Loading...
HomeMy WebLinkAboutMINUTES - 07191988 - 1.6 (2) t HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS DATE:July 12, 1988 FROM: cc: Perfecto Villarreal , Executive Director , SUBJECT: CALIFORNIA HOUSING AUTHORITIES RISK MANAGEMENT AGENCY JOINT EXERCISE OF POWERS AGREEMENT I. RECOMMENDED ACTION: AUTHORIZE the Executive Director of the Housing Authority of the County of Contra Costa to execute the revised Joint Exercise of Powers Agreement to Provide Risk Management Services for California Housing Authorities, as recommended by the Advisory Housing Commission. I1. FINANCIAL IMPACT: None. III. REASONS FOR- RECOMMENDATION/BACKGROUND: On February 4, 1986, the Board of Commissioners approved executionlof a Joint Powers Agreement to Provide Risk Management Services for California Housing Authorities. At that time, only the Housing Authority of the County of Contra Costa and the Oakland Housing Authority were parties to the Agreement. The California Housing Authorities Risk Management Agency (CHARMA) has expanded and both the Marin County and Fresno City and County Housing AuthQrities are now a party to the Agreement. As a result, definition of membership has been redefined as Charter and Non-Charter, and after two years in operation, clarification of the claims reporting procedures was necessary. The revised Joint Exercise of Powers Agreement reflects these changes. A copy of the Agreement was forwarded to County Counsel for review and comment. At its meeting on June 20, 1988, the Advisory Housing Commission moved to recommend that the Executive Director be authorized to execute the revised Joint Exercise of Powers Agreement to Provide Risk Management Services for California Housing Authorities. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioners elect to not authorize the Executive Director to execute the revised Joint Exercise of Powers Agreement to Provide Risk Management Services for. California Housing Authorities, the Housing Authority would lose its $25,000 to $5,000,000 liability insurance coverage. CONTINUED ON ATTACHMENT: YES SIGNATURE: CST RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDA ION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON JUL 1 9 1 APPROVED AS RECOMMENDED X OTHER VOTE OF COMMISSIONERS X___ UNANIMOUS (ABSENT --- ) I HEREBY CERTIFY THAT THIS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND. ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. ATTES C C: TED County Administrator JUL 19 County Counsel Phil Batchelor, Clerk of the Housing Authority Board of Commissioners M382/7-83 BY DEPUTY JOINT EXERCISE OF POWERS AGREEMENT TO PROVIDE RISK MANAGEMENT SERVICES FOR CALIFORNIA HOUSING AUTHORITIES ACCT002B Revised 5/26/88 JOINT EXERCISE OF POWERS AGREEMENT CALIFORNIA HOUSING AUTHORITIES TABLE OF CONTENTS PAGE ARTICLE 1 - PURPOSE 3 ARTICLE 2 - DEFINITIONS 4 ARTICLE 3 SEPARATE ENTITY 10 ARTICLE 4 - ESTABLISHMENT OF RISK MANAGEMENT PROGRAMS 11 ARTICLE 5 - GOVERNING BOARD 11 ARTICLE 6 - POWERS 13 ARTICLE 7 - LIABILITIES 15 ARTICLE 8 - ADMINISTRATION OF FINANCES 16 ARTICLE 9 - MEMBERS 16 ARTICLE 10 - NEW MEMBERS 17 ARTICLE 11 - FUNDING 18 ARTICLE 12 - CLAIMS SETTLEMENT AND DEFENSE OF CLAIMS 19 ARTICLE 13 - MEMBER RESPONSIBILITIES 21 ARTICLE 14 - TERMS OF AGREEMENT 22 ARTICLE 15 WITHDRAWAL 22 ARTICLE 16 - SANCTIONS AGAINST NON-COMPLIANCE 22 ARTICLE 17 - REFUND UPON WITHDRAWAL OR REMOVAL FROM MEMBERSHIP 23 ARTICLE 18 - OBLIGATIONS 0F . MEMBERS AFTER WITHDRAWAL FROM MEMBERSHIP 24 ARTICLE 19 - RIGHTS AND RESPONSIBILITIES OF TERMINATING MEMBERS 24 ARTICLE 20 - DISPOSITION OF ASSETS UPON TERMINATION OF AGREEMENT 26 ARTICLE 21 - ENFORCEMENT 26 ARTICLE 22 - INVALIDITY r. 26 ARTICLE 23 - AMENDMENTS ? '•�� 27 ARTICLE 24 - ASSIGNMENT RECEIVED 27 ARTICLE 25 - AGREEMENT COMPLETE 1 27 ARTICLE 26 - DATA AGREEMENT EFFECTIVE JUL 1988 27 PHIL BATCHELOR K RD OF SUPERVISORS ,RA COSTA CO. B ... De u1 FINAL AMENDED JOINT EXERCISE OF POWERS AGREEMENT TO PROVIDE RISK MANAGEMENT SERVICES FOR CALIFORNIA HOUSING AUTHORITIES This Agreement is entered into pursuant to the provisions of Chapter 5 (beginning with Section 6500 ) of Division 7 of Title 1 of the Government Code authorizing specified local public agencies to exercise jointly the power to provide risk management programs , including insurance, pursuant to the provision of Chapter 3 (begin- ning with Section 989 ) of Part 6 of Division 3. 6 of Title' l of the Government Code . W I T N E S S E T H WHEREAS, the public interest requires .and it is in the mutual interest of the parties hereto to join together to establish cooperative risk management .programs ; and WHEREAS, the operation of such a cooperative program is of such magnitude that it is necessary for the parties to this Agree- ment to join together to accomplish the purposes hereinafter set forth ; and -1- Revised 5/26/88 WHEREAS , each of the local public entities which is a party to this Agreement has the power to establish and operate risk management programs ; and WHEREAS, Chapter 5 , Division 7 , Title 1 of the California Government Code authorizes the joint exercise of two or more local public entities of any power which is common to each of them; and WHEREAS, each of the parties to this Agreement desires to join together with the other parties for the purpose of creating funds to indemnify and otherwise protect the parties against losses , and jointly purchase excess insurance, reinsurance, and administra- tive services in connection with cooperative risk. management pr.o grams ; and WHEREAS , in light of the above, the California Housing Authority Risk Management Agency ( CHARMA ) was created in April of 1986 when the Oakland Housing Authority ( 4-01-86 ) , the Marin Housing Authority ( 6-26-86 ) , the Contra Costa Housing Authority ( 4-01-86 ) , and the Fresno Housing Authority ( 7-09-86 ) entered into a Joint Exercise of Powers Agreement ; and WHEREAS , a need has been recognized to amend the original Joint Exercise of Powers Agreement to more clearly reflect the needs and desires of the participating public entities . -2- Revised 5/26/88 NOW, THEREFORE, for and in consideration of the mutual advantages to be derived therefrom, and in consideration of the execution of this Agreement by other local public entities, each of the parties hereto does agree that the Joint Exercise of Powers Agreement created in April of 1986 shall be retroactively governed by this amended document as if this document had been in effect since the inception of this Agreement , and further agrees as fol- lows : ARTICLE 1. PURPOSES AND OBJECTIVES CHARMA is established to provide each member with indemnification and financial protection against any covered risk of loss as may be agreed upon by the members . CHARMA is established to achieve the following objectives for the benefit of its members ; ( a ) Reduce the cost of each risk area through effective loss con- trol practices and combined purchasing power ; (b) Reduce the cost of claims administrative services through cen- tral management and combined purchasing power ; ( c ) Achieve a greater stability in the cost of risk through a com- bination of the size of membership, longer duration of insur- ance agreements, effective loss control practices, and self- insurance ; -3- Revised 5/26/88 (d ) Reduce the amount and frequency of losses experienced by member agencies through better risk management ; ( e ) Improve the control of sources of risk through the application of risk management loss control techniques ; ( f ) Improve recovery from third parties ; (g) Maintain adequate reserves to provide for future losses ( h ) Monitor local, state, and federal legislative and risk manage- ment activities with, the intent to advocate CUARMA `s position 4 through coordination with appropriate legislative representa- tives ; and ( i ) Perform other functions as required to effectively implement risk management programs as required by the Board for the pur- pose of accomplishing the goals of this Agreement . ARTICLE 2 . DEFINITIONS The following definitions shall apply to the provisions of this Agreement : -4- Revised 5/26/88 ( a) "Annual Assessment" shall mean a premium charge or other con- sideration imposed or collected by CHARMA from each member on an annual basis . Said "annual basis" shall be the financial year beginning on April 1 and ending on March 30 of the follow- ing year . ollow-ing. year . All annual assessments shall be determined and set by the Board based on factors