
Estim. hrs. @ hour S
D. Trial:
Estim. hrs. @ hour S
VI. MISCELLANEOUS (Identify and list under each heading)
03.OS-OG
A. Settlement Matters:
Estim. hrs. -1 hour S
B. Administration/Client Reports/Calls:
Estim. hrs.0 hour S
C. Securing Expert:
Estim. hrs. a hour S
25
r
D. Miscellaneous: Estimated Fees
Estim. hrs. a hour S
VII. ESTIMATED FUTURE EXPENSES FOR CASE
A.
PrcdiscovM
S
B.
Discovery
S
C.
[Motions
S
D.
Pretrial/Tri31
$
E.
Miscellaneous
S
F.
Expert Fees
$
G.
Costs
$
Total Estimated Future Expenses
S
Vill. T11ME DURATION ESTIMATE (In months):
Length of Time Before Settlement or Trial: Months
o3-05-M 26
EXHIBIT 4
LIABILITY PROGRAM
BIG INDEPENDENT CITIES EXCESS POOL (BICEP)
Self -Insured Retention:
Program Year:
The Member, , hereby agrees to enter into and participate in the
Program of Coverage ("Program") as stated herein in accordance with the terms and
conditions as follows:
ARTICLE
DEFINITIONS
The definitions of terms used in this Program shall be the same as those contained in
the Joint Powers Authority Agreement ("JPA") and the Bylaws of Big Independent Cities
Excess Pool ("BICEP"), unless otherwise expressly provided herein.
1.1 'Actuary" means a firm with at least one employee who is both a Fellow of the
Casualty Actuarial Society and a Member of the American Academy of Actuaries, which
firm is appointed by BICEP with the approval of at least a majority of the Board.
1.2 "Administrative Premium" means each Member's proportion of all administrative
costs of BICEP including, but not limited to, fees of any accountants, Actuary, attorneys,
Claims Auditor, financial auditors, general management, investments services, trustee
services, and all other necessary administrative costs of BICEP or charges required to
be paid by it in order to administer BICEP, as further set forth in Section 4.1.2.1 hereof.
1.3 "Case Reserves" means amounts in the Claims Payment Fund required to be
designated as reserves for payment of Settlements pursuant to Article III hereof in
accordance with prudent claims practice and the recommendations in the Claims
Auditor's annual report. Case Reserves will be adjusted to reflect any changed
Circumstances subsequent to the year any Claim is filed and to reflect the amount by
which a Settlement exceeds or is less than reserves established for any Claim;
provided, however, that there shall be no Case Reserves established for a Claim or any
portion thereof within a Member's Self -Insured Retention or which is covered by
Insurance pursuant to Section 2.1.1 hereof.
1.4 "Claim(s)" means a demand(s) against a Member to recover for losses or
damages within or alleged to be within the scope of Coverage in accordance with
Section 2.1.below.
Liability ?mgram
QS-31-06
4-
1.5 `Claims Auditor" means an individual or an organization experienced in the
handling of public entity liability Claims, appointed by BICEP with the approval of a
majority of the Board who shall be independent of any party who administers Claims on
behalf of BICEP or its members.
1.6 "Claims Payment Fund" means the fund established for the payment of
Settlements pursuant to Section 3.2 hereof. Nothing in this Program is intended to
prohibit BICEP from designating the Claims Payment Fund as being comprised of
separate accounts for the purposes of issuing and securing funding.
1.7 `Coverage Period" means each year coextensive with the Memorandum Period
(as set forth in Section II, Paragraph 20 of the Memorandum) for which a Member pays
Participation Premium.
1.8 "Experience Percent Contribution" means each Membees percentages set forth
in the BICEP Experience Rating Study performed by BICEP's Actuary in each year
prior to the next Coverage Period using the methodology set forth in the Liability Rating
Plan, attached hereto as Exhibit A in this Program.
1.9 "Participation Premium" means with respect to each Member, the sum of the
Administrative Premium, Risk Sharing Premium and Insurance Premium, due and
payable by each Member on each Premium Payment Date as determined in
accordance with Article 1V hereof.
1.10 "Payroll" means with respect to a Member, the workers' compensation payroll of
such Member as reported to the State of California or if a Member is not domiciled in
California, as required to be reported in the other state.
1.11 "Participation Premium Adjustment" means the actual accounting of revenue and
expenses and all Claims, including incurred but not reported (IBNR), for each Coverage
Period that occurred on or after July 1, 2004 versus the amounts deposited for each
Coverage Period commencing July 1, 2004 and thereafter, in accordance with the
Liability Rating Plan.
1.12 "Pure Premium Adjustment" means the annual adjustment on all risk -shared
Claims that occurred from October 1,1988 (inception date of BICEP) up to July 1, 2004.
1.13 "Retained Earnings" shall be that as identified in the audited annual financial
statements of BICEP.
1.14 "Reverse Following Form" means suspending the terms and conditions of the
Memorandum and replacing them with terms and conditions of the policy of Insurance,
or with the terms and conditions of another public agency's memorandum of coverage.
Liability Program
05-31-06
-2-
1.15 "Risk Sharing Premium" means the amount necessary to fund expected losses
required to be established to pay Settlements of the Members for a Coverage Period as
determined in accordance with the Liability Rating Plan.
1.16 "Risk Sharing Layer" means a specific layer of coverage per occurrence
applicable to one or more Members. BICEP may establish one or more levels of self -
insured retention in compliance with Section 2.1 hereof as approved by the Board
annually.
1.17 'Settlement(s)" means the settlement by BICEP or a Member, in accordance with
Insurance in effect or the Memorandum, of a Claim against such Member, or the final
adjudication of such Claim. The amount of any Settlement may include any costs or
expenses deemed appropriate by BICEP in connection therewith including DEFENSE
COSTS as described in the Memorandum or as covered by Insurance.
1.18 "Supplemental Premium" means the amount new Members must deposit with
BICEP if the new Member will participate in B10EP's Retained Earnings on an equal
footing with Charter Members.
1.19 "Terminated Member" means a Member permitted to withdraw from Coverage
pursuant to Article Vll of the Bylaws or a Memt;er expelled pursuant to Article Vltl of the
Bylaws.
ARTICLE It
COVERAGE PROGRAMS
2.1 Coverage.
In accordance with Article V of the Bylaws, BICEP hereby provides and the
Member hereby accepts the Coverage and shall participate in the Risk Sharing Layer as
set forth in the Declaration for each year's Coverage Period.
2.1.1 BICEP may provide Coverage, or a portion of Coverage. to the Members
by purchase of insurance ("Insurance") from a commercial insurer or reinsurer, upon the
approval of the Board. BICEP shall be obligated to assist and cooperate with each
Member in collecting for covered Claims from such insurers to the fullest extent.
2.1.2 BICEP shall pay any covered Claims in each Coverage Period in
accordance with the Memorandum. However, prior to each Coverage Period, BICEP
may also determine whether or not to suspend the Memorandum and to approve and
accept a Reverse Following Form as the basis for liability coverage of Claims.
2.1.3 Notwithstanding any recoveries through reinsurance or insurance, in no
Liabilily Program
05-31 -0G
-3-
event shall BICEP be obligated to pay any covered Claim in excess of the maximum
amount of $10 million per occurrence or $25 million annual aggregate for all Claims.
-ARTICLE III
PAYMENT OF CLAIMS
3.1 Case Reserves.
BICEP shall retain a Claims Auditor for the purpose of submitting an annual
report to BICEP setting forth (a) the amount of Case Reserves necessary to be
established with respect to each Claim arising during the preceding full Coverage
Period and a breakdown of the amount of Case Reserves applicable to each Risk
Sharing Pool, and (b) any adjustments (whether upward or downward) necessary to be
made in the amount of each Case Reserve previously established pursuant to this
Section.
3.2 Payment of Settlements.
BICEP shall establish a Claims Payment Fund for the payment of Settlements.
Settlements shall be paid upon submission to BICEP in accordance with the procedures
of the Liability Risk Management Requirements, attached as Exhibit A to the
Memorandum, and incorporated herein by reference, as approved and adopted by the
Board.
3.3 Structuring Settlements.
Each Member hereby covenants to cooperate with BICEP in the settlement
and/or litigation of Claims in excess of the Members Self -Insured Retention. To the
extent such Member has control over any negoVation or structuring of a Settlement and
subject to the limitations as determined by BICEP in accordance with Section 2.1.2.,
above, each Member shall not allow Settlement payment dates earlier than the date the
Claims Payment Fund has been or will be fully funded to cover Case Reserves
established for the payment of such Claim. With respect to any judgment (as defined in
California Government Code Section 970 or in accordance with the laws applicable to
any out-of-state member) in an amount which exceeds such Members Self -insured
Retention, each Member shall petition the ccurt for payment of such judgment in
installments pursuant to the provisions of California Government Code Section 974.6 or
in accordance with the laws applicable to any out-of-state member upon request by
BICEP after consideration by the BICEP Board of its Target Retained Earnings Policy
Statement attached hereto as Exhibit B and incorporated herein by reference.
L.iahilily PWam
05-31.46
-d-
V
ARTICLE IV
PREMIUMS
4.1 Member's Premium Costs.
4.1.1 Appropriation of Premium Payments. Each Member shall take such action
as may be necessary to include Participation Premium payments payable hereunder in
its annual agency budget and to make the necessary annual appropriations for all such
payments to BICEP. The obligations on the part of each Member herein contained shall
be deemed to be and shall be construed to be duties imposed by law and it shall be the
duty of each and every public official of each Member to take such action and do such
things as are required by law in the performance of the official duty of such officials to
enable each Member to carry out and perform its obligations herein.
4.1.2 The Participation Premium payments are made in consideration for
Coverage for each Coverage Period. The entire amount of Participation Premium is due
on the Premium Payment Date, which shall be August 1 of each Fiscal Year which is
coextensive with the applicable Coverage Period. The determination of the amount of
the Participation Premium payable for such Coverage Period by each Member shall be
made as soon as reasonably possible but no later than the day before the renewal date
preceding the next Coverage Period. Each Member shall be obligated to pay the
Participation Premium, which is determined as fcllows:
4.1.2.1. Administrative Premium. Each Member shall pay to BICEP
an Administrative Premium. The method for charging Administrative Premium may be
to apply the Experience Percent Contribution set forth in the Liability Rating Plan,
Exhibit A, or to divide all administrative costs equally between the Members, as annually
determined by the Board.
4.1.2.2 Risk Sharing Premium. Each Member shall be responsible
for its proportion of the Risk Sharing Premium, as calculated in the Liability Rating Plan,
Exhibit A. The Risk Sharing Premium shall be calculated in the following manner. With
respect to each Coverage Period, BICEP shall determine the total of the Risk Sharing
Premium by retaining an Actuary to prepare a report to be delivered to BICEP preceding
the beginning of such Coverage Period which recommends the amount of funds to be
deposited in the Claims Payment Fund such that the deposit, along with anticipated
investment income, equals the expected value cf all pooled losses, plus any margin for
contingency the Board may determine appropriate for the Risk Sharing Layer retained
by BICEP for said Coverage Period.
In no event will Risk Sharing Premium be payable to establish Case
Reserves for Coverage in excess of $10 million per occurrence unless the Board raises
the limit above $10 million per occurrence.
Liability Program
05.31 d16
15-
4.1.2.3 Insurance Premium. In a Coverage Period for which
BICEP has purchased Insurance on behalf of each Member, each such Member shall
be obligated to pay its proportion of the costs of such Insurance in accordance with the
Experience Percent -Contribution under the Liability Rating Plan, in lieu of all or a portion
of Risk Sharing Premium, in addition to the other components of Participation Premium.
4.1.2.4 Supplemental Premium. In the sole discretion of each
Member, a Member may pay to BICEP a Supplemental Premium that shall be applied
and credited to that Member's portion of Retained Earnings.
4.1.3 Adjustments to Participation Premium. The Participation Premium may
be adjusted as follows:
4.1.3.1 Participation Premium Adjustment. Annually beginning
after July 1, 2005, the Participation Premium may be adjusted by a Participation
Premium Adjustment.
BICEP shall give prompt written notice to each Member of the
determination of such adjustment. If assessed due to a deficit in a prior Coverage
Period, each Member shall be obligated to pay the full amount of the assessment on the
Premium Payment Date-, unless, at the discretion of the Board, each Member is allowed
to pay a portion of the assessment prorated up to five (5) years as authorized by the
Board. In the event of an excess in payment in any Coverage Period, each Member
shall be credited its proportion of such excess payment in accordance with Exhibit A
Liability Rating Plan and attachments thereto, which shall be held by BICEP as
Retained Earnings until released in accordance with the provisions of this Program.
4.1.3.2 Pure Premium Adjustment. A Pure Premium Adjustment
shall be applied to the Participation Premium as applicable to Claims of each Member
that occurred during the period from October 1, 1988 up to July 1, 2004. The amount of
the Pure Premium Adjustment shall be calculated in accordance with the Liability Risk
Coverage Agreement, dated as of October 1, 1988, which shall remain in force and
effect for such calculation. Said Liability Risk Coverage Agreement shall automatically
expire upon the event that all such Claims have been fully satisfied. Such Pure
Premium Adjustment shall be detailed and included in each Member's renewal invoice.
4.1 A. Use of Retained Earnings. The Board may, but is not obligated to,
authorize the release of Retained Earnings as a dividend to be applied to the
Participation Premium of a Member or to be paid to a Member, upon consideration of
the Target Retained Earnings Policy Statement (Exhibit B).
4.2 Terminated Member's Premium Costs
4.2.1. Each Terminated Member shall take such action as may be necessary to
LiahiLty Program
05-31.06
-6-
include Termination Premium payments payable hereunder in its annual agency budget
and to make the necessary annual appropriations for all such payments to BICEP. The
obligations on the part of each Terminated Member herein contained shall be deemed
to be and shall be construed to be duties imposed by law and it shall be the duty of
each and every public official of each Terminated Member to take such action and do
such things as are required by law in the performance of the official duty of such officials
to enable each Terminated Member to carry out and perform its obligations herein. This
obligation may not be imposed in any given year that a Terminated Member's account
exceeds their charges for adjustments and aliecations, depending on the condition of
the Claims Payment Fund and the Board's determination whether to release any
Retained Earnings after consideration of the Target Retained Earnings Policy Statement
(Exhibit B).
4.2.2. Termination Premium. A Terminated Member shall pay a Termination
Premium which is comprised of all costs, including but not limited to, any administrative
costs and any adjustments applicable pursuant to Section 4.1.3 of this Program, for any
Coverage Period in which the Terminated Member was an active Member of BICEP.
4.2.3 Determination of a Members Retained Earnings Upon Withdrawal or
Expulsion. In connection with permitting withdrawal of a Member from Coverage
pursuant to Article VII of the Bylaws or expelling a Member pursuant to Article Vill of the
Bylaws, a portion of Retained Earnings shalt at such time be allocated to the
Terminated Member in accordance with the most recent annual audited financial
statement of BICEP available as of the effective date of the Terminated Member's
withdrawal or expulsion. The sum of such amounts allocated to such Terminated
Member shall be applied first to the payment of Termination Premium pursuant to
Section 4.2.2.
4.2.4. After credit to pay the Termination Premium and all other obligations due
from such Terminated Member under the terms of this Program and any interest
thereon, BICEP shall hold the remaining balance of the Terminated Members Retained
Earnings ('Remaining Assets`) due to the Terminated Member, if any, in a segregated
account. BICEP wilt transfer to a Terminated Member its Remaining Assets on the
earliest practicable date when such Member is no longer subject to the payment of a
Termination Premium under the terms of this Program i.e., when all Claims within the
scope of Coverage prior to withdrawal or expulsion of such Member have been f,na!ly
determined and/or paid as Settlements, unless the Board upon consideration of its
Target Retained Earnings Policy Statement (Exhibit B) determines that release of the
Remaining Assets will substantially affect the financial condition of BICEP. If there are
insufficient Remaining Assets to meet the Terminated Member's continuing obligations
to BICEP, the Terminated Member shalt be obligated to pay any such deficit amount.
4.2.5 The release of Retained Earnings to each Member upon the dissolution of
BICEP pursuant to Article VI of the Bylaws shall be handled in substantially the same
Liability Program
05-31-06
-7-
manner as hereinabove provided in this Section 4.2.
4.3 Common Premium Provisions to Members and Terminated Members
4.3.1 No Withholding. Notwithstanding any dispute between BICEP and a
Member or Terminated Member, including a dispute as to the scope or nature of
Coverage provided by BICEP or the availability of amounts in the Claims Payment Fund
to pay Claims made against any Member or Terminated Member, or for any other
reason (other than the termination of the obligation to pay Participation Premium
pursuant to Section 4.2.4 hereof) each Member including Terminated Member shall
appropriate funds sufficient to pay and shall make all Participation Premium payments
including Pure Premium Adjustments, and Participation Premium Adjustments for
Members or Terminated Members when due and shall not withhold any such payments
pending the final resolution of such dispute.
4.3.2. Payment of Invoices. BICEP invoices are to be paid within 30 days of
presentation to Members unless another due date is specified on the invoice.
4.3.3 Rate on Overdue Payments. In the event a Member or Terminated
Member fails to make any of the payments required in this Article, the payment in
default shall continue as an obligation of the Member or Terminated Member until the
amount in default shall have been fully paid, and in addition to any remedies available
with respect to such default, the Member or Terminated Member agrees to pay the
same with interest thereon. Interest shall be calculated using BICEP's average
earnings rate as determined in the latest 12-month Investment Performance Portfolio
prepared by BICEP's investment managers, but not to exceed the highest rate
permitted by law, from the date such amount was originally payable. This provision can
be waived by the Board on a case -by -case basis.
4.3.4 Damages; Revocation of Withdrawal. In no event shall withdrawal from
Coverage release a Member from its obligation to pay damages resulting from default
under the terms of this Program which is not remedied by payment of Termination
Premium or from its obligation to pay Pure Premium Adjustments and Participation
Premium Adjustments with respect to Claims within the scope of Coverage prior to such
withdrawal. BICEP shall continue to pay Settlement of Claims relating to the withdrawn
Member within the scope of Coverage prior to withdrawal as provided herein, unless the
Member defaults in the payment of its continuing obligations described herein.
4.3.5 Member's Rights Upon Dissolution of BICEP. In the event of the
dissolution of BICEP in accordance with Article VI of the Bylaws, the terms and
conditions of this Liability Program shall remain in full force and effect until such time as
all Claims within the scope of Coverage have been finally determined andlor paid as
Settlements. Remaining Assets (as defined in Section 4.2.4, above) shall be distributed
consistent with Section 4.2A.
Liability Program
Q5-31-06
-8-
Liability Program
05-31-06
ME
�J
IN WITNESS WHEREOF, the undersigned Member acknowledges reading, fully
understanding and accepting the terms and provisions of the Program.
Date:
By:
Print Name:
City of.
Liability Program
05.31.06
-10-
V
V
Exhibit A
Big Independent Cities Excess Program (BICEP)
Liability Rating Plan
I. Participation Premium
i:or each Coverage Period, beginning July 1, 2004, a Participation Premium shall be
calculated for each member. The Members' Participation Premium shall be sufficient to
pay the Members' Risk Sharing Premium, Insurance Premium and Administrative
Premium. The process for calculating each Members' share of these three Premiums is
set forth in Appendix A-1, Exhibits CA-1 through CA-9, inclusive, and as more
specifically set forth below.
A. Risk Sharing Premium. As stated in 1. above, each Member's Risk
Sharing Premium shall be bas;d on the following data for the three years
beginning four years prior to the Coverage Period for which Participation
Premiums are being calculated: -
1. Reported incurred losses. These are loss payments plus reserves for
incurred but unpaid claims, as established by BICEP's claims
administrator. Only liability claims of the type covered by the
Memorandum or in accordance with Section 2.1.2 shall be
considered.
2. Number of reported incurred claims exceeding $250,000.
3. Workers compensation payroll, as reported to the State of
California or any other state if a member is domiciled in another
state.
The above three amounts shall be used to compute an experience
modification factor (Xmod) for each Member for the upcoming Coverage
Period.
Each Member's share of the Risk Sharing Premium shall be the product of
its:
Xmod, multiplied by its
2. Workers compensation payroll for the year for which Participation
Premiums are being calculated, multiplied by
C.\Docum m atd Seniars Local ScWnWTCffWMry Inlemd Fiks4DLK;'%BICLP-ExbibitA-OeA:03 jUability rnjmmxS•14-%Xfir 4&C
A-1
WE
3. The loss rate calculated by BICEP's actuary and as adopted by
BICEP for the Risk Sharing Laycr(s) in which the Member will
participate. The BICEP Board may elect to include an addition to
Retained Earnings in the loss ratc(s).
B. Insurance Premium. Each Member's Insurance Premium shall be
calculated as the product of its Experience Percent Contribution multiplied
by the total premium to be paid by BICEP for insurance for the upcoming
program year.
C. Administrative Premium. Each Member's Administrative Premium
shall be calculated as the product of its Experience Percent Contribution
multiplied by the total amount of Administrative Premium required by
BICEP for the upcoming program year.
11. Participation Premium Adjustment
Following the close of each Coverage Period, an adjustment shall be made to the
Participation Premium, as described in I. above, paid by each Member. The adjustment to
each component of the Participation Premium shall be calculated as set forth below.
A. Risk Sharing Premium. Ea:h Member's share of the total Risk Sharing
Premium paid by all Members for the Coverage Period shall be calculated.
The percentage so determined shall be multiplied by total losses in all Risk
Sharing Layers in which a Member participates to determine each
Member's actual share of the Risk Sharing Premiums. Total losses shall
include amounts paid, case reserves and incurred but not reported losses.
The BICEP Board may elect to include an addition to or deletion from
Retained Earnings.
B. Administrative Premium. Each Member's share of actual
administrative costs shall be its Experience Percent Contribution
multiplied by total administrative costs for the year.
C. Insurance Premium. Each Member's share of actual insurance
premiums shall be its Experience Percent Contribution multiplied by total
insurance premiums for the year.
C.00cumems and scninezr.Lmal settinoTen"rary Ini m t Fil"l. "13,CEP EchibiLA060305 (L ab,lily "rzM (5.10-%Xfinsly.
A-i
Each Member's Participation Premium Adjustment for each Coverage Period shall be:
A. The Participation Premium paid at the beginning of the year, less
B. The Members share of Risk Sharing Premium, Administrative Premium
and Insurance Premium, as calculated in Section I1, items A, B and C
above.
The process for calculating Member Participation Premium Adjustments is set forth in
Appendix A-1, Exhibits EQ-1 and EQ-2.
A Participation Premium Adjustment for each Coverage Period shall be calculated
18 months following the close of the Coverage Period and at annual intervals thereafter
until all claims in the Risk Sharing Layer are closed.
C:'•.Dmtowts and Scl iWm'Local SedinOTem"Yy Internet Fiktal.K2'AICEP_ExhibitA_067,05 (Liability ProMmx5-10-06xfinal}doc
A-3
V
.. APPENDIX A-1
BIG INDEPENDENT CITIES EXCESS POOL Ex1+Dt CA-1
EXPERIENCE RATING
Payroll 2001 i02 to 2W3104
1. Payroll (S0001
Payroll
(SM)
Payroll
Psyrott
Payroll
2001 i02 to
(1000)
(Y.,03)
(S000)
2003ro4
City
2001102
200;103
200104
(2)•(3)*(4)
(1)
(2)
(3)
(4)
(5)
HuntingronBeach
$76.759
$70.241
682.939
$239.939
Oxnard
44.061
47.693
52.796
144,550
son Bernardino
76.036
75.443
91.446
242.925
Santa Ana
IM926
118.970
120.367
355.273
West Cowne
21.671
22.111
26.776
70.556
Total
$334455
1343.467
1374.222
$1.052.244
11. Pertenl a1 Payroll
Average
Percent
Pereenl
Percent
Percent
Payroll
Payroll
Psyryt
Payroll
200142 to
City
2001102
2t10;103
2003104
2003r04
Huntington Beach
23.0%
23.1 %
22.2%
22.7%
Oxnard
13.2%
13-9%
14.1 %
137%
San Bernardno
22.7%
22.0%
24 4%
23 1 %
Santa Ana
34 7%
34 6%
32 2%
33 6%
We" coma
6 S%
$A%
7.2%
6 7%
Total
100 0%
100 0%
100 0%
100 0%
Salmon 1 in from the ARIA Toth actuanal fludy_
Section II is eased on Section 1.
SIC EP L1CA_123104 "mple_rrijed(05-1406).11a
9
V
BIG INDEPENDENT CMFS ExCESS POOL
EXPERIENCE RATING
_. APPENDIX A-1
A
PPENDIX A-1
E.Iwtmt CA 2
RoDoned Incurred Losses as of Deco Thew 31. 2004 for 2031 J02 to 2033r04
I. Reported Incurred losses as of Oecemeer 31..0C4
2001 J02 to
2003r04
Reported Repo•ud
ReOoned
Reported
Incurred k4ned
Incurred
plmurred
Losses Losses
losses
Losses
City 2001102 2002133
200304
(2)#(3)+(4)
(1) (2) 131
(4)
(5)
Huntington Beach
$1,929.567
$2 427.625
$962.625
$5.320.017
Oxnard
3,938,763
1 600.419
021.421
5.760.622
Sin 8arrtard.no
2,042.436
564.543
2.023,635
4.630.5413
$ants Ana
1.323.603
1.506.485
970.200
3.600,376
West Corms
925.639
77,H0
121.014
1.124.092
Total
$9.560.107
35,178.711
S4,999.673
l20.636.4e1
11. Percent of Reported Incurred Losses as of Deco itm 31. Me
Foment
Percent
Percent
Patent
Roomed
Reposed
Reined
Reported
Incurred
Incurred
Incurred,
1nWrra6
Losses
Losses
losers
Losses
2M,02to
2001002
2002'03
2003r04
2003'04
tarry
Huntington Beach
20 2%
39.3%
19 5%
25 0%
171ne-0
34 9%
25.9%
16 6%
27.9%
SanBemudmo
21.4%
9.1%
41.3%
224%
Santa Ana
13 0%
24.4%
19 6%
t6 4%
wept Covina
9.7%
1.3%
2 S%
5.5%
70181
100.0%
100.0%
100 0%
100 0%
StCEPLW-A_123t04 =aTpte ratuedln-10-061.sls
r
L
-.
APPENDIX A-1
BAG R40EPENDENT CITIES EXCESS POOL
EsINAM CA-3
EXPERIENCE RATING
2001102 fo 2003104 Clams
with Reported Incurred losses Over a 1250.000 Threshold as
of Dece"of 31. 2004
1. Clams Over $250,000 Threshold
Cla.-ns
Over
Clams Ctairs
Claim
S250.000
Over Over
Over
Threshold
$250.000 $2$0.000
$250.000
2001r02to
Threshold Threshold
Threshold
2003.'04
'
2001102 20C2,03
2003r04
(2)*131•(e)
city
42) (3)
(4)
15)
Nvnhn0lon Beach
3 3
0 6
Oxnard
2 1
0 3
San Bernardino
2 0
2 4
Santa Ana
0 1
1 2
West Covina
1 0
0 1
Total
0 3
3 1a
If. Percent Claims Over a S250.000 Threshold
Percenl
Percent Perent
Percent
Clams
clams Coe rM
Claims
Over
Over O"ev-
Over
$250.000
$250.000 5250,300
S250.000
Threshold
Threshold Threshold
Threshold
20011M 10
2001102 2002133
2001-04
2003r04
City
Hunlirgion Beach
37.5%
50 0%
0 0%
37 5%
Oxnard
25.0%
20 0%
0.0%
1e a%
San Bernardino
25-0%
0 0%
".7%
25-0%
Sa ila Ana
0.0%
20 0%
33.3%
121%
West Covina
12.5%
0 0%
0.0%
0-3%
Total 100.0% 100 0% 100.0% 100.0%
BICEP L1CA_123104_sar,VIe_valued (05.10-06).xls
�I
APPENDIX A-1 --
SiG INDEPENDENT CITIES EXCESS POOL
Ex11iW1 CA-4
EXPERIENCE RATING
Relative Loss Rates
1. 2001 102
Percent
Relative
Resorted
lass
Percent Incurred
Rate
Payroll Losses
2001102
2001102 2001102
13)
II
t�l
(2)
1(2) -
Huntington Beach
23.0% 20.2%
0 672
Oxnard
13.2% 34.9%
2 651
Son Bernardino
22 7% 21.4%
0.940
Santa Ana
34.7% 13-0%
0.399
West Covina
8.5% 9-7%
1.494
Total
100-0% 100.0%
1.000
11. 2002r03
Percertl
Raletive
Reported
Lass
Percent
Incurred
Rate
Payroll
Losses
2002003
1y
2002I03
2002.'03
(3v(2)
(t)
(�)
(3)
(4}
Huntington Beach
231 %
39 3%
1.704
Oxnard
139%
259%
1-e68
SanSemorlina
220%
9-1%
0.416
Santa Ana
34.6%
24 4%
0.704
West Covina
6 4%
1.3%
0.195
Total 100.0%- 100.0% 1.000
111. 2003r04
PercMt
Retalive
Rcporied
Loss
Percent
Incurred
Rate
Payroll
Losses
2007r04
City
2003+04
2C031C4
(3y(2)
(1)
(2)
13)
(4)
Huntington beach
22-2%
196%
O887
Oxnard
14A %
16.6%
1.189
San Bernardino
24.4-4
41.3%
1691
Santa Ana
32 2%
19 e%
0.616
West Corns
7.2%
2 5%
0-348
Total
I000%
1000%
5.000
Sections 1. it and Ill. 12) are from ExFibit CA-1.
Sections 1. 11 and Ill. (3) are from Exhibit CA-2.
r
APPENDIX A-1
BIG INDEPENDENT CMES EXCESS POOL Eahlb,l CA-5
EXPERIENCE RATING
Relalrvt CI Inn Rates
1.2001 t02
-
percenl
Claims
Relative
Otter
Clam
Percent
S260.000
Rate
Payroll
Threshold
2001 A22
2001102
City
2001 A
(3Y(1)
(1)
12)
M
(4)
Huntington Beach
23.0%
37.5%
1.634
Oxnard
13.2%
25.0%
1496
San Bernard,"
22 7%
25.0%
1.100
Santa Ana
34.7%
0.0%
0 000
Weal Covina
5.5%
121%
1.229
Total
100.0%
100.0%
1.000
11.2002103
Percent
Claims
Relative
Over
Clain+
Percent
$250.000
Rate
Payroll
Thrashod
2002,113
Gty
2002103
2002,03
(3V12)
rr
(2)
t31
14)
Huntington 968en
23 1 %
60 0%
2 500
Oxnard
13-9%
20.0%
1.440
San Bernardino
22.0%
0.0%
0.000
Santa Ana
34.6%
20.0%
0-577
Well Covina
6 4%
0 0%
0 000
Tool
100 0%
100 0%
1.000
111. 2003.'04
Percent
Clams
Relative
Over
Clarrn
Percent
:250,000
lnyande
Ray
Payroll
20031@4
Gty
20OW04
2003M
pw(2)
(1)
(2)
(3)
(4)
Huntington Beach
22.2%
0.0%
0.000
Oxnard
14.1 %
0.0%
0.000
San Bernardino
24.4%
66 7%
2.500
Sa+la Ana
32.2%
33.3%
1.037
Weal Covina
72%
0-0%
0.000
T0,61 100.0% 100.0% 1.000
Sections 1. 11 and III. (2) are from Exh,bd CA-1.
Section■ 1. 11 and Ill. (3) are tram Esh bit CA•3,
Sections 1. 11 and III. (4) is ca"oed to 2.500.
a
•-•
APPENDIX A-1
A
PPENDIX A-1
BIG INDEPENDENT
C TIES EXCESS POOL
Ed wb t CA-6
EXPERIENCE RATING
Calculation
of Experience LIof:litali0n Factor for 200Sr06
I. Average Rein
do Loss Rate
Average
RNawn
Loss
Rate
Relative
RNatire
Relative
M M210
Los f
Loss
Loss
2003r04
Rolla
Rate
Rase
AvV,12).
City
2031.'02
2002.'03
21)0=4
13L(4)1
0)
(2)
13)
14)
15)
Huntington Beach
0-079
1.704
0 a67
1.157
Oxnard
2.851
1.00
1 1e9
1.902
San Bernardino
0.040
0.416
1691
1.015
Santa Ana
0.399
0.704
0 616
0 573
Weft Covina
IA94
0.195
0-348
0679
Total
1.000
1-000
7 000
1 000
It. Average Relative Claim Pale
Average
Rdativa
CIWM
Rai*
Relative
Relative
Relative
2001 A2 to
Claim
C1alm
Claim
2003M4
Role
Raga
Rate
Avg)(2).
C'ly
2001 i02
2002.113
2o03i'04
(3).(4)]
111
12)
(3)
(4)
(5)
Huntington Beath
1.634
2.500
0 000
1-370
Omwd
1.696
1.440
0 000
1.113
San Be-ardno
1.100
0-000
2 500
1200
Santa Ana
0 000
0.577
1 037
0 538
Wes! Covina
1.929
0.000
0 000
0 043
Tots
1.000
1.000
1.000
1000
Ill. Experience Modi6caaon Factor
Average
Average
Relative
Relative
Average
-
Loss
Claim
Percent
Cre&.Wily
Prior
2005"
Rate
Rate
Rating
Payroll
Weight
ExpaneriCa
Experience
2001 IC2 10
2001 Al2 fo
Factor
2001 IC2 10
ISYI(5)-
Modiacalion
Modification
Cily
2003r04
2003,04
Aii9112)_(3)1
20031`04
Mall(S)XI)
Factor
Fedor
(1)
(2)
(3)
(4)
(S)
IQ
(71
I6)
Huntington Beach
1.157
1-376
1.267
22 7%
0 402
1-040
1.129
Oxnard
1.902
1.113
1.507
13 7%
0 269
1.479
1.464
San Bernardino
1.015
1.200
1.109
231 %
0 406
0 985
1 033
Same Ana
0-573
0 538
055E
33 0%
0 500
0 760
0 656
West Cowie
0 679
0.643
0-E61
6-7%
0 166
1.166
1 ON
Total
1A00
1.000
1.000
Loco
1.000
Section I. ($ (3) and 14) are from Exhibit CA-4
Section If. (2). (3) and 141 are hom Exhibit CA-S.
Section III. (51 ra from Exhibd CA•I.
Section Ill. IS) Is designed to give the largest CUT a weight of 0.500 and ottvarf Props bdiisay Iess.
Section Ill. (7) is from the prior expentrOM feting sludy.
Section Ill. (6) a (4) x 16) • 11 000 . (6)1= (7). B b Subject to on aft -balance factor M 0.99S.
APPENDIX A-1
OrG INDEPENDENT CI71sS EXCESS POOL ExMbit CA-7
EXPERIENCE RA1idG
CalcWaLion of Experience Percent Contnbv6on 200!VO6
1. Us ng hlaxtmym City Wa0ta at 0-SOO
Expenence
Percent
Payroll
Percnt
Experience
Conintwtion
($0001
Payroll
Modigcalion
2005106
Cary
200310+
20071)4
Factor
13)X(+)
11)
12)
M
t+y
ts1
Hunfin1loe Beach
$92.938
222%
1.129
25.01 %
Oxnard
52.796
1+.1 %
1.+8+
20 93%
San &wnardvno
91.e+6
2e 4%
1 033
252396
Same Ana
1211.367
32 e%
0666
21._10%
West Corn
26.776
7 2%
1.080
7.72%
Total 9374.322 100 0% 1.000 100 00%
(21 Was provided by BICEP for 200510S rating.
12) is based on (2)
(e} is Irom Exhibbt CA-6.
.,.
APPENDIX A-1
BIG INDEPENDENT
CITES EXCESS
POOL
Exh-b-I CA-8
EXPERIENCE
RATING
E■angte
of Recon'mended Rating
Plan
I. Risk Snaring Premium lot 2005t06
Premium
Premium
Loss Pale
Loss Rate
at 1500.000
at 51.000.000
Experience
Payroll
atS500.00C
atSt.000.000
Retention
Retention
Modncation
(5000)
Relent on
Retention
200506
2005N6
City Factor
2005M
20OW
2w5m
(2)X(3)x(4)
(2)XIII)X S)
(1) (2) '
(3)
(4)
(5)
(a)
(7)
Huntington Beach 1.129
$87.989
S6 DDO
$3-040
SS95.649
S30t.897
Oxnard 1.454
56.011
6-000
3 040
496,764
252.717
San Batnardino 1.033
27.015
6 D00
3.040
601.199
304.609
Santa Ana 0.956
127.697
6.1500
3040
502.827
254.766
West Covina 1.090
28.407
GOOD
3-040
104.048
93.251
Total 1.000
$397,118
92.362.706
$1.207.239
II. Admirristrative Premium and Insurance Premium fort 2005M6
200s"
2005"
Insurance
Insurer"
Premium
Premium
Experience
52.000.D)0
$12.000.000
Percent
Admtirstrative
to
to
Contribution
Premum
512.00D:300
577,000.000
City 2005r06
12)xToial(3)
12►xTota (41
(2)xTotal(5)
(1) (2)
(3)
(4)
(5)
Hunt.rVon Beach 25 01 %
$56.266
$425.123
$62.518
Ormard 20 93%
47.100
355.669
52.334
San Bemardrno 252314
56.771
425.940
63.079
Sinta Ana 21.10*4
47.482
358.754
52.75a
West Covina 7.72%
17.380
131.313
19.311
' Total 100.00%
5225.000
51.700.000
$250.000
Section 1. (2) is Iron ExhiNt CA-?.
