Agency review of finances determines Richmond not in fiscal distress
RICHMOND, Va.—Just over four months ago, the City of Richmond was flagged by an early warning system intended to help the Commonwealth identify possible local fiscal distress.
The city of Richmond initially scored 13.8 percent out of 16 on the overall Financial Assessment Model (FAM) used by the Auditor of Public Accounts, according to a letter from the organization that was shared with CBS 6.
At that time the organization requested to perform further review. The city provided their office with additional information related to budget processes, debt, borrowing, expenses and payables, revenues and receivables, staffing, and other external variables. Richmond representatives also met with the agency and detailed the city’s strong bond rating process and other factors.
On Friday, Jan. 26, the Auditor of Public Accounts determined that Richmond does not have fiscal distress.
“Based on our review of the completed assessment questionnaire and information provided to our office, along with discussion with your locality, we have concluded that the City of Richmond does not appear to be in a situation of fiscal distress that would warrant further assistance or intervention from the Commonwealth,” read the letter.
The agency said that their office this year developed criteria to make preliminary determinations of fiscal distress based on an analysis of calculating 10 key financial ratios using audited financial data, as well as other qualitative factors.
The mayor’s office said that the city’s financial advisors, Davenport & Company, also determined the FAM criteria previously used were too limited in scope and substance, did not take into account Richmond’s demographics, economic development, strength of management nor the city’s debt practices and reasons for debt.
“I am pleased the APA has obtained a further and better understanding of our financial strengths and best practices,” said Lenora Reid, Richmond’s Deputy Chief Administrative Officer for Finance and Administration. “Richmond remains actively and successfully engaged in bolstering our city finances, and this most recent APA correspondence reiterates this fact for all to see.”