Why the rush in Atherton city manager shuffle?

Contract written so hastily a key section was read to council from a cell phone

This is an expanded version of a previously published article.

After a flurry of activity that quickly produced two employment contracts, and included a hastily scheduled special City Council meeting and the retroactive resignation of the town's interim city manager, Atherton has new interim leadership.

Deputy City Clerk Theresa DellaSanta is now the town's interim city manager, and former manager John Danielson will continue working for the town of Atherton as an independent consultant, but for $2,000 less per month than the town appeared poised to pay him just a day before his contract was signed.

Both decisions were made by a unanimous City Council on Friday morning, Jan. 27, at a special meeting called after Mr. Danielson abruptly left his post as interim city manager. His departure was in response to a decision, unexpected by town officials, by the California Public Employees Retirement System (CalPERS) that essentially forced him to resign.

The town announced late Wednesday, Jan. 25, that the City Council would vote Jan. 27 on a proposed contract that would pay Mr. Danielson $14,000 per month, for up to three months, to help find a permanent city manager, and to serve as an adviser to the new interim manager. Mr. Danielson had been making $15,000 per month as interim city manager.

But on Jan. 27, shortly before the council met to vote on his and Ms. DellaSanta's contracts, the town issued revised proposed contracts, adjusting Mr. Danielson's salary downward to $12,000 per month.

Mayor Bill Widmer said the number was recalculated based on the estimated cost of hiring a search firm to recruit a permanent city manager; Mr. Danielson will be paid $5,000 per month to do so. The remaining $7,000 per month is to cover Mr. Danielson's work advising the new interim manager, as needed.

Ms. DellaSanta will make about $8,012 per month in her new post, about 25 percent more than her current monthly salary of about $6,410.

Mayor Widmer noted that the financial terms of both contracts represent a net gain of about $1,400 per month for the town.

Urgent situation

The town faced an urgent situation with CalPERS' decision not to exempt Mr. Danielson, the retired city manager of Elk Grove, from a rule that prohibits public employee retirees from working for a single public employer for more than one year if he or she is to receive a pension. Mr. Danielson began working for the town on Jan. 3, 2011.

The council in December requested the exemption, with City Attorney Bill Conners advising that a provision in state law allows CalPERS to grant such an exemption. But a state statute went into effect on Jan. 1 clarifying ambiguous wording in the law, and that change clearly makes an exemption illegal, Mr. Conners explained.

Because town staff was forced to work so quickly to negotiate both contracts by the time the council met on Jan. 27, the council and public didn't receive the proposed contracts until about two hours before the meeting.

Mr. Conners said he worked much of the night to fine-tune Mr. Danielson's contract in such a way that it will pass muster with CalPERS which is important if Mr. Danielson is to continue his status as a retiree and receiving his pension.

"CalPERS has raised concerns that hiring (Mr. Danielson) back in any capacity will be a sham," Mr. Conners told the council. Therefore, he said, the contract must be solid and clearly state Mr. Danielson's role as a consultant rather than an employee.

The rush was so great that the proposed contract presented to the council that morning had already been revised. Mr. Conners read the revised "Scope of Services" section from a hand-held mobile device after rewording that section. This prompted Councilwoman Elizabeth Lewis to say, as she expressed concerns over the speed with which the council had to act, that she was apprehensive about approving a document when "the main portion of it was just read from a cell phone."

Councilwoman Kathy McKeithen had earlier presented a list of concerns with the contract, and Mayor Widmer advocated more specificity in both duties and accountability in Mr. Danielson's contract.

But Mr. Conners stressed the need to keep the contract flexible enough and still meet CalPERS' strict requirements that Mr. Danielson not in any way act in a capacity that could be construed as employment by the town.

In the end, council members acknowledged the need to act quickly, and expressed trust in Mr. Danielson to work in the interests of the town.

Why the rush?

With the town scrambling to secure the CalPERS exemption to keep Mr. Danielson on board -- only weeks before his contract was to expire -- the question arises: Were the council and the interim city manager asleep behind the wheel?

"I wouldn't say that," Mayor Widmer told the Almanac.

But one of two priorities the council gave Mr. Danielson when it hired him for 960 hours, up to 12 months, was to find a permanent city manager. The search for a manager typically takes three or more months. So why wasn't the search begun in September at the latest?