adopted from time to time by the Board . Annual assessments shall include funds for expected losses , reserves, and all operational expenses . ( b) "Board of Directors" or "Board" shall mean the governing body of CHARMA. The Board shall be comprised of seven members. Four. chairs shall be permanently occupied by one representative from each of the four Charter Members. Three chairs shall be occupied by representatives from three different Non-Charter Members . The selection of each individual occupying said director chairs shall be in accordance with the provisions as set forth in Article 5 . ( c) "CHARMA" shall mean California Housing Authority Risk Manage- ment Agency, the public entity created by this Agreement . ( d ) "Claims" shall mean demands inade against members for occur- rences covered under that member and CHARMA' s Joint Protection Agreement . -5- Revised 5/26/88 (e) "Claims Management" shall mean the process of identifying, controlling, resolving, and managing claims made against any member . The claims management function includes supervising legal services, adjusting services, investigating services , and engineering services to resolve such demands or claims . ( f ) "Coverage Terms" shall mean those provisions and conditions as set forth in any Joint Protection Agreement issued to each member by CHARMA, which define the indemnification and fin- ancial protection which is provided by CHARMA to its members , and the member 's obligations and responsibilities thereunder . The coverage terms may be modified or altered from time to time within the applicable rules and regulations ,adopted by the Board and governed by this Agreement . Modification and altera- tions shall be implemented through the periodic issuance of updated Certificates of Coverage . ( g) "Deductible" shall mean the amount of risk assumed directly by a member . Claims within this area of risk shall be paid directly by L-he member . Deductible shall be used interchange- ably with SIR (Self Insured Retention ) . ( h ) "Defense Costs" shall mean all fees and expenses caused by and relating to the adjustment , investigation, defense or litiga- tion of a claim, including attorney ' s fees, court costs, and interest on judgments . -6- Revised 5/2:6/88 ( i ) " Insurance Funds" shall mean the fund into which insurance assessments shall be deposited .and from which claims in excess of a member 's deductible or self-insured retention shall be paid . ( j ) "Initial Assessment" shall mean an assessment levied against a prospective new member , the payment of which is a condition precedent to its becoming a member as decided by the Board of Directors . ( k ) "Joint Protection Agreement" shall mean an agreement entered into between CHARMA and an individual member . The Agreement shall set forth the specific terms and conditions under which CHARMA agrees to provide coverage to that member . CHARMA shall enter into a separate agreement- with each individual member . ( 1 ) "Loss Fund" shall mean a fund held and administered by CHARMA into which members may deposit funds to cover their deductible or SIR amounts . (m) "Local Public Entity" shall mean a Housing Authority, a Com- munity Development Agency, a Redevelopment Agency, or another Joint Powers Entity consisting exclusively of the above entities . -7- Revised 5/26/88 ( n ) "Member." shall mean a local public entity which has duly exe- cuted this Agreement and which is entitled to all the rights and benefits conferred herein and which is also subject to the conditions and obligations imposed on it by" this Agreement, the By-Laws, Joint Protection Agreement ( s) , and all rules and regu- lations adopted by the Board . ( o) "Charter Members" are the initial members which have entered into the Joint Exercise of Powers Agreement on or before August 29 , 1986, and those members which attain Charter Membership status in accordance with Section 2. 1 of the By-Laws of CHARMA. (p) "Non-Charter Members" are those members which have entered or will enter into this Joint Exercise of Powers Agreement after August 29 , 1986 . (q) "Noncompliance," shall mean any failure to comely with the terms of this Agreement , with the By-Laws -under this Agreement, with .a Joint Protection Agreement , or with any other rules and requ- lations which may be adopted by the Board, but only to the extent that such noncompliance is deemed material by and within the sole discretion of the Board . -8- Revised 5/26/88 ( r ) "Occurrence" shall mean an accident , event , or error or omis- Sion during a policy period, including injurious exposure to conditions , which result in personal injury, property damage , or errors and omissions neither expected nor intended from the standpoint of the member . (s ) . "Operating Fund" shall mean the fund established to pay all administrative costs incurred in the implementation of the Agreement , the By-laws, and the Joint Protection Agreements . ( t ) "Claims Manager" shall mean an individual or organization which is well experienced in claims management and is currently in the business of providing claims management services to organ- izations similar to CHARMA . (u ) "Risk Manager" shall mean an individual or organization which is well experienced in risk management and is currently in the business of providing risk management services to organizations similar to CHARMA. ( v) "Program Director" shall mean the person hired by the Board to coordinate and manage CHARMA. (w) "Risk Area" shall mean an area of exposure to pure risk of financial loss . As used in this Agreement, this term refers to one of the following exposures : workers ' 'compensation, errors -9- Revised 5/26/88 and omissions , public liability , automobile liability, fire and extended coverage, and such other areas as the Board shall agree upon . ( x ) "Risk Management" shall mean the process of identifying, eval- uating, reducing, transferring, and eliminating factors and circumstances which could result in physical property damage, liability to third persons and public official and employee liability. Risk management includes various safety procedures , educational programs, and incorporates elements of insurance, law, administration,. technology, and general business utilized to effectively manage risks . (y) "Special Assessment" shall mean any assessment authorized by the Board in addition to the annual assessment( s) . ( z ) "Dividend" shall mean the amount of funds returned to a member by the Board based upon an adopted plan or resolution . ARTICLE 3 . SEPARATE ENTITY There is hereby created a separate public entity, the full legal name of which shall be "California Housing Authority Risk .Management Agency" , and shall be referred to herein as "CHARMA" . CHARMA is a public entity separate from other parties to this Agreement . -10- Revised 5/26/88 ARTICLE 4. ESTABLISHMENT OF RISK MANAGEMENT PROGRAMS Risk management programs beneficial to the members shall be estab- lished . The operational mechanics of the programs shall be estab- lished by or under the direction of the Board of Directors in com- pliance with all provisions of this Joint Exercise of Powers Agree- ment , the By-Laws hereunder , and the various Joint Protection Agree- ments entered into between CHARMA and each individual member . ARTICLE 5 . GOVERNING BODY (a ) Until such time at which CHARMA is comprised of seven or more members , CHARMA shall be governed by a Board of Directors com- posed of four . chairs. . The four chairs shall be dedicated so that each of the four chairs shall be occupied by one represen- tative from each of the four Charter Members . At the Annual Membership Meeting, each Charter Member shall appoint a desig- nated representative to occupy its dedicated chair for the following one-year term . (b) when CHARMA increases its membership to seven or more members, CHARMA shall be governed by a Board of Directors composed of seven chairs . Four of the seven chairs shall be dedicated so that each of the four chairs shall be occupied by one represen- tative from each of the four Charter Members . At that Annual Membership Meeting, each Charter Member shall appoint a repre- -11 Revised 5/26/88 sentative to occupy its dedicated chair for the following one-year term. The appointed representative shall be an em- ployee of a CHARMA member . The three remaining chairs shall be occupied by three represen- tatives from Non-Charter Members . The three representatives serving in the