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RESOLUTION NO. 5320
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA'
AUTHORIZING THE EXECUTION AND DELIVERY OF A LIABILITY
RISK COVERAGE AGREEMENT, A TRUST AGREEMENT, AND THE
FILING OF A VALIDATION PROCEEDING AND CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
I'lHEREAS, the City of Arcadia (the "City") is a
municipality duly organized and existing under the
Constitution and laws of the State of California (the
"State") and the Charter of the City;
WHEREAS, the City is authorized by Part 6 of
Division 3.6 of Title 1, Section 990 et ~., of the
California Government Code (the "Act") 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
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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, El 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
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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");
WHEREAS, 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 Dr that such insurance is
not available at a reasonable cost;
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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
market to provide primary or excess public entity liability
insurance to local governments at reasonable rates Dr, 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 needs of the
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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
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(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 in 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;
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WHEREAS, it is necessary and in the interest of the
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
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, Dr
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";
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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 PrDvidees 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
Risk Premium and Supplemental Risk Premium is the means by
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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 PrDvidees 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;
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NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE
CITY OF ARCADIA AS FOLLOWS:
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 2. 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 Azusa, Baldwin
Park, Bell, Culver City, Downey, El 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 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,
City Clerk and 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
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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, City Clerk and any other officer Dr 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
delivery thereof,
SECTION 4, Validation Proceedings. The Mayor, City
Manager and City Clerk and any other officer or official of
the City authorized by the Mayor are hereby authorized and
directed to participate and cooperate to the fullest extent
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practicable with the Provider, the other PrDvidees and
representatives of Brown & Wood ("Special 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 Dr
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 City Clerk 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 Dr 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 Certificates,
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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, approved and adopted this 2nd day of September ,1986,
m~.~
Mayor 0 he C~ y of A cad~a
ATTEST:
...~
C~ty Clerk of the City
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES SS:
CITY OF ARCADIA
I, CHRISTINE VAN MAANEN, City Clerk of the City of Arcadia,
hereby certify that the foregoing Resolution No. 5320 was passed
and adopted by the City Council of the City of Arcadia, signed by
the Mayor and attested to by the City Clerk at a regular meeting
of said Council on the 2nd day of September, 1986 and that said
Resolution was adopted by the following vote, to wit:
AYES: Councilman Chandler, Gilb, Lojeski and Young
NOES: None
ABSENT:
Councilman Harbicht
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