CITY OF PALM DESERT CONTRACT 035650 HUMAN RESOURCES DEPARTMENT STAFF REPORT REQUEST: Approve a City Manager Employment Agreement with Lauri Aylaian for services as the City of Palm Desert City Manager and appoint her as City Manager effective October 3, 2016. SUBMITTED BY: Lori Carney, Human Resources Manager DATE: September 8, 2016 CONTENTS: Staff report Employment Agreement (Exhibit A) Recommendation: By Minute Motion: Approve the City Manager Employment Agreement (Exhibit A) with Lauri Aylaian for services as the City of Palm Desert City Manager and appoint her as City Manager effective October 3, 2016. Strategic Plan Objective: This decision supports the City?s commitment to being a regional leader. As a key participant in the development of the Envision Palm Desert Strategic Plan, Lauri Aylaian is deeply familiar with the plan, its genesis and its goals. Her appointment demonstrates the City's continued commitment to the goals outlined in the plan. Executive Summary: At its August 25, 2016, meeting the Council authorized staff to negotiate and draft an employment agreement with Lauri Aylaian for services as City Manager within the terms and conditions approved by the Council and highlighted as follows: 0 $220,000 annual salary; - No auto allowance use of city vehicle as needed; Staff Report City Manager Agreement - Lauri Aylaian September 8, 2016 CONTRACT NO. C35650 Page 2 of 3 a Health, dental, vision, disability and life insurance benefits as provided to other management employees (disability and life coverage limited to $200,000 of earnings); 0 Vacation accrual, two weeks initial bank, four weeks annually for the first year, increasing by one (1) day annually (as provided for other executive management employees); however with a limit on accrual balance of 320 hours; 0 Management leave, three weeks annually, no option to cash out any portion, ?use it or lose? provision; 0 Sick leave accrual (96 hours annually) as provided to all employees; no cash-out; Retiree Health no stipend, enrollment in the RHSP savings plan with 1% employee contribution and 1% employer match; 0 Severance equal to four (4) months? salary not applicable if terminated for cause. Background: At its April 28, 2016, meeting the City Council retained Ralph Anderson Associates to conduct a nationwide recruitment for a new City Manager. After receiving nearly 50 applications from across the country, the Council selected eight semi-finalists for interviews. Following interviews on July 29, the Council narrowed the field to three finalists who were interviewed on August 24. At its August 25, 2016 meeting the City Council unanimously selected Lauri Aylaian as the top candidate and authorized staff to prepare an agreement based on the agreed upon terms outlined above. Staff Report City Manager Agreement Lauri Aylaian September 8, 2016 Page 3 of 3 Fiscal Analysis: CONTRACT NO. C35650 The FY 16/17 budget was developed based on the prior City Manager?s contract. The proposed contract is valued at approximately $64,000 less than the currently budgeted amount. Submitted by: m/ Lori Carney, ?uman Resources Manager i east/M. Moore, Director of Finance Approval: wtin McCarthy, Interim?jManager CITY OF PALM DESERT CITY MANAGER EMPLOYMENT AGREEMENT This City Manager Employment Agreement (?Agreement?) is entered into as of the 8th day of September {the "Effective Date?), between the City of Palm Desert (hereinafter referred to as the "City"} and Lauri Aylaian (hereinafter referred to as the ?City Manager? or the "Employee"). City and City Manager! Employee are sometimes referred to in this Agreement as ?Party? and collectively as ?Parties.? RECITALS WHEREAS, it is the desire of the City Council of the City to retain the services of Employee as City Manager pursuant to the provisions of the City of Palm Desert Municipal Code (?City Code"), and WHEREAS, it is the desire of the City Council to provide certain benefits, establish certain conditions of employment and to set certain working conditions of the City Manager. NOW, THEREFORE, the above named Parties hereby mutually agree and promise as follows: 1. Duties, Acceptance of Appointment, Hours of Work, Regional Liaison. 1.1 Duties. The City Manager shall perform those duties and have those responsibilities that are commonly assigned to a city manager of a city in California, and as may be further set forth in the City?s Municipal Code. City Manager shall perform such other legally permissible and proper duties and functions consistent with the Office of the City Manager, as the City Council shall from time to time assign. It is expected that City Manager shall abide by the ICMA Code of Ethics. City Manager is encouraged to participate in community and civic affairs. 1.2 Acceptance of Appointment. City Manager hereby accepts the appointment as City Manager of the City of Palm Desert subject to all terms and conditions set forth in this Agreement. 1.3 Hours of Work It is recognized that City Manager devotes a great deal of time outside the normal office hours?schedule, and to that end, she shall be allowed to establish an appropriate work schedule recognizing that the City Manager should endeavor to be available during regular City Hall hours. 1.4 Devotion to City Business The City Manager?s position is full-time. City Manager shall not engage in any business, educational, professional, charitable, or other activities that would con?ict or materially interfere with performance of her City Manager duties, except as may be specifically authorized by the City Council. 