City Management
Mayor John Ge ys Council Kathy Pender
David B. Vehaun City Manager
Jimmy Bagley Deputy City Manager
(Mayor Pro Tem)
Steven Gibson
John A. Black III
Deputy City Manager
Nikita Jackson Sandra Oborokumo
CONTENTS
James Reno Kevin Su on
Welcome le er ‐ 3 City Reports ‐ 4 By the Numbers ‐ 6 Transparency ‐ 7 Major Trends ‐ 8 Financial Basics ‐ 10 Budget v. Actual ‐ 12
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City Staff Mike Blackmon Fire Chief Phyllis Fauntleroy Human Resources
Director
Anne Harty Chief Financial Officer Cindi Howard General Services Director
Bill Meyer Planning & Development
Director
Terrence Nealy Public Works Director John Taylor Parks, Recrea on &
Tourism Director
Stephen Turner Economic & Urban
Debt ‐ 13
Mike Jolly
Capital Assets ‐ 14
Net Posi on ‐ 15
Chris Wa s Police Chief Jennifer Wilford Housing & Neighborhood
Electric Director
Mark Ke lewell
Water/Sewer Director
Development Director
Services Director
Rock Hill Residents, Quality takes a lot of effort, me, and dedica on. Quality also means being a responsible steward of the public dollar. To facilitate accountability and transparency, we provide financial informa on in several formats for our customers. Every month, a financial report and a financial dashboard disclose our revenues and expenses. Annually, the City also produces a Comprehensive Annual Financial Report, or CAFR. The CAFR consists of a number of audited financial statements that provide the overall financial posi on of the City. The audit is required by state law and ensures that the City conforms with Generally Accepted Accoun ng Principles (GAAP). This Popular Annual Financial Report condenses informa on from the CAFR into an easy‐to‐understand report. Although this report does not include all funds, assets, liabili es, and component units; it does provide the highlights of the City’s finances over Fiscal Year 2018. For more detail, please access the full CAFR at the City’s website at www.cityofrockhill.com/ transparency. In addi on to the financial posi on of the City, this report also includes data from economic, demographic, and performance data sources. I hope that you find this report helpful and informa ve. Sincerely, David B. Vehaun City Manager
Should you have any ques ons about this report, please feel free to contact any of the following personnel: City Manager David Vehaun david.vehaun@ cityofrockhill.com
Chief Financial Officer Anne Harty anne.harty@ cityofrockhill.com
Strategy & Performance Manager Lisa Brown lisa.brown@ cityofrockhill.com
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PAGE 4 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 City Reports
There are a number of reports and documents that provide the public with valuable informa on about our plans, goals, and progress. Here are brief descrip ons of some of these useful documents.
Strategic Plan Our City’s strategic plan is a roadmap that moves our vision into reality. Our plan is separated into three major focus areas; Quality Services, Quality Places, and Quality Community. We use our strategic plan to align financial resources with ini a ves that e to a broader vision. The goals and tasks included in this plan directly determine the City’s work plans. Twice a year, the City’s elected officials review progress on exis ng tasks. Mid‐year data is presented at a Council retreat and the Year‐End Report is issued with the final
Strategic Plan FY2018 Year‐End Report At the end of each fiscal year, the City reviews its strategic goals and tasks to gauge our progress based on performance metrics. Each task is given a stoplight color that provides the reader an easy‐to‐read indica on of our success. Addi onally, the report provides detailed informa on about the degree to which we achieved our goals These reports are used to hold ourselves accountable to our customers, the City Council, and residents. The year‐end reports are typically available in August of each year. 4
QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 5 City Manager’s Annual Report Each fall, the City Manager’s Annual Report highlights the accomplishments of the City over the prior fiscal year. Organized around the Strategic Plan’s focus areas of Quality Services, Quality Places, and Quality Community, this report provides a broader perspec ve as to completed construc on projects, internal focuses for employees, and community‐wide celebra ons. The Annual Report also includes a complete lis ng of the awards and recogni ons that the City has received. Fiscal Year 2018 saw a number of awards from regional, state, and na onal partners. Awards came from a variety of achievements from Traffic Safety DUI Enforcement to Program of the Year for the BMX World Championship to the 13th win of the Area‐Wide Op miza on Program (AWOP) Award for quality drinking water.
