In 2007, the City of Davis Police Department was facing a critical moment. They had just been rocked by a year of turmoil, both internally and from segments of the community. They had a chief that had taken a position in another city, and the organization itself was fragmented and in need of new leadership.
Instead of hiring from within that department, City Manager Bill Emlen looked to the outside to bring in fresh ideas and a new leadership style. He ended up with Landy Black, who has helped rebuild both his department and trust within segments of the community.
In 2006, the city suddenly fired City Manager Jim Antonen. They quickly put Bill Emlen, who had been the planning director, in as City Manager. Within six months he was the permanent city manager, having shed the interim label. We can debate the wisdom of that move or how it worked out. I wrote earlier this week that Mr. Emlen has strengths and weaknesses. His watch has seen positive occurrences and negative ones.
However, what is clear now is that the city is in need of new leadership. If the city wants to take its time and do a full search for a new city manager, that is fine. They certainly have able people in the department to be interim city managers.
But when it comes time to find a new city manager, we need to look outside of the city. We need to change the culture of how this city has been run over the past decade. We have new challenges that require fresh ideas.
We need someone who will focus on creating a stronger city organization with less resources. We need to understand that in this new economy, growth may not be norm, it may be the exception.
We need to re-organize our priorities away from residential growth and developmen, and toward economic growth and development.
We need to change, fundamentally, the way the city provides services to the public.
We need to find a way to create more density while preserving our open space and greenbelts.
But the biggest challenge that I think we have is that we need to save our city’s budget in the face of economic downturn, the collapse of the real estate market, and the explosion of pension obligations.
It was before Bill Emlen arrived that the seeds were laid for our demise. First with the shift to 3% at 50 for public safety officials. Then with the shift to 2.5% at 55 for other employees. And finally with huge labor contract increases in 2004 and 2005, adding as much as 25 to 35 percent to labor costs, on top off previous increases. Suddenly rank and file workers were making nearly six digits in salary, and closing in on $150,000 in total compensation.
In my interview with Mr. Emlen he told me point blank, “And I will say, I think you disagree with this one, the reality is I think we’re working with a pretty conservative budget. Obviously we’re dealing with huge forces out there that have changed in the last several years. But I challenge you to go out and look at cities throughout the region, and look at their financial situation versus ours.”
I both agree and disagree with him. First, Davis has been hit less hard by this crunch than other cities. But that did not stop Davis from wracking up huge unfunded liabilities. While the city does not pay in salary what other cities do, it makes up for it in cafeteria cash-outs, health care benefits, and retirement health benefits.
Moreover, Davis was completely reliant on two streams of money for sustaining a decade of wage and benefit hikes. We rode the wave of the real estate market. And while the university’s imposed stability has saved our market from collapses that other cities have seen, the sustaining force of the market is gone. The result is that we will not see the growth in the real estate market in the next few years that could have buffered the hit we are about to take with pensions (a problem that all cities have) and unfunded retiree health care liabilities (which are more pronounced in Davis than other communities due to the generosity of our system).
Davis does not have the saving grace of being able to fall back on economic recovery that other cities might. Our retail sector is relatively small, even with the addition of Target. Thus, sales tax revenue rebound will not save us even if the economy improves, which does not seem imminent.
Thus, by 2014-15 when the new costs hit us, we will likely be unprepared to meet them.
We had a window of opportunity in 2009-10 with the labor contracts, and here is where I do criticize Bill Emlen, along with the Davis City Council. He could have taken the bull by the horns here and tried to push for wholesale overhauls of the processes. Instead, he took an incremental approach, a conservative approach if you will, in hopes of re-directing the ship in small increments, hoping somehow the external forces will be kind enough to allow Davis over the course of two or three of these contracts to move to the right place.
But consistently, I think, he and his finance director have been overly optimistic, both in terms of recovery and in terms of the net impact of the coming hit. And I think he leaves us extremely vulnerable to forces outside our control over the next three years. If things go poorly, we could be facing bankruptcy. Davis may have a conservative budget, but it also has a modest retail sector to help steer any rebound.
To face these problems, Davis would benefit from fresh leadership and ideas. The city has two new councilmembers that have vowed to help get the city’s fiscal house in order. But those councilmembers need help, they need a new captain that can help direct the change. Someone who is not tied in to the existing city structure or the city’s political establishment.
