City of Lock Haven Early Intervention Program Demographic and - - PowerPoint PPT Presentation

City of Lock Haven Early Intervention Program

Demographic and Financial Presentation May 20, 2019

Pennsylvania Economy League

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Pennsylvania’s leading independent, nonprofit, public policy research and development organization for over 80 years PEL Central Division provides technical assistance to municipalities of all sizes and types throughout the state PEL works to foster good government that provides the most efficient core public services that meet local resident needs at the lowest cost We believe healthy local governments assist in creating a sustainable Pennsylvania economy that can keep and attract residents and businesses

Early Intervention Program Scope of Work

Analyzed City financial history and demographics Projected revenues and expenditures Reviewed

• perations of

City departments (Administration, Police, Public Works) Evaluated City labor, water, wastewater, economic development and Airport Compiled recommendations for all areas 3

Demographics Population 1970 to 2010

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11,427 9,617 9,230 9,149 9,772

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000

1970 1980 1990 2000 2010

Demographics Population 1990 to 2016

5 1990 to 1999 2000 to 2009 2010 to 2016 1990 to 2016 Births 1,068 1,076 710 2,854 Deaths 1,326 1,272 739 3,337 Natural Pop. Change

• 258
• 196
• 29
• 483

Total Population (start) 9,230 9,149 9,772 9,230 Total Population (end) 9,149 9,772 9,725 9,725 Total Population Change

• 81

623

• 47

495 Less Natural Change

• 258
• 196
• 29
• 483

Net Migration 177 819

• 18

978

Demographics Population by Age 1990 to 2010

1,635 1,530 1,531 6,003 6,206 7,104 1,592 1,413 1,137

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 1990 2000 2010 Under 18 18-64 65 and Over

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Demographics College Age Population

2000 2010 # % # % Lock Haven 1,573 17.2 2,013 20.6 Clinton County 1,626 4.3 2,027 5.2

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2000 2010 # #

Lock Haven 22.7 25.0 Clinton County 37.8 38.5

Population in Non-Institutional Group Quarters Median Age

Demographics Housing Units 1990 to 2010

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Change 1990-2010 Owner-Occupied -239 units; Renter: +463 units; Vacant: +98 units 500 1,000 1,500 2,000 2,500 1990 2000 2010

Rental Units: 61% of total Owner-Occupied: 31.5% of total Vacant: 7.5% of total

Demographics Median Value Owner-Occupied Home

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1990 2000 2010 Lock Haven $43,600 $76,100 $89,700 Clinton County $46,300 $78,000 $98,400 Pennsylvania $69,700 $97,000 $159,300 $0 $40,000 $80,000 $120,000 $160,000 $200,000

Demographics Median Household Income

1990 2000 2010 Lock Haven $16,910 $20,731 $25,579 Clinton County $22,128 $31,064 $39,354 Pennsylvania $29,069 $40,106 $50,398 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

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Demographics Findings

• Large working age population is a positive but also includes college

students; declines in under age 18 is negative sign for residential growth

• Rentals increased to over half of housing units plus increase in

vacancies

• Value of owner-occupied homes gives better indication of resident

population wealth but values below county and well below the state

• Implications for blight considering increase in rentals/vacancies
• Implications for property taxes in potential lower assessments as owner-
• ccupied converts to rentals or vacancies
• Implications for wage taxes as under 18 residential population declines

and provides less of a feeder to working age residents; wage taxes of college students typically go to home municipality Demographics are heavily influenced by Lock Haven University and create challenges for City

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Historical General Fund Revenues, Expenditures, Surplus/Deficit

12 2013 2014 2015 2016 2017 Revenues $5,824,476 $4,577,736 $4,486,278 $4,829,496 $4,571,793 Expenditures $5,466,295 $4,437,189 $4,431,587 $4,573,672 $4,649,441 Surplus/(Deficit) $358,181 $140,547 $54,691 $255,824 ($77,649) Adjusted Surplus/(Deficit) $1,970,944 $676,931 $361,483 $451,846 $418,162

$(250,000) $1,000,000 $2,250,000 $3,500,000 $4,750,000 $6,000,000 $7,250,000

Adjustments remove capital revenues/expenditures

Assessed vs. Market Value

$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000

Assessed Value Market Value

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Historical General Fund Tax Revenues