2. Term 8: Renewal. This Agreement shall be deemed effective for an initial term beginning on October 3, 2016 and continuing through October 2, 201? (?Initial Term?), unless sooner terminated or extended by the Parties as set forth in this Agreement. In the event that the City Council determines that the Employee is not to be reemployed upon expiration of the Initial Term of this Agreement, she shall be given written notice thereof by the Council at least thirty (30) days in advance of the expiration of the Initial Term of this Agreement. Should the written notice provided fer in this Section 2 not be given at least thirty (30) days prior, the Agreement shall be extended on the same terms for an additional year. Subsequent terms shall have the same notice and renewal requirements. Failure by the City Council to provide written notice of intent not to reemploy at least thirty (30) days in advance of expiration shall result in an additional year-long renewal.l 3. Compensation. 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, conunencing on the Effective Date, in the amount of Two Hundred Twenty Thousand Dollars {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 October, 201? 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. 7 25001104399 1 9-151 14.2 ?nalized. 3.2 Health and Medical Benefits Except as provided for otherwise in this Agreement, City Manager shall be entitled to receive all benefits, including opt-out provisions, provided to other City executive management employees, as outlined the City?s Flexible Benefit Plan. 3.3 Pension The City agrees to enroll the City Manager as a member of the California Public Employees Retirement System in accordance with regulations. The City Manager shall contribute eight percent of her salary towards the ?employee? share of the cost of the retirement benefit. 3.4 Retiree Medical The City Manager shall participate in the established Retiree Health Savings Plan (RHSP) for the reimbursement of medical premiums and IRS approved medical expenses in retirement, at the same level and under the same regulations as other management employees. 3.3 Life and Long Term Disability Insurance City Manager shall also be entitled to participate in any group life or disability insurance programs approved by the City for all employees; however such coverage shall be limited to the first of salary. 3.4 Technology Allowance The City shall pay the City Manager Forty Dollars per month for usage of her personal cell phone, computer and computer-related equipment for City business. 3.5 Other Bene?ts In addition, and except as otherwise specified herein, City Manager shall receive all such other benefits and compensation that are generally applicable to executive managers of the City as of the date of this Agreement, as the same may be modified from time to time after the date of this Agreement, including but not limited to retirement benefits, long term disability insurance, holidays, administrative leave, bereavement and family illness leave. 3.6 Sick Leave Bene?ts The City Manager shall accrue paid sick leave at the same rate and in the same manner as other City employees and use of such leave shall be in accordance with City policy; however she shall not be eligible to cash out accrued sick leave at separation. usnnumzsuu I 94511-1 . 3 3.7 Nacation Leave Benefits Upon commencement of employment, the City Manager shall have sole access to a bank of eighty (80) hours of vacation leave. Additionally, the City Manager shall accrue one hundred sixty (160) hours of vacation each year, accrued at the rate of 6.15 hours per pay period, subject to a maximum accrual balance of 320 hours. Once the limit of 320 hours has been reached accrual shall cease until such time as the balance falls below the maximum. 3.8 Management Leave Bank. At the beginning of each ?scal year, the City Manager shall have sole access to a bank of one hundred and twenty {120) hours of administrative leave. Notwithstanding the fact that the City Manager?s employment will begin in the middle of a ?scal year, City Manager will have access to a bank of eighty (80) hours of Management Leave upon commencement of employment. City Manager may not cash out any portion of Management Leave. Any administrative leave not used by the end of each fiscal year shall not roll over from year to year, but shall be forfeited if not usedl 4. Performance Evaluation. The Council shall review the City Manager?s job performance at least once annually. The City Manager shall remind the Council of its obligations under this Section each year and shall work with the Council in ?nding an appropriate time to place her annual evaluation on the agenda. The Council shall in writing and in accordance with criteria established by the Council in consultation with the City Manager, develop the annual performance reviews and evaluations. The Council shall provide the City Manager a reasonable and adequate opportunity to discuss the City Managers evaluation with the Council. The annual performance reviews and evaluations shall be reasonably related to the City Manager's written job description and shall be based, in whole or in part, on goals for the City Manager's performance that are jointly developed and adopted by the Council and the City Manager. 5. Bonds. City shall bear the full cost of any ?delity or other bonds required of City Manager under any law or ordinance. 