three chairs reserved for Non-Charter Members shall be chosen as follows : Prior to each Annual Membership Meeting, each non-charter member shall nominate an :individual who is an employee of that member . All nominees shall be placed on a voting slate . At the Annual Membership Meeting, each non-charter member shall cast three votes by secret ballot for persons on the voting slate . Each non-charter member is allowed to cumulate its three votes so that any member may cast all three of its votes for one candidate, or two of its votes for one candidate with the remaining for another candidate, or divide its three votes among three separate candidates . The three nominees who receive the highest number of votes shall be elected to occupy for a .one-yeas term the three chairs reserved for non-charter member Directors . At the conclusion of each Annual Membership. Meeting when all of the Director ' s Chairs have been filled, each Director shall at his or her sole discretion appoint an alternate to serve throughout the year whenever the appointing Director is absent . Charter members may appoint alternates who are employees of -12- Revised 5/26/88 the same Housing Authority which employs the appointing Dire'c tor . Non-charter members may appoint alternates from any member agency. (c) Members of the Board of Directors are not entitled to compensa- tion from CHARMA. (d) The Board shall fix the time and place for its meetings . ( e ) The Board shall adopt the By-Laws of CHARMA. ARTICLE 6 . POWERS CHARMA is hereby granted all of the power and authority which is necessary to accomplish the purposes of this Agreement, including , but not limited to the following : ( a ) To fix and require of new members an initial assessment ; ( b) To fix and require of all members subsequent annual assessments to the extent such assessments are deemed necessary or appro- priate to facilitate the general purposes stated herein ; ( c ) To establish an insurance fund from which claims against the members shall be paid , and the authority to establish an oper- ating fund from which administrative expenses shall be paid, -13- Revised 5/26/88 and the authority to establish any other funds and accounts as the Board shall deem necessary and appropriate to further the . purposes of this Agreement ; (d) To make, enter into, and arrange for insurance and reinsurance contracts for excess, catastrophic, or any other such coverage as the Board shall deem necessary and appropriate; (e ) To establish and operate a program of risk management, which shall include the authority engage the services of a profes- sional risk manager ; ( f ) To establish and operate a program of claims management , which shall include the authority to engage the services of a profes- sional claims manager ; (g) To pay or approve the payment of any expenses and fees asso- ciated with the operation of CHARMA; and (h ) To make and enter into contracts ; to engage agents ; to acquire, hold , or dispose of property; to incur liability and obliga tions ; and to sue and be sued in the name of CHARMA. ( i ) To indemnify and hold harmless any member of the Board, officer of the Board , or any person acting on behalf of CHARMA to the extent that such indemnification is not prohibited by law. -14- Revised 5/26/88 The powers of CHARMA shall be exercised in the manner provided by law, and except as expressly set forth in this Agreement, subject only to those restrictions upon members in the exercise of similar powers . The Executive Director of each member or a designated alternate shall exercise all powers on behalf of his or her public entity. ARTICLE 7. LIABILITIES (a ) The debts , liabilities , and obligations of CHARMA shall not be the debts, obligations , or. liabilities of the members to this Agreement . (b) The debts , liabilities , and obligations of any one party to this Agreement shall not be the debts, liabilities , and obliga- tions of any other party to the Agreement or of CHARMA. ( c ) Claims against the Insurance Fund may only be filed with CHARMA by a member of CHARMA in accordance with and pursuant to the terms and provisions as set forth in the Joint Protection Agreement between CHARMA and said member . -15- Revised 5/26/88 ARTICLE 8. ADMINISTRATION OF FINANCES The Treasurer of the Agency shall be the depositary of the funds . The Treasurer shall invest and reinvest the funds in compliance with state laws and in the same manner as if they were participant funds . The duties of the Treasurer shall be as prescribed in Section 6505. 5 of the Government Code. The Agency will request bids from indepen- dent Certified Public Accountants to perform annual audits of all revenues and disbursements . ARTICLE 9. MEMBERS (a ) Each local public entity which is a party to this Agreement is a member of CHARMA and is entitled to the rights and privileges of members and is subject to the obligations of members , as provided in this Agreement . ( b) To become and retain status as a member , a prospective member shall execute this Agreement and shall comply with the follow- ing ( 1 ) Agree to remit to CHARMA an initial assessment, the amount of which shall be determined in a reasonable manner by the Board of Directors ; -16- Revised 5/26/88 ( 2 ) Agree to remit to CHARMA an annual assessment on a yearly basis in an amount with the Board determines to be neces- sary; ( 3 ) Agree to comply with the terms of the risk management program approved by the Board ; and ( 4 ) Agree to comply with this Agreement , the By-Laws under this Agreement , the Joint Protection Agreement., the Cert,i- ficate of Coverage applicable to that member, and with any rules and regulations which from time to time the Board may adopt . ARTICLE 10. NEW MEMBERS After formation of CHARMA by the initial members , new members may be accepted upon application and acceptance by the Board, only by a two-thirds vote of the Board , subject to acceptance by the prospec= tive member of the financial arrangements and assessments specified by the then current members through the Board of Directors . The housing authorities of Contra Costa, Fresno, Marin, and Oakland are charter members having the right to membership as initial partici- pants of this Joint Exercise of Powers Agreement'. -17- Revised 5/26/88 ARTICLE 11. FUNDING Each member , after consulting with the Claims Risk Manager, shall . select an amount of insurance coverage and shall also select a deductible amount or self-insured retention (SIR ) . These amounts shall be set forth on the Certificate of Coverage issued by CHARMA to that member , The deductible or SIR amount shall be the area of risk assumed directly by the member . Claims within the deductible or SIR area shall be paid directly by the member . A member may also contribute to a fund known as the Loss Fund which shall be held and invested by CHARMA solely for the account of that member . This Loss Fund shall be available to cover any deductible or SIR on any loss incurred by the member to the extent of the amount credited to the member in the Loss Fund . The Loss Fund shall be held in trust and invested by CHARMA. All interest and invest- ment proceeds earned by the Loss Fund shall accrue to the account on which they are earned . Each member shall deposit into the Insurance Fund an initial insur- ance assessment, the amount of which shall be determined by the Board of Directors under the policies set forth herein and within the parameters as established by the Joint Protection Agreement between CHARMA and the member and the Certificate of Coverage issued to the member by CHARMA. Each member shall deposit subsequent annual insurance assessments into the Insurance Fund in amounts to -18- Revised 5/26/88 be determined by the Board . The annual insurance assessments shall be calculated by or under the direction of the Board in a reasonable and prudent manner , based on recognized insurance practices . Fac- tors to be considered in calculating annual insurance assessments shall include , but shall not be limited to, a member ' s loss history, exposure, risk management program, and published rates . Notice of . annual insurance assessments , including amounts assessed, shall be sent by CHARMA to each member at least sixty (60 ) days prior to the first day of the fiscal year . Each member shall pay an initial administrative assessment, the amount of which shall be determined by the Board of Directors . Each member shall deposit subsequent annual