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Patch Blog: Breaking Down High Costs of City Manager

With his recent performance review, City Manager Paul Arevalo's $500,000 return has come into question. Now, it's time to break down the numbers.

With continued scrutiny over what City Manager Paul Arevalo is being paid, it is important to understand three things: average city population, pension pitfalls and reported salary. 

Arevalo fell into his position in 1999 after serving as assistant city manager, a move more times than not taken by a city when a manager leaves office. Due to the lack of qualified candidates, at times, cities have to find the right candidate who understands the intricacies of the environment to make a smooth transition.

By no means is replacing a city manager an easy task. Some cities have spent up to year searching, spending over $50,000. Most municipalities cannot afford the time. Time is money, and with my evaluation of West Hollywood’s City Manager, nothing is truer.

In 2010, the State Controller released new salary reporting requirements to California cities, directing them to clearly identify elected officials' and public employees' compensation. The authority to collect this information is granted under Government Code sections 12463 and 53892. Through this resource, we now have access and more transparency within local government.

Weho’s warranted wages

Should Arevalo, a hired official, receive a salary close to $300,000, not to mention his generous pension, comprehensive health and life insurance packages, car and phone allowances and other perks unrecorded or disclosed?

New attention has been given to high-paid city employees. West Hollywood's highest paid positions are City Manager ($295,870), Assistant City Manager ($223,688), Directors of Human Services ($214,319), Director of Public Information & Prosecution Services ($202,912), and Director of Public Works ($201,258).

Again, each of these high-paid positions comes with a healthy “package” associated with their employment and retirement. For example, in 2010, Arevalo was paid an additional $23,651 in pension contribution, $13,692 deferred compensation, $14,522 in health care provisions, and $6,100 in car allowance.

There is also a “defined benefit” pension formula. Arevalo at age 55 can collect 2.7 percent of his wages times the years of employment, gouging the city more. He has hit over 20 years of employment with the city.

We are seeing more and more cities reducing the pension formula percentage from 2 to 2.5 percent, along with increasing the year of retirement from 55 to 67.  Until changes are made in West Hollywood, the course is equally daunting in evaluating the performance along with the salary of Arevalo. 

It is a hefty price tag for someone who has created more litigation on behalf of the city in the last few years to double the costs for the city attorney and legal services. With the litigation scent in the air, the direction my nose goes toward is lack of proper management.

Averages

As a standard, we shall review 2010 findings due to the most accurate U.S. Census.  The Pacific Coast states and California average base salary for city managers is $144,806 with an average population of 25,000 to 49,999.  For a community size of 50,000 to 100,000 residents, the salary is a slightly higher $150,522.

2010 City Manager Salary Comparison to Population

CITY POPULATION CITY MNGR. SALARY SALARY/POP. Culver City 43,000 $293,478 9.15 Palm Springs 48,000 $211,000 4.39 Pasadena 151,000 $270,937 1.79 Santa Monica 97,000 $300,814 3.10 West Hollywood 34,000 $295,870 8.70 CA AVG. 50,000 $144,806 2.89

Problems with pensions

Even Pasadena, where Arevalo resides, has had to evaluate its city management salaries and pension packages in recent years to reduce the costs associated with pension assets falling short of obligations to retirees.

Palm Springs has had to reassess its city manager position and salary. The latest to come onto the block is San Diego, with a pension overhaul becoming a political hot button drawing eyes nationally. 

Bell was only the beginning of the outrageous. Now, municipalities are evaluating wages and pension plans to figure out a way to fix the shortfalls. If adjustments are not made, the greater the chances for failure.

In the case of Arevalo and his clan, we are looking at very sizeable sums. For Arevalo, based on the "defined plan" pension formula at 2.7 percent, his pension payout at age 55 is $159,770:

2010 Salary X 2.7% X Years of Employment = "Defined Plan" Pension Payout $295,870 X 2.7% X 23 years = $159,770

Not too shabby for a guy who also has deep relations with major developers in the area.

