town of danvers presentation...s&p presentation: key updates since 2017 • financial management...

July 22, 2019

Town of Danvers Presentation

Standard & Poor’s Site Visit

S&P Site Visit: Schedule

Town of Danvers Presentation and Tour with Standard & Poor’s

July 22, 2019 11:30AM – 3:30PM

11:30AM – 12:00PM Welcome and Introductions

12:00PM – 12:45PM Presentation by Town

12:45PM – 1:30PM Lunch and Discussion

1:30PM – 3:15PM Trolley Tour of Danvers

3:15PM – 3:30PM Wrap‐up Questions/Comments

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S&P Site Visit: Management Team• Daniel Bennett – Chairman of the Board of Selectmen

• Steve Bartha – Town Manager

• Jennifer Breaker – Assistant Town Manager

• Joseph Collins – Treasurer/Collector and Town Clerk

• Rodney Conley – Director of Administration & Finance

• Lisa Dana – School Superintendent

• David Fields – Director of Planning & Economic Development

• Aaron Henry – Director of Land Use & Community Services

• David Lane – Director of Public Works & Utilities

• Rich Maloney – Director of Inspectional Services

• Steve Poulos – Chief Assessor and Chief Procurement Officer

• Jill Summit – Assistant Treasurer/Collector

• Keith Taverna – Assistant School Superintendent Finance & Personnel

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S&P Presentation: Key Updates Since 2017

• Financial Management

• FY 2020 will mark five consecutive years of compliance with policies in 2016

• BOS adopted Financial Policy Guidelines in FY 2019 to cover remaining policy areas

• Continued expansion of long‐term financial planning and reporting

• Wealth and Income Indicators

• 30% of new residents in 2017 were between the ages of 30 and 44; in 2019 dollars,

their average household income was $138,000 and 60% earned $100,000 or more.

• The median sales price for a single family home in Danvers rose 8.4% in 2018 to

$465,000 (versus the statewide median sales price of $394,000).

• Liabilities (Pension & OPEB)

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2017 2019Assumed Rate of Return 7.75% 7.50%System Fully Funded Date 2036 2035System Funded Ratio 58.4% 58.6%OPEB Trust Balance $4.57 million $6.65 million

S&P Presentation: Financial Management

• Financial Policies & Best Practices

• Key Financial Policies adopted in 2016

• Financial Policy Guidelines adopted in 2019

• Annual Financial Summit

• 5 Year General Fund Forecast

• Capital Planning & Debt Management

• 5 Year Capital Improvement Plan

• School Construction Stabilization Fund

• Performance Management

• Stat program launched in 2019

• Budget Document Improvements

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S&P Presentation: Economic Growth

Fiscal Year Tax Levy Total Value New Growth Growth as % of Levy

2019 78,154,410 5,164,067,719 794,896 1.0%2018 75,354,881 4,905,997,118 912,837 1.2%2017 72,654,228 4,526,570,664 629,466 0.9%2016 70,286,547 4,391,700,413 859,357 1.2%2015 67,349,955 4,056,879,982 1,197,233 1.8%2014 64,756,756 3,934,210,567 906,400 1.4%2013 62,526,780 3,894,807,200 682,011 1.1%2012 62,526,780 3,922,581,465 609,480 1.0%2011 58,243,194 3,930,282,886 802,876 1.4%2010 56,031,976 4,096,958,924 608,195 1.1%2009 53,984,593 4,292,626,505 1,392,636 2.6%2008 51,331,368 4,363,590,583 663,796 1.3%

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2009 2010 2011 2012 2013 2014 2015 2016 2017 20187.8 7.2 6.4 6.1 5.8 4.8 4.0 3.3 3.1 2.1

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S&P Presentation: Economic Development

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Abiomed

Lahey NorthShore

Name # of EmployeesMedtronic Interventional Vascular 740IRA Motor Group 530Hospice Care Dimensions 522North Shore Community College 418Abiomed 400Home Depot 313Cell Signaling & Technology 300Lahey NorthShore 289Essex North Shore Tech School 252DanversPort Yacht Club 235Double Tree Conference Resort 232Recovery Center of Danvers 217Costco Wholesale 210Target 205Wal‐Mart 176Stop & Shop 160Lowe's Home Improvement 146Hunt Nursing & Retirement Home 145VNA North Shore, Inc 112BJ's Wholesale 103

Top 5 = 10%

Top 20 = 22% of all jobs

20 Largest Employers

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Use/Class Assessed Owner Assessed Value Assessed Tax

