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HomeMy WebLinkAbout05 - Amendment 1 to City Manager Agreement.O NEWPORT BEACH City Council Staff Report Agenda Item No. 5 September 1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Attorney's Office Aaron Harp, City Attorney 949 - 644 -3131, aharp @newportbeachca.gov PREPARED BY: Michael Torres, Deputy City Attorney APPROVED: C- M� TITLE: Amendment No. One to City Manager's Employment Agreement ABSTRACT: Due to current fiscal conditions, the City Council has asked employees, beginning with employees at the Executive Management level, to contribute more towards their retirement and to accept reduced leave benefits. The attached Amendment No. One reduces the City Manager's benefits to the same level as those recently given to the City Attorney. RECOMMENDATION: Adopt Resolution No. 2011- 94 approving and authorizing the Mayor and City Clerk to execute the attached Amendment No. One to the City Manager's Employment Agreement. FUNDING REQUIREMENTS: The attached Amendment No. One requires the City Manager to contribute more toward his retirement and reduces the amount of leave time he accrues, resulting in a savings to the City. DISCUSSION: Mr. David Kiff serves as City Manager of the City of Newport Beach ( "City ") under an Employment Agreement dated April 12, 2011 ( "Employment Agreement "). The City, like other public agencies throughout the state, is adapting to current fiscal conditions. The attached Amendment No. One brings the City Manager's benefit levels into conformity with the benefits recently given to the City Attorney. Specifically, under Amendment No. One, the City Manager will: (1) contribute 8% of his salary towards his PERs contribution; (2) contribute 1% of his salary to the City to reduce the overall cost of 1 Amendment No. One to City Manager's Employment Agreement September 27, 2011 Page 2 providing retirement benefits; (3) reduce his maximum flex leave accrual by 600 hours to 400 hours instead of 1,000 hours; (4) reduce his annual flex leave accrual by 2 days to 25 days instead of 27 days; and (5) reduce his administrative leave accrual by 80 hours to 40 hours instead of 120 hours. A redlined draft of the amended sections from the City Manager's Employment Agreement is attached to this staff report. Charter Section 503 requires the City Council to establish the City Manager's salary by ordinance or resolution. The City Council previously adopted Resolution No. 2011 -29 approving the City Manager's Employment Agreement, which set his benefit levels. Because benefits are a component of compensation a resolution is attached to this staff report approving Amendment No. One and the reduced benefit levels contained therein. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: C.t._ C. d �- Aaron Harp, City Attorney City Attorney's Office Attachments: (1) Amendment No. One (2) Redlined Draft of Amended Sections (3) Resolution No. 2011 - 2 AMENDMENT NO. ONE TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND DAVID KIFF THIS AMENDMENT NO. ONE TO EMPLOYMENT AGREEMENT ( "Amendment No. One "), is entered into as of this 27th day of September, 2011, by and between the City of Newport Beach, a California Municipal Corporation and Charter City ( "City" or "Employer "), and David Kiff, an individual ( "Employee ") and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City; B. Pursuant to the Employment Agreement dated April 12, 2011 ( "Employment Agreement'), Employer hired Employee to serve as City Manager upon the terms and conditions contained in the Employment Agreement; C. Due to current fiscal conditions, Employer desires City employees to contribute to the cost of employee pension benefits and accept reduced leave allowances; and D. Employer and Employee mutually desire to reduce Employee's current benefits to mirror those of the City Attorney. NOW, THEREFORE, Employer and Employee acknowledge the receipt of adequate consideration and mutually desire to amend the Employment Agreement and agree as follows: 1. Section 4(B) of the Employment Agreement shall be amended to read as follows: B. Flex Leave. Employee shall accumulate Flex Leave as provided in the City's Key and Management Compensation Plan, Executive Management category ( "Compensation Plan "), at the current rate of 25 (twenty -five) days per calendar year. His maximum accrual is limited to four hundred (400) hours. The right to sell back accumulated Flex Leave shall be consistent with the Compensation Plan. 2. Section 4(C) of the Employment Agreement shall be amended to read as follows: C. Administrative Leave. Employee shall be entitled to forty (40) hours of administrative leave per calendar year. Administrative leave will not accrue from calendar year to calendar year and must be used or lost at the conclusion of each calendar year. Consistent with the Compensation Plan, 1 3 there is no right to sell back any accumulated Administrative Leave. 