Evidence of Failed Process in Recent City Council Proceedings

Written by Lakewood News from Karen on January 19, 2023. Posted in Uncategorized.

OVERVIEW

On December 19, 2022, Lakewood City Council passed a new City Manager employment agreement after receiving incomplete information and having limited Council discussion. Some City Council Members seemed to equate a new agreement with the City Manager performance evaluation while others spoke of contract provisions. The result is an agreement for the City of Lakewood’s highest-paid position that increases the City Manager’s benefits, reduces the City Manager’s accountability, and includes misunderstood provisions.

The agreement amendment process started with misunderstandings. From the beginning, the public (and Council) was told that discussions were being held because incentives in the City Manager Employment Agreement expired. In fact, no expiration dates can be found in the previously existing 2014 agreement. (see note 1 below)

There is also some confusion regarding the extent of the amendments. Although the Mayor and some Council Members stated that only specific amendments were being changed relative to incentives, important City Manager performance objective evaluation measures were removed (see note 2). Even the head of the negotiating team believed, and stated, that these evaluation objectives remained, although they were actually removed. In addition, at least two Council Members still believed they remained after votes had been cast.

Other items were added without discussion, including a new provision for retirement payout for the City Manager, on top of existing retirement benefits. (see note 3)

In the end, the entire 2014 agreement was terminated and superseded, although only specific clauses were rewritten in the final 2022 employment agreement. (see note 4)

Brief Recap…

Public statements from Lakewood City Council members during the December 19 meeting show that City Council members were not clear on what was being discussed. These issues include:

The belief that the contract contained an expiration date, which it did not;
The belief that the City Manager’s objective performance criteria remained intact, when they were removed;
Enhanced retirement benefits were added without any council discussion.

City Council’s role is to provide checks and balances related to the financial and executive activities of the City Manager. Checks and balances should begin with implementing a critical review of the proposed City Manager employment agreement. Without a critical review, the public’s interests are not represented. The troublesome fact is, without adequate Council oversight, the City Manager could ask for, and receive, practically anything.

HOW DID THIS HAPPEN?

A healthy Council review process includes information dissemination and review, discussion with multiple viewpoints, position statements, and the ability to vote based on correct and understood information. In the case of the City Manager Employment Agreement review, these processes failed:

Council was given the City Manager Employment Agreement changes without a redline version – which is the industry standard for editing. (see note 5)
Council voted on a new employment agreement without seeing the entire agreement. (see note 6)
Council was not given an opportunity for informed discussion regarding changes (see note 7)
Three Council Members are on record stating that they believed the December 19 meeting was to be an up/down vote only, i.e. no discussion and amendments were to be offered (see note 8)
Formal amendments (to the proposed amendments) were not posted ahead of time to give other Council Members an opportunity to consider options (see note 9)
Rules for yielding the floor were not followed, resulting in muting additional discussion (see note 10)

One result of the discussion breakdown was the apparent misunderstanding surrounding the role of the City Manager’s performance evaluation. Several Councilors made remarks implying that since the evaluation was good, the employment agreement amendments must also good. One person said we got here because of the performance evaluation and the decision to give her a bonus. Two others commented favorably on performance and referenced similar comments on LakewoodSpeaks. One councilor said that everybody already had a chance to talk about this, apparently during the performance evaluation. In fact, every Council Member who voted for the new agreement and made any comment at all, referenced the performance evaluation more than the agreement. It seems that a majority of Council believed that a favorable performance evaluation meant that the new employment contract could just be “rubber stamped” for approval, with little discussion.

Implementation of a “rubber-stamp” process is contrary to the oversight policy inherent in the city charter. It is also evidence of misconceptions about the responsibilities of Council.

Does your Council Member know that nothing expired in the City Manager Employment Agreement? Do they know they authorized an additional 3% pay increase over other employees? Did they calculate how much the new incentives cost on top of the existing bonus? Do they know they could ask for redlines or make the argument for additional discussion? Are they willing to have the extra discussion?

Please see Dec 19 meeting, Springsteen interview, Olver interview, Able interview, and Shahrezaie interview for reference information. Email comments or corrections. Updated 1/20/23 to remove reference to second defined contribution plan.

