20-0707_SANTA MARGARITA WATER DISTRICT_Agenda Report_E14City of San Juan Capistrano
Agenda Report
TO: Honorable Mayor and Members of the City Council
FROM: Benjamin Siegel, City Manager
SUBMITTED BY: Sam Penrod, Human Resources and Risk Manager
DATE: July 7, 2020
SUBJECT: Annexation Hiring Agreement with Santa Margarita Water District
RECOMMENDATION:
Approve the Annexation Hiring Agreement with the Santa Margarita Water District.
DISCUSSION/ANALYSIS:
In January 2020, the City Council approved an Annexation Agreement with the Santa
Margarita Water District (SMWD), which outlined the terms for transfer of the City’s water
and sewer utility systems to SMWD. As part of that effort, SMWD has authorized the
transfer of sixteen City positions that would automatically transfer to SMWD once the
annexation process is completed. While the City has the right to make the decision to
transfer the water utility, the impacts of that decision on City employees are subject to
“meet and confer” with the impacted employee labor groups, the Classified Employees
Association (CEA) and the Management and Professional Employees Association
(MPEA). Negotiations have been ongoing to reach agreement on a variety of
employment-related issues, and the attached Annexation Hiring Agreement is part of
those efforts and was developed in close coordination with SMWD staff and legal counsel.
The Agreement outlines such things as the number of positions authorized to transfer
from the City to SMWD, how the salary placement of each of the individuals in those
positions is calculated, the probationary period that must be served by those individuals
who will transfer, the ability of transferring staff to carry-over a specified number of leave
hours, and how severance would be handled for anyone who transfers but does not
satisfactorily complete the probationary period.
7/7/2020
E14
City Council Agenda Report
July 7, 2020
Page 2 of 2
Staff recommends that the City Council approve the attached Annexation Hiring
Agreement. The SMWD Board of Directors is scheduled to consider this agreement at
its July 17, 2020, meeting.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
ENVIRONMENTAL IMPACT:
In accordance with the California Environmental Quality Act (CEQA) the recommended
action is exempt from CEQA per Section 15061(b)(3), the general rule that the CEQA
applies only to projects which have the potential for causing a significant effect on the
environment. Where it can be seen with certainty that there is no possibility that the
activity in question may have a significant effect on the environment, the activity is not
subject to CEQA. An Annexation Hiring Agreement would not be an activity with potential
to cause significant effect on the environment and therefore is exempt from CEQA.
COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS:
Not applicable.
NOTIFICATION:
Kathleen Springer, SMWD Human Resources Manager
Sergio Klotz, MPEA President
Laura Stokes, CEA Representative
ATTACHMENTS:
Attachment 1 – Proposed Annexation Hiring Agreement
Page 1 of 4
Annexation Hiring Agreement
between
Santa Margarita Water District
and
City of San Juan Capistrano
This Annexation Hiring Agreement (Agreement) is entered into by and between the Santa
Margarita Water District (SMWD) and the City of San Juan Capistrano (City).
Whereas, in January 2020, the Santa Margarita Water District (SMWD) and the City of San
Juan Capistrano (City) entered into an Annexation Agreement pertaining to the intended transfer of
the City’s water and wastewater systems (Utilities System) and annexation of the service area
territory (Annexation).
Whereas, Section 18 of the Annexation Agreement reflects the general agreement between
SMWD and City as to how the staffing-related matters pertaining to the Annexation will be carried
out.
Whereas, SMWD and City wish to memorialize their agreement as to more specific terms
and provisions pertaining to these staffing-related matters, and to certain rights and entitlements of
City employees of the Utilities System who may or will be hired into SMWD employment in
connection with the Annexation Agreement.
Now, therefore, SMWD and City hereby agree as follows:
A. New Positions
SMWD will authorize 16 new vacant full-time employment positions in the following job
classifications:
SMWD Job Classification Number of Positions
Chief Plant Operator – GWRP 1
Project Engineer 1
Maintenance Foreman 1
Construction Inspector 1
Plant Operator / Sr. Plant Operator – GWRP 2
Maintenance Mechanic / Sr. Maintenance Mechanic 7
Customer Relations Specialist 1
GIS Specialist 1
Office Specialist 1
ATTACHMENT 1
Page 2 of 4
B. Offers of Employment
Eligibility. Based on the above list of 16 new positions, SMWD shall extend initial Offers of
Employment to current City employees of the Utilities System in positions deemed comparable by
SMWD and who meet the minimum qualifications for the position . Offers of Employment shall be
contingent upon the following: (a) effectuation of the transfer of the Utilities System; and (b) pre-
employment background check and medical examination.