Section 1. (3) iS based on psymN IV 2(103r04 and a 3% Vend.
Section L 14) and (5) are apprOurnati019
Section L (4) and (5) fund beset from SIR shown to 92 million.
Section 9- (2) is from Exhibit CA•7.
Section It. Tota'(3). Totall4) and Total($) are for example only.
0
m
APPENDIX A-1
BEG INDEPENDENT CITIES EXCESS POOL E■1`Al CA-9
EXPERIENCE RATING
Calculation 01 Total F aymenl for 2005M
200SM
Insurance
Pr"urn
200S106
200506
$2.000.000
20CyM
Total
R-s4 Snann0
10
Admn flrWre
Paymenl
City
Retention
Premum
$17.000.000
premium
(1)
(2)
(3)
(4)
15)
46) '
Hunbriglon Beach
$1.000,000
$301.897
54!7.641
556.266
8645.804
Omnard
1.00O.000
252.?1?
4C8.203
47.100
709.021
Son Bernardino
1.00O.O00
304.We
492.019
56.771
653.308
Santa Ana
1.000.000
254.76E
411.512
47.482
7 U.760
West Covina
509.000
184.04e
150.624
17.380
352.052
Total 51,298.03E 57.950.000 5225.000 S3 4?3.035
(3).(4) and (5) are from E■Itibl CA-8
BICEP LICA_123104 %ample valued (05.10.06) xis
APPENDIX A•1
BIG INDEPENDENT CITIr:S EXCESS POOL EX1,01 EO• I
COST ALLOCATION
2ws%%6 Expenses
I. Total Expenses
AmaMl
Actual
Type oI
Dep" ed in
Costs in
Expenmture
2005+06
(1)
(2)
(3)
Incurred losses
S 1.98.036
5950.000
Excess Insurance
i.1t50.000
2.000,000
Legal Expense
75.030
6.000
Audit
20.000
8.000
Consulting
50.000
20.000
Management
65.000
$5.000
O%tw Expense
15.000
15.00%
"$Irr ent Income
0
115.0001
Total
$3.&M036
310e6,000
It. Expenses by Type
Artounl Actual
Depos.ted in Casts In
Type 2015" 2005106
losses
SI.296.036
$935.000
Excess Insurance
1.950.000
2.000.o00
AN Other
225.000
113.000
Total
53.e'3.036
%3.045.000
Section L 12) and (3) are for illustration.
1n $acuen 1. Incuffed losses. (2) is greater than (3) due 10 reserve c"ngea in prior yews
Section 11 it based on Section 1.
in Section It. investment income is an offset to losses.
APPENDIX A-1
BIG INDEPENDENT CITIES EXCESS POOL
Exhbit EQ-2
COST ALLOCAT ON
2D05D8 Member OA xabon
1. Abcation by Membef
Share of
Share of
Share of
Experience
AN Other
Insurance
Percent
Pooled
TOW
Pei n,
Expenses
Preff*JM
Risk
Losses
Aduat
C.ontnbubw
2005106
20MW RskSharxrg
Sharing
200"6
Costs
City 2oor%
(2)XTotal(3)
(2)XTotal(4) Pail for
Premium
(6)XTotal(7)
(3)+(4)*(7)
_
201 s06
(5) rotaks)
f1} (2)
(3)
(4) (5!
16)
(7)
(a)
HuntrK"Beach 2501 %
IM258
$500.145 $301.897
---
SN7,482
f745.8(5
O)awd 20.93%
23,655
418.670 252,717
1947%
182,037
52402
San Bernardino 2S.23%
28.512
504.635 3D4,608
23.47%
219.415
75202
Santa Ana 21.10%
23.847
422.064 254.768
19 &M
133.513
629,41,23
West(rpAna 7.729E
8.725
154,485 184,048
14.1a%
132.573
295.718
Total 100.D0%
$113.000
S2.D00,000 S1298,038
100.0D%
$935,000
$3.048.000
11_ K%mder Equity
Equity)
(Deficit) for
Amtxx4
Total
2005108
Doposited in
Actual
Operations
coy 2005AM
costa
(2),(3)
(1) (2)
(3)
(4)
Hansngton Beach f845.804
$745.065
$99.939
Oxnard 708.021
824.362
93.859
San Bernardino 853.398
752.562
100,837
Santa Ana 713.760
629.423
$4.337
Wort Covina 352.052
295.738
55264
TOW 13.473.036
$3.048.000
$425.036
Section I, (2) is km Extiibit CA-7.
So.tion I, Total(3; and Total(4) are from Exfxbd EC-1.
Section 1. (5) is hom Exh xt CA,9.
Se'.tion I. Total(7) is from E,NIA EQ-1.
So-tinn 11. (2) is Mom Exhibit CA-9.
Setion 11, (3) is from Section 1. (8).
Exhibit B
BICEP
Liability Program
Target Retained Earnings Policy Statement
1. PURPOSE. The purpose of this policy statement is to give guidance to the Board in
making annual funding decisions for the Liability Program. By adoption of this policy
statement, the Board of Directors acknowledges that the long-term financial strength
of the Liability Program is of utmost importance. There is a high degree of
uncertainty in actuarial estimates due to the possibility of occasional catastrophic
claims and inconsistent or inaccurate case reserving; therefore, the Board of
Directors desires to fund the Program in a cautious and prudent manner and return
dividends to its members in an equally cautious and prudent manner.
2. TARGET RETAINED EARNINGS. BICEP has determined that the target retained
earnings goal for the Liability Program is the actuarially determined 85% confidence
level discounted for investment income, subject to the following ratios:
Participation Premium to Retained Earnings ratio: Target =1.5:1
This ratio is a measure of how Retained Earnings is leveraged against
possible pricing inaccuracies. A low ratio is desirable.
BICEP Retention to Retained Earnings ratio: Target = 0.51
This ratio is a measure of the maximum amount that Retained Earnings
could decline due to a single loss. A low ratio is desirable.
Outstanding Reserves to Retained Eamings ratio: Target =1.5:1
This ratio is a measure of how Retained Earnings is leveraged against
possible reserve inaccuracies. A low ratio is desirable.
• Retained Earnings is the amount shown as Retained Earnings in BICEP's most
recent financial audit.
• Participation Premium includes the Risk Sharing Premium and
reinsurance/excess insurance premium but does not include administrative costs.
• BICEP Retention is the maximum amount of exposure to a single loss retained
by BICEP over the most recent 10 years.
WhilityProgram 0 1 -21 -06
-B-1-
• Outstanding Reserves are the sum total of unpaid case reserves, and incurred
but not reported claims, in the Risk Sharing layer as determined by the Claims
Auditor and Actuary. _
3. ANNUAL ACTUARIAL STUDY. BICEP will conduct an annual actuarial analysis to assist
the Board of Directors in making funding decisions on a prospective and
retrospective basis.
4. APPLICATION OF TARGET SURPLUS CRITERIA. After annual review of the target
retained earnings ratios, the Board of Directors will be able to determine whether it is
desirable to increase, decrease. or stabilize retained earnings. if the Board desires
to decrease retained earnings, it may approve a funding level below the 85%
confidence level. Conversely, a funding decision above the 85% confidence level
will indicate a bias toward Increasing retained earnings. A determination to fund at
the 85% confidence level will reflect the Board's desire to keep retained earnings at
the current level.
5. RETROSPECTIVE DIVIDENDS. Dividends may be available four (4) years from the end
of a Coverage Period. The Board of Directors, using the target retained earnings
ratios as a guide, may declare additional retrospective dividends at any time.
6. PROSPECTIVE DIVIDEND. To the extent the Board approves funding a new year at a
confidence level less than the target 85%, the Board recognizes the difference
between actual funding and the 85% confidence level as a prospective (up front)
dividend.
7. AMENDMENT. This policy statement, amended by the Board dated , 2006,
shall be reviewed annually and reaffirmed or modified accordingly.
Liability Prognm 01.21-06
-s-2-
EXHIBIT 5
V
WORKERS' COMPENSATION PROGRAM
BIG INDEPENDENT CITIES EXCESS POOL (BICEP) 1
Self -Insured Retention:
Program Year:
The Member, , hereby agrees to enter into and participate in the
Workers' Compensation Program of Coverage ("Program") as stated herein in
accordance with the terms and conditions as follows:
ARTICLE I
DEFINITIONS
The definitions of terms used in this Program shall be the same as those contained in
the Joint Powers Authority Agreement ("JPA") and the Bylaws of Big Independent Cities
Excess Pool ("BICEP"), unless otherwise expressly provided herein.
1.1 "Administrative Premium" means each Member's proportion of all administrative
costs of BICEP relating to the Program, as further set forth in Section 4.1.2.1 hereof.
1.2 "Allocated Costs" means those costs of the Program which are specifically
related to a Member.
1.3 "Claim(s)" means a demand(s) against a Member to recover for losses or
damages within or alleged to be within the scope of the Program.
1.4 "Coverage Period" means each year coextensive with the Fiscal Year (as defined
in the Bylaws) for which a Member pays Participation Premium, unless and as amended
by the Board.
1.5 "Insurance" means providing coverage for Claims in excess of a Membees Self -
Insured Retention amount by commercial insurance or reinsurance.
1.6 "Participation Premium" means with respect to each Member, the Administrative
Premium, if any, and estimated Insurance Premium payable by each Member on each
Premium Payment Date as determined in accordance with Article IV hereof.
1.7 "Settlement(s)" means the settlement by a Member and/or insurer, in accordance
with the Program, of a Claim against such Member, or the final adjudication of such
Claim.
Workcrs' Compensation Program
01-21-06
M
M
2.1 Coverage.
ARTICLE II
COVERAGE PROGRAMS
In accordance with Article V of the Bylaws, BICEP hereby provides and Member
hereby accepts workers' compensation coverage (`Coverage") as set forth in the
Declaration for each year's Coverage Period.
2.1.1 Upon the approval of the Board. BICEP shall provide Insurance which is in
excess of the Self -Insured Retention as determined by the Member. The usual method
of funding will be to have each Member deposit their portion of premium for Insurance
purchased at the beginning of each Fiscal Year as a component part of their
Participation Premium.
2.1.2 Insurance provided for BICEP to its Members for Coverage, or any portion
thereof, shall be primary to pay any covered Clairns. BICEP shall be obligated to assist
and cooperate with each Member in -collecting for covered Claims from such insurers to
the fullest extent.
2.1.3 BICEP shall not be obligated to pay any covered Claim.
ARTICLE III
PAYMENT OF CLAIMS
3.1 Settlements.
3.1.1 Each Member shall retain the right to approve or reject a Claim where the
settlement amount is less than their Self -Insured Retention.
3.1.2 Each Member shall have the authority and responsibility for all legal costs
for defense of a Claim that does not involve the insurance carrier(s). The Member may
choose the attorney to handle Its Claim.
ARTICLE IV
PREMIUMS
4.1 Members Premium Costs.
4.1 A Appropriation of Premium Payments. Each Member shall take such action
as may be necessary to include Participation Premium payments payable hereunder in
Workcrs' Compensation Program
01-21-0G
-2-
its annual agency budget and to make the necessary annual appropriations for all such
payments to BICEP. The obligations on the part of each Member herein contained shall
be deemed to be and shall be construed to be duties imposed by law and it shall be the
duty of each and every public official of each Member to take such action and do such
things as are required by law in the performance of the official duty of such officials to
enable each Member to carry out and perform its obligations herein.
4.1.2 The Participation Premium payments due in any Coverage Period shall be
made in consideration for Coverage for such Coverage Period. The entire amount of
Participation Premium is due on the Premium Payment Date which shall be August 1 of
each Fiscal Year. The determination of the Participation Premium payable in each
Coverage Period by each Member shall be made as soon as reasonably possible but
no later than the day before the renewal date preceding a Coverage Period. Each
Member shall be obligated to pay the Participation Premium which is determined as
follows:
4.1.2.1. Administrative Premium. Each Member shall pay to BICEP
as Administrative Premium such amounts as shall be required for the payment of all
administrative costs of BICEP including but not limited to, general management and all
other necessary administrative costs of BICEP or charges required to be paid by it in
order to administer the Program, if any. The Administrative Premium shall be equally
shared by each Member in the Program.
4.1.2.2. In a Coverage Period for which BICEP has purchased
insurance on behalf of each Member, each such Member shall be obligated to pay its
Allocated Costs which includes but is not limited to the premium for such insurance and
includes insurance brokerage fees and/or comm'ssions.
4.1.3 At the end of a Coverage Year, insurers may audit each Member's payroll
which may result in refunds, credits or additional premium payable.
4.2 Common Premium Provisions to Members and Terminated Members
4.2.1. No Withholding. Notwithstanding any dispute between BICEP and a
Member or Terminated Member, including a dispute as to the scope or nature of
Coverage provided by insurers or for any other reason, each Member including a
Terminated Member shall appropriate funds sufficient to pay and shall make all
Participation Premium payments when due, including any audited payroll as provided in
Section 4.1.3 above, and shall not withhold any such payments pending the final
resolution of such dispute.
4.2.2. Payment of Invoices. BICEP invoices are to be paid within 30 days of
presentation to members unless another due date is specified on the invoice.
Workers' Comperosation Program
01-21-06
-3-
4.2.3. Rate on Overdue Payments. In the event a Member or Terminated
Member fails to make any of the payments required in this Article, the payment in
default shall continue as an obligation of the Member or Terminated Member until the
amount in default shall have been fully paid, and in addition to any remedies available
with respect to such default, the Member or Terminated Member agrees to pay the
same with interest thereon. Interest shall be calculated using the BICEP's average
earnings rate as determined in the latest 12-month Investment Performance Porfolio
prepared by BICEP's investment managers, but not to exceed the highest rate
permitted by law from the date such amount was originally payable. This provision can
be waived by the Board on a case -by -case basis.
4.2.4. Termination of Coverage. In no event shall termination of
Coverage due to withdrawal or expulsion release a Member from its obligation to pay
damages resulting from default under the terms of this Program or from its obligation to
pay their Self -Insured Retention of Claims within the scope of Coverage prior to such
withdrawal. BICEP shall continue to pay Settlement of Claims relating to the withdrawn
Member within the scope of Coverage prior to withdrawal as provided herein, unless the
Member defaults in the payment of its continuing obligations described in the preceding
sentence. Notice to withdraw shall be revocable by the Member only with the consent
of BICEP.
4.2.5. Member's Rights Upon Dissolution of BICEP. In the event of the
dissolution of BICEP in accordance with Article VI of the Bylaws, the terms and
conditions of this Workers' Compensation Program shall remain in full force and effect
until such time as all Claims within the scope of Coverage have been finally determined
and/or paid.
IN WITNESS WHEREOF, the undersigned Member acknowledges reading, fully
understanding and accepting the terms and provisions of the Program.
Date:
Workers' Compensation Program
01-21-0G
By:
Print Name:
-4-
Res. No. 2006-38
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, qualified City Cleric of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City,
do hereby certify that the whole number cf 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 an regular meeting thereof held on the 3rd day of July,
2006 by the following vote:
AYES: Bohr, Green, Coerper, Sullivan, Hardy, Hansen, Cook
NOES: None
ABSENT: None
ABSTAIN: None
Cittherk and ex-offcio Qerk of the
City Council of the City of
Huntington Beach, California
ATTACHMENT 2
V
RESOLUTION NO. 2006-39
A RESOLUTION OF THE CITY COUNCII, OF THE CITY OF HUNTINGTON
BEACH NAMING THE DEPUTY CITY ADMINISTRATOR OR HIS/HER
WRITTEN DESIGNEE AS THE CITY'S REPRESENTATIVE TO THE BIG
INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
WHEREAS, Resolution No. 6234 was adopted by the City of Huntington Beach on
December 3, 1990, designating Karen Foster as the City's representative to the "Big Independent
Cities Excess Pool Joint Powers Authority" ("BICEP"), and said designee has retired and the
City desires to name a new designee,
NOW, THEREFORE, the City Council of the City of Huntington Beach hereby resolves
as follows:
SECTION 1. The Deputy City Administrator, or his/her written designee, is designated
as the City's representative to the BICEP, instead of and in place of Karen Foster.
SECTION 2. The Deputy City Administrator shall designate an alternate to serve as the
City's representative to the BICEP, at such times as the City's regular representative is
unavailable.
PASSED AND ADOPTED by the City Ccuncii of the City of Huntington Beach at a
regular meeting thereof held on the 3 j day of _ auly , 2006.
GGc�
Mayor
ATTEST: ROVED AS TO FORM:
Cit Perk City Attorney
REVIEWED AND APPROVED:
ty Admirfistrator
INIT D AND APPROVED:
Deputy City Administrator
06-29612153
k
Res. No. 2006.39
STATE OF CALIFORNIA
COUNTY OF ORANGE j ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, 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 an regular meeting thereof held on the 3rd day of July,
2006 by the following vote:
AYES: Bohr, Green, Coerper, Sullivan, Hardy, Hansen, Cook
NOES: None
ABSENT: None
ABSTAIN: None
Cit), erk and ex-officio CI k of the
City Council of the City of
Huntington Beach, California
RCA ROUTING SHEET
INITIATING DEPARTMENT:
City Aftorne /Administration
SUBJECT:
BICEPIExcess Insurance
COUNCIL MEETING DATE:
July 3, 2006
RCA ATTACHMENTS
STATUS
Ordinance w/exhibits & legislative draft if applicable)
Not Applicable
Resolution wlexhibits & legislative draft if applicable)
Attached
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
(Signed in full by the Qty Attome
Not Attached (Explain)
Subleases, Third Party Agreements, etc.
(Approved as to form PZ Cit Attome
Not Attached (Explain)
Certificates of Insurance (Ap2roved by the a Attome
Not Attached (Explain)
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If applicable)
Not Applicable
Staff Re ort if a licable
Attached
Commission, Board or Committee Report If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
Assistant CoAdministrator Initial
City Administrator initial
City Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author. SFF
v
Esparza, P�rtt
From: Field, Scott
Sent: Tuesday, July 11, 200610:30 AM
To: Esparza, Patty; Williams, Patti
Subject: RE: E-8 - 7/3/06 meeting - BICEP
there are too many "patties."
Esparza , if you would get the PDF to Patti Williams, she wil deliver it to the right people at BICEP.
City of Huntingto'ach�
2000 Main Street
Huntington Beach, CA 92648
(714)536-5662
Important Notice -The preceding message is confidential and protected by the attorney -client privilege. it is not intended for
transmission to, or receipt by unintended persons. If you believe it has been sent to you in error, do not read it. Please
reply to the sender that you have received the message in error, then destroy it.
Thank you.
From: Esparza, Patty
Sent: Tuesday, July 11, 200610,26 A.*4
TO: Field, Scott
Subject: RE: E-8.713/06 sheeting - BICEP
Do you have the address & does it go to anyone's attention? I was planning on emailing a PDF copy to you & Patti - is that
OK or do you still need a paper copy?
---Original Message --
From:
Feld, Scott
Sent:
Tuesday, July 11, 200610:18 AM
To:
Esparta, Patty
Cc:
Williams, Patti
Subject:
RE: E•8 - 713106 meeting - BICEP
Patty, if you could have the Mayor and City Clerk sign the Joint Powers Agreement, and then deliver a certified copy to
me and to Patti Williams.
Patti, would you get to the Agreement to BICEP.
Thanks,
Scott Field
Assistant City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
(714)536-5662
Important Notice -The preceding message is confidential and protected by the attorney -client privilege. It is not
intended for transmission to, or receipt by unintended persons If you believe it has been sent to you in error, do not
read it. Please reply to the sender that you have received the message in error, then destroy it.
Thank you.
From: Esparza, Patty
2006-06-21 01:09PiR FR011-KfA SPIKE' ''I AS$— 4213r483101 � - 685 P.001/002 „ F-40840
BIG INDEPENDENT CITIES EXCESS POOL JOI1\T POWERS AUTHORITY
c/o Cenral blanager, Ken Spikrr And Assoclates, Inc. 1100 South Flower Street, Suile 2100
Los Anroles, California 90015•2115 - (213) 743.9066 - FAX No. (213) 748•6101
ABOARD OF DIRECTORS MEETING
4
0
Tuesday -- June 27, 2006
rrI
' 10:00 a.m.
C7
Embassy Suites
own
N
2111 East Huntington Drive
Wow
i Arcadia, California
m�'
COrn
' 626-445-8525
NOTICE TO THg EUBLTC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff,
no action, or filing.
BUSINESS GENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held May 11, 2006.
(Pages 9-12)
11. Comments from the Public.
Ill. Receive and File Monthly Investment Reports. (Pages 13-18)
IV. Approval of Statement of Investment Policy. (Pages 19-37)
I
V. Approval of Financial Audit for the Period Ending June 30, 2005. (Pages 38-52)
Vl. Discussion of 2006 Actuarial Study. .
VII: Approval of Liability Claims Audit-2006. (Pages 53-58)
Vlll. Discussion and Approval of Purchase of Excess Insurance for Fiscal Year 2006-
2007.
IX. Status Report on the Approval of BICEP Operating Documents.
X. Discussion and Authorization to Renew Agreement with Alameda Corridor -East
Construction Authority. (Pages 59-71)
X1, insurance Broker Report.
XII. General Manager's Report.
+213T483101 "685 P.002/002 F-989
2005-05-21 01:09PM FROWKEH SPIKE' `0 ASP"
`r
BICEP
Board of Directors Meeting Agenda
June 27.2006 -- Page 2
X111_ Election of Officers.
X1V. Closed Session: Conference with (regal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
Martinez, Olivado — City of Oxnard
Claim No. 15924
Deborah Kline City of Pomona
Claim No. 14754
Molina --City of Oxnard
Claim No. 16369
Mulligan, et at- City of Huntington Beach
Claim No. 16397
Nowotny—City of Huntington Beach
Claim No. 16954
Manta Mgmt City of San Bernardino
Claim No. 052075
Valdovinos, Zefedno--City of Oxnard
Claim No. 2005034758
XV. Adjournment.
**NOTICE TO CITY CLERKS * *
PLEASE PQVTHIS fifEET NG NOTICE
12137486101 %KEN SPIKER $ASSOC —"93 P-002 APR 28 103 12:18
Until
13IG-INDEPENDENT CITIES EXCESS POOL JOINT P 1f ERS AUTHORITY
c/o Getteral Diaaagec, Sett Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
- Los Angeles, California 90015-2115 (213) 748.0066 - FAX No. (213) 743-6101
BOARD OF DIRECTORS MEETING
Thursday -- May 1, 2003
.10:00 a.m.
Mt. Vernon Room
-The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
' (213) 629-12.00
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff,
no action, or filing.
VAINESS AGENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held March 11,
2003. (Pagesll-14)
11. Approval of Minutes of Special Telephonic BICEP Board of Directors Meeting
Held April 16, 2003. (Pages15-16) -
Ill. 'Receive and Pile BICEP Monthly Investment Reports. (Pages 17-27)
i
IV. Comments from the Public.
V. Closed . Session: Conference with Legal Counsel Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
w
Mulligan, et al -- City of Huntington Beach
Claim No. 16397 ry '
co _
Deborah Wine— City of Pomona
Claim No. 14754 "
Christine Abarca, et al — City of Pomona Y
Claim. No. 16700
Candice Dick ---City of San Bemardino
k--�ITY OF HUNTINGTON BEA`-1
MEETING DATE: December 1, 2003 DEPARTMENT ID NUMBER: AS-044
Council/Agency Meeting Held:
Deferred/Continued to:
)(Approved Q Conditionally Approved (3 Denied
City C
r s Si ature
Council Meeting Date: December 1, 2003
Department ID umber: AS-044
CITY OF HUNTINGTON BEACH T"''� 5�ns�t•ve
REQUEST FOR ACTION
a n c:
SUBMITTED TO: HONORABLE AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, CITY ADMINISTRATORz-cr-
PREPARED BY: CLAY MARTIN, DIRECTOR OF ADMINISTRATIVE SERVICES
SUBJECT: Approve the addition of the City of West Covina and the withWrawal of
the City of Pomona to the B;g Independent Cities Excess Pool and
authorize the prepayment of BICEP revenue bonds. a... No -)
[Statement of issue, Funding Source, Recommended Action, Altemat've Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: In accordance with the Big Independent Cities Excess Pool (BICEP)
Joint Powers Authority Agreement, the City Councils of all participating cities must approve
the addition of the City of West Covina and the withdrawal of the City of Pomona from BICEP
as well as authorize the prepayment of BICEP revenue bonds.
Funding Source: Liability Insurance — General Liability Insurance. 10035610.73010
Recommended Action:
1. Approve the First Amendment to the Joint Powers Agreement creating the Big
Independent Cities Excess Pool which acknowledges the withdrawal of the City of
Pomona and the admission of the City of West Covina as a party to the Agreement.
2. Approve the Third Amendment to the Liability Risk Coverage Agreement which
authorizes the admission of the City of West Covina, the premium payments, the
allocable proportion of basic premium payments for the other participants.
3. Approve Resolution N6. ', which authorizes the addition of the City of West Covina as
a new participant and the withdrawal of the City of Pomona and permits all participants
(Huntington Beach, Oxnard, San Bernardino and Santa Ana), with at least two thirds
approval, to exercise, as a group, the option to prepay the basic premium revenue
bonds.
H:Wew Documents\My DocumentslBICEPWICEP RCA documents.DOT
1111912003 4:39 PM
LD
� REQUEST FOR ACTION �—)
MEETING DATE: December 1, 2003 DEPARTMENT ID NUMBER: AS-044
Alternative Actions):
1. Do not approve the First Amendment to the .Joint Powers Authority acknowledging
the addition of the City of West Covina and the withdrawal of the City of Pomona
from the Big Independent Cities Excess Pool.
2. Do not approve the Third Amendment to the Liability Risk Coverage Agreement
which authorizes the addition of West Covina, the withdrawal of Pomona and the
reallocation of the basic premium payments.
3. Do not approve the resolution authorizing the change in membership to the Joint
Powers Authority and not authorize the prepayment of the basic premium revenue
bonds.
Analysis:
In 1988, the City of Huntington Beach joined the cities of Pomona, Santa Ana, San
Bernardino and Oxnard in the development and formation of the Big Independent Cities
Excess Pool. The participating cities financed a deposit into a claims payment fund by the
issuance of BICEP $15,055,000 Insurance Program Revenue Bonds, Series 1988A. The
Revenue Bonds are secured by and are payable from a portion of the annual premiums paid
by each participating city. The annual debt service on the bonds is approximately $1.4
million paid through a combination of city basic premium contributions (approximately 40%)
and investment earnings (approximately 60%). At present $6.91 million remains outstanding.
City of Pomona
The District Court of Appeals held Pomona liable for wrongful foreclosure on a
redevelopment project. The plaintiff's case is estimated to be in the millions. BICEP, as well
as the excess carrier, issued a Reservation of Rights letter due to coverage issues. Pomona
has filed a cross complaint against BICEP for failure to pay all of their legal fees. This entire
matter currently remains in litigation.
In FY 2002/03, the City of Pomona notified BICEP of its intent to withdraw from BICEP.
Under the terms of the Liability Risk Coverage Agreement, a member must give 2 years
notice before withdrawing from BICEP. BICEP bound coverage for Pomona for FY 03104
pursuant to its obligation under the Liability Risk Coverage Agreement and Pomona failed to
pay its proportional share of the insurance premiums. Effective August 18, 2003 and
pursuant to the rights granted under the Liability Risk Coverage Agreement, BICEP expelled
Pomona as a member of BICEP for non payment of premium. The attached resolutions and
amendments acknowledge the expulsion of Pomona as a BICEP member.
F�
H:Wew DocumentsWy DocumentsOICERSICEP RCA documents.DOT
1111=003 5:27 PM
�w) REQUEST FOR ACTION �-J
MEETING DATE: December 1, 2003 DEPARTMENT ID NUMBER: AS-044
City of West Covina
On June 12, 2003, the BICEP board of directors approved admission of West Covina to
BICEP. The approval of West Covina was conditioned upon the formal approval by the city
councils of each member city, which is accomplished through the attached resolution. West
Covina met the requirements of admission to BICEP (e.g. over 100,000 in population and
employment of a full time risk management profession), and exhibited a favorable loss
history based upon an analysis performed by an independent actuary.
Revenge Bonds
BICEP's approach of financing the pool for claims payments with bonds has served the
members well over its 15 year history. BICEP has paid over $16 million in claims on behalf
of its members and currently maintains an asset base of approximately $16.6 million. With
the declining bond interest rates, the BICEP board of directors approved the defeasance of
BICEP's bond issue, subject to the approval of the city council of each member city. The
prepayment of the bond issue would be provided by funds already held by BICEP. BICEP
has sufficient capital in its reserves to retire its bond issue and still retain between $6.9 and
$7.7 million in capital. The advantages to early payoff include:
1. Annual debt service savings of $1.4 million
2. Retention of all investment earnings which could be used to defray liability premiums
and/or administration costs
3. Elimination of the onerous provisions within the operating agreements connected to the
bonds and bondholders
4. Provides the opportunity to revise existing operating agreements to be more flexible and
responsive to member needs
5. Eliminates basic premium payments which results in an average annual premium savings
of $135,000 per member.
6. Ability to attract new members is enhanced
Environmental Status: N/A
3
H:Wew DocumentslMy DocumentsWCEMICEP RCA documents.DOT
1111212003 5:27 PM
�-) REQUEST FOR ACTION �-)
MEETING DATE: December 9, 2003 DEPARTMENT ID NUMBER:
Attachment(s)•
AS-0"
1 City Council Resolution No. aM3~'39
2 First Amendment to the Joint Powers Authority Creating the Big
Independent Cities Excess Pool Joint Powers Authority
I [ 3 1 Third Amendment to the Liability Risk Cove
RCA Author. Karen Foster
y
H:Wew DocumentsWy DocumentsWCEP1BICEP RCA documents DOT
i 119 212003 5:27 PM
m
ATTACHMENT #1
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH AMENDING THE LIABILITY RISK COVERAGE AGREEMENT
AND THE JOINT POWERS AGREEMENT CREATING THE BIG
INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY,
. APPROVING THE PREPAYMENT OF BASIC PREMIUM, AND
AUTHORIZING, RATIFYING, AND APPROVING CERTAIN OTHER
DOCUMENTS AND ACTIONS I1\' CONNECTION THEREWITH
WHEREAS, the City of Huntington Beach is a municipal corporation organized and
existing under and by virtue of the constitution and laws of the State of California (the "City");
and
The Cities of Huntington Beach, Oxnard, Pomona, San Bernardino, and Santa Ana
formed the Big Independent Cities Excess Pool Joint Powers Authority, a joint exercise of
powers entity organized and existing under the laws of the State of California (the "Authority");
and
The Authority and the Cities of Huntington Beach, Oxnard, Pomona, San Bernardino,
and Santa Ana entered into the Liability Risk Coverage Agreement dated as of October 1, 1988
(the "Original Agreement'), as amended by the First Amendment to Liability Risk Coverage
Agreement dated as of December 1, 1988 (the"First Amendment'), by and among the
Authority and the Cities of Huntington Beach, Oxnard, Pddiona, San Bernardino, and Santa Ana,
and by Resolution No. 95-1, adopted by the Board of Directors of the Authority (the "Board")
on November 25, 1995 (the "Second Amendment") (the Original Agreement, as amended by
the First Amendment and the Second Amendment, is referred to herein as the "Agreement';
and
The City of Pomona ("Pomona") has been expelled from Coverage (as defined in the
Agreement) as a Participant (as defined in the Agreement) under the Agreement, effective as of
August l 8, 2003; and
The City has been informed that the City of West Covina {"West Covina") has delivered
to the Authority an application to be admitted as. a new Participant; and
In connection with the admission of West Covina as a new Participant and the expulsion
of Pomona from Coverage as a Participant under the Agreement, certain provisions of the
Agreement and the exhibits thereto are required to be amended, supplemented, or waived, as
applicable; and
The City proposes to enter into a Third Amendment to Liability Risk Coverage
Agreement (the "Third Amendment") by and among the Authority and the Cities of Huntington
Beach, Oxnard, San Bernardino, Santa Ana, and West Covina, to provide for, among other
things, the admission of West Covina as a new Participant; and
43resodbicep amend11116M3
In connection with the admission of West Covina as a new Participant, West Covina is
required under the Agreement, among other things, to become a member of the Authority under
the Joint Powers Agreement Creating the Big Independent Cities Excess Pool Joint Powers _
Authority (the "JPA Agreement'), executed by each of the Cities of Huntington Beach, Oxnard,
Pomona, San Bernardino, and Santa Ana in September 1998; and -
In connection with the expulsion of Pomona from Coverage as a Participant under the
Agreement, Pomona shall be deemed under Article 17 of the JPA Agreement to have withdrawn
from the JPA Agreement and shall no longer be a party to the JPA Agreement; and
In connection with the admission of West Covina as a member of the Authority and the
withdrawal of Pomona as a member of the Authority, certain provisions of the JPA Agreement
are required to be amended or supplemented, as applicable; and
The City proposes to enter into a First Amendment to Joint Powers Agreement Creating
the Big Independent Cities Excess Pool Joint Powers Authority (the "JPA Amendment') by and
among the Cities of Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West Covina, to
provide for, among other things, the admission of West Covina as a member of the Authority and
the acknowledgement of the withdrawal of Pomona as a member of the Authority; and
Section 11.2 of the Agreement permits all Participants (i.e., the Cities of Huntington
Beach, Oxnard, San Bernardino, and Santa Ana), with at least two-thirds approval of the
members of the Board, to exercise as a group the option to prepay the Basic Premium (as defined
in the Agreement) of all Participants pursuant to Section 11.1 or 11.3 of the Agreement, as
applicable, in the manner and upon the terms set forth in such applicable section; and
The City desires to approve the prepayment of its Basic Premium, subject to the
conditions set forth herein; and
The City desires to approve, ratify, and confirm in all respects all previous actions taken
by the City or any member of this City Council of this City (the "City Council') or any other
officer or staff member of the City with respect to the foregoing and
The forms of the following documents are on file with the City Clerk of the City (the .
"City Clerk") and have been submitted to this City Council, and the Risk Manager of the City
(the "Risk Manager"% in consultation with the City Attorney of the City (the "City Attorney"),
has examined and approved each document and has recommended that this City Council direct
the completion, where appropriate, and the execution and delivery of such documents and the
consummation of the foregoing recitals:
(a) the Third Amendment; and
(b) the JPA Amendment;
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
find, determine, resolve and order as follows:
43rewfbiccp ameed/1116,'03 2
SECTION 1. The foregoing recitals, and each of them, are true and correct.
SECTION 2. The Third Amendment is approved in substantially the form presented at
this meeting. Each of the Mayor of the City (the "Mayor') and the Mayor Pro Tern of the City
(the "Mayor Pro -Teal"), acting alone, is hereby authorized and directed, for and in the name of
the City, to execute and deliver the Third Amendment with such changes, insertions, and .
omissions as such officer or the Risk Manager steal I require or approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
SECTION 3. The JPA Amendment is approved in substantially the form presented at
this meeting. Each of the Mayor and the Mayor Pro Tem, acting alone, is hereby authorized and
directed, for and in the name of the City, to execute and deliver the IPA Amendment with such
changes, insertions, and omissions as such officer or the Risk Manager shall require or approve,
such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 4. The option to prepay all of the City's Basic Premium at any time pursuant
to Section 11.2 of the Agreement is approved, without further action by this City Council;
provided that all of the following conditions are satisfied: (a) all Participants (i.e., the Cities of
Huntington Beach, Oxnard, San Bernardino, and Santa Ana) shall have approved such option to
prepay, so that such option shall be exercised by all such Participants as a group; (b) at least two-
thirds of the members of the Board shall have so approved the exercise of such option to prepay
all Basic Premium; (c) Undesignated Reserves (as defined in the Agreement) in the Claims
Payment Fund (as defined in the Agreement), moneys in the Debt Service Reserve Fund (as
defined in the Agreement), or any other lawfully available moneys shall be used for such
prepayment; and (d) notwithstanding the last paragraph of Section 11.2 of the Agreement, the
majority of the Participant members of the Board shall have determined that the Authority's
pooled self-insurance program shall not terminate by virtue of such prepayment of Basic
Premium. The Board shall determine the time that any such optional prepayment of Basic
Premium shall be made under Section 11.2 of the Agreement and whether any such optional
prepayment shall be exercised pursuant to Section 11.1 or 11.3 of the Agreement, in the manner
and upon the terms set forth in such applicable section.
SECTION 5. The Mayor, the Mayor Pro Tem, the Risk Manager, the City Clerk, the
City Attorney, and any other proper officer of the City are hereby authorized and directed, jointly
and severally, to do any and all things and to execute and deliver any and all documents
necessary or proper for carrying out the transactions contemplated by this Resolution or any of
the documents referred to herein, and to execute and deliver any and all certificates,
representations, opinion letters, and other documents necessary or desirable to accomplish the
transactions described in such documents or herein.
SECTION 6. Any document, the execution of which by the Mayor, the Mayor Pro Tetra,
the Risk Manager, the City Clerk, the City Attorney, or any other proper officer of the City is
authorized by this Resolution, shall, in the absence or inability to act of such officer, be executed
by any authorized designee of such officer, such authorization to be given in writing.
