The council chamber in Radford holds about sixty people when it is full, and on a Monday night in April 2017, it is not full. A budget hearing on a spring Monday does not draw a crowd. Five seats at the front, a podium in the middle for anyone who wants to speak and mostly empty chairs.
Mayor Bruce Brown has a prepared statement in front of him, and when his turn comes, he reads it in an even voice. He is not a man built for performance. What he reads into the record that night is closer to an accountant’s memo than a speech.
“I am unable to support the proposed budget as it continues a trajectory that is not sustainable,” he says. “Simply put, we remain on a path that draws too heavily from our reserves.”
He keeps going, plainly. Years earlier, as Brown tells it, the council made a decision that seemed sound at the time: to feed the city’s general fund with profits from the municipal electric utility. He tells the room that power got more expensive after deregulation in 2008 and 2009. He tells them the foundry on West Main Street closed at the end of 2013 and took the city’s single largest electricity customer with it. He gives them the running total. The fiscal year now ending will finish about $1.5 million in the red. The budget on the table assumes another $3.5 million pulled from reserves to balance the next one. At that pace, he says, the city’s reserves across all funds will drop to roughly $5.5 million.
Then he reaches for the number he wants them to keep. The city’s budget reports that 54% of Radford’s real estate is exempt from property tax; then-Mayor Bruce Brown estimated 60% in 2017.
Here is the thing Brown is describing, in plainer terms than he uses. Radford is a city that cannot tax enough of its own ground to pay for itself, so it went into the electricity business and ran its government on the markup. For a while, that worked the way a crown works. It made a small place sovereign, able to fund its own schools and its own police on the spread between the power it bought wholesale and the power it sold to its residents. A crown built from electric load depends on someone buying the load, and the biggest buyer had just gone cold.
The vice-mayor speaks next, a retired Virginia Tech professor named Dick Harshberger, and he agrees. He says this is not a sustainable budget. He says he would vote for a tax increase. He says the city is below where it ought to be on reserves.
Then the council votes. Three in favor: Gropman, Marshall, Turk. Two against: Harshberger and Brown. The budget passes, three to two.
Brown’s statement goes into the minutes. So does the vote. The minutes go onto the city’s website, where they sit, in sequence with everything that came before them and everything that came after, for nine years before anyone outside the building reads them as a warning.
To understand what Brown meant about the foundry, you have to go back to a building most of Radford only ever called “the foundry,” as if there had only ever been one.
There had been four, depending on the year and the paperwork. Pipe Foundry. Special Foundry. Radford Foundry. New River Foundry. In one form or another, they had been pouring iron on the same ground at 1701 West Main Street, on the bank of the New River, since the 1890s. By 2000, the operation belonged to Intermet Corporation, which had bought it in 1986 and ran it as New River Castings. About a thousand people worked the site.
At half past nine on the night of Sunday, March 5, 2000, natural gas collects in the basement of the plant. About a hundred people are inside. A worker will later tell the Roanoke Times that they had been warned of a gas buildup.
The gas finds a flame. The blast throws twenty-foot flames over the building and takes out a wall of the main structure. Fire Chief Lee Simpkins, standing in what is left of the core department, describes mass destruction across an area the size of a ballfield and puts the damage above $30 million. The building is still burning when the trucks arrive.
Three workers die. Curtis Grooms is 29, from Floyd County. Debbie Sheppard is 37. Karen Anderson Hamilton is 35, and her husband Douglas is on the floor that night too, the two of them married only six months. He walks out. Her body is brought out of the rubble days later.
The state eventually fines the company $761,000, the largest workplace-safety penalty in Virginia history to that point. People on West Main had spent years complaining about the black dust that settled on their cars and their porches, a grievance state environmental officials had already taken up. After March 5, the dust stops being the thing anyone talks about.
The plant rebuilds. The iron pours again, and it goes on doing the other thing nobody outside city hall thinks about when they think about the foundry. It keeps buying electricity from the City of Radford, in industrial quantities, and the markup on that power keeps flowing into the budget that pays for the town. The foundry was two things at once that almost no one held in mind together. It was where people went to work and sometimes did not come home. It was also, quietly, part of how the city balanced its books. The same furnaces did both.
The iron does not pour much longer. In 2008, Intermet files for bankruptcy, and in 2009, it moves to close the New River Foundry and let its last 76 workers go. As the closing is announced, the city manager, Tony Cox, tells a reporter what the plant has quietly meant to Radford’s books. Utility sales to the foundry, he says, have bolstered the city’s general fund for a long time, though the figure has fallen with production and now comes to less than a tenth of it. A city manager is saying, on the record in 2009, the thing Brown will say to an almost empty room eight years later. The town runs partly on the foundry’s electric bill.
