City Management
Mayor John Gettys, Jr.
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
Derrick Lindsay James Reno Kevin Sutton
CONTENTS
Welcome letter - 3 City Reports/Awards - 4 By the Numbers - 6 Financial Transparency - 7 Major Trends - 8 Financial Basics - 10
City Staff Mike Blackmon Fire Chief
Budget v. Actual/ Millage Rate - 12
Deana Keever
Debt - 13
Anne Harty
Credit Rating - 14
Cindi Howard
Capital Assets - 14 Capital Projects - 15 Net Position - 15
Human Resources Director Chief Financial Officer 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, Our Strategic Plan is built around three core areas: Serving Our Community, Engaging Residents, and Growing Rock Hill. Serving, Engaging, and Growing also means dedication to responsible stewardship of public dollars even through catastrophic effects. COVID-19 has affected our community, like many others, but we remain on track to achieve our strategic goals and do so in a fiscally responsible manner. 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). Another tool is this Popular Annual Financial Report, an effort to condense 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 2020. 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 that give context to why tax dollars are spent in the way they are. 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 2020 City Reports/Awards There are a number of City 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 and FY2020 Year End Report The Rock Hill Strategic Plan FY2019—FY2021 plan provides a roadmap that guides Rock Hill’s vision into reality. The plan is separated into three major focus areas; Serving the community, Engaging residents, and Growing Rock Hill. Rock Hill uses the strategic plan to align financial resources with initiatives, tying them to the broader vision. The goals and tasks included in this plan directly determine the City’s work plans. The City’s elected officials review progress on existing tasks regularly throughout the year. At the end of each fiscal year, the City reports out performance metrics on strategic goals and tasks to gauge progress. Each measure is given a “stoplight” color that provides the reader an easy-to-read indication of success. Additionally, the report provides more detailed information about the degree to which goals were achieved.
This report holds the City accountable to its customers, City Council, and residents. The year-end report is typically available in August of each year. The FY2020 report highlights the performance of the second year of Rock Hill’s three-year strategic plan. Rock Hill’s performance management efforts, including the strategic plan and annual reporting earned ICMA’s Certificate of Excellence in Performance Management in FY2020. The City’s FY2020 Performance Report can be found on the Government Transparency and Performance website.
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). Rock Hill received both the Award for Outstanding Achievement in Popular Annual Financial Reporting and Certificate of Achievement for Excellence in Financial Reporting in FY2020.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - PAGE 5 City Awards Fiscal Year 2020 saw a number of awards from regional, state, and national partners including many for Rock Hill programs and initiatives. Municipal Association of South Carolina 2020 Achievement Award The My Ride transit system won the 2020 Award in the category of Public Service. The award honors innovation and excellence in local government projects and services. American Public Power Association Reliable Public Power (RP3) Award This award recognizes the City of Rock Hill as a leading power provider on a national level. For the first time, the City’s RP3 award included the Diamond designation placing the City among the top recipients for this award. South Carolina American Public Works Association Project of the Year Our stormwater services received 2020 SCAPWA Project of the Year for their work on the Cotton Mill Stream Restoration.
National Institute for Automotive Service Excellence (ASE) Blue Seal of Excellence Our Fleet Maintenance staff continue to meet the Blue Seal of Excellence Recognition Program standards established by the ASE. The eligibility criteria require at least 75% of the technicians to have at least one ASE Certification. Many of our technicians have multiple certifications and 4 are designated as master technicians. The Division is now 100% certified.
2019 International Code Council Innovation in Code Administration Award The Rock Hill Open for Business Program was named the winner of this prestigious national award for the work that we do with new small businesses in the community. Commission on Accreditation for Law Enforcement Agencies Certificate of Advanced Accreditation with Meritorious Ranking Our Police Department completed a successful on-site review of its operations and received its 7th consecutive certification. International Economic Development Council 2019 Silver Award for Excellence in Economic Development Entrepreneurship The Technology Incubator received this award in recognition of their work on the Venture Mentoring System. Insurance Services Office (ISO) ISO 1 Classification Rock Hill Fire Department maintains an ISO 1 designation.
