HomeMy WebLinkAbout2015 CON County of San Diego - SANDPIPA JPA - AmendmentNOTE TO FILE
01-29-18
IN THE MATTER OF: Resolution 2015-61, of the City of National
City consenting to the termination of the San Diego Pooled
Insurance Program (SANDPIPA) Joint Powers Authority (JPA).
Please note the following:
A FULLY EXECUTED ORIGINAL AGREEMENT - AMENDMENT
WAS NEVER FILED WITH THE OFFICE OF THE CITY CLERK.
ORIGINATING DEPARTMENT:
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Finance Public Works
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RESOLUTION NO. 2015 — 61
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
CONSENTING TO THE TERMINATION OF THE SAN DIEGO POOLED
INSURANCE PROGRAM (SANDPIPA) JOINT POWERS AUTHORITY (JPA),
EFFECTIVE JULY 1, 2016; AND AGREEING TO AMEND ARTICLES
25.A AND 25.B OF THE SANDPIPA JOINT POWERS AGREEMENT
FOR THE PURPOSE OF WINDING DOWN AND DISSOLVING THE JPA
WHEREAS, the City is a member of a joint powers authority, the San Diego
County Cities Joint Powers Agreement For Risk Management Services and Related Insurance
Coverages Creating the San Diego Pooled Insurance Program Authority for Municipal Entities
(SANDPIPA); and
WHEREAS, the SANDPIPA Board, representing the member agencies, has
determined that it is in the best interest of SANDPIPA members, and in the public interest, that
SANDPIPA be terminated and its assets distributed to members per the Joint Powers
Agreement; and
WHEREAS, the City hereby agrees to an amendment of the Joint Powers
Agreement by amending Article 25.A to add "distribution of dividends," after "disposing of all
claims", so that the Board of Directors is expressly authorized to continue to distribute
dividends, in accordance with the "plan document" referenced in Article 26, during the period of
winding up and dissolving the business affairs of the Authority; and
WHEREAS, the following language is added to Section 25.A: "Withdrawn or
cancelled members are entitled to participate in dividend distributions after accounting for their
Board determined share of administrative expenses."
WHEREAS, the City hereby agrees to an amendment of the Joint Powers
Agreement, substituting "the Board of Directors" for "The Executive Committee" in Article 25.B
of the Joint Powers Agreement, so that powers of the Authority for purposes of winding up and
dissolving the business affairs of the Authority will be vested in the Board of Directors.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
National City hereby agrees to the amendments to the JPA, paragraphs 25.A and 25.B, as
stated in the recitals above and as set forth in the Agreement with the proposed changes
attached to the staff report.
BE IT FURTHER RESOLVED that the City Council hereby provides its written
consent to the termination of SANDPIPA per Article 25 of the Joint Powers Agreement, effective
July 1, 2016, with SANDPIPA to continue to exist for the purpose of disposing of all claims,
distribution of dividends, distribution of assets, and all other functions necessary to wind up the
affairs of the Authority.
BE IT FURTHER RESOLVED that the City Clerk is directed to communicate this
Resolution to SANDPIPA.
[Signature Page to Follow]
Resolution No. 2015 — 61
Page Two
PASSED and ADOPTED this 5th day of May, 201
on Morrison, Mayor
ATTEST:
, „id)
Michael R. Dalla, City Clerk
APPROVED AS TO FORM:
dia Gacit : Silva
City Attorne
Passed and adopted by the Council of the City of National City, California, on May 5,
2015 by the following vote, to -wit:
Ayes: Councilmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY: RON MORRISON
Mayor of the City of National City, California
,,,,‘6 1
City CI yof the City of tional City, California
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 2015-61 of the City of National City, California, passed and adopted
by the Council of said City on May 5, 2015.
City Clerk of the City of National City, California
By:
Deputy
CITY OF NATIONAL CITY, CALIFORNIA
COUNCIL AGENDA STATEMENT
MEETING DATE: May 5, 2015
AGENDA ITEM NO. 0
ITEM TITLE:
Resolution of the City Council of the City of National City consenting to the termination of the San Diego
Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July 1, 2016; and agreeing to
amend Articles 25.A and 25.B of the SANDPIPA Joint Powers Agreement for the purpose of winding down and
dissolving the JPA.
PREPARED BY: Stacey Stevenson
PHONE: 336-4308
EXPLANATION:
Refer to attached staff report
DEPARTMENT: Human Resources
APPROVED BY: CZ5C6'1(
FINANCIAL STATEMENT: APPROVED: ` flir,w( Finance
ACCOUNT NO.
APPROVED: MIS
This action is anticipated to result in a positive cash flow of $743,632 over a six year period.
ENVIRONMENTAL REVIEW:
This is not a project and, therefore, is not subject to environmental review.
ORDINANCE: INTRODUCTION:
FINAL ADOPTION:
STAFF RECOMMENDATION:
Adopt the resolution consenting to the dissolution of the SANDPIPA JPA and the amendment of Articles 25.A
and 25.B of the SANDPIPA Joint Powers Agreement.
BOARD 1 COMMISSION RECOMMENDATION:
N/A
ATTACHMENTS:
Staff Report
Resolution
R�sok,VZ‘0\A No. aa\B-GI
CAL �RNIA 4.0
N TIO erry
INCORPORATE
City Council Staff Report
May 5, 2015
ITEM
Resolution of the City Council of the City of National City consenting to the termination of the
San Diego Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July
1, 2016; and agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers
Agreement for the purposes of winding down and dissolving the JPA.
BACKGROUND
A January 20, 2015 staff report to the City Council (attached) provided an update on the status of
the San Diego Pooled Insurance Program Authority (SANDPIPA), a joint powers authority
(JPA). As stated in the report, with the impending retirement of SANDPIPA's General Manager,
the JPA's only full-time employee, the SANDPIPA Board has been engaged in succession
planning efforts that were further complicated in December, 2014 with 67% of the member cities
(8 of 12) submitting notices of intent to withdraw from SANDPIPA as of July 1, 2015.
The following staff report provides an update on events that have occurred since the last report
followed by a request for authority.
DISCUSSION
At its February 19, 2015 workshop, the Board considered five options (Options A — E) for
moving forward given both the planned retirement of the General Manager and the possibility of
up to eight member cities withdrawing from the JPA. The options were variations of two themes:
maintaining SANDPIPA with modifications to the current funding model in an effort to reduce
member contributions; and a transition as a whole or as individual cities to CSAC Excess
Insurance Authority (CSAC EIA).
CSAC EIA is a state-wide pool that was initially created for California counties. Over time, the
pool expanded its membership to include California cities and other public entities. SANDPIPA
currently purchases its excess layer through CSAC EIA. National City also purchases CSAC
EIA Excess Workers' Compensation coverage through the California Public Entity Insurance
Authority, a joint powers authority. While there are several other pools in the southern California
Page 2
Resolution of the City Council of the City of National City consenting to the termination of the
San Diego Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July
1, 2016; and agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers
Agreement for the purposes of winding down and dissolving the JPA.
May 5, 2015
region, CSAC was identified as the most viable option as its structure is similar to that of
SANDPIPA and because of the existing relationship between the two entities.
After reviewing all five options, it was agreed that two options would be carried forward as
recommended options to be considered at the next Board meeting. The Board held a meeting on
March 26, 2015 and discussed the two recommendations: modify the structure of SANDPIPA in
an effort to reduce costs, bringing the member contributions closer to those of CSAC EIA; and as
a group, purchase coverage through CSAC for Program Year 2016 (July 1, 2015 through June
30, 2016) and begin the process of dissolving SANDPIPA. The two options were identified as
Options C&D combined and Option E as follows:
1) Option C&D - Maintain the current structure of SANDPIPA, join CSAC EIA at $1
million attachment up to $50 million in coverage, reduce SANDPIPA's pool layer
confidence level to 65% for the remaining $1 million pool portion, and return 50% of the
available funds (dividend); or
2) Option E - Group purchase liability coverage from the CSAC EIA GL1 program for
Program Year 2016 at each member's Self Insured Retention and start the run off
process. SANDPIPA members would have the option to purchase directly from CSAC
EIA for Program Year 2017.
