The State of the City
The Honorable Scott Myers
Mayor
Mr. J. Michael Joyal, Jr.
City Manager
Mr. Brian J. Gottlob
PolEcon Research
7:30 a.m. Tuesday, February 12, 2008
Cocheco Country Club
Forum Series
The State of the City
The Honorable Scott Myers
Mayor, City of Dover
The State of the City
Mr. J. Michael Joyal, Jr.
City Manager, City of Dover
The State of Our City is
GOOD
We must continue to find our way
along a path towards
GREATNESS
Volunteers Make Dover Great
Arena Commission
Zoning Board of Adjustment
Recreation Advisory Board
Utilities Commission
Cemetery Board
Solid Waste Advisory Commission
Transportation Advisory Commission
Cocheco Waterfront Development
Advisory Commission
Library Trustees
Conservation Commission
Dover Business and Industrial
Development Authority
Dover Housing Authority
McConnell Center Oversight
Committee
Open Lands Committee
Professional Staff Make Dover Great
Executive Offices
Finance
Planning and Community Development
Police
Fire & Rescue
Community Services
Recreation
Public Library
Human Services
Public Schools
“If you're doing something you care
that much about, and you believe in its
purpose deeply enough, then it is
impossible to imagine not trying to
make it great. It's just a given.”
Jim Collins, Author
From Good to Great: Why Some Companies
Make the Leap… and Others Don’t
Population growth
30,000
28,000
1.0% Annual Growth
26,000
24,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Population
Trend Line
Source: NH Office of State Planning
Student growth
5,000
1.5% Annual Growth
4,500
4,000
3,500
3,000
1998
2000
2002
Students
2004
2006
2008
Trend Line
Source: Dover School Department
Development activity
800
-0.4% Annual Growth
600
400
-1.0% Annual Growth
200
0
1998
2000
Total Permits
2002
Dwelling Units
2004
Trend Line
2006
2008
Trend Line
Source: Dover Planning Department
Vehicle Registrations
33,000
1.3% Annual Growth
31,000
29,000
27,000
25,000
1998
2000
2002
2004
Vehicle Permits
2006
2008
Trend Line
Source: Dover Finance Department
Assessed value
3,000
2,500
2,000
1,500
1,000
500
1998
2000
2002
2004
2006
2008
Valuation (millions)
Source: Dover Finance Department
Average Home Value
300,000
250,000
200,000
150,000
17.0% Annualized Return
100,000
50,000
1998
2000
2002
2004
2006
2008
Average Residential Value
Source: Dover Finance Department
Average Home Tax Bill
6,000
5,000
4,000
8.5% Annual Growth
3,000
2,000
1998
2000
2002
2004
2006
2008
Tax Bill
Source: Dover Finance Department
General fund balance
10
8,000,000
8
6,000,000
6
4
4,000,000
2
14.9% Annual Growth
0
2,000,000
1997
1999
2001
Fund Balance
2003
2005
2007
Percent of Budget
Source: Dover Finance Department
Projects and Activities
North End Fire Station
Public School Renovations
Streets & Sidewalks Repairs
Downtown and Waterfront Development
Master Plan Update
Tax Cap Charter Amendment Implementation
North end Fire Station
Public School Renovations
Streets & Sidewalks Repair
Downtown and Waterfront
Development
Master Plan Update
Our Most Immediate Challenge
Successful Implementation of Tax Cap
Our Continued Trek to Greatness
“We must maintain unwavering faith that we
can and will prevail in the end, regardless of
the difficulties,
AND
at the same time, have the discipline to
confront the most brutal facts of our current
reality, whatever they might be.”
Jim Collins, Author
From Good to Great: Why Some Companies
Make the Leap… and Others Don’t
The State of the City
Mr. Brian J. Gottlob
PolEcon Research
Trends and Directions in The Dover
Economy
Presentation to the Greater Dover Chamber of Commerce
“State of the City Forum”
February 12, 2008
Brian J. Gottlob
PolEcon
Dover, NH
(603) 749-4072
[email protected]
U.S. Economic Overview
• Slowing Economy Through Summer (Recession is
Semantics – Weakness Will be Clear)
• Housing and credit markets are biggest risk
• Impacts spreading to consumer & business
confidence as well as spending
• Labor market continues to weaken
• Large monetary (interest rates) and fiscal stimulus
will limit severity of downturn
Nationally, Business Confidence Has been
Eroding Since the Summer “Subprime Shocks”
Weekly Business Confidence Index
35
30
25
20
15
10
5
08
20
Se
pt
.
