Answers to Your Questions about the EL City Manager’s Contract Termination

East Lansing Info (ELi), your dedicated news source for East Lansing city government, is being bombarded with readers’ questions related to what happened at City Council last night, Jan. 17. Here, we take readers’ questions and provide answers with links. 

To recap, Council’s agenda for last night’s meeting was changed yesterday afternoon. In a surprise move, it showed a “separation agreement” with City Manager George Lahanas alongside a contract to hire retired East Lansing fire chief Randy Talifarro as interim city manager, effective Feb. 13. 

Lahanas’ contract now technically ends in 30 days, but he is effectively out, as Council appointed Police Chief Kim Johnson to be acting city manager starting immediately and running until Talifarro’s work begins. 

Council voted 4-0 on all these decisions. In addition, Council voted 4-0 to appoint Noel Garcia Jr. to the vacant seat on Council. (Read our report about last night’s meeting here.)

Did the termination of Lahanas’ contract come “out of the blue”?

Clearly not. The fact that, by yesterday afternoon, there was a five-page contract ready to go for appointing Talifarro as interim city manager indicates the move was in the works for weeks, if not months. Talifarro is retired and lives out of state – which means he had to be persuaded to come back to Michigan – and the contract file name was called “version 3.”

Moreover, it had become evident to ELi reporters watching city council meetings that there was growing tension between members of Council and Lahanas. 

Two recent examples include Lahanas’ sharp debate with Councilmember Dana Watson about the deer cull and council members’ obvious displeasure with the persistence of the Evergreen Avenue property debt and a tax capture plan that shunts property taxes from new big downtown buildings to the Downtown Development Authority. Council members were also showing open annoyance about not having their questions followed-up on, not getting materials to them or to the public with adequate time for review, and so on.

While Mayor Pro Tem Jessy Gregg had, for many months, almost universally sided with Lahanas on points of debate at Council, in the last several weeks she had stopped doing so. And Lahanas looked tense and even angry at several meetings where he expressed frustration that he seemed to feel Council was stepping on his toes as the C.E.O. of the City of East Lansing. (East Lansing has a city manager form of government and, according to the City Charter, the city manager is the chief executive officer of the city.) 

ELi also had plenty of sources indicating a wider dissatisfaction with Lahanas’ leadership in the last few months. 

Members of the DDA were looking to hire their own staff rather than using the city’s staff, out of dissatisfaction with Lahanas’ relatively high degree of control of the DDA’s activities because it has been staffed by his staff. Downtown business owners were grumbling. A library workers’ union rep expressed sharp words to Council last Saturday during a special meeting, saying workers feel the city’s administration has been treating them as “a liability or a nuisance” rather than “an asset or a partner.” Workers in other units were telling ELi of similar feelings of not being supported.

Notably, Lahanas’ administration has been shedding department heads in the last year and has been unable to hire to fill those key positions. As ELi reported last week, East Lansing’s Director of Planning, Building & Development (and Deputy City Manager) Tom Fehrenbach just resigned to take a job with the state. Finance Director Jill Feldpausch left in June to take a job with MSUFCU. Human Resources Director Shelli Neumann also recently departed. 

That’s not to say they left because of Lahanas. But that they have all left recently did not signal to Council that Lahanas was managing to keep a stable workforce. The city has taken to attaching job ads to many of its public communications.

Gregg said in her comments last night that Lahanas had “inherited” some problems, like the Evergreen Avenue debt and the pension liability problem. But 10 years into his job as city manager, Lahanas hadn’t solved those problems. 

A recent council review of his job performance asked him to “apprise council members of the other relatively low rankings the state has provided on its municipal finance scoreboard.” Looking at that scoreboard, compared to other Michigan municipalities, East Lansing ranks in the lowest 17^th percentile in terms of “governmental net position ratio.” This calculation “measures long-term solvency or the ability of a local government to manage long-term debt obligations.” 

In pension health, East Lansing ranks in the lowest 11th percentile. As ELi recently reported, the total pension liability has risen by about $60 million since Lahanas became city manager. (He’s one of the beneficiaries of that pension system.)

Obviously, Lahanas’ tenure included enough achievements for councils to keep him in the job after he was promoted from director of human resources to city manager in 2012. The city’s downtown has grown significantly in terms of height and economic development. Lahanas’ advocacy of the city income tax helped get that ballot proposal passed, and the income tax has put $11.5 million towards the pension debt in three years. (The total debt stands at about $218 million.) And he led the city through the pandemic.

But something changed in a council majority’s feelings about Lahanas, enough to seek to terminate his contract.

What did council members say about the reasons for termination?