6. Vehicle. City agrees to make available a city owned vehicle for her use for City business as needed. The City shall reimburse the City Manager at the IRS standard mileage rate for any business use of her personal vehicle. TISHIHHMEMN 94504.2 Comment Provides 1' weeks often) leave availability in a given year. but limils the amounl Ihnt can be cashed out. Comma?: Details and: review for ?nal language. i 7. General Business Expenses 7.1 City agrees to budget and pay for professional clues and subscriptions for City Manager necessary for her continuation and participation in national, regional, state and local boards, task-forces, conferences and meetings, associations and organizations desirable for City Manager's continued participation, professional growth, and advancement, and for the bene?t of the City. At a minimum, such professional dues shall include participation in the International Citnyounty Management Association (ICMA) and the California City Managers Foundation. 7.2 City agrees to budget and pay for travel expenses, in accordance with existing policy, of City Manager for professional and official travel, board and task-force meetings, conferences, and occasions to adequately continue the professional development of City Manager and to pursue necessary of?cial functions for City. 7.3 City recognizes that the City Manager may incur expenses of a non-personal, job-related nature that are reasonably necessary to the City Manager?s service to the City. The City agrees to either pay such expenses in advance or to reimburse the expenses, so long as the expenses are incurred and submitted in accordance with the City?s normal expenditure reimbursement procedures. To be eligible for reimbursement, all expenses must be supported by documentation meeting the City?s normal requirements and must be submitted within time limits established by the City. 2.4 Notwithstanding the above, to the degree the City must make budget reductions, appropriate reductions in General Business Expenses commensurate with reductions in other citywide accounts may be made at the sole discretion of the City Council. 3. Abuse of Office or Position. Pursuant to Government Code Sections 53243, 53243.1 and 53243.2, if City Manager is convicted of a crime involving an abuse of her office or position, all of the following shall apply: if Manager is provided with administrative leave pay pending an investigation, City Manager shall be required to fully reimburse City such amounts paid; (2) if City pays for the criminal legal defense of City Manager (which would be in its sole discretion, as it is generally not obligated to pay for a criminal defense), City Manager shall be required to fully reimburse City such amounts paid; and if this Agreement is terminated, any Severance Pay and Severance Benefits related to the termination that City Manager may receive from City shall be fully reimbursed to City or void if not yet paid to City Manager. For purposes of this Section, abuse of office or position means either: (1) an abuse of public authority, including waste, fraud, and violation of the law under color of authority; or (2) a crime against public justice, including, but not limited to, a crime described in Title '7 (commencing with Section 92) of Part 1 of the Penal Code. 23091 945 [14.2 9. Notices. Any notice required or permitted by this Agreement shall be in writing and shall be personally served upon the other Party, or sent by United States Postal Service, postage prepaid and addressed to the appropriate Party as follow: If to City: ADDRESS Attn: Mayor lCity of Palm Desert T3510 Fred Waring Drive Palm Desert, CA 92260 If to City Manager: Lauri Aylaian City Manager [Last reported address in personnel file] Notice shall be deemed given as of the date of personal service or upon the date of deposit in the course of transmission with the United States Postal Service. 10. Termination. 10.1 At?Will Employee City Manager shall serve at the will and pleasure of the City Council. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right of the City Council to suspend from duty, remove from office or otherwise terminate the services of City Manager at any time, at the sole discretion of the City COuncil. This Agreement may be terminated as follows. 10.2 Termination - Council Vote The City Council may remove the City Manager Without Cause by motion adopted by the affirmative votes of a majority of the members of the City Council. Notwithstanding such authority, the City Manager may not be removed within ninety days before or after the date of a municipal election, or recall of one or more of the members of the City Council. 10.3 Termination - Change in Form of Government If any of the governing policies pertaining to the role, power, duties, authority, or responsibilities of City Manager are amended to substantially change City?s form of government, either by action of the City Council, a duly passed initiative measure or state legislation, City Manager shall have the right to terminate the Agreement and receive Severance Pay under Section 10.9. .(lLl423l291945tl-12 10.4 Reduction of Salary or Benefits If the City Council reduces the Annual Base Salary or any other financial benefit of the City Manager in a percentage that is greater than the average reduction sustained by all executive managers, without the City Manager?s written consent, such action shall constitute a termination of this Agreement, and City Manager is then entitled to Severance Pay under Section 10.9. 