Examining the Impact of Population and Business Growth in the Southeast Region (CPE)

Transcription:

David G. Moffett (00:09):

Welcome to the session after lunch. So we'll try to keep you guys awake. So this is the examining the impact of population and business growth in the southeast region, which you guys have heard all about over the last several panels. One important point though, it's not just happening in Florida, it is happening in Florida, but it's happening elsewhere in the southeast as well. So what I wanted to do is let each of the panel members introduce themselves and then we'll jump right in. Go ahead.

Melissa López Rogers (00:50):

My name is Melissa López Rogers. I'm a Shareholder at Greenberg Traurig, and also Co-Chair Orlando and Atlanta Public Finance and Infrastructure Practices.

Jennifer Garza (01:03):

My name is Jennifer Garza and I'm a Local Government Ratings Analyst with S&P Global. I'm a Director and I'm based out of Dallas, Texas. I work on the LG East Local government portfolio.

Laura Howe (01:17):

Good afternoon. My name is Laura Howe. I'm a Director with PFM out of Orlando office. I lead the Florida K 12 practice but also work with clients up in Georgia, in Louisiana as well.

Michael Curcio (01:30):

Hi everyone. Michael Curcio, our Core Products Group, which is Division on High.

David G. Moffett (01:45):

Alright, well thank y'all for being here and thank you for agreeing to be on the panel. My name is David Moffett, I'm with Oppenheimer Public Finance. I sit in Atlanta and have for a long time. So today's panel we wanted to focus as much of the southeast has experienced rapid growth in both population and business relocations and we've heard about the sunny mild climate, the continued wake of COVID-19, the virtual work opportunities, the favorable business climate, et cetera. We wanted to see or discuss what we are seeing in the southeast as municipalities and states digest this growth both reactively and proactively. So before we jump into some of the things we've seen, what I wanted to do is call on Jennifer and see if she would kick us off with some of the growth statistics that she's seen from her seat.

Jennifer Garza (02:48):

Alright, great. Yes, the region overall has been doing well and has experienced a good amount of growth as a whole in comparison to other areas in the nation when it comes to credit quality. Contending and planning for this rapid growth can come with some revenue windfall, but also new demands for services, vice versa for those areas that are growing at a slower pace and therefore not seeing additional revenue growth to meet with higher costs of services that is demanded can also be a challenge. So it's a two-sided coin. I'd like to set the stage with some of these statistics for the southeast states in comparison to the nation and I felt like these graphics did go a long way in terms of showing you the growth that's occurring. So the five-year CAGR, which is the middle column in this slide, basically gives you good context for how much growth has occurred in this is employment.

(03:44):

Can you go back one more slide to population? Thank you. The five-year CAGR is the five-year growth. So if you think about that, that's 2019 to 2023 in that really gives you good context for how much growth we've realized. And so this graphic on the right with the states, you see the pink and the salmon represents contraction in that population growth over that five year period. And then when you get to the darker blue teal colors, that represents the strongest level of growth over that time period. So you can see in our southeast region on the whole is seeing pretty good to moderate growth. Mississippi and Louisiana have seen some contraction over that time period for Florida in of itself, it's the strongest growing, strongest growing state in the southeast region, which we've heard a little bit about from our Florida representatives here. But a lot of the migration or the immigration into the state is coming from the Midwest and the Northeast and there's been a lot of headquarter relocations to this area.

(04:46):

So bringing jobs and income to the state, which is positive. The second state ranking highest in population growth is South Carolina, which is pretty close behind at 5.89% growth and they've seen both strong net domestic and international net migration and even larger growth in the retiree age population than other age cohorts. So the three other states that have stronger population growth in the US are North Carolina at 4.5%, Tennessee at 3.8% and Georgia at 3.7%. Now the states that lag behind the US are just four. Alabama is just marginally below the state's rate of growth at 2.1% Virginia at 1.35%, which is really just realizing more steady pace of moderate growth over time. Mississippi and Louisiana, as I mentioned before, are the two states that had had seen contraction in population. Louisiana itself has had persistent outmigration declining birth rates and rising death rates. There's also a pretty material demographic shift out after major hurricane Katrina.

