HomeMy WebLinkAboutResolution 2618 Authorizing execution of MMIA Interlocal Agreement: 8-04-86
CERTIFICATE OF MINUTES RELATING TO
RESOLUTION NO. 2618
Issuer: City of Bozeman (the Municipality)
Governing Body:
City Commission
Kind, date, time and place of meeting: a regular
meeting, held Aug. 4 , 1986, at 2:00 o'clock ]2..m., in
the Municipal Building , Bozeman, Montana.
Members present: Mayor Mathre, Commissioner Jordan, Commissioner
Stiff. Commissioner Martel, Commissioner Vant Hull
Members absent: None
Documents attached:
Minutes of said meeting (pages):
including
through _,
RESOLUTION NO. 2618
A RESOLUTION RELATING TO PARTICIPATION IN POOLED
SELF-INSURANCE PROGRAM; APPROVING AND AUTHORIZING THE
EXECUTION OF THE MONTANA MUNICIPAL INSURANCE AUTHORITY
INTERLOCAL AGREEMENT, APPROVING THE MUNICIPALITY'S
PARTICIPATION IN THE AUTHORITY'S LIABILITY INSURANCE
COVERAGE PROGRAM, AUTHORIZING THE EXECUTION OF THE
LIABILITY INSURANCE COVERAGE AGREEMENT, APPROVING THE
INDENTURE OF TRUST AUTHORIZING THE ISSUANCE OF BONDS
ON ITS BEHALF AND APPROVING THE DISTRIBUTION OF A
PRELIMINARY OFFICIAL STATEMENT RELATING THERETO AND
AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY
OF A NOTE EVIDENCING THE MUNICIPALITY'S PROPORTIONATE
SHARE OF PRINCIPAL OF AND INTEREST ON THE BONDS
I, the undersigned, being the duly qualified and
acting recording officer of the political subdivision issuing
the obligations referred to in the title of this certificate,
certify that the documents attached hereto, as described
above, have been carefully compared with the original records
of the corporation in my legal custody, from which they have
been transcribed; that the documents are a correct and
complete transcript of the minutes of a meeting of the
governing body of the political subdivision, and correct and
complete copies of all resolutions and other actions taken and
of all documents approved by the governing body at the
meeting, insofar as they relate to the obligations; and that
the meeting was duly held by the governing body at the time
and place and was attended throughout by the members indicated
above, pursuant to call and notice given as required by law.
WITNESS my hand officially as such recording
and the seal of the City this ~ day of August
(j!.~,=- 01 J~fii)~ --
(SEAL) Clerk
officer
, 1986.
Member
Vant Hull
moved the adoption of the
following resolution.
RESOLUTION NO. 2618
A RESOLUTION RELATING TO PARTICIPATION IN POOLED
SELF-INSURANCE PROGRAM; APPROVING AND AUTHORIZING THE
EXECUTION OF THE MONTANA MUNICIPAL INSURANCE AUTHORITY
INTERLOCAL AGREEMENT, APPROVING THE MUNICIPALITY'S
PARTICIPATION IN THE AUTHORITY'S LIABILITY INSURANCE
COVERAGE PROGRAM, AUTHORIZING THE EXECUTION OF THE
LIABILITY INSURANCE COVERAGE AGREEMENT, APPROVING THE
INDENTURE OF TRUST AUTHORIZING THE ISSUANCE OF BONDS
ON ITS BEHALF AND APPROVING THE DISTRIBUTION OF A
PRELIMINARY OFFICIAL STATEMENT RELATING THERETO AND
AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY
OF A NOTE EVIDENCING THE MUNICIPALITY'S PROPORTIONATE
SHARE OF PRINCIPAL OF AND INTEREST ON THE BONDS
Be It Resolved by the Governing Body of the City
of Bozeman (the Municipality) As Follows:
Section 1. Authorization and Recitals.
1.01. Recitals and General Authoritv. The
Municipality is authorized by Montana Code Annotated,
Section 2-9-211 to procure insurance separately or jointly
with other political subdivisions and use a deductible or
self-insurance plan, wholly or in part. The Municipality
has previously entered into or evidenced its intent to
enter into a Participation Agreement with the Insurance
Trust (the Trust) of the Montana League of Cities and
Towns (the League) for the purpose of obtaining liability
insurance coverage under the League's Liability Insurance
Protection Program, such Program providing up to $500,000
of coverage per occurrence.
