Top water district official resigned with hefty payout

LYNNWOOD — The longtime general manager of Alderwood Water and Wastewater District remained on the agency’s payroll for more than seven months after he worked his last day in January, racking up more than $180,000 under an agreement with district leaders.

Jeff Clarke, who has managed the agency’s day-to-day operations since 2012, was put on paid administrative leave by the district’s Board of Commissioners in early January, records show.

The Alderwood district “permanently damaged Mr. Clarke’s reputation” by suspending him, “implying that he engaged in some misconduct or wrongdoing” an attorney for the former general manager wrote in a Jan. 14 letter to the district’s legal counsel.

Clarke resigned from his position weeks later under the terms of the six-figure “separation agreement,” signed Jan. 27 and provided to The Daily Herald in response to a public records request. Exactly why Clarke’s relationship with the board soured — after years of positive performance reviews and pay raises — is still an open question.

“The bottom line is, over time, the board and the GM had different visions about the future of the district,” said Larry Jones, president of the district’s Board of Commissioners.

Based in Lynnwood, Alderwood is the state’s largest special purpose water and sewer district. It covers some 40 square miles and serves more than 200,000 people in south Everett and a half-dozen other jurisdictions, Jones said.

Under the terms of the agreement, neither Clarke nor the district admitted any fault.

Both agreed to refrain from disparaging one another.

“I don’t have anything to say about it,” Clarke said when asked about the document. “I signed that agreement with the board, and I departed. And I have lived up to the terms of the agreement.”

Per the pact, Clarke was permitted to announce his “retirement” to employees in an email in late January, after the district’s legal counsel signed off on the message.

“I have decided to resign my position as General Manager of the Alderwood Water & Wastewater District, effective January 28, 2020,” the email said. “After serving in this position for nearly eight years, I am looking forward to retirement, travel, spending time with my family and serving in my new position as an elected Commissioner with the Mukilteo Water and Wastewater District.”

Clarke also serves on the Snohomish Health District’s Public Health Advisory Council, representing the water utilities sector.

His experience in the public sector dates back decades. He led Snohomish County’s Solid Waste Division from 1992 to 2005, when he was chosen by the Peace Corps to oversee volunteers in the small eastern European nation of Moldova.

About eight years ago, his starting salary as general manager was $147,500, according to an offer letter he signed in January 2012. The board approved multiple pay increases during his tenure. He earned about $233,000 annually as of early this year.

Clarke told staff in a May 2019 employee newsletter that he planned to retire in Spring 2021.

“There are several major projects that AWWD staff is working on that I want to either complete or assist in moving further along before I leave this organization,” Clarke wrote in the newsletter, provided to The Herald in response to a records request.

Jones said the district’s separation with Clarke was unrelated to a former employee’s June 2019 complaint about the general manager.

District Administrative Services Manager Mike Pivec lodged a variety of allegations against Clarke in a five-page report to the board, including that the general manager used a district credit card for personal purposes, selected a close friend for consulting contracts and treated district employees inappropriately.

A month before Pivec complained, Clarke had placed him on paid administrative leave to investigate a claim that Pivec had tampered with an employee’s time card after the employee worked one hour of overtime without prior approval.

Soon after filing the report with the board, Pivec agreed to resign from his position. His severance package included six months’ salary, according to the resignation agreement with the district, signed June 28, 2019.

An outside law firm, hired by the district to investigate Pivec’s complaint, reported the accusations against Clarke were not supported by fact. The probe instead concluded that Pivec was trying to distract the board from his own situation or persuade commissioners to intervene in Clarke’s timecard investigation.

Pivec said he didn’t raise the concerns prior to being placed on administrative leave because he feared retaliation from Clarke.

The attorney who investigated Pivec’s claims also did not interview Pivec before preparing her report.

Jones said he stands by the third-party investigator’s conclusions.

“It was an independent investigation by an attorney who is experienced in those matters — someone who I had never met before,” Clarke said. “She found that I had done nothing wrong and that Mr. Pivec’s allegations had no merit.”

Months after the investigation, District General Counsel Joe Bennett contacted a Bellevue-based law firm in early December, seeking outside “employment law counseling,” emails show. Ed Taylor, an attorney with Sebris Busto James who would play a key role in negotiating Clarke’s settlement agreement, began representing the district.

Bennett and Taylor met with the Board of Commissioners to discuss a “personnel issue” during a closed-door executive session that lasted more than three hours on the night of Jan. 6, according to meeting minutes. Clarke was not there for the executive session.

The next morning, Bennett sought information from human resources needed to formulate the separation agreement, emails show.

Finance Director Sri Krishnan, who no longer works for the district, was appointed acting general manager.

The Herald requested any documentation provided to the board in December or January related to its decision to place Clarke on administrative leave. But Alderwood Human Resources Manager Camille Gatza declined to share those records, saying the documents are exempt from public disclosure under state law because they are considered “an attorney’s work product” and “attorney-client privileged communications.”

Placing Clarke on leave exposed the district to liability because commissioners had assured Clarke that he would be able to keep his job until 2021, Clarke’s attorney, Alex Higgins, wrote in the Jan. 14 letter to the district’s legal counsel.

After receiving “consistently positive feedback” from the board over the years, Clarke turned down another potential employment opportunity last fall, Higgins wrote. Snohomish County Executive Dave Somers approached Clarke in November via Facebook to see if he was interested in applying for the position of county Public Works Director, but Clarke “politely declined to apply,” according to Higgins’ letter.

The board proposed a severance package, worth more than $181,000, to Clarke in a Jan. 13 memo.

Clarke wanted 10 months’ salary as a severance, plus an additional $13,500 in “deferred compensation,” according to the subsequent letter from his attorney.

Higgins later requested that Clarke paid “continued salary instead of a lump sum” so that he could keep accruing retirement benefits.

Clarke and the district settled on an agreement that would keep him on the payroll until Aug. 13. He was to be paid for 236 hours of unused vacation time and 8 hours of holiday pay, as well as $9,000 in deferred compensation, per the pact.

The board approved the document in a 5-0 vote following a roughly 40-minute executive session on Jan. 27, meeting minutes show.

The parties were barred from “disclosing the terms or existence” of the pact, “except to immediate family members, accountants, District employees on a need to know basis, or as required by law.”

The board has since selected Dick McKinley as the next general manager. McKinley, the former public works director of Paso Robles, Calif., worked his first day at the district on Sept. 21.

Rachel Riley: 425-339-3465; rriley@heraldnet.com. Twitter: @rachel_m_riley.