At the state level, Governor Jerry Brown has put forth a pension reform plan changing retirement ages from 55 to 67, replacing current “defined benefit” pensions with a hybrid program also including a 401(K)-like contribution component, prohibiting retroactive pension increases, requiring all employees to contribute 50 percent or more of their pensions, along with other points. Pensions are the new dirty word for local governments as they have become more and more liable with time.

With corporate salary climbing having been kept to a minimum in the last few decades, it seems very odd a city with 34,000 people should be paying outrageously high salaries for it’s city employees. The city’s job descriptions are much too vacant to warrant the six figure salaries and pensions being doled out.

Is Arevalo responsible for millions of dollars in escalating costs over the Master Plan, not to mention the increase in litigation expenses, a grasp of event planning financials, as seen in the Christopher Street Report, or the debacle now seen over at Plummer Park?  

It is the thriving businesses and tax dollars generated along with area homeowners that deserve the championing of sorts. While we are at it, we should probably recognize all those individuals who received the $10 million dollars worth of parking fines, meter fines and camera citations. Each year, this line seems to grow larger and larger. These folks are the ones truly responsible for the way the city is moving, not Arevalo.

For a guy who continually nods off during Council meetings, I personally think he and others are over paid. At the end of the day in 2010, Arevalo walks away with a total of $513,605 ($353,835 + $159,770 pension after age 55).

