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~IT9 OF SAN _RNARbl~ - REQUE9r FOR COUNCIL AC.Q.
From: JAMES ROBBINS
Deputy City Administrator -
Dept: Administrative Services
Subject:
BICEP
Om: April 11, 1988
Synopsis of Previous Council action:
November 9, 1987 Presentation to Ways and Means Committee:
Direct the City Attorney to prepan: resolution "authorizing the execution
and delivery of a liability risk coverage agreement and filing of validation
proceedings and certain other actions in connection therewith", on
January 4, 1988.
Recommended motion:
(1) Designate the Mayor as the City's official representative and the Risk Manager
as the designated alternate.
(2) Adopt the resolution - "Resolution of the City of San Bernardino approving and
authorizing execution and delivery of a joint powers agreement creating the
Big Independent Cities Excess Pool Joint Powers Authority, authorizing the
execution and delivery of a liability risk coverage agreement and the filing of
a validation proceeding and certain other actions in connection therewith."
I~ @.s::-
Contact person:
JAMES ROBBINS
Phone:
5122
Supporting data attached:
Ward:
Amount: <t4'~ (')) 0 (} 0
Source: (Acct. No.) (, J). c:r (j.s;3 S 3>5 "'05-
(Acct. oescriotionl/... ....U1Y ~A..'u~ p~ -
Finance: p tI!J. 4 J<---'--.
FUNDING REQUIREMENTS:
Council Notes:
. ---~- .<-- .,- ~.
CI"" OF SAN BERNARDIQ. - REQUE9r FOR COUNCIL AC~N
STAFF REPORT
The BICEP Program is now ready for final action. Since the last time this item
was before you, there has been a consensus of the agencies involved that the
initial formation group would be eight cities. The other cities will be joining
as soon as they can gain approval from their respectful city councils. The
time frame for approval varies from city to city. The actuarial study conducted
by Coopers and Lybrand has indicated that a minimum number of cities to form
the Joint Power Authority Board would be seven. This authority is being formed
with eight cities. The remaining cities who have participated in this effort
will be admitted to the authority without penalty or question.
The bond offer has been reduced in size to reflect the eight city participating.
Therefore, the premium remains the same as if all ten or twelve cities were'
joining at this time. Due to time requirements, it is anticipated that the
insurance program will commence about August 1, 1988. The Authority will have
its first meeting on April 29th. It is respectfully recommended that the Mayor
and Council appoint the designated individual to serve on the Joint Power
Authority Board of Trustees and adopt the resolution forming the Joint Power
Authority and begin the validation procedures.
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RESOLUTION NO.
RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING AND
AUTHORIZING EXECUTION AND DELIVERY OF A JOINT POWERS AGREEMENT
CREATING THE BIG INDEPENDENT CITIES EXCESS POOL JOINT POWERS'
AUTHORITY, AUTHORIZING THE EXECUTION AND DELIVERY OFA LIABILITY
RISK COVERAGE AGREEMENT .AND THE FILING OF A VALIDATION PROCEEDING
AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.
WHEREAS, the City of San Bernardino (WCityW) is a
municipality duly organized and existing under the Constitution
and laws of the State of California (WStateW).
WHEREAS, the City is authorized by Part 6 of Division 3.6
of Title 1, Sections 990 et seq., of the California Government
Code (WActW) to insure itself against tort or inverse
condemnation liability, to insure its employees against injury
resulting from an act or omission in the scope of his employment
and to insure against the costs of defending such claims;
WHEREAS, pursuant to Section 990.4 of the Act the City is
authorized to provide insurance by self-insurance which may be
funded by appropriations and to establish or maintain reserves
for such purposes;
WHEREAS, pursuant to Section 990.6 of the Act, the cost to
the City of such self-insurance is a proper charge against the
City and therefore the City Council of the City is authorized to
make premium payments for such coverage in an amount such Council
determines to be necessary to provide such coverage;
WHEREAS, pursuant to Section 990.8 of the Act, the City is
empowered to obtain insurance coverage through a joint powers
agreement with other local public entities created pursuant to
Chapter 5 of Division 7 of Title 1, Sections 6500 et seq. of the
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1 California Government Code (the "Joint Powers Law"), and such
