12-27-77 agendaCITY OF RICHFIELD, MINNESOTA /
Office of City Manager
Council Letter No. 386
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject; Purchase in Excess of $1,000
For a number of years, the city has participated in the Hennepin County
Joint Purchasing Program. One of the major items Richfield purchases through
this program each year is vehicles for our public safety fleet. Hennepin
County has now received bids for patrol vehicles for some 17 municipalities.
Richfield's 1978 patrol automobile needs are included in that bid. The 1978
Central Garage Budget provides for the purchase of six public safety automobiles
all of which will be replacements for fully depreciated vehicles in the Central
Garage Revolving Fund.
The public safety department in 1978 plans to continue with the program.of
utilizing compact size automobiles. Therefore, it is the recommendation of the
Public Safety Director, in which I concur, that the city council authorize the-
purchase of six compact police sedans . These six vehicles will replace patrol
vehicles currently owned by the city which have accumulated substantial mileage
or wear in city use. Each of the vehicles being replaced will be sold at a
Hennepin County auction in the spring of 1978, to obtain a maximum investment
return per vehicle.
It is recommended that the city council approve the purchase of six public
safety patrol vehicles, in the amount of $32,575.
Respectfully submitted,
~.
Wayne S . Burggraaff
City Manager
WSB/e j a
cc: Public Safety Director
Public Works Director
Finance Director
t
1
6
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 385
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City. of Richfield
Gentlemen:
Subject: Final 1977 Revision for Departmental Budget Appropriations
The- purpose of this council letter is to submit the annual resolution providing
for the final revision of the departmental budget appropriations..
Section 7.07 of the City Charter provides that upon request of the. city
manager,. the city council may approve departmental budget appropriation re-
visions within the general fund appropriation during the last three months of the
year- to insure that departmental expenditures do not exceed appropriations . In
accordance with this charter provision, we have completed a final review of the
1977 budget, and barring any unexpected emergencies during the .last few days
of the year, have prepared a budgef transfer resolution which provides sufficient
appropriations to cover all anticipated departmental expenditures .
The proposed transfer resolution is attached, You will note that the total
anticipated expenditures for 197.7 are unchanged and remain at the limit estab-
lished by the city council in adopting this budget in October, 1976. In the case
of a few departmental operations, the transfers are required to meet anticipated
expenditure levels .
It is recommended that the attached resolution be adopted.
Respectfully submitted,
~~~ ~ o
~'~ytice
Wayne S. Burggraaff
City Manager
WSB/e j a
cc: Finance Director
RESOLUTION NO.
RESOLUTION AUTHORIZING REVISIONS OF 1977
BUDGETS OF VARIOUS DEPARTMENTS
WHEREAS, Resolutions Numbers 5590 and 5676 appropriated funds for
personal services, other expenses and capital outlays for each department
of the City for the year 1977, and
WHEREAS, the City Charter, Chapter 7, Section 7.09 gives the council
authority to transfer unencumbered appropriation balances from one office,
department or agency to another within the same fund at the request of the
City Manager, and
WHEREAS, the City Manager has requested a revision of the 1977 budget
appropriations in accordance with Charter revisions.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Richfield, Minnesota as follows:
1. That the 1977 appropriations for each department of the general fund
be revised as follows:
GENERAL FUND
Mayor-Council
Executive
Finance
Health
Legal
Public Works
Planning
AMOUNT
$5 , 000 Increase
$2 , 800 Increase
$1,500 Decrease
$ 500 Increase
$3, 600 Increase
$7,540 Decrease
$2,860 Decrease
Total General Fund
0
2 , That the City Manager and the Finance Director bring into effect the
provisions of this resolution.
Passed by the City Council of the City of Richfield this 27th day of December,
1977.
ATTEST:
Loren L. Law Mayor
Thomas j. Moran City Clerk
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 384
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject: Authorization to Readvertise for Bids
On October 11 , 1977, the city council authorized the call for bids for
the annual excavation, removal and disposal of lime residue at the water
treatment plant. However, no bids were received in response to this call.
Funds are provided in the 1978 water division budget for this work, and
it is again recommended that the city council authorize this call for bids.
These bids will be opened January 1 9, 1978.
Respectfully submitted,
G~~,~ S . ~
Wayne S . Burggraaff
City Manager
WSB/eja
cc: Public Works Director
i
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 383
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject: Renewal of On-Sale & Sunday Liquor Licenses, The
Godfather, Inc.
The public hearing on the request for renewal of the on-sale and Sunday liquor
licenses issued to The Godfather, Inc. , 700 W. 66th Street, was continued from
December 12, 1977 to December 27, 1977 to enable the license applicant to complete
filing all of the information required for the license renewal.
The application was submitted by Mr. john Anzevino, President; and Mr. Gerald
Burnett, Vice-President; for the corporation. All necessary information including an
accountant's statement, surety bond, insurance certificates, political contribution
certificates, and license fees have now been filed along with the application.
The present on-sale and Sunday liquor licenses for Zhe Godfather,- Inc. , .will
expire December 31, 1977. The current renewal application is the first one for the
present owners, who were first licensed in May, 1977.
Application .Investigation
In accordance with the ordinance, the public safety director has made an invest-
- igation of inforrra tion required by Section 11.06, subdivision 4 of the on-sake liquor
ordinance: .
