For most executives, contract negotiations are a private matter.
Government is different and recently in New Smyrna Beach, the public got to be the proverbial fly on the wall with the mayor negotiating the city manager employment agreement on behalf of the City Commission.
Khalid Resheidat sat down with Mayor Russ Owen in front of the cameras to discuss the key terms of his contract. Mr. Resheidat has been employed by the city for 30 years, most recently as the assistant city manager before being asked to step up to the interim city manager job when Pam Brangaccio retired in May.
The contract with Mr. Resheidat will be a little different in that it won’t be open ended. Under the conditions of the Florida State Retirement System, Mr. Resheidat has a set retirement date of Aug. 31, 2024. So the city will be going through this same process with another city manager in less than five years.
Mayor Owen began the conversation acknowledging the awkwardness of the situation and explaining to Mr. Resheidat how he arrived at the proposed contract.
“I have spent a great deal of time looking through as much data as I can from other cities to make sure what we are offering is competitive,” he said. “To clarify, I didn’t focus so much on what prior employees in New Smyrna had in their contract, I focused more on the current market conditions and what I thought would be advantageous in your situation.”
The mayor then outlined the key financial terms in the proposed agreement that had been provided to Mr. Resheidat before the meeting. On behalf of the city, the Mayor offered a base salary of $152,000 and a $600 monthly car allowance.
For health insurance and retirement contributions, the mayor proposed keeping the status quo. Mr. Resheidat’s current contract maintains the city will cover 100% of his health insurance and 50% of any dependent coverage. And New Smyrna currently contributes 14.6% of his base salary to the Florida Retirement System.
Mr. Resheidat’s retirement contribution recently was reduced from about 25% to the 14.6% when he entered the state’s Deferred Retirement Option Program (DROP). Under DROP, employees who have reached retirement eligibility can continue to work for up to a maximum of 60 months with certain limitations on retirement fund contributions.
The final financial terms discussed were the amount of leave time to be earned annually and severance pay should he be let go without cause.
The mayor proposed a reduction in the amount of annual leave time Mr. Resheidat earns from 320 hours to 192 hours, which is what department directors receive. Mayor Owen explained most of the leave time goes unused, or Mr. Resheidat has given time from his account to other employees who run out due to illness. The mayor suggested an additional $3,500 deferred compensation contribution to make up for the reduction in personal leave time.
For severance, the mayor proposed a structure that would start off at 10 weeks pay if Mr. Resheidat was fired in the first year of the contract, with it reducing each year until he would not be eligible for any severance in his final (fifth) year.
Mayor Owen then asked Mr. Resheidat to respond to the terms as outlined, acknowledging he was expecting some negotiation and urging him to feel comfortable to provide feedback on any of the areas discussed.
“I’m accustomed to working hard to negotiate on behalf of the city, but I don’t usually do a good job negotiating for myself,” Mr. Resheidat said.
He said he was fine with the salary and car allowance as proposed. He asked for the city to increase his dependent health insurance coverage to 100% for the next two years, and then he would no longer need that benefit.
Regarding the 10.81% reduction in his retirement contribution, because it could no longer go into his pension due to DROP, he asked that it go into a separate deferred compensation account. He said this would not represent a new cost to the city since it had already been occurring until just recently.
Mr. Resheidat agreed to reduce the annual personal leave time earned, but asked that it be reduced from the 320 hours to 240 hours rather than the 192 the Mayor proposed.
The last issue was severance. Mr. Resheidat asked for 20 weeks pay if he is fired without cause at any time within the first four years of the contract. “This position is a highly political position,” he explained. “You are working at the pleasure of the commission and you take a risk by that.”
Mr. Resheidat said he didn’t anticipate needing the severance, but it made for a more even playing field. “I came in with dignity and I plan to leave with dignity,” he said.
The mayor agreed to include the changes Mr. Resheidat requested and said the final draft would be provided to him and then the commission at the Nov. 12 meeting.
Mayor Owen also explained he would be asking the commission to add language to the contract to further protect the city manager and the city. It was wording he found when researching other city manager contracts. The clause would state that, “In no event may the manager be terminated within 90 days before or after any municipal election for the selection or recall of one or more of the members of the (commission) except by unanimous vote.”
Mayor Owen said he was happy Mr. Resheidat would be serving his remaining years with the city in this capacity. “This is really a great story to me. It’s a great story for staff to see. New Smyrna is loyal to the people who are loyal to New Smyrna. You can start in a position in another department and end your career in the corner office. That’s a great narrative that resonates with me,” he said.
Mayor Owen said he was hopeful the commission would approve the contract they negotiated and would see that it was good for both parties. “I’ve looked at this from a market driven approach, trying to come up with a fair, competitive compensation package. I think you’ve earned this. You’ve earned the right for this position. I look forward to you bringing your brand of leadership to the team and I’m excited about the things that will evolve under your guidance.”