City Management
Mayor John Gettys
David B. Vehaun City Manager
Council Kathy Pender
Jimmy Bagley Deputy City Manager
(Mayor Pro Tem)
John A. Black III
Steven Gibson Deputy City Manager
Nikita Jackson Sandra Oborokumo James Reno Kevin Sutton
CONTENTS
Welcome letter - 3 City Reports - 4 By the Numbers - 6 Transparency - 7 Major Trends - 8 Financial Basics - 10 Budget v. Actual - 12 Debt - 13 Capital Assets - 14 Net Position - 15
City Staff Mike Blackmon Fire Chief
Deana Keever Human Resources Director
Anne Harty Chief Financial Officer
Cindi Howard General Services Director
Mike Jolly Electric Director
Mark Kettlewell Water/Sewer Director
Bill Meyer Planning & Development Director
Terrence Nealy Public Works Director
John Taylor Parks, Recreation & Tourism Director
Stephen Turner Economic & Urban Development Director
Chris Watts Police Chief
Jennifer Wilford Housing & Neighborhood Services Director
Should you have any questions about this report, please feel free to contact any of the following personnel: Rock Hill Residents, Serving, engaging and growing Rock Hill takes a lot of effort, time, and dedication. Serving, engaging and growing Rock Hill also means being a responsible steward of the public dollar. To facilitate accountability and transparency, we provide financial information in several formats for our customers. Every month, a financial report and a financial dashboard disclose revenues and expenses. Annually, the City produces a Comprehensive Annual Financial Report, or CAFR. The CAFR consists of a number of audited financial statements that provide the overall financial position of the City. The audit is required by state law and ensures that the City conforms with Generally Accepted Accounting Principles (GAAP).
This Popular Annual Financial Report condenses information from the CAFR into an easy-to-understand report. This report does not include all funds, assets, liabilities, and component units; however, it does provide the highlights of the City’s finances over Fiscal Year 2019. For more detail, please access the full CAFR on the City’s website at www.cityofrockhill.com/ transparency. In addition to the financial position of the City, this report also includes data from economic, demographic, and performance data sources. I hope that you find this report helpful and informative.
Sincerely, David B. Vehaun City Manager
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
PAGE 4 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 City Reports There are a number of reports and documents that provide the public with valuable information about our plans, goals, and progress. Here are brief descriptions of some of these documents.
Strategic Plan Our City’s strategic plan provides a roadmap that guides our vision into reality. Our plan is separated into three major focus areas; Serving the community, Engaging residents, and Growing Rock Hill. We use our strategic plan to align financial resources with initiatives that tie to our 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 existing tasks. Mid-year data is presented at a Council retreat and the Year-End Report is issued with the final annual results.
Strategic Plan FY2019 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 indication of our success. Additionally, the report provides detailed information 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 yearend reports are typically available in August of each year.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - 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 Serving, Engaging, and Growing; this report provides a broader perspective as to completed construction projects, internal focuses for employees, and community-wide celebrations.
The Annual Report also includes a complete listing of the awards and recognitions that the City received. Fiscal Year 2019 saw a number of awards from regional, state, and national partners. The highlight of our awards this year was recognition from the National Civic League as an All-America City. This award came to the City exactly 50 years following our first designation as an All-America City.
Comprehensive Annual Financial Report (CAFR) The Popular Annual Financial Report (PAFR) is a high level summary of the Comprehensive Annual Financial Report. The Comprehensive Annual Financial Report (CAFR) is a set of governmental financial statements comprising the financial condition of a state, municipal or other governmental entity that complies with the accounting statements maintained by the Governmental Accounting 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 sections of our CAFR– the introductory, financial, statistical, and federal awards sections. The financial information is based on generally accepted accounting principles (GAAP). All reports are available on the City’s website: http://www.cityofrockhill.com/transparency
PAGE 6 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 By the Numbers Though the financial impact 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 functions and services.
74,309
7,367
population
building inspections
38.4
34
square miles
miles of trails
3.18 minutes
Avg. Police Priority 1 Calls response time
72% strategic goals met
8,313
$6.7 million
City Facebook likes
in grants received (CY)
$14.8
127
million (CY) sports tourism economic impact
organized neighborhood associations
35 events hosted in Old Town
5,585 Fire inspections
200 centerline miles of City maintained roads
398 RHPD community events
84% Code Enforcement cases voluntarily abated
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - PAGE 7 Transparent and Accountable The City of Rock Hill has a number of funds and funding sources that make up the official financial statements. The City also offers a number of resources including financial dashboards and cost of public service comparisons to help residents understand the City’s finances.