No ordinance violations have been recorded against The Godfather since it opened
in August of this past year. There were four reported police incidents during this time .
In each case, it appears that the incident was beyond reasonable control of the man-
agement. All of the incidents involved customers.
A copy of the report from the public safety director, commenting on the police
investigation of this application for renewal, is attached. The detailed incident
reports are available in the city manager's office.
Council Letter No. 383 -2- December 27, 1977
Accountant's Report
The on-sale liquor ordinance requires that the applicant file with the city a
statement made by a certified public accountant which shows the total gross sales
and the total food sales of the preceding 12 month period. This information has'
been provided by The Godfather, Inc. for the months of August through October,
the first three months of operation of the business:
August, September, October__1977
Total Sales $191, 971
Food Sales 96, 183
of Food Sales to Total 50.1
of Liquor Sales to Total 49.9%
The purpose of obtaining this information is that the state statutes require the
serving of food be a principal part of the business of a restaurant which has an on-
sale liquor license. Council members will recall that originally the city ordinance
included a definition of the phrase "principal .part of the business, " stating that
more than 50% of the gross retail sales of licensed premises must be derived from
the sale of food. That definition was deleted in 1971, leaving only the statutory
requirement which does not include a definition of the phrase.
The city attorney has advised that "principal part of the business" may be
interpreted to refer to percent of gross sales , but also to such things as the amount
of investment necessary to serve food, compared to the serving of beverages, or the
number of employees engaged in the preparation and serving of food compared with.
beverages; or the amount of space provided for the preparation and serving of food
as compared with beverages. In short, the statute could be defined in a number of
ways and in no way infers that the definition must be limited to a percent of gross
retail sales.
A stipulation attached to the original license required that the applicants file
monthly financial statements with the city. Although they have not provided these
statements previously, the licensees have indicated to the public safety director
that they will be in a position to provide these statements from now on.
Health and Safety Regulations
Various improvements dealing with health and safety regulations have been
required of the building in which The Godfather, Inc. is located, over the past years.
In addition, routine environmental health inspections and fire prevention inspections
are conducted at the establishment.
At the present time the fire division of the public safety department reports that
The Godfather, Inc. has complied with all the fire code regulations. The environ-
mental health department also reports that, although several problems of non-compli-
ance with applicable health and safety laws have been noted, the Godfather, Inc.
has corrected many problems which have existed previously, and appears to be
Council Letter No. 383 ~ -3- December 27, 1977
making ari effort to comply with health and safety regulations by correcting the
noted deficiencies.
Off-Street Parking Contract Provisions
The original off-street parking contract for the restaurant located at 708
West 66th Street, then the Heidelberg Dining Lounge, was. approved by the city
council on July 27, 1970. The performance bond required as a condition of the
off-street parking contract required numerous improvements; most of which have
been completed. The stipulations for landscaping and sidewalk improvements were
waived due to the fact that the Lynda le/Hub/Nicollet project would require changes.
In addition, the rooftop .billboard sign which the council had requested be removed,
has been removed.
Miscellaneous Information
The applicant has filed the necessary- political contribution declarations
indicating that officers of the corporation have not made any political contributions
during the past year.
The city assessor reports the- following information concerning market value
and taxes as it appears on city records:
Year Ending Year Ending
October 31, 1976 October 31, 1977
Market Value
Taxes Paid
$550,000.00. $625,000.00-
2.4,153.58 29,216.16
Recommendation
It is recommended that the application for renewal of the on-sale and Sunday
liquor licenses issued to the Godfather, Inc. , be both granted and issued subject to
the following provision:
1. That the applicant provide monthly financial statements to the City
of Richfield ,
WSB/e ja
cc: Public Safety Director
Public Works Director
Environmental Health Director
Deputy City Clerk
Respectfully .submitted,
S
Wayne S. Burggraaff
City Manager
MEMORANDt1M
Date: December 20, 1977
To: Wayne S. Burggraaff
City Manager.
From: Thomas A. Morgan, Jr.
Director of Public Safety
Subject: LIQUOR LICENSE RENEWAL - THE GODFATHER, INC.
On December 6, 1977 I submitted a report to you containing the initial investi-
gation conducted by the Department of Public Safety in reference to the appli-
cation for a liquor license renewal for the Godfather, Inc. A copy of this
initial report is attached for your reference. At that time, we were unable
to make a recommendation with regard to the license renewal since the required
financial data had. not been supplied to the Public Safety Department by the
applicant.
On Tuesday, December 13, 7977 Mr.-John Anzevino, the principal applicant, met
with myself and the public safety personnel assigned to this investigation..
