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Tuesday September 2nd 2014

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What Will Our Strong Mayor Do Next?

Inside The Hayward Transition Process
by Rick Outzen

Vinyl Music Hall was packed Nov. 2, 2010. The crowd was an eclectic mix of people–old, young, black, white, white collar and blue collar. They weren’t there for the music. They were at Vinyl to celebrate the election of Ashton Hayward, Pensacola’s first strong mayor and the man who personified their hopes and dreams of a new city. The people laughed, they cried. They shook hands, they hugged.

However, not everyone in Pensacola was overjoyed. The election of the upstart Hayward sent a ripple of uncertainty throughout Pensacola City Hall. For the first time since the Great Depression, outsiders would have unfettered access to the inner workings of Pensacola city government. Secrets hidden for decades, budget line items that gave staff caches of cash for pet projects, and favorable contracts that kept the Good ol’ Boys at bay would now be exposed to the light.

The old game under the city-manager form of government was to keep six city council members happy, give the council only one recommendation on every issue and embarrass those that stepped out of line. When the council seemed to be getting restless or rebellious, then inundate them with minutia, pack their agendas with long presentations, and make the meetings last hours.

On that warm Nov. 2 night, everything was about to change. Hayward was not a City Hall insider. He had vowed to change city government. He was supported by that same radical bunch that had gotten the new charter passed the prior year. The 2008 City Council elections had produced flies in the ointment, like Maren DeWeese, Larry Johnson and, at times, Diane Mack, but nothing like Hayward, who would have the power to hire and fire the city employees.

Hayward had no political track record. He was an unknown commodity. He also was inexperienced—a fact that may have given some hope to city staff, since surely he would have to rely on their institutional knowledge, at least until he hired his city administrator. Many of the senior city leaders had contracts with expensive termination clauses. Change was not going to be as quick as Hayward’s supporters expected. There would be time for city staff to adjust.

CRASH COURSE IN CITY GOVERNMENT

The mayor-elect, however, had a little time to adjust. Hayward had 69 days before he was sworn into office. He had less than 1,650 hours to get ready to take the reins of the primary economic engine in the county, outside of the beaches. Hayward had campaigned on 20 Solutions for 2011 and his ambitious Westside Plan, but he had spent little time planning for the execution of those ideas. The Thursday after the election, Hayward began to assemble his transition team. Their mission was to figure how in the heck he was going to do all that he had promised.

Transitions can be rocky. In 2009, Escambia County saw both ends of the spectrum. David Morgan took over the Escambia County Sheriff’s Office, replacing most of his predecessor’s cronies with sworn officers and professionals from inside the agency. Few people noticed the changes in leadership.

James Owens took a radically different approach when he took over the Public Defender’s Office. Owens fired 14 of his 125 employees and hired 12 new attorneys on the day after he was sworn into office. The news media interviewed the fired employees as they were leaving the M.C. Blanchard Building with boxes in their hands. It wasn’t a pretty sight.

Which example would Hayward follow?

Blaise Adams, city president for RBC Bank, was named chairman of the Hayward Transition Team, with Rev. LuTimothy May, pastor of Friendship Missionary Baptist Church, as the co-chairman. The other members included Cynthia Williams, senior planner, West Florida Regional Planning Council; Ron Ellington, business consultant who worked with Innisfree Hotels; Bo Carter, former president and CEO of Coastal Bank and Trust; David Penzone, former Southeast Managing Tax Partner, Deloitte Private Client Tax Advisors; John Asmar, attorney, former Assistant County Administrator and City Manager of Homestead, Fla.; Bruce Partington, attorney, Clark Partington Hart Larry Bond & Stackhouse; Gordon Sprague, retired Global Partner, Invesco; Taylor “Chips” Kirschenfeld, Senior Scientist and Division Manager, Escambia County Water Quality and Land Management. Jerome Watson, retired deputy administrator for Escambia County Public School District, was added later in January.

On the original team, only Asmar, Kirschenfeld and Sprague had any government work experience. Both Adams and Carter had served as chairman of the Pensacola Bay Area Chamber of Commerce. The team members weren’t made public until mid-December.

