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Durham council approves letter-of-credit to cover DCTC insurance claims
Summary
Council voted during a work session to authorize the city manager to obtain a letter of credit to cover historical liability claims tied to the Durham City Transit Company insurance program and to execute related documents so the carrier’s collateral requirement can be met before an approaching statute-of-limitations deadline.
The Durham City Council voted during Wednesday’s work session to authorize the city manager to apply for and issue a letter of credit to satisfy insurer collateral requirements for the Durham City Transit Company’s (DCTC) high-deductible liability policy.
Finance staff told the council the need stems from historical claims that arose while DCTC managed GoDurham and from a carrier requirement that the city provide collateral for open, incurred claims. Heather Galiotti of the finance office said the policy remains open and the carrier is requiring collateral to cover claims that fall under the plan’s deductible. Staff said the letter of credit must be in place before the month’s end to meet timing requirements tied to the statute of limitations.
Council voted to suspend the rules so the item could be acted on during the work session. The council then approved three related, successive motions: authorization for the city manager to apply for a letter of credit from JPMorgan Chase not to exceed $450,000; authorization to issue a letter-of-credit agreement to Travelers Indemnity Company; and authorization for the city manager or his designate to execute the applications, renewals, amendments and related documents necessary to meet the insurer’s requirements, provided any changes are consistent with the intent of the agenda memo.
The motions were moved, seconded and approved on the floor. Staff said the urgency stems from an expiring deadline tied to open claims; the memo cited a change in banking providers and a carrier requirement that the city post collateral for the deductible portion of covered claims.
City staff said they will complete required documents and provide implementation details to meet Travelers’ letter-of-credit requirements. Council did not provide a roll-call tally in the staff presentation; the motions were handled as priority items under the consent/pulled-items process and acted on immediately.
What’s next: Staff will complete the legal documents and return any necessary confirmations to the council. The council’s formal minutes and staff memo provide the full background and the statutory timing that prompted the expedited vote.
