Good afternoon, everyone.

Good afternoon.

The informal meeting of the Richmond City Council will now come to order.

And Madam Clerk, if you would provide the chamber emergency evacuation announcement, followed by roll call and then document review.

Would appreciate that.

Upon activation of the emergency alarm signal, all persons should immediately exit the building.

Please use the exits to the left or right front of the council chamber or the east or west stairwell outside the rear doors of the chamber.

Do not use elevators or escalators.

After exiting the building, security will direct everyone down 9th Street to the assembly area located inside the former public safety building parking lot.

Able persons should assist visually and hear and impair visitors with exiting the building.

And Madam President, for the record, all members are in attendance this evening with the exception of councillors Breton, Lynch, and Vice President Jerdon.

You do have a quorum.

Thank you, Madam Clerk.

Let's proceed with the document review.

Starting with the consent agenda, item number one, ordinance 20.

Item number one, ordinance 2025-258.

This paper was amended at the March 10th council meeting.

It's currently being retained on this evening's consent agenda.

Item two, ordinance 2026 003.

This paper planning commission recommended approval of this paper on the fed on the at their February 17th council meeting and is currently being retained on this evening's consent agenda.

Item 3, ordinance 2026 042.

This paper was amended at the March 10th council meeting and will be will be retained on this evening's consent agenda.

Item 4 excuse me.

Item 4, ordinance number 2026 051, Planning Commission recommended approval.

Item 5, Ordinance 2026 052.

This paper was was scheduled to be continued to the April 27th council meeting due to the cancellation of the Finance and Economic Development Standing Committee meeting.

However, I believe there is a request that this item be committee referral waived.

Councilmember Robertson.

And there are a couple other papers that were supposed to come before the finance committee, which was canceled because of the weather.

And so I am asking for this paper and the other two as well, but I know they have to be read in, but that's uh agenda item number seven and eight as well to be omitted from uh going back to the committee and we can move forward on them.

Thank you, Councilmember Robertson.

Thank you.

So if that's the consensus of council, item five, item seven, and item eight will be actually on this evening's agenda on the consent agenda and not continue to the April 27th council meeting.

So is that the consensus of council?

Yes, madam clerk, thank you.

All right.

So item number five, ordinance 2026 052 will be retained on this evening's consent agenda.

Item six, ordinance 2026 053.

Committee referral was waived on this item and will be retained on this evening's consent agenda.

Item seven and eight, ordinance 2026 054, and item uh and 2026 055 will both be on this evening's consent agenda.

Item nine, ordinance 2026 056, land use, housing, and transportation standing committee recommended approval.

Item 10, resolution 2026 R003, land use housing and transportation standing committee recommended a continuance.

So this item is to be continued to the April 27th council meeting.

Item 11, ordinance resolution 2026 or 013.

This item is to be continued to the April 27th council meeting due to the cancellation of the five of the March Finance Economic Development Standing Committee meeting.

On the regular agenda, we have item 12, ordinance 2025-215.

Um, this paper will be on this evening's regular agenda.

Previously, the planning commission did recommend.

I'm sorry, I take that back.

This item is to be continued to the April 13th council meeting.

Item 13, ordinance 2025 282.

This paper is to be continued to the April 27th council meeting due to the cancellation of the March Finance and Economic Development Standing Committee meeting.

Items 14 through 22, ordinance 2026 063 through 2026 071 are all budget related items and all in after tonight's budget public hearing, all items will be continued to the Monday, April 13th council meeting.

And Madam President, those are all the items on this evening's docket.

Thank you, Madam Clerk.

Members, um, given that we have all of the budget papers on for this evening, and and certainly anticipate and welcome and want to hear from the community.

I would like to ask that we consider uh public comment uh of two minutes so we can really uh certainly hear from as many folks from the public as possible.

Okay.

Any question, concern, etc.

Ms.

Gibson.

Uh thank you, madam president.

Um going back, I just wanted to note that I plan not to abstain from item number two, ordinance 2026-003.

Um, and in regards to public comment, um and if there are, you know, it doesn't appear that there are, you know, we can see based on the audience.

I mean, I would prefer to I I would prefer to have a allow folks to have the full three minutes unless we kind of have an a belief that right.

We will um certainly will see once um you know folks are here, but we have about 17, I think, on already on public comment who have signed up.

I think is that the correct number, Madam Clerk?

Um yes, it is at this time that have already signed up to uh speak.

Yes.

And so I'm just anticipating if we don't get it, you know, huge numbers so that you know folks can um have opportunity to speak.

Uh uh we can do a longer time period, but I want to hear have people have opportunity to speak.

So thank you.

Thank you.

And Madam President, the next would be the item for discussion.

It'll be the FY 2025 annual comprehensive financial report.

Mr.

Donald.

Or CAO, Mr.

Donald, welcome again.

All right.

Well, good afternoon, counsel.

Thank you for uh having us here today.

This is uh turned into one of my favorite topics, which is a shock because I've never been so excited to talk about audits in my life, but uh getting this one in and getting it ready and getting it done and the results of the audit is uh one that I'm extremely excited for, which again is a shock because I wasn't actually here when the work was done.