administrative assessments into the Operating Fund in amounts to be determined by the Board . Annual administrative assessments shall be calculated by or under the direction of the Board by projecting the cost of operation dur- ing the coming fiscal year , and then prorating the. projected cost among the members based on the percentage of the total annual Insur- ance Fund assessments each member will be assessed . ARTICLE 12. CLAIMS SETTLEMENT AND DEFENSE OF CLAIMS Each member shall determine whether a claim filed against it which is within the limits of its deductible or SIR is to be allowed, compromised, settled or rejected . -19- Revised 5/26/88 Where a claim or settlement demand is in excess of a deductible or SIR amount , the member against whom the claim has been filed shall recommend to the Board whether such claim shall be allowed, compro- mised, settled or rejected ; however , such claim shall not be dis- posed of unless such recommendation is approved by the Board . Any disagreement arising out of the provisions of this paragraph shall be settled by arbitration in accordance with the Commercial Arbitra- tion Rules of the American Arbitration Association. When a reserve is established or revised by the adjuster , the self- insured retention level will be reviewed . Should a reserve reach one-half of the self-insured retention of the entity, a reserve advice letter will be sent to CHARMA. Should a reserve pierce the excess coverage ( exceed the self-insured retention ) , a notification letter will be sent to CHARMA. Activity and settlement authority will transfer to CHARMA . The Chairman of the Board of Directors of CHARMA will be the primary contact on these claims . If the Board determines that the attorney or adjuster selected by the member to manage its claim is managing the claim in an inappro- priate way, and if the claim is in excess of the applicable deduct- ible amount, then the Board , at its discretion, may replace the adjuster or attorney with one retained by CHARMA to then manage the claim and/or litigation. If and when CHARMA assumescontrol of the defense of a claim against any member , the reasonable costs of -20- Revised 5/26/88 defense incurred by CHARMA are reimbursable to CHARMA by the member in the amount of the member 's deductible . Costs over the member 's .deductible will be paid by CHARMA. ARTICLE 13 . MEMBER RESPONSIBILITIES Members shall be responsible for : (a ) Coordinating their activities with CHARMA; ( b) Maintaining an active safety and loss control program; ( c) Reporting to the Program Director any significant operational changes and new programs ; ( d ) Providing necessary data as required; (e ) Complying with risk management requirements as established by CHARMA; ( f ) Establishing and maintaining a prudent claims management pro- gram for self-insured risks ; (g) Paying all assessments levied by the Board in a timely manner ; and 721- Revised 5/26/88 (h) Complying with the letter and spirit of this Agreement . ARTICLE 14 . TERM OF AGREEMENT This agreement shall continue in effect until it is terminated by mutual consent of all current parties to the Agreement . ARTICLE 15. WITHDRAWAL A member may withdraw from this Agreement upon complying with the applicable withdrawal notice and procedural requirements as follows : A member may withdraw from membership in CHARMA by giving notice to the Board of Directors sixty ( 60 ) days prior to 'the date of with- drawal . Upon the effective date of withdrawal, the Joint Protection Agreement between the member and CHARMA shall be terminated, and the member shall be deemed to have withdrawn . ARTICLE 16 . SANCTIONS AGAINST NONCOMPLIANCE Upon noncompliance by any member, the Board shall have the power to do any one or a combination of the following : -22- Revised 5/26/88 (a ) Remove the member from CHARMA, thereby excluding such member from any indemnification and financial protection provided by CHARMA, subject to the applicable notice and procedural re- quirements as set forth in Section 2 . 9 of the By-Laws or as set forth in any other rules and regulations adopted by the Board . ( b) Offset any amounts due from CHARMA against any amounts which the member owes to CHARMA. (c) Accrue and charge interest at a reasonable rate on any amounts which the member owes to CHARMA. (d ) Impose any reasonable penalties , but only to the extent that any financial penalty imposed approximates the actual monetary loss suffered by CHARMA as a result of the noncompliance. ARTICLE 17 . REFUND UPON WITHDRAWAL OR REMOVAL FROM MEMBERSHIP Upon withdrawal or removal from membership under the provisions of either Article 13 or Article 14 above, a member may be entitled to receive a refund of a portion of the amount of claims funds contrib- uted to the Insurance Fund by that member . The method for determin- ing any amount to be refunded shall be established in a fair and . equitable manner by or under the direction of the Board of Direc- tors . -23- Revised 5/26/88 ARTICLE 18 . OBLIGATIONS OF MEMBERS AFTER WITHDRAWAL OR REMOVAL FROM MEMBERSHIP A withdrawing or removed member shall remain liable for any special assessment attributable to that member up through the date of its withdrawal or removal . . A member who has withdrawn or has been removed as a member under this Agreement shall remain under an obligation to actively pursue and resolve any claim made against it arising from a covered occur- rence during the period of its membership and which is payable from the Insurance Fund . A member who has withdrawn or has been removed from this Agreement remains under an obligation to provide CHARMA with such statistical and loss experience data and other information as may be necessary for CHARMA to carry out the purpose of this Agreement . ARTICLE 19 . RIGHTS AND RESPONSIBILITIES OF TERMINATING MEMBERS The withdrawal, by the voluntary termination or involuntary termina- tion of an individual member , shall not terminate that .member ' s responsibility to the Authority and to the other individual members for the following: -24- Revised 5/26/88 ( a ) To cooperate fully with the Authority and the other individual members in determining the cause of losses and in the settle- ment of claims occurring during the terminating member ' s mem- bership, as defined in the Joint Protection Agreement entered into by the members hereto . ( b) To pay all assessments or special assessments, as determined by the Board, regarding or pertaining to losses occurring during the terminated member ' s active membership. ( c ) To cooperate with and assist in the carrying out of the pur- poses and spirit of this Agreement . ( d ) To participate in the decisions regarding any claim against the terminated party and to have a vote as a Board member for that limited purpose . The terminating member shall hold harmless, indemnify, and defend the Authority and its individual members from all claims, suits , actions , and causes of action alleging liability on the part of the Authority or remaining members due to the acts, errors, and omis- sions of the terminating member . -25- Revised 5/26/88 ARTICLE 20. DISPOSITION OF ASSETS UPON TERMINATION OF AGREEMENT Upon termination of this Agreement, all property or funds held by CHARMA shall be distributed to all parties who are then members . Assets available for distribution shall be returned to the members in proportion of their gross assessments less claims paid and expenses paid . ARTICLE 21 . ENFORCEMENT CHARMA shall have the authority to enforce this Agreement . Any controversy or claim arising out of or relating to this Agreement , or the breach thereof , shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association , and judgment upon the award rendered by the arbitra- tor ( s ) may be entered in any court having jurisdiction thereof . ARTICLE 22. INVALIDITY Should any portion , term, condition , or provision of this- Agreement be determined by a court of competent jurisdiction to be illegal and in conflict with any law of the State of California , or be otherwise rendered unenforceable or ineffectual , the validity of the remaining portions , terms , conditions , or provisions shall not be affected thereby. -26- Revised 5/26/88 ARTICLE 23. AMENDMENTS This Agreement shall be altered or amended only by the mutual con- sent of all parties signatory hereto . ARTICLE 24 . ASSIGNMENT No member may assign any right , claim, or interest it may have under this Agreement . No