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Home My WebLink About2025-02-11; City Council; 02; City of Carlsbad Fiscal Year 2023-24 Annual Financial Audit ResultsCA Review AZ Meeting Date: Feb. 11, 2025 To: Mayor and City Council From: Geoff Patnoe, City Manager Staff Contact: Roxanne Muhlmeister, Assistant Finance Director roxanne.muhlmeister@carlsbadca.gov, 442-339-2417 Subject: City of Carlsbad Fiscal Year 2023-24 Annual Financial Audit Results Districts: All Recommended Action Receive and file a report on the city’s fiscal year 2023-24 annual financial audit results. Executive Summary The City of Carlsbad is required by the State of California, under California Government Code Section 12410.5(b), to be audited annually by a certified public accountant or public accountant, licensed by, and in good standing with, the California Board of Accountancy. The city’s annual financial audit for fiscal year 2023-24 resulted in an unmodified opinion, with no material weaknesses in internal controls or material instances of noncompliance identified. Explanation & Analysis The Finance Department is responsible for the stewardship of the city’s assets and liabilities, helping to ensure accurate and timely information which supports the city in making sound financial decisions. An important component of this stewardship is the completion of the city’s annual financial audit by a certified public accounting firm. Results of the Fiscal Year 2023-24 Financial Audit City staff selected and issued a five-year contract to the CPA firm Lance, Soll & Lunghard LLP in February 2022 to perform the city’s annual financial audit. The role of the external auditor is to express an opinion as to whether the city’s financial statements are materially misstated. The external auditors follow Government Auditing Standards that have been created by the American Institute of Certified Public Accountants. The fiscal year 2023-24 audit began in April 2024 with the external auditors conducting interim fieldwork, and the audit concluded on Dec. 13, 2024, when the auditors issued their opinion on the city’s financial statements. The city received an “unmodified” opinion, which means it is the auditor’s judgment that the city’s financial statements and footnotes are fairly stated, without any material exceptions, and in compliance with the generally accepted accounting principles known as GAAP. Feb. 11, 2025 Item #2 Page 1 of 224 The auditor did not identify any material weaknesses in internal controls nor any material instances of noncompliance. The Independent Auditor’s Report is part of the city’s Annual Comprehensive Financial Report, which is provided as Exhibit 1. This annual report also includes further discussion and analysis of the city’s finances and basic financial statements. Transparency The city publishes quarterly financial status reports on the city’s website which highlight the city’s General Fund, Water Fund, Wastewater Fund and Golf Course Fund revenues and expenditures for the fiscal year. City staff also provide the public and City Council with quarterly economic and financial reports and presentations at City Council meetings throughout the fiscal year. A brief description of these updates is provided below. Quarterly financial status reports Quarterly financial reports provide the unaudited detail of city’s General Fund, Water Fund, Wastewater Fund and Golf Course Fund revenues and expenditures for the fiscal year. These quarterly reports can be found on the city’s website at carlsbadca.gov/departments/finance/financial-reports. Quarterly Economic and Financial Update Presentations to City Council: • First quarter of fiscal year 2023-24, presented Nov. 14, 2023, covered the period of July through September 2023. • Second quarter of fiscal year 2023-24, presented Feb. 27, 2024, covered the period of October through December 2023. • Third quarter of fiscal year 2023-24, presented May 14, 2024, covered the period of January through March 2024. • First quarter of fiscal year 2024-25, presented Nov. 11, 2024, covered the period of July through September 2024. Approval of fiscal year 2023-24 budget carryforward requests and appropriation of funds to fiscal year 2024-25 In addition to requesting carryforward funding for fiscal year 2024-25, the Oct. 8, 2024, carryforward report provided an unaudited synopsis of the financial results of fiscal year 2023-24 for the city’s General Fund. (Carryforward budget items carry unspent funds budgeted to have been spent in one fiscal year into the budget for the following fiscal year.) Fiscal Analysis This is an informational item with no fiscal impact. Feb. 11, 2025 Item #2 Page 2 of 224 Next Steps The city’s next financial audit, for fiscal year 2024-25, is scheduled to commence with Lance, Soll & Lunghard in early Spring 2025. The audit is expected to conclude by the end of December 2026. Environmental Evaluation This action does not require environmental review because it does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment. Exhibits 1. City of Carlsbad’s fiscal year 2023-24 Annual Comprehensive Financial Report Feb. 11, 2025 Item #2 Page 3 of 224 #6%(&5 ': 0QFSBUJOH#VEHFU $BQJUBM*NQSPWFNFOU1SPHSBN 4USBUFHJD%JHJUBM5FDIOPMPHZ*OWFTUNFOU1SPHSBN CI T Y O F C A R L S B A D , C A L I F O R N I A Annual Comprehensive Financial Report Fiscal Year ended June 30, 2024 Exhibit 1 Feb. 11, 2025 Item #2 Page 4 of 224 AAnnuall Comprehensive Financiall Report Fiscall Yearr Ended June 30, 2024 Prepared by the Finance Department 1635 Faraday Ave. Carlsbad, CA 92008 www.carlsbadca.gov Feb. 11, 2025 Item #2 Page 5 of 224 Feb. 11, 2025 Item #2 Page 6 of 224 CITY OF CARLSBAD, CALIFORNIA Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents Page Number INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................................... i Certificate of Achievement of Excellence ............................................................................................................... xix Location Map ........................................................................................................................................................... xx Directory of Officials ................................................................................................................................................ xxii Organizational Chart ............................................................................................................................................... xxiii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT ..................................................................................................................... 1 MANAGEMENT'S DISCUSSION AND ANALYSIS .................................................................................................... 4 BASIC FINANCIAL STATEMENTS Government – Wide Financial Statements Statement of Net Position .................................................................................................................................. 26 Statement of Activities ....................................................................................................................................... 27 Fund Financial Statements Balance Sheet – Governmental Funds .............................................................................................................. 29 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ........................................................................................................................ 30 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...................................................................................................................... 31 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................................................................................................................ 32 Statement of Net Position – Proprietary Funds ................................................................................................. 33 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ............................................................................................................................. 34 Statement of Cash Flows – Proprietary Funds .................................................................................................. 35 Statement of Fiduciary Net Position – Fiduciary Funds ..................................................................................... 37 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ................................................................................................................................ 38 Notes to Financial Statements .............................................................................................................................. 39 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule General Fund .................................................................................................................................................. 82 Feb. 11, 2025 Item #2 Page 7 of 224 CITY OF CARLSBAD, CALIFORNIA Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents Page Number FINANCIAL SECTION (Continued) Required Pension and Other Postemployment Benefits Schedules Schedule of Changes in the Net Pension Liability and Related Ratios Miscellaneous Plan ......................................................................................................................................... 83 Schedule of Changes in the Net Pension Liability and Related Ratios Safety Plan ...................................................................................................................................................... 85 Schedule of Changes in the Net OPEB Liability and Related Ratios ............................................................. 87 Schedule of Plan Contributions ...................................................................................................................... 89 Notes to Required Supplementary Information ..................................................................................................... 90 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet – Nonmajor Governmental Funds .............................................................................. 