Commercial Liberty Tree Mall $56,499,400 $1,197,222

Residential DSF IV Danvers $70,192,500 $932,156

Commercial Partners Healthcare System, Inc. $29,955,270 $642,166

Residential Northland Endicott Green LLC $41,351,400 $549,147

Commercial Home Depot $24,916,500 $527,981

Commercial Endicott Plaza Limited Partnership $23,324,200 $494,240

Commercial Atlas Realty $22,166,900 $469,717

Commercial Valenti, Sam $22,123,700 $468,801

Commercial/Industrial/Residential Brookwood $21,754,700 $457,617 Commercial Group One Realty $21,446,300 $454,447

10 Top Taxpayers

S&P Presentation: Fiscal Year 2019

• $5.2 million in Free Cash (Generated in FY2018)• Strengthened Reserves

• +$1.5 million in General Stabilization • +$750,000 in School Construction Stabilization

• Investments in Capital ($600,000) and OPEB ($350,000)

• Revenue• Projected to Exceed Estimates by approximately $1.5 million• Conservative Estimates in Major Local Receipts (MVE, Hotel, Meals)• New Agreements with Community Partners

• Expenditures• Projected to be Under Budget by approximately $2.0 million• Mild Winter (Snow & Ice Surplus of approx. $250,000)• Collaboration with Schools, Library, Other Departments

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S&P Presentation: Fiscal Year 2020

• Revenue• Tax Rate increase of roughly 2.5% plus $600K in New Growth• Very conservative local receipt estimate as is the norm• New revenue sources through local partnerships• Planned use of school stabilization fund to maintain a steady

impact on the operating budget

• Expenditures• Backfilling a vacant Civil Engineer is the only “new” position

(split funding between tax and enterprise)• Anticipated retirement contribution increase of 7.1%• Overall, 3.7% increase in General Fund Operating

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S&P Presentation: Financial Policies

Source Target Actual ComplianceFY17 Budget Under 10% 6.1% YesFY18 Budget Under 10% 5.5% YesFY19 Budget Under 10% 6.1% Yes

Source Target Actual ComplianceFY16 CAFR 8‐12% 11.2% YesFY17 CAFR 8‐12% 11.0% YesFY18 CAFR 8‐12% 8.5% Yes

Source Target Actual ComplianceFY16 CAFR >15% 22.0% YesFY17 CAFR >15% 21.1% YesFY18 CAFR >15% 21.4% Yes

Source Target Actual ComplianceFY17 Budget >1% 3.0% YesFY18 Budget >1% 2.7% YesFY19 Budget >1% 1.9% Yes

FREE CASH AFTER APPROPRIATION

AS % OF OPERATING

NET DEBT SERVICE

UNASSIGNED FUND BALANCE AS % OF NET OPERATING

TOTAL FUND BALANCE AS % OF NET OPERATING EXPENDITURES

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Formal policies adopted by Selectmen in March 2016

S&P Presentation: Debt

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S&P Presentation: Debt

• Town has funded $6.4 million in pay‐as‐you‐go (cash) capital outlay over the past ten years

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S&P Presentation: Unassigned Fund Balance

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S&P Presentation: Total Fund Balance

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S&P Presentation: Free Cash

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S&P Presentation: Reserves

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Reserve Fund FY2015 FY2016 FY2017 FY2018 FY2019Stabilization 720,097$ 728,723$ 1,033,551$ 1,048,318$ 1,571,771$ School Building Stabilization 4,109,879$ 3,678,667$ 4,230,022$ 4,886,642$ 5,980,318$ OPEB 3,140,761$ 3,758,041$ 4,572,294$ 5,534,965$ 6,648,458$ Education Reserve 75,711$ 76,102$ 76,633$ 77,751$ 79,493$ Revenue Stabilization 461$ 463$ 463$ 474$ 485$ Total 8,046,909$ 8,241,996$ 9,912,963$ 11,548,150$ 14,280,525$

S&P Presentation: Future Cost Pressures - Personnel

Fiscal Year FY2008 FY2013 FY2018FTEs 236 227 230 ACS Survey Population 26,762 26,899 28,079 Employees Per Thousand 8.82 8.42 8.19

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S&P Presentation: Future Cost Pressures - Health Care

• Town & IAC working on plan design changes for FY2021

• Migrating 60‐70 retirees from active to MedX in 2020; removing $700k to $1.0 million in claims experience