We need someone willing to take on these challenges with bold new ideas about how we can save money, while maintaining our high level of city services. The people of Davis are very demanding. They will not take crumbling roads, declining city services to go along with the same high salaries and labor contracts that we have had in place since the middle part of the last decade.
This is another window of opportunity for the council to make for a fresh start. It was not expected. And the timing perhaps not the best, as we have two council members that have barely had three meetings under their belt, but that is the life of an elected official, no time to get settled before the next crisis hits. Time to see what this new council is really made of.
—David M. Greenwald reporting
Anyone who has reached the level Emlen has or close to it–in other words anyone likely to be seriously considered as his replacement–will be well versed in the all-important bureaucratic necessity of CYA (cover your derriere).
I agree with DMG that it would be great to find a city manager who could swoop in and solve our problems, but where would such a person come from and, frankly, why would our CC want to hire someone who would rock the boat? AS you mention most other cities have worse problems than we do–do we look to their staff?
If we can find someone who is unwaveringly honest so that staff reports cannot be manipulated as they generally are (this is not unique to Davis, indeed, Davis, once again, is likely much better than average due to public scrutiny) that would be an improvement, but this type of behavior generally does not lead to promotion. In most organizations one is expected to go along with the norms.
Also my own experience hiring (in a university setting) is that outsiders often look better until they arrive. If one hires an insider one at least knows what one is getting.
Our best chance of changing things was the last election. So far it does not look prmising on the fiscal front. I think we can expect a better CC in many ways but not on the fiscal front which I agree is a serious problem.
The selection and filtering system for any city manager position is the three majority members of the city council, however that composition may evolve. Each city council member wants a manager that is most responsive and supportive of that particular council member’s view on city matters. Nothing inherently sinister in that (although it is guaranteed to be alleged), that is just human nature. We want to work with people we like, and like us.
There is no magic formula for going “inside or outside” in the selection of a public administrator, with one exception. If the organization is corrupt and reform is sought, an outsider is essential, even when the system has qualified an honorable candidates within. Davis is not corrupt, despite the occasional cynical,reckless, and unsupported comments to the contrary. Therefore, the selection process for Davis City Manager should be legitimately opened up to all qualified candidates regardless of their current geographic and organizational status.
This is contrary to all current opinion. but with the salary now offered for the Davis City Manager, prepare to get a “B-list” of candidates. The pay scale for Davis city manager is well below competitive salary standards found in well-managed California cities. If you don’t believe this–or don’t want to–call some professional municipal recruitment “headhunter” firms and ask them.
It will never happen, but the most positive step the Council could take in recruitment for a high-quality manager is to substantially increase the salary. You want a miracle worker? They are out there, buy one.
The best way to save and salvage the City’s financial future is to get the very best manager that money can buy. He/she will save you 20-fold in cost savings in return. I say this knowing with utter confidence this remark will fall on deaf ears of all those who control such matters.
Davis’ politics does not lend itself to any degree of harmony and tranquility to any of its leadership positions. Some residents even take a perverse pride in how politically contentious Davis is and say this is participative democracy. Maybe so, but it does come at a cost, a cost that will be extracted in the next manager selection choice.
The departing city manager made one partially candid remark in the usual array of polite parting remarks. He spoke of the tedium of protracted city council meetings. How many sought-after highly qualified future city managers want to sit in a room until 2am listening to people on both sides of the podium say the same tiresome message? Few other cities have this “job condition.” The great managers, always in high demand, go elsewhere and who can blame them?
Phil is (very) substantially “on point”… that being said, the CC should make sure there is no ‘linkage’ between CM compensation and Department Heads… that will enable them (CC) to negotiate a package that will bring the ideal candidate into play (might get nibbles with current package, but suspect more will be needed to ‘land’ the right one). I also suspect, given our history of CC relations and the fact that the CM is truly “at will” and can disappear on any given Wednesday morning following a 3-2 vote to terminate, I’ll wager that a fairly generous “golden parachute” package for termination w/o cause in first 3 years, will probably need to be on the table.
