Item No. 7
Town of Atherton
CITY COUNCIL STAFF REPORT – CONSENT AGENDA
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, ASSISTANT CITY MANAGER/FINANCE
DIRECTOR
MONA EBRAHIMI, CITY ATTORNEY
DATE: OCTOBER 15, 2025
SUBJECT: A RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF
ATHERTON CONSENTING TO THE DISSOLUTION OF SAN MATEO
COUNTY CITIES INSURANCE GROUP JOINT POWERS AUTHORITY
PURSUANT TO SECTION 5 OF THE SAN MATEO COUNTY CITIES
INSURANCE GROUP JOINT POWERS AGREEMENT AND
APPROVING A DISSOLUTION AGREEMENT TO GOVERN THE
DISSOLUTION PROCESS
RECOMMENDATION
Staff recommends that the Council approve the proposed Resolution Consenting to the Dissolution of the San Mateo County Cities Insurance Group Joint Powers Authority Pursuant to Section 5 of the San Mateo County Cities Insurance Group Joint Powers Agreement and Approving a Dissolution Agreement to Govern the Dissolution Process.
BACKGROUND
The San Mateo County Cities Insurance Group Joint Powers Authority (the “Cities Group”) was formed on October 5, 1978 for the purpose of allowing its Member Agencies to pool resources to fund and administer their respective workers’ compensation programs. The Cities Group now also administers other benefits, such as life insurance, long-term disability, and dental programs, on behalf of some of the Member Agencies. However, the Cities Group’s primarily purpose remains the administration of workers’ compensation programs.
The founding members of the Cities Group were the Cities of Half Moon Bay, Foster City, and Brisbane, and the Towns of Atherton and Hillsborough. The City of San Carlos was added to the membership in 1989 and the City of Dublin was added to the membership in 2004. Although the City of Brisbane withdrew from membership in the early 2000s, the Cities Group has enjoyed stable membership during its 47-year history.
Cities Insurance Group Dissolution Staff Report
October 15, 2025
However, in November 2024, the City of Foster City submitted a withdrawal notice to the Cities Group, indicating that it planned to withdraw from membership as of July 1, 2025. Pursuant to Section 4 of the Joint Powers Agreement (the “JPA”), as amended in 1997, any Member Agency that has completed at least three years of membership may unilaterally withdraw from the Cites Group on July 1 of any calendar year, after providing notice of its intent to withdraw on or before January 1 of that same year. Ultimately, Foster City’s membership was terminated August 1, 2025, pursuant to an agreed termination under Section VIII(B) of the Cities Group Bylaws, as amended in 2000. Under the Termination Agreement with Foster City approved by the Cities Group Board of Directors, Foster City assumed all liability for the past, current, and future claims it generated. The Cities Group, therefore, is no longer responsible for any claims generated by the City of Foster City.
After receiving the withdrawal notice from the City of Foster City in November 2024, four of the five other Member Agencies also submitted withdrawal notices prior to the January 1, 2025 deadline. Unlike Foster City, however, those Member Agencies indicated that they issued their notices in order to reserve their right to withdraw from the Cities Group but had not yet determined whether they intended to withdraw as of July 1, 2025. Ultimately none of the other Member Agencies withdrew from the Cities Group, and the membership remains as follows: the City of San Carlos, the City of Half Moon Bay, the City of Dublin, the Town of Atherton, and the Town of Hillsborough.
Although the Cities Group has continued to operate successfully after the departure of the City of Foster City, the future viability of the Cities Group is in question. Because Foster City represented a disproportionately large share of the total claims handled by the Cities Group, the Group will become financially less stable and will be less attractive on the reinsurance market. With this in mind, and at the Board’s direction, Cities Group staff worked with the Board President to conduct initial research into the possibility of merging the Cities Group with another Joint Powers Agency or other public agency administering workers’ compensation programs. Unfortunately, each of the identified agencies indicated that Cities Group members wishing to move their workers’ compensation programs would have to do so individually, rather than moving all five Cities Group members as a unit.
The Cities Group Board President and staff presented this finding to the Board of Directors in February 2025 and recommended that each Member Agency conduct its own due diligence to determine where it might take its claims should the Cities Group dissolve. The Board held several discussions in the following months about the future of the Cities Group and the prospect of dissolving the Group.
On June 10, 2025, the Cities Group Board of Directors approved a resolution, which found that an orderly dissolution of the Cities Group was the preferable method of transitioning the Member Agencies out of the Cities Group, rather than having each Member Agency individually withdraw.
That resolution directed Cities Group staff to create and present to the Board a dissolution plan under which the Cities Group would cease providing claims administration and all other benefit services on behalf of the Member Agencies on or before December 31, 2025.
Cities Insurance Group Dissolution Staff Report
October 15, 2025
In accordance with the Board’s direction, the Cities Group staff drafted a Dissolution Agreement that would govern the dissolution process and establish the on-going rights and obligations of the Member Agencies. The draft of that Dissolution Agreement was provided to the attorneys representing each of the Member Agencies and Cities Group staff worked with representatives from each Member Agency to address questions, concerns, and objections to the terms of that Dissolution Agreement. After completing that review process with representatives of each of the five Member Agencies, the Dissolution Agreement was presented to the Board at its meeting on September 9, 2025.
