Shenandoah City Council planning to change city ordinances, ignore Texas Local Government Code, in order to give General Manager Smith a “golden parachute” employment agreement

Shenandoah City Administrator Greg Smith discussing city taxes with residents on April 6, 2017.

Shenandoah, April 11 – The Shenandoah City Council is set to repeat the mistake of history in a special council meeting set for tomorrow, April 12, 2017, at 6:00 p.m., at the City of Shenandoah Municipal Complex, 29955 IH-45 North, Shenandoah, with the primary item on the agenda being to change city ordinances in order to allow City Administrator Greg Smith to have a “golden parachute” severance pay package in his employment agreement with the City. Shenandoah will follow in the footsteps of its neighbor, the City of Oak Ridge North, which found itself mired in litigation only six years ago after an “establishment” group there sought to protect the employment of Oak Ridge North City Manager Paul Mendes.

Texas Local Government Code Section 25.028

Texas law makes clear that City managers may only have “at-will” employment relationships with the municipality which hires them. Texas Local Government Code Section 25.028 mandates:

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

Therefore, cities cannot protect city administrators from subsequent city council decisions to terminate the employment relationship at will.

Smith’s contract with Shenandoah

Shenandoah City Administrator received a lucrative, yet controversial, contract on a 3 to 2 vote of the Shenandoah City Council two months ago. The contract, which the Council approved on February 1, 2017, 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 rid of him for two years.

City Council’s contract with Smith violated City Ordinances

In their haste to provide Smith a lucrative employment contract with long-term benefits prior to the May 6, 2017, elections, where a slate of pro-resident, anti-establishment candidates are running to attempt to gain a majority of the City Council, the current members of the City Council failed to consider that they would need to repeal certain longstanding Shenandoah City Ordinances that prohibit such an employment agreement of the nature they gave to Smith.

The City Ordinance which prohibits the Smith contract is one which the City Council approved in 1995 and included within the 2002 Adopted Code of Ordinances. Since the City Council has failed to review all of the City’s ordinances specifically to determine if there are others which the Smith contract violates, the City Council is proposing to adopt a new ordinance which, in a sweeping manner, repeals “all provisions of the ordinances of the City of Shenandoah in conflict with the provisions of” the new ordinance which would permit the City Council to enter into an employment agreement for the position of City Administrator.

Section 2-96 of the 2002 Adopted Code of Ordinances prohibits the City from entering into any contracts with city employees.

Of course, the new City Council resolution will not be able to circumvent Section 25.028 of the Texas Local Government Code, which the Texas Legislature passed and the Governor of Texas signed into law.

Oak Ridge North’s sad, similar tale

When pro-resident advocates came onto the Oak Ridge North City Council  in December, 2009, they voted to terminate City Administrator Paul Mendes, who had “golden parachute” severance payment provisions in his contract with that city. Mendes filed suit in Judge Fred Edwards’ 9th District Court. After Edwards ruled against the City on an issue, the Ninth Court of Appeals at Beaumont heard an appeal in what had become very expensive litigation for the small city on the east side of Interstate 45 across from The Woodlands and Shenandoah. The appellate court ruled partly in favor of the City and partly in favor of Mendes but never reached the issue of whether Mendes’ contract was even valid under Section 25.028 of the Local Government Code, which would seem to prohibit “golden parachute” language in city administrator contracts.

The Beaumont Court of Appeals sent the Mendes lawsuit back to Judge Edwards to adjudicate. The City of Oak Ridge North file a motion for summary judgment in part based upon Local Government Code Section 25.028’s prohibition of long-term city administrator contracts. While the motion for summary judgment was pending before Judge Edwards, Mendes settled his lawsuit with the City of Oak Ridge North.

The sad and costly tale of Mendes and Oak Ridge North appears to be well on its way to repeating itself in Shenandoah.




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