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HomeMy WebLinkAbout1993-11-09 - AGENDA REPORTS - CONTR CITIES TRUST FUND AGMT (2)y `- AGENDA REPORT City Manager Item to be presented bj/: Dennis Luppe s CONSENT CALENDAR DATE: November 9, 1993 SUBJECT: Contract Cities Trust Fund Surcharge Rate Agreement DEPARTMENT: City Manager BACKGROUND The City currently contracts with the County of Los Angeles for various services which Include: sheriff's, public works and animal control. Under each of these contracts, the City Is assessed a surcharge rate for joint indemnity to cover the risklinsurance program. The surcharge rate is based on an agreed percent of the actual cost of the service. The County has established agreements with each contracting city. However, in the past the surcharge has been Inadequate to fully fund the risk/liability program. Most cities operated under one 1978 agreement, and 11 cities operated under a 1991 agreement. The surcharge.formulas under the 1978 and 1991 agreements have been insufficient In providing the necessary levels of funding to sustain the risMiabiiity program without the County supplementing the fund. After three years of work, the attached Agreement has been created to: 1. Prevent the County from having to balance between what was being paid Into the joint Indemnity fund by Its contracted cities and what was actually available to manage the risk/liability program and 2. have all the contract cities operate under the same agreement. It provides for multiple surcharge rates depending upon the type of contracted service, and establishes a cap on the annual surcharge rate Increases. The attached Joint Indemnity Agreement has been reviewed and approved in concept by the Contract Cities subcommittee and Executive Committee. This agreement reflects the format and language requested by our representatives.: The County Is requesting every city to execute the attached agreement to enable the contract cities program to operate under one contract. This agreement will not be brought before the Supervisors unless executed and returned by all cities. The Impact of this agreement to Santa Clarita is illustrated by the charts below. Insurance Pereentaae Chance 1992 Insurance Current Rate with Rate without Contract Rate Insurance Rate Agreement Agreement Sheriff 4.5% 6.5% N/A N/A Public Works 1.75% 2.25% Animal Control 1.75% 2.2S% �f Continued To: 3% 6.0% 3% Agenda Item` % 3 Insurance Cost Change RECOMMENDATION Adopt the attached Agreement and forward the executed Agreement to the Contract Cities Trust Fund Administrator. DEUIrsttnd.agn 1992 Insurance 1993 1993 Contract Cost Budgeted Cost Rate Without With Agreement Agreement Sheriff $368,000 $531,000 WA N/A Public Works $18,000 $28,000 $38,000 $75,000 Animal Control $2,000 $3,000 $3,000 $7,000 RECOMMENDATION Adopt the attached Agreement and forward the executed Agreement to the Contract Cities Trust Fund Administrator. DEUIrsttnd.agn I JOINT INDEMNITY AGREEMENT THIS AGREEMENT, dated for reference purposes on the day of 19_, is made and entered into between the County of Los Angeles, sometimes hereinafter referred to as the "County," and the City of sometimes hereinafter referred to as the "City." RECITALS (a) City and County have heretofore contracted for the performance of services by County, its officers, agents and employees, and may in the future extend, renew and amend such contracts, and enter into other and further contracts for the performance of services, all of which may be' hereinafter referred to as "service contracts"; and (b) Such contracts are agreements under Section 895 of the Government Code, and pursuant to 895.2 thereof -joint and several liability is imposed on the parties; and (c) Pursuant to 895.4 of the Government Code, the parties may provide for contribution or indemnification upon any liability arising out of the performance of said agreements; and (d) The County is willing to assume liability and defend and hold the City harmless from any loss, cost or expense caused by the negligent or wrongful act or omission of County officers, its agents'and employees occurring in the performance of said service agreements except as hereinafter provided; and i (e) The City is willing to assume liability and defend and hold the County. harmless from loss, cost or expense caused by ,I 0 the negligent or wrongful act or omission of City officers, agents or employees occurring in the performance of agreements between the parties, except as hereinafter provided; and (f) The parties have, based upon the aforementioned recital of facts, heretofore entered into an agreement entitled "Joint Indemnity Agreement" the format of which was approved by the Board of Supervisors in October 1991, or an agreement dated for reference purposes only as the 14th day of November, 1977 entitled "Assumption of Liability Agreement" which has remained in full force and effect to the present time; and (g) Pursuant to said agreements , County has established the Contract Cities Trust Fund (sometimes hereinafter referred to as "Trust Fund") into which County has deposited designated portions of the funds received from City and other Cities as compensation for the performance of services; and (h) Said Trust Fund was established by the County Auditor - Controller for the payment of losses for which the County may be liable under the terms of the Assumption of Liability Agreement and the Joint Indemnity Agreement and which the County agreed to maintain for the purpose of paying such losses; and (i) Said Fund was under the full control of the Board of Supervisors, and the City, pursuant to said agreements, agreed to make payments to the Fund in such amounts as may be established by the Auditor -Controller in accordance with the policies and procedures established by the Board of Supervisors and in the same ratio