05-D SCCA ContractAGENDA INFORMATION SHEET
PROJECT: Consider approval of an agreement for the City of Paris to be an assurer to the Sports
Car Club of America (a private organization) for the Club's obligations to the Texas Military Facilities
Commission with regard to a sports car rally at Camp Maxey.
BACKGROUND: The City of Paris has been approached by the Lamar County Chamber of
Commerce to approve and sign an agreement by and among the Texas Military Facilities
Commission, the Sports Car Club of America, Lamar County, and the Lamar County Chamber of
Commerce to allow the Sports Car Club to conduct its annual road rallies at Camp Maxey. The City
is being asked to sign the agreement in the role of an assurer, meaning that ifthe Sports Car Club fails
to meet its obligations under the agreement, the City, along with the Chamber and the County, will
be called upon to fulfill those obligations. This arrangement was a requirement imposed by the Texas
Military Facilities Commission during the course ofameeting ofthe Commission with representatives
of the Lamar County Chamber of Commerce.
The proposed agreement is included with the agenda materials. The responsibilities assumed by the
City in signing this agreement are found under paragraph II C-F and paragraph VI C. Under the
provisions of paragraph II C-F, the SCCA is obligated to restore all roads and other disturbed
property at the club's expense and to reimburse the Commission and the AGD for their expenses
incurred for use of their personnel for pre- and post-rally inspections of the premises. If the SCCA
fails to meet this obligation, then the assurers, as a group, are obligated to assume those
responsibilities and fulfill them on behalf of the club. I would point out there is no allocation among
the assurers as to who would be the first entity obligated to step in for the club if the club fails to
perform. Ifthe SCCA and the assurers fail to fulfill their commitments under subparagraphs C& D,
then a$5,000.00 deposit will be utilized by the commission to defray these expenses. Although the
contract does not indicate who will post the deposit, the Lamar County Chamber of Commerce has
indicated it will provide such a deposit.
With regard to the obligations assumed by the City under paragraph VI C, relative to the other
obligations assumed by the City, this obligation is the most crucial. Under paragraph VI C, the
assurers (again as a group) have agreed to indemnify and hold harmless the Commission and the AGD
from the claims of persons or entities arising out of the conduct by the SCCA of the rallies authorized
under the contract, to the extent allowed by the constitution and laws of the State of Texas. Again,
the allocation of such potential liability among the assurers is not stated. Presumably, this obligation
to step in and indemnify a private sports car club would be subject to paragraph II B in which the
SCCA is obligated to obtain a general liability insurance policy in the amount of $5,000,000.00,
naming the commission and the AGD as additional insured. However, because the level of liability
for personal injury suits, including those involving automobile mishaps, in today's courts has resulted
in enormous cash judgments, coverage of even $5,000,000.00 may be inadequate given a particular
circumstance.
To be certain of the City's position in this situation, the Legal Deparhnent forwarded a copy of the
contract to the City's insurer, the TML Insurance Risk Pool to assess whether or not the City's
coverage would apply to the obligations being assumed under this contract. The response from Ms.
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.
DESCRIPTION: Ifthe City Council desires to approve this agreement, the City Council should first
find 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 triggered the City's liability.
Finally, one other aspect of the arrangement which could be considered is to determine the order of
responsibility among the assurers to meet these obligations. The contract itself is silent on the
question of whether or not this responsibility would be shared equally among the Chamber of
Commerce, Lamar County, and the City ofParis or whether one entity would have firstresponsibility
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 liability.
RECOMMENDED ACTION: Consider the request for the City to enter into the proposed
agreement.
STAFF CONTACT: Gary Vest, Lamar County Chamber of Commerce; Larry W. Schenk, City
Attorney; and Michael E. Malone, City Manager
COUNCIL DATE: Consider at City Council's regular 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.
