Manhattan Beach city manager Mark Danaj officially let go
by Mark McDermott
Mark Danaj’s tenure as Manhattan Beach’s city manager officially ended Jan. 3 when the City Council unanimously voted to terminate his contract, three weeks after placing him on administrative leave.
The decision was announced by Mayor Amy Howarth after a late night, closed session following last Wednesday’s council meeting.
“After careful consideration, the Manhattan Beach City Council, by a 5-0 vote, has exercised its option to terminate the employment agreement with City Manager, Mark Danaj,” Howarth said. “The action is effective immediately and is without cause under the terms of his contract.”
“The City Council respects the privacy of its employees and former employees. Since this is a personnel matter, there will be no further comments,” Howarth said.
Danaj will continue to receive his salary and benefits, totaling $260,000 a year, for up to the next 12 months. Part of his compensation was also a low-interest $1.7 million loan for the purchase of a home in Manhattan Beach; per his contract, that loan is now required to be paid off within a year or he faces penalties. His contract also stipulates that Danaj is now is required to seek new employment, and if successful those earnings would offset the city’s financial obligations to him.
Danaj, who was hired in 2014, issued a statement in which he emphasized the “without cause” aspect of his termination.
“I was always confident this Council’s inquiry would find no wrongdoing,” he said, referencing the City Council’s three-week investigation prior to making a final determination on his status. “In fact, when I was originally hired, I insisted that ICMA’s [the International City/County Management Association] professional code of ethics be incorporated into my contract. This separation without cause speaks for itself.”
Through his attorney, Danaj also sought to make clear his departure had nothing to do with the charges of sexual misconduct that have created the current “#metoo” movement in many industries.
“This had nothing to do with sexual harassment or sexual misconduct,” said attorney Allison Berry Wilkinson. “There was, in fact, no wrongdoing on any front by the city manager.”
The council, as Howarth noted, is legally constrained from talking about the reasons behind the decision to let Danaj go. But the council majority elected last March — Nancy Hersman, Richard Montgomery, and Steve Napolitano — made clear in their campaigns that they were displeased with city management, particularly regarding fiscal matters. A source within City Hall said the city spent $10.5 million on consultants during Danaj’s three-and-a-half year tenure.
“We study a lot, we delay a lot, and we spend money on things we don’t necessarily need. It’s time to get things done,” Napolitano said during his campaign.
The creation of new positions within city government drew particular ire, specifically the hiring of the city’s first-ever economic vitality manager and assistant city manager — the latter who also came with a low-cost housing loan in addition to a $200,000 salary. All totaled, four new positions, all paying in excess of $200,000, were created early in Danaj’s tenure.
Wilkinson said that those positions were not created by Danaj, but rather by the former council, at the city manager’s recommendation — that is, the positions were created through the city’s policymaking process. But she said the manner in which the new council sought to terminate those positions resulted in a conflict between the council and Danaj. The city manager was following the council’s direction to eliminate the positions, she said but believed the city needed to do so within a process prescribed by municipal code, rather than immediately eliminating those positions. Typically, positions are added and created through the city’s budget process.
“The new council came in after campaigning on this reduction of positions, especially executive positions within the city,” Wilkinson said. “They wanted to accomplish this in a particular way that would have violated the municipal code. They were overstepping, in terms of what the direction was; the city manager sought to accomplish the elimination of those positions in a different manner, which angered them. They wanted to him to do it in a specific way, which, in his opinion exposed the city to liability. He couldn’t do that and instead did it a different way. And he was punished for it.”
“Under municipal code, only the city manager can hire and fire for budgeted positions,” Wilkinson said. “The city council creates and eliminates budgeted positions. If city council eliminates a budgeted position, they have to do so in compliance with the Brown Act, which means they have to agendize it for open session. Specific council action has to be taken. So there were some steps that were skipped along the way. The ultimate goal for council was to no longer occupy these positions at a high salary. Mark did secure this objective for the city.”
A public record request submitted to the city for any documents related to the elimination of positions in the 30 days previous to Danaj being assigned to administrative leave turned up no documents.
“You will not find any agenda items or any official documents in which the council followed the municipal code or the Brown Act to eliminate the positions,” Wilkinson said.
City Attorney Quinn Barrow said the positions had not been eliminated. He also noted, however, that the city’s municipal code generally speaking authorizes the council to abolish positions “whenever in the judgment of the Council it becomes necessary in the interests of economy or because the necessity for the position involved no longer exists,” according to code. And while the code gives the city manager sole authority as hiring officer, it also enables the council to make suggestions, Barrow noted.
“There was no violation of municipal code,” Barrow said. “The city manager is appointment authority, but the council can make suggestions. I’m not saying that is what happened in this case, but I’m not sure [Wilkinson] is reading our municipal code. With respect to the Brown Act, again, there is no violation.”
Economic vitality director Andy Sywak has been reassigned to another position within the city. Assistant city manager Nadine Nader left the city last month, apparently of her own accord, to take the same position for the City of Santa Clara. Nader, a former colleague of Danaj’s at his previous job as assistant city manager in Fremont, California, was hired in 2015 and given a $2.3 million home loan that then-councilperson Tony D’Errico characterized as a bridge loan rather than housing assistance. Nader paid off the loan not long after the new council members took office last year. Napolitano and Montgomery had specifically criticized that loan while campaigning.
Montgomery declined to comment on the departures but said generally speaking no such loan would again be approved by this council. He also noted that the contract of the previous city manager, Dave Carmany, included provisions in which the city took an equity position on the home he obtained through a city loan.
“So when it sold we made money on the sale,” he said. “The previous city council inexplicably refused to use the same contract that was successfully utilized with Carmany.”
City manager home loans are not an infrequent practice in city government, particularly for city managers relocating to affluent communities. But Montgomery said the council could find no other city in California that had given an assistant city manager a home loan.
“This new council will not repeat the financial excesses made in the recent past,” Montgomery said.
Danaj, 48, was hired with a mandate to make City Hall more technologically current and city government more open and transparent. His initial three-year contract was in 2015 extended through 2020. In his statement, he expressed pride at what he’d accomplished in Manhattan Beach and gratitude for his former staff’s work.
“From reaffirming our AAA-bond rating to siting and building our skatepark after years of failed attempts, to enhancing how residents can engage with City Hall online via innovative apps to restoring employee morale at City Hall, to shepherding the unprecedented public-private partnership with the Harrison Greenberg Foundation that will soon result in a world-class aquarium at the end of our iconic pier, I thank all the employees of the city that every day make these things and many more happen,” Danaj said.