The City’s Financial Dashboard - www.cityofrockhill.com/transparency
Accounts payable reports, showing the detail of all checks written, are available monthly on the City’s website. The City also provides a monthly financial dashboard that shows previous year and year-to-date and budget to actual comparisons. As a graphic representation of the financial data, it can be more intelligible than tables of numbers. The City not only provides information on revenues and expenses, but also presents City rates for taxes and utility services showing they are competitive with other communities. The City annually benchmarks the average cost of household expenses to 28 other cities.
The City’s Cost of Public Services Comparison - www.cityofrockhill.com/transparency
PAGE 8 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 Major Trends The preparation of the budget and the information provided in the financial statements are impacted by economic trends. These trends include the local economy, long-term financial planning, and the larger national economy.
Economic and Demographic Characteristics Unemployment in the area has steadily decreased. From a high of over 16% in 2009, the City saw the unemployment rate in 2019 drop to slightly more than 4%.
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics This overall trend of decreasing Rock Hill unemployment rate, in part, is the result of a concerted effort to attract and develop new businesses within Rock Hill. Many of these new jobs are found in the Tax Increment Financing (TIF) Districts of Riverwalk and the Textile Corridor. Additionally, our entrepreneurship and business mentoring programs create jobs within Rock Hill.
While the unemployment rate remains relatively low, there was a decrease in the value of construction activity. FY2019 saw permit valuation decrease by 14% (from $297 million in FY2018 to $260 million in FY2019). This permit valuation number includes any changes/adjustments that occur during the construction process. The City of Rock Hill monitors economic trends to ensure that City fiscal policy is prepared to weather any changes in circumstance that may affect our local economy.
Rock Hill Top Employers Employer Rock Hill School District Piedmont Medical Center Winthrop University Comporium City of Rock Hill Atlas Copco USA Williams & Fudge, Inc.
Type of Business
Employees (FTE)
Other Other Other Other Other Manufacturing Office
2,484 1,650 1,170 890 860 500 370
Source: York County Economic Development
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - PAGE 9 City Initiatives The City recognizes the value of multiyear 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 time and then project funding gaps for the remaining three years before a mid-plan update. This type of planning allows the City to proactively plan for expenditure changes and future additional revenue Wastewater Treatment Plant construction sources. For the electric, water, and sewer public utilities and stormwater, the City also utilizes 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 additional 12 million gallons per day (MGD) of drinking water and to complete initial upgrades to the wastewater plant to prepare for future expansion of sewage treatment capability.
Resource Education & Development Initiative (REDI) Resource Education & Development Initiative (REDI) is a neighborhood focused effort to understand and prioritize concerns of local residents. The pilot neighborhood in Catawba Terrace used input Alpha Phi Alpha sidewalk cleanup in Catawba Terrace from the neighborhoods, to better identify and target resources to address specific needs. Some needs can be fulfilled by the City, but other needs are addressed by community partners such as the Alliance for Catawba Terrace. Since beginning this effort in 2017, there have been community clean-ups, a decrease in crime, and a reduction in fire issues. The City looks forward to expanding this program into other neighborhoods in the coming year.
PAGE 10 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 Financial Basics There are many different forms of revenue and expenses. The descriptions below provide a broad overview. For the full details of this information, 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 is a slight increase from the previous year. Program Revenues– revenues that are specifically tied 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 76% of all City revenues. Operating grants and contributions – usually grant funding received from the state or federal government that goes towards a specific program function—make up 2% of all revenues. Capital grants and contributions– grant funding received from the state or federal government that goes towards a specific capital purchase—make up 6% of all revenues. Investment earnings picked up dramatically. Better net results from electric coupled with steadily rising market interest rates resulted in interest earnings significantly higher than the prior year.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - PAGE 11 PROGRAM EXPENSES Program expenses are generally broken down by City departments. The Utility Funds in the City (Electric, Water, Wastewater, and Stormwater) are also accounted for individually. There are two expense categories that include multiple departments and divisions in the City: General Government– includes many of the support functions in City government like the City Manager’s Office, Finance, and Human Resources. Public Safety– includes the Police, Fire, and Judicial Departments. The City participates in a joint-ownership of the Piedmont Municipal Power Agency (PMPA). PMPA is a wholesale electric provider for ten cities within South Carolina. The purchase of electricity to provide power to the community is the City’s largest expense. Electric expenses total 44% of the City’s budget. Mild weather patterns created lower demand and decreased the total electric expenses. Core governmental services in Public Safety are the next largest expense and account for 13% of expenses. 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. Interest on long-term debt increased as the City issued new utility revenue bonds, new installment purchase revenue bonds, and state revolving fund loans.