3. Section 4(D) of the Employment Agreement shall be amended to read as follows: D. Additional Benefits. Employee shall receive the same health insurance and retirement benefits, and be entitled to participate in plans and programs such as short term and long term disability plans, life insurance plans, and deferred compensation plans, as are available under the Compensation Plan. This Agreement shall be deemed amended as to these benefits, and these benefits only, whenever the City Council adopts a resolution or takes action changing these benefits under the Compensation Plan. 4. Section 4(I) is added to the Employment Agreement to read as follows: I. PERS. Employer shall make no contribution to Employee's PERS share of retirement costs on behalf of Employee. Employee shall, in addition to making the full Employee contribution toward Employee's retirement costs (eight percent (8 %) of Employee's salary), make a one percent (1 %) of salary contribution to Employer through payroll deduction as reimbursement toward Employer's overall cost of providing retirement benefits. 5. Except as expressly modified herein, all other provisions, terms and covenants set forth in the Employment Agreement shall remain unchanged and shall be in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. One as of the date set forth above. EMPLOYEE M David Kiff APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: �,_, c " Aaron Harp, City Attorney THE CITY OF NEWPORT BEACH, a Charter City and Municipal Corporation Michael F. Henn, Mayor ATTEST: Leilani Brown, City Clerk 2 r Redline Draft of Amended Employment Agreement Sections B. Flex Leave. Employee shall accumulate Flex Leave as provided in the City's Key and Management Compensation Plan, Executive Management category ( "Compensation Plan "), at the current rate of 2527 (twenty -five) days per calendar year. His maximum accrual is limited to four hundred (400) 4-,9A0- hours. The right to sell back accumulated Flex Leave shall be consistent with the Compensation Plan. C. Administrative Leave. Employee shall be entitled to fort 40 tweRty (120) hours of administrative leave per calendar year._ Administrative leave will not accrue from calendar year to calendar year and must be used or lost at the conclusion of each calendar year. Consistent with the Compensation Plan, there is no right to sell back any accumulated Administrative Leave. D. Additional Benefits. Employee shall receive the same health insurance and retirement benefits, and be entitled to participate in plans and programs such as short term and long term disability plans, life insurance plans, and deferred compensation plans, as are available prev+ded ire -under the Compensation Plan. This Agreement shall be deemed amended as to these benefits, and these benefits only, whenever the City Council adopts a resolution or takes action changing these benefits under the Compensation Plan. I. PERS. Employer shall make no contribution Employee contribution toward Employee's retirement costs (eight percent (8 %) of Employee's salary), make a one percent (1 %) of salary contribution.to Employer through payroll deduction as reimbursement toward Employer's overall cost of providing retirement benefits. fI RESOLUTION NO. 2011- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING AMENDMENT NO. ONE TO THE CITY MANAGER'S EMPLOYMENT AGREEMENT WHEREAS, Mr. David Kiff was first appointed by the City of Newport Beach as City Manager under an employment agreement effective from September 12, 2009 through September 11, 2011 ( "Initial Employment Agreement "); WHEREAS, Mr. Kiff was appointed, and continues to serve, as City Manager based upon a City Council finding that Mr. Kiff is the best qualified on the basis of his executive and administrative qualifications, with special reference to his experience in, and his knowledge of, accepted practice in respect to the duties of the office as set forth in the City's Charter; WHEREAS, Mr. Kiff's Initial Employment Agreement was subsequently amended pursuant to that certain Amendment No. One to Employment Agreement between the City of Newport Beach and David Kiff dated September 28, 2010; WHEREAS, Mr. Kiff and the City entered into an amended and restated employment agreement that superseded the Initial Employment Agreement and the September 28th amendment ( "Employment Agreement "); WHEREAS, Mr. Kiff and the City desire to amend the Employment Agreement to reduce the benefits provided under the Employment Agreement to a level that is in conformity with those benefits received by the City Attorney; and WHEREAS, benefits are a component of compensation and City Charter Section 503 requires the City Council to establish the City Manager's compensation via ordinance or resolution. