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SR-06-09-2015-3OCity un it Report City or Santa mouica" City Council Regular Meeting: June 9, 2015 Agenda Item: a... To: Mayor and City Council From: Donna Peter, Director Subject: Contract for Service as City Manager — recommendation that the City Council approve a contract with Rick Cole for his services as City Manager. Recommended Action Staff recommends that the City Council approve the proposed Employment Agreement with Rick Cole for his services as City Manager and authorize the Mayor to execute the agreement. Executive Summary Council has announced its decision to appoint Rick Cole to the position of City Manager. California law requires that his salary be established and approved in public. The vote on the contract will establish his salary at $27,452per month and fulfill that legal requirement. Background Last summer, City Manager Rod Gould announced his intention to retire from his career in city management at the conclusion of his five -year commitment to the City of Santa Monica. Thus, Mr. Gould's service to Santa Monica concluded on January 31, 2015. At its meeting of January 27, 2015, Council appointed Assistant City Manager Elaine Polachek to the position of Interim City Manager. During this time, a recruitment for City Manager was conducted. On May 27, 2015 Council appointed Rick Cole as the new City Manager. Discussion The proposed contract between the City and Mr. Cole will establish a monthly salary of $27,452. Additionally, the contract will specify that Mr. Cole will receive the benefits provided to all members of the City's Executive Pay Plan. 1 of 2 Additionally, the contract provides for nine months severance pay. And, as both the Council and Mr. Cole desire that he reside within the City, the contract also provides for moving expenses, temporary rental assistance, and a home loan. Next Steps Following approval and execution of the contract, Mr. Cole will officially begin his service as City Manager on June 29, 2015. Financial Impacts and Budget Actions Salaries and benefits for the City Manager position are included in the FY 2015 -17 Proposed Biennial Budget. Prepared By: Tatiana Morrison, Executive Administrative Assistant Approved Forwarded to Council f Donna Peter, Director 6/2/2015 Elaine M Polachek, Interim City MSKUY005 Attachments: A. Cole Agreement 6.2015 (DOCX) 2of2 PROPOSED EMPLOYMENT AGREEMENT This Employment Agreement, entered into this __ day of June, 2015, by and between the City of Santa Monica, a California municipal corporation ( "City"), and Rick Cole ( "City Manager "), is made with reference to the following: RECITALS: A. The Santa Monica City Council has appointed Rick Cole to the position of City Manager of the City of Santa Monica. B. The City and Rick Cole wish to enter into an agreement setting forth the terms and conditions of his employment. C. The City Council prefers that the City Manager live in Santa Monica, and Rick Cole prefers to live in the City. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Salary. 1.1. The City agrees to pay the City Manager an annual base salary of Three Hundred Twenty-Nine Thousand Four Hundred Twenty -Four Dollars ($329,424) payable in installments in the same manner and at the same time as other City employees are paid. 1.2. In July of each year, the City Manager's pay scale shall be automatically adjusted in the same percentage as any cost of living adjustment that may be granted to participants in the Executive Pay Plan for that fiscal year, with the base salary adjusted accordingly. 2. Performance Review. The City Council agrees it will complete an annual performance review, of the City Manager. The date of the review each year will be agreed upon by both the City Manager and City Council. As part of the review, City and City Manager agree to jointly define such goals and performance objectives which they determine necessary for the proper operation of the City in the attainment of the City Council's policy objectives. The City Council and City Manager shall establish the relative priority among the various goals and objectives. Said goals and objectives shall be obtainable generally within the time limits, as specified in the annual operating and capital budgets and appropriations approved by the City Council. 3. Benefits, 3.1. Effective July 1, 2015, the City Manager shall have those benefits and privileges of employment customarily provided to Department Heads and set forth in the Executive Pay Plan as it may be amended from time to time. PROPOSED EMPLOYMENT AGREEMENT 3.2. The accrual and use of vacation and sick time shall be as set forth in the Executive Pay Plan except that, in addition to the benefits provided by that plan, the City Manager shall also continence employment with 21 days of vacation and 12 days of sick leave already accrued. 3.3. The CalPERS retirement formula applicable to the City Manager and the appropriate category of CalPERS membership shall be determined by CalPERS. 4. Relocation and Temporary Rental Housing Allowance. 4.1. The City shall pay the City Manager's expenses of moving to Santa Monica, The City Manager shall obtain three bids for moving services and confer with the Mayor on the selection of a moving company. 4.2. The City shall provide the City Manager with a rental housing allowance for up to seven months for living in Santa Monica. The monthly allowance is Two Thousand Dollars ($2,000) and shall not exceed a total of Fourteen Thousand Dollars ($14,000). 5. Home Ownership Option. 5.1. The City shall make a home loan available to the City Manager at a fixed interest rate of 3.00 percent (3 %). 5.2. The loan shall be made on terms standard for residential real estate loans. The term of the loan shall be no less than 15 years and no more than 30 years. Payment options shall include "interest only' and "principal plus interest." The loan will be secured by the real estate in the manner customary for residential loans. 5.3. The loan shall not exceed $1.3 million and the City Manager agrees to provide at least ten percent (10 %) of the purchase price of the home. 5.4. The City Manager shall be responsible for property taxes and insurance. The City shall be named on such insurance. 5.5. Within two years of separation from the City, the City Manager shall buy out the loan from the City. 6. Severance Pay. 6.1. The City shall pay to the City Manager severance pay in an amount equal to nine (9) months base monthly salary upon his termination by the City or upon his separation by mutual agreement between the City and City Manager. For purposes of this Section, "termination by the City" means action by the City Council to terminate City Manager's employment as provided for in the City Charter Section 700. Severance pay shall be paid within thirty (30) days of termination by the City. Notwithstanding the foregoing, severance pay shall not 2 PROPOSED EMPLOYMENT AGREEMENT be required pursuant to this paragraph if the termination of the City Manager was based upon good cause. "Good cause" is defined as follows: (1) Conviction of, or plea of, guilty or nolo contendere to, any crime or offense (other than minor traffic violations or similar offenses) that is likely to have a material adverse impact on the City or City Manager's reputation; or (2) Proven failure of the City Manager to observe or perform any of his duties and obligations, if that failure continues for a period of thirty business days from the date of his receipt of notice from the City Council specifying the acts or omissions deemed to constitute that failure. 6.2. If the City Manager decides to resign his position with the City, he will provide the City Council with at least thirty (30) days written notice. In the event the City Manager resigns his employment with the City, he shall not be entitled to any severance pay. However, the City Manager shall be paid for all accrued and unused vacation leave. 7. Duration of Agreement. This Agreement shall continue in full force and effect until modified by the City and the City Manager in writing or until such time as the City Manager's employment with the City terminates. Upon the termination of the City Manager's employment, he shall be paid all accrued benefits under this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first above written. APPROVED AS TO FORM: MARSHA JONES MOUTRIE City Attorney CITY OF SANTA MONICA, a municipal corporation By: KEVIN McKEOWN Mayor By: RICK COLE City Manager ATTEST: ----------------------- SARAH P. GORMAN City Clerk 3 Reference: Agreement No. 10078 (CCS)