At that time, Mr. Anzevino presented a financial statement for the three months
ended October 31, 1977 prepared by the certified public accounting firm of
Kreitman, Orenstein, and Schweitzer. This statement, a copy of which is attached
for your information, represents the most current financial statement of the
corporation-and covers their first three months of operation. As you will-note,
the statement is unaudited and is based upon the .accounting records of the cor-
poration. However, the statement would appear to meet the requirements set
forth in city ordinance code 11.06, subd. 7. The balance sheet seems to be
consistent with the financial information provided us several months ago when
the corporation app]ied for an initial liquor license. The statement does- re-
flect a significant operating deficit for the three month period. However,
this is perhaps not an uncommon situation for a business of this type during
their initial months of operation. Many of the charges seem to be related to
"start-up" costs and are of a one time nature. The Public Safety Department
does continue to have a concern, as noted in our report regarding the initial
liquor license application, with regard to t'~e available assets to provide an
adequate cash flow to sustain this type of business enterprise. The applicants
maintain that they do have sufficient operating capital based upon their past
experience in similar business ventures. The applicants have also assured us
that from this point, they will be in position to furnish the- monthly financial
statements established as a condition of this license by the city council.
The financial reports
three month period of
lowing categories:.
Liquor Sales
submitted by the applicants indicate gross sales for the
$191,971. These sales have been broken down into the fol-
$95,788
(49.9%)
Food Sales $96,183 (50.1%)
.Memorandum - Wayne S. Burggraaff
December 20,-1977
Page Two
The sales do appear to be consistent with the ordinance requirement that the
"principal part of the business fora license is the serving of food".
The Fire Division has completed their required inspection of the property and
finds no violation of the appropriate codes currently existing. Based upon the
investigation of the Public Safety Department, we can find .no legal basis to
deny the renewal of this license. We would strongly recommend that the .city
also continue to maintain as a condition of the license the requirement that the
applicants submit monthly financial statements to the Public Safety Department,
at least-for the period of this Jicense renewal year.
Q't~
TAM/ go -
Attachments
MEMORANDUM-
Date: December 6, i977
To: Wayne S. Burggraaff
City Manager
From: Thomas A. Morgan, Jr.
-Director of Public Safety
Subject: LIQUOR LICENSE RENEWAL - THE GODFATHER, INC.
As a part of the liquor license renewal process, the Public Safety Department
figs initiated the required criminal investigation into the operations of The
Godfather, Inc. I am attaching a copy of Police Agent Hollick's re Port of
the background investigation conducted to date for your information. By way
of summary, I might just mention that the principals in the corporation and
the manager are the same as under their current license.
We have had difficulty in conducting this investigation because of lack of
cooperation on the part of the principal applicants. As noted in Agent
Hollick's memorandum, the applicants have as yet provided no financial state-
ments to the City of Richfield with regard to their business operation. They
have failed to meet the conditions set as a part of their original license
by the city council which required the provision of a monthly financial state-
ment to the city. Additionally they have not, as yet, provided the financial
statements requested for the period of their operation during this current
year. Therefore, the Public Safety Department has been unable to determine
the current financial status of their business or the source of funds under
which they-are currently operating. It is my opinion that this information
is critical to the thorough background investigation the council should have.
available in considering their application for a license renewal.
We have reviewed the police division incident reports involving The Godfather
since they opened in early August. The Public Safety Department has responded
to four calls for police service at the establishment in the following cat-
egories:
Theft (occurring within the building) i
Theft from Automobile (occurring in the parking lot) 1
Assault
1
Possession of Stolen Property (occurring in the parking 1
lot)
Totai Incidents to Oate
4
Wayne S. Burggraaff
December 6, 1977
'Page Two
Based upon the type of business, it is my opinion that there have not been.
excessive calls for public safety service. The four calls reported this
year to date appear to have been beyond reasonable control of the manage-
ment. All of the incidents involved customers. We have received no com-
plaints against the business itself. For your review prior to the council
consideration of this matter, I am including copies of the-four incident
reports involved.
Since we have not received any financial statement information regarding
this business, I would recommend that the city council defer action of
their license renewal until such time as the requested information has been
submitted, and the Public Safety Department has had an opportunity to bath
analyze and verify these financial statements.
TAM/go
" - , ~ CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 382
Agenda December 27, 1977
The Honorable. Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject: Bid on Worker's Compensation and General
Business Liability Insurance
The purpose of this council letter is to provide general background inform-
ation and a specific recommendation on city insurance coverage for.-1978.
BACKGROUND INFORMATION
A three year general business liability policy is scheduled to terminate on
December 31, 1977. The worker's compensation policy for city personnel will
end on the same date. Therefore, on October 24, 1977, the city council. author-
ized the preparation of specifications and a call for bids to replace these policies.
Bids were subsequently requested for a one year period covering January 1 to
December 31, 1978.
The request for insurance coverage for only a one year period represents a
departure from the city's past practice of awarding multi-year policy agreements.
Because only a very few insurance companies are currently bidding on municipal
insurance in Minnesota, and because of the increasing costs of insurance, these
companies are reluctant to submit bids for more than one year. Had we requested
a multi-year proposal it is doubtful whether the city would have received any in-
surance bids .
The 1978 Insurance Bid
Bids for the city's 1978 insurance coverage were opened on December 19,
1977. Only one bid submitted by the Marsh & McLennan Insurance Agency was
received. Home Insurance Company provides most of the coverage in this bid.
The Richfield experience is not unique . 'In July when Edina opened one -yeas
insurance proposals, there was only one principle bidder.. The St. Louis Park
experience just a few days ago was the same. In both of these instances Home
Insurance Company provided most of the coverage .
