I’ve taken some time to earnestly reflect on what transpired in the last week related to the controversy surrounding our city manager’s proposed contract extension that included an option to lease a house from the city. In a rush to respond to the melee of negative feedback, most of my statements were pithy and, admittedly, incomplete. If you care to read, I want to give a narrated account of what led me to support the contract. I will conclude with a few lessons I learned and a sincere apology to you, the residents of Kyle.
Let’s start from the beginning. A few months ago, I was notified that discussions were underway to extend our city manager’s contract through 2025. In small-to-medium size towns, the city manager is often one of the highest paid persons in the city because the city is often the largest employer. It is also a highly volatile position and prone to turnover.
Regardless, in a town exploding in population like Kyle, the city manager is a crucial position. The goal of a good council is to find a great city manager and keep him or her around for the long term.
I haven’t been shy about my support for our city manager, Mr. Sellers. Up to this point, he has demonstrated uncompromising morals, a commitment to excellence, and an ability to lead by navigating complex financial situations while simultaneously galvanizing the support of his staff. That’s a potent mix, and it reminds me of something I learned in college when I interviewed Paige Patterson as part of a school assignment. Mr. Patterson’s answer to the first question I asked has become a cornerstone to how I go about my professional life. I asked him, “What is the core competency of a successful manager?” He emphatically replied, “Find, secure, and empower talent.” That answer weighs heavily on my mind whenever I am tasked with hiring someone. I used it to build my business. And it absolutely guided my approach to the contract extension with Mr. Sellers.
Hired Jan 1, 2015, Mr. Sellers originally signed a three-year agreement through the end of 2017. The ICMA Code of Ethics, which Mr. Sellers is known to closely follow, states that “a minimum of two years generally is considered necessary in order to render a professional service to the local government.” That meant, as the two-year mark approached, other municipalities and recruiters were likely to reach out and see if Mr. Sellers was interested in leaving Kyle.
That was not okay with me. I’m a competitor, and I did not want to see Mr. Sellers leave. I could not imagine a better fit for our city than him, and if it was possible to retain Mr. Sellers for the long haul, I wanted to find a way.
To be clear, Mr. Sellers never mentioned to me that he was being courted by larger municipalities with deeper pockets – though I had heard it was so. He never once attempted to leverage himself in that way, which was even more reason why I wanted to keep him.
The trick was to find out how we could set him up to feel secured in his position long term without breaking the bank. My job, then, was simple – retain Mr. Sellers and do it responsibly. And that meant, just because I wanted to keep him, I also needed to find a financially sound way to accomplish that goal.
The traditional method of negotiating to keep a highly-performing city manager is to offer a raise. That raise comes in the form of an increased recurring expense against the budget and, by extension, the taxpayers.
I was hoping we could find an innovative, less expensive way to retain Mr. Sellers. As a rule, I don’t like increasing the fixed overhead of any organization, my own included, which is why I voted against several proposals to add employees in the 2016 budget. In a private company, retention packages for executives often come in the form of stock options and other non-salary type perks. It’s a way to align incentives with ownership and simultaneously keep down fixed overhead. That’s the school I come from. But, of course, a city doesn’t have stock options.
Mr. Sellers is currently paid $181,000, just below the median for cities of our size. To retain him, I expected we would need to offer above the median, possibly $200,000 or more. When I learned there was an option that might accomplish our goals to keep Mr. Sellers and simultaneously reduce his salary to $152,000, you can imagine I was all ears. The way to accomplish this was to purchase a house that Mr. Sellers could lease from the city in the form of a pay cut and in lieu of a raise.
I didn’t have to consider this option for long because I do the exact same thing in my business. My company owns the house in which I live and we both benefit through a reduction in wages. So in principal, I was immediately on board with the idea because I knew it worked. I also knew the city had ended the 2016 fiscal year with an unaudited surplus of roughly $1,800,000. Those monies were sitting in our account earning virtually zero interest. They could be used in various ways, but the financial side of me is always looking for strategic ways to reduce the tax burden on our citizens. Looking back, the most common feedback on Facebook was to suggest alternative ways to spend monies instead of buying a house. But with each suggestion, there were always at least a half dozen reasons why the proposal was financially less sound than what we were proposing. Sure, a new splash pad benefits some citizens, but it also increased overhead and could not be sold down the road. Fixing roads was a good suggestion, but we were in the middle of spending $40 million on our roads. An additional $550,000 wasn’t going to get us anywhere that we weren’t already going. And on down the list I went.
I thought, if I could use some of that surplus to acquire a city property and have it both reduce our fixed annual overhead by $50,000 and be something we could sell down the road for par value or more, I was absolutely on board. I called it one of the “easiest decisions I have made on council.”
Honestly, like many I wasn’t thrilled about the price of the house. When we first discussed the agreement in executive session I argued for $400,000. To me, that number was appropriate for the CEO of Kyle. But I’m not the only member of council, and when the number came back higher, I had to decide how strongly I opposed the price. Was I willing to oppose the entire deal because the house was more money than I wanted to spend? No, I thought. Not in this case. The financials around the deal still held firmly. And a $550,000 house was still consistent with the type of executive home we felt was appropriate for the CEO of an organization the size of ours.
During the final month of negotiations, the council went back-and-forth with various iterations of the contract, fine-tuning it so that we were all in agreement. This was all done behind closed doors per state law. All things considered, I was happy with the contract. On December 6th, we finalized the agreement and unanimously approved the document. The financials were rock solid and we were securing the best employee I could have hoped for to lead the city for many years ahead. And that was that.
Or so I thought.
