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HomeMy WebLinkAbout02/03/2015 00 Misc Distributed at the Meeting Distributed att the Meeting • BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting Of February 3, 2015 ITEM TITLE: Resolution authorizing the City Manager of the City of Yakima to consent to a settlement entered into by the City of Yakima ( "City ") and Cities Insurance Association of Washington ( "CIAW ") to resolve and settle the damage claim brought by James S. Brown SUBMITTED BY: Helen A. Harvey, Senior Assistant City Attorney SUMMARY EXPLANATION: This matter is on for consideration of a Resolution authorizing the City Manager to consent to a settlement entered into by the City of Yakima and CIAW to resolve and settle a damage claim filed by James Steve Brown on July 30, 2014, and to settle all claims by the claimant. The damage claim filed by James Steve Brown alleged $1,561,930 in damages. The claim against the City of Yakima was settled by the City and CIAW, subject to the presentation of the settlement before the Yakima City Council. A copy of the Release of All Claims is attached. The amount of the settlement is $150,000, of which the City will pay approximately $64,050. The remaining settlement amount of approximately $85,950 is to be paid by CIAW and the City's insurance risk pool CIAW Resolution X Ordinance Contract Other (Specify) Contract Contract term: Start date: End Date or Upon Completion: Mail to (name and address): Phone: Financial Impact/Item Budgeted: Yes X No Amount: Funding Source /Fiscal Impact: Risk Management Insurance required: Strategic Priority (choose only one): economic development , public safety improve the built environment , public trust and accountability X , partnership development STAFF RECOMMENDATION: Adopt Resolution RESOLUTION NO. R -2015- A RESOLUTION authorizing the City Manager of the City of Yakima to consent to a settlement entered into by the City of Yakima ( "City ") and Cities Insurance Association of Washington ( "CIAW ") to resolve and settle the damage claim filed by James S. Brown WHEREAS, on July 30, 2014, a damage claim was filed by James Steve Brown with the City of Yakima Clerk's Office; and WHEREAS, through negotiations, a settlement was reached by the City of Yakima and CIAW and the claimant to resolve and conclude all claims in the matter; and WHEREAS, in the settlement agreement, liability for all such claims is denied by the entities being released; and WHEREAS, the amount of the settlement is $150,000, of which the City will pay approximately $64,050, and the remaining settlement amount of approximately $85,950 is to be paid by CIAW and the City's insurance risk pool CIAW; and WHEREAS, the City Council of the City of Yakima deems it to be in the interest of the City to authorize the City Manager to consent to a settlement entered into by the City of Yakima and CIAW and the claimant to resolve and conclude the damage claim; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is authorized to consent to the settlement entered into by City of Yakima and CIAW to resolve and settle the damage claim filed by James Steve Brown, which settlement will be paid by the City of Yakima and CIAW ADOPTED BY THE CITY COUNCIL this day of February, 2015. Micah Cawley, Mayor ATTEST City Clerk SETTLEMENT AGREEMENT 1. Release For the consideration recited below, James `Steve" Brown and Angie Brown, husband and wife, and the marital community composed thereof, and their representatives, beneficiaries, heirs, children, grandchildren, executors, administrators, successors and assigns (hereinafter "Releasing Parties "), forever release the City of Yakima, Cities Insurance Association of Washington ("CIAW "), and all their respective past, present, and future agents, employees, officers, directors, elected and appointed officials, assigns, successors, attorneys and related entities (hereinafter "Released Parties ") from all claims, rights and causes of action, which may ever be asserted by the Releasing Parties, whether presently known or unknown, presently asserted or unasserted, presently vested or contingent, which in any way arise out of or are related to any incidents, acts or omis- sions between the Releasing Parties and the City of Yakima and its past. present or future elected or appointed officials, officers, employees, and agents, including but not limited to (1) all matters arising from or related to James `Steve" Brown's employment with the City of Yakima, his termination from employment with the City of Yakima, or his reinstatement of employment with the City of Yakima, (2) all those matters which are or could have been asserted as a claim by Angie Brown; (3) all those matters which are or could have been the subject of the Claim for Damages filed by James Brown on or about July 30, 2014, (4) all matters which are or could have been the subject of Equal Employ- ment Opportunity Commission Charge Number 551-2014-01511, and (5) any other incidents, acts or omissions involving the Releasing Parties and the Released Parties occurring through the date this Settlement Agreement is signed. This release includes all claims, rights and causes of action under federal, state, or local law, including, but not limited to. whether based in statute, regulation, code, ordinance, tort, contract, equity or otherwise, and specifically including by way of illustration, but not limited to, all claims under the United States Constitution, the Washington State Constitution, Age Discrimination and Employment Act, Title VIT of the Civil Rights Act of 1964 (as amended by the Civil Rights Act of 1991), Older Workers Benefit Protection Act, and the Washington Law Against Discrimination (RCW Chapter 49.60). This release covers any and all past, present and future injuries, damages or losses known or not known to the Releasing Parties, but which may later develop or be discovered in connection with the above referenced matters. including, but not limited to, all claims of Settlement Agreement - 1 of 4 the type set forth above, for violation of civil rights, for retaliation, for personal injuries, for loss of income, for attorney's fees, for costs, and for loss of consortium. 