HFFA Transition Costs – Severance Pay

The town board voted well over a month ago on July 11 to change management companies at HFFA. As a consequence of that decision, pursuant to section 8.(c) of the current management contract between the town and the current management company, Health & Sports Works, if the contract is terminated without cause the town is required to pay a termination fee equal to 6 mos. base management fees AND 8 WEEKS SEVERANCE FOR DEPARTMENT HEADS. Interestingly, this line about severance was only added to the current contract that the prior board rushed through less than a month before the 2015 elections – approved 4-2  by Commissioners Julian, McAulay, Neely, and Bales (yes, the same Melinda Bales running for re-election this year).

In all three prior management contracts in 2002, 2006, and 2011, the termination language limited the town’s exposure to 6 mos. base management fees – of course, if the town had taken the reasonable position that the contract was being terminated for cause, taxpayers wouldn’t have had to pay any additional monies to terminate the contract. Why the town would ever agree to such unfavorable terms is a topic for another post.

Would you expect current employees at HFFA to receive “severance pay” if they maintain employment under the new management company? Dictionary.com tells me that severance pay is paid because of a lack of work. So if the new management company decides to hire employees of HSW and keep them employed in their same or similar positions, how will they be without work? Doesn’t make sense to me, but that’s the position HSW is taking according to emails sent to the town. Seems to me the town never intended to pay “severance” to people who maintain consistent work. Too bad the current contract doesn’t have a definitions section so any disagreements over terms could be easily resolved. Good thing the town has top notch legal counsel advising them on how to resolve disputes over easily understood terms like severance.

So, how much are taxpayers in Huntersville going to have to pay the current management company to stop managing HFFA? At present, the demand for severance appears to be $95,287.29 related to nine, YES NINE, department heads. Just to put that in context, the town only has six department heads, eight if you include the town attorney and town manager. Don’t bother trying to find information about each department at the HFFA website, it’s not there. Will the current town board and current town manager just agree to whatever amount HSW  demands in severance without negotiating? I guess we’ll just have to wait and see.