And so it is I'm glad to see this one come to fruition as the administration and I think I've had the opportunity to uh provide updates to the council multiple times regarding the status of the FY 2025 uh for um you received updates in November, December, as well as uh January.

Uh and while I know most of those were just around the status of when it would be complete and when it would come, um, and for I think the sixth or seventh year or six out of seven years, the effort was behind.

Uh I did want to share some insight on two points.

One, uh, which I know we've had the question asked, but I'll just ask it.

I mean, I would give you the answer uh preempted.

The delay does not uh impact budget development or the decision making process.

And two, we have remained in compliance with state notification requirements, as well as keeping all of our stakeholders uh involved.

We're required to notify the state once, which we did.

Uh of course, I believe if you know, but maybe the public does not, that more than 50 localities in the state of Virginia um were late in delivering their AFR.

Now, while we endeavor to be not just best in class, world class, our focus on the FY26 AFR, which we're already starting on, is to make sure that it is on time and that our component units uh including Richmond Public Schools, who we're gonna give some special attention to and working with them because I think we've now started to align a lot better to make sure that we receive all of that information, and our goal is to ensure that we're on time uh this year.

Uh I did want to give you some quick insights into why it was late, because I know that question has come up multiple times, and while we've answered it, I want to make sure now that it's finished, we kind of make that clear again.

The first piece is the required reconciliation of audit procedures, basically just ensuring accuracy.

So once you get all your component unit information, you also want to make sure it's correct.

And so uh when we receive those things late, our responses are going to be late.

Uh the second piece, you know, is not a secret here that all of your top financial leadership as well as your CAO transitioned at the end of FY25.

So you've got a whole new crew kind of giving your insight and looking over this data, which I actually think new eyes on this activity is ending up gonna be helpful for us in the long term.

Uh mention that timing of the financial data from component units.

But one piece that doesn't get spoken about, which is very important, especially for the future framework of the delivery of this product is the implementation of new accounting standards.

Um, I think it's GASB 101 and 102.

I got that right, okay.

Uh, and then operational constraints uh that include staff and capacity again, mentioning that leadership, kind of walking out the door on you early and um at the end of the fiscal year.

So for us, you know, just to be clear on what our focus on while timeliness is important.

What is the most important is accuracy, completeness, integrity, and financial reporting even over speed.

Now that we got the first part out the way, that speed portion, we need to clean that up and get that right moving into FY26.

And so with that, we have partnered with CLA who brings some independent um expertise and audit support, financial reporting, and specifically the part that I'm most excited about is internal controls, and they will walk us through current audit status, key process challenges, as well as recommended improvements and a path forward.

And uh while I mentioned at the beginning, I was uh so excited for this piece to end.

One with us having a modified and unmodified opinion, meaning the updates we gave you are accurate, but two, I was happy to have it over and kind of close the book on it.

But Mr.

Miller so eloquently reminded me that uh only get a brief uh reprieve because we're actually starting the close out process for FY26 a lot earlier to encourage both us and our component units to be ahead of schedule versus on time in uh FY26.

And so that level of commitment and expertise has been welcomed and thankful for his leadership on that.

And with that, I will turn it over to CLA and Mr.

Miller.

Thank you, sir.

Good afternoon.

My name is Greg Miller.

I'm a principal of CLA.

I was the one overall responsible for performing the fiscal year 25 audit.

Uh I'm here to present the results of our audit procedures with you this evening.

Uh, there should be a little slide deck with you.

I'm gonna skip through the agenda and some of the placeholder slides and skip to uh some more of the meat.

So we were engaged to perform an audit of the city's financial statements.

An audit is a pretty vague term used a lot to describe a bunch of different things.

Uh so I wanted to have a slide to discuss what a scope is and what the plan deliverables are of an audit.

So an audit is uh we perform procedures in order to express an opinion on whether the financial statements are reasonably stated in accordance with U.S.

GAAP or generally accepted accounting principles.

Uh it is reasonable assurance, it's not an absolute assurance.

We do use sampling.

We can't test every single transaction the city enters into uh in a given year.

Uh but during the course of that audit, we also evaluate the internal controls that support the financial reporting, that final act for product at the back end of the process.

Uh so we evaluate those controls and may have recommendations uh for best practices or um best practice, if you will, for control changes or or um nuances with the control structure.

Uh we're also engaged to perform a single audit, so that is expressing an opinion over uh compliance with federal compliance requirements for those federal dollars you spent that is currently still in process, uh so working through that.

As part of a local government in Virginia, there are certain compliance requirements out there the city has to follow.

One since participating in VRS, so we do an examination over the VRS data that's submitted to VRS as part of that process.

That has been completed.

We also perform agreed upon procedures over internal controls at the sheriff's office, and that agreed upon procedure engagement has been completed.

We're currently wrapping up a VDEQ agreed upon procedure for Department of Public Utilities and working to wrap that up currently.

In regards to communications of the audit, we have quarterly status meetings with the audit committee.

So updating them on a quarterly basis on the prog progression of the audit.