Quotes from CSAC EIA for each SANDPIPA member city were made available as was a run-off
model for SANDPIPA. The quotes showed that for most cities, even after factoring in projected
SANDPIPA dividend payments the cost of purchasing coverage through CSAC (contribution) is
less than the cost of purchasing coverage (contribution) from SANDPIPA. The savings to
National City is illustrated as follows:
A. SANDPIPA
Contribution
B. Declared
SANDPIPA
Dividend
C. Actual
SANDPIPA
Contribution
Less Dividend
(A-B)
D. Estimated
CSAC EIA
Contribution
E. Estimated
Savings
(C-D)
$655,156
$259,086
$396,070
$248,099
$147,971
After discussion, the unanimous vote of the Board was to adopt option E, followed by other
related motions intended to effectuate the chosen course of action.
Page 3
Resolution of the City Council of the City of National City consenting to the termination of the
San Diego Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July
1, 2016; and agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers
Agreement for the purposes of winding down and dissolving the JPA.
May 5, 2015
March 25, 2015 SANDPIPA Board Actions
Motion
Vote
1
Approve SANDPIPA joining CSAC-EIA as a group purchase
for liability coverage at the members' individual retentions in
its GL 1 program effective July 1, 2015 for the 15/16 Program
Year.
Unanimous in
favor
2
Approve a Resolution provided in the [Board] agenda material
to effectuate a dissolution process, effective July 1, 2016 and
terminate SANDPIPA' s providing liability coverage.
Resolutions are to be submitted to City Councils for all 12
member cities for approval by May 21, 2015.
Unanimous in
favor
3
Approve extending the deadline for the rescission of Notices
of Intent to Withdraw from April 1, 2015 to May 21, 2015.
11-1 in favor
4
Direct the General Manager to address the following
outstanding items for presentation to the Board and discussion
no later than June 30, 2015: Tail coverage, CalPERS liability,
disposition of outstanding claims, dividend payout as part of
runoff, review of existing contracts, Request for Proposals for
Third Party Administrator and other matters.
Unanimous in
favor
Through these motions, it is the intent of the member cities to dissolve SANDPIPA. In year one
(Program Year 2016), the cities will move as a group, with SANDPIPA as the vehicle, to CSAC
EIA and the SANDPIPA Board will begin the run-off process, the process of shuttering the JPA.
At this time, a six year run-off is projected. During the run-off, each of the twelve member cities
will pay administrative fees to SANDPIPA associated with the run-off process. The preliminary
run-off schedule also anticipates the payment of dividends of $3 million dollars each year,
distributed proportionately among all member cities. In year two, each city will have the option
of staying with CSAC EIA as an individual member or choosing another course of action (i.e.
joining another pool or fully self -insuring).
As the JPA was created by the City Councils of each member city, the vote of the Board is
advisory. Execution requires a confirming vote of at least nine of the associated City Councils.
As shown above, Board approved motion number 2 was to bring this matter before the City
Council by May 21, 2015 for action. The proposed Council action includes consenting to an
amendment to the SANDPIPA Joint Powers Agreement, Article 25, Termination and
Distribution. The proposed changes are in support of the interests of the member cities, allowing
for the distribution of dividends during the dissolution process; the payment of dividends to
withdrawn or cancelled members, minus their share of administrative expenses; and expanding
oversight of the dissolution process to the full Board of Directors, not just the Executive
Page 4
Resolution of the City Council of the City of National City consenting to the termination of the
San Diego Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July
1, 2016; and agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers
Agreement for the purposes of winding down and dissolving the JPA.
May 5, 2015
Committee as it is currently written. Proposed changes to the Agreement are identified in
Attachment 2 using underlining and strike out conventions.
RECOMMENDATION
Based on the anticipated savings, staff recommends adopting a resolution:
• consenting to the termination of the San Diego Pooled Insurance Program (SANDPIPA)
Joint Powers Authority (JPA) effective July 1, 2016; and
• agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers Agreement
for the purposes of winding down and dissolving the JPA
FISCAL IMPACT
The execution of the proposed actions includes a provision wherein each member city will
contribute to the cost of administering the SANDPIPA run-off process. The projected
administrative fee for National City is $53,188 for the first year. Factoring annual CSAC
contributions, SANDPIPA administrative fees and SANDPIPA anticipated dividend payments,
the projected fiscal impact to the City is a gain. As shown in Attachment 1, National City's total
expenses (CSAC contributions and SANDPIPA administrative fees) are projected to be less than
the anticipated dividends resulting in a positive budgetary impact. The positive cash flow over
the six year run off period is:
Program Year
Positive Fiscal*
Impact
2016
$103,924
2017
$140,141
2018
$134,896
2019
$128,756
2020
$122,185
2021
$113,730
Total
$743,632
*National City's net dividend after the payment of insurance contributions and administrative fees
Page 5
Resolution of the City Council of the City of National City consenting to the termination of the
San Diego Pooled Insurance Program (SANDPIPA) Joint Powers Authority (JPA) effective July
1, 2016; and agreeing to amend Articles 25.A and 25.B of the SANDPIPA Joint Powers
Agreement for the purposes of winding down and dissolving the JPA.
