Chapter 161
2006 -- S 2732 SUBSTITUTE B
Enacted 06/22/06
A N A C T
RELATING
TO TOWNS AND CITIES -- COUNCILS AND GOVERNING BODIES
Introduced
By: Senators Bates, Felag, Paiva-Weed, C Levesque, and Gibbs
Date
Introduced: February 14, 2006
It is enacted by the General Assembly as
follows:
SECTION 1. Section
45-5-20.1 of the General Laws in Chapter 45-5 entitled "Councils
and Governing Bodies" is hereby amended to
read as follows:
45-5-20.1. Power
of city and town councils to jointly establish an insurance
corporation, to obtain insurance, and to enter
into a cooperative risk management program.
Power of city and town councils and regional
school districts to jointly establish an
insurance corporation, to obtain insurance, and
to enter into a cooperative risk
management program. -- (a) City Cities
and town councils, school committees, and water and
fire districts may, through passage of a resolution,
establish agreements between two (2) or more
cities, town councils, school committees, and
water and fire districts and towns for obtaining or
effecting insurance by self insurance, for
obtaining or effecting insurance from any insurer
authorized to transact insurance in the state,
or for obtaining and effecting insurance secured in
accordance with any other method provided by
law, or by combination and of the provisions of
this section for obtaining and effecting
insurance. Agreements made pursuant to this section may
provide for pooling of self insurance reserves,
risks, claims and losses, and of administrative
expenses associated with the same, among local
government units.
(b) To accomplish
the purposes of this section any two (2) or more cities, and
towns,
school committee or water and fire districts may authorize the
creation of a corporation separate
corporations (the "corporation") for the
purpose of; (1) issuing to the cities, and towns,
school
committees, and water and fire districts which are members of
the corporation corporations, their
departments, officials, and employees, their
boards, commissions, authorities, and other agencies,
and their members, policies of insurance and
reinsurance of all types and categories, including,
without being limited to, the following types
and categories: property, casualty, and life, accident,
and health insurance, and (2) developing and
administering an interlocal risk management
program. The corporation corporations,
in addition, may have as its their purposes reducing the
risk of its members; safety engineering;
distributing, sharing, and pooling risks; acquiring excess
loss insurance; and processing and defending
claims against the members of the corporation
corporations. Any contributions made to the corporation
corporations for the purpose of
distributing, sharing, or pooling risks shall be
made on actuarially sound basis, and the
corporation corporations shall have an audit
performed annually, copies of which shall be
provided to the members of the corporation
corporations, the insurance administrator, and the
auditor general; discrete accounts shall be kept
for each risk management program developed and
administered by the corporation corporations.
The corporation shall not receive funds from any
local government or local government agency for
the purpose of distributing, sharing, or pooling
any risk, until a plan for the operation of the
corporation has been approved by the insurance
administrator, which approval shall not be
unreasonably withheld.
(c) The corporation
corporations shall not be considered an insurance company and shall
not be subject to the provisions of the laws of
the state of Rhode Island regulating insurance
companies. and therefore shall in no
way be regulated by the Rhode Island department of
business regulation.
(d) The corporation
corporations created pursuant to the provisions of this section will be
created by filing articles of incorporation
pursuant to chapter 6 of title 7 entitled Rhode Island
Nonprofit Corporation Act and the articles of
incorporation will be filed by an
incorporator/incorporators designated by the
city, or town councils, school committees or water
or fire districts authorizing the
creation of the corporation. The articles of incorporation creating
the corporation corporations
pursuant to the provisions of this section may contain provisions, not
inconsistent with this section, that the
incorporators determine to be desirable or useful in
fulfilling the purposes set forth in this
section. The corporation corporations created pursuant to
the provisions of this section will have the
powers of a nonprofit corporation created under
chapter 6 of title 7 entitled Rhode Island
Nonprofit Corporation Act including, without being
limited to, the power to issue bonds, notes, and
other obligations in any amounts and upon any
terms that the corporation's governing board
determines.
