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HomeMy WebLinkAbout2002-05-13 City Council (8)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL 12 FROM: DATE: SUBJECT: CITY MANAGER MAY 13, 2002 DEPARTMENT:CITY MANAGER’ S OFFICE CMR: 238:02 APPROVAL OF EMPLOYMENT AGREEMENT WITH DIRECTOR OF ADMINISTRATIVE SERVICES RECOMMENDATION It is recommended that the City Council approve the attached employment agreement. between the City of Palo Alto and Carl Yeats, Director of Administrative Services. DISCUSSION Currently all DePartment-Directors are covered by the City’s Merit System Rules and Regulations. This employment agreement makes the Director of Administrative Services, Carl Yeats, the equivalent of an "at will" employee and therefore exempt from portions of the Merit Rules. This would enable the City Manager to. terminate the employment of the Director of Administrative Services without cause. In recognition of Mr. Yeats’ "at will" status, the employment agreement includes a six-month severance provision. The employment agreement and severance allowance also ,protect .the City from employment-related litigation. The City Attorney recommends both the "at will" conversion and litigation protection componentsof the agreement. I plan to soon recommend to the City Council that all Executive Managers (i.e., the Department Directors and Assistant City Manager) hired in the future be "at will" employees not covered by the Merit Rules. Likewise, the City Attorney intends to request that all future Senior Assistant City Attorneys, whose, hiring is approved by the Council like Department Heads, be hired as "at will" employees. Current Executive Managers will have the opportunity to "opt in" and become "at will" employees with an employment agreement if they so choose. All Council Appointed Officers (CAOs) already serve at the pleasure of the Council as "at will" employees under employment agreements. To implement "at Will" employment for Executive Managers, I will soon be submitting an amendment to the Compensation Plan and Merit Rules. CMR:238:02 Page 1 of 2 "At will" employment for Executive Managers supports a more performance-based environment. It should be noted that "at will" employment is now the curr~nt standard for Executive Managers in local government. The employment agreement also allows the City to provide a housing loan so that Mr. Yeats can afford to purchase a home. The City recruited Mr.Yeats from Southern California where he served as a City Manager. While housing assistance was available as part of our Management Compensation Program to Mr. Yeats when he was hired in 1998, he was unable to purchase a home in Palo Alto or an adjacent community and has been renting for the past several years. The City has been fortunate that recently hired CAOs ¯ and Executives (i:e.,. City Auditor, Planning and Human Resource Directors) already lived in Palo Alto or neighboring communities and had previously acquired homes when real estate values were not so exorbitant; The. details of the housing assistance are included in the following City Manager’s Report (Item 12A on this agenda). RESOURCE IMPACT Implementation of this recommendation to make the-current Administrative Services Director an "at will" employee does not have any resource impact.The resource implications 0fthe housing assistance are discussed in CMR:247:02. ATTACHMENTS 1. Employment Agreement 2. Resolution of the City Council of the City of Palo Alto Amending the Compensation Plan .for Management and Confidential Personnel and Council Appointed Officers to Amend the Compensation of the Director of Administrative Services, Carl Yeats BENEST City Manager CMR:238:02 Page 2 of 2 EMPLOYMENT AGREEMENT THIS AGREEMENT is between the. City of Palo Alto, a municipal corporation and chartered city (~City") and Carl Yeats, its Director of¯Administrative Services (~ASD Director"). It is effective on the latest date next to the signatures on the last page. This Agreement is entered into on the basis of the following facts, among others: A. City, acting by and through its duly appointed City M~nager and with the approval of its¯ duly elected City Council, desires to employ ASD Director as its Director of Administrative Services ¯subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code and in the Charter of the City of Palo Alto ¯(the ~Charter"). B. ASD Director desires .to be employed by the.City, as its Director of Administrative Services, subject to the terms and conditions set forth in this Agreement, the ¯Palo Alto