(05:57):

So that's some of the explanation for some of those demographic trends. Alright, if we can move to the next slide On employment, you can see that a lot of these top rankings for the southeast states mirror greatly those that have high population growth. So Florida's number one with 8.7% growth over the five year period, North Carolina second, then Georgia, Tennessee, South Carolina, Alabama, Virginia, and then it normalizes more to a moderate rate of growth, Mississippi at nearly 2% growth and then Louisiana had a contraction of 2% over that same time period. So it'll be a little bit of a slower recovery for the Louisiana portfolio. Now for this last slide shows some context for GDP growth for the area. So it really shows a measure of output net worth for these state governments. So GDP for the US grew over the 2023, about 2.5%. So Florida was nearly double that at 4.98% followed by South Carolina and Tennessee at around 3.6%.

(07:01):

Louisiana was 3% and North Carolina, Alabama were around two and a half and 2.7% respectively. So Louisiana is the only one in that group that didn't have a correlation with strong population growth and strong employment growth during that same time period. And that's largely because a lot of their GDP is driven by natural resources, oil and gas mining. They also have a significant amount of port and export activity coming throughout the state. Alright, so what does all that mean for credit quality? Well, economic growth prospects, demographic and employment trends and tax-based composition are really key variables that we analyze in terms of unique economic makeup. Proactive management and governance remain key to our credit, credit stability and particularly given the broad range of rising risks that governments face as extreme weather risks, cyber events, demographic shifts, and an ongoing labor force imbalance. At the beginning of the year, s and p put the local government outlook on stable because they're largely buoyed by solid revenue growth, healthy reserves and the ability to absorb rising expenditures without hurting credit quality. A prolonged period of elevated interest rates has led to lower issuance volume, particularly since some governments still have federal stimulus funds to spend as rates fall bond volume may accelerate as the year presses despite projections for cooling inflation issues are still grappling with rising infrastructure costs, particularly in capital heavy sectors like utilities and transportation.

(08:31):

And these increases in construction costs could squeeze capital budgets and lead to reprioritization of projects. When you compound all of this with rapid growth, increase in demand for services, a competitive wage environment and tight labor market, local governments in the southeast may have many challenges to manage through. There was some uncertainty in year one and two post pandemic in terms of whether the return to work environment would result in volatility or snapback in a lot of the population growth that the southeast states had experienced. But that really has yet to come to fruition. Alright. And so I think with all of those factors coming in, there is quite a bit to analyze and assess. There's unique characteristics state by state in terms of the demographic shifts that come into play and the growth that comes into play. But as you know, a county, a municipality can also outpace growth experience different challenges than the state and the larger government does. And so every credit has their own union story.

David G. Moffett (09:33):

Thanks for that. Definitely a great overview in terms of the situation that we find ourselves in. Mike, I'm curious, having covered both general munis and revenue producing munis in the southeast, would you describe how some of these general muni entities are meeting this population growth as well as how some of the revenue produced Munis are preparing or have prepared, especially electric utilities?

Michael Curcio (10:02):

Thanks David. We've definitely seen a lot of activity. Last year was a bit of an anomaly with population growth, obviously issue cash stimulus. I think that FUSE needs to be starting to run out. I think that basement low interest rate, I think they're going to have to come back to market and we're starting to see that. So where are we seeing the growth of assure the general government space? We're seeing a lot of activity from the school board issuance and thank you Laura for question Marion. Cops issuance. I think it's a great example of focusing on the enrollment growth, the current enrollment of 44,000 students and to go up to 50,000 years. Right there you're seeing 25% increase, that's Marion County, but throughout the Marion just another good example, Inland County Villages.