What transpired is something I’m only beginning to understand. The mayor had mentioned some people might not like the “optics” of the deal. And I was fine with that. After all, I had supported multiple items through my first five months on council that didn’t sit well with some people. I didn’t like dissent, but I had come to understand that negative reactions were part of my lot as a volunteer on the council.
But this was clearly something different. I woefully miscalculated the fallout.
About a week after we voted on the contract and published the details, articles were written in the Hays Free Press and on KXAN.com outlining the plan. The articles included the salacious headlines “City of Kyle buying home for use of city manager and family,” and “Kyle hones contract for city manager: Compensation to include up to $550K home.” A few local folks shared these articles around the neighborhood pages on social media. An explosion of negative feedback ensued. Hundreds and hundreds of comments – almost entirely negative – filled up the Socialverse.
“Using taxpayer money to benefit a private citizen is a bad idea!”
“You can spin it anyway you’d like, but in the end it is what it is. The residents of Kyle giving him a new home!”
“How about putting our tax dollars to better our schools first!”
After a while the comments got more aggressive.
“When is our mayoral election? Anyone know?”
“Just keep wasting taxpayer money. Worse than a banana republic. Never heard of city officials getting half million dollar homes in my life.”
“I would call this open tax embezzling.”
“This is cronyism and there is no justification for it. You have failed to fulfill your fiduciary responsibility.”
And finally people came right out with the truth of how they felt.
“Nope, not supporting this whatever numbers are thrown in my face.”
On it went for over 24 hours straight.
The comments left me dizzy and dumbfounded. And that’s my fault as a rookie councilmember. I had no idea I could be so sure something was smart while the whole city universally rose up and told me I was wrong.
And the thing is, with every disparaging comment, my belief that I was right did not wane, but strengthened. I would read a comment, dismiss the poor logic, and I would say to myself…
“$550,000 for an appreciating, sellable asset. $50,000 reduction in fixed expenses.”
And then more comments would flood in. I would read them, painfully, and then remind myself…
“We get the asset, he gets quality of life. We secure him for the future and reduce our overhead at the same time. The house is not his, it’s ours.”
Another wave of criticism, and I would think…
“Great city manager. Great investment. Reduced overhead. Reduced tax burden. You do this in your own business. You know it works.”
Eventually I took to this blog and the media to defend the position. I recorded a television interview for KXAN and spoke with Taylor Goldenstein of the Statesman for nearly an hour. I wrote an article and then started responding to individual comments on Facebook. I thought if I could just explain my viewpoint clearly then people would be forced to agree. The math was so simple. The agreement was perfectly logical and fiscally responsible.
If I’m honest, I was not listening. If I was I would have realized in this case, logic wasn’t the problem. A few folks responded graciously and admitted the numbers made sense, even if they didn’t like a few particulars. But by-and-large, the public was not remotely interested in the proposal. They were transfixed on the house as a representation of excess. They channeled all their frustrations into this contract and unloaded endless rounds of keyboard courage. I received emails and phone calls all day long from angry residents.
Eventually I knew we had tapped into a lurking discontentment within the community that I had not seen before or even knew existed. People like to grumble; I knew that from my time campaigning. But what I didn’t understand is just how much this house would become a symbol to our citizens of everything they hate about government. I realized I had brought a knife to a gunfight. My knife was logic and the gun was “optics.” I was a dead man walking.
On the night before we finalized the sales agreement to purchase the house, I was sitting in my bedroom stewing. It was miserable to realize that I would be crucified if I voted for the agreement. But how could I balk? To do so would mean throwing a very good contract out the window and replacing it with something I thought was far worse. It also meant falling on the sword of my own judgment to appease a crowd.
About 1AM I finally picked up the phone. If the people are set against this, I thought, I must relent. I called the mayor. He had been on the phone with Mr. Sellers having the same conversation I wanted to have. We all agreed the house was no longer an option. It had become a lightning rod, and as such it was no longer wise to move forward.
And so, with a heavy heart, I went to council and watched as Mr. Sellers gave a gracious statement to withdraw the house from consideration and ask that we start over.
And that’s pretty much the story. Since Friday I have learned some very tough lessons. Probably the biggest lesson came at the hands of a woman who warned me a year ago that you cannot run government like a business. I had a lot of respect for this woman, but I told her I thought she was wrong. “A business is EXACTLY how government should be run,” I said defiantly. “No,” she countered. “The only measure that matters are how satisfied your constituents are. That’s the only bottom line. Democracy is messy and optics really count.”
How about that for some tough crow to eat. I still don’t agree with her entirely, but in this case, she was clearly right. In the battle between logic and optics, logic will fail every time.
Another big lesson I learned is in how ideas are framed and what we can do to be more transparent in the process. What we should have done is taken no action on the item after the December 6 meeting. Instead, we should have published the contract with a press release that explained our thinking in detail. Then, we could have invited the citizens to have the chance to speak on the item at the next regularly scheduled council meeting, which would have been January 3rd at 7pm. I’m not sure much would have changed in terms of the outcome or feedback, but it still would have been more appropriate.
And to that point I owe the public a sincere apology. I never intended to pull the wool over anyone’s eyes. But I see now that it looked that way. In that respect, the public was right to be outraged because we compounded the bad optics of the deal with a poor rollout.
In summary, my hope is that you will learn with me that we can all do more for the city we love. For you, that means holding elected officials accountable while holding back judgement until you have thought an issue through and perhaps reached out to a councilmember. For me, that means recognizing the necessary place of optics in politics. Nobody wins if a good idea dies at the altar of poor politics.