03rrso/bictp emend/11/6/03 . 3
SECTION 7. All actions previously taken by this City Council and by the officers and
staff of the City with respect to the matters addressed by this Resolution are hereby approved,
ratified, and confirmed in all respects, including, without limitation, all actions necessary or
desirable to provide for Coverage for West Covina, effective as of July 1, 2003.
SECTION 8. This Resolution shall take effect from and after its date of adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 1st day of December , 2003.
Ma
ATTEST:
City Clerk
REVIEWED AND APPROVED:
City strator
APPROVED AS TO FORM:
City Attorney
03reso/bicep amend/11/6/03 4
Res. No. 2003-87
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY the duly elected, 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 an regular meeting thereof held on the 1st
day of December, 2003 by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio Ark of the
City Council of the City of
Huntington Beach, California
ATTACHMENT2
FIRST A.h1ENDMENT TO
JOINT POWERS AGREEMENT
CREATINIG THE BIG INDEPENDENT CITIES EXCESS POOL
JOINT POWERS AUTHORITY
THIS FIRST AMENDMENT TO JOINT POWERS AGREEMENT CREATING THE .
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY, dated as of
November 1, 2003 (this "First Amendment', by and among the CITY OF HUNTINGTON,
BEACH ("Huntington Beach'), the CITY OF OXNARD ("Oxnard'), the CITY OF SAN
BERNARDINO ("San Bernardino!), the CITY OF SANTA ANA ("Santa Ana'), and the CITY
OF WEST COVINA ("West Covina'), each a municipal corporation duly organized and existing
under the Constitution and laws of the State of California (the "State), amends the JOINT
POWERS AGREEMENT CREATING THE BIG INDEPENDENT CITIES EXCESS POOL
JOINT POWERS AUTHORITY, executed and delivered in September 1988 (the "Agreement"),
by and among Huntington Beach, Oxnard, San Bernardino, Santa Ana, and the CITY OF
POMONA ("Pomona"), a municipal corporation duly organized and existing under the
Constitution and laws of the State. All capitalized terms used but not defined herein shall have the
respective meanings assigned to such terms in the Agreement.
RECITALS:
WHEREAS, pursuant to Chapter 5, Division 7, Title 1 of the California Government Code
(Section 6500 et seq.) (the `.`Joint ]rowers Law' and the Agreement, Huntington Beach, Oxnard,
Pomona; San Bernardino, and Santa Ana formed the BIG INDEPENDENT CITIES EXCESS
POOL JOINT POWERS AUTHORITY (the "Authority") as joint exercise of powers agency; and
WHEREAS, Article 17 of the Agreement provides, among other things, that a Member
which no longer participates in any Insurance Program of the Authority by reason of expulsion
from an Insurance Program or otherwise, shall be deemed to have withdrawn from the Agreement
and shall no longer be a party to the Agreement; and
WHEREAS, Pomona has been expelled, effective August 18, 2003, from Coverage as a
Participant under, and as such terms are defined in, the Liability Risk Coverage Agreement, dated
as of October 1,1988, by and among the Authority and Huntington Beach, Oxnard, San
Bernardino, Santa Ana, and Pomona, as amended by the First Amendment to Liability Risk
Coverage Agreement, dated as of December 1,1988, by and among the Authority and Huntington
Beach, Oxnard, San Bernardino, Santa Ana, and Pomona, as further amended by Resolution
No. 95-1, adopted by the Board of Directors of the Authority (the "Board") on November 25,
1995 (collectively, the "Liability Risk Coverage Agreement"), and as further proposed to be
amended by the Third Amendment to Liability Risk Coverage Agreement, dated for reference
purposes as of November 1, 2003 (the "Third Amendment'), and does not currently participate
in any other Insurance Program of the Authority; and
WHEREAS, Article 16 of the Agreement provides, among other things, that any qualified
city may become a party to the Agreement with the approval of two-thirds of the members of the
Board; and
fiat Amendmait to )PA.DOC
WHEREAS, the Board has unanimously approved the admission of West Covina as a new
Participant under the Liability Risk Coverage Agreement and as a member of the Authority and a
party to the Agreement; and
WHEREAS, pursuant to the Third Amendment, West Covina shall be admitted as a new.
Participant under, and as such term is defined in, the Liability Risk Coverage Agreement; and .
WHEREAS, all of the Members of the Authority desire to execute this First Amendment to
approve the admission of West Covina as a Member under, and as a party to, the Agreement and to
acknowledge the withdrawal of Pomona as Member under the Agreement; and
WHEREAS, in connection with the admission of West Covina as a new Member, certain
provisions of the Agreement are required to be amended; and
WHEREAS, Article 23 of the Agreement sets forth the conditions under which and the
procedures pursuant to which the Agreement may be amended; and
WHEREAS, Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West Covina
desire to amend the Agreement in accordance with Article 23 thereof and to make certain
certifications in connection there%ith, all as further set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree at follows:
I . Acknowledgement of Withdrawal of Pomona as a Member. Because Pomona has
ceased to participate in any Insurance Program of the Authority, in accordance with and subject to
Article 17 of the Agreement, Pomona has withdrawn from the Agreement and as a Member of the
Authority and is no longer a party to the Agreement.
2. Admission of West Covina as a Member. West Covina is hereby admitted as a
Member of the Authority and as a party to the Agreement.
3. Amendment to Appendix A. Appendix A of the Agreement is hereby amended to
read in its entirety as follows:
MEMBERS
City of Huntington Beach
City of Oxnard
City of San Bernardino
City of Santa Ana
City of West Covina
4. Into ration of Terms: Reaffirmation of A eement. From and after the effective
date hereof, (a) all references to the "Agreement" shall mean and include the Agreement, as
amended by this First Amendment, and (b) all references to "Member" or "Members" shall mean
First Amendment to )PA.D0C 2
and include each or all, as applicable, of Huntington Beach, Oxnard, San Bernardino, Santa Ana,
and Nest Covina. Each of Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West
Covina hereby reaffirms each of the provisions of the Agreement and confirms that, as so amended,
the Agreement is and remains in full force and effect for the term thereof and is binding upon the
parties hereto and their respective successors or assigns (but only to the extent, if any, permitted
under the Agreement). :
5. Resolution of Conflictinix Provisions. If any terms of this First Amendment
conflict with terms of the Agreement that have not been explicitly amended or waived by this First
Amendment, the terms of this First Amendment shall control and the applicable terms of the
Agreement shall be deemed to have been amended or waived to conform to the terms hereof.
6. Severabil tv. in the event any provision of this First Amendment shall be held
invalid or unenforceable by any court of competent jurisdiction_, such holding shall not invalidate
or render unenforceable any other provision hereof.
7. Applicable Law. This First Amendment shall be governed by and construed solely
in accordance with the laws of the State of California_
8. Captions. The captions or headings in this First Amendment are for convenience
only and in no way define, limit, or describe the scope or intent of any terms, provisions, or
sections of this First Amendment.
9. Execution in'Counterparts. This First Amendment may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
10. Effective Date of this First Amendment. This First Amendment shall be effective
on and after the date that the Board shall have received written notice of the approval, execution,
and delivery of this First Amendment by each of the Members and the satisfaction of any
requirements of the Joint Powers Law.
11. State and County Firings. The General Manager/Secretary of the Authority is
hereby directed to file all appropriate notices pertaining to this First Amendment with the office of
the California Secretary of State and the County Clerk of the County of Los Angeles, as applicable,
within thirty (30) days of its effective date as required by Government Code Section 6503.5, and
within ten (10) days of its effective date as required by Government Code Section 53051.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
First Amendment to JPA.DOC 3
N
IN WITNESS WHEREOF, the undersigned, each of which is a Member of the Authority,
have caused this First Amendment to be executed as of the date first written above, to be effective
on and after the effective date.
APPROVED AS TO FORM:
B c
APPROVED AS TO FORM:
AS TO FORM:
I By:
I APPROVED AS TO FORM:: -
I APPROVED AS TO FORM:
By:
First Amendment to 1PALDOC 4
CITY OF HUNTINGTON BEACH'
By:
It's: M,4
CITY OF OXNARD
By.
It's:
CITY OF SAN BERNARDINO
By:
It's:
CITY OF SANTA ANA
By:
It's:
CITY OF WEST COVINA
By:
It's:
ATTACHMENT 3
THIRD AMENDMENT TO
LIABILITY RISK COVERAGE AGREEMENT
THIS THIRD AMENDMENT TO LIABILITY RISK COVERAGE AGREEMENT dated
for reference purposes as of November 1, 2003 (this "Third Amendment'), by and among the BIG
INDEPENDENT CITIES EXCESS POOL JOINT PONVERS AUTHORITY, a joint exercise of
powers agency duly organized and existing under the laws of the State of California (the "State'),
including, without limitation, Section 6500 et seq. of the Government Code of the State (the
"Authority'), and the CITY OF HUNTINGTON BEACH ("Huntington Beach', the CITY OF
OXNARD ("Oxnard"), the CITY OF SAN BERNARDINO ("San Bernardino"), the CITY OF
SANTA ANA ("Santa Ana'), and the CITY OF WEST COVINA ("West Covina'), each a
municipal corporation duly organized and existing under the Constitution and laws of the State,
amends the Liability Risk Coverage Agreement dated as of October 1, 1988 (the "Original
Agreement"), by and among the Authority and Huntington Beach, Oxnard, San Bernardino, Santa
Ana, and the CITY OF POMONA ("Pomona'), a municipal corporation duly organized and
existing under the Constitution and laws of the State, as amended by the First Amendment to
Liability Risk Coverage Agreement dated as of December 1, 1988 (the "First Amendment'), by
and among the Authority and Huntington Beach, Oxnard, San Bernardino, Santa Ana, and Pomona,
and by Resolution No. 95-1, adopted by the Board of Directors of the Authority on November 25,
1995 (the "Second Amendment") (the Original Agreement, as amended by the First Amendment
and the Second Amendment, is referred to herein as the "Agreement"). All capitalized terms used
but not defined herein shall have the respective meanings assigned to such terms in the Agreement.
RECITALS:
WHEREAS, Pomona has been expelled from Coverage as a Participant under the
Agreement, effective as of August 18, 2003; and
WHEREAS, West Covina, a municipal corporation having a population of at least 100,000,
has delivered to the Authority an application to be adrrAtted as a new Participant under the
Agreement; and
WHEREAS, Section 6.1 of the Agreement sets forth the conditions under which the
Authority may admit and provide Coverage to a new Participant that is not currently a Participant
under the Agreement; and
N4WREAS, in connection with the admission of West Covina as a new Participant, certain
provisions of the Agreement and the Exhibits thereto are required to be amended, supplemented, or
waived, as applicable; and
UTIEREAS, Section 9.3 of the Agreement sets forth the conditions under which and the
procedures pursuant to which the Agreement may be amended; and
WHEREAS, each of the Authority, Huntington Beach, Oxnard, San Bernardino, Santa Ana,
and West Covina desire to amend the Agreement in accordance with Section 9.3 and waive certain
other provisions of the Agreement, all as further set forth herein;
Third Amendment to IRCADOC
L/
�.j
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree at follows:
I. Amendment of Exhibits. The Agreement is hereby amended by adding the
following Exhibits in substitution for the corresponding Exhibits attached to the Agreement:
Exhibit A: Schedule of Basic Premium Payments
Exhibit B: Allocable Proportion for each Participant
Exhibit I: Notice Addresses
2. Admission of West Covina as aNew Participant. West Covina is hereby admitted as
a Participant, effective as of the Effective Date (as defined in Section S hereof); provided, however,
that the Authority shall provide Coverage to West Covina, effective retroactively as of July 1, 2003.
In connection with the foregoing:
(a) Solely in connection with the admission of West Covina as a Participant, each of the
Authority, Huntington Beach, Oxnard, San Bernardino, and Santa Ana hereby (i) waives the
provisions of subsection (a) of Section 6.1 of the Agreement pertaining to the date by which West
Covina is required to have become a member of the Authority and (ii) agrees that, notwithstanding
such subsection (a), such membership shall instead be effective on or before the Effective Date.
(b) Solely in connection with the admission of West Covina'as a Participant, each of the
Authority, Huntington Beach, Oxnard, San Bernardino, and Santa Ana hereby (i) w,aives the
provisions of subsection (b) of Section 6.1 of the Agreement pertaining to the date by which West
Covina is required to have provided to the Authority a completed application for admission and
(ii) agrees that, notwithstanding such subsection (b), such application shall instead be provided on
or before the Effective Date.
(c) Solely in connection with the admission of West Covina as a Participant, each of the
Authority, Huntington Beach, Oxnard, San Bernardino, and Santa Ana hereby (i) waives the
provisions of subsection (c) of Section 6.1 of the Agreement pertaining to the date by which West
Covina is required to have approved an amendment to the Agreement pursuant to which West
Covina shall become subject to all of the terms thereof as a Participant and (ii) agrees that,
notwithstanding such subsection (c), such approval by West Covina may instead be provided on
any date on or prior to the Effective Date.
(d) Solely in connection with the admission of West Covina as a Participant, each of the
Authority, Huntington Beach, Oxnard, San Bernardino, and Santa Ana hereby (i) waives the
provisions of subsection (d) of Section 6.1 of the Agreement pertaining to the first date of the
Coverage Period for West Covina and (ii) agrees that, notwithstanding such subsection (d), such
Coverage Period shall instead commence retroactively as of July 1, 2003.
(e) Solely in connection with the admission of West Covina as a Participant, each of the
Authority, Huntington Beach, Oxnard, San Bernardino, and Santa Ana hereby (i) waives the
Third Amrndmrnt to LACA.DOC 2
%,./ �.0►
provisions of subsection (e) of Section 6.1 of the Agreement pertaining to the date by which the
Authority's Governing Board shall have approved the admission of West Covina as a Participant
and (ii) agrees that, notwithstanding such subsection (e), such approval by the Authority's
Governing Board may instead be provided on any date on or prior to the Effective Date.
3. Selected Premium Payments Payable by West Covina. In connection with its
admission as a new Participant, West Covina shall be liable for the payment of 8.61 % of the total
Administrative Premium and 8.61% of the total Pure Premium payable on the Basic Premium
Payment Date with respect to fiscal year 2003-04. West Covina shall be liable for the payment of a
portion of the total Administrative Premium and the total Pure Premium in future fiscal years, and
shall be assessed, credited, or refunded Pure Premium Adjustments, in accordance with and as
provided in the Agreement or. other procedures or policies of the Authority.
West Covina and each of the other Participants shall be deemed to have an Allocable
Proportion for purposes of determining amounts to be allocated or distributed pursuant to Article V
of the Agreement. Each Participant's (including West Covina's) Allocable Proportion for such
purposes shall be the average of the Pure Premium Proportion determined by the Actuary for each
Participant for each Coverage Period that such Participant received Coverage under the Agreement.
4. Notices. Section 12.1 of the Agreement is hereby amended in its entirety to read as
follows:
Notices. All approvals, authorizations, consents, demands; designations, notices,
offers; requests, statements, or other communications hereunder (each, a "Notice")
from any party hereto to any other party shall be in %writing and shall be deemed
sufficiently given and served upon the other party, if delivered via hand delivery, as
of the date and time of receipt of such delivery, or, if mailed, three days after deposit
in the United States mail as first-class mail, postage prepaid, at the addresses set
forth in Exhibit I hereto. Each party, by Notice given hereunder, may designate an
address to which subsequent Notices shall be sent.
5. Effective Date of this 'Third Amendment. Notwithstanding the first sentence of the
penultimate paragraph of Section 9.3 of the Agreement, this Third Amendment shall become
effective immediately after the last to occur of the following (the "Effective Date"): (i) each of
Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West Covina, and all members of the
Governing Board of the Authority have approved and consented to the form and execution of this
Third Amendment, (ii) this Third Amendment has been executed and delivered by all of the parties
hereto, (iii) counsel for each of Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West
Covina has delivered an opinion substantially in the form of Appendix I attached hereto,
(iv) counsel for the Authority has delivered an opinion substantially in the form of Appendix 11
attached hereto, (v) all of the conditions set forth in Section 6.1 of the Agreement, as amended or
waived, as applicable, by this Third Amendment, have been satisfied; (vi) Bond Counsel has
delivered an opinion in form and substance as required under Section 9.3 of the Agreement, (vii) an
Actuary has delivered a certificate in form and substance as required under Section 9.3 of the
Agreement, and (viii) West Covina shall have become a member of the Authority.
Third Amendmrnt w LRCA.DOC 3
6. Costs and Expenses. In accordance NNith the last sentence of the penultimate
paragraph of Section 9.3 of the Agreement, all costs, fees, and expenses incurred in connection with
Us Third Amendment shall be borne pro rata by Huntington Beach, Oxnard, San Bernardino,
Santa Ana, and West Covina.
7. - .. Incorporation of Terms; Reaffirmation of Agreement. From and after the Effective
Date, (a) all references to the "Agreement" shall mean and include the Original Agreement, as
amended by the First Amendment, the Second Amendment, and this Third Amendment, and (b) all
references to "Participant' or "Participants" shall mean and include each or all, as applicable, of
Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West Covina. Each of the Authority,
Huntington Beach, Oxnard, San Bernardino, Santa Ana, and West Covina hereby reaffirms each of
the provisions of the Agreement and confirms that, as so amended, the Agreement is and remains in
full force and effect for the term thereof and is binding upon the parties hereto and their respective
successors or assigns (but only to the extent, if any, permitted under the Agreement).
8. ResoIution of Conflicting Provisions. If any terms of this Third Amendment
conflict with terms of the Agreement that have not been explicitly amended or waived by this Third
Amendment, the terms of this Third Amendment shall control and the applicable terms of the
Agreement shall be deemed to have been amended or waived to conform to the terms hereof.
9. Severability. In the event any provision of this Third Amendment shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
10. Applicable Law. This Third Amendment shall be governed by and construed solely
in accordance with the laws of the State of California.
11. Captions. The captions or headings in this Third Amendment are for convenience
only and in no way define, limit, or describe the scope or intent of any terms, provisions, or sections
of this Third Amendment.
12. Execution in Counterparts. This Third Amendment may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
[THE REMAINDER OF THIS PAGE 1S INTENTIONALLY LEFT BLANK]
Third Amendment to LRCA.DM 4
V
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to be
executed as of the date first written above, to be effective on and after the Effective Date.
BIG INDEPENDENT CITIES EXCESS POOL
APPROVED AS TO FORM:
JOINT POWERS AUTHORITY
By:
By: • �;'l;f„
APPROVED AS TO FORM:
CITY OF HUNTINGTON BEACH
�
By -By:
E
Mgyo—t.
APMOVED AS TO FORM:
CITY OF OXNARD
By:
By:
APPROVED AS TO FORM:
CITY OF SAN BERNARDINO
By:
By:
APPROVED AS TO FORM:
CITY OF SANTA ANA
By:
By:
APPROVED AS TO FORM:
CITY OF WEST COVINA
By:
By:
Tetra Amendment to LKCA.DOC 5
1
EXHIBIT A
SCHEDULE OF BASIC PREMIUM PAYMENTS
Period Ending
Principal
Interest Rate
Interest
Total Debt Service
Annual Debt Service
March 1, 2004
$ 865,000.00
6.100%
$ 189,299.96
$1,054,299.96
$1,054,299.96
September 1, 2004
163,975.00
163,975.00
March 1, 2005
925,000.00
6.300
163,975.00
1,088,975.00
1,252,950.00
September 1, 2005
134,837.50
134,837.50
March 1, 2006
980,000.00
6.400
134,837.50
1,114,837.50
1,249,675.00
September 1, 2006
103,477.50
103,477.50
March 1, 2007
1,045,000.00
6.400
103,477.50
1,148,477.50
1,251,955.00
September 1, 2007
70,037.50
70,037.50
March 1, 2008
1,105,000.00
6.500
70,037.50
1,175,037.50
1,245,075.00
September 1, 2008
34,125.00
34,125.00
March 1, 2009
1,050,000.00
6.500
34.125.00
1,084,125.00
1,118,250.00
Total
5,970,000.00
$1,202,204.%
$7,172,204.96
$7,172,204.96
Third Amendment to LRCA.DOC A-1
•
EXHIBIT B
ALLOCABLE PROPORTION FOR EACH PARTICIPANT
City of Huntington Beach
24.80%
City of Oxnard
18.08%
City of San Bernardino
22.09%
City of Santa Ana
35.03%
Notwithstanding the foregoing table, the Allocable Proportion of each of above Participants and
West Covina, for purposes of determining amounts to be allocated or distributed pursuant to
Article V of the Agreement, shall be determined as set forth in Section 3 of the Third Amendment
and in Article V of the Agreement.
Third Amendment to LRCA.DM B-1
•
If to the Authority:
EXHIBIT I
NOTICE ADDRESSES
Big Independent Cities Excess Pool Joint Powers Authority
c/o Ken Spiker and Associates, Inc.
1100 South Flower Street, Suite 2100
Los Angeles, CA 90015-2115
Attention: General Manager
If to the Participants:
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attention: Risk Manager
City of Oxnard
305 West Third Street
Oxnard, CA 93030
Attention: Risk Manager
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418
Attention: Risk Manager
City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
Attention: Risk Manager
City of West Covina
1444 West Garvey Avenue
West Covina, CA 91790
Attention: Risk Manager
Third Amendment to LRCA.DOC I-1
RCA OOUTING !�HEET
INITIATING DEPARTMENT:
SUBJECT:
Big Independent Cities Excess Pool
COUNCIL MEETING DATE:
December 1, 2003
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if a licable
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Attached
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
Si ned in full b the City Attome
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by Cit Attome
Not Applicable
Certificates of Insurance -(Approved PX the Ci Attome
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If a licable
Not Applicable
Staff Report if applicable)
Not Applicable
Commission, Board or Committee Report if applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Apelicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
Assistant City Administrator Initial
Ci Administrator Initial
City Clerfc
RCA Author: Karen Foster
V
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
Agskh�t4'c/o General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 40015-2115 • (213) 748.0066 + FAX No. (213) 748-6101
BOARD OF DIRECTORS MELTING
Thursday —.tune 12, 2003
10:00 a.m.
The Camellia Room
The New Otani Hotel Cr �
120 South Los Angeles Street -0
Los Angeles, California
(213) 629-1200 w r.
.__1 +'
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff,
no action, or filing.
BUSINESS AGENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held May 1, 2003.
(Pagesl 1-15)
11. Receive and File BICEP Monthly Investment Reports. (Pages 16-25)
111. Comments from the Public.
N. Approval of Financial Statements for the Periods Ending September 30. 2002 and
December 31, 2002. (Pages 26-31)
V. Closed Session: Conference with Legal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
Mulligan, et al -- City of Huntington Beach
Claim No. 16397
Deborah Kline — City of Pomona
Claim No. 14754
Christine Abarca, et al — City of Pomona
Claim. No. 16700
1
"w
BICEP
Board of Directors Meeting Agenda
June 12, 2003 -- Page 2
Candice Dick —City of San Bernardino
Claim No. KBC03008
Jaime Alvarez --City of San Bernardino
Claim No. 16828
V1. Approval of Financial Audit for the Period Ending June 30, 2002. (Pages
32-45)
V1I. Approval of Proposed Budget for Fiscal Year 2003-04. (Page 46)
VIII. Approval of BICEP Statement of Investment Policy. (Pages 47-49)
IX. Discussion of Addition of New Members to BICEP and Formation of Optional
Liability Pool. (Pages 50-54)
X. Approval of the Admission of the City of West Covina in the BICEP
Liability Pool. (Page 55)
X1. Insurance Broker Report.
Xll. General Manager's Report.
XIII. Election of Officers.
XIV. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING !NOTICE
2
�f r
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
C/o
General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 90015-211S - (213) 748.0066 - FAX No. (213) 749-6101
MEMORANDUM
Date: June 12, 2003
To: Members of the BICEP Finance and Personnel
Committee
From: Gregory J. Spiker, ARM, General Manager
-
Subject: FINANCE AND PERSONNEL COMMITTEE MEETING
There will be a meeting of the Finance and Personnel Committee at
9:00 a.m. on Thursday, June 12, 2003, in the Camellia Room of the
New Otani Hotel located at 120 South Los Angeles Street, Los
Angeles, California.
The Agenda for the meeting is as follows:
I. Approval of the Financial Audit for the Year ended June 30,
2002. (Pages 4-17)
IL Approval of BICEP Statement of Investment Policy. (Pages
18-20)
111. Discussion of BICEP proposed budget for FY 2003-2004.
(Page 21)
IV. Comments from the Public.
V. Adjournment
The members of the Committee are as follows:
Jeff Stevens, Chairperson City of Santa Ana
Tamara Sexton City of Oxnard
Michael More City of Oxnard
Tom Marek City of San Bernardino
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
1
12137486101 KEN SP1KER &ASSOC
V
BICEP
Board of Directors Meeting Agenda
May 1, 2003 -- Page 2
Claim No. K13CO3008
T-R59 P-003 APR 2B 103 12:18
Jaime Alvarez —City of San Bernardino
Claim No. 16828
VI. Discussion of Membership Growth including the Implications of Adding New
Members Under the Existing Financial Structure and Formation of Optional
Liability Pool.
VII. Insurance Broker Report. (Pages 28-40)
Vill. General Manager's Report.
IX. Discussion of General Management Services. (Pages 41-53)
X. Discussion of Claims Auditing Services. (Pages 54-61)
Xl. Discussion and Approval of General and Auto Liability Claims Administration
Audit. (Pages 62-83)
XII. Appointment of Nominating Committee_
XIII. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
1 d 4+ sre und+cr penal o! Pat$"
Cl N 1n✓[. ;tin i'e act: it !!t3
09 i 1t'i.s kn .L�a''. 0[t t: E L[iI.CH:I E0.'.rti.klt�0d1'�' ["?�C3t•
Uri t ouf[ ; ct tho Civic Cent o
r.
Date Signature
12137486101 KEN SPIKER &ASSOC T—^=4 P-001 APR 144'03314:42
r
YQ
. .. � �� 1— cam►
B1G_INDEP£NDENT CITIES EXCESS POOL INT POWERS 1U R x ORITY
' c/o General Manager, Ken Spiker And Associates, Inc. 1100 South, ]Flower Street, Suite 210o
Los Angeles, California 90013-2115 • (213) 746.0066 • FAX No. (213) 749.6101
FAX COVER SHEET
April 14, 2003 . _ .
TO: -CITY CLERK, CITY OF OXNARD
CITY CLERK, CITY OF SAN BERNARDINO
CITY CLERK, CITY. OF SANTA ANA
CITY CLERK, CITY OF HUNTINGTON BEACH
CITY CLERK, CITY OF-POMONA
FROM: Gregory J. Spiker, ARM
BICEP General Manager
RE: Agenda for BICEP Telephone Board Meeting
Wednesday, April 16, 2003 —10 a.m.
PLEASE POST THE ATTACHED MEETING NOTICE. THANK YOU.
Page I of 2
12137486101 KEN SPIKER SASSOC T-7';4 P-002 APR 14 103 14:42
81G INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY .
•e/o General. Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 90015.2115 • (213) 748.0066 • FAX No. (213) 749.6101
NOTICE OF SPECIAL TELEPHONIC MEETING OF
THE BIG INDEPENDENT MUS EXCESS POOL
' JOINT POWERS AUTHORITY
(Government Code Section 54953)
Notice is hereby given that on Wednesday, April 16, 2003, at 10:00 a.m., a special meeting of the Big
Ii►dependent Cities Excess Pool ("BICEP") Board of Directors will be telephonically conducted to discuss e
follonving:
1. Comments from the Public_
2. Closed Session: Conference with Legal Counsel — Existing Litigation (Subdivision a of Section
54956.9 ' the Government Code)_
;... Name of Cag.
Deborah Kline v. City of Pomona
Claim No. 16397
3. ,Adjournment.
The locations for the tcleconfcrence meeting are as follows:
BICEP 1100 South Flower Street, Suite 2100, LA., CA 90015
City of Pomona Pomona City Hall, Risk Management Office
505 South Garrey, Pomona, CA 91766
City of San Bernardino San Bernardino City Hail, Human Resources Dept.
300 N. D Street, 2°`` Floor, San Bernardino, CA 92418
City of Huntington Beach Huntington Dead; City IIall, Risk Management Office
2000 Main St, Lower Level, IIuntington Beach, CA 92648
City of Santa -Ana Santa Ana City Hall, 20 Civic Center Plaza, Room 412
Santa Ana; CA 92702
City of Oxnard Oxnard City Hall, 300 West Third St, Room 302
Oxnard, CA 93030
A,ll votes shall be by roll call.
DATE: April 14, 2003 BIG N. DEPEND . CM C POOL
By.
Gregory J. S , Gene anager
BIG INDEPENDENT CITIES EXCESS POOL JOINT POl4 ERS AU 1IORIT1'
c/o General Alanager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 90015-211S - (213) 748.0066 - FAX No. (213) 748.6101
BOARD OF DIRECTORS MEETING
Thursday —February 14, 2002
10:00 a.m.
The Monticello Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 629-1200 _ _
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in the
form of approval, modification, denial, referral to staff, no
action, or filing.
BUSINESS AGENDA
I. Approval of Minutes of BICEP Board of Directors Meeting Held December 6,
2001. (Pages 7-9) _
11. Comments from the Public.
111. Insurance Broker Report.
IV. Discussion of Proposed Guidelines for Attendance at Pooling Seminars.
(Pages 10-11)
V. Discussion of Ac#uarial Services: (Pages 12-18) c
VI. Adjoummen#_
w
49
W
* * NOTICE TO CITY CLERKS
PLEASE POST THIS MEETING NOTICE
c
n
a
1
r
BIG INDEPENDENT CITIES EXCESS POOL JOINT 1' I RI
c/o General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 900I5.2115 • (213) 749.0066 • FAX No, (213) 748-6101
BOARD OF DIRECTORS MEETING
Tuesday — March 11, 2003
10:00 a.m.
Mt. Vernon Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 629-1200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the fonn of approval, modification, denial, referral to staff,
no action, or filing.
BUSINESS AGENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held February 6,
2003. (Pages 8-12)
II. Receive and File BICEP Monthly Investment Reports. (Pages 13-23)
Ill. Comments from the Public.
IV. Discussion of Membership Growth including the Implications of Adding New - -
Members Under the Existing Financial Structure. (Page 24)
V. Closed Session: Conference with Legal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
Mulligan, et al — City of Huntington Beach
Claim No. 16397
Deborah Kline — City of Pomona
Claim No. 14754
Christine Abarca, et al -- City of Pomona
Claim. No. 16700
1
00
BICEP
Board of Directors Meeting Agenda
March 11, 2003 -- Page 2
Robert Jones —City of Oxnard
Claim No. 16743
Candice Dick —City of San Bernardino
Claim No. KBC03008
Jaime Alvarez —City of San Bernardino
Claim No. 16828
VI. Insurance Broker Report. (Pages 25-34)
VII. Discussion of BICEP Treasurer Vacancy.
VIII. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
JkIn
INDEPENDENT CITIES EXCESS POOL JOINT POIV ' ' AU HORITY
c/o General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 9001S-2I1S • (213) 748.0066 • FAX No. (213) 748.6101
BOARD OF DIRECTORS MEETING
Thursday — February 6, 2003
'10:00 a.m.
Monticello Board Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 6294 200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff,
no action, or filing.
BUSINESS AGENDA
Approval of Minutes of BICEP Board of Directors Meeting Held October 3,
2002. (Pages 11-16)
Receive and File B10EP Monthly Investment Reports. (Pages 17-27)
Comments from the Public.
Report from the Investment Manager including Review of the investment
Report for the Period Ending January 31, 2003.
Closed Session: Conference with Legal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
Mulligan, et a1— City of Huntington Beach
Claim No. 16397
Deborah Kline -- City of Pomona
Claim No. 14754
Christine Abarca, et al — City of Pomona
Claim. No. 16700
1
5
BICEP
Board of Directors Meeting Agenda
February 6, 2003 -- Page 2
Robert Jones —City of Oxnard
Claim No. 16743
Candice Dick —City of San Bernardino
Claim No. KBC03008
Jaime Alvarez —City of San Bernardino
Claim No. 16828
VI. Discussion of General Counsel Services. (28-29)
VII. Discussion of Actuarial Study and Feasibility of Forming a Workers'
Compensation Pool.
Vill. Insurance Broker Report.
IX. Discussion of 2003 CAJPA Legislative Committee Procedures. (Pages 30-
52)
X. Review of Amendment to Agreement for Risk Management and Insurance
Services between Alameda Corridor East -Construction Authority (ACE) and
BICEP. (Pages 53-67)
XI. Discussion of BICEP Treasurer Vacancy.
XII. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
2
�a 7 C_4j2X'W4j
aV4:0ea
BIG INDEPENDENT CITIES EXCESS POOL JOINT PO 'ER�S UTifORITY
c/o General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 90015-211S - (213) 748-0066 - FAX No. (213) 748.6101
x
.� -,
BOARD OF DIRECTORS MEETING L C
Thursday — October 3, 2002
10:00 a.m.
Mt. Vernon Board Room +v
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 629-1200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff,
no action, or filing.
BUSINESS AGENDA
i. Approval of Minutes of BICEP Board of Directors Meeting Held June 20,
2002. (Pages 12-15)
Il. Approval of Minutes of BICEP Board of Directors Special Telephonic Meeting
meld June 28, 2002. (Pages 16-18)
Ill. Approval of Meeting Notes of the Finance and Personnel Committee Meeting
held June 20, 2002. (Page 19-20)
IV. Receive and File BICEP Monthly Investment Reports. (Pages 21-31)
V. Comments From The Public.
VI. Approval of Financial Statements for the Periods Ending December 31,2001
and June 30, 2002. (Pages 32-41)
VII. Closed Session: Conference with Legal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
BICEP
Board of Directors Meeting Agenda
October 3, 2002, Page 2
Name of Case
Mulligan, et al — City of Huntington Beach
Claim No. 16397
Scottsdale Insurance Company — City of Huntington Beach
Claim No. 16459
Deborah Kline -- City of Pomona
Claim No. 14754
Christine Abarca, et al — City of Pomona
Claim. No. 16700
Rustillo Castillo --City of Oxnard
Claim No. 16737
Larry Brown —City of Oxnard
Claim No. 16738
Eric Gonzales —City of Oxnard
Claim No. 16739
Robert Jones —City of Oxnard
Claim No. 16743
Jaime Alvarez —City of San Bernardino
Claim No. 16828
VIII. Discussion and Authorization to renew Agreement for Risk Management and
Insurance Services between Alameda Corridor East -Construction Authority
(ACE) and BICEP. (Pages 42-54)
IX. Insurance Broker Report including Discussion of CSAC EIA Membership
Criteria and Insurance Program Renewals for FY 2003-04.
X. Discussion of Possible Formation of a Workers' Compensation Pool.
XI. Discussion of New Member Marketing.
XI1. Discussion of Marketing Brochure & Proposed BICEP Website. (pages 55-56)
Xlii. Discussion of General Counsel Services. (Page 57)
XIV. Discussion of BICEP Treasurer Vacancy.
XV. Adjournment.
1
1 * * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
1)
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
c/o General Manager, ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 40015-2I1S - (213) 748-0066 - FAX No. (213) 749.6101
BOARD OF DIRECTORS MEETING
Wednesday — May 22, 2002
10:00 a.m.
Mt. Vernon Board Room .,.
The New Otani Hotel --
120 South Los Angeles Street:
Los Angeles, California
(213) 629-1200
r1Cf'. r:
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:.
Board of Directors action on the following items can be in �•-b
the form of approval, modification, .denial, referral to staff,
no action, or filing.
BUSINESS AGENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held December
19, 2002. (Pages 7-9)
11. Approval of Minutes of BICEP Board of Directors Meeting held February 14,
2002. (Pages 10-13)
111. Receive and Fife BICEP Monthly Investment Reports (Pages 14-24)
IV. Comments From The Public.
V. Discussion of Investment Report for the Period Ending April 30, 2002.
VI. Closed Session: Conference Vith Legal Counsel — Existing Litigation
(Subdivision a of Section 54956.9 of the California Government Code).
Name of Case
Mulligan, et al — City of Huntington Bea
Claim No. 16397
Goldkorn, et al — City of San Bernardino
Claim No. 16051
1
INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
General Dtanager, hen Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
Los Angeles, California 90015.2115 • (213) 748.0066 • FAX No. (213) 748-6101
SPECIAL BOARD OF DIRECTORS MEETING
Wednesday —December 19, 2001
10:00 a.m.
The Camelia Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 629-1200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in the
form of approval, modification, denial, referral to staff, no
action, or riling.
BUSINESS AGENDA
Discussion of Insurance Services and the Introduction of the new BICEP
Insurance Broker, The Robert F. Driver Company.
ll. Discussion of Proposed Guidelines for Attendance at Pooling Seminars.
(Pages 6-7)
III. ' Comments from the Public.
IV. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
1
BIG INDEPENDENT CITIES EXCESS POOL JOINT PO1ti'ER A I I' 1
c/o General Manager, Ken Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
1�. Los Angeles, California 90015.2115 • (213) 748.0066 • FAX No. (213) 748-6101
BOARD OF DIRECTORS MEETING
Thursday -December 6, 2001
10.00 a.m.
Monticello Board Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
- (213) 629-1200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the fallowing items can be in the
form of approval, modification, denial, referral to staff, no
action, or filing.
BUSINESS AGENDA
I. Approval of Minutes of B10EP Board of Directors Meeting Held November 1,
2001. (Pages 7-11)
U. Approval of Minutes of BICEP Board of Directors Meeting Held November 20,
2001. (Pages 12-13)
Ill. Comments from the Public.