(11:30):

But I think it speaks to where we're not just seeing the population also in light of universal voucher program that Florida could also also brand new school facilities. Potentially they might see more environment in other areas of the southeast like Alabama. We're definitely seeing a pick up an issue just from back. The envelope figures are close from B, it looks like 70% of already been issued in the first quarter last year. Similar to Florida, we're seeing a lot of board issuances and deals in Alabama living combination property. Northeast really a property tax. So I think needs to be a little more creative, more diverse revenue stream. They're a relatively new example that we're seeing. Alabama transportation infrastructure back deals, those are typically exclusive. An example county that they have to view the roads with all the growth going around in. And you have now the state tructure bank serving as a backstop down the state public road.

(13:21):

We're starting to see that activity. State of Alabama have used that new structure to finance their roads and it's nice to see support. And on the revenue side we're seeing a lot of water sewer utility deals. One specifically I worked on was the Wildwood Utility District, which there's a lot of the villages and just some the numbers from a growth seeing just out of that area is pretty staggering Over the past 23 years, averaging 2,700 per year during that five years during that period is 3,800 really eye opening with growth comes some uncertainty. So like the transactions like that, that service coverages so rely on growth will haircut the growth. We'll look at portability assuming that they're not growing at this. But in that area I think we're really comfortable.

(14:34):

And lastly on the utility side, growth of the population is obviously a challenge to the grid, but you also have issues that are compounding that Bitcoin mining operations data centers, there's still a strong demand for large distribution centers. So all those with the friendly business environment on utilities to address those challenges. I took a quick look at Trump's 10 year site plan and a lot of their past assets are built in the eighties or the nineties. They're going to bring on those. I did see that there. They have contractor power for a solar power plant and megawatts. So that's positive stuff. Obviously Georgia power and yeah, all units now coming online. So that's going to be to have, it remains to be seen I think on the utility side of new projects outside of Val. So it's something we're keeping our eye on and it's an exciting region to be involved in. I think it's very active and we look forward to.

David G. Moffett (16:12):

Thanks Mike, appreciate that. Melissa Lopez, I know you've been staying close to some of the state legislature work that's been going on to in some of the southeastern states to facilitate some of the needed infrastructure. Why don't you share some of your thoughts that you've seen across the southeast?

Melissa López Rogers (16:32):

Absolutely. I think one trend that we found particularly interesting was the introduction of legislation in Georgia and Alabama with respect to community development districts. And that is a concept that is well known here in Florida where it's just a local special purpose government framework authorized under state law. We saw legislation introduced. It has not passed yet, but there are strong efforts and lobbying around that legislation. Particularly what we have learned in our conversations with stakeholders in Georgia is that there is a real push from the governor to really focus on rural communities. So really getting outside of metro Atlanta. And one of the benefits or advantages of introducing the kind of the CDD framework in Georgia is really allowing developers to bring much needed infrastructure for projects and have residents enjoy those projects and not put a burden on other neighboring communities, counties, cities, et cetera.

(17:55):

So we've been monitoring that legislation very closely. It was really interesting, there was a similar legislation in Alabama that really focused on breaking out tax proceeds from the sale of alcohol within the CDD's that would then be awarded as grants based on a recommendation of each legislator in a particular county. So I think that's kind of an example for me of the creativity that we're seeing where there may be something that exists somewhere else, bringing it to a new state or a new community and then adding a local touch to it. That's something that we will be continuing to monitor in Georgia. It's not just state legislation. It actually requires a constitutional amendment so that one may take a little longer to progress. We've also seen some pretty interesting legislation around affordable housing or attainable housing here in Florida. As many know there was legislation passed in that sector.

(19:14):

There's also a really interesting bill that's been introduced and has not passed in South Carolina that actually allows churches to build affordable housing without being taxed. So I think part of what we're seeing in the legislation is not just the financing mechanisms like community development districts, but also seeing other ways to work with the private sector. So kind of not the complicated P three transactions, but just fundamentally what it is for public and private stakeholders in the community to work together. We also saw some transportation legislation really more from a funding side, so nothing particularly creative there, but it is a focus and we're seeing more intentionality with where those dollars are being invested. And then I think the thing that we're seeing generally that was surprising for some of us, at least when we talked about it on this panel is where we're seeing the state legislation bridge with local legislation and we're starting to see mixed use development projects where air we would've never really imagined to see them.