Although many people on this blog have been critical of the overall payroll for the City and many have been critical of the actions of City Staff, I don’t know that it follows that we would also begrudge a competitive salary for a good City manager. Its a tough job and deserves a good salary. The same cannot be said of everyone on the City payroll. My main complaint about Davis City planners have been: a) there are too may of them; b) many (e.g. Hess) appear to have an agenda which is contrary to what many of us see as the best interest of the City.
I’d much rather pay up for a good City manager and save money elsewhere. I suspect many on this blog would agree–of course what constitutes a good City manager is in the eye of the beholder.
I hear Robert Rizzo, the retired city manager from Bell is looking for a new job. Maybe if Davis would be willing to a pay a city manager rock star salaries, we might be able to recruit a city manager with talents commensurate with those of Mr, Rizzo.
Davis city politics is neither particularly difficult or unique. We are a little college town with not much on the cutting edge of anything really going on. We may think we are unusually complex and special, but are really only a legend in our own minds.
As Mr Emlen put it when asked by the Vanguard……………
[quote]The Vanguard asked him if he enjoyed getting out of the pressure-cooker of Davis. He responded, “I never felt it was a pressure- cooker.”
[/quote]
[quote]We need to re-organize our priorities away from residential growth and developmen, and toward economic growth and development.–David Greenwald[/quote] and [quote]Davis does not have the saving grace of being able to fall back on economic recovery that other cities might. Our retail sector is relatively small, even with the addition of Target. Thus, sales tax revenue rebound will not save us even if the economy improves, which does not seem imminent.–D.G.[/quote]”Economic development” always sounds good, but it does not necessarily bring net revenue to the city. For example, the recent tax exemptions given to high-tech energy make it unlikely that high tech industry will actually add net revenue. The equipment tax, which used to bring significant revenue from high tech industry, appears to be gone. The lack of net revenue will be doubly true if a business park is built on land annexed from the county, where we can expect to get a much lower share of the property tax.
It would be nice to bring some clothing stores and a department store to Davis, but it could be difficult due to our proximity to the K-Street Mall and to Vacaville, and the added revenue would be really tiny compared to our total budget. A leading professional retail developer told me that our “fragmented market”, our small population and our isolated location make the recruitment of such retail difficult.
There are two types of revenue that bring in large amounts of money. One is car dealerships and the other is hotels — particularly if they are associated with conference centers. Hotels in the county out by the Mondavi center bring the city no revenue at all.
The revenue from the University’s new hotel and the soon to be remodelled and expanded Memorial Union book store and cafeteria will all go to the county, even though the county provides virtually no services, and has no impacts. This will hurt.
Short of a major big-box malls, it is hard to think of economic development aside from auto dealerships and a hotel-conference that would significantly help Davis in the revenue department.
Many cities with far, far more retail are in far, far worse shape than Davis.
What would really help Davis would be a tax on internet sales, with the standard city share of purchases made from Davis citizens to be rebated to Davis. Also helpful to Davis, and all other cities on the brink, would be the ability to modestly tax services.
Make that “For example, the recent tax exemptions given to high-tech industry make it unlikely that high tech industry will actually add net revenue.”
One thing to keep in mind is that Jim Antonen was selected by an intensive nationwide search with by a leading head-hunter company. Bill Emlen was promoted from within. People can draw their own conclusion as to which worked out better.
Personally, I have seen city managers with huge salaries that are not that impressive. I don’t necessarily buy into the assumption that there are only a few people capable of doing good management work, or that they have to be paid huge sums to do it.
There might be something to be said for promoting our most talented person from within, and there might be something to be said for hiring an extremely intelligent, young person with a top quality education who might have a lot of energy, be a quick study, and cost the city less money.
I plan to get more specific answers as to what our pension obligations will be if we hire a very high paid new employee close to retirement age (which, remember, is only 55).
[quote]I plan to get more specific answers as to what our pension obligations will be if we hire a very high paid new employee close to retirement age (which, remember, is only 55). [/quote]
Well, unless that outside hire serves the City for at least 5 years (roughly, the median “life” of a City Manager), AND that person has at least 5 years of PERS or equivalent service beforehand, AND if that person retires directly from the city, there would be no cost/liability for retiree medical, if the CM is hired on terms consistent with the current PASEA, City Mgt. contracts. If they ‘just’ meet all three criteria, the obligation would be 50% of coverage for the employee, 45% for any dependents.
