HomeMy WebLinkAboutD-4 Staff Report - Second Amendment to City Manager Employment AgreementSCHEDULED ITEM
D-4
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: MARCO A. MARTINEZ, CITY ATTORNEY
VIA: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: JULY 19, 2021
SUBJECT: ADOPT RESOLUTION APPROVING THE SECOND AMENDMENT TO THE CITY
MANAGER EMPLOYMENT AGREEMENT
BACKGROUND:
On April 1, 2018, the City entered into a City Manager Employment Agreement with Sergio Gonzalez to
serve as City Manager for the City of Azusa. On September 16, 2019, the City Council approved the First
Amendment to the City Manager’s Employment Agreement, providing the City Manager with a one-time,
3% bonus and increased the amount provided in the City Manager’s Flexible Benefit Plan. However, since
2019, the City Manager has not been provided with any additional compensation or benefit changes.
The City Council recently completed a performance evaluation of the City Manager’s performance. As part
of that evaluation, the City Council considered certain changes to the City Manager’s current salary and
benefit package and provided direction to the City Attorney for further negotiations. Those negotiations
have culminated in the attached changes to the City Manager Employment Agreement.
SB 1486 (2016) requires the City Council/City to orally report a summary of a recommendation for a final
action on the salaries, salary schedules, or compensation paid in the form of fringe benefits of a local agency
executive during the open meeting in which the final action is to be taken. Thus, we will be providing a brief
staff report summarizing the terms prior to taking action.
RECOMMENDATION:
Staff recommends the City Council take the following action:
1)Adopt Resolution No. 2021-C34 of the City Council of the City of Azusa, California, Approving a
Second Amendment to the City Manager Employment Agreement (Sergio Gonzalez).
APPROVED
CITY COUNCIL
7/19/2021
2nd Amendment to City Manager Employment Agreement
July 19, 2021
Page 2
ANALYSIS:
In accordance with the terms of the current Employment Agreement, throughout May and June of 2021, the
City Council conducted a thorough performance evaluation of the City Manager and determined that it
would be appropriate to consider revisions to the Employment Agreement.
City Manager Accomplishments
The Council’s direction was premised after reviewing the City Manager’s accomplishments, above and
beyond overseeing the daily operations of city services, which included the following:
1. Implemented a "Fiscal Sustainability Plan."
2. Began with a comprehensive review of several franchise agreements/city contracts resulting
in significant increases to city revenues. Further implementation of the Fiscal Sustainability
Plan included the passage of Measure Z generating more than $4.5 million annually.
Reserves grew by 122%, Revenues grew by $6 million annually, reduced unfunded pension
liability with projected savings of $54 million over next 20 years, Refinanced Community
Facility District bonds resulting in significant savings for residents, received multiple credit
rating increases beginning in October 2018 and most-recently in March 2021.
3. Attained significant grant funding (Over $5 million for Street Improvements, Library
programs and COVID Relief.)
4. Successful in securing multi-year contract agreements with all open labor groups.
5. Restructured City departments resulting in significant savings and improved efficiencies:
Administrative Services Department (Combined Finance and Human Resources), Public
Works (Took over Parks Maintenance) and Community Resources (Took over Community
Transit).
6. Coordinated a comprehensive response to challenges posed by the COVID-19 Pandemic:
Secured a COVID 19 Testing Site, Secured ongoing Vaccine Clinics, Delivered over 52,000
meals to Azusa seniors, Implemented an emergency utilities assistance program to help
residents avoid utility shut offs, Implemented a small business assistance program
distributing over $200,000 in grant funds, significantly increased digital programs and
services available to residents/business community.
7. Established a multi-department working-group to address the significant impacts on public
safety, city parks, streets and the business community brought on by those experiencing
homelessness.
2nd Amendment to City Manager Employment Agreement
July 19, 2021
Page 3
Proposed Amendments
After considering these accomplishments, the Council provided direction to the City Attorney for negotiating
changes to the City Manager’s Employment Agreement. These negotiations culminated in the following
proposed amendments:
1. Increasing the annual compensation from $214,000 per year to $240,000 per year (Section
3.1).
2. Increasing the Health & Medical Benefit allowance from $1,400 per month to $1,500 per
month (Section 3.3).
3. Increasing the contribution to the City Manager’s Health Reimbursement Account from
$1,000 per year to an amount based on years of service (Section 3.5).
4. Increasing the severance payment term, effective January 1, 2022, from nine (9) months to
twelve (12) months (Section 11.9).
The salary increase percentage and benefit changes are consistent with the salary and benefit increases
provided to the City’s bargaining groups in recently completed negotiations. Moreover, the proposed salary
increase leaves the City Manager at the mid-range of the salary paid to other City Managers in surrounding
and comparable cities (See Attached Informal Survey).
FISCAL IMPACT:
The fully burdened (salary + benefits) increase above current budget is $27,167 annually. Upon Council
approval, Staff will prepare the appropriate budget amendment
Attachments:
1. Resolution No. 2021-C34 Approving the Second Amendment to the City Manager Employment
Agreement.
