USE/CREATION OF JOINTPOWERS AUTHORITIES TO SHARE MUNICIPAL RESOURCES Colantuono & Levin, PC Teresa L. Highsmith
USE/CREATION OF JOINT POWERS AUTHORITIES TO SHARE MUNICIPAL RESOURCES California Contract Cities Association 52nd Annual Municipal Seminar May 14, 2011
WHY FORM A JPA? A Joint Powers Authority, by Agreement, may create an entity which is separate from the parties to the Agreement, but which can exercise the powers which are common to its members Can be more cost effective Example: a city, a county and a Fire District form a JPA to provide fire prevention services, but pool and share the costs of administration and management
Can facilitate regional or political goals WHY FORM A JPA? Example: a local reuse authority where multiple jurisdictions have an economic/job creation interest in the reuse and redevelopment of a former military base property
WHY FORM A JPA? Can pool resources and assets Example: a JPA can issue revenue bonds to help fund the construction of improvements, even where the one or more of the parties to the JPA may not have this authority individually The power to issue revenue bonds is additional to the powers common to the parties to the JPA (Govt. C. Sec. 6547 A JPA’s issuance of revenue bonds is not subject to the 2/3 voter requirement in order to incur indebtedness in excess of annual income and revenue The debt of JPA and the assets at risk are those of the JPA, not the individual members (Govt. C. Sec. 6551)
WHY FORM A JPA? Can limit liability of members of the JPA Limitation of individual liability is contractual through the terms of the Agreement
IMPORTANT COMPONENTS OF A JPA AGREEMENT Must state a Purpose (Govt. C. Sec. 6503) Capture the exercise of the common powers of the members in the statement of the purpose of the JPA
IMPORTANT COMPONENTS OF A JPA AGREEMENT Must state the Powers of the JPA and/or how they will be exercised Consider stating the powers as broadly as possible, in case you ever need them Power to contract to employ agents, officers and employees to acquire, lease, construct, maintain, operate and dispose of real property or improvements power of eminent domain power to incur debt, including bonding authority power to sue or be sued
IMPORTANT COMPONENTS OF A JPA AGREEMENT Manner of exercising power Choose a member whose powers represent the lowest common denominator of powers of the members—often a general law city Financing and Bonding authority? Make sure to chose a member with the power to adopt an ordinance when establishing the manner of exercising the common powers Describe as broadly as possible (e.g., “use any statutory power available under the Joint Exercise of Powers Act or any other applicable laws of the state whether heretofore or hereinafter enacted or amended…”) the power to issue
IMPORTANT COMPONENTS OF A JPA AGREEMENT Governance Issues Appointment authority of each member to create Board members of JPA Can appoint alternate members in case of a absence of a Board member Removal of individual Board members—who has the power? Distribution of voting power among Board members How are vacancies handled? Does the appointing member use the same process to appoint a new member or does an alternate step into that vacancy?
IMPORTANT COMPONENTS OF A JPA AGREEMENT Organization of the JPA Appointment of Officers Chair Vice-Chair Secretary Legal Advisor The JPA may chose to appoint the City Attorney of one of the members to act as General Counsel to the JPA
IMPORTANT COMPONENTS OF A JPA AGREEMENT Treasurer Must perform an annual audit Will the JPA have employees or contract with a member entity for employee services? Personnel policies/procedures/compliance with Meyers, Milias, Brown Act. Discuss governance, organization and compliance with Brown Act more particularly in separately drafted By- laws
IMPORTANT COMPONENTS OF A JPA AGREEMENT Liability of the JPA vs. liability of individual members Must specify that the liability of the JPA is not the liability of any individual member—draft as broadly as possible to pick up language in Govt. C. Sec 6508.1 This applies to contractual liability of the JPA, but may not apply to tort liability of the JPA (See Govt. C. Sec. 895.2)
IMPORTANT COMPONENTS OF A JPA AGREEMENT Indemnity Clause Govt. C. Sec. 895.2 holds public entities who enter into agreements with each other jointly and severally liable for (tort) injuries caused by negligent acts of any member or the entity created by the agreement Consider having the JPA indemnify individual members from claims and liabilities arising from performance of activities and exercise of powers under the Agreement Consider naming each member as an additional insured under the JPA general liability insurance policy Some Agreements provide cross-indemnity between members for any negligent acts alleged—acts like a comparative negligence
IMPORTANT COMPONENTS OF A JPA AGREEMENT Insurance Can belong to a Risk Pool (itself a JPA) Workers compensation insurance necessary if JPA has employees General Liability insurance to back up indemnity obligations Privileges and immunities Gov. C. Sec. 6513 states that all privileges and immunities from liability that apply to officers, agents, employees of a public agency apply equally when they are performing duties for the JPA—good to lift this statutory provision and include it in the Agreement
IMPORTANT COMPONENTS OF A JPA AGREEMENT Termination Rights of Individual Parties Partial dissolution of assets pro rata or forfeiture? Require terminating member to address its share of any liability/debt service
IMPORTANT COMPONENTS OF A JPA AGREEMENT Dissolution of Assets/Termination of JPA JPA can have a set termination date Can terminate by vote of members Unanimous vote vs. simple or even super-majority? Provide for distribution of assets depending on how those assets were shared when JPA was formed—e.g., does a member initially contributing a certain asset retain that asset upon dissolution? Dispute Resolution (for problems between members)?
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