By: Its: CITY OF SHOREVIEW By:
Sandra Martin, Mayor
ATTEST: ______
Terry Schwerm, City Manager
Memorandum
TO: City Council
FROM: Deborah Maloney, Assistant Finance Director
DATE: March 2, 2020
SUBJECT: Award 2020 Insurance policies ITEM
NUMBER: 8.g
SECTION: CONSENT AGENDA
REQUESTED MOTION
To award the 2020 City insurance policies for Property, Mobile Property, Municipal Liability, Automobile, Crime, Open Meeting Law, Employee Dishonesty Bond, Equipment Breakdown, Volunteer Accident and Workers’ Compensation coverage to the LMCIT, and approve an optional increase to Data Breach coverage.
To award the 2020 Shoreview EDA insurance policies for Municipal Liability, Automobile, Crime, Open Meeting Law and Employee Dishonesty Bond to the LMCIT.
INTRODUCTION
Annually the City Council considers approval of the City’s insurance coverage, as well as coverage for the EDA. The policy period runs from December 1 to December 1 of each year, and insurance coverage is bound from December 1, 2019 until new policies are delivered to the City in 2020.
DISCUSSION
A breakdown of premiums by policy for the City, including a comparison to prior years, is provided in the table attached. Overall, the City’s insurance premiums will increase $41,637 for the policy period 2020, an 11.45% increase for the year.
Premiums for the EDA are shown in the table attached, with a total premium increase of $155 from last year.
An explanation of significant fluctuations is as follows:
Property Casualty/Liability: The 2020 property casualty/liability premiums increased by $23,690 (14.84%). The LMCIT Board of Trustees approved a number of changes to property casualty/liability coverage for the coming year. Premium rates saw an average increase of 4.5% this year, with property and liability rates each increasing 6% due to exceptionally high occurrences of property losses and employment liability claims; in addition to general rate increases, the city’s experience modification factor increased from 0.917% to 1.106%, this is based on property and liability claims occurring in the 3 years prior to the renewal period, this
Workers’ Compensation: The City’s workers’ compensation premium increased $17,947 (7.88%). This was a combination of a substantial increase in the City’s experience modification factor from 1.00% to 1.12% and an average overall premium rate increase of 1.0%, as well as projected wage adjustments for 2020. The experience modification factor adjustment is a result of an increase in workers’ compensation claims in previous years; this accounts for the majority of the premium increase. Because the rates are based on budgeted salaries, the second phase of the wage adjustments approved with the 2020 adopted budget was applied to salary estimates in determining 2021 Workers’ Compensation wage basis, which in turn increased the premiums; any variance from the estimated wages will be accounted for with the annual Workers’ Compensation audit in January 2021.
Other Insurance issues:
City of Shoreview EDA Coverage: Coverage for workers’ compensation for the City’s EDA is provided for in the City’s policies.
Large deductible savings: The City’s insurance policies are subject to a $25,000 deductible for each occurrence, with an annual aggregate limit of $75,000. Selecting the $75,000 optional large deductible option results in
premium savings of $232,670 over a $25,000 deductible. Based on past claim history staff is recommending the $25,000/$75,000 large deductible option.
OPTIONAL EXCESS LIABILITY COVERAGE
The City’s tort liability coverage is $1,500,000 per occurrence and $500,000 per claimant. This liability limit applies in all claims to which the state statutory tort limits apply. However, should a case be filed in Federal court, such as a discrimination suit, the immunity law does not apply. Excess liability coverage of $1,000,000 is available. If the City elects to carry the coverage, we would have $2,500,000 of total coverage.
If the City waives the statutory tort limits and purchases excess liability coverage, a single claimant could potentially recover an amount up to the limit of coverage purchased. The total which all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants. This premium for the excess liability coverage is $22,710 for the City and $770 for the EDA. The City’s insurance agent has indicated that most of the cities that they insure through the LMCIT do not carry this insurance and depend on the immunity law to protect them.
After considering the premium cost compared with the likelihood of the City’s need for additional coverage, staff does not recommend waiving statutory tort limits or purchasing excess liability coverage for 2020. The City council has concurred with this recommendation for the past several years and elected not to waive statutory tort limits or purchase this additional coverage.
OPTIONAL DATA BREACH LIMIT INCREASE
The League offers optional Data Breach increased coverage that increase the city coverage to
annual aggregate liability coverage in the event that city protected data were to become compromised by a data breach. The cost for this additional coverage is $1,000. IT staff recommends that the city add this optional coverage.
RECOMMENDATION
The City’s total insurance package of $405,382 (including the Large Deductible Option) is a $41,637 increase over last year. If the City dropped the $25,000/$75,000 deductible option, and chose the standard $1,000 deductible, premiums would increase an additional $232,670. The EDA’s total insurance package of $1,401 is a $155 increase over last year, which includes a $1,000 deductible option.
It should be noted that one advantage of participating in the LMCIT plan for insurance is the potential for an annual dividend. During 2019, the City and EDA’s property/casualty dividend was $6,927 and $46 respectively and, as in the past, was deposited into the Liability Claims fund to cover losses less than the City’s $75,000 annual aggregate deductible.
The motion approves existing insurance coverage for the period December 1, 2019 through December 1, 2020. Staff recommends approval of the motion.