2. Second Amendment to City Manager Employment Agreement
3. Informal City Manager Salary Survey
45635.01000\29377035.1
RESOLUTION NO. 2021-C34
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF AZUSA, CALIFORNIA, APPROVING A SECOND
AMENDMENT TO THE CITY MANAGER EMPLOYMENT
AGREEMENT (SERGIO GONZALEZ)
WHEREAS, on April 1, 2018, the City entered into a City Manager Employment
Agreement with Sergio Gonzalez to serve as City Manager for the City of Azusa; and
WHEREAS, on September 16, 2019, the City Council approved the First Amendment to
the City Manager’s Employment Agreement, providing the City Manager with a one-time, 3%
bonus and increased the amount provided in the City Manager’s Flexible Benefit Plan; and
WHEREAS, Since 2019, the City Manager has not been provided with any additional
compensation or benefit changes; and
WHEREAS, in accordance with the terms of the Employment Agreement, throughout
May and June of 2021, the City Council conducted a thorough performance evaluation of the City
Manager and determined that it would be appropriate to revise the Employment Agreement
pursuant to the terms contained herein in accordance with Azusa Municipal Code Chapter 2,
Article III, Division 2; and
WHEREAS, the amendments include:
1.Increasing the annual compensation from $214,000 per year to $240,000
per year;
2.Increasing the Health & Medical Benefit allowance from $1,400 per month
to $1,500 per month;
3.Increasing the contribution to the City Manager’s Health Reimbursement
Account from $1,000 per year to an amount based on years of service.
4.Increasing the severance payment term, effective January 1, 2022, from
nine (9) months to twelve (12) months.
WHEREAS, this Second Amendment is also authorized pursuant to Section 12.1 of the
Employment Agreement; and
WHEREAS, in accordance with Azusa Municipal Code Chapter 2, Article III, Division 2,
the City Council desires to approve the Second Amendment to the City Manager Employment
Agreement attached to this Resolution as Exhibit “A.”
Attachment 1
2
45635.01000\29377035.1
THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES HEREBY
RESOLVE AS FOLLOWS:
SECTION 1. Approval of Second Amendment to the City Manager Employment
Agreement. The City Council hereby approves the Second Amendment to the City Manager
Employment Agreement between the City of Azusa and Mr. Sergio Gonzalez, which is attached
hereto as Exhibit “A” and incorporated herein by reference.
SECTION 2. Effective Date. This Resolution shall take effect immediately upon
adoption.
PASSED, APPROVED AND ADOPTED this 19th day of July, 2021.
____________________________________
Robert Gonzales
Mayor
ATTEST:
________________________________________
Adrian Garcia CMC
Chief Deputy City Clerk
APPROVED AS TO FORM:
__________________________________________
Marco A. Martinez, Best Best & Krieger LLP
City Attorney
3
45635.01000\29377035.1
EXHIBIT “A”
SECOND AMENDMENT TO THE CITY MANAGER EMPLOYMENT AGREEMENT
(2021)
[SEE ATTACHED]
45635.01000\34190774.1
CITY OF AZUSA
SECOND AMENDMENT TO
CITY MANAGER EMPLOYMENT AGREEMENT
(SERGIO GONZALEZ)
1.PARTIES AND DATE.
This Second Amendment to the City Manager Employment Agreement ("Second
Amendment") is made and entered into as of July ___, 2021 by and between Sergio Gonzalez
(hereinafter referred to as "City Manager" or the "Employee") and the City of Azusa, a municipal
corporation of the State of California (hereinafter referred to as "City"). City and Employee may
sometimes referred to individually as "Party" and collectively as "Parties" throughout this First
Amendment.
2.RECITALS.
A.On April 1, 2018, the City entered into the City Manager Employment Agreement
with Sergio Gonzalez to serve as City Manager for the City of Azusa; and
B.On September 16, 2019, the City Council approved the First Amendment to the
City Manager’s Employment Agreement, providing the City Manager with a one-time, 3% bonus
and increased the amount provided in the City Manager’s Flexible Benefit Plan; and
C.Since 2019, the City Manager has not been provided with any additional
compensation or benefit changes; and
D.In accordance with the terms of the Employment Agreement, throughout May and
June of 2021, the City Council conducted a thorough performance evaluation of the City
Manager and determined that it would be appropriate to revise the Employment Agreement
pursuant to the terms contained herein in accordance with Azusa Municipal Code Chapter 2,
Article III, Division 2; and.
E. This Second Amendment is also authorized pursuant to Section 12.1 of the
Employment Agreement.
3.TERMS.
3.1 Amendments to Employment Agreement. The City Council of the City of Azusa
hereby approves the following Amendments to the City Manager Employment Agreement::
A.Section 3.1 (Salary) of the Employment Agreement is hereby amended and restated
to read as follows to be effective July 1, 2021:
“3.1 Salary
Attachment 2
45635.01000\34190774.1
City agrees to pay City Manager, and City Manager agrees to accept from City, as
compensation for services rendered by City Manager pursuant to this Agreement, an annual
base salary, commencing on the Effective Date, in the amount of Two Hundred Forty Thousand
dollars ($240,000.00) (hereinafter "Annual Base Salary"), payable in installment payments in
the same manner and at the same times as salaries of other executive managers of the City are
paid.
