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HomeMy WebLinkAbout07/09/2002 - Study SessionCITY OF NEWPORT BEACH City Council Minutes Study Session July 9, 2002 - 4:10 p.m. ROLL CALL Present: Heffernan, Bromberg, Adams, Proctor, Mayor Ridgeway; Glover (arrived at 4:12 p.m.) Absent: O'Neil (excused) CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Council Member Heffernan requested that Assistant City Manager Kiff be present at the regular meeting during Item No. 7, Summer -Fall 2002 Water Quality Testing Contract: Vessel Waste Discharge Study. He additionally requested that Risk Manager Farley be present for the discussion of Item Nos. 8 & 9, General Liability Excess Insurance Renewal and Property Insurance Renewal. 2. REVIEW OF CITY PROPERTY LIABILITY INSURANCE COVERAGES AND COSTS FOR FY 02-03 (REFER TO COUNCIL AGENDA ITEM NOS. 8 AND 9 FOR STAFF REPORTS). City Manager Bludau stated that the premium for option 2 of the general liability excess insurance renewal for Item No. 8 in the staff report should be corrected to read $830,532. City Manager Bludau noted that although liability and property insurance were discussed during the recent budget review, the numbers have since been confirmed and staff wanted to make the City Council aware of its options. Risk Manager Farley stated that the insurance market place has changed drastically during the past year. She stated that the change has been due to a hardening of the insurance market, loss of excess insurance from re- insurers, loss of investments, and the September 11, 2001 incident. Risk Manager Farley stated that staff is recommending that the Self Insured Retention (SIR) for general liability be maintained at $500,000. Mayor Ridgeway confirmed with Risk Manager Farley that the City's excess general liability insurance coverage for 2001 -02 was $25 million at an annual premium cost of $331,000, and the premium for 2002 -03 is proposed to be $944,107 for a $21 million coverage limit. He additionally confirmed that the premium for property insurance for 2001 -02 was $399,796 and is proposed to be $636,239 in 2002 -03. City Manager Bludau pointed out that the $500,000 SIR for general liability is per incident. Per Council Member Heffernan's question, Risk Manager Farley stated that it is the 2001 -02 insurance that would cover any claims related to the Veches Volume 55 - Page 255 INDEX [No report] City of Newport Beach Study Session Minutes July 9, 2002 INDEX case and that it would be applied per occurrence. Council Member Heffernan summarized by stating that the $500,000 would apply per occurrence, the $25 million would be used on an aggregate basis and then, if necessary, the City's cash reserves would be used. Regarding the 2002 -03 fiscal year budget, Risk Manager Farley stated that staff estimated that $512,000 would be needed for the property premium and $450,000 would be needed for the general liability premium. Council Member Heffernan asked how the estimates could be so far off when they were made so recently. Risk Manager Farley stated that the quotes were received after the estimates were made and were beyond what could have been expected. She additionally confirmed that the costs that are over what has been allocated will be paid for through reserves. Risk Manager Farley introduced Mark Zahoryin, account executive for Cal Surance, the City's insurance broker. Mr. Zahoryin stated that when excess insurance is purchased for general liability, the primary layer must be filled first. He stated that Royal Indemnity, the City's only carrier in 2001 -02, could only do $1 million for the primary layer in 2002 -03 due to a new terrorism exclusion in their policy. Mr. Zahoryin stated that Royal Indemnity still provided the best quote for the primary layer on an "occurrence" basis. He explained that quotes based on "claims made" could end up being significantly higher. He added that once the primary layer was satisfied, the goal was to get an additional $10 million for the other layers that would include terrorism. Mr. Zahoryin stated that the goal was met for the second layer and in summary, the City would be fully covered for property on the terrorism issue. For liability, the City would be covered for terrorism on the primary $1 million and the second layer of $10 million excess of $1 million. In regard to the insurance marketplace, Mr. Zahoryin stated that he was able to keep the primary and second layers at a reasonable price, and convinced Clarendon to present a quote for $10 million excess of $11 million for the third level. Mr. Zahoryin stated that the two options presented in the staff report provide the City with coverage limits of $21 million and $16 million for general liability. Mayor Ridgeway asked Mr. Zahoryin to provide more information on the terrorism issue. Mr. Zahoryin stated that the terrorism exclusion has been requested by the insurance companies and only applies to cities