Lago Vista agreed to pay $210,291 to settle with its city manager

The Lago Vista City Council voted 4 to 2 on October 3, 2024, to settle with its city manager, and the agreement committed the city to pay $210,291.32 (our addition).^1,2 No one said the terms or the cost out loud before the vote.³ In the budget year the Settlement Sum fell due, the city's own budget book projects the City Manager personnel line at about $105,000 over budget.^2,4,5 On January 6, 2026, the council voted 6 to 1 to add $75,000 to that line, and the city listed "Separation costs for the former City Manager" among its reasons.^6,7,8

How it started

Tracie Hlavinka became city manager after Joshua W. Ray left the post. The city's July 2021 newsletter says Ray "accepted a position with the City of Shelbyville, Tennessee" in January of that year.⁹ The council appointed Hlavinka on June 17, 2021.¹⁰

Then-City Manager Tracie Hlavinka's attorney later laid out her account of what happened in a demand letter to the city attorney, dated August 29, 2024.¹¹ The events below come from that letter, and the city later denied its claims in the settlement agreement.^2,11

The letter says that at the April 4, 2024, council meeting, Council Member Rob Durbin referred to Hlavinka as a "big girl." It says Council Member Chelaine Marion said at the same meeting that Hlavinka needed to "put her big girl panties on." According to the letter, Hlavinka reported the comments to Mayor Kevin Sullivan right away and met with him about them on April 10, 2024. It says she emailed the mayor and City Attorney Cobby Caputo about the comments on April 17, 2024.¹¹

The letter says that on April 18, 2024, Durbin said the city had "one ass to kick," referring to Hlavinka. It says that on April 20, 2024, at Lago Fest, Council Member Paul Roberts called her a vulgar name and said he had his "big boy panties on." It says she reported that to the mayor and, on April 22, 2024, to the city attorney. According to the letter, Hlavinka emailed the council on April 24, 2024, to propose sensitivity training for its members. It says Roberts objected, and Council Member Shane Saum expressed concern that the training would appear to be "punitive" for the council.¹¹

On May 2, 2024, the Lago Vista City Council voted unanimously to have the city attorney hire an outside investigator to look into an employee complaint and the city manager's response to it.¹² The letter says the council held Hlavinka's mid-year evaluation that day, and Council Member Paul Prince told her the city "was better under her leadership." It says that during the May 16, 2024, meeting, which Hlavinka joined by Zoom, Roberts was overheard saying "when we fire Tracie." It says Marion then messaged Hlavinka to apologize for the remark. The letter says she was subjected to "excessive scrutiny" and blamed for problems outside her duties. It says she had in effect already been "constructively discharged."¹¹

The letter alleged gender discrimination and retaliation under Title VII of the Civil Rights Act and Chapter 21 of the Texas Labor Code. It demanded $181,500 "in exchange for a full confidential release." It also asked for at least 12 months of insurance benefits, a payout of all accrued leave, and her attorney's fees. It said her employment was on the council's agenda that same day and warned, "Taking further action against Ms. Hlavinka at this meeting will only enhance an already strong retaliation case." Without a settlement, the letter said, she would file a charge of discrimination with the Texas Workforce Commission and the federal Equal Employment Opportunity Commission, then sue.¹¹

The October 3 vote

The October 3 agenda, posted publicly on September 26, 2024, listed "Consultation with Legal Counsel and deliberation regarding the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the City Manager," citing Texas Government Code Sections 551.071 and 551.074.¹³

Texas law lets a city council go behind closed doors to get legal advice on "a settlement offer." It also lets a council close the room to deliberate "the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of a public officer or employee." The law also says, "A final action, decision, or vote on a matter deliberated in a closed meeting under this chapter may only be made in an open meeting."¹⁴

Council first went into closed session at 4:05 p.m. It returned to closed session at 7:57 p.m. to keep discussing that and other items. Members came back into open session at 9:40 p.m. to vote.¹ On the video, the chair opened the item by saying, "This is underneath Texas Government Code sections 551.071 and 551.074." Next the chair asked, "Item number one, consideration of separation agreement with city manager. Any action?" Prince responded, "I move that we approve the separation agreement with modifications per the discussion in executive session." The chair then said, "Any discussion on that motion? All those in favor say aye." Moments later the chair announced, "it passes 4 to 2 with Mr. Roberts and Mr. Durbin dissenting."³

The council voted 4 to 2 on October 3, 2024, to approve a separation and settlement agreement with Hlavinka.^1,2 Council Member Paul Prince made the motion, and Mayor Kevin Sullivan seconded it. Mayor Sullivan, Mayor Pro Tem Chelaine Marion, Council Member Stephanie Smith, and Prince voted yes. Council Member Rob Durbin and Council Member Paul Roberts voted no. Council Member Shane Saum had left the meeting and did not vote.¹

The vote itself was taken in open session.¹ No one stated the settlement terms or the dollar amount out loud between the motion and the vote.³ The same night, the council voted 6 to 0 to appoint Taylor Whichard as interim city manager.¹ Whichard was then the city's public works director.^12,15

The agreement and what it cost

Hlavinka signed the settlement agreement the next day, October 4, 2024. The settlement agreement later signed by the city says Hlavinka's claims were the ones in that August 29 demand letter, "which claims the City categorically denies." It also says she "expressed a desire to resign her employment with the City to move on to other professional opportunities." The City of Lago Vista, not individual council members, is the party that agreed to pay. The release in the agreement also covers the city's current and former council members, who are among the "Releasees."²