2 pooling of self-insured claims and the risk sharing of losses is
3 not considered insurance subject to regulation under the
4 California Insurance Code.
6 WHEREAS, the city and certain other cities organized under
6 the laws of California having a population in excess of 100,000
7 (which are referred to below as Participants) propose to form a
8 pooled liability insurance risk sharing program pursuant to the
9 Acti
10 WHEREAS, in order to implement such pooled liability
11 insurance risk sharing program the City and the Participants
12 propose to create a joint powers authority pursuant to the Joint
13 Powers Law, to be known as the "Big Independent Cities Excess
14 Pool Joint Powers Authority" (the "Authority") by approving and
15 executing a joint powers agreement creating the Authority (the
16 "Joint Powers Agreement")i
17 WHEREAS, the Joint Powers Agreement will authorize the
18 Authority to exercise necessary powers to implement the purposes
19 of the Authority through the Authority's Board of Directorsi
20 WHEREAS, it is anticipated that the Authority will assist
21 the City and the other Participants to obtain self-insurance for
22 liability risks (the "Coverage") through and on the terms set
23 forth in the Liability Risk Coverage Agreement presented to this
24 meeting and on file with the Clerk of the City (the "Coverage
25 Agreement") by and among the Authority and other California
26 cities, which may include the Cities of Fullerton, Garden Grove,
27 Huntington Beach, Oxnard, Pomona, Sacramento, San Bernardino and
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1 Santa Ana, California (each of the City and Cities set forth in
2 this paragraph being referred to herein individually as a
3 "Participant" and collectively as the "Participants");
4 WHEREAS, this Council proposes to authorize the execution
6 of the Coverage Agreement for the purpose of providing Coverage
6 for the City for the benefit of the City's residents and
7 taxpayers and for the health and safety of the public;
8 WHEREAS, the Participants propose to cause the Authority to
9 authorize the issuance, sale and delivery pursuant to a Trust
10 Indenture (the "Indenture") of revenue bonds (the "Bonds")
11 payable from revenues of the Authority, including Basic Premium
12 (as defined in the Coverage Agreement) to be paid by the City and
13 the other Participants under the Coverage Agreement, in order to
14 fund reserves initially in an amount determined sufficient to pay
15 Se.ttlements (as defined in the Coverage Agreement) when due and
16 to provide the Coverage described in the terms set forth in the
17 Coverage Agreement and in the Memorandum of Liability Coverage
18 attached thereto (the "Memorandum");
19 WHEREAS, the City has conclusively determined following
20 investigation that public entity liability insurance coverage is
21 not available to the City from commercial insurers or. from any
22 other source at a reasonable cost;
23 WHEREAS, the City has further determined, based upon the
24 advice of independent professional insurance cOnsultants familiar
25 with the cyclical nature of the reasonable availability of
26 coverage in the commercial insurance market, that it is uncertain
27 when such liability insurance is expected to become available at
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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 burdens on its
citizens in the event of large liability claims recoveries;
WHEREAS, this Mayor and Common Council hereby further
determines that the periodic unwillingness of the commercial
insurance market to provide primary or excess public entity
liability insurance to local governments at reasonable rates or,
in certain cases, at any rate, mandates that the City seek not
only an immediate solution but also a long-term permanent
solution to this problem which will in future years free it from
exposure to the vagaries of commercial insurance cycles;
WHEREAS, the City, along with a steering committee of the
other Participants, in consultation with independent professional
insurance consultants, have formulated a joint risk-sharing
insurance program to be administered by the Authority to meet the
public entity liability insurance coverage needs of the
Participants which will provide the following advantages, among
others, to the Participants:
(a) immediate funding of a claim payment fund (the "Claims
Payment Fund") through an initial deposit from the proceeds of
the sale of the Bonds for the dual purpose of providing immediate
protection from large claims loss and facilitating eventual
access to the commercial reinsurance market;
(b) mutual agreement by the Participants to pay annual
premium amounts on both a prospective and a retrospective basis
calculated actuarially to spread and moderate the cost of claims
loss to each Participant;
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1 (c) relief from the burden of paying premiums to
2 commercial insurers at levels reflecting the insurers high costs
3 of underwriting, administration and brokerage fees since the
4 Authority's costs will be limited to reasonable administrative
5 costs I
6 (d) relief from the commercial insurers' rights under
7 excess liability policies to force claim settlements which are
8 payable primarily in each case from the Participant's self-
9 insurance fundsl
10 (e) access to the commercial reinsurance market in future
11 years when commercial reinsurance is available at rates deemed
12 favorable by the Participantsl and
13 (f) actuarially-determined premium payments calculated to
14 provide amounts in each year necessary to maintain the Claims
15 Payment Fund at an actuarially sound level and therefore
16 sufficient to reserve against the incurred losses of the