"There were other things that were very pressing that took priority with regards to the staffing and the outsourcing," Mr. Widmer said.

Indeed, the other key duty the council assigned to Mr. Danielson was fixing the town's estimated $856,000 structural deficit -- a problem the interim manager approached by outsourcing two departments and laying off 13 of the town's 16 general employees.

Complicating the situation was Mr. Danielson's medical crisis in mid-November, which kept him from work for weeks. When town officials finally came to grips with the fast-approaching end of Mr. Danielson's contract, "there was an assumption that the law allowed for an extension" to the contract, Mayor Widmer said.

Retroactive retirement

Meanwhile, Mr. Danielson dodged a potential bullet by revising his date of resignation. Although the town announced on Jan. 25 that his resignation would be effective Jan. 27, that date was changed to Jan. 19.

The Almanac reported on Jan. 26 that CalPERS, in a Jan. 19 letter, stated that Mr. Danielson had to "cease employment immediately" if his status as a retiree was to remain in effect. Amy Norris of CalPERS told the Almanac that the agency must have his letter of resignation by Jan. 30, showing that he had resigned by Jan. 19.

When the town sent out the revised reports and contracts on Jan. 27, the date of resignation was not specified. The Almanac requested the resignation letter, and learned that the resignation date had been changed to meet the CalPERS requirement.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Jan 31, 2012 at 3:23 pm

Peter Carpenter is a registered user.

""There were other things that were very pressing that took priority with regards to the staffing and the outsourcing," Mr. Widmer said."

I certainly feel that the Town is in much better shape as a result of Danielson's effort and year on the job. In many ways he has laid the ground work for hiring a permanent manager who can start with a stabilized situation rather than a having to do all of the house cleaning and repair work that Danielson has done. If a new manager had been brought in six months ago she/he would have had to use a lot of their institutional capital to accomplish what Danielson did while serving as interim manager.

As for the 'rush' discussed in the article I am pleased the the council dealt with the Danielson/DellaSanta transition in a timely manner. What would the author prefer - that we go on for months without resolving this matter Well done Town Council.

Posted by Malcolm Dudley, a resident of Atherton: Lindenwood
on Feb 1, 2012 at 8:21 am

In my opinion it would be in Mr. Danielson's and the town's best interest for Mr. Danielson to move on. We appreciate the effort he has made, but there are a number of factors that negatively impact the town if he continues on in any capacity. Most importantly there are very good reasons why Calpers restricts the number of hours the retiree can work without giving up their retirement pay and medical benefits. Based upon the 70% calculation it appears that Mr. Danielson probably receives a pension of about $175,000, plus medicaL benefits. Under the law he is not allowed to work more than 960 hours in a fiscal year, which he has now done for two fiscal years.

The town needs to set the standard for strict compliance with the spirit of the law, as an example for the community. We expect the community to fully comply with the spirit of the law, all of our town ordinances and regulations, not trying to find ways to get around the law. Calpers has already said that it is a "SHAM" to try to keep him on in some capacity. Clearly the town has worked hard to craft a contract that would pass muster, attempting to make it appear that he has no capacity to influence town decisions and actions. In addition to paying him $12,000 per month, plus recruiting expenses, the town will continue to provide free housing, worth approximately $8,000 per month. This house has never been provided for anyone that is not an employee. I am not an accountant or tax expert, but I believe the town would have to give him a Form 1099 to cover the value of this rent free home (about $24,000 for three months.) He would have a significant tax liability for this benefit, not in his best interest.

Beyond the factors mentioned above, having the town adhere to the spirit of the law, not trying to find a way around the law, and the potential financial consequences of the contract, home, etc. there are other important considerations.

The town has had unprecedented problems, with a very divided community, and Mr. Danielson has been a part of all of these difficulties. The best hope is to hire a new city manager who has not been on either side of the issues that presently divide the town. It is very important to get a fresh start, and having Mr. Danielson involved in the recruiting process would not lead to a fresh start. He must also feel less than opptimistic about where the town is at this time with the divisiveness. His feelings would certainly impact the feeling of possible candidates for city manager. The new city manager will have a uniquie opportunity to build their staff, as most senior staff positions are filled with interim employees. A new city manager should not be influenced by the past city manager's decisions and employees hired by the past manager. It truly is time to move on with a fresh start.

