Introducing "Telegraph Raw and Uncut" - Informal Session of March 9, 2009 - 'Financial Tsunami'

Good evening readers. This post is something of an experiment. I am currently editing this afternoon's meeting and hope to be uploading it shortly. This is the first of what I hope will become a regular feature of this blog -- full video of Council meetings and their committee meetings. Of course, this is something I believe our local government should be doing already. However it is not; and it is not likely to occur in the foreseeable future. So I humbly present to you the Informal Session of Richmond City Council of March 9, 2009. The Informal Session is the meeting that occurs before the televised meeting. The major topics of the meeting are 1) David Rose from Davenport and Company presenting the mayor's plan to raise the city's bond rating to AAA; 2) Rayford Harris, Jr., Director Department of Finance on the state of the city's finances (1:27); 3) Council's Proposed Tax Rates on Real Estate (2:08).


President Kathy Graziano opened the meeting at 3:10 PM. She introduced Richmond Mayor Dwight C. Jones. He opened his comments by saying that the following presentation was one of the most important aspects of his plan for Richmond's financial future. The mayor said, "We are in a unique moment in time. We are in a dire economy, the worst economy since the great depression."

Mayor Jones introduced the Tier One Plan. The basic plan is to upgrade the City's Bond Rating to "Triple A." The Mayor said that it would not be easy and it would take several years. He also called on citizens and government to "tighten our belts" and " to make tough choices." Mayor Jones said that bond rating agencies look at several factors when determining a city's bond rating: 1) does the Mayor and the Council work together collaboratively, 2) crime rates, and 3) level of poverty. According to recent statistics I've heard, most recently from Councilwoman Ellen Robertson, Richmond's current rate of poverty is 23%. Mayor Jones said, "We have moral and financial reasons to address these problems." Mayor Jones introducing the consultants from Davenport & Company was a little reluctant to mention Roland Kooch's (former RMA Board Member) name which ensued a moment of levity.

The presentation was given by David Rose of Davenport & Company (begins 6:19 minutes into the video). Here is a copy of the document (minus Appendices) he presented to the Council which he references during his presentation. Mr. Rose told us that Davenport and Company has worked with the City of Richmond for about ten years. Mr. Rose made this presentation to the mayor the week before and to all department heads the Friday before this Monday meeting.

He said he would be presenting an executive briefing on the state of the city, future city investments, and the city's debt capacity, and the compliance with self-imposed and financial best practices. Mr. Rose mentioned being "shovel-ready" with projects to take advantage of stimulus money (10:00 minutes) and "formally introduc[ing]" the Council and the Mayor to the national credit rating agencies.

Here is a compilation of interesting statements gleaned from the presentation. Richmond enjoys a "very strong" credit rating and has received 4 credit rating upgrades since 2001. Richmond's concentration of poverty is second only to New Orleans in the South Eastern United States. Richmond currently borrows $70-75 million annually to continue city operations. It cost the city about $2 million in interest for this annual short term loan. At 22:00 minutes, Mr. Rose said that the city should look at twice a year real estate billing as a way to avoid annual "revenue anticipation" loans beginning in 2011 or 2012.

The "Rainy Day Fund" (also called the "Undesignated Fund Balance") is currently set at 7% of the General Fund Budget and is valued at $47 million; Mr. Rose suggested raising it to 10%. $380 million in Capital Improvement Projects (CIP) have been identified. It is currently proposed to borrow $360 million to fund the Capital Improvement Program. At 31:00 minutes, Mr. Rose told Council the city had a debt capacity of $300 - $400 million for the next 5 years and it would cost about $72 million per year to finance.

On Dec. 31, 2008, the City Finance Department estimated that the city budget would have a $13 million shortfall.

Questions from City Council begin at 42:00 minutes with Chris Hilbert (3rd District) asking about how poverty affects the bond rating and the ability of the city to pay a premium for AAA rating. At 48:00 minutes, Ellen Robertson (6th District) said she was excited by the discussion on twice a year real estate billing, and discussed the anti-poverty commission, COLA for retirees, and stimulus funding impact. At 53:00 minutes Marty Jewell (5th District) lamented rising juvenile crime, reduced spending on Parks & Rec for 20 years, lack of opportunities for youth employment, and preventing homelessness. At 56:25, Bruce Tyler (1st District) thanked Mr. Rose for "the most comprehensive presentation I've seen on finance since I've been on the Council." He agreed with the need to "reign in borrowing" but was concerned about the impact of twice a year tax collections.

At 58:55, Mr. Tyler asked about Capital Improvement Projects and got Mr. Rose talking (around 1:01) about a new city jail, "that big elephant in the room" that Mr. Rose states could be funded by debt.

Here's a link to the minutes of Wise County Board of Supervisors meeting from March 21, 2001 where Mr. David Rose and Mr. Roland Kooch presented "on the findings and recommendations of the Southwest Virginia Regional Jail Task Force for Establishing the Southwest Virginia Regional Jail Authority." Don't be surprised to hear similar proposals for Richmond from these two soon.

At 1 hour 4 minutes, Richmond City Clerk Lou B. Ali reviewed upcoming appointees to Council's Boards, Commissions and Authorities. There were 9 reappointments and 10 new appointments. Proposed appointments included: Thomas A. Silvestri (President and Publisher of the Richmond Times-Dispatch) for the Richmond Metropolitan Convention and Visitors Bureau replacing Nicole G. Hood who resigned; Reappointments of James H. Harris, Clarence N. Jenkins, David E. Cheek, J. Stephen Buis, Wilson J. Washington, Susan D. Hansen, Kelly K. Horne, and Esther J. Windmueller to the Community Criminal Justice Board; Appointments of Matthew P. Geary (succeeding John Hugh Moss, PhD) and Irving C. Wright (succeeding Willie B. Fuller) as members of the Capital Area Alcohol Safetly Action Program (ASAP) Policy Board; Appointing Glenn Hudson, Robert W. "Robin" Miller Jr., G. Andrew Nea Jr., and Marcia Reid Woody as members of the Affordable Housing Trust Fund Oversight Board. Mr. Hilbert reported that he had a conflict of interest with the appointment of Robin Miller so he would not be discussing or voting on Miller's appointment. For the City Planning Commission, reappointment of Charles W. Wray and appointment of Amy Howard. Reappointment of Napoleon L. Peoples and new appointment of Jodi Mincemoyer to the Richmond Behavioral Health Authority (RBHA).

A very interesting dialogue with Mr. Rayford Harris, Jr., Director of Department of Finance, City Economist Jonathan Cohodas, and the Council begins at 1 hour 27 minutes and continues for half an hour.

Then came the interesting display of Council members discussing tax policy, from Mr. Tyler's adamant insistence for the lowest tax rate to voiced sympathies of hard times. With no input from the public, the city's budget is being drafted by Mayor Jones' administration, and the Council is contemplating setting a tax rate in the face of declining revenues, questionable housing values, growing unemployment, and with no budget in hand. Every 1¢ change in the real estate tax rate (which is currently $1.20 for every $100 of your home's assessed value) represents a $2 million change in revenue to the city. The "roll back rate" which is set by the state is $1.19. Council agreed to introduce papers for the rates between $1.17 - $1.21.

Council Chief of Staff Daisy Weaver closed out the last ten minutes of the meeting starting at 2 hours 27 minutes with a report to the Council.