92 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ............................................................................. 98 Budgetary Comparison Schedules Affordable Housing ....................................................................................................................................... 104 Community Development Block Grant .......................................................................................................... 105 Donations ...................................................................................................................................................... 106 Financing Districts ......................................................................................................................................... 107 Habitat and Agricultural Management .......................................................................................................... 108 Other Special Revenue Funds ...................................................................................................................... 109 Police Grants and Asset Forfeiture ............................................................................................................... 110 Section 8 Rental Assistance ......................................................................................................................... 111 Tyler Court Apartments ................................................................................................................................. 112 California Opioid Settlement ......................................................................................................................... 113 Housing and Homeless Grants ..................................................................................................................... 114 Community Facilities District #1 .................................................................................................................... 115 Infrastructure Replacement .......................................................................................................................... 116 Assessment and Other Districts ................................................................................................................... 117 Bridge Thoroughfare Districts ....................................................................................................................... 118 Gas Tax ........................................................................................................................................................ 119 General Capital Construction ........................................................................................................................ 120 Grants and Other Capital Projects ................................................................................................................ 121 Park Development ........................................................................................................................................ 122 Planned Local Drainage Facilities ................................................................................................................ 123 Public Facilities Construction ........................................................................................................................ 124 Sales Tax/Trans Net ..................................................................................................................................... 125 Traffic Impact Projects .................................................................................................................................. 126 Technology Investment Capital .................................................................................................................... 137 Feb. 11, 2025 Item #2 Page 8 of 224 CITY OF CARLSBAD, CALIFORNIA Annual Comprehensive Financial Report For the Year Ended June 30, 2024 Table of Contents Page Number Combining Statement of Net Position – Non-Major Proprietary Funds ............................................................... 128 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Non-Major Proprietary Funds ............................................................................................. 129 Combining Statement of Cash Flows – Non-Major Proprietary Funds ............................................................... 130 Combining Statement of Net Position – Internal Service Funds ......................................................................... 131 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Internal Service Funds ........................................................................................................ 132 Combining Statement of Cash Flows – Internal Service Funds .......................................................................... 133 Combining Statement of Fiduciary Net Position – Custodial Funds ................................................................... 134 Combining Statement of Changes in Fiduciary Net Position- Custodial Funds .................................................. 135 STATISTICAL SECTION Net Position by Component ............................................................................................................................... 136 Changes in Net Position .................................................................................................................................... 138 Fund Balances of Governmental Funds ............................................................................................................ 142 Changes in Fund Balances of Governmental Funds ......................................................................................... 144 General Governmental Tax Revenues by Source ............................................................................................. 146 Water and Wastewater Rates ............................................................................................................................ 147 Assessed Value and Estimated Actual Value of Taxable Property ................................................................... 148 Direct and Overlapping Property Tax Rates ...................................................................................................... 149 Principal Property Taxpayers ............................................................................................................................. 151 Property Tax Levies and Collections ................................................................................................................. 152 Ratios of Outstanding Debt by Type .................................................................................................................. 153 Schedule of Direct and Overlapping Bonded Debt ............................................................................................ 154 Direct and Overlapping Debt ............................................................................................................................. 156 Legal Debt Margin Information .......................................................................................................................... 158 Pledged-Revenue Coverage ............................................................................................................................. 160 Demographic and Economic Statistics .............................................................................................................. 162 Principal Employers ........................................................................................................................................... 164 Authorized Full-Time and 3/4 -Time City Government Employees by Program Area ....................................... 165 Operating Indicators by Function/Program ........................................................................................................ 167 Capital Asset Statistics ...................................................................................................................................... 169 Feb. 11, 2025 Item #2 Page 9 of 224 Feb. 11, 2025 Item #2 Page 10 of 224 IIntroductory Section Feb. 11, 2025 Item #2 Page 11 of 224 Feb. 11, 2025 Item #2 Page 12 of 224 Administrative Services FinanceDepartment1635FaradayAvenue°Carlsbad,CA92008°442Ͳ339Ͳ2430t www.carlsbadca.gov i December13,2024 HonorableMayor,CityCouncil, andResidentsoftheCityofCarlsbad CityofCarlsbad Carlsbad,CA92008 LETTEROFTRANSMITTAL FISCALYEAR2023Ͳ24ANNUALCOMPREHENSIVEFINANCIALREPORT HonorableMayor,CityCouncil,andResidents: Iampleasedtopresentthefiscalyear2023Ͳ24AnnualComprehensiveFinancialReportfortheCityofCarlsbad(“city”).The informationfoundinthisreportisprovidedbymanagementtotheCityCouncilandthepublictoassistthoseinterestedin understandingthefiscalconditionofthecityasofJune30,2024. Managementassumesfullresponsibilityforthecompletenessandreliabilityoftheinformationcontainedinthisreport, baseduponacomprehensiveframeworkofinternalcontrolsthathasbeenestablishedforthispurpose.Becausethecostof internalcontrolsshouldnotoutweighitsbenefits,thecity’scomprehensiveframeworkofinternalcontrolshasbeendesigned toprovidereasonable,ratherthanabsolute,assurancethatthefinancialstatementswillbefreefrommaterialmisstatement. StatelawandtheCarlsbadMunicipalCoderequirethatanannualfinancialreportisprepared.Thisreportfulfillsthat obligation.Ithasbeenpreparedinconformitywithgenerallyacceptedaccountingprinciples(GAAP)andwiththefinancial reportingrequirementsprescribedbytheGovernmentalAccountingStandardsBoard(GASB).Theindependentauditingfirm, Lance,Soll&Lunghard,LLP,hasissuedanunmodifiedopiniononthecity’sfinancialstatementsforthefiscalyearthatended June30,2024.Theindependentauditor’sreportislocatedatthefrontofthefinancialsectionofthisAnnualComprehensive FinancialReport. Management’sDiscussionandAnalysis(MD&A)immediatelyfollowstheindependentauditor’sreportandprovidesa narrativeintroduction,overviewandanalysisofthebasicfinancialstatements.TheMD&Acomplementsthisletterof transmittalandshouldbereadinconjunctionwithit. Asarecipientoffederalandstatefinancialassistance,thecityisrequiredtohavea“SingleAudit”performedbyan