The agreement lists a "Settlement Sum" of $158,913, paid in three checks. That includes $55,619.55 for alleged lost wages, $55,619.55 for other alleged damages, and $47,673.90 paid directly to her law firm, the Dupree Law Firm, for attorneys' fees and expenses. On top of that, the city agreed to pay $4,493.52 for six months of COBRA health coverage, $41,884.80 for 480 hours of accrued vacation, holiday, compensatory and sick time, and $5,000 toward Hlavinka's attorney's fees.²

Add those figures together and the payments under the agreement come to $210,291.32. That total is our own addition. It does not appear anywhere in the agreement itself.²

The agreement could not take effect until a seven-day period to revoke it had passed, and it required the Settlement Sum to be paid within 14 days after that. Under the agreement, her resignation took effect 14 days after the city made all payments. By those terms, the $158,913 Settlement Sum was due in October 2024, the first month of the city's budget year. That timing is our reading of the agreement's dates.² The city's October 2024 report shows its budget year starting that month.⁵

That October, the city's revenue and expense report shows the general fund Administration department's personnel line labeled "City Manager," account 10-510-1100, at $224,743.42 for the month. Its budget for the whole year was $190,575.⁵

What changed afterward

The October 17, 2024, agenda included a proposed ordinance on employee separation agreements. The agenda item report's background section said the existing practice, which let the city manager sign separation deals under a certain dollar amount without council approval, "lacks fiscal transparency and potentially circumvents the City Charter's requirement for Council approval for the termination of department heads by getting employees to agree to a settlement or risk being fired."¹⁶ At the meeting that night, the council first voted 7 to 0 to table its personnel policy rewrite and directed that comments on the policy and on separation agreements go to the city attorney within seven days. It then voted 7 to 0 to remove that ordinance item from the agenda.¹⁵

On November 21, 2024, the council voted 7 to 0 to adopt revised personnel policies that added a requirement that "City Council shall be notified of all separation of agreements/severance agreement."¹⁷

How the public learned the cost

Taxpayers can fairly ask a question. When a council approves a settlement in open session without saying what it costs, how does the public find out what it paid?³

The signed settlement agreement itself became a public record under a different part of state law, the section of the Public Information Act that lists "a settlement agreement to which a governmental body is a party" as public information.¹⁸ After the agreement was requested, the question of releasing it went to the Texas Attorney General. On January 15, 2025, that office wrote, "The submitted information consists of a settlement agreement to which the city is a party and is therefore subject to section 552.022(a)(18) of the Government Code," and ruled that "the city must release the submitted information."¹⁹ That ruling came more than three months after the October 3, 2024, vote.^1,19

A new city manager and the budget

Charles West later became city manager. On May 1, 2025, Mayor Sullivan updated the council on how West's contract negotiation came about, with West in attendance.²⁰

For the 2024-2025 budget year, the city's budget book shows the City Manager line at $275,680 spent by August 20, 2025, and $296,000 projected by year end. That projection is about $105,000 over the $190,575 budget (our math).⁴

That budget year ended September 30, 2025. On December 4, 2025, city finance staff asked the council to amend it. The staff report listed "Separation costs for the former City Manager and relocation expenses for the newly hired City Manager" among the reasons. It also cited "Increased legal costs related to grievance investigations, lawsuits, and multiple employee separations."⁸ The council voted 7 to 0 that night to table the item. The minutes say it was "tabled to re-write ordinance and bring back to City Council."²¹

On January 6, 2026, the council voted 6 to 1 to adopt the amendment.⁶ It added $75,000 to the City Manager line, account 10-510-1100, raising that line's budget from $190,575 to $265,575. The city's note on that change says the city manager in place at the start of 2024 "left and agreement was paid out," and a new city manager "was hired and had to be relocated." The same amendment added $25,000 to the city's Legal Services budget.⁷ In all, it added $216,000 to the general fund budget.²² The minutes say that, per the finance director, "the monies for the increase in the General Fund were covered by underspending in non-departmental Contract Services."⁶ Even after the amendment, the budget book's $296,000 projection for the City Manager line is $30,425 above the amended budget (our math).^4,7

The October report and the budget book do not say what the extra spending was for.^4,5 The amendment names separation costs and relocation but does not split the $75,000 between them, so this story cannot confirm how much of it was the settlement.⁷ State law makes records of how a city spends public money public information.¹⁸ The city's general ledger for account 10-510-1100 in October 2024 is one of those records, and residents can request it.²³

Where it stands

West was still listed as city manager at the July 16, 2026, council meeting.²⁴ By the August 6, 2026, meeting, minutes list him as absent. At that meeting, the council voted 7 to 0 to appoint Chief Ron Joy as acting city manager until an interim manager could be named. On August 6, the council also voted 7 to 0 to appoint a council subcommittee to work with SGR, "a firm to identify candidates for Interim City Manager."²⁵ On September 3, 2026, the council voted 7 to 0 to approve a contract with SGR to appoint Isaac Turner as interim city manager. Minutes from that meeting identify Joy as Police Chief Ron Joy.²⁶

The council minutes we reviewed do not say whether West has left the job or why he was absent.^25,26 This story does not guess.

What you can do

Residents can file their own public information request with the city for the settlement payment checks and the October 2024 general ledger detail for account 10-510-1100, to see exactly how and when the money moved.²³

Residents can also speak during citizen comments at council meetings. The October 3, 2024, agenda told residents who wanted to speak during citizen comments to submit a completed form.¹³

If you have records related to this settlement or others like it, you can share them with us at /share-records. We protect your identity and publish the evidence when we can do so safely.