REPORT TO COUNCIL
SUBJECT
Title
Introduction of Ordinance Amending Section 2.04.030 of the Sunnyvale Municipal Code Relating to City Manager Claims Settlement Authority
Report
BACKGROUND
On November 28, 2023, the Council reviewed a colleagues’ memo requesting creation of a Charter Review Committee (CRC) to conduct a comprehensive review of the Sunnyvale City Charter and nine specific potential Charter amendments.
On June 4, 2024, the City Council created a CRC to consider amendments proposed by the Council as well as additional amendments proposed by the CRC and City staff. Following a recruitment and interview process, Council appointed the committee on December 3, 2024, and members were sworn in on December 10, 2024.
On June 3, 2025, City Council held a joint meeting with the CRC (RTC No. 25-0212). At that meeting, Council reviewed the CRC’s list of potential amendments to the City Charter and directed the CRC to study five specific potential amendments. The CRC studied each item and developed proposed amendments for Council consideration. On February 3, 2026, after public input, a community survey, and its analysis, the CRC presented its report (RTC No. 26-0254), which included recommendations for four potential charter amendments, including allowing the City Manager to settle claims above $50,000, with the limit set by ordinance.
Between February 3 and June 23, 2026, the Council reviewed and approved the CRC report and recommendations, directed staff to conduct public opinion polling on the proposed amendments, received and discussed polling results. On May 19, 2026 (RTC No. 26-0380), Council directed staff to return with all materials necessary to place three measures on the November 2026 General Election ballot. One of those measures would authorize the Council to establish the City Manager’s settlement authority by ordinance, with an initial limit of $250,000, aligning it with the City Manager’s existing purchasing authority, if approved by voters. On June 23, 2026, Council adopted Resolution No. 1369-26 (Attachment 3) calling a General Municipal Election to be held in the City of Sunnyvale on Tuesday, November 3, 2026, for the purpose of submitting to City voters a measure amending Section 1314 of the City Charter related to City Manager settlement authority.
This report, and the accompanying ordinance setting the City Manager's settlement authority at $250,000, implement the direction Council gave on May 19, 2026. The ordinance would become effective only if voters approve the Charter amendments at the November 2026 General Election.
The measure proposes to amend Section 1314 of the Charter to allow the City Council to establish by ordinance the City Manager's authority to settle legal claims against the City, effectively allowing the Council to set the City Manager’s settlement authority above the current limit of $50,000. The CRC recommended that Council adopt an ordinance setting a specific settlement authority limit and procedures that would take effect only upon passage of the ballot measure, suggesting that such an ordinance would “give the voters more clarity on the settlement authority limit.” This report provides Council with the opportunity to implement that recommendation.
EXISTING POLICY
Elections Code Article 3 (City or City and County Charters)
Sunnyvale City Charter
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15320,15378 and 15061(b)(3) as it is an organizational structure change and does not have the potential to result in either a direct or reasonably foreseeable indirect physical change in the environment.
DISCUSSION
California Government Code Section 935.4 establishes that settlement authority for claims against a local public entity is limited to $50,000 unless a charter provision authorizes a higher amount. CRC studied whether the City Charter should be amended to allow the City Council to establish by ordinance the City Manager's authority to settle legal claims against the City, and recommended amending the Charter to authorize the City Council to set the settlement limit by ordinance. An excerpt from the CRC report containing the CRC’s full analysis of the settlement authority issue is included as Attachment 2 for information.
The CRC further recommended that if the Council placed the recommended Charter measure on the ballot, the Council should concurrently adopt an ordinance setting a specific settlement authority limit and procedures that would take effect if the measure passes, to “give the voters more clarity on the settlement authority limit.”
Consistent with the current Charter, Sunnyvale Municipal Code (SMC) Section 2.04.030 currently provides that the City Manager’s authority to settle claims is limited to $50,000 or less. The CRC report notes that $50,000 has been the limit since at least 1989. The CRC also reviewed settlement authority limits in other California charter cities and considered inflation since the $50,000 limit was set and suggests that “a new limit in the range of $100,000 to $150,000 would be appropriate.” The report further noted that “Sunnyvale Municipal Code Section 2.08.040 designates contract approval and spending authority to the City Manager up to $250,000.”
In the public meetings discussing the CRC recommendations and potential charter measures, staff and the Council indicated a preference for a settlement authority limit of $250,000, consistent with the City Manager’s current contract approval authority under SMC 2.08.040. Aligning approval authority in these areas would promote administrative efficiency by reducing the need for closed sessions with City Council to approve settlements of claims and litigation. Council would retain overall responsibility for monitoring the cost of settlements through the budget process. In addition, the City’s claims program has built-in safeguards including the involvement of a third party claims administrator and annual claims audits by the California Joint Risk Management Authority (CJPRMA) (the organization that provides the City’s excess insurance).
The proposed ordinance amends SMC section 2.04.030 to reference Charter Section 1314 and increase the City Manager’s settlement authority from $50,000 to $250,000. Although the ordinance would be adopted now, it would only become operative if the measure amending Charter Section 1314 is approved by a majority of voters at the November 3, 2026 election. If the Measure is not approved, this ordinance will not become operative and will be considered repealed.
FISCAL IMPACT
There is no fiscal impact associated with adopting this ordinance.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Introduce an Ordinance Amending Section 2.04.030 of the Sunnyvale Municipal Code Relating to City Manager Claims Settlement Authority, to Become Operative Only if the November Ballot Measure Proposing Amendments to Charter Section 1314 Passes
2. Do not introduce an Ordinance Amending Section 2.04.030 of the Sunnyvale Municipal Code Relating to City Manager Claims Settlement Authority.
3. Provide other direction to staff related to an ordinance setting City Manager claims settlement authority.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Introduce an Ordinance Amending Section 2.04.030 of the Sunnyvale Municipal Code Relating to City Manager Claims Settlement Authority, to Become Operative Only if the November Ballot Measure Proposing Amendments to Charter Section 1314 Passes.
JUSTIFICATION FOR RECOMMENDATION
Alternative 1. Alternative 1 is consistent with the CRC’s recommendation to adopt an ordinance setting a specific settlement authority limit that would take effect only upon passage of the ballot measure in conjunction with placing a measure to amend Charter section 1314 on the ballot, and staff and Council’s previous discussions indicating that $250,000 is an appropriate amount that aligns with the City Manager’s existing contract approval authority.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Melissa Tronquet, Senior Assistant City Attorney
Reviewed by: Connie Verceles, Assistant City Manager
Reviewed by: Rebecca Moon, City Attorney
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Draft ordinance
2. Excerpt from 2026 Charter Review Committee Report: Recommendation 4-City Charter Section 1314