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HomeMy WebLinkAbout13 - City Manager Employment AgreementCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 13 February 14, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Council Ad Hoc Compensation Committee Mayor Don Webb Mayor Pro Tern Steve Rosansky Council Member Ed Selich SUBJECT: Proposed Modifications to City Manager Employment Agreement RECOMMENDATION: By Resolution, enter into a two year employment agreement with the City Manager, which includes a 5% salary increase the first year, effective January 7, 2006, and a 4% salary increase the second year, effective January 6, 2007. DISCUSSION: The City Council recently completed a performance evaluation on the City Manager for the 2005 calendar year and found him to have effectively carried out his job duties. The Council Committee composed of Mayor Don Webb, Mayor Pro Tern Steve Rosansky and Council Member Ed Selich has communicated with the City Manager regarding overall compensation and benefits. It is clear that the City Manager's total compensation is well below other Orange County cities used as comparisons; and therefore, we recommend an increase in compensation and benefits over a two year contract period. In April, 2005, the OC Register did an article on total compensation paid to City Managers in Orange County, using figures obtained in 2004. The Newport Beach City Manager's total compensation was found to rank 15th of the 34 Orange Council cities at $211,932 per year. The survey information is almost two years old, and our City Manager has not received a compensation adjustment since that time, placing him even further behind many of his peers in the County. We believe that Newport Beach is a city that requires a higher level of management oversight that most Orange County cities, given it is a full service city and given the issues relating to water quality, the Coastal Commission, John Wayne Airport and the City's $190M budget. Proposed Modifications to City Manager Employment Agreement February 14, 2006 Page 2 Based on these findings, the Council Committee recommends the following modifications be made in the City Manager's contract: Enter into a two year employment contract with the City Manager with only those changes included within this recommendation. Establish an annual base salary of $195,977 (5% increase) effective January 7, 2006, until the first payroll period in 2007, at which time the City Manager's annual base salary would increase by 4% to $203,816. 3. Effective January, 2006 the City Manager would be provided a car allowance of $450 per month for the use of his personal car for City business. 4. The City Manager's Administrative Leave time (time provided in -lieu of overtime, but not carried over from year to year) be increased from 10 to 15 days per year. It is our belief these compensation adjustments will place our City Manager around 10`h in total compensation paid to Orange County City Managers, which we believe is fair to both our City Manager and the community. We have spoken with the City Manager and he is agreeable to these contract terms. RESOLUTION NO. 2006- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ADJUSTING THE COMPENSATION PAID TO THE CITY MANAGER WHEREAS, the City Council has evaluated the performance of the City Manager during the preceding (12) months; WHEREAS, an adjustment to the base salary and term modifications to the current employment agreement are appropriate given the performance of the City Manager and the compensation paid to other City Managers within Orange County; and WHEREAS, the proposed modifications to compensation and benefits are reflected in the Fifth Amended Employment Agreement that is attached to this Resolution as Exhibit A. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Newport Beach that the salary and benefits of the City Manager shall be as specified in Exhibit A and that the Mayor is authorized to execute Exhibit A on behalf of the City Council. ADOPTED this 14" day of February 2006. Don Webb Mayor ATTEST: Lavonne Harkless City Clerk EXHIBIT A FIFTH AMENDED EMPLOYMENT AGREEMENT This Fifth Amended Employment Agreement (Fifth Amended Agreement), which is effective as of the 7th of January, 2006, between the City of Newport Beach (City') and Homer Bludau ( BLUDAU') is made in light of the following: RECITALS A. City and BLUDAU entered into an agreement on March 8, 1999 pursuant to which City employed BLUDAU as the City Manager of City of Newport Beach (Original Agreement); B. The Original Agreement was amended first on February 28, 2000 (First Amended Agreement) and both the Original Agreement and the following three Amended Agreements required periodic evaluation of BLUDAU's performance as City Manager to determine if his "base salary or benefits should be modified." C. The Newport Beach City Council has conducted an evaluation of BLUDAU's performance over the past twelve months and has determined that his performance warrants an increase in salary and modification of other benefits as specified in this Fifth Amended Agreement. Now, therefore, the Parties agree as follows: SECTION 1 Employment as City Manager City shall continue to employ BLUDAU as City Manager of the City of Newport Beach to perform the functions and duties of that position as specified in the City Charter and Municipal Code of the City of Newport Beach. BLUDAU shall also perform other duties by the City Council, without additional compensation, so long as those duties are related to matters of concern to the City of Newport Beach or cites generally and are performed by management employees of other municipalities. SECTION 2 Effective Date/Term This Fifth Amended Agreement shall take effect January 7, 2006 and remain in effect until January 7, 2008 or until amended by the Parties or terminated pursuant to Section 4. SECTION 3 Base Compensation City shall pay BLUDAU an annual base salary of $195,977.00, effective January 7, 2006, in twenty-six (26) equal installments paid at the same time other management employees of the City are paid. Effective January 6, 2007, BLUDAU's annual base salary will increase to $203,806 and remain in effect until this agreement is changed by City Council action. This Fifth Amended Agreement shall be deemed modified to be consistent with any subsequent resolution adopted by the City Council changing the base salary of the City Manager or the manner (but not the amount) in which management employees are paid. City shall have the right to deduct or withhold from BLUDAU's base salary any and all sum required for federal or state income tax, social security tax and all other taxes, deductions or withholdings required by then current state, federal or local law. City shall also deduct sums BLUDAU is obligated to pay because of BLUDAU's participation in plans