Embattled South Pasadena City Manager Stephanie DeWolfe has decided to retire from the city effective Saturday Sept. 12, the city said in a press release Sunday Sept. 13. Fire Chief Paul Riddle will assume the role of Acting City Manager effective immediately.
Riddle “will continue to lead the remaining COVID‐19 response and begin taking the action necessary to safely move our community forward,” the press release stated.
The announcement came about a half hour after the City Council met for a special closed meeting at 4 pm Sunday via teleconference. That meeting followed another closed special session the Council held Friday evening.
“The City Council wishes her the best in the next chapter of her life,” said Mayor Bob Joe.
“Pursuant to the terms of Ms. DeWolfe’s employment agreement, she is entitled to severance upon her separation from the City,” the city said in a separate statement. The city did not report the amount of the severance. The city also said that because it has not yet been approved, DeWolfe was not eligible for the “Golden Handshake” early retirement incentive program that the city is set to consider for a handful of employees at its Sept. 16 public meeting.
DeWolfe was set on Nov. 7 to begin the last year of a four-year contract. She leaves after having become the focus of a raging controversy over her management of the city and especially its finances. During her 2-year, 10-month tenure, she went through five finance directors, and replaced over a half dozen department heads.
Hired to modernize the city’s processes, DeWolfe initiated the downsizing and complete re-staffing the Finance Department based on a confidential study she commissioned that exposed years of what she later called “inappropriate accounting practices.” In late 2018, she brought in veteran municipal finance expert Craig Koehler to implement the reorganization, but he departed the city in less than a year.
Six months later, DeWolfe hired Karen Aceves as the new finance director, but by then the city was already falling behind not only in cleaning up the financial morass, but in the preparation of the city’s annual audit and Comprehensive Annual Financial Report.
Additional questions were raised about the city’s handling of a sewage leak at the home of a resident who subsequently sued the city. Another lawsuit was filed by a former finance department employee who said her termination during the department’s reorganization was an act of retaliation and scapegoating. Both suits remain pending.
A public sense of mistrust in the City Manager spiked in late spring when local citizens began scrutinizing the city’s budget and audit documents. Former South Pasadena Finance Director Josh Betta released a report saying the proposed 2020-21 budget figures were “blatantly incorrect” while finance professionals Stephen and Sheila Rossi identified millions of dollars in discrepancies between the proposed budget Aceves got approved by the city’s finance commission and the one she submitted days later for approval by the city council. An initiative led by citizen Bill Kelly pressured the city to delay adoption of the budget until the audit could be finalized. To date, neither the budget, the audit or the CAFR have been completed.
Other critics of DeWolfe believed she was overly focused on development, citing for example her release of a request for proposals to develop a hotel on the site of the current City Hall building. Others said she was dismissive of the city’s advisory commissions.
The finance controversy boiled over after former Mayor Dr. Marina Khubesrian, a strong DeWolfe defender, admitted that she’d used false identities to send a set of threatening and toxic emails to a Council colleague and to citizen critics of city management. Khubesrian resigned, support for DeWolfe on the Council softened and on Sept. 2 the remaining council members opted to replace Khubesrian with Rossi, a DeWolfe critic who vowed to zero in on the city’s finances. Nine days later the city held the first of the two special closed meetings which resulted in today’s announcement of DeWolfe’s retirement.
DeWolfe’s hiring as city manager was approved by Council Sept. 20, 2017 four months after former City Manager Sergio Gonzalez left to take a job in Hermosa Beach. Peckman & McKenney was hired to run an “expedited and intensive” recruitment process resulting in a list of 35 names from which DeWolfe was selected after a day of “robust interviews.”
In a report to the Council proposing DeWolfe’s hiring, City Attorney Teresa Highsmith wrote that “Ms. DeWolfe describes herself as being able to ‘push the envelope’ when necessary, driving innovative outcomes developed through listening to the community and seeking balance among diverse stakeholders.”