17 Participantsl
18 WHEREAS, this Mayor and Common Council hereby further
19 determines that the Participation Premium (as defined in the
20 Coverage Agreement) to be paid in each year by each Participant,
21 including the City, as provided for and upon the conditions set
22 forth in the Coverage Agreement will be payable only upon the
23 condition of the receipt of the consideration represented by the
24 insurance protection to be provided in such year under the
25 Coverage Agreement, but in the event that such protection is so
26 provided in any year such Participation Premium will be a binding
27 obligation of the City payable from legally available moniesl
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1 WHEREAS, this Council hereby further determines that the
2 obtaining of the insurance protection and services provided for
3 under the Coverage Agreement is essential in the preservation and
4 fostering of the health, safety and property rights of the
5 citizens of the City and the lack of availability of reasonable
6 commercial public entity liability insurance to local governments
7 generally in the State of California and to the City in
8 particular constitutes a pUblic emergenCYl
9 WHEREAS, it is necessary and in the interest of the
10 citizens of the City to establish, through the execution of the
11 Joint Powers Agreement and the Coverage Agreement and sale of the
12 Bonds, and maintain through pro rata contributions of each
13 Participant, inCluding the City, a debt 'service reserve fund
14 therefor, in order to estab~ish adequate reserves to permit the
15 Bonds to be marketed at the lowest possible interest rates;
16 WHEREAS, this Mayor and Common Council hereby determines
17 that it is reasonably expected that the cost of funding and
18 maintaining such reserve fund will be more than offset by the
19 anticipated benefits and economies to be realized by the pooling
20 of risks and losses pursuant to the Coverage Agreement.l
21 WHEREAS, Article 16, Section 6 of the Constitution of the
22 State, regarding lending of public credit or funds, provides, in
23 relevant part, that such Section "shall not prohibit any county,
24 city and county, city, township, or other pOlitical corporation
25 or subdivision of the State from joining with other such agencies
26 in providing for the payment of workers' compensation,
27 unemployment compensation, tort liability, or public liability
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1 losses incurred by such agencies, by entry into an insurance
2 pooling arrangement under a joint exercise of powers agreement,
3 or by membership in such publicly-owned nonprofit corporation or
4 other public agency as may be author ized by the Legislature";
5 WHEREAS, Premium shall be paid by the City in consideration
6 of the Coverage offered by the Coverage Agreement and by the
7 Memorandum and the sharing of the risk of liability for claims
8 associated with the pooled self-insurance program during each
9 Coverage Period (as defined in the Coverage Agreement); this
10 Council hereby agrees and determines that such Premium payments
11 represent the fair market value of the Coverage; in making such
12 determination, consideration has been given to the initial costs
13 of establishing the pooled insurance program, the unavailability
14 of affordable commercial liability insurance to the City and to
15 other Participants, the anticipated costs of commercial liability
16 insurance in the future, the obligations of the Participants
17 under the Coverage Agreement (including the other Participants'
18 agreement to share the risk of costs imposed by liability claims
19 to the City), the obligation of the Authority to provide
20 insurance services, the benefits resulting from capitalization of
21 a pooled insurance program (including the prospect of access to
22 the commercial liability reinsurance market) and the other
23 benefits therefrom which will accrue to the City and the health
24 and safety of the general public;
25 WHEREAS, the City receives benefit from the sharing of risk
26 of costs imposed by liability claims under the terms of the
27 Coverage Agreement during each Coverage Period; the assessment of
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1 Pure Premium is the means by which such risk-sharing is
2 implemented 1 and the procedure established in the Coverage
3 Agreement for the calculation, adjustment and assessment of Pure
4 Premium is hereby determined to be fair, just and reasonable as a
5 means of such risk-sharingl
6 WHEREAS, Section 52511 of the California Government Code
7 provides that "[al local agency may bring an action to determine
8 the validity of its bonds, warrants, contracts, obligations or
9 evidences of indebtedness pursuant to Chapter 9 (commencing with
10 Section 860) of Title 10 of Part 2 of the Code of Civil
11 Procedure" and the City proposes to bring such an action together
12 with the other 'Participants to validate the Participants'
13 obligations under the Coverage Agreement, and proposes to
14 authorize legal counsel to conduct such proceedingsl and
15 WHEREAS, all acts, conditions and things required by the
16 Constitution and laws of the State to exist, to have happened and
17 to have been performed precedent to and in connection with the
18 execution of the Joint Powers Agreement and the Coverage
19 Agreement as authorized hereby do exist, have happened and have
20 been performed in regular and due time, form and manner as
21 required by law, and the City is now duly authorized and
22 empowered, pursuant to each and every requirement of law, to
23 execute the Joint Powers Agreement and the Coverage Agreement, in
24 the manner and upon the terms herein provided.
