A severance agreement announced last month by city leaders in Newport Beach indicates long-time city manager Grace Leung is being forced to resign, not leaving on her own accord, a move that means city taxpayers will pay Leung nearly $370,000 next year to not work for them.
The move comes less than a year after Leung was named in a lawsuit that claimed she urged a human resources director to change records to cover up what may have been an inappropriate use of public funds.
The city has said previously that the lawsuit is baseless and that it has investigated the allegations and found Leung did nothing wrong.
The money being paid to Leung, which reflects a one-year severance, doesn’t include compensation that Leung will receive for the remainder of this year, when she is expected stay on the job to assist incoming city manager Seimone Jurjis.
Leung, who city staff said Monday was out of town and could not be reached for comment, has been city manager in Newport Beach since 2018. Prior to taking the Newport Beach job, which includes oversight of more than 750 full-time employees and a budget of about $495 million, Leung held high ranking finance and management roles in the cities of Sunnyvale and Irvine.
Jurjis, who previously worked as Newport Beach’s chief building official and community development director, was named an assistant city manager in July 2023.
Leung’s severance isn’t unusual. City manager employment contracts typically call for some walkaway money — usually equal to six to 12 months of their salary — if they’re terminated by elected officials.
It’s also common for city councils to fire city managers. Santa Ana, Costa Mesa and Laguna Beach, among others, have recently cut ties with city managers, and taxpayers in those cities also are or recently have been paying highly compensated employees to not work for them.
What isn’t typical is that the city isn’t being specific about why Leung is being let go.
Mayor Joe Stapleton said only that the decision to cut ties with Leung was made after “thoughtful consideration of what’s best for the community’s future.”
A key issue, he noted, is the city’s push to meet state-mandated affordable housing quotas.
In 2022, the city adopted a plan to approve 4,845 new housing units through 2029 and to set aside three quarters of those, or roughly 3,633 dwellings, as affordable for low- to moderate-income households. The plan is an effort to comply with state law, which requires cities to provide housing for all income groups. That goal is particularly tricky — financially and culturally — in a city where the median home price is about $3.8 million.
At least two city groups filed suit to block the Newport Beach plan. But those challenges were struck down in June, when an Orange County Superior Court ruled in favor of the city’s housing rules.
A month later, the city council announced it was cutting ties with Leung and pushing Jurjis, one of two assistant city managers, to the top spot. The city chose not to conduct a national search for a new city manager.
“We’ve got to be prepared for what’s next,” Stapleton said, referring to the affordable housing issue. “And Seimone is going to help shepherd us through that.”
But some in the community believe Leung’s departure has less to do with housing than it does with a lawsuit filed late last year by the city’s former director of human resources, Barbara Salvini.
In that lawsuit, Salvini claimed that in 2023 Leung asked her to change records to cover up what the suit describes as a possible “illegal gift” of public funds. Following that request, Salvini’s lawsuit claims she asked the city to investigate the issue. She also claims, in the lawsuit, that she faced retaliation and age discrimination stemming from that incident. She is seeking unspecified damages.
Stapleton insisted that the lawsuit has nothing to do with the decision to cut ties with Leung.
“Everybody is trying to make something out of this, but there is nothing there,” he said. “I couldn’t be more appreciative of Grace’s service in the last seven years. and I look forward to serving with Seimone for the next seven years or however long he wants to serve in that role.”
He also said there has been “plenty of internal investigations” related to the HR director’s claims of Leung, and “there was nothing there.” But because the lawsuit is not yet resolved, he said, he can’t comment in detail.
A trial date has been set for August 2026.