FAIRHOPE, Ala. - Although Alabama law apparently requires City Council approval of all major municipal contracts, the city did not get council approval in the recent hiring of Fairhope’s liability insurance company.

And two council members take different positions on whether contracts like that should first come before the council for approval.

Councilman Rick Kingrea said the method for handling the contract was proper, but Councilwoman Debbie Quinn said, “All contracts should be, and legally have to be from my viewpoint, approved by the council, whether that’s insurance contracts, or whatever they might be.”

As revealed March 23 in the The Fairhope Courier, the city’s administration changed liability insurance companies in January but without first receiving council approval of the contract, or bringing the change of policies to the council’s attention.

“Well, basically the council gave the treasurer full authority not long ago for making all those decisions, and that’s been part of the treasurer’s responsibility ever since I’ve been with Fairhope,” Mayor Tim Kant said yesterday. “One of the treasurer’s jobs has been to shop for insurance and get the best deal for Fairhope, and that’s what happened this time. If the council wants those particular issues to come before them, we’d be more than glad to do so.”

The city switched its liability insurance coverage from the Alabama Municipal Insurance Corp. to Travelers when the existing AMIC policy came up for renewal on Jan. 9, said City Treasurer Nancy Wilson.

AMIC is currently in litigation with the city over whether it should reimburse hundreds of thousands of dollars paid by the city to Hand Arendall attorneys for their representation of the city and Kant in the three-year-old “Dyas triangle” lawsuit. The company sued the city last summer and then stopped making reimbursement payments altogether. The city countersued. That lawsuit has been put on temporary hold by agreement of the parties pending resolution of the Dyas lawsuit, according to city officials.

Last week Wilson said she did not think the new insurance contract needed council approval because it was a budgeted item. That is also the reasoning Kant gave Thursday, with which Kingrea agreed.

“If the council has provided or the budget provides X-number of dollars to cover liability insurance – and that’s what we’ve done – then we’ve basically turned that responsibility over to Nancy Wilson and the mayor,” Kingrea said. “I would only see the need for the council to be involved if the premium payments continue to escalate, and we didn’t know why, or there was a conflict between what the mayor and treasurer thought. But there was really no conflict between those two, and I think they made the right decision from a financial viewpoint.”

ALM in its 2008 treatise on Alabama municipal law called “Selected Readings for the Municipal Official” states that “since most municipal contracts will impact in some way the property or finances of a municipality, the decision to enter into a contract must be made by the council.” In support of that statement, ALM cited Section 11-43-56 of the Code of Alabama, which confers control over all city finances and property on the council.

Quinn agreed with ALM on that statement and also said the council should take up the issue, generally, of how contracts should be handled by the council.

“We’re in charge of the checkbook for the city,” Quinn said Thursday. “All contracts should be decided by the council. I don’t know how this happened without the council’s knowledge. I think the issue needs to be taken up with the council, and we should have that conversation. For us to be left out is evidence of one more step that we need to be taking to become more the council we should be, instead of what we’ve been in the past. ”