An aerial view of Rehoboth Beach
An aerial view of Rehoboth Beach
The weather has cooled down, but it’s getting quite hot in Rehoboth Beach.
A lawsuit filed in the Delaware Court of Chancery this month alleges that the beach city’s board of trustees violated state law, the public trust, common sense and the city’s charter by hiring a former Nevada city manager named Taylor Tedder.
“This case seeks to remedy an abuse of power by public officials elected to serve the people of the City of Rehoboth Beach, Delaware. In this case, the violation resulted in the imposition of an illegal and over-the-top public contract on the City and its citizens,” says the complaint, filed Aug. 15 by attorney Theodore A. Kittila on behalf of Rehoboth Beach residents Steven Linehan and Thomas Gaynor.
The lawsuit asks the judge to void a million-dollar severance package for Rehoboth Beach’s new city manager, Taylour Tedder. His $250,000 salary and $750,000 forgiven home loan have been the subject of city protests since April. By most measures, the deal made Tedder one of the highest-paid public employees in the state of Delaware.
The reasons for Tedder’s deal: Insights into the Rehoboth Beach city manager’s multi-million dollar contract
The lawsuit alleges that Rehoboth Beach Mayor Stanley Mills and other city councilors conducted the negotiations and discussions illegally and out of public view and that Tedder’s qualifications did not meet the requirements of the Rehoboth Beach City Charter.
The lawsuit is directed against the mayor and each commissioner individually and in their capacity as city councilors, as well as against Tedder and the city of Rehoboth. The city, for its part, says it does not comment on ongoing litigation as a matter of policy.
Here’s what we know:
Why is Taylor Tedder’s contract so controversial?
The public outcry probably has less to do with Tedder’s past as former city manager of Boulder City, a tourist town in Nevada outside Las Vegas known for its proximity to the Hoover Dam, than with the amount and terms of his contract.
Tedder’s contract includes a base salary of $250,000, a $50,000 allowance for moving expenses and a $750,000 city housing loan.
This loan is to be fully forgiven if Tedder remains in office for seven years. Without taking into account interest, the loan benefit will be at least $107,000 per year if Tedder stays until the end of this term.
Among salaries tracked by Delaware Online/The News Journal, Tedder is the highest-paid municipal or county employee in Delaware, better paid than the city managers of Philadelphia and Baltimore and nearly all city managers in a survey of hundreds of Texas city managers, except for cities the size of Dallas and Arlington.
City officials say the lucrative deal was necessary to attract a good candidate in a difficult job market and persuade him to stay. The lawsuit argues the city did so illegally or outside of its authority.
Did Rehoboth Beach violate its bylaws when it hired Taylour Tedder?
The lawsuit alleges, among other things, that the city did not have the authority to offer Tedder a job because he did not meet the qualifications for the position set forth in the city charter.
The 1967 city charter requires city managers to hold a “degree in engineering from an accredited college or university,” “have served as city manager of another incorporated municipality for a period of at least four (4) years,” or “have practical experience as an engineer for a period of at least four (4) years.”
Tedder served as city manager of Boulder City, Nevada, for nearly three years. Before that, he served as deputy city manager in Leavenworth, Kansas, for five and a half years. His master’s degree is in public administration, a common degree among modern city managers. In the past, city managers were often recruited from the engineering profession.
The lawsuit also alleges that Tedder’s protection from firing violates the city constitution because his removal requires a two-thirds vote within 90 days before or after an annual election – which requires near-unanimity from the seven-member body nearly half the year.
“The employment contract is manifestly illegal because it is inconsistent with Section 17c of the Charter, which provides that the City Manager may be terminated by a simple majority vote of the Commissioners,” the lawsuit states.
What violations of state law are alleged in the lawsuit over Taylor Tedder’s contract?
And this is where things get tricky. Delaware Attorney General Kathy Jennings’ office found back in June that the city of Rehoboth Beach violated the state’s Freedom of Information Act by discussing the terms of Tedder’s contract and his qualifications and hiring in closed sessions, away from the public.
“Public employee compensation is a public matter because it is ‘well established that citizens have a right to know how their public officials are compensated with taxpayer dollars, in whatever form that compensation may be,'” the Attorney General’s Office said in its June 26 statement. “Accordingly, we conclude that the City violated the FOIA by holding discussions about the City Manager’s employment contract, and specifically the compensation package, in a closed session.”
In the ruling, Jennings’ office specifically noted that these FOIA violations meant the contract could be voided by the Delaware Court of Chancery. The office also outlined a path forward for the city: The Board of Commissioners should re-ratify Tedder’s contract in a public meeting, with citizen comments allowed.
That’s exactly what Rehoboth Beach did in a tense July 8 meeting during which residents stood up and called Tedder’s contract “outrageous,” “excessive” and “incomprehensible.”
Previous reporting: After tense meeting in Rehoboth Beach, lawsuit threatened over city manager’s contract
After public comments, Mayor Mills said he had not wavered from his original vote for Tedder. Mills called Tedder the strongest candidate they found in a difficult job market.
“I believe I or we did the right thing for the future of Rehoboth,” he said, adding that Tedder’s contract could not simply be canceled or changed. Commissioners voted unanimously to ratify the contract.
In the lawsuit, the plaintiffs argue that this ratification process was not sufficient to correct the FOIA violations identified by the Attorney General’s Office.
“The Board of Commissioners’ purported ratification of the contract on July 8, 2024 does not remedy the material procedural deficiencies, charter violations, FOIA violations, or illegal use of municipal funds,” the lawsuit states.
What are the plaintiffs demanding in the lawsuit against Rehoboth Beach?
Above all, they want the contract to be declared void. They also want Teddler to pay back compensation.
The lawsuit seeks a declaration that “the employment agreement constitutes an illegal use of municipal funds and that the Mayor and Commissioners’ alleged ratification of the employment agreement on July 8, 2024 does not cure the Mayor and Commissioners’ violation of the Charter.”
The plaintiffs also seek reimbursement of attorneys’ fees and “any other compensation the court deems appropriate.”
City officials had said before the lawsuit that they believed they were complying with the city charter, but have also begun reviewing the requirements for the position set out in the charter – a process that officials said is unlikely to be completed until next year.
Matthew Korfhage is a business and development reporter in the Delaware region, covering all things land and money: openings and closings, construction and the many companies that call the First State home. Send tips and insults to [email protected].