ATTACHMENTS
Premium change charts.xlsx
City of Shoreview
Premium Increase
Coverage Carrier 2018/2019 2019/2020 (Decrease)
Property LMCIT $ 54,086 $ 62,653 $ 8,567
Mobile Property LMCIT 3,877 4,385 508
Municipal Liability LMCIT 56,302 70,950 14,648
Automobile LMCIT 8,349 7,880 (469)
Crime - Money & Securities LMCIT Included Included -
Open Meeting Law LMCIT Included Included -
Employee Dishonesty Bond LMCIT 1,529 1,414 (115)
Equipment Breakdown LMCIT 11,752 12,303 551
Volunteer Accident LMCIT Included Included -
Workers' Compensation LMCIT 227,850 245,797 17,947
Total $ 363,745 $ 405,382 $ 41,637
City of Shoreview EDA
Premium Increase
Coverage Carrier 2018/2019 2019/2020 (Decrease)
Municipal Liability LMCIT 800 988 188
Automobile LMCIT 68 68 -
Crime - Money & Securities LMCIT Included Included -
Open Meeting Law LMCIT Included Included -
Employee Dishonesty Bond LMCIT 378 345 (33)
Total $ 1,246 $ 1,401 $ 155
Percent Increase (Decrease) 15.84 % 13.10 % 26.02 % (5.62)% 0.00 % 0.00 % (7.52)% 4.69 % 0.00 % 7.88 % 11.45 % Percent Increase (Decrease) 23.50 % 0.00 % 0.00 % 0.00 % (8.73)% 12.44 % 85
Memorandum
TO: City Council
FROM: Tom Wesolowski, City Engineer
DATE: March 2, 2020
SUBJECT: Approve Change Order No. 1 for the North Owasso Boulevard Reconstruction, City Project 19-07
ITEM NUMBER:
8.h
SECTION: CONSENT AGENDA
REQUESTED MOTION
To adopt Resolution No. 20-20 approving Change Order No. 1 the North Owasso Boulevard Reconstruction, City Project 19-07.
INTRODUCTION
The attached Change Order No. 1 was prepared by the City's engineering consultant for the project, SEH, Inc. and reviewed by staff. The change order must be approved by the City Council to modify the contract.
DISCUSSION
On September 3, 2019, the City Council awarded a contract to Forest Lake Contracting, Inc. in the amount of $6,844,298.01 for the North Owasso Boulevard Reconstruction, City Project 19-07.
Change Order No. 1 was prepared in order to address certain changes, additions, or modifications to the original contract.
As part of the project the sanitary sewer services, for properties adjacent to North Owasso Boulevard, will be replaced from the main line to the property line. Record drawings for the existing sanitary sewer did not accurately represent the location of 10 sanitary sewer services in the project area and the work items required for the replacement of the services were not included in the original bid quantities. The location of the additional services are shown in the attached change order. The change order will increase the quantities of the associated bid items for a total additional cost of $41,450.00.
After the project was bid, it was determined a property adjacent to North Owasso Boulevard was not currently served by City water. The location of the additional water service is shown in the attached change order. The change order will increase the quantities of the associated bid items for a total additional cost of $4,715.00.
After the project was bid, it was determined a water main stub should be installed that will
located south of North Owasso Boulevard. The future connection will provide a looped water system that will provide a redundant water supply to the neighborhood and also improve the overall performance of the distribution system by equalizing flows and pressure and improving fire flow. The location of the stub is shown in the attached change order. The change order will increase the quantities of the associated bid items for a total additional cost of $8,270.00.
Additional removals and restoration is required for the installation of the sanitary sewer services and water main stub. The change order will increase the quantities of the associated bid items for a total additional cost of $12,350.00.
Change Order No. 1 results in an increase to the contract of $66,785.00 and increases the total contract amount to $6,911,083.01.
Change Order No. 1 will be funded from the following funds: Municipal State Aid - $12,350.00
Water Fund - $12,985.00 Sanitary Fund - $41,450.00
Due to the additional work the substantial completion date will be extended 6-days from October 4, 2020 to October 10, 2020 and the final completion date extended 6-days from November 1, 2020 to November 7, 2020.
RECOMMENDATION
It is recommended the City Council adopt the attached Resolution No. 20-20, approving Change Order No. 1 for the North Owasso Boulevard Reconstruction, City Project 19-07. ATTACHMENTS
Change Order No. 1 Resolution 20-20
Engineers | Architects | Planners | Scientists
Short Elliott Hendrickson Inc., 3535 Vadnais Center Drive, St. Paul, MN 55110-3507
SEH is 100% employee-owned | sehinc.com | 651.490.2000 | 800.325.2055 | 888.908.8166 fax
February 26, 2020 RE: City of Shoreview
North Owasso Boulevard Reconstruction SEH No. Shore 140128 14.00
Tom Wesolowski City Engineer City of Shoreview
4600 Victoria Street North Shoreview, MN 55126-5817 Dear Tom:
Enclosed is Change Order Number 1 for the above referenced project. The purpose of the change order is to add work on North Owasso Boulevard. This work is primarily related to additional sanitary sewer services, additional water service and a water main stub into the City easement between 246 & 234 N Owasso Boulevard.
The change order adds $66,785.00 dollars of work to the contract. The additional work items and unit prices were part of the original contract, so the change order simply increases quantities of items already bid. The items are detailed in the spreadsheet of estimated cost of change included in Change Order Number 1.
Forest Lake Contracting, Inc. has requested 6 additional working days in order to complete the additional work. This extends the substantial completion date from October 4, 2020 to October 12, 2020 and the final completion date from November 1, 2020 to November 8, 2020.
With the cost of the change based on contract unit prices and the reasonable request for an extension of the contract by 6 working days, we recommend that the City consider approval of this change order. Sincerely,
SHORT ELLIOTT HENDRICKSON INC.
Justin R. Bergerson, PE Project Manager
(Lic. MN)
jrb
Attachment
s:\pt\s\shore\140128\7-const-svcs\71-mgmt\50-chg-order\letter for change order.docx