Why Should Delaware Care?
Last year, the city of Rehoboth quietly negotiated a record-breaking compensation package for its city manager, making it the highest ever given to an administrative officer in Delaware. Several residents objected to the deal, including two filed a lawsuit challenging the legality of it. In all, the fight could impact the direction of a city that serves as a magnet for Delaware tourism.
A Delaware judge last month heard arguments in a lawsuit brought by two Rehoboth Beach residents who claimed their city illegally struck a high-dollar contract last year with its newest city manager, Taylour Tedder.
The court hearing occurred one year after Rehoboth Beach residents first learned that city officials and Tedder had negotiated a pay package that included a $250,000 annual salary and a forgivable $750,000 home loan.
In September, Spotlight Delaware reported that the negotiations had followed officials’ seven-month search for a new city manager — one that highlighted the difficulties of attracting a qualified professional to a relatively small beach community with an expensive housing market.
If the plaintiffs in the lawsuit are ultimately successful, Rehoboth Beach could be forced to terminate Tedder’s lavish contract, which could make the city liable for a severance payment, or even a lawsuit from Tedder.
It could also require city officials to restart an arduous recruitment process to find a new manager to oversee operations in Delaware’s flagship beach town.
The judge will decide in the coming weeks or months whether she will toss out the case, or let it proceed to a potential trial.
During the court hearing on March 28, attorneys for the residents – Steven Linehan and Thomas Gaynor – claimed city officials violated the municipality’s foundational charter by hiring a manager who didn’t have sufficient experience for the job, including in engineering.
Rehoboth Beach’s charter says that a city manager must have an engineering degree, at least four years of experience managing another incorporated municipality, or four years of practical engineering experience.
“Right now, you have somebody that has essentially been quote, unquote, learning on the job for the last year. That person should have never been appointed,” said Ted Kittila, the plaintiffs’ attorney.
But Michelle Bounds, an attorney who represents the city and Tedder, argued that the city charter gives Rehoboth Beach commissioners broad authority to decide qualifications and compensation for the city manager.
Bounds also argued that the lawsuit should be thrown out because the plaintiffs waited too long to sue. She said they knew about Tedder’s hiring three months before he officially started the job, but didn’t file their lawsuit until August.
That delay caused unnecessary harm to the city and its officials, they said.
In the end, the judge said she would take the matter “under advisement,” indicating she will issue a written ruling on the motion to dismiss the case at a later date.
If the case moves forward, Kittila said his clients are hoping for a judgment that declares that officials violated the charter by hiring Tedder, and directs the city to return taxpayer money that has been paid to him.
‘Illegal and outsized public contract’?
The dispute over Rehoboth’s city manager contract started in 2023 when the beach town lost its last city manager, Laurence Christian, who resigned after being on the job for only eight months.
“My family’s needs have evolved, and I need to prioritize them,” Christian told the Cape Gazette back in 2023.
Last year, Spotlight Delaware obtained emails through a Freedom of Information Act request that revealed how eager city officials struggled to find a suitable replacement during the subsequent hiring process.
After losing top candidates to other locales, city officials determined that the offering salary offer was falling short. Applicants who shied away from the job cited the rising cost of living and booming housing market in Sussex County as a concern. That prompted the city to raise its base salary range from $140,000 to $200,000.
Following a seven-month search, commissioners selected Tedder, a 35-year-old city manager from Boulder City, Nevada, who had about two years of municipal experience at the time.
While city officials initially capped the salary for the job at $175,000, they ultimately offered Tedder a package that paid 56% more than his predecessor. It also was a salary that surpassed that of Delaware’s governor.
Tedder began negotiating with the city in March of last year, and Rehoboth residents learned of his hiring the following April when the city made a public announcement. In the announcement, city officials chose not to disclose Tedder’s pay package. They ultimately did so shortly when asked about it by the Cape Gazette following a public meeting.
Tedder officially started last May, amid a growing backlash.
Then, in June, the Delaware Department of Justice determined that Rehoboth’s private discussions about Tedder’s contract violated Delaware’s FOIA law. That ruling was one factor that eventually led to the current lawsuit.
When filing the complaint, Linehard and Gaynor called the pay agreement an “illegal and outsized public contract.”
“People lost a lot of confidence in the city of Rehoboth and its mayor and its commissioners when they basically said, we’re just going to appoint whoever we want,” said Kittila during the hearing.