There are a couple slides in here that are leveraged from the initial audit committee meetings from a planning perspective.

I'll call those out as we get there.

And then today the wrap-up of the fiscal year 25 audit.

In performing our audit, we do have to follow certain professional standards.

So general accepted auditing standards or gas, if you will, are the general standards that auditors follow, whether you are a company, a non-for-profit, a local government.

But be as a local government, we also have to follow the government auditing standards.

That's an additional layer of professional standards that we have to follow during the course of our engagement.

Being in the Commonwealth, we also have to follow the APA's specifications for audits of cities, counties, and towns.

That's where that AUPs over the VRS examination, the sheriff's report that I mentioned earlier derived from.

As I mentioned, there's a federal wards audit as well.

So the guidance under that is the uniform guidance, which is the code of federal regulations, and then OMB's compliance supplement.

I will highlight the OMB compliance supplement typically is issued in the May time frame.

This one was not issued until the end of November.

So from a federal government standpoint, that was the significantly delayed guidance to tell us what they are looking for in that audit process, so that impacts the single audit timeline.

Within the reporting unit, which was mentioned earlier of the city or the reporting entity of the city, there are component units that are in there.

We do not audit those opinion units.

Those entities are reported by other auditors.

I've laid out those on the slides of which those component units are.

So our relation as it relates to those component units within your financials are based on the results of those other auditors' audits.

From an audit deliverable standpoint, the annual comprehensive financial report is a fairly thick document.

I don't know if you had an opportunity to read cover to cover yet, but it's pushing 300 pages.

But there's various sections within that.

So I wanted to highlight what our opinion and how it relates to those sections within that document.

So the basic financial statements, those are the financial statements you would think.

Your statement of net position, your statement of changes, as well as the notes that support those financial statements, is what we have an opinion on.

We have an in relation to opinion that relates to the CIFA, the schedule of federal expenditures, combining schedules and individual fund financial statements and budgetary schedules.

So that is saying that those financial statements are in all material respect agree back to the basic financial statements as a whole.

Uh called the statistical section.

Based upon the contents of those sections, we do not issue an opinion on those, and this is all the same whether you no matter what city you are or county you are in the commonwealth or in the country.

Some of them talk about economic information and forward-looking statements.

I don't have a magic eight ball, so I cannot audit what those forward-looking statements are.

We also report on internal controls.

We do not express an opinion on the operating effectiveness of internal controls, but we do evaluate those in designing the audit procedures that we apply in order to support our opinion on the financial statements.

So as I mentioned earlier, there's a couple slides that were leveraged from the audit committee meeting.

So I have not adultered this slide.

So it has the final reporting date as of November.

This was the initial audit plan.

I think we've already mentioned some of the items of why that plan did not materialize with significant turnover in financial leadership at the city during the fiscal year closed process.

Based upon that.

A procedure hasn't been applied to in the financial statements, but we will spend more time on the more significant dollars, the more higher risk dollars than the less uh riskier or easily substantiated uh dollar amounts.

Uh from an opinion standpoint, we did issue an unmodified opinion or a clean opinion.

That is the type of opinion you are looking for uh in the auditor's report on your financial statements.

Um we did issue uh one material weakness as it relates to uh the reporting of uh EDA bonds within the Act for itself.

Uh we did not identify any reportable matters of noncompliance that require to be uh reported, and then as I mentioned earlier, we're still working through the federal uh single audit aspect.

Uh so those two that portion of the engagement is still uh in process.

Uh during the course of our audit, uh we did have six uh additional items that we included in a management letter for recommendations.

One pertains to the finance department, which had to do primarily with staffing.

We already mentioned the key leadership changeover from a leadership standpoint, but also looking at the critical uh the critical technical skills in finance as well as the bench strength within finance in order to support uh finance's mission in the timeline of issuing the AC for.

The remaining bullets on this slide pertain to auditor public account compliance testing that we have to do, uh and the details of those uh items uh are laid out in our management recommendation letter.

As far with any engagement, we are required to communicate with those charged with governance.

This highlights those uh bullets of the items that are we were required to communicate.

So overall, we performed our uh audit in accordance with gas and governmental uh auditing standards.

We had no outside of the timeline, we had no changes in our planned scope of the engagement, the time changing, but not the scope of the engagement.

Uh and then there were two GASB implementations, Caspian 101 and 102 that were uh impacted this year, GASBY 101 being the most time uh consuming implementation of those two.

There's an appendix to the slide deck that has GASPE updates.

I'm not gonna spend a lot of time talking to those, but more than happy to talk through those if you guys have any questions.

There are two that are will impact fiscal year 26 as well.

Uh from a disclosure standpoint, then disclosures are neutral, consistent, and clear within the financial statements, and there's no significant or unusual transactions in which there was not adequate supporting authoritative guidance on how to account and disclose uh those transactions.

Uh from a difficulty standpoint, we did not have any disagreements with management.

Uh we work cordially with management and appreciate management's uh time to get us the information.

Uh we can only audit the information that we're given.

Uh it's I I can't audit stuff I don't have.