PAGE 6 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 By the Numbers Though the financial impact of revenues and expenses outline important information on Rock Hill operations, our performance measures show what has been accomplished by the City. The metrics below highlight some demographic as well as performance inputs, outputs, and outcomes of a variety of City functions and services.
75,048
34.6
Population*
Median Age**
39.8
34
square miles
miles of trails
3.6 minutes
69%
$50,444 Median household Income**
23% Population Under 18**
191
strategic goals met
centerline miles of City maintained roads
6,667
$7.3 million
3,035
building inspections
in grants received (CY)
Fire inspections
$29
127
million sports tourism economic impact (CY)
organized neighborhood associations
Avg. Police Priority 1 Calls response time
*US Census, 2020 population estimate **US Census, 2019 ACS, 5-year estimates
90% Code Enforcement cases voluntarily abated
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - PAGE 7 Financial Transparency The City of Rock Hill has a number of funds and funding sources that make up the official financial statements. The City also offers public facing resources including monthly financial reports and cost of public service comparisons to help residents understand the City’s finances.
From the Rock Hill Financial Monthly Report, May 2020
Financial Data and Comparisons Accounts payable reports, showing the detail of all checks written, are available monthly on the City’s website. The monthly financial reports provide graphs for reader consumption. As a graphic representation of the financial data, it can be more clear than tables of numbers and do a better job of highlighting trends. 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 any related household expenses to 28 other cities. The City sees to balance rates in a fiscally responsible manner that provides reasonable rates to customers while also reinvesting in infrastructure.
From the Rock Hill City’s Cost of Public Services Comparison
All reports are available on the City’s website: http://www.cityofrockhill.com/transparency
PAGE 8 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 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 local and state financial implications, and the larger national economy.
Economic and Demographic Characteristics After years of a steadily decreasing rates, Rock Hill experienced a significant increase in unemployment rate with the COVID-19 public health response that began in March 2020. Although the COVID-19 related unemployment rate has not reached the same level as the Great Recession, the City has worked to help impacted residents and businesses. Due to the pressure brought about from the pandemic, the City of Rock Hill remains committed to attracting and retaining businesses. Rock Hill shifted to resident and small business assistance, working with local partners to develop the Rock Hill Unite program. This program has several components, one of which assists residents with utilities payments and another provides loan assistance to small businesses. The small business element of Rock Hill Unite was designed to grant assistance to local small businesses that were not eligible for the Federal Small Business Administration Paycheck Protection Program (PPP). Rock Hill Unite began taking applicants for both programs in late FY2020, so results of this program will be seen in FY2021. Despite the challenging unemployment numbers for the end of FY2020, there was an increase in the value of construction activity. FY2020 saw Rock Hill Top Employers permit valuation increased by 4% (from Employer Employees (FTE) $260 million in FY2019 to $271 million Rock Hill School District 2,400 in FY2020). This permit valuation number includes any changes/ Piedmont Medical Center 1,682 adjustments that occur during the Comporium 1,107 construction process. Winthrop University 816 City of Rock Hill Atlas Copco USA Williams & Fudge, Inc. Source: York County Economic Development
738 650 370
The City of Rock Hill continuously monitors economic trends to ensure the City adapts policy as economic difficulties such as COVID-19 arise.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - PAGE 9 Capital Projects Water and Waste Water Treatment Plants The City recognizes the value of multi-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 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 sources. For the electric, water, and sewer Water Filtration Plant construction public utilities and stormwater, the City also utilizes a ten year long-range plan to project future plant expansions and maintenance projects. The City of Rock Hill is the regional water and wastewater provider for much of the surrounding County, which has seen the affects of continued growth. In an effort to meet the projected needs of our customers, the City is currently upgrading both plants to provide for additional capacity. Combined, these two projects represent a nearly $200 million total investment in infrastructure needed to manage the demands of growth across the entirety of York County.
