Welcome to Conservation Defense Insurance Legal Structure Part II • Audio will come via your phone. • Join the conference call: Call 800- 243-6403; Enter Pass Code 7153888 • Close all other programs (email, Word, etc.) • Technical Problems? Call 888-569-3848
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Welcome to Conservation Defense Insurance Legal Structure Part II
• Audio will come via your phone.• Join the conference call: Call 800-243-6403;
Enter Pass Code 7153888 • Close all other programs (email, Word, etc.) • Technical Problems? Call 888-569-3848
Committed Land Trust Discussion
ProposedConservation Defense Insurance Program
Legal Structure Part II
May 2011
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Progress Since March• Submitted three Foundation requests• $1 Million each• Meet with numerous potential funders• Filed all regulator applications• Met with IRS• Actuarial review underway• Organized the limited liability company
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Legal Structure Needs• Simple and effective
• Attractive to funders
• Protects Alliance and land trusts
• Integrates the insurance program and Alliance prevention and risk management services
• Ensures stability through quality control and guidance by the Alliance subsidiary
• Complies with all laws, regulations and accounting standards
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Development Process• Alliance convened volunteer team of prominent attorneys
– Philip Tabas, VP and General Counsel of TNC– Andy Dana (MT) and Jessica Jay (CO)
• Conservation Insurance Pioneers and Authors– Fred Rich and Ted Holt of Sullivan & Cromwell
• Evaluated alternative legal structures• Recommended structure to the Alliance board• We are grateful for their pro bono services to create the
conservation defense insurance program
Legal Structure
COMMERCIAL PROVIDER OF CAPTIVE MANAGEMENT
SERVICES
CAPTIVE MANAGEMENT
COMPANY
THE INSURANCE COMPANY
TERRAFIRMA RRG LLC
(Vermont manager-managed not-for-profit LLC)
LAND TRUST OWNER MEMBERS
THE LAND TRUST
ALLIANCE, INC.
(Massachusetts not-for-profit corporation)
The Manager (ARMS)
ALLIANCE RISK MANAGEMENT SERVICES LLC
(Vermont LLC; Alliance sole member)
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Legal Structure Details
• Owners: The land trusts insured by the RRG
• Corporate Status: a Vermont manager-managed not-for-profit Limited Liability Company
• Tax Status: IRC § 501(n) charitable risk pool
• Regulatory Status: Risk Retention Group
• Governance: LLC Agreement and Members Committee
• Employees: None
• Services: On contract basis from the Alliance manager and from private third party expert providers such as the captive manager
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Owners and Members Terrafirma Risk Retention Group LLC
• Formed 4-18-11 by Land Trust Alliance • Exclusive purpose as a qualified charitable risk pool IRC § 501(n)• Owned and controlled by the participant § 501(c)(3) land trusts• Members must continuously meet the membership requirements
Managed under contract by a non-member Manager • Selected by the Members• Non-member manager is Alliance Risk Management Services LLC
(“ARMS”)• The Alliance is the sole and managing member of ARMS• ARMS is not the third party, commercial captive insurance manager • Manager has conservation expertise • Captive Manager has insurance expertise
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Roles• The Members Committee similar to a board of directors • Responsible for overseeing Terrafirma• No directors, trustees or officers• Terrafirma contracts with ARMS for management• ARMS appointed by Members Committee • Staffed by Alliance• Terrafirma reimburses ARMS for its costs • ARMS performs non-administrative tasks and supervises
commercial providers and does risk management• ARMS can be replaced by a super majority of the Members• Terrafirma directly contracts with captive insurance manager• Captive manager handles financial and regulatory matters• Terrafirma contracts with other providers
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Involvement of the Members• Members elect the Members Committee by region• Members have direct vote to demand a general meeting• Members vote on other fundamental organization matters • Members appoint and dismiss Manager by two-thirds vote• Members Committee supervises Manager and contractors • Members get annual report from the Members Committee • Annual meeting; Terrafirma will have at least 461 members • Members may call a meeting by a majority vote• Unanimous vote required to amend the Articles and other• Two-thirds vote to amend Operating Agreement and dissolution• Majority vote required for all other actions
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Members Committee Formalities• All volunteer; Single term of three years• Mandatory year off after single three-year term• Only member land trust senior staff and board trustees/directors• Must be independent • Nine classes; one class for seven geographic regions • One class for the western at-large expert member • One class for the Vermont resident appointed • Initial Members Committee appointed by ARMS• Annual meeting required in Vermont for Members Committee• At least three times a year by telephone or web • ARMS convenes and chairs meetings, circulates agendas, etc.
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Elections
• Elected by Members in region (one Member, one vote)• Staggered elections, two Committee Members elected annually• Vacancies filled by Members Committee• All elections via secure online voting system only • 10-day response period, system users affirm authority to vote• No quorum, candidate in each region with most votes wins• Members Committee nominates candidates• Includes representatives of all land trust size, type and location• Includes representatives accredited non-accredited land trusts
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Regions
• Pacific: AK, CA, HI, OR, WA 74 Land Trusts• Mtns and Plains: AR, AZ, CO, IA, ID, KS, MO, MT ND, NE,
NM, NV, OK, SD, TX, UT, WY 72 Land Trusts• Western: Combined Pacific and Mountains & Plains regions• New England: CT, MA, NY 65 Land Trusts• Lakes: IL, IN MI, MN,OH, WI 64 Land Trusts• Northern NE: ME, NH, VT 62 Land Trusts• Atlantic: DC, DE, MD, NJ, PA, RI, VA, WV 62 Land Trusts• South: AL, Fl, GA, KY, LA, MS,NC,SC,TN 61 Land Trusts• Vermont Resident: Statutory domicile requirement; appointed
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Claims Committee
• Claims decisions • Determination of claims• Claims triage • Case management• Approval of settlements and litigation decisions• Direction to National Coordinating Attorney
(ARMS staff)
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Claims Committee Formalities
• Members Committee members not eligible
• Five year terms
• Nominated by ARMS
• Approved by Members Committee
• Independence requirements
• Volunteers will be experienced land trust practitioners