(20:40):

And so one area of particular focus that I looked at was Huntsville, Alabama, and there's a lot of mixed use projects there. So I think one of the things that we're seeing is kind of this intersection between various factors and one of them is what they're calling climate change relocation. And so generally if you are in a coastal area and you kind of have fatigue from hurricanes, you're generally not going to move across the country. You're going to move somewhere close. So looking at migration patterns or potential migration patterns from coastal areas to cities like Huntsville, cities like Atlanta and other similarly situated cities in the southeast. And so I think that's going to be another area where we'll continue to see legislation in the future with creative solutions.

David G. Moffett (21:39):

Interesting. So Laura, I know you've been running around on a lot of large scale infrastructure projects and a lot of municipalities are trying to get ahead of that curve and some municipalities are reacting to that curve. I'd love to hear some examples that you have to address being proactive or reactive to the population and businesses moving in.

Laura Howe (22:13):

Sure. I would think at the beginning of 2020 there were clients and specifically within the state of Florida, those areas were already growing. So their strategies were a bit more proactive as opposed to as a pandemic moved along and the growth in population in Florida boomed in areas that it wasn't necessarily being forecasted that we were going to see these areas of growth. So it sort of put clients in a position to be reactive instead of proactive because nobody could anticipate that coming. I would say as of today, everyone is looking at this in approach in a proactive way, trying their best to be forecasting out. Many clients that have been talking to lately, instead of doing a five year capital plan, they're trying to estimate out 15 or 20 years tasking their staff with this to look at how these projects that are coming in the infrastructure that's needed, not just in the next five years but beyond that to make sure that they can support the citizens that are there and that they have the revenues available for that.

(23:19):

Obviously inflation has been a huge issue. The cost of building a school has more than doubled over the past four years. One of the benefits I would say to offset that though at least is those that had been proactive enough to have a sales tax in place. If a client doesn't and they have this growth that's coming in, they're going out and they're asking voters. Now, thankfully in the state of Florida, most of the voters are very supportive of sales tax and get those passed, but the projects that have been increasing, the sales tax dollars increase. So that does help offset somewhat some of that inflation. But it has been a pretty huge challenge when you're looking at building a high school and it's over 200 million. As Mike had mentioned Marion schools, they hadn't seen this growth that was coming. They were trying to figure out deferred maintenance needs that were there.

(24:10):

The villages is mostly based in Sumter County. There was a little bit in Marion, but the villages has boomed. I used to work closely with the villages back in the day and the developer had said 10 years ago that he was done. There wasn't going to be another district. And those districts keep popping up, which is only in turn there needs to be the support staff that's coming. Those people that are supporting the work in the villages have children, which is kind of pushing out past sumter really into the other areas that are there. And so while Marion schools, for example, wasn't necessarily seeing this growth they are now, they've been doing studies to try and figure out where the growth is happening within the district.

David G. Moffett (24:58):

All right. Okay. I heard stay in place until further. Okay. They're going to say it again, so we get to listen to it again,

Jennifer Garza (25:26):

Keeping it interesting.

David G. Moffett (25:28):

Okay. Wrote three times.

Jennifer Garza (25:33):

It's just to make it memorable. Yes. Remember that time. Should I keep going? As long as the high pitch thing doesn't continue,

David G. Moffett (25:45):

I'm not going to count them anymore.

Jennifer Garza (25:49):

Do we keep going?

Laura Howe (25:52):

I can keep going if people want. Get my thoughts back together.

(25:59):

So there's basically a lot of planning that's going into how communities are doing it. I know with the low, the workforce housing, the developments that are going, cities are looking at that. It's developers coming in that it's workforce housing to make sure that the teachers have places to stay in the lower incomes. I know that around the Disney area, they were looking at that because obviously the people who are working at the parks aren't able to afford even the rent. And so it's four or five people living in an apartment together to be able to afford based on their wages at the parks. But that's a huge economic boost in the state of Florida that's super important. And so it's trying to figure out those solutions that I know in Orlando they're creating a whole little industry for workforce housing as well. I'm trying to think of the other points I was saying. I think that'll wrap it up for now. Sorry, my train of thought was a little off there.

