March hearing set on dismissal of Rehoboth city manager suit

A March 26 date has been set to hear oral arguments on whether a lawsuit seeking the termination of Rehoboth Beach City Manager Taylour Tedder’s contract should be dismissed.

The city announced Tedder’s hiring in April; he took up his duties May 15. Among other things, his contract calls for a $250,000 annual salary, plus $50,000 in moving expenses and a $750,000 home loan that will be forgiven in full if he stays for seven years.

Almost immediately, citizens began looking for answers from city commissioners on how they came to reach the financial terms of Tedder’s contract. A significant portion of the consternation was a result of timing – the announcement of Tedder’s hiring, and the associated terms, came a month after city commissioners passed a $38.7 million budget that included an increase in property taxes, parking rates, rental taxes, wastewater meter fees and a future increase to mercantile license fees to close a deficit in excess of $4 million. The fiscal commitments of the future city manager’s contract were not discussed during last year’s budget cycle.

There were also questions about why Tedder’s professional qualifications apparently didn’t meet the city’s charter requirements for hiring a new city manager. The charter requires four years of previous city manager experience and an engineering degree. Tedder didn’t have either. He was city manager of Boulder City, Nev., when he was hired, but hadn’t been there two years. Prior to that, he was assistant city manager in Leavenworth, Kan., for a number of years.

During a workshop in May, city commissioners had planned on discussing charter changes that would have reflected Tedder’s qualifications. At the time, Mayor Stan Mills said commissioners would defer the issue until the General Assembly’s next legislation session, instead of trying to get the changes passed by the end of the last session, which ended June 30.

The General Assembly convened for its new session Jan. 14, but the proposed charter changes aren’t coming.

At this time, the city is not pursuing any related charter changes because the city maintains that Tedder already meets the charter provision, said Mills in an email Jan. 14.

In addition to the compensation package and city charter requirements, there were questions about the hiring process. In June, after citizens filed a complaint, the state Attorney General’s Office determined commissioners violated the Freedom of Information Act several times during the process of hiring Tedder. As for remediation, the AG’s office recommended commissioners discuss Tedder’s contract, including the compensation package, and ratify the vote associated with the contract at a future meeting held in compliance with FOIA’s open meeting requirements. That meeting was held July 8, when commissioners again agreed to the terms of the contract.

About two months later, Aug. 15, attorney Theodore Kittila, on behalf of property owners Steven Linehan and Thomas Gaynor, filed the lawsuit against city commissioners in Chancery Court.

The lawsuit is seeking to void Tedder’s contract because, Kittila argued, it was beyond the commissioners’ power to enter into an agreement that violates the city charter, and the employment agreement is an illegal use of municipal funds.

The city’s attorney, James McMackin, has argued the charter clearly authorizes the board to hire a city manager, impose the necessary qualifications for city manager, and determine the city manager’s salary. 

The lawsuit has been working its way through the legal process ever since.

Kittila provided a statement from Gaynor.

“The city has essentially taken the position that the people of Rehoboth should be left with no recourse when their leaders abuse their positions and conduct the people’s business with the people’s money behind closed doors without the people’s input. We hope and anticipate that a Delaware judge will disagree with such a preposterous blank-check view of city power and look forward to the hearing and a successful outcome,” said Gaynor.

Mills didn’t have a comment on the lawsuit, only on the possible path forward.

At the hearing, or likely thereafter, the judge will rule on the motion to dismiss, said Mills. In the event the motion is not granted, only then would a trial date be scheduled, he said.