Why Arroyo Grande council members decided to put Steve Adams on leave

By the time the Arroyo Grande City Council members met in closed session Wednesday night, they had each decided that City Manager Steve Adams could no longer effectively lead the city.

Their decision to put Adams on paid administrative leave was not made because of any big revelations in an investigation into an incident involving Adams back in July, council members said in telephone interviews Thursday.

Rather, council members felt that Adams’ ability to continue to do his job had been compromised by the controversy swirling around Arroyo Grande since news of a July 3 incident broke three months ago.

“A city manager is such a crucial role, and people lean on him and look to him for support,” Councilwoman Kristen Barneich said, “and I wasn’t sure that he could effectively lead with all that was going on around him.”

On the night of July 3, five police officers found Adams and Community Development Director Teresa McClish at City Hall. They later said they had some wine at downtown restaurants and were drinking tea at City Hall until they felt safe to drive home.

A recent investigation did not find any substantive evidence that would point to an inappropriate or romantic relationship between the pair, but their actions exhibited poor judgment and gave the perception of some form of inappropriate conduct, according to a public summary of the report by Sintra Group.

In addition, the investigators found a significant number of city employees who were interviewed perceived there was “something more than just a casual or business manager-subordinate relationship between the two.”

Administrative Services Director Debbie Malicoat is expected to serve as acting city manager until an interim manager can be hired. The council will consider officially appointing Malicoat as acting manager when it meets Tuesday.

Newly-elected council members — Mayor-elect Jim Hill, who beat Mayor Tony Ferrara as a write-in candidate, newcomer Barbara Harmon and incumbent Tim Brown — will be sworn in the following week at a special Dec. 1 meeting.

The council could appoint an interim manager within the next three weeks and could select a consultant to recruit a permanent manager at its Dec. 9 meeting.

Adams, a 14-year employee, will remain on paid administrative leave until an interim manager is hired. He earns $157,294 annually.

Adams said in October that he will not receive a severance package. He will receive payout for the 724 hours of leave that he has accrued — about $54,700, Malicoat said, as specified in a council resolution establishing wages and benefits for management employees.

(Adams earns 33 days a year of annual leave, which is what management-level employees receive instead of vacation and sick leave. He can accrue up to 725 hours of annual leave.)

When asked why they didn’t consider terminating Adams without cause Wednesday, several council members said his contract stipulates that if he were to be fired without cause he would be paid a lump sum equal to six months’ salary and benefits — an estimated $105,000 — in addition to the annual leave payout.

In addition, a few council members did not feel that they could terminate Adams for good cause, which would require a finding of malfeasance, failure to perform his duties in a professional and responsible manner, or “conduct unbecoming the position of city manager or likely to bring discredit or embarrassment to the city,” his contract reads.

“The argument could be made that we already disciplined him so unless there’s new information we couldn’t discipline him for cause,” Councilman Tim Brown said.

Councilman Jim Guthrie said putting Adams on paid leave rather than firing for cause lessens the risk of litigation against the city.

“I felt this was a more expedient way to accomplish what we wanted to accomplish,” Guthrie said. “There would likely be no litigation.”

Mayor Tony Ferrara was absent from Wednesday’s meeting but said Thursday that he believed the council’s action “probably is the best thing to do.” Councilman Joe Costello could not be reached for comment Thursday.

Ferrara also responded to a comment Brown made at Wednesday’s meeting about the July 3 incident. Brown criticized Ferrara for apparently being initially hesitant to inform the rest of the council about the incident after Ferrara learned of it from City Attorney Tim Carmel.

Ferrara said when Carmel called him to tell him of the incident, Carmel had talked to Police Chief Steve Annibali and had statements from the five officers. Ferrara suggested that Carmel talk to Adams and McClish before contacting the rest of the council to “give them a more comprehensive report.”

“That’s how that went down,” Ferrara said. “There was no hesitancy.”

McClish continues to work for Arroyo Grande and did not receive any disciplinary action related to the incident, several council members said.

Though Adams’ tenure with Arroyo Grande is ending on a sour note, several council members were quick to note some of his accomplishments: putting in place a comprehensive road improvement program, completing the somewhat controversial City Hall move and related restaurant projects in the Village, and leading the city through the Great Recession.

“He has worked so hard to keep the entire city in good working order, to keep our budgets balanced,” Ferrara said. “Things are changing for the better all over town, and it’s largely because of the hard work that Steve has done along with our staff, and people have completely lost sight of that.”

Added Guthrie: “Steve’s position is a big one to fill. He did a tremendous job as city manager, and I think we’re going to see going forward how big.”

This story was originally published November 20, 2014 at 5:34 PM with the headline "Why Arroyo Grande council members decided to put Steve Adams on leave."