T L
QJIENGOVERNMEN'LAL R19K POOL
March 21, 2002
Mr. Larry Schenk, City Attorney
City of Paris
P.O. Box 9037
Paris, TX 75461-9037
~ ~J 19oc2~
'A.i A
%L:?; 4 c
RE: Insurance Coverage - Contract - Texas Military Faciliries Coirunission
Dear Mr. Schenk:
The Pool defers to the City Attorney in matters pertaining to City policy. Any agreement
should be reviewed and approved by the City Attorney for compliance with City policy.
The coverage provided by the Pool includes liability assumed under contract. Punitive
and exemplary damages are not excluded with the exceprion of purvtive and exemplary
damages assumed by contract. It is strongly recommended that the City request
additional named insured status under the contractors insurance policies.
I would point out the following:
The insuring agreement found in the liability coverage document for the Pool
states:
As respects Geileral Liability:
"The Fund will pay on behalf of the Member or Covered Party all sums for
which the Member or Covered Party shall be+come legally obligated to pay as
damages arising out of an occurrence that takes place during the Fund Year and
within the Agreement Territery:
A. Because of bodily injury, property damage, adverHsing injury or personal
injury to which this self-insurance applies as stated in the Agreement,
including clauns within the completed operations hazard and products
hazard."
As respects Errors and Omissions Liability:
"The fund will paV on behalf of the Member or Covered Party all monetary
damages which the Member or Covered Party shall be legally obligated to pay
for any civil claim or claims because of a wrongful act which occurs during the
Fund Year and within the Agreement Territory."
Texas Murrtcipwt LEncus IrrrsRCOVeRxnErrrnc. Risx PooL
1821 Rutherford Iane, First Floor • Austin, Texas 78754 •(512) 491-2300 •(S00) 537-6655 Texas Only
P.O. Box 149194 • Austin, Texas 787149194
March 21, 2002
Mr. Larry Schenk, City Attorney
City of Paris
Page 2 of 2
Covered Party for both General Liability and Errors and Omissions (Public Officials
Liability) is defined as: the Member, any officer, director, elected or appointed official,
any member of a board or cominission of the Member, and any employee of the Member
when such Covered Parries are acting within the scope of their duties or employment as
such: or any volunteer while acting within the scope of duties assigned by the Member
and while under the general supervision of an officer, director, elected or appointed
official, member of a board or conunission of the Member or an employee of the
Member.
These agreements are subject to the conditions and exclusions found in the coverage
document.
Any claim submitted would be considered and based on the merits of the information
developed, a decision would be made as to whether or not coverage would apply.
I trust you will find this to be in order. The conHnued confidence and participation of
thc City of Paris in the Texas Municipal League Intergovernmental Risk Pool is
appreciated. Piease do not hesitate to call should you have additional quesHons,
comments ar if we may be of further service.
Sincerely,
, ~ • G
(Mrs.) Step anie DeAnn Harvey, CPCU, CIC 7
Senior Underwriter - Extension - 427
sdh
attachments
cc: Ms. Mattie Cunningham, City Clerk, Fund Contact, City of Paris
Ms. Laura Lantrip, Field Services Representative
TL
AL II
DRAFT
J:WttorneyW.ICE~6WO~CURRENT\6orfatt Use Agrm Cvnp Maeey Res.wptl
ApN 4, 2002
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
PARIS, TEXAS, APPROVING AND AUTHORIZING A SURFACE USE
AGREEMENT BY AND AMONG THE TEXAS MILITARY FACILITIES
COMMISSION, THE SPORTS CAR CLUB OF AMERICA, LAMAR
COUNTY, THE LAMAR COUNTY CHAMBER OF COMMERCE, AND
THE CITY OF PARIS REGARDING THE USE OF CAMP MAXEY FOR A
ROAD RALLY CONDUCTED BY THE SPORTS CAR CLUB OF
AMERICA; MAHING OTHER FINDINGS AND PROVISIONS RELATING
TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE.