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2013 2014 2015 2016 2017 Real Estate Taxes $2,017,728 $2,192,981 $2,371,476 $2,457,873 $2,421,059 Earned Income Tax $481,733 $491,754 $511,430 $528,518 $479,597 LST $167,422 $160,886 $166,410 $162,070 $172,949 Real Estate Transfer $44,007 $73,529 $42,305 $63,264 $73,408 Business Privilege Taxes $165,289 $142,406 $144,800 $170,525 $130,058 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000

Note: Does not include mechanical device tax

Historical General Fund 2017 Taxes

Real Estate Taxes 74% Earned Income Tax 15% LST 5% Real Estate Transfer 2% Business Privilege Taxes 4%

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Note: Does not include mechanical device tax

Historic Expenditures Personnel vs. Non-Personnel

2013 2014 2015 2016 2017 Personnel $2,591,967 $2,826,423 $3,031,362 $3,117,184 $3,261,255 Non-Personnel 859,969 813,139 824,148 878,293 726,513 Capital Projects 244,988 343,692 158,990 80,102 184,684 Capital Purchases 1,367,775 192,692 147,802 115,921 311,127 Debt Service 379,036 260,250 264,685 223,521 176,342 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000

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Note: Does not include transfers

Historic Expenditures 2017 Personnel Expenditures

Personnel 70% Non-Personnel 15% Capital Projects 4% Capital Purchases 7% Debt Service 4%

Note: Does not include transfers

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Historic Expenditures Adjusted Health Insurance

2013 2014 2015 2016 2017 Health Insurance Total $592,517 $763,134 $782,696 $863,255 $847,883 PMIHC Reimbursement

• 227,254
• 270,918
• 192,565
• 309,008
• 101,727

Adjusted Health Insurance $365,263 $492,216 $590,131 $554,247 $746,156

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Historical General Fund 2017 Departmental Expenditures

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General Government $974,445 25% Engineering $55,249 1% Police $1,704,917 43% Fire $363,841 9% Code Enforcement $62,202 2% Planning/Zoning $96,044 2% Emergency Management $54,653 1% Public Works $567,397 14% Parks/Recreation $109,019 3%

Historic Expenditures 2018 Estimated versus Budget

2018 Estimated Budget Revenues $5,741,745 $4,076,884 Expenditures 4,896,701 4,619,541 Surplus/(Deficit) $845,044

• $542,657

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• Revenues almost $1.7 million higher than budgeted
• Higher tax revenue = additional $411,431
• Other revenue sources: Loan proceeds, PHMIC reimbursement,

blight account transfer, recycling grant

• Expenditures were $427,430 greater than budgeted; mostly due to

capital spending

Historic Expenditures Airport Fund

2013 2014 2015 2016 2017 2018 2019 Actual Actual Actual Actual Actual Actual Budget Revenues $710,861 $298,295 $282,036 $232,544 $280,943 $261,060 $265,760 Expense 516,639 513,104 332,939 292,452 286,393 307,275 205,477 Surplus/Deficit $194,222

• $214,809
• $50,903
• $59,908
• $5,450
• $46,215

$60,283

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• Airport personnel costs are moved to the General Fund in 2019
• 2019 projected Airport surplus is transferred to the General Fund

Historic Expenditures Water and Wastewater Funds

2013 2014 2015 2016 2017 2018 2019 Actual Actual Actual Actual Actual Actual Budget Revenues $1,715,918 $1,718,627 $1,759,189 $1,874,396 $2,147,614 $1,491,647 $1,538,238 Expenditures 1,363,521 1,765,835 1,757,744 1,436,275 1,434,818 1,630,528 1,717,466 Surplus/(Deficit) $352,397

• $47,209

$1,445 $438,122 $712,796

• $138,881
• $179,228

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2013 2014 2015 2016 2017 2018 2019 Actual Actual Actual Actual Actual Budget Budget Net Revenue 2,350,898 2,376,235 2,267,839 2,316,834 3,262,495 3,405,425 3,228,934 Net Expenditures 1,622,410 1,824,821 2,670,901 2,735,923 2,857,454 3,204,245 3,284,946 Net Surplus/(Deficit) $728,487 $551,413

