OCALA, FL (352Today.com) – When Councilman Jim Hilty pulled agenda item 6o from the consent agenda at the Tuesday, October 20, 2026, Ocala City Council meeting, the tone of the meeting shifted.
The item was titled: Reappointment of City Manager, Peter Lee. In September, Hilty had voted against renewing Lee’s contract, citing concerns that included downtown business closures, code enforcement issues, and what he described as a lack of responsiveness and leadership
He returned to those concerns at the Oct. 20 meeting.
“The reason I removed 6o is, first off, I can’t vote for something that I voted against when the contract was first given to us, so therefore I have to have a separate stance on this. But secondly, and I would appreciate if you look at moving this vote until later on, because there are two issues that are going to be coming up here that I show and see a lack of responsibility by the city management, to carry out what the duties are. There’s two separate agenda items that are gonna bring this to light, and I think is, again, shows either a lack of transparency, a lack of management, or a lack of communication between the management and the staff,” Hilty said.
The reappointment, required under the city code for a two-year term beginning Nov. 1, passed with Hilty casting the sole no vote. Under the employment agreement attached to the item, Lee’s base salary is $267,608. The city will contribute 21 percent of that salary, approximately $56,198, to a 401(a) retirement plan. He also receives a $750 monthly car allowance ($ 9,000 annually), a city-provided mobile phone, and term life insurance equal to his base salary, rounded to the nearest thousand, plus an additional $100,000. He is eligible for the same health, vision, and dental coverage as other city employees, plus any citywide cost-of-living adjustments. If terminated without cause, the agreement provides 20 weeks of compensation (including benefits and car allowance) plus three months of administrative leave, along with payout of accrued leave.
Lee is currently the highest-paid city employee.
Hilty’s first comments on Lee’s performance came when the council reached agenda item 9i, an ordinance renewing the franchise agreement with People’s Gas System (TECO). The prior agreement had expired roughly four years earlier, though both parties had continued operating under its terms, with the city allowing TECO to use public rights-of-way and TECO continuing to pay franchise fees.
Hilty compared the situation to his former work in the securities industry. He said that if a client moved out of Florida and he failed to obtain a license in the new state, he would not have been permitted to collect the revenue. Similarly, if he had not conducted an annual review for a client with a managed financial plan, he would not have received the management fee.
“How did it go on for four years without being renewed? I’m not sure. Five months ago, the city manager was contacted by the affairs rep. No action. He contacted myself and another council member; we finally got action on this,” he said. “So how is the city entitled to four years’ worth of money on this when we didn’t have a contract?” he continued.
City Attorney William Sexton said the delay was largely his office’s responsibility while staff negotiated terms. He noted that both parties had continued performing under the prior agreement and that contract law kept it in effect, with TECO continuing franchise payments of roughly $622,000 per year.
“Well, it should have been taken up five months ago when the city manager was approved with it. It’s not something we have to do to handle his job to get you to do what you have to do, and I understand the law, but we’re talking about the city receiving over $600,000. We should not have continued on a handshake,” Hilty said.
Councilman Jay Musleh chimed in to defend the process.
“There was no handshake, and it continued to pump the natural gas through the right-of-way to individual businesses and homes,” Musleh said. “Contractual law says that both parties continue to honor their agreement. Therefore, we’re entitled to the $600,000 as they were entitled to continue to supply gas to residences and businesses. So that part of the argument is moot. I agree. It’s a little bit concerning that this wasn’t acted on sooner, but again, I don’t know if there was really any harm done,” he continued.
Sexton reiterated that the delay was primarily his office’s responsibility rather than Lee’s. The ordinance was approved.
The second item Hilty referenced was 10b, a request for an additional $190,936 related to four fire apparatus units. Facilities and Fleet Management Director John King said the shortfall resulted from his own miscommunication about a prepayment credit from late 2024.
King then explained that the additional $190,936 request stemmed from his failure to properly communicate a prepayment credit approved in November 2024. He said the original authorization had included the discount, but the prepayment invoices were not processed as intended. King emphasized that the error was solely his, that it did not reflect on City Manager Pete Lee’s leadership, and that the city had ultimately come out slightly ahead after factoring in interest earned on the funds and additional vendor credits.
“It’s totally my oversight,” King said. “It is in no way, shape, or form indicative of our leadership of our city manager. He does a fine job. This is totally on me.”
Hilty questioned the transparency and referenced a prior conversation with Lee, as well as an earlier fraud incident. In April 2026, the city was the target of a business-email compromise that diverted roughly $278,000 to $492,000 in a vendor payment (figures varied in initial reports). The issue came to light in late July. At the Aug. 4 council meeting, Hilty pressed for public disclosure that night, saying the public deserved to know and that waiting created the appearance of a cover-up. Lee said he had informed council members privately that an investigation was ongoing, that he had told Hilty the day before he would not raise it at that meeting, and that it was not covered up. The city later reported partial recovery of funds, insurance claims, and process changes; one employee involved on the front end no longer worked for the city.
At Tuesday’s meeting, Hilty tied the fire apparatus issue to that earlier case.
“I appreciate you falling on the sword for the city manager, but… Why are we just finding out about it now? Where is the transparency from your office to us when there’s a problem like this? This is not a minor problem; this is a major problem that’s happening. Same thing with the scam, we didn’t find out,” Hilty said. “He could have very easily said that it was John King that took responsibility, but he made up this story about some young people, just like with the scam.”
Lee spoke up in that moment to say he never made up a story.
“John doesn’t have to fall on a sword for me. I’m the one who ultimately lands on my feet. I take full responsibility of that. The first thing that I do is not run to council. The first thing that I try to do whenever these things happen is fix them… I do not have a reverse. [I] can’t undo. I can only fix it.”
Other council members said mistakes are inevitable in a large organization and that the focus should be on whether problems are corrected. City of Ocala Mayor Ben Marciano used his personal experience as a business owner in the conversation.
“We have a billion-dollar business that we’re running 1500 employees. I’m going to tell you right now, mistakes are going to happen every council meeting. They are going to happen. Mistakes happen in every business. I have a $5 million company that every meeting I go to, they talk about the mistakes… We need to look at, okay, are the mistakes occurring, and then is Pete doing something to address the problem? That should be it.” Marciano said.
Near the end of the meeting, Councilman Jay Musleh echoed the sentiments of the others in his defense of Lee. “We have 1,100 employees here. Every one of them’s going to make a mistake in the next year, every single one of them. I can’t tell you how many mistakes I made. We made. We ran Gateway Bank and then Center State and South State, but we always found a way to get past them. We were lucky enough that we didn’t have writers in the room writing about our mistakes and some of the arguments that we had about our mistakes, but at no point in time were our leaders or our directors dishonest in dealing with staff in the public, and I’d like to say the same thing for Pete.”
The expenditure was approved.
Other city officials, including the police chief, city attorney, city clerk, and internal auditor, were also reappointed that evening.
The next city council meeting is scheduled for November 3, 2026, at 4 p.m.