06-28-2012 Council Agenda - Laserfiche WebLink

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LMC League of Minnesota Cities Cities promoting excet[anco League of Minnesota Cities Insurance Trust 145 University Avenue West, St. Paul, MN 55103 -2044 (651) 281 -1200 • (800) 925 -1122 Fax: (651) 281 -1298 • TDD: (651) 281 -1290 www.lmnc.org Joint powers agreements — an outline of risk considerations Cities are always looking for more effective and efficient ways to provide services to citizens. There's increasing political and financial pressure to reduce spending and taxes and at the same time to maintain and increase services. Intergovernmental cooperation can be an effective strategy to accomplish this, but it has to be done right. If it isn't, the result can be conflict among the parties and complicated, contentious, and expensive litigation. Here's an outline of some key considerations that can help avoid some of those problems. 1. What kind of intergovernmental cooperative arrangement are we creating? Intergovernmental cooperation can take different forms. It's important to be clear what form of cooperation you intend. The most common types of cooperative arrangements are: • Joint powers entity. The joint operation is governed by a joint board, which has the power to receive and expend funds, enter contracts, etc. • Service contract. One governmental unit purchases a service from another. • Mutual aid. Two or more governmental units agree to assist each other when needed. • Shared resources. Two or more governmental units share the use of facilities. 2. Important considerations for any intergovernmental cooperative arrangement. • Put it in writing. In any intergovernmental cooperation situation, there should be a written agreement spelling out what the understanding and agreement is. • Be clear and unambiguous as to who is responsible for what. • Address how the arrangement would be terminated and how assets or liabilities would be allocated. • Address risk allocation. The goal in each case is to minimize costs by minimizing conflicts and litigation among parties and allowing for a common defense. But how you do it varies for different types of agreements. 3. Recommendations for how to address risks in different types of joint powers agreements. Risk provisions for agreements creating a joint powers entity. • Joint entity indemnifies the member governmental units for liability claims. • Joint entity carries liability coverage that protects the joint entity, the member governmental units, and their respective officers, employees, and volunteers. • Address how the cost of any uninsured or excess liability would be allocated; e.g. equal shares, or in the same proportion as other costs are shared. -17- AN EQUAL OPPORTUNITY /AFFIRMATIVE ACTION EMPLOYER