Contention Flares Up in IRB Over Change in Manager Contract
by Leo Coughlin
INDIAN ROCKS BEACH - While Commissioner Jose Coppen has expressed concern over the attempt to change the city manager's contract that came up at the City Commission's September 25 meeting.
At the end of his routine report, City Attorney Andy Salzman mentioned a change to be made in the manager's contract as an "addendum" to the existing contract that was signed in August when City Manager Steve Cottrell was officially hired.
Coppen maintains that the change in the contract is a material alteration, a substantive change in Section 15 of the contract.
Cottrell denies this is the case, saying, "I sincerely believe that all to parties to my contract as well as the city attorney fully intended I be the full beneficiary of a 15 and then a 17 percent contribution to the city's retirement plan, during the two year time frame of the contract, despite the inadvertent omission of the numerical designation of the only part of their present 'retirement plan.'"
The portion of the contract at issue, Section 15, signed by Cottrell says this -
"Employee shall the have the option to choose to participate in city's retirement (401K; or FRS) retirement plan. If employee chooses to participate in the said plan, city shall contribute an amount equal to fifteen percent (15%) of employee's annual salary into said plan on employee's behalf. Said percentage shall increase at a rate of two percent (2%) for each year of service to a maximum twenty-one percent (21%). Except as set forth in this Section, city shall not be obligated to provide employee with any other deferred compensation or retirement plan."
The proposed change, which Coppen characterizes as a "material alteration," says this -
"Employee shall have the option to choose to participate in city's retirement plan (401a, 457 deferred compensation, FRS, or a combination of 457 and FRS)."
Coppen said that Salzman asserted that the change was not material and was a simple addendum to the contract, but the resolution implementing change says "The City Manager's Employment Agreement is amended as contained in Addendum No. 1" (which contains the change in language).
At last week's meeting it sounded as though Salzman and Cottrell were seeking a quick sign-off by the commission on the proposed change.
Mayor-Commissioner Bill Ockunzzi balked at this. He said he thought the matter should go to the commission for review and discussion.
Salzman and Cottrell persisted, with Cottrell asserting that they were dealing with a "scrivener's error."
In a message to the commission late last week, Coppen disagreed with this contention. He pointed out the provision in Section 15 of the signed contract that says "Except as set forth in this section, city shall not be obligated to provide employee any other deferred compensation or retirement plan."
The underlying factor seems to be the vesting of the retirement benefits. Under the present arrangement, Cottrell would be vested in five years. Under a plan he prefers full vesting would take place immediately.
At stake is money, although both Cottrell and Salzman said the change would have no "financial impact."
For example, Cottrell is paid $95,000 annually. The city's contribution to his retirement would be $14,250 in the first year and $16,150 the second year for a total of $30,400. If he left employment after two years under five year vesting he would receive 40 percent of that sum, i.e., $12,160. Under full vesting, he would receive the full amount - a difference of $18,240.
During the brief discussion September 25, both Salzman and Cottrell insisted that the proposed change would have no financial impact if adopted.
Clearly, with the change in payout there is a financial impact.
Coppen said in the memo to his colleagues, "It appeared that it was the desire of the City Attorney, in concert with the City Manger, to 'rush' the matter through at the September 26 meeting, apparently seeking a quick consensus of the City Commission to make this vital change."
Salzman responded in an e-mail to City Clerk Deanne O'Reilly requesting that the matter be placed on a commission meeting agenda later than October 2, which had first been discussed as a time for discussion.
He said, in part, "I do not want any misunderstandings by any member of the commission regarding this matter."
Cottrell insists that what he wants was the original intention by both parties although he signed a contract that varies from what he said everyone intended.
He said, "While this item was not presented as well it should have been . . ., I feel that a majority of the commission nonetheless believes that I should be . . . treated as fully vested at the outset."
Apart from the merits of what Cottrell seeks, what concerned Coppen, he says, is the manner in which it was brought up plus the fact that the change is "material," a word Salzman, a lawyer, disputes.
As to contracts, it is customarily assumed and has been held by courts that the language of a contract in and of itself expresses the intention of the parties to the contract. And the presumption is that a party who signs a contract knows, understands and agrees to its provisions.
An alteration, according to legal definition, "is an act done upon (a contract) by which its meaning or language is changed . . . or change in rights, interests or obligations of parties."
And an alteration is said to be material when it affects the rights of a party to the contract.
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