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Rudolf Martin February 22, 2012 at 03:59 PM
thank you for breaking it down in detail and putting it all in perspective, Steve Ward. I do not begrudge anyone their salary and a wealthy city like west hollywood should absolutely pay above average wages. but the numbers seem to have gotten out of control. it is time to re-evaluate city salaries that are more than 50% above state average. Mr. Arevalo's seems to be 100% above state average. The argument we hear from City Hall that Mr. Arevalo deserves credit for the city being flush with cash is odd and insulting to the residents and businesses (yes, and also the parking offenders) in WeHo who are the only ones responsible for city income. The CM does not bring in one penny.
Todd Bianco February 22, 2012 at 04:28 PM
A City Manager is an important executive position. As with any business, a CEO sets the tone and motivates employees, keeps existing customers happy, brings in new business and looks for new revenue streams. He is also responsible, ultimately, for proper fiscal management and financial reporting. I'd like to know how our CM has fulfilled his duties, not just the usual "everything's perfect" public slapping on the back. This isn't a trap or trick, just straight forward reporting of the value an employee brings to the organization. The other thing I'm leery of is pension bashing. Our entire pension/retirement system was dismantled and given to the vampire squids on Wall Street in the 1980s during the "Reagan Revolution." In the "old days" most companies had defined benefit pension plans. You worked a certain amount of years and, as Steve demonstrates above, you got a secure retirement - a defined benefit - when you retired. The VAST majority of public employees don't have a pension anywhere near what these top-paid "executive" receive. If you work for a company that dumped their defined benefit plan (most of them, legally) in favor of a "defined contribution" plan - i.e. IRC Section 401(k) retirement plans - then you know what twenty years or longer of Wall Street's busts and booms have done to your savings. Matching employer contributions are down or zero and so is the value of your 401(k) account. But don't worry, you still pay fees to those fund managers.
Ali February 23, 2012 at 02:32 AM
Considering the number of empty storefronts in WeHo, I would say he isn't doing that great of a job then, Todd. Even at the Gateway shopping plaza, where the Target is, there are empty storefronts. PayLess Shoes left, The Auto Club moved to the west side and left an empty storefront. All through the City, there are empty stores. That is why I am so confused why the City Council is so gung-ho on mixed use developments. Who is going into the street level retail spaces?
joninla February 23, 2012 at 04:25 AM
Steve - I think I am in agreement with your main point. However overpaid we feel the City Manager is getting, it is a difficult to impossible task to change his salary or that of any public employee at any level. However, this year the State Legislature did pass AB 1344 due to the problem that is not unique to WeHo, of transparency in local government as well addressing the previous reality that a convicted city employee is still entitled to his/her pension rights. AB 1344 - If applicable would force the City manager to reimburse the City for the costs of his legal defense if found guilty of criminal behavior, a well as severance package and a few other things. With the secrecy of City Hall, I can not point to any known criminal illegal activities, however with the Millions of dollars flowing through the City and the surface level appearance of it being spent frivolously (A $13 Million Dollar Robo Garage for City Hall has absolutely not rational reason for even being considered), that I have a strong feeling there is ample behind the scenes transactions going on, with at least one being of a criminal nature and could be brought for a fair trail. Absent any other suggestions, spending so much time dwelling on what is impossible to change does nothing for the Residents but distract from the other big issues such a Plummer Park and the rest.
John D February 23, 2012 at 06:44 PM
Mr Ward, what city do you live in just for full disclosure? I do not know of any other city other then West Hollywood that offers such a good quality of life for its residents, and fosters a strong business community. West Hollywood should be the model for many cities if they wish to be successful. Mr. Arevalo as City Manager certainly must be doing something right. You do not base a City Manager's salay on population. You base it on how the city is run, how it takes care of its residents, and fiscal responsibility. Thet does not just happen. West Hollywood is a terrific city to both live and do business in.
Rudolf Martin February 23, 2012 at 07:11 PM
I agree with John D(uran) that West Hollywood is still a great city to live and do business in. Sometimes we forget to give credit. but there are always things that could be improved and Steve Ward's blogs strike me as informed constructive criticism. But is it really fair to ask for full disclosure and not even reveal your own identity?
joninla February 23, 2012 at 09:38 PM
John D - I think most people living in West Hollywood agree that it offers one of the best places to live in the urban Los Angeles area. However, just being content with what we know, and dismissing the amount of obscene City Funds that are devoted to projects that don't enhance the City and some are going to be multimillion dollar expense with destructive results (both the plumme park and city hall robo garage). The City has fostered a very intense animosity between landlords and tenants, while not actually following through when a tenant has a legitimate grievance against a landlord. Likewise, there is an almost unheard of disregard for the people living in property they own (non-renters) paying their property tax and being ignored or painted in a very negative light (eg the constant, numerous reference to 'rich condo buyer coming in a ruining our city), Likewise, I have ended up getting to know many of the local small business owners and the one universal complaint they all have expressed is the City's efforts to prevent business growth. There are a million examples, but the most basic is the City ticketing so heavily as a major source of revenue, but without considering how many of those tickets are written for residents of the City needing to park their car somewhere when they get home. So to dismiss all problems with 'life is good here' seems a bit shortsighted.