WHEREAS, the Lamar County Chamber of Commerce has approached the City ofParis to
be a contractual participant as an assurer in a Surface Use Agreement by and among the Texas
Military Facilities Commission, the Sports Car Club of America, Lamar County, and the Lamar
County Chamber of Commerce with regard to road rallies to be conducted by the Sports Car Club
of America at Camp Maxey; and,
WHEREAS, the City Council finds and determines that the City of Paris benefits by such
events, through the collection of sales tax and hotel/motel tax revenues, as a result of the participants
in said events utilizing the restaurant and hotel facilities available in the city of Paris; and,
WHEREAS, conducting such events in the area adjacent to the city of Paris will generally
enhance the city of Paris as a location far tourists and tourist-related activities; and,
WHEREAS, as a consequence of the benefits conferred upon the City of Paris by the
collection oftaxrevenues and the favorable impactofthe revenues anticipated to be received by local
businesses and vendors, the City finds and determines that entering into the aforesaid agreement
accomplishes a public purpose and serves the public good in full conformance with all applicable
constitutional requirements of the State of Texas, including, but not limited to, Article 3 Section 52
of the Constitution of the State of Texas, and is in the best interests of the health, safety, and welfare
of the citizens of the city of Paris; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS,
TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in all things
approved.
Section 2. That the City of Paris does hereby approve and authorize the Mayar to execute
an Agreement by and among the Texas Military Facilities Commission, the Sports Car Club of
America, the City of Paris, Lamar County, and the Lamar County Chamber of Commerce, a copy
of which is attached hereto as Exhibit A and for all purposes incorporated herein, whereby the City
of Paris, to the extent permissible under the laws and Constitution of the State of Texas, will serve
as an assurer to certain obligations of the Sports Car Club of America under said agreement, the
purpose of which is to allow the Sports Car Club of America to conduct sports car rallies on federal
property located at Camp Maxey.
Section 3. That this resolution shall become effective from and after its date of passage.
PASSED AND APPROVED this 8th day of April, 2002.
Michael J. Pfiester, Mayor
ATTEST:
Mattie Cunningham, City Clerk
APPROVED AS TO FORM:
Larry W. Schenk, City Attorney
SURFACE USE AGREEMEN7
STATE 01° TEXA$ §
kNOW ALL MEN BY THESE PRESENTS:
COUIJTY OF TRpVIS §
T'HIS AGREL•MENT is made and entered into eCfec[ive lanuary 1, 2002 emong the TEXAS
M1LITqRY PACILITIGS CqMMISSlON, (COMAQISSION), the SPORTS CAR CLIIB OF AMbItJCp,
(SCCA), THE CITY OF YARIS, .LAMAR GOUNTY, and the LAMAR COVNTY CHAMBER OF
COMMERCF. (cha letter J eneitics jaindy rcferred (o as ASSURERS),
1. SUBJECT OF AGREF,MEIYT AND PROPERTY AESCRIPTIOIV
COMMISSION y+).'ancs to SCCp the righc to use the ruadways and so much of the addi[ional
property located .in Lamar Counry Tc:eas, cummonly referteA (o as Camp Maxey (the Premises) as requircd
Cor the sole purpose described in Secrion N. hcieof. A map generalty descri6ing Camp Maxey is anached
as Exhibit A and iacorporaeed hcrein by tlils refzrence tor all purpoees.
II. TERM AND CONSIDEFtATION
Thc Agreemaat is Cor a pcriod of 1 year, b<ginning 7anuary 1, 2002 and ending Aecember 31,
2002, regardltyy of the dpte eigned. fhc total cunside[atiun tor tFas Agreem.eat is:
A. Paymcne to the Commission of the sum of TL•N DOI.LpRS (g 10 and 00/100) per enhy ptr raUy,
S. The fiunishing by SCCA. of a gcnecal liabiliry insurance policy in the amount of Five MiAion Dallars
(35,U00,000 and 00l100) naming the COMMISSION and the Adjutant Gcneral's Dcpartment of the Statc of
Tcxas (AGD) as addirional incureds.
