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CC – Item 3C – Staff Report – Res. 97-27 4 )1 stat teport ...:....... . :. TO: HONORABLE MAYOR AND MEMBERS ROSEMEAD CITY COUNCIL FROM: FRANK G. TRIPEPI, CITY MANAGEL—V5e7 DATE: JULY 2, 1997 RE: RESOLUTION NO. 97-27 APPROVING THAT CERTAIN AGREEMENT ENTITLED "JOINT POWERS AGREEMENT OF THE SELF-INSURANCE AUTHORITY FOR EFFECTIVE RISK MANAGEMENT Attached for your consideration is Resolution No. 97-27 approving the Joint Powers Agreement of the Self-Insurance Authority for Effective Risk Management (SAFER). The City Attorney's Office has reviewed the agreement and is recommending approval. BACKGROUND In 1978 the City of Rosemead, along with the other contract cities, signed an assumption of liability agreement with the County of Los Angeles under which the County agreed to take responsibility for claims and actions arising out of contract services provided by the County including services provided by the Public Works Department and the Sheriffs Department. The cities agreed to pay a surcharge of 2% of the contract amounts to be placed in a special fund managed by the County, referred to as the Liability Trust Fund , from which claims and administration costs would be paid_ The County reserved the right to unilaterally raise the surcharge rate_ In the early 1990's the County indicated an intention to substantially raise that surcharge. In response a sub-committee of the California Contract Cities Association City Manager's Committee was formed to study the matter. One problem they identified was the County apparently had no idea how much was in the Trust Fund since it had been co-mingled with other funds_ The sub-committee was able to hold the County's proposed increase to 3%for public • works and 6%for law enforcement which took effect in 1992-93. A Claims Review Committee, comprised of Contract Cities representatives, was formed to assist the County in reviewing outstanding claims. COUNCIL AGENDA JUL Q 81997 { ITEM No. .C._j J page two SAFER July 2, 1997 Despite these changes there were still major problems with the accounting, reporting, funding and the decision-making involved in the administration of the Liability Trust Fund. As of January, 1996, the Liability Trust Fund has outstanding claims totaling $59 million. DISCUSSION To achieve greater control over the risk management aspect of County contract services, Contract Cities has developed a proposal for formation of the Self-Insurance Authority for Effective Risk Management (SAFER), a joint powers entity similar to the existing California Joint Powers Insurance Authority (CJPIA), that is to develop and implement a joint protection program for Sheriffs and Public Works Department contract services. To utilize the expertise of the CJPIA and avoid duplication of staff; the SAFER joint powers agreement designates CJPIA as the administrators of the program, subject to removal by the SAFER Board. The joint protection program is to be developed by CJPIA and approved by the SAFER Board. It will govern the scope of coverage, formulas for risk sharing and pooled losses, initial costs to the members and the procurement of excess insurance coverage. The program will also involve an Indemnification Agreement under which each member city contracts with the County to indemnify and defend the County for claims arising out of the provision of contract services to the extent that such coverage is provided through SAFER. Contract Cities is currently negotiating with the County for support of this proposal. It is felt that forming the joint powers authority now is important to demonstrate the solidarity of the thirty- nine Contract Cities on this issue. However,the program will not become operative until after the joint protection program is defined and the indemnification agreement with the County and each of the thirty-nine member cities is signed. Thus the City of Rosemead will not irrevocably commit itself to the program until, at some later date,the City Council considers the then fleshed out terms of the joint protection program and authorizes execution of the indemnity agreement. It should be noted that the joint protection program will only provide coverage for claims arising after the operative date. The existing shortfall in the Liability Trust Fund , and any claims arising up to the operative date, is a separate issue to be handled at a later date. page three SAFER July 2, 1997 RECOMMENDATION It is recommended that the Rosemead City Council adopt Resolution No. 97-27: (1) authorizing execution of the agreement entitled "Joint Powers Agreement of the Self- Insurance Authority for Effective Risk Management"; 2) designating Councilmembers Taylor and Vasquez as appointee and alternate to the SAFER board of directors and (3) designating the California Contract Cities Association as the City's agent with respect to negotiations with the County to