Why Should Delaware Care?
Last year, the city of Rehoboth quietly approved a record-breaking compensation package for its new city manager, which was the highest ever awarded to a municipal administrator in Delaware. Public backlash soon followed, culminating in a lawsuit challenging the deal’s legality. Now, the city may be facing a domino effect, as the generous pay package could set a precedent for expanded benefits and higher compensation for future city employees.
A lawsuit challenging the hiring and high-dollar contract of Rehoboth Beach City Manager Taylour Tedder will move forward after a Delaware judge denied the city’s motion to dismiss the case.
But one city leader said the impact of the case is already being felt, as city employees across departments are seeing higher pay and benefits, citing the precedent set by Tedder’s pay package, which included a $250,000 annual salary and a forgivable $750,000 home loan.
“[The case] has escalated the expectations of those who are prospectively being hired and the existing staff who see that maybe they’re undercompensated,” said Rehoboth City Commissioner Suzanne Goode, who has been critical of Tedder’s pay package and the city’s spending overall.
About a year ago, many city residents were outraged to learn that the city had negotiated a $1 million compensation package with Tedder, which pays 56% more than his predecessor and surpasses that of Delaware’s governor.
The issue ultimately led to a lawsuit challenging his hiring.
Two city residents filed a lawsuit against the city in August, calling the pay agreement an “illegal and outsized public contract.” They claimed the officials violated the city charter by hiring a manager who didn’t have sufficient experience for the job, including an engineering degree.
But Tedder has now been on the job for just over a year, and since then, Rehoboth Beach has seen a rise in taxpayer-funded spending on city employee salaries and benefits.
In March, Rehoboth Beach commissioners approved full city coverage of employee health care plans as a part of next year’s budget, which will begin next April.
Just last year, health care coverage was increased from 80% to 90% of plan costs, as reported by the Cape Gazette
The city also hired its first in-house attorney, Lisa Borin Ogden, at a base salary of $200,000 following the departure of its longtime contracted legal counsel from Baird Mandalas Brockstedt & Federico.
By comparison, in Wilmington, a city with more than 70,000 residents, the current city solicitor makes just under $160,000, according to their city officials.
According to the Cape Gazette, Rehoboth had spent nearly $850,000 on attorneys during the 2025 fiscal year, but Goode says these actions were intended to “soothe” frustrations among staff who aren’t receiving a compensation package as generous as Tedder’s.
Goode said that these issues will continue unless Tedder makes a “good faith effort” and renegotiates his pay package. She even suggests that he start paying back his $750,000 home loan to the city.
“For the taxpayers in Rehoboth Beach, there is no end to this disaster of Mr. Tedder’s contract,” she said.
Meanwhile, Goode and her colleagues are scheduled to continue discussions over a merit increase to Tedder’s already controversial salary at their June 9 meeting.
Judge: City manager qualifications ‘ambiguous’
Spotlight Delaware had previously reported that Tedder’s hiring 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.
Once the city officials negotiated Tedder’s pay package, they didn’t publicize the dollar amount until after they announced that Tedder would fill the position.
Amid the outcry from residents about the lack of transparency, two Rehoboth Beach residents, Steven Linehan and Thomas Gaynor, sued the city, claiming officials violated the city charter by hiring Tedder, who they argue lacked the legally required qualifications: an engineering degree, four years of experience managing another municipality, or four years of practical engineering experience.
They also allege the $1 million compensation package was unlawfully negotiated in private and was in violation of Delaware’s open government laws.
The city has defended its decision by saying that the city charter gives Rehoboth officials broad authority to decide qualifications and compensation for the city manager.
The case will now move forward after Vice Chancellor Bonnie W. David rejected the city’s request to dismiss it late last week.
In her opinion, David affirmed that the city charter clearly grants officials the authority to determine employee compensation. However, she noted that the charter’s language regarding city manager qualifications is “ambiguous” and open to multiple interpretations.
The case will now move into the discovery phase, where both sides can request documents, take sworn testimony, and gather evidence related to Tedder’s hiring process and qualifications.
“We remain confident and will continue to defend the hiring of City Manager Taylour Tedder,” Rehoboth Beach Mayor Stan Mills said in a statement. “Our focus remains on delivering high-quality public services and ensuring that City Manager Tedder can continue leading our team with the stability and direction that our community deserves.”
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.
But Gaynor said that it is too early to determine how the issue will be resolved if he wins the court case.
“The remedies that will be applicable will ideally become apparent as we get more access to the intentional actions the city took to the detriment of the people of Rehoboth,” Gaynor told Spotlight Delaware.
