HomeMy WebLinkAboutE-09 Staff Report - AB 1912 Azusa Terminate JPACONSENT ITEM
E-9
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: AARON LEDET, SENIOR MANAGEMENT ANALYST
DATE: DECEMBER 3, 2018
SUBJECT: APPROVE A RESOLUTION AUTHORIZING THE TERMINATION / DISOLUTION
OF THE HUMAN SERVICES CONSORTIUM OF THE EAST SAN GABRIEL
VALLEY JOINT POWERS AUTHORITY
BACKGROUND:
On September 29, 2018 Governor Brown signed Assembly Bill 1912 (AB1912) into law requiring
member agencies of a Joint Powers Authority (JPA) to take responsibility for the pension commitments
of the JPA when it dissolves. As the legislation exempts JPA’s dissolved prior to January 1, 2019, the
(four) member agencies of the Human Services Consortium of the East San Gabriel Valley have elected
to dissolve the JPA and thus indemnify the Cities from potential liabilities related to AB1912.
RECOMMENDATION:
Staff recommends the City Council take the following action(s):
1)Approve the attached Resolution No. 2018-C69 authorizing the termination of the September 11,
1979 Joint Powers Agreement entered into between the cities of West Covina, Covina, Azusa
and Glendora and dissolving the Human Services Consortium of the East San Gabriel Valley;
and
2) Authorize the Mayor to execute the Agreement to terminate the JPA.
ANALYSIS:
In 1979, the cities of West Covina, Covina, Azusa and Glendora entered into a Joint Powers Authority
(JPA) known as the Human Services Consortium of the East San Gabriel Valley, dba LA Works. This
separate agency could contract with the County of Los Angeles, State of California and agencies of the
United States Government for the funding of programs to be developed, coordinated and implemented
for the delivery as a sub-grantee under the Comprehensive Employment and Training Act.
APPROVED
CITY COUNCIL
12/3/2018
Termination of the Human Services Consortium of the East San Gabriel Valley (JPA)
December 3, 2018
Page 2
Over the years, LA Works provided various opportunities to targeted populations in job training for
careers ranging from maintenance, transportation to medical. The agency assisted thousands of persons
in need of basic job skills with on-the-job experience to make them a better candidate when seeking full-
time work.
LA Works stopped receiving grant funding in 2014. Shortly thereafter, most employees were let go and
the consortium closed shop. With no resources, LA Works stopped paying CalPERS in 2015. CalPERS
declared the JPA in default and reduced the pensions of former employees.
In response to the JPA’s insolvency, Assembly Bill 1912 (AB 1912) was signed into law on September
29, 2018. AB1912 will require agencies that form joint power authorities to take responsibility for
pension commitments when they dissolve; however, the law will not apply to JPA’s that have dissolved
prior to January 1, 2019. In order to formally dissolve the Human Services Consortium of the East San
Gabriel Valley, dba LA Works, the Azusa City Council is asked to consider a Resolution authorizing the
Mayor to execute the Agreement to Terminate the JPA.
JPA’s are a vital tool that state and local government agencies use to address service demands and
infrastructure needs in a cost effective manner, which otherwise could not be effectively achieved by
local agency acting on its own. Among the various benefits of JPA’s is that operation costs are the
responsibility of these independent joint power authorities and should not be passed on to member
agencies that have their own pension liabilities, priorities and issues to address.
LA Works became insolvent in 2015. Under the JPA, member cities were not legally obligated to cover
the agency’s debts. Still, CalPERS requested payment from the four cities to which all declined under
the terms of the JPA. In 2017, CalPERS declared LA Works in default and reduced the retirement
pensions of former employees. CalPERS estimates a payment of $18 Million, or $4.5M from each of
the four cities, would be required in order to fully fund and restore the former employee’s pensions.
For any JPA dissolving after January 1, 2019, AB 1912 shifts the financial responsibility as it relates to
pension liabilities to the member cities/agencies. The bill will apply to JPA’s as they move towards
termination and would trigger a 3-step process to ensure 100 percent of retirement liability is met.
