Why Should Delaware Care?
The contract offered by the City of Rehoboth Beach was the largest compensation package given to an administrative officer in Delaware history and could reset the negotiating floor for other jurisdictions. It has drawn considerable criticism from residents, but city leaders have remained steadfast in their support of the deal.
When Rehoboth Beach’s then-city manager resigned from his post last year, Commissioner Patrick Gossett said the news left him “devastated.”
Not only was Laurence Christian talented and visionary, Gossett said in an email to a consultant, but he feared that the resignation less than nine months into his tenure would spark questions of, “What the hell is going on in Rehoboth Beach; who would want to work there?”
After a tumultuous seven-month search to replace Christian as the chief administrative officer for Delaware’s largest beach community, the Rehoboth Beach commissioners ultimately hired Taylour Tedder, offering him a record-setting compensation package that pays him more than the governor and included a forgivable $750,000 home loan – drawing the ire of many town residents.
Last month, two residents filed a lawsuit in the Delaware Court of Chancery seeking to overturn approval of that package, which totals more than $2.5 million over the next seven years. If successful, the case could terminate Tedder’s contract and force the city back to the negotiating table, or potentially make it liable for a severance payment due to termination without cause.
Gossett’s message to Catherine Tuck Parrish, the vice president of Raftelis, an executive search firm that works with the city, was one of nearly 2,000 email messages, memos and other documents obtained by Spotlight Delaware in a Freedom of Information Act (FOIA) request that spanned the length of the city’s search for a new manager.
Those messages paint a picture of a board that was acutely concerned about its image, particularly at a time when it has frequently hosted President Joe Biden and kept losing its top candidates to other communities.
The withdrawal of a highly regarded candidate just before Christmas last year pushed the city’s leaders to become more aggressive in its recruitment efforts, including significantly inflating its salary and housing loan offers.
The post-Christian search
Rehoboth leaders were stunned by Christian’s decision to resign about nine months into his tenure as city manager, citing the need to address family issues. Parrish noted that she had never seen a candidate that she had placed with a client leave a role so soon.
Although supportive of his needs, the decision put Rehoboth back into a recruitment effort after a previously arduous process that took nearly a year to resolve.
In an email seeking talking points from the commissioners, the city’s labor attorney Jim McMackin III put it bluntly.
“We have optics challenges – Word spreads in the community; [Laurence Christian’s] short tenure; Some drama,” he wrote. “We want to break into the network of rock star candidates. How the next few weeks unfold will determine our brand/image. If tarnished, we will be getting nothing but B list candidates.”
Over the course of October and November 2023, the city commissioners developed a recruitment pitch based on the allure of Rehoboth’s tourism base and its family-friendly reputation. They advertised a salary range of $140,000 to $175,000 along with a relocation and housing assistance package.
For comparison, Christian was paid $160,000 annually in salary and received a $15,000 relocation bonus to move from Bethel Park, Pa., along with $20,000 in housing assistance toward a down payment.
Within a few weeks of the job listing, the city had received 18 applications and reached more than 900 potential candidates, although several remarked that the salary proposal was too low, particularly when Sussex County’s booming housing market was driving up the cost of living.
“The issue with salary is that housing got more expensive with rising interest rates. You won’t attract D.C. area person with this salary (unless it fits a person need),” Parrish wrote to Gossett in October.
Ultimately, the fall 2023 search turned up three finalists for the job, but one dropped out of consideration early in the process. The leading candidate, Eden Ratliff, notified Rehoboth on Dec. 20 that he was taking a competing offer to help lead Charlottesville, Va.
“Charlottesville needs more help. As many of us in this field understand, it is a government and community that has struggled with controversy and stability, and the community members there are worse off for it,” he wrote in a letter to the search team. “I understand and accept that Rehoboth Beach wants change and is on a path to delivering better services which will take a change agent with patience, experience, and determination to be a leader internally and externally. While I am confident that I could be that person for Rehoboth, I am equally confident that there are other professionals who will serve the community just as well.”
The deputy city manager role that Ratliff accepted reportedly paid $208,000 annually and oversaw a city with a daily population that nearly matches Rehoboth at its seasonal summer peak.
The recruiting loss just before an in-person visit to the city once again left Rehoboth’s leaders dismayed.