Council Letter No. 382 -2- December 27, 1977
The total Marsh & McLennan 1978 insurance premium bid for Richfield is
$301,090. The December 14, 1977 St. Louis Park bid for similar coverage and
exposure (except no public liquor. retail store exposure) is $300, 000. The
Edina bid cost for similar insurance with bids opened six months ago was
$283,346.
A General Perspective
Insurance .protection for cities and their employees has become increasingly
expensive. Within just a few short years the costs have far exceeded the in-
crease in the Consumer Price Index or any other indicator of inflation. Premiums
for much liability and casualty insurance have more than doubled in .many instances.
Some cities have experienced an inability to obtain insurance coverage for muni-
cipally operated utilities, liquor stores and medical facilities.
While costs have spiraled upward, the number of insurance carriers willing
to write municipal coverage has dwindled sharply. At the. same time public
officials. not only in Minnesota, but throughout the country, have become more
and more concerned- about increased exposure and less well defined risks for their
cities and themselves.
During 1977 the staff of the League of Minnesota Cities has been exploring
what action the LMC could take to help member cities with these insurance prob-
lems . At the November LMC Board meeting the following actions were taken:
1. Staff directed to pursue state legislation clearly establishing.
cities' authority to engage in individual and joint self-insurance
activities .
2. Staff directed to encourage and cooperate with any cities in-
terested in establishing cooperative or joint risk management or
self-insurance programs which appear to have transferability to
other areas of the state .
3. Board to consider the possibility of a statewide insurance study
in April, 1978.
These actions represent broad interest and concern in this subject area and
should prove to be of assistance to the City of Richfield as it pursues this
problem. A committee of staff personnel -has been formed, met once and is meeting
again on December 29 to explore joint insurance possibilities. The governments
involved are Hennepin County, St.Louis Park, Edina, Richfield, Bloomington,.
Brooklyn Center., Brooklyn Park, and ,Crystal.
WORKER'S COMPENSATION INSURANCE
The premium bid by Marsh & McLennan for Worker's Compensation Insurance
in 1978 is $137, 361; representing an increase of 5.3% over the 1977 cost..
Council Letter No. 382 ~ ~ -3- December 27, 1977
Worker's Compensation premium costs for recent years are as follows:
1973 $ 53,621
1974- $ 53, 825
1975 ~ $ 69,003
1976 $108,726 -
1977 $130,475
The premium for Worker's Compensation insurance bid for 1978 and that paid
for the other-years shown above is determined by three factors: employee salaries,
the city's "experience modification" , and state legislation regulating coverage
and benefits .
Employee Salaries
Benefit costs incurred by worker's compensation insurance companies fall
into two general categories: medical. costs and partial salary replacement during
periods of lost time. Therefore, increasing salaries and total .size of payrolldo
tend~to increase benefits and premium costs within limitations imposed by state
law.
An employee who is eligible receives two thirds of his gross weekly wage
before deductions , but not to exceed the current legislative maximum of $197
per week .
Experience Modification
The experience modification factor is determined by the state, and is a ratio
of Richfield's average loss experience compared with the anticipated average loss.
experience for .similar work groups statewide. A modification factor of 1.00 for
a work group means that the group's actual losses- were exactly the same as the
anticipated losses for that work group on a statewide basis: A modification factor
lower than 1.00 means that the group has experienced fewer losses than the average
group of employees, statewide. Similarly, a modification factor above 1.00 means
that a work group has had more losses than the average work group. ,
Richfield's experience modification factor in 1974 was .99. In 1975, it rose
to 1.02, and in 1976 to 1.10.. The most recent modification factor is 1.39. This
is based on losses that occurred in-1973, 1974 and 1975. The. experience modifi-
cation is always based on the loss experience of the three years prior to the two
most recent years. This means that, for the three years, 1973, 1974, and 1975,
Richfield experienced more losses than the average work group.
Exhibit A is a graph showing number of claims and benefits paid for recent
years . Exhibit B is an itemized listing of the. information used to construct the
graph. There are wide fluctuations in the data, but it is significant to note a
decreasing trend in both number of claims and benefits paid.
The method of calculating the experience modification factor has served to
fncrease Richfield's modification factor. In calculating the modification factor,
all claims of $750 or less are included at their full cost. All claims exceeding
Council Letter No. 382 -4- December 27, 1977
$750 are figured into this calculation at a reduced rate . The city's current
modification factor of 1.39 is based on the 1973-75 three year period of which
1973 and 1974 were very high experience years. The experience modification
factor which the city will receive about the middle of 197.8 will be based on
1974-1976 and should be lower due to the dropping of a poor year and the addition
of a relatively good year. If our experience modification does decrease below
the- level of 1.39, the premium the city-will actually pay in 1978 could be less
than the estimated $137,361, since that premium bid was based on the modification
rating of 1.39. The significant influence of the modification rating on the premium
an employer must pay can be illustrated by the fact that, if Richfield's present
experience modification rating. were 1.00, our I978 premium would be nearly
$38, 000 less .
In summary, while we are still experiencing a high modification rating, it
does appear to be headed. downward.. The Minnesota Worker's Compensation In-
formation Committee has reported that between 1974 and 1976 the number of
Worker's Compensation claims in Minnesota jumped from 40,000 to 50,000 and a
greater percentage of injured workers are declared permanently disabled . There-
fore, our current trend appears to be in marked contrast with the statewide exper--
fence .
