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Coverage for Economic Development Authorities

Compilation as of June 16, 2005

Request as included in May 17, 2005 “AGRiP News” email: “information on whether pools that cover city or county Economic Development Authorities (EDA) use the same coverage form as for a member city or county; of if they have a special coverage form or endorsement for the EDA? The requesting pool is also interested in any information other pools may offer on their experience or consideration of providing coverage to these authorities”.

Initial inquiry by David Paulk, Director of Risk Management and Insurance, Association of County Commissioners of Georgia.

Responses
  1. Dave Brooks, County Risk Sharing Authority (OH)Page 1
  2. Tom Job, Kansas County Association Multiline PoolPage 1
  3. Chris Carey, Virginia Association of Counties Group Self-Insurance AssociationPage 1
  4. Wayne Carlson, Nevada Public Agency Pool and Public Agency Compensation TrustPage 2
  5. Mark Kammers, Washington Governmental Entity PoolPage 2
  6. Charles Schwab, Michigan Municipal Risk Management AuthorityPage 2
  7. Bill Kurtz, Middlesex County Municipal Joint Insurance Fund (NJ)Page 3
  8. Mike Hammond, Miami Valley Risk Management AssociationPage 3

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  1. Dave Brooks, County Risk Sharing Authority (OH), Administrator, May 18, 2005.

In Ohio, counties have the authority to establish Economic Development Authorities as a department of the Board of Commissioners, the majority of our members have done that, and they would therefore have the same coverage as any other covered board or department, and there is no amendment or endorsement specific to their operation. The staff would be considered county employees. Most of the activities center around planning/advising/promoting. The loss experience has been nil, there are been no significant problems/issues associated with the functions.

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  1. Tom Job, Kansas County Association Multiline Pool, Administrator, May 18, 2005.

We cover economic development authorities only if the member county has control over the entity and any employees of the authority are considered county employees. Additionally, we would expect the economic development board reports to the members governing board. If these requirements are met the economic development authority is considered an insured under the member county’s policy, so no separate policy is issued.

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  1. Chris Carey, Virginia Association of Counties Group Self-Insurance Association, Assistant Administrator, May 18, 2005.

We write EDAs on the same form as we do other participating members. There are no special considerations involved from an underwriting perspective. Our EDAs are generally very small from a premium perspective so we do apply rates that are approximately 20% higher than other pool members and we do have a minimum premium for Public Officials.

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  1. Wayne Carlson, Nevada Public Agency Pool and Public Agency Compensation Trust, May 18, 2005.

We write EDAs and treat them as if they were similar to other special purpose districts (fair boards, tourism agencies, etc.). We use the same coverage document. Our EDAs are quite small (a couple of staff) so the exposure is quite limited. We consider them to be akin to tourism promotion agencies for underwriting purposes - some advertising liability, premises liability and off premises travel around town or to other's locations if a business is considering relocating.

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  1. Mark Kammers, Washington Governmental Entity Pool, Executive Director, May 19, 2005.

WGEP extends coverage to Public Development Authorities and Public Facility Districts in Washington State. The Public Development Authority sounds similar to an Economic Development Authority. In Washington State, PDAs are similar to ports, except they cannot impose a property tax, they are self sustaining. They are usually formed by a county or a large city, usually with surplus public property for the purpose of economic development. Many times it is a closed military base or other public property that has outlived its purpose and the PDA develops the property as commercial property for economic development. WGEP underwrites them as a Port and we have found them to be very low risk with high property values. For us they have been a good risk with good premium. I would consider a city or county very high risk, not the PDAs.

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  1. Charles Schwab, Michigan Municipal Risk Management Authority, Director of Risk Management, June 2, 2005.

MMRMA prefers to have separate legal entities covered as two members. We have extended coverage to Boards and Authorities as part of the main member, if the sub member serves the original member exclusively. Otherwise, we face the possibility ofa conflict by including in coverage both a member and non-member.

MMRMA has a similar situation with consolidated courts. Michigan combined several Circuit and District courts two years ago. The MI Supreme Court Administrator's office didn't consider insurance complications. We were made aware of the consolidation by way of a claim arising from one of the new consolidated court, which served 2 MMRMA Members of the 4 counties under the combined system.

Although the claim originated from an employment situation of a nonmember, we felt obligated to protect our members and cover. The insurer of the nonmember where the claim originated denied coverage.

Since the consolidated courts are separate legal entities, we have informed our members that they should be insured separately. That was over a year ago without any coverage being requested by the new consolidated courts. Budgets are tight and without original allocations being set to pay for insurance, it looks like an "ignore it and it will go away position" is being followed.

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  1. Bill Kurtz, Middlesex County Municipal Joint Insurance Fund (NJ), Assistant Executive Director, May 25, 2005.

We provide to economic development authorities the same liability coverage form as all other members. The assessment (contribution) for newly organized EDAs is $3,000, with subsequent annual assessments (contributions) based on their budget. Our experience is that they are a minimal exposure for the pool.

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  1. Mike Hammond, Miami Valley Risk Management Association (OH), Executive Director, June 23, 2005.

The Ohio Revised Code (ORC) allows political subdivisions to create Community Improvement Corporations (CIC) for promoting industrial, economic, commercial, and civic development of a community or area. A CIC organized under a specific section of the ORC has been designated an agency of the political subdivision and constitutes a public body. A political subdivision which has designated a CIC as such agency then can enter into an agreement with it to provide for a number of various economic development activities. As such, they are performing those functions on behalf of the political subdivision. An Ohio Attorney General’s Opinion reasoned that the political subdivision is required to defend and indemnify a CIC if they acted in good faith and not manifestly outside the scope of their responsibility.

Accordingly, our liability coverage document under persons or entities covered includes Community Improvement Corporations designated by the insured to perform a governmental function under ORC 1724.10. Additionally, we provide an endorsement that specifically names each of the CICs. Most of the CICs are inactive or there is little activity and present little risk or exposure.

Our Board has adopted a policy on extending coverage to CICs, which includes some excluded coverage items. One of those exclusions includes hazardous or undesirable risks. One of our members is using a CIC to redevelop and clean-up a former Department of Energy Defense facility which included hazardous materials. As such we do not cover that particular CIC.

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