10.5 Resignation City Manager may voluntarily resign her position as City Manager, after giving City at least thirty {30) days written notice prior to the effective date of such resignation, unless such notice is waived in whole or part by the City Council. In the event the City Manager resigns from her employment with City, the City Manager shall not be entitled to any Severance Pay. 10.6 Death. If, during the term or any extended term, the City Manager dies, the employment and this Agreement is terminated. The City Manager?s estate shall receive any accrued and owed salary and bene?ts, but shall not be entitled to any additional compensation or payment, including but not limited to Severance Pay. 10.? Disability. In the event the City Manager is permanently disabled or is otherwise unable to perform her duties because of sickness, accident, injury, or mental incapacity for a period of six consecutive months, the City may terminate the City Manager?s employment and this Agreement. City Manager shall be entitled to Disability bene?ts as provided by and the terms of any Long Term Disability insurance plan, but not any additional compensation or payment, including Severance Pay. 10.8 Cause The City Council may remove the City Manager for Cause without any need for Severance Pay by motion adopted by the affirmative votes of a majority of the City Council. Cause for purposes of this Agreement shall only mean the following: Acts in bad faith or gross misconduct to the detriment of the City or to the City Manager?s reputation; Refusal or failure to act in accordance with any legal requirement or specific direction or order of the City Council; Exhibition in regard to her employment unfitness or unavailability for service, unsatisfactory performance, misconduct, dishonesty, habitual neglect, or incompetence; ?Milli-1.2 Involvement in crime involving dishonesty, breach of trust, or public conduct reflecting negatively on the City (no pending criminal prosecution need be in effect for termination due to fraud, embezzlement or public conduct reflecting on the City; rather the Council must only have a good faith belief based on a good faith investigation); Creation of physical or emotional harm to any person; or Breach of any material term of this Agreement. Upon any allegation that the City Manager has engaged in conduct that would result in her termination "for cause? as defined above, she is entitled to address and attempt to rebut those allegations before the Council in a closed session prior to the Council making any ?nal determination regarding the veracity of those allegations. In the event the Council, in its discretion, still finds merit to the allegations and terminates, the Employee shall not be entitled to any severance and will he owed no further compensation. 10.9 Severance Pay In the event this Agreement is terminated pursuant to any one of sections 10.2, 10.3, or 10.4 of this Agreement, the City Manager shall receive a severance payment, in a lump Sum, equal to four (4) months of City Manager?s then Base Salary or, if lesser, an amount equal to the Annual Base Salary remaining on the unexpired term of the contract ("Severance Pay?). Such severance paymentshallbeher sole remedy for termination under sections 10.2, 10.3, or 10.4 of this Agreement. The Severance Pay shall be paid 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 to this Agreement. Notwithstanding the foregoing, if the City Manager is terminated for Cause, pursuant to Section 10.3 of this Agreement, then City Manager shall not be eligible for Severance Pay. 725000042099 I945041 I, - ?Eomnlant Details of language slill being ?nalized ?11. General Provisions. 11.1 This writing constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior oral or written representations or written agreements on the subject matter hereof, which may have been entered into between the parties. No modification or revision to this Agreement shall be of any force or effect, unless the same is in writing and executed by the Parties hereto. 11.2 Each Party agrees and acknowledges that no rePresentations, inducements, promises, or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any Party, which are not embodied herein and that any agreement, statement, or promise not contained in this Agreement shall not be valid or binding on either Party. 11.3 If any provision, or portion thereof, contained in the Agreement is held unconstitutional, invalid or unenforceable, the remainder of this Agreement, or portion thereof, shall be deemed severable, shall not be affected and shall remain in full force and effect. 11.4 This Agreement shall be governed by and construed in accordance with the law of the State of California. Venue shall be in Riverside County. 11.5 This Agreement shall be construed as a whole, according to its fair meaning, and not in favor or against any Party. By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit or against the Party responsible for any particular language in this Agreement. 11.6 City Manager acknowledges that she has had an opportunity to consult legal counsel in regard to this Agreement, that she has read and understands this Agreement, that she is fully aware of its legal effect, and that she has entered into it freely and voluntarily and based on her own judgment and not on any representations or promises other than those contained in this Agreement. 