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Oregon City pays $439,500 settlement to former city manager who had sued in federal court

This story has been modified from its original version.

Oregon City is paying a $439,500 settlement to former City Manager David Frasher, who sued in federal court when the city claimed his 2013 five-year contract was invalid after firing him without cause in 2015.

FILE PHOTO - David FrasherFrasher's lawsuit had demanded a total of $433,000: $400,000 in unpaid termination money, along with penalty wages and other economic losses. In the settlement agreement approved by the City Commission on Oct. 18, $50,000 was designated for Frasher's attorney fees.

"I am pleased to have closure, and I am grateful that Oregon City officials were ultimately willing to work with me to resolve this matter," Frasher said. "The terms of the settlement agreement do not permit me to speak about the case other than to say that it has been settled."

Oregon City commissioners voted unanimously on Oct. 13, 2015, to cut ties with Frasher, who had been on "routine" administrative leave pending an investigation of a complaint filed on Aug. 11, 2015. City officials declined to pay the 2013 contract's more than $400,000 in severance to Frasher out of a "fiduciary responsibility" to make sure taxpayers' funds don't go to unnecessary items. Oregon City has since spent $142,737.12 on attorneys to fight Frasher's claims, and Pamplin Media Group requested the exact number through a public-records request.

More than $40,000 in costs to the city went to Frasher in 2015 in salary and benefits during the two months he was kept on administrative leave. Once he was fired, he was paid about $47,000, before taxes, for his last pay period, unused vacation and executive leave. City officials at the time said that denying the severance payment was legal.

"The city's official position is that the case has been resolved, and that's all you're going to get," Mayor Dan Holladay said.

The settlement agreement, co-signed by Holladay and Frasher on Oct. 12, places tight restrictions on what the city and Frasher can say about the case. Neither current city officials nor Frasher are allowed to make disparaging remarks about one another.

"If Frasher authorizes city to disclose the reason for his termination, city will confirm that Frasher was terminated because the working relationship with the Commission was impaired, and not for engaging in misconduct," the agreement reads. "In order to avoid misunderstandings, if either party is asked about the lawsuit, that party will respond by stating only that it has been resolved."

Holladay said at the time the April 11 federal lawsuit was filed that the 2013 agreement, which spelled out Frasher's $163,800 annual salary and severance provisions, was made "null and void" in January 2015, when Holladay and two other newly elected commissioners were sworn in.

Frasher's attorney pointed out that the three new city commissioners, in fact, signaled their approval of the 2013 employment agreement when they met with Frasher in executive session to discuss the employment agreement.

During an April 1, 2015, open meeting of the City Commission, the commissioners voted unanimously to pay Frasher a $8,190 bonus on April 30, calculated from 5 percent of Frasher's annual salary.

Midway through the legal proceedings, Oregon City switched its attorney working on the case from Akin Blitz to Peck Rubanoff & Hatfield. Holladay could not confirm or deny whether the city thought it had received faulty legal services from Akin Blitz as its reasoning for switching legal firms.

Oregon City lost much of its leverage to settle the case when Frasher was hired as city manager of Hot Springs, Arkansas, in early 2016. Negotiated as part of the settlement agreement was a "to whom it may concern" letter co-signed by Holladay and the replacement city manager listing some of Frasher's accomplishments as city manager and attempting to correct the record about an allegation that Frasher made racially insensitive remarks.

"The city investigated the complaint, and the city's independent outside investigator determined that the allegations were not sustained," the letter said. "No other formal complaints had ever been made against Mr. Frasher, and he received strong and positive performance evaluations from the City Commission for five consecutive years."

Oregon City's former Community Development Director Tony Konkol, who was appointed as interim city manager in August 2015, has since been named the permanent city manager and remains the leader of the city.

Frasher said that Oregon City has a bright future, and he wished the city well in all its endeavors.

"In my time in Oregon City, I was fortunate to work with some wonderful people, and I made some lifetime friendships for which I will always be grateful," he said. "I will remember Oregon City as a special place not because of its rich history, diverse resources or exciting potential, but for its kind, compassionate and honorable people who demonstrated their community values to me many times."

This story has been updated from its original version posted online to include the total amount that Oregon City spent on paying Frasher to be on administrative leave and legal services to fight Frasher's lawsuit. Akin Blitz's firm, Bullard Law, received the majority ($87,609.24) out of the total $142,737.12 legal bill.

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