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Baloca reported that the City has $8.2 million in reserves to handle current claims and also has an 80% confidence level, which means that the City is 80% confident in its ability to settle claims. Jermanis explained that the City is responsible for the first $250 thousand to $1 million of the liability claim and anything above will be handled by the excess pool (CJPRMA). Jermanis also reiterated that the reserves are adequate and that the $8.2 million could fluctuate every year, depending on the annual actuarial study. Mayor Young inquired about the process for handling and reporting on a case with a potentially large claim, (i.e. John Burris case). Jermanis emphasized that Meyers Nave, George Hills and the Finance department will continuously communicate and discuss if the reserves are adequate. Young is also recommending that any potential large claims be communicated to the Council. Williams commented that not all cases are candidates for structured settlement. In fact, a structured settlement is usually used when there is permanent injury. Baloca and Williams both emphasized that the City would go out and solicit the assistance of a structured settlement provider when needed. Starosciak questioned how often a review of the self-insurance program is conducted. Baloca responded that, to his knowledge, this is the first time that the self-insurance has had an independent Review. However, the confidence level is determined in-house after review of the annual actuarial study which is based on loss history, current loss and projected loss data. J ermanis further explained that the confidence level is mostly budgetary; meaning that if the City has no money then the confidence level could be budgeted lower or according to the amount Council would like to keep in reserve. Starosciak also questioned about the approval authority regarding claims. Jenuanis stated that the City Manager/Finance Director can approve claims payment up to $25K. Starosciak recommends bringing the settlement threshold to Council for reVIew. 2. Continued Discussion Regarding Single Family Residential Exemptions from the Business License Tax (BL T) At the last Finance Committee meeting (September 6, 2006), the Committee discussed the possibility of creating an exemption to the BL T for Related Party Residential Property was questioned. Staff looked at two possible alternatives: (1) creating a definition for family and extended family, and crafting an exemption for rentals made to both relationship categories; and (2) exempting all rental property owners that have only one residential unit. In regards to the first alternative, Baloca reiterated that the legal definition of family is broader, and can be considered discriminatory when compared to the definition of nuclear family and extended family. Baloca also shared the administrative problems that could be created in trying to determine relationships. In regards to the second alternative, exempting only one residential unit would also not be a favorable solution since it would result in an approximate $62K loss of revenue to the City. Baloca stated that the City received six related party rental complaints where all the penalties were waived. Total penalties waived to all residential property owners were over $1 7K. Staff is recommending continuing its current practice of reviewing customer request letters for tax and penalty waiver and make appropriate reductions.