independentauditfirm.TheSingleAuditisdesignedtomeetthespecialneedsoffederalgrantoragencies.Thestandards governingSingleAuditengagementsrequirethattheindependentauditorreportnotonlyonthefairpresentationofthe financialstatements,butalsoontheauditedgovernment’sinternalcontrolsandcompliancewithlegalrequirements,with specialemphasisoninternalcontrolsandlegalrequirementsinvolvingtheadministrationoffederalawards.Thesereports willbecompletedinearly2025andmadepubliclyavailableonthecity’swebsiteinthecity’sseparatelyissuedCompliance ReportsandOtherFinancialInformation. Feb. 11, 2025 Item #2 Page 13 of 224 ii ProfileoftheCityofCarlsbad TheCityofCarlsbadissituatedinnorthSanDiegoCounty whereagreatclimate,beautifulbeachesandlagoons,and abundantnaturalopenspacecombinewithworldclass resorts,familyattractions,wellͲplannedneighborhoods,a diversebusinesssectorandacharmingvillageatmosphere tocreatetheidealCaliforniaexperience. CITYGOVERNMENT Incorporatedin1952,theCityofCarlsbadisamunicipalcorporationfollowingthecouncilͲmanagerformofgovernment.The CityCouncil,thecity’slegislativebody,definesthepolicydirectionofthecity.ThecitymanageroverseesthedayͲtoͲday operationsofthecity.TheCityofCarlsbadalsohasanelectedCityClerkandCityTreasurer.TheCityCouncilappointsthe CityManagerandCityAttorney. Districts TheCityCouncilconsistsofanelectedmayorandfourelectedcouncilmembers.EachservesafourͲyearterm.In2017,the cityswitchedtoasystemwhereCityCouncilmembersareelectedbydistrictinsteadofatlargeorcitywide. Feb. 11, 2025 Item #2 Page 14 of 224 iii CharterCity TherearetwotypesofcitiesinCalifornia:charterandgenerallaw.Chartercitiesfollowthelawssetforthinthestate’s constitutionalongwiththeirownadopted“charter”document.Generallawcitiesfollowthelawssetforthbythestate legislature. In2008,CityofCarlsbadresidentsoverwhelminglyvotedtoapprovethechartercitymeasure.Thechartergivesthe CityofCarlsbadmoreflexibilityonsuchissuesaspurchasingandcontracting.Certainaffairs,suchastrafficandvehicle regulation,openandpublicmeetingslaws,certainplanningandenvironmentallaws,andeminentdomain,remainmatters ofstateauthorityevenasachartercity. ThisreportincludesfinancialstatementsfortheCityofCarlsbad,theHousingAuthorityoftheCityofCarlsbad,theCarlsbad PublicFinancingAuthority,andtheCarlsbadMunicipalWaterDistrict.Throughtheseentities,Carlsbadprovidesafullrange ofservicestoitscitizensandcustomersincluding: x Fireandparamedicservices x Policeprotectionservices x Developmentservices x Libraryandartsprograms x Housingandhomelessservices x Recreationprogrammingforallages x Parkandrecreationareas x Streetconstructionandmaintenance x Waterdeliverysystem x Wastewatersystem Inadditiontothefullrangeofservicesnormallyassociatedwithamunicipality,Carlsbadoffersprogramstohelpresidents andbusinesses.Thecity’sHousingAuthorityadministersfederalhousingassistancetoapproximately600lowͲincome householdsinCarlsbad,andolderresidentscantakeadvantageofCarlsbad’sseniorcitizenprograms. BudgetProcess TheCityCouncilsetstheoverallpolicydirectionfortheCityofCarlsbadandhelpsstaffprioritizeprograms,projectsand servicestosupportthatdirection.PublicinputplaysacriticalroleinsettingboththelongͲrangepolicydirectionofthecity anddecisionsaboutdayͲtoͲdayspending.ThecityoperatesonafiscalyearthatbeginsJuly1.Citystaffinalldepartments prepareindividualbudgetsfortheirfunctionalareas.Thesebudgetsarethencombinedintoanoverallcitybudgetthatis presentedtotheCityCouncileachspringforreviewandinput. Feb. 11, 2025 Item #2 Page 15 of 224 iv TheCityCouncilhastheauthoritytoapprovetheannualbudgetandmayamenditduringtheyearifneeded.Thelegallevel ofbudgetarycontrolisatthefundlevel,whichmeansspendingineachdifferenttypeoffundmaynotexceedthebudgeted amountwithoutCityCouncilapproval.Budgetarycontrolforthecityismaintainedthroughitsaccountingsystems.Quarterly reportssummarizingtheresultsofoperationsforthecity’smoresignificantfundsareprovidedtotheCityCouncilandthe publiconthecity’swebsite. TheCityCouncil’s5 Ͳ YearStrategicPlan TheCityofCarlsbadisguidedbya5ͲYearStrategicPlan,whichwasadoptedbytheCityCouncilin2022.Theplanservesasa roadmapbyidentifyingspecific,measurableobjectivestobeachievedduringthefiveͲyeartimeframe.The5ͲyearStrategic Planincludeshighlevelgoals,objectives,projectsandservicecommitmentsthatsupporttheCarlsbadCommunityVision. CommunityCharacter MaintainCarlsbad’suniquecommunitycharacterandconnectedness QualityofLifeandSafety PrioritizethesafetyandwellͲbeingofthecommunity SustainabilityandtheNaturalEnvironment Protecttheenvironmentandnaturalresources EconomicVitality Fosterahealthylocaleconomy OrganizationalExcellenceandFiscalHealth Beamodelforeffectiveandefficientlocalgovernment Coreservices Thecityfulfillsitspurposeandsupportsthe5ͲYearStrategicPlangoalseverydaybyprovidingcoreservicesandfunctions ofmunicipalgovernmentataveryhighlevelofquality.Fromaresourceperspective,theseongoingservicesrepresentthe vastmajorityofthecity’sannualbudget. Feb. 11, 2025 Item #2 Page 16 of 224 v EconomicandFiscalIssuesFacingtheCity AtthetimeofdevelopingtheFiscalYear2024Ͳ25ProposedBudget,thenation,stateandcityhadbeenfacingthelingering effectsofunprecedentedinflationarylevelschallengingtheeconomy.IntheCityofCarlsbad,highinflationarylevelshave actuallyboostedsomeofthecity’srevenuesourceslikesalesandtransientoccupancytax,butthecity’sexpenditureshave alsobeenimpactedbyinflation.TheFederalReservehastakenswiftactiontocombattheriseininflationbyincreasing interestratetargets.AlthoughitisanticipatedtheFederalReservewillbegintoreducetargetratestowardtheendof calendaryear2024andinto2025,wehaveyettoseeinflationlevelsreturntomorehistoricallynormallevels.Asthecity movesforward,andasthelevelofdisposableincome,personalsavingsandpentͲupdemandcontinuestodiminishasaresult ofthesesustainedinflationarylevels,uncertaintyaboutthecity’srevenueskeepingpacewithitsexpendituresincreases. Priortothepandemic,thecityboastedalowunemploymentrateof2.9%.Attheheightofthepandemic,unemployment spikedto13.8%.Overthepastthreeyears,theunemploymentratehashadsomecorrelationtotheprevalenceofCOVIDͲ19 intheregion.However,withthepandemic’seconomicimpactsbehindus,unemploymentratessettledbetween2%and3% duringcalendaryear2022andincreasedto3.5%in2023.Throughthefirstquarterofcalendaryear2024,macroͲtrendsin thetechindustrypushedunemploymentupnationally,butthelabormarketisstillconsideredtobeverytight.Asof March2024,theunemploymentratewas5.3%atthestateleveland4.4%atthecountyandlocallevel. Nationalinterestrates,whichdroppedsignificantlyduringthepandemic,haveeclipsedpreͲpandemicratesforallcategories. OneͲyearratesarecurrentlyat5.10%,tenͲyearratesarecurrentlyat4.48%,and30Ͳyearratesareat4.64%.Followingthe FederalReserve’sincreaseininterestratetargetsallthewayto5.25%Ͳ5.50%,inflationhasdecreasedbutnottodesired levelsof2%.TheFederalReserveisexpectedtobeginreducingratetargetslaterthiscalendaryearandinto2025.Asof May2024,localinflationhaddecreasedyearͲoverͲyearfrom5.2%to3.2%. Maintaininggoodfiscalhealthmustremainatoppriority.Meetingthisobjectivepreservesthecity’sabilitytocontinue providingimportantprogramsandservicestothecommunity.Pasteconomicchallengesandprudentfinancialplanninghave providedopportunitiesfordevelopingsolutionstoaddresslostrevenueswhilepreservingvitalservices.Thepositiveeffect ofinflationonsomeofthecity’srevenuesourceshavebeensignificantbutisconsideredoneͲtimeandsomethingtobevery closelymonitoredmovingforward.Asinflationislikelytodeclineinthefuture,sowillrevenuegrowth.Disciplinedspending andlongͲtermfinancialplanningremaincriticaltoensuringthefuturesustainabilityofimportantcityprogramsandservices. LongͲ TermFinancialPlanning Strategicplanningbeginswithdeterminingthecity'sfiscalcapacitybaseduponlongͲtermfinancialforecastsofrecurring availablerevenuesandfuturefinancialobligations.Priortotheadoptionoftheannualbudget,thefinancedepartmentwill prepareaTenͲYearFinancialForecast(Forecast)thatevaluatesknowninternalandexternalissuesimpactingthecity's financialcondition.ThemethodologyforpreparingtheForecastcanbefoundintheappendicesofthisdocument.The Forecastisintendedtohelpthecity: x Attainandmaintainfinancialsustainability, x HavesufficientlongͲterminformationtoguidefinancialdecisions, x Havesufficientresourcestoprovideprogramsandservicesforthestakeholders, x IdentifypotentialriskstoonͲgoingoperationsinthelongͲtermfinancialplanningprocessandcommunicatethese risksonanannualbasis, x Establishmechanismstoidentifyearlywarningindicators,and x Identifychangesinexpenditureorrevenuestructuresneededtodeliverservicesortomeetthegoalsadoptedby theCityCouncil. Feb. 11, 2025 Item #2 Page 17 of 224 vi ItisimportanttostressthattheForecastisnotabudget.TheForecastdoesnotdictateexpendituredecisions,butrather highlightstheneedtoprioritizetheallocationofthecity’slimitedresourcestoensurethecontinuationofcorecityservices. ThepurposeoftheplanistoprovidetheCityCouncil,keystakeholdersandthepublicanoverviewofthecity’sfiscalhealth basedonvariousfinancialandservicelevelassumptionsoverthenexttenyears.Italsoallowsforthediscussionofnecessary stepstobeinitiatedduringthedevelopmentandimplementationoffuturebudgets.TheForecastisintendedtolookbeyond theannualbudgetcycleandserveasaplanningtooltobringalongͲtermperspectivetothebudgetprocess.TheForecast alsotakesintoconsiderationCityCouncilpoliciesthatneedtobemetonanannualbasisincludingGeneralFundreserve guidelines,pensionfundingguidelines,etc.Shouldprojectedexpendituresexceedprojectedrevenuesinanygivenyear,the CityManagerwillneedtoidentifystepstomitigatetheshortfallspriortopresentingabalancedbudgettotheCityCouncil forconsiderationduringtheannualbudgetdevelopmentprocess. ItshouldbenotedthattheForecastisasnapshotintimeandwillchangeasadditionalinformationismadeavailableand incorporatedintothefiscalprojections.Inflationandtheuncertaintyassociatedwiththeeconomyhasincreasedthevolatility ofprojectingfuturerevenues. ThecitypreparesalongͲtermfinancialmodelforbothcapitalandoperatingneeds.Itisimperativethatthecityplanforthe impactsofdevelopment,theconstructionandoperationofnewpublicfacilities,andplanningresourcesneededtobuild them.ThecitypreparesatenͲyearoperatingforecastfortheGeneralFund,afiveͲyearStrategicDigitalTransformation InvestmentProgram,andafifteenͲyearCapitalImprovementProgram.AspartofthenewStrategicDigitalTransformation InvestmentProgramandtheCapitalImprovementProgram,thecityannuallycalculatestheamountsneededtopayforthe