FINDINGS | DISCUSSION
At its September 9, 2025 meeting, the Board of Directors approved the resolution attached here as Attachment 2, which formally recommends to the councils of the Member Agencies that they each consent to the dissolution of the Cities Group and approve the Dissolution Agreement. The Dissolution Agreement is attached to Attachment 1 as Exhibit A. Though Atherton's representative was unable to attend the September 9 Cities Group Board meeting due to a prior conflict communicated to the Cities Group Board, the Town's representative was informed throughout the process leading up to the September 9 meeting and is supportive of the dissolution plan. Pursuant to Section 5 of the JPA, the Cities Group cannot dissolve unless all Member Agencies consent to the dissolution. Therefore, each of the five councils must adopt resolutions providing that consent.
Attached here as Attachment 1 is a proposed resolution that would consent to the dissolution of the Cities Group and authorize the City Manager to execute the Dissolution Agreement recommended by the Cities Group Board of Directors. If approved by all five councils of the Member Agencies, the Dissolution Agreement will govern the dissolution process and set forth the rights and responsibilities of each Member Agency during that process. Most notably, the Dissolution Agreement would require the following:
• Each Member Agency must remain a member of the Cities Group for the duration of the dissolution process (Section 2);
• Cities Group will cease all claims operations and the provision of other benefits as of the “Transfer Date” on January 1, 2026 (Section 4);
• Each Member Agency must take responsibility for all of its past, current, and future claims as of the Transfer Date and assume all liability associated with those claims (Section 5);
• As of the Transfer Date, the costs of operating the Cities Group will be split equally among the five Member Agencies as “Shared Expenses”, rather than apportioned based on claim volume (Section 6);
• At the direction of the Board of Directors, the Cities Group will conduct audits and/or other studies to determine the correct ending fund balances for each of the Member Agencies as of the Transfer Date, and those with negative balances will be required to bring those balances to $0 on or before August 1, 2026 (Section 7); Cities Insurance Group Dissolution Staff Report
October 15, 2025
• Member Agencies with positive fund balances of the Transfer Date that are not depleted through the assessment of Shared Expenses shall be refunded the balance of those funds prior to the final dissolution of the Cities Group (Section 7); • The Board shall select one or more Member Agencies to retain the records of the Cities Group for the periods required by statute (Section 12); • The Member Agencies agree to waive all potential claims related to the Cities Group that they may have against one another or against the Cities Group (Section 14); and • The dissolution will occur at the time that the Board finds by adoption of an “Ending Resolution” that all of the Cities Group’s outstanding obligations have been resolved.
Several Member Agencies requested that Cities Group staff provide an estimated schedule for the dissolution process. Attached here as Attachment 3 is a preliminary estimated schedule, which anticipates the completion of the dissolution process by the end of calendar year 2026. However, pursuant to Section 5 of the JPA, the Cities Group must resolve all of its outstanding obligations before it can complete the dissolution process. The actual timeline for the dissolution, therefore, will be dictated by the pace at which the outstanding obligations of the Cities Group can be resolved.
It is important to quickly obtain the consent of the Member Agencies to the recommended dissolution so that each Member Agency and the Cities Group staff have clarity about, and can plan for the date on which claims will no longer be handled by the Cities Group. It is also important to allow enough time for Cities Group staff to work with the Member Agencies to transfer claims to new claims administrators. For those reasons, each Member Agency must obtain council consent to the dissolution and approval of the Dissolution Agreement by October 31, 2025.
For reference, the Cities Group JPA and Bylaws, and the amendments to each, are attached here as Attachment 4.
During this dissolution process, Town staff has been working on alternative plans for Worker’s Compensation coverage and the handling of claims as of January 1, 2026. The Town identified Bay Cities and PLAN JPA as options for alternative programs for worker’s compensation coverage. Town submitted applications for participation in both Bay Cities JPA and PLAN JPA programs. PLAN JPA approved the formation and development of a workers compensation coverage program in June 2025. The Town also participates in the PLAN JPA Liability and Property insurance programs. The formation of the worker’s compensation program completes the insurance offerings of the PLAN JPA. The Town’s two applications have been accepted. Both the PLAN JPA and Bay Cities JPA include membership of various bay area cities. With PLAN JPA currently having 28 members and Bay Cities JPA currently 16 members. We are currently exploring the best program coverage for the Town and will be presenting at a future meeting a recommendation of workers compensation program provider to begin January 1, 2026.
Cities Group JPA will handle claims up to December 31, 2025 and then each City of the JPA would take all their existing claims with them to their new JPA. The Town currently has twelve open claims with a total liability of approximately $340,000.
Cities Insurance Group Dissolution Staff Report
October 15, 2025
CONCLUSION
Staff requests that the Council approve the proposed resolution attached here as Attachment 1, which will consent to the dissolution of the Cities Group and authorize the City Manager to execute the Dissolution Agreement on behalf of the Town.
FISCAL IMPACT
The overall fiscal impact on joining a new coverage program would include possible slight increase in yearly assessment premiums and access options to individual SIRs. Due to the Town’s diligence in building up its Workers’ Compensation Fund over the years, there is a healthy fund balance for transition from the Cities Group to a new JPA if there is a requirement for the establishment of an equity reserve.
GOAL ALIGNMENT
Goal A- Maintain Fiscal Responsibility
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders – to include, but be not limited to, media outlets, school districts, Menlo Park Fire District, service provides (water, power, and sewer), and regional elected officials.
ATTACHMENT
1.Proposed Resolution Consenting to the Dissolution of the Cities Group and Approving a Dissolution Agreement to Govern the Dissolution Process Exhibit A – Dissolution Agreement
2. Resolution of the Cities Group Board of Directors Recommending that the Member Agencies Approve the Dissolution of the Joint Powers Authority Pursuant to the Terms of a Dissolution Agreement (adopted September 9, 2025)
3. Estimated Schedule for Dissolution
4. Cities Group JPA and Bylaws