Agenda packet — Half Moon Bay City Council, December 3, 2024 (part 2 of 2)

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: December 3, 2024
TO: Honorable Mayor and City Council
FROM: Catherine Engberg, City Attorney
TITLE: SECOND AMENDMENT TO EMPLOYMENT CONTRACT FOR CITY MANAGER ______________________________________________________________________________ RECOMMENDATION:

By motion, approve Amendment No. 2 to the August 20, 2022 City Manager Employment Agreement with Matthew Chidester to increase the annual base salary from $272,950 to $281,138.50 effective July 1, 2024, and provide for future cost of living increases consistent with what is received by other City executive staff or with State CPI, whichever is lower.

FISCAL IMPACT:

The proposed Amendment No. 2 raises the City Manager’s compensation by 3% ($8,188.50) from $272,950 to $281,138.50 a year effective July 1, 2024. In addition, the proposed Amendment No. 2 would result in an increase of City Manager’s compensation for future fiscal years by the same increase received by other City executive staff members or the State’s CPI, whichever is lower. Future increases will vary based on cost of increases for other staff and CPI.

STRATEGIC ELEMENT:

This recommendation supports all elements of the City Council’s strategic plan.

DISCUSSION:

The City Council completed its annual performance evaluation of the City Manager on Tuesday, November 26, which the Council found to be positive. The evaluation was conducted with support from an independent facilitator. It included a comprehensive 360-degree evaluation, as well as an assessment using the International City Managers Association Practices for Effective Local Government Leadership (attached).

At the conclusion of the evaluation the City Council directed the independent facilitator to negotiate with the City Manager a contract amendment (Amendment No. 2 to the City Manager Employment Agreement) related to the following:
• An extension of the City Manager’s contract term currently set to expire eight months from now in August 2025;
• An increase in the Manager’s compensation by 3% ($8,188.50), from $272,950 to $281,138.50 a year effective July 1, 2024. In addition, the proposed Amendment No. 2 236

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would result in an increase of City Manager’s compensation for future fiscal years by the same increase received by other City executive staff members or the State’s CPI, whichever is lower, consistent with Government Code section 3511.2; and • Modifications to the contract language regarding the use of an independent facilitator for performance evaluations of the City Manager.

While Council indicated that it would consider a longer extension, the City Manager requested a nine (9) month extension (to May 19, 2026), which will allow the new Council time to conduct the standard annual evaluation process prior to any further amendments. The City Manager agrees with the other terms. Amendment No. 2 is still being finalized to reflect these negotiated terms, and will be added to the agenda packet once final.

On December 5, 2023, the City Council approved Amendment No. 1 to the August 20, 2022 City Manager Employment Agreement. This Amendment No. 2 follows the same process and schedule. State law requires that any City Manager contract amendments be considered at a regularly scheduled Council meeting. Dec. 3, 2024 is the last regularly scheduled Council meeting of the year given (the December 17, 2024 meeting has been cancelled).

ATTACHMENTS:

1. ICMA Practices for Excellent Local Government Leadership

2. August 20, 2022 City Manager Employment Agreement

3. December 5, 2023 Amendment No. 1 to City Manager Employment Agreement

4. Amendment No. 2 to the City Manager Employment Agreement (to be added) 237

1. PERSONAL AND PROFESSIONAL INTEGRITY
Being fair, honest, and ethical in all personal and professional relationships and activities.

2. COMMUNITY ENGAGEMENT
Ensuring and managing community involvement in local government to support good decision making.

3. EQUITY AND INCLUSION
Creating an environment of involvement, respect, and connection of diverse ideas, backgrounds, and talent throughout the organization and the community.

4. STAFF EFFECTIVENESS
Taking responsibility for the development, performance, and success of employees throughout the organization.

5. PERSONAL RESILIENCY AND DEVELOPMENT
Demonstrating a commitment to a balanced life through ongoing self-renewal and development in order to increase personal capacity.

6. STRATEGIC LEADERSHIP
Defining and communicating a vision and leveraging all resources and tools to achieve it.

7. STRATEGIC PLANNING
Developing a plan of action that brings the community together, provides clarity of purpose and priorities, and guides the organization’s actions in achieving its goals and objectives.

8. POLICY FACILITATION AND IMPLEMENTATION
Engaging with elected officials and other community stakeholders to create and execute policies that achieve common goals and objectives.

9. COMMUNITY AND RESIDENT SERVICE
Discerning community needs and providing responsive, equitable services.

10. SERVICE DELIVERY
Understanding the basic principles of service delivery, using strategic decision making and continuous improvement to serve the organization and community, and influencing the components and relationships between operational areas.

11. TECHNOLOGICAL LITERACY
Demonstrating an understanding of information technology and ensuring that it is incorporated appropriately in service delivery, information sharing, and public access.

12. FINANCIAL MANAGEMENT AND BUDGETING
Implementing long-term financial analysis and planning that integrates strategic planning and reflects a community’s values and priorities; preparing and administering the budget.

13. HUMAN RESOURCES MANAGEMENT AND WORKFORCE ENGAGEMENT Ensuring that the policies and procedures of the organization are applied consistently and fairly and motivating and engaging the workforce to its highest potential.

