City outlines recovery plan
Bobb outlines coming days in financial turnaround
PETERSBURG — With their contract renewed until September, the Robert Bobb Group is looking to continue to help move the city out of its financial hole. Though some progress has been made, challenges remain.
“We’ve made some tremendous progress, but we’ve got to let the reality sink in across the entire city that there is a problem, and it’s going to require some hard restructuring decisions,” said Robert Bobb.
This reality is still being felt in several areas. The city struggled to fund desperately needed fire and police vehicles. Because of their low credit score (a “BB” with a negative outlook) the city cannot obtain loans on capital markets. The city was forced to look for private financiers to put up the $2.8 million necessary to buy the vehicles.
“We should not have reached that point of desperation,” said Bobb.
The recent sale of the Petersburg Hotel also fell through, though the reasons why are unclear. Officials are hoping the deal is reworked in the upcoming weeks.
Though steps have been made, the city’s financial woes are not going away anytime soon. Officials have stated that the house is still on fire, and the city still faces key decisions that will shape its future.
Bobb and Interim City Manager Tom Tyrrell talked extensively about what they called the “five pillars” of a healthy city. Police services, fire protection, emergency medical services, public schools, and good financial policies all contribute to the health of a locality. The combination of these five factors, when strengthened, will make Petersburg more attractive to businesses and potential new residents, they said.
Currently in phase two of their turnaround plan, the Robert Bobb Group has worked through some of the tougher financial issues that the city had to resolve
before moving forward. Phase one encompassed more of the short -erm financing that the city desperately needed at the end of last year. This included securing an unconventional Revenue Anticipation Note (RAN) loan to assist with cash flow, and necessary payments needed for things like city payroll. The city completed fiscal year 2016 over budget, with a significant decline in its revenue base. Changes were made to the current 2017 fiscal year budget to bring it into balance, but the budget might have to be amended again to make sure that balance is achieved.
“The problem that we’re having currently is that the revenues aren’t coming in as we had anticipated,” said Bobb. “Between now and June 30, we still might need to make some drastic measures to bring the 2017 budget into balance.”
Phase one ended in March. The main focus of the second stage is stabilizing many of the government processes that had run amok over past administrations, while establishing a path to long-term financial stability. The budget proposed by the Bobb Group for the upcoming fiscal year consolidates and streamlines several departments and processes, making the system more coherent and efficient. When going through the city’s tangled financial books, Interim Finance Director Nelsie Birch found many examples of crisscrossed spending, such as the city having multiple vendors for things like copy machines and security cameras. Changes were made to several departments, like the reorganization of Parks and Leisure into the Department of Leisure and Cultural Affairs. Long-standing issues in emergency services were addressed including the pay cut that was implemented in April of 2016 for all city workers. The cut was restored beginning last month for emergency workers.
“Once the pay cut was implemented, we lost officers to other localities,” said Bobb. “Those who were trained [for Petersburg] left.”
The new budget also brings up the minimum salary of emergency workers to make it competitive with neighboring localities.
Though the budget is conservative, both the City Council and the Bobb Group anticipate improvements in collection rates, which have gone up over recent months. Public Works Director Emmanuel Adediran said the utility billing collection rate for April went up to 88.05 percent, a drastic improvement from the 70 percent rate the city was experiencing in the past.
“The city’s major challenge going forward will be the ability to bill and collect,” said Bobb.
Over the past several years, collection of taxes and utility bills has been spotty at best, with residents reporting inaccurate billing statements on their water bills, or even not getting billed at all for months at a time. This has directly affected the city finances, as money is not flowing through the city’s bank account as it should. Back in February, the Treasurer’s office came under fire when stacks of unprocessed checks were discovered in the office. Treasurer Kevin Brown decided not to run for reelection this year, meaning the office will undergo significant changes.
Members of City council and the Bobb Group have stressed the need for a “culture change” where billing is more organized, and though it may be unpopular, when money goes uncollected services get shut off. Although many of these sorts of problems can be traced to the water meter fiasco with Johnson Controls in 2015 (a contract the Bobb Group says is being investigated), the fact remains that the city has not collected delinquent fees for water bills in several years.
“We have to create a culture where if you don’t pay you’re going to get shut off,” said Bobb.
Still on the agenda in phase two is extensive actions to modernize the city workforce, and to develop Standard Operating Procedures for a better managed government. This includes the hiring of a permanent city manager, deputy city manager, police chief, and finance director, which the city is in the process of doing now.
“If you don’t have financial visibility, you’re flying blind,” said Tyrrell. “We need to get a team in there that can give us that visibility.”
Once the budget gets passed and the 2018 fiscal year begins, the focus will turn to developing a longterm finance plan that will be followed after the Bobb Group leaves in September. Capital improvement projects will specifically be looked at, especially in regards to the ongoing saga with the water system.
Though not originally included in the Bobb Group’s contract, the water system has become a hot button issue the past several months, as the city currently needs over $90 million to upgrade its system and make necessary payments to the Appomattox Regional Water Authority. With Aqua Virginia and Virginia American Water having both bid to buy the system, there is debate as to whether the city will sell it or not.
Selling it would put either company in charge of water billing and maintenance, negating the city’s need to come up with the money. Though the companies would also be in charge of the water rates, a point of issue with those against the sale. The City Council appointed a special ad hoc committee in February to analyze the system, and rank alternatives to privatization. They are scheduled to release their recommendation in July.
Outside of the water system, new computer programs are being implemented to help modernize the public works department. One of those, CityWorks, is set to launch in the upcoming months. CityWorks will provide a way for all public works projects to mapped out, and citizens can go on and trace the exact funding for each project.
“What we’re doing with OpenGov and CityWorks is connecting the fund source for all that public works stuff, and making it so that you can tie it back, and see how much is spent,” said Dileep Rajun, a data analytics specialist.
The new tracking methods using OpenGov and CityWorks will prevent money being used on projects that it wasn’t allocated to, a problem that played a big role in the city’s financial decline. The city had actually purchased the systems several years ago, but are only now in the process of implementing them. The company that creates CityWorks is letting the city use it for free through 2018.
“What we’re implementing increases transparency of government and engagement,” said city spokesperson Clay Hamner. “It makes government run more efficiently and efficiency means lower cost.”
As the Robert Bobb Group moves into the last months of their contract, they hope to leave behind a stable city environment with sound financial policies in place. Though decisions will still have to be made once they leave, they hope the city will be better equipped to handle its finances.
“We can say we want to have a structurally balanced budget,” said Tyrrell. “But if we don’t live it, it doesn’t mean anything.” — John Adam may be reached at jadam@ progress-index.com or 804-722-5172.