In the press release on the team, Hayward said, “One of my priorities as Mayor will be to ensure that everyone has a voice in the process, and that we take advantage of the incredible talent we have right here at home. I’m happy to have such an impressive group of community leaders and policy experts who have volunteered to assist me in building a better future for our city.”

Hayward said that his transition team was part of a deliberate, reasoned approach to ensure that that would lead to a “more transparent, more accountable and more responsive city government.”

CITY GOVERNMENT 101

The Hayward Transition Team was under no legal requirement to be transparent, accountable to the public, or responsive. There were no public meetings held or reports issued on its deliberations. Its emails, reports and meeting minutes weren’t subject to Florida’s Public Record laws.

IN knew Hayward and some of his team members were meeting with city staff, but little else. The daily newspaper reported that the Hayward Transition Team gathered a stack of documents three feet high, containing summaries, memos, contracts, lawsuits, financial documents, budgets and more.

Since those documents represented what potentially could be an unprecedented view into the workings of Pensacola city government, the IN made a public record request for them so the paper could review the same information given to the Hayward Transition Team. They provided a “City Government 101” primer on how the city operates and what are some of the biggest issues facing it in the coming year. They also offer a peak into what Hayward may be planning for the first few months of his administration.

The stack of documents received were considerably less than three feet high. Some of the reports could be easily found on the city’s website, such as the budget, financial reports and Community Redevelopment Plan, 2010. Other documents were reports and presentations previously given to the Pensacola City Council on the Port of Pensacola, Pensacola Gulf Coast Regional Airport, Energy Services of Pensacola and the pensions. Based on the emails the IN reviewed, dozens of meetings were held by transition team members with department heads.

Some heads, such as Al Garza Jr., Director of Public Works, and City Attorney Rusty Wells, followed up their meetings with letters and emails in which they made recommendations and pointed out significant issues. It doesn’t mean that others didn’t make recommendations, only there are no written communications from them.

CITY ADMINISTRATOR

The new city charter replaced the city manager position with a city administrator who is hired by and works under the mayor. Hayward committed in his campaign that he would conduct a nationwide search for that position.

The public records revealed that the Hayward Transition Team considered six firms: Bob Murray & Associates, Gilbert Tweed International, Waters-Oldani Executive Recruitment, Slavin Management Consultants, The Mercer Group and Gans, Gans & Associates. All six firms were listed and analyzed in a Excel spreadsheet.

Eventually Hayward would select Gilbert Tweed International, which, according to the decision grid released, had no senior government staff placements in Florida, but significant corporate search work in the state.

Its president, Stephanie Pinson, was given credit for extensive experience in transportation, government and industrial companies worldwide.

The estimated timeline for completion of the search was 12 weeks, which includes development of the position profile; designing evaluation and selection process; identifying qualified candidates; screening of applicants with recommendations; doing  more extensive background checks, if requested; and assistance with negotiations and presentation of offer of employment.

The estimated cost listed is $40,000.

POSSIBLE VACANCY WINDFALL

A week before the general election, Hayward stated in his opening remarks at the chamber’s mayoral debate that he would rollback the millage rate. That promise put pressure on the Hayward Transition Team to find money in the budget.

Based on the records given to the IN, the team may have found $3.1 million, of which $1.62 million was in General Fund dollars. The savings would come from eliminating positions in the budget that have not been filled.

The $1.62 million savings to the General Fund came from not filling 24 positions, including the assistant city manager ($157,586, salary plus benefits), fire chief ($141,130) and assistant police chief ($138,826). Of the 24 positions up for elimination, six were in the Fire Department and 14 in the Police Department.

The remaining $1.48 million in savings was split among various funds, such as Community Redevelopment Agency, Sanitation and Gas Utility funds. The biggest impacts were in the Airport and Gas Utility funds with savings of $439,194 and $247,163 respectively. The highest paid position in the fund accounts recommended for elimination was the Management Information Services Administrator ($89,176 salary plus benefits).

