Chapter 031
2009 -- H 6040
Enacted 06/19/09
A N A C T
RELATING TO TOWNS AND CITIES
Introduced By: Representatives Jackson, A Rice, and Martin
Date Introduced: March 26, 2009
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 and regional school districts to
jointly
establish an insurance corporation, to obtain insurance, and to
enter into a cooperative risk
management program. -- (a) 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 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) For purposes of
this section the term "Eligible Entities" shall mean any city, town,
school committee, water or fire district, or other public or
quasi-municipal authority, agency or
entity, or organization that is an instrumentality of such
cities or towns, or any group of such
cities or towns, authorities, agencies or entities which is
a member of the corporations created
pursuant to the provisions of this section.
(b)(c) To
accomplish the purposes of this section any two (2) or more cities, towns,
school committee school
committees, or water and fire districts, may authorize the creation
of
separate corporations (the "corporation") for the
purpose of; (1) issuing to the cities, towns,
school committees, and water and fire districts which are members
of the corporations, their
departments, officials, and employees, their boards, commissions,
authorities, and other agencies,
and their members,: (1) issuing to the eligible entities 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 corporations, in addition, may have as 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
corporations. Any contributions made to the corporations for the
purpose of distributing, sharing,
or pooling risks shall be made on actuarially sound
basis, and the corporations shall have an audit
performed annually, copies of which shall be provided to the
members of the corporations, and
the auditor general; discrete accounts shall be kept for
each risk management program developed
and administered by the corporations.
(c)(d)
The corporations shall not be considered an insurance company and shall not be
subject to the provisions of the laws of the state of
and therefore shall in no way be regulated by the
(d)(e)
The 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, town councils, school committees,
or water or fire districts, authorizing the
creation of the corporation. The articles of incorporation
creating the 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 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)(f)
The 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
Nonprofit Corporation Act, (1) will be deemed to be
public corporations, instrumentality, and
agency of the state of
of the corporations and its eligible entities but
will not constitute a department of the government
of the state of
governmental functions of the state of
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 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
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)(g)
The bonds, notes, or other obligations issued by the 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
is a member of the corporation but will be payable
solely from the revenues or assets of the
corporations.
(g)(h)
Notwithstanding any provision of this chapter or special or general law to the
contrary, each city, town, school committee, or water or
fire district eligible entity which is a
member of the corporations created pursuant to the
provisions of this section will be authorized to
enter into contracts with the 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, town, school committee, or water or fire
district, an
eligible entity 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, town, school committee
or water or fire district an eligible entity either prior to or
subsequent to the making of any
appropriations which may be needed to carry out the obligations of
the city, town, school
committee or water or fire district eligible entity under the contract.
(h)(i) The property and assets of the corporations created
pursuant to the provisions of
this section, the income of the 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
subdivision or other instrumentality of the state of
and gift taxes with respect to the bonds, notes, or other
obligations issued by the corporations.
(i)(j) Whenever the governing board of the
corporations created pursuant to the
provisions of this section determines that the purposes for
which the corporations were created
have been substantially fulfilled and all bonds, notes, or
other obligations of the corporations have
been fully paid or adequate provision has been made for
their payment, the 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
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)(k) No
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)(l) No
corporations created pursuant to the provisions of this section and no agent or
broker acting on behalf of the 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 corporations.
SECTION 2. This act shall take effect upon passage.
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LC02298
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