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HomeMy WebLinkAboutContract Cities Trust Fund: Joint Indemnity Agreement liMe# 01410 CONTRACT CITIES TRUST FUND JOINT INDEMNITY AGREEMENT CONTRACT CITIES TRUST FUND JOINT INDEMNITY AGREEMENT COUNTY OF LOS ANGELES CITY OF ARC DIA _+ OFFICE OF THE COUNTY COUNSEL SEP �.I 1991 �' 648 HALL OF ADMINISTRATION :�RRRi�� ' TY "MI FP • 5OO WEST TEMPLE STREET • a, LOS ANGELES, CALIFORNIA 90012 TELEPHONE (213)9745033 DE WITT W. CLINTON. COUNTY COUNSEL TELECOPIER (213)626-7446 September 18, 1991 To: CITY MANAGERS AND ADMINISTRATORS OCT 1 I From: S.A. REM. : ./// CITY ATTORNEY OFFIr Management Spec �,tlist --- Re: Revised Assumption of Liability Agreement New Title Joint Indemnity Agreement and Board of Supervisor's Letter Enclosed is the Board of Supervisors letter and Revised Assumption of Liability Agreement now titled Joint Indemnity Agreement for execution by your City Council. Information based on recent actuarial studies on the financial status of the Contract Cities Trust Fund were submitted to the CCCA. After extensive review and findings by the CCCA City Managers Sub Committee of the contract cities Liability Trust Fund Program administered by the County the following recommendations were negotiated and adopted by the CCCA Executive Board, and Board of Directors. • That CCCA request the County Counsel and Board of Supervisors to adjust the surcharge rate on July 1, 1991 to 3% and July 1, 1992 to 4% for sheriff and public work services. This transition would recognize the severe fiscal problems we face from the recession and state budget crisis. • That CCCA request that the county agree to a 5-year repayment period should an extraordinary judgment/settlement hit the trust fund. This would reduce the likelihood of a mid-year adjustment that could severely impact our contact services. • That the President appoint a CCCA Claims Committee to work with County Counsel on assuring that the claims filed against the fund are indeed contract city cases and aggressive risk management activities are carried out by county departments which provide exposure to this trust fund. City Managers/AdSwIlistrators ,400, September 18, 1991 Page 2 • That Chairman Jackson and the city manager sub- committee be authorized to determine the estimated shortfall to the trust fund since its inception and be authorized to negotiate a settlement to compensate for past "wrongs. " Additional negotiations were conducted with the City Managers/Administrators committees which resulted in the following recommendations some of which are contained in the attached documents and are as follows. • Surcharge rate effective October 1, 1991 will be 3% through July 31, 1992 for Sheriffs and Public Works Services. All other contractual services will remain at 2% new actuarial study will establish rate for Fiscal Year 1992-93 . Those cities not signing the new agreement will be assessed at 4. 5% trust fund rate for all services as provided for under the existing Assumption of Liability Agreement. • Five year repayment period request for a possible extraordinary judgment/settlement hitting the trust fund is unfeasible one year repayment period is included in the agreement. The State Constitution prohibits the County from lending its credit, thereby requiring repayment of advances within the shorter time period. Additionally and as requested by the Executive Board. • A CCCA Claims Committee has been formed and has commenced reviewing contract city claims with County Counsel Trust Fund Administrator. • An actuarial study and audit will be conducted to determine the estimated shortfall to the Trust fund and a settlement will be negotiated to compensate the trust fund. The Board of Supervisors is expected to act on this matter October 1, 1991. Therefore please return an executed original copy of your city approval of the agreement as soon as possible. We will send you a conformed copy of the agreement upon execution by the chairman of the Board of Supervisors for your files. City Managers/Admistrators , September 18, 1991 Page 3 Should you have any questions I may be reached at (213) 974-5033 . mnSvcs:SR:dca Attachments REZA(WPS 1:A):AMENDMNT cc: Sam Olivito, Executive Director, CCCA Jim Van Horn, President CCCA Howard Chambers, Chairman City Managers/City Administrators John Hammergren, LASD Roslyn Robson, Department of Public Works Daniel 0. Ikemoto, Auditor-Controller 44.0' Nolo COUNTY OF LOS ANGELES OFFICE OF THE COUNTY COUNSEL 848 MALL OF AOMINISTRATION SOO WEST TEMPLE STREET LOS ANGELES. CALIFORNIA 90012 974-1801 OE WITT W. CLINTON. ;T..Nrr =OLNSEL The Honorable Board of Supervisors County of Los Angeles 383 Hall of Administration 500 West Temple Street Los Angeles, California 90012 Re: Contract Cities Trust Fund Program Modifications (Three Votes) Dear Supervisors: The County currently provides a variety of contract services to eighty-seven cities. Services provided by the County under this Contract Cities Program result in liability claims by third parties. Under State law, in the absence of an agreement, Cities and the County would be jointly liable and would share in the cost of defense and the payment of any awards. However, State law permits Cities and the County to reallocate these liabilities. In this County, by existing contract the eighty-seven Cities and the County have agreed that the Contract City Trust Fund is to be maintained by the County to pay these charges. Since 1978 each City's trust fund contribution has been two percent of total contract billings. At the present time, two independent audits have confirmed that the contribution rate needs to be increased to cover rising liabilities. Noe' Noe The Honorable Board of Supervisors Page Two The Contract Cities Association and the affected County departments have agreed on proposed contract modifications. These are the application of increased and variable rates to reflect the level of liability exposure resulting from each service and a specific City guarantee to replenish the Fund. Pending the results of an actuarial study regarding future rates, those Cities which sign the new agreement will be charged a three percent rate for Sheriff and Public Works and a two percent rate for all other services. These Cities will reimburse any deficiency in the trust fund balance within one year. Those Cities choosing not to sign the new agreement will pay a higher rate of 4 . 5 percent as authorized under the existing agreement. The Board of Directors of the Contract Cities Association has approved and recommends this agreement. THEREFORE, IT IS RECOMMENDED that your Board: Approve the attached Joint Indemnity Agreement between the County and Contract Cities, instructing the Chairman to sign each agreement upon presentation after its execution by the City. Very truly yours, DE WITT W. CLINTON County Counsel DWC/LWP/fsl Attachment