• Anticipated budget savings/cost avoidance of +10%

Fiscal YearTotal

AppropriationIncrease over Prior Year

FY16 Actual 10,174,837$ FY17 Actual 10,421,512$ 2.4%FY18 Actual 11,113,410$ 6.6%

FY19 Projection 11,775,387$ 6.0%FY20 Budget 12,447,019$ 5.7%

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S&P Presentation: Future Cost Pressures - Pension

• Net pension liability of $75.64 million

• 58.6% Funded as of 1/1/2018

• Lowered assumed rate of return from 8.00% to 7.50%

• General Fund, Water and Sewer fully funded by 2035

• Electric fully funded by 2027

• Per adopted policy, Pension ADEC (~$5.0 million in 2019) will redirect to OPEB Trust when Pension is fully‐funded

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1/1/2016 1/1/2018Assumed Rate of Return 7.75% 7.50%System Fully Funded Date 2036 2035Actuarial Funded Status 58.4% 58.6%Market Value of Assets $95.98 million $117.89 millionNet Pension Liability $79.76 million $75.64 million

S&P Presentation: Future Cost Pressures - OPEB

Fiscal Year Contribution Interest Earned Balance (Market Value)

FY07‐FY16 3,690,245$ 67,796$ 3,758,041$ FY17* 573,795$ 250,459$ 4,572,294$ FY18 724,795$ 237,876$ 5,534,965$ FY19 782,795$ 330,698$ 6,648,458$ FY20 832,795$ TBD TBD

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S&P Presentation: Future Cost Pressures - OPEB

• Net OPEB Liability of $181 million

• Committed to, at minimum, a $50,000 increase each year to our total annual contribution to the fund

• FY2021 healthcare savings redirected first to tax‐supported OPEB contribution

• Redirect pension resources once fully‐funded to OPEB

Fiscal YearScheduled

ContributionProjected Interest

(4.1%)Projected Balance

w/ ReturnsFY19 782,795$ ‐ 6,648,458$ FY20 832,795$ 272,587$ 7,753,839$ FY21 882,795$ 317,907$ 8,954,542$ FY22 932,795$ 367,136$ 10,254,473$ FY23 982,795$ 420,433$ 11,657,701$

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S&P Presentation: Water & Sewer

Water• Launched five year, $10 million Capital

Improvement Program

• Approved 15% rate increase for FY2020 to fund CIP, ongoing projects, and strengthen retained earnings

Sewer• Midway through $4 million Capital

Improvement Program

• Second phase of Frost Fish Brook project beginning ($1.35 million)

• Retained earnings projected to continue to exceed 10% of annual revenue

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Vernon C. Russell Water Treatment Plant (Middleton)

South Essex Sewerage District Plant (Salem)

S&P Presentation: Smith School Project

• Approved by Special Town Meeting February 2019

• Broke ground in June 2019; school opens fall 2021

• $52.0m project: $31.5m Town / $20.5m MSBA

• Expanded size (280 to 465) to accommodate growing K‐5 school population (+15% by 2025, per MSBA)

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PROJECT TIMELINESmith Elementary School

TOWN FUNDINGo Board of Selectman Hearing (1.8.19)o Finance Committee Hearing (1.15.19)o Town Meeting to Approve Project Budget (2.4.19)

DETAILED DESIGN (DDs & CDs) MILESTONESo DD Pricing Set Issued for Cost Estimates (2.5.19)o SSBC Approved DD Package (2.22.19)o DD Package Submitted to MSBA (2.28.19)o 60% CD Pricing Set Issued for Estimates (6.27.19)o 60% CD Package Submitted to MSBA (7.26.19)o 90% CD Pricing Set Issued for Estimates (8.22.19)o 90% CD Package Submitted to MSBA (9.16.19)o 100% CDs Completed (11.1.19)

BIDDING/CONSTRUCTION MILESTONESo Award Early Package #1: Enabling (by 5.17.19)o EP#1: Enabling Work Start (6.19.19)o EP#2: Award Early Foundations/Steel Package (by 9.27.19)o EP#2: Foundations Work Start (11.15.19)o Establish/Execute GMP & Award Priority Contracts

(12.27.19)

BIDDING/CONSTRUCTION MILESTONESo EP#2: Steel Work Start (1.31.20) o Construct New School (Finish by 5.28.21)o New School Opens (September 2021)o Move, Demo Existing School, Site Work (6.3.21 through 11.30.21)