“Very disappointed in the way this played out. I should have pushed hard to offer the position on Dec. 11. Live and learn!,” Commissioner Toni Sharp wrote to Gossett. “I have no additions to the brochure other than the salary issue that you stated will be addressed shortly. Back to the drawing board.”
The Tedder search
After losing out on Ratliff, the city commissioners discussed in early January how to become more competitive in their recruitment of qualified candidates. Ultimately, they agreed to push their salary offer to between $200,000 and $215,000, although Mayor Stan Mills reportedly expressed concerns that was pushing the city’s precedent too high.
That search led to 36 applicants – nearly all of whom came from the mid-Atlantic states and some from Delaware – although several of Rehoboth’s finalists once again dropped out of contention, according to email records. One candidate decided it was not the right time to switch jobs, one took a job in Virginia and one said that she was already earning $250,000 in base salary and was seeking bigger compensation.
One of the finalists left was furthest from Rehoboth, but leaders were particularly excited about: Tedder, a 35-year-old city manager from Boulder City, Nevada.
In his application, Tedder, who had led the city of nearly 15,000 since 2021, touted his ability to connect the community with its leadership through his TEDder Talks video series, crafting of economic development projects and incentive programs , and his negotiation of land lease contracts from solar fields that helped supplement city revenues.
“Rehoboth Beach’s potential is endless, especially with its dynamic location, strong business community, historic districts, beautiful clean beaches, and excellent strategic vision that continues to be enhanced. The opportunity to join your team in facilitating the prosperity of Rehoboth Beach would allow me to realize my professional goals,” he wrote.
On March 23, the city paid to fly Tedder and his wife to Rehoboth Beach for in-person interviews with elected leaders and department heads, and a tour of the city.
By the time he was headed back to the airport, the city had already sent a conditional offer.
“He was very excited and appreciated the city’s generosity. I didn’t say he had to live in the city but mentioned that you all were trying to make it possible through the offer,” wrote Tucker Parrish, the city’s consultant.
Negotiations raise stakes
In the conditional offer sent to Tedder, Rehoboth offered an annual salary of $250,000 – or 56% more than Christian had received about 18 months earlier and 40% more than Tedder made in Boulder City.
Rehoboth would also contribute 5% of his annual salary to a 457(b) retirement account – the governmental version of the more common 401(k) account – with 1% annual raises up to a 10% cap, essentially adding $12,500 to $25,000 to his annual compensation.
Tedder would receive $750 a month in a vehicle allowance as well as an allowance for a city cellphone and laptop. Along with standard benefits, Tedder would receive 300% of his salary in life insurance and six months in severance should he be dismissed without cause.
Most notably though, the city also offered him up to $50,000 to move his family to Delaware and a conditional loan for housing worth $500,000, which would be entirely forgiven after nine years of service.
But with Rehoboth Beach’s hot market pushing housing above $1 million in most cases, Tedder quickly countered with a request for a loan up to $800,000 and an opportunity to buy down his interest rate, among other requests.
Gossett, the commissioner leading negotiations, instead countered with the full authorization of the city’s lending up to $750,000, but proposed forgiving it after only seven years of service rather than nine.
If his employment ended, for any reason, before his fourth anniversary, repayment of the entire loan would be due.
After eight days of back-and-forth negotiations and legal consultation, a deal was reached.
“We have an agreement! I appreciate all of the quick work of you, Catherine, the Mayor and other Commissioners to make this a reality so quickly,” Tedder wrote to Gossett on April 4. “I am truly honored and excited to be your next City Manager.”
Public outcry rises
With the city jockeying to arrange the deal in time to finalize his hiring at the board’s April 8 meeting, the commissioners debated whether to publicize Tedder’s significantly higher salary.
In the end, they chose to keep it quiet until asked.
“As you know, your salary is a matter of public record. While we have chosen not to include your salary in the press release, we fully expect that we will be asked about your salary by the local Cape Gazette reporter. When/if that happens, we will share your salary with him and any other reporter/citizen who asks directly for that information,” Lynne Coan, the city’s communications director who often cautioned the board of a need for public transparency, warned Tedder ahead of the meeting.
Within 24 hours of Tedder’s announced hire, the Cape Gazette did ask for and receive the new city manager’s contract, and its publication led to a wave of criticism from town residents who felt it was excessive.