Uh so we do appreciate management uh providing complete and accurate information.

Um consultation, if we were made aware of any consult that management would maybe be consulting on how to account for a particular item or present a particular item uh in the financial statements were made aware of that, we would be required to inform you as those charged with governance of that, and we were not informed of any of any such consultations.

Within your financial statements, not every single dollar can be tied down to a specific bank account or a cash receipt or a cash invoice.

There's a lot of numbers that require an amount of estimation in order to determine what those amounts are.

The largest of those amounts are bulleted out here, your pension and OPEB liabilities, um, self-insurance liabilities, those are all uh liabilities that are based upon actuarial sciences that management engages an actuary uh in order to uh estimate what those uh liabilities are.

Uh investments, they're very valued at fair value.

Obviously, Apple stock is probably something you can just look up on Yahoo Finance to see how what it was valued at a given day at any given date, uh, but not all investments are that easily valued, so there's estimation on what that fair value is.

Uh those would be your your largest ones in there, although the next couple are bulleted on the slide.

Uh other matters that were required to communicate, as I mentioned earlier, we had one um material weakness, and we had uh as a result of one uh material audit adjustment related to the EDA bonds, uh, and then we had no uncorrected misstatements.

That's to say, hey, I think we need to make this journal entry and management saying no, we don't need to.

That did not occur.

And we did obtain uh management representation letters, those are standard industry representations.

This is management gave me what we asked for, the information was accurate complete what they of what they did give us.

Um we did obtain that uh letter on February 27th.

And with that, that's the end of my formal communication, but more than happy to receive any feedback or questions you may have.

Uh my contact information is here, and as I mentioned, there's an appendix with the new GASBY that if there are any questions, more than willing to sit down and discuss those with you as well.

So thank you.

Thank you for the presentation members.

Are there any questions at this time?

Okay.

Councilmember Albacher.

Thank you.

I just have a few questions about I know you said an amount of estimation.

Do you have for investment accounts?

Is there like a level of tolerance for what that estimation is, and does that account into your um into your audit findings?

Yeah, so all of our test work is based upon materiality.

There's a quantitative aspect of materiality, an actual dollar amount, and then a qualitative uh aspect of materiality.

So that's not the dollar amount, but hey, if this were to be 100% wrong, would that be a real big issue from the community standpoint or from a regulator standpoint?

Uh this isn't a school board, but example just pops up in my head is one individual laptop at a school probably isn't that big of a deal.

But if a whole classroom of computers went missing, that'll probably make the paper.

Um so small dollars, big impact.

So that's the qualitative aspect.

So we do consider not just in the fair value measurement, but in all of our audit procedures, uh, a level of materiality uh when we're evaluating this.

Okay, thank you.

And then you mentioned an allowance for doubtful accounts.

Can you can you expound on that a little bit?

Yeah, so within whenever there's accounts receivable as of 630, money that's either owed either from the DPU or other local governments or the state or Fed.

Management does an analysis on the collectibility of those accounts receivable, whether they'd be able to collect 100% of it or not of it based upon historical experience and current current economic uh conditions, and then they make a calculation of what that allowance for doubtful accounts is, uh, and that reduces the accounts receivable balance on the balance sheet within the financial statements.

So we test the underlying assumptions and recalculate management's calculations of those amounts and determining whether those amounts appear reasonably stated.

So you all don't determine the calculation for that for the doubtful accounts the management does.

Correct.

Is that some of them like when it pertains to taxes receivable?

GASB prescribes a calculation based upon the last three years of collectibility.

Um so that one's more uh accounting pronouncement driven.

So there is like a formula around it.

It's not just like management can say it's eighty percent, and we're always under that threshold.

Correct.

For for taxes, there is everything else, there's not a prescribed um thou shalt count it this way.

Um it's a management uh uh based upon experience of practice as a standing of how they calculate that.

Uh we do compare whether they're consistent between periods.

You wouldn't want uh one year we calculated it this way, the next year you calculate it that way, and every year we're we're we're changing that uh doesn't allow the financial statements to be comparable between periods.

Right.

Uh so we do evaluate whether there are changes from that standpoint.

Um were there this like I'm just thinking we had a transition in leadership, so like were there significant changes from last year versus this year in terms of not as it pertains to how the calculations for allowance for doubtful accounts were were were calculated, no.

Okay, or the number of those accounts that that remains stable as well, right?

Would they ever come again?

The like the the just like the general number of those accounts remains stable as well, right?

Because it's a you can it's a definable bucket.

Yeah, I mean from year to year, though they'll the accounts receivable can change.

I mean, DPU has a fair amount of uh receivables, but a lot of that has to do with the billing calendar and where 630 falls in to line.

So if there's more days within before 630 that have let to be billed, then you would expect um the accounts receivable to be a larger balance in that given year.

Um but from a collectibility standpoint, uh there weren't giant swings in determining how uh that allowance was calculated between periods.

Okay, thank you.

Councilmember Gibson.

Thank you, Madam President.

Um I have a a few questions, and uh some of them may be um better answered by administration, but um I appreciate the background and context that you've provided.