2017 2018 2019

Schematic Design6/7/18 – 12/29/18

Design Development10/17/18 – 2/28/19

Construction Documents3/1/19 – 11/1/19

Enabling Work6/19/19 – 10/3/19

2020‐2022

Construct New School11/15/19 – 5/28/21

Demo Old School, Final Paving & Site Work6/3/21 – 11/30/21

THE BIG PICTUREKey Dates

Last updated 6.7.19

FORMING THE PROJECT TEAMo OPM Contract Executed (5.5.17)o Designer Contract Executed (11.3.17)o Begin Feasibility Study (11.3.17)

FEASIBILITY STUDY HIGHLIGHTSo SSBC Approved Ed. Plan & ISS

(2.8.18)o SSBC Approved PDP & Options

(2.8.18)o SC Approved Educational Plan

& Initial space Summary (2.12.18)o PDP Submitted to MSBA (2.16.18)o First Community Forum (5.3.18)o SSBC Approved PSR Package

(5.25.18)o PSR Submitted to MSBA (6.6.18)o MSBA FAS Meeting (7.25.18)o MSBA Board Meeting (8.29.18)

SCHEMATIC DESIGN HIGHLIGHTSo Begin Schematic Design (6.7.18)o SSBC Approved SD (10.12.18)o SD & DESE Submitted to MSBA (10.17.18)o MSBA Board Meeting (12.12.18)

CM@RISK (CMR) PROCUREMENTo Submitted OIG CMR Application (8.10.18)o Received OIG Notice to Proceed (9.5.18)o CMR RFQ Issued (9.12.18)o CMR RFP Issued (11.9.18)o CMR Interviews/Selection (11.29.18)

DETAILED DESIGN MILESTONESo Begin Detailed Design (10.17.18)

Feasibility Study11/3/17 – 8/29/18

YOU AREHERE

S&P Presentation: Smith School Project

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S&P Site Visit: Tour of Danvers

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Points of Interest

Endicott Park

Town of Danvers Tour: Points of Interest

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1. Danvers Police Department

The Danvers Police Department is a state‐of‐the‐art facility that recently underwent a $5.5 millionrenovation/addition in 2015, creating a modernized emergency communications center and enhancedtraining center. The dispatch center was designed with scalability in mind to accommodated regionalpartners in the future.

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2. Liberty Tree Mall

With an FY2019 tax assessment of $1.2 million, and an assessed value of $56 million, Liberty Tree Mallby Simon is the Town’s largest taxpayer. Described as the dominant value shopping destination forBoston's North Shore, the mall is home to over 70 stores. Major retailers include Best Buy, Marshalls,Michaels, Old Navy, Sky Zone, Staples, Target, Total Wine & More, and Best Fitness. Many of thesestores, as well as the AMC Theater, have seen sizable investment in recent years. Total Wine, inparticular, has added tremendous value to the mall, with its personal property new growth last yeargenerating $90,000 in new tax revenue alone.

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3. Pope’s Landing

Located within Danversport's naturally protected harbor are several private marinas. The Crane RiverMarina is the Town's public marina and provides dockage for 68 vessels up to 25' in length. The harboris made up of four rivers: the Danvers River, Waters River, Crane River, and Porter River. Collectively,Danvers is homeport to nearly 850 vessels.

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4. Cherry Hill Industrial Park

Cherry Hill is the Town’s premier office and life science location. Created decades ago as a traditionalindustrial park, today it is home to a burgeoning cluster of advanced manufacturing and life sciencecompanies, including the Town’s largest and fastest growing firms:• Abiomed – leading medical device provider has invested tens of millions of dollars on expansion and renovation in

recent years and has 400 employees. Its real estate value has grown by 84% in the past three fiscal years alone.• Millipore – major life science company also making upgrades to its location in recent years.• Medtronic – medical technology leader and the largest employer in the Town with a staff of 740.

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5. Danvers High School

Danvers High was originally constructed in 1960 and underwent a $68 million addition/renovationfrom 2010 to 2013. The project received 56.1% reimbursement from the MSBA on eligible costs. The250,000 SF building houses 1,000 students in grades 9‐12, and includes a community gym, districtadministrative offices, and district maintenance spaces. The separate athletic complex project wascompleted in 2016, in part, with a $1.6 million gift from Phillip H. Morse, a Danvers native and minorityowner of the Red Sox, who dedicated the complex to his father, former selectman J. Ellison Morse.

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6. St. John’s Prep

Founded in 1907, St. John’s Preparatory School is a boys’ grades 6‐12 private college‐prep schoollocated in Danvers. It occupies approximately 175 acres with a student enrollment of 1,500. In recentyears, the school has invested $50 million in the campus on a middle school and wellness center.

