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HomeMy WebLinkAbout05 SECOND AMENDMENT TO CITY MANAGER EMPLOYMENT AGREEMENTG��Y Ort, GST1 MEETING DATE: TO: FROM: SUBJECT: SUMMARY AGENDA REPORT OCTOBER 7, 2014 Agenda Item 5 Reviewed: City Manager Finance Director 6 NIA HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL DAVID E. KENDIG, CITY ATTORNEY SECOND AMENDMENT TO CITY MANAGER EMPLOYMENT AGREEMENT Consider amending the City Manager's employment agreement. RECOMMENDATION Adopt Resolution 14 -59 approving Amendment No. 2 to the Employment Agreement with the City Manager, and authorize the Mayor to execute the Amendment. FISCAL IMPACT For Fiscal Year 2014 -15, the Amendment No. 2 would result in a one -time cost of $7,800 and may result in an additional one -time cost of $10,015 if the City Manager exercises his option to cash out additional General Leave during the current Fiscal Year. Amendment No. 2 could also result in unknown savings to the City in the event that the City Manager is terminated without cause less than 9 months before December 29, 2017. This Amendment could also result in unknown savings in the event the City Manager cashes out accrued General Leave prior to future increases in salary. BACKGROUND AND DISCUSSION The City Council entered into an employment agreement with Jeffrey C. Parker to serve as Tustin's City Manager beginning December 29, 2011, and approved the Amendment No. 1 to the Agreement on July 2, 2013. The employment agreement currently does not have an expiration date, and provides for a severance payment in an amount equal to nine months of salary and nine months of Flexible Benefits contributions in the event the City Manager is terminated without cause prior to December 29, 2016. The City Council's authorized negotiator and the City Manager have reached a tentative verbal agreement to establish a fixed term for the City Manager's Agreement to expire on December 29, 2017. In addition, the proposed amendment would establish limitations on the availability of severance pay and benefits in the event he is terminated without cause prior to December 29, 2017. If he is terminated less than 9 months prior 1027723.2 City Council Agenda Report October 7, 2014 Second Amendment to Employment Agreement with City Manager Page 2 to December 29, 2017, then Amendment No. 2 would provide that severance pay would be limited to his monthly salary multiplied by the remaining number of months before the December 29, 2017, and that Flexible Benefits contributions would continue only: (1) for the same number of remaining months, or (2) until the date he commences other employment, whichever is earlier. In exchange for agreeing to those limitations, the City Manager would receive a one- time lump sum payment of $7,800. Because it would be a one -time payment of a flat dollar amount, Mr. Parker's base salary would remain unchanged by Amendment No. 2 and the payment would not be reportable to CaIPERS as pensionable income. Finally, the City Manager would also be authorized to cash out up to 80 additional hours of accrued General Leave annually. By law, all accrued General Leave must be cashed out at the time of an employee's separation. Earlier cash -out of General Leave could reduce the City's long -term liability associated with accrued General Leave because that leave would be cashed out at the then - applicable salary rate rather than the salary rate in effect at the time of retirement. Attachments: 1. City Council Resolution No. 14 -59 2. Amendment No. 2 to Employment Agreement 1027723.2 RESOLUTION NO. 14 -59 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, APPROVING AMENDMENT NO. 2 TO THE EMPLOYMENT AGREEMENT WITH THE CITY MANAGER WHEREAS, the City Council of the City of Tustin, California (the "City ") approved an Employment Agreement ( "Agreement') with Jeffrey C. Parker to serve as City Manager effective December 29, 2011 with an open -ended term; and WHEREAS, Amendment No. 1 to Employment Agreement was approved on the consent agenda of the City Council on July 2, 2013 (the "First Amendment') which adjusted the compensation for the City Manager but which did not limit the term of the Agreement; and WHEREAS, the Council desires to amend the Agreement to establish a fixed term expiring on December 29, 2017, to make revisions to the severance provisions to limit the potential duration of severance and benefit payments in the event of termination, and to authorize additional accrued General Leave to be cashed out; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Tustin hereby approves Amendment No 2 attached hereto and incorporated by reference, and ratifies the Agreement as amended by Amendment No. 1 and Amendment No. 2. