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City Council Minutes Page 2 November 6, 2006 ----------------------------- MOTION BY COUNCILMEMBER MOTIN AND SECONDED BY COUNCILMEMBER FARBER TO APPROVE THE TH 169 STUDY AGREEMENT AND AUTHORIZE THE MAYOR AND CITY ADMINISTRATOR TO EXECUTE THE AGREEMENT, WITH THE FOLLOWING CHANGE: THAT THE LANGUAGE REGARDING THE SECOND PAYMENT OF $500,000 BE REVISED TO READ, “UP TO $500,000”. MOTION CARRIED 5-0. 4. Open Mike No one appeared for Open Mike. 5.1. Insurance Renewal Presentation by Mary Eberly Mary Eberly of First National Insurance Agency provided an update on the July 1, 2006 League of Minnesota Cities Insurance Trust (LMCIT) renewal, which includes the workers’ compensation insurance. Ms. Eberly explained that the workers’ compensation experience modification factor dropped from its already excellent rate of .81 to .68, resulting in a significant savings in premium for the upcoming year. She commended the City for its excellent safety and risk management efforts. Ms. Eberly stated that although the increase in premium is impacted by the Builder’s Associations lawsuit, 35 percent of the increase is due to additional equipment and property, such as the addition of the golf course and Westbound Liquor. She noted that an inflationary factor is added to keep pace with the value of the assets. Ms. Eberly noted that the rate for golf courses is higher, since these are generally open, less secure sites. Also, she pointed out that the future library and YMCA will be added to the City’s inventory next year. Mayor Klinzing asked how much the premium would be reduced by going with a $5,000 deductible. Ms. Eberly stated that the reduction is based on a 3-year claim history, so the result with be a net savings of approximately $10,000. Councilmember Motin asked for clarification on the Accident Equipment Breakdown noted on the deductible options. Ms. Eberly explained that this would be some type of mechanical equipment breakdown or failure at one of the facilities, such as the ice arena, and would include heating or air conditioning systems. Councilmember Farber asked which part of the insurance would pay for a new roof. Ms. Eberly stated that would be the property insurance component. Councilmember Dietz asked how the League is able to recoup the loss from the Builder’s lawsuit. Ms. Eberly explained that that the defense cost was $140,000 and that the participant pays the deductible. This means the City’s expense was around $18,000 - $19,000. She explained that this matter counts for about $25,000 in this year’s Municipal and Auto Liability premium increases, and will impact the City’s premium costs for the next two years, as well. Ms. Eberly noted that the lawsuit counts as two claims. Councilmember Dietz stated he felt the deductible should be increased. Councilmember Farber stated that he was not comfortable with a $10,000 deductible.