2005-10-12 CC Packet - Laserfiche WebLink

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For agreements that create a "joint powers entity" 1. Consider incorporating the joint powers entity. M.S. 465.717, subd. 2, which was passed in 2000, authorizes any joint powers entity to incorporate itself as a Chapter 317 A non-profit corporation. On its face, this would seem to eliminate the member cities' vicarious liability exposure, since M.S. 317 A.407 specifies that members of a non-profit corporation are not liable for the corporation's acts or liabilities. We'd caution though that there's been little experience with incorporating joint powers entities in this way. We don't know for sure what a court might actually do with regard to liability of an incorporated joint powers entity - e.g., whether and how governmental immunities and defenses would be available, etc. There may also be some disadvantages to being a non-profit corporation, such as additional reporting and filing requirements, and so on. Incorporating a joint powers entity as a non-profit corporation is stepping into new and untested legal ground, and cities considering it should weigh the potential advantages and disadvantages carefully with their legal counsel. 2. Consider carrying higher liability coverage limits. Obviously, the higher the joint powers entity's coverage limits, the more likely it is to be adequate. But regardless of what the coverage limit is, you can never be absolutely assured that it will be adequate. Even with a coverage limit equal to the number of members times $1,000,000, there's still the risk of claims that the statutory limits don't apply to. And with larger joint powers entities - those with ten or twenty or thirty members - carrying a coverage limit that high may not be practical or economical. For all cities . Support a legislative fix. The League will be pursuing legislation to address this problem. City officials need to be talking with legislators about the problems and inequities the court's ruling creates. A key point to discuss with legislators is the disincentive for inter-local cooperation which this court ruling creates. A final comment The federal Eighth Circuit Court of Appeals' ruling in Reimer v. Crookston creates potential problems for cities. Given the potential seriousness of those problems, cities should consider adopting the strategies outlined above. However, it's important also to keep in mind that this ruling is not necessarily the final word on the issue. Two points to be aware of: . We have petitioned the Eighth Circuit Court to reconsider its ruling, in light of the ruling's potentially far-reaching consequences. We don't yet know when the court will decide if they'll rehear the case. 4