August 13, 2020

COVID 19: What’s Next for Local Businesses and City Budgets?

COVID 19 Planning: What’s Next?

When the job market shifted because of COVID-19, workers were sent from their office spaces to work from home. Employees continue working from home and some businesses as well as local governments are rethinking how they do business. Office spaces have emptied out.

Businesses were shuttered for months on end and some may never return. Thousands of workers are now unemployed.

Your city has likely already considered the impact to city coffers due to the loss of employment revenues. Have you considered what this will mean for the built environment? What will become of the empty spaces and vacant buildings in your city?

While we wait for a COVID-19 cure or vaccine, now is the time to address the impact of this double whammy to city budgets.

Like businesses, city governments look for savings where they can find them. Some savings may be found in hiring freezes, elimination of vacant positions, reorganizing or reprioritizing the work itself. Other cuts may come by adjusting schedules to reduce overtime and perhaps overall numbers.

Additional value may be realized by evaluating current services. Are these services still a value to your citizens? Has technology surpassed your current provision and is upgrading too costly? Now is the time to consider how city services are being provided and assess whether it’s of value to your residents or rather a service provided because the city has always done it this way.

During leaner times, it’s good for cities to review service fees – does the current rate cover the costs of services being provided? Perhaps now is the time to establish a cross-functional team from different departments within the city. Ask them to track the revenue generated across each municipal service juxtaposed to the cost of providing the service, then compare the findings to the fee being charged.

As municipalities look at other cost-saving measures, they may turn to other assets such as buildings and properties. Are there any city-owned properties that can be reconfigured for another purpose; could your city consolidate multiple locations into one; do you need to consider liquidating a building that is no longer serving a need? What about leased spaces – should you renegotiate the terms or the duration? Would it be advantageous to enter a partnership or start a new joint development agreement with another entity, private or public?

It may be time to conduct an inventory of city-owned properties. If there are several, appoint a committee (including the city engineer or code enforcement officer, and a real estate professional) to look at the data and, assess possibilities and opportunities. Consider potential liabilities attached to each asset, perhaps there are valid reasons nothing has been done in the past. Bring the information to the city council/commission to determine next steps going forward.

With historically low interest rates the city may have a great opportunity to realize future savings by refinancing existing debt.

Does the city own any assets like undeveloped tracts of land and unused rights-of-way? Is it possible the city could provide land and partner with a telecommunication company or other energy/solar producer? Seek opportunities to use traditional sources to enhance streetlights, broadband and other public infrastructure needs.

With the economy sputtering and an uncertain health crisis facing us for the unforeseen future, cities should explore a range of cost-saving options. Your city may find value in unexpected places.