HomeMy WebLinkAboutD-2 Staff Report Fifth 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: NOVEMBER 4, 2024
SUBJECT: ADOPT RESOLUTION APPROVING THE FIFTH 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:
•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.
•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.
•On October 3, 2022, the City Council approved a Third Amendment to the City Manager’s
Employment Agreement approving a salary increase, an increase to the vehicle allowance and an
increase to the severance term.
•On September 18, 2023, the City Council approved a Fourth Amendment to the City Manager’s
Employment Agreement approving a salary increase and an increase to the severance term.
The City Council recently completed a performance evaluation of the City Manager’s performance. The
Council discussed the City Manager’s achievements, including:
•Balanced Budget with significant increases to reserves
• Grant services yielding greater funding for infrastructure projects
•Statewide recognition of award-winning programming in Community Resources
Approved
City Council
November 4, 2024
Fifth Amendment to City Manager Employment Agreement
November 4, 2024
Page 2
• Successful in reaching multi-year agreements with city bargaining units
• Old Schoolhouse relocation and restoration – “Historic Row”
• Azusa Library “Outdoor Learning Space”
• Completion/Operation of the Azusa Resource Center
Additionally, 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
report summarizing the terms and basis of the recommended actions.
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Adopt Resolution No. 2024-C63 of the City Council of the City of Azusa, California, Approving a
Fifth Amendment to the City Manager Employment Agreement (Sergio Gonzalez).
ANALYSIS:
In accordance with the terms of the current Employment Agreement, throughout September and October of
2024, 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:
1. Amending the term to add an expiration date of June 30, 2028, for the Agreement (Section 2).
2. Increasing the annual compensation from $280,000 per year to $300,000.00 per year and
incorporating a salary schedule for future increases (Section 3.1). The increased compensation for
2024 is retroactive to July 1, 2024. The future increases are identified below, and the percentage
increases are consistent with increases provided to city employees in recently approved labor
agreements:
Schedule of Future Salary Adjustment
Effective Date Percentage Increase Total (Annual) Base Salary
July 1, 2025 Three Percent (3%) $309,000.00
July 1, 2026 Four Percent (4%) $321,360.00
July 1, 2027 Four Percent (4%) $334,214.40
Fifth Amendment to City Manager Employment Agreement
November 4, 2024
Page 3
3. Amending the severance payment term (for termination without cause) from fourteen (14) months to
add an additional month for every year of service to the maximum permitted by state law (eighteen
(18) months -Section 11.9). The remaining terms remain unchanged.
FISCAL IMPACT:
The City Manager’s salary is allocated to several cost centers citywide. The Fiscal Year 2024-25 adopted
budget includes an estimated 3% salary increase for the City Manager, so while the increased annual salary
proposal is $20,000, the fully burdened impact of the recommended changes is $13,600 and will be charged
as follows:
Fund/Account Number Amount
General Fund 10-10-110-000 $4,080
Proposition A 15-55-521-480 $ 680
Proposition C 17-55-521-480 $ 680
Consumer Services 31-40-702-920 $4,080
AB939 39-40-750-065 $4,080
Subsequent increases will be budgeted accordingly.
Fiscal Impact Reviewed by: Reviewed and Approved:
Talika M. Johnson Sergio Gonzalez
Director of Administrative Services City Manager
Attachments:
1) Resolution No. 2024-C63 Approving the Fifth Amendment to the City Manager Employment
Agreement.
2) Fifth Amendment to City Manager Employment Agreement.
RESOLUTION NO. 2024-C63
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA,
CALIFORNIA, APPROVING A FIFTH AMENDMENT TO THE CITY
MANAGER EMPLOYMENT AGREEMENT (SERGIO GONZALEZ)
WHEREAS, 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
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, 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, on October 3, 2022, the City Council approved a Third Amendment to the
City Manager’s Employment Agreement approving a salary increase, an increase to the vehicle
allowance and an increase to the severance term; and
WHEREAS, on September 18, 2023, the City Council approved a Fourth Amendment to
the City Manager’s Employment Agreement approving a salary increase and an increase to the
severance term; and
WHEREAS, in September and October of 2024, 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 based upon a
determination of satisfactory performance; and
WHEREAS, the Fifth Amendment attached hereto as Exhibit “A” is authorized pursuant
to Section 12.1 of the Employment Agreement and Azusa Municipal Code Chapter 2, Article III,
Division 2.
THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES HEREBY
RESOLVE AS FOLLOWS:
SECTION 1. Approval of Fifth Amendment to the City Manager Employment
Agreement. The City Council hereby approves the Fifth Amendment to the City Manager
Employment Agreement between the City of Azusa and 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, 2024.
PASSED, APPROVED and ADOPTED this 4th day of November, 2024.
___________________________________
Robert Gonzales
Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2024-C63 was duly adopted by
the City Council, at a regular meeting of said Agency held on the 4th day of November 2024, by
the following vote of the Council:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
___________________________________
Best Best & Krieger, LLP
City Attorney
EXHIBIT “A”
[ATTACH FIFTH AMENDMENT]
45635.01000\42862563.2
CITY OF AZUSA
FIFTH AMENDMENT TO
CITY MANAGER EMPLOYMENT AGREEMENT
(SERGIO GONZALEZ)
1. PARTIES AND DATE.
This Fifth Amendment to the City Manager Employment Agreement ("Fifth Amendment")
is made and entered into as of November ___, 2024 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 be
referred to individually as "Party" and collectively as "Parties" throughout this Fifth 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. On October 3, 2022, the City Council approved a Third Amendment to the City
Manager’s Employment Agreement approving a salary increase, an increase to the vehicle
allowance and an increase to the severance term; and
E. On September 18, 2023, the City Council approved a Fourth Amendment to the
City Manager’s Employment Agreement approving a salary increase and an increase to the
severance term; and
F. In September and October of 2024, 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 based upon a determination
of satisfactory performance; and
G. This Fifth Amendment is authorized pursuant to Section 12.1 of the Employment
Agreement and Azusa Municipal Code Chapter 2, Article III, Division 2; and
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:
45635.01000\42862563.2
A. Section 2 (Term) of the Employment Agreement is hereby amended and restated to
read as follows:
“2. Term. This Agreement shall be effective beginning on ______ and shall terminate
on June 30, 2028, unless terminated by either party pursuant to Section 11. The expiration of this
Agreement on its own terms shall be considered a resignation pursuant to Section 11.5.”
B. Section 3.1 (Salary) of the Employment Agreement is hereby amended and restated
to read as follows:
“3.1 Salary
Effective July 1, 2024, 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, in the amount of Three Hundred Thousand dollars ($300,000.00) (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.
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. The Annual Base
Salary shall be increased each July 1st by the following percentages:
SCHEDULE OF SALARY ADJUSTMENT
Effective Date Percentage Increase Total (Annual) Base Salary
July 1, 2025 Three Percent (3%) $309,000.00
July 1, 2026 Four Percent (4%) $321,360.00
July 1, 2027 Four Percent (4%) $334,214.40
. ”
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 fourteen
(14) months of City Manager's then monthly Base Salary ("Severance Pay") in accordance with
the provisions of this section. Beginning July 1, 2025, such severance payment shall be increased
by one month for every year City Manager is employed by City, up to the statutory maximum
[currently 18 months per Gov. Code 53260(a)(1)]. Payment of the Severance Pay be his sole
45635.01000\42862563.2
remedy for termination without cause or section 1.1.3 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 Fifth 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 4th day of
November, 2024.
[SIGNATURES ON FOLLOWING PAGE]
45635.01000\42862563.2
CITY OF AZUSA EMPLOYEE
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