(e) The corporation
corporations created pursuant to the provisions of this section,
notwithstanding the filing of its articles of incorporation
pursuant to chapter 6 of title 7 entitled
Rhode Island Nonprofit Corporation Act, (1) will
be deemed to be a public corporation
corporations, instrumentality, and agency of the
state of Rhode Island acting for the benefit of the
municipalities which are members of the corporation
corporations but will not constitute a
department of the government of the state of
Rhode Island, and (2) will be deemed to be
exercising public and essential governmental
functions of the state of Rhode Island. No part of
the net earnings of the corporation corporations
created pursuant to the provisions of this section
will be distributable to, or inure to the
benefit of, any private person. The members of the
governing board of the corporation corporations
created pursuant to the provisions of this section
will consist solely of chief executives, chief
elected officials, finance directors, or treasurers of
municipalities, or any other municipal officials
that may be provided for in the bylaws of the
corporation corporations, and the members
shall receive no compensation for the performance of
their duties but each member may be reimbursed
for his or her reasonable expenses incurred in
carrying out their duties.
(f) The bonds, notes,
or other obligations issued by the corporation corporations
created
pursuant to the provisions of this section will
not be deemed to constitute a debt or liability or
obligation of the state of Rhode Island or of
any political subdivision of the state or of any
municipality which is a member of the
corporation but will be payable solely from the revenues
or assets of the corporation corporations.
(g)
Notwithstanding any provision of this chapter or special or general law to the
contrary, each city, or town,
school committee, or water or fire district which is a member of the
corporation corporations created pursuant to
the provisions of this section will be authorized to
enter into contracts with the corporation
corporations with respect to, among other matters, the
payment of premiums and other payments, for
terms not exceeding twenty-five (25) years in
duration. To the extent that the obligation to
pay premiums or make other payments under any
contract is deemed to constitute the incurring
of indebtedness by a city, or town, school
committee, or water or fire district, the contract may
nevertheless be entered into without
obtaining the approval of the electors of the
city or town notwithstanding the provisions of
sections 45-12-19 and 45-12-20 and
notwithstanding any provisions of the city's or town's charter
or any special or general law to the contrary.
Any contract may be entered into by a city, or town,
school committee or water or fire district either prior to or
subsequent to the making of any
appropriations which may be needed to carry out
the obligations of the city, or town, school
committee or water or fire district under the contract.
(h) The property
and assets of the corporation corporations created pursuant to
the
provisions of this section, the income of the corporation
corporations, and any bonds, notes, or
other obligations issued by the corporation,
their transfer, and the income from these (including
any profits made on the sale thereof) will at
all times be free from taxation by the state of Rhode
Island or any political subdivision or other
instrumentality of the state of Rhode Island, excepting
inheritance, estate, and gift taxes with respect
to the bonds, notes, or other obligations issued by
the corporation corporations.
(i) Whenever the
governing board of a corporation the corporations created
pursuant to
the provisions of this section determines that
the purposes for which the corporation corporations
was were created have been substantially
fulfilled and all bonds, notes, or other obligations of the
corporation corporations have been fully paid
or adequate provision has been made for their
payment, the corporation corporations
may be dissolved in the manner provided for nonprofit
corporations pursuant to chapter 6 of title 7
entitled Rhode Island Nonprofit Corporation Act and,
upon the corporation's corporations'
dissolution, title to all funds and assets of the corporation
shall vest in and become the property of the
members of the corporation in proportions that are
provided for in the corporation's articles of
incorporation.
(j) No corporation
corporations created pursuant to the provisions of this section shall be
required to pay any recording or filing fee or
any transfer tax of any kind on account of papers or
instruments recorded or filed by it or on its
behalf.
(k) No corporation
corporations created pursuant to the provisions of this section and no
agent or broker acting on behalf of the corporation
corporations shall be required to pay a surplus
line premium tax of any kind on premiums for any
policies of insurance and reinsurance to or
from the corporation corporations.
SECTION 2. This
act shall take effect upon passage.
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LC02088/SUB
B
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