IV. Evaluation of Prospective Brokerage Firms and Award of a Contract for
Insurance Services.
V. General Manager's Report. (Page 14)
Vl. Other Business.
VII. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
7R
• BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
c/o General 1lfanager, hen Spiker And Associates, Inc. 1100 South Flower Street, Suite 2100
maw Los Angeles, California 90015-2115 • (213) 748.0066 • FAX No.-(213) 748-6101
BOARD OF DIRECTORS MEETING
Thursday —November 1, 2001
--
10:00 a.m.
o
C-7.)
Mt. Vernon Board Room
o=�-�.
The New Otani Hotel
Cr
C-,nr`
120 South Los Angeles Street
D
>�'
Los Angeles, California
_
(213) 629-1200
3
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in the
form of approval, modification, denial, referral to staff, no
action, or tiling.
BUSINESS AGENDA
1. Approval of Minutes of BICEP Board of Directors Meeting Held October4, 2001.
(Pages 9-13)
11. Receive and Fife BICEP Monthly Investment Reports. (Pages 14-24)
111. Comments from the Public.
1V. • Approval of Quarterly Financial Statements for the Periods Ending March 31,
2001 and June 30, 2001. (Pages 25-34)
V. Discussion of Proposals for Insurance Services. (Pages 35-50)
VI. Discussion of the Excess Workers' Compensation Policy Cancellation by
National Union Fire Insurance Company (NU). (Page 51)
V11. Discussion of New Member Recruitment Plan. (Page 52)
VIII. Status Report on the Insurance Procurement on Behalf of the Alameda Corridor -
East Construction Authority (ACE).
IX. Other Business.
X. Adjournment.
* * NOTICE TO CITY CLERKS * *
PLEASE POST THIS MEETING NOTICE
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
c/o General Manager, lien Spiker And Associates, Inc. 14156 Magnolia Blvd., Suite 103
Sherman Oaks, California 91423 • (813) 788-0406 • FAX No. (919) 784.1197
BOARD OF DIRECTORS MEETING
Thursday - May 11, 2000
10:00 a.m.
Mt. Vernon Board Room
The New Otani Hotel
120 South Los Angeles Street
Los Angeles, California
(213) 629-1200
NOTICE TO THE PUBLIC REGARDING AGENDA ITEMS:
Board of Directors action on the following items can be in
the form of approval, modification, denial, referral to staff, no
action, or tiling.
BUSINESS AGENDA
I. Approval of Minutes of BICEP Board of Directors Meeting Held April 6, 2000.
11. Comments From the Public.
Ill. Receive and File BICEP Monthly Investment Reports.
IV. Overview of Marketing Results and Discussion of Excess Liability and Workers'
Compensation Insurance Renewal Quotations for FY2000-2001.
V. Discussion of BICEP Statement of Investment Policy.
VI. Discussion of BICEP FY2000-2001 Budget.
VI1. Appointment of Nominating Committee.
VI11. Election of Officers.
IX. Other Business.
BIG INDEPENDENT S EXCESS POOL '
Board of Directors Meeting Agenda
May 11, 2000 - Page 2
X. Adjournment to Next Board of Directors Meeting to be Held at The New Otani
Hotel on June 1, 2000.
NOTICE TO CITY CLERKS:
PLEASE POST THIS MEETING NOTICE.
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
c/o General Manager, Ken Spiker And Associates, Inc. 14156 Magnolia Blvd., Suite 103
shermau Oaks, Ca1tiornia 91423 • (918) 788.0406 + FAX No. (818) 794.1187
MEMORANDUM
Date: May 11, 200b
To: Members of the BICEP Finance and Personnel Committee
From: Gregory J. Spiker, ARM,:General Manager
Subject: FINANCE AND PERSONNEL COMMITTEE MEETING
There will be a meeting of the Finance and Personnel Committee at 9:00 a.m. on
Thursday, May 11, 2000, in the Mt. Vernon Board Room of the New Otani Hotel located
at 120 South Los Angeles Street, Los Angeles, California.
The Agenda for the meeting is as follows:
1. Discussion of .Proposed BICEP FY2000-2001 Budget
11. Discussion of BICEP Statement of Investment Policy
III. Comments from the Public.
IV. Adjournment.
The members of the Committee are as follows:
Jeff Stevens, Chairperson
David Borik
Michael More
Ed Raya
City of Santa Ana
City of Santa Ana
City of Oxnard
City of San Bernardino
NOTICE TO CITY CLERKS:
Please post this meeting notice (Agenda)
APPROVED BY CITY COUNCIL
REQVg `T FOR CITY
TY C ERIC
COUNCIL"AMON
Qa/
Date
December 3, 1990
Submitted to: Honorable Mayor and City Council
Submitted by: Michael T. Uberuaga, City Administrator
Prepared by: Robert J. Franz, Deputy City AdministratoU
Subject: Designation of Representative: Big Independent Cities cess Pool oint
Powers Authority (BICEP) `
Consistent with Council Policy? [X] Yes _ [ ] Nevr Policy or Exception ?,.,j 4 2 3 it
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
Statement -of -Issue: The attached resolution designates Karen Foster, Risk Manager, as the
City's representative to the BICEP Joint Powers Authority.
Recommendation: Adopt attached Resolution 423il- .
n 1 i
BICEP is a liability insurance pool In which the City has been a participant since the
Inception of the pool in 1988. The objective of BICEP is to shield member cities from
financial and operational losses due to large settlements. This provides coverage
up to $25 million per occurrence less a self insured retention ofErogram
l million. Participation in
BICEP enables the City to provide insurance coverage at a low stable cost regardless of the
condition of the commercial insurance market.
Edward H. Thompson was previously designated as the City's representative but has
recently retired. Upon his retirement, Karen Foster was appointed as Rick manager after
an open recruitment. The Authority By-laws require that the governing body designate the
specific representatives. Robert J. Franz is currently designated as- the alternate
representative and would remain as the City's alternate.
Eunding Source: Does not apply.
,alternative Action: Designate another City official as BICEP Representative.
Resolution to accomplish the recommendation above.
552bj
Plo 5/85
LJJJJRiff)CITY OF HUNTINGTON BEACH
Via INTER -DEPARTMENT COMMUNICATION
HuNn ION ILM-H
CONNIE HROCKWRY From GAIL HUTTON
To Clerk City Attorney
Subject Joint Powers Liability InsuranceDate December 5, 1988
Agreement
In response to your November 30, 1988, communication regarding
the above, only the resolution needs to be amended, not the
agreement you sent to us. Accordingly, Art DeLaLoza's
secretary, Karen S. Arnold, will retrieve your original
resolution #5948 and correct pages 4 and 6, then return the
same to you for your files.
Thank You,
GAIL HUTTON
City Attorney
cc: Art DeLaLoza, Deputy City Attorney
Distribution:
mite: Requesting Department
Yellow: Office Control File
Pink: Assigned Staff Member
REQUEST FOR LEGAL SERVICES FOLLOW-UP MEMORANDUM
To: Connie Brockway From: Office of the
City Attorney City Attorney
Subject: Your Request for Legal Services Date: 11/30/68
This will acknowledge
receipt of your Request for
Legal
Services,
below listed.
Dated: 11/30/89
Type of Legal Service
Requested:
[
]
Ordinance [
x ]
Insurance
[
]
Resolution [
]
Bonds
[
]
Contract/Agreement [
]
Opinion
[
]
Other:
Description:
r'Vnend. pages 4 & 6 Joint Powers Liability Ins Agreemc-nt
This Request for Legal, Services has been assi ed
to r.^r r r �r for handling. He/she can be reached
throughextension .
The Control Number assigned to this request is A - "
Please reference this number when making any inqu r es n regard to
this matter. Thank you.
0673L
To
Subject
4
C10-1
114��
CITY OF HUNTINGTON BEACH
INTER -DEPARTMENT COMMUNICATION --�L
Gail Hutton, City Attorney From Connie Brockway, City erk
JOINT POWERS LIABILITY INSURANCE Date November 30, 1988
AGREEMENT
Attached is the original agreement for the Joint Powers Liability
Insurance Program which was approved by the City Council on
November 21, 1988 - Resolution No. 5948. According to the attached
memo from your office, it is necessary to amend pages 4 and 6.
Please make the necessary changes and return to our office.
CB:bt
CC: Ed Thompson, Insurance
Bob Franz, Administrative Services
Sol HV 1� II OE lox
143'J��
g0 3
i,?i;10! IV A1I3
k..0+
J"le CITY OF HUNTINGTON BEACH
ekll INTER -DEPARTMENT COMMUNICATION
4_ J MVNTIWOON 6EACH
To From
HONORABLE MAYOR JOHN ERSKINE GAIL HUTTON
MEMBERS OF CITY COUNCIL City Attorney
Subject g y Date
Huntington Beach City Council November 21, 1988
Meeting, 11-21-88, Agenda Item
D-10, Resolution No. 5948
(Joint Powers Liability Resolution)
Need for Amendment
In order to protect the City you will need to interlineate the
referenced agenda item per the attached amended pages.
The interlineation consists of the insertion of the words,
"Subject to City Attorney approval." The City Charter, Section
309 (e), provides this protection of City Attorney approval as to
form of all documents. Without this interlineation Resolution
5948 would authorize execution of documents which have not been
approved by the City Attorney.'
GAIL HUTTON 1
City Attorney
GH/gc
Attachment: Agenda Item D-10, pages 4 and 5
cc: Paul Cook, City Administrator
Connie Brockway, City Clerk
Robert Franz, Director of Administrative Services
r]
requirement of law, to execute the First_ Amendment to Liac:litl
r
Risk Coverage.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
HUNTINCTON 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.'t.o public affairs of the City, and
. that:.•t.he--statem'ents,- 1in-dings and ---determinations of the .City .set
forth. in the preambles above, in the First Program Resolution and.
of' the document approved herein are true and correct.
SECTION 2. Basic Premium Obligation-Under_First Amendment to
~ TSubject to City Attorney approval,
Liability Risk Coverage Agreement... The Mayor, City Manager %or
City Administrator) and Finance' Director are hereby authorized and
r
w� directed, for and in. the name and on. behalf of the City to execute
.acknowledge and deliver. -to the Authority- the First Amendment to
Liability Risk Coverage .Agreement in substantially the form
approved by this City -Council by Resolution No. 5929 and on file
with the Clerk of the City Council, with such changes therein as
such officer. may require ...or approve, such approval to be
conclusively evidenced by the execution .and delivery thereof;
provided, however, that. the maximum annual Basic Premium
obligation of the City established thereunder shall not exceed
$540,000 and the aggregate principal component of Basic Premium
established thereunder shall not exceed *4,800,000.
SECTION 3. Authorization of Representatives to Authorize
Issuance of Authors Bonds. The representatives of the City to
the Big Independent Cities.Excess Pool Joint Powers Authority (the
"Authority") are hereby, authorized and directed_ to authorize, as
V
V
including approval of execution by the Authority of the First
�y
Amendment to Liability Risk Coverage Agreement and a First
Amendment to Trust Indenture relating to the Bonds.
SECTION 7. 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 First: Amendment to Liability Risk
Coverage Agreement.
Subject to City Attorney approval,
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.,;,.Ynece,ssary .t-_p.r :i advisabPe n, 'order to consummate the
issuance`i:�-*sale_-;•?and..:deli.very _of. the.: Bonds :` by the Authority and
otherwise••:to:•darry out•,,•.give effect % o. and -comply with the terms
and intenr:s of,.: `this- .resolution, ---the. Bonds, the Joint Pourers
Agreement: �; the::"Li:abi•li.-ty *:-Risk coverage Agreement ( including the
'First- Amendment.- to -.'Liability.-- Risk Coverage 'Agreement) and the
Trust lniden'ture (including the First Amendment to Trust Indenture)
relating' -to. the ,Bonds. Such actions • heretofore taken by such
officers are hereby ratified, confirmed and approved.
PAGE END
T
REQU6+ FOR CITY COUNCi" ACTION
Date
Submitted to: Honorable Mayor and City Council
Submitted by: Paul E. Cook, City Administrator ""
Prepared by: Robert Franz, Deputy City Administrat14 f-
November 7, 1988
Subject: Joint Powers Liability Insurance Program I•PPZOVYDXy CITY QC��C
kA Cel ;�� a/ . 4
V R-11i
Consistent with Council Policy? [X] Yes [ ] New Policy or Excepti
CITY maker
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
STATEMENT OF ISSUE:
The attached Resolution needs to be approved by Council to complete the
documents regarding the Joint Powers Liability Insurance Program.
RECOMMENDATION:
Approve the attached Resolution to implement the revenue bond financing
of the Big Independent Cities Excess Pool Joint Powers Authority excess
liability insurance program.
AMIT_vGTC•
The attached Resolution authorizes maximum Basic Premium obligations
(which correspond to debt service obligations) to be inserted in the
First Amendment to Liability Risk Coverage Agreement. The maximum
amounts are the highest possible anticipated amounts; it is anticipated
that initial Base Premium amounts will be significantly lower. very
conservative high maximum amounts were selected to avoid the risk of
requiring another approving resolution.
The attached Resolution does not approve the form of Purchase Contract
or. -%Official Statement to be executed by the Authority, but does
specifically authorize the City's representatives to the Authority to
approve such documents as members of the Authority.
FUNDING SOURCE:
Funds for participation in the Joint Powers Authority are budgeted in
the Liability Insurance Program.
ALTERNATE ACTIONS:
1. None practical, as City is already a member of the JPA.
0
PI O 5/85
Request for City Council Action
November 7, 1988
Page Two
ATTACHMENTS:
1. Resolution
2. Kelling, Northcross & Nobriga, Inc. letter of November 4, 1988.
PEC:RF:EHT:sp
t
KELLING, NORTHCROSS & NOB111GA,1NC.
1SnR,�,�.fq.t�i lll�'llt S.I6,i, J..Y le,
riEMORAN DU'1
Date: November 4, 1988
To: BICEP Member Cities
From: Dan Cox,'"l
IIT
�Zi�{{a i V �� l�l� �VV
,5,4 J
Re: Financing Resolution "Not -to -Exceed" Amounts
By this time each City should have received the form of
resolution for its Council to consider in order to approve
the financing.
Each resolution authorizes the City's BICEP
representative to approve the execution of the bond purchase
agreement at the time of the sale of the bonds. Since the par
value. of and interest rates on the bonds will not be known
until after the Councils take action, -the authority of each
representative to approve the execution of -the purchase
agreement is valid provided that.the.par:value'of the bonds,
the City's share of the bonds, the interest rates on the
bonds, the resulting Basic .Premium...of the City (before
deducting the credit for -investment - earnings) and the
underwriter's discount do not exceed the parameters stipulated
in the resolution.- The resolution is set-up in this manner so
that the bond sale does not have to coincide with five City
Council meetings.
In order to avoid the situation where one of the
parameters has been exceeded after Council action has taken
place, we developed extremely conservative "not -to -exceed"
amounts for use in the resolutions. An explanation of how
and why we derived these ariounts and what the current
estimates are as follows:
Total Par Value. At this time -we- anticipate that the
Claims Payment Fund will be funded at about $12' million
dollars, and, with capitalized interest, reserve fund and
program development and issuance costs added, a bond par
value of about $15.1 million. Since Coopers & Lybrand is in
the process of analyzing the recent data on the Cities and
the final program structure for the purpose of rendering the
actuarial opinion and nay, as a result, require a- higher
initial funding level, we assumed a $15 million Claims
Payment Fund in determining the not -to -exceed par value.
With reserve fund, capitalized interest and costs added, an
$18.8 million par value was derived.
City Share of Par value. We anticipate that each City's
Allocable Proportion (share of debt service and par value)
will be roughly the same percentages as the share of Pure
'"ixl.'A'"13'remium aid for the .first Coverage Period. Since these
suiry i P g
Fi,N 41 i• 1; 7-_1 • l:
percentages will be finalized after Coopers has performed its
analysis, we added five percentage points to each City's
percentage to determine each City's maximum share of the par
value. The amount -for each City is derived as follows:
Zi.tY
Huntington Beach
Oxnard
Pomona
San Bernardino
Santa Ana
(1)
$ of 1st
Pure Premium
20.58%
15.05
14.17
20.5E
29.62
(2)
Plus Roughly
5% pts Equals
25.50%
20.00
20.00
25.50
35.00
(3)
1B.8 million
Tines (2)
(RoundgdZ
$4.8 million
3.8 million
3.8 million
4.8 million
6.6 million
Interest Rate.. We have provided for a maximum interest
rate of 9.0% to allow for a major downturn in,the bond market
between now and the bond. sale. The market has been pretty
stable lately and we -do not expect such a -downturn to occur.
Had the bonds been sold this week, we conservatively estimate
that the interest rates would have: ranged from 6.25% in the
first maturity to 7.75% in twenty years.
Basic Premium. The maximum interest rate and par value
and a 20 year financing would result: in a;naxirum.,annual
gross debt service of about .$2.1- million.' Each,City's
riaximu-m annual Basic Premium (before•_investment earnings
credit) was derived in the same manner as the Maximum share
of par value.
Discount. The maximum discount of 2.35% is the -discount
quoted in the Drexel/Stone proposal. This may be reduced
depending upon how the bonds are marketed.
Mark. liorthcross previously distributed a schedule for'
the October 27 DICEP_meeting which reflects the estimated net
debt service for each City (Basic Premium with investment -
earnings credit). -'Based on our current. expectations, these
amounts are still pretty fair estimates. Prior to the tine
the bond purchase agreement is'signed, we will review the
final numbers with each City.
I hope you find this information helpful. Please do not
hesitate to give Mark or me a call if you have any.
questions.
DWC:shp
t
t�
I
3
5
7
9
11
13
15
17
19
21
23
2�
27
29
31
33
35
37
39
41
43
45
EXECUTION
COPY
LIABILITY RISK COVERAGE AGREEMENT
Dated as of October 1, 1988
among the
BIG INDEPENDENT CITIES EXCESS PCOL JOINT POWERS AUTHORITY
and
THE CITIES OF HUNTINGTON BEACH,
OXNARD, POMONA, SAll BERNARDINO
AND SANTA ANA
r
3
.5
7
TABLE OF CONTENTS
9
Pa e
11
ARTICLE I
13
DEFINITIONS AND EXHIBITS
15
SECTION
1.1 Definitions and Rules of Construction ......
5
SECTION
1.2 Findings ...................................
10
17
SECTION
1.3 Exhibits ...................................
10
19
ARTICLE II
21
REPRESENTATIONS, COVEN;JITS AND WARRANTIES
23
SECTION
2.1 Representations, Covenants and Warranties
25
of the Participants ......................
11
SECTION
2.2 Representations, Covenants and Warranties
27
of the Authority ..........................
13
29
ARTICLE III
31
DEPOSIT OF MONEYS; COVERAGE; PAYMENT OF SETTLEMENTS;
33
PURCHASE OF COMMERCIAL INSURANCE
35
SECTION
3.1 Deposit of Moneys ..........................
15
SECTION
3.2 Coverage ...................................
15
37
SECTION
3.3 Payment of Costs of Issuance .....0.........
15
SECTION
3.4 Payment of Settlements .....................
15
39
SECTION
3.5 Purchase of Commercial Insurance
orReinsurance ...........................
16
41
SECTION
3.6 Case Reserves and Loss Reserves ...........
17
43
ARTICLE IV
45
TERM OF AGREEMENT; PREMIUM
47
SECTION
4.1 Term of Agreement; Terminatibn of a
49
Participant's Obligations to Pay
Participation Premium ....................
19
i
2658002/2
Page
I
SECTION
4.2
Budget and Appropriation of Premium
Payments .................................
20
3
SECTION
4.3
Obligation to Pay Premiums .................
20
SECTION
4.4
Premiums ...................................
21
5
SECTION
4.5
Pure Premium Adjustments ...................
25
SECTION
4.6
Special Pure Premium Adjustments ...........
27
7
SECTION
4.7
Participants Making a Cash Deposit into
the Claims Payment Fund ..................
28
9
SECTION
4.8
Credits for Withheld Refunds ...............
28
11
ARTICLE V
13
RESERVES RELEASED FROM THE
15 PLEDGE OF THE INDENTURE
17 SECTION 5.1 Receipt of Reserves Upon Discharge of
the Trust Indenture ...................... 29
19 SECTION 5.2 Receipt of a Participant's Allocable
Share Upon Withdrawal or Expulsion ....... 29
21 SECTION 5.3 Receipt of a Participant's Share of Debt
Service Reserve Fund Upon Prepayment ..... 30
23
25 ARTICLE VI
27
ADMISSION TO, WITHDRAWAL FROM AND EXPULSION
FROM THE POOLED SELF-INSURANCE PROGRAM
29
SECTION 6.1
Conditions to Providing Coverage to a
31
New Participant .. ....... ... ... ......
30
SECTION 6.2
Conditions to Permitting Withdrawal of a
33
Participant from Coverage ................
32
SECTION 6.3
Conditions to Permitting Expulsion of a
35
Participant from Coverage ................
34
37
ARTICLE VII
39
ABATEw EiNT
41
SECTION 7.1
Abatement of Participation Premium in
43
the Event of Failure to Pay Settlements ..
34
45
2658002/2
ii
Paae
1
3
5
SECTION 8.1
7 SECTION 8.2
9
11
13
SECTION 9.1
15 SECTION 9.2
SECTION 9.3
17
19
21
ARTICLE VIII
INDEMNIFICATION AND RELEASE OF AUTHORITY,
TRUSTEE AND PARTICIPANTS; DISCLAIMER
23 SECTION 10.1
SECTION 10.2
25 SECTION 10.3
SECTION 10.4
27
SECTION 10.5
29
SECTION 10.6
31
33
Release and Indemnification Covenants ...... 35
Disclaimer................................. 35
ARTICLE IX
ASSIGNMENT AND AMENDMENT
Assignment by the Authority ................
No Assignment by the Participants ..........
Amendment .....
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Everts of Default .........................
Remedies on Default .......................
No Remedy Exclusive .......................
Agreement to Pay Attorneys' Fees and
Expenses ................................
No Additional Waiver :replied by
One Waiver ..............................
Trustee and Owners to Exercise Rights .....
ARTICLE XI
35 SECURITY FOR OR PREPAYMENT OF BASIC PREMIUM;
TERMINATION PREMIUM
37
SECTION 11.1 Deposit of Security for Basic Premium
39 by a Participant .........................
SECTION 11.2 Deposit of Security for Basic Premium or
41 Optional Prepayment by All Participants ..
SECTION 11.3 Optional Redemption of Bonds.. ..............
43 SECTION 11.4 Termination Premium ........................
SECTION 11.5 Continuing Premium Obligations .............
45
2658002/2
35
36
36
38
39
40
40
40
40
41
42
43
43
44
Page
1 ARTICLE XII
3 MISCELLANEOUS
5
SECTION
12.1
Notices .................................
45
SECTION
12.2
Binding Effect .............................
45
7
SECTION
12.3
Severability ................. .............
45
SECTION
12.4
Further Assurances and Corrective
9
Instruments ..............................
45
SECTION
12.5
Execution in Counterparts ..................
45
11
SECTION
12.6
Applicable Law ..............................
46
13
Exhibit
A -
Schedule of Basic Premium Payments ...........
A-1
15
Exhibit
B -
Allocable Proportion for Each Participant ...
B-1
Exhibit
C. -
Initial Participation Premiu:-t ................
C-1
17
Exhibit
D -
Special Pure Premium Adjustments and
Adjustment Proportions .....................
D-1
19
Exhibit
E -
Participants Making a Cash Deposit Into
the Claims Payment Fund ....................
E-1
21
Exhibit
F -
Memorandum. of Liability Coverage .............
F-1
Exhibit
G -
Underwriting and Claims Administration
23
Standards and Liability Claims
Control Guidelines .........................
G-1
25
Exhibit
H -
Form of Written Requisition ..................
H-1
Exhibit
I -
Notice Addresses .............................
I-1
27
Schedule
A
- Methodology for Calculating Total
29
Pure Premium .. .......................
SA-1
Schedule
B
- Formula for Calculating Pure Premium
31
Adjustment ...............................
SB-1
iv
2658002/2
I LIABILITY RISK COVERAGE AGREEMENT
3
THIS LIABILITY RISK COVERAGE AGREEMENT, dated as of
5 October 1, 1988, by and among the BIG INDEPENDENT CITIES EXCESS
POOL JOINT POWERS AUTHORITY, a joint exercise of powers agency
7 duly organized and existing under the laws of the State of
California, including, without limitation, Section 6500 et seq.
9 of the Government Code of the State of California, as provider
(the "Authority"), and the CITIES OF HUNTINGTON BEACH, OXNARD,
11 POMONA, SAN BERNARDINO AND SANTA ANA, CALIFORNIA, each a
municipal corporation duly organized and existing under the
13 Constitution and laws of said State, and, in the case of the
cities of Huntington Beach, Pomona, San Bernardino and
15 Santa Ana, the respective charters of such cities (each an
"Initial Participant" and collectively, the "Initial
17 Participants");
19
W I T N E S S E T H
21
WHEREAS, each Participant is authorized by Part 6 of
23 Division 3.6 of Title 1, Section 990 et sec., of the California
Government Code (the "Act") to insure itself against tort or
25 inverse condemnation liability, to insure its employees against
injury resulting from an act or omission in the scope of his
27 employment and to insure against the costs of defending such
claims;
29
WHEREAS, pursuant to Section 990.4 of the Act each
31 Participant is authorized to provide insurance by
self-insurance which may be funded by appropriations and to
33 establish or maintain reserves for such purposes;
35 WHEREAS, pursuant to Section 990.6 of the Act, the cost to
each Participant of such self-insurance is a proper charge
37 against the Participant and therefore the governing board of
each Participant is authorized to pay premiums for Coverage in
39 an amount such governing board determines to be necessary to
provide such Coverage;
41
WHEREAS, pursuant to Section 990.8 of the Act, each
43 Participant is empowered to obtain Coverage through a joint
powers agreement with other local public entities, and such
45 pooling of self -insured claims and the risk sharing of losses
is not considered insurance subject to regulation under the
47 California Insurance Code;
r
I WHEREAS, the Authority is a joint powers agency of which
each Participant is a member;
3
WHEREAS, the Authority is authorized to exercise necessary
5 powers to implement the purposes of the Authority as
established by the Authority's Governing Board;
7
WHEREAS, the Authority has determined to assist each
9 Participant to obtain self-insurance for liability risks
through this Agreement;
11
WHEREAS, the city council of each Participant has
13 authorized the execution of this Agreement for the purpose of
providing Coverage for the Participant for the benefit of the
15 Participant's residents and taxpayers and for the health and
safety of the public who interact with the Participant;
17
WHEREAS, the Authority proposes to authorize the issuance,
19 sale and delivery, pursuant to the Trust Indenture described
herein, of Insurance Program Revenue Bonds (the "Bonds") in
21 order to initially fund reserves in an amount determined
sufficient to pay Settlements when due and to provide the
23 Coverage described in the terms set forth herein and in the
Memorandum of Liability Coverage attached hereto as Exhibit B
25 (the "Memorandum");
27 WHEREAS, the Authority and the Participants have heretofore
conclusively determined following investigation that either
29 public entity liability insurance is not available to the
Participants from commercial insurers or from any other source
31 or that such insurance is not available at a commercially
reasonable cost;
33
WHEREAS, the Authority and the Participants have further
35 determined, based upon the advice of independent professional
insurance consultants familiar with the cyclical nature of the
37 reasonable availability of coverage in the commercial insurance
market, that it is uncertain when such liability insurance is
39 expected to become available at a commercially reasonable cost,
thereby in the interim exposing the•Participants to
41 self --insuring from available revenues on a year -by -year basis
with the attendant risks of fiscal instability and ruinous
43 burdens on its citizens in the event of large liability claims
recoveries;
45
WHEREAS, the Authority and the Participants have further
47 determined that the periodic unwillingness of the commercial
insurance market to provide primary or excess public entity
49 liability insurance to local governments at reasonable rates
or, in certain cases as at present, at any rate, mandates that
2658002/2
2
I the Participants seek not only an immediate solution but also a
long-term permanent solution to this problem which will in
3 future years free them from exposure to the vagaries of
commercial insurance cycles;
5
WHEREAS, the Authority and the Participants, in
7 consultation with independent professional insurance
consultants, have formulated a joint risk -sharing insurance
9 program to be administered by the Authority to meet the public
entity liability insurance needs of the Participants which will
11 provide the following advantages, among others, to the
Participants:
13
(a) immediate funding of a claims payment fund (the
15 "Claims Payment Fund") through an initial deposit from the
proceeds of the sale of the Bonds for the dual purposes of
17 providing immediate protection from large claims loss and
facilitating eventual access to the commercial reinsurance
19 market,
21 (b) mutual agreement by the Participants to pay
annual premiums determined on both a prospective and a
23 retrospective basis calculated actuarially to spread and
moderate the cost of liability losses to each Participant,
25
(c) relief from the burden of paying premiums to
27 commercial insurers at levels reflecting the insurers' high
costs of underwriting, administration and brokerage fees
29 since the Authority's costs will be limited to reasonable
administrative costs,
31
(d) relief from the cor^rnercial insurers' rights under
33 excess liability policies to force claim settlements which
are payable primarily in each case from the Participant's
35 self --insurance funds, and
37 (e) access to the commercial reinsurance market in
future years when commercial reinsurance is available at
39 rates deemed favorable by the Participants.
41 WHEREAS, the Participants have further determined that the
Participation Premium to be paid in each year by each
43 Participant as provided for and upon the conditions set forth
in this Agreement will be payable only upon the condition of
45 the receipt of the consideration represented by the insurance
protection and services to be provided in such year under this
47 Agreement, but in the event that such protection and services
are so provided in any year such Participation Premium will be
49 a binding obligation of each Participant payable from legally
available moneys of each Participant;
51
3
2658002/2
I WHEREAS, the Participants have further determined that the
obtaining of the insurance protection and services provided for
3 under this Agreement is essential to the preservation and
fostering of the health, safety and property rights of the
5 citizens of each Participant and the lack of -availability of
reasonable commercial public entity liability insurance to
7 local governments generally in the State and to the
Participants in particular constitute a public emergency;
9
WHEREAS, each Participant has heretofore determined that it
it is necessary and in the interest of the citizens of each such
Participant to establish, through the issuance and sale of the
13 Bonds, and maintain through pro rata contributions of each
Participant a debt service reserve fund therefor, in order to
15 establish adequate reserves to permit the Bonds to be marketed
at the lowest possible interest rates;
17
WHEREAS, the cost of funding and maintaining such reserve
19 fund has been determined by each Participant to be more than
offset by the anticipated benefits and economies to be realized
21 by the pooling of risks and losses pursuant to this Agreement;
23 WHEREAS, Article 16, Section 6 of the Constitution of the
State of California, regarding lending of public credit or
25 funds, provides, in relevant part, that such Section "shall not
prohibit any county, city and county, city, township, or other
27 political corporation or subdivision of the State from joining
with other such agencies in providing for the payment of
29 workers' compensation, unemployment compensation, tort
liability, or public liability losses incurred by such
31 agencies, by entry into an insurance pooling arrangement under
a joint exercise of powers agreement, or by membership in such
33 publicly -owned nonprofit corporation or other public agency as
may be authorized by the Legislature";
35
WHEREAS, it is a matter for the city council of each
37 Participant to determine the amount of premiums which such
Participant shall pay for proper insurance coverage;
39
WHEREAS, each Participant has heretofore determined and
41 does hereby confirm that, in view of the foregoing facts and
circumstances, the premiums to be required hereunder are
43 reasonable and advantageous and to the public benefit of the
citizens of such Participant;
45
WHEREAS, the Participants have determined to implement a
47 risk sharing program, by means of execution of this Agreement,
prior to issuance of the Bonds;
49
NOW, THEREFOR, in consideration of the above premises and
51 of the mutual covenants hereinafter contained and for other
good and valuable consideration, the parties hereto agree as
53 follows:
4
2658002/2
1 ARTICLE I
3 DEFINITIONS AND EXHIBITS
5 SECTION 1.1 Definitions and Rules of Construction. Unless
the context otherwise requires, the capitalized -terms used
7 herein shall, for all purposes of this Agreement, have the
meanings specified in the Trust Indenture, dated as of the date
9 hereof (the "Indenture"), by and between
as Trustee thereunder, and
11 the Authority, together with any amendments thereof or
supplements thereto permitted to be made thereunder; and the
13 additional terms defined in this Section shall, for all
purposes of this Agreement, have the meanings herein
15 specified. Unless the context otherwise indicates, words
importing the singular number shall include the plural number
17 and vice versa. The terms "hereby", "hereof", "hereto
"herein", "hereunder" and any similar terms, as used in this
19 Agreeent,, refer to this Agreement as a whole.
21 "Actuary" means a firm with at least one employee who is
both a Fellow of the Casualty Actuarial Society and a Member of
23 the American Academy of Actuaries, which firm is appointed by
the Authority with the approval of at least a majority of the
25 Authority's Governing Board.
27 "Adlustment Proportion" means, with respect to the Coverage
Periods ending on June 30, 1989, 1990 and 1991, in the event
29 that Special Pure Premium Adjustments are assessable against
any Participant with respect to any such Coverage Period
31 because the Pure Premium payable by such Participant is capped
at $1,250,000, the proportion used to determine Pure Premium
33 Adjustments with respect to such Coverage Period.
35 "Administrative Premium" means, with respect to each
Participant, such Participant's Pure Premium Proportion of all
37 administrative costs of the Authority relating to the Coverage
or the Bonds, as further set forth in Section 4.4(d) hereof.
39
"Allocable Proportion" means the percentages set forth in
41 Exhibit B of this Agreement.
43 "Authority" :Weans the Big Independent Cities Excess Pool
Joint Powers Authority, a joint exercise of powers authority
45 duly organized and existing under the Constitution and the laws
of the t ate.
47
"Basic Premium" means, with respect to each Participant,
49 the payments set forth in Exhibit A hereto which correspond to
such Participant's Allocable Proportion of principal of
5
2658002/2
I (whether at maturity or upon mandatory sinking fund redemption)
and interest on the Bonds, as set forth in Section 4.4(b) of
3 this Agreement.
5 "Basic Premium Payment_Date" means August 1 of each year
during the period in which Bonds are Outstanding; provided that
7 the first Basic Premium Payment Date shall be the date of
initial issuance and delivery of the Bonds.
9
"Case Reserves" means amounts in the Claims Payment Fund
11 required to be designated as reserves for payment of
Settlements pursuant to Section 3.6 hereof in accordance with
13 prudent insurance practice and in accordance with the
recommendations of the Claims Review Committee of the Authority
15 and the annual report of the Qualified Claims Auditor. Case
Reserves will be determined by the Qualified Claims Auditor
17 annually, on or prior to February 1 of each year. Case
Reserves will be adjusted to reflect changed circumstances
19 subsequent to the year any Claim is filed and to reflect the
amount by which a Settlement exceeds reserves established for
21 any Claim; provided, however, that there shall be no Case
Reserves established for a Claim or any portion thereof within
23 a Participant's Self -Insured Retention, as described in
Exhibit F hereto, or which is covered by commercial insurance
25 or reinsurance pursuant to Section 3.5 hereof.
27 "Claim" means a demand against an Insured to recover for
losses or damages within or alleged to be within the scope of
29 the Memorandum.
31 "Claims Pavment Fund" means the Claims Payment Fund
established for the payment of Settlements pursuant to
33 Section 3.4 hereof. Nothing in this Agreement is intended to
prohibit the Authority from designating the Claims Payment Fund
35 as being comprised of separate claims payment funds for the
purposes of issuing and securing additional bonds issued by the
37 Authority and secured by premium payments of new Participants.
39 "Code" means the Internal Revenue Code of 1986, as amended.
41 "Consumer Price Index" means The Consumer Price Index,
Urban Wage Earners and Clerical Workers, All Items, Base
43 1967=100, published by the Bureau of Labor Statistics, U.S.
Department of Labor, or if said Index is not available for the
45 United States, then an available index for the geographical
area within the United States most similar to the entire United
47 States, published by said bureau or its successor, or if none,
by any other instrumentality of the United States or of the
49 State of California, in the order mentioned.
L
2658002/2
I "Coverage" means the insurance provided pursuant to and in
accordance with and on the terms set forth in this Agreement
3 and in the Memorandum attached as Exhibit F hereto, including,
but not limited to, rights to payment of Settlements from funds
5 on deposit in the Claims Payment Fund under the terms of this
Agreement.
7
"Coverage Period" means each year for which a Participant
9 pays Participation Premium; provided, however, that the first
Coverage Period shall be the period of 12:01 a.m. on October 1.
11 1988 through July 1, 1989 at 12:01 a.m. California time.
13 "Governing Board" means members of the Board of Directors
of the Authority; provided that only members representing
15 Participants shall be entitled to vote on any action with
respect to the pooled self-insurance program of the
17 Participants established by this Agreement and any references
in this Agreement to a majority or specified percentage of the
19 Governing Board shall be deemed to mean a majority or specified
percentage of Participant Members of the Governing Board.
21
"Insured", as used in the Memorandum, means a Participant
23 and any other insured described therein.
25 "Loss Reserves" means the amounts in the Claims Payment
Fund required to be designated as reserves for payment of
27 Settlements pursuant to Section 3.6 hereof. Loss Reserves
shall include Case Reserves. Loss Reserves other than Case
29 Reserves are not required to be funded by any means other than
the payment of Pure Premium and are not required to be
31 established at any time for Coverage in excess of $10,000,000
per occurrence.