as the. cost of services received by the - 2 - City is to the total cost to the County of its performance of City Service Agreements for similar services; and (j) City and County are willing to continue said service contracts, and utilizing solely the Trust Fund, County is willing to assume liability and defend and hold City harmless from any loss, cost or expense caused by the negligent or wrongful acts or omissions of County officers, its agents or employees occurring in the performance of said service contracts; and (k) Both City and County have been dissatisfied with some of the terms and provisions of the aforementioned Assumption of Liability Agreement, its interpretation, and application and, similarly the Joint Indemnity Agreement and desire, by this Agreement, to restate those agreements into a new Joint Indemnity Agreement; and (1) County desires by this Agreement to limit, except as hereinafter provided, its financial responsibility to provide defense and indemnification to the Trust Fund; and (m) City ,desires to have the right to review both contributions to the Trust Fund and expenditures.therefrom and to meet and confer with County in that regard. NOW, THEREFORE, it is mutually agreed as follows: 1. Effective Date. This Agreement'shall not be effective until the same and identical copies thereof have been approved by the Board of Supervisors after approval by all Cities that are currently - 3 - n contributing to the Trust Fund established by the Auditor - Controller pursuant to the Assumption of Liability Agreement of November 14, 1977 or the previous Joint Indemnity Agreement. Upon the approval of this Agreement by the City of and all such Cities, as well as the Board -of Supervisors, the agreement of November 14, 1977 and the prior Joint Indemnity Agreement shall be superseded. Notwithstanding the date of the aforementioned approvals, the effective date of this Agreement after all approvals have been obta d shall be May 1, 1994, provided further that if .'_1 approvals have not been obtained by June 1, 19940 this Agreement shall be of no further force and effect. 2. Application to Other Agreements. This Agreement shall apply to and shall be deemed to be a part of all service agreements now existing or hereafter entered into including amendments, renewals or other extensions thereof wherein City and County have contracted under circumstances where the liability of City and County is joint and several pursuant to Section 895.2 of the Government Code of the State of California. Notwithstanding any provision of any County service agreement between City and County, now or hereafter in effect, County will assume liability and defend and hold the City harmless from loss, cost or expenses caused by the negligent or wrongful act or omission of County officers, agents and employees, occurring .in the performance of service agreements - 4 - between the -parties hereto to the extent such liability is imposed on the City by the provisions of Government Code Section 895.2, unless a service contract between City and County expressly provides that said Assumption of Liability Agreement or the previous Joint Indemnity Agreement or this Agreement is inapplicable. 3. County's Duty to Assume Liability and Defend. Pursuant to the provisions of this Agreement, County will assume liability, defend, and indemnify City from any loss, cost or expense caused by the negligent or wrongful act or omission of County officers, agents and employees occurring in the performance of service agreements. between the parties to the extent that such liability is imposed on the City by the provisions of Section 895.2 of the Government Code. Where the County's liability arises out of an act required of County pursuant to a service agreement or the omission was a failure of County to act where required by the service agreement, the County's liability under the terms and provisions of this paragraph shall be limited to the Trust Fund, and the County shall not be required to contribute any of its own funds for said defense or indemnity except as hereinafter provided. Where the act or omission of a County officer,. agent or employee does not arise out of a duty of the County to perform a service under a service agreement, the County shall assume liability, defend and hold the City harmless from loss, cost or expenses caused by the negligent or wrongful act or omission of - 5 - County officers, agents and employees without using said Trust Fund. 4. Indemnity by City. (a) Acts or Omissions. City will undertake to investigate, defend and pay any losses, costs, settlement awards, judgments, or expenses originating from claims or litigation based or alleged to be based upon the negligent or wrongful act or omission of City, its officers, agents or employees occurring during the performance of the service contracts. (b) Dangerous Conditions of City Property. when liability is based or alleged to be based on a dangerous condition of City property pursuant to Government Code Sections 830 etc. sea. (including, but not limited to, the plan or design of the City property), City shall assume liability and defend and hold -County harmless from any loss, cost or expense caused by the negligent or wrongful act or omission of City, its officers, agents or employees. (c) Exception for Maintenance or Inspection of City Property. Where a duty is imposed on County pursuant to a service contract to provide maintenance or inspection services pertaining to City property, County shall utilize the Trust Fund to investigate,. defend, and pay any losses, costs, settlement awards, judgments or expenses originating from claims or litigation allegedly based upon the .existence. of a dangerous - 6 - condition of City's property as a result of the negligent or wrongful act or omission or County officers, agents or employees