The San Bernardino City Council voted this evening to terminate City Manager Charles Montoya, slightly more than six months after his October 2023 hiring. The vote to do so was made unanimously, citing no cause for the action, which will allow Montoya to collect the severance specified in his contract.
Montoya’s sacking comes less than four months after he unilaterally signed a letter of intent with the San Francisco-based bond underwriting firm Stifel Financial Services in preparation of the issuance of some $120 million in municipal bonds to be utilized for various improvement and infrastructure projects in the city, including the seismic retrofitting of City Hall, which has been shuttered since 2017.
Montoya, who was previously employed as the city manager of Watsonville in California and was the town manager of Florence, Arizona and the city manager of Avondale, Arizona, the finance director and treasurer with the Town of Castle Rock in Colorado, the chief financial officer for both Centennial, Colorado and Jefferson County, Colorado, was hired in October after a city manager recruitment effort in the spring and summer of 2023 that attracted 57 applicants. That headhunting effort was marred by multiple glitches, including some shifting attitudes with regard to ending the recruitment altogether and settling on hiring the interim city manager who had managed the city previously, Charles McNeely. McNeely’s early sentiment against taking the permanent position, followed by his change of heart to wanting to step out of retirement to again take on the top administrative role in the city he left in 2012, along with the commitment the council had made to not hire the interim city manager into the full-time post, thwarted his belated candidacy.
An effort by Mayor Helen Tran to have the council accede to hiring her one-time boss when she had been the human resources director in West Covina, former West Covina City Manager David Carmany for a time interrupted the city manager hiring process. The council as early as July seemed to have reached a consensus to hire Stockton City Manager Harry Black, but a lack of security with regard to the firm the city hired to carry out the recruitment, Berkeley-based Koff & Associates, resulted in Black withdrawing his application.
In August, the recruitment effort at last seemed to have settled into a consensus that the best the city could do was to hire Salinas City Manager Steve Carrigan, with the mayor and four of the council strongly favoring him and one councilman willing to go along, while two council members believed the city should redouble its efforts to find a more satisfactory candidate. The council was scheduled to finalize the decision to hire Carrigan, but once again, Koff & Associates was unable to maintain confidentiality around the identity of the leading candidat. For reasons that are yet unclear, the city postponed the official of Carrigan, who remained twisting in the wind between the end of August and his scheduled official hiring on October 4. In that temporal gap, his application for the San Bernardino job became known to his political masters on the city council in Salinas, at which point Carrigan lost his nerve and withdrew as a candidate in San Bernardino.
Thus, Montoya was chosen not as the first or even second or third choice but rather as someone elevated up the list when others did not take the assignment they had applied for. It is unclear whether other candidates who had applied for the job were offered the post prior to the city council finally consenting to Montoya’s hiring in October.
When he arrived in November, Montoya set about impressing the city council with his can-do attitude and energetic approach, seeking to address longstanding issues that he said had been festering because of bureaucratic and political malaise and procrastination. He set about having staff analyze problems and challenges the city faced, often initiating preliminary action or laying groundwork for decisive moves to be taken in an effort to demonstrate his ability to engage in the four principles of management: planning, organizing, directing and controlling. This this approach was appreciated by some members of the council, who felt decisive action with regard to certain problems was called for. It was further appreciated that Montoya was not adhering to the direction of one dominant member of the city’s decisionmakers, such as had been the case with former City Manager Bob Field and former Mayor John Valdivia. There was also some confidence that with his financial expertise, Montoya was providing sound guidance while overseeing a city that had declared bankruptcy in 2012 and had not exited from that status until 2017.
Nevertheless, in much of his approach, Montoya was presuming upon the acceptance of his action being done in good faith and that the mayor and both the individual council members and the council as a whole would view his taking action without their explicit consent, based upon his own independent judgment as not only justifiable but not being disrespectful of their authority. Very early on, this approach opened up a schism on the council, with Councilwoman Kimberly Calvin and Councilman Ben Reynoso in particular, believing that Montoya was overstepping his authority.
