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The State of the CityThe State of the CityThe Honorable Scott MyersMayor
Mr. J. Michael Joyal, Jr.City Manager
Mr. Brian J. GottlobPolEcon Research
Forum SeriesForum Series
7:30 a.m. Tuesday, February 12, 2008Cocheco Country Club
The
Sta
te o
f the
City
The
Sta
te o
f the
City
The Honorable Scott MyersMayor, City of Dover
The
Sta
te o
f the
City
The
Sta
te o
f the
City
Mr. J. Michael Joyal, Jr.City Manager, City of Dover
The State of Our City isGOOD
We must continue to find our way along a path towards
GREATNESS
Volunteers Make Dover GreatVolunteers Make Dover GreatArena CommissionArena CommissionZoning Board of AdjustmentZoning Board of AdjustmentRecreation Advisory BoardRecreation Advisory BoardUtilities CommissionUtilities CommissionCemetery BoardCemetery BoardSolid Waste Advisory CommissionSolid Waste Advisory CommissionTransportation Advisory CommissionTransportation Advisory CommissionCocheco Waterfront Development Cocheco Waterfront Development Advisory CommissionAdvisory CommissionLibrary TrusteesLibrary TrusteesConservation CommissionConservation CommissionDover Business and Industrial Dover Business and Industrial Development AuthorityDevelopment AuthorityDover Housing AuthorityDover Housing AuthorityMcConnell Center Oversight McConnell Center Oversight CommitteeCommitteeOpen Lands CommitteeOpen Lands Committee
Professional Staff Make Dover GreatProfessional Staff Make Dover Great
Executive OfficesExecutive Offices
FinanceFinance
Planning and Community DevelopmentPlanning and Community Development
PolicePolice
Fire & RescueFire & Rescue
Community ServicesCommunity Services
RecreationRecreation
Public LibraryPublic Library
Human ServicesHuman Services
Public SchoolsPublic 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, AuthorFrom Good to Great: Why Some Companies Make the Leap… and Others Don’t
Population growthPopulation growth
24,000
26,000
28,000
30,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Population Trend Line
1.0% Annual Growth
Source: NH Office of State Planning
Student growthStudent growth
3,000
3,500
4,000
4,500
5,000
1998 2000 2002 2004 2006 2008
Students Trend Line
1.5% Annual Growth
Source: Dover School Department
Development activityDevelopment activity
0
200
400
600
800
1998 2000 2002 2004 2006 2008
Total Permits Dwelling Units Trend Line Trend Line
-0.4% Annual Growth
-1.0% Annual Growth
Source: Dover Planning Department
Vehicle RegistrationsVehicle Registrations
25,000
27,000
29,000
31,000
33,000
1998 2000 2002 2004 2006 2008
Vehicle Permits Trend Line
1.3% Annual Growth
Source: Dover Finance Department
Assessed valueAssessed value
500
1,000
1,500
2,000
2,500
3,000
1998 2000 2002 2004 2006 2008
Valuation (millions)
Source: Dover Finance Department
Average Home ValueAverage Home Value
50,000
100,000
150,000
200,000
250,000
300,000
1998 2000 2002 2004 2006 2008
Average Residential Value
17.0% Annualized Return
Source: Dover Finance Department
Average Home Tax BillAverage Home Tax Bill
2,000
3,000
4,000
5,000
6,000
1998 2000 2002 2004 2006 2008
Tax Bill
8.5% Annual Growth
Source: Dover Finance Department
General fund balanceGeneral fund balance
2,000,000
4,000,000
6,000,000
8,000,000
1997 1999 2001 2003 2005 20070
2
4
6
8
10
Fund Balance Percent of Budget
14.9% Annual Growth
Source: Dover Finance Department
North End Fire Station
Public School Renovations
Streets & Sidewalks Repairs
Downtown and Waterfront Development
Master Plan Update
Tax Cap Charter Amendment Implementation
Projects and Activities
North end Fire Station
Public School Renovations
Streets & Sidewalks Repair
Downtown and Waterfront Development
Master Plan Update
Successful Implementation of Tax Cap
Our Most Immediate Challenge
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, AuthorFrom Good to Great: Why Some Companies Make the Leap… and Others Don’t
The
Sta
te o
f the
City
The
Sta
te o
f the
City
Mr. Brian J. GottlobPolEcon 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. GottlobPolEcon
Dover, NH(603) 749-4072
bgottlob@poleconresearch.com
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
0
5
10
15
20
25
30
35
2007
Marc
h
June
Sept.
2008
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 1990-
91 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%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 070.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
% NH Loans Past Due
% NH Loans in Foreclosure
NH Housing Price Appreciation (OFHEO Index) & Loans in Foreclosure
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
'00 '01 '02 '03 '04 '05 '06 '070.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
NH Home Price Aprreciation
% NH Loans in Foreclosure
Unfortunately, Home Price Trends Will Determine How Many Loans Eventually Fall Into Foreclosure.