MunicipalCode, and in the Charter. C. City and ASD Director desire to esSablish specific terms and conditions relating to compensation and benefits, performance evaluations, and related matters. D. This Agreement will make ASD¯Director an employee exempt from the City’s Merit System Rules & Regulations pursuant to Section 106 of such Rules. E. ASD Director desires a predictable amount of severance notice and severance pay ishould his employment be terminated. F~ City, mindful of the frequency, administrative disruption, and expense of employment-related litigation, desires to prevent litigation arising from any termination of the employment¯ relationship with ASD Director. // // // 010627 ape 0053028 BASED UPON THE FOREGOING, CITY AND ASD DIRECTOR AGREE ¯ AS FOLLOWS: ¯ i. Employment. ASD Director has been employed for an indefinite term since May 4~ 1998. 2. -Duties of ASD Director.ASD Director shall perform the duties established for the Director of Administrative Services by the Charter,Palo Alto Municipal Code, direction of the City Manager, or aso.therwise provided by law, ordinance, or regulation. 2.1. Full Energy and Skill. ASD Director shall devote.~his full energy, skill, ability, and productive time to the performance of his duties. 2.2. No Conflict. ASD Director shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, which is actually or potentially in conflict with, inimical to, or which interferes with the performance of his duties. 2.3 Permission Required For Outside’ Activities. ASD Director shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, without the ~expreSs permission of the City Manager. 3. Compensation. ASD Director shall be compensated as provided in this Section 3. 3.1. Compensation. ASD Director shall receive an initial base annual salary of One Hundred Forty-Six Thousand Six Hundred Forty Dollars ($.146,640.00) commencing on the effective date of the contract. 3.2. Salary Adjustments.. Not less than once each year, the City Manager shall meet with ASD Director for the express purpose of evaluating the performance Of ASD Director. The City Manager will act in good faith in determining whether to increase or decrease the salary of ASD Director, but the ultimate decision in this regard is within the sole discretion of the City Manager. 4. Regular Benefits and Allowances. ASD Director will be eligible for, and shall receive, all regular benefits (i~e., health insurance, PERS contribution paid by City, etc.) and vacation, sick leave, and~ management leave as are generally -2- provided to management employees pursuant to the City Council- approved Management Compensation.Plan. 5. Additional’ Benefits and Allowances. In addition to the benefits specified in section 4, ASD Director shall receive the following additional benefits and allowances. 5.1 Housing~Assistance. City shall assist ASD Director with the purchase of a house in Palo Alto,. or outside Palo Alto within 25 miles driving distance of City Hall, as provided in this section 5. 5.2 Reasonable Time to Purchase. ASD~ Director shall ¯~urchase a house¯ within a reasonable time after the effective date of this Agreement. He shall continually reside in it¯thereafter during the term of the Agreement. 5.3 City Loan. City shall provide to~ ASD Director a loan (the¯ "City Loan"), secured by a note and first deed of trust on the home purchased by ASD Director, ~up to the amount of $800,000.00. The term of the City Loan shall be 30 years. The interest on the City Loan shall be adjusted annually on July 1 and shall be as follows: 5..3.1. For a period of five (5) years from the date of execution of the note, a rate equal to the lower of 5.5% or the sum of the City’s portfolio rate,~which is defined as the annual rate of return on investment funds of the City of Palo Alto during the most recent fiscal year, plus one quarter percent (1/4%) as calculated annually by the City’s ¯ Department of Administrative ¯Services and independently verified by the City Auditor; and 5.3.2. For the next twentY-five (25) years, the sum of the City’s portfolio rate plus one quarter percent (1/4%), such rate not to exceed twelve percent. (12%) per annum. 5.4 Execution of Documents. City and ASD Director shall cooperate in the preparation and execution of all title documents necessary to conform the purchase of the home to the provisions of .this subsection. The deed shall reflect the terms and conditions of this Agreement, to the extent deemed necessary by the City Attorney. 