On the surface it seemed like a foolish waste of tax-payer dollars, but deliberately over-spending on securing the district’s next Operations Manager could end up being a shrewd move.
Last week the Gateway Sun discovered that the Gateway Services Community Development District was planning to alter its arrangement with its district management firm, Severn Trent.
Specifically, Severn Trent is no longer going to be supplying a full-time Operations Manager to the district. As a result, the pay that Severn Trent receives from the GSCDD is going to drop by $75,900 per year – from $225,000 annually down to $149,100.
At this time, Severn Trent employs April White, who is the GSCDD’s Interim Operations Manager.
As part of the new arrangement which could be approved on June 2, the GSCDD would hire April White away from Severn Trent to serve as the GSCDD’s permanent “General Manager” going forward. White would be awarded a three-year contract with salaries of $85,000 in year 1, then $90,000 in year 2 and $95,000 in year 3.
I’m sure you realized as quickly as I did that the $75,900 savings were going to be wiped out – and then some – by White’s average salary of $90,000 per year. Add in the cost of health insurance and various payroll taxes and it added up to an additional $30,000+ worth of expenses per year to the district’s residents.
You’ll have to forgive me for jumping the gun, but it seemed completely idiotic to pay the same person (White) to perform the same role (Operations Manager/General Manager) for $30,000 more than if they had just left the arrangement with Severn Trent alone.
But what if the GSCDD is planning on making an even larger change to their relationship with Severn Trent in the future? What if they’re planning on ending that relationship altogether?
Many of the roles that Severn Trent performs for the GSCDD could be performed by White herself, so there’s a ton of overlap which could result in cost savings. Severn Trent does provide an accountant as part of the agreement, so White would have to find a new accounting firm. But that wrinkle is obviously solvable.
Making sure that White is committed to the GSCDD would be a requirement before parting ways with Severn Trent. Perhaps that’s why the Supervisors seem interested in paying the extra money?
But why would Severn Trent agree to allow White to become a district employee? Surely they can see the writing on the wall here?
The GSCDD’s agreement with Severn Trent runs until March 31, 2017, however there is a clause in the contract that either party can terminate the agreement with 60 days notice.
So Severn Trent could have held firm to the existing contract and made another $37,500 guaranteed – or they could co-operate with the GSCDD and hope that the district doesn’t move too quickly to terminate their agreement.
If the GSCDD decides to run out the clock on the contract with Severn Trent, then the district would pay Severn Trent $124,250. A sum larger than $37,500, obviously.
From Severn Trent’s point of view, if co-operating buys them just two extra months then they will come out ahead financially. So it made little sense for Severn Trent to draw a line in the sand.
But the bottom line is that the only way paying extra money to lock up White for three years makes any sense for the district’s residents would be if the plan is to terminate the agreement with Severn Trent at some point.
If parting ways with Severn Trent is the plan, then I can see why the extra costs of securing April White as the General Manager of the GSCDD would be a sound investment.
However if the GSCDD Supervisors plan to keep both White and Severn Trent long term, then this is going to be a nearly $100,000 mistake by the time White’s 3-year contract is done.
We’ll see what happens, but I would be shocked if Severn Trent is still the GSCDD’s district manager by the end of 2016.