May 5, 2015
Attachments:
1. SANDPIPA Run -Off Analysis (6 Year)
2. SANDPIPA Joint Powers Agreement (with proposed changes to Article 25)
3. January 20, 2015 Staff Report
RUN-OFF
Member
Chula Vista
Coronado
Del Mar
Encinitas
Escondido
Imperial Beach
Lemon Grove
National City
Oceanside
Santee
Solana Beach
Vista
Footnotes:
A
Indicated'
CSAC EIA
% of Contributions
Admin at Member SIR
13.48%
7.49%
6.30%
7.66%
11.48%
6.28%
6.20%
7.8196
12.58%
6.72%
6.33%
7.66%
667,589
218,450
86,500
165,857
568,196
79,500
67,500
248,099
595,324
165,988
130,500
264,896
SANDPIPA Run -Off Analysis (6 Year)
Reflecting 3% Contribution Increase each year
8 C D g F
Declaring
$3,000,000
in Dividends
454,345
218,009
90,088
241,274
339,502
158,541
58,759
405,211
541,665
228,479
34,807
230,233
PLUS
2015/16 2015/16 2016/17
Run -Off Contributions Contributions
Admin Less Dividends Less Dividends
91,805
51,037
42,916
52,150
78,210
42,802
42,229
53,188
85,669
45,736
43,143
52,169
3,258,399 3,000,912 681,053
MODIFIED ADMIN: (allocation to be determined)
"A": Funding @ Member SIR to a S50,000,000
305,049
51,478
39,328
(23,266)
306,903
(36,239)
50,969
(103,924)
139,328
(16,755)
138,836
86,832
249,717
16,137
6,695
(61,099)
259,750
(68,989)
18,330
(140,141)
86,865
(49,318)
107,337
51,955
2017/18
Contributions
Less Dividends
G
2018/19
Contributions
Less Dividends
266,167 284,381
20,564 25,830
7,414 8,749
(58,348) (54,792)
273,747 289,247
(68,481) (67,364)
18,494 19,247
(134,896) (128,756)
101,361 117,478
(46,271) (42,499)
109,405 112,133
5 7, 765 64,473
938,540 477,238 546,923
681,053 148,200 122,000 91,000
H
2019/20
Contributions
Less Dividends
303,570
31,493
10,325
(50,886)
305,577
(66,015)
20,220
(122,185)
134,478
(38,401)
115,144
71,625
628,128 714,944
68,500
48,500
2020/21
Contributions
Less Dividends
326,246
38,944
13,308
(45,209)
324,877
(63,268)
22,561
(113,730)
154,705
(32,729)
119,614
80,645
825,965
49,500
Attachment I
TOTAL SIX
Year
Contributions
Less Dividends
1,735,129
184,446
85,820
(293,601)
1,760,102
(370,356)
149,820
(743,632)
734,217
(225,971)
702,470
413,295
4,131,738
Attachment 2
SAN DIEGO COUNTY CITIES JOINT POWERS AGREEMENT
FOR RISK MANAGEMENT AND RELATED INSURANCE COVERAGES
CREATING THE SAN DIEGO POOLED INSURANCE PROGRAM
AUTHORITY FOR MUNICIPAL ENTITIES
(SANDPIPA)
WHEREAS, certain signatory members of the San Diego County Cities Joint Powers
Agreement for Risk Management and Related Insurance Coverages desire to create a separate
and independent joint powers authority for the purpose of establishing and administering an
insurance program involving risk sharing; and
WHEREAS, participation by eligible municipal entities shall be wholly voluntary; and
WHEREAS, Government Code Section 6500 et seq. provides that two or more public
agencies may, by agreement, jointly exercise any power common to the contracting parties; and
WHEREAS, Government Code Section 990.4 provides that a local public entity may
self -insure, purchase insurance through an authorized carrier, or purchase insurance through a
surplus line broker, or any combination of these; and
WHEREAS, Government Code section 990.8 provides that two or more local entities
may, by a joint powers agreement, provide insurance for any purpose by any one or more of the
methods specified in Government Code Section 990.4; and
WHEREAS, each of the parties to this agreement desires to join together with the other
parties for the purpose of pooling certain self -insured claims and losses, as provided in
Government Code Section 990.8, and jointly purchasing excess insurance and administrative
services in connection with an insurance program for said parties;
NOW, THEREFORE, for and in consideration of the mutual advantages to be derived
therefrom and in consideration of the execution of this agreement by other public entities, it is
hereby agreed that San Diego Pooled Insurance Program Authority For Municipal Entities be
created as follows:
SAN DIEGO POOLED INSURANCE PROGRAM
AUTHORITY FOR MUNICIPAL ENTITIES
This agreement is made and entered into the County of San Diego, State of California, by
and among the cities organized and existing under the laws of the State of California, hereinafter
referred to collectively as "cities" and individually as "city," which are parties signatory to this
agreement. Said cities are sometimes referred to herein as "parties."
ARTICLE 1
DEFINITIONS
The following definitions shall apply to the provisions of this agreement:
A. "Assessment" shall mean the amount due and payable by the city in excess of the
premium for valid claims.
B. "Auditor" shall mean that person appointed by the board who is required to draw
warranties on behalf of the authority and provide for an annual audit, in accordance with
the law and the bylaws.
C. "Authority" or "SANDPIPA" shall mean the San Diego Pooled Insurance Program
Authority for Municipal Entities created by this agreement.
D. "Board of Directors" or "Board" shall mean governing body of the Authority.
E. "City" or "cities" shall mean general law or charter cities, established under the laws of
the State of California, which are signatory members of the authority; provided, however,
that this definition shall not be construed to prevent the Authority from extending
insurance coverage to any subsidiary, conditions approved by the board.
F. "Claim" shall mean demands made against the cities which are within the Authority's
insurance program.
G. "Clerk" shall mean the person of the Authority who is so appointed by the board under
the bylaws.
H. "Earned premium" shall mean earned premium as defined in the California Insurance
Code.
I. "Excess Insurance" shall mean that insurance which may be purchased on behalf of the
Authority to protect the funds of the cities against catastrophic losses or an unusual
frequency of losses during a single year.
J. "Executive Committee" shall mean the Executive Committee of the board of Directors of
the Authority.
K. "Fiscal Year" shall mean that period of twelve months which is established as the fiscal
year of the Authority.
L. "Incurred Loss" shall mean total expenses for payment of a claim, including reserves
therefore.
M. "Insurance" shall mean self-insurance through risk -pooling funded program, and/or any
commercial insurance contract, and the context requires.
SANDPIPA
Joint Powers Agreement
April 1, 1986 (with proposed 2015 amendments to Article 25)
2
N. "Insurance Program" shall mean insurance and risk management programs offered by or
through the Authority.
O. "Insurance Year" shall mean a period of time, usually twelve (12) months, determined by
the Executive Committee into which each element of the insurance program is segregated
for ease in determining premiums, incurred losses, and assessments.
P. "Memorandum of Insurance" shall mean the basic liability self-insurance program funded
by risk -sharing, issued through the Authority in policy form.
Q.
"Premium" shall mean the amount determined by the Board annually as necessary to fund
the insurance program of the Authority.
R. "Pro forma statement" shall mean a projection of estimated losses, expenses, premiums,
assessments, and other revenues for a reasonable period, for any insurance offered by the
Authority.
S. "Program Underwriter" shall mean an individual or legal entity, either under contract or
employed by SANDPIPA, to provide underwriting services.
T. "Reserves" shall mean funds not yet committed to the payment of a valid claim but held
for the payment of the claims.
U. "Risk Management" shall mean the process of identifying, evaluating, reducing,
transferring, sharing, and eliminating risk. Risk management includes various elements
of insurance, law, administration, technology, accounting, and general business to
effectively manage hazards and losses to which member cities may be exposed.
V. "Risk Manager" shall mean the manager of day-to-day affairs of the authority, appointed
by the board.
W. "Risk pooling or sharing" shall mean any common fund: (1) which is composed of cash,
investments permitted by Government Code Section 53601 et seq., or other assets; (2) to
which two or more members of the Authority have agreed to contribute in accordance
with the terms of the contract or memorandum of insurance of insurance in which
participation is voluntary; (3) from which claims and risk management costs of any
contributor to that common fund shall be paid; and (4) which operates in accordance with
this joint powers agreement.
X. "Self-insurance" shall mean providing for claims, losses, and risk management by risk -
pooling and the maintenance of reserve funds by the city.
Y. "Self -insured retention" or "retained limit" shall mean the amount below which a city is
liable, at its own expense, under the Memorandum of Insurance.
SANDPIPA
Joint Powers Agreement
April 1, 1986 (with proposed 2015 amendments to Article 25)
3
Z. "Underwriting Committee" shall mean standing committee to be established by the
Board, comprised of a chairman (elected from the Board) and two or more members -at -
large from participating agencies.
ARTICLE 2
PURPOSES
This agreement is entered into by cities pursuant to the provisions of the Government Code
Sections 990.4, 990.8, and 6500 et seq. in order to provide comprehensive and economical public
liability coverage and coverage for other risks to which the Board of Directors may agree.
Additional purposes are to reduce the amount of frequency of losses and to decrease the cost
incurred by cities in the handling and litigation of claims. These purposes shall be accomplished
through the exercise of the power of such cities jointly in the creation of a separate entity, the
San Diego Pooled Insurance Program Authority For Municipal Entities (the "Authority"), to
administer an insurance program pursuant to which the cities will pool certain losses, claims, and
funds, jointly purchase excess insurance (if available) and administrative and other services,
including claims adjusting, data processing, risk management consulting, loss prevention, legal,
and related services.