• $403,062
• $419,089

$405,041 $201,180

• $56,011

Water Fund Wastewater Fund (Operating)

Historical Expenditures Findings

The General Fund performed well financially

• Surpluses throughout; 2018 budgeted as deficit but resulted in

surplus

• Tax revenue growth from four property tax increases
• Considerable reimbursements for health care offset costs
• Significant amount of capital spending done with General Fund

revenues

Expenditure Patterns

• Two-thirds of costs related to personnel
• Largest expenditures related to Police Department
• Most of City’s debt obligations are related to enterprise activities

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Projection Assumptions

Revenue Projection Assumptions

• The 2019 budget serves as the baseline
• Tax rates and fees remain at 2019 levels
• 0.9 percent annual growth in Real Estate

Tax revenue based on assessment growth

• 1.25 percent annual growth in Earned

Income Tax revenue

• Annual growth in Local Services Tax

revenues assumes 100 new jobs annually

• 3.0 percent growth in state pension aid
• Other revenues held at 2019 levels

Expenditure Projection Assumptions

• The 2019 budget with adjustments serves as the

baseline

• Employee count remains at 2019 budgeted levels
• No new debt incurred; debt service based on

amortization schedules

• Union employee wages and salaries were increased at

the annual contractual rate (including longevity and rank the annual average increase is 2.25 percent) and then 2.0 percent annually for the years 2022 and 2023.

• Other employee wages and salaries were increased at

2.25 percent annually

• Pension were increased at 2.25 annually
• Health insurance was increased by 8.0 percent

annually, other insurances increased by 2.1 percent annually

• Other annual expenditure growth rates were based on

historical patterns and/or projected annual inflation rates of 2.1 percent, Capital expenditures were held constant at 2019 budget levels

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Financial Projections

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($730,932) ($878,340) ($980,753) ($1,095,417) ($1,222,447) ($2,000,000) ($1,000,000) $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 Projected 2019 Projected 2020 Projected 2021 Projected 2022 Projected 2023 Revenues Expenditures Surplus/(Deficit)

Projected General Fund Deficits and Fund Balance

• $4,000,000
• $3,000,000
• $2,000,000
• $1,000,000

$0 $1,000,000 $2,000,000 Audited 2013 Audited 2014 Audited 2015 Audited 2016 Audited 2017 Reported 2018 Estimated 2019 Projected 2020 Projected 2021 Projected 2022 Projected 2023 Fund Balance Surplus/(Deficit) 26

Projected General Fund Revenues

2019 2020 2021 2022 2023 Tax Revenue $3,337,723 $3,341,528 $3,371,119 $3,400,995 $3,431,159 Nontax Revenue $839,292 $885,330 $893,270 $901,445 $909,861 Transfers $304,344 $121,313 $118,813 $116,313 $113,813 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000

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Projected General Fund Expenditures

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2019 2020 2021 2022 2023 Personnel $3,605,104 $3,737,180 $3,876,423 $4,018,999 $4,169,573 Non-Personnel $1,051,579 $981,247 $979,447 $987,086 $999,622 Capital Projects $18,500 $18,500 $18,500 $18,500 $18,500 Capital Purchases $15,500 $15,500 $15,500 $15,500 $15,500 Debt Service $263,552 $216,028 $216,028 $216,028 $216,028 Transfers $258,056 $258,056 $258,056 $258,056 $258,056 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000

Projected General Fund Findings

GF Expenditures Expected to Outpace Revenues

• Projected revenue growth of less than 1 percent versus expenditure growth of

9 percent

• Increasing deficits would deplete City’s $1.5 million unrestricted fund balance

(end of 2018) if used to offset deficits

• Largest absolute expenditure growth is in personnel costs, particularly health

care

Other Trends

• Assessed value is flat and trending over market value; could result in appeals

that would reduce property taxes

• Increase in rentals and vacancies could also impact property taxes
• Both trends are significant because property taxes are City’s largest revenue

source

• Deficits budgeted in Water and Wastewater Funds for 2019

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Findings and Recommendations Water and Wastewater Funds

