Shenandoah Councilman Houston admits contract violates “at will” employment requirement for city administrators

Shenandoah City Councilman John Houston.

Shenandoah, April 13 – At the conclusion of a fiery meeting in front of a large crowd of angry Shenandoah citizens, the Shenandoah City Council voted 3 to 2 to give City Administrator Greg Smith an employment contract with a “golden parachute” of two-years severance pay if the City terminates his employment without cause. Two members of the City Council argued that the employment agreement violates Section 25.028 of the Texas Local Government Code, which mandates for general rule cities like Shenandoah:

“The city manager is appointed by and serves at the will of the government body of the municipality.”

City Attorney William Ferebee, a sober attorney who seemed to strive to call “balls and strikes” fairly during the meeting, noted that Section 25.028 does apply to city administrators and requires that city councils have the right to terminate their contracts “at-will.” Ferebee also explained that contracts that can’t terminate at-will are “extremely rare and only used in very large companies.”

The last City Councilman, who spoke before Mayor Ritch Wheeler’s final comments before the Council’s vote, was Councilman John Houston who faces a re-election battle against two challengers on May 6, 2017. Houston admitted,

“The whole idea of the contract with [City Administrator] Greg Smith was to keep people who don’t like a particular person from being able to run him out if they get elected to the city council.”

Several citizens and Councilman Ron Raymaker raised the issue that the council would act more prudently if it waited to vote on the Smith “golden parachute” employment contract after the May 6 elections where three of the five City Council seats are up for election. It seemed apparent that the upcoming elections were precisely the reason the City Council felt they needed to act hastily in this meeting by repealing a city ordinance which prohibits employment contracts, which the Council passed on a 4 to 1 vote, and approving Smith’s employment agreement.

Smith’s contract with Shenandoah

Shenandoah City Administrator Greg Smith received a lucrative, yet controversial, contract on a 3 to 2 vote of the Shenandoah City Council two months ago. A problem arose, however, when citizens discovered that a City Ordinance on the books since 1995 prohibited such contracts. The contract, which the Council approved on February 1, 2017, is identical to the employment agreement also approved last night on a 3 to 2 vote. The agreement gives Smith:

  • $156,472.80 per year in salary
  • a monthly $1,200 car allowance
  • a monthly $120 cell phone allowance
  • a guaranteed raise provision
  • 30 days per year of vacation
  • a 2-year “golden parachute” meaning that if the City terminates Smith, he’ll be entitled to two years of full pay and benefits until he finds another job.

The “golden parachute” means that, even if it’s the City Council’s “will” to terminate Smith, they can’t get him off the payroll for two years.

The City of Oak Ridge North across the highway from Shenandoah found itself in a lengthy and expensive lawsuit when pro-resident advocates came onto the Oak Ridge North City Council and voted to terminate former city administrator Paul Mendes, who had a similar “golden parachute” severance agreement. After lengthy litigation in the trial court, in the Beaumont Court of Appeals, and in the trial court a second time, the City of Oak Ridge North and Mendes concluded the litigation in an out-of-court settlement.

Shenandoah Mayor Ritch Wheeler.

Shenandoah Mayor Wheeler made an interesting statement at the conclusion of the discussion before the vote approving Smith’s contract. Wheeler noted that “I don’t like the process” with respect to how the Council negotiated the contract with Smith. He and Councilman Raymaker complained that they did not have sufficient time to review the agreement in February before the Council voted on it. Wheeler also criticized the use of a committee of two councilmen – Houston and Darrell Frazier – to negotiate the agreement rather than conducting the negotiation with all five Councilmembers and the Mayor present.

The following shows how Council members voted on Smith’s employment agreement last night, April 12, 2017:

Darrell Frazier – Yes

John Houston – Yes

Michael McLeod – No

Ron Raymaker – No

Jean Teague – Yes.

 

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