effectuate the program. saferi • RESOLUTION NO. 97-27 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD APPROVING THAT CERTAIN AGREEMENT ENTITLED "JOINT POWERS AGREEMENT OF THE SELF-INSURANCE AUTHORITY FOR EFFECTIVE RISK MANAGEMENT THE CITY COUNCIL OF THE CITY OF ROSEMEAD HEREBY RESOLVES AS FOLLOWS: Section 1. The City Council of the City of Rosemead (the "City') does hereby find, determine, and declares as follows: a. Applicable law, including, without limitation, California Government Code Section 6500 et seq. provides that two or more public agencies may by agreement jointly exercise any powers which are common to the contracting parties. b. Applicable law, including, without limitation, California Government Code Section 990.4, permits a local public entity to self-insure; to purchase insurance through an authorized carrier; to purchase insurance through a surplus lines broker, and/or to do any combination of the above. e. The public interest, convenience and necessity will be best served by the execution and implementation of the Joint Powers Agreement of the Self-Insurance Authority for Effective Risk Management ("SAFER") (the "Agreement") which will allow the parties hereto to pool their self-insured losses; purchase excess insurance and provide for administrative services in connection with a joint protection program; and City Council, based upon staff reports have found that it is economically feasible and practical for the parties to the Agreement to do so. Section 2. The City Council hereby approves the Agreement and authorizes the Mayor to execute the Agreement on behalf of the City in substantially the form attached hereto as Exhibit A. Section 3. The City Council hereby appoints Council Member Taylor to serve as the City's principal appointee to the SAFER Board of Directors ("Representative"). Section 4. The City Council hereby appoints Council Member Vasquez to serve as the City's Alternate Representative to serve on the SAFER Board of Directors in the absence of the regular Representative. Section 5. The City Council hereby appoints the California Contract Cities Association to act as its Agent with respect to the negotiations with the County of Los Angeles (the "County") relating to an Indemnification Agreement by and between the City and the County in connection with that certain City-County Law Enforcement Services Agreement dated as of June 28, 1994. Section 6. The City Clerk is hereby directed to transmit an executed copy of the Agreement and a certified copy of this resolution to Sam Olivito, Executive Director, California Contract Cities Association, 10810 Paramount Boulevard, Suite 202, Downey, California 90241. Section 7. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED this 8th day of July, 1997. MAYOR ATTEST: City Clerk STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) ss CITY OF ROSEMEAD I,Nancy Valderrama, City Clerk of the City of Rosemead, hereby certify that the foregoing Resolution No. 97-27 was duly adopted by the City Council of the City of Rosemead at a regular meeting thereof, held on July 8, 1997, by the following vote of the Council: AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS CITY CLERK EXECUTION COPY JOINT POWERS AGREEMENT OF THE SELF-INSURANCE AUTHORITY FOR EFFECTIVE RISK MANAGEMENT (SAFER) IAX2:163528.13 (a) Chair, Vice Chair and Secretary. 15 Ib) Duties of Secretary 16 lc) Treasurer. 16 (d) General Counsel 16 Section 14. ' Creation of Administrative & Claims Committee. 17 Section 15. Function of Administrative & Claims Committee. 19 Section 16. Powers of Administrative & Claims Committee. 19 Section 17. Meetings of the Administrative & Claims Committee. 21 Section 18. Administrator 21 Section 19. Appointment of Administrator. 22 Section 20. Liability Coverage 23 Section 21 . The Joint Protection Program 24 Section 22. Events of Default. 27 Section 23. Action on Default. 28 Section 24. Non-waiver. 28 Section 25. Remedies Not Exclusive. 29 Section 26. Accounts and Records. 29 la) Annual Budget. 29 (b) Funds and Accounts. 29 (c) Treasurer's Report. 29 Id) Annual Audit. 30 (e) Costs. 30 Section 27. Responsibility for Funds. 30 Section 28. Responsibilities of the Authority. 32 Section 29. Responsibilities of Members 34 Section 30. Interim Period and Effective Date of Program. 