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Springfield councilors back staff plan to lower insurance requirement for smaller encroachment permits to $1 million
Summary
City staff recommended lowering professional liability insurance for type 2 encroachment permits from $2 million to $1 million to reduce costs for small design firms and housing projects; councilors asked for a future risk-matrix and more outreach before broader changes to PIP standards.
Jeff Pascall, DPW Community Development Division Director, briefed the Springfield City Council on potential changes to professional liability insurance required for privately funded public improvement projects (PIPs) and smaller type 2 encroachment permits.
The memo in the council packet summarized the city's current approach, noting that Springfield has required $2,000,000 in professional liability coverage for design professionals on PIPs since about 2021 as a consistent standard tied to the Oregon Tort Claims Act. Pascall said the requirement was adopted after case-by-case exceptions and litigation in earlier years and that the city has since removed a separate general commercial liability requirement for design professionals.
The discussion focused on complaints from small engineering firms and solo practitioners that premiums can be high relative to fees on smaller projects. "The premiums for these insurance policies can be significant when compared to the fees that the engineers might earn on smaller projects," Pascall said, describing outreach to local firms and consultants including Brown and Brown.
Councilors pressed staff for comparative context and examples. Councilor Blackwell asked, "What is the industry norm?" and staff replied that many jurisdictions tie coverage to Oregon Tort Claims Act limits and that approaches vary: "Other jurisdictions may not have any professional liability requirement," staff said, and some rely on more city engineering staff or contract city engineers.
Councilor Doyle noted the Mountain Gate slide claim as an historical example and questioned whether the $2 million limit was justified by past payouts. Pascall explained that in the Mountain Gate case the engineer’s liability ultimately reported as about $500,000 in damages but that legal defense costs and the presence of multiple claimants can drive higher exposures, so the higher limit is intended to cover multiple claimants and defense costs.
Staff presented alternatives including (a) a formal, project-level risk assessment process that would require more staff time, (b) continuing the consistent $2 million rule and (c) a more targeted reduction for the more commonly used type 2 encroachment permit to reduce costs for housing-related small projects. Jeff Haskell, Community Development Director, and Jamie Aboa, Risk Manager, were part of the staff response.
On balance, staff recommended lowering the professional liability requirement for encroachment permit type 2 projects to $1,000,000 as a way to reduce costs for small firms and small residential projects without requiring a formal council resolution. Officials told the council this change could be implemented administratively by the Community Development Division Director if the council supported it.
Councilors generally signaled support for that administrative change and for returning with a simple, staff-usable risk matrix at a later work session. Councilor Bradley warned against ad-hoc, case-by-case exceptions and recommended a clear, documented decision tool. Councilor Doyle expressed support for reducing burdens on small firms but emphasized protecting taxpayers from uncovered claims. Councilor Durham and others supported further study and a staff tool to reduce subjectivity.
The council’s direction was: staff will administratively lower the encroachment permit type 2 professional liability requirement to $1,000,000 and prepare a follow-up work session with a draft risk matrix and additional outreach findings. Staff also said they would continue to consult the city’s insurance broker and risk consultant for premium estimates; staff provided a broker range for $2,000,000 professional liability premiums of roughly $500–$2,000 per year but cautioned quotes vary by firm and coverages.
Looking ahead, staff said any broader change to PIP standards or the city’s Engineering Design Standards and Procedures Manual would require a formal council resolution and a public process.
The council did not take a formal vote during the work session; the action taken is administrative direction to staff with a commitment to return with a draft matrix and additional outreach results.
