Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality
ITEM TITLE:
Professional Liability Insurance for Privately-Funded Public Improvements
ACTION REQUESTED:
Direct city staff on changes to professional liability insurance requirements for privately-funded public improvement projects, such as lowering the coverage requirements for type 2 encroachment permits.
ISSUE STATEMENT:
Should the city change the professional liability insurance requirements for design professionals (such as engineers) who work on privately-funded public improvement projects, to lower costs associated with housing development?
DISCUSSION/FINANCIAL IMPACT:
The City Council has asked City Attorney's Office, in coordination with the Risk Manager and City Engineer, to review whether changes could be made to the city's professional liability insurance requirements for privately-funded infrastructure projects, to reduce costs on private developers and encourage more competition in this field.
The city currently requires design professionals working on Public Improvement Projects (PIPs), who are typically registered professional engineers, to carry professional liability coverage of at least $2 million on a claims-made basis. The design professional is not required to provide general commercial liability coverage in favor of the city; this coverage is provided by the general contractor at a minimum level of $2 million per claim and $3 million in aggregate.
The Council Briefing Memorandum (Attachment 1) addresses these topics:
How does the city approach permitting for public improvements?
How does the city approach professional liability coverage?
What does the city's permitting data show?
What are the City Council's options?
What are the next steps?
For a detailed discussion of specific risks associated with privately-funded public improvements, including claims examples and history, please see the City Attorney's Office privileged memorandum to Council dated January 24, 2025.