creditor , assignee, or third party beneficiary of any member shall have any right , claim, or title to any part, share, interest, fund, premium, or asset of CHARMA. ARTICLE 25 . AGREEMENT COMPLETE The foregoing , and the documents referred to herein, constitute the full and complete Agreement of the parties . There are no oral understandings or agreements not set forth in writing or in the By- Laws . ARTICLE 26 . DATE AGREEMENT EFFECTIVE This Agreement shall become effective immediately after it has been adopted by two ( 2 ) public entities . -27- Revised 5/26/88 Public entities shall have sixty ( 60 ) days after the effective date to become members of CHARMA by adoption of this Agreement. The're- after , public entities may become members only under provisions applicable to new members . The "effective date" referred to hereunder refers to the creation of CHARMA, and not to insurance protection. Insurance protection is effective only upon execution of a Joint Protection Agreement by the prospective member and CHARMA and payment of the required initial assessment . Executed by the undersigned local public entities upon the respec- tive dates set forth after the signatures of their duly authorized officers . HOUSING AUTHORITY HOUSING AUTHORITY By. By: Date : Date: -28- Revised 5/26/88 HOUSING AUTHORITY HOUSING AUTHORITY By: By: Date: Date: ACCT002B -29- Revised 5/26/88 JOINT EXERCISE OF POWERS AGREEMENT CALIFORNIA HOUSING AUTHORITIES TABLE OF CONTENTS l PAGE ARTICLE 1 - PURPOSE 3 .ARTICLE 2 - DEFINITIONS 4 ARTICLE 3 - SEPARATE ENTITY 10 ARTICLE 4 - ESTABLISHMENT OF RISK MANAGEMENT PROGRAMS 11 ARTICLE 5 - GOVERNING BOARD 11 ARTICLE 6 - POWERS 13 ARTICLE 7 - LIABILITIES 15 ARTICLE 8 - ADMINISTRATION OF FINANCES 16 ARTICLE 9 - . MEMBERS 16 ARTICLE 10 - NEW MEMBERS 17 ARTICLE 11 - FUNDING 18 ARTICLE 12 - CLAIMS SETTLEMENT AND DEFENSE OF CLAIMS 19 ARTICLE 13 - MEMBER RESPONSIBILITIES 21 ARTICLE 14 - TERMS OF AGREEMENT 22 ARTICLE 15 - WITHDRAWAL 22 ARTICLE 16 - SANCTIONS AGAINST NON-COMPLIANCE 22 ARTICLE 17 - REFUND UPON WITHDRAWAL OR REMOVAL FROM MEMBERSHIP 23 ARTICLE 18 - OBLIGATIONS OF MEMBERS AFTER WITHDRAWAL FROM MEMBERSHIP 24 i ARTICLE 19 - RIGHTS AND RESPONSIBILITIES OF TERMINATING MEMBERS 24 ARTICLE 20 - DISPOSITION OF ASSETS UPON TERMINATION OF AGREEMENT 26 ARTICLE 21 - ENFORCEMENT 26 ARTICLE 22 - INVALIDITY 26 ARTICLE 23 - AMENDMENTS 27 ARTICLE 24 - ASSIGNMENT 27 ARTICLE 25 - AGREEMENT COMPLETE 27 ARTICLE 26 - DATA AGREEMENT EFFECTIVE 27 FINAL AMENDED JOINT EXERCISE OF POWERS AGREEMENT TO PROVIDE . RISK MANAGEMENT SERVICES FOR CALIFORNIA HOUSING AUTHORITIES This Agreement is entered into pursuant to the provisions of Chapter 5 ( beginning with Section 6500 ) of Division 7 of Title 1 of the Government Code authorizing specified local public agencies to exercise jointly the power to provide risk management programs , including insurance, pursuant to the provision of Chapter 3 (begin- ning with Section 989 ) of Part 6 of Division 3. 6 of Title 1 of the Government Code . WI T N E S S E T H WHEREAS, the public interest requires "an'd it is in the mutual interest of the parties hereto to join together to establish cooperative risk management programs ; and WHEREAS, the operation. ol such a cooperative program is of such magnitude that it is necessary for the parties to this Agree- ment to join together to accomplish the purposes hereinafter set forth ; arid -1- Revised 5/2.6/88 WHEREAS , each of the local public entities which is a party to this Agreement has the power to establish and operate risk management programs ; and WHEREAS, Chapter 5 , Division 7, Title 1 of the California Government Code authorizes the joint, exercise of two or more local public entities of any power which is common to each of them; and WHEREAS, each of the parties to this Agreement desires to join together with . the other parties for the purpose of creating funds to indemnify. and otherwise protect the parties against losses , and jointly purchase excess insurance, reinsurance , and administra- tive services in connection with cooperative risk management pro- grams ; and 3 WHEREAS , in light of the above, the California Housing Authority Risk Management Agency ( CHARMA ) was created in April of 1986 when the Oakland Housing Authority ( 4-01.-86 ) , the Marin Housing Authority ( 6-26-86 ) , the Contra Costa Housing Authority ( 4-01-86 ) , and the Fresno Housing Authority ( 7-09-86 ) entered into a Joint Exercise of Powers Agreement ; and WHEREAS , a need has been recognized to amend the original Joint Exercise of Powers Agreement to more clearly reflect the needs and desires of the participating public entities . -2- Revised 5/26/88 NOW, THEREFORE, for and in consideration of the mutual advantages to be derived therefrom, and in consideration of the execution of this Agreement by other local public entities, each of the parties hereto does agree that the Joint Exercise of Powers Agreement created in April of 1986 shall be retroactively governed by this amended document as if this document had been in effect since the inception of this Agreement , and further agrees as fol- lows : ARTICLE 1. PURPOSES AND OBJECTIVES CHARMA is established to provide each member with indemnification and financial protection against any covered risk of loss as may be agreed upon by the members . CHARMA is established to achieve the following objectives for the benefit of its members : ( a ) Reduce the cost of each risk area through effective loss con- trol practices and combined purchasing power ; (b ) Reduce the cost of claims administrative services through cen- tral management and combined purchasing power ; ( c ) Achieve a greater stability in the cost of risk through a com- bination of the size of membership, longer duration of insur- ance agreements, effective loss control practices, and self- insurance ; -3- Revised 5/26/88 ( d ) Reduce the amount and frequency of losses experienced by member agencies through better risk management ; ( e ) Improve the control of sources of risk through the application of risk management loss control techniques ; ( f ) Improve recovery from third parties ; (g) Maintain adequate reserves to provide for future losses; ( h ) Monitor local , state, and federal legislative and risk manage- ment activities with the intent to advocate' CHARMA 's position through coordination with appropriate legislative representa- tives ; and ( i ) Perform other functions as required to effectively implement risk management programs as required by the Board for the pur- pose of accomplishing the goals of this Agreement . ARTICLE 2 . DEFINITIONS The following definitions shall apply to the provisions of this Agreement : -4- Revised 5/26/88 ( a) "Annual Assessment" shall mean a premium charge or other con- sideration imposed or collected by CHARMA from each member on an annual basis . Said "annual basis" shall be the financial year beginning on April 1 and ending on March 30 of the follow- ing year . All annual assessments shall be determined and set by the Board based on factors adopted from time to time by the Board . Annual assessments shall include funds for expected losses, reserves, and all operational expenses .. ( b) "Board of Directors" or "Board" shall mean the governing body of CHARMA. The Board shall be comprised of seven members . Four chairs shall be permanently occupied by one representative from each of the four Charter Members. Three chairs shall be occupied by representatives from three different Non-Charter Members . The selection of each individual occupying said director chairs shall be in accordance with the provisions as set forth in Article 5. ( c) "CHARMA" shall mean California [dousing Authority Risk Manage- ment Agency, the public entity created by this Agreement . ( d) "Claims" shall mean demands made against members for occur- rences covered under that member and CHARMA 's Joint Protection Agreement . -5- Revised 5/26/88 ( e) "Claims Management" shall mean the process of identifying, controlling, resolving, and managing claims "made against any member . The claims management function includes supervising legal services, adjusting services, investigating services , and engineering services to resolve such demands or claims . ( f ) "Coverage. Terms" shall mean those provisions and conditions as set forth in any Joint Protection Agreement issued to each member by CHARMA, which define the indemnification and fin- ancial protection which is provided