joninla February 23, 2012 at 10:20 PM
Oh .... John D is John Duran. That makes all the difference in the world. I didn't realize it (thanks Rudolf). So I now feel like we just got a repeat of the offensive out burst Mayor Duran gave to the Residents exercising their right to at least give input, that "THEY SOULD BE GRATEFUL FOR WHAT THEY HAVE". Rewording it and not making it clear you were the currently acting Mayor of the City is 'shabby' behavior which confirms the lack of sincerity that everyone felt when he 'apologized' for his comments. However, I must say when it comes to "consistencey" both John D and Mayor John Duran are definitly consistent in their opinions and belief the Residents not a factor in the Mayor decision making procees and it irks him when residents thinik otherwise.
John D February 23, 2012 at 11:22 PM
I am not John Duran, I have lived in WEHO for over 20 years, and Manage several successful hotels...The problem is Mr. Ward only offers criticism, and he does not even live in the city. His information is at times a very wrong. I have seen West Hollywood go from a neighborhood of LA to a brand recognized around the world. West Hollywood is the envy of many destinations. I am not going to get into a war of postings. This will be my final post.
joninla February 23, 2012 at 11:38 PM
please forgive my error in thinking you were someone you are not. The comment was therefore not meant for you or about you. Thank you for correcting me error.
Rudolf Martin February 24, 2012 at 12:27 AM
John D, I was joking about D(uran) but thank you for the disclosure. Your point about WeHo is valid of course and if this wasn't your final post I'd ask you which information specifically was very wrong. I don't see it as a war of posts, merely an exchange of ideas and information.
Steve Ward February 24, 2012 at 01:31 AM
First, who said WeHo wasn’t great? I referred to the City as it could be better managed at a lower salary and pension. Unfortunately, I feel you miss my point about giving credit to the area itself, and the people that come in and out of it day and night that truly make that City. NOT AREVALO. You don’t see any problem or relevance with the high costs associated with the pension system at the moment? Much conversation is being heard regarding Brown's 12-point Plan regarding pensions. Disclosure, disclosure. Exactly! I agree with you. Would like to see more of it out of City Hall. More folks should question the way city government is being run, along with the escalating costs involved. I value open discussion of these issues. They truly are relevant. I am not sure why you did not find my article enlightening? Did you all ready know these numbers? Most people do not. I’ve blown through millions tax dollars through the doors of West Hollywood as a business. I reside in Beverly Hills, footsteps away from West Hollywood at the moment, but am currently involved on the local level. Not sure if we have ever met at any council meetings? Also, I am a Realtor, if you noticed in my profile, where I have clients and business in the city. Your point is? The exposure of what all is involved with a person’s over-priced salary and his merits while reviewed by Council this past week was enough reason to explore the position. And this is bad?
Steve Ward February 24, 2012 at 01:42 AM
Are all of your hotels in WeHo, John D? Curious question. I take it your involvement with Arevalo is close? Does he help you and your businesses somehow? How? Let us know the wonderful perspective you have here. Didn't realize you were here to moan without any back-up... Sheesh. As the manager of several of these successful hotels, you must have first hand experience of the stellar attributes this man has. Drink more juice. Glad you are an advocate for government transparency. Ha! I think we would all be interested in knowing which hotels you are associated with that brings your perspective validity? Sorry, not much for kumbaya slaps on backs when the management is a joke with many of us.
Chris Bray February 24, 2012 at 04:08 AM
See this for context: http://blogs.laweekly.com/informer/2011/03/west_hollywood_credit_cards_paul_arevalo.php John Douponce 11 months ago West Hollywood is fortunate to have Paul Arevalo as our City Manager. He is worth every penny paid to him. Paul has led this city to Finacial Health. We have a strong business community that he works hand in hand with. Without that city and business relationship how do you think we would pay for the services for our citizens? I have the highest regard for Paul and his integrity. His salary is not excessive as compared to other cities of our size, and budget in California. It is his job to meet with Business Leaders and Developers to insure West Hollywood is competative. As a business operator in this city I can tell you he works hard every day to make sure the citizens of West Hollywood are taken care of and protected. I am proud to live in this city, and proud of our great City Manager. It is easy to write stories without all the facts. I have lived and operated a business for over twenty years, and have the highest regard for Mr. Arevalo.
Chris Bray February 24, 2012 at 04:13 AM
Indeed, no other city than West Hollywood offers such a good quality of life for its citizens. Santa Monica is a living hell, Malibu is just like Calcutta, and Beverly Hills -- well, let us just avert our eyes, those poor helpless people. Only West Hollywood has trees and houses and stuff. Paul Arevalo did it!