State Legislation
Perhaps the two most significant statutory provisions affecting cost of this
insurance are- the weekly disability benefit level and presumed employer liability
for certain categories of employees .
The current maximum weekly disability payment is $197 per week which be-
came effective in October, 1977. The legislation also provides that this benefit
level is subject to annual escalation of a six. percent maximum to keep pace with
the cost of living. Maximum weekly disability- payments have been increased in
recent years as follows;
1971 $ 80/week
1973 $100/week
1975 $135/week
1976 $145.33/week
1977 $197/week
These increases amounting to $146% in just five years have obviously had an
impact on insurance costs . In addition, an employee who terminated employment
with the city as a result of an injury is eligible. to continue receiving additional
payments directly from the insurance company for any remaining disability or
retraining, and, of course, an employer would be charged for those benefits as .
well by an increase in premium.
The state law gives additional potential benefits to police and fire personnel
by conferring presumed liability on the employer for certain kinds of diseases.
Council Letter No. 382 -5- December 27, 1977
These diseases include myocarditis, coronary sclerosis and pneumonia or its
sequel.
Normally, it is necessary to clearly demonstrate that an injury or disease.
_ is work related before an employee becomes eligible for worker's compensation
benefits. However, where police and fire personnel incur one of the diseases
listed in the preceeding paragraph, it is presumed that the disease resulted from
the person's employment. This is the case whether or not the person is on duty
when the symptoms of the disease first occurred.
The presumed liability statute substantially increases employer and thus
insurance company liability. It has had a direct impact on Richfield in that
three public safety personnel have suffered heart attacks in the 1971-73 period
and in each instance received insurance benefits in excess of $16,000. A
claim for another public safety employee who experienced a stroke in 1975 is
still open. Perhaps council members noticed a recent newspaper story where a
26 year old Minneapolis police officer who suffered a mental breakdown was
awarded $13,777 in compensation and $154.05 per week for as long as he is
disabled because of a finding that. the breakdown was a direct result of his job.
That kind of a decision has an indirect impact on all employers of public safety
personnel and their worker's compensation insurance .
COMPREHENSIVE LIABILITY AND UMBRELLA INSURANCE
The -premium bid. by Marsh & McLennan for comprehensive liability and um-
brella insurance in 1978 is $163,729; representing an inc rease of 148% over the
1977 cost. Annual costs for this kind- of insurance in recent years are as follows:
1973 $43,630-
1974 55,355
1975 47,575
1976 ~ 57,418
1977 66,013
The current three year policy for the city's liability insurance frequently
referred to as the comprehensive business insurance will expire on December 31,
1977. This business insurance package includes all the city's insurance coverage
except the worker's compensation insurance and the health and life insurance
coverages provided to city employees . The various types of insurance include
public and institutional property {fire, extended coverage, vandalism and malicious
mischief), comprehensive public liability, }iquor liability, employee bonds, boiler
insurance, glass breakage insurance, personal injury and liability, and fleet
liability, property damage, collision and comprehensive coverage. The city-also
has an "umbrella" policy which provides an additional one million dollars of
coverage for any of these perils detailed in the comprehensive- insurance package.
Council Letter No. 382. -6-
December 27, 1977
The city's loss experience under the comprehensive insurance has fluctuated
widely.. The following table shows the losses incurred from general city operations
from. 1975 through September, 1977:
1975 1976 1977
General liability $14,592 $3,097 $10,703
Auto liability 15 , 62 0 2 , 401 891
Auto physical damage 0' 450 0
During this time, the city has had no losses under any of the other exposure
against which we are insured. A summary of the individual losses for these years
is attached to this council letter and marked Exhibit C.
The premium which the city. must pay for this comprehensive business insurance
is based on numerous factors, but includes the actual loss experience as well as
the assumed "exposure" : Because of the many diverse activities in which the
city engages, ranging from selling liquor to constructing parks, and maintaining
sewers, our exposure is substantially greater than that of an employer who only
sells liquor or only builds parks. The cost that a municipality must pay for in-
surance to protect against these different exposures reflects the diversity of
activities in which the city engages .
Reasons for Increased Insurance Costs
As already noted, the increase in these liability insurance costs is approx-
imately $100, 000 from 1977 to 1978. While these kinds of insurance costs and
substantial increases are not unique to the City of Richfield, it is important to
be aware of some of the more significant reasons for the increase. It is virtually
impossible to assign dollar amounts to the various reasons, but together they do
represent increased exposure and cost to the insurance company. The more
important reasons are as follows:
1. We are currently in the final month of a three-year agreement for this
liability insurance during which time the insurance company has been
locked in on premium costs. Therefore, the increase for 1978 is not
simply a one year increase, but reflects the economic changes which
have occurred during 1975-77.
2. The 1978 policy does include some increased coverage. The maximum
liability coverage per incident has been increased from $300,000 to
$500,000. Similarity, the limit on personal injury insurance has been
increased to $300/$500,000 per incident. In addition, we have gone
through the .normal process of adjusting values on city properties to
.reflect appreciation.
3. As .indicated previously in this council letter, cities are- incurring
more -and more liability exposure for a variety of reasons .
