Uh, Oh, Look Who’s “City B”

The city of Richmond is “City B,” the unnamed locality, which, along with Petersburg, Bristol and two unnamed counties, was noted by the Auditor of Public Accounts as in severe fiscal stress, reports the Richmond Free Press. While State Auditor Martha S. Mavredes has not identified Richmond publicly, the city’s name is included in a report that has circulated widely within government circles.

That classification, which was based on 10 financial ratios taken from localities’ Comprehensive Annual Financial Reports (CAFR), might come as a surprise to investors in Richmond’s AA rated bonds. But the city’s score under Mavredes’ methodology has plummeted in the past two years from 50 in fiscal 2014 to 13.7 in 2016. The weekly did not provide the data behind the scores.

The low rating is all the more astounding given the fact that the city is not an aging mill town like Petersburg and Bristol, but has a diversified economy with strong government and finance sectors, and has enjoyed extensive real estate re-development, a growing population and an expanding tax base. The main warning sign has been the inability of city administrators to consistently meet deadlines for publishing their CAFR.

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3 responses to “Uh, Oh, Look Who’s “City B”

  1. “The inability of city administrators to consistently meet deadlines for publishing their CAFR” suggests many things, but does not say any of them. You’ve touched on CAFR before; but for those of us who don’t see the R-TD or have access to Richmond scuttlebutt, I hope you can pass along the gist of what is really happening when it becomes known well enough to repeat in public.

  2. I think a link to the CAFR itself would be a help in folks understanding what is reported… what is required to be reported…

    here’s a link to the Richmond CAFR:

    http://www.richmondgov.com/Finance/documents/AnnualReports/2016cafr.pdf

    One of the things this blog, BR could do .. is a little bit of an intro into CAFRs and what they show… how to read.. etc… perhaps a guest blogger…

    that would be helpful in people understanding more than just what is in some single-source news reporting…

    One of the more interesting things I think is the fact that the State of Virginia actually not only requires such a report but in a stipulated template/format which then allows further comparison and analysis such that “At risk” localities can actually be identified… There is another report known as the Local Government Comparative Reports which I’m not sure how or if related to CAFRs… maybe someone knows.. then you also have the LCI done by VDOE which calculated fiscal stress and ability to pay…etc..

    it’s not something the localities don’t already know – their bond advisors also require such CAFR data in order for them to perform the required independent audit and render a bond rating.

    But just like the Schools in Virginia .. some localities.. engage in a financial info fan dance so unless one is an experienced budget analyst… figuring out what’s what is a real chore.

    If Virginia is embarking on a state level audit of localities .. I’m sure it won’t be well-received by some localities who would rather their populace not really know the bad and ugly part of the good, bad and ugly… and hold their elected accountable… but truth be known.. in the larger jurisdictions especially those with larger populations of transient and lower income – that level of interest and scrutiny is down a few notches compared to other things like who the best entertainers and football players are… the latest cool things on Facebook…. etc… sorry… the average person has little or no interest in these things and at election time votes for the folks who have the best advertising… oh bite my tongue!

  3. I’m scared to see who else is on there.

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