Comprehensive Annual Financial Report (CAFR) The Popular Annual Financial Report (PAFR) is a high level summary of the Comprehensive Annual Financial Report. A Comprehensive Annual Financial Report (CAFR) is a set of governmental financial statements comprising the financial report of a state, municipal or other governmental en ty that complies with the accoun ng requirements promulgated by the Governmental Accoun ng Standards Board (GASB). The CAFR financial statements are audited by an independent firm to confirm that the City fairly presented its financial statements. There are four main sec ons of our CAFR– the introductory, financial, sta s cal, and federal awards sec ons. The financial informa on is based on generally accepted accoun ng principles (GAAP). All reports are available on the City’s website: h p://www.cityofrockhill.com/transparency 5
PAGE 6 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 By the Numbers
Though the financial numbers of revenues and expenses are very important to the City of Rock Hill, our performance is also very important. The metrics below highlight the outputs/outcomes of a variety of City func ons and services.
34
square miles
miles of trails
89%
$6.2 million
City Facebook likes
in grants received
sports tourism economic impact
miles of City maintained roads
7,332
$40.4 million
225
75%
commercial fire inspec ons
strategic goals met
responded to within 5 min.
4,116
Police Priority 1 Calls
6
38.18
New Knowledge Park employees
building inspec ons
popula on
543
7,649
73,068
376 RHPD community events
127 organized neighborhood associa ons
42 homes saved from foreclosure
QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 7 Transparent and Accountable The City of Rock Hill has a number of funds, specific uses for certain funding sources, many different ways to borrow money, and different aspects within governmental accoun ng. For these reasons, the City offers a number of The City’s Financial Dashboard - www.cityofrockhill.com/transparency resources including financial dashboards and cost of public service comparisons. Accounts payable reports, showing the detail of all checks wri en, are available monthly on the City’s website. The City also provides a monthly financial dashboard that shows year‐to‐date and budget to The City’s Cost of Public Services Comparison - www.cityofrockhill.com/transparency actual comparisons. As a graphic representa on of the financial data, it can be more user‐friendly than tables of numbers.
The City not only provides informa on on revenues and expenses, but also ensures that our rates for taxes and u lity services are compe ve with other communi es. The City annually benchmarks the average cost of household expenses to 28 other ci es. The result is a cost of public service schedule showing that the City is compe ve in its service delivery. 7
PAGE 8 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 Major Trends The prepara on of the budget and the informa on provided in the financial statements are impacted by major economic trends. These trends include the local economy, long‐term financial planning, and the Knowledge Park Ac on Plan.
Economic and Demographic Characteris cs Source: Bureau of Labor Statistics
Unemployment in the area has steadily decreased. From a high of over 16% in 2009, the City saw the unemployment rate in 2018 drop to 3.8%, a low not seen since well before the recession. Historically, the City’s unemployment rate has been above county, state, and na onal averages; however, in 2018 Rock Hill unemployment dipped below the na onal average. This trend is, in part, the result of a large number of new companies with higher paying jobs in our area. The majority of these new jobs are found in the Tax Increment Financing (TIF) Districts of Riverwalk and the Tex le Corridor. There are a number of various business types that contribute to the overall health of our community which makes the City ‘s economy more diverse. In addi on to Rock Hill Top Employers employment growth, Employees there is an increase in Employer Type of Business (FTE) the value of Rock Hill School District Educa on 2,565 construc on ac vity. Piedmont Medical Center Healthcare 1,628 FY2018 saw permit valua on increase by Comporium Communica on 867 8% (from $287 million City of Rock Hill Government 860 in FY2017 to $310 Winthrop University Educa on 854 million in FY2018). This permit valua on Williams & Fudge, Inc Office 370 number includes any Beacon Medaes, LLC Manufacturing 350 changes/adjustments that occur during the West Marine Distribu on and Logis cs 300 construc on process. Source: York County Economic Development
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QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 9 Long‐Term Financial Planning The City recognizes the value of mul ‐year planning. For the past few decades, the City annually prepares a ten year long‐range plan. This allows City staff to balance two years of budgets at a me and then project funding gaps for the remaining three years before a mid‐plan update. This type of planning allows the City to proac vely plan for expenditure changes and future addi onal revenue sources. For the electric, water, and sewer public u li es, Water Treatment Plant construction the City also u lizes a ten year long‐range plan to project future plant expansions, maintenance projects, and adjustments to rates. In an effort to meet the projected needs of our customers, the City is currently working to expand the water plant to provide an addi onal 12 million gallons per day (MGD) of drinking water and to complete ini al upgrades to the wastewater plant to prepare for future expansion of sewage treatment capability.