They didn’t say much, possibly because they’re looking to avoid a lawsuit from Lahanas if they say anything too negative.

Mayor Ron Bacon made the motion to sever relations with Lahanas, but downplayed the significance of the move, saying he just wanted to move in a new direction. However, he also said the matter had hit him in the gut “like some more catastrophic events we have been through.” (He didn’t clarify what he meant.)

Gregg praised the job Lahanas had done and added, “This was not the result of any malfeasance or mismanagement. And wherever he ends up in his next community, they will have a strong manager and be lucky to have him.” She also chastised people who question Council’s motives on decisions and asked the public “to squash that tendency.”

Councilmember George Brookover said only that he would “reluctantly” vote for the motion because Lahanas had already signed the agreement. Watson had no comment.

Later in the meeting, as Council moved to appoint Talifarro to interim city manager and Garcia to Council, Bacon and Watson made comments about the importance of appointing two people with public safety backgrounds. (Talifarro is a retired fire chief and Garcia is a retired police lieutenant.) 

“I feel like our police are trying to walk back towards us,” Watson said as she was advocating for Garcia’s appointment. “And I would like to be able to walk back towards the police as a city council. I think that Mr. Garcia offers that presence, where there is comfort with what he has done and perhaps more bridges can be created during this nine-month time frame.”

But the reasons for the three big decisions last night – on Lahanas, Talifarro and Garcia – are undoubtedly complex.

How did the vote on Lahanas go down? And can the council really come to a decision in advance, behind closed doors, legally?

It was clear from what was said – with Brookover saying he was voting to terminate Lahanas’ employment “reluctantly” – that Bacon knew he had three votes in advance of the meeting, and three was all he needed. 

According to Michigan’s Open Meetings Act, the vote had to take place in public. But the law allows Bacon (or any other council member) to “canvass” colleagues one by one out of public view. Given neither Lahanas’ separation agreement or Talifarro’s hiring contract were discussed at the meeting, it’s safe to assume those contracts had been worked out with at least a majority of council (three members) in advance.

Why did they hire Talifarro for interim and not someone currently working for the city?

The reason Bacon gave for hiring Talifarro was Talifarro’s experience running two fire departments simultaneously – East Lansing’s and Lansing’s. Bacon said public safety is his number one concern and that, going into budget season, he wanted someone who could handle big budgetary and management issues.

Bacon and Watson also spoke about wanting to address the tensions with the police department rank and file. Hiring Talifarro means hiring a leader who police officers are likely to trust from the outset. Many of them have worked with him before and respect him. 

Talifarro’s ability to run two cities’ fire departments simultaneously is seen as a real feat. And, he left Lansing because he was dissatisfied with the mayor’s handling of diversity issues there, and this is a council that wants leaders in the area of diversity, equity and inclusion. (That Garcia spoke so strongly to DEI in his presentation on Saturday is likely one reason he was chosen for Council.)

There’s also no obvious choice for interim city manager from among the city’s current personnel. Director of Planning Tom Fehrenbach, who was also deputy city manager, recently resigned. Other departments whose heads might logically become an interim city manager all have acting directors, including Human Resources, the Department of Public Works and the Finance Department.

Why is the police chief now the acting city manager?

The City Charter says, within 90 days of taking office, the city manager will “designate a Deputy City Manager who shall perform the duties of City Manager during a vacancy in the office. The City Manager may also designate an Administrative Officer to serve as Acting City Manager during the absence of the City Manager and Deputy City Manager from the City.”

For years, Director of Planning Tim Dempsey was designated by Lahanas as his deputy city manager. But after Dempsey left in 2019, Lahanas didn’t appoint anyone deputy city manager so far as ELi can ascertain. 

According to City Attorney Tony Chubb’s remarks at Council’s meeting last night, only in late June 2022 did Lahanas make a succession plan. (That was right when Feldpausch was leaving her job as finance director.) He appointed Fehrenbach deputy city manager and appointed the police chief to be the next in line.

Since Lahanas’ employment has effectively ended with the separation agreement vote, and Fehrebach’s last day with the city is Friday, Council voted (at Brookover’s suggestion) to go ahead and name Police Chief Kim Johnson the acting city manager until Talifarro takes the job of interim city manager in mid-February.

Why did they give Lahanas “so much” in the separation agreement?

Lahanas’ severance package, approved by Council, includes payment of his one-year base salary of $172,896 to be paid in a lump sum by Feb. 28, 2023. Lahanas will also be paid $46,036 for unused paid time off. 

