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HomeMy Public PortalAbout86-106 (09-02-86) ~* an amount such Council determines to be necessary to provide such coverage; WHEREAS, pursuant to Section 990.8 of the Act, the City is empowered to obtain insurance coverage through a joint powers agreement with other local public entities, and such pooling of self-insured claims and the risk sharing of losses is not considered insurance subject to regulation under the California Insurance Code; WHEREAS, the Independent Cities Risk Management Authority (the "Provider") is a joint exercise of powers agency of which the City is a member; WHEREAS, the Provider is authorized to exercise necessary powers to implement the purposes of the Provider through the Provider's Governing Board; WHEREAS, the Provider has determined to assist the City and certain other cities which are members of the Provider to obtain self-insurance for liability risks (the "Coverage") through and on the terms set forth in the Liability Risk Coverage Agreement dated as of November 1, 1986 by and among the Provider, and the Cities of Arcadia, Azusa, Baldwin Park, Bell, Culver City, Downey, '~1 Monte, Glendora, Hawthorne, Hermosa Beach, Huntington Park, Indio, Inglewood, Lynwood, Manhattan Beach, Monterey Park, Redondo Beach, San Fernando, South Gate, Vernon, West Covina and Whittier, California (each of the City and such Cities 2 set forth in this paragraph being referred to herein individually as a "Providee" and collectively as the "Providees"); WHEREAS, this Council proposes to authorize the execution of the Agreement for the purpose of providing Coverage for the City for the benefit of the City's residents and taxpayers and for the health and safety of the public; WHEREAS, the City proposes to authorize the sale and delivery pursuant to the Trust Agreement described below of Certificates of Participation (the "Certificates") evidencing undivided and proportionate interests in Basic ~" Premium to be paid by the City and the other Providees under the Agreement in order to fund reserves initially in an amount determined sufficient to pay Settlements (as defined in the Agreement) when due and to provide the Coverage described in the terms set forth in the Agreement and in the Memorandum of Liability Coverage attached thereto at Exhibit B (the "Memorandum"); 6dHEREAS, the City has conclusively determined following investigation that either public entity liability insurance coverage is not available to the City from commercial insurers or from any other source or that such insurance is not available at a reasonable cost; I 3 WHEREAS, the City has further determined, based upon the advice of independent professional insurance consultants familiar with the cyclical nature of the reasonable availability of coverage in the commercial insurance market, that it is uncertain when such liability insurance is expected to become available at a reasonable cost, thereby in the interim exposing the City to self-insuring from available revenues on a year by year basis with the attendant risks of fiscal instability and ruinous burdens on its citizens in the event of large liability claims recoveries; WHEREAS, this Council hereby further determines that the periodic unwillingness of the commercial insurance IP' ~ market to provide primary or excess public entity liability insurance to local governments at reasonable rates or, in certain cases as at present, at any rate, mandates that the City seek not only an immediate solution but also a long-term permanent solution to this problem which will in future years free them from exposure to the vagaries of commercial insurance cycles; WHEREAS, the City, the Provider and the other Providees, in consultation with independent professional insurance consultants, have formulated a joint risk-sharing insurance program to be administered by the Provider to meet the public entity liability insurance coverage reeds of the 4 ~"' Providees which will provide the following advantages, among others, to the Providees: (a) immediate funding of a claims payment fund (the "Claims Payment Fund") through an initial deposit from the proceeds of the sale of the Certificates for the dual purpose of providing immediate protection from large claims loss and facilitating eventual access--to the commercial reinsurance market, (b) mutual agreement by the Providees to pay annual premium amounts on both a prospective and a retrospective basis calculated actuarially to spread and moderate the cost of claims loss to each Providee, ~'^ (c) relief from the burden of paying premiums to commercial insurers at levels reflecting the insurers' high costs of underwriting, administration and brokerage fees since the Provider's costs will be limited to reasonable administrative costs, (d) relief from the commercial insurers' rights under excess liability