Knowledge Park Ac on Plan The highest profile event this year was the development of the Knowledge Park Ac on Plan. This community effort engaged hundreds of ci zens in planning for the future of Rock Hill’s foremost economic development ini a ve. The February kickoff mee ng a racted more than 300 ci zens, and about 170 stakeholders par cipated in the work of eight ac on teams over a three‐month period. The Knowledge Park Ac on Plan celebra on held in June a racted more than 300 ci zens, with team leaders sharing their goals for Knowledge Park. In short, the table is set for the next three years to achieve the goals of the City Council’s new Strategic Plan. 9
PAGE 10 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 Financial Basics
There are many different forms of revenue and expenses. The descrip ons below provide a broad overview. For the full details of this informa on, please visit the City’s website and review the CAFR.
REVENUE SOURCES General Revenues– include property taxes, investment income, funding from other governments, and hospitality taxes (which is a fee on prepared food and beverages, etc.). Property taxes provide for the majority of General Fund expenditures, but only make up 12% of total City revenues. This percentage remained unchanged from last year. Program Revenues– revenues that are specifically ed to certain program expenses. Charges for services– this is revenue received for things like business licenses, electric, water, and sewer bills, solid waste fees, etc. This makes up 80% of all City revenues. Opera ng grants and contribu ons – usually grant funding received from the state or federal government that goes towards a specific program func on—making up 2% of all revenues. Capital grants and contribu ons– grant funding received from the state or federal government that goes towards a specific capital purchase—making up 6% of all revenues. 10
QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 11 PROGRAM EXPENSES Program expenses are generally broken down by City departments. The U lity Funds in the City (Electric, Water, Wastewater, and Stormwater) are also accounted for individually. There are two expense categories that include mul ple departments and divisions in the City: General Government– includes many of the support func ons in City government like the City Manager’s Office, Finance, and Human Resources. Public Safety– includes the Police, Fire, and Judicial Departments. The City par cipates in a joint‐ownership of the Piedmont Municipal Power Agency (PMPA). PMPA is a wholesale electric provider for ten ci es within South Carolina. The purchase of electricity to provide power to the community is the City’s largest expense. Electric expenses total 49% of the City’s budget. Core governmental services in Public Safety are the next largest expense account for 13% of expenses and General Government expenses amount to 12% of City expenses. Public Safety and General Government expenses are largely made up of salaries and benefits for City personnel. 11
PAGE 12 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 Budget vs. Actual Every year, the City adopts an annual opera ng budget based on priori es ar culated in the strategic plan. There are two main types of funds– governmental and enterprise funds. The general fund, the largest governmental fund, is financed primarily by property taxes and business licenses. The enterprise funds– electric, water, sewer, and stormwater – are mainly financed The chart to the right reflects budgetary results more from a cash or modified accrual basis than from the pure accrual basis required under GAAP.