_ Council Letter No. -38.2 -7- December 27, 1977
Together with this increased exposure-goes an additional
'problem of -less -well defined risk all of which contributes to
increased premium costs .
4. There appears to be an increased .propensity for aggrieved
or injured parties to sue. the government. This is happening
in city government as well as other governmental levels and
does have an impact on potential risk and insurance premiums.
S. Premium costs are also influenced by the size of negotiated or
court established settlements . There seems to be a general
trend toward higher settlements and in some cases, incidents
have actually been reported where the insured party becomes
involved in making a partial payment or settlement after the
claim has been denied by the insurance company. These pro-
cedures can have an effect on the security of coverage for the.
insured and can also be precedent setting for future claims
both large and small.
In addition to the rea sons listed above, it is also important to recognize
that insurance company overhead costs have increased in recent years -since
even though. a claim may be finally denied, the process .sometimes involves sub-
stantial investigative and legal work on the part of the company. At the same
time overhead expenses have been increasing, insurance company investment
returns have been decreasing which together may have some impact on premium
costs .
SUMMARY
In summary, .the insurance premiums for the City of Richfield have risen
substantially in recent years as shown below:
Insurance Premiums
Covera e 1973 1974 1975 1976 1977 1978
orker's Comp. $53, 621 $53, 825 $69, 003 $108, 726 $130, 475 $137, 361
en' 1. Pkg .
and $4:3,630 $55,355 $47,575 $ 57,418 $_66,013 $163,729
mbrella
Bids were opened by the City Manager for 1978 insurance coverage in accordance
with city council authorization on December 19,1977. The public works director,
the finance director, the public safety director and the administrative assistant
were present at the bid opening. Only one bid was received in the amount shown
in the preceeding table and as indicated in the attached minutes and tabulation of
the bid opening .
Council Letter No. 382 -8- December 27, 1977
While the bid is substantially higher than 1977, we have found this to be
consistant with the experience of other municipalities . There appears to be
no alternative but to accept the bid for 1978 and intensify our efforts to explore
alternatives with other municipalities; Hennepin County and the League of
Minnesota Cities for future years.
The 1978 budget provides $236,641 for insurance ..premium purposes which
is $64,4.49 short of the amount needed to finance the 1978 coverage. About
$35, 000 of this amount will need to be provided in -the general fund by a transfer
from the unallocated contingency. The remaining amounts will be reflected by
increased overhead costs in other funds such as liquor, sewer and water where
user fees generate the revenues.
RECOMMENDATION
It is the recommendation of the administrative assistant, who is responsible
for the city's insurance and risk management program; in which I concur, that
the city council take the following actions:
1. Accept, file and approve .the attached minutes of the bid opening
and the bid tabulation .
2. Authorize acceptance of the 1978 insurance coverage bid of Marsh
and McLennan Agency.
3. Authorize preparation of a general fund contingency transfer resolution
in the estimated amount of $35,.000.
4. Authorize the city manager and his staff to continue to work with
other jurisdictions to .explore alternative. means to protect the
city's insurance exposure at lower cost to the city.
Respectfully submitted,
S.
~~
Wayne S. Burggraaff
City Manager
WSB/eja
cc: Administrative Assistant
Finance Director
CITY OF RICHFIELD-
Bid Opening
December 19, 1977
Insurance
Comprehensive Business Package
Umbrella Liability
Workers' Compensation
Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative
staff was called by Wayne S. Burggraaff, City Manager, who announced that the
purpose of the meeting was to receive, open and read aloud, sealed bids on a
comprehensive business insurance package as advertised in the official newspaper
on November 9, 1977.
Present: Wayne S. Burggraaff, Gity Manager
Carl Marinics, Public Works Director
Tom Morgan, Public Safety Director
Joyce Wilde, Administrative Assistant
Thomas J. Moran, City Clerk
The following bid was submitted and read aloud:
BIDDER AND BID SECURITY
ALTERNATIVE A
A-1 A-2 A-3 TOTAL
Marsh & McLennan
5% Bid Bond
$129,979 $33,750 $137,361 $301,090
The City Manager announced that the bid would be tabulated and considered at
the regular council meeting of December 27, 1977.
Thomas J. Moran Gity Clerk
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EXHIBIT B
WORKER'S COMPENSATION INSURANCE LOSSES
1974
Department No, of claims Medical paid Lost -time paid
Public Safety 35 $ 2, 868 $ 6, 200
Public Works 15 12, 774 .18, 695
Park & Recreation _ 9 668 513
Other 5 1 16 0
TOTAL 64* $ 1 6, 426 $ 25, 408
1975
Department No, of claims Medical paid Lost-time paid
Public Safety 26 $ 3, 941 $ 1 , 761
Public Works 16 2, 277 l , 951
Park & Recreation 5 124 0
Other 8 505 789
TOTAL ~ 55 * $ 6, 847 $ 4, 501
1976
Department No, of claims Medical paid Lost-time paid
Public Safety 11 $ 1 , 795 $ 2, 862
Public Works 13 672 513
Park & Recreation 5 183 0
Other 11 831 0
TOTAL 40* $ 3,481 $ 3,375
1977
Department No_, of claims Medical paid Lost--time paid
Public Safety 12 $ 2,212 $ 5,562
Public Works 12 268 0
Park & Recreation 5 88 639
Other 6 270 0
TOTAL 35 * $ 2, 838 $ 6, 201
* there are still one claim open from 1974, five claims open from 1975, two
claims open from 1976, and three claims open from 1977.. Reserves set aside
against the 1977 open claims total $13, 437.