policies to force claim settlements which are payable primarily in each case from the Providee's self-insurance funds, (e) access to the commercial reinsurance market in future years when commercial reinsurance is available at rates deemed favorable by the Providees, and 5 ~ (f) actuarially-determined premium payments calculated to provide amounts in each year necessary to maintain the Claims Payment Fund at an actuarially sound level and therefore sufficient to reserve against the incurred losses of the Providees. WHEREAS, this Board hereby further determines that the Participation Premium (as defined in the Agreement) to be paid in each year by each Providee including the City as provided for and upon the conditions set forth in the Agreement will be payable only upon the condition of the receipt of the consideration represented by the insurance protection to be provided in such year under this Agreement, but ir_ the event that such protection is so provided in any year such Participation Premium will be a binding obligation of the City payable from legally available moneys; WHEREAS, this Council hereby further determines that the obtaining of the insurance protection and services provided for under the Agreement is essential in the preservation and fostering of the health, safety and property rights of the citizens of the City and the lack of availability of reasonable commercial public entity liability insurance to local governments generally in the State of California and to the City in particular constitutes a public emergency; 6 WHEREAS, it is necessary and in the interest of the ~^ i ~ citizens of the City to establish, through the sale of the Certificates, and maintain through pro rata contributions of each Providee including the City a debt service reserve fund therefor, in order to establish adequate reserves to permit the Certificates to be marketed at the lowest possible interest rates; WHEREAS, this Council hereby determines that it is reasonably expected that the cost of funding and maintaining such reserve fund will be more than offset by the anticipated benefits and economies to be realized by the pooling of risks and losses pursuant to the Agreement; WHEREAS, Article 16, Section 6 of the Constitution of F~^ ~ the State, regarding lending of public credit or funds, provides, in relevant part, that such Section "shall not prohibit any county, city and county, city, township, or other political corporation or subdivision of the State from joining with other such agencies. in providing for the payment of workers' compensation, unemployment compensation, tort liability, or public liability losses incurred by such agencies, by entry into an insurance pooling arrangement under a joint exercise of powers agreement, or by membership in such publicly-owned nonprofit corporation or other public agency as may be authorized by the Legislature"; F'` 7 r~^ WHEREAS, Premium shall be paid by the City in consideration of the Coverage offered by the Agreement and by the Memorandum and the sharing of the risk of liability for claims associated with the pooled self-insurance program during each Coverage Period (as defined in the Agreement); this Council hereby agrees and determines that such Premium payments represent the fair market value of the Coverage; in making such determination, consideration has been given to the initial costs of establishing the pooled insurance program, the unavailability of affordable commercial liability insurance to the City and to other Providees, the anticipated costs of commercial liability insurance in the future, the obligations of the Providees under the Agreement (including the other Providees' agreement to share the risk of costs imposed by liability claims to the City), the obligation of the Provider to provide insurance services, the benefits resulting from capitalization of a pooled insurance program (including the prospect of access to the commercial liability reinsurance market) and the other benefits therefrom which will accrue to the City and the health and safety of the general public; WHEREAS, the City receives benefit from the sharing of risk of costs imposed by liability claims under the terms of the Agreement during each Coverage Period; the assessment of f'i Risk Premium and Supplemental Risk Premium is the means by 8 ~"` which such risk-sharing is implemented; and the procedure established in the Agreement for the calculation, adjustment and assessment of Risk Premium and Supplemental Risk Premium is hereby determined to be fair, just and reasonable as a means of such risk-sharing; WHEREAS, Section 52511 of the California Government Code provides that__°[a] local agency may bring an action to determine the validity of its bonds, warrants, contracts, obligations or evidences of indebtedness pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure" and