*Does not include all funds
*Does not include all funds
The FY2018 budget totaled $236 million, a 5% increase over the FY2017 budget. This budget included no electric rate increase for the first me in 18 years. The budget included rate increases for water and sewer rates to fund capital improvements, resul ng in an average of $20 per month for residen al water customers and an average of $41 per month for wastewater residen al customers. In a con nual effort to be business friendly, the City con nued to offer a 5% discount for on‐ me business license fee renewals. Since 2011, the property tax millage rate has remained flat at 93.5 mills. In comparing budget to actual amounts, Fiscal Year 2018 was overall a favorable year for the City. The Actuals for “Other Financial Sources” in the General Fund were affected by proceeds for capital leases—both for replacement vehicles, equipment and electric buses which will formally begin opera on in FY2019. 12
QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 13 Debt Management A large part of Rock Hill’s long‐term financial planning focuses on managing debt. The City uses fiscal prudence in the issuance and repayment of debt. Debt is typically issued for large‐scale capital projects. These projects are included in the annual capital improvement plan and are reviewed by the management team quarterly. FY2018 Total Outstanding Debt Exis ng Debt Tax increment $ 29,136,000 16,687,000 There are two different types of long‐term debt General obliga on Limited obliga on 25,895,000 the City issues—debt repaid with general Municipal improvement district 4,304,000 revenues of the City (the full faith and credit of HUD Sec on 108 loan 1,344,000 the City) and debt repaid by a specific revenue SC DHEC loan 1,402,486 sources. The City monitors these different debt SC JEDA bonds 21,295,000 types to ensure that there is adequate capability U lity revenue 186,197,000 State revolving fund 17,956,749 for repayment. State statute authorizes the City $ 304,217,235 to issue, without referendum, general obliga on TOTAL debt not to exceed 8% of the total assessed value of property. General obliga on debt is typically used to finance public safety capital projects like the building of a new fire sta on. Debt issued from specific revenue sources (such as the U lity system or Hospitality tax) does not have legal limits. Currently, the City has exis ng obliga ons of approximately $304 million. This is an increase from the prior year exis ng debt of $287 million. The City issued $3.8 million in state revolving fund loans for stormwater and water projects, $1.7 million in tax increment financing bonds for infrastructure improvements in the Tex le Corridor TIF district, $1.6 million in limited obliga on bonds to pay off a por on of the Cycling facili es bank loans, $6.5 million in limited obliga on bonds to acquire property and make improvements to the site where the City is developing an indoor sports arena, $21.3 million in SC Jobs Economic Development Authority (SC JEDA) bonds for construc on of the indoor sports facility, $8 million in combined u lity system revenue bonds to refund its 2009A bonds, as well as addi onal capital lease debt for electric buses, vehicles and heavy equipment acquisi on. Construction of indoor sport facility 13
PAGE 14 ‐ QUALITY BY THE NUMBERS FISCAL YEAR 2018 Credit Ra ngs
The City is evaluated for its overall credit worthiness and for specific debt issuances. For general obliga on debt, the City has “AA‐” from Standard and Poor’s and “Aa3” from Moody’s. This means the City is considered to have high credit quality. Standard and Poor’s describes the “AA‐” ra ng as “very strong capacity to meet financial commitments.” For u lity related debt, the City has “A” from Standard and Poor’s and “A3” from Moody’s. Moody’s describes “A3” as “upper‐medium grade” and “subject to low credit risk.” Benchmark comparisons of the City’s credit ra ngs can be found at www.rankingrockhill.com. City crews repaving road
Capital Assets Capital assets include any property, equipment, or infrastructure (bridges, roads, sidewalks, etc.) that exceed $5,000 and have an es mated useful life of at least two years. Over the course of me, capital assets are depreciated by a straight line method based on the type of asset. The City’s total capital investment at the end of June 2018 was $378,209,499 (net of accumulated deprecia on and related debt). This investment is a 7.3% increase over the prior fiscal year. Capital assets represent 80% of the City’s assets. These capital assets include buildings, land, machinery, and equipment less any related debt outstanding. This year, the Huey Road electric substa on, Burgis Creek Pump Sta on, Cherry Road underground electric project, East White Street/Tex le Corridor work in the Knowledge Park area, and a major apron project at the airport were some of the larger, new capital projects. Almost $47 million of expenditures were capitalized this year to add to the City’s overall net posi on invested in capital assets. 14
Lige Street Park construction
QUALITY BY THE NUMBERS FISCAL YEAR 2018 ‐ PAGE 15 Capital Projects in Process There are a number of construc on projects going on throughout the City. All of these projects will impact future City’s capital assets in a posi ve way. A sample of the current projects is as follows:
Major road realignment projects and repaving inadequate City roads
W. Main/S. Cherry Road overhead to underground power lines
Cherry Park alternate exit
White Street pedestrian improvements
Various infrastructure improvements for City parks
Net Position
The statement of net posi on is a way to assess the balance of the City’s assets, or resources, minus the City’s liabili es, or financial obliga ons. This statement is organized by governmental and business‐type ac vi es. The governmental ac vi es includes assets and liabili es related to the general func ons of City government. Business‐type ac vi es include the enterprise fund assets and liabili es for electric, water, sewer, and stormwater. The City’s overall net posi on increased by 5% between FY2017 to FY2018. This increase was mainly due to contribu ons of capital assets received from developers and opera ng income from the electric, water, and sewer systems.
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www.cityofrockhill.com/transparency
City of Rock Hill 155 Johnston St. PO Box 11706 Rock Hill, SC 29731 www.cityofrockhill.com