2. Consideration The consideration for the aforementioned settlement and the release contained in paragraph 1 above includes the following 1) Payment by CIAW to the Trust Account of the Law Office of Hector Leal the sum of One Hundred Fifty Thousand Dollars ($150,000), payable for the benefit of the Releasing Parties; 2) Restoration of 649 75 hours of leave in one of two ways at the op- tion of the Releasing Parties. A) Sick Leave: Use the hours as sick leave at full hours (649 75) which can be used for scheduled pre- ventative health and dental appointments, unscheduled personal /family illness, or long -term illness or injury; or B) Paid Time Off Convert 649 75 hours to paid time off (PTO) at the rate of 70% which totals 453.83 hours. Paid time off is a leave program for nonrepre- sented City employees which combines sick leave, va- cation, and personal holidays into one leave bank. 3) Tax liability, if any, on the proceeds of the settlement sum shall be paid by the Releasing Parties, and the Releasing Parties agree to hold the City of Yakima and CIAW harmless and to indemnify them from any tax consequences of this settlement. The duty to indemnify and hold harmless the City of Yakima and CIAW includes, but is not limited to, any required employer contribution or payment if any of the settlement proceeds are determined to be taxable income as to the Releasing Parties or their law firms. 4) Employer shall not discriminate, intimidate, harass, threaten, retali- ate or take any adverse employment action against Employee be- cause he exercised his right to submit a tort claim, EEOC charge or otherwise complained about the facts and circumstances of his sepa- ration from employment with the City in November of 2013 Any Settlement Agreement - 2 of 4 such prohibited retaliation includes adverse actions independent of the workplace. Examples of kind of conduct that may be considered retaliatory under this Agreement includes denial of promotion as well as material changes in the terms and conditions of employment such as work assignments. An employee who retaliates against Em- ployee may be subject to discipline up to and including termination of employment. 5) Settlement is contingent on City Council approval at its next meeting on Tuesday, February 3, 2015 If City Council approval of the set- tlement is denied, the Released Parties hereby agree to not contend the lawsuit filed by the Releasing Parties on or after February 5, 2015, is untimely 3. Indemnification for Subrogation and Lien Claims, and Hold Harmless The Releasing Parties represent that all Reliable expenses, and all subrogation claims, and all claims of any other persons or entities legally entitled to share in the proceeds of this settlement have been paid. or will be paid or otherwise resolved from the proceeds of this settlement. The Releasing Parties agree to defend, indemnify and hold harmless the Released Parties from and against all lien and subrogation claims, if any, including all costs and attorney's fees incurred in the defense of such claims. 4. Warranty of Capacity to Execute Agreement All signatories to this Settlement Agreement certify and warrant that they are fully authorized to enter into this agreement and bind themselves and the parties thereto 5. Governing Law This Settlement Agreement shall be construed and interpreted according to the laws of the State of Washington. The venue of any action necessary under this Settlement Agreement shall solely be in Yakima County, Washington. 6. Denial of Liability This Settlement Agreement expresses the full and complete settlement of all claims. It is expressly agreed that liability for all such claims is denied by the Released Parties as is any fault relating to the matters described. It is agreed and understood that this settlement Settlement Agreement - 3 of 4 is a compromise of disputed claims. Regardless of the adequacy of the above considera- tion, acceptance of this release shall not operate as an admission of liability on the part of the Released Parties. 7. Consultation With Counsel All signatories to this Settlement Agreement have read this Settlement Agreement and fully understand the terms. They have had an opportunity to seek independent legal counsel regarding the legal implications of this Settlement Agreement. J 0 •/ Dated. February 3 . 2015 Janes "Steve" Brown, Releasing Party JP"( "N_ Dated. February 3 , 2015 Angie Brown, "leasing Party Dated. February , 2015 Tony O'Rourke, City Manager, on Behalf of the City of Yakima Settlement Agreement - 4 of 4 Distributed at the Meeting MEMORANDUM To Honorable Mayor and Members of the Yakima City Council From. Tony O'Rourke, City Manager Date February 3, 2015 RE. 2013 State Auditor's Accountability Audit The staff takes seriously its role in ensuring compliance and adequate safeguarding of the City's $208 million operations from fraud, loss, or abuse. To that end, we work closely with the State Auditor to cooperate and comply with the State Auditor's Office on professional standards and state, federal, and local laws. To ensure independence and objectivity, City Council members are directly notified and invited by the State Auditor to its annual entrance