Rock Hill Sports and Event Center The Rock Hill Sports and Event Center (RHSEC) is a 170,000 square foot indoor amateur sports facility that anchors the University Center redevelopment project within Knowledge Park. Construction on the RHSEC was completed in December 2019, but the public health response to COVID-19 prevented a grand opening event. Staff worked diligently to implement safety protocols to accommodate a phased-in approach to fully opening the center within CDC guidelines. With protocols in place, Rock Hill was able to host the American Cornhole League Invitation Qualifier which was televised live on ESPN and ESPN2 during a time when live sports events were not being held. The COVID-19 restrictions made the initial opening of the RHSEC a “soft� opening, allowing The Rock Hill Sports and Event Center for smaller events to take place as scheduled.
PAGE 10 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 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 unchanged 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 77% of all City revenues, which is consistent with FY2019. 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 which is consistent with FY2019. Capital grants and contributions– grant funding received from the state or federal government that goes towards a specific capital purchase—make up 3% of all revenues, a significant decrease from FY2019 in large part due to an almost $6 million grant related to the My Ride transit system in the previous year. Changes in Revenue between FY2019 and FY2020—Overall, revenue from all sources has decreased by 1% between FY2019 and FY2020, from $253 million to $250 million. Aside from the My Ride capital grant received last year, there were mild decreases in charges for services—largely related to mild weather patterns that decreased overall electric revenue. There were also modest decreases in revenue due to the impact of the COVID-19 pandemic.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - 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 Planning and Development, Finance, and Human Resources. Public Safety– includes Police, Fire, and Judicial Departments. The City participates in a jointownership of the Piedmont Municipal Power Agency (PMPA), 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, accounting for 41% of the City’s expenses. Mild weather patterns created lower demand, therefore decreasing total electric expenses. Core governmental services in Public Safety are the next largest expense, accounting for 15% of expenses. General Government expenses amount to 14% of City expenses which are largely made up of salaries and benefits for City personnel. Capital and Electric expenses aside, most City funds are spent on City personnel and expenses related to the City’s 1,000+ employees. Increased expense in employee health claims, retirement increases from the state, and liability for one time COVID-19 paid time off added to expenses. Tax increment financing (specifically, the Textile TIF) related expenses as well as expenses related to new parking services in Knowledge Park, Police radios, and the expanded My Ride transit system impacted the City budget. The primary difference between revenues (prior page) and expenses was related to principal payments on debt and cash funded projects. Changes in Expenses between FY2019 and FY2020— Overall, expenses increased by 3% when comparing FY2019 and FY2020. Similar to the revenue side, the electric system saw decreased demand, correlating with a decrease in purchase power expenses. The challenges of COVID-19 also brought about additional, unplanned expenses in order to maintain the safety of our customers and staff members.
PAGE 12 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 Budget vs. Actual/Millage Rate 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 charges for service. In comparing budget and actual expenses, it is important to note that many of the differences are brought up through A Parks, Recreation & Tourism employee at Cherry Park. different accounting methods— budgetary outcomes are calculated on a cash or modified accrual basis rather than from the pure accrual basis required under GAAP for accounting records. In comparing the FY2020 budget to actual amounts for most general fund accounts, revenue sources were within $400,000 of the budgeted amount – with expenses exceeding the planned budgeted amount by roughly another $400,000. The difference between budget and actual amounts were less than $1,000,000.
The FY2020 budget also included funds for City initiatives such as the expansion of the fare free transit system introduced in FY2019. Knowledge Park continued to be a high priority in FY2020, creating expenses related to Textile TIF financing as well as a new parking system needed for the 139,000 projected visitors to the Rock Hill Sports and Event Center. Other expenses related to COVID-19, such as increased employee health claims and liability for paid time off extended to employees, were unusual but a necessary investment in Rock Hill’s primary asset—its employees.