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7. Endicott Park

Purchased by the Town in the 1960’s, Endicott Park's 165 acres is home to some of the most uniqueand varied recreational land on the North Shore. The park’s landscape includes pastoral views, historicfarm buildings, orchards, woodlands, and marshes, with a network of trails and gravel roads forexploration of the park. More than 200,000 visitors experience the park each year from the NorthShore and beyond. The Town was recently awarded a $1 million MassWorks grant toward thetransformation of the hay barn into a revenue generating space for private and civic events. 37

8/9. New Residential & Mixed-Use

The development of Sandpiper Circlehighlights the demographic trend we’re seeingof wealthier families moving into the town.Assessed as vacant, non‐taxable land, the areawas valued at $150,000 in FY2017. Now the 20subdivisions are on the market valued at$400,000 for land and over $1 million withhouses constructed.

20 Locust Street is an exciting projectrenovating the former Ideal Baby Shoecompany headquartered just on the edge ofthe Downtown area. Currently underdevelopment, there is a projected $2.6 millionbeing invested in this mixed‐use property,which will result in 24 new housing units.

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10. Danvers Town Hall

Built in 1855, this building originally served as the Town’s High School in addition to its Town Hall.The building was completely renovated in 2005‐2006 and is included here to represent the politicaland administrative stability that the community has enjoyed for generations. The 1949 DanversTown Manager Act created the position of the same name to serve as the community’s ChiefExecutive and Fiscal Officer. Names and job titles have changed over time, but professionalmanagement, financial discipline, service continuity, and long‐range planning have been constant.

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S&P Site Visit: Tour of Danvers

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Other Points of Interest

Town of Danvers Flag

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Danvers Central Fire Station (High St)

This shot is representative of the Town’s ongoing commitment to capitalinvestment. Since 2007, the Town has renovated Town Hall, Danvers High,and the Peabody Institute Library; purchased a commercial building(across from Central Fire) to house the Water & Sewer Divisions; kicked offthe Smith School project; and invested close to $11.0 million in the rollingfleet across all departments, including the fire trucks pictured here.

Essex North Shore Agricultural & Technical School

Essex North Shore Agricultural and Technical School is an agricultural and technical high school. Openingin September 2014, the $140 million school combined North Shore Technical High (Middleton), EssexAgricultural High (Danvers), and vocational programs at Peabody Veterans Memorial High School. Themission of the school is to create a culture of academic and technical excellence, encourage continuousintellectual growth, and promote professionalism, determination, and citizenship for all students, asthey develop into architects, artisans, and authors of the 21st century community. 42

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North Shore Community College

The NSCC’s Danvers Campus employs 418 people (our fourth largest employer) andtrains key sectors of our current and future workforce in fields such as Nursing,Computer Science, Industrial Technology, Business Admin, and Education. Thecampus also features the Commonwealth's first state‐owned Zero NetEnergy building.

Class 1 Car Dealerships

Danvers currently has 17 Class 1 dealership licenses owned by several major dealers including Ira andKelly Automotive Groups. This industry provides employment opportunities, brings people from allover to the Town, and generates noteworthy motor vehicle excise taxes based on lease location.

In addition to the roughly $1.63 million per year these facilities generate in real estate and personalproperty tax, the Town has also averaged $4.72 million per year overall in Motor Vehicle Excisecollections since FY 2015.

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Electronics Avenue

Electronics Avenue is Danvers’ second business park, covering 52 acres adjacent to Route 1 andInterstate 95. Primarily industrial manufacturing in nature, it is transitioning to advancedmanufacturing and hosts Samsung NeuroLogica, a medical imaging technology company; BackerHotwatt, an electric heating element manufacturer; Hansen Aerospace, which provides testing serviceson aerospace parts, products, and materials; and roughly a dozen other businesses. The site is alsohome to Sanctuary, a medicinal marijuana company which has a host agreement with the Town that,once fully actualized, calls for an annual payments of the greater $250,000 or 3% of gross revenue.

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Mass General Hospital & Endicott Street

The Endicott Street corridor, adjacent to the Liberty Tree Mall, anchors the Town’sregional retail sector but also includes a growing Mass General Hospital campus. TheTown is working now on ensuring that the zoning along this corridor is calibrated tocapitalize on what will be needed in the area to enhance and support their growth. Tothis end, we are working with a private developer on redeveloping the EconoLodgesite to bring in approximately 200 units of housing to the site.

Town of Danvers

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1 Sylvan Street | Danvers | Massachusettswww.danversma.gov

Danvers Rail Trail