Of the total potential savings of $3.1 million, only $1.87 million was in actual salaries, about 60 percent of the total. The balance was in Fire & Police Pensions ($335,200), FICA & Social Security Replacement ($123,482), Group Insurance ($633,466), Disability Insurance ($3,257) and Florida Retirement System ($139,721).

RESTRUCTURE PROPOSAL

Al Garza Jr., Director of Public Works, gave the Hayward Transition Team his analysis of the general issues and recommendations on the organization structure.

Garza pointed out that Pensacola has suffered from a declining population growth rate since the 1970s as people migrated to the unincorporated areas of Escambia and Santa Rosa counties primarily because of lower tax rates. What kept Pensacola from shrinking to a population base of 40,000 or less was the development near the airport along Spanish Trail during the late 1980s and early 1990s.

“It’s easy to say let’s revisit annexation, but without any incentives to offer residents outside the City I can’t imagine anyone voluntarily being incorporated into the City,” wrote Garza. “We need to find the carrot that we could hold out to areas just outside the City Limits so they feel it would be economically advantageous to be within the City.”

The City needed to do a better job of selling the efforts the City is providing to improve urban services and conditions, such as police, fire, parks, roadways, stormwater, street lighting and business development and opportunities, according to Garza. “We don’t blow our own horn enough.”

Garza saw that the demolition of apartment complexes in the City after Hurricane Ivan created a lack of fair market housing that pushed renters to the area slumlords’ low rent/poorly-maintained homes in the central and western portions of the City. “Stimulation of economic redevelopment in these areas is essential,” wrote Garza.

The Director of Public Works pointed out the duplication of services within the different departments. There are three different electrical/instrument control operations, four different grass cutting operations, right-of-way operations split between three different departments, as well as Code Enforcement in three different departments. “It’s hard to coordinate your activities when you don’t know what the other guy is doing,” he wrote. “A consolidation of similar activities would help with this situation and allow an organizational downscaling as well as improve service delivery.”

Last fall, the Pensacola City Council led by Mayor Mike Wiggins rejected a stormwater rate increase. Currently the stormwater capital project program has been scaled back by $400,000 to offset decreased revenue. Garza believed the City needed to determine if rates should be adjusted to current expenditure levels or if operations should be cutback further to the current revenue.

Garza also looked at the City’s organization structure. Based on the management concept that no one individual can realistically control more than six activities directly at any one time, he proposed that Mayor Hayward place under his direct control the City Administrator, City Attorney, City Clerk and Finance Department. Under the City Administrator there would be six major departments: Fire, Police, Human Resources, Public Enterprise, Public Service and Community Development.

Functions under the department level would be classified by division level. The proposed organization would decrease the number of department directors and downscale administrative staffs.

CITY LEGAL ISSUES

City Attorney Rusty Wells provided on Dec. 7 Mayor-elect Hayward and his Transition Team an update on the major lawsuits against the City and what he had indentified as upcoming significant matters.

Gulf Power’s 30-year franchise agreement expired in December 2009. The renewal negotiations are still on-going. Mayor Hayward will have to complete them under his administration.

The City is negotiating the fire collective bargaining agreement, which expired Ju1y 1, 2010. The police agreement expires in 2012. The police and fire pension issues will be a part of those negotiations. In addition, the American Federation of State, County and Municipal Employees, which is part of the AFL-CIO, is in the process of attempting to organize the City’s blue-collar employees.

Wells also identified the 2010 Charter as an issue requiring an in-depth briefing on the charter’s relationship with the current Code of Ordinances in order to determine those areas of authority that are clear-cut under the Charter so the new mayor can take an informed approach to resolve them.

The other big issue was the Maritime Park, which has seen CMPA fire its master developer and file suit against it, alleging fraud in the inducement of the contract. The Studers also announced the purchase of a Double A baseball team, which is affiliated with the Cincinnati Reds, and a commitment of $2 million to expand the stadium to 5,000 seats.

