LOS BANOS (CVJC) — The Los Banos City Council voted 4-1 on Wednesday to rehire a former city manager who was fired last year, give him tighter job security and pay him $1.8 million as part of a deal to prevent him from filing a lawsuit over his termination.

Josh Pinheiro will return to the top city administrative position Feb. 21.

Councilmember Deborah Lewis was the lone vote against the two resolutions to approve the settlement and return Pinheiro to office. Last year, she was one of the three members who voted to terminate his “at-will” employment contract. Since then, the two others have left the council.

The councilmembers who voted to approve the settlement agreement and employment contract said the price tag was worth it.

“I did a cost-benefit analysis. Time is more valuable than money,” Mayor Paul Llanez said. “So to spend $1.8 million to get $50 million worth of things done? I’ll do it every single day of the week.”

Los Banos, a town of about 46,000 people on the west side of Merced County, has been without a permanent city manager since council members fired Pinheiro, who was just nine months into his four-year contract. The council has declined to publicly discuss the reason for his termination.

Pinheiro’s imminent second stint of employment appeared to divide residents who spoke during public comment. A handful of community members showed up both in support of and against his appointment.

Pinheiro did not attend the meeting in person. He also did not return a phone message left by the Central Valley Journalism Collaborative seeking comment after the council meeting Wednesday night.

Prior to the votes, City Clerk Lucy Mallonee read aloud several letters written by people who said they were city employees and wished to withhold their names over fears of retaliation by Pinheiro, should the council return him to office. They described Pinheiro as unprofessional, domineering, impulsive and “crooked.”

“I am absolutely dumbfounded by the present conditions set forth in bringing Josh Pinheiro back as city manager,” one letter read. “It is very apparent that this entire situation is unethical.”

Others described him as a micromanager who didn’t trust department heads to make their own hiring decisions. They also said he took credit for movement on city projects that were already in the works before he started the job.

Some of the letters alleged Pinheiro was being appointed because of his connections to members of the council, rather than his professional skills. “Mr. Pinheiro won the Los Banos lottery by being friends with members of the council, and the public should know that,” said one.

Following Pinheiro’s termination, an attorney representing him sent the city a demand notice alleging wrongful termination and retaliation, according to a city staff report. However, there are no records to indicate a lawsuit was ever filed.

Pinheiro’s settlement with the city was negotiated by an attorney with Avloni Law, a San Francisco-based employment law firm that, according to its website, specializes in sexual harassment and discrimination cases.

Under the deal approved Wednesday, Pinheiro will receive a payment of $1.8 million, have his employment reinstated, and receive a raise that will boost his base salary to $215,000. In return, he agrees not to sue the city, current and former council members or employees in connection with his first stint as city manager.

City Attorney William Vaughn said the settlement payment will come from unallocated general fund money since the city’s insurer declined to insure the payment.

The deal approved by the council also changes the terms of any possible termination, requiring a unanimous 5-0 vote to fire Pinheiro rather than a simple majority vote. In comments before the vote, Lewis called the change undemocratic.

“This, to me, is unjust for our residents, and it’s unjust for the council,” Lewis said. “In the long term, I think it sends the wrong message to our community.”

Pinheiro, 36, will be among the highest-paid city managers for such a small city in the Central Valley. His base salary will equal that of City Manager Stephanie Dietz in Merced, which is Merced County’s seat and has nearly twice the population of Los Banos.

Pinheiro’s qualifications for city manager remain unclear. Jones and Lambert described him as a “businessman.” Lambert said Pinheiro has experience working for companies such as Amazon and Tesla without offering specifics.

Llanez said a recruitment firm contracted to recommend candidates for the city manager position returned 10 candidates, none of whom lived in Los Banos or had children in local schools.

“We didn’t know if that person shared our values, or shared our culture or our community,” he said. “That weighed heavily with me.”

Councilmember Douglas Begonia Jr. said he’s known Pinheiro his entire life. He defended Pinheiro’s character and said the anonymous employee letters critical of him were inaccurate.

“The things that I heard said about him doesn’t describe who he is at all,” Begonia said.

Over the last decade, Los Banos has seemingly had a revolving door in its city manager’s office, with Pinheiro among six people to have the assignment. Steve Carrigan held the role for two years before leaving in 2015 for Merced; and Alex Terrazas was in office from 2016 to 2021, when his contract was terminated for reasons that were not disclosed. Former Police Chief Gary Brizzee twice filled in as interim city manager; and two others filled in after Pinheiro’s firing last year: Gary Wellman, a longtime Merced County public official, was followed by Los Banos Community and Economic Development Director Stacy Souza Elms.


This story was reported and edited by the Central Valley Journalism Collaborative, cvlocaljournalism.org, a nonprofit newsroom based in Merced, CA.

Josh Pinheiro addresses an audience at a Los Banos Downtown Association breakfast in November of 2021 at the Los Banos Community Center.

Brianna Vaccari

Central Valley Journalism Collaborative