Those steps would be as follows:
1. The JPA members would have to agree to apportioned liability;
2. If they are unable to do so, CALPERS would determine apportioned liability for each member;
3. If the JPA and/or its member(s) disagree with the CALPERS determination they could appeal to
a binding arbitration process.
The City of Azusa forwarded LA Works a notice to withdraw from the JPA effective June 30, 2017.
The other three cities followed with similar action, however under AB 1912, former LA Works
employees may elect to pursue legal action for payment from the cities to restore their full benefits. To
limit exposure and avoid any question as to whether or not the JPA has been officially dissolved prior to
January 1, 2019, the four cities have agreed and collaboratively prepared a Resolution and Termination
Agreement included respectively as Attachments 1 and 2 for consideration and approval from the
respective City Councils. Under the Termination Agreement included, effective December 21, 2018 the
Human Services Consortium of the East San Gabriel Valley, dba LA Works, will be officially dissolved
Termination of the Human Services Consortium of the East San Gabriel Valley (JPA)
December 3, 2018
Page 3
and terminated. The cities of West Covina, Glendora and Covina have already taken action and
approved termination agreements.
FISCAL IMPACT:
Approval of the Termination Agreement sets to remove a fiscal impact of up to $4.5 Million dollars.
Prepared by: Fiscal Impact Review:
Aaron Ledet Talika M. Johnson
Senior Management Analyst Director of Finance
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachment(s):
1) Resolution Agreement No. 2018-C69
2) Termination Agreement
RESOLUTION NO. 2018-C69
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA,
CALIFORNIA, TERMINATING THE SEPTEMBER 11, 1979 JOINT POWERS
AGREEMENT ENTERED INTO BETWEEN THE CITIES OF WEST COVINA,
COVINA, AZUSA AND GLENDORA AND DISSOLVING THE HUMAN
SERVICES CONSORTIUM OF THE EAST SAN GABRIEL VALLEY
THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS
FOLLOWS:
WHEREAS, on or about September 11, 1979, the Cities of West Covina, Covina, Azusa
and Glendora entered into a Joint Powers Agreement (“Agreement”) pursuant to the provisions
of Title 1, Division 7, Chapter 5, Article 1 (Section 6500, et seq.) of the California Government
Code to create a separate public entity known as the Human Services Consortium of the East San
Gabriel Valley (“Consortium”); and
WHEREAS, the Consortium is also commonly known as LA Works; and
WHEREAS, the Agreement was subsequently amended three (3) times; and
WHEREAS, California Government Code §6508.1, in effect on and subsequent to the
effective date of the Agreement, states in relevant part that: “If the agency is not one or more of
the parties to the agreement but is a public entity, commission, or board constituted pursuant to
the agreement, the debts, liabilities, and obligations of the agency shall be debts, liabilities, and
obligations of the parties to the agreement, unless the agreement specifies otherwise.” (Emphasis
added); and
WHEREAS, the Agreement provides that the debts, liabilities and obligations of the
Consortium do not constitute the debts, liabilities or obligations of any party to the agreement;
and
WHEREAS, the Agreement provides that the Agreement, and the activities engaged in
pursuant to it, shall be terminated not longer than one hundred and ninety days after a majority of
the signatory parties mutually agree in writing to terminate the Agreement; and
WHEREAS, the City Council of the City of Azusa desires to: 1) affirm and ratify its
withdrawal from the Consortium, effective December 21, 2018; 2) dissolve the Consortium; and
3)terminate the Agreement, and all of the activities engaged in by the Consortium pursuant to
the Agreement, effective December 21, 2018.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA,
CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City Council of the City of Azusa hereby: 1) affirms and ratifies the
City’s withdrawal from the Consortium, effective December 21, 2018; 2) approves the
dissolution of the Consortium; and 3) approves the termination of the September 11, 1979 Joint
Powers Agreement, as Amended, entered into between the Cities of West Covina, Covina, Azusa
and Glendora pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section
Attachment 1
6500, et seq.) of the California Government Code to create a separate public entity known as the
Human Services Consortium of the East San Gabriel Valley. The termination of the Agreement,
as Amended, shall be effective on December 21, 2018.
