Legal Review Committee Agenda and Packet 2016 12 15

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City Council Legal Review Committee November 2, 2016 Page 2of4 However, the Committee is trying to address concerns regarding liability to the City if the 501 is sued or if there are perceptions a 501 is acting inappropriately. Councilmember Loo stated the City has a fiduciary responsibility to its residents to protect itself in the case of a lawsuit. Michael Menaker, Business Retention & Development Committee and the Revitalization Commission, asked why this is a concern as there has never been a lawsuit with one of the City's 501s. Councilmember Leh stated that is true, but there have been such issues in the metro area with other cities. He stated there needs to be a clear line of understanding that the 501 is a separate legal entity from the City. If a 501 wants to be a part of the City it then needs to follow all the City's rules and regulations. Mayor Pro Tem Lipton agreed there needs to be a clear separation between the City and the non -profits. It is particularly difficult that the Cultural Council (LCC) has a completely joint directorate. If someone is appointed to the LCC by the City Council they are automatically appointed to the 501. We want it to be a separate entity. Councilmember Leh noted the following issues need to be addressed: Liability — what is the City's liability and do members of the 501 know the liability they are taking on serving on a board. Staff Time — the City Council has a duty to control staff resources and time spent with the 501s as that is a limited resource. Similar Treatment — the City must be sure it treats similar groups equally. There needs to be transparency in the funding process and other 501s should have an equal chance to apply for funding/resources. Branding — the brand of the nonprofit and that of the City should not be confused and the nonprofit should not be perceived as being the same as the City. Given the above, Councilmember Leh stated there are three options: 1. Continue as is knowing there are concerns. 2. An absolute separation of the 501s and the City. 3. Some combination whereby there is a clear separation of business practices, but the 501s receive some benefits. Leh noted some of the ideas to be considered include: Boards must get their own liability insurance. Boards must have a separate directorate from any City appointed board. City staff may not be voting members of any affiliated non-profit.