New City Manager Comes With Big Ideas, Controversy

Santa Ana City Manager David Cavazos. (Photo by: Adam Elmahrek)

Santa Ana City Manager David Cavazos. (Photo by: Adam Elmahrek)

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During his tenure as the city manager of Phoenix, David Cavazos developed a reputation as a deft and imaginative budget cutter, drawing praise for closing a massive budget deficit.

Supporters said Cavazos — who is taking the helm as Santa Ana city manager in October — worked his budget magic in part by creating an efficiency task force that has saved nearly $100 million annually through such initiatives as eliminating paper paychecks and rerouting wastewater to cool the city’s power plant.

However, while few had issues with reforms like paperless checks, some of Cavazos’ initiatives were controversial, not the least of which being a 2 percent food tax on common groceries, which critics say is regressive and hurts poor and working-class residents the most.

He is also taking heat in Phoenix for how he left town. Late last year the Phoenix City Council agreed to give Cavazos a $78,000 pay raise, which boosted his pay by more than 30 percent. At least one reason the raise was granted was council members didn’t want to lose him to another city.

But within months of receiving his raise, Cavazos was applying for the city manager opening in Santa Ana. The raise not only increased his pension in Phoenix but also allowed him to demand a $315,000 annual salary from Santa Ana, which is more than the city has ever paid to its top bureaucrat. The total cost of the Phoenix pension and compensation package from Santa Ana — including health benefits, time-off pay, housing allowance and moving costs — tops $700,000.

While Cavazos’ maneuvers ruffled some feathers, others chalk it up to shrewd negotiating and don’t fault him.

“That’s hard to turn down,” said Phoenix Councilman Jim Waring, the only council member to vote against the pay raise. “I understand him making the move.”

Instead, Waring and others liken Cavazos to a super-star professional athlete, a free agent who haggled a great deal for himself and is a “game changer” for the team lucky enough to get him.

A Star City Manager?

Santa Ana council members pointed to a track record in Phoenix that proves Cavazos can bring in vital economic development. With millions in private investment and new revenue, Cavazos will pay for himself and much more, city leaders argued.

According to Councilman David Benavides, Cavazos played a key role in attracting the headquarters or regional centers of Amazon.com, The Gap, and TJ Max to Phoenix. Under Cavazos’ city manager tenure over the last four years, 45 new companies with 7,200 new jobs came to the city, Benavides said.

Also, Phoenix has made strides in areas that Santa Ana leaders want to parallel, such as a light-rail project, a five-year strategic plan and downtown development.

Cavazos is credited with attracting $4 billion in public and private investment to the Phoenix downtown, establishing an Arizona State University campus, building a Sheraton hotel and arranging a $600-million expansion of the convention center.

As Phoenix’s aviation director, Cavazos connected the city with major airlines, such as the Mexican airline Volaris, according to Benavides.

There are major differences between Phoenix, a city of nearly 1.5 million, and Santa Ana, a heavily Latino, working-class city of 329,000. Yet Benavides argued that Cavazos’ accomplishments in Phoenix show that Cavazos knows how to take a city to the height of its potential.

“What that shows is the vision, the innovation, the creativity to look at what opportunities lie within the city and what can I pursue to bring in investment,” Benavides said. “I’m confident that David will look at the opportunities that lie in Santa Ana. I’m confident that we’re going to have a return that will surpass any expectation that we might have.”

When Cavazos was appointed Phoenix city manager in 2009, the city was facing a daunting $277-million budget deficit.

The efficiency task force that Cavazos convened transformed city operations in ways large and small, Phoenix leaders say. The paperless paychecks saved tens of thousands of dollars, and the rerouted wastewater is saving millions, according to Vice Mayor Bill Gates, who led the task force.

“David has set and created a culture of continuous improvement. He’s always asking the employee for other ways they can do their job more efficiently. It’s obviously been very successful,” Gates said.

But closing the Phoenix budget deficit wasn’t all the result of creative ideas.

The Phoenix food tax has been one of the city’s most controversial issues. A divided council in 2010 approved the tax on a 24-hour public notice. Cavazos at the time argued that without it, the city would have to make painful cuts, including layoffs of police officers.

Yet within months of the food tax approval, city leaders signed a contract with public employee unions that granted them nearly $29 million in promotions and raises. Cavazos also received his pay raise while the food tax was still in place.

And while Santa Ana council members have hailed Cavazos for a commitment to openness in government, critics say the food tax failed the city’s biggest transparency test.

Phoenix Councilman Sal DiCiccio has called it the “food tax for pay raise scandal.” He claimed in an open letter that Cavazos essentially deceived the public by holding 15 budget hearings, not one mentioning the pay raises.

“Looking back on that, that should have been more transparent,” said Gates. “I don’t think there was an attempt to hide it, but I don’t think it was clearly presented.”

What happened exactly with the food tax is unclear — Cavazos canceled a scheduled Voice of OC interview — but Gates and Waring say that Cavazos’ first budget-balancing plan included $277 million in cuts that were too steep for the council to accept. Cavazos returned with a second plan that included the food tax.

Most Santa Ana residents interviewed by Voice of OC were critical of a food tax, which is considered regressive and punishing for low-income residents.

“Considering poverty is definitely an issue in Santa Ana, I don’t know if that would be very beneficial here,” said Daisy Gonzalez, a community outreach coordinator with The Kennedy Commission, which advocates for low-income housing.

Despite the food tax, Phoenix officials point to rising approval ratings for the city, with the most recent poll showing that 93 percent of residents say that Phoenix is a good place to live.

Santa Ana leaders say they hope to achieve similar results.

“The city of Santa Ana deserves the best — the best talent, the best management — and we’re confident we’re getting that in David Cavazos,” Benavides said.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek

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