Petersburg’s once bleak financial situation is starting to brighten.

Banking giant Wells Fargo provided a $6.5 million, short-term loan to the city last week that has eased the city’s financial crunch, enabled it to meet payroll through the end of the budget year on June 30 and ensured payment of current bills.

That includes making a $1 million payment that is past due to the South Central Wastewater Authority, the regional body that treats the city’s sewage, thus adhering to a court-approved settlement of the authority’s lawsuit and avoiding a debt default.

Now Petersburg is engaged in Phase II of its recovery — an overhaul of is long-term debt, according to interim City Manager Tom Tyrell. The overhaul will provide additional millions of dollars to cover unpaid bills that piled up prior to July 1.

“Our financial advisers and multiple state offices are working with the city to restructure its existing debt,” Mr. Tyrell announced Monday.

“This restructuring will allow us to accomplish two things: To build in cash-flow relief and to begin to pay back approximately $20 million owed to vendors,” he stated.

He stated that he, his staff and members of the Robert Bobb Group, the Washington-based consulting group that was hired seven weeks ago to foster a city turnaround, would begin meeting with vendors and vendor groups in January to discuss repayment plans.

In what could amount to a Phase III, Mr. Tyrell and the Robert Bobb Group received authority from Petersburg City Council on Tuesday night to consider a proposal from a private company, Aqua Virginia Inc., to take over the management and assets of the city’s water and wastewater systems.

The proposal calls for the company to own and operate the utility services, invest in essential improvements to the underground piping and assume responsibility for billing and collection.

Because the proposal was unsolicited, the city now must put the proposition out for bids to see if other companies want to compete. The city would then consider the options, according to Robert C. Bobb, the former Richmond city manager who heads the consulting firm.

Having a private company take over could improve service to residents, Mr. Bobb said, and free up city money to meet other needs.

“Petersburg’s water system is over 100 years old,” Mr. Bobb said. “Such an aging system has multiple leaks, but the city has no capital budget to make repairs.”

City Engineer Daniel Harrison said that the system dates back to the 1880s and includes “aging water mains and clay and cast iron pipes. We do not have an ongoing replacement plan, and our system is close to needing major improvements.”

Petersburg still faces challenges, including maintaining police and fire service. More than 40 police officers and firefighters reportedly have quit since July as a result of pay cuts. Other key city departments also have lost employees as a result of the financial situation.

Still, Mr. Tyrell sees hope, with the Wells Fargo loan coming before the city ran out of money. “It does give us breathing room,” he said.

He noted that the $6.5 million loan, plus 4.5 percent interest, must be repaid by October 2017. He said his staff is making sure that can happen as part of the redo of the city’s finances.

“We are operating according to the plan presented to City Council” in mid-November, Mr. Bobb said. “Petersburg is still in a crisis mode, and this is not the time to interpret short-term financing as a long-term accomplishment. 


“We need for the public and vendors to be patient,” he said. “Our plan is working, and we need cooperation from all to make it successful.”