35 IAX2:163528 13 -II- JOINT POWERS AGREEMENT OF THE SELF-INSURANCE AUTHORITY FOR EFFECTIVE RISK MANAGEMENT (SAFER) This Joint Powers Agreement ("Agreement") of the Self-Insurance Authority for Effective Risk Management (SAFER) ("Authority") is made and entered into by and among the public entities (collectively, "Members") who are signatories to this Agreement, pursuant to Section 6500 seq. of the Government Code and other applicable law; WITNESSETH: The parties to this Agreement do agree as follows: Section 1 . Recitals. This Agreement is made and entered into based upon the following facts: (a) Applicable law, including, without limitation, California Government Code Section 6500 el seq, provides that two or more public agencies may by agreement jointly exercise any powers which are common to the contracting parties; and LAX2:163528.13 • • Section 2. Definitions. The following words and phrases as used in this Agreement shall have the following meanings ascribed to them, unless the context clearly otherwise requires: (a) "Administrative & Claims Committee" shall mean the committee of the Authority created pursuant to Section 14 hereof. (b) "Administrator" shall mean the entity appointed to perform the administrative function for the Authority including the evaluation and management of claims and settlement of claims of less than $100,000 or such other amount as may be established by the Administrative and Claims Committee. • (c) "Agreement" shall mean this Joint Powers Agreement, as it now exists or may hereafter be lawfully amended. Id) "Authority" shall mean the public entity created pursuant to Section 7 • of this Agreement. (e) "Board of Directors" or "Board" shall mean the governing body of the Authority. IA%2:163528.13 -3- • (I) "Insurance" shall mean any commercial insurance contract. (m) "Joint Protection Program" shall mean and include, without limitation, all of the following as adopted, followed, practiced, or approved by the Administrative and Claims Committee: the Authority's process for accepting, rejecting, adjusting, defending and paying claims; ii. the Authority's statement or memorandum of coverage of liability claims; iii. the Authority's formula or process for calculating deposits Members are obligated to pay to the Authority; iv. the level of risk pooled by the Members in the Authority; and v. the type, cost and limits of purchased insurance. (n) "Liability Coverage" shall mean self-insurance through a funded program and may include a commercial insurance contract. WU:163528.13 -rj- • Section 4. Member's Warranties. Each Member warrants to each other Member: (a) That it had the legal authority to enter into this Agreement; and (b) That it took all necessary steps required to duly authorize the execution of this Agreement on behalf of such Member; and (c) That this Agreement shall be binding and in full force and effect as to each such Member; and (d) That it will act in good faith and deal fairly with the other Members. Section 5. Effective Date. Term. (a) Effective Date. This Agreement shall be effective on and after the date of execution hereof by the last of twenty-seven 127) Cities. Ib) Term. The term of this Agreement shall continue until it is terminated as provided in Section 35 hereof. • WO:163528.13 -7- convenient or required to implement this Agreement, including, but not limited to, any or all of the following: • (1 ) To make and enter into contracts; and (2) To incur debts, liabilities or obligations; and (3) To acquire, receive and hold or dispose of real and/or personal property, including, but not limited to, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and governmental entities; and (4) To sue and be sued in its own name; and (5) To exercise all express and implied powers necessary, convenient and proper to carry out the terms and provisions of this Agreement, or otherwise authorized by law. (b) Powers provided for herein shall be exercised pursuant to the terms of this Agreement and in a manner consistent with applicable law. (c) In accordance with Government Code Section 6509, the powers of the Authority shall be exercised in the manner prescribed in the Joint Exercise of Powers Act, Government Code Sections 6500 et seq., as that Act now exists and may hereafter be amended, and shall be IAX2'.163528.13 -9- (2) Alternate Representatives. Each Member shall designate and appoint a person as an alternate representative to serve on the Board in the absence of the Regular Representative of that Member. Persons so appointed by the legislative body of each Member shall be an officer or employee of the Member. An alternate representative shall be seated and authorized to act as a member of the Board only when the Regular Representative of that Member is not present and acting as a member of the Board. (3) Limitation on Appointment. Persons appointed as Regular or Alternate Representatives to the Board shall serve at the pleasure of the legislative body of the appointing Member. (4) Voting. Persons seated on the Board shall be entitled to cast a vote on matters pending before the Board, only if such person is physically present at the meeting of the Board. (5) Participation of Alternates. An Alternate Representative may participate in the proceedings of the Board only in the absence of that Member's Regular Representative. IAX2:1635211.13 -1 1- • Id) The Board shall have the authority to remove and replace the Administrator upon a majority vote of the entire Board. (e) The Board may adopt