with police or fire services. He stated that terrorism is defined as a politically motivated event and does not include riots or civil commotion. Mayor Ridgeway asked if the premium would be reduced if the City agreed to waive the terrorism clause from the policies. Mr. Zahoryin stated that the endorsement for such an exclusion in the Royal Indemnity policy has not been approved by the State Department of Insurance, but added that their quote was still lower than those that did not have terrorism included. Mayor Ridgeway asked if Royal Indemnity had significant losses during the past twelve months. Mr. Zahoryin stated that they did not have losses that were significantly different than the past four years, and are reacting more to potential catastrophic losses than any actual losses. Mayor Ridgeway asked if Royal Indemnity took into consideration that Newport Beach is basically a single story community without high rises. Mr. Zahoryin stated that Royal Volume 55 - Page 256 City of Newport Beach Study Session Minutes July 9, 2002 INDEX Indemnity is still concerned about the protection of the population and the costs for defense. He added that each risk is looked at on its own merits. Mayor Ridgeway confirmed that the $1 million primary layer is per occurrence and the secondary layer would not be used for any occurrences that were not over $1 million. Mr. Zahoryin added that insurance is purchased for the catastrophic losses. Council Member Heffernan cited an example of a single occurrence causing six claims for $1 million each and asked how the claims would be paid. Mr. Zahoryin stated that the City would pay $500,000, the primary layer would cover the next $1 million and the secondary layer of excess insurance would cover the remaining $4.5 million. He added that if it weren't a single occurrence, it would be handled differently. Additionally, Mr. Zahoryin explained that terrorism is covered for the primary layer and the first excess layer of $10 million, but not for the third layer. Council Member Heffernan asked why the City would be liable for an act of terrorism. Mr. Zahoryin stated that the City might not be liable, but the City would still have to defend itself. In regard to the reservoir, Mr. Zahoryin stated that the repair of the reservoir, as well as any damage it might cause, is not covered under the property insurance. Council Member Glover asked if the reservoir was covered for anything. Mr. Zahoryin stated that it is covered for pollution under the City's pollution liability insurance. Council Member Adams asked if staff had considered increasing fees to recover some of the increase in the premiums. City Manager Bludau stated that it hadn't been considered yet. Council Member Adams asked the council members their feelings on increasing user fees for use of City facilities. City Manager Bludau stated that it could be difficult to determine what the fees should be. Mayor Ridgeway stated that the fees for all programs are already inclusive of the City's costs and reviewed on a regular basis. He additionally noted that it is unknown if the increases being experienced this year will continue next year. City Manager Bludau stated that it is not just the cities with their own fire and police departments that are experiencing the increases, since all cities either provide the services or pay fees for such services. Mayor Ridgeway stated that he wasn't prepared to talk about increasing user fees at this point, and was only concerned about getting adequate insurance for the lowest cost. He stated that the increases being presented are 300% for general liability insurance and 60% for property. City Manager Bludau stated that staff will look at fees and allocations, and reminded the City Council that they will need to decide at the evening meeting between the two general liability excess insurance options presented in the staff report. He stated that staff is recommending that the first option be selected that has a coverage limit of $21 million and an additional premium of approximately $113,000. Council Member Glover asked if City programs were still being advertised in other communities and if the practice should be reevaluated. Recreation Superintendent McGuire reported that the City mails the Newport Volume 55 - Page 257 City of Newport Beach Study Session Minutes July 9, 2002 INDIEX Navigator, the City's recreation program publication, to all Newport Beach residents and anyone who requests it. Additionally, she stated that press releases are sent out. Council Member Glover noted that although fees are charged, there are still costs associated with providing the programs. Per Mayor Ridgeway's question, Recreation Superintendent McGuire stated that nonresidents are charged an additional fee and that approximately $15,000 to $20,000 is received annually from such fees. Council Member Adams stated that the City facilities that are used by the public