____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: _______________________
Disposition: ___________________________
Agenda Item No: 2.d
Meeting Date: April 6, 2026
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: City Attorney’s Office
Prepared by: Andrea Visveshwara,
Chief Assistant City Attorney
City Manager Approval: ______________
TOPIC: AUTHORITY FOR CLAIMS/LITIGATION SETTLEMENT AND LEGAL EXPENDITURES SUBJECT: RESOLUTION TO INCREASE THE SETTLEMENT AUTHORITY OF THE CITY MANAGER FOR CLAIMS AND LITIGATION FROM $20,000 TO $50,000, TO AUTHORIZE THE CITY’S FINANCE DIRECTOR OR DESIGNEE TO PAY ALLOWED,
SETTLED, OR COMPROMISED CLAIMS, AND TO AUTHORIZE THE CITY MANAGER TO EXCLUDE LEGAL COSTS PAID FROM THE CITY’S LIABILITY FUND FROM THE
CONTRACT NOT TO EXCEED AMOUNT IN CONTRACTS FOR LEGAL SERVICES RECOMMENDATION:
Staff recommends that the City Council adopt the resolution to increase the settlement authority of the City Manager for claims and litigation from $20,000 to $50,000, to authorize the City’s Finance Director or Designee to pay allowed, settled or compromised claims or litigation, and to authorize the City Manager to exclude legal costs paid from the City’s Liability Fund from the contract not to exceed amount in contracts for legal services.
BACKGROUND:
In 1992, the City Council adopted Resolution No. 8757, which established a Risk Management Policy for the City. Section D of the Resolution delegated authority to the City Manager and a Property and Casualty Loss Committee to settle claims for up to $20,000. It also delegated to the City Manager the authority to settle workers’ compensation claims for up to $20,000. In 2011, the City Council adopted Resolution No. 13089, which revised Section D of Resolution No. 8757 to increase the City Manager’s authority to settle workers’ compensation claims to $50,000.
In addition, in 2024, the City entered into a five-year contract with George Hills, a third-party administrator, to manage government tort claims, adjustments, investigations, and other liability claims, as well as administrative functions for property damage and personal injury claims made by third parties against the City. George Hills also interacts with the California Joint Powers Management Authority (CJPRMA) on behalf of the City. CJPRMA is a member-directed excess liability risk retention pool, which may provide coverage for City claims in excess of $750,000, inclusive of legal costs of defense. As part of the services offered by George Hills, George Hills facilitates payment for the cost of defense, including payment to outside legal counsel. In accordance with San Rafael Municipal Code (SRMC) Section 2.55.080, expenditures are limited by the unencumbered appropriation in the fund account against which said SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
purchase or contract is to be charged. This is what the Council appropriates within the Liability Fund on an annual basis through the budget process.
ANALYSIS:
Government Code Section 935.4 authorizes a public entity to authorize an employee to allow, compromise, or settle a claim against the local public entity if the amount to be paid pursuant to the acceptance, compromise, or settlement does not exceed $50,000, and for the public entity’s fiscal officer to pay the allowed, compromised, or settled amount. Further, Government Code Section 949 allows a public entity to delegate the authority to settle a legal action. The proposed resolution further revises Section D of the original risk management policy set forth in Resolution No. 8757 to increase the City Manager’s authority to settle claims to the maximum allowed by state law and to be consistent with the existing City Manager authority to settle workers’ compensation claims.
In recent years, the City has seen an increase in litigation that falls outside the purview of the George Hills contract and coverage by CJPRMA (“Non-Covered Litigation”). In this type of litigation, the City contracts directly with the law firm and pays all defense costs directly, including legal costs, from the City’s Claim Fund. SRMC Section 2.55.040.A requires the Council to award contracts that exceed $100,000. Legal service contracts are exempt from bidding requirements per SRMC Section 2.55.100.D.
Given the quick pace and unpredictable nature of litigation, staff would like to align payment of legal defense costs for Non-Covered Litigation with that of the litigation managed by George Hills and covered by CJPRMA to be limited to what the Council appropriates to the Liability Fund and is unencumbered. In addition, there may be strategic reasons why the City may not want to publicize what a litigation budget is in a particular case. The proposed resolution allows the City Manager to exclude from a contract not to exceed amount any legal costs that are paid from the Liability Fund. For the legal services contract with Burke Williams & Sorenson, the City Council has already authorized litigation costs to be excluded from the contract’s not to exceed amount. The proposed resolution would apply this exclusion to all legal service contracts. Legal costs related to representation and advice on matters which are paid with funds from the Liability Fund would be excluded from a contract’s not to exceed amount. This includes legal services contracts entered at the City Manager level.
