Publication Date: Wednesday, June 08, 2005
City manager's perks stir debate
City manager's perks stir debate
(June 08, 2005) Council deliberates, but eventually approves, new terms in Benest's contract
by Bill D'Agostino
Perks offered to Palo Alto City Manager Frank Benest stirred debate among members of the Palo Alto City Council Monday night, with some feeling the proposed benefits were impolitic.
Despite the deliberation, the council voted 5-3 to approve an updated contract. The new agreement includes provisions that allow Benest to stay in his home, which is partially owned by the city, after he retires and give him the option to have the city pay a portion of the property tax in exchange for a commensurate drop in his salary.
However, three council members -- Judy Kleinberg, Hillary Freeman and LaDoris Cordell -- voted against the updated contract. (Councilwoman Yoriko Kishimoto was absent.) Kleinberg noted that the city is facing a budget deficit for fiscal year 2005-06, and is considering numerous layoffs.
"The timing of this is unfortunate when we are identifying employees whose entire livelihood is at stake," Kleinberg said.
In 2001, the city helped Benest purchase his Bryant Street home in Palo Alto. The city still owns 56.8 percent of it. The city paid $900,000 of the $1.6 million purchase price and loaned Benest an additional $500,000.
Councilwoman Dena Mossar said the home was "the best investment in the city's portfolio" and the new contract was an incentive to keep a city manager who the council highly regards.
A similar debate occurred earlier in the evening, before the council approved the appointment of the city's new human resources director, Russell Carlsen.
In Carlsen's new contract there is a provision that gives him $500 a month of rent assistance for 48 or 60 months. Freeman voted against his appointment because she felt that the perk was not prudent.
Other council members who voted in favor of the appointment said such assistance was necessary to attract top managers to Palo Alto, given the area's extremely expensive housing. Carlsen's annual salary is $144,310.
The newly approved city manager contract will allow Benest, who is raising two school-aged children by himself after the death of his wife last year, to stay in the home until Dec. 31, 2017 or until his children graduate or leave Palo Alto public schools, whichever comes first. He was seeking stability for his family, according to council members who negotiated the deal.
Council members who voted in favor of the contract also said allowing Benest to stay in the home would give the city's investment more time to mature. When the home is sold, the city and Benest will proportionately split the return on the investment.
However, Freeman worried the "lucrative" deal would set a precedent for future city managers, forcing the city to own numerous homes in Palo Alto.
The council also approved a condition that allows Benest to ask for the city's help in paying his property taxes in exchange for reducing his salary by $10,000. Until now, the city had not been paying any of the property tax. The city's estimated share of the property tax is $10,000.
Councilman Jack Morton said the provision would not impact the city financially, but would allow Benest to pay less in taxes.
Council members who voted against the deal said it was not a signal of their feelings for Benest.
"I am separating the personal from what is the political and the economic here," Cordell said.
Staff Writer Bill D'Agostino can be e-mailed at bdagostino@paweekly.com.
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