HomeMy WebLinkAbout101-SummerHill Creekside Homes Pollution Legal Liability Coverage Options.pdf
Page 1 of 2 SARATOGA CITY COUNCIL MEETING DATE: March 16, 2011 AGENDA ITEM: DEPARTMENT: Recreation & Facilities CITY MANAGER: Dave Anderson PREPARED BY: Michael Taylor DIRECTOR: Michael
Taylor Richard Taylor, City Attorney Jonathan Wittwer, Assistant City Attorney SUBJECT: SummerHill Creekside Homes Pollution Legal Liability Coverage Options RECOMMENDED ACTION: Staff
recommends the Council authorize staff to amend the SummerHill Subdivision Improvement Agreement (SIA) to replace the Pollution Legal Liability (PLL) insurance requirement with alternative
terms described in the Staff Report. REPORT SUMMARY: At the City Council meeting of March 2, 2011, SummerHill Homes asked that the PLL insurance requirement listed in section 13 of the
SIA be deleted and replaced with substitute language indemnifying the City for environmental risks for the project. Council asked that staff return at the next meeting with a recommendation
regarding PLL coverage for the SummerHill Creekside Homes Development, directing staff to investigate the origin of the PLL requirement and comparing Saratoga requirements with what
other public agencies require. The origin was an outside counsel who anticipated that developers would have a grading and storm water subcontractor who would have PLL coverage. Investigation
as to what other public agencies require is ongoing and Staff will provide Council with a more complete perspective on the “Public Agency standard” at the Council meeting. To date only
three cities have responded to our inquiries and none have a PLL requirement in their SIA. San Jose does not require PLL insurance but does require a strong Warranty (Attachment A).
Mountain View requires a very extensive general indemnification which does not specify pollution claims, but appears broad enough to cover them (Attachment B). Staff also again contacted
the ABAG Risk Manager who provided the ABAG PLAN and an email explanation of risk management “Best Practices” that are recommended to all ABAG members (Attachment C). The ABAG “Best
Practices” would result in the current PLL insurance requirement remaining in the SIA.
Page 2 of 2 Council could reasonably require either the Public Agency standard or the ABAG Best Practices. This Staff Report recommends the former because this appears to be a relatively
low risk situation (though not risk-free) based on the Modified Phase 1 Environmental Site Assessment (note there is no Phase 2 Assessment). Furthermore, the City will only own the land
where the sidewalks, pathways and other “streetside” improvements are being made, and it already owns that land. The Public Agency standard currently recommended by Staff is as follows:
(1) SummerHill Homes to provide certification as to any and all existing insurance coverage possessed by it or its subcontractor(s) working on earthmoving or storm water as to public
improvement aspects of the project; and (2) SummerHill to provide a Special Provision regarding Indemnification as to Pollution Legal Liability. This indemnification would be limited
to $2,000,000 aggregate and claims filed within ten years of project completion. The indemnification would be provided by SummerHill Creekside LLC and SummerHill LLC (with representations
and warranties as to adequate assets and maintaining records for ten years with City right to inspect if lack of adequate assets is ever claimed). The indemnification would include discharges
by SummerHill, its contractors, subcontractors, employees, agents and third parties. FISCAL IMPACTS: The recommendation to require indemnification or insurance for Pollution Legal Liability
would have no additional fiscal impact on City funds at this time. CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: There would be no change in the existing agreement and staff would
require Pollution Legal Liability Insurance as stated in the original Subdivision Improvement Agreement. FOLLOW UP ACTION: As directed by Council. ATTACHMENTS: Attachment A – San Jose
Subdivision Improvement Agreement (SIA) Attachment B – Mountain View Indemnification Provision Attachment C -ABAG Risk Management Best Practices – Risk Manager Email and Contractor Selection
and Control