conference. The 2013 accountability audit conference was held on October 8, 2014 More importantly, City Council members are notified and invited to attend the State Auditor's exit conference to review and discuss the results of the audit by the State Auditor Finally, a complete copy of the audit is sent to City Council members by the State Auditor In this case, the results were electronically transmitted to the City Council members on January 23, 2015 Due to these proactive measures to ensure transparency, I was surprised to read in today's Yakima Herald Republic that a council member wants to "know why he's just now finding out about (audit) problems first identified in 2012, and why they have not been fixed " First, all council members have been provided the State Auditor's findings prior to today Second, the State Auditor reported, "In most areas we audited, City operations complied with applicable requirements and provided adequate safeguarding of public resources. The City also complied with state laws and regulations and our policies and procedures in the areas we examined " However, the State Auditor identified two areas in which the City could make improvements. Police Department 1 Better documentation and supervisor approval of voided cash receipts This was also a finding in 2013 The 31 voided cash receipts out of 4,875 represents 0 6% of all receipts or $578 based on the average cash receipt of $18 67 While this matter should have been properly addressed in 2013, the Police Department Records Division was completely focused on the planning and implementation of a new records system to comply with state and federal reporting requirements. Compounding this situation was the necessary turnover of the records division management staff to improve operational efficiency, staff productivity, and morale. 2. Proper police department retention of 15,595 traffic and criminal citations and required monthly audits. The original copies of all traffic and criminal citations are sent to the Municipal Court for processing, however, the police department should retain its copies. Unfortunately, the destruction of the 2013 citations was done in error, without knowledge or approval of the City's records management officer in the City Clerk's office The monthly audits have not been conducted since 2010, when it was first brought to the City's attention This is not acceptable and we have hired a new police services division manager with an accounting and MBA background to ensure these issues are complied with going forward. Transit 1 The State Auditor identified in 2013 and 2014 the necessity for better internal controls to ensure bus passes sold at 16 locations are properly received and accounted for. The City is aware of its responsibility to maintain proper internal controls over bus pass inventory The State Auditor believed we were only performing the correct reconciliation at nine of the 16 bus pass sale locations. Because this had been an issue in the last audit, Yakima Transit began the following process in early 2014 at the seven locations that the State Auditor had concerns about. a. Every quarter Yakima Transit counts out the passes and tickets to each location (vendor) At the time they are counting the passes out to distribute to each of the vendors, Yakima Transit enters those numbers in a spreadsheet to confirm the exact count and it is documented in the vendor's paperwork. Each vendor confirms the amount of passes and tickets received equals the amount distributed from Yakima Transit. b Once the new passes are sold, Yakima Transit takes the vendor's paperwork and counts each pass sold and collects the revenue received and owed to Yakima Transit. The vendors are given a receipt, which they verify by signing, that confirms the transaction. Yakima Transit keeps a copy on file as well. c. After returning to transit with returned passes and revenue from each vendor, Yakima Transit puts all of this information into a spreadsheet to accurately track. The revenue and paperwork are placed in envelopes of the respective vendor d Each separate vendor envelope is then submitted to finance to avoid confusion and to specifically keep track of each vendor containing all revenue and informational sheets as to where the tickets /passes were sold, how many were sold, and at what rate (youth, adult, school district, and senior citizen). For the first eight months of 2014, the City had collected $273,215 or $6,087 more than total bus passes sold While we have no reported bus pass revenue losses, we recognize the importance of maintaining adequate internal controls. To that end, we will add additional remedial measures, which would more quickly identify potential losses. We recognize the importance of maintaining adequate internal controls, and appreciate the input from the State Auditor to assist us in better safeguarding public assets. While we do not believe we have had, or are having a loss of bus pass revenue, we recognize that the remedial measure we identified will more quickly identify a potential loss. Additional recommendations by the State Auditor, not considered significant enough to include in a finding in the accountability report included • City -wide fuel use • Fire Department fuel use • Gifting public funds /conflict of interest We worked with the State Auditor on strengthening internal controls to monitor both City -wide and fire department fuel use, but object to the issue of conflict of interest. Our objection to the State Auditor on this matter is attached In summary, we take our fiduciary responsibility seriously We will resolve the matters identified by the State Auditor, however, we do not want the public to