Um my first question is you know, we've been talking a lot about the surplus um uh as a body, and um it the the calculation of the surplus is not is not a page in the document as you might expect.

Um I was wondering if that uh that type of calculation is something that can be or could be included as part of the documentation.

Um you know, and if that you know, then perhaps the administration could speak to whether or not that's that breakdown is something that they could provide.

Yeah, so the the act for the annual comprehensive financial report is based on U.S.

accepted generally accept accounting principles.

Um I'm not familiar enough on the calculation for uh the surplus, um, which is a maybe even a broader term than audit, um whether that calculation even is based upon GAAP.

Uh so we're reviewing the financial statements that they're in accordance with GAAP, which is the same accounting standards that um the city of Norfolk, the city of Alexandria, that they all follow the same uh accounting standards.

Internal accountings for a schedule of that nature are probably more driven on the city regulation and whether it was calculated within how the city defines that from a surplus standpoint, um it's it's it's a it's a vague term.

You can have a budget that management underspends and it looks like it's great that that there's a lot of money left over the year end, but the original budget included using fund reserves from the prior years, so you ended up just not going in the hole as much as you originally would have.

You didn't actually better put the city's financials in the long term.

So it I'm sure there's something that we could do to look at it, whether I don't think an audit is the appropriate term.

It might be an agreed upon procedure or some nature of that to say, hey, this is calculated in line with what the city regulation is.

Um but an audit as what we just spoke about is probably not the correct uh vehicle.

Um thank you.

Um I'm hoping that the administration could speak to that, but before before that, I wanted to ask about the uh the amounts that are included in you know, the I guess essentially the relationship between the CAFR and our budget.

Um, understood it's it's generally the practice to receive the CAFR ahead of publishing the budget.

And I would presume that part of that is because our budget includes um uh actual amounts for fiscal for that for that fiscal year.

So the fiscal year 2025 actual amounts are included in the budget presentation that has been made.

Um and one of the things that I noted, looking specifically, for instance, at the general property taxes, when I compared and I looked at the CAFR, for instance, I mean like HENRICO, um the amount noted in the CAFR or in its audit uh for general property taxes was essentially identical to the amount included in their budget for that fiscal year 25.

And they've got a much larger budget, it was like maybe $800,000 difference, right?

So it's essentially you know, very close in terms of a proportion of the budget.

For in our budget, the um discrepancy is pretty notable.

Um page 11 of the CAFR, it includes for general property taxes the actual amount as 595.8 million dollars, whereas the actual amount in our budget is um about 10 million dollars less, you know, give or take, it was 584.5 million.

And and the reason why that matters is you know, I'm interested in ensuring that we are putting money towards services and not towards a surplus.

And I I just want to make sure that we're not that we are um you know basing the budget, you know, as close as possible to what those actual amounts are.

So I'm just wondering, you know, in terms of process, you know, is uh is what is the the relation between the CAFR and the budget development process look like and um and is it reasonable to expect that there would be um uh some alignment in those line items, particularly around revenue.

Just to make sure that I'm understanding correctly, when you're looking at the fiscal year 26 budget, we're talking about the the fiscal year 25 actual as it relates back to the annual comprehensive binding report property taxes, correct?

So right now we're working on the fiscal year 27 budget, right?

And so the fiscal year, the proposed fiscal year 27 budget has amounts for revenue, you know.

So I'm looking specifically at revenues, general fund revenues, and there's a proposed number for fiscal year 27, and it goes back, it shows actual amount for fiscal year 25 and an actual amount for fiscal year 24, right?

And so, but the difference between that and the CAFR is roughly you know 10 million dollars.

It seems 10 million dollars less in the budget than in the CAFR.

And I was curious, so I I compared it to Henrico, and in Henrico, the numbers were essentially equivalent, much smaller discrepancy, much larger budget.

So I'm I'm just wanting to make sure that you know uh what the general practice is is that the CAFR would inform those actual numbers.

You know, we're frequently told well these are unaudited, but but I'm wondering, you know, is there is it fair to assume that there'd be some correlation between what we report in a budget document for general property tax revenues and what would be reported in the CAFR for you know property tax revenue?

Yeah, and there should be some reconciliation process.

I have not looked at the budget document um to that level of as you mentioned is unaudited.

What it sounds like it might be or where the gap might be is what rolls up into the line item as property taxes in the ACFAR, and what line rolls up into the property taxes in the budget.

Are um interest and penalties included in the ACFAR line, but not in the budget, are delinquent accounts included in the ACFAR, but not in the budget.

Um, and that could drive what your difference is between those two.

So, what would you prove suggest um that the body does, or how could it how could we get that reconciliation?

Yeah, I'd I'll probably turn the management for for that answer.

I'm I'm not as familiar with the budget document um in order to answer.

I got one side of the equation, but not both sides of them.

Go ahead and challenge.

Yeah, that's uh were there any other questions for Mr.

Miller before I think you were trying to have some the CA.

Were there any other questions for Mr.

Miller?

Maybe what for Mr.

Miller and Ms.

Trammell.

Yes.

I have a question.