projectsandanticipatedoperatingbudgetimpacts.Inthisway,thecitycananticipatetheeffectsofdevelopmentfromboth acapitalandanoperatingperspective. OneimportantinitiativethecityhasundertakentoensureitsfinancialhealthisthedevelopmentofanInfrastructure ReplacementFund.Withthisfund,thecitysetsasideaportionofGeneralFundrevenuesonanannualbasisformajor maintenanceandreplacementofitsinfrastructure.Muchofthecity’sinfrastructureisrelativelynew;thus,thecityisjust nowexperiencingtheimpactofmaintenancerequirements.Bysettingasidefundsnow,thecity’sresidentscanbeassured thatthepropermaintenanceandreplacementwillbeperformed,asneeded,onstreets,parksandmanyfacilitiesforwhich thecityisresponsible. Employeeretirementcostscontinuetorequireongoingprudentfiscalmanagement.TheCityCouncilissuedapensionfunding policytocodifyitscommitmenttoensurethatresourceswillbeavailabletofulfillthecity’scontractualretirementpromises toitsemployees,andtominimizethechancethatthefundingofthesebenefitswillinterferewithprovidingessentialservices tothecommunity.Thepolicyoutlinesafundingdisciplinetoensurethatadequateresourceswillbeaccumulatedina systematicanddisciplinedmannertofundthelongͲtermcostofbenefitstotheplanparticipantsandannuitants.Overall fundinglevelsofthecity’splansarereviewedannuallytoensurethecity’sfundinglevelremainsatleast80%–thecity’s minimumtargetedlevel.Whilethisenhancesthecity’sfundingposition,risksremaininthesystem.Requiredemployer contributionswillcontinuetoincreaseoverthenextfewyearsandactualcontributionincreasescouldexceedexpectations iffutureinvestmentreturnratesorotherfactorsareunfavorable. Revenueandexpendituregrowthprojections Thecity’sForecastconsiderstheannualgrowthofallcurrentlyknownelementsofcityrevenuesandexpenditures.Projecting revenuesisparticularlydifficultwhenconsideringrisinginflationandimpactstoconsumerdemand.Whenforecasting expenditures,someofthemajorfactorsconsideredarerisinghealthcareandworkers’compensationcosts,underperforming pensionprograms,andgeneralinflationinbothpersonnelandoperatingexpenditures.Currently,thecityprojects expendituregrowthwilloutpacerevenuegrowthinthenearfuture.Tosupporttheincreaseinongoingcosts,thecitywill needtoconsideralternativeoptions,suchaswaystoincreaseeconomicactivitythatwilldrivesustainableincreasesinthe city’scurrentrevenuebase,anexpansionofthecity’srevenuebase,orareductionofthecity’scurrentserviceofferingsand associatedcosts. Feb. 11, 2025 Item #2 Page 18 of 224 vii FINANCIALMANAGEMENTPOLICIES RevenuePolicies Thedevelopmentandmaintenanceofbalancedandreliablerevenuestreamswillbetheprimaryrevenueobjectiveofthe city.Effortswillbedirectedtooptimizeexistingrevenuesourceswhileperiodicallyreviewingpotentialnewrevenuesources. Onemethodtomaximizeexistingrevenuesourcesistopromoteahealthybusinessclimate.Revenueestimateswillbe preparedonanannualbasisduringthepreparationofthebudgetandmajorrevenuecategorieswillbeprojectedona tenͲyearbasis.Revenueswillbeestimatedconservativelyusingacceptedstandardsandestimatesprovidedbythestateand othergovernmentalagencies.Alternativerevenuesourceswillbeperiodicallyevaluatedtodeterminetheirapplicabilityto meetidentifiedcityneeds.Sourcesofrevenuewillbeevaluatedandmodifiedasnecessarytoassureadiversifiedandgrowing revenuebasethatimprovesthecity’sabilitytohandlefluctuationsinindividualrevenuesources. Revenuesfrom“oneͲtime”orlimiteddurationrevenuesourceswillnotbeusedforongoingoperatingexpenses.Feesand chargesforserviceswillbeevaluatedand,ifnecessary,adjustedannuallytoensurethattheygeneratesufficientrevenuesto meetservicedeliverycosts.Thecitywillestablishuserchargesatalevelgenerallyrelatedtothefullcost(operating,direct, indirectandcapitalcosts)ofprovidingtheservice,unlesstheCityCouncildeterminesthatasubsidyfromtheGeneralFund isinthepublicinterest,inaccordancewiththecity’scostrecoverypolicyforfeesandchargesforservices.Thecitywillalso considermarketratesandchargesleviedbyothermunicipalitiesofsimilarsizeforlikeservicesinestablishingrates,feesand charges.EnterpriseandinternalservicefundswillaimtobeselfͲsupporting. ExpenditureandBudgetPolicies MajorexpenditurecategorieswillbeprojectedonatenͲyearbasis.Thecitywilloperateonacurrentfundingbasis. Expenditureswillbebudgetedandcontrolledsoasnottoexceedcurrentrevenuesplustheplanneduseofanyaccumulated fundbalances.Annualbudgetedoperatingexpendituresshallnotexceedannualoperatingrevenues,includingbudgeteduse ofreserves,unlessdirectedbytheCityCouncil. TheCityManagershallprepareandsubmittotheCityCouncilannuallyaproposedoperating,strategicdigitaltransformation investmentprogramandcapitalimprovementprogrambudgetandthebudgetswillbeadoptedbyJune30ofeachyear. Budgetstatusreportsarepreparedquarterlyandpostedonthecity’swebsite.Becausethebudgetisbasedonestimates, fromtimetotime,itisnecessarytomakeadjustmentstofinetunethelineͲitemswithinit.Variouslevelsofadministrative controlareutilizedtomaintainthebudget’sintegrity.ProgrammanagersareaccountableforthelineͲitemlevelofcontrolof theirindividualprogrambudgets.Departmentheadsareaccountableforthefundlevelofcontrolforfundswithintheir departments.TheCityManagerisaccountableforthefundlevelofcontrolforfundsacrossdepartments,upto$100,000. TheFinanceDepartmentoverseesthegenerallevelofaccountabilityrelatedtobudgetaryintegritythroughsystematicchecks andbalancesandvariousinternalcontrols. CityCouncilPolicy87,GeneralFundSurplusPolicyoutlinestheuseofsurplusfundsresultingfromunrestrictedGeneralFund actualrevenuesexceedingtotalactualexpenditures,encumbrances,andcommitmentsforagivenfiscalyear.Itistheintent ofthecitytouseallsurplusfundsgeneratedtomeetreservepolicies,andthereductionoravoidanceoflongͲtermliabilities. ThecitywillnotuseyearͲendsurplusfundstofundongoingoperationsunlessotherwiseapprovedbytheCityCouncil. ThecitywillusesurplusfundstoreplenishanyGeneralFunddeficiencies,uptotheminimumlevelassetforthinCityCouncil Policy74,GeneralFundReservePolicyandthenanypensionliabilitydeficiencies,asdefinedinCityCouncilPolicy86,Pension FundingPolicy. TheCityManagerisauthorizedtoapprovethecarryforwardofanyunencumberedandunspentbudgetforaparticularitem equaltoorlessthan$100,000intothefollowingfiscalyear.TheseitemswillbeoneͲtimeexpendituresandnotforongoing services,programsorpersonnel.Anyremainingsurplusfundsinexcessofreserveandpensionliabilitydeficienciesanditems equaltoorgreaterthan$100,000willbebroughtforwardforCityCouncilapproval. Feb. 11, 2025 Item #2 Page 19 of 224 viii ThecityadherestolongͲrangefinancialplanning,whichforecastsrevenuesandexpendituresoveralongͲtermperiod,using assumptionsabouteconomicconditions,futurespendingscenariosandothersalientvariables.Financialplanningallowsthe citytoexecuteoverallstrategiestosupporttheprocessofaligningfinancialcapacitywithlongͲtermserviceobjectives. Financialforecastsareupdatedatleastonceayear,ormoreoftenifunexpectedchangesineconomicconditionsorother unforeseencircumstancesexist.AnysignificantchangeswillbereportedtotheCityManagerandtheCityCouncil.Otherwise, thesefinancialforecastswillbeusedasatoolduringthedevelopmentoftheannualbudgetprocessandtosetutilityrates asneeded. ReservePolicies ThecityformallymandatesthelevelsatwhichreservesshallbemaintainedfortheGeneralFundandinformallysetsminimum targetlevelsfortheenterpriseandinternalservicefunds. CityCouncilPolicy74,GeneralFundReservePolicywasmostrecentlyupdatedandapprovedbytheCityCouncilinJune2019. ThepurposeofthepolicyistoestablishatargetminimumlevelofdesignatedreservesintheGeneralFundto: x Reducetheriskoffinancialimpactsresultingfromanaturaldisasterorothercatastrophicevents; x Respondtothechallengesofachangingeconomicenvironment,includingprolongeddownturnsinthelocal,state ornationaleconomy;and x Demonstratecontinuedprudentfiscalmanagementandcreditworthiness. ThecitycommitstomaintainingGeneralFundreserves(thetermreservereferstoanyunassignedfundbalance)atatarget of40%ofGeneralFundannualoperatingexpenditures.Thetotalreservelevelwillbecalculatedusingtheprioryear’sadopted GeneralFundbudgetedexpenditures. AtthediscretionoftheCityCouncil,reservelevelsinexcessofthe40%targetrequirementmaybeusedforoneͲtime opportunitycostpurposes.Reservefundswillnotbespentforanyfunctionotherthanthespecificdirectionintheannual budgetorbyaseparateCityCouncilaction. Asageneralbudgetprincipleconcerningtheuseofreserves,theCityCouncildecideswhethertoappropriatefundsfrom reserves.Reservefundswillnotbespentforanyfunctionotherthanthespecificpurposeofthereserveaccountfromwhich theyaredrawnwithoutspecificdirectionintheannualbudgetorbyaseparateCityCouncilaction. TheCityCouncilapprovedCityCouncilPolicy96,UtilitiesReservePolicyinMarch2023toestablishguidelinestoensurethe fiscalstabilityofthepotablewater,recycledwaterandwastewaterfundsandprovideguidancetostaffinthemanagement ofeachutility’sfinances.Thesefundswilltargetareservefundinglevelof100%ofannualdebtservicecosts,120daysof operatingcosts,and1%ofsystemreplacementvalueinemergencycapital.TheWastewaterFundwilltargetareservefunding levelof50%ofthefiveͲyearrollingaverageofannualspendingoncapitalimprovementprojectswhilethePotableand RecycledWaterfundswilltarget100%ofthisaverage.Also,theWastewaterFundwilltargetareserveof10%ofraterevenues whilethePotableandRecycledWaterfundswilltargetareserveof20%ofraterevenuestoprovideasourceoffundsto smoothratesoravoidrateincreasesintheeventofshortͲormidͲtermdisruptiontorevenuessuchasdroughtͲrelated demandreductions.ThecityortheCarlsbadMunicipalWaterDistrict’spotablewater,recycledwaterandwastewaterutilities willtreatminimumreservelevelsaspracticalreservefloorsandallowreservestoincreaseordecreaseasnecessarywithin theminimumandtargetlevelsprescribedabove. Thecity’sWorkers’CompensationandRiskManagement(GeneralLiability)fundswillmaintainminimumreservesequalto theestimatedoutstandingclaimsascalculatedbyathirdͲpartyadministrator.Additionalreserveamountsmaybesetaside asdeemedappropriatebasedonthirdͲpartyactuarialstudiescompletedattwoͲyearintervals.Duringtheannualbudget process,thetargetconfidencelevelwillbecomparedwiththeprojectedfundbalanceofeachfund,andiftheprojectedfund balanceisgreaterthanorlesserthanthetarget,aplantoadjustthefundbalancewillbeconsidered,usingeitherorboth increasingrevenuesthroughinterdepartmentalchargesandoneͲtimecashcontributionsfromthosefundscontributingto theshortfall.Feb. 11, 2025 Item #2 Page 20 of 224 ix TheInformationTechnologyAssetReplacementandVehicleAssetReplacementfundsshallmaintainminimumreservelevels