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: 1. The City Council hereby approves and authorizes the Mayor and City Clerk to execute Amendment No. One to the Employment Agreement with David Kiff attached hereto as Exhibit "A" and incorporated herein by reference. 2. The City Council finds this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) -1- 6 of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly 3. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution. ADOPTED this 27th day of September, 2011. Michael F. Henn, Mayor ATTEST: Leilani Brown, City Clerk Attachment: Exhibit "A ": Amendment No. One -2- 7 AMENDMENT NO. ONE TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND DAVID KIFF THIS AMENDMENT NO. ONE TO EMPLOYMENT AGREEMENT ( "Amendment No. One "), is entered into as of this 27th day of September, 2011, by and between the City of Newport Beach, a California Municipal Corporation and Charter City ( "City" or "Employer "), and David Kiff, an individual ( "Employee ") and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City; B. Pursuant to the Employment Agreement dated April 12, 2011 ( "Employment Agreement "), Employer hired Employee to serve as City Manager upon the terms and conditions contained in the Employment Agreement; C. Due to current fiscal conditions, Employer desires City employees to contribute to the cost of employee pension benefits and accept reduced leave allowances; and D. Employer and Employee mutually desire to reduce Employee's current benefits to mirror those of the City Attorney. NOW, THEREFORE, Employer and Employee acknowledge the receipt of adequate consideration and mutually desire to amend the Employment Agreement and agree as follows: 1. Section 4(B) of the Employment Agreement shall be amended to read as follows: B. Flex Leave. Employee shall accumulate Flex Leave as provided in the City's Key and Management Compensation Plan, Executive Management category ( "Compensation Plan "), at the current rate of 25 (twenty -five) days per calendar year. His maximum accrual is limited to four hundred (400) hours. The right to sell back accumulated Flex Leave shall be consistent with the Compensation Plan. 2. Section 4(C) of the Employment Agreement shall be amended to read as follows: C. Administrative Leave. Employee shall be entitled to forty (40) hours of administrative leave per calendar year. Administrative leave will not accrue from calendar year to calendar year and must be used or lost at the conclusion of each calendar year. Consistent with the Compensation Plan, 1 0 there is no right to sell back any accumulated Administrative Leave. 3. Section 4(D) of the Employment Agreement shall be amended to read as follows: D. Additional Benefits. Employee shall receive the same health insurance and retirement benefits, and be entitled to participate in plans and programs such as short term and long term disability plans, life insurance plans, and deferred compensation plans, as are available under the Compensation Plan. This Agreement shall be deemed amended as to these benefits, and these benefits only, whenever the City Council adopts a resolution or takes action changing these benefits under the Compensation Plan. 4. Section 4(I) is added to the Employment Agreement to read as follows: I. PERS. Employer shall make no contribution to Employee's PERS share of retirement costs on behalf of Employee. Employee shall, in addition to making the full Employee contribution toward Employee's retirement costs (eight percent (8 %) of Employee's salary), make a one percent (1%) of salary contribution to Employer through payroll deduction as reimbursement toward Employer's overall cost of providing retirement benefits. 5. Except as expressly modified herein, all other provisions, terms and covenants set forth in the Employment Agreement shall remain unchanged and shall be in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. One as of the date set forth above. EMPLOYEE THE CITY OF NEWPORT BEACH, a Charter City and Municipal Corporation By: By: David Kiff Michael F. Henn, Mayor APPROVED AS TO FORM: ATTEST: CITY ATTORNEY'S OFFICE By: � C, ff ,-� - By: Aaron Harp, City Attorney Leilani Brown, City Clerk 2 0