After years of tense negotiations and frozen salaries, dozens of managers in Palo Alto's Utilities Department will receive 12 percent raises under a contract that the City Council approved Monday night.

The contract, which the council approved by a vote of 8-1, with Councilman Greg Tanaka dissenting, applies to the 48 members of the Utilities Management and Professional Association of Palo Alto (UMPAPA), a labor group that formed in 2009 and that includes all supervisory and management-level jobs in the Utilities Department. Since then, the employees in this group have been operating without a memorandum of understanding. The only salary adjustment they had received occurred in 2013, when the city unilaterally imposed new terms.

The agreement, which covers the period between Dec. 10 and June 30, 2019, represents a rare note of consensus in what has thus far been a fractious and litigious relationship between city management and the nascent labor group, which in 2009 broke apart from the larger non-unionized group of managers and professionals.

Since then, UMPAPA has won two court battles against the city. In 2011, a judge rejected the city's challenge and affirmed UMPAPA's right to exist apart from the larger management group. And earlier this year, an administrative law judge for the state Public Employment Relations Board chided the city for failing to negotiate in "good faith" with UMPAPA during contract talks that stretched back to 2011 and described as "outrageous" the city's failure to reach an agreement with the group despite seven years of negotiations.

The two sides had also squabbled over competing "benchmark" surveys, which purported to show how local salaries compare to the market level, and over the city's insistence to include an "at will" clause in the contract, which would allow the city to fire without cause new employees in eight management positions.

In preparing the new agreement, city staff had considered both the recently conducted market study and the compensation offered to other managers in City Hall. While the salaries of UMPAPA members have remained flat, employees in the unrepresented Management of Professional unit have received base wage increases of 2.5 percent per year.

A new report from Human Resources Department also cited the heavy turnover that the Utilities Department is currently experiencing, with a high number of vacancies and voluntary departures. The report also notes that key leadership positions within the Water, Gas, Wastewater, Engineering and Operations division have been hard to recruit and retain over the past three years.

"After nine years without a Memorandum of Agreement, this tentative agreement is intended to address the City's need to recruit top talent, incentivize progression within the Utility ranks for succession planning and set the framework for positive negotiations for future successor contracts," the report states.

In addition to offering employees a 12 percent raise, the agreement caps medical contributions, replacing the existing system in which the city covers 90 percent of medical costs and the employee covers the remaining 10 percent. The agreement also requires employees to contribute an additional 1 percent of their salaries toward pensions and creates a grievance process for contractual disputes, which would be referred to neutral outside arbitrators.

The contract is expected to raise the city's employment costs by about $1.14 million, with all the cost increases occurring in enterprise funds.

The council approved the agreement on its consent calendar, with no discussion or debate. Tanaka, the sole dissenter, cited the magnitude of the salary increase as the reason for his vote against the increase.

"I think there's probably better ways for doing this than we did. That's why I voted no," Tanaka said.