Montoya appeared to be safe in the niche he had created for himself, since there was a growing and intensifying estrangement between Calvin and the rest of the council. As Montoya, too, was on the outs with Calvin, he and the council majority, primarily Councilman Ted Sanchez, Councilwoman Sandra Ibarra, Councilman Juan Figueroa and Councilman Fred Shorett, along with Mayor Tran, generally hewed to one side, while Calvin increasingly found herself isolated or with the support, on-again and off-again, of Councilman Reynoso and Councilman Damon Alexander. It thus appeared that Montoya had carved out for himself a safe haven within the administrative quarters of City Hall, which had relocated from the actual City Hall to offices within the immediately adjacent Vanir Tower in downtown San Bernardino.
Notefully, it was the effort to reestablish City Hall, which was constructed in 1972 without adhering to the then-newly formulated seismic standards put in place in the aftermath of the 1971 Sylmar Earthquake, which generated further doubt about Montoya’s suitability for remaining in the role of San Bernardino city manager.
Montoya appears to have presumed that the full council was, or a substantial majority of its members were, in support of the retrofit, the estimated cost of which had escalated from $8 million to $16 million to $21 million to $27 million to $41 million to $65 million to $75 million to $82 million to roughly $120 million in a little over six years.
An issue that raised itself was Montoya’s relationship with the bond underwriting firm of Stifel Financial Services, with which he had numerous past dealings in his various municipal capacities elsewhere. Over the past two decades, Stifel had realized in excess of $27 million in fees based upon projects which utilized funding structured by Stifel in the various cities where Montoya worked. In January, Montoya, without doing a cost comparison or conducting an open competitive bid, signed a letter of intent to utilize Stifel as San Bernardino’s bond underwriter going forward. A target amount for an initial bond issuance of $120 million was being openly discussed in the back rooms and hallways of the Vanir Tower. It was unclear how much of that money was to be devoted to the City Hall renovation and whether another portion would be utilized for very-low-income and low-income housing to be undertaken by the city’s housing authority. Statements by Montoya as well as two officials with Stifel, Sara Oberlies Brown, the managing director of the firm’s San Francisco Office and Mark Reader, Stifel’s managing director in its Phoenix office, did not specify how the money was to be applied.
Meanwhile, there was a legitimate debate as to whether the effort to reclaim City Hall was a worthwhile undertaking. Though there was general agreement that the building from an aesthetic and presentational standpoint was a positive asset, structural engineers sounded a piercing note of caution, saying despite the best efforts to shore up the building’s concrete pillars, the structural integrity of the building could not be absolutely guaranteed, no matter how much money was thrown toward doing so. Some counseled the city to seriously consider razing the existing building, as difficult and painful as doing so might be, and constructing the edifice from scratch, building it on a foundation that would incorporate gargantuan springs which serve as base isolators/dampers to absorb the seismic energy of even the most severe earthquakes to prevent structural damage and avoid any possibility of collapse.
Simultaneously, questions arose over Montoya’s single-minded dedication to hiring Stifel and obstinate opposition to any kind of competitive bidding by a fuller range of bond underwriters. It was noted that Stifel had hit a rough patch, in which its annual net income for 2022 had been $625 million, a 20.83 percent decline from 2021 and that the financial doldrums for the company had persisted into 2023, when its net annual income declined 22.34 percent from what it was in 2022 to $485 million. Some had the perception that Montoya was militating more on behalf of Stifel than he was for San Bernardino. Some went so far as to suggest that he was feathering for himself a future nest by which he would be able to move into a lucrative position with the company after he was no longer city manager.