It is also the purpose of this agreement to provide, to the extent permitted by law, for the
inclusion, at a subsequent date, of such additional cities as may desire to become parties to this
agreement and members of the Authority, subject to approval by the Board of Directors.
ARTICLE 3
PARTIES TO THE AGREEMENT
Each party to this agreement certifies that it intends to and does contract with all other parties
who are signatories of this agreement and, in addition, which such other parties as may later be
added as parties to and signatories of this agreement pursuant to Article 21. Each party to this
agreement also certifies that the deletion of any party from this agreement, pursuant to articles 22
and 23, shall not affect this agreement nor such party's intent to contract, as described above,
with the other parties to the agreement then remaining.
ARTICLE 4
TERMS OF THE AGREEMENT
This agreement shall become effective upon the first day it has been executed by two cities.
ARTICLE 5
CREATION OF AUTHORITY
Pursuant to section 6500 et seq. of the Government Code, there is hereby created a public entity,
separate and apart from the parties hereto, to be known as the San Diego Pooled Insurance
Program Authority For Municipal Entities. Pursuant to Government Code Section 6508.1, the
debts, liabilities, and obligations of the Authority shall not constitute debts, liabilities, or
obligations of any party to this agreement or to any city.
SANDPIPA
Joint Powers Agreement
April 1, 1986 (with proposed 2015 amendments to Article 25)
4
ARTICLE 6
POWERS OF AUTHORITY
A. The Authority shall have the powers common to cities and is hereby authorized to do all
acts necessary for the exercise of said common powers, including, but not limited to, any
or all of the following:
1. To make and enter into contracts, including contracts of insurance and self-
insurance for it's members providing the risk -pooling or sharing, whether or not
subject to regulation under the insurance code, to the extent and in the manner
permitted under Government Code Sections 990.4, 990.8, and 6508, or any other
provisions of law;
2. To incur debts, liabilities, or obligations;
3. To acquire, hold, or dispose of property, contributions and donations of property,
funds, services, or other forms of assistance from persons, firms, corporations,
and governmental entities;
4. To sue and be sued in its own name; and
5. To exercise all powers necessary and proper to carry out the terms and provisions
of this agreement, or otherwise authorized by law.
B. Said powers shall be exercised pursuant to the terms hereof and in the manner provided
by law.
ARTICLE 7
BOARD OF DIRECTORS
A. The Authority shall be governed by the board of Directors which is hereby established
and which shall be composed of one representative from each city, who shall be selected
by the city manager of that city. Each city in addition to appointing its members of the
Board, shall appoint at least one alternate. Each director and each alternate shall have a
staff employee of that city. The alternate appointed by a city shall have the authority to
attend, participate in, and vote at any meeting of the Board when the regular member for
whom he or she is an alternate is absent from said meeting.
B. Each director or alternate of the board shall serve until a successor is appointed. Each
director or alternate shall serve at the pleasure of the city by which he or she has been
appointed.
C. Each director or alternate shall have one vote.
SANDPIPA
Joint Powers Agreement
April 1, 1986 (with proposed 2015 amendments to Article 25)
5
ARTICLE 8
POWERS OF THE BOARD OF DIRECTORS
The Board of Directors of the Authority shall have the following powers and functions:
A. The Board shall elect from its members, pursuant to Article 10 of this agreement, an
Executive Committee.
B. The Board may review all acts of the Executive Committee and shall have the power to
modify and/or override any decision or action of the Executive Committee upon a
majority vote of the entire Board of Directors.
C. The Board shall review, modify, if necessary, and approve the annual operating budget of
the Authority prepared by the Executive Committee, pursuant to Article 11(d).
D. The Board shall receive and review periodic accounting of all funds under Articles 16
and 17 of this agreement.
E. The Board shall have the power to conduct, on behalf the Authority, all business of the
Authority, including that assigned to the Executive Committee which the Authority may
conduct under the provisions hereof and pursuant to law.
F. The Board shall have such other powers and functions as are provided for in this
agreement or in the bylaws.
ARTICLE 9
MEETINGS OF THE BOARD OF DIRECTORS
A. Meetings. The Board shall provide for it's regular adjourned regular, and special
meetings upon call of the president of the Board; provided, however, that it shall hold at
least one regular meeting annually, as set forth in the bylaws.
B. Minutes. The clerk of the Authority shall cause minutes of regular, adjourned regular,
and special meetings to be kept and shall, as soon as possible after each meeting, cause a
copy of the minutes to be forwarded to each member of the Board and to each city.
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
constitute action by the Board, except as otherwise specifically set forth in this agreement
or in the bylaws.
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D. Compliance with the Brown Act. All meetings of the Board, including, without
limitation, regular, adjourned regular, and special meetings, shall be called, noticed, held,
and conducted in accordance with the provisions for the Ralph M. Brown Act,
Government Code section 54950 et seq.
ARTICLE 10
EXECUTIVE COMMITTEE
A. There shall be an Executive Committee of the Board of Directors which shall consist of
at least three members, as provided in the bylaws. The members of the Executive
Committee shall include the president of the Board of Directors; the remainder of the
members shall be elected by the Board of Directors from its members, as provided in the
bylaws.
B. Vacancies on the Executive Committee shall be filled as provided in the bylaws.
ARTICLE 11
POWERS OF THE EXECUTIVE COMMITTEE
The Executive Committee may be delegated the following powers:
A. Determine details of and select the insurance program of the Authority.
B. Determine and select all insurance, including excess insurance, necessary to carry out the
programs of the Authority.
C. Have Authority to contract for or develop various services for the Authority, including,
but not limited to, claims adjusting, loss control, legal defense, and risk management
consulting.
D. Cause to be prepared the operating budget of the Authority for each fiscal year, subject to
review, modification, and approval by the Board, as provided for in Article 8(c).
E. Receive and act upon reports of the risk manager and committees of the Authority, as
provided in the bylaws.
F. The authority to hire persons as the Executive Committee deems necessary for the
administration of the Authority.
G. Exercise general supervisory and policy control over the risk manager.
H. Direct investment of funds collected by the Authority.
I. Such other powers and functions as are provided for pursuant to this agreement.
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ARTICLE 12
MEETINGS OF THE EXECUTIVE COMMITTEE
The meetings of the Executive Committee shall be held and conducted as provided in the bylaws.
The Committee shall make periodic reports to the Board of Directors, advising the Board of its
decisions and activities.
ARTICLE 13
OFFICERS OF THE AUTHORITY
A. President and Vice President. The Board shall elect a president and vice president of the
Authority at its first meeting in January of even -numbered years, each to hold office until
a successor is elected. In the event the president or vice president so elected ceases to be
a member of the Board, the resulting vacancy in the office of president or vice president
shall be filled at the next regular meeting of the Board held after such vacancy occurs.
The Executive Committee may appoint an interim president or vice president pending
action by the Board of Directors. In the absence or inability of the president to act, the
vice president shall act as president. The president, or in his or her absence the vice
president, shall preside at and conduct all meetings of the Board and shall chair the
Executive Committee.
B. Treasurer. The treasurer shall be appointed by the Board. The duties of the treasurer are
set forth in Articles 16 and 17 of this agreement.
C. Attorney. The Board shall appoint an attorney for the Authority.
D. Other Officers. The Board shall have the power to appoint, or to delegate to the
Executive Committee the power to appoint, the auditor and clerk and such other officers
as may be necessary to carry out the purpose of this agreement.
ARTICLE 14
INSURANCE COVERAGE
A. The Authority shall maintain levels of insurance coverage for cities determined by the
Board of Directors to be reasonably adequate.
B. The insurance coverages provided by the Authority may include protection for motor
vehicle, personal injury, property damage, errors and omissions, contractual, or
comprehensive general liability, or such other areas of coverage as the Executive
Committee may recommend to the Board.
