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Stephanie Harvey of the TML Risk Pool is included with the agenda materials. Ms. Harvey makes certain suggestions also endorsed by the Legal Department with regard to the contractual arrangement, and otherwise describes the City's coverage which would apply to this circumstance. First, Ms. Harvey 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 firstto such liability. Secondly, Ms. Harvey points out that if punitive and exemplary damages are awarded in a given instance, the TML risk pool will not cover the City for such damages assumed by contract. Under this proposed contract the City as an assurer is assuming all potential liability, without excluding punitive and exemplary damages. Finally, Ms. Harvey points outthatthe TML coverage would apply only ifand 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. On April 9, 2002, following the City Council's original consideration of this proposed contract on Apri18, 2002, the Legal Deparhnentcontacted Mr. Cue Boykin, an AssistantAttorney General whose responsibility is to represent state agencies, including the Texas Military Facilities Commission. Mr. Boykin, who drafted the contract in question, acknowledged the obligation he had sought to impose upon the City of Paris was in all likelihood an obligation contrary to the Texas Constitution. According to Mr. Boykin, the Texas Attorney General's Office has issued opinions stating broad and general indemnification clauses, when specified in contracts entered into by governmental entities, violated the Texas Constitution because such obligations constituted an open ended indemnity and an unfunded debt. In addition, Mr. Boykin acknowledged the very language he had included in the contract, that such assurances were effective only "to the extent allowed by the constitution and laws of the State of Texas," was intended to recognize there may be constitutional restraints on such indemnification. Mr. Boykin acknowledged he had personally placed this language in the contract on behalf of his client agency for the agency to feel better with regard to the potential for such liability. Mr. Boykin's statements track the understanding of the City Legal Department with regard to such constitutional restraints, but it also should be emphasized the Attorney General's opinions on such topics, while entitled to great weight in any subsequent court proceeding, are not binding on any Texas court and are treated as the opinion of another attorney. However, because such defenses are available to the City, any approval of such an agreement should directly reflectthe City's preservation of its right to raise such defenses if necessary in any subsequent proceeding. DESCRIPTION: Ifthe City Council desires to approve this agreement, the City Council should approve the agreement only conditioned upon the City being a named and co-insured on the $5,000,000 general liability policy to be provided by the Sports Car Club of America. In addition, any such approval should be explicitly conditioned upon the City reserving any and all defenses the City may have under the constitution and laws of the State of Texas with regard to the obligations of an assurer as stated in the agreement. Third, the City Council should be aware that as referenced above, even though the Texas Attorney General has opined that such blanket indemnifications are not consistent with the constitution, such an opinion does not protect the City from a court disagreeing with the Attorney General's opinion in a given instance. Furthermore, the City Council needs to understand that even with the City being included as a co-insured or additional insured on the Sports