definedastheamountofaccumulateddepreciationofcapitalizedassetsbasedontheoriginalcostofeachcapitalizedasset anduptoamaximumreserveleveldefinedastheaccumulateddepreciationbasedontheestimatedreplacementcostof eachcapitalizedasset. InvestmentPolicy ThecityhasestablishedaformalInvestmentPolicy.ItisthepolicyoftheCityofCarlsbadtoinvestpublicfundsnotrequired forimmediatedayͲtoͲdayoperationsinsafe,liquidandmediumͲterminvestmentsthatshallyieldanacceptablereturnwhile conformingtoallCaliforniastatutes.Itisintendedthatthepolicycovertheinvestmentactivitiesofallcontingencyreserves andinactivecashunderthedirectauthorityofthecity.Investmentsofthecityanditscomponentunitswillbemadeona pooledbasis;however,investmentsofbondproceedswillbeheldseparatelyifrequired. PensionFundingPolicy Thecity’sCityCouncilPolicy86,PensionFundingPolicyembodiesfundingandaccountingprinciplestoensurethatresources willbeavailabletofulfillthecity’scontractualpromisestoitsemployees.Thepolicyobjectivesincludeusingactuarially determinedcontributions,orADC,providedbyCalPERStofundthefullamountoftheADCeachyear,maintainingnoless thanacombinedminimum80%fundedratio,anddemonstratingaccountabilityandtransparencybycommunicatingall informationnecessaryforassessingthecity’sprogresstowardmeetingitspensionfundingobjectives. Intheeventthecityisunabletomeettheminimumcombinedpensionfundedratioof80%withcurrentresources (i.e.,withoutborrowingorusingreserves),theFinanceDirectorwillidentifyareasonableperiodtoreturntoaminimum80% fundedratiostatus. Inanefforttomitigatepensionratevolatility,managethecity’sfundedstatusandenhancelocalcontrolofcityfunds,the cityestablishedaSection115PensionTrust.Thecity’sSection115PensionTrustisataxͲexemptinvestmenttoolthatallows localgovernmentstopreͲfundpensionandretireehealthcosts.Oncecontributionsareplacedintothetrust,assetsfromthe trustcanonlybeusedforretirementplanpurposes.Withdrawalsmaybemadetoeitherreimbursethecityforretirement systemcontributionsortodirectlypayCalPERS.Benefitsofthetrustinclude(1)localcontroloverassets,(2)pensionrate stabilization,(3)potentialforhigherinvestmentreturnthanGeneralFund,and(4)diversificationfromCalPERS’investments. ContributionsfromtheGeneralFundareinvestedinaccordancewithCityCouncilPolicy98,PensionTrustInvestmentPolicy. Inanefforttomaintainacombinedfundedstatusof80%andtofundthecostsassociatedwithapotentialreductionin CalPERS’discountrate,thetrustisscheduledtoreceiveatotalof$40millioninprincipalcontributionsoverfivefiscalyears, andassuminganannualrateofreturnof6.25%,thetrustisprojectedtoaccumulatesufficientassetstofundapotential discountratereductionfromthecurrent6.8%to6.25%. LongTermGeneralFundCapitalFundingPolicy Thecity’sCityCouncilPolicy91,LongTermGeneralFundCapitalFundingPolicyensurestheneedsofthecityaremetand demonstratescontinuedprudentfiscalmanagementbyprovidingafundingsourceforlongͲterm,largevaluecapital purchases.Manycityassetsdemandlargecapitalexpenditures,examplesincluderoads,building,parksandinformation technologyinfrastructure.ThecityfundstheGeneralFundportionofthesenecessaryinvestmentsbyadoptinganannual budgetthatincludesatransferfromtheGeneralFundtooneormoreofthecity’slongͲtermcapitalfunds.TheselongͲterm capitalfundsincludetheGeneralCapitalConstructionFund,theInfrastructureReplacementFundandtheTechnology InvestmentCapitalFund.Thecitycommitstotargetingatransfertothecity’slongͲtermcapitalfundsof6%ofbudgeted GeneralFundrevenues.Thetransfersareproposedduringtheannualbudgetprocessoronanasneededbasisfor theCityCouncil’sconsideration. FullversionsofthesepoliciesandotherCityCouncilpoliciesareavailableonthecity’swebsiteatwww.carlsbadca.gov/cityͲ hall/lawsͲpolicies/councilͲpolicies. Feb. 11, 2025 Item #2 Page 21 of 224 x StrategicDigitalTransformationInvestmentProgram TheStrategicDigitalTransformationInvestmentProgram,orSDTIP,isacomprehensiveapproachtoplanningforandfunding digitaltransformationeffortsthroughoutthecity.Severaldocumentsinformthisprogram,includingtheCityCouncilͲ approvedConnectedCarlsbad:AnInclusiveCityInnovationRoadmap,theInternalDigitalInformationNetworkActionPlan andtheInformationTechnologyStrategy,whicharecomplementedbyafiveͲyearprojectedroadmapofdigital transformationinvestments.TheSDTIPisthestrategicplanfortechnologyanddigitaltransformationcombinedwithproject descriptions,costs,fundingsourcesandtimelines.Thepurposeofthisprogramistoprovideforanannualinvestment strategy,notacommitmentforspending,thatoutlinesafiveͲyearexpenditureplanforfuturedigitaltransformationand technologyprojectsandthecorrespondingrevenuesnecessarytopayforthem. ConnectedCarlsbad:AnInclusiveCityInnovationRoadmap InJanuary2019,citystaffpresentedConnectedCarlsbad:AnInclusiveCityInnovationRoadmap,designedtoprovideahighͲ level,organizedguideoutliningtheprinciplesthatmattertothecityincreatingamoreconnectedcommunity.Thisroadmap anditsassociatedactionplanwerebasedonacombinationofitems,including: x CityCouncilapprovedprojects, x existingcitydocuments, x previousInformationTechnologyassessmentsandinterviewswithdepartments,and x aglobalscanofothercitiesandbestpracticesthathaveemergedfromleadingsmartcitythinkersandCarlsbadͲ specificcommunityengagement. TheStrategicDigitalTransformationInvestmentProgramexpandsontheConnectedCarlsbadRoadmaptoincludeastrategy forevaluatingandprioritizingprojectsandafiveͲyearinvestmentroadmapthatincludesestimatedcostsandtimelines.This newinvestmentprogramcontinuestobeorganizedintothefiveprimarygoalareasapprovedbyCityCouncilinConnected Carlsbad,listedbelow. x PursueCommunitywideDigitalTransformationfocusesonthefoundationalelements,includingconnectivity,upͲtoͲ datehardwareandsoftware,andarobustsecuritystrategywhileprovidinganaspirationalvisionforthefuture. x BuildCapacityforDataͲDrivenGovernmentfocusesonthepolicies,proceduresandstaffingnecessaryforthecityto fullycapturethevalueofemergingmodelsofdataanalytics. x FosteraVibrantCivicEngagementCulturebuildsuponthefirsttwogoalswithahumanͲcenteredperspectivethat anengagedcitythatusesdataandtechnologyinawaythatrespectspeopleandtheirprivacywillsupportavibrant culturewhereresidents,organizationsandbusinessesareinvestedintheircommunityanditsfuture. x EnhanceAccessibilityandTransparencyrecognizesthatopengovernmentandapproachingproblemͲsolvingfrom anaccessibilityperspectiveleadstobetteroutcomesforall. x PromoteSafetyandSustainabilitythroughConnectivityleadstounderstandingtheinterconnectednatureofour communitiesthatcanachieveenvironmental,mobilityandsustainabilitygoalswhenapproachedinacrossͲ departmentalandcommunityinformedmanner. OnceCityCounciladoptstheproposedStrategicDigitalTransformationInvestmentProgram,projectsreceivean appropriationthatauthorizesspendingintheamountspecifiedfortheadoptedfiscalyearonly.Estimatedbudget informationisshownforafiveͲyearperiodtoprovidethemostcomprehensiveinformationaboutknownfutureprojects. SpendingauthorityinfutureyearsisnotgranteduntiladoptionoftheannualproposedSDTIPbudgetassociatedwitheach year. Feb. 11, 2025 Item #2 Page 22 of 224 xi InvestinginDigitalTransformation Asthecitycontinuestogrowanddevelop,theuseoftechnologyhasalsogrownexponentiallyoverthelasttwodecades.The SDTIPoutlinesthefinancialresourcesneededtoensurethatthetechnologyinfrastructureisinplacetoenablethecityto provideservicestothecommunity.Prudentfinancialplanningwillensurethatongoingfundingforinvestmentintechnology isavailable. SDTIPProjectEvaluation Makingdecisionsontechnologyimplementationsisachallengingandcomplextask.Thechallengingnatureofthesedecisions isexacerbatedbytheexpandingreachoftechnologyandtheincreasinglyinterdisciplinarynatureofemergingtechnologies. AmajorcomponentoftheSDTIPistheestablishmentofacrossͲdepartmentalapproachtotechnologyleadershiptoevaluate, prioritize,budgetforandadoptdigitaltransformationefforts.Anewadministrativeorderhasbeendevelopedthatprovides acollaborativeforumforkeystafftovalidateandprioritizetechnologyimplementations.Thisapproachalsoprovidesa structuredvenuetoexplorehowparticularconfigurationsofatechnologyimplementationmaypositivelyornegativelyaffect otherswithintheorganization.Theprocesstoevaluatedigitaltransformationinitiativesisongoingandmeetingsmaybeheld onamonthly,bimonthlyorquarterlybasisdependingontheneed. AnumberoffactorsareconsideredwhenputtingtogetherprojectsforthefiveͲyearprogram. Alldigitaltransformationand technologyprojectsshallbeconsistentwith: Proposedprojectsareevaluatedandprioritizedbyasetofcriteriathatinclude: x AlignmentwithCityCouncilgoalsandITstrategicplans,architecture,securityandtechnologystandards,including legislativeandregulatorymandates,andadministrativegoals. x CoordinationofITinvestmentsacrosstheenterprisetoavoidduplication,maximizingthereturnoninvestmentand increasingefficiency. x Effectivearticulationofthebusinesscaseincludingvalidoperationalbenefitsoftheproject. x Accuracyandreasonablenessofcostandbenefitestimates. x Considerationofpotentialprojectrisksandidentificationofappropriatemeanstomanagethoserisks. x Adherencetostandardprojectmanagementpractices. x Capacityofstaffingresourcestoimplementtheproject. Feb. 11, 2025 Item #2 Page 23 of 224 xii AstheSDTIPisimplementedthroughouttheyear,staffwillcontinuallyreͲevaluateprojects’scopes,costsandschedulesto responsiblyandcostͲeffectivelymanagecityresources. SDTIPFiscalYear2023Ͳ 24Appropriations Goingintofiscalyear2023Ͳ24,therewere44continuingandnewprojectsplannedoverthenextfiveyearsatanestimated totalcostof$33.7million.Includedinthe$33.7millionisapproximately$19.5millioninestimatednewcostsoverthecourse ofthesametimeframetoprovideadditionalfundingforthecontinuationofexistingprojectsaswellasfundingfornew projects.Withinthe$19.5millionisapproximately$4.6millionofestimatednewappropriationsforfiscalyear2023Ͳ24for thesesameprojects. Fiscalyear2023Ͳ24appropriationsbyprojectgoal PursueCommunitywideDigitalTransformation $15.1million Thisgoalincludesupdatingconnectivity,upͲtoͲdatehardwareandsoftware,andarobustsecuritystrategy. BuildCapacityforDataͲDrivenDecisionMaking $2.7million Thisgoal’sprojectsincludethepolicies,proceduresandstaffingnecessaryforthecitytofullycapturethevalueofemerging modelsofdataanalytics.ItbuildsacomprehensiveapproachtocitywidedatamanagementtoenabledataͲrichkey performancemetricsandeffectiveoperationofcitydepartments.Adatapolicyandresourceswillbecreatedtoalign departmentswithstandardsofdatacatalogingforcomplianceeaseofdatasharing. Feb. 11, 2025 Item #2 Page 