C. Upon Request, a city tendering a claim under any risk sharing insurance program of the
Authority shall be entitled to select a legal defense firm from among those acceptable to
under contract with the Authority.
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D. The Board may arrange for a group policy to be issued for cities interested in obtaining
additional coverage at an additional cost to those cities.
E. The Board may arrange for the purchase of excess insurance. The Board may
discontinue purchase of excess insurance if no longer available or needed to protect the
Authority's funds.
ARTICLE 15
IMPLEMENTATION OF THE INSURANCE PROGRAM
A. Program Formation; Appointments. As soon as practicable after the effective date of this
agreement, the Board of Directors shall determine the insurance coverages to be provided
as permitted in Article 14, the amount of premiums therefore, established precise cost
allocation plans and formulas, provide for the handling of claims, establish pro forma
statements of each risk -pooling or other type of insurance program, and specify the
amounts and types of excess insurance, if any, to be procured. In addition, the Board
shall appoint an Underwriting Committee, Claims Review Committee, and Program
Underwriter as soon as practicable. Vacancies on such committees shall be filled by
action of the Executive Committee on an interim basis until such time as the Board acts
to fill such vacancies.
B. Premiums and Assessments. The premiums and assessments for each city for any risk -
pooling program shall be recommended by the Underwriting Committee and approved by
the Board.
C. Annual Adjustments. The cost allocation plans and formulas adopted by the Board shall
provide for an adjustment in each cities premiums following the first year of operation of
each program, and annually thereafter, to produce a premium for each year, for each city,
for each risk -pooling program, which shall consider the following five items:
1. The city's incurred losses for each risk pooling program; and
2. The city's share of such losses and other expended for each risk pooling program
as a proportion of all cities such losses; and
3. The city's contribution to reserves, including reserves for incurred -but -not
reported losses, for each risk -pooling program; and
4. The city's share of costs to purchase excess insurance, if any; and
5. The city's share of costs to purchase any additional coverage, as provided in
article 14(c).
D. Notice of Premiums. Premium adjustments shall be made annually, and notices of
premiums shall be distributed at least sixty (60) days prior to the close of each insurance
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year. All premiums shall be due at payable within thirty (30) days after the effective date
of coverage, except as provided in Article 20.
E. Payment of premiums or Assessments Over Time. Inasmuch as some cities may
experience an unusual frequency of losses during a single insurance year which would
increase their subsequent premium substantially above the premium for that risk sharing
program for the insurance year, or result in an assessment, and cause budgetary problems,
the Board may allow for payment of a portion of such subsequent premium or assessment
to be made over a period of time not to exceed five years, with reasonable interest.
F. Underwriting Practices. Underwriting practices shall be generally consistent with
industry standards in order to stabilize premiums and permit purchases of excess
coverage, and other coverages supplemental to the Memorandum of Insurance.
1. Underwriting Committee. All matters dealing with the scope of coverage and
limits of liability provided under the Memorandum of Insurance shall be the
primary responsibility of the standing committee established by the Board called
the "Underwriting Committee." The Committee shall also be responsible for
recommending premiums and assessments to the Board. The Underwriting
Committee shall receive advice from the Program Underwriter Decisions of the
Underwriting Committee will be reviewed and acted upon by the Board. A
majority of vote of the entire Board shall be required to overrule a decision if the
Underwriting Committee in all matters.
2. Program Underwriter. The program Underwriter selected by the board shall be
independent of any broker or insurer with contracts with the Authority and shall
not be a staff employee of any party. The Program Underwriter shall advise the
Authority concerning its underwriting decisions.
3. Limits. The limits of liability offered under the Memorandum of Insurance shall
be established by the underwriting committee, using the following general
guidelines:
a. Per -occurrence limits shall approximate two times the annual premiums
collected under the program. The limits of liability shall be established
annually (at each anniversary) and shall not be amended with mid-term
addition or deletion of insurance.
b. Annual aggregate limits shall approximate four times the annual premiums
collected under the Memorandum of Insurance. The purpose of this
limitation is to assure that potential assessments are limited to a maximum
relative to the annual aggregate exposure.
The program Underwriter shall recommend limits of liability to the
Underwriting Committee. The Underwriting Committee shall approve,
disapprove, or modify such recommendation with just cause.
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April 1, 1986 (with proposed 2015 amendments to Article 25)
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4. Assessments. In the event assessments are necessary, the Program Underwriter
shall make recommendations to the Underwriting Committee. The committee,
with good cause, may amend, reject, or accept the proposed assessment, and make
a recommendation to the board. In the event a recommended assessment is
reduced or rejected, and alternate funding mechanism shall be adopted by the
Board as necessary to assure solvency of the program.
The assessment amount shall be allocated based on the following criteria:
1. The extent by which any city's losses have exceeded its contribution to the
insurance program.
2. In any insurance year, the ratio of a city's claims pending to all cities'
claims pending.
3. In any insurance year, the ratio of a city's premiums and other
contributions to the total therefore of all cities.
G. Assessment Payment. Assessments are due and payable within 30 days of date of
mailing of notice by the Board.
H. Exhaustion of Annual Aggregate Limits. In the event annual aggregate limits ate reached
for any insurance year, claims payments shall be made proportionally, based on the ratio
total claims under the program bear to the annual aggregate limits under the
Memorandum of Insurance.
ARTICLE 16
ACCOUNTS AND RECORDS
A. Annual Budget. The Authority shall annually adopt an operating budget, pursuant to
Article 8(c) of this agreement.
B. Funds and Accounts. The treasurer of the Authority shall establish and maintain such
funds and accounts as required by the Executive Committee and as required by good
accounting practice. Books and records of the Authority in the hands of the treasurer
shall be open to any inspection at all reasonable times by authorized representatives of
cities and as otherwise required by law.
C. Treasurer's Report. The treasurer, within 120 days after the close of each fiscal year,
shall give a complete written report of all financial activities for such fiscal year to the
Board and to each city.
D. Annual Audit. The auditor shall provide for a certified, annual audit of the accounts and
records of the Authority, which audit shall be made by a certified public accountant and
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April 1, 1986 (with proposed 2015 amendments to Article 25)
11
shall conform to generally acceptable auditing standards. A report thereof shall be filed
as a public record with each of the cities. Such report shall be filed within six months of
the end of the year under examination.
ARTICLE 17
RESPONSIBILITY FOR MONIES
A. The treasurer of the Authority shall have the custody of and disburse the Authority's
funds. He or she shall have the authority to delegate the signatory function of treasurer to
such persons as are authorized by the Board.
B. A bond in the amount determined adequate by the Board shall be required of all officers
and personnel authorized to disburse funds of the Authority, such as bonds to be paid for
by the Authority.
C. The treasurer of the Authority shall assume the duties described in Government Code
Section 6505.5, including:
1. Receive and acknowledge receipt for all money of the Authority and place it in
the treasury of the Authority.
2. Be responsible, upon his and her official bond, for the safekeeping and
disbursement of all of the Authority money so held by him or her;
3. Pay, when due, out of money of Authority so held by him or her, all sums payable
on outstanding bonds and coupons of the Authority;
4. Pay any other sums due from Authority money only upon warrants approved by
the presidents of the Board or his or her designee and the risk manager. The
warrants shall be drawn by the auditor, who shall be selected by the Board in
accordance with the bylaws and laws.
5. Verify and report monthly to the Authority and to cities the amount of money held
for the Authority, the amount of receipts since the last report, and the amount paid
out since the last report.
D. The treasurer shall deposit the funds of the Authority in accordance with the investment
policy required by law, and approved by the Board, in those instituting and investments
permitted pursuant to Government Code section 53601 et seq.
