How ex-Sacramento city manager received guarantee for an additional year in a highly paid job
There was hardly any discussion at a Sacramento City Council meeting just over five years ago when they approved an amendment to Howard Chan’s contract that included a provision guaranteeing him an additional 12 months as an assistant city manager if his job as city manager ended.
On an agenda item that included a 209-page city staff report, the council spent less than two minutes discussing and voting to approve the amendment to Chan’s contract.
Among the eight council members who voted to approve Chan’s contract in September 2019 was Councilmember Eric Guerra. Last month, he voted not to renew Chan’s contract because it contained the assistant city manager guarantee.
“It’s the condition of the contract that that’s a concern,” Guerra said last month while voting to reject Chan’s contract renewal. “Moving forward the way the contract is drafted actually creates a two-year employment guarantee, and not necessarily a one-year scenario here.”
In his motion to reject the contract extension, Guerra asked for the city clerk and the human resources director to begin the process of replacing Chan if he chooses to stick around another year as an assistant city manager.
Out of those who voted in favor of the 2019 agenda item, only Guerra and Councilmember Rick Jennings are still on the council. Jennings, who represents District 7, last month voted to extend Chan’s contract.
Chan’s city manager contract ended Dec. 31, and he has since exercised the option to continue working as a highly paid Sacramento assistant city manager for 12 months.
Guerra, who represents District 6, did not to respond to The Sacramento Bee’s question asking why was he concerned with the assistant city manager guarantee in Chan’s contract last month but voted to approve it in 2019.
He also did not respond to a question asking whether he is concerned about Chan announcing Tuesday that he was starting a new job with Sacramento as a “special advisor” to newly appointed Interim City Manager Leyne Milstein before she has decided what role Chan will have in her office.
Guerra also did not to respond to a question asking what role does he think Chan should have in the City Manager’s Office for the next year as the council works to deal with a $77 budget deficit and other city issues.
Philip Norton, Guerra’s chief of staff, told The Bee on Thursday that Guerra’s office was referring any questions regarding Chan to the City Manager’s Office.
Concerns about city manager’s contract
Guerra wasn’t the only council member who voiced strong concerns last month about the provision in Chan’s contract guaranteeing him an additional year as an assistant city manager on the payroll.
At the Dec. 17 City Council meeting to decide Chan’s fate, Councilmember Caity Maple said she had entered their closed session discussion about Chan ready to vote in favor of his request to extend his contract for another year, along with asking the city to immediately launch a candidate search to replace Chan.
Maple, who represents District 5, said she changed her mind during the discussion with her colleagues, recognizing that extending Chan’s contract could mean he’d continue to work in the City Manager’s Office for two more years; not just one.
“When we look at the contract language itself, it’s not just the year extension at the current (city manager) pay rate,” Maple said at the council meeting last month. “It’s also the option to exercise an additional year at the assistant city manager rate, which could be almost a million dollars for the city.”
But the council knew last month that Chan — even if his contract as city manager wasn’t renewed — still had the option of taking an assistant city manager job with a year’s salary worth more than $300,000.
“While I did not have a say in the negotiation of that provision, I recognize his right to use it,” Maple said Thursday in a written statement. “It is my hope that as we navigate budget challenges and negotiations, our city staff can seek his expertise when needed. Ultimately, it is up to our interim city manager to decide how best to navigate that relationship.”
The 2019 vote on Chan’s contract
Those who voted to amend Chan’s contract in September 2019 were Guerra, Jennings and then Mayor Darrell Steinberg, along with council members Angelique Ashby, Larry Carr, Jeff Harris, Jay Schenirer, and Allen Warren, according to the minutes from the meeting.
Then Councilmember Steve Hansen, who was in attendance at the start of the 2019 meeting, was absent when the council voted on agenda item, which included a raise for Chan that also increased his annual salary to $308,017. No council members voted against the item.
The 2019 agenda item was listed as a resolution for unrepresented officers and employees, the employer-employee relations policy, the citywide salary schedule and employment agreements for Chan and City Attorney Susana Alcala Wood. It was listed on the agenda as a discussion item, which the council members and the public would have an opportunity to discuss before the vote was taken.
A video of the September 2019 meeting shows no members of the public commented on the agenda item.
“I think we can make a brief presentation,” Steinberg said as he introduced the agenda item for public discussion.
Shelly Banks-Robinson, the city’s human resources director, told Steinberg the presentation would be “very brief.” She told the council the only portion of the staff report for the agenda item that required an “oral report” was the salary increases for the executive officers, Chan and Alcala Wood.
None of the council members made comments about the agenda item. Moments later, Guerra made a motion to approve the item. The motion was seconded by Ashby, and the council voted to approve the agenda item.
Chan’s new job pays more than $300K
Chan continues to work for the city though his contact as city manager was not renewed last month. Chan exercised the provision in his contract and is now an assistant city manager. The provision also guaranteed him a salary that would be be set at the top of the published range for an assistant city manager job.
City officials said his salary will be $340,812.60, per the contract, and he will receive all benefits under that job classification for up to 12 months.
The council vote that rejected Chan’s request for a one-year extension on his contract followed months of criticism over his high salary and decision-making.
Chan, who worked for the city for a total of 22 years made $262,627 when he became interim city manager in 2016. Toward the end of his eight-year tenure as city manager, Chan was earning $593,240 in total wages in 2023. His wages established him as the second highest paid city manager in California.
Milstein, a former finance director who served under Chan, said on Wednesday that she had not determined what role Chan will have in her office as the city faces the budget deficit and she oversees roughly 6,000 city employees, an annual operating budget of more than $1.6 billion and implementing policy directed by the City Council.
“When it comes to Howard’s contract, we are obligated to honor the provisions as approved by City Council,” Milstein said in a written statement. “I will be working with him in the near future on his role.”
Milstein will earn $352,000 under that interim contract. The council anticipates the nationwide search to permanently hire a new city manager will take six to eight months.
Councilmember Mai Vang, who represents District 8, voted against extending Chan’s contract and was the only one who voted against Milstein’s appointment as interim city manager. On Wednesday, Vang said in a written statement she “was hopeful our city was moving towards rebuilding trust and a new vision” when Chan’s contract renewal was rejected last month.
“The subsequent vote last week put us on the exact same path, so this move wasn’t surprising,” Vang said about Milstein’s appointment and Chan choosing to take the assistant city manager job. “I believe we can still chart a new way forward for our city if we lean into more courageous actions. I look forward to working with our mayor and council to find an external permanent city manager.”
