Newberg government — Council requests officials resignation after his former subordinate came forward, alleging the affair and threatening to sue the city

Newberg City Manager Dan Danicic resigned Aug. 12 at the request of the City Council, after he reportedly admitted to attempting to cover up an affair with a former city employee who had threatened to sue the city but has since agreed to settle out of GARY ALLEN - Newberg City Hall was rocked this week after City Manager Dan Danicic resigned amid allegations that he had a longterm illicit affair with a former city employee.

The news of the affair broke last week, after a July 12 letter to the city from the employee, former Capital Projects Program Administrator Tabrina McPherson, and her attorney, R. Kyle Busse of the Portland firm Busse & Hunt, was provided to this newspaper. In their letter, McPherson had alleged that her termination earlier this year stemmed from the affair and Danicic’s desire to keep it quiet.

“Given Mr. Danicic’s history of influence within the engineering department, we believe he orchestrated Ms. McPherson’s termination as a consequence of their past sexual relationship,” the letter alleges. “This would constitute sex discrimination under Oregon law.”

Formerly the city’s public works director, Danicic was appointed city manager to replace Jim Bennett in 2008, with his three-year contract being renewed in 2011. A press release from the city announcing Danicic’s resignation, effective immediately, said the council appreciated his 10 years of service to the city but had lost faith “in his ability to manage.”

“There were two issues: the liaison itself and him not being forthcoming about it,” Mayor Bob Andrews said in an interview last week. He added that the relationship “was against policy and against sound management, and it led to weakened leadership.”

Rumors persist

First hired in 1988 as a part-time building permit clerk, McPherson spent nearly 25 years with the city cultivating what Busse’s letter described as “a highly successful career.”

“Throughout her career, Ms. McPherson was praised for her good work and achievements, including being honored as the city’s employee of the year in February 2009,” the letter read in part.

It was in October of that same year that the “intimate personal relationship” began, a fact Danicic also acknowledged when the letter arrived last month, according to Andrews and City Attorney Terry Mahr. The letter alleges that the affair began in part due to Danicic’s “marital difficulties and his insistence to confide in Ms. McPherson about them.”

The affair, which continued for about two years, was kept secret both because Danicic was married with children and he was her indirect supervisor, Busse wrote. However, despite repeated denials by both parties, rumors of the relationship soon began to circulate at City Hall — especially within McPherson’s office at the engineering department.

According to the letter, McPherson’s colleagues suspected she was receiving favorable treatment as a result of the affair and that Danicic’s personnel decisions were being affected. The city endured massive layoffs in 2009 and 2011 due to budget cuts, and public works (which includes engineering) were among the offices significantly impacted.

Andrews and Mahr confirmed that the rumors had been brought to their attention in 2009, and said the council had investigated the matter and interviewed those involved, but had ultimately found no hard evidence of the relationship.

“We’d had some reports of this during the first round of layoffs, and we looked into it then and didn’t think it was occurring,” Mahr said. “And Mr. Danicic said it wasn’t occurring.”

But the rumors persisted. The letter claims that Danicic’s and McPherson’s reputations were tainted by the affair such that she ended the relationship in mid-2011.

“Unfortunately, substantial damage had been done by that time,” Busse wrote. “Ms. McPherson continued to be vilified in the department and, despite the fact that the relationship had never actually been publicly confirmed by either participant, the controversy lingered.”

Two sides tell different stories

At this point, the two accounts differ more sharply. McPherson and her attorney claim Danicic became “increasingly fixated on protecting himself” in the wake of the affair, seeking out her assurance on more than one occasion that he could count on her to be discreet. They allege that he even went so far as asking her to lie on oath about the matter should that ever become necessary.

Busse said that, initially, his client agreed to go along with the cover-up. However, he wrote that it soon became clear to her that she — rather than Danicic — was taking the brunt of the consequences for the affair, and she eventually informed him that “she was not going to fall on her sword for him.” His attitude toward her became defensive from then on, Busse wrote.

McPherson became concerned that her job was in jeopardy early this year, even though, according to Busse’s letter, her position had not been recommended for elimination during the two most recent department audits. When confronted about her job security, she alleged that her supervisor, City Engineer Jay Harris, was evasive about the matter.

She said Assistant City Manager Lee Elliott, who oversees public works, later told her that Harris had recommended that she be laid off but didn’t say why. Busse wrote that Danicic also confirmed as much, and that his knowledge of the situation led McPherson to believe “he had been involved in the decision-making process that led to her termination.”

Busse alleges that McPherson’s layoff was discriminatory in that she was apparently targeted as a consequence of her role in the affair, while Danicic was not even though he was involved in the same conduct.

“In combination, the city’s evasiveness and lack of transparency regarding its decision to terminate Ms. McPherson, along with the treatment she endured leading up to her termination and the involvement of Mr. Danicic, who had obvious reasons for wanting to rid himself of the burdens she presented, creates a strong inference that the elimination of Ms. McPherson’s position is merely a pretext for the city’s unlawful reason for terminating her employment,” Busse alleged.

Danicic has not commented publicly since his resignation last week. But Mahr said that — other than the fact that the relationship occurred — he denied the allegations within the letter, including that the affair had anything to do with McPherson’s being laid off.

Andrews, Mahr and Elliott said McPherson’s position as capital projects administrator was eliminated in response to economic factors.

“Before 2008, we were doing a lot of capital improvements, but then the capital projects stopped,” Elliott said. “With the downturn and everything, it was clear that we needed to do some restructuring.”

Settlement offered and accepted

Busse characterized his July 12 letter as McPherson’s “final effort to resolve this case” before filing a lawsuit against the city.

“Ms. McPherson had every expectation and intention to retire as a city employee. Her termination has had a devastating impact on her from both an economic and, more important, a personal level,” he wrote. “Should this case proceed to trial, the city will be exposed to liability for Ms. McPherson’s economic and non-economic damages, which will be substantial, as well as litigation costs.”

After requesting Danicic’s resignation Aug. 12 in executive session, the council amended the agenda for Monday’s meeting to include consideration of a $44,280 settlement offer for McPherson. According to information from the city, the amount represents a severance payment of nine months’ of her salary.

McPherson had been offered a severance package when she was laid off, but she rejected it as “inadequate,” according to the Aug. 19 meeting agenda item (which was prepared by Mahr). However, Mahr said McPherson had indicated that she was willing to accept the $44,280 sum in exchange for dropping any potential claims related to her termination.

Danicic’s contract stipulated that he receive a severance payment of six months’ salary, along with compensation for health insurance and accrued vacation time and administrative leave. This figured out to be a lump sum payment of approximately $72,000, the city’s release said. Danicic’s annual salary was in excess of $120,000, according to his contract.

Elliott, who was hired in October 2012, will serve as acting city manager until an interim manager is appointed by the council within the next few weeks. This will be followed by a recruitment process for a new city manager, which is expected to take months.

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