33
"Low Reserves Mode" means the occurrence and continuance of
35 one or more of the following events:
37 (1) the sum of the amounts in the Claims Payment
Fund, the Debt Service Reserve Fund and any other funds
39 held by the Trustee which are available to pay principal of
and interest on the Bonds is less than the greater of (a)
41 $10,000,000 or (b) sixty percent (60%) of the outstanding
principal amount of the Bonds; or•
43
(2) the total outstandinc_ Case Reserves exceed 75% of
45 the amounts then on deposit in the Claims Payment Fund.
47 "Memorandum" means the Memorandum of Liability Coverage set
forth in Exhibit F hereto.
49
7
2658002/2
I "Participation Premium" means, with respect to each
Participant, Administrative Premium, Basic Premium,
3 Supplemental Basic Premium and Pure Premium, payable by such
Participant on each Basic Premium Payment Date.
5
"Payroll" means, with respect to a Participant, the
7 workers' compensation payroll of such Participant as most
recently reported to the State of California.
9
"Participant" means each city which is a party to this
11 Agreement, as this Agreement may be amended from time to time.
13 "Pure Premium" means, with respect to each Participant, an
amount equal to the amount necessary to fund estimated Loss
15 Reserves required to be established to pay Settlements of the
Participants for a Coverage Period as determined according to
17 the methodology set forth in Section 4.4(e) of this Agreement.
19 "Pure Premium Adjustment" means, with respect to each
Participant, an amount payable by such Participant or
21 refundable to such Participant, based on the adjustments to
Case Reserves required by the report of the Qualified Claims
23 Auditor pursuant to Section 3.6 hereof reflecting events in
Coverage Periods preceding such report relating to Claims with
25 respect to preceding Coverage Periods, as set forth in
Section 4.5 of this Agreement. Pure Premium Adjustments shall
27 be deemed to include Special Pure Premium Adjustments for all
purposes of this Agreement except Section 4.5 hereof.
29
"Pure Premium Proportion" means, with respect to any
31 Participant and with respect to any Coverage Period, the
percentage of Pure Premium required to be paid by such
33 Participant in such Coverage Period as compared to the Total
Pure Premium paid by all Participants in such Coverage Period.
35
"Pure Premium Rate" means the rate for $1,000 of payroll of
37 a Participant for a specified Risk Sharing Pool determined as
provided in Section 4.4(e) hereof and the methodologies set
39 forth in Schedule A to this Agreeent.
41 "Qualified Claims_ Auditor" means an individual or an
organization experienced in the handling of public entity
43 liability claims, appointed by the Authority with the approval
of a majority of the members of the Authority's Governing
45 Board, who shall be independent of any party who administers
Claims on behalf of the Authority throughout each Coverage
47 Period.
49 "Risk Sharing Pool" means a specific layer of Coverage per
occurrence applicable to one or more Participants. Initially,
11
2658002/2
V
I there -shall be two Risk Sharing Pools (i.e., from a
Participant's Self -Insured Retention to $5,000,000 and from
3 $5,000,000 to $25,000,000). The Authority may establish one or
more pools in subsequent Coverage Periods in compliance with
5 Section 9.3(b) hereof.
7 "Settlement" means the settlement by the Authority or a
Participant, in accordance with the Memorandum, of a Claim
9 against such participant, or the adjudication of such Claim
without further right of appeal. The amount of any Settlement
11 may include any costs or expenses deemed appropriate by the
Authority in connection therewith including Defense Costs as
13 described in the Memorandum.
15 "Special Pure Premium Adjustments" means the Special Pure
Premium Adjustments payable pursuant to Section 4.6 hereof.
17
"SuDDlemertal Basic Premium" means, with respect to each
19 Participant, ten percent (10%) of the net Basic Premium payable
by such Participant on any Basic Premium Payment Date (after
21 credit to Basic Premium has been made pursuant to Section
4.4(b)(2) hereof).
23
"Term of the Agreement" means the time during which this
25 Agreement is in effect, as provided in Section 4.1 of this
Agreement.
27
"Termination•Premium" means the amount required to be paid
29 by a Participant to voluntarily terminate Coverage for a
Coverage Period and all future Coverage Periods, as set forth
31 in Sections 6.2 and 11.4 of this Agreement, or the amount
required to be paid to expel a Participant, as set forth in
33 Sections 6.3 and 11.4 hereof.
35 "Total Premium" or "Premium" means, with respect to each
Participant, the sum of the Participation Premium and Pure
37 Premium Adjustment payable by such Participant in any Coverage
Period.
39
"Total Pure Premium" means the total amount of Pure Premium
41 payable by all Participants in any Coverage Period determined
as provided in Section 4.4(e) hereof.•
43
"Trustee" -ears Seattle -First National Bank, a national
45 banking association, or any successor thereof.
47 "Undesinnated Reserves" means the amount in the Claims
Payment Fund in excess of the total amount that has been
49 designated as Loss Reserves pursuant to Section 3.6 hereof.
9
2658002/2
1 SECTION 1.2 Findings. Each Participant hereby finds and
determines that:
3
(a) The recitals to this Agreement are true and
5 correct.
7 (b) Public entity liability insurance in the amount
and scope described in the Memorandum is not commercially
9 available to such Participant in the private marketplace at
a commercially reasonable price.
11
(c) The Participation Premium shall be paid by each
13 Participant in consideration of the Coverage offered hereby
and by the Memorandum and the sharing of the risk of
15 liability for claims associated with the pooled
self-insurance program during each Coverage Period. The
17 parties hereto have agreed and determined that such
Participation Premium, together with any Pure Premium
19 Adjustments, represents the fair market value of the
Coverage. In making such determination. consideration has
21 been given to the initial costs of establishing the pooled
insurance program, the unavailability of commercial
23 liability insurance to such Participant and to other
Participants, the anticipated future costs of commercial
25 liability insurance should such insurance become available,
the obligations of Participants under this Agreement
27 (including the agreement to share the risk of costs imposed
by liability claims), the obligation of the Authority to
29 provide insurance services, the benefits resulting from the
funding of a pooled insurance program (including the
31 prospect of access to the commercial liability reinsurance
market) and the other benefits therefrom which will accrue
33 to such Participant and the general public.
35 (d) Such Participant receives benefit from the
sharing of risk of costs imposed by liability claims under
37 the terms of this Agreement during each Coverage Period.
The assessment of Pure Premium and Pure Premium Adjustment
39 is the rears by which such risk sharing is implemented.
The procedure established for the calculation, adjustment
41 and assessment of Pure Premium and Pure Premium Adjustment
is fair, just and reasonable as a•means of implementing
43 such risk sharing.
45 SECTION 1.3 Exhibits. The following Exhibits and Schedule
are attached to, and by reference made a part of, this
47 Agreement:
49 Exhibit A: The schedule of Basic Premium to be paid
by each Participant to the Authority, showing the date and
51 amount of such payments.
10
2658002/2
1 16Exhibit B: Allocable Proportion for Each Participant.
3 Exhibit C: Initial Participation Premium.
5 Exhibit D: Initial Pure Premium Adjustment
Proportions for each Participant and Special Pure Premium
7 Adjustment Maximum Amounts.
9 Exhibit E: Participants Making A Cash Deposit Into
the Claims Payment Fund.
11
Exhibit F: Memorandum of Liability Coverage.
13
Exhibit G: Underwriting and Claims Administration
15 Standards and Liability Claims Quality Control Guidelines.
17 Exhibit H: Form of Requisition.
19 Exhibit I: Notice Addresses.
21 Schedule A: Methodology for Calculating Pure Premium
and Formula for Calculating Pure Premium Rates.
23
Schedule B: Formula for Calculating Pure Premium
25 Adjustments.
27
ARTICLE iI
29
REPRESENTATIONS, COVENA'VTS AND WARRANTIES
31
SECTION 2.1 Representations, Covenants and Warranties of
33 the Participants. Each Participant makes the following
representations, covenants and warranties to the Authority.
35
(a) Due Organization and Existence. Such Participant
37 is a municipal corporation of the State, duly organized and
existing under the Constitution and laws of the State and,
39 in the case of each of the cities of Huntington Beach,
Pomona, Oxnard,.San Bernardino and Santa Ana, its
41 respective city charter.
43 (b) Authorization; Enforceab�. The Constitution
the laws of the State and, in the case of the cities of
45 Huntington Beach, Pomona, Oxnard, San Bernardino and Santa
Ana, the respective city charter authorize such Participant
47 to enter into this Agreement and to enter into the
transactions contemplated by and to carry out its
49 obligations under all of the aforesaid agreements, and the
Participant has duly authorized and executed all of the
11
2658002/2
1 aforesaid agreements. This Agreement constitutes the
legal, valid, binding and enforceable obligation of such
3 Participant in accordance with its terms, except to the
extent limited by applicable bankruptcy, insolvency,
5 reorganization, moratorium or similar laws or equitable
principles affecting the rights of creditors generally and
7 except as to the limitations on remedies against public
agencies generally.
9
(c) No Violations. Neither the execution and
it delivery of this Agreement by such Participant, nor the
fulfillment of or compliance with the terms and conditions
13 hereof by such Participant, nor the consumiration of the
transactions contemplated hereby by such Participant,
15 conflicts with or results in a breach of the terms,
conditions or provisions of any restriction or any
17 agreement or instrument to which such Participant is now a
party or by which such Participant is bound, or the charter
19 of such Participant, if applicable, or constitutes a
default under any of the foregoing.
21
(d) General Tax and Arbitrage Covenant. Such
23 Participant hereby covenants that, notwithstanding any
other provision of this Agreement, it will make no use of
25 the proceeds of the Bonds or of any other amounts or
property regardless of the source or take any action or
27 refrain from taking any action that may cause the
obligations of the Participants under this Agreement or the
29 Bonds to be "arbitrage bonds" subject to federal income
taxation by reason of Section 148 of the Code.
31
In addition, such Participant covenants that it will
33 not make any use of the proceeds of the obligations
provided herein or in the Indenture or any other funds of
35 such Participant or take or omit to take any other action
that would cause income on the Bonds to be includable in
37 gross income of the owners thereof for federal income tax
purposes. To that end, so long as any Basic Premium is
39 unpaid and any Bond is outstanding, such Participant, with
respect to such proceeds and such other funds, will comply
41 with all requirements of Section 103 of the Code and all
related sections and all regulations of the United States
43 Department of the Treasury issued thereunder and under
Section 103 of the Internal Revenue Code of 1954, as
45 amended, to the extent that such requirements are, at the
time, applicable and in effect.
47
(e) Structuring Settlements. Such Participant hereby
49 covenants to cooperate with the Authority in settling
Claims in excess of the Participant's Self --Insured
12
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I Retention as described in Exhibit F hereto, and, in
particular, (i) to the extent such Participant has control
3 over any negotiation or structuring of a Settlement and
subject to the limitations in the Memorandum, not to effect
5 Settlement payment dates earlier than the date the Claims
Payment Fund has been or will be fully funded to cover Loss
7 Reserves established for the payment of such Claim, and
(ii) at any time during which the Low Reserves Mode is in
9 effect or when otherwise requested by the Authority, with
respect to any judgment (as defined in California
11 Government Code Section 970) in an amount of one million
dollars ($1,000,000) or more, assuming such amount exceeds
13 such Participant's Self Insured Retention, to petition the
court for payment of such judgment in installments pursuant
15 to the provisions of California Government Code Section
970.6.
17
(f) Compliance with Memorandum. Such Participant
19 hereby expressly covenants to comply with the terms and
conditions set forth in the Memorandum and with the
21 Underwriting and Claims Administration Standards and the
Liability Claims Quality Control Guidelines set forth in
23 Exhibit G hereto.
25 (g) Acknowledgment of Security Interest. Such
Participant hereby expressly acknowledges the security
27 interest of the Trustee on behalf of the Bond Owners in
moneys to be paid hereunder and held by the Trustee.
29
SECTION 2.2 Representations, Covenants and Warranties_ of
31 the Authority. The Authority represents, covenants and
warrants to each Participant as follows.
33
(a) Recitals Correct. The recitals to this Agreement
35 are true and correct.
37 (b) Due Organization and Existence; Enforceability.
The Authority -is a joint exercise of powers authority duly
39 organized, existing and in good standing under and by
virtue of the laws of the State, authorized under the
41 Constitution and laws of the State to enter into this
Agreement and the Indenture;.is possessed of full power to
43 provide self-insurance to consenting public entities; and
has duly authorized the execution and delivery of all of
45 the aforesaid agreements. This Agreement and the Indenture
constitute the legal, valid, binding and enforceable
47 obligations of the Authority in accordance with their
respective terms, except to the extent limited by
49 applicable bankruptcy, insolvency, reorganization,
13
2658002/2
1 moratorium or similar laws or equitable principles
affecting the rights of creditors generally.
3
(c) No Encumbrances. The Authority will not pledge
5 any Premium or its other rights under this Agreement except
as provided under the terms of this Agreement and in the
7 Indenture.
9 (d) Equitable Exercise of Responsibilities. The
Authority will exercise all rights and responsibilities
11 hereunder reasonably and equitably for the benefit of all
Participants without preference or discrimination among
13 Participants.
15 (e) No Violations. Neither the execution and
delivery of this Agreement or the Indenture, nor the
17 fulfillment of or compliance with the terms and conditions
hereof or thereof, nor the consummation of the transactions
19 contemplated hereby or thereby, conflicts with or results
in a breach of the terms, conditions or provisions of the
21 Bylaws of the Authority or any restriction or any agreement
or instrument to which the Authority is now a party or by
23 which the Authority is bound, or constitutes a default
under any of the foregoing.
25
M General Tax and Arbitzaae Covenant. The
27 Authority covenants that, notwithstanding any other
provision of this Agreement, it will make no use of the
29 proceeds of the Bonds or of any other amounts or property
regardless of the source or take any action or refrain from
31 taking any action that may cause the obligations of the
Participants under this Agreement or the Bonds to be
33 "arbitrage bards" subject to federal income taxation by
reason of Section 148 the Code.
35
In addition, the Authority covenants that it will not
37 make any use of the proceeds of the obligations provided
herein or in the Bonds or any other funds of the
39 Participants or take or omit to take any other action that
would cause interest on the Bonds to be includable in gross
41 income of the owners thereof for federal income tax
purposes. To that end, so long as any"Basic Premium is
43 unpaid or any Bond is outstanding, the Authority, with
respect to such proceeds and such other funds, will comply
45 with all requirements of Section 103 of the Code and all
related sections and all regulations of the United States
47 Department of the Treasury issued thereunder and under
Section 103 of the Internal. Revenue Code of 1954, as
49 amended, to the extent that such requirements are, at the
time, applicable and in effect.
51
14
2658002/2
I (g) Structuring -Settlements. The Authority hereby
covenants, to the extent that it has control over any
3 negotiation or structuring of a Settlement, not to effect
Settlement payment dates of earlier than the date the
5 Claims Payment Fund has been or will be fully funded to
cover Loss Reserves established for the payment of such
7 Claim.
9 (h) Compliance with Memorandum. The Authority hereby
expressly covenants to comply with the terms and conditions
it set forth in the Memorandum.
13
ARTICLE III
15
DEPOSIT OF MONEYS; COVERAGE; PAYMENT OF SETTLEMENTS;
17 PURCHASE OF COMMERCIAL INSURANCE
19 SECTION 3.1 Deposit of Moneys. On the Closing Date, the
Authority agrees to direct the Trustee to deposit the proceeds
21 of the Series 1988A Bonds in the following funds as set forth
in an amendment to this Agreement to be entered into prior to
23 the date of issuance of the Series 1988A Bonds: (1) the Claims
Payment Fund, (2) the Costs of Issuance Fund, (3) the Debt
25 Service Reserve Fund and (4) the Principal and Interest Fund.
All moneys held under the Indenture shall be invested in
27 accordance with the restrictions set forth in Article VIII
thereof and in the Letter of Instructions to the Trustee
29 attached thereto as Exhibit C.
31 SECTION 3.2 Coverage. The Authority hereby provides the
Coverage to each Participant, and each Participant hereby
33 agrees to accept the Coverage, upon the terms and conditions
set forth in this Agreement and the Memorandum.
35
SECTION 3.3 Payment of Costs of Issuance. Payment of
37 Costs of Issuance shall be made from the moneys deposited with
the Trustee in the Costs of Issuance Fund established in
39 Article IV of the Indenture which shall be disbursed in
accordance and upon compliance therewith.
41
SECTION 3.4 Payment of Settlements. The Authority shall
43 establish a Claims Payment Fund for the payment of
Settlements. Settlements shall be paid upon submission to the
45 Trustee of properly completed Requisitions executed by the
Authority requesting such payment in substantially the form
47 attached as Exhibit H to this Agreement from moneys in the
Clairis Payment Fund held by the Trustee. Such Requisitions
49 will be submitted by the Authority to the Trustee in the
15
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V
1 chronological order that the Authority receives written notice
of Settlements. Requisitions shall be paid by the Trustee in
3 the sequential order received.
5 Payment of Settlements shall be made solely from any moneys
in the Claims Payment Fund, including Loss Reserves and
7 Undesignated Reserves as provided in Section 3.6 hereof. The
Authority shall not enter into a settlement agreement with
9 respect to a Claim unless the amount of the Settlement is
available in the Claims Payment Fund. All amounts paid from
11 the Claims Payment Fund as Settlements or designated as Loss
Reserves shall be deemed to be paid or designated first from or
13 with respect to amounts originally deposited from Bond
proceeds. If at any time sufficie::t moneys are not on deposit
15 in the Claims Payment Fund to pay in full any Settlement upon
submission to the Trustee of a properly completed Requisition
17 as described herein, such Requisition for Settlement payment
shall be paid in part to the extent of available moneys in the
19 Claims Payment Fund and the Trustee shall promptly upon the
occurrence of an event of abatement as described in Article VII
21 give notice of such insufficiency to the Authority, who shall
in turn give prompt notice to all Participants, that an event
23 of abatement, as described further in Article VII hereof, shall
have occurred.
25
In the event the Low Reserves Node is in effect, the
27 Authority will not enter into a settlement agreement with
respect to a Claim unless the amount of the Settlement has been
29 reserved as a Loss Reserve with respect to the Claim.
31 SECTION 3.5 Purchase of Commercial Insurance or
Reinsurance. The Authority may provide Coverage, or a portion
33 of Coverage, to the Participants by purchase of liability
insurance from a commercial insurer or reinsures, upon the
35 approval of the Authority's Governing Board by at least a
majority vote. The Authority may use Undesignated Reserves to
37 purchase such commercial insurance or reinsurance; provided,
however, that the Authority may use Loss Reserves to purchase
39 such commercial insurance or reinsurance if the policy of
commercial insurance or reinsurance -to be purchased covers the
41 Claims for which such Loss Reserves were established. In
either event, the Authority shall submit a Requisition to the
43 Trustee requesting a disbursement !rom the Claims Payment Fund,
attaching evidence of existence of the insurance policy being
45 purchased and certifying that such amounts are to be used in
compliance with this Section. The Authority shall continue to
47 be obligated to pay Settlements which are covered by.such
commercial excess insurance or reinsurance, purchased for
49 coverage within the mandatory limits provided by the Authority,
from moneys in the Claims Payment Fund even in the event such
16
2658002/2
1 co=erclal excess insurance or reinsurance, purchased for
coverage within the mandatory limits provided by the Authority,
3 fails to pay such Settlement or is insufficient for such
Settlement; provided that the Authority shall have no
5 obligation to pay Settlements which are covered by excess
insurance purchased by the Authority for a Participant on an
7 optional basis in excess of the mandatory limits provided by
the Authority. In an event of dispute between the Authority or
9 any Participant and any commercial excess insurer or reinsurer
as to payment of any Settlement, the failure in good faith to
11 pay such Settlement shall not result in abatement of any
Participant's obligation to make any Premium payments.
13
In a Coverage Period for which the Authority has purchased
15 commercial insurance or reinsurance on behalf of each
Participant, each such Participant shall be obligated to pay
17 its Pure Premium Proportion of the costs of such insurance in
lieu of all or a portion of Pure Premium, in addition to
19 Administrative Premium, Basic Premium, Supplemental Basic
Premium and Pure Premium Adjustments. In subsequent Coverage
21 Periods no Participant shall have any obligation to pay and no
right to receive Pure Premium Adjustments with respect to any
23 Coverage for which the Authority has purchased commercial
excess insurance or reinsurance on behalf of such Participant,
25 except such obligations or rights which may arise under such
commercial excess insurance or reinsurance; provided, however,
27 that, if such coverage is within the mandatory limits provided
by the Authority, in the event that a commercial insurer
29 providing excess insurance or reinsurance fails to pay a
Settlement within the scope of such excess insurance or
31 reinsurance coverage, the Participants shall be obligated to
pay Pure Premium Adjustments with respect to such excess
33 insurance or reinsurance coverage.
35 SECTION 3.6 Case Reserves and Loss Reserves. On or prior
to February 1 of each year, commencing February 1, 19B9, the
37 Authority shall retain a Qualified Claims Auditor for the
purpose of submitting an annual report on or prior to such date
39 to the Authority and the Trustee setting forth (a) the amount
of Case Reserves necessary to be established with respect to
41 each Claim arising during the preceding full Coverage Period
and a breakdown of the amount of Case•Reserves applicable to
43 each Risk Sharing Pool, and (b) any adjustments (whether upward
or downward) necessary to be made in the amount of each Case
45 Reserve previously established pursuant to this Section. In
determining the amount of Case Reserves necessary to be
47 established or adjusted as described above, the Qualified
Claims Auditor shall consider such facts and circumstances
49 occurring during the period covered by such report as it, in
its independent judgment, deems necessary in accordance with
17
2658002/2
I prudent insurance practice. Notwithstanding the foregoing, the
Qualified Claims Auditor shall take into account Settlements of
3 Claims in accordance with the criteria set forth in this
Section.
5
The Authority shall direct the Trustee to establish or
7 adjust Loss Reserves in the Claims Payment Fund. Loss Reserves
shall be initially established for each Coverage Period at the
9 time Participation Premium is due with respect to such Coverage
Period in accordance with the report prepared by an Actuary on
11 or before February 1 of each year. Adjustments in subsequent
Coverage Periods to Loss Reserves previously established shall
13 be based only upon establishment of and adjustments to Case
Reserves in accordance with the report of the Qualified Claims
15 Auditor described above. Such report of the Qualified Claims
Auditor shall beinn a form such that Pure Premium Adjustments
17 can be determined for each Participant, Coverage Period and
Risk Sharing Pool. The Authority may direct the Trustee to
19 establish Loss Reserves in excess o-� those designated in the
reports of the Actuary and Qualified Claims Auditor if the
21 Authority determines with the Qualified Claims Auditor the
existence of such facts and circumstances occurring during the
23 period covered by such report which deem it necessary to
establish excess reserves in accordance with prudent insurance
25 practice. Such annual adjustment shall be made on the
February 1 following receipt of the annual report of the
27 Qualified Claims Auditor. The parties acknowledge that under
certain circumstances it will be necessary to establish Case
29 Reserves in excess of the amounts then on deposit in the Claims
Payment Fund. In such event, such Case Reserves will
31 nevertheless be established as provided in this Section and
funded, through the payment of Pure Premium Adjustments, as
33 provided in Section 4.5 hereof. In the event that any such
adjustment to Loss Reserves results in the Low Reserves Node
35 being in effect, the Authority shall provide prompt written
notice of such fact to the Participants and the Trustee.
37
Upon the Settlement of any Claim and the payment thereof
39 from amounts on deposit in the Claims Payment Fund such amounts
shall be deemed reduced in the following order of priority:
41 first, from Case Reserves established to pay such Claim;
second, from Loss Reserves other than•Case'Reserves; third,
43 from Undesignated Reserves; and fourth, from designated Case
Reserves established to pay Settlements of other Claims (pro
45 rata among such other Case Reserves on the basis of the
respective amounts of such Case Reserves).
47
Invest.-ent earnings retained in the Claims Payment Fund
49 shall be credited first to replenish designated Loss Reserves
which have previously been reduced to pay Settlements of other
18
265BO02/2
V
LT
1 Claims, and then to Undesignated Reserves. Amounts designated
as Loss Reserves shall not be increased except as provided in
3 this Section.
5
ARTICLE IV
7
TEPUM OF AGREEMdENT ;
9 PREMIUM
11 SECTION 4.1 Term of Agreement; Termination of a
Participant's Obligations to Pay Particication Premium. The
13 Term of this Agreement shall commence on the date of its
execution and shall, subject to the following paragraph, end on
15 June 30, 2008, unless the Indenture shall not have been
discharged by its terms by such date, in which case the Term of
17 this Agreement shall be extended until the Indenture shall be
discharged by its terms, unless terninated prior thereto in
19 accordance with the following paragraph.
21 Upon the final discharge of the Indenture, the availability
of Coverage with respect to Claims in subsequent Coverage
23 Periods provided by this Agreement shall terminate unless the
parties agree to extend the Term beyond such date. In the
25 event the parties agree to extend the term of Coverage, the
provisions of this Agreement relating to Coverage after such
27 date may be amended in any mutually agreeable fashion without
notice to or consent of any parties other than the parties to
29 this Agreement at that time.
31 Further, upon the final discharge of the Indenture, the
Trustee shall transfer any remaining_ moneys in the Claims
33 Payment Fund to the Authority to be held as a claims payment
fund pursuant to Section 5.1 hereof. The obligations of all
35 Participants to pay Pure Premium Adjustments and the rights to
receive Pure Premium Adjustment refunds with respect to Claims
37 within the scope of Coverage prior to discharge of the Trust
Agreement shall continue until all liability with respect to
39 such claims has been finally determined.
41 The obligation of any Participant to pay Participation
Premium and, except as provided below; Pure Premium Adjustments
43 under this Agreement will terminate upon the earliest of any of
the following events:
45
(a) upon termination of this Agreement the payment by
47 such Participant of all of its Basic Premium payments
specified in Exhibit A hereto, its Supplemental Basic
49 Premium, Administrative Premium and of all Pure Premium
19
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V
1 required to be paid by such Participant pursuant to
Section 4.4 hereof;
3
(b) withdrawal of such Participant from Coverage
5 pursuant to Section 6.2 hereof; and
7 (c) expulsion of such Participant from Coverage
pursuant to Section 6.3 hereof;
9
provided, however, that none of the foregoing shall extinguish
11 (i) the obligations of such Participant to pay Pure Premium
Adjustments assessed with respect to Coverage Periods of such
13 Participant prior to such payment, withdrawal or expulsion or
(ii) the right to receive the benefits of such Coverage with
15 respect to Coverage Periods of such Participant prior to such
payment, withdrawal or expulsion, except as otherwise provided
17 in this Agreement.
19 SECTION 4.2 Budget and Appropriation of Premium Payments.
The Authority covenants to calculate and mail notice, no later
21 than April 15 of each year, to each Participant of the amount
of Total Premium to be payable by such Participant on the
23 following Basic Premium Payment Date during the Term of this
Agreement (based on an estimate of investment earnings to be
25 credited to the Basic Premium Payment Fund pursuant to Sections
3.03 and 6.03 of the Indenture on the following June 15). Each
27 Participant covenants to take such action as may be necessary
to include Total Premium payments payable hereunder in its
29 annual budget and to make the necessary annual appropriations
for all such Total Premium payments. During the Term of this
31 Agreement, each Participant will furnish to the Authority and
the Trustee prompt written evidence of such budget or
33 appropriation (which may be evidence of payment of such
amounts) in each such Coverage Period no later than August 1.
35 The covenants on the part of each Participant herein contained
shall be deemed to be and shall be construed to be duties
37 imposed by law and it shall be the duty of each and every
public official of each Participant to take such action and do
39 such things as are required by law in the performance of the
official duty of such officials to enable each Participant to
41 carry out and perform the covenants and agreements in this
Agreement agreed to be carried out and performed by such
43 Participant.
45 SECTION 4.3 Obligation to Pay Premiums.
47 (a) No Withholding. Subject to the provisions of
Article VII hereof, notwithstanding any dispute between the
49 Authority and a Participant, including a dispute as to the
scope or nature of Coverage provided by the Authority or the
20
2658002/2
1 availability of amounts in the Claims Payment Fund to pay
Claims made against any Participant, or for any other reason
3 (other than the termination of the obligation to pay
Participation Premium pursuant to Section 4.1 hereof) each
5 Participant shall appropriate funds sufficient to pay and shall
make all Premium payments when due and shall not withhold any
7 Premium payments pending the final resolution of such dispute,
9 (b) Rate on Overdue Payments. In the event a Participant
fails to make any of the payments required in this Article, the
11 payment in default shall continue as an obligation of the
Participant until the amount in default shall have been fully
13 paid, and in addition to any remedies available with respect to
such default, the Participant agrees to pay the same with
15 interest thereon, at twelve percent (12%) per annum, but not to
exceed the highest rate permitted by law, from the date such
17 amount was originally payable.
19 (c) Pledce to Bondowners. Pursuant to the Indenture, the
Authority will pledge its right to receive and collect all
21 Premmium payments and prepayments (but not Administrative
Premium) or any rights or obligations with respect thereto and
23 Termination Premium payable with respect thereto to the Trustee
in trust for the benefit of the Bond Owners. The Authority
25 hereby directs each Participant, and each Participant hereby
agrees to pay to the Trustee at the Trustee's principal
27 corporate trust office, or to the Trustee at such other place
as the Trustee shall direct in writing, all payments payable by
29 the Participant pursuant to this Section and Article XI hereof.
31 SECTION 4.4 Premiums.
33 (a) Participation Premium. The Participation Premium
payments due in any Coverage Period shall be made in
35 consideration for Coverage for such Coverage Period. The
entire amount of Participation Premium is due on the Basic
37 Premium Payment Date; provided, that with respect to the first
Coverage Period, Participation Premium shall be due on
39 October 25 (provided that Basic Premium shall be due on the
date of initial issuance and delivery of the Bonds) and shall
41 be payable in the respective amounts listed in Exhibit C hereto.
43 (b) Basic Premium
45 (1) Time and Amount. Notwithstanding any provision
of this Agreement to the contrary, no provision of this
47 Agreement relating to Basic Premium shall be effective
prior to the Closing Date of the first Series of Bonds.
49 Subject to the provisions of Article XI hereof (regarding
prepayment of Basic Premium and payment of Termination
51 Premium), Section 6.2 hereof (regarding withdrawal),
21
2658002/2
1 Section 6.3 hereof (regarding expulsion) and Section 7.1
hereof (regarding abatement) ea--h Participant agrees to pay
3 to the Authority, its successors and assigns, as a portion
of its annual Participation Premium payment for the
5 Coverage, Basic Premium in the amounts specified in
Exhibit A, to be due and payable on the Basic Premiuri
7 Payment Date, which correspond to amounts sufficient in
both time and amount to pay when due such Participant's
9 Allocable Proportion of the annual principal of (whether at
maturity or by mandatory sinking fund redemption) and
11 interest on the Bonds.
13 (2) Credits. Notwithstanding the foregoing, any
amount held in a Participant's account of the Principal and
15 Interest Fund on any Basic Premium Payment Date (other than
amounts required for payment of past due principal of or
17 interest on the Bonds not presented for payment) shall be
credited towards the Basic Premium of such Participant then
19 due and payable and no Basic Premium need be paid by a
Participant on any Basic Premium Payment Date if the
21 amounts then held in the Participant's account of the
Principal and Interest Fund are at least equal to the Basic
23 Premium then required to be paid.
25 (3) Effect of Prepayment. In the event that a
Participant prepays or provides for the payment of all of
27 its remaining Basic Premium pursuant to Article XI hereof
such Participant's obligations under this Agreement to pay
29 further Basic Premium shall thereupon cease and terminate.
31 (c) Supplemental Basic Premium.
33 (1) Time and Amount. Notwithstanding any provision
of this Agreement to the contrary, no provision of this
35 Agreement relating to Supplemental Basic Premium shall be
effective prior to the Closing Date of the first Series of
37 Bonds. Subject to the provisions of Article XI hereof
(regarding prepayment of Basic Premium and payment of
39 Termination Premium), Section 6.2 hereof (regarding
withdrawal), Section 6.3 hereof (regarding expulsion) and
41 Section 7.1 hereof (regarding abatement), each Participant
agrees to pay the Authority, its successors and assigns, as
43 a portion of its annual Participation Premium for Coverage,
Supplemental Basic Premium, to be due and payable on the
45 Basic Premium Payment Date.
47 (2) Credits. Notwithstanding the preceding sentence,
no Participant shall be obligated to pay Supplemental Basic
49 Premium in excess of its Allocable Proportion of the amount
by which the amount held in the Debt Service Reserve Fund
22
2658002/2
r
is less than the Reserve Requirement on the April 15
immediately preceding the Basic Premium Payment Date.
3
(d) Administrative Premium. Each Participant shall pay to
5 the Authority as Administrative Premium such amounts as shall
be required for the payment of the Participant's Pure Premium
7 Proportion of all administrative costs of the Authority
relating to the Coverage or the Bonds, including without
9 limitation all expenses (including counsel fees but not
including Defense Costs as defined in the Memorandum),
11 compensation and indemnification of the Trustee under the
Indenture, taxes or fees of any sort whatsoever payable by the
13 Authority as a result of its undertaking of the transactions
contemplated herein or in the Indenture, fees of any Actuary,
15 Qualified Claims Auditor, auditors, accountants, insurance
brokers, or attorneys, and all other necessary administrative
17 costs of the Authority or charges required to be paid by it in
order to administer the self-insurance program described in
19 this Agreement, or to comply with the terms of the Bonds or of
the Indenture or to defend the Authority and its members
21 against any actions or suits or sums in connection herewith.
23 (e) Pure Premium. Pure Premium shall be calculated in the
following manner, with respect to each Coverage Period
25 commencing on or after July 1, 1989, the Authority shall retain
an Actuary to determine and prepare a report to be delivered to
27 the Authority and the Trustee by the February 1 preceding the
beginning of such Coverage Period. Such report shall set forth
29 the rates ("Pure Premium Rates") per $1000 of Payroll required
to fund the expected losses and allocated loss adjustment
31 expense for the layer of Coverage from each Participant's
Self -Insured Retention to $5 million per occurrence in the
33 first Risk Sharing Pool and from $5 million to $10 million per
occurrence for Participants in the second Risk Sharing Pool for
35 each of the next three Coverage Periods. Such Pure Premium
Rates shall be determined by the Actuary in such a manner that
37 the resulting Total Pure Premium shall be an estimate by the
Actuary of the amount of funds to be deposited in the Claims
39 Payment Fund such that the deposit, along with anticipated
investment income not allocable to the Principal and Interest
41 Fund (pursuant to Section 3.03 of the Indenture), equals the
expected value of all pooled losses up to $10 million per
43 occurrence arising out of events that took place during the
Coverage Period. Funding for expected losses above $10 million
45 will not be included in the Pure Premiums but will be funded by
Pure Premium Adjustments as Case Reserves are established for
47 Claims. The Actuary shall utilize the general methodologies
set forth in Schedule A to calculate Pure Premium Rates, using
49 such Actuary's best professional judgment, and shall certify
that such methodologies were used. The methodologies set forth
2658002/2
23
1 in Schedule A for calculating Pure Premium may be amended other
than within the parameters stated therein only by unanimous
3 consent of the members of the Authority's Governing Board. The
Authority shall be obligated to assess the Total Pure Premium.
5 Notwithstanding the foregoing, the Pure Premium Rates
determined in any Coverage Period for the next three Coverage
7 Periods with respect to a given Risk Sharing Pool (and a given
Self -Insured Retention) shall be subject to the following
9 limitations on rate of increase: the increase per Coverage
Period of Pure Premium Rates from the first Coverage Period to
11 the second Coverage Period and from the second Coverage Period
to the third Coverage Period shall not exceed the greater of
13 fifteen percent (15%) per annum or the Consumer Price Index
percentage increase during the year preceding the date of the
15 determination; the increase of Pure Premium Rates from the
Coverage Period in which the Actuary makes such determination
17 to the first such Coverage Period is not subject to a
limitation on rate of increase.
19
Notwithstanding the foregoing, the Pure Premium for each of
21 the first three Coverage Periods shall not exceed $1,250,000
for any Participant. Amounts in excess of such limit shall be
23 assessable against such Participant as Special Pure Premium
Adjustments.
25
With respect to the Coverage Period commencing July 1, 1989
27 and all subsequent Coverage Periods, the Pure Premium payable
by each Participant shall be determined by multiplying its Pure
29 Premium Rates for each Risk Sharing Pool in which it is
participating by its Payroll divided by $1,000.
31 Notwithstanding the foregoing, the Pure Premium for any
Participant determined by application of such formula may be
33 changed upwards by up to twenty --five percent (25%) of the Pure
Premium to reflect loss history or any significant changes in
35 risk exposure, upon the direction and approval by a vote of
two-thirds of the Governing Board of the Authority, or, with
37 respect to changes of greater than twenty-five percent (25%),
with unanimous consent of the Governing Board. In no event
39 will Pure Premium be payable to establish Loss Reserves for
coverage in excess of $10,000,000 per occurrence.
41
Commencing with the Coverage Period commencing on July 1,
43 1989, the determination of Total Pure Premium, Pure Premium
Rate and Pure Premium payable in each Coverage Period by each
45 Participant shall be made no later than the April 15 preceding
such Coverage Period, commencing April 15, 1989.