Rudolf Martin February 24, 2012 at 05:19 AM
thank you for the context, chris bray. for his canonizing review mr. arevalo better take john d(ouponce) out to a steak dinner at the soho house with his city credit card. on us.
joninla February 24, 2012 at 05:43 AM
Just as a side note on the credit card issue that came up. I didn't follow it, but my initial continued thought is "Why would a Council Member be buying anyone a meal on 'their' tab" I would think the people dining with the Council would be buying the meal for the change to 'get the ear' of a Council Member about plans they may have. Why would a Council need to impress, influence or need to pick up the bill for a 'business meal'. On the same thought, the lack of anything but a nominal stipend for the Council Members seems even more telling when compared to the Salary of the City Manager, that obviously there are other financial benefit flowing to the wallets of the virtually unpaid elected city leaders to warrant such a battle to keep their position and power.
joninla February 24, 2012 at 05:57 AM
re: "Without that city and business relationship how do you think we would pay for the services for our citizens?" I was under the impression that the City source of revenue was primarily based on the Nightlife and Weekend Influx and Tourist/Hotel Tax ... Which are businesses, but not of the kind that residents use on a daily basis for regular daily life needs. Also, it has been bragged about how the City's Parking Ticket Revenue is so much greater that it actually funds a large portion of the Annual Budget. I don't drive, but I think residents getting parking tickets because there are not enough parking spaces for the residents, and the money is then used for 'city services" makes me wonder what people would prefer. No parking tickets vs the cost of the 'services' actually received by the residents. Finally doing a job well is expected. To given praise, honor and a free pass on everything else is wrong. A salary guarantees us the excellent work product along with full integrity and honesty on all levels. There are so many secrets, the 'stories' told to justify all the action taken don't even add up on a basic logic scale. And as for safety - I've never had a problem, but the crime rate and incidents I have been told about by neighbors who were victims is frightening. I would rather see more Sheriff's hired, than staff to run a Robo-Garage for the City Hall Employees.
Steve Ward February 24, 2012 at 06:00 AM
@Chris_Bray Lovely... :-( What I find most prudent is 53232.4. (a), (b) & (c). Good stuff for wasteful arrogant folk. http://info.sen.ca.gov/pub/05-06/bill/asm/ab_1201-1250/ab_1234_bill_20051007_chaptered.html
Shawn Thompson February 24, 2012 at 02:00 PM
Wow! Nice Job Chris! love it
Shawn Thompson February 24, 2012 at 02:02 PM
Steve: Loved the blog! So happy to see people getting informed and involved.
Shawn Thompson February 24, 2012 at 02:04 PM
Found part 2 of the post: have checked my facts. West Hollywood's compensation for a City Manager is lower than Rosemead, Moreno Valley, Beverly Hills and many other cities of our size. I would venture to say many of them do not match West Hollywoods triple AAA credit rating, or a balanced budget with no cuts to Social services. Have you ever driven from West Hollywood to Los Angeles and noticed the difference in the roads? West Hollywood maintains the city. We can always find things wrong, how about looking at the things that are right? The Pacific design Center, a world class facility, The Avenues of Art and Design, successful hotels, and some of the top restaurants in the world. We are so fortunate to have businesses that want to do business in our city. West Hollywood is a terrific brand, and that just does not happen without hard work, and good leadership. Yes it needs to be balanced with the needs of the community. Would you really rather live in Culver City over West Hollywood? Please be as quick to recognize the good things our City government does as you are to critize. If someone does an excellent job they should be compensated. Mr. Arevalo has worked some 20 years plus in this city. If you pay peanuts, you get monkeys.I will not get into a posting war with anyone. These will be my final comments. I again ask that you look at the quality of life in our city vs. others. I would not trade.
Chris Bray February 24, 2012 at 04:14 PM
Shawn Thompson, I love that comment, and thanks for finding it. My favorite part: "We can always find things wrong, how about looking at the things that are right? The Pacific design Center, a world class facility, The Avenues of Art and Design, successful hotels, and some of the top restaurants in the world." We have restaurants; therefore, Paul Arevalo's salary and expenses are justified. Huh? Imagine if the city manager had never been born -- we'd all just be poking in the mud with sticks, trying to find a potato. "Waiter, I'll have the risotto." "I'm sorry, sir, Paul Arevalo has resigned his position as city manager -- West Hollywood must now revert to a state of nature. We have ceased to exist. Here's your stick to dig for potatoes."
Lynn Russell February 24, 2012 at 09:35 PM
The saga of hubris never has a good ending.
Shawn Thompson February 25, 2012 at 05:31 AM
The "Spin" that’s put up on these boards to me is concerning. It seems to me to appear to have a real agenda to mislead residents and not be in the true spirit of democracy. I believe in transparency in both politics and public discussion. To have individuals choosing to mislead or block their identity on this blog doesn’t help anyone. I hope patch will fix this bug in the posting access
Shawn Thompson February 25, 2012 at 05:33 AM
Vote online for term limits here: https://www.facebook.com/questions/287134224667607/

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