Ju
ne
ar
ch
M
20
07
0
N.H. Economic Overview
• Performance will be better than the rest of New
England
• But we are not immune to weakening national
economy
• Housing just beginning to affect the labor market
• Business access to credit is key – remember the 199091 recession?
• Long-term success depends on our ability to continue
buck unfavorable regional demographic trends
Delinquencies and Foreclosures in NH Showed No
Signs of Slowing Through Q3 of 2007
2.0%
5.5%
5.0%
% NH Loans Past Due
1.8%
% NH Loans in Foreclosure
1.6%
4.5%
1.4%
1.2%
4.0%
1.0%
3.5%
0.8%
0.6%
3.0%
0.4%
2.5%
0.2%
2.0%
0.0%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Unfortunately, Home Price Trends Will Determine How Many
Loans Eventually Fall Into Foreclosure.
NH Housing Price Appreciation (OFHEO Index) & Loans in Foreclosure
16.0%
1.4%
14.0%
1.2%
12.0%
1.0%
10.0%
0.8%
8.0%
NH Home Price Aprreciation
6.0%
0.6%
% NH Loans in Foreclosure
4.0%
0.4%
2.0%
0.2%
0.0%
'00
-2.0%
'01
'02
'03
'04
'05
'06
'07
0.0%
Price Appreciation in NH Has Been Negative Since Mid-2006. NH is
one of 21 States as of October, With Negative Appreciation
NH Home Price Appreciation
12%
10%
8%
6%
4%
2%
0%
-2%
2005
2006
-4%
-6%
-8%
Source: Loan Performance Inc., First American Core Logic
2007
The Housing Market Won’t Stabilize Until The Supply of Unsold
Homes Declines, but Inventory Continues to Rise
(Albeit a Bit More Slowly)
Houses Added to Strafford Co. Market and Home Sales
3,000
2,599
2,246
2,500
2,000
1,260
1,500
1,085
1,000
500
0
2006
Added to the Market
2007
Houses Sold
Source: Northern NE Real Estate Network (does not include all inventory and sales in the state)
The “Wealth Effect” of Reduced Home Values.
Home Equity Lines of Credit (and Cash-Outs Refi’s) Fueled
Consumer Expenditures. Now HELOC’s are Trending Downward
in NH While Delinquencies Increase
$1,600,000
HELOC's at NH Banks
Delinquencies
$6,000
$5,000
$1,000,000
$4,000
$800,000
$3,000
$600,000
$2,000
$400,000
$1,000
$200,000
20
07
20
06
20
05
20
04
$0
20
03
$0
20
02
HELOC's ($000's)
$1,200,000
Delinquencies ($000's)
$1,400,000
$7,000
One Fallout From Subprime Crisis - Tighter Credit
The Federal Reserve Senior Loan Officer Survey Shows All
Types of Credit are Tightening
% of Loan Officers Saying Credit is Tightening
100
Tightening for Large & Medium C&I Borrowers
80
Tightening for Small C&I Borrowers
Mortgages
60
Prime
Subprime
40
Comm.Real Estate
20
-40
2008
2007
2006
2005
2004
-20
2003
0
To Date, Commercial and Industrial Lending By NH Banks Does Not
Seem To Be Affected by Credit Market Woes
(Well Functioning Credit Markets are Essential for Economic Growth)
C&I Lending by NH Banks
2,300
C&I Lending by NH Banks
Millionss
2,100
1,900
1,700
1,500
1,300
1,100
900
700
500
2003
2004
2005
2006
2007
NH Employment Peaked This Past Summer
(and the Peak Will Likely be revised Downward)
655
650
645
640
635
630
625
2006
2007
2008
New Claims for Unemployment Offer One Sign
That We May Avoid Recession
Average Weekly New Unemp. Ins. Claims in NH
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
The NH Leading Index Has Turned Down Sharply
(Recession Risk Jumps to 60%)
40
6%
The NH Leading Index Dipped Further Into Negative Territory
30
20
NH Index Value
2%
10
0
0%
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
-10
-2%
-20
NH Leading Index Value
-30
-40
Index Value: -20.3
-4%
Rate of NH Emp. Growth
-6%
% Change in Emp. Over 12 Mos. Prio
4%
The Northeast Continues to Have Population Growth
but it is Losing Out to the South and West
