ArchivesOn the last day of the city’s current insurance policy, the Nogales City Council weighed proposals from three companies and voted to go with the highest bidder. Councilmembers voted 7-0 on June 30 to contract again with Pierre Baffert Jr., a local agent of Southern Trust Co., which sells policies for Travelers Insurance Co.
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Another local agent, Lee M. Jones of Lapre Scali & Co. Insurance Services LLC on Mariposa Road, was disqualified.
“Mr. Jones did not provide all the financial ratings and a history of municipal experience,” said City Attorney Jose Luis Machado. “I do not believe they meet the legal requirements.”
Jones and his colleague, John Stathis, vigorously defended their proposal and said it included all the information requested by the Request For Proposal (RFP).
“We’re about $85,000 under the bid by Baffert,” Stathis said. They offered a policy under One Beacon Insurance for $429,056, plus their commission.
“We will disqualify Jones’ company,” said Mayor Octavio Garcia-Von Borstel as council members nodded their agreement. “If we don’t listen to our legal department, this might bind us in the future,” he said.
That left two insurers in the running, Southern Trust and the Arizona Municipal Risk Retention Pool, which represents many small cities.
The pool bid $480,722, but did not send a representative to the meeting to answer questions.
The Arizona Legislature created the pool in 1987, said City Manager Jaime Fontes, who recommended that the city accept their lowest bid to save $70,000 per year.
“It does offer a lot of training opportunities (to help avert claims),” Fontes said.
The pool insured the county in 2000, before Baffert got the contract, recalled Vice Mayor Arturo Garino. “But they (representatives from the municipal pool) didn’t think it was important to show up.”
Before the vote was taken, Baffert lost his temper with Fontes about the bid process.
“Mr. Fontes, you’ve done everything to undermine me,” Baffert said. “You put it (the insurance RFP) out to bid twice.”
Machado warned Baffert the city wouldn’t allow any personal attacks.
Councilmember Nubar Hanessian wanted to know why the council was meeting at the last minute to approve a new insurance contract.
“Mr. Fontes, why are we here today with seven hours to make this decision?” Hanessian asked.
The city put the RFP out in April and received only one bid by June 1, the one from Baffert, Fontes said. After meeting with the mayor and deciding there was enough time, Fontes advertised in the Arizona Daily Star and Arizona Republic.
“We tried to get some healthy competition to see if we could effectuate a savings for the city,” Fontes said.
Machado said the city could accept a higher bid if it can find an “added value” in the proposal. “If you’re not going to go with the lowest bid, you have to articulate why.”
Baffert emphasized his local connection. “I have intimate knowledge of the City of Nogales for 59 years,” he said. “All those monies, the commission I make, is poured back into the community. You’ve got your added value here.”
Baffert said he wanted the business with the city even though it had an 87 percent loss ratio in the past three years, he told the council.
For every dollar of premium, the insurance company is paying 87 cents in claims, Baffert said in an interview. “An insurance company starts losing money at about 60 cents.”
The policy with Baffert’s company, Southern Trust, includes coverage for damage from earthquakes and volcanic activity. But its flood-damage coverage, up to $250,000 with a $50,000 deductible, exempts flood-plain Zones A and B.
Currently, the Nogales City Hall is in Zone C, said John Hays, flood-plain coordinator for Santa Cruz County. But the new flood-plain maps, approved by the Federal Emergency Management Agency (FEMA) in 2008, put city hall in Zone AE. Those maps are under appeal at the request of the city and county.
“Floods are the only thing separated out from regular insurance,” Hays said. But nationwide, floods cause more damage than wildfires, tornados, hurricanes and earthquakes combined, he said.
“There are certain areas excluded from flood coverage,” Machado said. “The city is going to have to get separate flood insurance.”
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Dear Rio Rico wrote on Jul 11, 2009 3:18 PM:
If we could predict odds at horseraces with the accuracty that you can predict the waste of money at the City, you and I Mr. Rio Rico, would be very very rich.
Oh Nogales! "
A Rio Rico Resident wrote on Jul 10, 2009 10:13 AM:
Dear Rio Rico wrote on Jul 9, 2009 12:17 AM:
THAT is a waste of money, not the $70,000.
Oh Nogales "
A Rio Rico Resident wrote on Jul 6, 2009 3:22 PM:
I was told I could not get flood insurance for my property, but when I whent to the county and asked Mr. Hayes, he told me that anyone can buy flood insurance for their property regardless of where it was. The only exceptions were when the community did not participate in the program, or the community asked fema to not let a particular property have insurance.
Listen to the experts, not the overpaid, under educated lawyer. "