14. COMMUNICATION AND INFORMATION SHARING
Effectively facilitating the flow of ideas, information, and understanding.

Practices for Effective
Local Government Leadership
238
1 CITY MANAGER EMPLOYMENT

AGREEMENT
between the
City of Half Moon Bay
and
Matthew Chidester
I. Parties and Date
This Agreement is entered into as of August 20, 2022 (the "Effective Date") by and between the City of Half Moon Bay, California, a municipal corporation (the "City"), and Matthew B. Chidester, an individual (the "City Manager"). The City and the City Manager are sometimes individually referred to as a "Party" and collectively as "Parties." A. The City requires the services of a City Manager; and B. Matthew B. Chidester has the necessary education, experience, skills and expertise to serve as the City’s City Manager; and
C. The City Council of the City (the “City Council”) desires to employ the Matthew B. Chidester to serve as the City Manager of City; and
D. The Parties desire to execute this Agreement pursuant to the authority of and subject to the provisions of the Half Moon Bay Municipal Code; and E. In consideration of these Recitals and the performance by the Parties of the promises, covenants, and conditions herein contained, the Parties agree as provided in this Agreement.

II. Employment and Term
The City hereby employs Matthew B. Chidester as its City Manager, and Matthew B.

Chidester hereby accepts such employment. The initial term of this Agreement shall be for a period of thirty-six (36) months commencing on August 20, 2022, and continuing until August 19, 2025 unless terminated earlier in accordance with Section VI. The Parties may agree to extend this Agreement by amending this Agreement in writing. Nothing in this Agreement shall prevent, limit or otherwise interfere with (a) City Manager’s at-will status; (b) the right of City to terminate the services of City Manager as provided herein; and (c) the right of City Manager to resign from his position as provided herein.

III. Commitments and Understandings
A. The City Manager's Commitments
1) Duties & Authority
(a) The City Manager shall be the chief executive officer of the City DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 239
2 and be responsible to the City Council for the proper administration of all affairs of the City.
(b) The City Manager shall perform all of the duties of the City Manager as set forth in Chapter 2.16 of the Half Moon Bay Municipal Code (the "Municipal Code"), the California Government Code, City policies and procedures approved by the City Council, and such other duties as may be directed by the City Council from time to time.
(c) The City Council may also designate the City Manager as the chief executive of other City-related legal entities. Such other legal entities could include a redevelopment agency, financing authorities, and joint powers authorities.
(d) To accomplish this, and to the extent consistent with the Half Moon Bay Municipal Code and applicable state law, the City Manager shall have the power and shall be required to:
(i) Attend all meetings of the City Council, unless excused by the Mayor, and take part in the discussion of all matters before the City Council.
(ii) Review all agenda documents before preparing the agenda for any regular or special meetings of the City Council. (iii) Direct the work of all City departments, except those that are directly appointed by or report directly to the City Council. (iv) Recommend to the City Council from time to time, adoption of such measures as the City Manager may deem necessary or expedient for the health, safety, or welfare of the community or for the improvement of administrative services, including
recommending to the City Council long-range plans to improve City operations and prepare for future City growth and development. (vii) Provide management training and develop leadership qualities among department heads and staff as necessary to build a City management team that can plan for and meet future challenges. (viii) Prepare and submit the annual budget.
(ix) Represent the City to press and other information media as required.
(x) Meet with individual citizens and groups to discuss complaints and explain City policy and actions.
(viii) Exercise control of City government in emergencies as DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 240
3 authorized by the Municipal Code and California law, including, but not limited to, being designated as the City’s Director of Emergency Services for the purposes of disaster management pursuant to the California Emergency Services Act, Government Code section 8630.
2) Hours of Work
(a) The City Manager is an exempt employee but is expected to engage in those hours of work that are necessary to fulfill the obligations of the City Manager's position. The City Manager does not have set hours of work as the City Manager is expected to be available at all times. This position is exempt from FSLA overtime pay requirements; therefore, City Manager shall not be entitled to additional compensation for any work performed in excess of the City’s regular workweek.
(b) It is recognized that the City Manager must devote a great deal of time to the business of the City outside of the City's customary office hours, and to that end the City Manager's schedule of work each day and week shall vary in accordance with the work required to be performed. The City Manager shall spend sufficient hours on site to perform the City Manager's duties; however, the City Council has discretion over the City Manager's work schedule and work location.
(c) During the Term of this Agreement, the City Manager shall not engage in any outside employment without the express prior consent of the City Council.
3) Disability or inability to perform
In the event the City Manager becomes permanently mentally or physically disabled to the extent that he cannot perform the full range of the essential functions of his position as determined by his treating physician or is otherwise unable to perform the full range of the essential functions of his position because of sickness, accident, injury, mental incapacity or other health reasons with reasonable accommodation and it reasonably appears such incapacity will last for more than six months, the City Council may terminate the City Manager.

B. City Commitments
1) The City shall pay for or provide the City Manager reimbursement for all reasonable, actual and necessary business expenses. The City shall provide the City Manager a City credit card to charge appropriate and lawful business expenses, subject to all City-adopted expense reimbursement policies and requirements.

DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 241
4 2) Subject to the limitations contained in the City's annual general fund operating budget for such expenditures, the City agrees to pay the following:
(a) Professional dues and subscriptions on behalf of the City Manager which are necessary for the City Manager's continuation and full participation in national, regional, state, or local associations and organizations necessary and desirable for the good of the City, and for the City Manager's continued professional participation and advancement. This includes the International City Management Association ("ICMA") and the California City Management Foundation ("CCMF");
(b) Travel and subsistence expenses of the City Manager to pursue official and other functions for the City, and meetings and occasions to continue the professional development of the City Manager, including, but not limited to, national, regional, state, and local conferences, and governmental groups and committees upon which the City Manager serves as a member; and
(c) Travel and subsistence expenses of the City Manager for short courses, institutes and seminars that are necessary for the good of the City or for the professional development of the City Manager. 3) The City recognizes the desirability of representation in and before local civic and other organizations, and the City Manager is authorized to become a member of civic clubs or organizations, for which the City shall pay membership dues to the extent that such expenditures are included in the annual operating budget.

C. Mutual Commitments
1) Performance Evaluation
(a) Annual performance evaluations are an important way for the City Council and City Manager to ensure effective communications about expectations and performance.
(b) The City Council recognizes that for the City Manager to respond to its needs and to grow in the performance of the City Manager's job, the City Manager needs to know how the City Council Members evaluate the City Manager's performance.
(c) To assure that the City Manager gets this feedback, the City Council shall conduct an evaluation of the City Manager's performance at least once each year. During the first year of this Agreement’s term, the City Council and the City Manager shall endeavor to discuss the City Manager’s performance at least once per quarter, with the first performance evaluation DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 242
5 occurring not later than three (3) months following the Effective Date at the initiation of the City Manager. In subsequent years, the City Council and the City Manager agree that performance evaluations, for the purpose of mid-course corrections, may occur quarterly or several times during each calendar year at the request of the City Council. The Parties may use an outside facilitator paid by City funds to assist them in conducting this evaluation, at the option of the City Council.
(d) No later than March of each year the City Manager and the City Council will create goals or other outcome measures that will provide the basis for determining the next year's performance objectives. (e) The annual review and evaluation shall be in accordance with specific criteria established by the City Council with the assistance of the City Manager. Such criteria may be added to or deleted as the City Council may from time to time determine. The City Manager shall timely cause to be placed on the Council’s agenda each year a “closed session” for the purpose of the annual review and evaluation.
(f) The City Council shall define such goals and performance objectives as it determines are necessary for the proper operation of the City for the attainment of the City Council's policy objectives, and the City Council shall further establish a relative priority among those goals and performance objectives.

IV. Compensation
The City agrees to provide the following compensation to the City Manager:

A. Compensation & Required Employer Costs
1) Base Salary
(a) The annual base salary for the position of City Manager shall initially be $265,000.00. The City Council shall annually consider an increase in base salary to be effective at the beginning of the upcoming fiscal year as part of the annual performance evaluation process described under Section III(D)(1).
(b) The City Manager shall be paid at the same intervals and in the same manner as regular City employees.
(c) The City shall not at any time during the term of this Agreement reduce the base salary, compensation or other financial benefits of the City Manager, unless as part of a general City management salary reduction, and then in no greater percentage than the average reduction of all City department heads. The City Manager shall participate in the same manner as other City department heads in DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 243
6 any general salary reductions including in the ones in effect at the date of the execution of this Agreement.
2) Required Employer Costs
(a) Federal Insurance Contributions Act (FICA) (if applicable). i. Old Age Survivor and Disability Income (OASDI).
ii. Medicare.
(b) Unemployment Compensation.
(c) Public Employees Retirement System (PERS).

The City contracts with the California Public Employees' Retirement System for retirement benefits. The City will pay the same percentage of the City's share and the City Manager's (Member's) share for participation in the Public Employees' Retirement System as is paid for other management employees. As of the date hereof, the City pays the full City share and other management employees pay the corresponding employee share.

The terms of the contract between City and CalPERS in accordance with applicable law shall govern the eligibility for and level of benefits to which City Manager is entitled.
(d) The cost of any fidelity or other bonds required by law for the City Manager.
(e) The cost to defend and indemnify the City Manager as provided in Section VII(C), below.
(f) Workers’ Compensation to the same extent provided for other City employees.

B. Basic Benefits
1) Leaves
(a) The City Manager shall accrue leaves as follows:
i. Holiday Leave: The City Manager shall be entitled to the following holidays with pay:

New Year’s Day
One day prior to, or following New Year’s Day*
Martin Luther King, Jr. Day
President’s Day
DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 244
7 Cesar Chavez Day
Memorial Day
Independence Day
Labor Day
Veteran’s Day
Thanksgiving Day
Day after Thanksgiving
Christmas Day
One day prior to, or following Christmas Day*
One Floating Holiday
*These exact dates shall be determined on an annual basis consistent with Citywide policy.

In addition to the above enumerated holidays, the City Manager will also be subject to the “City Hall Closure” as detailed in the Unrepresented Executive Employees Compensation and
Benefits Plan effective through June 30, 2026.
ii. Vacation Leave: The City Manager shall accrue vacation leave at the rate of 14 hours per month through the term of this contract. The City Manager may accumulate up to, but not more than, two (2) years of vacation credit at his current accrual level.

