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Another expensive exit

Melcher's big payout pushes total severance under Bach to $1.66 million



When Chris Melcher was hired as Colorado Springs city attorney, his "employment letter" said he'd receive 60 days' pay if he was terminated. But now we've learned that Melcher resigned and left with a half-year's pay, $91,868, and also collected $16,430 in consulting fees, though the city can't account for any hours of consulting work he performed. The city even footed the bill for outside legal counsel to negotiate Melcher's "separation" package, which cost taxpayers a total of $139,138.

Melcher, who now works in Georgia, is only the latest city employee to collect severance pay since Mayor Steve Bach took office in June 2011. Together, the 86 employees have been paid $1.66 million in severance pay alone. Some retired (see "Take the money and run," News, April 3, 2013), meaning they were also paid for unused sick time, a perk reserved only for retirees.

And although a personnel policy requires the mayor to report severance payments to City Council four times a year, he's not done so.

All of which outrages Council President Keith King.

"You've gotta be kidding me," King says. "This is mind-boggling. That's incredible. Wow. I don't know what else to say."

King vows to "open a discussion" about severance pay this fall, and it could become a campaign issue as candidates line up to replace Bach in the April 2015 election.

Bach, who hasn't announced whether he'll run, responded to the Independent's questions in writing through a spokesperson, who said some managers "elected to resign or retire" because they "were not on board with the Mayor's philosophy." He also said helping "departing employees transition" is a practice that's "consistent with the private sector."

Although severance pay is traditionally associated with terminations, Bach said through the spokesman that he's paid no severance in connection with "discipline."

After Melcher agreed to terms and started work in October 2011 at an annual salary of $183,736, plus an $8,475 annual car allowance, he negotiated two new agreements within five months. The first is described as an "Employee's At-Will Employment Agreement dated Dec. 28, 2011"; the second as an "Amendment to Employment Agreement dated March 1, 2012."

When the Independent asked, under the Colorado Open Records Act, for these agreements, the city said it didn't have them. When pressed, the city days later provided them. The first appears to mirror Melcher's original employment letter, while the March 2012 agreement adds six months' severance pay.

Melcher and the city referenced both documents in Melcher's November 2013 "Transition and Separation Agreement," which assured him those six months' pay. And on Jan. 2, Bach further amended the agreement to add consulting fees. Those fees totaled $16,430.

But when the Indy asked for the number of hours worked by Melcher and his hourly rate, the city responded by saying, "A search of City files found no records responsive to your request."

Melcher's payouts didn't end there. Bach agreed to pay $6,246 for the city's share of Melcher's health insurance premiums from February through July. Melcher also got $19,442 for 27.5 unused vacation days, which is required by law. It's worth noting that at-will appointees earn more vacation time than regular employees; Melcher earned 293 hours in his two years and four months, 75 hours more than a regular employee would have earned.

Billings obtained by the Indy through CORA also show the city paid Hogan Lovells law firm $5,152 for 12.5 hours of work by three attorneys on Melcher's transition and separation agreement, from October through December 2013.

Melcher, who was to provide consulting work from Feb. 1 through July 31, took a job with Spencer Fane Britt and Browne law firm, which opened an office in Colorado Springs on June 2 with Melcher as the sole lawyer.

In July, Melcher was named vice president and general counsel for Georgia Regents University in Augusta, Ga. GRU didn't respond to a records request by the Indy's press time, but online Georgia government salary records show Melcher's predecessor's annual salary was $223,219 in 2013.

In contrast to the Melcher deal, Chief of Staff Laura Neumann left the city in March without a departure payout and without extended health insurance premiums. She was paid $7,894 for 11 vacation days she had earned, based on her annual salary of $186,945.

The most recent appointee to arrange a departure is Dave Lethbridge, interim public works director. But he's still on the payroll at $152,087 a year despite the hiring of Travis Easton, former mayor of Monument, who began work as the new public works director on Monday.

In a response to the Indy's CORA request, the city labeled Lethbridge an "Active, Regular Employee," and said he'll be paid through Dec. 31.

In a "transition agreement" obtained under CORA, Chief of Staff Steve Cox tells Lethbridge he will work regular hours through Aug. 31. From Sept. 1 to Dec. 31, Cox writes, "you will be permitted to primarily telecommute," remain eligible for fringe benefit programs, and even be allowed to "pursue other employment opportunities" if it complies with the city's conflict-of-interest policy and if that second job can be done without interfering with his city duties.

Bach, through a spokesperson, says Lethbridge's deal is designed "to ensure a smooth transition." As for the 86 people having received severance through Sept. 22, Bach notes many of those were laid off when the city outsourced fleet maintenance Jan. 1.

But the big money went to top personnel. A list obtained last week by the Indy shows at least a dozen at-will employees and top managers were paid a combined $746,000 in severance payments. They include the police chief, fire chief, economic vitality director/chief of staff, budget director, HR director, airport director, IT manager, two city attorneys, streets manager, assistant city manager and communications manager. Cox collected $92,648 in severance pay when he left his chief of staff/economic vitality chief job in summer 2012, and then returned as chief of staff 19 months later.

The city's Personnel Policies and Procedures Manual states that up to six months of salary can be given to at-will employees (mayoral and Council appointees) at the Council's or mayor's discretion, but adds, "Any action taken under this program will be reported quarterly to City Council."

A lot of these things caught King off guard. He says Council has received one report from Human Resources Manager Mike Sullivan on severance payouts since he took office in 2013, and that was in response to a Council request. "He doesn't do it on a regular basis," King says.

As for Bach employing two public works directors simultaneously, King asks, "How can two people have the same title?" Asked for clarification, city spokesperson Kim Melchor says Lethbridge has been given the new title of transition public works director.

And regarding the amount of money Bach has used for severance pay, King says the city can't afford that and vows to "start asking these questions" as soon as possible.

Responding to queries from the Indy, mayoral hopefuls weighed in on the issue as they look to the April 2015 city election. Mary Lou Makepeace calls severance pay a "useful tool in some difficult situations," but adds it shouldn't be used routinely.

Another contender, Attorney General John Suthers, says in a voicemail that the city has paid "way too much," and that the amounts paid might indicate "they're not sure [employees] merit being terminated and they're nervous about it, or they're being overly generous."

Candidate Amy Lathen didn't respond.

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