Our former city manager’s for sale sign serves as a signal to our current council members

After negotiating an employment agreement in 2018 that would make him one of the highest-paid city managers in California and later getting terminated without cause, former Riverside City Manager John Russo just sold his city-funded home.

In February 2018, Russo brought a revised employment agreement to the city council that sparked a hotly contested debate and resulted in Riverside’s first mayoral veto in 25 years. The city attorney said the mayor did not have the power to veto the item and advised the mayor pro tem to sign and execute Russo’s contract. Per the execution of the renegotiated contract, Russo immediately received a $677,350 wire transfer from the city for a home loan at an initial 0.4% interest rate. The City of Riverside was sued by the mayor over his power to veto and by resident Ben Clymer Jr. to invalidate Russo’s revised contract¹. In 2020, the Riverside Superior Court ruled the mayor’s veto was legal and ruled the employment agreement invalid. The funds transferred to Russo under an invalid contract were not further advised, but the Promissory Note secured by the city’s Deed of Trust states that the city may declare the home loan fully due and payable within 180 days should Russo cease to reside at the property².

The for sale sign in Russo’s front yard is a timely signal to our council members as they soon negotiate two new charter officer contracts to fill the city clerk and city attorney vacancies. Russo’s case serves as a reminder that council members should proactively seek to establish fair, robust and sustainable charter officer contracts. Here’s why–

Russo’s Contract: A Brief History

The city council appointed Russo as city manager in 2015. Because Riverside is a Charter City that follows a Council-Manager system, the city manager, city attorney and city clerk are all contracted charter officer positions³. Charter officer contracts are negotiated by the applicants and the city council and compensation is generally based comparably to other cities’ charter contracts. Russo’s revised employment agreement should not have come as a surprise to Riverside given his history with other cities⁴. On February 6, 2018, about two years into his previously agreed five-year contract, Russo brought a revised employment agreement to the city council that included the following:

Seven-year contract that expired December 31, 2024;
Guaranteed 3%, year over year raise for satisfactory performance as determined by the city council;
280 hours of vacation time deposited into his account (which he immediately cashed out for approximately $44,000);
$500 a month in an auto allowance;
Eight weeks off annually for vacation and administrative leave, plus sick time allowance;
Free medical, dental and optical care for him and his family;
Fifteen-year $700,000 term life insurance policy;
Government pension and matching contributions;
Fifteen-year $675,000 home loan beginning at approximately a 0.4% interest rate.

The council members voted 5-2 to pass the revised employment agreement⁵. Council members Gardner, Melendrez, Soubirous, Mac Arthur and Adams voted in favor of the contract. Council members Conder and Perry voted in opposition. Former Mayor Rusty Bailey declared his veto of city council approval. However, former City Attorney Gary Geuss stated there is no authority under the City Charter for the mayor to veto a charter officer contract⁶. In response to the February 6 meeting, Bailey issued a veto statement stating Russo’s revised employment agreement was “bad timing, bad business, bad policy and a bad message.” Despite Bailey’s opposition, the mayor pro tem at the time, Chris Mac Arthur, signed and executed Russo’s employment agreement under the counsel of Geuss.

Two months later at the April 17, 2018 city council meeting, Russo was terminated without cause by the city council in a 4-3 vote⁷. Council members Gardner, Conder, Perry and Adams voted in favor of the termination. Council members Melendrez, Mac Arthur and Soubirous voted in opposition. There is no official statement from the city on Russo’s termination, but per the terms of his newly executed contract he received a severance package equal to his annual salary.

In July of the same year, the City of Irvine hired Russo as their city manager under a two-year contract at a compensation rate of $303,014.40 per year with severance terms equal to sixty days pay⁸. He remained living in his Riverside home and left the City of Irvine in September 2020.

Yet, Russo’s termination did not end the case in Riverside. Both Bailey’s right to veto according to the City Charter and Russo’s employment agreement were tried in the Riverside Superior Court. In April 2020, the Riverside Superior Court ruled Bailey’s veto was legal and declared Russo’s contract invalid. There was no direct counsel on Russo’s city-lent home loan and no further discussion on whether Russo should pay back the money he received through the invalid contract. The math is not entirely clear, but at minimum this would have been $44,000 in a vacation allowance that was immediately cashed out and $327,112 in severance pay, plus the remaining balance of the home loan. We would be remiss if we did not ask ourselves if the city council should unravel the payments made to Russo under an invalid contract.

What now?

Perhaps this will be the last time Riverside will need to be concerned with Russo, but is it the last time we’ll experience charter officers making up their own processes for what appeared to be personal gain? We’re about to find out.

Our council members will soon negotiate employment contracts for a new city attorney and city clerk. Employment agreement negotiations will happen in closed sessions, then the city council will vote on the employment agreements in an open session. The dates of the respective council meetings are yet to be determined. Given the city’s recent history with charter officer agreements, Riversiders should pay close attention to the upcoming vote. We should be asking ourselves and, most importantly, our council members the following questions:

What is the city council doing to negotiate fair, robust and sustainable contracts? Will these contracts benefit Riversiders during a time when many are experiencing job loss and homelessness?
How will the city council conduct background research to ensure that their selection is a high-quality candidate?
Should charter officers be guaranteed raises when other city employees are not receiving them?
What is an appropriate and competitive compensation for a public servant that will earn a generous government pension package?
What independent research has the city council done on cities similar in population, economy and total budget (general fund and public utilities) to prepare to negotiate compensation packages? And where should Riverside stand in comparison?
What benefits do these cities give that Riverside does not? Or, what benefits does Riverside give that other cities do not?