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An amendment to the Lansing City Charter sold to voters last November as an answer to golden parachutes and excessive severance payments has a giant legal loophole: It doesn’t apply to separation agreements like the one Mayor Virg Bernero signed with former City Attorney Janene McIntyre that included a $160,663 payout.
The mayor, in calling for support for the amendment, said on television last year that it would “limit contracts and excessive severance payments.”
The nuanced difference between severance and separation was outlined in a legal opinion sought by the city from the Dykema Gossett law firm that was given to the Lansing City Council by Interim City Attorney Joseph Abood.
“The limitations of the section applies to employment contracts only,” wrote Gary Gordon of the law firm in a March 23 memo to Joseph Abood, the interim city attorney. “The agreement is not an employment contract. It is a Separation Agreement and Release. The two legal concepts are separate and distinct. Section 6.401 of the City Charter is not applicable to the instant Separation Agreement and General Release.”
The separation agreement referred specifically to is the one struck secretly between Bernero and McIntyre on Feb 25.
The legal opinion may have been moot in the McIntyre situation. The administration has contended that the charter amendment, which took effect on Jan. 1, is not retroactive and hence would not have applied to any contract with McIntyre.
But the legal opinion muddies the reasoning voters were asked to approve the 2015 amendment to the City Charter limiting costly departure settlements.
It was initiated to quell outrage over a separation agreement between the Lansing Board of Water & Light and Peter Lark, the former general manager of the utility. Lark was fired early in 2015 but had a five-year contract. The utility in May agreed to a separation agreement that paid Lark $650,000.
Bernero, professing outrage about the large payment to Lark, asked the Council to place a ballot initiative on the Nov. 3 ballot that would limit the length of contracts with at-will employees to one year at a time and also prevent payouts.
In May of last year, Bernero told WILX that the charter amendment “would limit contracts and excessive severance payments” to top city officials. He claimed if such an amendment had been in place when the Lark firing happened at BWL, there would not have been a $650,000 pay day for the former general manager.
Voters approved the amendment by a nearly 60 percent margin. The amendment took effect for contracts with at-will employees of the city, including Mayoral appointees, on Jan. 1 of this year.
Neither Abood or Benereo’s chief of staff, Randy Hannan, returned calls about the agreement that allowed McIntyre to leave City Hall on March 4 with two checks: One, for $127,567, covered her salary through the end of the year; the other for $33,096 was a payment for accrued vacation, sick and personal leave. The city is also paying McIntyre’s health insurance until Dec. 31 — at an undisclosed cost.
The legal opinion from Dykema Gossett was supposed to shed light on the legal issues behind the separation for City Council members. Instead it’s causing more consternation, said Council President Judi Brown Clarke.
She said she felt “misled” by the administration officials about the legal opinion because she said Hannan and Abood had told the Council it would answer some questions about the settlement but it didn't.
Further, she said she now questions whether McIntyre was actually a fully vested employee of the city of Lansing during 2014. The reason? The city cannot locate the signed contract between McIntyre and the city. Abood on March 21 provided the Council with an unsigned draft copy of an extension for McIntyre that would have gone through June 2015. No contract extension has been released for June 2015 through December 2015, when she signed a contract for 2016.
“If no one has it, we’re forced to assume it doesn’t exist,” said Brown Clarke. “And if it doesn’t exist, how was she being paid as an employee of the city of Lansing?”
“Did the charter amendment apply? I don’t know, since we don’t have the contracts,” she said. But she said provisions in McIntyre’s original contract include a limitation on severance payments of up to 120 days in salary.
The memo argues the agreement was in the best interest the city.
“The city agreed to pay consideration, in part, for the release of any legal claims that the Employee may now have or may have in the future,” the attorney wrote. “So, based on the foregoing, it is appropriate for the Mayor to enter into this agreement.”
Gordon pointed out that release could save the city “several hundred thousand dollars — or more,” in litigation fees if McIntyre were to sue.
But what McIntyre might have sued for or about remains a closely guarded secret. Bernero administration officials have refused to discuss the reason McIntyre left the city — with the City Council or with the public.
Brown Clarke is pledging that the Council will get to the bottom of the separation agreement, despite stonewalling by the administration.
“Somebody’s going to own this,” she said, “and I don’t think it’s going to be the taxpayers.”