C. The <umniihnent by SCCfA to msmre all roacLa 1nd nny other disturbed pmperty to the'v pro-tally
cvndition aa detemtincd by prt• aad poslaally in5pection5 Of the Preml5e5 COMMiSSION and AGD
Qtrsonnel.
D. Tho assurance uf tlro ASSCRLERS that, upun SCCA's failuce fo 6onoc ies commihnmt in C. ebove,
each RSSIJR.ER will devote the necessery personnel and equipment M tomplete the Subsectiun C.
obligetions.
E. Tht Sepusit wi.th [hc Cnmrtuesioix af a Sccunty Deposit ip the am0unt of FIVE TFIOUSAND
DOLLARS ($S,OOU ANp 00/100) to prorcct the COMMISSION in the evcnt that the SCCA atul
EXWIBITA
£0:3988 L2L6 282 £96:01 £0S2-b81-£06 372134W0J j0 8380143:W021j BE'176 2H E1-21'dL1
ASSLlRERS fail ta (ulfill the't.r comini[tnent ynd assurancc in Subsecrtans C. and D., respectively.
F. The agreement by $CCA and A9SURERS to reimbutse the COMMISSION and the AGD for the
actual ezpenses incuned by tach aFency for clxz usc of theit ptrsomiel for pre• and past.rally inspeccions of
the Premiscs.
M. ME'CkIOll, T[h(E, AND PLACE OF PAYMENT
A. Paymcnt of suma due undar Scction II. Subsectiun A. shall be made tu the COMMISSiON hy
Cashier's Chcck, Certified Check, or Money Order within 10 days following eac6 rally.
B, The depusit requ'vad by Secriun 11 Subsecoon E. sholl bc made eo the GOMMISSION by Cashier's
CheclS Certified Check, or Money prd<i and delivtrcd no later than 10 Says before tnch rapy,
C. Payment of sums due w COMMISSlON under Secrion Il. Subsectiou F. shall be made to the
COMMISSION by Caahier's Chtck, Cenifiad Check, or Money Order witlun 30 days folluwiag receipc of
COIvIIv1ISSION'S invoicc.
D. Payment of sums due to AGD undar Sccuon lI. Subeection F. ahall be madc to the AGD by
Cashier's Chcck, Ceniticd Check, ur Money Ordcr within JO dayr following receipt of the AGD'S invoice.
E. All rcmimnccs due to the COMMISSION shall be maited tu Execudve Directoc; Texas Military
Facilities Commission; 2200 W. 754' St, Bldg. 64; quscin, TX 78703-122:.
P. All retttinances due to the qGD shalf be mailcd co the Adjutant Generel of Texas, P.O. Bux 5218.
Austin, TX 787~•5218.
IV. PUR.POSH AND LINiITATIONS
A. SCCA may uu the premiacs solely t'or the conduct of no more than 3 SCG sanctioned.au[amobile
rallics wherein the dciven race against the cluck and not agaisut each othar. As a majar vtducemcaL for thc
COMMISS[ON (u enter into this Agreement, SCCA &nd ASSIJRERS rcpresent that at no Uma will drivers ,
racc side-byside.
T). i. The totai number oCdays tor the thru authorizcd rallie5 may [lot ezceed fotuYceR (14).
ii. No rally witl be schcduled ormnducted withou[ 23t'st obtaining the w[itten pemtission of the
Commandcr ac Camp Maxzy. Undcr rto circumsWnca may the conduct of a rally Interfere with the mission
o ( the AGD.
b0:39dd S2L6 284 £06:01 £052-b81-£06 33J3WW0D -40 2I38WtWD:4108,d 8~:b0 20 £i-21tiW
f
iii. ihe Iovee of the lakc is ofi limits for tlle course of any ral ly.
