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coverage would apply to the obligations being assumed under this conuact. The response from Ms. Stephanie Hazvey of the TML Risk Pool is included with the agenda materials. Ms. Harvey makes certain suggestions also endorsed by the Legal Deparhnent with regard to the contractual arrangement, and otherwise describes the City' s coverage which would apply to this circumstance. First, Ms. Hazvey recommends the City request additional named insured status under the insurance policy to be obtained by the SCCA. This would mean that as to any judgment of liability against the City, the coverage under the $5,000,000.00 policy would apply first to such liabiliry. Secondly, Ms. Hazvey points out that iF punitive and exemplary damages are awazded in a given instance, the TML risk pool will not cover the City for such damages assumed by conuact. Under this proposed contract, the City as an assurer is assuming all potential liability, without excluding punitive and exemplary damages. Finally, Ms. Harvey points out that the TML coverage would apply only if and upon a finding of a lawful obligation on the part of the City to pay. That is, the City could make no gratuitous payment and expect TML coverage to apply. DESCRIPTION: If the City Council desires to approve this agreement, the Ciry Council should fust fmd there is a public purpose to be served by doing so to meet the standard of Article III, Section 52 of the Texas Constitution, which prohibits the gift of public funds or extending of credit by a municipality. The proposed resolution approving the contract includes such findings. Secondly, either by the contract itself or in a separate agreement with the SCCA, the City should be designated as an additional insured under the SCCA policy. Finally, the contract should be revised to reflect that the City will not be responsible for punitive and exemplary damages; if such an agreement is not reached, the Council needs to understand that the TML insurance coverage will not apply if such damages were awarded in the instance of a successful lawsuit which uiggered the City's liability. Finally, one other aspect of the azrangement which could be considered is to determine the order of responsibility among the assurers to meet these obligations. The conuact itself is silent on the question of whether or not this responsibility would be shared equally among the Chamber of Commerce, Lamar Counry> and the City of Paris or whether one entity would have first responsibility over another. COSTS: There is no direct cost set out in the contract which would accrue to the City. All costs are contingent costs, to assume the responsibilities of the sports car club to make necessary repairs to the premises, pay for personnel costs of the State, and ultimate responsibility for any liabiliry. RECOMMENDED ACTION: Consider the request for the City to enter into the proposed agreement. STAFF CONTACT: Gazy Vest, Lamar County Chamber of Commerce; Larry W. Schenk, City Attorney; and Michael E. Malone, City Manager COLJNCIL DATE: Consider at City Council's regulaz Council meeting of April 11, 2002. ADDITIONAL MATERIALS: See enclosed Resolution of approval, proposed Surface Use Agreement, and correspondence from Texas Municipal League Intergovernmental Risk Pool.