Barbara Germaine Whitehorne, who was hired as San Bernardino’s director of finance in February 2021, 32 months before Montoya arrived, had as close of a vantage on what Montoya was proposing as anyone at the city. While much of her time over the last several months was consumed with stacking the city’s projected line items above one another in its spending plan in the 2024-25 fiscal year and making necessary adjustments, additions and deletions to ensure that all of those fit within a number no greater than the city’s projected revenues between July 1, 2024 and June 30, 2025, she was simultaneously churning the numbers that pertained to the bond issuance Montoya had unveiled in selected circles within the city’s confines, the need for debt service those issuances would create, breaking that number down into the annual drain it would represent and comparing that alongside the numbers in the annual spending plan she was working on. She was driven to a conclusion that was far less sanguine than Montoya’s, namely that the city would not be able to logically service that debt in either the short or long term. At the end of April, she resolved to make her concerns known. Noting that the proposed bond issuance had escalated from roughly $80 million to $120 million, she believed the ultimate reality of the resultant debt was being either softpedaled or hidden. Exploring the matter further, it became clear that what Montoya was driving the city toward was having to pull $12 million out of its revenue stream to service the bonded indebtedness in upcoming 2024-25 and the city would thereafter have to devote $10 million annually toward that debt at a minimum starting Fiscal 2025-26, doing so continuously without respite for the next thirty years.”
The week of May 1, before she left on vacation, Whitehorn confronted Montoya, telling him in plain terms, she said, “The city does not have that money. She then provided the same information to the city’s team in charge of capital projects, including the City Hall retrofit.”
Upon returning from vacation on May 15, according to Whitehorn, she met with Montoya, indicating her unwillingness to offer her support for the City Hall salvaging effort. She said that Montoya sought to pressure her into changing her position by threatening to release, she said, “information damaging to my career into the public domain.” She responded by telling Montoya he would have to fire her to prevent her from opposing the bond issuances as a city employee. She quoted him as responding, “Oh, then I’ll just fire you without cause.”
Indeed, that is what Montoya did, arranging for Whitehorne to receive a pink slip later that day.
Whitehorne, however, did not go gently into the good night. Rather she returned for that evening’s city council meeting, where she gave the city council a blow-by-blow account of her confrontation with Montoya over the bond issuance proposal.
The matter stewed for a while. The council called for a special meeting tonight, May 22, at 6:30 p.m., one to be held behind closed doors and outside the view or earshot of the public, at which it was scheduled to engage in a “public employee performance evaluation… public employee performance dismissal [and] public employee appointment” relating to the “city manager.”
Before adjourning into its closed session, the council heard from multiple city residents, most of whom encouraged the council to dispatch Montoya. One of those, former Councilman Rikke Van Johnson, called for the council to undo Whitehorne’s firing and return her to the position of finance director. Another resident, former Assemblywoman Cheryl Brown, speaking on behalf of herself and her husband, Hardy Brown Sr., the founder and publisher of the Black Voice News, called upon the council to appoint Whitehorn to replace Montoya until a replacement is found.
The council adjourned into a closed session, during which it terminated Montoya without cause on a unanimous vote and appointed Deputy City Manager Rochelle Clayton as the acting city manager by vote of 5-to-3, with Tran, Figueroa, Shorett, Reynoso and Calvin prevailing and Sanchez, Ibarra and Alexander dissenting.
As of 10 p.m., more than an hour after the vote to terminate Montoya, the city’s website yet featured a city manager’s page in which he was featured as the city manager. Additionally, a press release that was put out on Friday, May 17 referencing Whitehorn and her statement to the council on May 15 was yet posted, which states, “During the public comment portion of the city council meeting, Barbara Whitehorn, former San Bernardino director of finance and management services, stated that she was terminated earlier that day for stating in a memo that the cost of the City Hall renovation was beyond what the city could afford. However, contrary to Whitehorn’s claims, the renovation project has yet to be designed, and construction costs have yet to be determined. Construction cost estimates and project financing options will be presented to the council during future meetings. The City of San Bernardino has confirmed that Whitehorn was an at-will employee and was terminated for cause involving financial issues that were unrelated to the City Hall project.”