Stephen Rossi, a corporate finance expert whose unsolicited report showing $14 million in discrepancies in South Pasadena’s proposed 2020-21 budget documents sent a lightning bolt through the city last June, was selected by the City Council Wednesday to serve out the final three months of the term left vacant by the resignation of District 2 Councilmember Marina Khubesrian.
The first thing Rossi was asked to vote on was a package of early retirement offers to 10 city employees including controversial City Manager Stephanie DeWolfe, of whom Rossi has been quite critical.
Five candidates for the position appeared separately in Council chambers for a teleconferenced session during which each was given 15 minutes to answer four questions posed remotely by Council members. Each was then told go home to await the outcome and prepare for a swearing in set for Sept. 16.
But in a surprise move initiated after the vote by Councilmember Michael Cacciotti, Rossi —who’d returned home to watch the proceedings — was called back to the chambers. He was immediately sworn in by Chief City Clerk Maria Ayala and then ascended the empty dais where he sat for the remainder of the meeting.
“That’s not the way I was expecting the night to go down,” Rossi, a managing director at Palm Tree LLC who has spent the better part of his life in South Pasadena, told the South Pasadenan News outside the chambers after the meeting ended at 11:30 p.m.
But he did not dwell on the unusual set of facts that brought him to this moment. “There is a lot of work that needs to be done. The city is in a financial crisis and we need to roll up our sleeves, dig into the numbers and make sure we have good, transparent, timely and accurate reporting.”
That’s why during his interview and as his first initiative on the Council, he pushed to create an ad hoc committee to make sure work on the “extremely delayed” 2018-19 city audit is completed and work on the 2019-20 audit begun before the Nov. 3 election, when voters will be asked to continue the 7.5 percent Utility Users Tax until it is amended or repealed by the voters.
City staff has already promised to complete the audit by the election, but Rossi said with the audit already behind, last week’s sudden departure of city Finance Director Karin Aceves for an indeterminate family leave is “problematic at best (and) does not bode well for trying to stay on track.” Residents’ confidence must be boosted to make sure the UUT gets passed, he added.
“I want to make sure we don’t leave it to chance but actually stay on top of it and drive it to completion.” Several things need to happen, including completion of the last ten months of bank reconciliations, implementation of regular monthly and quarterly financial reporting to the Council, and regular month-end closing procedures so the city never gets so far behind again.
Because “there hasn’t been a lot of transparency” on what other audit work needs to be done, Rossi also wants to get the city auditing firm’s pre-audit listing of requests to see where things stand on those items.
He’d also like to find out what happened with Aceves, “though my first concern would be if there is actually a medical problem, either herself or her family, particularly since we are in the middle of a pandemic.” One matter the ad hoc committee would consider, he added, is “if there is a way to help augment the band width that is depleted by having the head of the finance department gone.”
The other applicants for the vacant seat were attorneys Larry Allen Abelson, Marcos Rodriguez Holguin, and Timothy James Searight and Caltech astrophysicist Casey James Law.
Rossi’s candidacy was the subject of overwhelming public support. Over 330 persons signed a petition asking the Council to appoint him, at least half of whom live in District 2. Rossi, the only candidate to submit such a petition, said it was initiated and compiled by his supporters. After the interviews, the city clerk read 11 public comments, all of which supported Rossi, and then played three dozen recorded comments, over 30 of which also supported him.
Rossi was sworn in after the Council voted 3-0 to select him, with District 5 Councilmember Diana Mahmud abstaining. Mahmud had favored Larry Abelson, an attorney in Bank of the West’s commercial lending unit for the job, saying he had years of experience serving on various city commissions—an important training ground for city council–whereas Rossi had none. But her motion to select Abelson failed after Mayor Robert Joe and Councilmembers Michael Cacciotti and Robert Schneider all abstained.
“Larry Abelson is a wonderful person, resident, and colleague, and my wife and I even encouraged him to run for council in November,” Rossi told the South Pasadenan News. “However Council Member Mahmud’s motion to immediately move to a vote without any deliberation was disrespectful not only to all of the applicants who stepped up to serve the City, but was also disrespectful to the many residents who took the time to submit a multitude of public comments on the issue.”
Rossi’s first vote on the early retirement program was part of a package that included other “personnel actions” which the city said are aimed at closing $1.5 million of a $3.5 million 2020-2021 general fund budget deficit. Other actions include imposition of a permanent hiring freeze on certain vacant positions and a reduction in overtime for the police and fire departments. Some sources said the retirement program is also meant to serve to promote the ouster of City Manager DeWolfe, who is entering the final year of a four-year contract with the city.
Rossi voted for the package, but said he disputes the $3.5 million deficit estimate. He supported the personnel moves but questioned whether the cost savings are “as high as they are projecting.”
He wouldn’t say if he believes the city should retain DeWolfe. “My view on the city manager is probably fairly well documented at this point.”
Asked how he will make time for his Council work even though he is not retired, Rossi said he has a lot of people who work with him at Palm Tree. “It’s all about priorities and what is happening in the city right now is as big a priority as I could have.”
Commenters said Rossi’s 20-plus years of experience with corporate finance was especially relevant due to public’s deep concern and frustration about how the city and its finances have been handled, as detailed in the report prepared by Rossi and his wife as well as in the separate assessment submitted by former finance director Josh Betta. They said the job, which is only set to last through Dec. 2 when whoever is elected on November 3 takes the seat, needs someone who can “hit the ground running” and that Rossi is that person.
Rossi said he was overwhelmed by the outpouring of support from his neighbors. “It was awe inspiring and heartwarming for me to hear. I absolutely take that with a tremendous amount of care and consideration and gratitude. The next two and half months are about me trying to live up to that expectation.”