And the report you had said something about the inmate canteen.

What did that mean?

Uh the MA canteen, uh, that was uh specifically related to um telephone commissions, uh, just the timing of when the deposit was made.

Um, and then it was subsequently remediated as soon as the sheriff was made aware of it uh and moved it back.

So just the timeline and what account it went into, and then it got it moved back.

So it's um so who handles that?

The sheriff's office.

Thank you.

Thank you.

Thank you.

So no other questions for Mr.

Miller.

Mr.

Miller, thank you so very much.

I have a wonderful evening.

Yes.

Uh CAO Donnell, I think there is a question remaining on the table.

You would all righty.

Yeah, you could answer your question again.

Thank you.

Thank you, Mr.

Donald.

I have several questions.

Um the first one was um regarding the surplus calculation, if we could receive that um that breakdown.

Yeah, so if I'm not mistaken, when you say the surplus breakdown, you mean how we allocate it when it's done?

What are you what are you specifically at?

Sure.

Yes.

Um so we have uh currently city ordinance that defines how the surplus is uh calculated.

It is a um uh calculation that includes the downtown reserve fund, funding that goes into the unassigned fund balance, um, and then you know, there are other uh uh possibilities that there could be some deviation with school board funding and other encumbrances that then gets to the 12 to the to the surplus amount.

And I would just I'm my request is to see the math um that that brought us to that 12.6 million dollars.

Got it.

I'll look into that.

Okay.

And um, and do you have you know, any sense uh of what drove the discret, you know, the discrepancy from the initial calculation of 22 million dollars to the to the 12 million dollars.

Um what were the changes?

I'm presuming some type of change in the encumbrances.

What can you talk a little bit about what that was?

Yeah, I can I can give you that.

That's a great question because I saw uh council member Albacher's newsletter where I think she mentioned the discrepancy being so great between the 22 and the 12.6.

It's actually not a discrepancy, it's that the audit was not complete.

And so the calculations were still being done, and the actual legislation on the books at the city of Richmond is that you have to give an estimate by a certain date.

And as I think you're well aware, and I know the council and the public, one of the things that is most important is timeliness in complying with legislation.

So in lieu of saying that there is no uh data available, we actually took that snapshot in time and provided an estimate.

But at the time I also provided that those numbers were incomplete and that all of the uh final tallying had not been done.

At that time, we did not have all of the information from the component units.

We didn't have uh a full completed uh array of data and information.

So with the small subset that we had, we crafted an estimate for the council to be in compliance with the legislation on the books.

Thank you.

I think we're on the same page.

The question is essentially what were those things that were not complete.

So there was a you know, so you you know, multiple component units not being received.

Uh and so yes, understood.

So if if you have a document or some summary that provides detail about what those additional the additional information that came in and how much it was that gets to the $10 million discrepancy.

Yeah, so that's not how it works.

So no, I can't provide you that.

So I want to give you some clear insights.

Uh we're getting into the sausage making, so I want to make sure I get low enough in it for you to understand.

So you would receive, let's say you haven't received four of your component units.

So none of their information is in.

So you don't know where their final numbers are.

So the numbers that you have available, which is likely just the city of Richmond's data, is what you're basing that insight on.

You don't know which funds are actually uh in the red at the time that you actually have to ensure um are even.

So you you have really no information at that time.

So looking back at the end of FY25, you've spent and you've coordinated all of your activities.

That has occurred.

But all of your, I'll just call them all of your bean counters at that time, your CAO, your finance director, your deputy, uh, even at that time, the I forgot the director's title was none of those people were working with the city, and you had not received the component units.

So you took the data that you had, which was part and parcel, and you provided an estimate to be complying with the law.

But the the wealth of information that was not available, I could give you a listing, but it's it also is not going to be enough for us to go back and say, oh, well, there was 10 million found here.

That's not actually the way it worked.

What we did is took all of the information that had been provided by the uh directors per se and their service areas, and then we looked at historical information to see based on growth and some other assumptions what we could expect from the component units.

We then put together an estimate that provided the information that's required by law, but was not available to be um provided.

Thank you.

That's interesting.

Um of the uh things that stood out in the document and the CAFR is uh kind of a department by department breakdown of those departments where expenditures exceeded what they were appropriated on page 95.

Um the amount that stood out was the Department of Fire and Emergency Services.

They went over budget by 4.1 million dollars.

Um I was wondering if you could speak a little bit to that, and and does that perhaps provide some insight on where that uh the discrepancy in in the surplus could have been driven.

No, I don't think that's where the discrepancy in the surplus is, but how that was managed and all of those things.

Unfortunately, I wasn't here, so I can't speak to that.

Looking back on the numbers though, we do believe that that's one area, but there are a bunch of different uh funds or more than one fund that you look at where people either were overfunded or went over or under.

The one thing that I have noticed with fire, which is why we made the adjustments and recommendations that we did in the budget, is because they're overtime based on how many people on a truck and some of those other activities uh have had them going over in their spending.