EXHIBIT C
COMPREHENSIVE BUSINESS POLICY
Claims Paid:~1975
Date of Loss Paid Type.
4-16-75 $ 88.00 Hit Parked Vehicle
5-5-75 200.00 Injury - Faulty Design of Street
5-6-75 63.56* Truck Backed into car
5-13-75 246.31* Car hit .by street sweeper
6-11-75 105.00 Sewer
6-21-75 442.00 Cut foot on city equipment
7-22-75 225.00* Hit parked vehicle
8-?-75 54,04 Property Damage
8-15-75 50.00 Injury broken glass
9-3-75 545.40 Stepped on sprinkler
9-29-75 63.64* Police hit parked car
10-3-75 539.50 Property Damage
10-8-75 75.00 Paint splattered car
12-6-75 239.21* Automobile damaged
12-24-75 341.60 Snow plow hit car
_ 0 e~ n Claims 1975
2-18-75 $10,000 Reserve Fall in liquor store
7-18-75 20,000 Reserve Bicycle accident
12-28-75 Let Rest Fell through stands
*Automobile Policy
COMPREHENSIVE BUSINESS POLICY
Claims Paid: 1976
Date of Loss Paid ~ Type
1-?-76 $ 12.69 Yard Light
2-21-76 1,278.57* Automobile (P.D.)
2-25-76 15.78 Traffic Cable (Auto P.D.)
3-1-76 963.32* Hit Automobile (P.D.)
4-23-76 81.60 Hit Automobile (P.D.)
4-30-76 172.14* Auto accident (P.D.)
5-20-76 776.17 Flooded Basement
6-18-76 75.00* Damage to Auto (P.D.)
7_?_76 15.50 Bent yard light
8-12-76 144.50 Fall on sidewalk
9-2-76 263.46* Auto Accident (P.D.)
11-9-76 588.00 Sewer backup
11-18-76 475.00 Sewer backup
12-?-76 16.00 Broken window
Open C1 ai ms 1976
7-14-76 Open Tree trimmed
9-17-76 Open* Auto Accident -
10-11-76 Open Sewer backup
12=20-76 Open Fall down
10-7-76 Open* ~ P.D. Police Car
*Automobile policy
COMPREHENSIVE BUSINESS POLICY
Date of Loss
3-3-77
3-3-77
3-3-77
3-17-77
3-20-77
6-2-77
7-28-77
8-'LO-77
1-15-77
3-11-77
4-10-77
4-15-77
5-22-77
5-26-77
6-4-77
7-7-77
7-25-77
8-4-77
9-?-77
10-7-77
10-17-77
*Automobile policy
Claims Paid: 1977
Paid
$267.96
73.32
77.00
479.03*
152.00
244.60
204.94
144.10
Open Claims 1977
Open
~~
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Open*
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~~
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Type
Snow plow accident (P.D.)
Automobile (P.D.) ,
Car/street accident
Automobile (P.D.)
Lawn mower hit car
Fall down
Carpet damage
Automobile (P.D.)
Auto damage
Police Harassment
Sewer backup
Flooded basement
Auto accident
Personal injury
Fall down
"Hole in muffler"
Sewer backup
Injury at park
Water damage
Fall in liquor store
Water Damage
S
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 381
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject: Release of Bond on Off-Street Parking Contract,
1300-1302 Eas.t.66th Street
On the December 27, 1977 city council agenda there -is a resolution
providing for release of an off-street parking bond for George C. Maurer
Construction, Inc. , for the office building located at 1300-1302 East
66th Street.
The Public Works Department has inspected the property and confirmed
that the requirements of the off-street parking contract have been met. it
is recommended that the city council adopt the attached resolution, author-
izing release of this .off-street parking bond.
Respectfully submitted,
Wayne S. Burggraaff
City Manager
WSB/eja
cc: Public Works Director
RESOLUTION N0.
,RESOLUTION RELATING TO RELEASE OF BOND ON OFF-STREET PARKING
George C. Maurer Construction, Inc.
6625 Lyndale Avenue South
Location: 1300-1302 East 66th Street
Use: Office Building
WHEREAS, George C. Maurer Construction, Inc., 6625 Lyndale Avenue South, Richfield,
Minnesota, had an off-street parking agreement witr~ the Ci-ty of Richfield, relating to
1300-1302 East 66th Street, which contract bears the designation of Contract No. 2227
and which contract was guaranteed by a bond of the Travelers Indemnity Company, Hartford,
j Connecticut, in the amount of Four Thousand ($x+,000.00) Dollars, and
WHEREAS, George C. Maurer Construction, Inc. has complied with the provisions of
said agreement and the Travelers Indemnity Company now seeks to be relieved of any
further obligation under said bond, and
WHEREAS, there appears to be no justification for requiring George C. Mauer.Con-
struction, Inc. to continue to provide a bond for security on the performance of said
agrement,
NOW THEREFORE, ?BE IT RESOLVED by the City Council of the City of Richfield,
Minnesota, as follows:
That the city manager is hereby authorized and directed to release the Travelers
Indemnity Company, Hartford, Connecticut, for any and all acts of George C. Maurer Con-
struction, Inc., committed or incurred in violation of said Contract No. 2227 on and
after the 27th day of~December, 1977•
Adopted by the City Council of the City of Richfield this 27th day of December,
1977•
Loren L. Law Mayor
ATTEST:
Thomas.J. Moran -City Clerk
..