in the performance of such service contracts. S. Establishment of a Trust Fund. That certain Trust Fund heretofore established by the Auditor -Controller of the County for the payment of losses.for which the County may be liable under the terms of the prior Joint Indemnity Agreement or the Assumption of Liability Agreement of November 14, 1977, shall be audited by the Auditor - Controller within one hundred twenty (120) days after the close of the 1993-94 fiscal year. The County shall provide City with a full audited report of the amount received by the Trust Fund and the -expenditures therefrom as of July 1, 1994. If said audit report discloses that the County has advanced funds to the Trust Fund, that amount shall be repaid to the County through an increase in the County's charge.for said contract services. If said audit report established a -fund balance, that amount shall continue as' part of the Trust Fund hereafter established. City.and County agree that the Auditor -Controller of the County, effective July 1, 1993, shall maintain a Trust Fund for the payment of losses for which County may be liable under the terms of this Agreement. County agrees to maintain the funds, to be known as a Contract Cities Trust Fund, exclusively for the purposes set forth in this Agreement. City and County agree that the Trust Fund shall be under the full - 7 - control of the County. County shall, within one hundred twenty (120) days after the close of each fiscal year, provide each City having a service contract with the County with a full audited report of the amount received by the Trust Fund and expenditures therefrom. City shall have the right, through its representative or through a joint representative of Cities, to review with the Trust Fund Administrator said audit report as well as all supporting information and documentation. County shall from time to time -designate a "Trust Fund Administrator" who shall be compensated from the Trust Fund and who shall be responsible for day to day administration of the Trust Fund. County may also use the Fund to pay for any audits requested or required, including those performed pursuant to the provisions of this agreement. 6. Payment to Trust Fund. City agrees to make payments to the Trust Fund, and County agrees to require each City receiving service under service contracts to also contribute to the Trust Fund. Payments to the Trust Fund shall be made by City in such amounts as may be established by the County Trust Fund Administrator with concurrence of the Auditor -Controller according to the policies and procedures established by the County. In the discretion of County, each such payment related to - 8 - a particular service may consist of two components, the first being the amount necessary to participate in the Fund for the particular service currently being rendered and the second being the sum necessary to reimburse the County for all sums advanced by the County to the Fund, including interest, until the County is totally reimbursed. Increases or decreases in such participation or reimbursement payments shall be effective July 1 of each fiscal year. Each annual increase for the payment for a particular service shall not exceed three percent (3$) of the annual charges for the particular services rendered by County to City. The unused difference between any lower annual increase actually implemented and a maximum allowable increase may be accumulated as reserve authority to,extendthe rate for the particular service beyond the annual maximum increase, and the Trust Fund Administrator shall be permitted to add to any subsequent annual increase any portion of the accumulated reserve authority for the particular service, if needed, to reimburse County for funds advanced to -the Fund. . In the event of any termination, expiration or non -renewal of any service contracts. between County and City for any reason, City's obligation shall nevertheless continue to make such payments for the reimbursement component to the Fund for such continuing period as may be necessary to fully reimburse County for advances made on behalf of the Fund through the date of the last service rendered. to City. In such circumstances, the reimbursement component shall be applied to the average monthly - 9 - charges for services rendered by County to City for the last twelve (12) months of such service contract, All payments by City shall be made within thirty (30) days of receipt of invoices from County whether from a County department performing services pursuant to a servicecontract or from the Trust Fund Administrator for the= reimbursement component in the event the service contract is no longer in effect. City's liability to make payments to the Trust Fund or the County pursuant to this Agreement shall not, however, exceed the City's share thereof which shall be a percentage of the total amount due the Trust Fund at the same ratio as the City's total service contract costs bears to all Cities having service contracts with County for the particular service. In the event any City, other than the City of should default or fail to makea ents to the Trust Fund .Cit ! Y� � Y shall not be required to undertake alone to reimburse the Trust Fund for that amount, City's liability to -the County and the Trust Fund being limited to the ratio of its total service contract costs to all contract costs of all Cities contracting with the County for said particular contract services in the year of the default. 