47
As described above, prior to each Coverage Period the
49 Actuary shall determine Pure Premium Rates for each of the next
three Coverage Periods. Notwithstanding anything herein to the
51 contrary, the Pure Premium Rates determined for the second and
24
2658002/2
V
1 third Coverage Periods in any Actuary's report shall be
superseded by Actuary reports covering such Coverage Periods
3 prepared in subsequent years, except with respect to
Participants who have given notice of withdrawal pursuant to
5 Section 6.2 hereof. With respect to a Participant which has
given notice of intent to withdraw: the Pure Premium Rates
7 applicable for the two remaining Coverage Periods prior to the
effective date of withdrawal shall be based upon the Pure
9 Premium Rates which were determined in the Coverage Period
preceding the Coverage Period in which such notice was given.
11
Absent computational error, the calculation of such Pure
13 Premium shall be final and conclusive of the amounts due and
owing under this subsection.
15
SECTION 4.5 Pure Premium Adjustments.
17
(a) Consideration. Pure Premium Adjustments due in any
19 Coverage Period shall be made in consideration for continuation
of Coverage for prior Coverage Periods and for continued
21 eligibility to purchase Coverage for the current Coverage
Period.
23
(b) Time and Manner of Determination. On or prior to
25 February 1 of each year, commencing February 1, 1989, upon
receipt of the annual report of the Qualified Claims Auditor
27 pursuant to Section 3.6 hereof, the Authority shall determine
the amount of Case Reserves for all Claims of each Participant
29 to be established or adjusted with respect to all prior
Coverage Periods and for each Risk Sharing Pool as set forth in
31 the report of the Qualified Claims Auditor. On or prior to
February 1 of each year, commencing February 1, 1992, the
33 Authority shall determine, based upon the establishment or
adjustment of such Case Reserves, the Pure Premium Adjustment
35 for each Participant, which may be an assessment of additional
Pure Premium Adjustments or a refund of Pure Premium or Pure
37 Premium Adjustments paid in prior Coverage Periods. Pure
Premium Adjustments with respect to any subsequent Coverage
39 Period will be first determined during such Coverage Period and
be payable in the succeeding Coverage Period. Pure Premium
41 Adjustments shall be determined in accordance with Schedule B
hereto, which in general provides as follows:
43
(i) Pure Premium Adjustments with respect to any
45 Coverage Period are intended to provide a matching, over a
period not in excess of five years, of (a) the sum of
47 Settlements paid and outstanding Case Reserves required
with respect to such Coverage Period versus (b) the sum of
49 amounts paid as Pure Premium, paid or refunded as Pure
25
2658002/2
1 Premium Adjustments and Special Pure Premium Adjustments and
certain investment earnings on amounts with respect to such
3 Coverage Period;
5 (ii) the total Pure Premium Adjustment determined with
respect to any Participant in any Coverage Period shall be
7 equal to the sum of all Pure Premium Adjustments determined
with respect to Coverage Periods in which such Participant
9 participated in Coverage;
11 (iii) the Pure Premium Adjustment determined with
respect to any Participant with respect to any Coverage
13 Period shall be based upon such Participant's Pure Premium
Proportion applicable for such prior Coverage Period;
15 investment earnings cn the Claims Payment Fund (not
transferred to the Basic Premium Payment Fund pursuant to
17 Section 3.03 of the Indenture) shall be allocated according
to the ratio of Pure Premium paid by such Participant in
19 all Coverage Periods to Pure Premium paid by all
Participants in all Coverage Periods;
21
(iv) notwithstanding subparagraph (iii) above, with
23 respect to any Coverage Period with respect to which
Special Pure Premium Adjustments may be assessed pursuant
25 to Section 4.6 hereof, Pure Premium Adjustments shall be
based on the Adjustment Proportions set forth in Exhibit D
27 hereto instead of Pure Premium Proportions;
29 (v) Pure Premium Adjustment refunds in any Coverage
Period will not in the aggregate exceed 50 percent of the
31 Pure Premium paid and Pure Premium Adjustment assessments
scheduled to be paid in such Coverage Period; for such
33 purpose the Pure Premiu.:n of a Participant which has
withdrawn pursuant to Section 6.2 hereof or has been
35 expelled pursuant to Section 6.3 hereof shall be deemed to
be the Pure Premium last paid by such Participant; and
37
(vi) Pure Premium Adjustment refunds with respect to
39 any Coverage Period shall not be made until after the
second Coverage Period following -such Coverage Period.
41
Any conflict between this description and Schedule B
43 hereto shall be resolved by following the formula set forth
in Schedule B.
45
(c) Time of Pa .ent. The authority shall give prompt
47 written notice to the Trustee and each Participant of the
determination of Pure Premium Adjustments. Pure Premium
49 Adjustments shall be paid or refunded no later than the
August 1 next following their date cf determination. Pure
26
2658002/2
r
I Premium Adjustments shall be deposited with, or requisitioned
by, the Authority and the Authority agrees to deposit such
3 amounts into or pay them from the Claims Payment Fund, as the
case may be.
5
(d) Low Reserves Mode. Notwithstanding the foregoing, if
7 on the date of determination of Pure Premium Adjustments the
Low Reserves Mode is in effect, (1) the Pure Premium
9 Adjustments will be determined according to Schedule B hereto
but without regard to the provisions of Schedule B hereto
11 providing for assessment- of Risk Premium Adjustments over five
year periods and (2) any amounts of Pure Premium Adjustments
13 which would otherwise be refunded to Participants shall be
retained by the Authority in the Claims Payment Fund and no
15 refund of such &;counts shall be made.
17 (e) Obligations After Withdrawal of Expulsion. The
obligation of Participants to pay Pure Premium Adjustments
19 shall in no event be discharged by prepayment of Basic
Premiums. In the event of expulsion or withdrawal of a
21 Participant from Coverage, the obligation to pay Pure Premium
Adjustments of such Participant with respect to Coverage
23 Periods prior to expulsion or withdrawal shall not be
discharged and such Pure Premii= Adjustments shall be
25 determined as if Low Reserves Mode were in effect; provided
that such a Participant shall be deemed to have paid, and shall
27 not be obligated to pay, as Pure Premium Adjustments an amount
equal to the principal component of Basic Premium prepaid as
29 Termination Premium from a source other than such Participant's
Allocable share of Undesignated Reserves.
31
SECTION 4.6 Special Pure Premium Adjustments.
33 Notwithstanding Section 4.5 hereof
35 (a) Special Pure Premium Adjustments may be assessed
against certain Participants whose Pure Premium is capped as
37 set forth in Section 4.4 hereof in the amounts and with respect
to the Coverage Periods as set forth in or determined in
39 accordance with Exhibit D hereto;
41 (b) Special. Pure Premium Adjustments with respect to any
Coverage Period will first be determined prior to February 1 of
43 such Coverage Period, commencing February 1, 1989, and shall be
paid no later than the following August 1, commencing August 1,
45 1989; the Maximum Special Pure Premium Adjustment (determined
in accordance with Exhibit D hereto) amount with respect to any
47 Coverage Period (expressed as a rate per $1,000 of payroll)
will be determined prior to the February 1 preceding such
49 Coverage Period;
2658002/2
27
V
I (c) Special Pure Premium Adjustments assessed in any
Coverage Period shall be assessed before any Participant is
3 assessed in such Coverage Period for Pure Premium Adjustments;
5 (d) the total Special Pure Premium Adjustment with respect
to any Coverage Period shall be the difference between-M the
7 sum of Case Reserves required to be established with respect to
such Coverage Period and Settlements paid with respect to such
9 Coverage Period and (ii) the sum of Pure Premium and Special
Pure Premium Adjustments previously paid with respect to such
11 Coverage Pe_iod:
13 (e) if more than one Participant is subject to Special
Pure Premium Adjustments with respect to any Coverage Period,
15 the Special Pure Premium Adjustment with respect to any
Participant with respect to such Coveraqe Period shall be a
17 portion of the total Special Pure Premium Adjustment with
respect to such Coverage Period determined according to the
19 proportion of the total Special Pure Premium Adjustment to
which such Participant is subject with respect to such Coverage
21 Period as cc:apared to the total Special Pure Premium Adjustment
to which all Participants are subject with respect to such
23 Coverage Period;
25 (f) refunds of Special Pure Premium Adjustment assessments
with respect to a Coverage Period shall be made only after all
27 Pure Premium Adjustments with respect to such Coverage Period
which are scheduled to be paid have been paid in full; and
29
(g) for all other purposes under this Agreement, Special
31 Pure Premium adjustments shall be deemed to be Pure Premium
Adjustments.
33
SECTION 4.7 Participants Making a Cash Deposit into the
35 Claims Payment Fund. As a condition to eligibility to purchase
Coverage hereunder, each of the Participants listed in
37 Exhibit E hereto shall be required to make a cash deposit into
the Claims Payment Fund in the respective amount shown in
39 Exhibit E on or prior to the Closing Date. Notwithstanding any
provision herein to the contrary:
41
(a) no such Participant shall be'obligated to pay
43 Basic Premium, or Supplemental Basic Premium; provided that
each such Participant shall be obligated to pay Pure
45 Premium, administrative Premium and Pure Premium
Adjustments in the same manner as other Participants in
47 order to purchase Coverage; and
49 (b) such cash deposit shall be deemed to be a
prepay.:.ent of Basic Premium and shall be deemed to be Bond
51 proceeds.
28
2658002/2
1 SECTION 4.8 Credits for Withheld Refunds. Amounts that
would be paid to Participants as Pure Premium Adjustment
3 refunds, but for the limitation on such refunds to no more than
fifty percent (50%) of the Pure Premium paid in a Coverage
5 Period, may be credited against the amounts to become due in
the succeeding Coverage Period as Pure Premium Adjustment and
7 Pure Premium, in that order, until fully allocated. No such
credit may be made against Basic Premium, Supplemental Basic
9 Premium or Administrative Premium.
11
ARTICLE V
13
RESERVES RELEASED FROM THE
15 PLEDGE OF THE INDENTURE
17 SECTION 5.1 Receipt of Reserves Upon Discharge of the
Trust Indenture. All funds transferred by the Trustee to the
19 Authority upon discharge of the Indenture pursuant to
Section 3.04 of the Indenture will be held by the Authority as
21 a claims payment fund, to be applied to the payment of
Settlements of Claims within the scope of Coverage prior to the
23 termination of the Indenture, pursuant to the terms of this
Agreement. Upon termination of all obligations to pay Pure
25 Premium Adjustment and termination of this Agreement, the
Authority will distribute
27
(a) all Pure Premium Adjustment refunds to the
29 Participants,
31 (b) all Undesignated Reserves held by it, up to an
amount equal to deposits to the Claims Payment Fund from
33 Bond proceeds or cash deposits trade by new Participants in
lieu of Bond proceeds, according to the Allocable
35 Proportion, and
37 (c) the Allocable Share, as defined in Section 5.2
hereof, of each Participant which withdrew from or was
39 expelled from Coverage which has not been distributed to
such Participant pursuant to Section 5.2 hereof.
41
Allocable Proportion for such purpose shall be
43 proportionally adjusted to compensate nondefaulting
Participants in the event that amounts in the Claims Payment
45 Fund or Debt Service Reserve Fund have been applied to pay the
Basic Premium of any other defaulting Participant pursuant to
47 Sections 3.02 or 6.04 of the Indenture to the extent such
defaulting Participant has not ultimately repaid such amount.
49
29
2658002/2
1
3
5
7
9
11
13
1M
17
19
21
23
25
27
29
31
33
35
37
39
SECTION 5.2 Receipt of a Participant's Allocable Share
Upon Withdrawal or Expulsion. In connection with permitting
withdrawal ^of a Participant from Coverage pursuant to Section
6.2 hereof or expelling a Participant pursuant to Section 6.3
hereof, a portion of Undesignated Reserves shall at such time
be allocated to such Participant in accordance with Allocable
Proportion (as adjusted pursuant to Section 5.1 hereof). In
addition, a portion of the Debt Service Reserve Fund shall be
allocated to such Participant in accordance with Allocable
Proportion (as adjusted pursuant to Section 5.1 hereof). The
sum of such amounts allocated to such Participant shall be
applied first to the payment of Termination Premium pursuant to
Section 6.2 or Section 6.3 hereof. The Authority shall submit
a Requisition pursuant to Section 3.02 of the Indenture for the
amount of such portion in excess of such Termination Premium
and all other obligations due from such Participant under the
terms of this Agreement (its "Allocable Share"). The Authority
will hold the Allocable Share of each such Participant and any
interest thereon in a segregated account for the benefit of
such Participant, subject only to assessment for Pure Premium
Adjustment assessed against such Participant. The Authority
will transfer to such Participant i-s Allocable Share, less
assessments for Pure Premium Adjustment, on the earliest
practicable date when such Participant is no longer subject to
assessment for any obligations under the terms of this
Agreement, i.e. when all Claims within the scope of Coverage
prior to withdrawal or expulsion of such Participant have been
finally determined and/or paid as Settlements.
SECTION 5.3 Receipt of a
Service Reserve Fund Upon Pre
security or any prepayment by
Sections 11.1 or 11.3 of this
receive its share of amounts o
Reserve Fund, determined using
5.1(b)(i) above.
Participant's Share of Debt
pavmen:. Upon any deposit of
any Participant pursuant to
Agreement, such Participant shall
n deposit in the Debt Service
the ratio set forth in Section
ARTICLE VI
41 ADMISSION TO, WITHDRAWAL FROM AND EXPULSION FROM
THE POOLED SELF-INSURILNCE PROGRAM
43
SECTION 6.1 Conditions to Providing Coverage to a New
45 Participant. Commencing July 1, 1989, the Authority may
provide Coverage to a new Participant which is not currently a
47 Participant under this Agreement, subject to the following
conditions:
49
30
2658002/2
1 (a) such new Participant shall be a municipal
corporation in the State, or a joint powers authority
3 comprised of such municipal corporations, and a member of
the Authority;
5
(b) not later than the January 1 next preceding the
7 first Coverage Period for which the Authority provides
Coverage to such Participant, such new Participant shall
9 have submitted a completed application for achnission to the
Authority;
11
(c) not later than the February 15 next preceding the
13 first Coverace Period for which the Authority provides
Coverace to such Participant, such new Participant shall
15 have duly approved an amendment to this Agreement pursuant
to which it, shall become subject to all of the terms of
17 this Agreement as a Participant;
19 (d) Coverage of such new Participant shall be
effective on the first day of the Coverage Period next
21 succeeding the date of executior, of the amendments referred
to in paragraph (c) above;
23
(e) not later than the March 1 next preceding the
25 first Coverage Period for which the Participant provides
Coverage to such Participant, the Authority's Governing
27 Board shall have approved admission of such Participant;
29 (f) the Authority's Governing Board by at least
two-thirds' vote shall have consented to the amendment to
31 the Indenture and this Agreement permitting such new
Participant to become a Participant; provided that, prior
33 to July 1, 1991, such consent must be unanimous;
35 (g) the Authority and the Trustee shall have received
a report of an independent financial consultant that
37 providing such Coverage to such new Participant will not
adversely affect the credit or financial position of the
39 pooled self-insurance program due to the financial position
or credit standing of such new Participant;
41
(h) the Authority and the Trustee shall have received
43 an opinion of Bond Counsel that the amendments referred to
in paragraph (c) above are valid and binding against all of
45 the parties thereto and will not adversely affect the
tax-exempt status of interest paid on the Bonds;
47
M the Authority and the Trustee shall have received
49 a cert4ficate from an actuary that such admission of such
new Participant will not adversely affect the actuarial
51 soundness of the pooled self-insurance program; and
31
2658002/2
V
I (j) the Authority and the Trustee shall have received
an opinion of the insurance consultant --broker of record to
3 the Authority and the underwriting committee of the
Authority to the effect that providing Coverage to such new
5 Participant will not constitute a hazardous or unacceptable
loss exposure to the Authority.
7
The amendments to this Agreement and the Indenture
9 permitting such a new Participant to become a Participant shall
not reduce or diminish the Basic Premium or Supplemental Basic
11 Premium obligations of the existing Participants. Any new
Participant will be obligated to pay a mutually agreeable
13 portion of the total Ad:-ainistrative Premium and Pure Premium
payable on each Basic Premium Payment Date and will be assessed
15 Pure Premium Adjustments as provided in this Agreement, as
amended. :any such new Participant may be obligated to pay
17 amounts equivalent to Basic Premium or Supplemental Basic
Premium, or may be assessed an a=aal surcharge or fee or be
19 required to make a deposit into the Claims Payment Fund by the
Authority to participate in the self-insurance program. The
21 amen&,e._t to this Agreement may set forth a method by which the
new Participant shall be deemed to have paid Basic Premium for
23 purposes of determining amounts to be allocated or distributed
to it pursuant to Article V hereof.
25
Subject to the provisions of the Indenture, the Authority
27 may issue additional insurance program bonds on behalf of a new
Participant or Participants to finance a required deposit to
29 the Claims Payment Fund by such a new Participant or
Participants. To the extent permitted in the Indenture, such
31 additional insurance program bonds could be secured by Premium
paid by such new Participant or Participants and by amounts in
33 the Claims Payment Fund deemed to be derived from such Premium
payments and from the proceeds of such additional insurance
35 program bonds, but could not be secured by Premium paid by the
initial Participants under this Agreement or by amounts in the
37 Claims Payment Fund deemed to be derived from Premium payments
of the initial Participants or from the proceeds of the Bonds
39 issued on behalf of the initial Participants. notwithstanding
any provision of this Agreement to the contrary, this Agreement
41 may be amended to accomplish and reflect the issuance of such
additional insurance program bonds by -the Authority. Such
43 amendme::ts may include, but shall not be limited to, amendment
to references in this Agreement to the Indenture, the Bonds and
45 funds created under the Indenture to include, or refer to, as
appropriate, the indenture pursuant to which the additional
47 program bonds are issued, the additional program bonds and
funds created under such indenture.
49
32
2658002/2
1 SECTION 6.2 Conditions to Permitting Withdrawal of a
Participant from Coverage. Commencing July 1, 1991, the
3 Authority shall permit a Participant to withdraw from Coverage
under this Agreement, provided that the following are satisfied:
5
(a) such Participant shall not be in default of any
7 of its obligations to pay Premium hereunder;
9 (b) not later than the April 1 next preceding the
date which is two years prior to the effective date of such
11 withdrawal, such Participant shall have provided written
notice to the Authority of its intent to withdraw; provided
13 that, in the event that the Governing Board of the
Authority or the Participants, by less than unanimous
15 consent, agree to a revision a! this Agreement which
materially alters the rights and obligations of the
17 Participants under the terms of this Agreement, including
admission of a new Participant or revision of the
19 methodology for determining Pure Premium Rates, a
Participant which did not consent to such amendment shall
21 be entitled to withdraw from Coverage by providing written
notice to the Authority of its intent to withdraw not later
23 than the April 1 next preceding the effective date of such
withdrawal, commencing July 1, 1991;
25
(c) such Participant shall have paid (or there shall
2'3 have been applied on its behalf certain moneys as described
in Section 5.2 hereof) the full amount of Termination
29 Premium pursuant to Section 11.4(a) hereof and all fees and
expenses incurred by the Authority as a result of complying
31 with the procedures for withdrawal required herein to the
Authority;
33
(d) such withdrawal from Coverage shall be effective
35 on the first day of a Coverage Period; and
37 (e) such withdrawal shall not result in the number of
Participants becoming fewer than five; provided that, in
39 the event that deposit of security for Basic Premium or
optional prepayment by all Participants is provided for
41 pursuant to Section 11.2 hereof, a Participant may withdraw
regardless of the remaining number of Participants.
43
In no event shall withdrawal from Coverage release a
45 Participant from its obligation to pay damages resulting from
default under the terms of this Agreement which is not remedied
47 by payment of Termination Premium or from its obligation to pay
Pure Premium Adjustments with respect to Claims within the
49 scope of Coverage prior to such withdrawal. The Authority
shall continue to pay Settlements of Claims relating to the
33
2658002/2
V
V
I withdrawn Participant within the scope of Coverage prior to
withdrawal as provided herein and in the Indenture, unless the
3 Participant defaults in the payment of its continuing
obligations described in the preceding sentence. Notice to
5 withdraw shall be revocable by the Participant only with the
consent of the Authority.
7
SECTION 6.3 Conditions to Permitting Expulsion of a_
9 Participant from Coverage. The Authority may expel a
Participant from Coverage subject to the following conditions:
11
(a) such Participant shall be in default under this
13 Agreement;
15 (b) not later than sixty (60) days next preceding the
effective date of such expulsion, the Authority's Governing
17 Board, by at least two-thirds vote, shall have approved
such expulsion by written notice filed with the Trustee and
19 written notice of such action shall have been given to the
Participant to be expelled;
21
(c) an amount equal to Termination Premium for such
23 Participant shall have been deposited in a special account
by the Trustee at the direction of the Authority, as
25 provided in Section 5.2 hereof from Undesignated Reserves
in the Claims Payment Fund, the Debt Service Reserve Fund
27 or from voluntary premium payments by Participants; and
29 (d) such expulsion shall be effective sixty (60) days
after written notice shall have been given to the
31 Participant to be expelled; provided, however, that only
ten (10) days' written notice need be given to any
33 Participant in payment default.
35 In no event shall expulsion from Coverage release a
Participant of its obligation to pay damages resulting from
37 default under the terms of this Agreement which is not remedied
by payment of Termination Premium or from its obligation to pay
39 Pure Premium Adjustments with respect to Claims within the
scope of Coverage prior to such expulsion.
41
43 ARTICLE VII
45 ABATEMENT
47 SECTION 7.1 Abatement of Participation Premium in the
Event of Failure to Pay Settlements. In the event that the
49 Authority fails, and such failure continues for a period of
sixty (60) days, to pay a Settlement of a Participant pursuant
34
2658002/2
V
1 to the terms of this Agreement, other than by reason of good
faith dispute as to the scope of Coverage, the obligations of
3 all Participants to pay Participation Premium and Pure Premium
Adjustment hereunder shall automatically be abated in full.
5 The obligation of a Participant to pay Participation Premium
shall otherwise be discharged only as provided in Section 4.2.
7 This provision shall not be construed to bar any Participant
from making voluntary payments of any amounts of any premium
9 following an event of abatement. Oa the occurrence of any
event causing abatement, all moneys on hand (i) in the Debt
11 Service Reserve Fund, the Redemption Fund and the Prepayment
Fund held by the Trustee shall be available for use by the
13 Trustee to make payments of principal of and interest on the
Bonds, (ii) in the Principal and Interest Fund held by the
15 Trustee, to the extent of the proportional amount represented
by the portion of the Coverage Period which had occurred prior
17 to the event causing abatement, shall be used as in (i) hereof,
and amounts in excess of such amour- shall be transferred to
19 the Claims Payment Fund and shall be available to pay
Settlements.
21
23 ARTICLE VIII
25 INDEMNIFICATION A!ND RELEASE OF
AUTHORITY, TRUSTEE AND PARTICIPANTS; DISCLAIMER
27
SECTION 8.1 Release and Indemnification Covenants. Each
29 Participant shall and hereby agrees to indemnify and save the
Authority, the Trustee and all other Participants and their
31 respective officers harmless from and against all claims,
losses and damages, including legal fees and expenses, arising
33 out of (i) such Participant's breach or default in the
performance of any of its obligations under this Agreement or
35 (ii) such Participant's act or negligence or that of any of its
agents, contractors, servants, employees or licensees with
37 respect to the Coverage, but not including Claims. No
indemnification is made under this Section or elsewhere in this
39 Agreement for claims, losses or damages, including legal fees
and expenses arising out of the willful misconduct, negligence,
41 or breach of duty under this Agreement by the Authority,
Trustee, or any other Participant, cr•theit respective
43 officers, agents, employees, successors or assigns.
45 SECTION 8.2 Disclaimer. THE AUTHORITY AND THE TRUSTEE
MAKE NO WARMITTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED,
47 AS TO THE ADEQUACY OF THE COVERAGE FOR THE NEEDS OF THE
PARTICIPANTS,
49
35
2658002/2
J � ,
ARTICLE IX
3 ASSIGNMENT AND A.'"SENDMENT
5 SECTION 9.1 Assignment by the Authority. Certain of the
Authority's rights under this Agreement, including the right to
7 receive and enforce payment of Premium (other than
Administrative Premium) to be paid by each Participant under
9 this Agreement, have been assigned to the Trustee, subject to
certain exceptions, pursuant to the Indenture. Except as
11 provided herein and in the Indenture, the Authority will not
assign this Agreement, its right to receive Basic Premium from
13 any Participant, or its duties and obligations hereunder to any
person, firm or corporation so as to impair or violate the
15 representations, covenants and warranties contained in Section
2.2; provided, however, that nothing in this Section shall
17 limit the right of the Authority to purchase commercial
insurance or reinsurance on behalf of the Participants pursuant
19 to Section 3.5 hereof. The Trustee shall be considered a third
party beneficiary under this Agreement in regard to the
21 enforcement of the Trustee's rights hereunder.
23 SECTION 9.2 No Assignment by the Participants. This
Agreement may not be assigned by any Participant."
25
SECTION 9.3 Amendment. Except as provided below, this
27 Agreement may only be amended by a written instrument duly
authorized and executed by the Authority and all of the
29 Participants in accordance with Article X of the Indenture.
This Agreement, including the Exhibits and Schedules hereto,
31 may be amended, with the consent of two-thirds of the
Participants and two-thirds of the Governing Board of the
33 Authority without notice to or the consent of any of the Owners
of the Bonds and without complying with Article X of the
35 Indenture, in connection with (1) any provision of this
Agreement after the discharge of the Indenture, (2) any change
37 required or permitted to be made pursuant to Article VI hereof
upon the admission, withdrawal or expulsion of a Participant,
39 except as otherwise provided in Article VI or (3) any provision
of this Agreement relating to:
41
(a) the methodology and fcrmulae'for determination of
43 Total Pure Premium, Pure Premium, Pure Premium Rates,
Administrative Premium and Pure Premium Adjustments payable
45 by or to each Participant, including any changes to
Schedule A; provided that, prior to the Coverage Period
47 commencing July 1, 1991, any such amendment must be
approved by unanimous vote of the Participants; and further
49 provided that no such amendment shall reduce the level for
the establishment of Total Pure Premium or Pure Premium
51 Adjustments to less than that initially set forth herein;
36
2658002/2
I (b) Exhibit F and the scope and extent of Coverage as
provided in this Agreement and Exhibit G hereto; provided
3 that, prior to the Coverage Period cotmr.encing July 1, 1991,
any amendment which materially increases the types of
5 exposures included in Coverage must be approved by
unanimous vote of the Participants;
7
(c) a Participant's Allocable Share as provided in
9 Section 5.2 hereof; and
11 (d) commercial insurance pursuant to Section 3.5
hereof.
13
In addition, in the event Bonds are refunded pursuant to
15 Section 2.13 of the Indenture so that aggregate principal and
interest due on the refunding bonds on each Payment Date is
17 Tess than or equal to aggregate principal and interest on such
Bonds and final maturity of the Bonds is not extended, this
19 Agreement may be amended by majority vote of the Governing Body
to correspondingly and proportionately reduce Basic Premium
21 payments of Participants without notice to or consent of any of
the owners of the Bonds and without complying with Article X of
23 the Indenture.
25 All amendments hereto other than amendments to be made
following the discharge of the Indenture and amendments
27 authorized by all of the Participants shall be effective only
as of the beginning of a Coverage Period and any such amendment
29 shall be further conditioned on the giving of notice by the
Authority of such proposed amendment to all non -consenting
31 Participants not later than the May 1 preceding the effective
date of such amendment. All amendments hereto other than
33 amendments to be made following the discharge of the Indenture
shall be further conditioned on the receipt by the Authority
35 and the Trustee of (i)-an opinion of Bond Counsel to the effect
that such amendment does not affect the validity or
37 enforceability of this Agreement and does not adversely -affect
the tax-exempt status of interest on the Bonds, and (ii) in the
39 case of any amendment to the methodology and formulae for
determination of Total Pure Premium, Pure Premium, Pure Premium
41 Rates or Pure Premium Adjustments, or any amendment affecting
the Coverage or any amendment to Sections 2.1(e), 2.2(g), 3.4,
43 3.5, 3.6 or Article VI hereof a certificate of an Actuary to
the effect that such amendment does not adversely affect the
45 actuarial soundness of the pooled self-insurance program. All
costs and expenses incurred in connection with any amendment to
47 this Agreement shall be borne pro rata by the Participants.
49 Notwithstanding the foregoing, in the event that the number
of Participants is five or less and the amounts in the Claims
37
2658002/2
1 Payment Fund and the Debt Service Reserve Fund are insufficient
to provide for deposit of security for Basic Premium or
3 optional prepayment of all Participants pursuant to
Section 11.2 hereof, this Agreement may be amended only with
5 the consent of all Participants.
7
ARTICLE X
9
EVENTS OF DEFAULT AND PMIED I ES
11
SECTION 10.1 Events of Default. The following shall be
13 "events of default" under this Agreement and the terms "events
of default" and "default" shall mean, whenever they are used in
15 this Agreement with respect to a Participant, any one or more
of the following events:
17
(i) failure by such Participant to pay any Basic
19 Premium or Supplemental Basic Premium required to be paid
hereunder on the Basic Premium Payment Date:
21
(ii) failure by such Participant to observe and
23 perform any covenant, condition_ or agreement on its part to
be observed or performed herein_ or otherwise with respect
25 hereto, other than as referred to in clause M of this
Section, for a period of thirty (30) days after written
27 notice specifying such failure and requesting that it be
remedied has been given to such Participant by the
29 Authority, the Trustee or the Owners of not less than
twenty-five percent (25%) in aggregate principal amount of
31 Bonds Outstanding; provided, however, if the failure stated
in the notice cannot be corrected within the applicable
33 period, the Authority, the Trustee or such Owners, as the
case may be, shall not unreasonably withhold their consent
35 to an extension of such time if corrective action is
instituted by the Participant within the applicable period
37 and diligently pursued until the default is corrected; or
39 (iii) the filing by such Participant of a case in
bankruptcy, or the subjection of -any right or interest of
41 such Participant under this Agreement to any execution,
garnishment or attachment, or adjudication of such
43 Participant as a bankrupt, or assignment by such
Participant for the benefit of creditors, or the entry by
45 such Participant into an agreement of composition with
creditors, or the approval by a court of competent
47 jurisdiction of a petition applicable to the Participant in
any proceedings instituted under the provisions of the
49 federal bankruptcy code, as amended, or under any similar
act which may hereafter be enacted.
51
38
2658002/2
1 Notwithstanding the foregoing, failure by a Participant to
comply with the Underwriting and Claims Administration
3 Standards (including the Liability Claims Quality Control
Guidelines) referred to in Exhibit G shall be an event of
5 default only after following the procedures described therein.
7 SECTION 10.2 Remedies on Default. Whenever any event of
default referred to in Section 10.1 hereof shall have happened
9 and be continuing, it shall be lawful for the Authority to
exercise any and all remedies available pursuant to law or
11 granted pursuant to this Agreement. Upon the occurrence of any
event of default with respect to the obligation to pay
13 Premiums, the Authority may and, upon an Event of Default
described in Section 10.1(i) or upon the written direction of
15 Owners of a majority in aggregate principal amount of Bonds
then outstanding, shall cancel all Coverage rights of the
17 defaulting Participant for the portion of the then -current
Coverage Period commencing with the event of default and ending
19 with its cure. Despite the cancellation of Coverage of a
defaulting Participant for a given Coverage Period, the
21 Participant nonetheless agrees to pay to the Authority all
costs, losses and damages howsoever arising or occurring as a
23 result of such default and cancellation. No such cancellation
shall be or become effective by operation of law or otherwise,
25 unless and until the Authority shall have given at least sixty
(60) days, or in the case of an Event of Default described in
27 Section 10.10), at least ten (10) days' written notice of such
cancellation to the Participant; no such cancellation shall be
29 effected by operation of law or acts of the parties hereto,
except in the manner herein expressly provided; and no such
31 cancellation shall terminate the obligation of the cancelled
Participant to pay Pure Premium Adjustments relating to
33 Coverage Periods prior to such cancellation or to pay Premium
for subsequent Coverage Periods for which Coverage is made
35 available to such defaulting Participant; provided, however,
that notwithstanding anything herein or in the Indenture to the
37 contrary, there shall be no right under any circumstances to
accelerate the Basic Premium or otherwise declare any Basic
39 Premium not then in default to be immediately due and payable.
41 In the event that the Authority elects to expel any
defaulting Participant, subject to the conditions described and
43 in the manner provided in Section 6.3 hereof, the Participant
nevertheless agrees to pay to the Authority all costs, losses
45 or damages howsoever arising or occurring as a result of such
default. No such expulsion shall be or become effective by
47 operation of law or otherwise, unless and until the Authority
shall have given at least sixty (60) days' written notice, or
49 in the case of an Event of Default described in Section
10.1(i), at least ten (10) days' written notice of such
39
2658002/2
I expulsion to the Participant; no such expulsion shall be
effected either by operation of law or acts of the parties
3 hereto, except only in the manner herein expressly provided;
and no such expulsion shall terminate the obligation of the
5 expelled Participant to pay Pure Premium Adjustment relating to
Coverage Periods prior to such expulsion.
7
SECTION 10.3 No Remedy Exclusive. No remedy conferred
9 herein upon or reserved to the Authority is intended to be
exclusive and every such remedy shall be cumulative and shall
11 be in addition to every other remedy given under this agreement
or now or hereafter existing at law or in equity, including,
13 but not limited to the right of any Owner by mandamus or other
suit or proceeding at law or in equity to enforce his rights
15 against the Participant and to compel the Participant to
perform and carry out its duties under this Agreement, subject
17 to Section 13.08 of the Indenture. No delay or omission to
exercise any right or power accruing upon any default shall
19 impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised
21 from time to time and as often as may be deemed expedient. in
order to entitle the Authority to exercise any remedy reserved
23 to it in this Article it shall not be necessary to give any
notice, other thar. such notice as may be required in this
25 Article or by law.
27 SECTION 10.4 Agreement to Pay_ Attorneys' Fees and
Expenses. In the event any party to this Agreement should
29 default under any of the provisions hereof and the
nondefaulting parties should employ attorneys or incur other
31 expenses for the collection of moneys or the enforcement of
performance or observance of any obligation or agreement on the
33 part of the defaulting party contained herein, the defaulting
party agrees that it will on demand therefor pay to the
35 nondefaulting parties the reasonable fees of such attorneys and
such other expenses so incurred by the nondefaulting parties
37 awarded to the nondefaulting parties by a court of competent
jurisdiction.
39
SECTION 10.5 No Additional Waiver Implied by one Waiver.
41 In the event any agreement contained in this Agreement should
be breached by any party and thereafter waived by the other
43 parties, such waiver shall be limited to the particular breach
so waived and shall not be a waiver of any other breach
45 hereunder.
47 SECTION 10.6 Trustee and Owners to Exercise Richts.
Certain of the rights and remedies given to the Authority under
49 this Article X have been assigned by the Authority to the
40
2658002/2
W
1 Trustee under the Indenture. Such rights and remedies shall be
exercised by the Trustee and the Owners as provided in the
3 Indenture.
5
ARTICLE XI
7
SECURITY FOR OR PREPAYMENT OF BASIC PREMIUM;
9 TERMINATION PREMIUM
11 SECTION 11.1 Deposit of Security for Basic Premium by a
Particii2ant. Notwithstanding any other provision of this
13 Agreement, any Participant may on any date secure the payment
of all of its unpaid Basic Premium by an irrevocable deposit by
15 it with the Trustee of (i) an amount of cash which, together
with amounts on deposit in such Participant's Account,in the
17 Principal and Interest Fund which are not required to satisfy
the Rebate Requirement (as defined in Exhibit C to the
19 Indenture), is sufficient to pay all its unpaid Basic Premium
in accordance with the Basic Premium payment schedule set forth
21 in Exhibit A hereto, or by prepayment thereof pursuant to
Section 11.3 hereof, as the Participant shall instruct at the
23 time of said deposit, or (ii) Federal Securities together with
cash, if required, in such amount as will, in the opinion of an
25 independent certified public accountant, together with interest
to accrue thereon, and money then on deposit in such
27 Participant's Account of the Principal and Interest Fund
together with interest thereon but net of any amounts which may
29 be required to satisfy the Rebate Requirement, be fully
sufficient to pay all unpaid Basic Premium on their respective
31 Basic Premium Payment Dates in accordance with Schedule A or by
prepayment thereof pursuant to Section 11.3 hereof, as the
33 Participant shall instruct at the time of said deposit. Any
funds or Federal Securities so deposited shall be deposited by
35 the Trustee in such Participant's account of the Prepayment
Fund pursuant to the Indenture.
37
In the event of a deposit pursuant to this Section, all
39 Basic Premium obligations of such Participant under this
Agreement, and all security provided by this Agreement for said
41 obligations, shall cease and terminate, excepting only the
obligation of such Participant to make, or'cause to be made,
43 payments of such Participant's Basic Premium from the deposit
made by the Participant pursuant to this Section. Any such
45 deposit shall be deemed to be and shall constitute a special
fund for the payment of such Participant's Basic Premium in,
47 accordance with the provisions of this Agreement.