The Trust in conjunction with the League obtained
the passage of legislation in the 2nd Special Legislative
Session of the Montana Legislature in 1986 (the Law) which
allows municipalities or a board created on their behalf
to issue bonds or notes for the purposes of funding a
self-insurance or deductible reserve fund. The Trust has
determined such funding of a self-insurance or deductible
reserve fund (hereinafter a Claims PaYment Fund) through
the issuance of tax exempt bonds is desirable in that it
will enable the provision of excess liability coverage in
the amount of $1,500,000 per occurrence at a reasonable
cost. In order to comply with the Internal Revenue Code
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of 1954, as amended, and the Law it has been deemed
necessary and desirable that the Trust be dissolved upon
creation of the Montana Municipal Insurance Authority (as
hereinafter defined), pursuant to an Interlocal Agreement
(as hereinafter defined), and that the Authority succeed
to all rights, interest and responsibilities of the Trust
in administering the existing insurance programs in which
the Municipality is a participant.
Section 1.02. Proposed Proaram and Notes.
Representatives of the Trust and its financial and
insurance advisors have proposed that the Montana
Municipal Insurance Authority (the Authority) be created
as a joint exercise of powers entity pursuant to Title 7,
Chapter 11, Part 1, M.C.A. (the Interlocal Cooperation
Act) for the purpose of providing insurance and
reinsurance programs to Montana municipalities. The
Authority would be created through an Interlocal
Cooperation Agreement adopted and executed by all Montana
municipalities wishing to become members of the Authority
(Member Entities). The Authority would offer to its
Member Entities various insurance programs the
participation in which would be evidenced by the execution
of an agreement setting forth the terms and conditions of
the Program (the Program Agreement). Among the programs
to be offered by the Authority will be the Workers
Compensation Program currently administered by the Trust
and the Liability Insurance Coverage Program (the
Program). The existing liability insurance offered by the
Trust will become a part of the Program.
Pursuant to the Program, the Authority will issue
and sell bonds (the Bonds) on behalf of the Member
Entities (the Participating Members) adopting this
Resolution, each issuing a Note (as hereinafter defined)
and signing the Liability Insurance Coverage Agreement
(the Agreement) in order to establish a joint
self-insurance reserve fund (Claims Payment Fund) from
which insurance settlements will be paid on behalf of
Participating Members. Each Participating Member will
execute and deliver to the Authority a general obligation
note (the Note) in a principal amount equal to their
proportionate share of the principal and interest on the
Bonds (the Debt Service Premium). The respective Notes
and the Agreements will obligate each Participating Member
to pay its Debt Service Premium as evidenced by its
respective Note in order to participate in the Program.
In addition to the Debt Service Premium, each
Participating Member shall be obligated to pay Risk
Premium, Supplemental Debt Service Premium and any Risk
Premium Adjustments or Deferred Risk Premium Adjustments
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as may be charged for participation in the Program. In
addition to providing the insurance coverage described in
the Memorandum of Liability Coverage attached as Exhibit C
to the Agreement, the Authority will also provide risk
management and other related services to each
Participating Member. Other terms and conditions of
participation in the Program, including the conditions
upon which a Participating Member may withdraw or be
expelled from the Program, are set forth in the Agreement.
1.03. Documentation. Draft forms of the
following documents relating to the Program and the Note
have been prepared and submitted to this Governing Body,
and are hereby directed to be filed with the Clerk.
(a) the Montana Municipal Insurance Authority
Interlocal Agreement (the Interlocal Agreement), to be
entered into between the Municipality and other Member
Entities;
(b) the Liability Insurance Coverage Program
Agreement with Exhibit A, Name and Address of providees as
of August 28, 1986, Exhibit B, Names and Addresses of
Municipalities Expected to be providees as of October 30,
1986, Exhibit C, Memorandum of Liability Coverage,
Exhibit D, Form of Requisition, and Schedule A, Formula
for Calculating Risk Premium, Risk Premium Proportion (the
Agreement), to be entered into between the Authority and
the Municipality;
(c) the Indenture of Trust to be entered into
between the Authority and First Trust Company of Montana,
a state banking corporation, as Trustee, pursuant to which
the Bonds shall be issued (the Indenture); and
(d) the Note to be executed by the Municipality
and delivered to the Authority evidencing the
Municipality's obligation to pay its proportionate share
of principal and interest on the Bonds.
Section 2. Findinas.
It Is Hereby Found, Determined and Declared That:
(a) The Program offered by the Authority
provides an immediate and long-term solution to the
Municipality's inability to obtain primary or excess
general liability insurance at reasonable rates.