by CHARMA to its members , and the member ' s obligations and responsibilities thereunder . The coverage terms may be modified or altered from time to time within the applicable rules and regulations adopted by the Board and governed by this Agreement . Modification and altera- tions shall be implemented through the periodic issuance of updated Certificates of Coverage . ( g) "Deductible" shall mean the amount of risk assumed directly by a member . Claims within this area of risk shall be paid directly by the member . Deductible shall be used interchange- ably with SIR (Self Insured Retention ) . ( h ) "Defense Costs" shall mean all fees and expenses caused by and relating to the adjustment , investigation, defense or litiga- tion of a claim, including attorney 's fees , court costs, and interest on judgments . -6- Revised 5/26/88 ( i ) " Insurance Funds" shall mean the fund into which insurance assessments shall be deposited and from which claims in excess of a member 's deductible or self-insured retention shall be paid . ( j ) "Initial Assessment" shall mean an assessment levied against a prospective new member , the payment of which is a condition precedent to its becoming a member as decided by the Board of Directors . ( k ) "Joint Protection Agreement" shall mean an agreement entered into between CHARMA and an individual member . The Agreement shall set forth the specific terms and conditions under which CHARMA agrees to provide coverage to that member . CHARMA shall enter into a separate agreement with each individual member . ( l ) " Loss Fund" shall mean a fund held and administered by CHARMA into which members may deposit- funds to cover their deductible or SIR amounts . ( m) "Local Public Entity" shall mean a Housing Authority, a Com- munity Development Agency, a Redevelopment Agency, or another Joint Powers Entity consisting exclusively of the above entities . -7 Revised 5/26/88 ( n ) "Member" shall mean a local public entity which has duly exe- cuted this Agreement and which is entitled to all the rights and benefits conferred herein and which is also subject to the conditions and obligations imposed on it by this Agreement , the By-Laws, Joint Protection Agreement ( s) , and all rules and regu- lations adopted by the Board . (o) "Charter Members" are the initial members which have entered into the Joint Exercise of Powers Agreement on or before August 29 , 1986, and those members which attain Charter Membership status in accordance with Section 2. l of the By-Laws of CHARMA. (p) "Non-Charter Members" are those members which have entered or will enter into this Joint Exercise of Powers Agreement after August 29 , 1986 . (q ) "Noncompliance" shall. mean any failure to comply with the terms Of this Agreement , with the By-Laws under this Agreement, with a Joint Protection Agreement , or with any other rules and regu- lations which may be adopted by the Board, but only to the extent that such noncompliance is deemed material by and within the sole discretion of the Board . -8- Revised 5/26/88. ( r ) "Occurrence" shall mean an accident , event ,, or error or omis- sion during a policy period, including injurious exposure to conditions , which result in personal injury, property damage , or errors and omissions. neither expected nor intended from the standpoint of the member . (s ) "Operating Fund" shall mean the fund established to pay all administrative costs incurred in the implementation of the Agreement , the By-laws , and the Joint Protection Agreements . ( t) "Claims Manager" shall mean an individual or organization which is well experienced in claims management and is currently in the business of providing claims management services to organ- izations similar to CHARMA. (u ) "Risk Manager" shall mean an individual or organization which is well experienced in risk management and is currently in the business of providing risk management services to organizations. similar to CHARMA. ( v) "Program Director" shall mean the person hired by the Board to coordinate and manage CHARMA. (w) "Risk Area" shall mean an area of exposure to pure risk of financial loss . As used in this Agreement, this term refers to one of the following exL)osures : workers ' compensation, errors -9- Revised 5/26/88 and omissions , public liability, automobile liability, fire and extended coverage, and such other areas as the Board shall agree upon . ( x ). "Risk Management" shall mean the process of identifying, eval- uating, reducing, transferring, and eliminating factors and circumstances which could result in physical property damage, liability to third persons and public official and employee liability. Risk management includes various safety procedures, educational programs, and incorporates elements of insurance, S law, administration , technology, and general business utilized to effectively manage risks . (y) "Special Assessment" shall mean any assessment authorized by the Board in addition to the annual assessment(s) . ( z) "Dividend shall mean the amount of funds returned to a member by the Board based upon an adopted plan ori resolution . ARTICLE 3 . SEPARATE ENTITY There is hereby created a separate public entity, the full legal name of which shall be "California Housing Authority Risk Management Agency" , and shall be referred to herein as "CHARMA" . CHARMA is a public entity separate from other parties to this Agreement . -10- Revised 5/26/88 ARTICLE 4 . ESTABLISHMENT OF RISK MANAGEMENT PROGRAMS n � Risk management programs beneficial to the members shall be estab- lished . The operational mechanics of the programs shall be estab- lished by or under the direction of the Board of Directors in com- pliance with all provisions of this Joint Exercise of Powers Agree- ment , the By-Laws hereunder , and the various Joint Protection Agree- ments entered into between CHARMA and each individual member . ARTICLE 5 . GOVERNING BODY (a ) Until such time at which CHARMA is comprised of seven or more members, CHARMA shall be governed by a Board of Directors com- posed of four chairs . The four chairs shall be dedicated so that each of the four chairs shall be occupied by one represen- tative from each of the four Charter Members . At the Annual Membership Meeting , each Charter Member shall appoint a desig- nated representative to occupy its dedicated chair for the following one-year term . ( b) When CHARMA increases its membership to seven or more members , CHARMA shall be governed by a Board of Directors composed of seven chairs . Four of the seven chairs shall be dedicated so that each of the four chairs shall be occupied by one represen- tative from each of the four Charter Members . At. that Annual Membership Meeting, each Charter Member shall appoint ,a repre- -1_t- Revised 5/26/88 sentative to occupy its dedicated chair for the following one-year term. The appointed representative shall be an em- ployee of a CHARMA member . The three remaining chairs shall be occupied by three represen- tatives from Non-Charter Members . The three r.eprese'ntatives serving in the three chairs reserved for Non-Charter Members shall be chosen as follows : Prior to each Annual Membership Meeting , each non-charter member shall nominate an individual who is an employee of that member . All nominees shall be placed on a voting slate . At the Annual Membership Meeting, each non-charter member shall cast three votes by secret ballot for persons on the voting slate. Each non-charter member is allowed to cumulate its three votes so that any member may cast all three of its votes for one candidate, or two of its votes for one candidate with the remaining for another candidate, or divide its three votes among three separate candidates . The three nominees who receive the highest number of votes shall be elected to occupy for a one-year term the three chairs reserved for non-charter member Directors . At the conclusion of each Annual Membership Meeting when all. of the Director 's Chairs have been filled, each Director shall at hisorher sole discretion appoint an alternate to serve throughout the year whenever the appointing Director is absent . Charter members may appoint alternates who are employees of -12- Revised 5/26/88 the same Housing Authority which employs the appointing Direc- tor . Non-charter members may appoint alternates from any member agency. (c ) Members of the Board of Directors are not entitled to compensa- tion from CHARMA. (d) The Board shall fix the time and