HomeMy WebLinkAboutD-1 Staff Report - Third Amendment to City Manager Employment AgreementSCHEDULED ITEM
D-1
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: MARCO A. MARTINEZ, CITY ATTORNEY
VIA: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: OCTOBER 3, 2022
SUBJECT: ADOPT RESOLUTION APPROVING THE THIRD 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. Since then, the City Council has approved the following
revisions to the Employment Agreement:
•September 16, 2019 - First Amendment, providing a one-time, 3% bonus and increase to the monthly
Flexible Benefit Plan contribution from $1,200 to $1,400.
•July 19, 2021 - Second Amendment, increasing: annual salary from $214,000 to $240,000; monthly
Flexible Benefit Contribution from $1,400 to $1,500; the contribution to the Health Reimbursement
Account from $1,000 per year to an amount based on years of service (consistent with other non-
represented employees); and severance payment term, effective January 1, 2022, from nine (9)
months to twelve (12) months.
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, following is a brief staff
report summarizing the terms and basis of the recommended actions.
APPROVED
CITY COUNCIL
10/3/2022
3rd Amendment to City Manager Employment Agreement
October 3, 2022
Page 2
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Adopt Resolution No. 2022-C76 of the City Council of the City of Azusa, California, approving a
Third Amendment to the City Manager Employment Agreement (Sergio Gonzalez).
ANALYSIS:
In accordance with the terms of the current Employment Agreement, throughout July through September of
2022, 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. Since onboarding several notable accomplishments
include:
1. Balanced the City’s annual budget and grew reserves by 198% over last four years:
• Implemented Measure Z – maintaining local control of $5-6 million in sales tax
dollars annually (generated in Azusa and used for Azusa)
• Refinanced $80 million of Pension Obligation Bonds saving residents $54 million
over 25 years
• Renegotiated hazardous waste tax in accordance with State Law increasing revenues
from approximately $500,000 annual to over $1.2 million per year.
• Created operational efficiencies in various departments
2. Improved relations with County, State and Federal offices – resulting in funding for several
projects: Library Outdoor Learning Classroom, Teen & Family Services, School House
Relocation and Restoration and Water Well Rehabilitation.
3. Attained significant grant funding for Library programs, COVID relief, homelessness
initiatives, road improvements, and more.
4. Enhanced City’s “online” presence by posting on social media more frequently and timelier.
Improved handling of emergency situations such as power outages, fires and other necessary
communications internally, locally, and with regional partners.
5. Made essential investments in the City’s workforce for continued service to the Azusa
Community – closing all labor contracts, upgrading facilities and work spaces, requiring
routine supervisor and management training to improve efficiencies and reduce liability
exposure.
6. Received several credit rating upgrades and awards for financial stewardship and
implementation of regional initiatives (All-in for Azusa, Employee Wellness, Financial
Reports and Budget, etc.)
3rd Amendment to City Manager Employment Agreement
October 3, 2022
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, retroactively effective to July 1, 2022:
1. Increasing the annual compensation from $240,000 per year to $265,000 per year (Section
3.1).
2. Increasing the Vehicle Allowance from $500 per month to $600 per month (Section 6).
3. Increasing the severance payment term from twelve (12) months to thirteen (13) months
(Section 11.9).
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 Informal Survey as Exhibit A in attached Resolution).
FISCAL IMPACT:
The fully burdened (salary + benefits) increase above current budget is $30,350 annually. Upon Council
approval, Staff will prepare the appropriate budget amendment.
Attachments:
1) Resolution No. 2022-C76 Approving the Third Amendment to the City Manager Employment
Agreement.
2) Third Amendment to City Manager Employment Agreement.
45635.01000\29377035.1
RESOLUTION NO. 2022-C76
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF AZUSA, CALIFORNIA, APPROVING A THIRD
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 increasing the amount provided in the City Manager’s Flexible Benefit Plan; and
WHEREAS, on July 19, 2021, the City Council approved a Second Amendment to the
City Manager’s Employment Agreement providing a salary increase, increased Health & Medical
Benefits and increasing the term of severance; and
WHEREAS, in July and August of 2022, the City Council conducted a performance
evaluation of the City Manager, including a review of the City Manager’s current compensation
and benefits and determined that further amendments are warranted; and
WHEREAS, this Third Amendment is 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 Third Amendment to the City Manager Employment
Agreement attached to this Resolution as Exhibit “A.”
THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES HEREBY
RESOLVE AS FOLLOWS:
SECTION 1. Approval of Third Amendment to the City Manager Employment
Agreement. The City Council hereby approves the Third 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, however the compensation amendments provided shall be retroactive to July 1, 2022.
Attachment 1
2
45635.01000\29377035.1
PASSED, APPROVED AND ADOPTED this 3rd day of October, 2022.
____________________________________
Robert Gonzales
Mayor
ATTEST:
________________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
__________________________________________
Marco A. Martinez, Best Best & Krieger LLP
City Attorney
3
45635.01000\29377035.1
EXHIBIT “A”
THIRD AMENDMENT TO THE CITY MANAGER EMPLOYMENT AGREEMENT
(2022)
45635.01000\40733252.1
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CITY OF AZUSA
THIRD AMENDMENT TO
CITY MANAGER EMPLOYMENT AGREEMENT
(SERGIO GONZALEZ)
1.PARTIES AND DATE.
This Third Amendment to the City Manager Employment Agreement ("Third
Amendment") is made and entered into as of October ___, 2022 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.On July 19, 2021, the City Council approved a Second Amendment to the City
Manager’s Employment Agreement providing a salary increase, increased Health & Medical
Benefits and increasing the term of severance; and
D.In July and August of 2022, the City Council conducted a performance evaluation
of the City Manager, including a review of the City Manager’s current compensation and benefits
and determined that further amendments are warranted; and
E.This Third Amendment is authorized pursuant to Section 12.1 of the Employment
Agreement; and
F.In accordance with Azusa Municipal Code Chapter 2, Article III, Division 2, the
City Council desires to approve the Third Amendment to the City Manager 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:
Attachment 2
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“3.1 Salary
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 Sixty Five Thousand
dollars ($265,000.00) (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 6 (Vehicle Allowance) of the Employment Agreement is hereby deleted in
its entirety and restated to read as follows:
“6. Vehicle Allowance.
City agrees to pay to the City Manager, during the term of this Agreement and in addition
to other salary and benefits herein provided, the sum of six hundred dollars ($600) per
month, as a vehicle allowance to be used to purchase, lease, or own, operate and maintain
a vehicle. City Manager shall be responsible for paying for liability, property damage, and
comprehensive insurance coverage upon such vehicle and shall further be responsible for
all expenses attendant to the purchase, operation, maintenance, repair, and regular
replacement of said vehicle. The City shall reimburse the City Manager at the IRS standard
mileage rate for any business use of the vehicle beyond the greater City of Azusa area. For
purposes of this Section, use of the car within the greater City of Azusa area is defined as
travel to locations within a fifty (50) mile) radius of the City of Azusa City Hall.
C. Section 11.9 (Severance). Section 11.9 of the Employment Agreement is hereby
amended in its entirety 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 thirteen
(13) 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
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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 Effective Date of Amendments & Remaining Provisions of Agreement. The
amendments shown in Section 3.1 (A through C) shall be effective retroactively on July 1, 2022.
Except as otherwise specifically set forth in this Third Amendment, the remaining provisions of
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Third Amendment on this ____
day of October, 2022.
[SIGNATURES ON FOLLOWING PAGE]
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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