But you can also say similarly for police and what we've seen in FY26, which we're in now, you know, the impacts of services and the amount of uh of officers, as well as how we have chosen to align things such as gun violence, where we've made some changes this year will have impacts on the budget.

Thank you.

So just the my last question um, which is what I had posed to um uh uh before.

So the uh the um the question is regarding the discrepancy in the revenue amount and the actual fiscal 25 number in the budget book, which is uh the property tax total is on page 52, um the total the revenue for fiscal year 25, actual 584.

Or the ACFR, it just doesn't work it doesn't it doesn't sound like so I'm I'm stuck.

Uh page 11 of the the CAFR um has the amount at 595.8 million dollars.

So that's a discrepancy of 10 million dollars, and you know, if we are projecting year over year increases in property tax revenue.

My concern is is if we are basing that on a um perhaps an undercounted amount, 10 million dollars is substantial.

So I'm I'm wanting to understand why those numbers are different.

Yeah, I want to get you a thorough answer because I I think we probably have a disagreement and how we perceive uh that undercounting and whether it is nominal or substantial.

I think also some of the work that you've done just in general as a council, whether it's the assessment timeline and making sure that those things are aligned, because all of these things, just like our budget is a snapshot in time, you're doing projections on what your actual revenues as well as your expenditures are gonna be.

The one piece that I thought was very good by Mr.

Miller that was a great highlight was he kind of talked about this is our budget, our plan, but those things change throughout the year, and that's why you have your plan and then you have a little slight difference in your actuals.

So I'll take your question back and get you a written answer as to that difference, but I think based on when those decisions are made and what information is available at the time, I wouldn't see that as a large discrepancy.

But again, we likely differ on that.

Right.

Okay, so just to summarize the two things the documents that the administration will provide will be one a breakdown of the calculation on how we got to the surplus amount.

Yeah, I'm gonna look into that.

I don't know if I'm committing to that.

I'm gonna look into it because I'm not I want to make sure I know what you're asking for and I get you the right things, but yes, I understand.

Yeah, just looking to see the math that's as defined by city code, right?

Just ma'am, I'll look into that.

And then um, and then the second piece is to understand the discrepancy.

I'm not talking about future, I'm just talking about actual amounts, right?

So this is not projection, this is actual the actual amount stated in the budget for fiscal year 25 property revenue, right?

Property tax revenue in the budget book compared to the CAFR, it's a difference of 10 million dollars, and I'm hoping to get clarity on why that is.

Yeah, and I think I answered that for you, but I'll try to get an answer that's more to your liking when we provide it.

I think if is if you could just provide the line item of all the amounts that you know are in the CAFR, if we can understand how they we got to the CAFRE.

You are talking about the EFR.

I keep hearing I know you're switching between the two, but you're talking about the AFR.

You're you're just calling it something different, right?

Okay.

I'm just making sure I want to make sure I get you what you you're asking for.

Okay.

Thank you.

Thank you.

Um Miss Alba Bachar, I see your hand, but I want to make sure if there's anyone else who's not had an opportunity to ask a question at this time if there's an interest, if not.

Okay.

Seeing that Ms.

Alba Blacker.

Thank you.

Um, I just wanted to flag, and I don't know if this is for um the auditor or for the city administration, but on page 15 of the audit, it does say um the assessed value of taxable real estate in the city grew 7.5% and FY 25 from 14.6 billion to 44.6 billion, but that's actually 200 plus percent growth.

So I would just wanted to flag that as a judge.

As a typo.

Yeah.

Um you said 17.

Uh page 15.

1515.

Yes.

Um, and then I did have a question for Mr.

Donald.

Uh sorry, that's why I held it.

Um I know we I know you talked about you know not having all of the information from component areas at the time of the reporting deadline.

Um, again, I'm always trying to look forward.

So what I think one of the things that I I believe my colleague, Councilmember Gibson was trying to get to is like a listing of what those component areas are, like what you had at the time of that snapshot that was estimated, um, and then what you didn't have, so that that gives us a better picture.

So I think like naming those component areas would be very helpful.

And then um is that is that possible?

For partially, I believe so.

Remember, started in July.

So some of those things were already missing.

I know that I sat in on a board meeting uh maybe a month before we submitted for the ambulance authority, right?

Who I was one of the votes I had to be appointed so that we can vote to for theirs to come forward, it would be the same for RPS, so I think was the last component unit for sure.

And those are likely the two largest.

Um I can tell you that off the top of my head.

But there were others, and so we'll get you a list if that's what if that's gonna be helpful to you.

I think it I think it would be for edification.

Oh, sorry, is that okay?

Oh, um, and then just because I think knowing whether the component areas are internal to the city to City Hall versus partner agencies like Richmond Ambulance Authority.

That's a that's a helpful that's a helpful.

All of them would be all of the component units are external.

Okay, and then um the second piece of this is like moving forward uh uh is your team looking to create better processes or reporting with those component areas so that in the future we're getting that information sooner.

You hit the nail right on the head.

That's absolutely so we while this one in my audit, I'm going to take credit for it.

And I've never been late.

And so this is the first time, even though it occurred before I got here, I'll take that one and I'm not expecting to be late again.

