San Rafael announces city manager’s resignation, payout

Two weeks after the city said she was on paid leave, Cristine Alilovich has resigned as San Rafael city manager.

Alilovich and city officials announced a “mutual” separation agreement in a joint statement on Monday. Her resignation will take effect Saturday, according to the separation agreement.

“It has been a true honor to serve the residents, businesses, and dedicated City staff of San Rafael,” Alilovich said in the statement. “I am proud of what we have accomplished together and confident in the City’s capable leadership moving forward.”

Alilovich did not respond to requests for comment.

The city agreed to pay Alilovich a lump sum of $380,949.85, equal to her base pay and health insurance for 12 months. The city also agreed to pay her $69,917.40 for wages and leave owed through the separation date, according to the agreement.

Earlier this month, the city abruptly announced that Alilovich was on leave and the council had temporarily turned her responsibilities over to Paul Navazio, the finance director.

The move came after the city manager’s “performance evaluation” in closed session on Feb. 9. No action was taken during that session, officials said.

Alilovich’s leave was effective the following day.

The council made the unanimous decision to appoint Navazio following closed session at a special meeting on Feb. 11. The city would not say why the council made the change.

The council held another closed session on Feb. 17, but provided no updates.

City officials remained tight-lipped this week on the reasons behind the transition, thanking Alilovich for her 11 years of work for the city, the past three as the top administrator.

“We are grateful for Cristine’s leadership, professionalism, and service to the City,” Mayor Kate Colin said in the statement. “During a period marked by both challenge and opportunity, Cristine helped position San Rafael for long-term success. We thank her for her contributions and wish her well in the next chapter of her career.”

Colin declined to provide additional comments.

The agreement states that all parties “shall take all reasonable steps to avoid making additional oral or written statements beyond the joint press release” about the separation.

The agreement also includes a release of all claims, barring Alilovich from pursuing legal action against the city related to her employment or separation.

Alilovich signed the agreement on Sunday. The city finalized the contract on Monday, according to the document.

Alilovich was hired as assistant city manager in 2015 at a base annual salary of $156,060. Before joining the city, she was assistant director of finance for Marin County. She also previously worked in human resources, risk management and budgeting.

San Rafael promoted Alilovich to city manager in 2023. Her starting base salary for the position was $283,992 a year. Her final annual salary is $333,744.

Navazio joined the city as finance director in July 2023, receiving an annual salary of $199,500. His current salary is $232,692.

Navazio has more than 30 years of finance and public management experience. He came to San Rafael from his post as finance director at the Incline Village General Improvement District in the Lake Tahoe area.

Navazio is the former city manager of Woodland and assistant city manager and finance director of Davis. Navazio is also a former budget manager for Berkeley and Oakland.

The city manager of San Rafael oversees an annual budget of about $211 million and a workforce with the equivalent of more than 400 full-time positions.

“We appreciate the city’s update and the care being taken to ensure a smooth transition,” said Karen Strolia, president and chief executive officer of the San Rafael Chamber of Commerce. “The chamber remains a constructive partner to the city, and we’re focused on continuing the collaborative work that supports our local businesses and our broader community.”

The leadership change is one of many acute challenges the city has faced as of late.

City leaders have struggled with a variety of homelessness issues such as camping prohibitions, sanctioned camping areas and, more recently, surprise plans for a village of shelter cabins that set off public grievances and a lawsuit.

Housing also has been a flashpoint. Urbanization of the city, whose leaders have embraced housing growth, is on pace to rapidly alter the landscape and feel of downtown, as large-scale apartment projects, bolstered by state housing laws, have been approved in rapid succession. City planners and commissioners have been frustrated by their limited authority.

Earlier this month, Navazio detailed a grim budget forecast that projected a $3.5 million shortfall for next year. If left unchecked, that could grow to $6 million by 2030, depleting the city’s reserves, Navazio said.

Alilovich implemented a hiring freeze across all departments until at least June 30, the last day of the fiscal year. Exceptions were made for “sworn public safety personnel, dispatchers, lifeguards, and nongeneral fund temporary seasonal employees,” Navazio wrote in a staff report.

The city is considering tax renewals and new tax proposals as part of a strategy to boost city revenue and shrink the projected deficit.

At the last regular meeting on Feb. 17, the City Council authorized staff to seek a renewal of the library services tax on the June 2 ballot. If approved by voters, the $72.02 per parcel tax would increase to $74.18 per house starting July 1. The multifamily rate would be $74.18 plus $12.54 per dwelling. The nine-year term includes 3% annual increases.

The tax generates about $1.2 million annually.

The hiring freeze was necessary to ensure fiscal stability until officials knew the outcome of the June ballot measure. Whether to continue the hiring freeze will be determined as part of the city’s budget process, staff said.

Any future revenue measure under consideration will be more focused on addressing significant unfunded needs, rather than addressing the short-term budget gap, staff said.