5.5 No ¯additional¯ mortgages or liens. Except liens for taxes, special assessments, and first deed of trust, -3- ASD Director shall not cause any lien or mortgage to be recorded against the home. .5.6 Property Taxes and Insurance. ASD Director shall pay all property~ taxes and insurance on the home without reimbursement from City. ASD Director. shall obtain, and maintain in force, comprehensive homeowner’s insurance (HO-3), including earthquake and, if applicable due to location, flood coverage. 5.7 Maintenance. ASD Director shall maintain the home in good condition and shall ’be solely responsible for a~l maintenance and repair costs, including uninsured losses. 5.8 Loan Repayment and Acceleration. The loan shall be due and payable in full either upon sale of the house or within 12 months after termination of ASD Director’s employment with the City of Palo Alto, whichever occurs earlier. 6. Additional Expenses of Employment. City shal~ pay the following usual and customary employment expenses. 6.1.The cost of any fidelity or other bonds required by law for the ASD Director. 6.2. The cost to defend and indemnify ASD Director to the full extent of the law as provided by the California Tort Claims Act (Gov. Code, § 810, et seq.), or otherwise. 7. Duration of Employment. ASD Director understands- and agrees that he has no constitutionally protected property or ¯ other interest in his employment as ASD Director. He understands and agrees that he works at the will and pleasure of the City Manager and that he may be terminated, or asked to resign, at any time, with or without cause. 7.1. Severance Pay. If ASD Director is asked to resign or is terminated as ASD Director he shall receive a cash severance payment, or payments (without interest) at intervals specified by ASD Director, equal±ng 6 months salary and benefits. 7.2.Non-Payment of Severance Under Certain Conditions. If the termination of ASD Director is the result of conviction of a felony, he shall not be paid any severance pay. -4- 8 Miscellaneous. 8.1. Notices. Notices given under this Agreement shall be in writing and shall be either: a) served personally;. or b) sent by facsimile (provided a hard copy is mailed within one. (i) business day); or c) delivered by first-class United States mail, certified, with postage prepaid and a return receipt requested; or d) sent by Federal Express, or some equivalent private mail delivery service. Notices shall be. deemed received at the earlier of actual, receipt or three (3) days following deposit in the United States mail, postage prepaid. Notices shall be directed to the addresses shown below, provided that a party may change Such party’s address for notice by giving written.notice to the other party in accordance with.this subsection. CITY: Attn: Mayor City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 95901 Phone: (650) 329-2.226 FAX: (650) 328-3631 ASD DIRECTOR: Carl Yeats 250 Hamilton Avenue Palo Alto, CA 94301~ Phone: (650) 329~2450 FAX: (650) 323-1741 8.2. Entire Agreement/Amendment; This Agreement constitutes the entire understanding and agreement between .the Parties as to those matters contained in it, and supersedes any and .all prior or contemporaneous agreements, representations and understandings of the parties. This Agreement may be amended at any time by mutual agreement of the parties, but any such amendment must be in writing, dated, and signed by the parties and attached hereto. " .8.3. Applicable Law and Venue. This Agreement shall be interpreted according to the laws of the State of California. Venue of any action regarding this Agreement shall be in the proper court in Santa Clara County. 8.4. Attorney’s Fees. If any legal action or proceeding is brought to enforce or interpret this Agreement, the prevailing party as determined by the court shall be -5- entitled to recover from the other party all reasonable costs and attorney’s fees, including such fees and costs as may be incurred in enforcing any judgment or order entered in any such action. Nothing in this subsection shall be read to prevent the parties from agreeing to some alternative method of dispute~ resolution. If such a method is agreed to, any final determination shall include an award of attorney’s fees and costs by the presiding officer. 8.5. Severability. In the event any portion.of this Agreement is declared void, such portion shall be severed from this Agreement and the remaining provisions shall remain in effect, unless the result of such severance would be to substantially al’ter this Agreement or the obligations of the parties, in which case this Agreement shall be immediately terminated. 