(Residents Fleeing the Northeast)
Population Change 2000-2006
10,000,000
8,000,000
6,000,000
Net Domestic Migration
International Migration
Natural (Births-Deaths)
2,604,422
333,379
2,439,502
2,542,127
4,000,000
2,000,000
1,644,011
1,236,750
0
-1,830,176
1,023,870
3,745,322
3,387,539
South
West
1,954,761
-1,107,625
-2,000,000
Northeast
-4,000,000
Midwest
Northern New England (Mostly NH and Maine) Attract Residents
From Other States While International Migration Keeps Southern
NE from Pop. Losses
Sources of Population Change 2000-2006
800,000
Net Domestic Migration
600,000
400,000
International Migration
Natural (Births-Deaths)
315,876
200,000
0
-200,000
80,145
24,629
45,273
239,283
Northern NE
-361,834
-400,000
Southern NE
-600,000
New Hampshire is Not The Oldest State Nor is it Aging
Fastest – But There are Demographic Challenges
• NH has lower fertility rates (third lowest in the
nation)
• Lower mortality rates (because of better health of
seniors)
• Both of which are signs of success
• All civilized societies age as they prosper – it is
inevitable
• NH is attracting fewer 30-44 yr olds because there are
fewer of them everywhere – especially in the
Northeast
The Mistaken Logic Of NH “Losing Young Families”: The Difference
Between a Smaller Age Cohort Because of Getting Older or “Age
Progression” and a Smaller Cohort Because of Moving Out-of-State
100,000
90,000
Age 30-34
88,490
Age 25-29
76,884
80,000
70,444
70,000
70,444
Difference
Between Actual
and “Expected”
Is “Migration”
And = 6,440
Into This Age
Group. The 3034 Age Group
Is “Smaller”
Than in 2000 But
Not Because of
“Out-Migration”
60,000
50,000
40,000
30,000
20,000
2000
2005 ("Expected" Based
on # of 25-29 yr olds in
2000)
Actual 2005
Examined This Way NH Continues to Attract Young
Households
(Albeit at a Slower Pace than in the 1980’s and 1990’s)
Estimated Net In-Migration 2000-2005
65+
-3,374
60 - 64
-1,753
55 - 59
-972
-13
50 - 54
45 - 49
1,988
40 - 44
4,936
35 - 39
7,906
30 - 34
6,440
25 - 29
-1,350
-4,000
-2,000
1,251
20 - 24
0
2,000
Source: PolEcon analysis of “Current Population Survey” data
4,000
6,000
8,000
10,000
Dover’s Economic Performance has Been Strong
and We are Better Positioned for Long-Term
Prosperity
Important Trends in Dover
• Changing demographics
– Higher levels of educational attainment - “up-skilling”
– Increasing income - “up-scaling”
• More diversified economy
– Less reliant on cyclical industries
– Less reliant on a few, large employers
– Better able to whether national and state downturns
• Changing expectations
– By residents
– By businesses
• What hasn’t changed (enough) our view of Dover
Population Trends Confirm Dover’s Attractiveness
Population Change 2000-2006
Rochester
7.6%
Dover
6.8%
Salem
6.3%
Londonderry
5.8%
Merrimack
4.9%
Laconia
4.2%
Concord
3.4%
Manchester
2.2%
Nashua
1.2%
0.9%
Keene
Portsmouth
0.0%
0.1%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0% 10.0%
Dover Has Added Highly Educated and Skilled Residents
Faster than Has NH as a Whole
% Change in the Composition of Pop. Over 25 by Educ. Attainment
1990-2000
3.7%
Graduate or Prof.
Degree
2.1%
4.4%
Bachelor's Degree
2.3%
Dover
1.1%
Associate Degree
NH
0.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Dover Now Has a Population and Labor Force that is Well Educated,
Higher Skilled, and Better Able to Support Growth Industries
% Pop. Over 25 by Educ. Attainment (2000)
10.4%
9.2%
10.6%
10.0%
Graduate or Prof.
Degree
Dover
Strafford
Co.(Less Dover)
Rock. Co.