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
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2005 2006 2007
Source: Loan Performance Inc., First American Core Logic
The Housing Market Won’t Stabilize Until The Supply of Unsold Homes Declines, but Inventory Continues to Rise
(Albeit a Bit More Slowly)
2,599
1,260
2,246
1,085
0
500
1,000
1,500
2,000
2,500
3,000
2006 2007
Houses Added to Strafford Co. Market and Home Sales
Added to the Market 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
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
2002
2003
2004
2005
2006
2007
HE
LO
C's
($00
0's)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Del
inqu
enci
es ($
000'
s)
HELOC's at NH BanksDelinquencies
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
-40
-20
0
20
40
60
80
100
2003
2004
2005
2006
2007
2008
Tightening for Large & Medium C&I Borrowers Tightening for Small C&I Borrowers MortgagesPrimeSubprimeComm.Real Estate
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
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
2003 2004 2005 2006 2007
Mill
ions
sC
&I
Len
ding
by
NH
Ban
ks
NH Employment Peaked This Past Summer(and the Peak Will Likely be revised Downward)
625
630
635
640
645
650
655
2006 2007 2008
New Claims for Unemployment Offer One Sign That We May Avoid Recession
Average Weekly New Unemp. Ins. Claims in NH
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
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 Dipped Further Into Negative Territory
-40
-30
-20
-10
0
10
20
30
40
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
NH
Inde
x V
alue
-6%
-4%
-2%
0%
2%
4%
6%
% C
hang
e in
Em
p. O
ver 1
2 M
os. P
rio
NH Leading Index Value
Rate of NH Emp. GrowthIndex Value: -20.3
The NH Leading Index Has Turned Down Sharply (Recession Risk Jumps to 60%)
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
3,745,322 3,387,539
2,439,502 2,542,127
-1,830,176 -1,107,625
2,604,422
333,379
1,236,750 1,954,761
1,023,8701,644,011
-4,000,000
-2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
Northeast Midwest South West
Net Domestic MigrationInternational MigrationNatural (Births-Deaths)
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
239,283
-361,834
45,27324,629
315,876
80,145
-600,000
-400,000
-200,000
0
200,000
400,000
600,000
800,000
Net Domestic Migration
International Migration
Natural (Births-Deaths)
Southern NE
Northern NE
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
88,490
70,444
76,884
70,444
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2000 2005 ("Expected" Basedon # of 25-29 yr olds in
2000)
Actual 2005
Age 30-34 Age 25-29
DifferenceBetween Actualand “Expected”Is “Migration”And = 6,440Into This Age Group. The 30-34 Age GroupIs “Smaller”Than in 2000 ButNot Because of “Out-Migration”
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
4,936
-972
-1,753
-3,374
-13
1,988
7,906
6,440
1,251
-1,350
-4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65+
Source: PolEcon analysis of “Current Population Survey” data
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
2.2%
3.4%
4.2%
4.9%
5.8%
6.3%
6.8%
7.6%
1.2%
0.9%
0.1%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Portsmouth
Keene
Nashua
Manchester
Concord
Laconia
Merrimack
Londonderry
Salem
Dover
Rochester
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
0.6%
2.3%
2.1%
1.1%
4.4%
3.7%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Associate Degree
Bachelor's Degree
Graduate or Prof.Degree
Dover
NH
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)
12.6%
30.1%
20.0%
8.7%
18.7%
10.0%
9.6%
28.6%
20.7%
9.5%
21.1%
10.6%
14.2%
32.3%
20.2%
8.9%
15.1%
9.2%
11.9%
25.1%
21.4%
9.1%
22.0%
10.4%
0% 5% 10% 15% 20% 25% 30% 35%
No HS Diploma
HS Grad
Some College, noDegree
Associate degree
Bachelor's degree
Graduate or Prof.Degree
Dover
StraffordCo.(Less Dover)Rock. Co.
NH
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)
95
100
105
110
115
120
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Dover
N.H.
Employment Growth Has BeenStronger in Dover – Especially in Recent Years
15.7%
2.9%
15.1%
-5.6%
8.6%
4.1% 3.9%
-2.3%
-10%
-5%
0%
5%
10%
15%
20%
1996-2006 2002-2006
Private Sector Employment Growth
DoverStrafford Co.N.H.Laconia
Compared to Other Communities, Local Government Emp. Growth Has Been Lower in Dover in Recent Years
24.0%
36.5%
26.8%
20.20%
3.9%5.5% 6.6% 6.50%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1996-2006 2002-2006
Local Government Employment Growth
DoverStrafford Co.N.H.Laconia
Avg. Weekly Wages Show Dover Having Solid Gains in Job Quality
64.0%
45.1%
55.6%
17.8%
8.1%
17.6%
-5%
5%
15%
25%
35%
45%
55%
65%
75%
1996-2006 2002-2006
Private Sector Growth in Avg. Weekly Wages
Dover
Strafford Co.
N.H.
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
11.4%
4.9%
-2.3%
10.6%
-8.7%
4.6%
12.6%
11.4%
-32.5%
0.9%
1.6%
16.2%
21.6%
25.8%
32.1%
10.7%
2.5%
-7.7%
-9.1%
-40% -20% 0% 20% 40% 60% 80%
Manufacturing
Retail Trade
Health Care
Prof. & Tech. Service
Wholesale Trade
Information
Educational Services
Dover
Strafford Co.
N.H.
The Numbers Behind the Percentages
Emp. Growth 2002-2006
18
27
92
103
207
269
275
416
0 50 100 150 200 250 300 350 400 450
Manufacturing
Retail Trade
Wholesale Trade
Prof. & Tech. Service
Information
Adminitrative Support
Educational Services
Health Care
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)
70
80
90
100
110
120
130
140
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Dover Ports.
Manch. NashuaN.H.
Along With Employment Growth, Dover Has Done Comparatively Well Expanding its Commercial/Industrial
Tax Base Pct. Change in Commerical/Industrial Valuation 1999-2006
90.3%
113.8%
124.7%
137.7%
176.4%
83.3%
77.6%
60.6%
0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200%
Rochester
Keene
Nashua
Laconia
Concord
Dover
Manchester
Portsmouth
Continued Strong Growth in Commercial/Industrial Valuation is Needed to Balance Recent Population Growth
Comm./Ind. Valuation per Capita
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
00 01 02 03 04 05 06
DoverRochesterLaconia
ConcordKeene
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
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