Should the City Manager reach the maximum accrual level he will not accrue vacation until he utilizes his already accrued vacation leave.
iii. Administrative Leave: In addition to vacation leave, the City Manager shall accrue eight (8) hours of administrative leave per month. The City Manager may accumulate up to, but not more than, two (2) years of administrative leave credit at his current accrual level. Should the City Manager reach the maximum accrual level he will not accrue administrative leave until he utilizes his already accrued administrative leave.
iv. Sick Leave:
i. Accruals: The City Manager shall accrue eight (8) hours of sick leave with pay for each month of service. Sick
leave may be applied to:

1. Absence necessitated by an employee’s personal
illness.

2. Medical and dental appointments.

All conditions and restrictions that govern employee use of sick leave shall also apply to the use by an employee DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 245
8 to attend to an illness of his/her child, mother, father, mother-in-law, father-in-law, spouse, domestic partner; domestic partner’s mother, father, or child; and any
dependent living in the same household as the employee. ii. Sick Leave incentive: Two (2) days’ vacation leave will be awarded contingent upon non-usage of accumulated
sick leave (i.e. employee authorized one additional
vacation day per six (6) months provided sick leave
usage does not exceed two (2) days for that same period). v. Additional Leaves
The City Manager shall be eligible for the same bereavement, jury duty, court leave, military leave and industrial disability leave benefits provided to non-public safety City Department Directors.
vi. Leave Payoffs:
i. Vacation/Administrative Leave Payoff: The City
Manager may receive an annual payment in exchange for
earned vacation or administrative leave up to one
hundred four (104) hours in any given calendar year
payable during the month of November. At the time of
the request for the exchange, the City Manager must
retain a minimum of sixty (60) total hours of vacation
and/or administrative leave on their leave banks.
ii. Sick Leave Payoff: Upon separation from the City:

1. Should the City Manager have a minimum of five
(5) years of total service with the City, but less
than ten (10) years of service, shall receive
reimbursement for twenty-five percent (25%) of
their accrued sick leave with a cap of Twenty
Five Hundred Dollars ($2,500.00);

2. Should the City Manager have a minimum of ten
(10) years of total service with the City, but less
than twenty (20) years of service with the City,
he shall receive reimbursement equal to twentyfive percent (25%) of accrued sick leave with no cap;

3. Should the City Manager have a minimum of
twenty (20) years of total service with the City
shall receive reimbursement equal to forty
DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 246
9 percent (40%) of accrued sick leave with no cap.
2) Automobile
The City Manager shall be provided a monthly automobile allowance of $500 in exchange for making a vehicle available for the City Manager's own use and for City-related business and/or functions during, before and after normal work hours. By the City Manager making the City Manager's personal automobile available for use, the City Manager is not precluded from using City vehicles for City business during, before, and after the normal workday on occasion, when appropriate.
3) Relocation Expenses
The City Manager shall be provided a one-time allowance of ten thousand dollars ($10,000.00) to assist with relocation of his primary residence to a primary residence located in the corporate limits of the County of San Mateo. The City Manager shall complete this relocation not later than twenty four (24) calendar months following the Effective Date. This relocation timeframe may be extended by mutual agreement of the parties.

This allowance shall be paid in a lump sum to the City Manager within thirty (30) calendar days of the Effective Date. Should the City Manager fail to relocate consistent with the terms of this Section, the City may request that the City Manager refund the relocation allowance provided hereunder. The City Manager shall be responsible for all tax liabilities associated with this allowance.
4) Reimbursement for Use of Technology
Should the City Manager use his or her personal cell phone, tablet, computer or other technology in the course of City business, the City will provide a technology stipend of One Hundred Dollars ($100) per month. 5) Benefits that Accrue to Other Employees
The City Manager shall be entitled to all non-economic benefits, rights, and privileges accorded to non-public safety City Department Directors except as otherwise provided in this Agreement. If there is any conflict between this Agreement and any resolution fixing compensation and benefits for non-public safety City Department Directors or other unclassified employees, this Agreement shall control.
6) Housing Assistance Loan
The City agrees to make available to the City Manager a one-time loan of up to three hundred and twenty thousand dollars ($320,000) (“City Loan”).

The City Loan may be used solely for a down payment for the purchase of DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 247
10 a primary residence for City Manager within San Mateo County (“Residence”). To be eligible for the City Loan, the City Manager must close on the purchase of a Residence no later than August 31, 2024 and must have hired an Assistant City Manager or otherwise relinquished in writing his rights under Section VI(F) to the Assistant City Manager position. The City Loan shall be evidenced by a Promissory Note made by the City Manager payable to the City and secured by a Deed of Trust on the Residence recorded in the Official Records of San Mateo County. Any such City Loan will include the following terms:
(i) Fifteen (15) year term commencing three (3) years after the date of the Promissory Note, with an interest rate that is the lesser of (a) 2.5%, or (b) the five (5) year average rate of return on the state’s Local Agency Investment Fund
(“LAIF”) plus 1%; the interest rate shall be set at the time the Promissory Note is made and fixed over the term.
(ii) Unless otherwise provided under (v) below, loan payments will begin three years from the date of the Promissory Note.

