The reasons for John Coates’ abrupt resignation as the city manager of Carlsbad remain unknown. His departure, however, has cost the city more than $145,000. Courtesy photo
The reasons for John Coates’ abrupt resignation as the city manager of Carlsbad remain unknown. His departure, however, has cost the city more than $145,000. Courtesy photo
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Departure of city manager cost city over $145,000

CARLSBAD — In a mesh of paid leave, severance package, and increased salary for interim officials, the city of Carlsbad paid more than $145,000 total for the resignation of John Coates, its former city manager.

And because the decisions regarding the exit of the top city official were based on confidential personnel matters, the public will never know why City Council decided to spend that money in those ways.

Coates spent years building his career within the city of Carlsbad before he silently resigned after serving less than eight months as the official city manager.

He was first hired as Carlsbad’s parks and recreation director in January 2010, having previously worked for the city of Santee.

On being hired then-city Manager Lisa Hildabrand praised Coates’ “solid leadership and true passion for the parks and recreation field.”

Coates quickly rose to assistant city manager on July 19 that same year.

He would eventually take over for interim city manager duties for Hildabrand when she went on leave in November 2012. He was appointed as the official city manager on March 12, 2013.

As Carlsbad’s head official, Coates oversaw the city’s operations and delivery of services, reporting directly to City Council.

He ushered Carlsbad through significant changes including a new pay-for-performance agreement with city employees and the start of construction of the city’s desalination plant.

After months of serving as the official city manager, Coates announced his resignation to city council in a closed session meeting on Oct. 31, 2013.

The meeting’s agenda stated that the matter was discussed during Coates’ performance evaluation. The evaluation was specially scheduled because according to his city manager employee agreement, Coates was supposed to be evaluated once each year in January.

The following Monday, an intercity memo initially stated that Coates was out on leave and the city fire chief had stepped up as acting city manager.

Coates made no public comments about his resignation. City council declined to explain why he left after serving as the official city manager for less than a year.

Coates’ separation agreement required him and the city to remain tight-lipped about the matter.

According to the agreement, Coates is not allowed to comment or file any complaints, charges or lawsuits in regards to his resignation.

The city in turn agreed that human resources would respond to all employment references for Coates by stating, “only the dates of Coates’ employment and the position(s) held.”

The city’s only official statement about Coates’ resignation was released after his separation agreement was finalized on Nov. 6.

“John was called to serve at a critical time of transition for our city organization,” said Mayor Matt Hall in a statement upon Coates’ resignation.  “He has accomplished an ambitious agenda, leaving us well positioned to continue on our path of becoming a truly world class city.”

The only time any reasons for why Coates left would have been given was in the closed meeting, according to assistant city manager Kathy Dodson.

“The only people that know about (the reasons why) are him and council, and other than that, it’s hearsay,” Dodson said.

She stated further that the city is bound by law not to discuss personnel matters, which includes Coates’ reasons for leaving.

“The law is very clear that they are not allowed to talk about this issue,” she stated.

Personnel records are exempt from disclosure under California’s Public Records Act because releasing such information “would constitute an unwarranted invasion or personal privacy.”

Immediately after his resignation, Coates was placed on paid administrative leave.

He was retained on paid leave until March 12, 2014, exactly one year after he was formally appointed as city manager.

While on leave, Coates received his full pay and benefits, including vacation and car allowance, according to his separation agreement.

At the time of his resignation, he was earning a $220,500 annual salary along with additional benefits.

For the four and a half months he remained on administrative leave, he was paid approximately $80,600 in salary, plus benefits that included about $1,500 for his car allowance.

Coates was then paid a lump sum equal to three months of pay, $55,125, at the conclusion of his leave.

“(Paid administrative leave is) not a typical approach to a transition when a county or city manager leaves the community,” said Martha Perego, the International County/City Manager Association’s director of ethics.

She stated that in her professional opinion there must have been something unique regarding the confidential personnel matter at hand that led city council and Coates to such an unusual arrangement.

What Coates was being paid to do for the city while on paid administrative leave is not exactly clear.

During that time, he was not required to report to city hall or any city facility, according to his separation agreement. He was instructed to return all city property, including office keys, laptops, iPad, and credit cards, by Nov. 21.

Coates was obligated to be available by phone and email to help with the transition of city manager duties. This included Coates being available for depositions and other city litigation support.

But the city has declined to provide any further detail of what Coates specifically worked on during those four and a half months, again citing that it is a personnel matter.

“It’s hard to say for sure what’s happened,” said Rex Facer. He serves on the Federal Salary Council and works as an associate professor of public finance and management at Brigham Young University.

“That’s one of the frustrating things with personnel actions,” he said. “You don’t know ultimately what was the triggering event, because that’s what really provided the insight into why (city council) ultimately made the decision that they did to offer the administrative leave in addition to the more traditional severance package.”

As for Coates’ paid administrative leave, Facer said, “My guess is that what happened in the negotiations, he may not have been eligible for the separation lump sum until he had been employed for a year.”

Whether or not that was the case is not clear. Coates’ employment agreement from when he was hired as city manager does not mention any time requirement for him to qualify for severance.

But Facer explained that it is not that uncommon in the public and private sector for a severance package of that size to be granted to top managers.

He said that most likely the city determined that in order to hold up its professional responsibility to Coates and hire a new city manager as soon as possible, it was more cost effective to pay Coates via the paid administrative leave and lump sum arrangement.

In addition to the leave pay and severance Carlsbad paid Coates, the city also increased the salary of the city’s fire chief for serving as interim city manager in Coates’ absence.

Carlsbad Fire Chief Kevin Crawford assumed all of Coates’ city manager duties on Nov. 1, and days later city council formally appointed him as interim city manger until a permanent replacement was selected.

He was given a 15 percent pay raise for his new position, raising his annual salary from $189,300 to $217,695. He also received a $350 monthly vehicle allowance.

Crawford’s additional pay and car allowance totaled $10,865 by the time he left his employment with Carlsbad on Feb. 28.

Dodson served as interim city manager from March 1 until Carlsbad’s current city manager, Steve Sarkozy, started on April 14.

Coates acquired a new position as Napa’s parks and recreation manager and started the job in mid-March after the conclusion of his paid leave with Carlsbad. His salary is $150,000 annually plus benefits.

Between Coates’ paid leave, car allowance, severance, and benefits, plus Crawford’s pay raise and car allowance, the city ultimately paid over $145,000 to cover the expenses of Coates’ resignation.

Facer explained that while the city’s actions essentially follow standard practices, such confidential decisions could leave an impression on the public.

“There is something fundamentally different in the way that we feel when it’s taxpayer dollars being used,” he said. “But at the end of the day, what the city council is essentially saying is that they believe that the value that they will get by changing direction now is greater than the value that they would have gotten from the existing manager waiting four more months to make that transition.”