Travis County Commissioners Court
Tuesday, August 16, 2011 (Agenda)
Item 18
Number 18 is the consider and take appropriate action on various issues related to the proposed 2011 bond election including: a, updated list of projects; b, updated assumed implementation schedule, cash flow; c, proposed propositions; d, public-private partnerships, guidelines; e, bond covenants; f, election schedule timetable; g election order and; h, rolling owner controlled insurance program.
we took some action on a for the parks and roads and we approved basically what was submitted by the committee and we made three specific changes.
we took off low man ford and we added taylor.
those were the three.
anything else on a, list the projects?
>> low man's ford.
like you say, bee creek we increased the budget for and taylor lane, those were the big ones.
that was it.
>> okay.
>> and let's see.
--
>> judge, I thought the only outstanding issue was that third -- the list of the park list?
>> yeah.
to my knowledge we did -- we did gain a lot of ground on that and I'm satisfied with the option they've come up with, basically as a homestead -- homestead life estate.
>> life estate.
>> life estate at 50 acres.
>> laif estate at 50 acres and leasing the other part to the family if they choose to lease it for $5,000 a year.
what happened is a lease for hunting and grazing would cost around 10.
grazing itself would cost closer to 2500.
and grazing lease is what they would have in mind if anything, I'm told.
but if that is true, then the amount agreed on was twice that 2500, which is 5,000.
and I told them that would be satisfactory to me.
so a life estate in 50 as opposed to 700 or so, which was the recommendation last week.
and a lease for the other part, should the family choose to do so, and it would be at $5,000 annually.
is that your understanding?
>> but still getting the river front acreage, approximately 70 acres free and clear from either the life estate or the lease.
>> and so, judge, does that then put it back into the proposition as the other project?
>> it eliminates the need for that third category, which I was asking for.
>> okay.
>> the prop 3 portion of that would stand alone?
you integrated it?
you integrate it had into the other situation.
>> two, roads drainage and then park space, conservation easements and this would be one of the parks projects.
so just those two, right?
>> correct.
>> which really was the order we saw last week pretty much.
>> correct.
>> and it was the latest order with the attachment a, which is the holding and -- that's just the two propositions, right?
>> this has all the corrected numbers in it based upon the decisions that were made last week on the project.
>> the only other question I had was part of that second proposition is the conservation easements.
and I read just a little bit of the material and it refers to farms. And I guess I'm curious how farms figure in?
>> well, department preservation is one of the goals of conservation easements.
>> so it would be up there as a major emphasis.
>> excuse me, Commissioner.
when you say some of the information, are you talking about the bond election order?
>> well, some of the backup material and it kind of mentions farms and ranches.
and so I kind of -- I guess that would help in the eastern part of Travis County to deal with even the organic farms.
>> the idea is to prevent those folks who run that type of operation from giving in to the pressures of development and selling off that property that they're farming for houses.
>> okay.
>> but as to the conservation easements, we would address them one by one.
this proposition would give us the ability if approved by voters to set aside a sum of money for that use, then we would evaluate projects.
>> I think we're developing guide likes.
I think you know that.
we'll have that in place before November.
>> anything else regarding the election order?
that's g.
if not, I move approval.
>> second.
>> discussion on the motion?
all in favor?
that passes by unanimous vote.
election timetable?
schedule?
>> judge, I don't believe there's anything additionally to add to what we discussed last week unless there are questions on the timetable.
>> did we approve that last week?
>> the election timetable is not driven by statutory and department of justice guidelines.
>> so we don't need to take any specific action today.
>> I believe that's correct.
>> bond covenants?
did we just approve those?
>> I believe you did, sir.
>> and those are similar to --
>> as well as c, the proposed propositions.
>> the covenants are similar to the ones we've had in the past?
>> the covenants are fund mentally identical to what you've done in the past, particularly in '05 with respect to the allocation of funds to the projects and the various precincts and how the money flows upon the completion of projects within a precinct and then to the overall proposition.
a fundamental yes.
>> the people really like the way the county does these bond covenants to make sure that we really spend the money on the proposals that they have approved at the ballot.
so I'm glad they're back in.
>> okay.
>> we did say we would approve the updated list of projects already, right?
in addition to what we took last week.
what about the assume implementation schedule?
we've got two kind of cash flow reports from ms. Rio.
anything in addition to those?
any specific action taken on that necessary?