PAGE 12 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 Budget vs. Actual Every year, the City adopts an annual operating budget based on priorities articulated 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 through user fees. The chart above reflects budgetary outcomes on a cash or modified accrual basis rather than from the pure accrual basis required under GAAP. The FY2019 budget totaled $246 million, a 4% increase over the FY2018 budget. This budget included no electric rate increase for a second year. The budget included a 3% rate increase for wastewater rates to fund capital improvements, resulting in an average of $1.30 per month increase for residential wastewater customers, as well as a 5.91% increase in water rates, resulting in a $1.20 per month increase for residential water customers. In a continued effort to be business friendly, the City restructured business license fees, simplifying fees under which 94% of businesses will pay less than the prior year. Since 2011, the property tax millage rate has remained flat at 93.5 mills.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - 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.
FY2019 Total Outstanding Debt Tax increment General obligation Limited obligation Municipal improvement district HUD Section 108 loan Installment purchase revenue bonds SC DHEC loan SC JEDA bonds Utility revenue bonds State revolving fund loans
TOTAL
25,961,000 15,430,000 17,915,000 3,959,000 1,232,000 28,960,000 1,194,267 21,295,000 239,477,000 25,027,572
$ 380,450,839
Existing Debt There are two different types of long-term debt the City issues—debt repaid with general revenues of the City (the full faith and credit of the City) and debt repaid by a specific revenue sources. The City monitors these different debt types to ensure that there is adequate ability to repay the debt. State statute authorizes the City to issue, without referendum, general obligation debt not to exceed 8% of the total assessed value of property. General obligation debt is typically used to finance public safety capital projects like the building of a new fire station. Debt issued from specific revenue sources (such as the Utility system or Hospitality tax) does not have legal limits. Currently, the City has existing obligations of approximately $380 million. This is an increase from the prior year debt which was $304 million. The City issued $8 million in state revolving fund loans for stormwater and water projects; $28,960,000 in installment purchase revenue bonds for a parking deck and other infrastructure improvements in the Textile Corridor TIF district; $76,225,000 in combined utility system revenue bonds for expansion of the water filter plant from 48 MGD to 60MGD and to refund all of its outstanding 2009B bonds. Additionally, there is capital lease debt which includes equipment for the new indoor sports arena and vehicles/heavy equipment replacement. Construction of indoor sport facility
PAGE 14 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 Credit Ratings The City is evaluated for its overall credit worthiness and for specific debt issuances. For general obligation 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-” rating as “very strong capacity to meet financial commitments.” For utility related debt, the City has “A” from Standard and Poor’s and “A2” from Moody’s. Moody’s describes “A2” as “upper-medium grade” and “subject to low credit risk.” Benchmark comparisons of the City’s credit ratings can be found at www.rankingrockhill.com.
Fire Training Tower
Capital Assets Capital assets include any property, equipment, or infrastructure (bridges, roads, sidewalks, etc.) that exceed $5,000 and have an estimated useful life of at least one year. Over the course of time, 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 2019 was $397,107,612 (net of accumulated depreciation and related debt). This investment is a 5% increase over the prior fiscal year. Capital assets represent 79% of the City’s assets. These capital assets include buildings, land, machinery, and equipment less any related debt outstanding. This year, continued work on the indoor sports arena, investment in the water/sewer system and a major apron project at the airport were some of the larger, new capital projects. Almost $122 million of expenditures were capitalized this year to add to the City’s overall net position invested in capital assets.
Armory Park ribbon cutting
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2019 - PAGE 15 Capital Projects in Process There are a number of construction projects going on throughout the City. All of these projects will impact future City’s capital assets in a positive way. A sample of the current projects is as follows:
Major road realignment projects and repaving City roads
W. Main/S. Cherry Road overhead to underground power lines
Apron project at the airport
White Street pedestrian improvements
Various infrastructure improvements for City parks
Net Position The statement of net position is a way to assess the balance of the City’s assets, or resources, minus the City’s liabilities, or financial obligations. This statement is organized by governmental and business-type activities. The governmental activities includes assets and liabilities related to the general functions of City government. Business-type activities include the enterprise fund assets and liabilities for electric, water, sewer, and stormwater. The City’s overall net position increased by 9.5% between FY2018 to FY2019. This increase was mainly due to contributions of capital assets received from developers and operating income from the electric, water, and sewer systems.
www.cityofrockhill.com/transparency
City of Rock Hill 155 Johnston St. PO Box 11706 Rock Hill, SC 29731 www.cityofrockhill.com