24 of 224 xiii FosteraVibrantCivicEngagementCulture $1.3million Thecity’scivicengagementculturebuildsuponthefirsttwogoalswithahumanͲcenteredperspectivetousedataand technologyinawaythatrespectspeopleandtheirprivacy.Projectsinthiscategorywillsupportavibrantculturewhere residents,organizationsandbusinessesareinvestedintheircommunityanditsfuture. EnhanceAccessibilityandTransparency $1.7million ThisgoalrecognizesthatopengovernmentandapproachingproblemͲsolvingfromanaccessibilityperspectiveleadstobetter outcomesforall.ProjectsinthiscategoryincludeCivicEngagementwithOpenData,OnlinePermitting/ElectronicReviews, PatronPrint/CopyManagementandaVirtualPermittingCounter. PromoteSecurityandSustainabilitythroughConnectivity $12.9million Projectsinthisgoalincludetheannualreplacementofhardwareandtechnologyinfrastructure,aFacilitySecurityMaster Plan,thereplacementofthePoliceComputerAidedDispatchSystem,andanenhancementtothe9Ͳ1Ͳ1emergencysystem. SDTIPFutureAppropriations TheCityofCarlsbad’sSDTIPforfiscalyear2023Ͳ24tofiscalyear2027Ͳ28outlines44projectsatanestimatedtotalcostof $33.7million.Ofthe$33.7million,$19.5millionisforneworincreasedfundingforprojectsoverthenextfiveyears.The informationprovidedforfutureyearsreflectsthemostcomprehensivesnapshotofknownoranticipatedfutureprojectsas wellasassociatedestimatedcosts. Feb. 11, 2025 Item #2 Page 25 of 224 xiv CapitalImprovementProgram TheCityofCarlsbadCapitalImprovementProgramreflectsthecity’songoingcommitmenttomaintainingthehighest standardsofqualityfacilitiesforourcommunitytodayandinthefuture.Itisaplanningdocument,notacommitmentfor spending.The15Ͳyearprogramoutlinestheexpenditureplanforfuturecapitalprojectsandthecorrespondingrevenuesto payforthoseexpenditures. ProjectsthatareshownintheCIParegenerallydefinedasanyconstruction,rehabilitationorreplacementofmajor infrastructuresuchasstreets,libraries,parks,firestationsandadministrativefacilities,water,seweranddrainagefacilities, andotherfacilitiesthatarelocatedonorintheground.Inmostcases,thetotalconstructioncostofeachoftheseassetsis recordedandtrackedaspartofthecity’sinventoryofcapitalinfrastructureassetsandothercityͲownedproperty. OncetheCityCounciladoptstheproposedannualCIPbudget,projectsreceiveanappropriationthatauthorizesspendingin theamountspecifiedfortheadoptedfiscalyearonly.Estimatedbudgetinformationisshownfora15Ͳyearperiodtoprovide themostcomprehensiveinformationaboutknownfutureprojects.Spendingauthorityinfutureyearsisnotgranteduntil adoptionoftheannualproposedCIPbudgetassociatedwitheachyear. TheCIPisorganizedbythefollowingprojectclassifications: Feb. 11, 2025 Item #2 Page 26 of 224 xv InvestinginQualityofLife TheCityofCarlsbad’sphilosophyistotakeaproactive,longͲrangeplanningapproach tobuildinghighqualityfacilitiesandinfrastructurethatsupporttheneedsand prioritiesofthecommunity.Prudentfinancialplanninghasensuredongoing fundingtomodernize,repair,andreplaceexistinginfrastructureprojectsthrough numerousassetmanagementprograms.Sincethecityappliesacomprehensive assetmanagementapproachtoinfrastructureplanningandbudgetingitisabletoavoid morecostlyunexpectedrepairsoroperationalneedsandminimizetheburdenon emergencyexpenditures. Asthecitycontinuestogrowanddevelop,thereisacorrespondingincreaseinthedemandfordevelopmentͲrelatedservices andnewfacilities.Toensurethatthenecessaryinfrastructureandfacilitiesarebuiltonaschedulethatmeetsorexceedsthis demand,thecitizensofCarlsbadadoptedaGrowthManagementPlanin1986.Theplanwasestablishedtomanage developmentwithinthecitybylinkingresidential,commercial,andindustrialdevelopmentdirectlytostandardsfor availabilityofpublicservicesandfacilities. TheGrowthManagementPlanstatesthatunlessastandardleveloffacilitiesisavailabletomeetnewdemandsresulting fromthecity’sgrowth,developmentcannotproceed.Recently,certainactions,suchasimposingamoratorium,havebeen determinedtobeimpermissiblebytheCaliforniaHousingandCommunityDevelopmentDepartment,perSenateBill330, HousingCrisisActof2019,whichbecameeffectiveonJan.1,2020. ThedetailedlevelofplanningrequiredbyGrowthManagementhasallowedthecity’sCIPtoanticipatethefundingneeded forcapitalimprovementsinthenext15years.Facilitiessuchascommunitycenters,parksandfirestationshavebeen constructedandopenedtothepublicunderthisprogram. TheCIPhasbeendesignedtospecificallyaddressareaswhereneworexpandedfacilitieswillbeneededtomaintain compliancewiththeadoptedperformancestandards.Withtheadoptionofthefiscalyear2023Ͳ24CIP,compliancewiththe GrowthManagementPlaniscontinued. InOctober2022,CityCouncilapprovedafiveͲyearstrategicplanwithpolicygoalstoreflectthemostimportantprioritiesof thecommunity.TheCIPbudgetincludesthepriorityconstructionprojectsidentifiedthestrategicplan. CIPProjectEvaluation DevelopmentoftheCIPisateameffortinvolvingalloperationaldepartments,theCityManager’sOffice,theCityCouncil, andthecommunity.Communityfeedbackoninfrastructureneedsisconsideredandincorporatedasappropriate.TheCIPis fullyvettedatmultiplelevelsofthecityorganizationbyappropriatestaffusinganinclusiveandtransparentprocessand reviewedonaquarterlybasis. Feb. 11, 2025 Item #2 Page 27 of 224 xvi Projectswereevaluatedfortheabilityto deliverrealisticoutcomesconsidering anticipatedrevenuedecreasesinsome capitalfundingsources.Thecityremains focusedonmatchingexistingresources withreasonableandachievableproject scheduleswhilecontinuingtoworkon projectsthatarealreadyunderway. Existingprojectbalanceswereevaluated todeterminewhetheradditionalfunding wasneededoriftheexistingbalances wereadequate.Fundingrecommendations werematchedagainstprojecttimingand balancedagainstavailablefunding sources. AstheCIPisimplementedthroughouttheyear,staffcontinuallyreͲevaluateprojects’scopes,costsandschedulesto responsiblyandcostͲeffectivelymanageinfrastructureassetsattherequiredlevelsofservicethroughouttheirlifecycle. Recommendationsforprojectfundingconsidercurrentprojectstatus,projectschedulingandsequencingrequirements, projectconstraints,andcurrentstaffcapacity.Projectchartersareupdatedtoincludeprojectdescription,location,summary ofneed,justificationincludinganylegislativeorpolicycitations,costestimates,andprojectscores. CIPFiscalYear2023Ͳ 24Appropriations Inthefiscalyear2023Ͳ24CIP,thereareapproximately227continuingandnewprojectsplannedoverthenext15years.The fiscalyear2023Ͳ24CIPoutlines$97.7millioninnewappropriationstoprovideadditionalfundingforthecontinuationof existingprojectsaswellasfundingfor5newprojects.Projectedrevenuesduringthesamefiscalyearareestimatedat $95.9million. Capital Improvement Program Publichealth andsafety Citymission, visionand organizational values Community values Environmental review Governingand policy documents Funding availability City Council goals Feb. 11, 2025 Item #2 Page 28 of 224 xviii FISCALYEAR2023Ͳ24APPROPRIATIONSBYPROJECTTYPE CivicBuildingsandFacilityMaintenance $11.7million Thiscategoryincludesavarietyoffacilitiessuchasfirestations,librariesandthenewCityHall.Costsincluderepair, maintenanceandreplacementofcivicbuildings. Parks $46.2million Projectsincludeimprovementsandenhancementstoexistingparks,suchasplaygroundresurfacing,picnicareas andotherneedsidentifiedbythecommunityandinrecentlyupdatedparksmasterplans. Drainage $2.7million Thecity’sdrainageinfrastructureplaysanimportantroleinhandlingstormwaterrunoffflows,aswellas maintainingthewaterqualityofthecity’screeks,lagoonsandocean.Asthecitycontinuestoage,itisincreasinglynecessary tobalancerepairingandreplacingtheexistinglineswithenhancingthecurrentinfrastructuretoaccommodatefutureneeds. Sewer $13.4million Thecity’ssewer,orwastewater,projectsincludenumerouspipelineconstructionandrehabilitationprojects,as wellasimprovementstotheEncinaWastewaterTreatmentfacility.Mostnewlinesarebuiltandpaidforwithimpactfees collectedwithnewdevelopment. WaterandRecycledWater $9.4million Futurewaterandrecycledwaterprojectsincludeconstructionofnewpipelines,replacementofexisting waterlinesandreservoirimprovements.TheCarlsbadMunicipalWaterDistricthasbeenproducinganddeliveringrecycled waterforover30years. Transportation $26.7million PeopleofallagesandabilitieswanttogoplacessafelyandconvenientlyinCarlsbad,whethertheydrive,walk, bike,orrideabusortrain.Thecitycontinuestoinvestinmodernizingroads,leveragingtechnologytoimprovetrafficsystems, andmakingtimelyrepairsandrehabilitationoftheroadways,bridges,sidewalksandotherassetsinpublicrightsofway throughoutthecity. CIPFutureProjects TheCIPforfiscalyear2023Ͳ24tofiscalyear2037Ͳ38outlinesapproximately245projectsatacostof$798million.LongͲrange planningandresponsibleassetmanagementplaykeyrolesinthedevelopmentoffuturecapitalprojects.Usingdatafrom variousinfrastructuremasterplans,ongoingassetconditionassessments,technicalmodelling,fieldinspectionsaswellas communityfeedback,theinformationprovidedforfutureyearsreflectsthemostcomprehensivesnapshotofknownor anticipatedfutureprojectsaswellasassociatedestimatedcosts. Feb. 11, 2025 Item #2 Page 29 of 224 xviii AwardsandAcknowledgements TheGovernmentFinanceOfficersAssociation(GFOA)oftheUnitedStatesandCanadaawardedaCertificateofAchievement forExcellenceinFinancialReportingtothecityforitsAnnualComprehensiveFinancialReportforthefiscalyearended June30,2023.Thiswasthe26thconsecutiveyearthatthecityhasachievedthisprestigiousaward.Tobeawardeda CertificateofAchievement,agovernmentunitmustpublishaneasilyreadableandefficientlyorganizedAnnual ComprehensiveFinancialReport.ThisreportmustsatisfybothGAAPandapplicablelegalrequirements. ACertificateofAchievementisvalidforaperiodofoneyearonly.ThecitystrivestoannuallyproduceanAnnual ComprehensiveFinancialReportwhichwillcontinuetomeettheCertificateofAchievementProgram’srequirements.This reportwillbealsosubmittedtoGFOAtodetermineeligibilityforanothercertificate. Thisreporthasbeenacomprehensiveeffortbymanypeoplefrommanydifferentareasofresponsibility.Itcouldnothave beenaccomplishedwithouttheirhelpandthededicatedeffortsofallofthefinancestaff,especiallyRoxanneMuhlmeister, AssistantFinanceDirectorandKimRiboni,FinanceManager.IalsoappreciatethestaffofLance,Soll&Lunghard,LLPforthe professionalwayinwhichtheauditofthisfinancialreportwasconducted.Ithasbeenapleasuretoworkwiththem. Additionally,IwouldliketothanktheCityCouncil,theCityManagerandthecity’sExecutiveManagementTeamfortheir leadershipandunwaveringsupportinmaintainingthehigheststandardsofprofessionalisminthemanagementofthecity’s finances. Respectfullysubmitted, ZachKorach FinanceDirector