place for its meetings . ( e ) The Board shall adopt the By-Laws of CHARMA. ARTICLE 6 . POWERS CHARMA is hereby granted all of the power and authority which is necessary to accomplish the purposes of this Agreement, including, but not limited to the following : ( a ) To fix and require of new members an initial assessment ; ( b) To fix and require of all members subsequent annual assessments to the extent .such assessments are deemed necessary or appro- priate to facilitate the general purposes stated herein ; ( c ) To establish an insurance .fund from which claims against the members shall be paid , and the authority to establish an oper- ating fund from which administrative expenses shall be paid, -13- Revised 5/26/88 and the authority to establish any other funds and accounts as the Board shall deem necessary and appropriate to further the purposes of this Agreement ; ( d ) To make, enter into, and arrange for insurance and reinsurance contracts for excess, catastrophic , or any other such coverage as the Board shall deem necessary and appropriate; ( e ) To establish and operate a program of risk management, which shall include the authority engage the services of a profes- sional risk manager ; ( f ) To establish and operate a program of claims management , which shall include the authority to engage the services of a profes- sional claims manager ; (g) To pay or approve the payment of any expenses and fees asso- ciated with the operation of CHARMA; and (h ) To make and enter into contracts ; to engage agents ; to acquire, hold , or dispose of property ; to incur liability and obliga- tions ; and to sue and be sued in the name of CHARMA. ( i ) To indemnify and hold harmless any member of the Board, officer of the Board , or any person acting on behalf of CHARMA to the extent that such indemnification isnot prohibited by law. -14- Revised 5/26/88 The powers of CHARMA shall be exercised in the manner provided by law, and except as expressly set forth in this Agreement, subject only to those restrictions upon members in the exercise of similar powers . The Executive Director of each member,ror a designated alternate shall exercise all powers on behalf of his or her public entity. ARTICLE 7. LIABILITIES ( a ) The debts , liabilities , a.nd obligations of CHARMA shall not be the debts, obligations , or liabilities of the members to this Agreement . ( b) The debts , liabilities , and obligations of any one party to this Agreement shall not be the debts , liabilities, and obliga- tions of any other party to the Agreement or of CHARMA. ( c ) Claims against the Insurance fund may only be filed with CHARMA by a member of CHARMA in accordance with and pursuant to the terms and provisions as set forth in the Joint Protection Agreement between CHARMA and said member . -15- Revised 5%26/88 ARTICLE 8. ADMINISTRATION OF FINANCES The Treasurer of the Agency shall be the depositary of the funds . The Treasurer shall invest and reinvest the funds in compliance with state laws and in the same manner as if they were participant funds . The duties of the Treasurer shall be as prescribed in Section 6505. 5 of the Government Code . The Agency will request bids from indepen- dent Certified Public Accountants to perform annual audits, of all revenues and disbursements . ARTICLE 9. MEMBERS (a) Each local public entity which is a party to this Agreement is a member of CHARMA and is entitled to the rights and privileges of members and is subject to the obligations of members , as provided in this Agreement . ( b) To become and retain status as a member , a prospective member shall execute this Agreement and shall comply with the follow- ing ( 1 ) Agree to remit to CHARMA an initial assessment, the amount of which shall. be determined in a reasonable manner by the Board of Directors ; -16- Revised 5/26/88 ( 2 ) Agree to remit to CHARMA an annual assessment on a yearly basis in an amount with the Board determines to be neces- sar.y; ( 3 ) Agree to comply with the terms of the risk management program approved by the Board; and ( 4 ) Agree to comply with this Agreement , the By-Laws under this Agreement , the Joint Protection Agreement., the Certi- ficate of Coverage applicable to that member., and with any rules and regulations which from time to time the Board may adopt . ARTICLE 10. NEW MEMBERS After formation of CHARMA by the initial members , new members may be accepted upon application and acceptance by the Board, only by a two-thirds vote of the Board , subject to acceptance by the prospec- tive member of the financial arrangements and assessments specified by the then current members through the Board of Directors . The housing authorities of Contra Costa, Fresno, Marin, and Oakland are charter members having the right to membership as initial partici- pants of this Joint Exercise of Powers Agreement . -17- Revised 5/26/88 ARTICLE 11. FUNDING Each member , after consulting with the Claims Risk Manager, shall select an amount of insurance coverage and shall also select a deductible amount or self-insured retention (SIR) . These amounts shall be set forth on the Certificate of Coverage issued by CHARMA to that member . The deductible or SIR amount shall be the area of risk assumed directly by the member . Claims within the deductible or SIR area shall be paid directly by the member . is A member may also contribute to a fund known as the Loss Fund which shall be held and invested by CHARMA solely for the account of that member . This Loss Fund shall be available to cover any deductible or SIR on any loss incurred by the member to the extent of the amount credited to the member in the Loss Fund . The Loss Fund shall be held in trust and invested by CHARMA. All interest and invest- ment proceeds earned by the Loss Fund shall accrue to the account on which they are earned . Each member shall deposit into the Insurance Fund an initial insur- ance assessment, the amount of which shall be determined by the Board of Directors under the policies set forth herein and within the parameters as established by the Joint Protection Agreement between CHARMA and the member and the Certificate of Coverage issued to the member by CHARMA. Each member shall deposit subsequent annual insurancE assessments into the Insurance Fund in amounts to -18 Revised 5/26/88 be determined by the Board . The annual insurance assessments shall be calculated by or under the direction of the Board in a reasonable and prudent manner , based on recognized insurance practices . Fac- tors to be considered in calculating annual insurance assessments shall include , but shall not be limited to, a member ' s loss history, exposure, risk management program, and published rates . Notice of annual insurance assessments , including amounts assessed, shall be sent by CHARMA to each member at least sixty (60 ) days prior to the first day of the fiscal year . Each member shall pay an initial administrative assessment, the amount of which shall be determined by the Board of Directors . Each member shall deposit subsequent annual administrative assessments into the Operating Fund in amounts to be determined by the Board . Annual administrative assessments shall be calculated by or under the direction of the Board by projecting the cost of operation dur- ing the coming fiscal year , and then prorating the projected cost among the members based on the percentage of the -total annual Insur- ance Fund assessments each member will. be assessed . ARTICLE 12. CLAIMS SETTLEMENT AND DEFENSE OF CLAIMS Each member shall determine whether a claim filed against it which is within the limits of its deductible or SIR is to be allowed, compromised, settled or rejected . -19- Revised 5/26/88 Where a claim or settlement demand is in excess of a deductible or SIR amount , the member against whom the claim has been filed shall t recommend to the Board whether such claim shall be allowed, compro- mised, settled or rejected; however , such claim shall not be dis- posed of unless such recommendation is approved by the Board . Any disagreement arising out of the provisions of this paragraph shall be settled by arbitration in accordance with the Commercial Arbitra- tion Rules of the American Arbitration Association. When a reserve is established or revised by the adjuster , the self- insured retention level will be reviewed. Should a reserve reach one-half of the self-insured retention of the entity , a reserve advice letter will be sent to