The plant gets a reprieve. In 2010, a Virginia holding company, Virginia Casting Industries, buys the shuttered facility and promises to bring it back, pledging 300 jobs and a $9.1 million investment. Governor Bob McDonnell’s office puts up a $600,000 grant tied to those milestones, and the city matches it with a $600,000 electric-utility credit, a $1.2 million public bet on the foundry’s return. VCI never reaches three hundred jobs. In March 2012, it sells the plant to Grede Holdings, a Michigan company that runs 16 other foundries, and the job promise transfers with the keys.
Grede has owned the place about 60 days when, at a quarter past midnight on Sunday, May 27, 2012, a melting furnace loaded with molten iron lets go. About ten people are on the weekend watch. The blast throws a four-by-eight-foot sheet of metal through the roof, and it lands 200 yards away. Lee Simpkins, the same fire chief who stood in the wreckage in 2000, calls it the worst he has seen at the plant since. This time, no one is hurt.
In September 2013, Grede gives notice. Twenty-eight salaried workers on a Tuesday, 234 hourly workers on Wednesday. The company blames a lack of competitive cost structure and the lingering damage from the fire. In December, the furnaces go cold for good.
The town felt that the way a town feels a factory closing. Jobs gone, a payroll erased, a skyline gone quiet. What the town could not feel, because it does not arrive on any single day, was the other thing leaving: the city’s largest electricity account, and with it, the biggest single source of the markup the general fund had been living on. The lights in the houses stayed on. The crown lost a stone, and the drawdown it began would take nine years to reach the floor.
Why a city of 16,500 was in the electricity business at all begins with its ground. Radford is ten square miles on the New River, and it cannot grow. Virginia law freezes the borders of its independent cities, so Radford cannot annex its way out of trouble the way a county can. Inside those ten square miles sits Radford University, the city’s largest employer and its pride, founded in 1910 and, as a state institution, exempt from property tax on a large share of the most valuable land in town. Just outside the line sits the Radford Army Ammunition Plant, a federal facility that has carried the city’s name since 1941 and employs much of the New River Valley, which pays the city, as federal land, nothing. The arsenal gives Radford its name. It does not give Radford its budget.
So the city did the math, as a cornered small place does. If you cannot tax enough of your ground, you find another stream. Radford is one of only 12 localities in Virginia that buys electricity wholesale from Appalachian Power and resells it to its own residents and businesses at retail. The spread between those two prices became the backbone of the general fund. By the year Brown stood up to read his statement, the city’s own budget put the transfer from the Electric Fund to the general fund at just over $4 million, more than a fifth of all the electricity the city sold, and the budget said in writing why the transfer was necessary: because 54% of the city’s real estate is not taxable.
Fifty-four. Brown, at the podium, had said 60. He was not lying, and he was not far off. A clear majority of the most valuable land in his city genuinely produced no property tax, which is a remarkable thing to be true of any place. He had simply rounded up, the way a person rounds up when he is trying to make a room understand something he can see and they will not. The number on the page beside him was 54. The number in his mouth was 60. The gap between them is the small human distance between a warning and the record that outlives it.
Radford’s trouble was never that it spent wildly or that anyone stole. The trouble was structural and nearly arithmetical: a city-sized government standing on a town-sized tax base, propped up by an electricity markup that depended on industrial customers who were leaving. The taxable base was not even shrinking. Over two decades, it grew. What shrank was the markup. The foundry went cold, and not long after, Radford University built its own power plant and stopped buying from the city, taking another $1.25 million of load with it, and Pulaski County stopped honoring an old revenue-sharing deal, taking 200,000 more. The city kept selling power. It simply had fewer and smaller customers to sell it to.
Tommy Turner of Christiansburg is a researcher whose work on institutional governance and Virginia policy has appeared in the Richmond Times-Dispatch, the Virginian-Pilot, the Roanoke Times and Virginia Mercury. Part two on Thursday follows the nine years between Brown’s warning and the day the state arrived to say the same thing.
A note on sources: every quotation, vote, figure and date is drawn from public records published by the City of Radford, the Virginia Auditor of Public Accounts, the Federal Audit Clearinghouse and the Virginia Department of Labor and Industry, and from contemporaneous reporting by The Roanoke Times and Cardinal News.
