HomeMy WebLinkAboutD-2 Staff Report - Fourth Amendment to City Manager Employment AgreementSCHEDULED ITEM
D-2
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: MARCO A. MARTINEZ, CITY ATTORNEY
VIA: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: SEPTEMBER 18, 2023
SUBJECT: ADOPT RESOLUTION APPROVING THE FOURTH 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.
•October 3, 2022 – Third Amendment, increasing: annual salary from $240,000 to $265,000; monthly
Vehicle Allowance from $500 to $600; and severance payment term, from twelve (12) months to
thirteen (13) 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
benefits 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
Approved
City Council
September 18, 2023
4th Amendment to City Manager Employment Agreement
September 18, 2023
Page 2
report summarizing the terms and basis of the recommended actions.
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Adopt Resolution No. 2023-C42 of the City Council of the City of Azusa, California, approving a
Fourth Amendment to the City Manager Employment Agreement (Sergio Gonzalez).
ANALYSIS:
In accordance with the terms of the current Employment Agreement, throughout July and August of 2023,
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.
Proposed Amendments
After completing a successful evaluation, 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, 2023:
1. Increasing the annual compensation from $265,000 per year to $280,000 per year (Section
3.1).
2. Increasing the severance payment term from thirteen (13) months to fourteen (14) months
(Section 11.9).
An additional proposed modification to the City Manager’s Employment Agreement, is not an enhanced
benefit, but rather assists the City in accomplishing one of its strategic goals which is reducing its financial
liabilities. Section 3.10 Sick Leave Bank, of the current Employment Agreement, provides the City Manager
with a maximum sick leave accrual bank of 1,040 hours. With each salary increase, the compensated
absences liability for the sick leave bank increases the liability reported on the City’s financial statements.
The proposed amendment reduces the City Manager’s sick leave accrual cap from 1,040 to 320 hours and
pays off the liability on an as-you -go basis, thereby, reducing the long-term liability on the City’s financial
statements.
FISCAL IMPACT:
The fully burdened (salary + benefits) increase above current budget is $17,600 annually, of which 30% is
allocated to the General Fund and the remaining 70% is allocated to Enterprise and Special Revenue Funds.
Upon Council approval, Staff will prepare the appropriate budget amendment.
Attachments:
1) Resolution No. 2023-C42 Approving the Fourth Amendment to the City Manager Employment
Agreement.
2) Fourth Amendment to City Manager Employment Agreement.
45635.01000\29377035.1
RESOLUTION NO. 2023-C42
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF AZUSA, CALIFORNIA, APPROVING A FOURTH
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, increasing Health & Medical
Benefits, and increasing the term of severance; and
WHEREAS, on October 3, 2022, the City Council approved a Third Amendment to the
City Manager’s Employment Agreement providing a salary increase, increasing Vehicle
Allowance, and increasing the term of severance; and
WHEREAS, in July and August of 2023, 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 Fourth 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 Fourth 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 Fourth Amendment to the City Manager Employment
Agreement. The City Council hereby approves the Fourth 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, 2023.
Attachment 1
2
45635.01000\29377035.1
PASSED, APPROVED AND ADOPTED this 18th day of September, 2023.
____________________________________
Robert Gonzales
Mayor
ATTEST:
________________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
__________________________________________
Marco A. Martinez, Best Best & Krieger LLP
City Attorney
45635.01000\40733252.1
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CITY OF AZUSA
FOURTH AMENDMENT TO
CITY MANAGER EMPLOYMENT AGREEMENT
(SERGIO GONZALEZ)
1.PARTIES AND DATE.
This Fourth Amendment to the City Manager Employment Agreement ("Fourth
Amendment") is made and entered into as of September 18th, 2023 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 Fourth 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, increasing Health & Medical
Benefits, and increasing the term of severance; and
C.On October 3, 2022, the City Council approved a Third Amendment to the City
Manager’s Employment Agreement providing a salary increase, increasing Vehicle Allowance,
and increasing the term of severance; and
D.In July and August of 2023, 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 Fourth 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 Fourth Amendment to the City Manager Employment
Agreement.
Attachment 2
45635.01000\40733252.1
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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:
“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 Eighty Thousand dollars
($280,000.00) (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 3.10 (Sick Leave Bank) of the Employment Agreement is hereby deleted
in its entirety and restated to read as follows:
“3.10 Sick Leave Bank
Employee shall accrue 4.6154 hours of sick leave per pay period. Any sick leave accrued
after September 18, 2023, shall be capped at a maximum of three hundred twenty (320) hours at
any given time and shall have no cash value. All accrued sick leave hours as of September 18,
2023, shall be put into a separate Trust account to be valued at one hundred percent (100%) of
the Employee's rate of pay as of September 18, 2023. Employee shall "draw down" (reduce by
conversion to either first, 401(a) "Special Pay Plan" or second, deferred compensation) the
maximum amount (of hours) possible on a tax deferred basis (based on then applicable law) each
year until the balance of the Trust account is exhausted. Any unused sick days at the date of
termination of employment under this Agreement, may be converted for additional service credit
for CalPERS retirement purposes should the Employee retire directly from the City of Azusa.”
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C. Section 11.9 (Severance) 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 fourteen
(14) 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 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, 2023.
Except as otherwise specifically set forth in this Fourth Amendment, the remaining provisions of
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Fourth Amendment on this 19th
day of September, 2023.
[SIGNATURES ON FOLLOWING PAGE]
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CITY OF AZUSA EMPLOYEE/CITY MANAGER
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