David G. Moffett (26:56):

No, that was good. It was distracting while I was going on then when it went off, it was even more distracting. No, thanks for that. So Jennifer, why don't we circle back to you. We've read about a lot of municipalities repurposing different real estate assets for different purposes and such as affordable housing. Could you share some of those examples with the group Yes. That you've

Jennifer Garza (27:23):

Seen? Absolutely. So I have two high profile cities. I wanted to talk a little bit about as interesting examples, but before I jump in, I did find some research through S&P global market intelligence that just 19% of the US population had lived in an unaffordable metro area in 2019. And now that proportion has grown to 60%, which is quite a big jump. So high home price appreciation skyrocketed during the pandemic due in part to increase demand. And while cost of living and home affordability is generally more favorable in the southeast in comparison to some other areas, affordability did further weaken as mortgage rates increase. So for some context, Florida's housing affordability metric deteriorated from 160 in 2019 down to 80 in 2023 indicating home prices are less affordable in comparison to incomes. So some general themes and takeaways we've observed in review of budgets and discussions with local governments are that public safety, housing affordability, homelessness, downtown revitalization and office conversions have become nearly universal emphasis in city budget narratives and are commonly the focal point of new proposals for increased operational spending and capital investment while proactive spending targeting recovery.

(28:34):

Recovery priorities could be credit neutral or even credit supportive if effective. The practical necessity of addressing multiple concurrent issues may require difficult budgetary. So my first example is the city of Miami AA stable, Miami, Florida. Their city's tax revenue increase throughout the pandemic, including 11% growth between fiscal years 2022 and 2023, reflecting strong population increases in residential demand. Miami also outpaced other major cities in their return to office, mitigating the effects of material and long-term commercial space vacancies. Property taxes represent about 50% of their cities total operating revenue and have demonstrated a steady growth trajectory between 17 and 2023. With the recent valuation of growth, Miami's millage rate has declined, which does provide some additional financial flexibility to contend with additional needs. The city's primary spending priority is public safety. However, housing affordability has been a growing focal point in their bond program. As the CFO of Miami mentioned a further panel today, they had a Geo Miami Forever bond program that was adopted in 2017 for $400 million.

(29:43):

It included a hundred million dedicated to affordable housing for which the city has declarations of intent totaling 55 million at this point in 2019. It also announced a goal of creating or preserving 12,000 affordable housing units by 2024 and has adopted an affordable housing master plan. So even pre pandemic, they were planning for this type of event and need for their area, for their community, but it is likely with all of the growth that has come in, that there is an even stronger need that they'll have to adjust for. So the next example is the city of Atlanta, which is rated double A plus stable by S&P. So Atlanta exceeded its pre pandemic employment levels pretty quickly, like in late 2021 with annual growth projected at about 1%, which is in line with the state and national trends. The city does have a diverse commercial sector.

(30:31):

It's highlighted by its longstanding presence of headquarters of Fortune 500 companies. Atlanta also manages its tax levy through a millage rate impose on their tax digest or their taxable assessed value, and they can set that rate annually to what they need it to slowing growth across the state. And Atlanta's reliance on business travel, which has had a slow recovery relative to rebounding leisure activity is unlikely to materially affect the city's central operations and services. The city has enhanced efforts to address housing affordability and public safety through increased spending coupled with public private partnerships and other incentive programs. Recent new initiatives through the city's Invest Atlanta program include 380 million conversion of a downtown office space into a mixed use development, including 400 residential units, 200 of which are affordable and 200 are market rate. Four new programs to provide grants and low interest loans to assist small businesses and acquiring or improving commercial property and a proposal to build or preserve 20,000 units of affordable housing across the city. So to sum up, it's not a new phenomenon for locals to start preparing for this or planning for this effort, but an area that could be further pressured with higher growth in population with areas of lower incomes.