Interest will not accrue during this three-year “grace period” so long as City Manager continues employment with the
City under this contract, as may be amended from time to time. Following the expiration of the three-year grace period, assuming contract renewal, City Manager shall be required to pay all principal and interest for the loan amount which shall be amortized and payable in equal semi-monthly
installments over the fifteen year term through an automatic payroll deduction.
(iii) The City Loan may be prepaid earlier without penalty. (iv) City Manager shall be responsible to pay all applicable taxes, insurance and homeowners fees associated with the
Residence, and be responsible at his expense to maintain the Residence in good and habitable conditions at all times. (v) Notwithstanding (ii) above, the Promissory Note shall be due and payable in full within eighteen (18) months of the City Manager’s separation if the City Manager is terminated without cause, or within twelve (12) months if the City Manager voluntarily resigns, retires, or is terminated for cause, or following expiration and nonrenewal of this
Agreement. If the City determines in its reasonable
discretion that the Residence is no longer City Manager’s DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 248
11 primary residence, the Promissory Note shall be due and payable in full within one hundred twenty (120) days.
(vi) The lien of City’s Deed of Trust may be junior, subordinate, and subject only to (a) a mortgage, deed of trust, or other instrument primarily given to secure a loan or other
obligation and constituting a lien on all or any portion of the Residence; (b) liens for general ad valorem taxes and
assessments; and (c) encumbrances, such as easements,
rights of way, and covenants, conditions, and restrictions, all of a non-monetary nature, which exist of record as of the closing on the purchase of the Residence. City Manager shall give the City written notice within ten (10) days after a mortgage secured by the Residence is recorded in the
Official Records of San Mateo County.

The Parties agree to cooperate in the preparation and execution of all notes, deeds of trust, agreements, and other documents reasonably necessary to conform the terms of the City Loan to the provisions of this subsection in a form mutually agreed to by the Parties.

V. Security
A. Pensions
1) Federal Insurance Contributions Act (FICA)
If applicable.
2) Deferred Compensation
(a) Section 457 Plan or Section 401 (a) Plan
The City shall contribute ten thousand dollars ($10,000) annually to the City Manager’s Section 457 deferred compensation plan. That contribution shall be made in equal installments each pay period.

The City Manager may elect to contribute additional funds to any qualified Section 457 Plan or Section 401 (a) Plan that the City has approved.
3) Medical, Vision and Dental Insurance
The City Manager shall be eligible for the same medical, dental and vision insurance benefits available to other City employees.

The City will pay the minimum employer contribution required under the DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 249
12 Public Employees Medical and Hospital Care Act (PEMHCA) for each eligible active employee towards the purchase of medical insurance.

In addition, the City will maintain a Cafeteria Plan, pursuant to Section 125 of the Internal Revenue Code, for the purpose of providing employees with access to various health and welfare benefits and shall contribute up to a maximum of one thousand nine hundred dollars ($1,900) per month (the “Cafeteria Plan Allowance”).

The City shall provide dental and vision insurance up to the family level coverage for the City Manager.

Any and all additional sums, over and above the amounts stated above that are required to purchase the employee selected Health and Welfare benefit, shall be paid by the City Manager through payroll deduction. Cafeteria Plan Allowance in excess of actual premiums is to be paid to the City Manager.

In the event the City makes a pre-tax flexible spending account program available to City employees, the City Manager will have the ability to participate in such program (without contribution by the City). 4) Other Insurance
The City shall provide Life Insurance and Accidental Death and Dismemberment coverage for the City Manager in the amount equal to one (1) times his then-applicable annual base salary.

The City shall provide long-term disability coverage of sixty seven percent (67%) of monthly earnings to a maximum monthly benefit of Six Thousand Dollars ($6,000) after a sixty (60) day elimination period.

VI. Separation
A. Resignation/Retirement
The City Manager may resign at any time and agrees to give the City at least 30 days’ advance written notice of the effective date of the City Manager's resignation, unless the Parties otherwise agree in writing. If the City Manager retires from full time public service with the City, the City Manager may provide six months’ advance notice. The City Manager's actual retirement date will be mutually established. In the event City Manager terminates his employment under this Agreement, the provisions of this Agreement and all compensation and benefits owed City Manager under it, shall cease upon the effective date of such termination as determined by City, unless otherwise expressly provided in this Agreement.

B. Termination & Removal
1) The City Manager is an at-will employee serving at the pleasure of the City DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 250
13 Council as provided in Government Code Section 36506. 2) The City Council may remove the City Manager at any time, with or without cause, by a majority vote of its members. Notice of termination shall be provided to the City Manager in writing. “Involuntary termination” as used in this Section shall also include a request that the City Manager resign by the City Council as approved by a majority vote of the City Council or a reduction in salary or other financial benefits of the City Manager by more than ten percent (10%), except as occasioned by a reduction in the salary of other City management staff pursuant to section IV(A)(1)(c). Involuntary termination does not include City Manager’s death, incapacity due to injury or illness (physical or mental), dismissal for just cause as defined in Section E below, nor City Manager’s resignation for any reason other than stated in this Section.
3) The City Manager shall not be removed during the 60-day period preceding or following any City election for membership on the City Council, or during the 90-day period following any change in membership of the City Council, except upon unanimous vote of the City Council.

C. Severance Pay
1) In the event the City Manager is involuntarily terminated by the City Council during such time that the City Manager is willing and able to perform the City Manager's duties under this Agreement, then in that event the City agrees to pay the City Manager a lump sum cash payment equal to six months' base salary then in effect as provided in Section IV(A)(1) above or the number of months left on the unexpired term of the Agreement (whichever is less). Any severance payment shall exclude all other benefits, such as retirement, health, vision, and dental benefits. In addition, vacation and sick leave accrual shall immediately cease upon the date of City’s notification to City Manager that his employment will be terminated. The severance pay shall be computed from the effective date of City Manager’s termination. The intent of these provisions is to comply with Government Code section 53260. Should the Parties agree to renew this contract for a Subsequent Term, the Parties specifically agree that they may renegotiate the terms of this subsection, as they may with other contract terms. 2) In addition, the City shall extend to the City Manager the right to continue health insurance as may be required by and pursuant to the terms and conditions of the Consolidated Omnibus Budget Reconciliation Act Of 1986 (COBRA). The City agrees to pay the City Manager's COBRA coverage for six months or until the City Manager either secures full-time employment or obtains other health insurance, or the number of months left on the unexpired term of the Agreement, whichever of these three events first occurs. The City Manager shall notify the City within five (5) days of securing new full-time employment or insurance.

DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 251
14 3) In exchange for the consideration provided in paragraphs C (1) & (2), the City Manager shall execute release of all claims in a form mutually acceptable to the Parties.
4) All payments required under Sections VI(C)(1) and (2) are subject to and shall be interpreted to comply with the limitations set forth in Government Code Section 53260 regarding maximum severance pay.
5) Notwithstanding any other provision of this Agreement to the contrary, pursuant to California Government Code Section 53243.2, if this Agreement is terminated, any cash settlement related to the involuntary termination that the City Manager may receive from the City shall be fully reimbursed to the City if the City Manager is convicted of a crime involving an abuse of his office or position. The City Council may withhold payment of severance pay pending final disposition of any criminal charges. “Abuse of office or position” has the same definition as contained in Government Code Section 53243.4.

D. Separation for Cause
1) Notwithstanding the provisions of Section VI(C), the City Manager may be terminated for cause. As used in this section, "cause'' shall mean one or more the following:
(a) Conviction of a felony or a misdemeanor involving moral turpitude or dishonest acts for personal gain;
(b) Fraudulent or dishonest acts within the scope of his employment; (c) Willful misconduct or malfeasance;
(d) Willful breach or habitual neglect of duties.
(e) Gross negligence in the exercise of his duties.
2) In the event of termination for cause, the City may terminate this agreement immediately and City Manager shall be given written notice setting forth the reasons for such termination. Said termination shall take effect immediately or as specified by City in the Notice of Termination. In such event, City Manager shall be entitled to only the compensation accrued up to the date of termination, payments required by Section VI(E), below, and such other termination benefits and payments as may be required by law.

The City Manager shall not be entitled to any severance benefits provided by Section VI(C).

Notwithstanding the use of the term “cause” herein, nothing herein contained shall be deemed to create or establish a property right or a right to continuing employment in the position of DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 252
15 employment of City Manager or affect City’s right to terminate the employment of City Manager with or without cause in accordance with this Agreement.

E. Payment for Unused Leave Balance
1) On separation from City employment, the City Manager shall be paid for all unused accrued vacation and administrative leave allowances provided in Section IV(B)(1)(a)(ii) and (iii) above, and/or the City Manager may apply the leave time to service credit for retirement purposes if permitted by PERS. Accumulated vacation and administrative leave balances shall be paid at the City Manager's monthly salary rate at the effective date of separation
2) In the event the City Manager dies while employed by the City under this Agreement, the City Manager's beneficiaries or those entitled to the City Manager's estate, shall be entitled to the City Manager's earned salary, and any in-lieu payments for accrued benefits, including compensation for the value of all accrued leave balances.

F. Return to Prior Job Classification
The City Manager may elect to return to the position of Assistant City Manager within twelve (12) months of the Effective Date so long as (1) the City has not appointed a new Assistant City Manager or begun its recruitment for one and (2) the City Manager was not terminated for cause. If the City Manager elects to return to the position of Assistant City Manager, he shall be entitled to all of the compensation and benefits afforded to the Assistant City Manager, except as may otherwise be limited by this Agreement or which may be duplicative through operation of this Agreement. If the City Manager elects to return to the position of Assistant City Manager, he shall not be entitled to any severance pay as otherwise would be provided under Section VI(C) or the compensation and benefits as City Manager under this Agreement other than that due and owing to him as of his final day of work as City Manager. Nothing in this Agreement is intended to alter the at-will employment nature of the Assistant City Manager position, should the City Manager elect to return to the position of Assistant City Manager.

VII. Miscellaneous Provisions
A. Amendments
This Agreement may be amended at any time by mutual agreement of the City and the City Manager. Any amendments are to be negotiated, put in writing, and adopted by the City Council.

B. Conflict of Interest
DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 253
16 1) The City Manager shall not engage in any business or transaction or shall have a financial or other personal interest or association, direct or indirect, which is in conflict with the proper discharge of official duties or would tend to impair independence of judgment or action in the performance of official duties. Personal as distinguished from financial interest includes an interest arising from blood or marriage relationships or close business, personal, or political associations. This section shall not serve to prohibit independent acts or other forms of enterprise during those hours not covered by active City employment, providing such acts do not constitute a conflict of interest as defined herein.
2) The City Manager shall also be subject to the conflict of interest provisions of the California Government Code and any conflict of interest code applicable to the City Manager's City employment
3) The City Manager is responsible for submitting to the City Clerk the appropriate Conflict of Interest Statements at the time of appointment, annually thereafter, and at the time of separation from the position.

C. Indemnification
Except as otherwise provided by law, and provided that City Manager complies with the provisions of Sections 825 and 825.6 of the California Government Code, as now existing or hereafter amended, City shall defend, hold harmless, and indemnify City Manager against any tort, professional liability claim or demand or other legal action, whether groundless or otherwise, arising out of an alleged act or omission occurring in the performance of City Manager’s duties in accordance with the provisions of Sections 825 and 825.6, as now existing or hereafter amended.

