The following was published in the “Additional Thoughts” section of my March 4, 2023 newsletter
At the March 6, 2023 meeting, Council will consider first reading of an ordinance repeal and amendment that will drastically change how residents engage with the City when there is a problem and the City is potentially at fault.
C-3 (23-0299) An Ordinance to Amend Chapter 11 (Risk Fund) and Repeal Section 1:193 of Chapter 8 (Organization of Boards and Commissions) of Title I of the Code of the City of Ann Arbor
Agenda item C-3 is a proposal to eliminate the City’s Insurance Board, a forum that exists to consider resident requests for compensation from the City. The new ordinance empowers the City Administrator or his designee to decide payment or denial of all claims up to $75,000.
The City is not perfect and mistakes happen. Sometimes these mistakes impact individual residents under very specific circumstances. For example, a City snow plow on your street might slip into your parked car. A City tree in a public park or right-of-way might fall on your property and cause damage. Through the City’s Insurance Board, residents can file a written claim and explain what happened, identify the cost, and request compensation. The Insurance Board currently includes three voting members: two members of City Council and the City treasurer.
The City’s website explains how claims are handled under the current ordinance:
- Claims of $500 or less are reviewed and may be approved or denied by the City’s Chief Financial Officer.
- Claims of $10,000 or less are reviewed and may be approved or denied by the City’s Insurance Board.
- Claims of more than $10,000 are reviewed and may be approved or denied by the City’s Insurance Board. If a claim is approved by the Insurance Board for an expenditure over $10,000, the Insurance Board makes a recommendation of approval of the expenditure to City Council but City Council must approve or deny the expenditure.
These policies strike a balance between claims where the stakes are low (under $500) and claims that have a more significant impact on residents ($500-$10,000). The process also includes the right to appeal: individuals can present the details of their claim in person (via ZOOM) to the Insurance Board. When City operations result in damages over $10,000, such claims will appear on a public agenda for review and approval by the whole of City Council.
I served on this Board for four years, so I understand how it functions and what these ordinance amendments mean for both Council and residents.
The two Council members who serve on the Insurance Board commit to attending meetings once a month to review claims and vote on whether or not compensation should be awarded. City staff (including attorneys) and representatives from the City insurance broker also attend. The agenda of each meeting includes:
- Review of claims filed by residents (or visitors to the City)
- Explanation from staff about each incident that prompted a claim
- Direct engagement with claimants, when someone appeals a prior decision
- Report from a City attorney about all pending and ongoing litigation against the City
The Insurance Board agenda is an important window into the work of City government. Council Members in attendance learn, for instance, just how frequently the City receives similar claims, such as sewer back-ups after a heavy rain storm. Staff discussion of each individual claim often includes details about City protocols and explanation of what safeguards are in place to prevent more claims in the future. Through the process of appeal, residents (or others impacted by City operations) can directly speak to the Insurance Board to argue that a claim should not have been denied. A City attorney offers two Council Members a complete report on (and opportunity to ask questions about) all potential liability and litigation against the City.
Our elected leaders should WANT to be informed about where and how City operations impact individual residents and potentially cause harm. Claims of up to $10,000 should be of interest to City Council, at least enough for two members to participate in a meeting once a month. It is appropriate for the whole of Council to consider claims exceeding $10,000.
This week’s agenda includes a settlement that illustrates just how much transparency will be lost if this ordinance is repealed and the Insurance Board is eliminated.
CA-11 (23-0301) Resolution to Authorize Settlement of Claim by Jason Kosnoski
In CA-11, Council will consider settlement of a claim against the City in the amount of $15,000. The claimant alleges personal injury and damages that occurred “from stepping in a hole while running on Brooks Street near Sunset in the City of Ann Arbor.”
Just seven months ago, the City settled another claim for injuries from a pothole, coincidentally in the same neighborhood. Last August, City Council approved a settlement of $24,500 for injuries and damages “from stepping in a hole while walking on Sunset Road.”
Ryan Stanton from MLive wrote about that settlement, You can read his report here:
Both of these settlements appeared on a public agenda because the current ordinance requires it: any claim over $10,000 must be approved by City Council. Additionally, the current ordinance requires that all spending from the Insurance Board – even payment of claims less than $10,000 – be reported to Council, through meeting minutes:
Each expenditure shall be reported to City Council as part of the official minutes of the Board of Insurance Administration.
The repeal/amendment in C-3 removes this requirement, so claims from (and settlements with) residents will not appear on a public agenda of City Council unless they exceed $75,000. The new ordinance allows that information about these expenditures will be available to Council “upon request.”
WHY THIS MATTERS
In questions to the agenda, the proposed change is explained by staff as increasing “efficiency and expediency of the claims review and approval process” because a new process would “not require the extra layer of staff preparation and City Council review associated with placing such items on a City Council agenda for approval.” That efficiency and expediency comes at a cost: less accountability to the community.
The current ordinance recognizes that elected leaders should be directly involved in monitoring all claims against the City. The Insurance Board does not only add an extra layer of “staff preparation,” it also adds an extra layer of accountability to residents. When meeting minutes and claims exceeding $10,000 appear on City Council agendas, claimants can challenge their elected representatives and ask for additional consideration. MLive reported on this exact scenario in 2020:
The new ordinance in C-3 defines an internal, staff-only process for review and payment of claims against the City. Awards and settlements would be treated like any other City expenditure: only claims exceeding $75,000 will appear on a public agenda for Council approval.
These payments should not be treated like any other City expense, because they are fundamentally very different.
City expenditures of $75,000 are relatively small in the context of a City budget with annual spending of over $500 million. Individual claims against the City cannot be compared to other City expenses — the dollar amounts of these claims most directly impact the budgets of individual households. I don’t know any Ann Arbor household that would consider $75,000 (or even $10,000) a relatively small expense.
Where the City might be at fault for damages, residents expect meaningful consideration of a claim. The Insurance Board is where that happens, with active participation from two Council Members and transparency to the whole of Council and our community. City Council should care about the claims filed by residents. These amounts of money matter to individual residents and they should matter to our elected representatives.
Claims against the City often indicate where policies should change or priorities need to be adjusted; elected policymakers are appropriately a part of this process. Information about these claims should be included on public agendas – just as it is now – through both meeting minutes and specific Council approval of payments over $10,000. Our community has a right to know how often these claims happen and how much is spent to settle them.
In the last week, I talked to two former Council Members who, like me, served on the City’s Insurance Board. They shared my alarm at delegating these responsibilities entirely to staff and removing any Council involvement. The Insurance Board is where individuals demand accountability for specific government action (or inaction). Council engagement in this process matters.
This is, unfortunately, not the first time that Council has considered measures to reduce their own responsibilities and workload. It appears that C-3 comes from City staff, but it is wholly consistent with past Council efforts to reduce transparency and accountability to residents. I wrote about this problem in 2021:
This week, a new Council must consider their own willingness to serve and actually do the job to which they were elected.