8.6. Waiver. Any failure of a party to insist upon strict compliance with any term, undertaking, or condition of this Agreement shall not be deemedto be a waiver of such term, undertaking, or condition. To be effective,, a waiver must be in writing, signed and dated by the parties. 8.7. Representation by Counsel. ASD Director and City acknowiedge that they each did, or had the .opportunity to, consult with legal counsel of their ’respective choices with respect to the matters that are the subject of this Agreement prior to executing it. . // // // // // // II It II II --6’-- 020430 sd10053028 8.8. Section Headings. The headings on each of the sections and subsections of this Agreement are for the convenience of the parties only and do not limit or expand the contents of .any such section or subsection. Dated.:CITY OF PALO ALTO By Mayor Dated:ASD DIRECTOR Attest : Carl Yeats City-Clerk Approved as to Form: By:. Ariel Pierre Calonne City Attorney 0204~0 sd10053028 follows: RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OFPALO ALTO AMENDING THE COMPENSATION PLAN FOR MANAGEMENT AND CONFIDENTIAL PERSONNEL AND COUNCIL APPOINTEDOFFICERS ADOPTED BY RESOLUTION NO. 8096, AND AMENDED BY RESOLUTION NO. 8117, TO AMEND THE COMPENSATION OF THE DIRECTOR OF ADMINISTRATIVE SERVICES TheCouncil of. the City of Palo Alto does RESOLVE as SECTION i. Pursuant to the provisions of Section 12 of Article III of. the Charter of the ’City of Palo Alto, the Management Compensation Plan, adopted by Resolution No. 8096, and amended by Resolution 8117, is hereby amended by amending the compensation of the Director of Administrative Services, as set forth in Exhibit "A" and Attachment "A-l", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation as set forth in Section i. SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: - NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Asst. City Attorney City Manager Deputy Director of Administrative Services 020508 e! 8120268 Director of Human Resources 1 Exhibit "A" Director of Administrative Services Compensation The Director of Administrative Services is eligible for all benefits listed in the Compensation Plan for Management and Confidential Personnel and Council Appointees (the ~Compensation Plan") currently in effect, except Section I B and C, as applicable. Notwithstanding any contrary provisions of the Compensation Plan for Management and Confidential Personnel and Council Appointees, Director of Administrative Services shall be compensated in accordance with the employment agreement dated May __,. 2002, a copy of which is attached hereto as Attachment "A-l", and incorporated herein by reference. 020508 el 8120268 EMPLOYMENT AGREEMENT THIS AGREEMENT is between the City of Palo Alto, a municipal corporation and chartered city ("City") and Carl Yeats, its Director of Administrative Services (~ASD Director"). It is effective on the latest date next to the signatures on the iastpage. This Agreement is entered into on the basis of the following facts, among others: A. City, acting by and through its duly appointed City Manager and with the approval of its duly elected City Council, desires to .employ ASD Director as its Director of Administrative Services subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code and in the Charter of the City of Palo Alto (the ~Charter"). B. ASD Director desires to be employed by the City as its Director of Administrative Services, subject to the terms and conditions set forth in this Agreement, the. Palo Alto Municipal Code, and in the Charter. C. City and ASD Director desire to establish specific terms and conditions relating to compensation and benefits, performance evaluations, and related matters. D. This Agreement will make ASDDirector an employee exempt from the City’s Merit System Rules & Regulations pursuant to Section 106 of such Rules. E. ASD Director desires a predictable amount of severance notice and severance pay should his employment be terminated. Fi City, mindful of the frequency, administrative disruption, and expense of employment-related litigation, desires to prevent litigation arising from any termination of the employment relationship with ASD Director. // // // 010627 apc 0053028 BASED UPON THE FOREGOING, CITY AND ASD DIRECTOR AGREE AS FOLLOWS: i. Employment. ASD Director has been employed for an indefinite term since May 4, 1998. 2.Duties of ASD Director.ASD Director shall perform the duties established, for the Director of Administrative Services by the Charter,Palo Alto Municipal Code, direction of the City Manager, or asotherwise provided by law, ordinance, or regulation. 