City may conduct such defense reserving the rights of City not to pay the judgment, compromise, or settlement until it is established that the injury arose out of an act or omission occurring within the scope of City Manager’s employment as an employee of City. City is required to pay the judgment, compromise, or settlement only if it is established that the injury arose out of an act or omission occurring in the scope of City Manager’s employment as an employee of City. Nothing in this Agreement authorizes or obligates City to pay that part of any claim or judgment that is for punitive or exemplary damages. City may compromise and settle any such claim or suit and pay the amount of any settlement or judgment rendered therefrom only to the extent authorized in Sections 825 through 825.6, as now existing or hereafter amended. City may compromise and settle any such claim or suit and pay the amount of any settlement or judgment rendered therefrom only to the extent authorized in Sections 825 through 825.6, as now existing or hereafter amended. City is not required to indemnify City Manager for any illegal acts committed by City Manager but may agree to do so, in its discretion.

If the City Manager is convicted of a crime involving an abuse of his office or position, as defined in Government Code Section 53234.4, then the City Manager shall fully reimburse the City for any paid leave salary paid by the City to the City DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 254
17 Manager pending any investigation, funds provided to the City Manager for his legal criminal defense, and/or any severance pay or cash settlement paid to the City Manager related to his termination by the City. Said reimbursements are required if such payments are made, even if the payments were made by the City in the absence for any contractual requirement to do so
D. Severability
If any clause, sentence, part, section, or portion of this Agreement is found by a court of competent jurisdiction to be illegal or unenforceable, such clause, sentence, part, section, or portion so found shall be regarded as though it were not part of this Agreement and the remaining parts of this Agreement shall be fully binding and enforceable by the Parties hereto.

E. Laws Affecting Title
In addition to those laws affecting a City Manager, the City Manager shall have the same powers, rights and responsibilities as a Chief Executive Officer, City Administrative Officer, Administrator, and/or City Administrator as those terms are used in local, state or federal laws.

F. Jurisdiction and Venue
This Contract shall be construed in accordance with the laws of the State of California, and the Parties agree that venue shall be in San Mateo County, California.

G. Entire Agreement
This Contract represents the entire agreement of the Parties, and no representations have been made or relied upon except as set forth herein. This Contract may be amended or modified only by a written, fully executed agreement of the Parties.

H. Waiver
Waiver by either Party of any default, breach or condition precedent shall not be construed as a waiver of any other default, breach or condition precedent or any other right hereunder.

I. Ambiguity
The Parties acknowledge that this is a negotiated Agreement, that they have had the opportunity to have this Agreement reviewed by their respective legal counsel, and that the terms and conditions of this Agreement are not to be construed against any Party on the basis of such Party’s draftsmanship thereof.

J. Headings
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18 The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

K. Notice
Any notice, amendments, or additions to this Agreement, including change of address of either party during the term of this Agreement, which the City Manager or the City shall be required, or may desire, to make shall be in writing and shall be sent by prepaid first class mail or hand-delivered to the respective Parties as follows:
1) If to the City:

Mayor
City of Half Moon Bay
501 Main Street
Half Moon Bay, CA 94019
With a copy to:

Catherine Engberg, City Attorney
City of Half Moon Bay
Shute Mihaly & Weinberger LLP
396 Hayes Street
San Francisco, CA 94102
(Or such other address as the City Attorney may have on file at the time of the notice.)
2) If to the City Manager:

Matthew B. Chidester
City of Half Moon Bay
501 Main Street
Half Moon Bay, CA 94019
Or to City Manager’s home address on file with the City’s Human Resources Department.

DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 256
19 VIII. Execution
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and year first above written. This Agreement may be executed in counterparts, and each counterpart shall be deemed a duplicate original. A copy of a signature shall be deemed equivalent to an original signature. Electronic, fax and email signatures are equally binding as originals.
“City”
City of Half Moon Bay
A Municipal Corporation
“City Manager”
By: _______________________________
Mayor
_______________________________
Matthew B. Chidester
ATTEST:

By: _______________________________
City Clerk

APPROVED AS TO FORM
By: _______________________________
City Attorney
1547700.2
DocuSign Envelope ID: E5F23C24-8B01-47DF-9C5B-64B619725108 257
1 AMENDMENT NO. 1 TO

CITY MANAGER EMPLOYMENT AGREEMENT
between the
City of Half Moon Bay
and
Matthew Chidester
THIS AMENDMENT NO. 1 to the August 20, 2022 City Manager Employment Agreement is made and entered into as of November 7, 2023 by and between the City of Half Moon Bay, a municipal corporation, (“City”) and Matthew Chidester (“City Manager”).

A. The City employs the City Manager pursuant to the terms of the August 20, 2022 City Manager Employment Agreement between the parties (“Agreement”).

B. The City Council, through its labor negotiator, has negotiated with the City Manager to amend the Agreement.

C. The parties now desire to amend the Agreement as described in this Amendment No. 1.

NOW, THEREFORE, in consideration of the covenants contained herein and in the Agreement amended hereby:

1. Section IV.A.1(a) Base Salary is amended as follows:
(a) The annual base salary for the position of City Manager shall be $272,950, as of July 1, 2023. The City Council shall annually consider an increase in base salary to be effective at the beginning of the upcoming fiscal year as part of the annual performance evaluation process described under Section III(D)(1).