by-laws to the extent not inconsistent herewith. Section 11 . Meetings of the Board of Directors. (a) Meetings. The Board shall hold at least one meeting in each fiscal year at a time and place to be determined by the Administrative and Claims Committee. A majority of the Board may call a special meeting. (b) Minutes. The Secretary of the Authority shall cause minutes of all meetings to be kept and shall, as soon as practicable after each meeting, cause a copy of the draft minutes to be forwarded to each member of the Board and to each Member. _ (c) Quorum. A majority of the members of the Board shall constitute a quorum for the transaction of business, except that less than a quorum may adjourn from time to time. A vote of the majority of those members present at a meeting shall be sufficient to take action L1x3:163536.13 -13- the County, undertake to provide to County an indemnity for third party liability arising out of the performance of the services specified therein. Section 13. Officers of the Authority. (a) Chair. Vice Chair and Secretary. The Board shall elect members of the Board, who are also members of the Board of Directors of the CCCA, to serve as Chair, Vice Chair and Secretary of the Authority, each to hold office for a three-year term, except as hereinafter provided, and until a successor is elected and qualified. At the initial meeting of the Board it shall elect a Chair for a three-year term, a Vice Chair for a two-year term and a Secretary for a one-year term. At the Second Annual Meeting of the Board, the Board shall elect a Secretary for a . three-year term. At the Third Annual Meeting of the Board, the Board shall elect a Vice Chair for a term of three years. Thereafter, the election of Chair, Vice Chair and Secretary shall be in sequential years. In the event the Chair or Vice Chair or Secretary so elected ceases to be a member of the Board, the resulting vacancy in the • • office of Chair or Vice Chair or Secretary shall be filled at the next regular meeting of the Board held after such vacancy occurs. The Administrative and Claims Committee may call a special meeting of the Board for the purpose of conducting an election of officers. In the IAX3:163528.13 -15- (e) The Board shall have the power to appoint such other officers and employees as may be necessary in order to carry out the purposes of this Agreement. Section 14. Creation of Administrative & Claims Committee. There is hereby created an Administrative & Claims Committee (the "Administrative & Claims Committee"). The Administrative & Claims Committee shall be empowered to make and implement actions concerning the Joint Protection Program and to evaluate claims exceeding the settlement authority of the Administrator, as provided for in this Agreement, except for any decision which would require an amendment of this Agreement. The Administrative & Claims Committee shall be constituted as follows: (a) The Chair of the Board, the Vice Chair of the Board and the Secretary of the Board shall serve as members of the Administrative & Claims Committee. (b) Two (2) elected officials from the SCJPIA Executive Committee shall be selected by the SCJPIA Executive Committee to serve as members of the Claims Committee, provided, however, that SCJPIA is now serving and continues to serve as Administrator. L4X2:163528.13 -1 7- Section 15. Function of Administrative & Claims Committee. Such Committee shall meet from time to time as deemed necessary by them, and shall make recommendations to the Board based upon its expertise. Section 16. Powers of the Administrative & Claims Committee. The Administrative & Claims Committee shall: la) approve a Joint Protection Program for the Authority, subject to review, modification and adoption by the Board; (b) evaluate claims in excess of the settlement authority of the Administrator; (c) conduct on behalf of the Authority all business of the Authority not reserved in this Agreement for the Board; Id) call meetings of the Board; lel as needed, the Administrative & Claims Committee may create permanent or ad hoc advisory committees, to give advice to the Administrative & Claims Committee on such matters as may be referred to such committee by the Administrative & Claims W2:163538.13 -1 9- (i) the Administrative & Claims Committee may adopt by-laws. Section 17. Meetings of the Administrative & Claims Committee. The meetings of the Administrative & Claims Committee shall be held and conducted in the same manner as the meetings of the Board. Section 18. Administrator. The Administrator shall serve as the administrative body of the Authority. The Administrator shall have the general administrative responsibility for the activities of the Authority and the implementation of the Joint Protection Program. The duties of the Administrator shall include, but not be limited to the following: (a) prepare and implement a Joint Protection Program