7. Sufficiency and use of Trust Fund. To the extent that County has agreed to indemnify, defend and hold harmless City, its officers, agents and employees under this Agreement, said obligation shall continue to exist during -'10 - the term of this Agreement whether or not there are sufficient funds for such indemnity, defense or hold harmless in the Trust Fund. County's obligation is expressly conditioned on City's performance of its obligations -set forth below relating to replenishment of the Trust Fund. . If, in the discretion of the Trust Fund Administrator, the Trust Fund balance 'is inadequate to.fund' Contract Cities liabilities, the Auditor will advance from the County's funds amounts necessary to temporarily finance.such liabilities. City agrees to contribute on a monthly basis such reimbursement component as the Trust Fund Administrator determines is necessary from City and. other Cities contributing to the Trust Fund to replenish the Trust Fund in accordance with Paragraph 6 so that County's funds may be reimbursed. a. —Indemnity From the Trust Fund. Utilizing solely the Trust Fund, County will undertake to investigate, defend and pay any losses,• costs, settlement awards, judgments or expenses originating from claims or litigation based or alleged to be based upon the negligent or wrongful act or omission of County officers; agents or employees engaged in the performance of services for City pursuant to the service contracts, except as follows: (a) Where the County at any time- should reasonably conclude that the liability for said claim or action as between the City and County is based solely on the negligent or wrongful act or omission of the City, its officers, agents or employees occurring during the performance of said service agreement, County shall notify City in writing of its conclusion and that City.is required at its own cost and expense to investigate, defend and pay any costs and judgment or expenses arising out of the litigation. County shall give City at least thirty (30) days written notice of .its decision that City shall take over the defense of said action. Once County has notified City in writing of its decision, the Trust Fund shall not be charged for any.further defense or cost incurred by County in the defense of said claim or action. City agrees as soon as reasonably possible after the receipt of said notice to take over the defense of said action or claim, and if it should fail to do so, to reimburse County for all expenses incurred by County in defending City and County or in providing indemnification of City and County in respect to said claim or action. (b) Where the County contends that City is partially responsible through its negligent or wrongful act or omission, County shall nevertheless utilize the Trust Fund to undertake the responsibility herein imposed, but County shall, by written notification to City upon such determination, advise City that it reserves the right to claim indemnification from City for that portion of the loss, cost, settlement, award or judgment attributed to the City's negligent or wrongful act or omission. Said notice shall further advise City that City has the right to provide its own defense in said matter or to participate in the - 12 - defense of said matter. County shall give City at least thirty (30) days written notice of its decision, and if City should upon receipt of said notice elect to undertake the defense of said matter in whole or in part, the Trust Fund shall not be charged for any of the City's cost or expenses or for any portion of the judgment rendered against the City arising solely out of the negligent or wrongful act or omission of the City, its officers, agents or employees. (c) If it should subsequently be determined by a final judgment of a court having jurisdiction over the matter that liability for said claim or action as between the City and County was based solely on the negligent or wrongful act or omission of the City, City shall reimburse the Trust Fund for all costs, expense and judgments paid by the County on behalf of the City incurred thirty (30) days after the giving of said notice. (d) If it should subsequently be determined by a final judgment of a court having jurisdiction over the matter that liability is based solely on the negligent or wrongful act or omission of County, and County was required under the terms and provisions of this Agreement to provide defense and indemnify City from said Trust Fund, said Trust Fund shall reimburse City for its costs, expenses and any portion of said judgment paid by said City thirty (30) days after the giving of said notice. (e) If it should -subsequently be determined by a final judgment of a court having jurisdiction over the matter that - 13 L liability:is based partially on the negligent'or wrongful act or omission`of the City, City shall reimburse the Trust Fund for any cost, expense or judgment paid by the Trust Fund attributable to the City's negligent or wrongful act. (f) Where an action or cross-complaint is filed by either City or County to determine.their rights and liabilities under this paragraph, the County shall be reimbursed from said Trust Fund for any cost, expense -or judgment paid by the County pursuant to said action where by final judgment the County is the prevailing party in the action between County and City. , (g) Except for its contributions to the Trust Fund, City will not be liable for defense costs or for holding County harmless from loss, cost or expense caused in whole or in part by the negligent or wrongful act or omission of .County, its officers, agents and employees occurring during the performance of a service contract. 