CITY OF RICHFIELD, MINNESOTA
Office of -City Manager
Council Letter No. 380
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject: Amendment to Animal Kennel Contract
The City of Richfield currently has a contract with Oak Crest Kennels to
handle animals impounded by the city. This contract was implemented effective
January 1 , 1975 and is ongoing, remaining in effect unless either party gives
thirty (30) days notice requesting some change. Earlier this month, Oak Crest
Kennels notified the city of a proposed change in the .contract.
• .The present contract provides for a boarding fee of $2.SO,per day for any
species of animal. The kennel has requested to amend the contract by increasing
this daily boarding fee to $2.75. This increase would be the first overall increase
in boarding rates since the contract was originally implemented three years ago.
In February, 1976, the contract was amended to increase the daily boarding fee
for feline species from $1.75 to a uniform daily boarding rate of $2.50 for any
animal.
The Public Safety Department has again recently explored the possibility of
sharing in the kennel facility that is jointly utilized by the cities of Bloomington
and Edina. Although the actual daily boarding rate would be lower than the Oak
Crest rate, the total city cost would be substantially higher, because we would
be required to send our public safety personnel to the kennel to release animals
when claimed by the owners. Additionally, the Bloomington-Edina facility is un-
attended.. It is the feeling of the Public Safety Dir-actor, as well as-that of our
consulting veterinarian, that it is preferable to use an attended kennel- facility..
The city has experienced satisfactory service with the Oak Crest Kennels
during the past three years . Some problems we experienced in previous years
with other kennels doing animal impounding for the city have not occurred since
we entered into the agreement with Oak Crest.. The Environmental Health De-
partment has inspected the Oak Crest Kennel facilities and found them to meet
all applicable codes and standards.
Council Letter No. 380 -2- December 27, 1977
During 1975,. 324 animals were. impounded. In 1976, only 208 animals were
impounded. Through November of this year, 245 animals have been impounded.
About 25% of the animals impounded are eventually reclaimed by their owners.
It is the recommendation of the Public Safety Director, in which I concur,
than. the city council adopt the attached resolution authorizing this rate change
in the contract with Oak Crest Kennels. Sufficient funds are available in the
1978 budget to support this rate increase.
Respectfully sub 'tted,
~.
Wayne S. Burggraaff
City Manager
WSB/eja
cc: Finance Director
Pui~lic Safety Director
RESOLUTION NO.
°~ RESOLUTION AMENDING ANIMAL SERVICE CONTRACT
DATED JANUARY 1 , 1975 BY AND BETWEEN OAK CREST
KENNELS AND THE CITY OF RICHFIELD
WHEREAS, the City of Richfield and Oak Crest Kennels have entered into
an animal services agreement-dated January 1,1975 and
WHEREAS, this agreement has been amended effective as of February 10,
1976, and
WHEREAS, the parties wish to continue in full force and effect such
agreement subject to the amendment hereinafter stated:
NOW,- THEREFORE, upon the mutual consideration of the parties, the
animal services contract by and between Oak Crest Kennels and the City of
Richfield is amended by amending paragraph 12, item a to read as follows:
"Two and seventy-five one-hundreds {$2. ?5) dollars for each twenty-
four hours or fraction thereof for boarding any species of canine boarded
under the terms of this Agreement. "
And by amending paragraph 12, item b to read as follows:
"Two and seventy-five one-hundreds ($2.75) dollars for each twenty-
four hours or fraction thereof for the boarding of any species of feline
boarded under the terms of this Agreement. "
BE IT FURTHER RESOLVED that otherwise the agreement of January 1 , 1975
shall remain in full force and effect as therein provided.
Passed by the City Council of the City of Richfield this 27th day of
December, 1977.
Loren L . Law Mayor
ATTEST:
Thomas J. Moran City Clerk
!/
s
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No . 3.79
Agenda December 27, 1977
The Honorable Mayor
and
Members of the City Council
City of Richfield
Gentlemen:
Subject; Recommendation for Denial of Taxicab Driver's License
The December 27, 1977 city council agenda lists Robert Z,ouis Boenhardt as
an applicant for a taxicab driver license. On the basis of background investiga-
tion by the Public Safety Department, we are recommending denial of this applica-
tion .
The public Safety Department investigation revealed that Mr. Boenhardt has
at least two criminal theft offense convictions. Additionally, Mr. Boenhardt
does not currently possess a valid Minnesota driver's license.
It is the opinion of the Public Safety. Department that Mr. Boenhardt's history
of criminal violations and lack of a valid driver's license relate directly to the
license for which he has applied. Therefore, it is recommended that this license
application be denied.
Respectfully submitted,
..
~~~~
Wayne S. Burggraaff
CYity Manager
WSB/eja
cc: City Attorney
Deputy -City Clerk
Public Safety Director