Five cases are regarded as significant pending litigation against the City. Following the completion of the airport’s runway extension, the contractor Phoenix Construction Services, Inc. filed a $5.87 million lawsuit against the City and the construction project manager, Reynolds, Smith & Hills, Inc. Phoenix alleged breach of contract by failing to adjust the contract time and price and that the plans and specifications provided by the City were incomplete, insufficient and not constructible within the contract’s time frames, causing time and cost overruns.

Another lawsuit (DooleyMack Constructors of Northwest Florida, LLC v. City of Pensacola) also involves a recent capital project, the renovation of the Saenger Theatre. According to Wells, the alleged damage, approximately $1.2 million, is “composed of several discrete elements of the construction project” which DooleyMack claims were not properly handled by the City and/or its architect, Caldwell & Associates. Mediation was unsuccessful, although one of the major components is still being discussed by the parties.

The City has filed a Motion to Dismiss. If that isn’t successful, the City will advance a claim against Caldwell & Associates and its insurance carrier. The City Attorney anticipated bringing details of the claim to the city council in early 2011.

The lawsuit G.H. Skipper v. City of Pensacola was filed in 2003. The plaintiff claims that its contract to provide as-needed plumbing and installation work for Energy Services of Pensacola was deprived of revenue because ESP’s own in-house staff performed some of the work instead. The claim was dismissed in court, but reversed on appeal. Mediation in 2010 was unsuccessful and the case, whose damages claimed are $400,000, is scheduled for trial in 2011.

The City has a racial discrimination suit (Derrik Streeter, et al. v. City of Pensacola) filed in 2005 in federal court by four minority firefighters against the City and its union. The District Court entered in 2009 a Summary Judgment, but the Eleventh Court of Appeal remanded it in 2010 back to the District Court, where the City is awaiting disposition of a renewed Motion for Summary Judgment.

In 2006, a lawsuit (Estate of Nathaniel Wesley McCants v. City of Pensacola) arose from an explosion due to a gas leak at a Roads, Inc. worksite. The City, which owned the gas line, and Roads, Inc., which apparently damaged it, are co-defendants. ESP’s gas policy is covering this case.

Wells also instructed the Transition Team that he anticipates an additional significant lawsuit to be filed regarding the 2009 death of Victor Steen. The teen died when he was knocked off his bike and run over by a police cruiser. A Chapter 768 claim has been lodged and is covered under the Police Liability Insurer.

The City Attorney was asked to list the City’s outside counsel. Former City Manager Tom Bonfield entered in 2008 into a five-year retainer agreement with Richard Lott as bond counsel and Rick Miller of Edwards, Angel and Palmer as disclosure counsel. Keith Wells is the attorney for the City’s Civil Service Board. Gary Leuchtman of Beggs & Lane has been retained by the Fire Pension Board. Mike Stebbins serves the same function for the Police Pension Board. Lou Ray and Ed Fleming are the board attorneys for the Code Enforcement and Community Maritime Park Associates, respectively. Jack Fiveash is the City’s environmental legal consultant and Deborah Little is on retainer to pursue collections of liens on various properties in the City.

ENERGY SERVICES OF PENSACOLA

ESP is a critical revenue source for the City. It provides $854,000 as its allocation of overhead and an additional $8,000,000 to the General Fund.

The natural gas supply contract with BP North America (yes, the same BP involved with the Deepwater Horizon disaster) expires on March 31, 2011. The budget is $30 million annually and is currently out for bid. The natural gas is transported to the City through the Gulf South Pipeline, and that contract expires March 31, 2012. ESP is in discussion with Gulf South to purchase the pipeline that serves three NAS Pensacola locations.

PARKS & RECREATION

A priority for Mayor-elect Hayward is the Pensacola’s Westside. Dave Flaherty, Director of Parks & Recreation, suggested to the Transition Team that by reallocating funds in the 2011-2014 Capital Plan the new mayor could build both the Woodland Heights Community Center and the Legion Field Activity Center.

Flaherty also suggested either moving the City towards contract services, particularly in the areas of park landscaping and building maintenance, or the Mayor could pursue consolidating those functions with the county.

