Colantuono & Levin, PC

Teresa L. Highsmith

USE/CREATION OF JOINT POWERS AUTHORITIES TO SHARE

MUNICIPAL RESOURCES

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

WHY FORM A JPA? Can facilitate regional or political goals

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

Power to invest as funds not required for immediate necessities of JPA and in same manner as authorized for any local agency, pursuant to Govt. C. Sec. 53601

adoption of bylaws

exercise of all other powers not specifically mentioned by common to all members as authorized by Govt. C. Sec. 6508

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 debt or borrow from any source

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?

Are the Board members going to be compensated for attendance or not?

Votes required to take action?

Super-majority vote requirements for some decisions? If so, you will have to define those types of decisions in the Agreement

Decide how amendments to the Agreement will be handled

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 clause

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)?