by Lee McGuire / 11News -- Inside the City Council Chamber

After months of sometimes tense negotiations, 13,000 City of Houston employees have won a new contract -- and a pay raise. The new terms include a three percent across-the-board pay raise beginning in the next full pay period. Another raise comes in 2010, and again in 2011. The contract also calls for 25% "performance pay pools" to reward high-performing employees.

In addition, the contract increases the base pay of the city's lowest-paid workers to $9.50 an hour in the next pay period, then $10.00 an hour beginning in September, 2009. This minimum level was of the key objectives of the city employee's union, HOPE.

The contract also lifts the cap of 25 years on longevity pay, and calls for the city to review Holiday Pay within three months.

In addition, the union negotiated a 45-day waiting period before the City of Houston can lay off workers after privatization or outsourcing. It increases the days required for a "layoff notice" from 14 days to 45.

The City Council passed the contract 13-2, then stood to applaud the city workers in the Council chamber.

"You deserve this contract," said Houston City Council member James Rodriguez. "Thank you for putting up with us for the last 11 months."

Council Member Wanda Adams, a former City employee, said she sympathized with city workers who live on paychecks lower than $500 a week. "This will bring that up, and maybe you can finally quit that third job you're working to make ends meet," she said.

About two dozen city workers wearing "HOPE" t-shirts stood in the Council chamber as the city council prepared to approve the contract.

According to documents provided by the City of Houston, the cost of the pay increase and other components is about $5.2 million dollars in fiscal year 2008, and the total cost through FY 2011 is $179 million.

Here is a top-level summary of contract terms, which was handed out to City Council members. It's in ".MDI," or "Microsoft Document Imaging" format (sorry).

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