Footnotes:

Note 1:

The resolution states “certain incentive provisions that concluded on December 8, 2022” with no other explanation. Inquires to City Council as to what those incentives are have not been answered. The Mayor stated in the meeting that pension benefits expired. However, December 8, 2022, is the date Kathy Hodgson is 100% vested in the City Manager’s defined benefit plan. This plan is unique for City Managers, separate from regular employees and law enforcement. The Manager will get this incentive regardless of the new agreement; “Benefits payable under the Retirement Plan will vest, i.e., become nonforfeitable, in Employee remains employed on the 8th anniversary of this Agreement, on December 8, 2022”. Although “several incentives” are referred to in the Council materials, only this one has a date. “Vesting” does not mean expired. 2014 Agreement below

2014 Employment Agreement

14-04008-redacted Download

Note 2:

Below is the new section 5, which completely replaces the previous section 5. Section 5 no longer contains any objective outcomes, shown in the previous contract. Even the mayor, in charge of negotiations, stated several times during the meeting that he believed these measures remained. One Councilor voted for the removal of objective evaluations but later stated objectives were essential, showing the misunderstanding continues.

Note 3:

This new provision reads: “In the event the Employee elects to become Retired from the City, the City shall pay to employee, in lump sum, an amount equal to the pro-tata [spelling mistake in contract] Total Compensation earned as of her final day of employment.” Existing retirement benefits include being vested in the City Manager Pension Fund, the only defined benefit fund the city manages. If correctly interpreted, that means she shall receive an annuity worth 60% of her annual income. A new provision seems to be for an additional 2 years of income but the terms remain unclear, while also investing in the regular defined contribution, City Employees Pension Fund.

Note 4

In fact, the 2022 agreement reads, “This amended Agreement shall supersede and terminate the Employment Agreement dated December 8^th, 2014”. This clause by itself is a contradiction to section 9a: “In addition to the unexpired benefits set forth in the 2014 employment agreement, and any other unexpired benefits”. (see note 1 for expired benefits). The agreement seems to leave in place the 2014 agreement while at the same time superseding it. So when the amendment clauses are put in with the entire agreement, there are contradictions. Most of the unchanged clauses are “legalese”.

Note 5

Redlines are used to clearly indicate changes

Deletions are especially hard to detect without redlines.
Council had to work unnecessarily to get and compare old contracts to determine changes.

Council has had problems in the past after approving zoning changes without a redline. After approval, they found out they voted for several deletions no one noticed, which had long-term ramifications. (Ex, CCU housing)

Note 6

The 2022 agreement below supersedes the 2014 agreement. Instead of providing the entire agreement to Lakewood City Council, only the amended clauses were provided.

2022 Agreement

kathy-hodgson-agreement-word-2022 Download

Note 7

Informed discussion requires information for consideration

All information comes at the beginning of a convened executive session, not beforehand
Council is only given time at the beginning of session to consider items and ask questions.
Council Members who asked for additional time to get informed first were denied
Presentation of information often replaces informed discussion

Note 8

It seems apparent that someone made the decision to only have an up/down vote prior to December 19 and communicated outside of open session, in order for so many Councilors to have that idea.

Note 9

Amendments that are written out previously can be posted for full Council consideration. During the meeting, two Councilors proposed changes to the amendments, but they were not written out so that others could consider them beforehand – just like the original amendments themselves.

Note 10

Reasons offered by the Mayor for muting Councilor comments and questions include:

Being off topic (although all Councilor comments and questions related to the amendments. Not all were related to passing the amendments. “You already made your statement that you disagree”… Mayor Paul)
Potential for making personally disparaging remarks about an employee. No disparaging remarks were made, unless one counts two Councilors calling for a new manager without showing dissatisfaction with the person. The question must be asked: When would be a good time to introduce the idea – which must be done in public.
Maintaining decorum. No Councilor appeared upset until they were muted by the Mayor.

~Comments and corrections welcome here

Comments:

Lenore Herskovitz: On December 19, our City Councilors didn’t know if they were voting solely on amendments to the City Manager’s contract or for a Resolution that included a complete employment agreement. Why wasn’t the 2022 Employment Agreement in its entirety included in their staff provided packet that night? This is a very generous contract that will cost taxpayers around $360,000. Seven representatives voted to pass this resolution that included an employment agreement that they had not even read. How can you justify such negligence? Two councilors had their hands raised to speak when the Mayor called for a vote. He ignored them. These two councilors were half of the four who voted “No”. It is unfortunate that more did not join them.