believe the City Council did not have disclosure of these matters, or that the City's overall safeguards from fraud, loss, or abuse is lax. It is in fact compliant with state, federal and local requirements, with the exception of two minor areas in the police department and transit. We will correct these two deficiencies this year Encl. January 30, 2015 letter to State Auditor i 14 ``+ 'as LEGAL DEPARTMENT ,, l r'; , 200 South Third Street 1 10 .F %x "' �� Yakima, Washington 98901 -2830 b 1 1, \ \ RCo N „.:. t January 30, 2015 Ivan Dansereau State Auditor's Office Landmark Bldg., Rm. 204 230 S Second Street Yakima, WA 98901 Re: City of Yakima Management Letter for 2013 4th of July Assistance Dear Mr Dansereau. I was asked by the City Manager to provide a written response to the concerns expressed in a Management Letter provided to the City following the 2013 annual audit process. Specifically, the letter addressed concerns regarding the gifting of public funds and conflict of interest. The City appreciates you taking the time to meet with us following the audit completion to discuss this particular concern. As was indicated during that process, the City certainly does not dispute the fact that the contribution the City made to the 2013 Fourth of July event should have been provided through a proper contract for services. The City has regularly utilized the contract process for its support of the Fourth of July Committee, as well as numerous other service providers the City has associated with in the past for provision of publicly beneficial services. Unfortunately, in 2013 the City found itself being asked to support the 4th of July celebration at the very time when the fireworks deposit had to be paid in order to insure the Committee would receive them in time for the celebration. For that reason the Council acted immediately to approve the support to the Committee but inadvertently no formal contract was reviewed and approved. I want to assure the State Auditor's Office that the City is aware of the proper protocol for providing funds to public service organizations that support a public purpose and that in the future we will continue to follow the City's standard protocol of contracting for services prior to extending fmancial support to service providers. With regard to the concern expressed that the Mayor's participation on the 4th of July Committee may have conflicted his ability to consider and vote on the decision to support the committee financially, I do not believe that under the circumstances that existed there was a violation of RCW 42.23 030 That statute provides, in relevant part: No municipal officer shall be beneficially interested, directly or indirectly, in any contract which may be made by, through, or under the supervision of such officer, in whole or in part, or which may be made for the benefit of his office, or accept, directly or indirectly, Yakima lizard r ill Civil Division (509) 575 -6030 • Prosecution Division (509) 575 -6033 • Fax (509) 575 -6160 rill'_' 199] Mr Ivan Dansereau January 30, 2015 Page 2 any compensation, gratuity or reward in connection with such contract from any other person beneficially interested therein. An essential element of a violation of the provisions of the cited statute addressing prohibitions against private interests in public contracts is the existence of a personal financial benefit to a public officer who has a role in the establishment of a contract interest on behalf of an entity that is contracting with a government agency In the instant case, Mayor Cawley was acting as the Mayor of the City, elected by the members of the City Council, when the vote to provide funds to the committee occurred. He was also a member of the 4th of July Committee. All of that being the case, be assured that Mayor Cawley gained no financial benefit whatsoever from the decision of the Council to financially support the Committee's efforts to put on a 4th of July fireworks display for the benefit of the City's citizens. He did participate in the vote to offer City support, but in no way took any action to coerce other members of the Council to vote in support of providing funding. That aside, the real issue is that there was no benefit to the Mayor at all in the decision of the Council to provide support to the event. The City is very careful to avoid any perception that a financial conflict exists or may have been violated by an action of one of the Council members. In this case the Mayor served the Committee without compensation and gained nothing personally as a result of the Council's action or the Committee's receipt of funds. For that reason I am very confident that his participation on the Committee and the Council, as well as his part in the decision of the Council to provide support to the Committee, did not violate the statute cited above. hi the course of their service to the City all of the Council Members participate on committees and conunissions that provide service and input to the City Council and provide services for the benefit of the citizens. These positions are not compensated and the Council members serving thereon are not benefitted financially from this service, whether the particular committee may receive financial assistance for services to be provided to the City's citizens or not. Therefore, with regard to your expressed concern that the Mayor's actions may have violated RCW 42.23 030, I absolutely appreciate your concern in this regard, but am completely confident that no such violation has occurred in the past or will be permitted to occur in the future. Sincerely, eff Cutter City Attorney cc: Tony O'Rourke, City Manager Cindy Epperson, Finance Director