AGENDA ITEM NO. 9
CITY OF HAWTHORNE
City Council
AGENDA BILL
For the meeting of May 28, 2024
Originating Department: City Attorney
City Manager: __________
Vontray Norris
City Attorney: ___________
Robert Kim
SUBJECT:
Resolution No. 8467, A Resolution of the City Council of the City of Hawthorne, California, Noticing Intent to Withdraw from Independent Cities Risk Management Authority (ICRMA)
RECOMMENDED MOTION:
Staff recommends that the City Council adopt Resolution No. 8467.
DISCUSSION:
The City of Hawthorne has been a long-term member of Independent Cities Risk Management Authority (ICRMA). For several decades, the City has been a member in a pool of cities that collectively shared the general liability risks with other member cities of ICRMA. ICRMA is an entity created under the Government Code as a joint powers authority (JPA). Subject to each city’s retention, ICRMA pools liability insurance coverage for member cities for the first $2 Million in coverage, with additional excess insurance from commercial carriers for losses greater than the initial $2 Million layer.
Commencing in the fiscal year ‘23/’24, the City increased its Self-Insurance Retention from $500,000 per occurrence to $2 Million. Stated differently, the City became self-insured up to $2 Million per loss. This resulted in the annual savings of the premiums for liability insurance by $1 Million, during a time of dramatic increases in insurance premiums. It also meant that the City, while still in ICRMA, was no longer pooling risk with other cities up to the $2 Million limit and was benefitting through the commercial excess insurance coverage offered through ICRMA.
For various reasons, the City Attorney’s office has been exploring the City’s options with other similar but larger pooled insurance JPA’s. In the past few years, many cities left ICRMA for other JPAs. ICRMA’s pool has dwindled down to a little over dozen agencies from over 30 cities a few years ago.
The current Bylaws for ICRMA requires that a withdrawing city must give a one-year prior notice of its intentions to withdraw and prior to July 1. The notice must be in the form of a resolution from the city council and a letter from the city manager. Although such a clause may be legally questionable, for now, the city attorney’s office is recommending that the council approves the resolution and initiate the steps to separate from ICRMA by giving notice in June, 2024 for an effective withdrawal date of July 1, 2025, while reserving rights to challenge the required one year notice provision. The city then would leave ICRMA and secure coverage elsewhere. Should the council change its mind and decide to stay with ICRMA, the same bylaw allows the city to adopt another resolution to remain as a member. Such resolution would have to be submitted by December 1st.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
FISCAL IMPACT:
None.
NOTICING PROCEDURES:
72 hours posted notice pursuant to the Ralph M. Brown Act ATTACHMENT(S):
1. Resolution No. 8467