might present a higher liability risk to the City, and it's why he brought up the issue of user fees. Mayor Ridgeway agreed that there is a higher probability of a claim, but noted that property insurance is only going up 60 %, which is reasonable given what is going on in the insurance industry. Council Member Glover asked if the fire and police services provided by the City were causing the increase in the insurance costs. Mr. Zahoryin stated that it wasn't the only reason for the increases, but that it is taken into consideration by the insurance carriers when setting the rates. Council Member Heffernan asked what process was used by Cal Surance when the various insurance carriers were evaluated. Mr. Zahoryin stated that Cal Surance knows the areas of concern to the individual insurance carriers, separates these areas out from the all -risk policy and seeks carriers that can provide reasonable coverages for each. Per Mayor Ridgeway's question, Mr. Zahoryin stated that Cal Surance has been the City's insurance broker for 21 years and that he has handled the account for 15 years. He stated that Cal Surance continues to find the best opportunities for the City on all coverages. Mayor Ridgeway recommended that Cal Surance maintain closer contact with the various insurance companies and work harder at getting better rates. Mr. Zahoryin stated that he has 30 clients, all of which are large companies and municipalities, and he has the manpower and the time to adequately service each client. Council Member Heffernan confirmed with City Clerk Harkless that Item Nos. 8 and 9 on the regular meeting agenda would have to be pulled from the Consent Calendar if the recommended action were to be modified. Council Member Adams added that the public can also remove any items for discussion. Barbara Johnson, Newport Beach resident, suggested that the City have someone with insurance litigation expertise look at the policies and determine what coverage is adequate. Mayor Ridgeway stated that the City has a risk manager and a litigation attorney on staff. Council Member Heffernan confirmed with Administrative Services Director Volume 55 - Page 258 City of Newport Beach Study Session Minutes July 9, 2002 INDEX Danner that the insurance reserve fund would be used to pay for the unexpected increases in the insurance premiums. He asked what would be left in the reserve if the staff recommendations were approved at the evening meeting. Administrative Services Director Danner stated that the insurance reserve fund includes reserves for workers compensation, property, liability and compensated absences. He stated that the City is beginning the 2002 -03 fiscal year with $3.4 million in reserves for property and liability. He stated that staff originally estimated that $2.8 million would be remaining at the end of the fiscal year, but that the amount would be lower due to the unexpected increases in the premiums. Council Member Heffernan asked if he was concerned. Administrative Services Director Danner stated that there is a concern whenever reserves are used, but that he didn't feel that the reserves were large enough to increase the SIR, which would be another option. 3. CITYWIDE WAYFINDING AND DIRECTIONAL SIGNAGE PROGRAM UPDATE. Assistant City Manager Wood introduced John Temple of Hunt Design Associates, who would be providing a progress report on the citywide wayfinding and directional signage program. Mr. Temple stated that his company has been working closely with staff and the subcommittee that was formed. Per Mayor Ridgeway's question, Assistant City Manager Wood stated that the subcommittee consists of representatives from the Conference and Visitors Bureau, the Chamber of Commerce, lifeguards, General Services, Public Works, and the business improvement districts. Mr. Temple stated that they've been working on a finite list of destinations and sign locations. He stated that four different schematic design variations were created, and reviewed with the subcommittee and Jack Greenspan, a traffic engineer. Mr. Temple stated that the two preferred designs have been refined and expanded into a sign family. He additionally explained that a broad look at the City was taken and gateway locations where major directional signs would be needed were identified. Then, specific district directional sign locations were identified. Using a PowerPoint presentation, Mr. Temple displayed the four schematic designs that were created, as well as a sampling of some gateway signs. He then displayed the first of the two preferred designs that were selected, which also became known as the rectangular version or Version A. Mr. Temple displayed the Version A main directional signs, district directional signs, freestanding gateway signs and pole mounted gateway signs, as well as a rendering of how a sign would actually look on a roadway. For City Manager Bludau, Mr. Temple stated that the handout