V. B,REpCA
The Cpijurt of SCCA, o[ ASSUTtERS co pay or ptovidt any part of [he cansideratiun for this
Agccemept dacri6ed in Settion ]I. when due avnstitutes a 6mach of this AgreemenL I'he violation by
SCCA of any limitatian in Section N. consrimecs a breach ui'this Agrecment. COMMISSION may
declare this Agretmcnt void in ehe event of its brcach by SCCA or ASSUREliS, and COMMISSION may
seek all rcmedies and damages au[horizcd hy Iaw, includins reasonabla expenses and anomeys' Fecs.
VI. LTABII,1?Y, INDF.MNI1'Y, ANA HOLD HARMLESS AGREEMENT
A. COMMISSION sliall, nat be liablo for any loso, damage, ot injury of any kiud or cha[pue[ tu any
person oc properry arising .from eny use of the leayed premises, or any part thortof, er caused by o[ aiisulg
from any act or naussion of SCCA, ur uny of SCCA'S agents, employces, licensees, or invitees, ar by or
ftom any accident on the land ur any fve or achrr casualry thtrcon, occasioned by the tailure of SCCA to
mnincain thc premises iu a:afe conditions, or arisittg Gom any cause whnnoever.
E. SCCA agrces to indemnify aud hold ha[ailtex the COMMISSION and thr AGD $om [he claims of
any person ar mtity arising oui of ehe conduct oCany SCCA saneeioned relly coaducted oo die Pcamises,
whether o[ not autharized by thc terms hereuf.
C. ASSURERS egree to indemnify and hold harsnless the COMMISSION and thc AGD from thc
olaitns of eny person ur tntity ar.isuig auc of the conduct sny SCCA saGCtlaned rally conducted an thc
Prcmises, whethez or not authorized by Ihe ktms hcrcoj, to Ihe extcnt allowed by tLc ConstiNdon and law5
of [ha Stete of TexaSIC~
VII. CANCHCLAT'[ON
Tht COMMISSI9N and SCCA may lertninote Ikus Agreement upon tha giving of 30 days' prior
written notice.
n tailuro by COMMISSION to cancel this Agreemene upon SCCA's breach af a term hereof shall
not be t0t15lrtiOd as a waivei of COMMISSION'S rights to cancel and teimipote yaid Agreement !ur any
subtequenc vio.lation of any of die maferial cooditiuns hereof.
U.pon tcmdnacion of rhis Agreement for any cause whalsocvcr, SCCA wvenants and agreae to
50:39tld 12L6 28L £06:01 2052-68L-206 33831,11,103 X 2138WtlH7:W021j 82*6 20 £I-8Wl
1
peatea6ly tu[rendtr the ItaSed ptttnises to COMMISSION in as good a condirion as the proper[Y wa5 in
upon. SCCA'$ taking pussegsion at the bcginning of Ihc lease period.
VIII. VEMIE
Venue wil,l be in any coun oCTravis Counry having jurisdictian of thc subject•rtwrtcr, if suit is to
6c brought tbs the purposcs of enforcing any oF tlte pruvisions of this Agreement. This conscnt co vcnue is
not a waiver by COMMISSION oFany imm.unity to which it is cntided according co Tzxas law.
EXECUTED 1N Di1PLICATE ORIGINAI S on the datcs indiceted below, effeceve, howevtr,
7nnuary 1. 2002.
LL-SSOR: LESSEE:
Texas Milicary Facilicica Commission Sports Car Club of qmericn
2200 W. 35" St.; Bldg. 64
Austiq TX. 78 703-1 222
ey:
)ohn A. Wells, ExecuHve Diree[o[
By:
(Name and Title
Datc:
1'7IP CITY OF PARIS
sy:
Mayar ar Ciry Managtr
I.AMAR COUNTY CHAM9ER OF GOMMERCE
By:
Date:
Datr.
Lp.MAR COtJNTY
M. C. Su erv
Lamar Count Sud
Sy:
unty Judge t
Dare:
90:39tJd S2L6 28L £06:01 £052-b8L-F06 372131,&lOJ .i0 ?J38lJCH7:W08A 82:b6 20 ET-23tlU