1990-176-Approving Letter Of Agreement Between The Town And Town ManagerRESOLUTION NO. 1990 -176
RESOLUTION OF THE TOWN OF LOS GATOS APPROVING
LETTER OF AGREEMENT BETWEEN THE TOWN OF LOS GATOS
AND TOWN MANAGER
BE IT RESOLVED, and it is hereby resolved by the Town Council of the Town
of Los Gatos, County of Santa Clara, State of California, that the TOWN OF LOS GATOS
enter into the Letter of Agreement with the Town Manager (a copy of which is attached
hereto); and
BE IT FURTHER RESOLVED, that the Mayor is authorized and is hereby
directed to execute said Agreement in the name of and in behalf of the Town of Los Gatos.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos, California, held on the 20th day of August, 1990 by the following vote:
AYES: Joanne Benjamin, Eric D. Carlson, Robert L. Hamilton,
Brent N. Ventura and Mayor Thomas J. Ferrito.
NOES: None
ABSTAIN None
ABSENT. None
[.Y["a u
ATTEST`.
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TOWN CLERK OF THE TOW F LOS GATOS
LOS GATOS, CALIFORNIA
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07/24/90 13!36 %'14155705320 HUGHES HESS z 002
Hughes, Heiss & Associates
M A N A G E M E PI I U O N 3 U- T A N T S
Mr. Dave Knapp
805 Poplar Ave.
Boulder, CO 80304
Dear Dave;
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July 23,19W COPY
This will confirm our conversations of the past week, The Los Gatos Town
Council is offering you the Town Manager position with the following
compensation package:
• Starting salary will be $85,000.
• The Town will pay both the 7.618% employer and 7 %n employee
contributions to the California PERS retirement program.
• The Town will provide a $250 per month auto allowance to
compensate you for use of your automobile for business usage.
• Three weeks of paid vacation and 12 days of sick leave will be
accrued annually. Additionally, five days of administrative leave
will be provided to the Manager annually.
• The Council agrees to provide you with four months severance pay
in the event that you are terminated or resign at Council's request.
The Town would not be required to pay the four months salary if the
termination is based on an illegal act.
• The Town will provide you with housing assistance as follows:
07/24/90 13-37 $14155705320 HUGHES HEISS
The Town will provide you with a loan in the form of second
mortgage of up to $250,000 for purchase of a home within the
Town's incorporated area.
The variable rate of interest will be tied to the LAIF (Local
Agency Investment Formation) index, or some other
mutually agreeable index. The rate will be adjusted
annually.
All principal and interest will be due and payable: (1)
within six months of termination or when the home is no
longer your primary residence, or (2) upon the sale or
refinancing of the house. The Town, rather than the
commercial lender, would be given first priority on any
partial or full loan pre - payments. The pre- payments would
be applied to the principle balance.
All interest payments will be deferred until the sale of the
home. The interest due will be the cumulative amount based
on index, but shall not exceed the amount of the appreciated
value of the home after the purchase and sales costs are
calculated. The intent of this provision is for the Town to
share the risks associated with deferring interest payments,
and to minimize the possibility of the Manager suffering a
net loss as a result of low or no appreciation in property
values. See attached example.
You will secure a term life insurance policy at your expense
in the face amount of the Town's loan and shall have the
Town named as the primary beneficiary in order to pay off
the loan in the event of your death. Should this requirement
present a financial hardship, you have the option of using the
balance of funds available to you from your cafeteria benefit
to purchase this life insurance. You will devote all funds
available after payment of health and dental insurance
premiums towards securing the maximum amount of
insurance as possible with the Town named as beneficiary.
• $6,531 will be contributed annually by the Town to your "cafeteria"
benefit plan which provides for your and your dependents health
003
07/24/90 13 -37 214155705320 HUC}3ES HESS
and dental insurance premiums. The balance of funds between the
premiums and the $6,531 may be applied to life insurance, other
health care items, eg. vision expenses and deferred compensation.
• Up to five days will be provided to handle you and your family's
relocation details. This time will not be charged against your
vacation time.
• Three weeks of vacation and 12 days of sick leave will be credited to
you at the beginning of your employment. You will not earn or
accumulate any additional vacation or sick leave during the first
year.
• The Town Council will conduct a performance evaluation by the
completion of your sixth month and again at twelve months and
will conduct similar evaluations at least once per year thereafter.
A salary review will be included with each of the annual
evaluations.
• The Town will pay you $11,000 to cover all moving costs and
expenses associated with your relocation from Boulder to Los Gatos,
Should you voluntarily terminate your employment prior to
completing five years, you will reimburse the Town the full $11,000.
• Your starting date as Town Manager will be September 4, 1990.
Assuming that the above items are consistent with our discussions, please
sign one copy and return it to Mayor Ferrito in care of Bob Beyer, Interim Town
Manager.
Richard W. Perry
Principal
f 4L fl, / L/I
David Kndpp
Sincerely yours,
HUGHES, HEISS & ASSOCIATES
San Mateo
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For purposes of calculation, the examples are based on the following assumptions:
• Purchase price of $550,000
• Resale at five years
• $250,000 Town loan at an average interest rate of 8 -1/2% per annum (5
years interest is $106,250)
• Down payment of $100,000 by Knapp*
• Bank loan of $200,000
DL91MOUTION OF FUNDS FROM FUTURE BALE
Example #1
Avg. Appreciation
of 4%
Example #2
Avg. Appreciation
of 6%
Example #3
Avg. Appreciation
Of 8%
Sale Price
669,160
736,024
793,164
Payment of bank loan
200,000
200,000
200,000
Sales Commission/
closing cost
41,000
45,000
48,.500
Down - payment recovery
Knapp
100,000
100,000
100,000
Payment of Town
Loan Principal
250,000
250,000
250,000
Payment of Town
Loan Interest
78,160
106,250
106,250
Balance of proceeds
to Knapp
-0-
34,774
88,414
Town looses
Town repaid
Town repaid
$28,090 in
in full and
in full and
expected
Knapp gains
Knapp gains
interest.
$34,774
$88,414
*Knapp has indicated he will put down the maximum amount available. The
amount will he dependent on the proceeds fro#n the sale of his home.
AMENDMENT TO LETTER AGREEMENT
This Amendment to the letter of Agreement between David Knapp, Town Manager, and
the Town Council dated July 23, 1990, is amended to add the following provision:
(1) A period of six months from September 4, 1990, is
provided to purchase a home in the Town limits of Los
Gatos.
This Amendment was approved by the Town Council at its meeting of August 20, 1990.
J-�
David Knapp
MGR017;A: \NISC \AMEND