shows the correct shade of yellow or gold better than the slide. Mayor Ridgeway asked if it had been considered to add wording on the signs to indicate the direction to travel to get to San Diego. He noted that many visitors are trying to travel south of Newport Beach and don't know how to get there from the peninsula. Volume 55 - Page 259 C -3495 Citywide Wayfinding & Directional Signage Program (38) City of Newport Beach Study Session Minutes July 9, 2002 INDEX Referring to the rendering presented, Council Member Heffernan felt that sign clutter wasn't being eliminated, and confirmed with Mr. Temple that no signs would be removed. Council Member Adams pointed out that in the rendering, the signs remaining included a regulatory sign, which wasn't a part of the sign program, and the other was a historic sign, which isn't in the same family as the directional signs. Mr. Temple confirmed that eliminating sign clutter was a goal of the program, and that redundant signs would be removed. Mr. Temple continued his presentation by displaying the second of the preferred signs, Version B or the oval signs. He stated that the imagery and the right look for each district is still being developed. Per Council Member Adams' question, Mr. Temple stated that the minimum letter height in the signs is 4 -3/, inches. In conclusion, Mr. Temple stated that the next steps include testing the signs with full size mockups, meeting with the subcommittee, evaluating the sign messages and locations, and refining a preferred design. Council Member Glover asked if there was a need to have "Newport Beach" on all of the City entry signs. She stated that it just seems to add more verbiage and causes a problem. Mr. Temple stated that he was directed by the subcommittee to make the whole system inclusive and insure that when someone was in Corona del Mar, for example, they knew they were in Newport Beach. Assistant City Manager Wood added that the original recommendation by the Economic Development Committee (EDC) included a comment that visitors don't always realize that the City's many villages are all a part of Newport Beach. Council Member Adams asked why the background color of the recommended signs wasn't in conformance with the Manual of Uniform Traffic Control Devices ( MUTCD). Mr. Temple stated that the issue was not discussed with the traffic engineer. Council Member Adams stated that the MUTCD specifies that guide signs are to be white lettering on a green background, and expressed his concern for potential liability. He pointed out that a blue background, as used in Version B, is the national standard for airport signage. Council Member Adams stated that although he, personally, didn't like the preferred designs chosen, liability exposure and conformity were issues that needed to be addressed. He additionally stressed that the full size mockups are very important and legibility from vehicles needs to be insured. He stated that the structural impact of the pole signs also needs to be addressed and, lastly, he stated that the MUTCD recommends no more than three destinations per sign. Having more could create a potential liability issue. Mayor Ridgeway requested that staff look into the issues discussed by Council Member Adams. He additionally stated that he disagreed with using a blue background, due to its poor readability. He did believe that "Newport Beach" should remain on every sign, however. Volume 55 - Page 260 City of Newport Beach Study Session Minutes July 9, 2002 INDEX Council Member Adams noted that the rendering showed directional arrows that were too small, and looked more like pinpoints. He stated that the arrow selected was designed for pedestrian -level usage and not for roadways. He also asked if the median mounted sign monuments would be durable, or if they would be the Styrofoam kind that had been used in the past. Public Works Director Badum stated that there are alternatives for using signs that are breakaway, and they wouldn't necessarily have to be of the Styrofoam type. Council Member Adams stated that a fixed object sign would probably be denied by CalTrans. 4. FIREWORKS POLICY. City Manager Bludau stated that the City does not currently have a fireworks policy, and that staff was directed by Council Member O'Neil to present possible options for City Council consideration. City Manager Bludau stated that the staff report includes information on how the fireworks permits are currently issued, and one problem to consider is how the public should be notified of any fireworks displays. He suggested that the applicant be required to do a citywide mailer, since it is difficult to determine who will be affected by any given display and this would insure that everyone would be notified. City Manager Bludau stated that one fireworks policy option the City Council might want to consider would be to disallow fireworks displays in the City, except for on the 