11.7 In any dispute arising out of this Agreement, the prevailing party shall recover its reasonable attorneys? fees and costs. 12. Other Terms and Conditions of Employment The City, only upon agreement with City Manager, shall fix any such other terms and conditions of employment, as it may determine from time to time, relating to the performance of the City Manager, provided such terms and conditions are not inconsistent with or in conflict with the provisions of this Agreement, the City Code, or any other law, ordinance or City ResolutiOn. Except as otherwise provided in this Agreement, City Manager shall be entitled to the highest level of benefits that are enjoyed by other executive department 9 725:101m42m291945ma heads of the City as provided in the Municipal Code, Personnel Rules and regulations, or by practice. The City shall exempt the City Manager from the Residency Requirement contained in Section 2.04.020 of the Palm Desert Municipal Code. 13. Indemnification 13.1 City shall defend, hold harmless and inderrmify City Manager against any tort, professional liability claim or demand or other legal action, whether groundless or otherwise, arising out of any alleged act or omission occurring in the performance of City Manager?s duties or resulting from the exercise of her judgment or discretion in connection with the performance of her duties, unless the act or omission involved unlawful conduct, City shall not unreasonably refuse to provide for legal representation at City?s expense. Legal representation, provided by City for City Manager, shall extend until a ?nal determination of the legal action including any and all losses, damages, judgment, interests, settlements, fines, court costs, and the reasonable costs and expenSEs of legal proceedings, including appeals, and including attorneys? fees, and expert witness fees and all other trial and appellate costs, and other liabilities incurred, impoSed upon, or suffered by such City Manager in connection with or resulting from any claim, action, suit, or proceeding, actual or threatened, arising out of or in connection with the performance of City Manager?s duties. 13.2 City agrees to pay all reasonable litigation expenses of City Manager throughout pendency of any City-related litigation to which City Manager is a party, witness or advisor to the City. Such expense payments shall continue beyond City Manager?s employment with the City as long as litigation is pending. Post- employment, City agrees to pay City Manager for reasonable consulting fees, travel expenses and other costs, when City Manager serves as a witness, advisor or consultant to City regarding pending litigation. ON FOLLOWING Lilli-$289! Isl-1504.2 IN WITNESS WHEREOF, the parties have executed this City Manager Employment Agreement on the day of 2016. EMPLOYEHCITY MANAGER Lauri Aylaian, City Manager CITY OF PALM DESERT Robert Spiegel, Mayor ATTES T: City Clerk APPROVED AS TO FORM: City Attorneyr I 9-1504 . 2 Exhibit GENERAL WAIVERS AND RELEASES I, the undersigned, do hereby acknowledge and attest that I have read and understood Section 10.9 of my Employment Agreement with the City of Palm Desert and hereby agree that by accepting Severance Pay in the amount of four (4) months? or, if lesser, an amount equal to the Annual Base Salary remaining on the unexpired term of the Agreement, I agree to waive all rights to further claims, remedies, or legal action against the City, its of?cers and employees. In exchange for receipt of the Severance Pay, and all other salary and benefits owing, I and my representatives, heirs, successors, and assigns do hereby completely release and forever discharge the City of Palm Desert and its related entities and their present and former officers, directors, council members, agents, employees, attorneys, and successors (collectively, "Released Parties?) from all claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character, known or unknown, mature or unmatured, which I may have now or in the future arising from any act or omission or condition occurring on or prior to the date this General Waivers and Releases is signed whether based on tort, contract {express or implied}, or any federal, state, or local law, statute, or regulation (collectively, the ?Released Claims"). Released Claims shall also include, but not be limited to, claims for wages or other compensaticen due, Everance pay, bonuses, sick leave, vacation pay, life or health insurance, or any other fringe benefit. City Manager knowingly and voluntarily waives any and all rights or benefits that she may now have, or in the future may have, under the terms of Section 1542 of the California Civil Code, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERLALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. City Manager acknowledges that she has read and understands this waiver and voluntarily and knowingly is waiving her right under Section 1542 to pursue unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of any kind. izsiiumauauv I 94 5114.2 A-l Unless otherwise required by law, City Manager shall not ?le any claim, sue or initiate an action against any Released Part}.r or participate in any compliance review, action, or proceeding, individually or as a member of a class, under any contract (express or implied), or any federal, state, or local law, statute, or regulation pertaining in any manner to the Released Claims. Approved and Agreed to By: Lauri Aylaian CITY OF PALM DESERT Mayor ATTEST: City Clerk izsutinmzmu I 94504.2 A-2