ARTICLE 18
RESPONSIBILITIES OF THE AUTHORITY
The Authority shall perform the following functions in discharging its responsibilities under this
agreement:
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A. Provide an insurance program, as necessary, including, but not limited to, a self-insurance
risk sharing fund, and commercial insurance (which may include excess coverage and
umbrella insurance), by negotiation, bid, or purchases.
B. Assist cities in obtaining insurance coverage for risks not included within the insurance
program of the Authority, as permitted in Article 14(C).
C. Assist each city with the implementation of risk management programs related to risks
covered by the Authority's insurance program within the city.
D. Provide loss prevention and safety consulting services to cities, as required.
E. Provide claims adjusting and subrogation services for claims covered by the Authority's
insurance program, as required.
F. Provide loss analysis and 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 levels of self -insured retention (as to risk -sharing programs) and
deductibles (as to commercial insurance).
G. Conduct risk management audits to review the participation of each city in the insurance
program.
H. The Authority shall have such other responsibilities as deemed necessary by the Board of
Directors in accordance with this agreement.
ARTICLE 19
RESPONSIBILITIES OF CITIES
Cities shall have the following responsibilities:
A. Each city shall appoint a representative and at least one alternate to the Board of
Directors, pursuant to Article 7 of this agreement.
B. Each city shall maintain an active safety program and shall consider all recommendations
of the Authority concerning unsafe practices.
C. Each city shall maintain its own set of records in all categories of risk covered by the
insurance program of the Authority to insure accuracy of the Authority's loss reporting
system until no longer deemed necessary by the Board.
D. Each city shall pay its premium, and any assessment, within thirty (30) days of the
invoice date. After withdrawal or termination, each city shall pay promptly to the
Authority its share of any additional assessment when and if required of it by the
Executive Committee under Article 24 or 25 of this agreement.
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April 1, 1986 (with proposed 2015 amendments to Article 25)
13
E. Each city shall provide the Authority with such other information or assistance as may be
necessary for the Authority to carry out the insurance program under this agreement.
F. Each city shall, in any and all ways, cooperate with assist and assist the Authority, and
any insurer of the Authority, in all matters relating to this agreement and covered claims
and will comply with all bylaws, rules, and regulations adopted or approved by the Board
of Directors.
ARTICLE 20
INTERIM PERIOD AND EFFECTIVE DATE OF PROGRAM
A. Interim Period. Concurrently with approval of this agreement, each city shall approve
and accept the proposed premium, fee quote, and Memorandum of Insurance from Driver
Insurance. Such approval and acceptance shall be conditioned upon the formation of the
Authority and the Authority's approval of the proposed premium fee and Memorandum
of Insurance. Each city shall have thirty (30) days from the date of receiving such items
in writing to consent by resolution to enter the Authority and accept the provisions of the
Memorandum of Insurance.
B. Effective Date. The proposed Memorandum of Insurance shall state that it shall be
effective as of April 1, 1986.
ARTICLE 21
NEW MEMBERS
The Authority shall allow entry into its insurance program by new members only upon approval
by the Board, or by the Executive Committee if specifically delegated such authority by
resolution of the Board, which resolution may impose such conditions or limitations upon such
authority of the Executive Committee as the Board deems appropriate. Cities entering under this
article shall be required to pay their share of the organizational expenses, as determined by the
Board, including expenses necessary to analyze their loss data and determine their premiums.
ARTICLE 22
WITHDRAWAL
After an initial one-year, noncancellable commitment to the Memorandum of Insurance, a city
may withdraw, provided it has given the Authority a six-month written notice of its intent to
withdraw from this agreement and the Memorandum of Insurance.
ARTICLE 23
CANCELLATION
Notwithstanding the provisions of Article 22, the Authority shall have the right to cancel, for
good cause, any city's participation in the Authority and Memorandum of Insurance upon a two-
thirds vote of the entire Board of Directors, provided that a reasonable time shall be afforded, in
the discretion of the Board of Directors, to place coverage elsewhere.
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April 1, 1986 (with proposed 2015 amendments to Article 25)
14
ARTICLE 24
EFFECT OF WITHDRAWAL
A. The withdrawal of any city from this agreement shall not terminate the same, and a city,
by withdrawing, shall not be entitled to payment or return of any earned premium,
consideration, or property paid or donated by the city to the Authority, or to any
distribution of assets, except as provided in Article 25(c).
B. The withdrawal or cancellation of any city after the effective date of the Memorandum of
Insurance or other elements of the insurance program shall not terminate its responsibility
to contribute its share of premium or funds to the insurance program of the Authority,
until all claims or other unpaid liabilities covering the period the city was a participant
have been finally resolved and a determination of the final amount of payments due by
the city or credits to the city for such period has been made by the Executive Committee.
In connection with this determination, the Executive Committee may exercise similar
powers to those provided for in Article 25(b) of this agreement.
ARTICLE 25
TERMINATION AND DISTRIBUTION
A. This agreement may be terminated any time during the first year by the written consent of
all cities and thereafter by the written consent of three -fourths of the cities; provided,
however, that this agreement and the Authority shall continue to exist for the purpose of
disposing of all claims, distribution of dividends, distribution of assets, and all other
functions necessary to wind up the affairs of the authority. Withdrawn or cancelled
members are entitled to participate in dividend distributions after accounting for their
Board determined share of administrative expenses.
B. The Board of Directors is vested with all powers of the Authority
for the purpose of winding up and dissolving the business affairs of the Authority. These
powers shall include the power to require cities, including those which were signatory
hereto at the time a claim arose or was incurred, to pay their share of any additional
assessment, in accordance with loss allocation formulas for final disposition of all claims
and losses covered by this agreement. A city's share of such assessment shall be
determined on the same basis as that provided for assessments in Article 15(c) and (d) of
this agreement.
C. Upon termination of this agreement, all assets of the Authority shall be distributed only
among the parties that have been signatories hereto, including any of the cities which
previously withdrew pursuant to Article 22 or were canceled pursuant to Article 23 of
this agreement, in accordance with and proportionate to their cash contributions
(including premium payments and property at market value when received) made during
the term of this agreement. The Executive Committee shall determine such distribution
within six months after disposal of the last pending claim or loss covered by this
agreement.
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D. In the absence of an Executive Committee, the Risk Manager shall exercise all powers
and authority under this Article. The decision of the Executive Committee or Risk
Manager under this article shall be final.
ARTICLE 26
PROVISION FOR BYLAWS AND PLAN DOCUMENT
As soon as practicable after the first meeting of the Board of Directors, the Board shall cause to
be developed and shall adopt Authority bylaws and a plan document to govern the day-to-day
operations of the Authority. Each city shall receive a copy of any bylaws, plan document, or
other document developed under this article.
ARTICLE 27
NOTICES
Notices to cities hereunder shall be sufficient if delivered to the clerk of the respective city.
ARTICLE 28
ENFORCEMENT
The Authority shall have the right to enforce this agreement. If any suit or other proceeding or
arbitration is brought by the Authority, or any member, to enforce this agreement, the prevailing
party shall be entitled to recover costs and expenses, including reasonable attorneys' fees. No
court proceedings shall be initiated by the Authority, affected member, or withdrawn member
agency, other than for the collection or return of assessments or premiums. Other disputes shall
be resolved as provided in the bylaws.
ARTICLE 29
INVALIDITY
Should any portion, term, condition, or provision of this agreement be determined by a court of
competent jurisdiction to be illegal and in conflict with any law of the State of California, or be
otherwise rendered unenforceable or ineffectual, the validity of the remaining portion, terms,
conditions, and provisions shall not be affected thereby.