22.0%
15.1%
Bachelor's degree
21.1%
18.7%
9.1%
8.9%
9.5%
8.7%
Associate degree
NH
21.4%
20.2%
20.7%
20.0%
Some College, no
Degree
25.1%
32.3%
28.6%
30.1%
HS Grad
11.9%
14.2%
No HS Diploma
9.6%
12.6%
0%
5%
10%
15%
20%
25%
30%
35%
The most valuable resource in the 21st
century is brains. Well educated people
tend to be mobile. Watch where they go
because where they go robust economic
activity will follow
…..and change and conflict will inevitably
follow
Since the Turn of The Millennium, Dover’s Rate of Private Sector
Employment Growth Has Significantly Exceeded That of NH
Private Sector Employment (Index 1996=100)
120
115
110
Dover
105
N.H.
100
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Employment Growth Has Been
Stronger in Dover – Especially in Recent Years
Private Sector Employment Growth
20%
15.7%
Dover
15.1%
Strafford Co.
15%
N.H.
8.6%
10%
5%
Laconia
4.1% 3.9%
2.9%
0%
-2.3%
-5%
-5.6%
-10%
1996-2006
2002-2006
Compared to Other Communities, Local Government Emp.
Growth Has Been Lower in Dover in Recent Years
Local Government Employment Growth
36.5%
40%
Dover
35%
Strafford Co.
N.H.
26.8%
30%
Laconia
24.0%
25%
20.20%
20%
15%
10%
3.9%
5.5% 6.6% 6.50%
5%
0%
1996-2006
2002-2006
Avg. Weekly Wages Show Dover Having Solid Gains
in Job Quality
Private Sector Growth in Avg. Weekly Wages
75%
64.0%
Dover
65%
55%
55.6%
Strafford Co.
45.1%
N.H.
45%
35%
17.8%
25%
17.6%
8.1%
15%
5%
-5%
1996-2006
2002-2006
Dover is “Transitioning” Nicely to a More Diverse Economy, Adding
Employment in Newer or Faster Growing (Nationally) Industries, While
Stanching the Manufacturing Losses of the 1990’s
Emp. Growth 2002-2006
Educational Services
10.6%
32.1%
-9.1%
Information
-2.3%
25.8%
Wholesale Trade
-32.5%
4.9%
21.6%
Prof. & Tech. Service
11.4%
11.4%
16.2%
12.6%
10.7%
Health Care
Retail Trade
-8.7%
Manufacturing
Dover
1.6%
4.6%
2.5%
Strafford Co.
N.H.
0.9%
-7.7%
-40%
-20%
0%
20%
40%
60%
80%
The Numbers Behind the Percentages
Emp. Growth 2002-2006
416
Health Care
275
Educational Services
269
Adminitrative Support
207
Infor mation
103
Prof. & Tech. Service
92
Wholesale Trade
27
Retail Trade
18
Manufac turing
0
50
100
150
200
250
300
350
400
450
Compared to Most Regions in NH – Dover Has Not Lost as
Much of Its Manufacturing Base
(Portsmout Benefits From the Presence of Pease Tradeport)
Manufacturing Emp. (Index 1996=100)
140
130
120
110
100
90
Dover
Ports.
80
Manch.
Nashua
N.H.
70
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Along With Employment Growth, Dover Has Done
Comparatively Well Expanding its Commercial/Industrial
Tax Base
Pct. Change in Commerical/Industrial Valuation 1999-2006
Portsmouth
176.4%
Manchester
137.7%
Dover
124.7%
Concord
113.8%
Laconia
90.3%
Nashua
83.3%
77.6%
Keene
Rochester
0%
60.6%
20%
40%
60%
80%
100% 120%
140% 160%
180% 200%
Continued Strong Growth in Commercial/Industrial
Valuation is Needed to Balance Recent Population Growth
Comm./Ind. Valuation per Capita
40,000
Dover
35,000
Rochester
Laconia
30,000
Concord
Keene
25,000
20,000
15,000
10,000
5,000
00
01
02
03
04
05
06
Moving Forward There Are Many Challenges,
Here are a Few
• Manage conflicts over changing expectations/views of city
– Prosperity depends on the quality and “amenity value” of the city
– With changing demographics comes different expectations for services
– How we resolve this conflict determines our long-term prosperity
• Fiscal prudence is important and necessary but communities
can’t “cut their way to prosperity” – implementation of the
“tax cap” could unwind recent economic gains
• Increasingly Dover’s employment base can ‘blend” into the
fabric of the community but there is a need for more strategic
locations to accommodate businesses
• A higher skill economy requires connections to (and
identification with) higher-education institutions – Dover has
little of either
• Dysfunctional democracy delayed the positive trends, it could
just as easily reverse them