Battle brewing over personal bonds

City Attorney Robert Fournier (left) addresses the City Commission during a recent meeting as City Auditor and Clerk Pam Nadalini listens. Photo by Norman Schimmel

Sarasota city voters will face seven charter amendments on their Nov. 6 ballot. Five have a single purpose, one would divide the City Auditor and Clerk’s Office’s duties and one is a so-called “housekeeping amendment.”

Within the “housekeeping amendment” are 17 changes to the city charter. One of those came under scrutiny during the Sept. 8 meeting of the Coalition of City Neighborhood Associations. Should the city’s top officials be bonded?

Right now the charter is explicit. It requires the city manager, the city finance director and the city auditor and clerk to be bonded. But since Pamela Nadalini took the auditor and clerk’s job two years ago, she has been unable to secure a bond.

Instead, she has been covered by a city insurance policy, which City Attorney Bob Fournier says is “functionally equivalent” to a bond. To understand the difference between a bond and insurance, the coalition invited Fournier and Rob Wagner, an executive with Brown and Brown, a national insurance firm, to explain the two types of financial protection.

The basics

Wagner said the difference between a bond and insurance is simple. “For insurance, the prime objective is risk transfer. It’s a risk-pooling device,” he said. “The policy holders are paying for the losses, because the carrier assumes there will be losses.”

“Bonding is not like insurance as far as risk transfer. It is a contractual guarantee,” he said. “It does not assume a financial loss.”

Insurance is a two-party contract between the policy holder and the carrier, he explained. Bonding has three parties – the individual who takes out the bond, the person who gets money if the bond is violated, and the “guarantor,” the company that will make the payment. The guarantor then has the ability to chase down the individual who broke a bond to try to recover the amount the company paid.

“In insurance, nobody comes back to get their money back,” said Wagner. “A bond on a public official is different. It is a guarantee of faithful performance of a public official, and if there is a loss, the bond will cover the loss and the bonding company can go after the sum from the public official.”

The requirement for bonds is very common. Public construction contracts demand bonds, requiring that the job be completed under terms of the agreed-upon contract. And Florida notary publics, with their embossed seals, all have bonds. But Nadalini does not.

The amendment’s origin

When the city’s Charter Review Committee (CRC for short) began work on the amendment in 2010, the members were embarking on a document clean-up process. It had been a decade since the charter had been examined stem-to-stern. The committee asked senior city staffers to come forward with any recommendations for changes.

One of those changes showed up on Nov. 16, 2010, when Fournier said then-City Manager Bob Bartolotta and Human Resources Director Kurt Hoverter recommended the charter provision requiring bonding be deleted. Citing a memo from Hoverter, Fournier said the requirement for a bond “is an unnecessary annual cost” since the need could be filled with an existing insurance policy. Fournier added, “It’s sometimes hard to obtain the bond,” but he did not elaborate.

Nadalini then added that it would save the city $17,721 per year if the bonding requirement were scrapped.

CRC Member Art Levin suggested that either a bond or insurance be required, and that recommendation passed the committee unanimously. Fournier knew, but did not mention to the CRC, that Nadalini did not have a bond. It was the same story when the finished amendment came before the Sarasota City Commission on April 29, 2011. Neither Fournier nor Nadalini mentioned her lack of a bond.

The battle over bonds

A second city charter amendment on the ballot also addresses bonds for senior city officials. It is the amendment breaking up Nadalini’s office into a separate office for an auditor, with other responsibilities transferred to the City Manager’s Office under the aegis of an Office of City Clerk.

The “breakup” amendment states the duties and responsibilities of each of the two new offices, but it follows the lines of the existing charter to require the city manager, city finance director and the newly created position of city clerk all to have bonds.

If both the housekeeping and “breakup” amendments pass, Nadalini would still require a bond to hold the new job of city clerk. If both the housekeeping and breakup amendments fail, she would still require a bond, because the provisions of the existing charter would apply. If the housekeeping amendment fails and the breakup amendment succeeds, she will need a bond.

Only if the housekeeping measure passes and the breakup proposal fails will Nadalini be able to keep her current status as the un-bonded but insured city auditor and clerk.

Editor’s note: In the coming weeks, The Sarasota News Leader will examine the city’s seven charter amendments that will appear on the November ballot.