David G. Moffett (31:44):

Now those are good examples. The other topic that we wanted to cover as a group, sort of similar to what Munis are doing with different assets that they have available, the Buzz Freight Workforce housing, and it's sort of taken on a life of its own and can mean a lot of different things to a lot of people. But I know there are munis across the country that are using that concept to attract and retain employees as a way to either offer some sort of discounted housing or something of that nature and would open it up to the panel to, if you've seen those kinds of examples in your day-to-day would love to share those.

Melissa López Rogers (32:33):

Well, Laura, I think you mentioned earlier, Disney, also universal in Orlando are kind of to the two hot projects that have been the topic of conversation for some time. And I think one of the things that we discussed as a panel is they're pretty large developments, right? I mean, we're talking thousand plus unit each. And one of the things that needs to be considered is the infrastructure around that. And right now, one or more of those developments arguably are in areas that are already experiencing traffic congestion and have other infrastructure needs. So I think there's also this tension between finding the right community partners and filling a need because I think there's statistics that it's like tens of thousands of units that are needed in the central Florida market. And so just 2000 units really is just chipping away at it. But there are some infrastructure issues.

(33:36):

And I think the other thing, particularly in metro areas that needs to be counterbalanced is really trying to bring those projects forward sustainably and in an equitable manner. And I think that part of the conversation is often left out, but you referenced Atlanta and there's areas in Atlanta where it's not equitable and the development is not necessarily taking that into account. And so I think local governments have really shouldered the burden of that and trying to find ways to manage the projects and finance them in a way to take those things into consideration. I know the city of Atlanta did that with their social bond issuance in 2022.

David G. Moffett (34:28):

Any other examples you guys have seen in sort of that workforce housing category that would be interesting? I mean, one thing that I've heard a lot about, haven't seen it yet are a number of the larger school districts are using available, say B and C apartment buildings that are close to the schools, purchasing those and then offering discounts for their teachers to live in the community. I've heard this same thing again, haven't seen it, but for fire and first responders, police and different municipalities as another perk to attract and retain employees,

Laura Howe (35:16):

We've had a lot of conversations with the school districts in Florida about that. It just hasn't moved forward yet.

David G. Moffett (35:22):

Got it. And in the conversations, have the school districts sort of spearheaded that or is it the municipalities or both?

Laura Howe (35:32):

It started with the school districts that are pushing it forward. Obviously there'd need to be support at the city level as well, but those conversations have been going on for a couple years. It just hasn't crossed the finish line yet for them.

David G. Moffett (35:47):

Got it. One other topic that we had talked about on in preparing for this, different strategies that you guys have seen, municipalities that are located inland versus municipalities that are located on the coast and some of the different growth strategies that those folks are wrestling with. Any thoughts there either from assured guarantee, Mike? Sorry, I'll point calling you that, different lines of questioning that you guys are going down on the two.

Michael Curcio (36:26):

Yeah, I think a lot of it's environmental focused, but I think we're always looking at resiliency steps. Are the issuers taking, whether it's post, are they investing in their stormwater management systems? Miami's done a massive bond issue for that. And then inland, it's interesting because you still see in some of the software tools we look at for environmental risk, obviously you're not going to sea level rise or storm surge inland, but there is a lot of riverine flooding. I think once you, so building detention ponds and having the engineers manage the district, let's say, have all this water kind of run away from the homes, maybe building up the foot off the street. So those are all things that we're focusing on now. I think in the southeast, the sales tax sector is obviously resilient after a storm, so that gives us a lot of comfort.

(37:33):

The Florida cops transactions are countywide, so it's not like a single site risk. I'm always asking Laura for the maps where all the school districts are located and they're usually plotted all throughout the county and it's an all or none appropriation, so they have to choose to appropriate for one, they can't come pick and choose what assets they want to appropriate for. So that is another strength that we lean on when we're looking at environmental risk. I think one deal that always pops out in my mind I worked on a few years ago was Louisiana Energy and Power Authority, which was for the combined cycle unit in Morgan City, which I dunno if you're familiar, but it's down in the bayou. So if you use these flood maps we were looking at, the whole area was blue, it basically wiped out. What we were able to find out was through the Levee improvement district, they sent us maps of all the levee systems.