Posted by exactly, a resident of Atherton: other
on Feb 1, 2012 at 10:52 am

Malcolm, you have made a very compelling argument. There is something very unseemly about how the Town is behaving with CalPers. Sort of makes you want to take a shower.

Posted by Robert D., a resident of Menlo Park: other
on Feb 1, 2012 at 2:08 pm

Thank you - I have been saying the same thing albeit not to the level you did.
Fresh start is needed and get Atherton back to a place where the internal fights are not the topic of conversation

Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Feb 1, 2012 at 3:23 pm

Peter Carpenter is a registered user.

Individuals and organizations have to start from where they are, not from where they would like to be.

Given the dynamics of the existing council, I believe that the Town is better served by having Danielson organize the search for a permanent manager than having the council perform that role. There is nothing in the CalPERS rules that prohibits such a consulting relationship.

It is naive to think that any really good candidate will not be able to discern on their own the level of divisiveness that exists amongst the council members. Any candidate who perceives otherwise should be immediately disqualified.

Posted by Baffled, a resident of Atherton: West Atherton
on Feb 1, 2012 at 4:34 pm

Peter writes: "As for the 'rush' discussed in the article I am pleased the the council dealt with the Danielson/DellaSanta transition in a timely manner. What would the author prefer - that we go on for months without resolving this matter?"

Seems to me, the council and Danielson were the ones who went on "for months without resolving" the matter that Danielson was hired to resolve: finding a permanent manager.

So Peter, being such an advocate of transparency and responsible actions on the part of public officials, how could you possibly defend a process that led to the council voting on a contract that they didn't even have a chance to read because they got it only two hours before the meeting? And part of the contract sent out before the meeting wasn't even correct, and the attorney had to read the corrected section from his cellphone. And of course, the public didn't have a chance to read it either.

McKeithen appeared to be the only councilor who read it thoroughly, and she had a list of concerns about it. Is this responsible action by public officials? Can't you acknowledge that something went seriously wrong with this process if it concluded with the council approving a contract they hadn't really read because they felt under the gun to approve it? Do you really want our elected leaders to say, we have a problem with doing things this way but I guess we'll have to trust Danielson to do the right thing? Given your record as an advocate for transparency and holding public officials accountable, I simply can't understand your defensive stance.

Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Feb 1, 2012 at 4:52 pm

Peter Carpenter is a registered user.

I have not defended the process but I support the outcome. The council backed themselves into a corner and as a result they did not have a lot of options.

Posted by Remembering, a resident of Atherton: Lindenwood
on Feb 2, 2012 at 2:12 pm

"Why the Rush in the Atherton City manager shuffle?" This smarts of a similar situation in Washington regarding Obamacare when San Francisco's Queen Pelosi declared, "We have to sign it to find out what's in it!" Rush-rush seem to be the new tactic for getting shady deals passed and maneuvering around the law. What an embarrassment for a formerly peaceful community!

Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Feb 2, 2012 at 2:20 pm

Peter Carpenter is a registered user.

"shady deals passed and maneuvering around the law."

No such deals here, so what is your point?

Posted by Seenthis Before, a resident of Atherton: other
on Feb 2, 2012 at 4:00 pm

Maybe someone who worked for Danielson in the past will be hired as Atherton's new City Manager - similar to the occurrence in Southern California. Lets see what happens.

Posted by Robert D, a resident of Menlo Park: other
on Feb 2, 2012 at 4:02 pm

Peter - nice quote above...
"I have not defended the process but I support the outcome."
In 1537 Machiavelli wrote something similar, today it has been changed to "The ends justify the means"
So by supporting the outcome, you just justified (defended) the process.

The Town needs a fresh start - get a new interim in if needed, someone unknown to the council; yet who carries a reputation and for the price they are paying, the line should be long, then start your interviews.

Posted by Seenthis Before, a resident of Atherton: other
on Feb 2, 2012 at 4:02 pm

This happened before in Wildomar.

Posted by Seenthis Before, a resident of Atherton: other
on Feb 2, 2012 at 4:04 pm

See below link about Wildomar

Web Link

Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on Feb 2, 2012 at 4:32 pm

Peter Carpenter is a registered user.

"So by supporting the outcome, you just justified (defended) the process."

No. As I stated I have not defended the process. I do support the outcome. Those are two different independent positions.

I eat sausage but that does not mean that I necessarily like the way it is made.
I support the laws of this country but that does not mean that I like the way that each one of those laws was made.

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