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HomeMy WebLinkAbout1985-09-23 Council Packet - Work SessionKenai City Council Work Session September 23, 1985 Antenna Farm Priorities City Self Insurance "Dust Bowl" Old Town Study I I I I i 1 WORK SESSION AMENDED AGENDA Sept. 23, 1985, 7:00 PM 1 - FAA Antenna Farm 2. Priority List - 1986 a. Beaver Loop Water Line 3. City Insurance a. Self Insurance 4. City Land a. Dust Bowl b. Mental Health Land c. Access at End of Candlelight d. Golf Course e. Baron Park f. Walker Lane 5. Old Town Study 6. Landscaping Ordinance ' I ! � 4 1 AI I.I1 Y CITY OF KENAI G'a pdd a j 4i4d44" 210 FIDALOO KENAI, ALASKA M11 TEWHONE 21. 7690 NOTICE OF WORK SESSION There will be a work session on Monday, Sept. 23, 1985 at 7:00 PM in the Council chambers. To be discussed: _ 1 - FAA Antenna Farm 2 - Priority List - 1986 3 - City Insurance 4 - City Land Leases S -Old Town Stu�dy n GL� Janet Whelan ! City Clerk G OATEOs Sept. 190 1985 i Is i i i 1 o l r n � •J f� I I ri BILL 9HEFFICLO STATIC OF ALA14KA Of/ICE OF THE GOVERNOR .l IT NRA, U September 3, 1985 rnn"�•123¢��. The Honorable Tom Wagoner Mayor of the City of Kenai 210 Fidalgo r . ' ,�• Kenai, AK 99611 ld 0� 6tiY�.L Dear Mayor Wagoner: In mid -June I signed the last of the major capital budget and reappropriation bills passed during the 1985 Legislative Session. And, now it is time for us to begin the capital budget process for 1986. In choosing which local capital projects to recommend for funding, I will continue to base my decisions on the following principles: Projects should be for a public rather than a private purpose, Local projects should have a high community priority, State and regional projects should be the kind which provide facilities of lasting importance to a broad area of the state, Delivery of services and financing of projects should be through existing State and local programs when possible, Projects of a similar kind should be evaluated fairly and openly when competing for funds. New types of projects should be carefully reviewed for possible community, social, or cultural impact. Proposed projects should be reasonably feasible and be supported by realistic planning, design, and cost estimates. As you may recall, our legal deadline for completion and release of the Executive Budget is December 15. Therefore, I am requesting that community capital projects, listed in priority V _a 4 � 1 t` Se—ten.—b r i i QA r► Tfn/7A i1f.1A order and accompanied with as much supporting information as possible, be submitted to m© through my Office of Management and Budget by November 1, 1985. And, if I have vetoed a project that you still consider a high covimunit:y priority, feel free to request that project Again. Please submit your requests tot Division of Budget Review Office of Management and Budget Pouch AM Juneau, AK 99811 Attention: Thelma Cutler Program Budget Analyst The Administration will not be able to include all of your proposed projects in the budget, so indicate your priorities carefully. Your lists will be important in developing the capital budget I transmit to the Legislature this January. sincerely, Bill Sheffiel Governor 1 � ' / 1 r� 1 e MEMO TO: Kenai City Council FROM: Charles A. Brown DATE: September 20, 1985 SUBJECT: Insurance Exclusive of workers' compensation insurance, the City currently has the following coverages: Approx. PolicyCoverage Deductible price General Liability $ 1,000,000 $ 5,000 $ 67,000 Property (Bldgs.) 18,500,000 25,000 64,000 Auto Liability 500,000 - 28,000 Umbrella 10,000,000 - 70,700 Airport (primary) 1,000,000 - 5,675 Airport (excess) 24,000,000 - 26,615 Non -owned Aviation 1,000,000 - 3,150 Public Officials 500,000 50,000 20,300 Contractor's Equip. 