Former Arroyo Grande City Manager Steve Adams has filed a claim with the city’s liability insurance carrier for separation coverage and the insurer has determined that Adams qualifies for up to six months’ salary, Mayor Jim Hill said.
The insurance claim is in addition to a severance package Adams and the Arroyo Grande City Council agreed to in late January that provides Adams with $71,073 — equal to about four months' pay plus benefits.
The city’s insurer, the California Joint Powers Insurance Authority, determined that Adams is eligible for the separation coverage based on his claim of involuntary separation, Hill said. The carrier would pay Adams at no cost to the city.
The insurance coverage pays a maximum of six monthly payments and would stop if Adams finds another job or retires, Hill said. The claim falls under the “chief executive separation” clause of the city’s coverage and managers are not eligible if they have been fired for cause or are retiring.
Hill said the monthly payments would be equivalent to Adams’ salary but he didn’t know whether those payments would include benefits. Adams earned about $78,647 just in salary or $107,000 in salary and benefits over six months.
The city and Adams parted ways in the aftermath of a July 3, 2014 incident in which Adams was found alone at night in City Hall with a subordinate. Public backlash over the incident and the city’s handling of it ultimately led Adams last October to offer to resign once the city found a replacement for him.
The next month, the council accepted Adams’ resignation and put him on paid administrative leave until an interim city manager was hired in mid January. Adams received $80,773.38 while on leave.
Adams claimed that the council prematurely accepted his resignation, essentially firing him, and threatened a lawsuit if the city didn’t agree to the severance package.
The combined financial result related to Adams’ resignation — in paid leave, severance and a possible six monthly payments from the insurer — could reach more than $250,000.
Hill said that Adams, who had been city manager for 14 years, did not cite wrongful termination in his claim with the insurer.