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Contract incentives likely to draw debate

By Staff | Jul 14, 2010

The incentives portion of a proposed contract for incoming city manager Gary King may prove to be its most controversial aspect.
While some Cape Coral City Council members hail the idea of paying more for achievement of board-mandated goals, others say the initiatives outlined in the proposal are part of the basic job and should not result in additional compensation.
King’s proposed contract is valued at $195,873, including $20,000 in incentive-based bonuses.
Negotiated by King and Council-member Bill Deile, the terms and conditions of the contract were approved by King and City Attorney Dolores Menendez earlier this week, according to a memo from Deile dated July 13.
If approved by city council during a special meeting on July 19, King will receive $140,000 in base salary and, possibly, another $20,000 in bonuses. After 12 months, King would receive a performance review and compensation adjustment, and may include an increase in his salary.
The term of the proposed contract is two years.
Deile had been unanimously directed by city council to negotiate the contract’s terms.
“I’ve given a contract that King and our legal department can live with, now council has to decide if they can live with it,” Deile said.
Other highlights of the contract proposal include: $950 per month in lieu of group health insurance, $450 a month in vehicle allowance, and use of a city provided Blackberry.
King also would receive six months severance pay in a lump sum if he’s terminated without cause with $950 a month in lieu of group health insurance also paid to King for the same time frame unless he becomes otherwise employed.
Unlike previous contracts for city managers Terry Stewart and Carl Schwing, the performance based incentives to earn additional compensation is new.
If he reaches all 11 of his performance based incentives, King can make an additional $20,000.
As proposed, first year performance based incentives would include, but would not be limited to:
n Deliver a balanced budget for FY 2010 – 2011 that maintains the 2009 – 2010 millage rate while reducing the proposed budget’s use of reserves to support operations by $250,000.
n Implement a fleet management program, with the objective to reduce expenses by 16 percent.
n Reduce City’s net annual FY 2010 – 2011 contribution requirement for other post employment benefits (OPEB) by $1,500,000, measured on a full year effect basis.
Deile said the list of incentives are issues city council has been trying to address this year.
He said the bonus values associated with incentives are tied to each incentives’ difficulty.
“The values are based upon the value of obtaining that objective and the difficulty,” he said. “I didn’t want to put big dollars on the low-hanging fruit.”
Councilmember Marty McClain said the incentives should not be rewarded because most of the goals listed are part of a city manager’s job. King should be rewarded for driving economic development, and that the bonuses are not clearly defined.
“There’s no economic development component to the incentives being offered. It has nothing to do with the strategic planning council worked on,” McClain said.
The contract also contains an ethics clause that requires King to adhere to the International City Management Association’s Code of Ethics.
One of the ICMA’s guidelines state that city managers “should not engage in active participation in the election campaign on behalf of or in the opposition to candidates for the governing body”.
Bill Deile and Mayor John Sullivan said King did not violate this guideline prior to the last election. King contributed $75 to Sullivan’s campaign last year, as well as supported the slate of candidates known as “The Road Ahead”, which included Sullivan and Councilmember Chris Chulakes-Leetz.
“He’ll withdraw from whatever political role he’s played in the past,” Deile said.
Mayor John Sullivan said, “It is not a conflict. They guy donated $75 to my campaign, what’s the big deal? He was qualified by the city staff and did great on the interviews.”
Deile also included a compensation comparison with the contract materials that states current City Manager Carl Schwing’s overall package was valued at $203,589, and former city manager Terry Stewart’s at $212,959.
Schwing’s contract, approved by city council in March, was valued at $150,000 for the terms of the contract, which was one year, from March 1, 2010, to Feb. 28, 2011.
Schwing also received $550 a month for car allowance, full insurance premiums for himself and his wife, travel expenses and a hand-held communication device such as a Blackberry.
Schwing’s contract was also negotiated by Deile.
Richard “Dick” Williams, a volunteer with the Florida City and County Management Association’s Range Rider program, said the fact that Bill Deile negotiated the contract was not necessarily unusual.
The Range Rider program offers advice and counseling to municipalities and counties when hiring a city manager.
Williams himself has been a city manager in five different states, having served as city manager in Leesburg, Melbourne, Bartow and Haines City in Florida.
While not familiar with the incentive reward approach contained within King’s contract, Williams did say incentives weren’t anything untoward.
“I’ve not seen contracts with that kind of performance reward included, but there’s nothing objectionable to it,” he said.
Williams did say that he’s never seen someone with no previous city manager experience get a job managing a city of more than 160,000, and that King’s learning curve would be “vertical”.
“It’s a pretty big change, depending on the skills and abilities of that individual to adapt to those constraints,” he said of King’s move from the private to public sectors. “They’re tremendous constraints. They’re easily learned but can come back to bite you in a hurry.”