667,275 25,000 5,000 Medical Malpractice 2/4,000,000 - 11,300 Police Professional 1/2,000,000 10,000 11 800 3 A I believe the main interest of the Council is to discuss the amount of risk we are willing to accept. Basically, there are two approaches appropriate for the City: (1) no insurance, or (2) high deductibles. Lst's review each area of exposure and try to see what's feasible. General Liability Th s protects us from a variety of liability claims, and despite its high cost, is difficult to do without. This protection is $1,000,000, with Umbrella protection of another $10,000,000. i understand that if we do not carry the General Liability Policy, it is impossible to even get an Umbrella Policy. I personally believe this City is not big enough to totally self -insure (or do without) General Liability. A $1,000,000 claim is not out of the question. Remember, this coverage includes legal defenses. If we do without the insurance, we will pay the claims plus defense costs. Are we willing to bet that in the next 15 years ($1,000,000/$67,000) we will not have a judgement or legal fees of $1,000,000? The other option is a higher deductible. To go from zero deductible to $5,000 saved us $11,461. To go from $5,000 to $10,000 would have saved us another $2,435. The incremental savings diminishes as the deductible rises. We decided that it wasn't worth going to a $10,000 deductible. It didn't save anything. Recommendation: No change a r i i t I 4 I "'_ . Page 2, Insurance Property Th s s an area where we could explore no insurance. It's costing us $64,000 to insure against fire, theft, vandalism, etc., with a $25,000 deductible. Our most valuable buildings are the Airport ($3,300,000), Sewer Treatment Plant ($3,300,000), and the Public Safety Building ($2,800,000). The odds of a building being completely destroyed are very remote. We could discuss putting at least $1,000,000 more in the self-insurance reserve account and not purchasing this insurance. Simply increasing the deductible saves very little. We saved $35,000 by going with the $25,000 deductible. Going with a $50,000 deductible would have saved only an additional $2,911. And going with $75,000 deductible would have saved only an additional $11,641 (above the $25,000 deductible level). Recommendation: Review the need for Property Insurance Auto. Liability This s only for liability. The City carries no collision or comprehensive insurance. From that standpoint, we are already self -insured. For the $28,000 premium, I believe we would be foolish to do without this protection. We investigated the potential savings by having a deductible, and it was minimal. A $5,000 deductible would save $3,473, and a $10,000 deductible would save $4,810 (in total). We decided, again, that it was not worth the added risk. Recommendation: No change Umbrella Th s C ty is not large enough to do without Umbrella insurance. A $4 or $5 million claim is possible. If we had no insurance, one or two large awards could wipe us out. There is no deductible; in effect, the various underlying policies are the deduct- ibles. About all we can do here is review the amount of coverage. The first $5,000,000 cost $52,830. The second $5,000,000 cost $17,870. 1 suppose one could argue that we might only need $5,000,000 of coverage. But when the second layer costs one-third of the first layer, it seems like a good buy for the added protection. Recommendation: Review the need for $10,000,000 of Umbrella coverage. Airport Primary This *1,000,000 of coverage only costs $5.675. No real savings is available. Recommendation: No change 0 Page 3, Insurance Airport Excess This $2 ,000,000 costs $26,615. We can't adjust the deductible (the primary is underlying), and we aren't big enough to do without this vital coverage. This is paid by the Airport Land System Fund. I'd say as would have to buy it at practically any cost. Recommendation: No change Other Special Coverages The Other Special Coverages on page one (Non -owned Aviation, Public Officials, Contractor's Equipment, Medical, and Police) are not extremely expensive individually, even though the total is fairly high. There is not much we can do here. The biggest one is Public Officials, and it already has a $50,000 deductible. So, we are partially self -insuring. The three most expensive are the "professional" liability policies: Public Officials, Medical, and Police. The potential for claims is fairly high in these areas. We need the legal defenses that go with these policies. One way to look at it is this: Do you want to pay the insurance premiums, or do you want to pay the legal fees? The one area of possible savings is the Contractor's Equipment. This is accident replacement insurance for the heavy equipment. It only costs $5,000, but like the Property insurance, we could do without it. Recommendation: Review the need for Contractor's Equipment, Summary I believe that there are three areas where the City could save money on insurance, without assuming intolerable risks: 1) Drop the Property coverage at a savings of $64,000. 