(38:34):

And the cool thing with that was we were able to put that map into the software that we use and it showed, then it was blue up to the levee. And sure enough, four days before closing, I think hurricane Ida came through and the analysis we had done had held through. So there was no storm surge levees held up. So I think it is interesting for the issuers to kind of understand what also people in the market are asking about when it comes to environmental because if that levee improvement map, I think in the disclosure and would've been very helpful. So I think it's more just finding a standardized approach of where the questions are coming from and helping the issuers understand where everyone is looking for, what are the meetings to the risks.

Melissa López Rogers (39:26):

And disclosure was mentioned, and I was talking to Gary earlier, is Gary in the room? We're going to have a conversation later about evil disclosure counsel, lawyers and clients that take our advice or don't take our advice. But I think that was one of the things we discussed as well is when we're talking about impact of population growth, we focus on the numbers and the budgeting and the forecasting and the unique financing mechanisms, but there's also the legal aspects of it. And so I think part of the conversation we'll definitely see, and we've already started to see is a shift in terms of what disclosure is relevant and material for a coastal community, an inland community. I think taking into account things like climate driven migration, there was an article that talked about Orlando, Atlanta and Austin's not in the southeast, but those are the three cities that can expect to see a tremendous amount of population growth due to climate driven migration. And so perhaps as a coastal city, you're really focused on the how do we mitigate the things that are very imminent that we're dealing with, that we have been dealing with. Whereas if you are more inland really focusing on how do we get our arms around not only the current increased growth that we're seeing, but additional growth that may come from climate driven factors or other factors we saw with COVID.

Jennifer Garza (41:09):

Yeah, I'd like to add a little, I think for the coastal communities, there's a lot of discussion on drainage and saltwater intrusion, a lot of utility work that has to be done. What is the plan to prepare, respond, and recover or should an event occur? But it's often really impressive the kind of answers that you get, the responses you get from the local governments down to a scientific level. Well, if I measure out so many feet from the beach, I know how much sand I need to renourish and keep the sand replenished whenever it washes away from a major storm. But it's not that just the Florida coastal communities that have to contend with major utility enhancements and capital needs, even an inland community that is relatively flat or built more like a bull and is prone to flooding. I know this is at Southeast, but Leominster, Massachusetts earlier last year, earlier this year had some pretty significant flooding and had complete roads washed out and had trouble getting transportation through. And so it was a really major issue that they needed to address with their infrastructure. And so unfortunately, even when you're in a mature district, you're not on a coastal location. There's always infrastructure that needs to be kept up so that it's not deferred and you can continue to have economic growth or viability for your community.

Melissa López Rogers (42:37):

I think context is important as well, and I'll tie this to the disclosure piece is we had a client that was asked about essentially the impact of climate change and what the cost of that was going to be within a 20 year forecast period. And they had not commissioned any independent expertise reports to determine the cost for their particular governmental entity. But there was a federal report that talked about the metro area and the cost was astronomical. It was just hundreds of millions of dollars, billions of dollars. And so part of the conversation there is, as you're doing your individual planning, how does that really work? Does the cities, the counties, the special districts just throw their hands up and say, it's not our individual responsibility, or if you're going to take on some of that financial burden and responsibility, how much do you take on? When do you take it on? So I think that needs to be part of the conversation and being mindful for that particular entity to disclose the hundreds of billions of dollars that's going to cost to mitigate or remediate something arguably is really not relevant in terms of their financial stake in it individually. So it's very difficult to make statements like that. So we're not just evil in trying to put the red pen to everything. Sometimes it's a little complicated.

David G. Moffett (44:26):

No, thank you for that. So we've got a few minutes here, any other comments that you guys want to make? And if not, we will turn it over to questions and then close this out. Okay. Thank you all for that. So any questions? Was it a real fire alarm or was that All right. Appreciate you all's attention. Thank y'all. Appreciate it.