ARTICLE 30
TORT LIABILITY
Section 895.2 of the Government Code imposes certain tort liability jointly upon public entities
solely by reason of such entities being parties to an agreement as defined in Section 895 of said
Code. Therefore, the parties hereto, as between themselves pursuant to the authorization
contained in Sections 895.4 and 895.6 of the Government Code, each assumes the full liability
imposed upon it or any of its officers, agents or employees by law for injury caused by a
negligent or wrongful act or omission occurring in the performance of the Agreement, to the
same extent that such liability would be imposed in the absence of Section 895.2 of said Code.
To achieve this purpose each party indemnifies and hold harmless the other party for any loss,
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16
cost or expense that may be imposed upon such other party solely by virtue of Section 895.2 of
the Government Code.
Upon exhaustion of aggregate policy limits, as described in Article 15, under the Memorandum
of Insurance (and excess insurance, if obtained) for any insurance year, no city or party shall be
assessed or held in any way responsible for the claims or losses of any other city which are
excess of such limits; and any expenses that may reasonably be incurred as a result of such
excess claims. Accordingly, this agreement does not affect city claims processing or payment
after exhaustion of aggregate policy limits; however, such claims management procedures may
be considered by the Authority in evaluating the conformance of city risk management practices
with Authority standards.
ARTICLE 31
CLAIMS, LITIGATION, OR JUDGMENTS AGAINST THE AUTHORITY
A. Defense of Claims. As to any claim or action against the Authority which is based on or
arises out of an occurrence involving an officer or employee of the Authority during the
course and in the scope of such duties, who is also an officer or employee of a city, such
claim or action against the Authority will be defended by the Authority to the extent
required by law. Such claims or actions shall not be considered claims or actions against
such city solely as a result of employment by the Authority.
B. Claims and Judgment Against the Authority. Claims and judgments against the
Authority shall be paid from, or charged to, the appropriate coverages or self -insured
funds the Authority has established against such claims, judgments or losses. Such
amounts shall be paid from the Authority's own coverage or self -insured funds.
C. Arbitration. Any differences, claims or matters in dispute arising between or among
members shall, if such differences arise out of this agreement or the bylaws, be submitted
by such members to arbitration by the American Arbitration Association or its successor
under the pertinent provisions of the laws of the State of California relating to arbitration,
except as provided below. The decision of the arbitrator(s) may be entered as a judgment
in any court of the State of California or elsewhere. Costs of arbitration, including
reasonable attorneys' fees, shall be recoverable in arbitration.
D. Authority Representation Conflicts. Any differences, claims or matters in dispute arising
between or among members shall, if such differences do not arise out of this agreement
or the bylaws, be handled as follows:
1. After being notified in writing that one member agency has filed a formal claim
against another in accordance with provisions of the Government Code, the
Authority can no longer act on behalf of either member insofar as the case giving
rise to the claim is concerned if the claim involves a risk covered by the
Memorandum of Insurance, or other risk -sharing insurance policy of the
Authority in which each of the involved members is a participating member.
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2. Conversely, the Authority may continue to act on behalf of a participating
member, even after receipt of written notice of a formal claim filed by one
member agency against another, provided the claim only involves a risk -sharing
insurance policy of the Authority in which only one of the involved member
agencies is participating.
In any case falling within the boundaries of (1) or (2) above, the Authority may, in its discretion,
act on behalf of one or all involved members, provided that the Authority first obtains the written
consent of each involved member; provided that the failure of the Authority to act on behalf of
any member under this section shall not affect the Authority's obligation to provide coverage,
including coverage of legal defense costs under the Memorandum of Insurance or other risk -
sharing insurance of the Authority.
ARTICLE 32
PROHIBITION AGAINST ASSIGNMENT
No city may assign any right, claim, or interest it may have under this agreement, and no
creditor, assignee or third -party beneficiary of any city shall have any right, claim, or title to any
part, interest, fund, premium, or asset of the Authority.
ARTICLE 33
AGREEMENT COMPLETE
The foregoing constitutes the full and complete agreement of the parties. There are no oral
understandings or agreements not set forth in writing herein.
IN WITNESS WHEREOF, the parties hereto have first executed this agreement by
authorized officials thereof on the date indicated below:
City of Chula Vista
By:
City of Coronado
By:
Authorized by Resolution No. Authorized by Resolution No.
City of Del Mar
By:
City of Encinitas
By:
Authorized by Resolution No. Authorized by Resolution No.
City of Escondido City of Imperial Beach
By: By:
Authorized by Resolution No.
SANDPIPA
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April 1, 1986 (with proposed 2015 amendments to Article 25)
Authorized by Resolution No.
18
City of Lemon Grove
By:
Authorized by Resolution No.
City of Oceanside
By:
Authorized by Resolution No.
City of Solana Beach
By:
Authorized by Resolution No.
SANDPIPA
Joint Powers Agreement
April 1, 1986 (with proposed 2015 amendments to Article 25)
City of National City
By:
Authorized by Resolution No.
City of Santee
By:
Authorized by Resolution No.
City of Vista
By:
Authorized by Resolution No.
19
INCORPORATE?
City Council Staff Report
January 20, 2015
ITEM
Attachment 3
Staff Report: Report on the Status of the San Diego Pooled Insurance Program Authority
(SANDPIPA)
BACKGROUND
On September 23, 1986, the City Council of the City of National City adopted Council
Resolution 15,088 authorizing the City to join the newly created San Diego Pooled Insurance
Program Authority (SANDPIPA). SANDPIPA was created as a Joint Powers Authority (JPA)
under the provisions of Government Code Sections 990.4, 990.8 and 6508 for the purpose of
establishing and administering an insurance program involving risk sharing; to reduce the
amount of frequency of losses; and to decrease the cost incurred by cities handling and litigation
of claims. Under the provisions of the joint powers agreement, cities pool certain losses, claims,
and funds, and jointly purchase excess insurance, administrative and other services.
In 1993, SANDPIPA hired a full-time General Manager to handle day to day operations of the
JPA, including liability claims monitoring, fiscal oversight, broker management and industry
oversight of SANDPIPA. Work is performed from the General Manager's home office.
Underwriting, bookkeeping, legal counsel, audit services (claims and financial), and actuarial
analysis services are provided by contractors.
The JPA is governed by a Board that is comprised of one representative and an alternate from
each member city. Today the JPA has twelve member cities:
• Chula Vista • Escondido • Oceanside
• Coronado • Imperial Beach • Santee
• Del Mar • Lemon Grove • Solana Beach
• Encinitas • National City • Vista
DISCUSSION
Having received notice from the General Manager of her intent to retire within an approximate
24 month period, the SANDPIPA Board began an exploratory process of succession planning.
Page 2
Staff Report — Report on the Status of the San Diego Pooled Insurance Program Authority
(SANDPIPA)
January 20, 2015
Contracting for the services of Bickmore, a risk management consulting firm as the facilitator,
the board explored its range of options: maintaining the current program model; enhancing the
current model by adding an Assistant General Manager and renting formal office space; merging
the JPA with another existing pool; contracting with a firm for pool administration; and
dissolving of the JPA. In a recent action, the majority of the Board voted to contract for pool
administration in lieu of hiring a new employee General Manager. The change is intended to
provide increased access to data systems, and provide enhance support to the Board that comes
with working with a firm with a depth of employees (verses one in-house staff position). The
change could increase responsiveness to member cities and strengthen the JPA's ability to
respond to industry shifts. The change would also eliminate the JPA's employment liability.