2) Reduce the Umbrella to 05,000,000 of coverage at a savings of $17,870. 3) Drop the Contractor's Equipment coverage at a savings of $5,000. I think we should put insurance costs in perspective. Really, all the Council has been told is that our rates went from $84,600 last year to $313,540 this year. This is bad; but, is it unacceptable? One measure of reasonableness is insurance cost relative to the size of the City. One of the best measures of size is total expenditures, which includes elements of numbers of buildings, employees, vehicles, etc. Year 77-78 78-79 79-80 84-85 85-86 Insurance Prior Year Cost Expenditures g $ 107,900 $ 4,105,597 2.67. 117,300 4,576,692 2.6 133,500 5,779,441 2.3 84,600 11,087,286 0.8 313,540 9,821,771 3.2 I Page 4, Insurance While 3.2% of total expenditures is higher than the norm, it's not extremely higher than what we were paying 6 or 8 years ago. Also, we have more coverage (higher limits) on several policies now than we had in those earlier years. The fact is, insurance costs dropped dramatically for about a 4-year period, and have now bounced back to higher levels. My advice to Council is to consider the areas summarized above. However, if the decision were mine, I would not substantially change the insurance program that we now have. I contacted Roy Barton, the Finance Director of the Borough, and he will be at the Monday meeting and be available for questions about the Borough's insurance. I � i ryn � Fr' ' II 11 HQ HAL c,.QU, —Y BUILDERS RESIDENTIAL • COMMERCIAL • APARTMENTS 110 SOUTH WILLOW, SUITE 105 • P.O. BOX 2829, KENAI, ALASKA 90611 • (907) 283.7012 0 September 11, 1985 City of Kenai 210 Fidalgo Street -- - Kenai, AK 99611 iGentlemen: I would like to initiate purchase of the property to the east of Lot Three, Baron Park Subdivision. This lot would contain approzimately 163,145 square feet. Attached is an approximate plat of the area. I am enclosing a check for $500.00 as earnest money - on said purchase. i Please contact my office at 283-4659 if there is { need for more information. ' Sincerely, {i Clint D. Hall r � 1 d 'ry 1745 5WENo R ad S 70, - spae fl i7l,&vt FAMILY MEDICAL CLINIC APC Lavern Davidhiiar, DO. AAFP, John Standeler, PA-C Paula Dunn. PA-C 206 uockweil Ave Soldotna, AK 99669 Telephone. (907)262.7566 September 19, 1985 Bill Brighton V" �1�96U Dear Mr. Brighter; Z an requesting a lease on 43 acres of land from the city of Kenai. The land is located between Lawton and the Spur Hwy and borders on walker Lane. ThaWc you for your assistance. Sincerely, ., L. nmddhizar I I I FAMILY MEDICAL CLINIC APC Lavern Davidhuar, OO AAFP, lohn Stande}er. PA-C Paula Dunn, PA-C 206 Rockwell Ave Soldoina, AK 99669 Telephone: (907) 262.7566 September 19, 1985 Bill Brighton City Manager Kenai, AK 99611 Dear Mr. Brightont I an requesting a lease on 4' acres of land from the city of Kenai. The land is located between Lautan and the Spur Hwy and border's on Walker Lane. Thank you for your assistance. Sincemly, L. Davidhuar � I a. ti ,•t I �N � 1 I September 19, 1985 William J. Brighton Cit Manager Citi of Kenai Kenai, AK 99611 Y Dear Sir, In lieu of a formal application to purchase, please consider this letter as being a notification of interest to purchase city property consisting of one acre at the inter- section of Walker Lane and the Spur Highway north of Lawton Drive by Kurani, Inc. of 611 W. Tudor Road, Anchorage, AK. , I have made arrangements to request a change of zoning of this property at the October 2, 1985 meeting of the Kenai City Council. If an application to purchase is needed prior to our request for a zoning change, please advise us. ' Sincerely, E . 1 R. L. ( ob) Nath Associate Broker f� ERA Property World, Inc. 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