49 Notwithstanding the foregoing, in the event the Participant
deposits cash or Federal Securities sufficient to pay all its
41
2658002/2
1 unpaid Basic Premium to and including a specified redemption
date pursuant to Section 11.3 hereof, such deposit will not
3 secure the payment of all of such Participant's Basic Premium
until proper notice of redemption of Bonds (corresponding in
5 total amount to the Basic Premium being prepaid) shall have
been given in accordance with Article V of the Indenture,
7 except as provided below. In the event the Bonds are not by
their terms subject to redemption within the next succeeding
9 sixty (60) days, such deposit will not secure the payment of
all such Participant's Basic Premium until the Participant
11 shall have given the Trustee, in form satisfactory to the
Trustee, irrevocable instructions to give, as soon as
13 practicable, in the manner prescribed by Article V of the
Indenture, a notice to the owners of such Bonds that the
15 deposit described above has been made with the Trustee and that
a corresponding principal amount of Bonds are deemed to have
17 been paid in accordance with this Article and stating such
maturity or redemption date upon which moneys are to be
19 available for the payment of the principal of said Bonds or
redemption price, if applicable, of said Bonds.
21
In making any such deposit, the Participants shall comply
23 with all restrictions and provisions contained in the
No -Arbitrage Certificate signed by the Authority relating to
25 the Bonds.
27 SECTION 11.2 Deposit of Security for Basic Premium or
Optional Prepayment by All Participants. The Participants may
29 as a group, by at least two-thirds approval of all members of
the Governing Board of the Authority, secure the payment of all
31 remaining unpaid Basic Premium of all Participants in the
manner set forth in Section 11.1 hereof. In the event of a
33 deposit pursuant to this Section, all Basic Premium obligations
of the Participants under this Agreement, and all security
35 provided by this Agreement for said obligations, shall cease
and terminate, excepting only the cbligation of the
37 Participants to make, or cause to be made, payments of Basic
Premium from the deposit made by the Participants pursuant to
39 this Section. Said deposit shall be deemed to be and shall
constitute a special fund for the payment of Basic Premium in
41 accordance with the provisions of this Agreement.
43 In making any such deposit, the Participants shall comply
with all restrictions and provisions contained in the
45 No --Arbitrage Certificate signed by the Authority relating to
the Bonds.
47
The Participants may also, by at least two --thirds' vote of
49 the Governing Board of the Authority, exercise as a group the
42
2658002/2
I option to prepay Basic Premium of all Participants pursuant to
Section 11.3 hereof in the manner and upon the terns set forth
3 in such Section.
5 The Participants may use Undesignated Reserves in the
Claims Payment Fund, moneys in the Debt Service Reserve Fund or
7 any other lawfully available moneys to deposit or prepay the
amounts described in this Section.
9
Notwithstanding the foregoing, in the event that the number
11 of Participants is five (5) or less, so that a Participant is
unable to withdraw pursuant to Section 6.3 hereof unless
13 deposit of security for Basic Premium or optional prepayment by
all Participants is provided for pursuant to this Section 11.2,
15 any Participant may cause the Authority to use any amounts in
the Claims Payment Fund and moneys in the Debt Service Reserve
17 Fund to deposit or prepay the amounts described in this Section.
19 Unless the Participants elect otherwise by vote of at least
a majority of the Participant members of the Governing Board of
21 the Authority, the pooled self --insurance program shall
terminate by virtue of such deposit or prepayment, except for
23 the obligations of each Participant to pay Pure Premium
Adjustments, as provided in Section 4.1 hereof.
25
SECTION 11.3 0 tional Redem tion of Bonds. Subject to the
27 terms and conditions of this Section, the Authority hereby
grants an option to each Participant to prepay in whole, the
29 unpaid principal amount of such Participant's Basic Premium, on
the dates specified below. Said option shall be exercised by a
31 Participant by giving written notice to the Trustee of the
exercise of such cption at least forty --five (45) days prior to
33 the date of prepayment. Such option shall be exercised by
depositing with said notice cash in an amount equal to the
35 corresponding outstanding principal of Bonds to be redeemed,
plus accrued interest on the principal amount to be prepaid to
37 the date of redemption, together with any Basic Premium then
due but unpaid, and said cash deposit shall be accompanied by
39 an amount equal to the amount expressed as a percentage of the
principal amount prepaid constituting a prepayment price which
41 is designated in an amendment to this Agreement entered into on
or prior to the date of issuance of the first Series of the
43 Bonds.
45 SECTION 11.4 Termination Premium.
47 (a) A Participant may withdraw from Coverage pursuant
to Section 6.2 hereof or be expelled from Coverage pursuant
49 to Section 6.3 hereof when the full amount of Termination
Premium shall have been deemed to have been paid to the
43
2658002/2
i Authority. The Termination Premium for a Participant shall
be determined by the Authority in an amount equal to the
3 su^i of the following at the time of such expulsion or
withdrawal: (i) the amount that would be required to (1)
5 secure the payment of such Participant's Basic Premium
pursuant to Section 11.1 hereof or (2) prepay such
7 Participant's Basic Premium pursuant to Section 11.3 hereof
on the next date on which such prepayment may be made, as
9 the case ray be, (ii) an amount equal to such Participant's
Allocable Proportion of the amount, if any, by which the
11 amount in the Debt Service Reserve Fund is less than the
Reserve Requirement and (iii) an amount equal to all Pure
13 Premium Adjustments scheduled to be paid by such
Participant. Termination Premium shall be paid from, to
15 the extent available: (x) such Participant's Allocable
Proportion of the Debt Service Reserve Fund, and its
17 Allocable Proportion of Undesignated Reserves in the Claims
Payment Fund not to exceed its Allocable Proportion of
19 deposits made to the Claims Payment Fund from Bond proceeds
or its cash deposit into the Claims Payment Fund in lieu of
21 Bond proceeds hereof and (y) in the event of withdrawal,
from voluntary premium payments by the withdrawing
23 Participant and, in the event of expulsion, from voluntary
premium payments by other Participants. If Undesignated
25 Reserves are less than a withdrawing Participant's
Allocable Proportion of deposits made to the Claims Payment
27 Fund from Bond proceeds or its cash deposit into the Claims
Payment Fund, such withdrawing Participant shall receive a
29 credit to subsequent Pure Premium Adjustments in accordance
with Schedule B hereto.
31
(b) The Authority, at the direction of the Governing
33 Board of the Authority by majority vote, will direct the
Trustee by written instruction to use the components of
35 Termination Premium described in clause (i) of the
preceding paragraph to either (i) make an irrevocable
37 deposit pursuant to Section 11.1 hereof or (ii) redeem a
corresponding principal amount of Bonds then redeemable.
39 The portion of Termination Premium not required for such
deposit or prepayment will be deposited in the Debt Service
41 Reserve Fund or the Claims Payment Fund, as the case may be.
43 SECTION 11.5 Continuing Premium Obligations. In the event
of irrevocable deposit by a Participant pursuant to Section
45 11.1 hereof or prepayment (except in connection with voluntary
withdrawal or expulsion) pursuant to Section 11.3 hereof, such
47 Participant shall remain liable in each Coverage Period to pay
Supplemental Basic Premium, Administrative Premium, Pure
49 Premium and Pure Premium Adjustment. In the event that an
irrevocable deposit or prepayment by all Participants pursuant
44
2658002/2
I to Section 11.2 hereof is made and the Participants elect to
continue the pooled self-insurance program, each Participant
3 shall remain liable in each Coverage Period to pay
Administrative Premium, Pure Premium and Pure Premium
5 Adjustment. In the event of payment of Termination Premium by
or on behalf of a Participant pursuant to Section 11.4 hereof,
7 such Participant shall remain liable to pay Pure Premium
Adjustment assessed with respect to Coverage Periods prior to
9 withdrawal or expulsion, as provided in this Agreement.
li
ARTICLE XII
13
MISCELLM.-MUS
15
SECTION 12.1 Notices. All notices, certificates.or other
17 communications hereunder shall be sufficiently given and shall
be deemed to have been received five business days after
19 deposit in the United States mail in certified form, postage
prepaid, to the Participants, the Authority or the Trustee at
21 the addresses set forth in Exhibit I hereto. The Authority and
the Participants, by notice given hereunder, may designate
23 different addresses to which subsequent notices, certificates
or other communications will be sent.
25
SECTION 12.2 Binding Effect. This Agreement shall inure
27 to the benefit of and shall be binding upon the Authority and
the Participants and their respective successors and assigns.
29
SECTION 12.3 Severability. In the event any provision of
31 this Agreement shall be held invalid or unenforceable by a
court of competent jurisdiction, such holding shall not
33 invalidate or render unenforceable any other provision hereof.
35 SECTION 12.4 Further Assurances and Corrective
Instruments. The Authority and the Participants agree that
37 they will, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such
39 supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or
41 incorrect description of the Coverage hereby provided or
intended so to be or for carrying out the expressed intention
43 of this Agreement.
45 SECTION 12.5 Execution in Counterparts. This Agreement
may be executed in any number of counterparts, each of which
47 shall be an original and all of which shall constitute but one
and the same instrument; provided that for purposes of
49 perfecting the pledge and assignment of certain rights under
this Agreement to the Trustee, the counterpart of this
51 Agreement delivered to the Trustee shall be deemed the original.
45
2658002/2
11
1 SECTION 12.6 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
3 State.
5 IN WITNESS WHEREOF, the Authority has caused this Agreement
to be executed in its name by its duly authorized officers; and
7 the Participants have caused this Agreement to be executed in
their respective names by their respective duly authorized
9 officers, as of the date first above written, and such
Agreement shall be effective from the date of execution shown
11 below.
13
is
17
19
21
23 Approved as to form:
25 1A - . /
27 16.a- r?
6:r�
29
Approved as to form:
31
33
35
37 Approved as to form:
39
41
46
2658002/2
BIG INDEPENDENT CITIES EXCESS
POOL JOINT POWERS AUTHORITY
By
CITY OF HUNTINGTON BEACH
By
CITY OF OXNARD
By
CITY OF POMONA
By
ft
1. SECTION 12.6 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
3 State.
5 IN WITNESS WHEREOF, the Authority has caused this Agreement
to be executed in its name by its duly authorized officers; and
7 the Participants have caused this Agreement to be executed in
their respective names by their respective duly authorized
9 officers, as of the date first above written, and such
Agreement shall be effective from the date of execution shown
11 below.
13
15
17
19
21
23 Approved as to form:
25
27
29
Amonroved ps to rm:
31 ,1 n ..
33 S4V
35 CAY RA-�'' (9/30/88)
37 Approved as to form.
39
41
2658002/2
46
BIG INDEPENDENT CITIES EXCESS
POOL JOINT POWERS AUTHORITY
Ey
CITY OF HUNTINGTON BEACH
C OXNARD
i
By
Mayor 9/30/88
CITY OF OXNARD
M
Mayor (9/30/88)
CITY OF POMONA
By
•
1 SECTION 12.6 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
3 State.
5 IN WITNESS WHEREOF, the Authority has caused this Agreement
to be executed in its name by its duly authorized officers; and
7 the Participants have caused this Agreement to be executed in
their respective names by their respective duly authorized
9 officers, as of the date first above written, and such
Agreement shall be effective from the date of execution shown
11 below.
13 BIG INDEPENDENT CITIES EXCESS
POOL JOINT POWERS AUTHORITY
15
17
By
19
21.
CITY OF HUNTINGTON BEACH
23 Approved as to form:
25
By --
27
29 CITY OF OXNARD
Approved as to form:
31
33 B-
35
CITY OF POMONA
37 Approved as to form: 41
2658002/2
46
i
1 CITY OF SAN BERNARDINO
Approved as to form:
3
5 By
7
• CITY OFOSA ANA
9 Approved as to form:r By�'
2658002/2
47
1
Approved as to form;
3
5
7
9 Approved as to form:
11
47
2658002/2
CITY OF SAN BERNARDINO
2 By
CITY OF SANTA ANA
By.
1 EXHIBIT A
3 SCHEDULE OF BASIC PREMIUM PAYMENTS*
5 Date Interest Principal
(August 1)_ Component Component
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45 '` The obligation to pay Basic Premium will not arise and be
effective until the Closing Date of the first series of Bonds.
47 No series of Bonds will be issued unless, on or prior to the
respective Closing Date, this Exhibit A is amended to insert a
49 schedule of Basic Premium payments.
A-1
I EXHIBIT B
3 ALLOCABLE PROPORTION FOR EACH PARTICIPANT
5
CT_T`f OF HUNTItiGTON BEACH
7 CITY OF OXNrinD
CITY OF POMONA
9 CIT'_' OF S +N BERNARDINO
CITY OF SANTA ANA
11
B-1
L�
I EXHIBIT C
3 INITIAL PARTICIPATION PREMIUM
5
7
9
CITY
OF
HUNTINGTON BEACH
11
CITY
OF
OXNARD
CITY
OF
POMONA
13
CITY
OF
SAN BERNARDINO
CITY
OF
SANTA ANA
15
TOTALS
17
Adminis-
Pure
trative
Premium
Premium
Total
$ 432,180
$ 20,580
$ 452,760
316,050
15,050
331,100
297,570
14,170
311,740
432,180
20,580
452,760
622,020
29,620
651,640
$ $"Q , 0 $2,200,09Q
C-1
v
1 EXHIBIT D
3 SPECIAL PURE PREMIUI4 ADJUSTMENTS
AND ADJUSTMENT PROPORTIONS
5
7 Special Pure Premium Adjustments may be assessed with
respect to the Coverage Periods ending on July 1, 1989, 1990
9 and 1991 to a Participant to the extent that such Participant's
Pure Premium paid in any such Coverage Periods is less than the
11 Pure Premium which would have been paid in such Coverage Period
had the Pure Premium not been capped at $1-.25 million with
13 respect to each of such Coverage Periods as provided in
Schedule A.
15
The corresponding Adjustment Proportion for a given
17 Participant will be equal to the Pure Premium which would have
been paid by such Participant had Pure Premium not been capped
19 at $1.25 million divided by the total Pure Premium which would
have been paid by all Participants had Pure Premium not been
21 capped at $1.25 million.
D- 1
1
1 EXHIBIT E
3
PARTICIPANTS ?MING A CASH DEPOSIT INTO THE CLAIMS PAYMENT FUND
5
7 None
E--1
` { J EXiiIBIT F
MASTER MEMORANDUM OF LIABILITY COVERAGE
FOR THE
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
Throughout this AGREEMENT, words and phrases that appear capitalized have special
meaning. They are defined in Section II — Definitions.
In consideration of payment of the premiums, the Big Independent Cities Excess Pool Joint
Powers Authority. IBICEPI hereinafter known as the Authority agrees with the respective
member CITY of BICEP as follows:
SECTION I — COVERAGES
The Authority will pay those sums on behalf of the CITY for ULTIMATE NET LOSS in excess
of the Retained Limit stated in Item 5 of the Declarations that the CITY becomes legally
obligated to pay as damages by reason of Liability imposed by law or Liability assumed by
contract because of:
A. BODILY INJURY or PROPERTY DAMAGE. and/or
B. PERSONAL INJURY: and/or
C. PUBLIC OFFICIALS ERRORS AND OMISSIONS
as those terms are herein defined and to which this AGREEMENT applies. Included in I
Authority's obligation to pay are DEFENSE COSTS falling within the definition of COVERED
ULTIMATE NET LOSS.
SECTION )I — DEFINITIONS
• A. AGREEMENT — means the Memorandum of Liability Coverage for the Authority.
B. AIRCRAFT — means a vehicle designed for the transport of persons or property
principally in the air.
C. AUTOMOBILE means a land motor vehicle, trailer or semi -trailer.
D. BODILY INJURY — means bodily injury, sickness or disease sustained by a person,
including death resulting from any of these at any time.
E. CITY —means the entity named in the Declarations, including any and all commis.
sions, agencies. districts, Authorities. councils (including the governing councils)
Of similar Entities coming under the CITY's direction or control or far which the
CITY's council members sit as the govetning body.
BICEP 3/9/38 F— 1
F. CLAIM — means a demand against an Insured Ras defined in Section IV hereof) to
recover for losses or damages within or alleged to be within the scope of this
AGREEMENT.
G. COVERED INDIVIDUALS — means persons who are past or -present elected or ap-
pointed officials, employees or volunteers of the CITY whether or not compen-
sated, while acting for or on behalf of the CITY, including while acting on outside
committees, commissions, agencies, districts, authorities, councils, commissions
or boards at the direction of the CITY.
H. COVERED ULTIMATE NET LOSS — means an amount by which ULTIMATE NET
LOSS not covered by other available Insurance or self-insurance exceeds the Re-
tained Limit stated In Item (5). of the Declaration, such amount not in any event
however to exceed the Limit of Liability stated in Item (4) of the Declarations.
1. - DEFENSE -COSTS — means fees and expenses incurred by the Authority or an In-
Sured caused by and relating to the adjumment. Investigation, defense or appeal of
a claim including attorney's tees, court costs and interest on judgements accruing
after entry of judgement all within the scope of coverage afforded by this agree-
ment. DEFENSE COSTS shall not include the office expense of the Authority or
any Insured nor expenses of a claims administrator engaged by any CITY or the
Authority. except CITY DEFENSE COSTS which will be reimbursed on an agreed
flat fee per day of service to CLAIM.
J. INVERSE CONDEMNATION —means a claim by anyone other that an Insured that
an Insured has taken or diminished the value of land through land use restrictions
on such land or use of adjacent land or air space by an Insured, or otherwise.
K. MEMORANDUM PERIOD — means the period stated in Item (3) of the Declara-
tions.
L. NUCLEAR MATERIALS — means source material. special nuclear material, or
byproduct material. Source Material, Special NUCLEAR MATERIAL and Byproduct
Material have the meanings givers to them by the Atomic Energy Act of 1954 cr in
any law amendatory thereto. '
M. OCCURRENCE — means:
1. With respect to BODILY INJURY or PROPERTY DAMAGE: an accident or
event, Including injurious or repeated exposure to substantially the same con-
ditions, which results, during the memorandum period. in BODILY INJURY or
PROPERTY DAMAGE neither expected nor intended from the standpoint of
thelnsured.
2. With respect to PERSONAL INJURY and PUBLIC OFFICIALS ERRORS AND
OMMISSIONS respectively: an offense described in the definitions of those
terms in this section.
N. PERSONAL INJURY —means injury caused by or arising out of one or more of the
following offenses:
1. False arrest, detention or imprisonment, or malicious prosectuion;
2. Wrongful entry or eviction or other invasion of the right of private occupancy;
BICEP 3/9/88 F"2
3. Publication or utterance of material that slanders or libels a person or organiza-
tion cr disparages a person's or crganization's goods. products or services, or
oral or written publication of material that violates a person's right of privacy;
and
a. Discrimination based upon race, religion, nationality, national origin, color,
creed, sex, sexual preference, age or employment;
5. Assault and battery.
0. POLLUTANTS — means any solid, liquid. gaseous, or thermal irritant or contami-
nant, including smoke. vapor. soot. fumes. acids, alkalis, chemicals, and waste.
Waste includes materials to be recycled, reconditioned or reclaimed. The term
POLLUTANTS as used herein is not defined to mean potable water or agricultural
water or water furnished to commercial users or water used for fire suppression.
P. PROPERTY DAMAGE — means:
1. Physical injury to tangible property, including all resulting toss of use to that
property: or
2. Loss of use of tangible property that is not physically injured.
0. PUBLIC OFFICIALS ERRORS AND OMISSIONS — means an offense consisting of
any actual or alleged misstatement or misleading statement or act or omission by
neglect or breach of duty including misfeasance, malfeasance, or nonfeasance by
COVERED INDIVIDUALS individually or collectively in the discharge of their duties
with the CITY. or any matter claimed against them solely by reason of their being
or having been public officials.
R. ULTIMATE NET LOSS —means the sum for which the Insured is liable either by ad-
judication or by compromise after making proper deduction for all recoveries and
salvages, and also includes DEFENSE COSTS.
SECTION III — DEFENSE AND SETTLEMENT
The Authority shall have the fight and duty to participate in the defense of any suit against an
Insured, where such suit is likely to involve a COVERED ULTIMATE NET LOSS even it any
allegations are groundless, false or fraudulent. After the amount of the CITY's Retained Limit
has been exhausted by payment of judgements, settlements and DEFENSE COSTS, the
Authority shall pay any excess within its Limit of Liability. '
The Authority shall at its own expense, have the right to participate in the investigation,
negotiation, settlement or defense of any CLAIM or suit against any Insured when the final,
in the opinion of the Authority, such claim may result in a COVERED ULTIMATE NET LASS.
The Insured shall fully cooperate in all matters pertaining to such claims or proceeding.
No CLAIM shall be settled for an amount in excess of the Insured's Retained Limit without
the prior consent of the Authority.
BICEP 3/9/88 E— 3
LJ
LJ
SECTION IV
RETAINED LIMIT -- THE AUTHORITIES LIMIT OF LIABILITY
The Authorities Liability as the result of any one OCCURRENCE shall be only the ULTIMATE '
NET LOSS in excess of the CITY's Retained Limit as specified in Item 5 of the Declarations:
and then for an amount not exceeding the amount specified in Item (4) of the Declarations.
For the purpose of determining the Authorities Limit of Liability and the CITY's Retained
Limit. all damages arising out of continous or repeated exposure to substantially the same
general conditions shall be considered as arising out of one OCCURRENCE.
SECTION V — COVERAGE FERIOD AND TERRITORY
Each Insured shalt have coverage for all BODILY INJURY, PROPERTY DAMAGE. PUBLIC
OFFICIALS ERRORS AND OMISSIONS and PERSONAL INJURY which occur anywhere in
the world during the MEMORANDUV! PERIOD. -
SECTION VI -- ENTITIES OR PERSONS INSURED
The Insureds covered by this agreement are:
A. The CITY,
B. COVERED INDIVIDUALS,
C. With respect to any AUTOMOBILE usage. Insured does not include:
1. Any Ferson or organization, or any agent or employee thereof, operating an
AUTOMOBILE sales agency, commercial repair shop, commercial service sta.
tion, commercial storage garage or commercial public parking place. with
respect to an OCCURRENCE arising out of the operation thereof. This does not
apply to publicly owned, operated. or publicly owned and leased parking
garages or lots: or • -
A
2. The owner or any lessee, other than the CITY or COVERED INDIVIDUAL, of a
hired AUTOMOBILE or any agent or employee of such owner or lessee.
SECTION VII — EXCLUSIONS
A. This AGREEMENT does not apply to:
I. Any claims arising out of the contamination o the environment by POLLUTANTS
introduced at anytime into or upon land, the atmosphere or any watercourse or
body of water or aquifer. This exclusion applies whether or not the Contamination
is introduced into the environment intentionally or accidentally or gradually or
suddenly and whether or not the insured or any other person or organization is
responsible for the contamination. This exclusion does not apply. however, to
BODILY INJURY OR PROPERTY DAMAGE caused by heat, smoke or fumes from a
hostile fire. As used in this exclusion. a hostile fire means one which becomes un-
controllab'e or breaks out where it was not intended to be.
SIC_P 3/9/88 F-4
Contamination includes any unclean, unsafe or unhealthful condition either actual
or potential, which arises out of the presence in the environment of any POLLU-
TANT, whether permanent or transient.
Environment includes land, bodies of water, underground water or water table or
aquifer, the atmosphere and any other natural feature of the earth, whether or not
altered. developed or cultivated.
2. Any toss, cost or expense arising out of any governmental directions or request
that the CITY test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize POLLUTANTS.
3. Any CLAIM for past salary or wages due because of discrimination or because of
wrongful termination or violation of civil rights of any employee or official of the
CITY;
4. BODILY INJURY to:
a. An employee of the CITY arising out of and in the course of employment by
the CITY: or
b. The spouse. child, parent, brother or sister of that employee as a conse-
quence of actions of the employee arising out of and in the course of his/her
employment by the CITY.
This exclusion applies whether the CITY may be liable as an employer or in any
other capacity, except with respect to Liability of others assumed under contract;
5. Any obligation for which the CITY or any Insurance company as its Insurer may be
held liable under any workers' compensation or disability benefits law or any
similar law;
6. Liability arising out of the ownership or operation of any hospital or airport;
7. BODILY INJURY or PROPERTY DAMAGE arising out of or in connection with the
operation of any hospital, clinic, or established health care facilities owned cr
operated by the CITY due to:
1. The rendering of or failure to render
A. Medical, surgical, dentai. X-ray or nursing service or treatment,
cr the furnishing of food or beverages in connection therewith;
B. Any service or treatment conductive to health, or of a profes-
sional nature or:
C. Any cosmetic or tonsorial service or treatment.
2. The furnishing of or dispensing of drugs or medical, dental, or surgical sup-
plies or appliances.
This exclusion shall not apply. however, to BODILY INJURY or PROPERTY
DAMAGE arising out of the performante of occupational physical examinations,
paramedics services, emergency care, or T.B. testing clinics;
S. Liability arising out of the rupture, bursting, overflow. or release of water from any
dam(s), etc.
9. Fines, punitive damages, or damage multiples such as treble damages awardable
pursuant to statute; of other applicable law.
EICEP 319188 F-5
10. PROPERTY DAMAGE to:
a. Property owned by the Insured; or
b. Property rented to, leased or in the care. custody and control of the Insured
where it has assumed the Liability for damage to or destruction of such prop-
erty, unless the Insured would have been liable in the absence of such
assumption of Liability;
c. Watetcraft exceeding 26 feet in length. in the CITY's care, custody or con-
trol;
d. AIRCRAFT
11. Any Liability arising out of the ownership, operation, use or maintenance of any
AIRCRAFT;
12. Any Liability arising out of the operation of any transit authority, transit system. or
public transportation system owned or operated by the Insured. except a transit
system operating over non -fixed route systems such as dial -a -ride, senior citizen
transportation, or handicapped transportation; and
13. Any Liability arising out of the failure to supply or provide an adequate supply of
gas, water or electricity when such fai'ure is a result of the inadequacy of the In-
sured's facilities to supply or produce sufficient gas, water or electricity to meet
the reasonable demand.
14. Any Liability arising out of, or in connection with the principles of eminent do-
main, condemnation proceedings or INVERSE CONDEMNATION by whatever
name called, and whether or not Liability accrues directly against the Insured by
virtue of any agreement entered into by or on behalf of the Insured.
This exclusion shall not apply to PROPERTY DAMAGE caused by the negligence
or other fault of the Insured even though a legal theory upon which a claimant
seeks recovery is the principle of INVERSE CONDEMNATION.
B. This agreement does not apply under Coverage C (PUBLIC OFFICIALS ERRORS AND
OMISSIONS): • .
1. BODILY INJURY;
2. PROPERTY DAMAGE;
3. PERSONAL INJURY;
4. Benefits payable under any employee benefit plan (whether the plan is negotia-
ted, of voluntarily established by the CITY or mandated by law because of unlaw-
ful discrimination;
5. Refund of taxes, fees or assessments;
BICEP 319I88 F— 6
u
6. Liability of a COVERED INDIVIDUAL (al arising in whole or in part out of a
COVERED INDIVIDUAVS obtaining remuneration or financial gain to which the
COVERED INDIVIDUAL was not legally entitled or (b) arising out of the willfull vio.
lation of any applicable law or other regulation committed by, or with the know-
ledge or consent of any Insured.
7. To any Liability arising out of estimates of probable costs or cost estimates being
exceeded or faulty preparation of bid specifications or plans including architec-
tural Flans;
i
8. Failure to perform, or breach of, a contractual obligation;
1 9. Liability imposed under the Employee Retirement Income Security Act of 1974
(ERISA), as may be amended from time to time.
10. L.iabitity imposed under the Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA I. as may be amended from time to time.
EICEp 319188 F-7
SECTION Vill — CONDITIONS
A. PREMIUM AND AUDIT fs
The premium designated in the Declaration as "Deposit Premium" is a deposit premium
only.
The Authority shall be permitted but not obligated to inspect the Insured's propertyand
operations at any reasonable time. Neither the Insured's rights to make inspections nor
the making thereof nor any report thereon shall constitute an undertaking, on behalf of
or for the benefit of the Insured or others, to determine or warrant that such property or
operations are safe. The Authority may examine the Insured's books and records at any
reasonable time during the MEMORANDUM PERIOD and extensions thereof and within
three years after the final termination of this memorandum, as far as they relate to the
subject matter of this AGREEMENT.
B. -DUTIES IN THE EVENT OF AN OCCURRENCE
CITY's duty in the event of an OCCURRENCE, claim or suit:
1. In the event of an OCCURRENCE reasonably likely to involve a COVERED ULTI-
MATE NET LOSS written notice containing particulars sufficient to identify the
entity and also reasonably obtainable information with respect to the time, place
and circumstances thereof, and the games and addresses of the entity(s) and of
available witnesses shall be given by or for the insured to the Authority or any of
its authorized agents as soon as practicable.
2. If a claim is made or suit brought against the Insured, the Insured shall be obligated
upon demand to forward to the Authority every demand, notice, summons or
other process received by the Insured or the Insured's representative.
3. The Insured shall cooperate with the Authority and upon its request assist in en-
forcing any right of contribution or indemnity against any person or organization
who may be liable to the Insured because of an OCCURRENCE with respect to
which coverage is afforded under this AGREEMENT: and the Insured shall attend
hearings and trials and assist in securing and giving evidence and obtaining the at-
tendance of witnesses. The Insured shall not, except at its own cost, voluntarily
make any payment, assume any obligation or incur any expense which is likely to
result in an ULTIMATE NET LOSS that exceeds the Retained Limit stated in Item
15) of the Declarations. In the event that the amount of ULTIMATE NET LOSS be-
comes certain either through final court judgement of agreement among the In-
sured. the claimant and the Authority shall then pay on behalf of the Insured the
COVERED ULTIMATE NET LOSS.
C. BANKRUPTCY AND INSOLVENCY PROVISION
Bankruptcy or insolvency of the CITY shall not relieve the Authority of any of its obliga-
tions hereunder.
D. OTHER INSURANCE
If collectible insurance or other coverages with any joint powers Authority or other self -
funding mechanism is available to the Insured covering a loss also covered hereunder
(whether on a primary, excess or contingent basis), such contribution shall apply to-
wards the satisfaction of the Insured's Retained Limit. The coverage hereunder shall
contribute with, such other. insurance. provided that this clause does not apply with
respect to excess insurance purchased specifically to be in excess of this AGREEMENT.
BICEP 319/88 F-8
V
E. DURATION OF AN OCCURENCE
An OCCURRENCE with a duration of more than one coverage period shall be treated as
a single OCCURENCE arising during the coverage period when the OCCURRENCE
begins.
F. ENDORSEMENT CONDITIONS
Notice to any agent or knowledge possessed by any agent or by any person shall not ef-
fect a waiver cr change in any part of this AGREEMENT or stop the Authority from
asserting any right under the terms of this memorandum. nor shall the terms of this
AGREEMENT be waived or changed, except by endorsement issued to form a part of
this memorandum.
G. ACTION AGAINST THE AUTHORITY
No actions shall lie against the Authority with respect to the coverages and related pro-
visions defined in this AGREEMENT unless, as a condition precedent thereto. there
shall have been full compliance with all the terms of this AGREEMENT. nor until the
amount of the Insured's obligations to pay shall have been finally determined either by
judgement against the Insured after actual trial or by written agreement of the Insured.
the claimant and the Authority. Any person or organization or the representative there-
of who has secured such judgement or written agreement shall thereafter be entitled to
recovery under this AGREEMENT to the extent of the coverage afforded by this
AGREEMENT.
No person or entity shall have any right under this AGREEMENT to join the Authority as
a party to any action against the Covered Perry to determine the Insured's Liability, nor
shall the Authority be impleaded by the Insured's or its legal representative.
H. SUBROGATION
The Authority shall be subrogated to the extent of any payment hereunder to all the In-
sured's rights of recovery thereof, and the Insured shall do nothing after loss to pre-
judice such right and shall do everything necessary to secure such right. Any amount so
recovered shall be apportioned as follows:
1. The expenses of all such recovery proceedings shall be paid before any reimburse-
ments are made for the highest layer of coverage. If there is no recovery in the pro-
ceedings conducted by the Authority, it shall bear the expense thereof.
2. The highest layer of coverage shall be reimbursed first and if there be sufficient re-
coveries then the next highest layer until all recoveries are used up..
I. ASSIGNMENT OF INTEREST
Assignment of interest under this memorandum shall not bind the Authority unless and
until its consent is endorsed hereon.
J. CROSS LIABILITY
In the event of ULTIMATE NET LOSS to one or more Insureds for which another Insured
is or may be held liable. then this policy sha'1 cover such entity or person against whom
claim is made or may be made, the same as if separate memorandums of coverage had
been issued to each Insured, except that the Limits of Liability for all such Insureds shall
not exceed the Limits of Liability set forth in the memorandum declarations.
EICEP 319188 F — 9
K. CANCELLATION
This AGREEMENT maybe cancelled by the Authority in accordance with Article VI
See -Lion 6.3 of the Liability Risk Coverage Agreement by receipted delivery to the Insured r
CITY at the address shown in this AGREEMENT, written notice stating when not less
a than sixty days thereafter such cancellation shall be' effective; provided that, if the In-
sured fails to discharge when due any of its obligations in connection with the payment
for this AGREEMENT or any installment thereof, extension or credit, this AGREEMENT
may be cancelled by the Authority in accordance with Article VI Section 6.3 of the
Liability Risk Coverage Agreement, by receipted delivery to the Insured CITY at the ad-
dress shown in the AGREEMENT, written notice when not less than ten days theteahet
such cancellation shall be effective.
The time of surrender or the effective date and hour of cancellation stated in the notice
shall become the end of the coverage period.
z
BICEP 319188 F — 10
V
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
PUBLIC ENTITY LIABILITY
DECLARATION
s
CERTIFICATE NO.
This will certifythatthe following MEMBER is covered in accordance with the terms and con-
ditions of the Master Memorandum of Public Entity Liability Coverage by the BIG INDEPEN-
DENT CITIES EXCESS POOL JOINT POWERS AUTHORITY hereinafter called BICEP.
11 MEMBER CITY:
2) MAILING ADDRESS:
3) MEMORANDUM PERIOD: FROM- TO 12.01 A.M. Standard Time
at the address of the Member as stated herein.
41 LIMIT OF LIABILITY:
S LESS MEMBER CITY'S RETAINED LIMIT AS ULTIMATE
NET LOSS as the result of any one OCCURRENCE
because of BODILY INJURY or PROPERTY DAMAGE or
PERSONAL INJURY or PUBLIC OFFICIALS ERRORS
AND OMMISSIONS, or any combination thereof during
the AGREEMENT PERIOD.
51 MEMBER CITY'S RETAINED LIMIT:
5 ULTIMATE NET LOSS as the result of any one OCCUR-
RENCE because of BODILY INJURY or PERSONAL
INJURY or PUBLIC OFFICIALS ERRORS AND OMMIS.
SIONS, or any combination thereof during the AGREE-
MENT PERIOD.
61 CLAIMS ADJUSTING FIRM:
71 ANNUAL DEPOSIT PREMIUM:
81 Endorsements attached to policy at inception:
Countersigned by
This Declarations and Coveragelsl, with Standard Provisions and Endorsements, if any,
issued to form a part thereof, completes the above -numbered Agreement.
EICEP 319188 F— 11
�HIBIT G
BIG INDEPENDENT CITIES EXCESS POOL
LIABILITY RISK MANAGEMENT REQUIREMENTS
t. Each Participant shall maintain a full time risk management employee or other risk man-
agement professional or otherwise must be able to demonstrate a sound professionally
administered risk management program. If there is no risk manager then approval is
subject to unanimous consent of the membership. The person so designated will serve
as liason for the Participant to the Authority for all matters relating to risk management.
(Risk management means the process of Identifying, evaluating, reducing. controlling,
transfering and eliminating risks through various methods such as purchasing Insur-
ance. funding claims payments, legal defense of claims, controlling losses and claims
reserves.)
2. Each participant shall maintain a loss prevention program, and shall consider and act
upon all recommendations of the Authority concerning the reduction of unsafe condi-
tions. (Loss prevention means developing techniques for changing or removing condi-
tions which would be likely to cause loss.)
3. Each Participant shall maintain records of claims which provide at a minimum, the
following information by fiscal year: number of claims (open and closed); amounts
paid: amounts reserved; and the total amount incurred (allocated expenses shall be in-
cluded). If losses are capped the potential excess amount provided for all losses incur-
red in excess of 50% of the Retained Limit or $ 500.00 whichever is less. Loss records
will be provided for the preceding five years. -
Copies of records maintained shall be submitted to the Authority as directed by the
General Manager. Liability Risk Committee. Claims Review Committee or other duly
constituted committees.
4. The Participant shall use only qualified personnel to administer its Liability claims.
5. The Participant shall litigate suits using qualified defense counsel experienced in tort
Liability. Authority retains the right to associate with the defense counsel for cases like-
ly to exceed the Participant's retained limit.
6. The Participant shall use, as guidelines. the Authoritie's Liability Claims Audit Control
Guidelines and shall advise its claims administrator that these standards are to be utili-
zed in the Authoritie's Uability claims audits.
7. The Participant shall furnish to the Authority written notice as soon as practicable of
any potential or actual claims to recover losses or damages within or alleged to be with.
in the scope of the Memorandum in accordance with the following requirements:
A. A claim or occurrence which is. or is reserved at. an amount at least equal to. 50%
of the Participant's retained limit or $ 500,000 whichever is less:
B. A claim or occurrence which is the result of an incident involving potential joint
and several Utiability, if reserved at 50% of the Participant's retained limit or
$ 500.000 whichever is less; f
le
BICEP 319/88 C-1
C. A claim or occurrence which is the result of incidents involving paralysis, or brain
damage, dismemberment or death;
D. An occurrence which results in two or more claims from the same incident if
reserved In total at 50% of the Participant's retained limit or $500,000 which-
ever is less.
