FIN 2017-09-06 Item 2A - Report - Public Safety Bond Financial Oversight Committee

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Responses to questions from June 29, 2017 Public Safety Bond Financial Oversight Committee meeting 1. Additional clarification from the City Attorney regarding Committee members' fiduciary authority and liability. Under state law, PSBFOC members would be immune from civil liability for making or failing to make discretionary decisions in the course of their official duties, except in the case of tortious conduct (intentional acts which bring harm to someone else or that infringe on the rights of others). This immunity is qualified, because damages can be assessed for violation of the Federal Civil Rights Act (42 U.S.C. §1983) if the conduct in question violates clearly established statutory or constitutional rights that a reasonable person should have known about. Sintra v. Seattle, 119 Wn.2d 1, 25, 829 P.2d 765 (1992). That said, as long as appointed officials act in good faith, do not engage in tortious conduct, or violate clearly established rights, they do not risk personal liability for their actions. Further, per the PSBFOC Charter, the City Council retains fiduciary authority over the public safety bond funds. In addition, I have verified with the City's insurer, WCIA, that PSBFOC members are covered by the City's insurance when acting in the course and scope of their duties for the City. As such, it does not seem necessary to secure additional Board of Director's insurance. 2. A 6% real estate brokerage commission seems high —is this worth further negotiation? The real estate commissions paid to brokers on commercial properties are not a fixed 6% like they are on residential properties. If the seller puts its property on the market voluntarily, then the commission is negotiated by seller and seller's agent, including what they might pay to a buyer's agent (if anything). But if the City is buying a property that's not on the market, the unwilling seller is not likely to offer to pay a commission. Therefore, the payment of the commission falls to the buyer (the city) and we have negotiated to pay Heartland a 2.5% commission (not 3%). This amount will be based on the gross purchase price, and will not be doubled if there's no buyer's agent involved. If we buy a property that happens to be on the market, AND happens to be offering a buyer's agent commission, the amount of the commission will have been included in the sales price, so the buyer is paying in any case. In that scenario, we would negotiate a fair arrangement with Heartland. But that scenario is unlikely, given the properties currently being considered for the Public Safety Plan. It's also worth clarifying for Mr. Coplen that the $60,000 portion of Heartland's contract is a not - to -exceed amount, against which Contract Land Services (as a subcontractor to Heartland) will bill its time hourly. Furthermore, Heartland has agreed to cover the first $40,000 of CLS's billings as credits against Heartland's commission. That is, CLS will bill its time and get paid as we go, but when there's a closing on a property, Heartland's commission will be reduced by the amount paid to CLS thus far, up to a maximum of $40,000. n