2019-22 McMillen, Jon - CM Employment AgreementCity of La Quinta
CITY COUNCIL MEETING: June 4, 2019
STAFF REPORT
AGENDA TITLE: APPROVE 27-DAY EXTENSION TO THE CURRENT CITY
MANAGER’S EMPLOYMENT AGREEMENT; APPROVE THE NEW CITY MANAGER’S
EMPLOYMENT AGREEMENT; AND RECEIVE UPDATE ON TERMINATION
AGREEMENTS WITH TALL MAN GROUP
RECOMMENDATION
(1) Approve the Third Amendment to the current City Manager Employment
Agreement extending his term through June 30, 2019, substantially in the form
attached to this report; (2) Approve the new City Manager Employment
Agreement with Jon McMillen, to be effective July 1, 2019, substantially in the
form attached to this report; and (3) Receive and file update on the mutual
termination agreements with Tall Man Group.
EXECUTIVE SUMMARY
•The City Council has concluded a 5-month recruitment process for a new
City Manager.
•At its May 21, 2019 meeting, the Council unanimously voted to extend the
current City Manager’s employment term through June 30, 2019; to appoint
Mr. McMillen as the next City Manager, effective July 1, 2019; to approve
terms and conditions of the new City Manager’s Employment Agreement;
and to have City’s designated representatives oversee mutual termination
of executory agreements with Tall Man Group prior Mr. McMillen starting as
the new City Manager.
FISCAL IMPACT
There is no fiscal impact from extending the current City Manager’s employment
for 27 days (Attachment 1); the new City Manager cannot start until July 1 and
the Council would need to appoint an interim city manager for this period. The
current City Manager’s compensation will be a pro-rated allocation of his current
annual base salary plus benefits (total “pro-ratable” compensation including
benefits is $220,366) for the extension days.
The new City Manager Employment Agreement (Attachment 2) sets a base annual
salary of $210,000 (starting July 1, 2019), subject to potential increase to
$215,000 at the Council’s discretion, after six months employment. The new City
Manager also may be eligible, at the Council’s discretion, for annual performance-
based compensation up to 5% of the annual base salary, not to exceed $10,000,
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for any year in which performance-based compensation may be paid. The new
City Manager would receive the same benefits as currently authorized for
management employees; these benefits would annually cost $20,998.
There is no fiscal impact with the mutual termination of the Tall Man Group
professional services agreements (Attachment 3), as all City payment obligations
have been fully performed under those agreements. These agreements were set
to terminate on June 30, 2019 and the City has not determined if these services
are needed.
BACKGROUND/ANALYSIS
After working for the City as a consultant since 1988 and as the City Manager
since June 4, 2012, current City Manager Frank Spevacek announced his plan to
retire earlier this year. The City hired Ralph Andersen & Associates, with
designated representative Dave Morgan, in February to assist in the process of
hiring a new City Manager. After a national recruitment that attracted 72
applicants from around the country, Council narrowed the list of finalists to six
semi-finalists and two finalists after a series of candidate interviews and a
thorough review of references, among other recruiting actions.
At its May 21, 2019 regular meeting, the Council unanimously voted (5-0 in favor)
to appoint Mr. McMillen as the next City Manager, effective July 1, 2019, and to
approve terms and condition of an Employment Agreement as negotiated between
the City Attorney, Dave Morgan and Mr. McMillen, with instructions to have the
final written agreement scheduled for Council consideration at this meeting.
Mr. McMillen’s qualifications include 17 years of services to the City as a
consultant. He has led some of the City’s more significant projects and programs
over the last several years, such as the SilverRock Resort planning and
development, Vista Dunes mobile home affordable housing development, Last
and Final Recognized Obligation Payment Schedule (ROPS) for the La Quinta
Successor Agency, and Washington Street Apartments temporary relocation and
affordable rental housing development. With his expertise in real property
acquisition and construction management, he has provided to the City general
financial analysis for project feasibility; from his company management and
business experience, he has provided to the City general economic advice for City
programs and operations, including strategic organizational planning. He is a
state-licensed general contractor and has worked closely with staff in several
other cities, such as Coronado.
To bridge the 27-day gap between the current City Manager’s employment term
and new City Manager’s start-date, the Council also unanimously voted (5-0 in
favor) to extend the current City Manager’s Employment Agreement through June
30, 2019. To ensure Mr. McMillen’s transition from the President and sole
shareholder/owner of the Tall Man Group, Inc., to the new City Manager as a City
employee, the Council also unanimously voted (5-0 in favor) to authorize the
City’s designated representatives to execute mutual terminations of current
executory agreements for various services provided by Tall Man Group.
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The Third Amendment to Employment Agreement for the current City Manager
(Attachment 1) memorializes in writing the Council’s action to extend Mr.
Spevacek’s current contract through and including June 30, 2019. The
Employment Agreement for the new City Manager (Attachment 2) sets forth the
terms and conditions approved by Council at its May 21, 2019 meeting.
Prior to the Council’s June 4, 2019 meeting, the City and Tall Man Group entered
into: (i) a Professional Services Agreement, as amended, under which Tall Man
Group provided on behalf of the City fiscal analysis and projections, real estate
analysis, property acquisition/disposition services, due diligence activities and
review, assistance to the City with developer negotiations, project proposal and
pro-forma analysis and evaluation, and assistance with negotiations and
agreement structure, which agreement expires on June 30, 2019; and (ii) an
Agreement for Contract Services under which Tall Man Group provided on behalf
of the City building assessment and evaluation services relating to the Shumway
Ranch, which agreement expires 180 days after its execution (or September 2,
2019). Additionally, the La Quinta Housing Authority and Tall Man Group entered
into a Professional Services Agreement, as amended, under which Tall Man Group
provided on behalf of the Housing Authority project management services related
to the Washington Street Apartments temporary relocation and affordable rental
housing rehabilitation, which agreement expires on December 31, 2019.
Pursuant to the Council’s direction from May 21, 2019, the City Manager (on
behalf of the City and Housing Authority) executed with Tall Man Group an
“Acknowledgment of Completion of Services and Mutual Termination”
(Attachment 3) for all of the pending Tall Man Group agreements, with the mutual
termination effective as of June 1, 2019. All independent contractor services
agreements with Tall Man Group have now been terminated.
ALTERNATIVES:
None proposed, as the Council voted at its last meeting. The recommended action
is to ratify and memorialize those official Council actions.
Prepared by: Bill Ihrke, City Attorney
Approved by: Frank J. Spevacek, City Manager
Attachments:
1.Third Amendment to Employment Agreement (for current City Manager)
2.Employment Agreement (for new City Manager)
3.Acknowledgment of Completion of Services and Mutual Termination of
Agreements for Professional Services Provided by Tall Man Group
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