or programs generally described in Section 5 of this Fifth Amended Agreement. SECTION 4 Termination and Severance Pay A. BLUDAU may terminate this Fifth Amended Agreement by giving the City at least forty-five (45) days prior written notice of termination. B. City may terminate this Fifth Amended Agreement, without cause, upon the affirmative votes of a majority of the members of the City Council at any regular or special meeting of the City Council. However, consistent with provisions of the City Charter, this Fifth Amended Agreement may not be terminated within ninety (90) days after any municipal election for the selection or recall of one or more members of the City Council. BLUDAU shall be furnished with written notice stating the Council's intention to terminate this Fifth Amended Agreement, and any reasons for termination, if deemed appropriate by the City Council, at least forty-five (45) days prior to the effective date of termination. C. In the event this Fifth Amended Agreement is terminated by the City, BLUDAU shall, as of the effective date of termination, receive severance pay equal to one -half (1/2) of his then current annual base salary. However, BLUDAU shall not be entitled to any severance pay if this Fifth Amended Agreement is terminated because of BLUDAU's criminal conduct, malfeasance in office, or gross abuse of discretion. SECTION 5 Employee Benefits A. BLUDAU shall accumulate flex leave at the rate of twenty-six (26) days per year, commending on the effective date of this Fifth Amended 2 Agreement. BLUDAU shall also be entitled to 120 hours of administrative leave per year. BLUDAU shall not be entitled to any compensation, or compensatory time off, for overtime. BLUDAU shall not be entitled to flex leave spill -over pay and shall not be subject to any flex leave accrual threshold. B. BLUDAU shall be entitled to the same health insurance and retirement benefits on the same terms and conditions as are available to other non - safety management employees of the City. C. BLUDAU shall be entitled to participate in plans and programs available to other non -safety management employees of the City such as short term and long term disability plans, life insurance plans, and deferred compensation plans. D. BLUDAU shall undergo an annual physical examination. City shall reimburse BLUDAU for the actual costs of the annual physical examination up to a maximum of $1,000.00. E. The then current City personnel ordinances, resolutions, rules and policies shall apply to BLUDAU in the same manner as applied to other management employees, provided, however, in the event of a conflict between the provisions of this Fifth Amended Agreement and the City Charter, the City Charter shall prevail. F. This Fifth Amended Agreement shall be deemed modified whenever the City Council adopts a resolution or takes action changing the benefits, plans or other terms and conditions of employment generally applicable to other non -safety management employees of the City. SECTION 6 Business Expenses A. Effective January 2006, BLUDAU shall receive a monthly car allowance of $450 for use of his personal car for City business. B. City shall reimburse BLUDAU for all reasonable business expenses (except automobile expenses) actually incurred by BLUDAU in the performance of services pursuant to this Fifth Amended Agreement. BLUDAU shall, to the extent possible, use a credit card issued in the name of the City of Newport Beach to pay for business expenses. 9 SECTION 7 Meetings and Conferences BLUDAU shall, at City expense, be entitled to attend a reasonable number of local, state and national conferences relevant to the performance of duties required of a City Manager and pursuant to the City Charter, the Newport Beach Municipal Code and this Fifth Amended Agreement. SECTION 8 Housing As required by the City Charter and the Original Agreement, BLUDAU has established residency in, and become an elector of, the City of Newport Beach. To facilitate BLUDAU's purchase of housing in Newport Beach, City has loaned BLUDAU the sum of $50,000 (Loan). The Loan has been, and shall be, used solely to purchase housing in Newport Beach. BLUDAU shall pay simple interest on the unpaid balance of the Loan during each fiscal year (or portion) in which the Loan, or any portion of the Loan, remains unpaid. The interest payment for all or a portion of any fiscal year shall be due on or before September 15th of the following fiscal year. The interest rate on the Loan for each fiscal year shall be the average rate of return on all City investments during that fiscal year. BLUDAU may, but is not required to, make payments to reduce the principal amount of the Loan at any time and payments to reduce the principal shall not be subject to any pre - payment penalty. BLUDAU shall pay the entire unpaid balance of the Loan upon the expiration of ten (10) years from the effective date of this Fifth Amended Agreement or BLUDAU's separation from City employment. In the event all or any portion of the Loan remains unpaid at the time of BLUDAU's separation, City shall have the right to withhold, from value of any accumulated paid leave for which BLUDAU would otherwise be paid upon separation, a sum equal to the amount of the then current unpaid balance. SECTION 9 Evaluation The City Council shall conduct regular evaluations of BLUDAU's performance during the term of this Fifth Amended Agreement. The City Council may, as part of the evaluation, discuss if BLUDAU's performance warrant any modification of his base salary and /or benefits. However, any decision to modify BLUDAU's base salary or benefits shall be made by the City Council only at a duly noticed public meeting held in compliance with the Ralph M. Brown Act. SECTION 10 General Provisions A. BLUDAU shall serve at the pleasure of the City Council as specified in the Newport Beach City Charter and may be terminated "at will" and without specification of cause, subject only to the procedural requirements specified in this Fifth Amended Agreement and /or relevant provisions of the City Charter of City ordinance. B. This Fifth Amended Agreement shall be binding on, and inure to the benefit of, the heirs, executors, and assigns of BLUDAU. C. Any notice required by this Fifth Amended Agreement shall be in writing and deemed given when personally delivered (to the City Clerk in the case of the City), or when properly addressed and deposited in the United States mail, registered or certified, with postage prepaid and return receipt requested. D. This Fifth Amended Agreement represents the entire understanding of the Parties and any modification is effective only if it is in writing and signed by the Party to be charged. Dated: Dated: APPROVED AS TO FORM: Robin Clauson City Attorney 5 Don Webb Mayor of Newport Beach Homer L. Bludau City Manager of Newport Beach