2. Section IV.B.1(a)(iii) Administrative Leave is amended to add a new subsection (i) as follows:
i. Supplemental Administrative Leave: An additional, one-time allocation of 117 hours of administrative leave shall be added to the City Manager’s leave bank (“Supplemental Leave”), which must be used by August 19, 2025. Any portion of the
Supplemental Leave that has not been used by August 19, 2025 will be automatically removed from the City Manager’s leave bank.

This Amendment No. 1, together with the provisions of the Agreement that are unaffected by this Amendment No. 1, constitute the entire agreement between the parties.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.

DocuSign Envelope ID: BC9CF670-3F71-4F58-88CC-8BC639644495 25863
2 “City”
City of Half Moon Bay
A Municipal Corporation
“City Manager”
By: _______________________________
Mayor
_______________________________
Matthew Chidester
ATTEST:

By: _______________________________
City Clerk

APPROVED AS TO FORM
By: _______________________________
City Attorney
DocuSign Envelope ID: BC9CF670-3F71-4F58-88CC-8BC639644495 25964
1 AMENDMENT NO. 2 TO

CITY MANAGER EMPLOYMENT AGREEMENT
between the
City of Half Moon Bay
and
Matthew Chidester
THIS AMENDMENT NO. 2 to the August 20, 2022 City Manager Employment Agreement is made and entered into as of December 3, 2024 by and between the City of Half Moon Bay, a municipal corporation, (“City”) and Matthew Chidester (“City Manager”).

A. The City employs the City Manager pursuant to the terms of the August 20, 2022 City Manager Employment Agreement between the parties, which was amended by Amendment No. 1 dated November 7, 2023 (collectively, “Agreement”).

B. Following the City Council’s annual performance evaluation of the City Manager for 2024, the City Council, through its labor negotiator, has negotiated with the City Manager to amend the Agreement.

C. The parties now desire to amend the Agreement as described in this Amendment No. 2.

NOW, THEREFORE, in consideration of the covenants contained herein and in the Agreement amended hereby:

1. Section II Employment and Term amended as follows:

The City hereby employs Matthew B. Chidester as its City Manager, and Matthew B. Chidester hereby accepts such
employment. The term of this agreement shall be through May 19, 2026 initial term of this Agreement shall be for a period of thirty-six (36) months commencing on August 20, 2022, and continuing until August 19, 2025, unless terminated earlier in accordance with Section VI. The Parties may agree to extend this Agreement by amending this Agreement in writing. Nothing in this Agreement shall prevent, limit or otherwise interfere with (a) City Manager’s at-will status; (b) the right of City to terminate the services of City Manager as provided herein; and (c) the right of City Manager to resign from his position as provided herein.

2. Section III.C.1(c) Performance Evaluation is amended as follows:
(c) To assure that the City Manager gets this feedback, the City Council shall conduct an evaluation of the City Manager’s performance at least once each year. During the first year of this Agreement’s term, the City Council and the City Manager shall endeavor to discuss the City Manager’s performance at least once per quarter, with the first performance evaluation occurring not 260
2 later than three (3) months following the Effective Date at the initiation of the City Manager. In subsequent years, tThe City Council and the City Manager agree that performance evaluations, for the purpose of mid-course corrections, may occur quarterly or several times during each calendar year at the request of the City Council. The Parties may use an outside facilitator, selected by mutual agreement of the City Council and City Manager, paid by City funds to assist them in conducting evaluations, at the option of the City Manager City Council.

3. Section IV.A.1(a) Base Salary is amended as follows:
(a) The annual base salary for the position of City Manager shall be $281,138.50, as of July 1, 2024 $272,950, as of July 1, 2023. The City Council shall annually consider an increase in base salary to be effective at the beginning of the upcoming fiscal year as part of the annual performance evaluation process described under Section III(D)(1). In addition, the City Manager shall receive an annual cost-of-living adjustment in an amount equal to that provided to City unrepresented management employees, or equal to the California Consumer Price Index for Urban Wage Earners
and Clerical Workers, as calculated by the Department of Industrial Relations, whichever is less.

This Amendment No. 2, together with the provisions of the Agreement that are unaffected by this Amendment No. 2, constitute the entire agreement between the parties.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.
“City”
City of Half Moon Bay
A Municipal Corporation
“City Manager”
By: _______________________________
Mayor
_______________________________
Matthew Chidester
ATTEST:

By: _______________________________
City Clerk
261
3 APPROVED AS TO FORM
By: _______________________________
City Attorney
1855579.1
262
1 AMENDMENT NO. 1 TO

A. The City employs the City Manager pursuant to the terms of the August 20, 2022 City Manager Employment Agreement between the parties (“Agreement”).

B. The City Council, through its labor negotiator, has negotiated with the City Manager to amend the Agreement.

C. The parties now desire to amend the Agreement as described in this Amendment No. 1.

NOW, THEREFORE, in consideration of the covenants contained herein and in the Agreement amended hereby:

This Amendment No. 1, together with the provisions of the Agreement that are unaffected by this Amendment No. 1, constitute the entire agreement between the parties.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.

By: _______________________________
City Clerk

APPROVED AS TO FORM
By: _______________________________
City Attorney
DocuSign Envelope ID: BC9CF670-3F71-4F58-88CC-8BC639644495 25964

Half Moon Bay City CouncilDecember 3, 2024

Half Moon Bay City Council
December 3, 2024