the City proposes to bring such an action together with the other Providees to validate the Providees' obligations under the Agreement and the Trust Agreement, and proposes to authorize legal counsel to conduct such proceedings; and WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; 9 (~ NOhT, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE ( CITY OF LYNWOOD AS FOLLOWS: i. SECTION 1. Declaration of Council. This Council hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the City, and that the statements, findings and determinations of the City set forth in the preambles above and of the documents approved herein are true and correct. SECTION ~. Liability Risk Coverage Agreement. The form of Liability Risk Coverage Agreement, dated as of November 1, 1986 with an effective date of its date of execution, between the City and the Cities of Arcadia, Azusa, Baldwin Park, Bell, Culver City, Downey, E1 Monte, Glendora, Hawthorne, Hermosa Beach, Huntington Park, Indio, Inglewood, Manhattan Beach, Monterey Park, Redondo Beach, San Fernando, South Gate, Vernon, West Covina and Whittier, California as Providees and the Independent Cities Risk Management Authority (the "Provider"), as Provider, presented to this meeting and on file with the Clerk of the City Council is hereby approved. The Mayor, City Manager, Finance Director anc'. any other City officer or official of the City authorized by the Mayor are hereby authorized and directed, for and in the name and on behalf of the City, to execute, acknowledge and deliver to the Provider, on or after the date on which the judgment of validation referred 10 to in Section 4 hereof becomes final, said Liability Risk Coverage Agreement in substantially said form, with such changes therein as such officer may require to approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 3. Trust Agreement. The form of Trust Agreement, dated as of November 1, 1986 with an effective date of the date of execution thereof, among the Provider, the Providees and Seattle-First National Bank (the "Trustee"), presented to this meeting and on file with the Clerk of the City Council, is hereby approved. The Mayor, City Manager, Finance Director and any other officer or official of the City authorized by the Mayor are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Provider and the Trustee, on or after the date on which the judgment of validation referred to in Section 4 hereof becomes final, said Trust Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and deli~~ery thereof. SECTION 4. Validation Proceedings. The Mayor, City Manager and Finance Director and any other officer or official of the City authorized by the Mayor are hereby authorized and directed to participate and cooperate to the 11 1 fullest extent practicable with the Provider, the other Providees and representatives of Brown & Wood ("Special i Counsel"), which firm has heretofore been retained by the Provider as legal counsel with respect to the Certificates and validation proceedings and which retention is hereby ratified by this Council, in the conduct of validation proceedings regarding the Agreement and the Trust Agreement and to do any and all things and to execute and deliver any documents which such officers and staff may deem necessary or advisable in connection therewith. SECTION 5. Attestation and Seal. The Clerk of the City Council is hereby authorized and directed to attest the signature of the authorized signatory, and to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of said Liability Risk Coverage Agreement and Trust Agreement. SECTION 6. Further Actions. The Mayor, City Manager and Finance Director and any other officer or official of the City authorized by the Mayor, are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the sale, execution and delivery of the Certificates by the Trustee and otherwise to carry out, give effect to and comply with the terms and intent of this resolution, the 12 Certificates, Liability Risk Coverage Agreement and Trust Agreement.. Such actions heretofore taken by such officers are hereby ratified, confirmed and approved. SECTION 7. Effective Date. This resolution shall take effect immediately upon its passage. PASSED AND ADOPTED this 2nd day of September 1986 ROBERT HENNIN~; Mayor ~ , City of Lynwood Attest: ANDREA L. HOOPER, City Clerk City of Lynwood APPROVED AS TO FORM: ~~ City Attorney 0 APPROVED AS TO CONTENT: Donald J. Fras r,~Acting Assistant City Manager 13 STATE OF CALIFORNIA ) ss. COUNTY OF LOS ANGELES ) i I, the undersigned, City Clerk of the City of Lynwood, do hereby ~ certify that the foregoing resolution was passed and adopted by the City Council of the City of Lynwood at a regular meeting held on the 2nd day of September 1986. AYES: COUNCILPF.RSON BYORK, MORRIS, WEhLS, IIENNING NOES: NONE ABSENT: NONE ~~-~~~, City Clerk, City of Lynwoo ~~ "G1 I