The city rundown:
$1.2B needed to maintain infrastructure
5/13/2016, 6:38 a.m.
The City of Richmond needs to borrow $1.2 billion during the next 10 years to maintain its streets, provide sidewalks, ensure dozens of bridges remain usable and keep its 84 buildings in good shape, according a mayoral task force examining the future borrowing needs of the city government.
That doesn’t count $650 million needed in the next 10 years to provide quality school buildings — either new or renovated, according to Richmond Public Schools, which is participating in the task force.
The only problem: The city doesn’t have the capacity to borrow that kind of money.
According to a report David Rose, the city’s financial adviser, provided to Richmond City Council, Richmond would be able to borrow a total of $329 million in the 10-year period between 2018 and 2027 under current policies.
In fact, the only sector of city government that will have the borrowing capacity to meet virtually all of its needs is the Department of Public Utilities, which has a dedicated stream of revenue from customer payments for water, sewer service and natural gas to support its debt.
The tight squeeze on borrowing is creating one of the biggest challenges that will face the next mayor and City Council following the November elections — how to modernize worn out school buildings while keeping the city’s infrastructure from wearing out.
For Mr. Rose, it’s a familiar problem.
“This is typical for local governments,” said the senior vice president for Davenport & Co., who is a recognized expert in public finance.
Richmond is like every big city, he said, with “more needs than borrowing capacity. Even at the best of times, we don’t have enough capacity to do all the things that need to be done.”
But this is not the best of times. Despite a surge in population and private construction, revenue coming into the city is increasing at less than 2 percent a year.
To balance the budget for the 2017 fiscal year that begins July 1, City Council had to go along with the mayor’s plan to slash departmental budgets by 12 percent and to increase the cost of metered parking and trash collection.
And even though the council came up with an additional $5.5 million for schools, most of that money came from one-time increases in revenue — not an assured stream of new income.
When it comes to maintaining infrastructure, the city has hurt itself by refusing to make that a priority.
Given a choice of investing $175 million in four new schools or spending the money to upgrade and renovate at least 15 buildings, the mayor and council chose to build a new high school, middle school and two elementary schools and leave the problem of fixing the other buildings to another time.
John Buturla, Richmond’s deputy chief administrative officer for operations, compiled the needs on the city side and the shortfall is obvious.
His numbers suggest the city would need to borrow $116 million a year for each of the next 10 years just to meet infrastructure needs.