FISCAL IMPACT:
There is no fiscal impact associated with the adoption of this resolution. The fiscal impact of allowing, settling, or compromising claims, and the cost of defense of litigation matters, is analyzed through the City’s budget process and the appropriation of funds to the Liability Fund (Fund 605).
RECOMMENDED ACTION:
Staff recommends that the City Council adopt the resolution to increase the settlement authority of the City Manager for claims and litigation from $20,000 to $50,000, to authorize the City’s Finance Director or Designee to pay allowed, settled or compromised claims or litigation, and to authorize the City Manager to exclude legal costs paid from the City’s Claim Fund from the contract not to exceed amount in contracts for legal services.
ATTACHMENTS:
1. Resolution
RESOLUTION NO.
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL RESOLUTION TO INCREASE
THE SETTLEMENT AUTHORITY OF THE CITY MANAGER FOR CLAIMS AND LITIGATION FROM $20,000 TO $50,000, TO AUTHORIZE THE CITY’S FINANCE
DIRECTOR OR DESIGNEE TO PAY ALLOWED, SETTLED, OR COMPROMISED
CLAIMS, AND TO AUTHORIZE THE CITY MANAGER TO EXCLUDE LEGAL COSTS PAID FROM THE CITY’S LIABILITY FUND FROM THE CONTRACT NOT TO
EXCEED AMOUNT IN CONTRACTS FOR LEGAL SERVICES
WHEREAS, in 1992, the City Council adopted Resolution No. 8757, which established a Risk Management Policy for the City, which delegated authority to the City Manager and a Property and Casualty Loss Committee to settle claims for up to $20,000, and which delegated to the City Manager the authority to settle workers’ compensation claims for up to $20,000; and
WHEREAS, in 2011, the City Council adopted Resolution No. 13089, which revised Resolution No. 8757 to increase the City Manager’s authority to settle workers’ compensation claims to $50,000; and
WHEREAS, Government Code Section 935.4 authorizes a public entity to authorize an employee to allow, compromise, or settle a claim against the local public entity if the amount to be paid pursuant to the acceptance, compromise, or settlement does not exceed $50,000, and for the public entity’s fiscal officer to pay the allowed, compromised, or settled amount; and
WHEREAS, further, Government Code Section 949 allows a public entity to delegate the authority to settle a legal action; and
WHEREAS, the City Council desires to further revise the original risk management policy set forth in Resolution No. 8757 to increase the City Manager’s authority to allow, settle or compromise claims and litigation to the maximum allowed by state law and to be consistent with the existing City Manager authority to settle workers’ compensation claims; and
WHEREAS, San Rafael Municipal Code Section 2.55.040.A requires the Council to award contracts that exceed $100,000; and
WHEREAS, given the quick pace and unpredictable nature of litigation, and for strategic litigation reasons, the City Council desires to ensure that legal costs incurred related to claims and litigation matters are paid promptly to ensure no interruption in service; and NOW, THEREFORE BE IT RESOLVED, that the City Council hereby authorizes:
1. The City Manager or designee to reject, allow, compromise, or settle claims, lawsuits or other actions against the City and to negotiate and execute any resulting agreement, provided the amount to be paid pursuant to the agreement to allow, compromise or settle does not exceed fifty thousand dollars ($50,000); and that the Finance Director or designee is authorized to make payment on said allowance, compromise or settlement, upon request by the City Manager or designee; and
2. For legal services contracts, the City Manager or designee may exclude legal costs related to advice and counseling or representation in claims, lawsuits or other adjudicative proceedings from the legal services contract’s not to exceed amount, to pay for the aforementioned legal costs, provided that such legal costs are paid with funds from the Liability Fund, subject to the requirements of San Rafael Municipal Code Section
2.55.080. This authorization applies to existing legal services contracts and legal services contracts executed under the City’s Manager’s or designee’s authority as provided for in SRMC 2.55.040.
I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael, held on Monday, the 6th day of April 2026, by the following vote, to wit:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
_________________
Lindsay Lara, City Clerk