Independent of the Board's succession planning, exercising the provision of Article 22 of the
joint powers agreement, a member City submitted formal notice of its intent to withdraw from
the JPA as of July 1, 2015. The intent of the notice was to provide said City with the opportunity
to explore other alternatives that might be more economically advantageous to their
circumstances. Notices of intent are not final and can be withdrawn with the consent of the
Board. Given the notice, the Board made a decision to analyze the impact the withdrawal would
have on the other cities remaining in the JPA. The Board also agreed to allow other individual
member cities to seek initial quotes from the State insurance pool. Whereas SANDPIPA is a
small regional risk sharing pool, the State pool includes member counties and cities across
California thus, the State pool has greater buying power. The full matter was scheduled for
discussion at the Board's January 29, 2015 meeting.
Initial, non -binding estimates were received from the State pool in December, 2014, and
distributed to the Board. These early estimates indicate that most member cities, including
National City could likely see a reduction in premium costs by moving to the State pool. In late
December, 2014, the City of National City became aware that seven other cities submitted
notices of intent to withdraw also as of July 1, 2015.
The most recent financial data provided November 6, 2014 shows that the JPA is fiscally
healthy. However, it can be assumed that if 67% of the member cities (8 of 12) opt to withdraw,
the program will no longer be viable. Given that, at the direction of the City Manager, as a
preservation of rights and as a protection of the City's interests, on December 26, 2014 the City
of National City submitted a notice of intent to withdraw effective July 1, 2015. It is still
National City's desire to work with the other member cities to determine the best course of
action for the JPA, considering the interests of all member cities. Again, the notice was
submitted as a preservation of rights and can be withdrawn. All information received to date is
preliminary, requiring more extensive analysis.
As stated above, there is a Board meeting scheduled for January 29, 2015. It is anticipated that
options will be discussed, including the process and impact of dissolving the JPA should that
become necessary. While dissolution was not the course of action adopted by the Board, current
circumstances (the potential loss of 67% of current membership) will likely warrant a revisiting
of that option by the Board. In addition, staff will continue our own internal analysis and review
Page 3
Staff Report — Report on the Status of the San Diego Pooled Insurance Program Authority
(SANDPIPA)
January 20, 2015
of options. This report is intended to provide a preliminary overview of the current situation. As
more information becomes available, additional detailed reports will be provided to the City
Council as well as requests for direction.
RECOMMENDATION
Accept and file the report.
FISCAL IMPACT
There is no fiscal impact associated with this report at this time. A fiscal analysis will provided
in future reports.
RESOLUTION NO. 2015 -
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
CONSENTING TO THE TERMINATION OF THE SAN DIEGO POOLED INSURANCE
PROGRAM (SANDPIPA) JOINT POWERS AUTHORITY (JPA) EFFECTIVE JULY 1, 2016;
AND AGREEING TO AMEND ARTICLES 25.A AND 25.B OF THE SANDPIPA JOINT
POWERS AGREEMENT FOR THE PURPOSES OF WINDING DOWN AND DISSOLVING
THE JPA.
WHEREAS, the City is a member of a joint powers authority, the "SAN DIEGO
COUNTY CITIES JOINT POWERS AGREEMENT FOR RISK MANAGEMENT SERVICES
AND RELATED INSURANCE COVEAGES CREATING THE SAN DIEGO POOLED
INSURANCE PROGRAM AUTHORITY FOR MUNICIPAL ENTITIES (SANDPIPA)"; and
WHEREAS, the SANDPIPA Board, representing the member agencies, has determined
that it is in the best interest of SANDPIPA members and in the public interest that SANDPIPA
should be terminated, and its assets distributed to members per the Joint Powers Agreement;
WHEREAS, the City hereby agrees to an amendment of the Joint Powers Agreement in
Article 25.A adding "distribution of dividends," after "disposing of all claims," so that the Board
of Directors is expressly authorized to continue to distribute dividends, in accordance with the
"plan document" referenced in Article 26, during the period of winding up and dissolving the
business affairs of the Authority. The following language is added to Section 25.A: "Withdrawn
or cancelled members are entitled to participate in dividend distributions after accounting for
their Board determined share of administrative expenses."
WHEREAS, the City hereby agrees to an amendment of the Joint Powers Agreement,
substituting "the Board of Directors" for "The Executive Committee" in Article 25.B of the Joint
Powers Agreement, so that powers of the Authority for purposes of winding up and dissolving
the business affairs of the Authority will be vested in the Board of Directors.
NOW, THEREFORE BE IT RESOLVED the City hereby provides its written consent to
the termination of SANDPIPA per Article 25 of the Joint Powers Agreement, effective July 1,
2016, with SANDPIPA to continue to exist for the purpose of disposing of all claims,
distribution of assets, and all other functions necessary to wind up the affairs of the Authority.
The City Clerk is directed to communicate this Resolution to SANDPIPA.
PASSED and ADOPTED this 5th day of May, 2015
Ron Morrison, Mayor
ATTEST:
Michael R. Dalla, City Clerk
APPROVED AS TO FORM:
Claudia Gacitua Silva
City Attorney
RESOLUTION NO. 2015 —
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
CONSENTING TO THE TERMINATION OF THE SAN DIEGO POOLED
INSURANCE PROGRAM (SANDPIPA) JOINT POWERS AUTHORITY (JPA),
EFFECTIVE JULY 1, 2016; AND AGREEING TO AMEND ARTICLES
25.A AND 25.B OF THE SANDPIPA JOINT POWERS AGREEMENT
FOR THE PURPOSE OF WINDING DOWN AND DISSOLVING THE JPA
WHEREAS, the City is a member of a joint powers authority, the San Diego
County Cities Joint Powers Agreement For Risk Management Services and Related Insurance
Coverages Creating the San Diego Pooled Insurance Program Authority for Municipal Entities
(SANDPIPA); and
WHEREAS, the SANDPIPA Board, representing the member agencies, has
determined that it is in the best interest of SANDPIPA members, and in the public interest, that
SANDPIPA be terminated and its assets distributed to members per the Joint Powers
Agreement; and
WHEREAS, the City hereby agrees to an amendment of the Joint Powers
Agreement by amending Article 25.A to add "distribution of dividends," after "disposing of all
claims", so that the Board of Directors is expressly authorized to continue to distribute
dividends, in accordance with the "plan document" referenced in Article 26, during the period of
winding up and dissolving the business affairs of the Authority; and
WHEREAS, the following language is added to Section 25.A: "Withdrawn or
cancelled members are entitled to participate in dividend distributions after accounting for their
Board determined share of administrative expenses."
WHEREAS, the City hereby agrees to an amendment of the Joint Powers
Agreement, substituting "the Board of Directors" for "The Executive Committee" in Article 25.B
of the Joint Powers Agreement, so that powers of the Authority for purposes of winding up and
dissolving the business affairs of the Authority will be vested in the Board of Directors.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
National City hereby agrees to the amendments to the JPA, paragraphs 25.A and 25.B, as
stated in the recitals above and as set forth in the Agreement with the proposed changes
attached to the staff report.
BE IT FURTHER RESOLVED that the City Council hereby provides its written
consent to the termination of SANDPIPA per Article 25 of the Joint Powers Agreement, effective
July 1, 2016, with SANDPIPA to continue to exist for the purpose of disposing of all claims,
distribution of dividends, distribution of assets, and all other functions necessary to wind up the
affairs of the Authority.
BE IT FURTHER RESOLVED that the City Clerk is directed to communicate this
Resolution to SANDPIPA.
[Signature Page to Follow]
Resolution No. 2015 —
Page Two
PASSED and ADOPTED this 5' day of May, 2015.
Ron Morrison, Mayor
ATTEST:
Michael R. Dalla, City Clerk
APPROVED AS TO FORM:
Claudia Gacitua Silva
City Attorney