Feb. 11, 2025 Item #2 Page 30 of 224 xix Feb. 11, 2025 Item #2 Page 31 of 224 xx Feb. 11, 2025 Item #2 Page 32 of 224 xxi Asof12/19/2024 ElectedOfficials KeithBlackburn,Mayor MelanieBurkholder,CouncilMember–District1 KevinShin,CouncilMember–District2 PriyaBhatͲPatel,MayorProTem–District3 TeresaAcosta,CouncilMember–District4 SherryFreisinger,CityClerk ChristianPeacox,CityTreasurer LeadershipTeam GeoffPatnoe,CityManager CindieMcMahon,CityAttorney AssistantCityManager(vacant) GaryBarberio,DeputyCityManager,CommunityServices PazGomez,DeputyCityManager,PublicWorks LauraRocha,DeputyCityManager,AdministrativeServices MichaelCalderwood,Chief,FireDepartment ChristieCalderwood,Chief,PoliceDepartment MariaCallander,Director,InformationTechnology SheilaCobian,Director,LegislativeandConstituentServices AmandaFlesse,Director,PublicWorksUtilities TomFrank,Director,PublicWorksTransportation JasonHaber,Director,IntergovernmentalAffairs EmilyHasegawa,EngineeringManager,PublicWorksConstructionManagement&Inspections ZachKorach,Director,Finance KyleLancaster,Director,Parks&Recreation JohnMaashoff,PublicWorksManager,PublicWorksFleet&Facilities FaviolaMedina,Director,CityClerkServices MandyMills,Director,Housing&HomelessServices JeffMurphy,Director,CommunityDevelopment KristinaRay,Director,Communication&Engagement SuzanneSmithson,Director,Library&CulturalArts JudyVonKalinowski,Director,HumanResources JamesWood,Director,PublicWorksEnvironmentalSustainability BoardsandCommissionsChairs AgriculturalConversionMitigationFeeAdvisoryCommittee–CarolynAlkire ArtsCommission–BarbaraChung BeachPreservationCommission–LisaStark CommunityͲPoliceEngagementCommission–PatrickConnolly HistoricPreservationCommission–ChadMajer HousingCommission–TylerCollins LibraryBoardofTrustees–StanSchatt Parks&RecreationCommission–RobertWinston PlanningCommission–PeterMerz SeniorCommission–KathrynRangus Traffic&MobilityCommission–JoshCoelho Feb. 11, 2025 Item #2 Page 33 of 224 xxii Feb. 11, 2025 Item #2 Page 34 of 224 FFinancial Section Feb. 11, 2025 Item #2 Page 35 of 224 Feb. 11, 2025 Item #2 Page 36 of 224 LSLCPAS.COM INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor and Members of the City Council City of Carlsbad, California Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Carlsbad, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Feb. 11, 2025 Item #2 Page 37 of 224 To the Honorable Mayor and Members of the City Council City of Carlsbad, California Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: x Exercise professional judgment and maintain professional skepticism throughout the audit. x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and required pension and other postemployment benefits schedules, as listed on the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2Feb. 11, 2025 Item #2 Page 38 of 224 To the Honorable Mayor and Members of the City Council City of Carlsbad, California Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual fund financial statements and schedules (“supplementary information”)are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Irvine, California December 13, 2024 3Feb. 11, 2025 Item #2 Page 39 of 224 Feb. 11, 2025 Item #2 Page 40 of 224 Management’sDiscussionandAnalysis ManagementoftheCityofCarlsbad(“city”)providesreadersthisoverviewandanalysisofthefinancialactivitiesofthecity forthefiscalyearendedJune30,2024.Theintentistoassistthereaderofthesefinancialstatementsinbetterunderstanding theimpactoffinancialdecisionsmadebythecity.Thisanalysiswillfocusonthesignificantchangestoexplainthecity’s overallfinancialcondition.Theinformationpresentedhereshouldbeconsideredinconjunctionwiththeadditional informationfurnishedintheletteroftransmittal. OverviewoftheFinancialStatements Thefinancialstatementssectionoftheannualreportconsistsoffourparts–management’sdiscussionandanalysis (thissection),thebasicfinancialstatements,requiredsupplementaryinformation,andanoptionalsectionthatpresents combiningstatementsfornonmajorgovernmentalfundsandinternalservicefunds.Thebasicfinancialstatementsinclude twokindsofstatementsthatpresentdifferentviewsofthecity. x ThefirsttwostatementsareGovernmentͲwideFinancialStatementsthatprovidebothlongͲtermandshortͲterm informationaboutthecity’soverallfinancialstatus. x TheremainingstatementsareFundFinancialStatementsthatfocusonindividualpartsofthecitygovernment,reporting thecity’soperationsinmoredetailthantheGovernmentͲwideStatements. o TheGovernmentalFundsFinancialStatementsdetailhowgeneralgovernmentservices,suchaspublicsafetyand libraryservices,werefinancedintheshortͲterm,aswellaswhatremainsforfuturespending. o ProprietaryFundsStatementsoffershortͲandlongͲtermfinancialinformationabouttheactivitiesthecityoperates likebusinesses,suchasprovidingwaterandwastewaterservices. o FiduciaryFundsStatementsprovideinformationaboutthefinancialrelationships–suchasassessmentandbusiness improvementdistricts–inwhichthecityactssolelyasatrusteeoragentforthebenefitofotherstowhomthe resourcesbelong. Thefinancialstatementsalsoincludenotesthatexplainsomeoftheinformationinthefinancialstatementsandprovide greaterdetail.Thestatementsareaccompaniedbyrequiredsupplementaryinformationthatfurtherexplainandsupportthe informationinthefinancialstatements.Inadditiontotheserequiredelementsisthecombiningfundstatementssectionthat providesfinancialinformationaboutthenonmajorgovernmentalfunds,internalservicefunds,andfiduciaryfunds,whichare addedtogetherandpresentedinsinglecolumnsinthebasicfinancialstatements. Theremainderofthisoverviewsectionofmanagement’sdiscussionandanalysis(MD&A)explainsthestructureandcontent ofeachofthestatements. GovernmentͲwideFinancialStatements TheGovernmentͲwideFinancialStatementsreportinformationaboutthecityasawhole,usingaccountingmethodssimilar tothoseusedbyprivateͲsectorcompanies.TheStatementofNetPositionincludesallofthecity’sassetsandliabilities.Allof thecurrentyear’srevenuesandexpensesareaccountedforintheStatementofActivities,regardlessofwhencashisreceived orpaid. ThetwoGovernmentͲwideFinancialStatementsreportthecity’snetpositionandhowithaschanged.Netposition–the differencebetweenthecity’sassetsandliabilities–isonewaytomeasurethecity’sfinancialhealth,orposition.Overtime, increasesordecreasesinthecity’snetpositionareanindicatorofwhetherthecity’sfinancialhealthisimprovingor deteriorating,respectively.AdditionalnonͲfinancialfactorsshouldbeconsidered,suchaschangesinthecity’spropertytax baseandtheconditionofthecity’sinfrastructure,toassesstheoverallhealthofthecity. 4Feb. 11, 2025 Item #2 Page 41 of 224 TheGovernmentͲwideFinancialStatementsofthecityaredividedintotwocategories: x Governmentalactivities–Mostofthecity’sbasicservices,suchaspolice,fire,publicworks,communityservices,and internalservicesareincludedhere.Taxes,revenuesfromothergovernmentsandagencies,incomefrompropertyand investments,grantsandcontributions,andchargesforservicesfinancemostoftheseactivities. x BusinessͲtypeactivities–Thecitychargesfeesto customerstocoverthecostofcertainservicesit provides.Thecity’swater,wastewater,solidwaste andmunicipalgolfcourseoperationsarethe primarybusinessͲtypeactivities. FundFinancialStatements TheFundFinancialStatementsprovidemoredetailed informationaboutthecity’smostsignificantfunds–not thecityasawhole.Fundsareaccountingdevicesused bythecitytokeeptrackofspecificsourcesoffunding andspendingforparticularpurposes. Somefundsarerequiredbystatelawandbond covenants,whilethecityestablishesotherfundsto controlandmanagemoneyforparticularpurposes (suchasthedeveloperimpactfeefunds)ortoshowthat itisproperlyusingcertaintaxesandgrants (suchastheSection8RentalAssistanceFund). Thecityhasthreekindsoffunds: x Governmentalfunds–Mostofthecity’sbasicservicesareincludedingovernmentalfunds.Thesefundsareusedto accountfor(1)cashandotherfinancialassetsthatcanreadilybeconvertedtocashflowinandout,and(2)balancesleft atyearͲendthatareavailableforfuturespending.Consequently,theGovernmentalFundsStatementprovidesadetailed shortͲtermviewthathelpsthereaderdeterminetheamountoffinancialresourcesthatcanbespentinthenearfuture tofinancethecity’sprograms.Thestatementsarepresentedonamodifiedaccrualbasisofaccounting.Areconciliation betweenthelongͲtermandshortͲtermfocusoftheGovernmentͲwideFinancialStatementsisprovidedimmediately followingeachstatement.Therearecurrentlythreegovernmentalfundtypesbeingusedbythecity:theGeneralFund, specialrevenuefunds,andcapitalprojectfunds. x Proprietaryfunds–Servicesforwhichthecitychargescustomersafeeforaservicearegenerallyreportedinproprietary funds.Proprietaryfunds,likeGovernmentͲwideFinancialStatements,providebothlongͲandshortͲtermfinancial information,andarepresentedonanaccrualbasisofaccounting. Therearetwotypesofproprietyfunds,enterprisefundsandinternalservicefunds: o EnterprisefundsareusedtoreportactivitiesthatprovidebusinessͲtypeservices,generallytoexternalcustomers– suchaswater,wastewater,solidwaste,andgolfservices.InboththeGovernmentͲwideFinancialStatementsandthe FundFinancialStatements,thesefundsareshownunderbusinessͲtypeactivities. o Internalservicefundsareusedtoreportactivitiesthatprovideservicesandsuppliesforthecity’sotherprogramsand activities–suchasfleet,workers’compensation,risk/liability,andinformationtechnology. 