CHARMA. Should a reserve pierce the excess coverage (exceed the self-insured retention ) , a notification letter will be sent to CHARMA. Activity and settlement authority will transfer to CHARMA. The Chairman of the Board of Directors of CHARMA will be the primary contact on these claims . If the Board determines that the attorney or adjuster selected by the member to manage its claim is managing the claim in an inappro- priate way, and if the claim is in excess of the applicable deduct- ible amount, then the Board , at its discretion, may replace the adjuster or attorney with one retained by CHARMA to then manage the claim and/or litigation . If and when CHARMA assumes control of the defense of a claim against any member , the reasonable costs of -20- Revised 5/26/88 defense incurred by CHARMA are reimbursable to CHARMA by the member in the amount of the member ' s deductible . Costs over the member ' s deductible will be paid by CHARMA. ARTICLE 13. MEMBER RESPONSIBILITIES Members shall be responsible for : (a ) Coordinating their activities with CHARMA; ( b) Maintaining an active safety and loss control program; (c) Reporting to the Program Director any significant operational changes and new programs ; ( d ) Providing necessary data as required; (e ) Complying with risk management requirements as established by CHARMA; ( f ) Establishing and maintaining a prudent claims management pro- gram for self-insured risks ; (g ) Paying all assessments levied by the Board in a timely manner ; and -21- Revised 5/26/88 (h) Complying with the letter and spirit of this Agreement . ARTICLE 14 . TERM OF AGREEMENT This agreement shall continue in effect until it is terminated by mutual consent of all current parties to the Agreement . ARTICLE 15. WITHDRAWAL A member may withdraw from this Agreement upon complying with the applicable withdrawal notice and procedural requirements. as follows : i� A member . may withdraw from membership in CHARMA by giving notice to the Board of Directors sixty ( 60 ) . days prior to the date of with- drawal . Upon the effective date of withdrawal, the Joint Protection Agreement between the member and CHARMA shall be terminated, and the member shall be deemed to have withdrawn.. ARTICLE 16 . SANCTIONS AGAINST NONCOMPLIANCE Upon noncompliance by any member , the Board shall have the power to do any one or a combination of the following : -22- Revised 5/26/88 ( a ) Remove the member from CHARMA, thereby excluding such member from any indemnification and financial protection provided by CHARMA, subject to the applicable notice and procedural re- quirements as set forth in Section 2. 9 of the By-Laws or as set forth in any other rules and regulations adopted by the Board . ( b) Offset any amounts due from CHARMA against any amounts which the member owes to CHARMA. (c) Accrue and charge interest at a reasonable rate on any amounts which the member owes to CHARMA. (d) Impose any reasonable penalties , but only to the extent that any financial penalty imposed approximates the actual monetary loss suffered by CHARMA as a result of the noncompliance. ARTICLE 17 • REFUND UPON WITHDRAWAL OR REMOVAL FROM MEMBERSHIP Upon withdrawal or removal from membership under the provisions of either Article 13 or Article 14 above, a member may be entitled to receive a refund of a portion of the amount of claims funds contrib- uted to the Insurance Fund by that member . The method for determin- ing any amount to be refunded shall be established in a fair and equitable manner by or under the direction of the Board of Direc- tors . -23- Revised 5/26/88 ARTICLE 18 . OBLIGATIONS OF MEMBERS AFTER WITHDRAWAL OR REMOVAL FROM MEMBERSHIP A withdrawing or removed member shall remain liable for any special assessment attributable to that member up through the date of its withdrawal or removal . A member who has withdrawn or has been removed as a member under this Agreement shall remain under an obligation to actively pursue and resolve any claim made against it. arising from a covered occur- rence during the period of its membership and which is payable from the Insurance Fund . A member who has withdrawn or has been removed from this Agreement remains under an obligation to provide CHARMA with such statistical and loss experience data and other information as may be necessary for CHARMA to carry out the purpose of this Agreement . ARTICLE 19 . RIGHTS AND RESPONSIBILITIES OF TERMINATING MEMBERS The withdrawal, by the voluntary termination or involuntary termina- tion of an individual member , shall not terminate that member ' s responsibility to the Authority and to the other individual members for the following: -24- sr. Revised 5/26/88 ( a ) To cooperate fully with the Authority and the other individual members in determining the cause of losses and in the settle- ment of claims occurring during the terminating member ' s mem- bership, as defined in the Joint Protection Agreement entered into by the members hereto . ( b) To pay all assessments or special assessments , as determined by the Board , regarding or pertaining to losses occurring during the terminated member ' s active membership. ( c ) To cooperate with and assist in the carrying out of the pur- poses and spirit of this Agreement . ( d ) To participate in the decisions regarding any claim against the terminated party and to have a vote as a Board member for that limited purpose . The terminating member shall hold harmless , indemnify, and defend the Authority and its individual members from all claims, ,suits , actions , and causes of action alleging liability on the part of the Authority or remaining members due to the acts, errors, and omis- sions of the terminating member . -25- Revised 5/26/88 ARTICLE 20 . DISPOSITION OF ASSETS UPON TERMINATION OF AGREEMENT Upon termination of this Agreement , all property or funds held by CHARMA shall be -distributed to all parties who are then members . Assets available for distribution shall be returned to the members in proportion of their gross assessments less claims paid and expenses paid . ARTICLE 21 . ENFORCEMENT CHARMA shall have the authority to enforce this Agreement . Any controversy or claim arising out of or relating to this Agreement , or the breach thereof , shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association , and judgment upon the award rendered by the arbitra- tor ( s ) may be entered in any court having jurisdiction thereof . ARTICLE 22 . INVALIDITY Should any portion , term, condition, or provision of this Agreement be determined by .a court of competent jurisdiction to be illegal and in conflict with any law of the State of California , or be otherwise rendered unenforceable or ineffectual , the validity of the remaining portions , terms , . conditions , or provisions shall not be affected thereby. -26- Revised 5/26/88 ARTICLE 23. AMENDMENTS This Agreement shall be altered or amended only by the mutual con- sent of all parties signatory hereto. ARTICLE 24 . ASSIGNMENT No member may assign any right , claim, or interest it may have under this Agreement . No creditor , assignee, or third party beneficiary of any member shall have any right , claim, or title to any part, share, interest, fund, premium, or asset of CHARMA. ARTICLE 25 . AGREEMENT COMPLETE The foregoing , and the documents referred to herein, constitute the full and complete Agreement of the parties . There are no oral understandings or agreements not set forth in writing or in the By- Laws . ARTICLE 26 . DATE AGREEMENT EFFECTIVE This Agreement shall become effective immediately after it has been adopted by two ( 2 ) public entities . -27- Revised 5/26/88 Public entities shall have sixty ( 60 ) days after the effective date to become members of CHARMA by adoption of this Agreement . There- after , public entities may become members only under provisions applicable to new members . The "effective date" referred to hereunder refers to the creation of CHARMA, and not to insurance protection . Insurance protection is effective only upon execution of a Joint Protection Agreement by the prospective member and CHARMA and payment of the required initial assessment . Executed by the undersigned local public entities upon the respec- tive dates set forth after the signatures of their duly authorized officers . HOUSING AUTHORITY HOUSING AUTHORITY By. By: Date : Date : -28- Revised 5/26/88 HOUSING AUTHORITY HOUSING AUTHORITY By: By: Date• Date; - ACCT002B -29- Revised 5/26/88