Several correspondences from citizens ended up in the emails obtained via FOIA, including a letter from Bob Cope who complimented Tedder’s “negotiating skills because he sure took you (us city taxpayers) to the cleaners.”
With a controversy on their hands, the board drafted a letter to the community that sought to quell the commotion.
“While Mr. Tedder’s compensation package raises eyebrows, most of the offerings are standard in city manager contracts across the country. While having a high cost of living, the East Coast, ironically, has low regional compensation for city managers; we are confident that his $250,000 annual salary is warranted and will be well earned. Even with the $750,000 conditional, forgivable loan that is being offered to Mr. Tedder, it’s unlikely that he will be able to purchase a home in the City of Rehoboth Beach, but at least it will help him and his wife to find a home close by and mitigate some of the high housing costs in our area,” they wrote.
It’s true that Tedder did not end up in town limits, but instead purchased a $895,000 home in the Bayfront at Rehoboth, less than 10 miles away from city hall.
“We firmly believe that we did the right thing in hiring Mr. Tedder, and we are confidently optimistic that his training and credentials, his leadership skills, his experience in a destination community (Tedder comes to us from home of the Hoover Dam, which attracts 7 million visitors every year), and his energy and enthusiasm are good fits for our community … Our hope is that over the next several years, you will come to agree that Rehoboth Beach struck a good deal in hiring Taylour Tedder,” the board added.
Despite that attempt at reassurance, the commissioners continued to be criticized and questioned by town residents, who number just 1,500 year-round.
It convinced Gossett to draft a talking points memo for how Mayor Mills should answer questions at a public meeting. While its first two pages include the city’s boilerplate responses, the third page was titled, “If the mood turns angry.”
“Time would be better spent to welcome the new city manager as opposed to the vitriol that is being expressed on social media. Many of these comments are from people who have not bothered to learn the facts about the search and the decision made on the hiring of the new City Manager and many who do not live or pay taxes in the City of Rehoboth Beach,” he advised. “Let him do his job. He has not even started. Trial by social media does nothing but beat people down and poison the discourse of our city.”
Hiring leads to lawsuit
On May 15, Tedder made his appearance as city manager for his first day and Rehoboth was still enduring a firestorm of criticism.
Two weeks later, he told the Cape Gazette that he wasn’t necessarily surprised by the reaction to his contract.
“I don’t want myself to be distracted by the online public reaction,” the new city manager told the local newspaper. “It’s important to me to focus on the job at hand, and to utilize my skills and experience to effectively serve the community.”
While he has personally been accepted by locals to the beachfront city, criticism has not fully abated about the compensation package that he received.
In June, the Department of Justice’s state solicitor ruled that the city violated state FOIA law in several instances by discussing his compensation in private rather than in an open session. It directed the city to reconsider the pay package at a public session, which the board did in July while quickly approving it once again.
That led to a lawsuit by residents Steven Linehard and Thomas Gaynor in the Delaware Court of Chancery, seeking to overturn the compensation package that they argue is “an illegal and outsized public contract.”
“Not only was the sheer size of the compensation package astounding, but in the course of uncovering what had been negotiated behind closed doors, plaintiffs and other residents of the City learned that the new City Manager, Tedder, does not have the qualifications mandated by the Charter,” they claim in the lawsuit.
The plaintiffs are referring to the fact that Tedder does not have an engineering degree nor has he served as a city manager for four years elsewhere – two minimum requirements under the city’s charter.
One thing appears certain from the emails: the city commissioners knew of those requirements.
As early as October 2023, Gossett circulated potential changes to the charter that would remove the engineering degree requirement and instead require a degree “in a field related to the duties of the position.” The changes were once again brought up on April 11, after Tedder had been hired.
Those changes would need to be approved by the Delaware General Assembly, but city leaders never sought to introduce them in last year’s session.
Spotlight Delaware asked city leaders why they proceeded with hiring Tedder when he did not meet the job’s chartered requirements, but they declined to answer, citing the pending lawsuit. They also declined to answer questions regarding why they shaved two years off the home loan forgiveness period and whether any of the board members expressed concerns about the cost of the compensation package before its approval.
The city has filed notice in Chancery Court that it will seek a motion to dismiss the case, but the arguments for that motion have not yet been made, as of Monday.
Upcoming Meetings
The Rehoboth Beach Board of Commissioners is next scheduled to meet on Sept. 20. For more information on its meetings, click here.
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