He also made reorganization recommendations similar to those proposed by Garza. Flaherty suggested moving all construction projects under Engineering, which would put one department in control of planning, coordinating and overseeing capital improvements. The mayor should also consider eliminating some mid- to upper-level management positions.

WESTSIDE PLAN

The Hayward Transition Team did look at the affordable housing. According to an email exchange between team member Ron Ellington and Pat Hubbard, Director of Housing, the team discussed the old school site on the corner of C and Chase streets, which was sold in 2004 for $400,000 by Frank and Vickie McGinley to Blount Redevelopment, LLC, as a possible redevelopment project for the Hayward administration.

“The transition committee agreed that the Blount St. site is of interest for all the reasons we discussed, as is the parallel issue/opportunity that you raised; tighter code enforcement on blighted properties and aggressively pursuing the owners to the full extent of the law,” wrote Ellington in an email to Hubbard. “We agreed that this will also be a key part of the Mayor’s plan to be announced after he takes office.”

Ellington wrote that the transition team had talked about the Westside plan, affordable housing and the Blount Street site. They had agreed that Mayor Hayward would appoint a Westside Improvement Committee to be announced shortly after he takes office. “The committee will be representative of the service area constituency,” wrote Ellington, “and will hold a series of meetings as well as one-on-one conversations to gather the community’s input on how they would prioritize the elements of the plan and what values they would seek to derive from each.”

Mayor Hayward did announce on the day that he was sworn into office a Westside Improvement Committee: Rev. LuTimothy May, Rev. Bernard Yates, Rev. Lonnie Wesley, Rev. Joseph Marshall and Rev. Charles Morris.

CITY MEDICAL CLINIC

Another interesting report found through the Public Record request was an explanation of the City’s Medical Clinic.

The City’s Risk Management Department has its own medical clinic that is staffed with two nurses. A citizen reading the annual budget wouldn’t find it because it’s buried inside the Insurance Retention Fund under Risk Management. The budget for Risk Management jumped 28 percent over the past four years and has an approved budget this year of $1.25 million.

The Hayward Transition Team asked for a report on the City Clinic. Risk Management described the clinic as its “medical resource and front line defense to assist Risk in controlling the City’s self-insured workers compensation cost.” In 2008 fiscal year, the City spent $2.7 million on claims. This year it has budgeted $4.2 million, a 55 percent increase. Not all those claims are workers compensation related, but clearly the City has a problem in this area.

The City Clinic files the Notice of Injury and serves as a sort of M.A.S.H. unit providing triage and then determining if an injured worker needs treatment beyond the skill level of the clinic. According to the report, there were 70 accidents in calendar year 2010 that did not incur medical treatment beyond the clinic, saving the City an estimated $50,000.

The City Clinic gives the City and its claim adjuster medical information on its employees. The report states “The Clinic is privy to health information that may provide a clue to a previous injury or medical condition that could be contributory to the work-related injury at hand.” This access to the medical records provides insider information that is not readily available to adjusters without the clinic.

WHAT WILL HAYWARD DO?

Mayor Hayward has selected his search firm for his city administrator and has named his Westside Improvement Committee, but there has been little noticeable movement on the other recommendations made to his Transition Team.

His management team at City Hall is the same one that ran the City before he was elected. If Gilbert Tweed International’s timeline holds true, then Hayward is about three months away from hiring his administrator, which will be towards the end of his budget preparations.

On Jan. 10, Hayward held a press conference after he had taken office. His staff handed out six priorities for his administration:

Hire a city administrator

Appoint Westside Improvement Committee

Examine personnel vacancies for potential savings

Explore budget reductions

Expedite tree fund and beautification projects

Partner with local governments to recoup lost revenues from oil spill

He accomplished the second priority the day he announced it. All others are still pending, as of our Tuesday, Feb. 8 press deadline.

The crowd that packed Vinyl Music Hall on the night of his election are waiting to see how he will use the information supplied to him and his Transition Team by city staff to take action on the remaining priorities as well as all the commitments and promises he made during the campaign.

The honeymoon period is quickly evaporating.

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