SECTION 2. The Mayor is hereby authorized to execute the Agreement to Terminate the
September 11, 1979 Joint Powers Agreement entered into between the Cities of West Covina,
Covina, Azusa and Glendora and Dissolve the Human Services Consortium of the East San
Gabriel Valley
.
SECTION 3. The City Clerk shall certify to the passage and adoption of this resolution
and shall enter the same in the Book of Original Resolutions.
APPROVED and PASSED this _____ day of ________________, 2018.
City Council of Azusa, California
BY:
Joseph Romero Rocha
Mayor
APPROVED AS TO FORM:
Best, Best & Krieger, LLP
City Attorney
I, ________________, City Clerk of the City of Azusa, do hereby certify that the foregoing
Resolution was duly adopted by the City Council of the City of Azusa at a regular meeting held
on the ____ day of ____________, 2018, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
Dated:
Jeffery Lawrence Cornejo, Jr.
City Clerk
1
AGREEMENT TO TERMINATE THE SEPTEMBER 11, 1979
JOINT POWERS AGREEMENT ENTERED INTO BETWEEN
THE CITIES OF WEST COVINA, COVINA, AZUSA AND
GLENDORA AND DISSOLVE THE HUMAN SERVICES
CONSORTIUM OF THE EAST SAN GABRIEL VALLEY
WHEREAS, on or about September 11, 1979, the Cities of West Covina, Covina,
Azusa and Glendora entered into a Joint Powers Agreement (“Agreement”) pursuant to
the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500, et seq.) of the
California Government Code to create a separate public entity known as the Human
Services Consortium of the East San Gabriel Valley (“Consortium”); and
WHEREAS, the Consortium is also commonly known as LA Works; and
WHEREAS, the Agreement provides that the debts, liabilities and obligations of
the Consortium do not constitute the debts, liabilities or obligations of any party to the
agreement; and
WHEREAS, the Agreement was subsequently amended three (3) times; and
WHEREAS, the Agreement provides that the Agreement, and the activities
engaged in pursuant to it, shall be terminated not longer than one hundred and ninety
days after a majority of the signatory parties mutually agree in writing to terminate the
Agreement; and
WHEREAS, the City Councils of the Cities of West Covina, Covina, Azusa and
Glendora have voted to terminate the Agreement and all of the activities engaged in by
the Consortium pursuant to the Agreement, effective December 21, 2018.
Agreement
The Cities of West Covina, Covina, Azusa and Glendora hereby mutually agree
to dissolve the Consortium and to terminate the September 11, 1979 Joint Powers
Agreement and the activities engaged in pursuant to said Agreement, as Amended,
which was entered into between the Cities of West Covina, Covina, Azusa and Glendora
pursuant to the provisions of Title 1, Division 7, Chapter 5, Article 1 (Section 6500, et
seq.) of the California Government Code, to create a separate public entity known as the
Human Services Consortium of the East San Gabriel Valley.
The Agreement, as Amended, and the activities engaged in pursuant to said
Agreement, as Amended, shall be terminated effective December 21, 2018.
Attachment 2
2
This Agreement may be executed simultaneously in one or more counterparts,
each of which will be deemed an original, but all of which together will constitute one
and the same instrument. For purposes of this Agreement, facsimile and electronic
signatures will be deemed to be original signatures.
In witness whereof, the parties hereto have caused this Agreement to be executed
and attested by the proper officers thereunder duly authorized as of the day and year
written below.
CITY OF WEST COVINA
Dated: ___________ By: ___________________
Mayor
Attest:
__________________________
City Clerk
CITY OF COVINA
Dated: ___________ By: ___________________
Mayor
Attest:
__________________________
City Clerk
CITY OF AZUSA
Dated: ___________ By: ___________________
Mayor
Attest:
__________________________
City Clerk
CITY OF GLENDORA
Dated: ___________ By: ___________________
Mayor
Attest:
__________________________
City Clerk