4th of July and other special circumstances approved by the City Council. He stated that another potential option would be to allow fireworks displays, but with strict time restrictions in place. He noted that it could be enforced by disallowing a permit for a given period of time to a fireworks vendor who violated the requirement or having the applicant post a bond. Mayor Ridgeway stated that the residents in the City have a strong interest in fireworks. He stated that although the private fireworks display that caused so much attention a few weeks prior was conducted too late at night, he didn't think it was reasonable to require the applicant to provide citywide notification. He stated that he could support displays that occurred prior to 9:00 p.m. on Fridays, Saturdays and some holidays. Mayor Pro Tem Bromberg stated that he could support a 9:00 p.m, time limit for displays, but that the City shouldn't get too involved beyond that. He added, however, that he will work towards a 4th of July fireworks display taking place in 2003. Council Member Adams asked if the City would be pursuing the issue of the Dunes not offering a fireworks display in 2002. If a display were to take place in 2003, he suggested that the launching area be moved from the lagoon to the southern end of the nature preserve to mitigate some of the liability problems. Mayor Ridgeway stated that he supports a fireworks display for the 4th of July. He added that at the current meeting, the City Council is deciding Volume 55 - Page 261 Council Policy/ Fireworks (41) City of Newport Beach Study Session Minutes July 9, 2002 what policy the City should have and what should be included in the policy. INDEX Council Member Heffernan stated that there will be more fireworks displays requested in the future. He confirmed with City Manager Bludau that the current permit requires proof of insurance and use of a certified fireworks technician. City Manager Bludau noted that requiring a bond is not currently required, but is being recommended. Council Member Heffernan stated that minimum requirements need to be established, as the requests will continue. He noted that a recent 30- minute display in Avalon cost $15,000, which is considered an affordable cost to many. Mayor Ridgeway stated that fireworks purveyors quote costs of closer to $1000 to $2000 per display minute. He asked the City Manager if he received the direction he needed regarding a fireworks policy. City Manager Bludau stated that setting time limits would not require a new policy, but requiring a bond and denying future requests based on noncompliance would. Council Member Proctor asked how other beach communities are handling fireworks displays. Fire Chief Riley stated that a survey of other beach communities had not been conducted. He noted, however, that all fire departments are following the same standards in regard to safety regulations. He stated that research could be done in regard to the event approval process. Mayor Ridgeway requested a report on the other beach communities, and suggested that it include the fireworks displays conducted by Disneyland and how their situation is handled. Fire Chief Riley stated that the problems experienced by Disneyland are the same problems experienced by the Dunes, and noted that the biggest problem is claims from fallout. He stated that where to conduct a fireworks launch is a major issue. Fire Chief Riley stated that there is not a Council policy in Anaheim and that Disneyland has conducted the fireworks at 9:30 p.m. since 1958. Council Member Glover noted that a newly formed group has made presentations to the South Coast Air Quality Management District about the pollution caused by the Disneyland fireworks. City Manager Bludau stated that staff would conduct a survey of the coastal cities and present the findings at a future study session. Dolores Otting suggested that staff also contact the Big Canyon Association, because they conduct fireworks displays every year. PUBLIC COMMENTS Barbara Johnson, Newport Beach resident, complimented and thanked City for the cleanup that was done on July 5, 2002. Additionally, she w for the status of her suggestion for the City to form a budget committee. Manager Bludau stated that he would be reporting back to the City Cot on the matter at an upcoming City Council meeting. Volume 55 - Page 262 City of Newport Beach Study Session Minutes July 9, 2002 INDEX Dolores Otting stated that in 1996, the City Managers of Orange County signed an agreement that refuse would only be taken to County landfills. She stated that an endorsement in the Cal Surance pollution policy includes other landfills and should be reviewed. ADJOURNMENT - 5:55 p.m. The agenda for the Study Session was posted on July 3, 2002, at 2:45 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. Recording Secretary c�e,�_LJ- / /Ct•i � , Mayor ZZ-0„�_ �. yu � City Clerk Volume 55 - Page 263