for the Authority; (b) select and purchase all necessary insurance, including excess insurance, necessary to carry out the Joint Protection Program; (c) have the authority to contract for or develop various services for the Authority, including, but not limited to, claims adjusting, loss control and risk management consulting services;, IAX21163528.13 -21- Section 20. Liability Coverage. (a) The Joint Protection Program administered for the Members by the Authority shall provide indemnification of the County pursuant to an Indemnification Agreement by and between each Member, individually, and the County. (b) The Joint Protection Program administered for the Members by the Authority shall include comprehensive coverage of such areas of coverage as the Administrative & Claims Committee may determine, arising out of the performance of services by the County, on behalf of a Member. (c) The Authority shall maintain an insurance limit as set by the Administrative and Claims Committee to be adequate. (d) The Administrative & Claims Committee shall arrange for the purchase • of such insurance as it deems necessary to protect the Authority against catastrophes. L/0(1163528.13 -23- • (2) The Members share of pooled losses and other expenses based on the Members percentage cost of contract services, as determined by the Administrative & Claims Committee; and (3) Each Members contribution to a catastrophe fund and reserves for incurred-but-not-reported losses to be determined by the Administrative & Claims Committee. The Administrative & Claims Committee may make such deposit adjustments retrospective to the prior year and each Member shall pay any additional deposit required by such retrospective adjustment. (d) The Administrator shall develop criteria for determining each Member's annual share of pooled losses and expenses and contributions to a catastrophe fund which may include as a factor consideration of each Members costs for County services as compared to the total County contract costs for all Members; the . Members individual loss experience; and such other criteria as the Administrative & Claims Committee may determine to be relevant. (e) The annual readjustment of the amount of deposit shall be made and notices for readjusted deposit amounts and the next years deposits UX2:163528.13 -25- (h) The Board may expand the Authority's Joint Protection Program to make available to Members protection in addition to that which is provided for in this Agreement. Section 22. Events of Default. The following events shall be Events of Default: (a) default by a Member in the due and punctual payment of any and all deposits and readjusted amounts when and as the same shall become due and payable; or (b) default by a Member in the observance of any of the covenants, warranties, agreements or conditions on its part in this Agreement contained, if such default shall have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Member by the Authority; provided, however, that if such default can be remedied but not within such 30-day period and if the Member has taken all action reasonably possible to remedy such default within such 30-day period, such default shall not become an Event of Default for so long as the Member shall diligently proceed to remedy the same in accordance with and subject to any directions or limitations of time reasonably established by the Authority. LAX2-..163528.13 _47- Section 25. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 26. Accounts and Records. (a) Annual Budget. The Board shall adopt an annual operating budget. (b) Funds and Accounts. The Treasurer shall establish and maintain such funds and accounts as may be required by good accounting practices and as directed by the Board or by the Administrator. All such funds and accounts shall be maintained separate and apart from the funds and accounts of the SCJPIA. Books and records of the Authority in the hands of the Treasurer shall be open to any inspection at all reasonable times by representatives of Member. (c) Treasurer's Report. The Treasurer, within one-hundred and twenty (120) days after the close of each fiscal year, shall give a complete IAx2:163529.13 -29- the signatory function and warrants to such persons as are authorized by the Administrative & Claims Committee. (b) A bond in the amount determined by the Administrative & Claims Committee to be adequate shall be required of all officers and personnel authorized to collect or disburse funds of the Authority. The bond premium shall be paid for by the Authority. (c) The Treasurer of the Authority shall assume the duties described in California Government Code Section 6505.5, including: (1 ) Receive and receipt for all money of the Authority and place it in the treasury of the Treasurer to the credit of the Authority; and (2) Be responsible upon his or her official bond for the safekeeping and disbursement of all