>> not that I recall, no.
>> do we need to take any?
>> no.
>> no.
>> okay.
pbo says we're okay.
>> public-private partnership guidelines?
>> we have revised those from the ones that were used in 2005.
tom assisted us in that respect and it tightened up the fiscal security component in particular.
you may recall that we've had some issues with the economy turning south and has made it difficult for a couple of our public-privates in '05 to get completed.
the type of changes that tom has incorporate understand here should prevent that from occurring again.
>> I move approval of the amended public-private partnership guidelines.
>> second.
>> what new language did you add, mr. Nuckols?
>> it's essentially using public improvement districts or other special districts as the security for making sure that the landowner or the developer includes their financial contribution at some point.
>> they can do it other ways that includes them in the menu of ways they can do it.
>> yes.
it's been added to the menu.
>> there's a motion to approve d, public-private partnerships guidelines.
any more discussion on the motion?
all in favor?
that passes by unanimous vote.
rolling owner controlled insurance programs.
>> we're here to make a presentation for you.
>> who likes this besides dan?
>> [ laughter ] dan, explain to us --
>> [ laughter ]
>> oh great!
>> just kidding, just kidding.
judge, Commissioners, I'm here to explain as best I can the rolling ocip.
some of you may remember we did an ocip on the construction several years ago and we did save some money.
the ocip is designed to bring together all of the insurance under one package and thus save some not just money, but some of the confusion that can arise when you have multiple insurance companies involved in a construction project.
traditional contractors, insurance for construction project includes worker's compensation, general liability and builder's risk.
usually you have four or five different carriers, and that can cause some confusion when there is a loss.
you don't have finger pointing and delays and who is going to accept liability and who is going to pay what on the claim.
that can stall construction in some instances.
when you have an rocip.
and a rocip is a rolling, owner controlled insurance program.
that's when you have multiple projects and you're going to apply the ocip to all those projects.
it eliminates that confusion because you have one carrier and that carrier is going to handle the claims regardless of who -- which of their insureds is the person or organization that caused the loss.
the way you save money is your contractor is not bidding the insurance premiums, which they also add 10% profit and 10% overhead.
so their bid should come in less than it would normally come if if they were providing insurance themselves.
usually you save about three percent on premium, but you can save an enormous amount on the savings of overhead profit on that premium.
I think the ocip we had here saved about $1.3 million on about 130 million in construction.
but you have to he -- what have you to watch out for is the safety because without a good solid safety program you're going to experience losses, and that's going to eat up what savings you would have had.
if there are questions, I can certainly try and answer those for you.
some of the intricacies are what the market is like directly affects the premium that you will be charged.
right now the market is up and down, so the premiums may not be as reasonable as they would be if the market -- the market was up and insurance companies were earning a lot of investment money.
so they'll make it up on premium.
the administrative costs depends on who you pick to run your administration.
we had an administrator that was reasonably fair in their charges that we paid I think about $100,000 over a three-year period for them to administer the issuance of certificates of insurance and handling of claims. We were able to negotiate when we had our ocip at maximum premium of $775,000.
they paid out $1.4 million in claims. And so you may remember that a million dollars of that was a water damage claim that occurred at the cgaj about two months before the building was occupied.
that million dollars was something that the carrier paid.
we paid a 10,000-dollar deductible.
I don't think those policies are out there any longer.
most carriers are going to have a higher premium, higher deductible, but you're more at risk.
looking at the bond package I think about the bond amounts -- I think there's 130 million in construction, is that right?
>> it's probably less than that.
that's pretty close.
>> that's close to a threshold of what would make this qualify for an ocip.
and underwriters are a little peculiar.
they like to have a starting point, a middle point and ending point and nothing in between that is open or delayed.
so if your projects start and they're going to finish, they're going to be continuous and finish at a point in time, underwriters will work with you.
if there's going to be separation between projects they'll get a little antsy and they'll want to have a little higher premium.
so a lot of things can affect the ocip.
lying anything else it comes down to what you negotiate and who you negotiate with.
the ocip can be used and save money.
there are a lot of intricacies that would have to be looked at.
it's a doable program if all the construction can be wrapped up into a period of time that begin, has a start, a middle and an end, I think you can negotiate a good coverage package.
any questions?
anything I've confused you on?
and I was just kidding, I love --
>> dan, what I need some clarity on is making sure that you have an amount of premium that you think is required.
and like I say, things have change and things have gotten to be more expensive, each in your insurance field.
and also the amount of deductible to end up dealing with the situation that goes bad.