Millage Rate The City takes pride in keeping property tax rates reasonable—balancing the needs of the community and being good stewards of the public dollar. The City’s millage rate has remained flat at 93.5 mills for ten years. Over the last twenty years, the tax millage rate dropped 12%. The City has kept millage rates low due to the City’s priority of financial responsibility for tax dollars and leveraging of the growth of the community.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - 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 and funding are included in the annual capital improvement plan and are reviewed by the management team quarterly.
Existing Debt
Wastewater Treatment Plant construction, equalization basin
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, but the City makes investment based on the needs to the system. Ultimately, the City uses fiscal prudence in the issuance and repayment of debt, particularly focusing on investing in our system and leveraging historically low interest rates. Currently, the City has existing obligations of approximately $391 million. This is an increase from the prior year. Significant changes in debt obligations include an additional $12 million in TIF funding issued for infrastructure as well as utility debt due to wholesale provision of water and wastewater to new development in York County. These needed investments, specifically upgrading the water filtration plant, ensures high quality drinking water for customers and the expansion of the wastewater treatment plant safeguards the Catawba river. The City’s commitment to environmental stewardship must be balance with meeting the needs of our people. The obligations incurred have enabled to the City to make a substantial and significant investment in the infrastructure of the community, thereby improving the physical state of the community for residents, and making it more attractive to Parking Deck A at University Center, Knowledge Park. private investment.
PAGE 14 - POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 Credit Ratings The City is evaluated for its overall credit worthiness and for specific debt issuances. A good credit rating reduces borrowing costs and generally reflects an organization’s sound financial practices. The City’s underlying rating on general obligation debt was “AA-” from Standard & Poor’s and “Aa3” from Moody’s. The City’s underlying rating on its combined utility system revenue bonds was “A” from Standard & Poor’s and “A2” from Moody’s. This means the City is considered to have high credit quality. Standard and Poor’s describes the “AA-” rating as “very Bond rating comparison from Ranking Rock HIll strong capacity to meet financial commitments.” For utility related debt, the City has maintained an “A” rating 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.
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 2020 was $424,298,543 (net of accumulated depreciation and related debt). This investment is a 6.8% increase over the prior fiscal year. Capital assets represent 85% of the City’s assets. These capital assets include buildings, Rock Hill Sports and Events Center, January 2020 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 $27 million of expenditures were capitalized this year to add to the City’s overall net position invested in capital assets.
POPULAR ANNUAL FINANCIAL REPORT FISCAL YEAR 2020 - PAGE 15 Capital Projects in Process There are a number of construction projects going on throughout the City. All of these projects will have a positive impact future on the City’s capital assets and provide needed enhancements for Rock Hill’s residents. A sample of the current projects is as follows: •
Wastewater Treatment Plant upgrades and treatment capacity expansion.
•
Water Filter Plant/raw water intake upgrades.
•
University Center development.
•
Infrastructure for City parks. Miracle Park, February 2020
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 combines all governmental and business-type activities. When comparing all assets and liabilities the City had a total, positive net Total Net Position position of $374 million for FY2020. The $400,000,000 City’s overall net position increased by 6% $350,000,000 between FY2019 to FY2020. This increase $300,000,000 was mainly due to contributions of capital $250,000,000 assets received from developers and $200,000,000 operating income from the electric, water, $150,000,000 and sewer systems. The City of Rock Hill $100,000,000 has seen steady increases in its net $50,000,000 position over the last few years—adding $high quality investments for the health, 2016 2017 2018 2019 2020 safety, and enjoyment of Rock Hill’s residents.
Additional information highlighting the City of Rock Hill’s commitment to transparency can be found on the website: www.cityofrockhill.com/transparency
www.cityofrockhill.com/transparency
City of Rock Hill 155 Johnston St. PO Box 11706 Rock Hill, SC 29731 www.cityofrockhill.com
