After Richmond’s auditor found numerous problems with how the city gives money to local nonprofits, the budget Mayor Danny Avula introduced last month would repeal legal safeguards meant to prevent the misuse of public funds given to charitable groups.

The pending budget would also repeal a rule requiring the city attorney’s office to produce written legal opinions and make them available to anyone “affected by the opinion or having an interest in the opinion.”

Additionally, the proposed budget weakens rules requiring high-ranking City Hall officials to live in the city. The plan would lift the residency requirement for two officials — the directors of social services and information technology — while making it easier for others to get waivers letting them live outside Richmond.

The three policy changes were included in the 115-page budget ordinance the City Council has to pass by May, making them less likely to draw the attention they might receive if filed as standalone legislation. 

The proposals went largely unmentioned last week as Avula and other City Hall officials presented the $1 billion operating budget to the council. They appear only in the more technical ordinance the council must approve to enact the new budget, not in the 600-page budget book outlining the city’s projected revenues and expenditures.

It’s not uncommon for officials to clean up outdated or contradictory code sections through the budget. 

For example, Avula’s proposal also strikes an archaic rule requiring the budget to be presented at exactly 3 p.m. on March 27, an oddly specific time that caused scheduling difficulty this year.

But the other changes go beyond minor technical fixes, eliminating or weakening more significant statutory rules City Hall was apparently finding it difficult to follow.

The budget was created with input from both the new mayor’s team and officials who worked in City Hall before Avula took office, such as interim Chief Administrative Officer Sabrina Joy-Hogg and City Attorney Laura Drewry.

In response to an inquiry from The Richmonder, Avula said he was aware of the policy proposals, but wasn’t expecting them to show up in his budget.

“While I discussed many of these items with my team during the rush of our compressed budget season, I did not intend for those items to be included in the budget ordinance,” Avula said. “I've got some work to do to iron out our internal processes, and I remain committed to a collaborative, transparent process working together with City Council.”

Acknowledging council members might not appreciate finding surprises tucked away in a dense budget document, Avula said he would ensure the council receives full presentations on the policy changes.

After The Richmonder asked why issues largely unrelated to the budget had been written into the budget ordinance, Avula sent the City Council an apology on behalf of his administration, saying he too had just learned about it.

“If I put myself in your shoes, I would feel like this was the opposite of the trust building, collaborative approach I have pledged to take with you all, and I’m sorry for that,” Avula said in a text message to council members.

Non-departmental grants/outside agencies

In February, City Auditor Riad Ali issued a report that found the city had a lax and seemingly arbitrary process for awarding grant money to local nonprofits that provide services ranging from youth programs to housing assistance to arts and culture initiatives. 

Ali found the city didn’t have proper protocols in place to ensure that public grant funding was being used correctly or efficiently. 

In response to the audit, Joy-Hogg said the city could consider the funding for nonprofits to be gifts instead of grants. She also said the city doesn’t have the staff to do the type of rigorous grant oversight the auditor envisioned.

Instead of beefing up enforcement and oversight of grant contracts as the auditor suggested, the proposed budget repeals the entire code section that requires performance contracts when public funding is given to nonprofits.

The code section targeted for repeal says grant contracts must contain “specific performance measures sufficient to enable the city to determine whether the non-city entity actually has provided the services.” It requires nonprofits to report back to the city on whether they met their performance goals. 

The to-be-repealed code section also declares it “unlawful” for city employees to give money to nonprofits without a contract in place and says some improper transfers or expenditures of public funds can be punished as a misdemeanor crime.

Several City Council members have asked for more detailed information on how nonprofits are using the public money they receive. But the mayor’s proposal eliminates a rule requiring the administration to submit yearly reports to the council on how city-funded nonprofits performed.

Avula has said the city is planning to overhaul how it funds nonprofits and will put a new system in place for next year’s budget cycle. His proposal redefines what was previously known as the non-departmental grant program and now labels it funding for “outside agencies.”

The repeal of the existing legal guidelines, the mayor said, is part of that broader revamp.

“We want to start with a clean slate and design a process that’s more efficient and works better for the community organizations we fund, city staff, and City Council,” Avula said. “Council will soon receive detailed information on this year's process in the upcoming budget work sessions.”

The city could reinstate some of the nonprofit funding rules through the new procedures Avula says he intends to enact for the next budget cycle. But because the existing guardrails would be fully erased from the city code, there's no guarantee any future oversight mechanism would be as strict and legally binding as the one being eliminated.

Legal opinions

Josh Stanfield — a political activist and transparency advocate who has battled City Hall over a Freedom of Information Act request he filed with former City Council candidate Paul Goldman —  has called attention to a section of Richmond’s city code that requires the city attorney’s office to produce written legal opinions and make those opinions broadly available.

That rule would be axed under Avula’s budget.

Advice to officials from government lawyers is generally considered confidential under attorney-client privilege. But the city code section laid out a process similar to one followed by the Virginia attorney general’s office, which publishes formal opinions on how state laws should be interpreted. 

Stanfield has highlighted Richmond’s unusual legal transparency rule in his Substack newsletter and noted that the city attorney’s office doesn’t appear to be following it.

The city’s rule on legal opinions says when the attorney is asked for an opinion on “any question of law,” the office should respond in writing “as often and as fully as practicable.” 

Those written opinions are supposed to be kept on file, open to inspection by interested people and compiled in an index, according to the city code.

In response to a FOIA request seeking records of Richmond legal opinions, Stanfield wrote, the city attorney told him her office had no such documents because it was “unclear at what point a given piece of legal analysis rises to the level of an opinion.” 

The mayor’s budget seems to align the city code with Drewry’s position by simply getting rid of the rule.

“This language was requested by the city attorney in order to make it abundantly clear that her office can provide confidential advice to City Council and the city administration,” Avula said of the repeal measure in his budget.

Stanfield sees it as a step backward for transparency in Richmond government.

“It seems telling that in the inaugural budget of the new mayor they’re going to slip in a measure to repeal one of the only transparent bits of law in the Richmond code,” he said.

Residency rules

A dozen high-ranking city officials are required to live in Richmond while working for the city. 

Residency rules are common in local government and are meant to ensure that top appointed officials — such as the chief administrative officer and police chief — are part of the community they serve even though they’re not elected by voters.

The introduced budget strikes the directors of social services and information technology from the list of officials subject to the residency rule, and waters down the process through which the remaining 10 officials can seek a waiver allowing them to live elsewhere.

Under existing rules, waiver requests must be supported by written documentation and show a particular hardship the official would face from having to move, such as losing a significant amount of money on the sale or purchase of a home, losing access to special educational or medical services or needing to care for a family member.

The revised system proposed in the budget gets rid of the rule requiring written documentation and would allow the city to grant waivers simply by deeming the employee uniquely valuable or declaring they have “extenuating personal circumstances” that justify not living in Richmond.

In an article about the residency rules published last month, the Richmond Times-Dispatch reported that three current officials have been granted waivers: Department of Public Utilities Director Scott Morris, Department of Information Technology Director Scott Todd and Drewry.

Officials told the paper that Morris and Todd qualified for waivers under the existing rules, but the city didn’t explain why Drewry was allowed to live in Henrico County.

Avula said reforming the residency restrictions would improve the city’s ability to hire for top jobs.

“The existing residency requirements for high-level staff make it difficult to recruit and retain the best and most-qualified candidates,  especially when many candidates do not want to potentially uproot their families at the end of a four-year election cycle,” Avula said.  “I agree with reducing the number of positions with a residency requirement and with shifting the waivers towards more business-needs-based guidelines. I look forward to discussing these changes with City Council and the public.”