I'm kind of concerned about that.
I don't really know what number that we're really looking at there.
could you maybe help me out a little bit?
>> Commissioner, until you know what the projects are and you go to the market with what you're looking at --
>> but I guess -- I'm sorry.
>> well, for one thing, the highest cost in worker's compensation for premium, the highest --
>> what's that?
>> road construction has the highest degree of --
>> road construction has the highest.
>> of serious claims. You pay a premium on top of the premium for that job market.
when you have road construction you pay a higher premium for worker's compensation, so that's one area that you will see a higher degree of premium in.
what the total premium is, you just have to go to the market and see what you can negotiate.
it's hard to answer your question today for 130 million or 120 million of construction.
>> the thing that complicates it -- I can just see it being a good idea if you have a very compact construction site, like a large building.
and you can control or manage the safety better.
the safer it is, motor we make on this thing.
we have to invest some time into that.
but what we have here with this bond referendum is 30 projects scattered all over the county with a construction cost ranging from a few hundred thousand to $10 million.
and trying to get all of those project contractors to become very adept at safety could be difficult.
it's not like one big construction site.
I'm a little bit worried about that, whether we would get the most bang for the buck out of t.
>> when we really don't know what the voters are going to do, hopefully, and hopefully these bonds will be supported by the voters of Travis County, but if looking at what we have now and as you stated, steve, scattered all over the county, -- again, I think you gave a good analogy by saying hey, this is not a solo construction site, one location.
you can kind of control things a little better.
appeared having things scattered out all over the place, you look at the control to some degree.
and if the span of control is what it shouldn't be, we just have to gather in and determine.
and I guess is it s.
there any way, shape, form or fashion that counties that have had major road projects that's the most vulnerable on this -- in this referendum, has there been any other counties that have gone through the same type of scenario and -- for the insurance purposes?
and if so, can we maybe look at what -- I guess it's changed.
everyday this industry changes.
things change.
but I'm just trying to get ballpark on what we have before us, especially if it's beyond our control and scattered all over the place.
, you generally find that municipalities use ocips more than counties.
counties use it to a limited degree.
>> municipalities.
>> Travis County, robert wilson and I took a piece of legislation to get approve so that counties could get ocips, because counties were not approved in -- 1998 I believe it was.
but municipalities, city of Austin uses ocips extensively for their projects, but they're ongoing projects.
>> okay, city of Austin.
>> and the way you tell if it's going to save you money when you go out with your bid, you have them bid with insurance and without.
and you know if you're coming in with any degree of savings.
as steven said, safety is a key issue and we had seven projects under our ocip and had three different organizations providing safety with our occupational safety engineer overseeing all the safety on site.
>> thank you.
>> so the safety engineer was a county employee?
>> yes.
and he oversaw safety that was provided by the insurance carrier and by the contractors?
>> so that was successful from our view.
>> yes.
>> because of the money they saved.
>> yes.
>> and on the ocip, your goal is to get a list of projects and get all of them covered?
>> a list of projects with the scope of work and then we can go to the market and see what the underwriters will approve, what they'll cover.
>> is there like a minimum size?
I guess if the preferred size is as large as you can get it, but the minimum for the -- to track the interest of insurance companies is about how much?
>> I would say the threshold probably is between 70 and 80 million.
anything less than that I don't think you realize the savings.
>> so this is recommended simply as an option for us to consider at the appropriate time.
>> that is the intent of the bond committee.
>> it was not for us to decide today to do it, but for us to decide to look at it and see if it was better than the traditional insurance coverage, which we pay for anyway.
>> right.
>> one way or the other.
>> plus the overhead and profit.
>> yeah.
any other questions?
move that we indicate our intention to consider owner controlled insurance.
>> second.
>> discussion on the motion?
all in favor?
that passes by unanimous vote.
now I'm liking the ocip's kind of like you, mr. Mansour.
>> did we get a vote on the election order, judge?
>> yes, that was the first vote.
>> sometimes mr. Nuckols likes for us to vote on an item twice.
>> [ laughter ]
>> the belt and suspender man.
>> [ laughter ]
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