2.1. Full Energy and Skill. ASD Director shall devote his full energy, skill, ability, and productive time to the performance of his duties. 2.2. No Conflict. ASD Director shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, which is actually or potentially in conflict with, inimical to, or which interferes with the performance of his duties. 2.3 Permission Required For Outside Activities. ASD Director shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, without the express permission of the City Manager. 3. Compensation. ASD Director shall be compensated as provided in this Section 3. 3.1. Compensation. ASD Director shall receive an initial base annual salary of One Hundred Forty-Six Thousand Six Hundred Forty Dollars ($146,640.00) commencing on the effective date ofthe contract. 3.2. Salary Adjustments. Not less than once each year, the City. Manager shall meet with ASD Director for the express purpose of evaluating the performance of ASD Director. The City Manager will act in good faith in determining whether to increase or decrease the salary of ASD Director, but the ultimate decision in this regard is within the sole discretion of theCity Manager. 4. Regular Benefits and Allowances. ASD Director will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution paid by City, etc.) and vacation, sick leave, and management leave as are generally 2 020430 sd10053028 provided to management employees pursuant to the City Council- approved Management Compensation Plan. 5. Additional Benefits and Allowances. In addition to the benefits specified in section 4, ASD Director shall receive the following additional benefits and allowances. 5.1 Housing Assistance. City shall assist ASD Director with the purchase .of a house in Palo Alto, or outside Palo Alto within 25 miles driving distance of City Hall, as provided in this section 5. 5.2 Reasonable Time to Purchase. ASD Director shall purchase a house within a reasonable time after the effective date of this-Agreement. He shall continually reside in it thereafter during the term of the Agreement. 5.3. City Loan.City shall provide to ASD Director a loan (the "City Loan"), secured by a note and first deed of trust on the home’purchased by ASD Director, up to the amount of $800,000.00. The term of the City Loan shall be 30 years. The interest on the City Loan shall be adjusted annually on July 1 and shall be as follows: 5.3.1. For a period of five (5) years from the date of execution of the note, a rate equal to the lower of5.5% or the sum of the City’s portfolio rate, which is defined as the annual rate of return on investment funds of the City of Palo Alto during the most recent fiscal year, plus one quarter percent (1/4%) as calculated annually by the City’s Department of Administrative Services and independently verified by the City Auditor; and 5.3.2. For the next twenty-five (25) years, the sum of the City’s portfolio rate plus one quarter percent (1/4%), such rate not to exceed twelve percent (12%) per annum. 5.4 .Execution of Documents. City and ASD Director shall cooperate in the preparation and execution of all title documents necessary to conform the purchase of the home to the provisions of this subsection. The deed shall reflect the terms and conditions of this Agreement, to the extent deemed necessary by the City Attorney. 5.5 No additional mortgages or liens. Except liens for taxes, special assessments, and first deed of trust, -3- 020430 sd10053028 ASD Director shall not cause any lien or mortgage to be recorded against the home. 5.6 Property Taxes and Insurance. ASD DireCtor shall pay all property taxes and insurance on the home without reimbursement from City. ASD Director shall obtain, and maintain in force, comprehensive homeowner’s insurance (HO-3), including earthquake and, if applicable due to location, flood coverage. 5.7 Maintenance. ASD Director shall maintain the home in good condition and shall be solely responsible for all maintenance and. repair costs, including uninsured losses. 5.8 Loan Repayment and Acceleration. The loan shall be due and payable in full either upon sale of the house or within 12 months after termination of ASD Director’s employment with the City of Palo Alto, whichever occurs earlier. 6. Additional Expenses of Employment. City shall pay the following, usual and customary employment expenses. The cost of any fidelity or other bonds required by law for the ASD Director. 