Illustration by Kevin McFadin
After auditors revealed last August that Petersburg was $18.8 million in debt and on the verge of financial insolvency, City Council members did what leaders of many other localities have done when they have found themselves in a tight spot: They called Robert Bobb.
Led by a former Richmond city manager, the Washington-based Robert Bobb Group came on board in October and stabilized the ailing city by reducing the $18.8 million owed to vendors, the Virginia Retirement System and other sources to $5.8 million. Under the Bobb Group’s leadership, the city managed to settle several lawsuits with vendors such as the South Central Wastewater Authority, and set up payment plans. To cover payroll for city employees, the consultants obtained a $6.5 million short-term loan.
The Bobb Group also assisted with a national search to fill key positions, such as that of new City Manager Aretha Ferrell-Benavides and Finance Director Blake Rane. Ferrell-Benavides, who started in July, has held positions in local governments across the country, most recently in Glenn Heights, Texas.
“The city is getting better, but there are many ways in which the city is broke, and we have to show the public that we can cut the grass and maintain the streets,” Bobb says. “If the city looks broken, it becomes a place of disinvestment instead of investment.”
As Petersburg takes the next steps under a new administration, wary residents still don’t know how close the city is to clawing its way out of the hole. Is the advice of Bobb — whose recommendations to outsource city services have angered some — really gospel?
“The good works done by the Robert Bobb Group ought to be commended, but in recent months, it’s been overshadowed by this intense push to privatize everything,” says Barb Rudolph, co-founder of the civic watch group Clean Sweep Petersburg. She criticized City Council’s decision to outsource the Public Works Department’s facilities and maintenance division, based on the consultants’ recommendations. “It’s not putting people in place that can stay and gain institutional knowledge in Petersburg and be connected to the community.”
The city plans to transition to a contractor for facilities and maintenance by Sept. 30, according to a request for proposals. The city is also taking bids from outside firms to assume operations for risk management, human resources, payroll and utility billing. Nearly 30 employees could be affected if these operations are outsourced, over 20 of whom work in facilities and maintenance, says Tangela Innis, the city’s procurement manager.
Petersburg Mayor Sam Parham says that outsourcing will reduce the city’s payments for overhead costs such as insurance, and eventually will help build cash reserves. The adopted 2018 budget already excludes facilities and maintenance and risk management from city expenditures.
Audits have determined that Petersburg’s crisis sprang from chronic under collection of taxes and other fees. It was compounded by a practice of borrowing high-interest short-term loans when revenues didn’t meet expenses.
“The council and the city are so used to the city borrowing like it’s a way of life. Well, it’s not my way of life,” Parham says. “We have got to get away from being a payday loan city.”
Petersburg took a step toward a better future in June, when it passed its first balanced budget in years, with a $77.7 million general fund. The Bobb Group’s contract was extended through September to allow the new administration time to get on its feet.
Ferrell-Benavides, the city manager, says financial stabilization, beautification efforts and building business in Petersburg are her priorities. In particular, she says officials should focus on economic development in struggling business districts outside of downtown Petersburg, which has had marked growth despite the city’s financial difficulties.
“We have many businesses that are opening in our city, and we can’t take for granted that we have [positive] things happening. We have great restaurants in our community, Friday night the streets are filled,” she says. “But what we need to do is make sure we are focused on lifting all of our community.”
While Petersburg’s financial standing has improved, hurdles remain — such as the revelation that it will take $20 million to rebuild its rainy day fund (now $7.7 million in the red) to advisable levels, according to the city’s Comprehensive Annual Financial Report. The report, which details the city’s finances for the fiscal year ending on June 30, 2016, was turned in six months late, in May.
In response to Petersburg’s near-meltdown last year, the General Assembly formed the Joint Subcommittee on Fiscal Stress, which is working to set up a monitoring system that would alert state government when localities are in financial trouble and determine whether intervention is necessary. The governor has the authority to administer a $500,000 assistance fund to financially beleaguered localities. State Finance Secretary Richard “Ric” Brown says the fund could be used to explore the failures leading to a particular financial crisis, or for hiring consultants to fix the issue.
Sen. Rosalyn Dance, D-Petersburg, who serves on the subcommittee, acknowledges being leery about City Council’s hasty action to hire the Robert Bobb Group, but says, “They have gained [our] confidence that they are moving in the right direction.” She’s watching to see how Petersburg navigates the first quarter of this fiscal year. “I think that’s going to be the trigger to determine if we’ve turned the bend or not.”