9. No Funding of City's Unilateral Settlements or Litigation. Should City agree, or stipulate or consent to the settlement of any claim or action, the making or entry of any judgment, order -or other award for damages or for other relief against itself or any of its officers, agents or employees or against County or its officers, agents or employees in any proceeding or action authorized by law, involving a matter arising out of the performance by County pursuant to the service contracts, without the prior written consent thereto of County, - 14 - l then City agrees to indemnify, hold harmless and defend County from any loss, cost or expense sustained by County arising from such claim, judgment or other award irrespective of the legal basis upon which liability may be imposed by such claim or action, including liability of County. under the provision of Section 895.2 of the Government Code. 10. Cooperation in Assumption of Liability. City and County agree to fully cooperate and assist each other in all matters relating to losses covered by the terms of this Agreement. More specifically, but. not limited thereby, each party will: (a) In the event of a claim or suit or an occurrence likely to involve a claim .or suit covered'by this Agreement, give prompt written notice to the other party. written notice shall contain the name and address'of the person or organization sustaining injury or damage, and of any witnesses, as well as the time, place and circumstances of the occurrence. (b) If claim is made or suit is brought against a party on occurrences covered or likely to be covered by the terms hereof, such party shall immediately forward every claim, demand, notice, summons or other process received by it to the other party. (c) Cooperate with the other party and, upon the other party's reasonable request, assist in the processing of suits and enforcing any right of contribution.or indemnity against any - 15 - person or organization who may be liable to the other party for injury or damage covered by this Agreement, attend upon request hearings and trials, assist in securing and giving of evidence and obtaining the attendance of witnesses. 11. Participation in Litigation. Any party may, at its own cost, participate in the defense of any suit or in the prosecution of any appeal affecting matters herein involved where the duty of defense or prosecution is imposed on the other party and where the other party has consented thereto. 12. Control Over Prior Agreements. Any references in service contracts to.the "Assumption of Liability Agreement" or Joint Indemnity Agreement shall be deemed to be to this Agreement. The provisions of this Agreement shall supersede- and control over any other provisions inconsistent herewith in any such contract, and control future agreements between the parties hereto unless by specific reference therein this Joint Indemnity Agreement is made inapplicable. 13. Termination of Agreement. This Agreement shall continue during the term of any service contract between City and County unless: (a) County elects to terminate this Agreement upon thirty (30) days written notice to City. (b) Upon County's election, if City fails to cooperate with County as required by this Agreement. If City's failure is - 16 - capable of being cured, County shall not terminate pursuant to this provision without specifying the precise manner of City's failure to cooperate, specifying the action required of City, and allowing City thirty (30) days to. cure the failure. (c) Upon County's election, if City authorizes any judgment, order or other award for damages without the consent of County in violation of the terms and provisions of. this Agreement. (d) Upon County's election in its absolute discretion to terminate this Joint Indemnity Agreement as to all Cities having such service contracts with County. In such an event, City shall be entitled to the return of any consideration .actually. Paid by it, in pro rata proportion based upon City's level of contribution, of the sum remaining in the Trust Fund after discharge by the County of all liabilities. City agrees to remain liable for its reimbursement component payments as may be necessary to fully reimburse the County for the sums advanced by County to the Fund, and for all sums for which the. Fund may become, liable, as a result of incidents which are alleged to have occurred prior to termination of the agreement. City. 14. Termination of Service Contracts Between County and On termination by City of service contract with County or termination of said contract by County for any cause, County and/or Cityshall continue to defend, indemnify and hold - 17 - harmless the other party for all claims .and losses pursuant to the terms of this Agreement arising prior to the effective date of said termination. Such termination of any contract by City shall not relieve City of its liability for payment of its reimbursement component necessary to fully reimburse County for the sums advanced by County to the Trust Fund, or for all sums for which the Fund may become liable, pursuant to provisions of this Agreement. 15. Litigation. If any legal action should be brought to determine the County's duty to defend City pursuant to the provisions of this Agreement, or if any legal action or any other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing. party shall be entitled to recover reasonable attorney's fees and other costs incurred in that action or proceeding in addition to any other relief to which it may be entitled. Where the successful party is the County, City shall reimburse the Trust Fund for all such reasonable attorneys' fees and costs. Where the successful party is the City, County shall reimburse City for all its reasonable attorneys' fees and costs, and the Trust Fund shall not be utilized by the County for the payment of said fees and costs. - 18 - . IN WITNESS WHEREOF, the.parties hereto' have caused this Agreement to be executed by their fully authorized officers the day and year hereinafter set forth. APPROVED AS TO FORM: 199 By: City Attorney APPROVED AS'TO FORM: DE WITT W. CLINTON County Counsel CITY OF By: Mayor ATTEST this _ day of 199 By: City Clerk COUNTY OF LOS ANGELES By: Chairman, Board of Supervisors ATTEST this day of , 199 LARRY J. MONTEILH Executive Officer Board of Supervisors By: By: Deputy A:uGrusn - 19 -