Taxpayer giveaway or fair pay? Riverside mayor sues his own city over the city manager’s contract

Riverside Mayor Rusty Bailey, seen in his office recently, is fighting City Hall over the city manager's contract, calling it excessively generous.
Riverside Mayor Rusty Bailey, seen in his office recently, is fighting City Hall over the city manager’s contract, calling it excessively generous.
(Gina Ferazzi / Los Angeles Times)

As Riverside Mayor Rusty Bailey sees it, City Manager John Russo’s new contract is a giveaway of taxpayer money.

Bailey tried to veto the seven-year pact last month after it was approved by the City Council, only to be told by the city attorney that he doesn’t have that power. So Bailey has asked a court to set aside the contract unless the council overrides his veto.

“When is enough enough?” he said recently. “The new contract is beyond any other contract.”

But what Bailey sees as excessive, others see as fair compensation for a capable leader. Russo will receive pay and other benefits worth about $471,000 this year and a $675,000 low-interest home loan.


“When you have a coach that’s doing a great job, you want to support that,” Councilman Andy Melendrez said.

The new salary makes Russo one of the highest-paid city managers in California.

The debate has created — or perhaps exposed — an ugly environment at City Hall, with talk of conspiracies, collusion and power grabs just as the city has been on an upswing.

“A lot of good things are happening in Riverside and this is not particularly helpful,” said former Mayor Ron Loveridge. “City Hall needs to have its act together as it competes for business and residents.”

Russo declined to be interviewed. In an email, he said that “the true story is not about my contract but about petty corruption and a city that has changed and is changing, and a mayor who is not comfortable with those changes.”

At the meeting where the contract was approved, Russo told the City Council he thought the new agreement was reasonable.

“I’m sorry that at 59 years old, sitting here as the child of immigrants with a scholarshipped Yale degree and a top 10 law school, that I have to beg you to do and preserve what we’ve all busted our tails to do to make this city move,” he said.

Riverside City Manager John Russo argues that the new contract is reasonable.
(Gina Ferazzi / Los Angeles Times )

The dispute has struck a nerve in the inland city with a population of 320,000.

Someone emailed residents comparing Bailey to Saddam Hussein, saying he was a threat to democracy. A local politics blog, meanwhile, featured a photo of the mayor in a cape with the caption: “Our mayor, the proverbial hero, fighting for truth, justice and Riversidian way.”

Melendrez, the councilman, even proposed hiring a special counsel to investigate the mayor’s office for a “breach of attorney/client privilege” related to the dispute.

Russo was hired in 2015 with a pledge to bring transparency and accountability to the city. He had previously been Alameda’s city manager, and the city attorney and a City Council member in Oakland.

He left Oakland amid reports of a feud with the mayor, saying at the time that the city’s leadership had become “morally corrupt.”

Alameda Mayor Trish Herrera Spencer said Russo was a positive force in that city. “He totally commits himself to the job. And tries to do the best,” she said.

Bailey, a Riverside native, Army vet and former teacher, likes to say, “It doesn’t get much better than being the mayor of your hometown.” He is paid about $83,000 per year. He receives medical and other benefits, including a car allowance, that are similar to Russo’s.

In an email of notes to himself about the veto that was released by the city, the mayor hinted at a deeper dispute with the city manager. Russo “creates opposition to toy with them,” he wrote. “He manipulates and bullies. And takes credit that others deserve. That’s not leadership.”

He added: “Love my enemies. Bless those who curse me. Pray for their salvation.”

Even those who oppose his new contract acknowledge that Russo has done positive things in Riverside. He is credited with helping secure the Cheech Marin Center for Chicano Art, Culture and Industry for downtown. The museum and a new downtown library are scheduled to open in 2020.

Russo also helped land the California Air Resources Board’s $419-million headquarters and testing laboratory, which broke ground late last year. He worked to implement a two-year budget cycle and pushed through a voter-approved one-cent sales tax increase to boost public safety and other services.

“I think he is a brilliant individual and an innovative manager,” Bailey said.

But the new contract comes as Russo has asked all city department heads to find ways to cut their budgets by 4%. Residents are also facing utility rate increases later this year, and Riverside, like most California cities, faces significant employee retirement costs in coming years.

Russo was about two years into a five-year deal when the city decided to renegotiate amid talk that the county might be looking to hire him.

A widening rift between the mayor and the city manager is playing out at Riverside City Hall, above.
(Gina Ferazzi / Los Angeles Times )

Council members who supported the deal said they were trying to ensure consistent oversight of upcoming city projects. According to the city, the deal costs taxpayers no more than the previous contract because it limits how many weeks of unused time off Russo can cash out per year.

The new contract gives Russo 3% annual raises for satisfactory performance for an average base salary of $345,000. Including benefits, the total value will average about $462,000 annually.

In 2016, according to the most recent figures from the public-employee salary database Transparent California, the state’s highest-paid city manager was San Jose’s Norberto Dueñas, who has since retired. He made about $492,000 in pay and benefits, followed by David Cavazos, the former city manager in Santa Ana, who received $466,000.

Some council members expressed reservations about the timing of Russo’s new contract — given the proposed budget cuts, utility rate increases and the home loan. But almost everyone seemed to agree that they would like him to stick around.

“No one is trying to get rid of him,” said Councilman Jim Perry, who voted against the contract. But, he added, “I do not think the city should be involved as a mortgage company.”

Bailey said his legal challenge is about preserving “checks and balances.”

“It’s not personal,” he said. “I’m not running for higher office. This is the highest office for me.”

Because the contract was approved 5 to 2, the council probably has the five votes needed to override the veto. But council members say they have not acted because they don’t need to — that the veto has no legal weight.

Since February, Bailey said, city officials have retaliated against him by not participating in meetings that he hosts. He also said he believes Russo colluded with the city attorney to keep him from voiding the contract.

City Atty. Gary Geuss called that “nonsense.”

“I report to the City Council and I tell them what I believe the charter says,” he said.

According to Kevin C. Duggan, West Coast regional director for the International City/County Management Assn., city manager compensation should be “fair, reasonable, transparent, and based … on the characteristics of that community and what’s the value added that’s being brought to the community.”

Many observers see more than fiscal issues at play in Riverside.

“You have a clashing of personal styles, an outsider versus an insider,” Loveridge said. “The city manager is doing a good job. The mayor is doing a good job. The effort is to work out if they can work effectively together.”

Loveridge noted that Riverside’s mayor is the face of the city but holds few powers — and that has been a source of tension over the years. The mayor does not typically vote, except to break a tie.

Councilman Mike Gardner, who said he disapproves of the contract but voted for it in hopes of avoiding a veto showdown, said the city manager’s style has earned him some detractors who have now latched on to the pay issue.

“He is a very aggressive personality,” he said. “That’s what successful city managers have to have. We have had city managers in the past who were the nicest, sweetest people in the world and everybody loved them and they didn’t accomplish very much.”

Frank V. Zerunyan, a public policy professor at USC who specializes in local government, said there is plenty of blame to go around.

“When you have a failure like this, it’s a lack of leadership and it’s a failure on everybody’s part,” he said.

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