HomeMy WebLinkAbout07-15-2014 c9 Padilla 0 Council Memorandum
July 15,2014 COUNCIL MEETING: 1 S (�/
ITEM NO.: C-q
TO: City Council
FROM: Wayne Padilla, Finance& I.T. Director
VIA: Katie Lichtig,City Manager f4
SMELT: Agenda item C-9 Bond and Discl Counsel Agreement
This item is on this evening's consent agenda for approval and staff has been in conversations
with the law firm regarding the terns and conditions required by the city for providing
acceptable forms of insurance up until late this afternoon. Staff noted that the firm has submitted
an insurance certificate for errors and omission coverage that well exceeds the City's mimmum
requrired coverage but reflects a self-insured retention(SIR) in the amount of$3.5 million. The
City's current insurance terms and conditions call for any self-insured retention to be eliminated.
As staff from the City and the law firm have been working to address the matter, it has become
apparent that the City's insurance standard, in this instance, is not reflecting a best practice. The
annual cost of a surety bond to cover the SIR is between $35,000 and $55,000 per year and
would be borne by the City. As our discussions have progressed, staff has established an
understanding of the law firm's financial status and also of the requirements that they had to
meet to qualify for the errors and omission coverage, which required firther scrutiny of their
financial status. In short, they are financially capable of addressing the SIR in the unlikely event
that a claim is filed Based on these circumstances, staff is requesting approval of the agreement
with the stipulation that it shall be amended by the City Attorney to waive the requitement for
elimination of the SIR and require the law firm to provide periodic access to its financial reports
to ensure that it maintains resources sufficient to allow it to cover the SIR over the life of the
agreement. This is not a precedent-setting request as the SIR for the previous bond and
disclosure counsel in the amount of$250,000 was also waived by the City.
The reason that this request is being brought to the Council's attention at this time is due to the
fact that the financing for the LOVR overpass is time sensitive and staff is planning to have the
financing documents substantially complete for presentation at the September 16' City Council
meeting. Therefore the work to prepare those documents must begin in August.