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin held on the 7th day of October, 2014. ELWYN A. MURRAY Mayor ATTEST: JEFFREY C. PARKER City Clerk Resolution 14 -59 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Jeffrey C. Parker, City Clerk and ex- officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 14 -59 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 7"' day of October 2014, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: JEFFREY C. PARKER City Clerk Resolution 14 -59 CITY OF TUSTIN AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT This Amendment No. 2 ( "Second Amendment ") to the EMPLOYMENT AGREEMENT ( "Agreement ") is made effective as of October 7, 2014, and is entered into by and between the CITY OF TUSTIN, a California municipal corporation (the "City ") and Jeffrey C. Parker, an individual ( "Employee "). WHEREAS, the City and Employee entered into the Agreement effective December 29, 2011, with an open -ended term; and WHEREAS, the parties entered into Amendment No. 1 to Employment Agreement effective July 1, 2013, approved by the City Council on July 2, 2013 (the "First Amendment "), but which did not limit the term of the Agreement; and WHEREAS, the parties desire to amend the Agreement to establish a term expiring on December 29, 2017, to make corresponding revisions to the severance provisions to limit the potential duration of severance and benefit payments in the event of termination, and to authorize additional accrued General Leave to be cashed out. NOW, THEREFORE, FOR GOOD CONSIDERATION THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, it is mutually agreed by and between the City and Employee as follows: Section 1: Term. Section 1 of the Agreement shall be modified as follows such that it reads, in its entirety, as follows: "The City hereby appoints Employee and Employee hereby accepts employment with the City beginning December 29, 2011. This Agreement shall be reviewed at least once every year by the City Council or at the request of the City Manager. The Term of this Agreement shall expire on December 29, 2017. This Agreement may be extended by written amendment to this Agreement." Section 2: Severance and Benefit Payoff at Termination Subsection A of Section 8 of the Agreement shall be modified as follows: A. If the City terminates this Agreement (thereby terminating Employee's employment) without cause prior to December 29, 2017 as determined by the affirmative votes of a majority of the members of the City Council at any regular meeting as required by Section 1416 of the Tustin City Code, and if City Manager timely executes and delivers to City an original Separation Agreement and General Release in the form Page 1 of 3 1027593.4 attached hereto as Attachment 1, and does not thereafter timely exercise his right to revoke said Separation Agreement and General Release, the City shall provide Employee with thirty (30) calendar days written notice and shall pay Employee the lesser of either: (a) a lump sum severance benefit equal to nine (9) months of his then applicable base salary, and provide nine (9) months of Flexible Benefits contributions as provided under the then applicable Executive Management Salary Resolution, beginning on the Effective Date of termination; or (b) an amount equal to the monthly salary of the Employee multiplied by the number of months left until December 29, 2017 and provide Flexible Benefits contributions as provided under the then - applicable Executive Management Salary Resolution, beginning on the Effective Date of termination and ending on December 29, 2017. Notwithstanding anything to the contrary herein, the post - termination Flexible Benefits contributions provided for herein shall continue only until the earlier of either: (c) the date provided for under subsection (a) or (b) above; or (d) the date the Employee commences other employment. (The severance payment and Flexible Benefits contributions are referred to collectively herein as the "Separation Pay ".) Any Separation Pay provided must be reimbursed to City if Employee is convicted of a crime involving abuse of his position. Section 3: One -Time Lump -Sum Payment As an inducement to enter into this Second Amendment, a sentence shall be added to Section 5 of the Agreement (Benefits and Leaves of Absence), to read as follows: "Effective the pay period that includes October 7, 2014, Employee shall receive a one -time lump -sum cash payment of seven thousand eight hundred dollars ($7,800.00). Section 4: Cash -Out of General Leave In addition to any rights to cash out General Leave in accordance with the Executive and Management Salary Resolution (Resolution No. 13 -62, or a subsequent succeeding Resolution), Employee shall be authorized to cash out eighty (80) hours of General Leave per year. Section 5: Other Terms and Conditions Except as expressly amended herein, all other terms and conditions of the Agreement and First Amendment remain in full force and effect, without amendment, and are ratified hereby. Page 2 of 3 1027593.4 IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed on the dates reflected below each signature. CITY CITY OF TUSTIN A Municipal Corporation ELWYN A. MURRAY Mayor [m ATTEST: ERICA RABE City Clerk Services Supervisor APPROVED AS TO FORM: DAVID E. KENDIG City Attorney DATE: EMPLOYEE By: JEFFREY C. PARKER Employee DATE: Page 3 of 3 1027593.4