Additionally, Lahanas and his family will be provided continuation of their dental, health and life insurance through Feb. 29, 2024 (a little over one year). The city has also agreed to pay for Lahanas and his family’s health insurance between his 60th and 65th birthday, when he becomes eligible for Medicare. He is currently aged 52.

These terms largely mirror what Council granted Lahanas in a new contract in September 2020. The difference is the agreement to pay the family’s health insurance between Lahanas’ 60th and 65th birthday; the contract said he would get this if he retired from the city at age 60, not if he separated from the city before that date.

The “golden parachute” written into the 2020 contract effectively tied Council’s hands at this point. The council could not just wait until this contract expired in 2024 and avoid the “golden parachute” payout. That’s because the 2020 contract said the council had to give him another contract “that provides him with at least substantially similar compensation, benefits, severance and other terms as those contained in this Contract” or else make the payout then.

The 2020 contract, therefore, effectively locked the council into the golden parachute. Waiting to terminate Lahanas’ employment in 2024, when the current contract runs out, would have cost the council then as it did now.

How did that 2020 contract come about?

In July 2020, three members of council – Aaron Stephens, Jessy Gregg and Lisa Babcock – terminated the contract of City Attorney Tom Yeadon. At that meeting, in response, Mayor Ruth Beier and Councilmember Mark Meadows quit. That left Stephens as mayor and Gregg as mayor pro tem. The three remaining council members appointed Dana Watson and Ron Bacon to fill the positions vacated by Beier and Meadows.

When Beier quit, she warned Lahanas publicly that the remaining council was “coming for him next.” Just a few months later, in September 2020, Council voted to give Lahanas the new contract. Lahanas had pushed them to do so, and they said they were doing so to bring stability to the city’s government. 

At the time, the young Mayor Stephens said he had a good “partner” in Lahanas, and others on council also praised him. 

Councilmember Babcock had been given the job of dealing with the contract, and she had lawyers from the firm of Keller Thoma advising her. Lahanas had a long working relationship with Keller Thoma, a firm he kept hiring to do labor law for the city. (This was not work done by the contracted city attorney, Yeadon.) Keller Thoma apparently did not advise the city council against the perpetual “golden parachute,” or if they did, Council disregarded the advice.

So many department heads have left recently. Is the city falling apart?

It is true that the City of East Lansing now lacks a permanent City Manager, Director of Public Works, Finance Director, Human Resources Director, and Director of Planning, Building and Development. It is also true that someone has been appointed to serve in all those positions, except for Director of Planning. 

Odds are the average citizen won’t be aware of this much turmoil except through reporting from news organizations like ELi. When you call for emergency help, first responders still show up. Garbage was picked up today on the west side of town, on schedule. The Library Board of Trustees, the Arts Selection Panel, and the Parks and Rec Advisory Commission meetings will still happen today. The government is still functioning.

It’s also worth noting that this kind of massive turnover has struck many organizations and governments since the pandemic started.

What is the plan for hiring the next “permanent” city manager?

Under the City Charter, a majority of Council can hire or fire the city manager. Council has not yet announced any plans for managing the next appointment. When Lahanas was hired as city manager in 2012, there was an open search.

Why did Council ultimately vote to appoint Garcia to the open seat, and why didn’t they wait until he was seated to do this vote?

According to the City Charter, Council had to appoint someone to the seat Babcock vacated by the end of this month. So, they had to act soon on that. It seems likely Council did not want to put whomever was appointed to the vacant seat in the position of having to vote on such an intense matter right off the bat. 

It’s also possible Bacon, Watson and Gregg (all of whom appeared ready to vote to end Lahanas’ contract) were concerned that whomever they appointed might vote against them, undermining the unity of their decision or even tipping the vote in the other direction.

As ELi reported last night, right after the votes to end the contract with Lahanas and hire Talifarro as interim city  manager, Council voted on the council appointment, and ultimately appointed Garcia. 

Garcia is seen as a leader who can bring gravitas to a tense situation, as he has done at the Independent Police Oversight Commission. As noted above, he also gave evidence in his statement to Council on Saturday about his deep leadership in DEI in terms of recruitment and retention at the Lansing Police Department. He has also served on the Hispanic Latino Commission of Michigan, a commission he chaired for two years. All in all, he’s seen as highly professional and someone who will be widely respected.

Dan Bollman, for many years chair of the East Lansing Planning Commission, was clearly a close second for the job. Bollman is also seen as bringing professionalism and experience critical to Council’s coming work. But the sense expressed by Bacon and Watson is that Bollman’s orientation towards issues of planning, zoning and development is not as critical right now as Garcia’s orientation towards issues of policing, public safety, and what Garcia called the need for “bold” leadership.

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