8. A claims administration audit utilizing the Authoritie's Liability Claims Quality Control
Guidelines shall be performed. at a minimum, of once every three years, or more often
at the sole discretion of the Authority. particularly if:
A. There is an unusual fluctuation or increase In the Participant's claims experience
or number of claims:
B. There is a change of Liability claims administration firms; or in-house claimsllitiga-
tion management;
C. The Participant is a new Participant.
In most cases an audit will be performed on an "as needed" basis. but at least within
twelve months of the above -mentioned eventisl.
The claims audit shall be performed by a firm selected by the Authority. aecommenda-
tions made in the claims audit shall be addressed by the Participant and a written re-
sponse outlining a program for corrective action shall be furnished to the Authority
within sixty days of receipt of the audit.
9. The Participant shall obtain an actuarial study performed by a Fellow of the Casualty
Actuarial Society (FCAS) once every three years, or more often if indicated. Based
upon the Actuarial recommendations, the Participant shall maintain reserves and make
funding contributions equal to or exceeding the "Marginally Acceptable" ranges of the
actuarial report.
10. The Participant shall furnish an annual audited financial statement to the Authority.
NOTICES
1. The Authority shall furnish the Participant written notification of the Participant's
failure to meet any of the above -mentioned guidelines.
2. The Participant shall furnish a written response outlining a program for corrective ac-
tion, within thirty days of receipt of the Authoritie's notification. Extensions may be
granted under extenuating circumstances, at the discretion of the Authority.
3. After approval by the Authority of the Participant's corrective program, the Participant
shall implement the approved program within sixty days. The Participant may request
an additional sixty days from the Authority.
A
BICEP 31910E G-2
�1
SANCTIONS
1. Failure to comply with these guidelines and a failure to cure such noncompliance as
described in NOTICES Section 2 or 3 above (after notice as described in (1) above)
shall constitute an event of default in default accordance with the Liability Risk
Coverage Agreement.
LIABILITY CLAIMS QUALITY CONTROL GUIDELINES
I. CLAIMS INVESTIGATION
A. Factual investigation within thirty days of the Participant's knowledge of the
Claim, including statements from participants and witnesses. (Answer questions
who, what, where, when and why.)
B. Develop information regarding Liability issues, including immunities. comparative
negligence, joint tortfeasors, and joint and several Liability.
C. Begin to develop information on damages.
1. Property damage.
2. Nature and extent of injuries.
3. Medical costs.
4. Lost wages.
5. Other damages.
D.' Obtain and review contracts that maybe in effect relating to specific accidents.
1. Hold harmless indemnity agreements.
2. Additional insured requirements.
3. Other applicable insurance.
E. Obtain defective products and/or other evidence, and hold if at all possible. or at
least locate where it is being held.
Obtain product information for the file.
F. Utilize experts appropriately in cases.
G. Maintain membership in Claims Index Bureau.
1. Report all claims to the Claims Index Bureau.
2. Follow up on Claims Index Bureau information.
H. Arrange appraisals for damaged property.
I. Timely report to Authority and/or excess carrier.
11. TORT CLAIM REQUIREMENTS
All n9lices (pertaining to claims insufficiency, returning late claims, claims rejections,
etc.) shall be timely given in accordance with the relevant provisions of applicable law.
B10EP 3/9188 G-3
V
III. DOCUMENTATION
A. Reasonable reserves shall be established based upon facts known, within thirty
days of receipt of investigative report. Expenses shall be included. `
B. File shall contain documentation necessary to support the decisions made with
respect to claims disposition.
C. Photos, diagrams, plans, contracts, medical and law enforcement reports, and
other relevant documents shall be deposited in the claims file in a timely fashion.
IV. CASE SETTLEMENT FACTORS
A. Reasonable settlement considering value of damages, injury, and liability.
B. Timeliness of settlement.
C. Contributions from joint tortfeasors considered.
D. Documents evaluating and authorizing settlements.
E. Appropriate releases secured.
V. LITIGATED FILES
A. Defense attorney evaluation in file.
B. Proper follow-up for investigation requested by defense attorney.
C. Actions to monitor claim defense expenses.
D. Timely recommendations from defense firms regarding settlements and trial
preparation.
E. Results and total expenses documented.
BICEP 3/9/88 C-4
A
�..J
k,4�
Ill. DOCUMENTATION
A. Reasonable reserves shall be established based upon facts known. within thirty
clays of receipt of investigative report. Expenses shall be included.
B. File shall contain documentation necessary to support the decisions made with
respect to claims disposition.
C. Photos, diagrams, plans. contracts, medical and law enforcement reports, and
other relevant documents shall be deposited in the claims file in a timely fashion.
IV. CASE SETTLEMENT FACTORS
A. Reasonable settlement considering value of damages, injury, and liability.
B. Timeliness of settlement.
C. Contributions from joint tortfeasors considered.
D. Documents evaluating and authorizing settlements.
E. Appropriate releases secured.
V. LITIGATED FILES
A. Defense attorney evaluation in file.
B. Proper follow-up for investigation requested by defense attorney.
C. Actions to monitor claim defense expenses.
D. Timely recommendations from defense firms regarding settlements and trial
preparation. '
E. Results and total expenses documented.
BICEP 3/9188 G_4
EXHIBIT H
3 FORM OF WRITTEN__REQUISITION
5 [INSERT NAME AND ADDRESS OF TRUSTEE]
7 RE: Disbursement from the Claims Payment Fund pursuant to
Section 3.02 of the Trust Indenture, dated as of
9 1, 1988 (the "Indenture"), by and between
as Trustee (the "Trustee") and Big
11 Independent Cities Excess Pool Joint Powers Authority, a
joint exercise of powers authority organized under
13 California law (the "Authority")
15 REQUISITION NO.
17 You are hereby instructed to pay to the undersigned
Participant, or to at
19 $ as a Settlement from the Claims Payment Fund
as provided in Section 3.4 of the Liability Risk Coverage
21 Agreement dated as of 1, 1988, among the
Participants named therein and the Authority (the "Coverage
23 Agreement"). This amount has been incurred within the scope of
Coverage (as defined in the Coverage Agreement), has been
25 settled or finally adjudicated in accordance with the terms of
the Coverage Agreement and the Memorandum of Coverage appended
27 thereto and has not been the basis of any previous
disbursements.
29
Attached hereto is a certified copy of the
31 [settlement/judgment] and itemized list of costs and expenses
in connection with the Settlement.
33
(In the case of disbursement to pay a Pure Premium
35 Adjustment refund, the following form shall be used: You are
hereby instructed to pay to the Authority the amount of
37 $ to be paid to one or more of the Participants as
a Pure Premium Adjustment refund. Such amount has been
39 computed in accordance with Section 4.5 of the Liability Risk
Coverage Agreement dated as of 1, 1988 among the
41 Participants named therein and the Authority and is properly
payable at this time.]
43
[In the case of withdrawal or expulsion of a Participant,
45 the following form shall be used: You are hereby instructed to
pay to the undersigned Authority the Allocable Share of
47 , as Participant, as determined in accordance with
Section 5.2 of the Liability Risk Coverage Agreement dated as
49 of 1, 1988 among the Participants named therein
and the Authority, for safekeeping in a segregated account by
H-1
1
1 the Authority on behalf of the Participant, until the earliest
practicable date when it can be returned to the Participant,
3 all as described in such Agreement.]
5 [In the case of disbursement to pay for the purchase of
commercial insurance or reinsurance, the following fore: shall
7 be used: You are hereby instructed to pay
Attached hereto is a copy of evidence of such insurance
9 policy. The Authority certifies that all amounts disbursed
hereunder will be used in accordance with Section 3.5 of the
11 Coverage Agreement.]
13 [In the case of disbursement for the payments of amounts
due on an interest rate swap agreement .]
15
Very truly yours,
17
19
21
23
25
27
29
RECEIPT ACKNOWLEDGED:
31
as Trustee
IC
s
By
Participant Representative
By
Authority Representative
1
3
5
If to the
7 Authcrity:
EXHIBIT I
NOTICE ADDRESSES
9 If to the
ParticiDantS:
11
CITY OF H'JNTINGTON BEACH
13 2000 Main Street
Huntincton Beach, California 92648
15 P. O. Box 190
Huntington Beach,. California 92648
17 Attention: Risk Manager
19 CITY OF OXNARD
305 west Third Street
21 Oxnard, California 93030
Attention: Risk Manager
23
CITY OF PO13iOVA
25 505 So. Garey Avenue
Pomona, California 91766
27 P. 0. Box 660
Pomona, California 91769
29 Attention: Risk Manager
31 CITY OF SAN BE R-yARDLNO
300 North "D" Street
33 San Bernardino, California 92418
Attention: Deputy City Administrator
35
CITY OF SANTA A'NA,
37 20 Civic Center Plaza
Santa Ana, California 92701
39 Attention: Risk Manacer
I-1
1
SCHEDULE A
3 METHODOLOGY FOR CALCULATING TOTAL PURE PREMIUM
5
The Actuary should consider the loss experience and
7 exposures of the Participants as well as the experience of
other California cities, other public agencies, and other
9 risks, as appropriate. The Actuary should consider, as
appropriate, the experience of the great many claims for small
11 amounts, the less frequent claims for large amounts, and the
highly infrequent claims for very large amounts.
13
The Actuary should estimate the frequency and average cost
15 of claims, unless it is more appropriate to deal directly with
the loss rate itself. Additional analyses should be.considered
17 when appropriate.
19 In particular the Actuary should use models of the loss
process whenever doing so would improve the accuracy of the
21 result in a meaningful way.
23 The Actuary should clearly state the assumptions regarding
loss development, the trend in frequency of claims and the
25 average cost per claim, the payout of losses, the interest rate
to be earned on the Pure Premiums, and other appropriate
27 factors that underlie the calculations.
29 The Actuary should consider the impact of changes in the
claim environment, including, but not limited to, what the data
31 indicates about loss cost inflation; changes in the cost of
living (e.q., CPI); changes in the observed frequency of
33 claims; changes in litigation rates; changes in court
precedents; changes in the legislative environment; and changes
35 in exposures or hazards.
37 The Actuary shall recommend a Total Pure Premium that meets
the criteria set forth in Article IV, Section 4.4(e) of this
39 Agreement,
SA-1
s
1 SCHEDULE B
3 FORMULA FOR CALCULATING PURE PREMIUM ADJUSTMENT
5 STEP i Develop Data Inputs
7 A = Case Reserves and Settlements paid to date.
9 B = Pure Premium.
11 I =
Pure Premium Proportion or Adjustment Proportion (as
applicable pursuant to Section 4.5(B)).
13
T =
Special Pure Premium Adjustments.
15
Z =
Pure Premium Adjustments.
17
C =
Total investment income (including any profit or loss
19
under an interest rate swap agreement) for all
Coverage Periods on the Claims Payment Fund not
21
transferred to the Basic Premium Payment Fund.
23 x =
a given Coverage Period; x' = the current and two
preceding Coverage Periods.
25
y =
a given Participant.
27
p =
a given risk sharing pool (e.g. SIR to $5,000,000;
29
5.000,000 to 25,000,000); provided that when all
Participant are in all pools, p = one pool.
31
Axp =
Case Reserves and Settlements paid to date (A) for a
33
given Coverage Period (x) :or a given pool (p).
35 Bxyp =
Pure Premium (B) for a given Participant (y) for a
given Coverage Period W for a given pool (p); Byp is
37
the suz► of Bxyp over all Coverage Periods.
39 Ixyp =
Pure Premium Proportion or Adjustment Proportion (as
applicable pursuant to Section 4.5(B)), (I), for a
41
given Coverage Period (x) (which must be a Coverage
Period in which a given Participant participated in
43
the Program), for a given Participant (y), for a given
pool (p).
45
Typ
Special Pure Premium Adjustments collected, refunded
47
or scheduled to be collected (T) for a given
Participant (y) for a given pool; Txyp means Typ
49
allocated to a given Coverage Period (x).
SB-1
I Zyp = Pure Premium Adjustments collected, refunded or
scheduled to be collected (Z) for a given Participant
3 (y) for a given pool (p); Zxyp means Zyp allocated to
a given Coverage Period (x).
5
Cy r C times (the sum of By divided by the sum of B):•
7
STEP 2
9
Determine Incremental Increase in Amount of Pure Premium
11 Adjustment Required for a given Participant (y).
13 Qsyp Incremental increase to Pure Premium Adjustment for
current Coverage Period (s) for a given pool (p) for a
15 given Participant (y).
17 Dxyp Axn times (Ixyp); Dyp is equal to the sum of'Dxyp for
all Coverage Periods; Dx'yp is equal to the sum of
19 Dxyp for the current and two preceding Coverage
Periods.
21
s current Coverage Period.
23
Eyp = (Dyp minus Dx'yp) minus (Bvp minus Bx'yp plus Typ plus
25 Zyp minus Zx'yp plus Cy).
27 Ex'yp = If Dxyp is more than Bxyp plus Txyp plus Zxyp in any
of the current or two preceding Coverage Periods, then
29 _x'yp is equal to the sum of Dxyp minus Bxyp minus
Txyp minus Zxyp for those years in which Dxyp is more
31 than Bxyp plus Txyp plus Zxyp.
33 TEST 1
35
If Eyp plus Ex'yp is greater'than or equal to 0, then Qsyp
37 is equal to the sum of Eyp plus Ex'yp divided by five for next
five succeeding Coverage Periods (except as provided in
39 Sections 4.05(d) and 4.6 hereof).
41 TEST 2
43 If Eyp plus Ex'yp is less than or equal to 0, then Qsyp is
equal to 0. Skip to Test 2 of Step 3.
45
STEP 3
47
Calculate Pure Premium Adjustme.-.t for current Coverage
49 Period (s)
SB-2
I 3syp = Pure Premium Adjustment (R) assessment for the current
Coverage Period (s) for a given pool (p), for a given
3 Participant (y). This equals the sure of Qyp for last
four Coverage Periods plus Qsyp. .
5
Rsy = Total Pure Premium Adjustment to be levied for a given •
7 Participant for the current Coverage Period. t'r.
9 TEST 1
11 If the sum of Rsyp for all pools for a given Participant is
.:.ore than or equal to zero, then Rsy is equal to the sum of
13 Rsyp for all pools for a given Participant.
15 TEST 2
17 If Eyp plus Ex'yp was less than zero in Test 2 of Step 2,
above, then Rsy is equal to Eyp plus Ex'yp plus the sum of Qsyp
`"- 19 !or the last four Coverage Periods, provided, as follows:
21 1) The maximum Pure Premium Adjustment refund paid
in any Coverage Period shall not exceed 50% of
23 the Pure Premium and Pure Premium Adjustment
assessments to be paid by the Participant in such
25 Coverage Period (or, with respect to withdrawn
Participants, the last Coverage Year of
27 participation).
29 2) To the extent Eyp plus Ex'yp includes payment of
Special Pure Premium Adjustments (Typ), refunds
31 of such Special Pure Premium Adjustments shall be
further governed by Section 4.6.
33
With respect to a Participant which has previously
35 withdrawn from the Program, a credit to or refund of Pure
Premium Adjustments will be provided in an amount equal to the
37 amount by which such Participant's Allocable Proportion of the
initial deposits from Bond proceeds (or its cash deposit) to
39 the Claims Payment Fund and Debt Service Reserve Fund exceeded
its Allocable Proportion of the Undesignated Reserves in the
41 Claims Payment Fund and the Debt Service Reserve Fund at the
tine of withdrawal. Such credit will be made on a pro rata
43 basis from the Pure Premium Adjustment assessment installments
as scheduled at the time of withdrawal.
SB-3
REQUES'i` FOR CITY COUNCPLJACTION
l4-
Date
Submittedlo- honorable Flayor and City Council
Submitted by: Paul E. Cook, City Administrator �, ,C'
Prepared by: Robert Franz, Deputy City Administrato
September 1, 1988
Subject: Joint Powers Liability Insurance Program
Consistent with Council Policy? [ Yes [ ] New Policy or Exception
] DY CITY CQ'IT+ti OW
Q' lI--- _- - -i.*ffff
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: Goelcy
Statement of Issue:
The City has been without liability insurance coverage since April 7, 1986
and should consider some mechanism to protect itself from catastrophic �•
loss. `
Recommendation:
Approve the attached four documents:
1. RESOLUTION APPROVING JOINT POWERS AGREEMENT, FILING
VALIDATION PROCEEDING AND CERTAIN OTHER ACTIONS.
2. JOINT POWERS AGREEMENT. (JPA)
3. LIABILITY RISK COVERAGE AGREEMENT.
4. TRUST INDENTURE.
Analysis:
The City Council, by a 7-0 vote at the May 2, 1988 meeting, approved
the city's participation in a Joint Powers Agreement to provide
liability insurance protection to the City through a bond funded
mechanism. The Joint Powers Authority so created will be known
as the Big Independent Cities Excess Pool Joint Powers Authority,
or BICEP-JPA in short. The original program included the cities
of Huntington Beach, Fullerton, Oxnard, Pomona, Santa Ana, San
Bernardino and Sacramento. Fullerton and Sacramento have chosen
not to participate at this time, and the remaining five cities
are proceeding to implement the Joint Powers approach, making
the Joint Powers Authority effective October 1,'1988-. The difference
between the present recommendation and the action taken on May 2, 1988
V�
W"
Summarized as follows:
1. The number of cities forming BICEP has been reduced
from seven to five.
2. Commercial excess liability insurance is now available
at acceptable rates on a group purchase basis and
will be in effect on October 1, 1988.
3. The amount of the revenue bonds is reduced from $22M
to $14.75M since there are only five cities initially
participating.
4. The first $86,436 annual debt service payment will
not start until the second year.
5. The bonds will"be sold in January, 1989, however
the funded liability pool will be effective on October 1, 1988
- the formation date of the BICEP-JPA. This will provide
the twenty five million dollars of coverage on our
one million dollar Self Insured Retention.
6. The City's first year estimated cost has increased
slightly from the $424,000 figure in Resolution 5874
to $439,070. The increase is based on BICEP's purchasing
$8M of excess liability insurance as well as not
paying the first year's debt service cost on the
bond issue.
The attached documents should be reaffirmed and approved by City
Council and BICEP's five charter member cities by September 19,
1988. The organizational meeting of the BICEP JPA is scheduled
for September 23, 1988, to ensure an effective date of October
1, 1988.
Staff has extensively reviewed the concepts and this JPA approach
to liability insurance coverage for the City and recommends the
City's participation a viable approach to take at this time.
Each city's premium levels have been developed actuarially by
Coopers & Lybrand, working in concert with Marsh & McLennan.
Coopers L Lybrand is a well known and highly regarded international
actuarial and consulting firm, which does actuarial work for many
public entities in California. Marsh & McLennan is the largest
insurance broker in the country and serves as broker for many
public entities in California.
t
it is anticipated that other cities will wish to join BICEP at
some future time, and their acceptance will be determined by the
BICEP Board of Directors.
Funding Source:
Funds for participation in the BICEP-JPA are included in the Liability
Insurance Program.
1. Cease exploration of the BICEP Concept.
2. Continue seeking other alternatives.
3. Continue uninsured status.
Attachments:
Face pages of the following Documents:
1. RESOLUTION APPROVING JOINT POWER AGREEMENT, FILING
VALIDATION PROCEEDING AND CERTAIN OTHER ACTIONS.
2. JOINT POWERS AGREEMENT. (JPA)
3. LIABILITY RISK COVERAGE AGREEMENT.
4. TRUST INDENTURE.
These Documents, which consist,; -of about 100 pagese are available
for review in the City Clerk's Office.
PEC:RF:EHT/sp
REQUES,l FOR CITY COUNCLACTION
Submitted to: Honorable Mavor and Citv Council
Statement of Issue:
Date A ri 1 14, 1988
10 .
The City has been without liability insurance coverage since April 7,
1986 and should consider some mechanism to prot
loss.
Recommendation:
Approve the attached four documents:
1. Resolution approving Joint Powers Agreement, filing
validation proceeding and certain other actions.
2. Joint Powers Agreement. (JPA)
3. Liability Risk Coverage Agreement.
4. Trust Indenture.
Analysis:
ccTI• cr.
No liability insurance with realistic premiums and coverage has been
available to the City since the City determined not to accept an offer
of extremely limited coverage and high premium on April 7, 1986. Staff
has considered alternatives to insurance for the past two (2) years.
one of the alternatives is a group of eleven (11) California cities,
each of which has a population in excess of 100,000, joining together
to develop an alternative to purchasing commerical liability insurance;
namely, forming the Big Independent Cities Excess Pool (BICEP). We have
been meeting with this group since March, 1987.
is
The objective is to protect each participating city's funds and operations
from impairment due to large liability claim judgments and settlements.
The goal is to smooth out the ups and downs of the insurance industry
by issuing $60M in bonds upon formation and purchasing insurance when
it is available and reasonably priced.
The $25M risk sharing coverage would apply to each participating city
less the Self Insured Retention (SIR)► which is similar to a deductible.
Our SIR would be $1M per occurrence. Our estimated annual premium would
be $424,000. Funds are budgeted for the premium. BICEP should be formed
on or about July I long.
n
Plo 4184
Honorable Mayor
April 14, 1988
Page 2
and Cit..., Council
The City's $30,000,000 liability insurance program expired on April T,
1986 and no insurance company has offered to sell the City liability
insurance with sufficient coverage and reasonable premium since that time.
The following eleven (11) cities are potential charter members of the
BICEP, JPA:
Garden Grove Los Angeles Pomona San Diego
Fullerton Oakland Sacramento g
Huntington Beach Oxnard San Bernardino Santa Ana
Each city's premium levels were developed actuarially by Cooper & Lybrand,
working in concert with Marsh & McLennan.
Cooper & Lybrand is a well known and highly regarded international actuarial
and consulting firm, which does actuarial work for many public entities
in California. Marsh & McLennan is the largest insurance broker in
the country and serves as broker for many public entities in California.
The attached documents are at various stages of consideration by City
Councils and staff members of the above cities. The City's final commitment
will need to be made around July 1, 1988, just prior to the bond issue.
A final Request for Council Action will be submitted in June for final
consideration.
The approach to Liability Insurance outlined above has been reviewed
extensively by our outside independent consultant, Don Voller of Tillinghast,
and he recommends it as a viable approach for the City to take.
Staff will continue to investigate any other options that may be available.
An additional detailed analysis is attached.
Funding Source:
Funds for participation in the pool would be included in the Liability
Insurance account, No. 850483.
Alternate Actions:
1. Cease exploration of the BICEP Concept.
2. Continue seeking other alternatives.
3. Continue uninsured status.
Attachments:
Face pages of the following Documents:
1. Resolution approving Joint Power Agreement, filing validation
proceeding and certain other actions.
2. Joint Powers Agreement. (JPA)
3. Liability Risk Coverage Agreement.
4. Trust Indenture.
These Documents, wh�ch extend to over 2C0 pages, are available for review
in the City Clerk's office.
�CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
RISK MANAGEMENT DIVISION
(714) 536-5990
April 14, 1988
To: Honorable Mayor and City Council Members
Subject: Liability Insurance Joint Powers Authority
Big Independent Cities Excess Pool (BICEP)
Supplemental Analysis
BACKGROUND
For the past 2 years, staff has regularly advised that the sky
rocketing cost and non -availability of Municipal Liability Insurance
has forced the City into a position of total self-insurance, thereby
exposing itself to retaining unlimited liability for an "Claim
for Damage" received.
in March of last year the City received correspondence from the
Independent Cities Risk Management Authority (ICRMA) inviting large
California cities to participate in discussions relative to forming
a second capitalized risk sharing pool within the ICRMA program.
ICRMA is a large Southern California Joint Powers Authority consisting
of 26 cities in Los Angeles and Riverside County.
Working with ICRMA and its team of consultants, we have shaped
an effective program structure, and to date, it appears to be a
viable long term liability insurance solution. This program has
already proven effective for the 26 cities of ICRMA and the 35
counties of the County Supervisors Association of California -
Excess Insurance Authority (GSAC-EIA). It is anticipated that
this proposed BICEP pool will be fully operative no later than
September 1, 1988.
The thrust of this report is to provide a program description and
to seek an approval for the City's participation in the BICEP Program,
which evolved from the meetings sponsored by ICRMA.
DISCUSSION
I. The Program
Insurance pooling in California has proven thus far to be cost
effective and administratively efficient. The ICRMA program contains
the advantages of (1) Risk sharing and (2) a Funded Liability Reserve.
(designed to treat a pool of capital necessary to underwrite a
Comprehensive General Liability limit of $25 million per occurrence).
The program's concept makes sense and has attracted the potential
participation of the following large California Cities:
Honorable Mayor and C uncil Members
April 14, 1988
Page 2
Fullerton Pomona
Garden Grove Santa Ana
Huntington Beach San Diego
Los Angeles San Bernardino
Oakland Sacramento
Oxnard
All of these cities have populations of over 100,000 and are homogeneous
in their risk exposure. Each city has a comprehensive Risk Management
program, and will be pooling virtually all major perils of loss
at self -insured retention levels of between one and five million
dollars. The program offers a policy limit of $25 million and has
the expressed intention of reinsuring itself when economically
feasible to do so.
The Advantage of Risk -Sharing
The ability of a group insurance pool to share risk is one of the
primary benefits of the program. Risk -sharing by a pool has a
number of auxiliary benefits:
1. Risk -sharing minimizes the fluctuation in cost of insurance
or self insurance experienced by municipalities.
2. Risk -sharing allows the members of the Pool to set the terms
and conditions of their insurance coverage; and
3. Risk -sharing allows the members of the Pool to directly
control both administrative costs and loss adjustment.
The Pool, by achieving a risk -sharing balance, reduces the burden
of catastrophic loss each city bears when it self insures. On
the other hand, when a city joins the Pool it belongs to a group
which limits the number and sets the eligibility standards for
its membership. This reduces the city's risk of buying conventional
insurance from national firms with no membership requirements or
ability to control losses except through cancellation.
The Advantage of Funded Liability Reserves
A funded liability reserve is designed to create an ability for
self -insured cities to fund their Incurred But Not Reported (IBNR)
liabilities over a period of years thereby reducing General Fund
cashflow for this purpose.
It also provides a pool of capital to cover loss payments which
may arrive in early years. The advantages of this approach include:
1. A group insurance pool with a funded reserve has better access
to and greater bargaining strength with the reinsurance market.
ICRMA was apparently one of the first pools to obtain a
reinsurance quote.
Honorable Mayor and City Council Members
April 14, 1988
Page 3
2. A pool with a funded reserve reduces the cost of reinsurance
because it negotiates directly with the reinsures, reducing
the costs of intermediaries.
3. A pool with a funded reserve has a greater control over coverage
terms and claims adjustment policy when it purchases reinsurance.
An "unfunded" insurance pool that gradually builds its reserves
over time rather than fully funds from the outset, faces a potential
risk that it will be underfunded in the initial years and require
assessments of its members in the case of a catastrophic loss.
This risk is substantially reduced for the fully funded pool.
II. Program Structure
Incorporating the principles of Risk -sharing and a Funded Liability
Reserve► the proposed program is structured in the following manner:
1. In order to generate necessary funds to capitalize the program,
thereby making it financially sound from an actuarial and
insurance industry standpoint, the BICEP Program, as a Joint
Powers Authority, would arrange for the sale of Tax Exempt
Bonds which represent interests in premium payments made by
the member cities of BICEP. The size of the reserve and each
member's share is determined using an actuarily developed risk -
sharing formula.
2. BICEP would pay all debt service on the bonds issued by its
members to fund the loss payment reserve. BICEP pays the debt
service primarily from interest earnings on the reserve and
secondarily from annual premium payments of its members.
Legally, of course, each city menber is liable for the debt
which it incurs for this purpose_
3. As the pooled bond proceeds are drawn down to pay insurance
claims, they are replenished fron premiums. Over time, funds
identified as bond proceeds (therefore invested at a restricted
yield) are expended and reserves drawn from premiums form the
loss payment pool. These reserves can be invested at an
unrestricted yield which reduces premiums for Pool members
and accelerates the defeasance of bonded debt.
For each member city, its annual premium payment to the BICEP
Pool would consist of three parts:
1. Debt Service on the Bonds.
2. Administrative Charge - The Pool will have the normal cost
of administering its insurance program. It is expected that
BICEP will hire an experienced General Manager to administer
the pool for its members, and the premium will also cover this
expense.
V
Honorable Mayor and City Council Members
April 14, 1988
Page 4
3. 'Loss Assumption/Risk Premium Component - The total for Risk
Premium will be determined by a qualified actuary and will
be set for the first year prior to the Bond sale closing.
This premium calculation will be undertaken annually, subject
to a maximum allowable increase in any one year of 10%.
At the end of the first three years of pool operation, the
actuary will determine a new figure for the maximum allowable
increase. After the third year, any change greaterthan 25%
upwards or downwards of a city's Risk Premium Proportion must
be approved by a unanimous vote of the Pool's Governing Board;
any change less than 25% requires a majority vote of the entire
Board. This means that the City has veto power over harsh
increases.
Each participating city is responsible for its annual premium payment.
These are secured by an insurance purchase agreement between the
City and BICEP pursuant to which BICEP agrees to provide liability
insurance in exchange for each city's promise to pay premiums.
Setting Premiums and Risk Sharing Formula
The premium is used primarily to build up the Pool's own reserves.
Each city pays its share of debt service as part of its annual
premium payment. Becuase of earnings on bond proceeds, actual
net debt service requirements for member cities should be comparatively
small, and the balance of the premium payment will be used to establish
the Pool's own loss reserves. Debt service premium percentages
always remain the same. Actual premium levies are adjusted annually
to reflect changes in incurred loss estimates actual losses paid,
and the purchase of reinsurance so that premium levels remain actuarially
sound, and incurred loss reserves remain at realistic levels.
Premium levies are allocated according to a risk -sharing formula
which reflects a combination of exposure and loss history, but
with protective features to spread incurred losses among members.
Pllocations based on loss history will be based on multi -year moving
averages in order to smooth the shock of any catastrophic losses.
Adjustments will take the form of automatic refunds and would
in no way permanently alter a member's risk allocation or risk
premium proportion. Refunds shall also include interest from the
time the reserve was set up.
For a catastrophic loss, members may draw down reserves from the
capital base provided by bond proceeds, and amortize the loss.
A catastrophic loss liability will be allocated among members on
the same basis as any other major loss. This will allow members
to spread risk among participants and spread risk over time.
Leaving the Liability Insurance Pool
Members may leave the Pool after an initial 3 year commitment
period by allocating a sufficient amount of their equity in
the bond proceeds and reserves to cover outstanding principal
Honorable Mayor and Ci"�ty Council Members
April 14, 1988
Page 5
on the bonds. It is expected that a participant's share of
equity in the program will be proportional to what it has
contributed.
Withdrawing cities are also responsible for any losses
incurred during the period of their membership in the Pool.
If a city's withdrawal from the
the pool's actuarial soundness,
may have to be set.
III. Other Conditions
Legal
program fundamentally alters
then additional conditions
The law firm of Brown and Wood, a nationally known and respected
law firm, well experienced in bond counsel work and acting as bond
counsel to ICRMA, is providing the legal work for this program.
They have successfully put into operation three Funded Municipal
Liability Insurance Pools in California and one in Montana. They
have rendered the necessary legal opinions and have successfully
validated the issue of the sale of Bonds for insurance purposes
in numerous counties in California.
Insurance
The program, which is insurance driven, is designed and fully
supported by Marsh & McLennan, Inc., the country's largest insurance
broker. The Public Entity Division of Marsh & McLennan's San Franciso
office is ICRMA's Insurance Consultant for their program. The
program's coverage document is very comprehensive and has been
specifically tailored for large California cities. The coverage
is written on an "occurrence" form which is very desirable.
Additionally, very strong Risk Management and Claims Handling
guidelines have been built into the program so as to ensure the
responsible management of liability from each Member City.
Financial
The financial aspects have been previously discussed in describing
the program structure. The program's financial advisor is Kelling
Northcross and Nobriga who have successfully worked with Marsh
& McLennan and Brown and Wood in structuring the previously
mentioned funded insurance pools.
IV. Program Benefits
1. The primary benefit at this time is that no commerical insurance
is available, and the City is desirous of transferring risk if
economically feasible to do so.
Honorable Mayor and amity Council Members
April 14, 1988
Page 6
2. Risk -sharing through BICEP should allow the City to minimize
severe cost fluctuations in the insurance market place in
addition to saving on underwriting and insurance company
administration fees.
3. BICEP will enable cities to determine coverage terms and
policy conditions as the pool issues the policies and terms
of coverage.
4. The pool will be set up with strict Risk Management
requirements for member cities. However, if a catastrophic
loss occurs► rather than being at the mercy of an insurance
company for increased premium or cancellation, the risk -sharing
principle of the pool spreads this risk so that the City's
financial viability would not be devastated and it would be
able to amortize its loss over a reasonable period of time.
5. The use of bond financing for the insurance pool program
enables cities to restructure their own self-insurance reserves
and maintain them at significantly lower levels than if they
rely on self-insurance reserves only.
6. Considering the fact that this is strictly an excess loss pool►
with reasonable expected loss experience► the pool can become
self -amortizing over a period of ten to twelve years with the
City maintaining proportionate equity at all times.
7. The combination of proceeds and reserves is expected to exceed
outstanding principal at all times, proving greater security
for the bondholders, and thus reducing debt service expense
to the cities.
B. In the event that reinsurance becomes available in the future
from outside carriers at competitive rates, the Pool will be
in an ideal position to negotiate directly with the reinsurance
industry and obtain the lowest rates possible for its members.
The proceeds and reserves of the pool can then be drawn down
to pay debt service, and the bonds will become self -amortizing.
V. Program Risks
As with any program, there are advantages and disadvantages.
Naturally, a large claim against one city would, as is the case
in any risk -sharing pool be financed in part by the other cities
in the pool.
The funding plan has been deemed actuarily sound and has been loaded
to absorb a number of "big -hitting claims." However, if numerous
and staggering losses are experienced, particularly in the early
years, and all the proceeds are drawn down to pay claims, cities
conceivably could be paying debt service for insurance coverage
which may no longer be available.
�r, r�rwF r
Y
Honorable Mayor and City Council Members
April 14, 1988
Page 7
It should be noted, however, that numerous checks and balances
have been built into the system making it extremely unlikely for
the pool to go bankrupt. If for no other reason, these mechanisms
are sound because the bond raters in New York are very conservative
and in order to get the necessary sale, the potential investor
must be adequately protected from default.
CONCLUSION
This is a very viable, long term solution to the City's Liability
insurance problems. As a member of the Underwriting Committee,
I have been personally involved with the business terms of the
program. Although all terms of coverage, pooling, and membership
were negotiated and voted democratically among the committee members,
I find none of the terms to be objectionable to our City.
Document approval is required now in order to ensure participation
in the program.
Respectfully submitted,
&V74 a
Edward H. Thompson
Risk Manager
EHT:jpw
a)
B&W Draft
of 3/3/88
JOINT POWERS AGREEMENT
CREATING THE BIG INDEPENDENT CITIES EXCESS POOL
JOINT POWERS AUTHORITY
This Agreement is executed in the State of California by
and among those cities organized and existing under the
Constitution of the State of California which are parties
signatory to this Agreement. All such cities, hereinafter
called Members, shall be listed in Appendix A, which shall be
attached hereto and made a part hereof.
RECITATS
WHEREAS, Articles 1 and 2, Chapter 5, Division 7, Title
of the California Government Code (Section 6500 et seq.)
permits two or more public agencies by agreement to exercise
jointly powers cor:,mon to the contracting parties; and
WHEREAS, California Government Code Section 990.4 provides
that a local public entity may self -insure, purchase insurance
through an authorized carrier, or purchase insurance through a
surplus line broker, or any combination of these; and
WHEREAS, Article 16, Section 6 of the California
Constitution provides that insurance pooling arrangements under
joint exercise•of power agreements shall not be considered the
giving or lending of credit as prohibited therein; and
WHEREAS, California Government Code Section 990.8 provides
that two or more local entities may, by a joint powers
agreement, provide insurance for any purpose by any one or more
of the methods specified in Governcr.ent Code Section 990.4; and
WHEREAS, the cities executing this Agreement desire to join
together for the purpose of jointly funding programs of excess
insurance for comprehensive liability and other coverages to be
determined;
NOW, THEREFORE, the parties agree as follows:
1
2658002/25
1 VALIDATION
'COPY
3
5
7
9
11
13
15
17 .
19 LIABILITY RISK COVERAGE AGREEMENT
21
Dated as of 1, 1988
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25 among the
27
BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS AUTHORITY
29
31 and
33
THE CITIES OF FULLERTON,
35 GARDEN GROVE, HUNTINGTON BEACH,
OXNARD, POMONA, SAGO,
37 SAN BERNARDINO AND SANTA ANA
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41
43
45
47
1 BROWN & WOOD
DRAFT NO. 3
3 3/16/88
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7
9
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15 '
17 TRUST INDENTURE
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21 Dated as of 1, 1988
23
25 by and between
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29 BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS )kUTHORITY
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33 and
35
37 as Trustee
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41
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45
Relating to
47 Big Independent Cities Excess Pool Joint Powers Authority
Insurance Program Revenue Bonds, Series 1933A
2658002/6