of the Authority's money so held by him or her; and (3) Pay, when due, out of money of the Authority so held by him or her, all sums payable on outstanding bonds and coupons of the Authority; and LAX2:163528.13 -31- insurance, as well as excess coverage and umbrella insurance, obtained by negotiation or bid. (c) Provide loss prevention and safety and consulting services to Member and the County as required. (d) Provide claims adjusting and subrogation services for claims covered by the Authority. (e) Provide loss analysis control by the use of statistical analysis, data processing, and record and file keeping services, in order to identify high exposure operations and to evaluate proper level of self-retention and deductibles. (f) The Authority shall have such other responsibilities as deemed necessary by the Board of Directors in order to carry out the purposes of this Agreement. • • I A :163528.13 -33- • Section 30. Interim Period and Effective Date of Proaram. (a) Interim Period. In the event the Joint Protection Program is not developed prior to the Effective Date of this Agreement, then after the Effective Date of this Agreement the Authority shall, as expeditiously as possible, develop the details of the Joint Protection Program. Estimated deposits for the Members shall be developed by the Administrative and Claims Committee and presented to each Member by written notice. Each Member shall participate in the Joint Protection Program. The first year deposits shall be determined as expeditiously as possible after approval of the Joint Protection Plan. (b) Effective Date. The Joint Protection Program shall become effective on the date of its approval by the Administrative & Claims Committee, subject to review, modification and adoption by the Board. Section 31 . New Members. Following the first year of operation, the Authority shall allow new public agencies who contract with the County to become Members. New Members will be required to forthwith pay their share of organization expenses as determined by the Board, including those expenses necessary to analyze their loss data and determine their deposits. UX2a63528.13 -35- (b) The withdrawal or termination of any Member from this Agreement or an Event of Default with respect to any Member shall not terminate such Member's obligation to pay its share of deposits or funds to any fund or liability coverage program created by the Authority until all claims, or other unpaid liabilities, including losses incurred but not reported, covering the entire period the Member was signatory hereto have been finally resolved and a determination of the final amount of payments due by the Member or credits to the Member for the period of its membership has been made by the Administrative & Claims Committee. Section 35. Termination and Distribution. (a) This Agreement may be terminated any time during the first three noncancellable years by the written consent of all Members, and thereafter by the written consent of three-fourths (3/4ths) of the Members; provided, however, that this Agreement and the Authority shall continue to exist for the purpose of disposing of all claims, distribution of assets and all other functions necessary to wind up the affair's of the Authority. (b) Upon termination of this Agreement all assets of the Authority shall be distributed to Members in accordance with and proportionate to Iwx2:1635211.13 -37- The decision of the Administrative & Claims Committee or Secretary under this Section shall be final. Section 36. Notices. Whenever notices are required to be given pursuant to the provisions of this Agreement, the same shall be in written form and shall be served upon the Member to whom addressed by personal service as required in judicial proceedings, or by deposit of the same in the custody of the United States Postal Service or its lawful successor in interest, postage prepaid, addressed to the designated representative of each Member, as set forth in Appendix "A". Notices shall be deemed, for all purposes, to have been given on the date of personal service or three (3) consecutive calendar days following the deposit of the same in the custody of the United States Postal Service. Section 37. Amendment. This Agreement may be amended at any time by the vote of not less than two-thirds 12/3rds) of a quorum of the Board of Directors, with the exception of an amendment to Section 33 which shall require a three-fourths (3/4ths) vote of the entire Board of Directors. Section 38. Prohibition Against Assignment. No Member may assign any right, claim or interest it may have under this Agreement, and no creditor, assignee IA%3J6352$.13 -39- IN WITNESS WHEREOF, the parties hereto have first executed this Agreement by authorized officials thereat on the date indicated below. Date: CITY OF MAYOR ux2:'63539.13 -41- APPENDIX "B" [ATTACH COPY OF COUNTY LAW ENFORCEMENT SERVICES AGREEMENT)