6.2. The cost to defend and indemnify ASD Director to the full extent of the law as provided by the California Tort Claims Act (Gov. Code, § 810, et seq.), or otherwise. 7. Duration of Employment. ASD Director understands and.agrees that he has no constitutionally protected property or other interest in his employment as ASD Director. He understands and agrees that he works at ithe will and pleasure of the City Manager and that he may be terminated, or asked to resign, at any time, with or without cause. 7.1. Severance Pay. If ASD Director is asked to resign or is terminated as ASD Director he shall receive a cash severance payment, or payments (without interest) at intervals specified by ASD Director, equaling 6 months salary and benefits. 7.2.Non-Payment of Severance Uhder. Certain Conditions. If the termination of ASD Director is the result of conviction of a felony, he shall not be paid any severance pay. -4- 020430 sd10053028 8.Miscellaneous. 8.1. Notices. Notices given under this Agreement shall be in writing and shall be either: a) served personally; or b) sent by facsimile (provided a hard copy is mailed within one (i) business day); or c) delivered by first-class United States mail, certified, with postage prepaid and a return receipt requested; or d) sent by Federal Express, or some equivalent private mail delivery service. Notices shall be deemed received at the earlier of actual receipt or three (3) days following deposit in the United States mail, postage prepaid. Notices shall be directed to the addresses shown below, provided that a party may change such party’s address for notice by giving written.notice to the other party in accordance with this subsection. CITY: Attn: Mayor City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 95901 Phone: (650) 329-2226 FAX: (650)328-3631 ASD DIRECTOR: Carl Yeats 250 Hamilton Avenue Palo Alto, CA 94301 Phone: (650) 329-2450 FAX: (650) 323-1741 8.2. Entire Agreement/Amendment.~ This Agreement constitutes the entire understanding and agreement between the parties as to those matters contained in it, and supersedes any and all prior or contemporaneous agreements, representations and understandings of the parties. This Agreement may be amended at any time by mutual agreement of the parties, but any such amendment must be in writing, dated, and signed by the parties and attached hereto. 8.3. Applicable Law and Venue. This Agreement shall be interpreted according to the laws of the State of California. Venue of any action regarding this Agreementshall be in the proper court in Santa Clara County. 8.4. Attorney’s Fees. If any legal action or proceeding is brought to enforce orinterpret this Agreement, the prevailing party as determined by the court shall be -5- 020430 sd10053028 entitled to recover from the other party all reasonable costs and attorney’s fees, including such fees and costs as may be incurred in enforcing any judgment or order entered in any such action. Nothing in this subsection shall be read to prevent the ~parties from agreeing to some alternative method of dispute resolution. If such a method is agreed to, any final determination shall include an award of attorney’s fees and costs by the presiding officer. 8.5. Severability. In the event, any portion.of this Agreement is declared void, such portion shall be severed from this Agreement and the remaining provisions shall remain in effect, unless the result of such severance would be to substantially alter this Agreement or the obligations of the parties, in which case this Agreement shall be immediately terminated. 8.6. Waiver. Any failure of a party to insist upon strict compliance with any term; undertaking, or condition of this Agreement shall not be deemed to be a waiver of such term, undertaking, or condition. To be effective, a waiver must be in writing, signed and dated by the parties. 8.7. Representation by Counsel. ASD Director and City acknowledge that they each did, or had the opportunity to, consult with legal counsel of their respective choices with respect to the matters that are the subject of this Agreement prior to executing it. // // II // // // II II II II 020430 sd10053028 -6- 8.8. Section Headings. The headings on each of¯ the sections and subsections of this Agreement are for the convenience of the parties only and do not limit or expand the contents of any such section or subsection. Dated:CITY OF PALO ALTO By Mayor Dated:ASD DIRECTOR¯ Carl Yeats Attest: City Clerk Approved asto Form: By : Ariel Pierre Calonne City Attorney -7- 020430 sd10053028