Sue: As we would say in Grad School, that’s an N of 2, that’s not a pattern, that’s a line. Who are you favoring hiring from within?
David… for “mathematical rigor”, here’s what I remember re: CM hires:
Reese (unsure, think it was ‘outside’)
Storey (outside, search)
Traverso (inside)
Meyer (outside, direct contact)[John had worked for City, but was in private sector when hired as CM]
Antonen: (outside, search)
Emlen: (inside)
next: (I’m favoring outside, search)
Had at least one interim, from inside, Hippler.
Phil Coleman: “The departing city manager made one partially candid remark in the usual array of polite parting remarks. He spoke of the tedium of protracted city council meetings. How many sought-after highly qualified future city managers want to sit in a room until 2am listening to people on both sides of the podium say the same tiresome message? Few other cities have this “job condition.” The great managers, always in high demand, go elsewhere and who can blame them?”
I would argue that Bill Emlen was part of the reason the CC meetings ran so long…
SUE: [i]”I plan to get more specific answers as to what [b]our pension obligations[/b] will be if we hire a very high paid new employee close to retirement age …”[/i]
HP: [i]”Well, unless that outside hire … there would be no cost/liability for [b]retiree medical …[/b]”[/i]
HP, you misread Sue’s post in that respect. She was talking about pension obligations, not retiree medical.
Keep in mind that a lot of the pensions for people covered by CalPERS are [i]underfunded,[/i] according to PERS. Those underfunded pensions all must be backfilled by the agencies which employed them.
So the concern Sue is expressing is this: if we take on a new employee whose pension is underfunded by some hundreds of thousands of dollars, the City of Davis will take on a share of that liability.
I recently spoke with Melissa Chaney, who is the human services director for the City of Davis. I asked her about Bill Emlen’s pension, which, because he is moving to a new job in Solano County with a much bigger pension. She told me that insofar as it is now underfunded*, the City of Davis will be charged for that liability, caused by his change in employment.
Before the corruption scandal in Bell was exposed, I had no idea that past employers could be held liable for the pensions agreed to by later employers. But that is the case. Cities that Mr. Rizzo worked for prior to his arrival in Bell owe money to CalPERS to cover the great amount of his pension, which is based on the final money he made as Bell’s city manager.
*Note that another reason so many pensions are now greatly underfunded (according to CalPERS) is because of the poor performance of their portfolio. If it happens to be the case that they stock market takes off like gangbusters in the next 5-6 years, I would think that aspect of the liability would disappear.
HP, one other thing about a retiree medical liability for an older city manager. As long as she qualifies for retirement–that is, she has 5 years or more in the CalPERS system and she is of age–the City will almost certainly have to guarantee her full retiree medical [i]as a condition of taking the job.[/i]
It’s not the same situation with employees lower on the totem pole. They don’t have that kind of leverage, and unlike the city manager, their contract is tied to their bargaining unit. The city manager position is unique in that respect.
[quote]To face these problems, Davis would benefit from fresh leadership and ideas. The city has two new councilmembers that have vowed to help get the city’s fiscal house in order. But those councilmembers need help, they need a new captain that can help direct the change. Someone who is not tied in to the existing city structure or the city’s political establishment. [quote] David, I just returned from the special meeting of the City Council concerning the City Manager recruitment. I made the point during the meeting that you can go overboard by eliminated any existing employee.
When Jeannie Hippler was interum City Manager, we (a majority which included me) felt that an outside person was needed, for the same reasons that you have articulated.
But we had a year to see Jeannie Hippler in action. She was quite effective, fair and responsive. Atlhough Jim Antonen was a fine city manager, in retrospect I felt strongly that we made a mistake by favoring an outside person. He was not exceptionally “change” oriented. And it can be demoralizing to staff to assume that an “outsider” is needed, and it is difficult to know how anyone will function in the top position until you see them in action.
I always regretted making an assumption of “outside” over “inside”. Having gone down that road, I think the benefits are exaggerated. I want to keep an open mind.
I don’t know how I managed to get a box within a box.
I should add that I am making guesses about the thinking of the council majority. This is just a hypothesis of mine concerning the dynamics. Of course, I do not know what any colleague was thinking.