Commencing in April, 2019 and each year thereafter, said Annual Base Salary shall be
eligible for upward adjustments subject to the same procedures by which the salaries of other
executive managers of City are adjusted for meritorious performance, except that any such
adjustments shall be at the sole discretion of the City Council.
The term "Annual Base Salary" as used in this Agreement shall also include any such
adjustments approved by the City Council other than payments not eligible to be added to the
City Manager's Annual Base Salary pursuant to the terms of any applicable salary resolution of
City. The term "Monthly Base Salary" as used in this Agreement shall mean a sum of money
equal to one-twelfth (1/12) of City Manager's Annual Base Salary as defined herein.”
B. Section 3.3 (Health and Medical Benefits) of the Employment Agreement is
hereby deleted in its entirety and restated to read as follows:
“3.3 Health and Medical Benefits.
Effective July 1, 2020, the City shall provide the City Manager with a Flexible Benefit Plan
Allowance ("Allowance") equal to amount provided to members of the Azusa Mid-
management Association (AMMA), currently one thousand five hundred dollars
($1,500.00) per month. This plan can be used by the City Manager to pay, to the extent
available, for qualified benefits offered under the City’s Flexible Benefit Plan which are
elected by the City Manager. The City Manager understands that, in the event the total
monthly premiums and/or expenses for qualified benefits selected by him exceed the
Allowance, the excess shall be deducted from pre-tax wages of the City Manager. The
Allowance is inclusive of the statutory minimum contribution for medical benefits as
required by PEMCHA should the City Manager elect to participate in the City's PEMHCA
health plan. Should the City Manager enroll in group health coverage through other
sources not affiliated with the City, City Manager shall have the option to cash out up to
$600.00 per month (maximum) in-lieu of medical insurance payments."
C. Section 3.5 (Health and Medical Benefits) of the Employment Agreement is
hereby deleted in its entirety and restated to read as follows:
“3.5 Retiree Medical
The City shall establish a Health Reimbursement Account (HRA) for the City Manager
for the reimbursement of medical premiums and IRS approved medical expenses in
retirement. Upon employment, or as soon as possible thereafter, effective July 1, 2021,
the City shall deposit two thousand dollars ($2,000) into a HRA selected by the City.
Annually, on the anniversary date of his appointment, the City shall make additional
deposits into the HRA on behalf of the City Manager in accordance to the following
45635.01000\34190774.1
schedule based on continuous years of service:
Years of Service Amount of Annual Deposit
One (1) - five (5) One thousand dollars ($1,000)
Six (6) - ten (10) Two thousand dollars ($2,000)
Eleven (11) or more Three thousand dollars ($3,000)
Upon separation of employment, the HRA account shall be deemed the property of the
City Manager and his eligible dependents, if any, upon his death to be used exclusively
for the reimbursement of eligible medical expenses. A cash payment of unused amounts
is not permitted by federal laws.”
D. Section 11.9 (Severance). Section 11.9 of the Employment Agreement is hereby
amended in its entirety and shall be effective on January 1, 2022, to read as follows:
“11.9 Severance.
In the event this Agreement is terminated without cause or pursuant to section 1.1.3 of
this Agreement, the City Manager shall receive a severance payment, in a lump sum, equal to
twelve (12) months of City Manager's then monthly Base Salary ("Severance Pay") in
accordance with the provisions of this section. Such severance payment shall be his sole remedy
for termination without cause or section 11,3 of this Agreement.
The Severance Pay shall be paid only after the City Manager executes a waiver and
release agreement prepared by the City Attorney in a form substantially similar to that one set
forth as Exhibit "A" to this Agreement. Notwithstanding the foregoing, if the City Manager is
terminated for cause, as set forth in this Agreement, then City Manager shall not be eligible for
severance payment.”
3.2 Remaining Provisions of Agreement. Except as otherwise specifically set forth in
this First Amendment, the remaining provisions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Agreement on this ____ day of July, 2021.
[SIGNATURES ON FOLLOWING PAGE]
45635.01000\34190774.1
CITY OF AZUSA [INSERT NAME]
By:
Robert Gonzales Mayor
By:
Sergio Gonzalez
ATTEST:
By:
Jeffrey Lawrence Cornejo, Jr. City Clerk
APPROVED AS TO FORM:
By:
Marco A. Martinez City Attorney
45635.01000\34190774.1
A-1
EXHIBIT “A”
INFORMAL CITY MANAGER SALARY SURVEY
City Manager Salary Survey (June 2021)
Alhambra $256,325
Arcadia $231,205
Baldwin Park $250,000
Burbank $293,717
Covina $225,000
Duarte $214,200
El Monte $240,000
Glendale $291,900
Glendora $257,500
Irwindale $230,000
La Verne $240,000
Monrovia $220,356
Monterey Park $222,382
Pasadena $301,930
Rosemead $233,000
Rancho Cucamonga $344,000
West Covina $212,000
Whittier: $265,000
Azusa: $213,996 (CURRENT)
Attachment 3