Additionally, SMWD shall be under no obligation to extend an offer of employment pursuant to
these terms to any current City employee of the Utilities System who falls under any of the following
circumstances, as deemed by the SMWD General Manager:
Is no longer employed by the City as a regular full -time employee, or has notified the City of
an effective date of voluntary resignation or retirement occurring prior to the Annexation;
Is no longer working in the City’s Utilities System due to a change in employment status at
the City, such as reassignment, transfer, promotion, or demotion;
Has expressly declined the opportunity to be offered employment by SMWD;
Is under formal investigation, or is issued disciplinary action by the City, for serious
misconduct or severe performance deficiencies; or,
Whose employment with SMWD would be in violation of federal or state laws or
regulations, or SMWD policy, rules, or procedures.
Starting Salary. The starting salary in the Offers of Employment shall be at the applicable SMWD
salary step for the position that is closest to, but not less than, the City employee’s base salary on the
Annexation effective date. If the City employee’s base salary exceeds SMWD’s highest salary step
for the offered position, the highest salary step shall be offered.
Acceptance of Employment. City employees wishing to accept a final Offer of Employment from
SMWD shall be required to confirm their acceptance within a specified deadline, and shall also be
required to confirm they are no longer employed by the City prior to the commencement of their
employment with SMWD. The City and SMWD shall cooperate to effectuate a coordinated
transition of City employees from separation from City employment to their anticipated employment
with SMWD in accordance with the terms of this Agreement, with the aim of transitioning such
employees on or around the effective date of Annexation.
Pre-Hire Orientation. Prior to the Transfer Date, SMWD shall provide City employees who have
been offered employment with a group orientation session. The orientation session will also include
reviewing and/or processing pre-employment-related information, policies, and forms. The Santa
Margarita Water District Employees Association shall be given the opportunity to make a brief
presentation during the orientation session.
C. Terms of Employment
All City employees of the Utilities Systems who become SMWD employees upon Annexat ion in
accordance with the above terms (Prospective Employees) shall be considered newly hired SMWD
employees for purposes of all SMWD employment terms, benefits and compensation, except as
otherwise expressly provided for in this Agreement. Such terms include, but are not limited to, a
mandatory probationary period of 180 calendar days consistent with SMWD Personnel Rules and
Regulations and MOU, Article XI, during which time the Prospective Employee is “at-will” and may
be terminated from employment by SMWD at any time, without notice and without cause.
Page 3 of 4
Notwithstanding the above, the City and SMWD hereby expressly agree that the following terms
shall be applicable to Prospective Employees:
Option to Transfer Vacation Hours to General Leave Hours. Prospective Employees shall be
given the option, prior to separation from City employment, of either: (a) cashing out all of
their City-accrued vacation hours, or (b) electing to have up to 80 vacation hours transferred
to SMWD within fourteen days (14) days following their start date of employment with
SMWD, with the remaining amount cashed out by the City. Vacation hours elected to be
transferred to SMWD shall be converted to an equivalent number (1:1 ratio) of SMWD
“General Leave” hours. Prospective Employees shall be permitted to use their transferred
General Leave hours during their SMWD probationary period, and as otherwise subject to
SMWD’s general employment policies and practices for requesting and using General Leave.
The City shall pay SMWD the cash value of the vacation hours (as calculated based on City
salary) that are transferred to SMWD within 60 calendar days following the commencement
of SMWD employment, or within such time as mutually agreed upon by the parties. Such
payment from the City shall not be made, directly or indirectly, from the Water and
Wastewater Reserve Fund.
Certificate Pay. In the event a Prospective Employee commences employment with SMWD
during the month of April, May, or June, then the Prospective Employee shall be eligible to
receive certificate pay, as set forth in Article XII, Section 6 of the Memorandum of
Understanding between SMWD and the Santa Margarita Water District Employees
Association, beginning on July 1st despite their probationary status. If a Prospective
Employee starts employment during any other month, the Prospective Employee may be
eligible to receive certificate pay only after completion of the probationary period. This
provision applies only to Prospective Employees who are subject to the Memorandum of
Understanding between SMWD and the Santa Margarita Water District Employees
Association.
Probationary Severance. Except as provided herein, SMWD shall offer a severance payment
to any Prospective Employee released from employment by SMWD during their
probationary period. The amount of the offered severance payment shall be the dollar
equivalent of one week of their final base salary for each full year of continuous and
combined full-time City and SMWD employment. The Prospective Employee shall be
required to sign a general release of claims against SMWD in exchange for the severance
payment. Such payment shall be made through SMWD payroll. Prospective Employees who
voluntarily resign or are released from probation because of gross misconduct or severe lack
of performance, as determined by SMWD, shall not be eligible for this severance payment.
D. Labor Relations
Both SMWD and the City represent that each has met and conferred, and has reached agreement,
with their respective recognized employee organizations as to the entirety of this Agreement.
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E. Effective Date
This Agreement shall become effective immediately following execution by the Parties, on the latest
date appearing below.
SANTA MARGARITA WATER DISTRICT CITY OF SAN JUAN CAPISTRANO
By: _______________________ By: ___________________________
Betty H. Olson, Ph.D. Troy A. Bourne
President of the Board of Directors Mayor
Date:_____________________ Date:__________________________