RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF NEWARK RESOLUTION NO. H

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1 Board Meeting Date: -09 RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF NEWARK RESOLUTION NO. H Chief Legal Officer c-40~~nissioner -submitted the following resolution Resolution: That the Newark Housing Authority Board of Commissioners authorizes the Executive Director to execute a contract, and make any necessary corrections, with National Union Insurance Group (AIG), Pittsburgh, Pennsylvania for Directors & Officers Liability Coverage in an amount not-to-exceed $72,901.00, for one year, for the period beginning April 1, 2009 and ending March 3 1,2010. Commissioner Perez seconded the motion. BOARD OF COMMISSIONERS VOTE OF FINAL PASSAGE - Indicates vote AB -Absent NV- Not Voting COMMISSIONERS BUTLER CARTWRIGHT PALMER AYE NAY AB NV COMMISSIONERS PEREZ CRUZ CASEY AYENYE AB NV I 1 IIEREBY CERTIFY THAT THE ABOVE RESOLUTION WAS ACCEPTED AT THE BOARD OF COMMISSIONERS MEETING OF THE HOUSING AUTHORITY OF THE CITY OF NEWARK, NJ ON March 26,

2 1. Brief Description of Proposed Item RESOLUTION AUTHORIZING AWARD OF CONTRACT FOR DIRECTORS OFFICERS LIABILITY COVERAGE WITH NATIONAL UNION INSURANCE GROLTP (AIG), PITTSBURGH, PElVIVSYLVANIA AND NEW YORK, NEW YORK FOR POLICY COVERAGE DATES APRIL 1,2009 THROUGH MARCH 3 1,20 10 POLICY PREMIUM $72,90 1.OO 2. Date of Board Meeting: 3/26/09 3. Proposed Board Resolution: That the Newark Housing Authority Board of Commissioners authorizes the Executive Director to execute a contract, and make any necessary corrections, with National Union Insurance Group (AIG), Pittsburgh, Pennsylvania for Directors & Officers Liability Coverage in an amount not-to-exceed $72,901.00, for one year, for the period beginning April 1,2009 and ending March 3 1, A11 Back-up attached? yes 0 If no, What is missing and when will it be submitted: / 5. Chief Approval Signature Date: 6. Statement regarding availability of funds by CFO Funds Budgeted and ~ vailablem yes no Source yliy - 96I040-)($fl- #fld Account # Y~RIOOS CFO Approval Signature Date: 3b Approval of Executive Director Signature Date:

3 H \<,j :.::,:?$? /$-\.\.;tv ti, a -.!,>% Newark Housing Authority BOARD MEMORANDUM TO: FROM: SUBJECT: Keith D. Kinard Executive Director* / Ellen M. Harris Chief Legal Officer RESOLUTION AUTHORIZING AWARD OF CONTRACT FOR DIRECTORS & OFFICERS LIABILITY COVERAGE WITH NATIONAL UNION INSURANCE GROUP (AIG), PITTSBURGH, PENNSYLVANIA AND NEW YORK, IVEW YORK FOR POLICY COVERAGE DATES APRIL 1, 2009 THROUGH MARCH 31,2010 POLICY PREMIUM $72,901.OO DATE: March 1 1,2009 This memorandum recommends that the Newark Housing Authority (NHA) Board of Commissioners authorize the Executive Director to execute a contact, and make any necessary corrections, with National Union Insurance Group, Pittsburgh, Pennsylvania for Directors & Officers Liability Coverage in an amount not-to-exceed $72,901.00, for one year, for the period beginning April 1, 2009 and ending March 31, 2010 pursuant to the March 11, 2009 memorandum from Ellen Michelle Harris, Esq., Chief Legal Officer to Keith Kinard, Executive Director. BACKGROUND Procurement of insurance carriers for the agency's portfolio has been pursued through a noncompetitive solicitation of price quotes from various companies who may be willing to insure public entities. Federal Law states: Procurement by non competitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies: (A) The item is available only from a single source; (B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (C) The awarding agency authorizes non competitive proposals; or (D) After solicitation of a number of sources, competition is determined inadequate. By contrast, New Jersey Public Contracting Law under N.J.S.A. 40A: 1 1-5(a)(i)(m) recognizes the procurement of insurance coverage and consultant services as one of the few Professional Services which may be awarded without public advertising for bids so long as the governing body states: Supporting reasons for its actions in the resolution

4 Publishes notice of the award setting forth the name of the entity to whom the contract has been awarded; amount of the contract and the duration. Because HUD does not recognize professional services or extraordinary unspecifiable service, it gives rise to the notion that federal and state law may be in conflict. Therefore, we will rely on 24 CFR (d)(4)(i)(c) "The awarding agency authorizes non competitive proposals"; and 24 CFR (d)(4)(i)(d) "After solicitation of a number of sources, competition is determined inadequate." We believe this satisfies both HUD and State law for the procurement of these policies. Federal law states that this exception to public bidding is permissible. Award of the various insurance coverages for the NHA is proposed under the Federal guidelines for the following reasons: 1. Since the mid-1980s the insurance market has been extremely conservative in its willingness to insure large public entities. Historically in New Jersey, public agencies have had two choices for insurance coverage. They could purchase a commercial policy or declare themselves to be self insured. Commercial policies were very expensive; limited in coverage areas. Total self-insurance is fiscally impractical. 2. Litigious climate in New Jersey Providing insurance in New Jersey is extremely regulated due to the litigious climate in the State. 3. High Risk ExposureJConservative underwriting practices Most insurance companies decline to insure large public entities, particularly public housing because of the risk exposure. Insurance companies have become extremely conservative in risk allocation and consider the nature of insuring a public housing entity to be volatile and uncertain. 4. Companies will not write policies lines as a group The following lines are usually insured as a package: Excess general liability; excess auto; excess Employers liability and workers compensation. EVALUATION Companies who would consider insuring a large public entity decline to insure all lines of coverage as a group. For example, we requested quotes from the following: STAR National; AIG; Travelers; Marsh; Alliant; and CANJJFW. AIG and Travelers do not write excess policies on large public entities. Marsh, Alliant and CANJJFW declined to quote coverage. Only STAR National would write policies for these lines for a base premium. The other companies either would not quote coverage for public housing or would require us to seek a separate policy for workers compensation &excess employers' liability. The cost for this insurance is slightly higher this year than last year in that we sustained meaningful losses in this area of coverage. National Union Fire Insurance Company is a leader in this business and continues to provide excellent coverage. This company has indicated they

5 are willing to provide training in the area of employment protocols upon request. We are also able to choose our own attorneys to work on our behalf if the need arises. Other carriers will not permit this selection. RECOMMENDATION Accordingly, I recommend that the Board adopt the following Resolution: Resolution: That the Newark Housing Authority Board of Commissioners authorize the Executive Director to execute a contract, and make any necessary corrections, with National Union Insurance Group (AIG), Pittsburgh, Pennsylvania for Directors & Officers Liability Coverage in an amount not-to-exceed $72,901.00, for one year, for the period beginning April 1, 2009 and ending March 31,2010. mydocs - resolution - national insurance group (directors & officers)

6 Notice of Contract Award The Newark Housing Authority has awarded a contract without competitive bidding as a professional service pursuant to N.J.S.A. 40A: 11-5; 24 CFR (d)(4)(i)(c) and 24 CFR (d)(4)(i)(d). The contract and the resolution authorizing it are on file and available for public inspection in the Legal Department. Awarded to: National Union Insurance Group (AIG). Pittsburgh, Pennsvlvania Duration: One Year Nature and type of contract: Directors & Officers Liability Coverage Amount of Contract: $72,90 1.OO