25 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
26 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. Declaration of Council. The Mayor and Common
Council hereby specifically finds and declares that the actions
authorized hereby constitute and are with respect to public
affairs of the City, and that the statements, findings and
determinations of the City set forth in the preambles above and
of the documents approved herein are true and correct.
SECTION 2. Joint Powers A9reement. Pursuant to Section
6502 of the Joint Powers Law, the Joint Powers Agreement creating
the Big Independent Cities Excess Pool Joint Powers Authority by
and among the City and other cities, which may include the cities
of Fullerton, Garden Grove, Huntingon Beach, Oxnard, Pomona,
Sacramento, San Bernardino and Santa Ana, California, presented
to this meeting and on file with the Clerk of the City Council,
and the joint exercise of the powers common to the contracting
parties thereunder, are hereby approved. The Mayor, City Manager
(or City Administrator) and Finance Director are hereby
authorized and directed, for and in the name and on behalf of the
City, to execute and deliver such Joint Powers Agreement.
is hereby appointed the City's
representative to the Authority and ____________________ is
hereby appointed the City's alternate representative to the
Authority. Such representative and alternate representatives are
each hereby authorized to take all actions necessary and
appropriate to implement the purpose of the Joint Powers
Agreement and the Coverage Agreement.
SECTION 3. Liability Risk Coverage Agreement. The form of
Liability Risk Coverage Agreement, with an effective date of its
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1 date of execution, between the City and other California cities,
2 which may include the Cities of Fullerton, Garden Grove,
3 Huntington Beach, Oxnard, Pomona, Sacramento, San Bernardino and
4 Santa Ana, California as Participants and the Authority, as the
5 provider of liability insurance thereunder, presented to this
6 meeting and on file with the Clerk of the City is hereby
7 approved. The Mayor, City Manager (or City Administrator) and
8 Finance Director are hereby authorized and directed, for and in
9 the name and on behalf of the City, to execute, acknowledge and
10 deliver to the Authority, on or after the date on which the
11 judgment of validation referred to in Section 4 hereof becomes
12 final, said Liability Risk Coverage Agreement in substantially
13 said form, with such changes therein as such officer may require
14 to approve, such approval to be conclusively evidenced by the
15 execution and delivery thereof.
16 SECTION 4. Ya1idation Proceedings. The Mayor, City
17 Manager and Finance Director and any other officer or official~of
18 the City authorized by the Mayor are hereby authorized and
19 directed to participate and cooperate to the fullest extent
20 practicable with the Authority, the other Participants and
21 representatives of Brown & Wood, San Francisco, California
22 ("Special Counsel"), which firm is proposed to be retained by the
23 Authority as legal counsel with respect to the issuance of the
24 Bonds and validation proceedings and which retention is hereby
25 approved by this Council, in the conduct of validation
26 proceedings regarding the Coverage Agreement and the Bonds and to
27 do any and all things and to execute and deliver any documents
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1 which such officers and staff may deem necessary or advisable in
2 connection therewith.
3 SECTION 5. Attestation and Seal. The Clerk of the City is
4 hereby authorized and directed to attest the signature of the
5 ,authorized signatory, and to affix and attest the seal of the
6 City, as may be required or appropriate in connection with the
7 execution and delivery of said Coverage Agreement.
8 SECTION 6. Further Actions. Officers of the City Council
9 and the Mayor, City Administrator (or City Manager) and Finance
10 Director and any other officer or official of the City authorized
11 by the Mayor, are hereby authorized and directed, jointly and
12 severally, to do any and all things and to execute and deliver
13 any and all documents which they may deem necessary or advisable
14 in order to consummate the sale, execution and delivery of the
15 Bonds by the Authority and otherwise to carry out, give effect to
16 and comply with the terms and intent of this resolution, the
17 Bonds, the Joint Powers Agreement, Coverage Agreement and
18 Indenture. Such actions heretofore taken by such officers are
19 hereby ratified, confirmed and approved.
20 SECTION 7. Effective Date. This resolution shall take
21 effect immediately upon its passage.
22 I HEREBY CERTIFY that the foregoing resolution was duly
23 adopted by the Mayor and Common Council of the City of San
24 Bernardino at a _____________ meeting thereof, held
25 on the day of , 1988, by the
26 following vote, to wit:
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AYES:
Council Members
NAYS:
ABSENT:
City Clerk
The foregoing resolution is hereby approved this
day
of
___' 1988.
Evlyn Wilcox, Mayor
City of San Bernardino
Approved as to form
and legal content:
1~tbbJ~J;1ik~
Ci Attorn
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