I think one of the things that we're doing while I did it as a tongue-in-cheek comment that we're gonna be seeing each other in a couple of weeks after this, during the mid-uh year portion of what you would consider close out, we're doing that because we're not going to this is not pleasurable for me to be standing in front of y'all explaining why somebody else was late.

So I'm not gonna do it again.

So we are actually uh ramping up and moving all of our timelines and requirements up, not only on our staff, but also for our component units.

So it's not this is great question, and we're taking uh great lengths to make sure we expedite that process.

Okay, thank you.

Thank you, Mr.

Donald.

Um we are going to wrap up soon.

We have the last question that Mr.

Breton will give, but we if there are other questions, don't want anyone to lose that opportunity.

If you will get them to RJ, who will then get them to yourself for response, Mr.

Brenton.

Thank you.

Um actually did want to reiterate I appreciate that you um you know you don't consider the 10 million dollar change in the estimate to be a discrepancy, but um, but we are interested to know like what are the assumptions that you made about what you didn't know that turned out to be different from the reality, right?

And all and the volume of stuff that you didn't know to understand that to help us understand, you know, how good the estimates are gonna be.

Oh, sure, sure.

So um you're expressing that you had there's information you didn't have, and so I imagine you all had to make certain assumptions and guesses about the information you didn't have, right?

Which is understandable.

But helping us understand, you know, what the assumptions were that you made and then what was different when you got the information.

Um that would presumably help to explain how the estimate Oh, I can answer that right now, Councilmember Bretton.

Using some of those numbers, we were able to come up with comparing it to our activities and making the same assumptions for our partners.

We came with an estimate that allowed us to comply with the law.

Yeah.

Uh sensible.

So we'd love to see the comparison of that estimate to the reality, and that'll help us understand, you know, how an estimate can change.

When you say what's the difference, it's just that we got the information in from our component units.

So I it sounds like you might be asking for each one of their submissions so that we didn't have any information to actually utilize.

So you're asking for their information.

We'll get you that.

That's not an issue.

Certainly, I think I'm just asking asking you to compile it for us.

You know, just so it's easy to look at all at once.

Yeah, we'll bundle them all and send them over.

Thank you.

Um, I think I'm clear now.

I didn't understand that that was what council girl counselor Gibson wanted.

So we'll bundle them all and send those over.

Um I did have some questions, but some of the specific numbers did have have me asking some questions about the fact that the real estate tax collection was um eighteen point five million more than expected.

Um for personal property tax, I'm sorry.

I mean it's it's a lot, and I'm wondering if we know now what drove the difference between what was expected and what was collected.

Is that yeah, I know that that has been something that has kind of been a trend across the region.

I think those numbers are just up, but we can get you that as well.

Let me make sure y'all have captured that question.

I know.

And we have we're capturing them to get them back to you as well.

But I suppose um we can send another, you know, specific line item questions we can do by writing.

Yeah, please do.

Yes, we will.

And Mr.

Breton, if you would please make sure you get them to RJ has been recording all of the questions.

Thank you.

Um, to get them forward.

Uh CAO Donald, thank you.

All right.

And Mr.

Miller, thank you for the uh ACFAR report.

And the discussion look forward to the responses um as you're able to get those back to us.

At this time, Ms.

Jones.

I believe you have uh I'm all that the city council go into a closed meeting pursuant to subdivision A nineteen of section two dot two-three seven one one of the Virginia Freedom of Information Act to discuss briefings concerning specific cybersecurity threats to the public safety and the city's information technology system.

Ms.

Abbacher, will you second that motion?

Second, council is now voting on the motion to answer into a closed meeting.

Mr.

Bretton.

Miss Gibson.

Yes, Ms.

Jones.

What's this point?

Ms.

Trammell.

Hi.

Miss Abbacher.

Aye.

Vice President Jared.

President New Bill.

Aye.

That motion has been approved and a closed session will be held in a second floor large conference room.

Thank you.

But I think we can bring you there.

Yeah.

I'm appreciated the fact that we're called even the question about the property tax, right?

Banking on it in the middle of the year.

I got to pick it up in the morning.

Well, how long does it try to do that?

Yeah, I mean, it would be a I'll look I'll I was gonna say it would be better if you would like that one section from shackle.

Oh, so you like the cloud with one thing.

Well, yeah, uh yeah, we have some right now, but we're gonna have to find that bad.

Right.

Oh yeah.

I'm not leaving.

I called them an army.

Yeah.

Oh my god.

Yeah.

Oh yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

I think that's what I think that would be on the card.

Well, we have to make that one.

Yeah, I would have to get one.

Specifically, no.

Well, just second.

Okay, I'm gonna actually make the motion.

You ready, Miss Newbell?

Yes.

I second that motion.

Council is now voting on the motion to exit the closed meeting and enter into open session.

Mr.

Breton.

Aye.

Miss Gibson.

Yes.

And President Newville.

Aye.

The council hereby certifies to the best of all members' knowledge that only um public business matters lawfully exempted from open meeting requirements by the Virginia law were discussed in a closed meeting to which this certification applies.