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(b) The Program provides the following
advantages:
(1) immediate capitalization of a claims payment
fund (the "Claims Payment Fund") from the proceeds of
the sale of the Bonds for the purpose of providing
protection from large claims loss and facilitating
access to the commercial reinsurance market,
(2) mutual agreement by the Participating
Members to pay annual premium on both a prospective
and a retrospective basis calculated actuarially to
spread and moderate the cost of claims loss to each
Participating Member,
(3) relief from the burden of paying premiums to
commercial insurers at levels reflecting the insurers'
high costs of underwriting, administration and
brokerage fees since the Authority's costs will be
limited to reasonable administrative costs,
(4) relief from the commercial insurers' rights
under excess liability policies to force claim
settlements which are payable primarily in each case
from the participating Member's self-insurance funds,
(5) access to the commercial reinsurance market
in future years when commercial reinsurance is
available at rates deemed favorable by the
Participating Members and the Authority, and
(6) premium payments calculated to provide
amounts in each year necessary to maintain the Claims
Payment Fund at an actuarially sound level and
therefore sufficient to reserve against the incurred
losses of the Participating Member.
(b) In authorizing the Municipality's membership
in the Authority and the execution of the Interlocal
Agreement, the Municipality's execution of the Agreement
and the execution and delivery of the Note, the
Municipality's purpose is and in its judgment the effect
thereof will be to protect the health, safety, welfare and
economic well-being of the citizens of the Municipality by
making certain that the Municipality is insured against
losses and claims;
(c) The Premium to be paid in each year by the
Municipality and the method of calculation thereof as
provided for in the Agreement and the Note is reasonable,
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fair and just and shall constitute a general obligation of
the Municipality to be funded by a levy of an ad valorem
tax on all taxable property within the Municipality
without regard to any maximum mill levy limitation set by
statute;
(d) The terms and conditions for membership in
the Authority as set forth in the Interlocal Agreement,
the terms and conditions for participation in the Program
as set forth in the Agreement, and the provisions of the
Note are necessary, desirable and proper to achieve the
goals of the Program and the representations, covenants
and recitals made therein by the Municipality are true,
valid and accurate;
(e) The coverage provided to the Municipality by
the Program as evidenced by the Memorandum of Liability
Coverage is adequate consideration for the Municipality's
agreement to pay the Premium;
(f) It is desirable that the Note be issued upon
the terms and for the reasons set forth in this resolution
and the Agreement and the Municipality pledges to levy an
annual ad valorem tax on all property within its
jurisdiction in an amount sufficient to make the paYments
due thereon.
Section 3. Authorization and Approval of the
Interlocal Aoreement. the Aareement. the Note. the
Issuance of Bonds and the Distribution of the Official
Statement.
The Municipality is hereby authorized to become a
member of the Authority by execution of the Interlocal
Agreement. The Municipality is hereby authorized to
execute the Agreement and participate in the Program in
accordance with the terms and conditions set forth in the
Agreement. The Authority is hereby authorized to issue
Bonds pursuant to the Indenture of Trust to capitalize the
Municipality's share of the Claims PaYment Fund and pay
costs of issuance of the Bonds. The Municipality is
hereby authorized to issue the Note, subject to the terms
and conditions set forth in Section 4 hereof, to evidence
its obligation for a proportionate share of the principal
of and interest on the Bonds and its proportionate share
of the debt service reserve fund relating thereto. The
forms of the Interlocal Agreement, the Agreement, the
Indenture of Trust and the Note referred to in Section
1.03 hereof are approved, sUbject to such modifications
and revisions as are deemed appropriate and approved by
the chief executive officer, finance officer or treasurer,
and attorney for the Municipality, which approval shall be
conclusively evidenced by execution of the Interlocal
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Agreement, the Agreement and the Note. The Interlocal
Agreement, the Agreement and the Note are authorized to be
executed by the chief executive, the treasurer or finance
director and attested by the Clerk. The Municipality
hereby approves the distribution by the Authority of a
Preliminary Official Statement relating to the issuance of
the Bonds and consents to all references therein to the
Municipality. Copies of all the documents in final form
shall be delivered, filed and recorded as provided
therein.
Section 4. The Note.
The Note shall be issued to evidence the
Municipality's general obligation to pay its proportionate
share of the principal of and interest on the Bonds and
its proportionate share of the debt service reserve fund
relating thereto. Provided, however, that in no event
shall the principal amount of the Note exceed, at the time
such Note is issued, 3% of the taxable valuation of the
real and personal property located within the
Municipality.
Section 5. Effective Date.
:a
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This resolution shall become effective
immediately upon its passage and approval.
Passed and Approved by Governing Body of the City
of Bozeman, Montana this 4th day of August, 1986.
~~r~
Mayor
Il" rn~
Attest:
2t )1
.".. r. L ./ /), J ...,
(.- ff c,-- J ~(l0\J4,_.
Clerk of the Commission
J
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Member Jordan seconded the motion
and the following voted in favor thereof: Commissioner
Vant Hull. Commissioner Jordan. Commissioner Stiff. Commissioner
Martel and Mayor Mathr@.
and the following voted against the same: Non@.
Absent: None
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