Consider creation of joint operating authorities

• Joint operating authorities would give the City more ability to operate across

municipal boundaries in terms of rate structure and influent sewage quality

Raise sewer rates to appropriate levels

• New 2014 wastewater plant that also serves eight other partner communities

funded in part with $18 million loan

• Debt is in City’s name; other municipalities reimburse the City one year after debt

service payment

• Wastewater debt service spikes in 2020 and 2023; City will have to advance debt

service payment for other municipalities

• City needs to raise sewer rates because of higher treatment costs and debt service

increases

• Consider rate increases of at least 15 percent in 2020 and another increase of at

least 15 percent in 2023

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Findings and Recommendations Water and Wastewater Funds

Consider charging Central Clinton County Water Filtration Authority for City water

• City-owned raw water is given to the authority at no charge
• City must pay the authority for treated water
• City must refurbish its dams that supply the raw water at a cost of $21 million to

$26 million

• Improvement might require increase to water distribution rates
• Consider consulting with solicitor on options

Conduct a cost allocation study for Water and Wastewater Funds

• The City charges the water and wastewater funds for various tasks done on behalf
• f those operations by City staff
• The City should have a cost allocation study done to ensure that it is being

properly reimbursed and to increase transparency amongst the funds.

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Findings and Recommendations Housing and Development

Review challenge to rental inspection consent decree

• Current program subject to a 1980s consent decree that significantly

limits City’s ability to proactively monitor blighted, nuisance properties

• The solicitor should explore measures to overturn the consent decree

Consider adoption of more robust rental registration and inspection program with appropriate fee

• Register occupants
• Designate local property manager
• Look to other college towns for examples

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Findings and Recommendations Housing and Development

Create housing data base

• Software developed by Harrisburg Area Community College allows input of condition

and picture of each structure

• Additional information such as code violations, delinquent taxes/fees, police calls can

be added to the data base

• Allows City to set priorities regarding enforcement and take proactive approach to

blight

Develop a Comprehensive Plan

• Focus on Downtown and outline priorities for properties targeted for development
• Include a housing component reviewing:
• Affordability
• Student housing
• Housing demand by demographics
• Future employers

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Other Key Recommendations

Conduct a facilities study

• The City owns numerous properties including a municipal building that is too big

for City needs

• The City should conduct a facilities study to determine space needs, review

existing properties, consider selling unneeded properties and maximizing the use

• f others

Conduct a comprehensive study of the Airport

• The Airport is considered an asset but the City is struggling to maintain the facility
• Airport needs capital improvements, city was forced to reduce staff hours, GF is

paying for employees, hanger rentals are decreasing

• The City is bound by certain restrictions for its use
• High-level review identified some recommendations but a more comprehensive

review by a consultant that specializes in enterprise business strategy for aviation is needed

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Other Key Recommendations

Pursue delinquent local services taxes

• Collection of LST has been turned over to school district
• Previously, City did not actively seek LST payments through billing or
• ther means
• Consult with the solicitor about the potential of pursuing delinquent LST

Consider home rule

• City now is forced to rely on property tax increases as a way to raise

revenue because of limits on other local taxes

• Home rule removes those limits and permits the City to take a more

balanced approach by using a mixture of increases on various tax levies

• For example, rather than increasing property taxes, the City would be able

to raise earned income taxes, which does not impact retirees

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Other Key Recommendations

• Staff training, polices and procedures updates,

equipment and IT updates

• Labor recommendations for collective bargaining
• Economic and community development priorities
• Additional enterprise activity initiatives
• Department-specific proposals for administration,

public works, police Dozens of Additional Recommendations

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Key Points

Demographics indicate potential challenges

• Population flat
• Increase in rental

and vacant housing units

• Low value of

median owner-

• ccupied housing
• Decline in under

age 18 population Future Financial Challenges

• Expected relatively

flat revenue

• Contractual and

anticipated increased expenditures

• Both trends lead to

projected deficits Next Steps

• City Should Seek

EIP Phase II Funding for recommended initiatives as appropriate (studies, equipment, etc.)

• Review and

implement other initiatives