Atlanta to examine if ‘excessive’ bonuses given by Reed were legal

Bonus amounts higher than first reported. Figures ‘grossed up’ to account for taxes.

Bonuses awarded to former Mayor Kasim Reed’s top staff in the waning days of his administration were higher than the $350,000 reported Tuesday by The Atlanta Journal-Constitution. And now Mayor Keisha Lance Bottoms’ top aide told City Council that the new administration wants to hire an outside law firm to investigate whether the bonuses and other payments made during a holiday party in December violated state law and city code.

Under intense questioning by City Council’s finance committee on Wednesday, Bottoms’ chief of staff Marva Lewis called the bonuses “excessive” and said the nascent administration would not hand out taxpayer money as prizes for raffles, ugly sweater contests or lip sync competitions.

The AJC reported Tuesday that, in addition to the $350,000 in bonuses, Reed approved $42,500 for eight members of his security detail, and gave away $36,000 in raffle drawings and another $31,000 to contest winners. Former Human Resources Commissioner Yvonne Yancy also gave $57,500 to 11 members of her staff, just days before she resigned from her position.

The story raised the question of whether the payments were violations of law.

Joan Clarke, a senior assistant city attorney, said she’s not sure if the bonuses were legal. She said the law department wrote an opinion to the city’s Human Resources Department, but that it can’t be retrieved because of the cyberattack.

“Our response would be specific to the factual circumstances of how these bonuses were awarded and we would compare that to how the bonuses were awarded in the past,” Clarke told the council.

Council members weren’t thrilled with the idea of the city’s law department hiring outside counsel to investigate, and instead the finance committee recommended legislation that directs the city’s internal auditor and ethics office to investigate the matter. Both offices are independent of both the mayor’s office and the council.

The Bottoms administration could still hire an outside law firm to look into the matter, because City Attorney Jeremy Berry has full discretion over that.

“I will listen to the auditor and the ethics officer,” Council President Felicia Moore said after the meeting. “I won’t give much credence to the law department, particularly when the law department is party to this whole thing with a memo they can’t find.”

Bonuses ‘grossed up’

Bottoms had previously been unwilling to criticize the payments, making Wednesday’s testimony her administration’s first significant break from Reed, who strongly supported her mayoral bid in fundraising and with razor-sharp criticisms of her opponents.

The bonuses ordered by Reed are higher than the amount reported Tuesday by the AJC because they had been “grossed up,” Lewis said. That means the amount of the checks were increased by about 40 percent so that taxpayers — not the individual employees receiving the bonuses — covered the state and federal taxes on the awards.

“I’m suggesting the actual dollar amount of the bonuses is higher,” Lewis said. “So what you saw in the media reflects more of a net number. We are actively pulling a more accurate count of what that number is.”

The actual amounts of the bonuses were not provided to the AJC on Wednesday.

Lewis said the Bottoms’ administration represents “a new day” in the way the mayor’s office handles such things, and said bonuses can be a useful tool to retain or attract employees. She said there is no documentation justifying bonus awards based on job performance or metrics.

“The concept of giving a bonus is not necessarily a bad one, but we think they should be done in a reasonable and equitable fashion,” Lewis said. “The other piece that I will share: We have concerns, and I can say it would not be the approach of this administration to hand out taxpayer dollars in raffles or holiday parties. We get that concern as well.”

Moore said the council needs to be involved with choosing the law firm to investigate, if the administration pursues that.

“The law department shouldn’t be the only one selecting that person, because I’m not sure how independent they will be or how much it will cost,” Moore said.

Reed defended bonuses

City Attorney Berry hired Holland & Knight partner Robert Highsmith to investigate allegations that the city had violated the state’s open records law. Highsmith, and another partner at the firm, each charged taxpayers more than $770 an hour. The choice also drew criticism because the firm was paid $88,000 last year to advise the city on open records issues.

John Gaffney, the city’s deputy chief financial officer, said authorization for the bonus payments came from Chief Financial Officer Jim Beard and Human Resources Commissioner Yancy. He also said he was not aware of any other time that transactions of this type were processed through the Finance Department.

“These payments were based on — so when people won the ugly sweater contest or lip sync — all these names were put on a memo, or piece of paper with dollar amounts,” Gaffney said. “These were based on lists generated by the administration and signed off by the CFO and the HR commissioner.”

Councilman Howard Shook, who is chairman of the finance committee, said the law department’s view on bonus payments has evolved from being inappropriate, to being allowable because the city code doesn’t expressly prohibit them. He suggested the council could pass an ordinance saying that any payments not explicitly permitted in the city code are not allowed.

Reed on Tuesday issued a statement to the AJC through a spokesman defending the bonuses. He did not address AJC questions about the contest awards.

“Rewarding employees for service and performance is not new and has been common practice in the City of Atlanta,” the statement said. “These bonuses were appropriate and Mayor Reed believes that the individuals who received the bonuses were worthy of them based upon their contributions to the City of Atlanta’s unprecedented growth and fiscal stability.”

During Wednesday’s committee meeting, Moore marveled at the fact that she and other council members first heard about the bonuses from the media and not through City Hall’s rumor mill.

“I guess the money they received was so handsomely rich that they kept their months shut,” Moore said.

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