5Feb. 11, 2025 Item #2 Page 42 of 224 x Fiduciaryfunds–Thesefundsareusedtoaccountforsituationswherethecity’sroleispurelycustodial,suchasthe receipt,temporaryinvestment,andremittanceoffiduciaryresourcestoindividuals,privateorganizations,orother governments.Allofthecity’sfiduciaryactivitiesarereportedinaseparateStatementofFiduciaryNetPosition.These activitiesareexcludedfromthecity’sGovernmentͲwideFinancialStatementsbecausethecitycannotusetheseassetsto financeitsoperations. FinancialAnalysisoftheCityasaWhole NetPosition Thecity’scombinednetpositionasofJune30,2024,asshownbelow,was$1.91billion.Thecity’snetpositionincreasedby $32.5millionascomparedtothepriorfiscalyear.Thisincreasewasheavilyimpactedbyrevenuesexceedingexpensesfor theyearcombinedwithanincreaseinassetsfromfavorablechangeinmarketvalueofcashinvestments.Thiswasoffsetby asubstantialincreaseinnetpensionliabilityaswellasadecreaseandincreaseindeferredoutflowsandinflowsofresources relatedtopension,respectively. Asnotedearlier,overtime,netpositionmayserveasausefulindicatorofthecity’sfinancialposition.Forthecity,assetsand deferredoutflowsofresourcescurrentlyexceedliabilitiesanddeferredinflowsofresourcesby$1.91billionatthecloseof thefiscalyear. Alargeportionofthecity’snetposition,60.6%,reflectsitsnetinvestmentincapitalassets(i.e.,land,buildings,machinery, equipment,andinfrastructure),lessanyrelateddebtusedtoacquirethoseassetsthatisstilloutstanding.Thecityusesthese capitalassetstoprovideservicestoresidents;consequently,theseassetsarenotavailableforfuturespending.Althoughthe city’sinvestmentinitscapitalassetsisreportednetofrelateddebt,theresourcesneededtorepaythisdebtmustbeprovided fromothersourcessincethecapitalassetsthemselveswouldnotbeusedtopayfortheseliabilities. Thenetinvestmentin capitalassetsforthecitydecreasedslightlyduringfiscalyear2023Ͳ24fromareductionincapitalizableprojectcostsheldin assetscombinedwithadecreaseinoutstandingrecycledwaterdebt. Total Percentage Change 2023 2024 2023 2024 2023 2024 2023Ͳ24 Currentandotherassets $690.9 $742.6 $220.5 $233.1 $911.4 $975.7 7.1% NetOPEBasset 0.0 0.0 0.0 0.0 0.0 0.0 N/A Capitalassets 812.3 811.3 363.5 368.4 1,175.8 1,179.7 0.3% Totalassets 1,503.2 1,553.9 584.0 601.5 2,087.2 2,155.4 3.3% Deferredoutflows 85.4 82.0 6.6 6.2 92.0 88.2 Ͳ4.1% Otherliabilities 30.6 33.3 12.7 14.6 43.3 47.9 10.6% NetOPEBliability 2.6 1.1 0.3 0.2 2.9 1.3 Ͳ55.2% Netpensionliability 184.9 202.8 13.6 15.0 198.5 217.8 9.7% LongͲtermdebtoutstanding 31.7 35.6 10.8 14.6 42.5 50.2 18.1% Totalliabilities 249.8 272.8 37.4 44.4 287.2 317.2 10.4% Deferredinflows 13.7 15.2 5.1 5.5 18.8 20.7 10.1% Netposition Netinvestmentin capitalassets 809.1 803.8 352.5 351.8 1,161.6 1,155.6 Ͳ0.5% Restricted 249.2 267.7 38.4 136.6 287.6 404.3 40.6% Unrestricted 266.8 276.4 157.2 69.4 424.0 345.8 Ͳ18.4% Totalnetposition $1,325.1 $1,347.9 $548.1 $557.8 $1,873.2 $1,905.7 1.7% Total CITYOFCARLSBAD'SNETPOSITION (inmillionsofdollars) Governmental Activities BusinessͲType Activities 6Feb. 11, 2025 Item #2 Page 43 of 224 Ofthecity’stotalnetposition,21.2%representsresourcesthataresubjecttoexternalrestrictionsonusage.Theremaining balanceofunrestrictednetposition($345.8million)maybeusedtomeetthecity’songoingobligationstoresidentsand creditors. Theremainingnetpositionisunrestricted,meaningitcanbeusedforfuturespendingandlargelycoincidedwiththeexcess ofrevenuesoverexpenditureswhichwereoffsetbyanincreaseinthenetpensionliability. ChangesinNetPosition Thecondensedsummaryofactivitiesbelowshowsthatnetpositionincreasedby$32.5millionduringtheyear.Thisincrease occurswhenrevenuesearnedaregreaterthanexpensesincurred. Theincreaseinnetpositionwasdrivenbyseveralfactors,includinghigherinflationͲsupportedconsumerdemandboosting salestaxandtransientoccupancytaxrevenues,anincreaseingrantfundingforhousingandtransportationprograms,and significantgrowthininvestmentincomeandfairmarketvalueadjustmentscomparedtothepriorfiscalyear.Thesegains werepartiallyoffsetbyrisingexpendituresinfluencedbyinflation. 7Feb. 11, 2025 Item #2 Page 44 of 224 Approximately66%oftherevenuesofthecity’sgovernmentalactivitiesaregeneratedthroughtaxescollected (i.e.,propertytax,salestax,transientoccupancytax,etc.),andapproximately80%ofthecity’sbusinessͲtyperevenueis generatedthroughchargesforservices.Thechartonthenextpagegraphicallydepictsthecity’srevenuesources. ThecityfullyrecoveredfromtheCOVIDͲ19pandemic’sadversefiscalimpactsbyfiscalyear2022Ͳ23.Immediatelyfollowing thepandemicandduringthecity’sfiscalrecovery,economicuncertaintyspikedfromunprecedentedinflationaryincreases. BetweenMarchof2021andNovemberof2023,theconsumerpriceindexfortheSanDiegoregionexperiencedcontinual inflationaryincreasesrangingbetween4.1%and8.3%.Generally,duringperiodsofhighinflation,consumerdemand diminisheswhichmaynegativelyimpactrevenuessourceslikesalestax,transientoccupancytaxandchargesforservices.To accountforthis,revenueestimatesforbothfiscalyear2022Ͳ23and2023Ͳ24weresetconservatively;however,pentͲup demandandincreasedlevelsofpersonalsavingduringthepandemicallowedconsumerdemandtosustainhigherpricesfor goodsandservices.Basedonfiscalyear2023Ͳ24revenues,inflationhasnotyetnegativelyimpactedthecity’srevenue sources.However,aspersonalsavingsaccumulatedduringthepandemicisabsorbedbypentͲupdemandandinflation,we arebeginningtoseeaslowdown,particularlywithsalestaxandtransientoccupancytaxrevenues.TheFederalReservehas alsotakenswiftactioninresponsetoinflation,increasinginterestraterangesfrom0.25%Ͳ0.50%to5.25%Ͳ5.50%injust overaoneͲyearperiod.Resultingly,inflationhasdecreased,buttheFederalReservewillcontinuetomonitorinflationary databeforeconsideringanyratereductions.Theriskofrecessionisstillprevalentandcontinuedinflationaryincreases indicatethemostprudentpathistomaintainaconservativeoutlookforthecity’srevenuesinthefuture. Nearly80%ofGeneralFundrevenuesarederivedfromthreesources:propertytax,salestax,andtransientoccupancytax, orTOT.SalestaxandTOTrevenuestendtobemuchmoresensitivetochangesineconomicconditions,unlikepropertytax revenues,whichremainrelativelystablebecauseofthemitigatingeffectofProposition13,whichlimitsannualgrowthin assessedvalues. Thecity’slargestrevenuesource,propertytaxes,increasedby$6.1millionduetoassessedvaluesincreasingby6.2%for fiscalyear2023Ͳ24,duetoincreasesinbothresidentialandcommercialproperties,withasmallerincreaseseeninindustrial properties.Thisisthe11thyearinarowthatCarlsbad’sassessedvalueshaveincreasedfromyeartoyear,andinlinewith assessedvalueincreaseswithothercitiesinSanDiegoCountyfortheyear.ThisistheninthyearinarowsincetheGreat Recessionendedthatthecitysawincreasesinassessedvaluesinallthreepropertycomponents(residential,commercialand industrial).Althoughincreasesinresidentialassessedvalueswererecordedforfiscalyear2023Ͳ24,thecountyisnow experiencinghistoricallylowforͲsalehousinginventorywithhousingpricesremainingsteady. 8Feb. 11, 2025 Item #2 Page 45 of 224 Salestaxendedthefiscalyearwith$57.8millionandtheyearͲoverͲyearincreaseof$1.6millionor2.8%wasdrivenbythe city’stransportationandlightindustrygroups.Thelargesteconomicsegmentsinthecityareautomobiledealers,general retailstores,andrestaurants.Together,theygenerate70%ofthecity’ssalestaxrevenues. Transientoccupancytaxendedthefiscalyearwith$34.0million,asmalldecreaseof$240,000or0.7%.Duringthepriorfiscal yearCarlsbadexperiencedincreasedTOTrevenueswhichweredrivenbyacombinationofpentͲupdemandafterCOVIDͲ19 andanincreaseinaveragedailyroomrates.Fiscalyear2023Ͳ24sawalevelingoutofTOTlevels,whichappearstobethe emergenceofnewnormallevelsinlocaltourism. Whencomparedtothepriorfiscalyear,businesslicenseswereup1%,infiscalyear2023Ͳ24.Thesmallincreaseisduetoan increaseinlicenserenewalrevenueoffsetbyaslightreductioninpenaltyrevenuefromoverduebusinesslicenserenewals whencomparedtotheprioryear. Incomefrompropertyandinvestmentswasheavilyimpactedbyunrealizedgainscreatedbyadjustingthecity’sinvestments totheirfairmarketvalueonJune30,2023.Thisexplainstheincreaseinthiscategorywhencomparingfiscalyear2023Ͳ24to theprioryear.Thecityalsoearned$865,000inthecity’sPublicAgenciesPostͲEmploymentBenefitsTrust(Section115Trust), whichwasestablishedinSeptember2023. Theprimarycontributorstothecity’schargesforservicesarewaterandwastewatercustomers.Anincreaseintotalwater andwastewaterrevenueswasdrivenprimarilybyrateincreasesimplementedinJanuary2024combinedwithaslight increaseinwateruse.Thesefactorsledtoanoverallincreaseinchargesforservicesfortheyearforbothwaterand wastewater.Additionally,thecity’smunicipalgolfcourseexperiencedanincreaseinchargesforservicessupportedbyarate increaseandcontinueddemand. Thetotalcostofallprogramsandserviceswas$379.9millioninfiscalyear2023Ͳ24 whichwashigher(10.2%)thanpriorfiscal yearcostsof$344.8million.Themajorityoftheincreaseinprogramcostscamefromnegotiatedandcontractualsalaryand benefitcostincreases.Increaseswerealsodrivenincreasesinworkers’compensationandriskclaimliabilitiesandincreases inpensionliabilitiesasaresultofunfavorablenetinvestmentreturnsexperiencedbyCalPERSinfiscalyear2021Ͳ22.Increases werealsoseenincitymaintenancecosts,suchasforthepavementmanagementprogramaswellaseffortstowardsthecity’s SaferStreetsTogetherProgram.Thecity’swaterdistrictalsosawincreasesasthecostofwaterandamountofwater purchasedincreased. 9Feb. 11, 2025 Item #2 Page 46 of 224 x GeneralGovernment(8%) Thissegmentofthecityisdividedintothreemajorgroups:Policy&Leadership,AdministrativeServicesand nonͲdepartmentalcharges.ThePolicy&Leadershipgroupencompassesallelectedofficials,theCityManagerandCity Attorneyoffices,theCommunications&Engagementteam,andtheLegislative&ConstituentServicesteam.The AdministrativeServicesgroupincludesFinance,HumanResources(includingWorkers’CompensationandRisk Management),InformationTechnology,andInnovation&EconomicDevelopment.NonͲdepartmentalalsoincludesany specialprojectsdirectedbytheCityCouncil. x PublicSafety(29%) PublicSafetyremainsatopCityCouncilpriority.ThismajorserviceareaincludesthePoliceDepartment,whosemission istoprotectandservethecommunitywithintegrity,professionalismandvalor.TheFireDepartmentistheother componentofthismajorserviceareawithamissiontoenhancethequalityoflifebydeliveringexceptionalservicesin safeguardinglives,property,andtheenvironment. x CommunityServices(21%) CommunityServicesconsistsofLibrary&CulturalArts,Parks&Recreation,CommunityDevelopmentandHousing& HomelessServices.Thesecityserviceareasensurethecity’splanningandbuildingpoliciesarecarriedout,fosterlifelong learning,supportstrongneighborhoods,administeraffordablehousingandhomelessresponseprograms,attendtothe community’shealthandwellnessandpromotetransparencyingovernment.Library&CulturalArtsprovideseducational, informationalandculturalartsservicesforallcommunityresidents,whichcontributetoqualityoflifebysupporting lifelonglearning,thepursuitofknowledge,andcreatingtheavailabilityofcommunitygatheringplaces.Parks& Recreationofferscomprehensiveopportunitiesformeetingtherecreationalandsocialneedsandinterestsofthe communitybyprovidingprogramsforallsegmentsofthepopulation.CommunityDevelopment’sprimaryrolesinclude thedayͲtoͲdayadministrationofthelocal,state,andfederallanduseregulations,promotingeconomicandbusiness development,protectinglifeandproperty,enhancingpublichealth,andpreservingtheenvironment.Community DevelopmentencompassesLandUsePlanning,Building,CodeEnforcement,andLandDevelopmentEngineering. x PublicWorks(17%) PublicWorksisresponsibleforbuildingandmaintainingallcityinfrastructureassets.ThisserviceareaincludesPublic WorksAdministration,Facilities&Fleet,EnvironmentalSustainability,Transportation,ConstructionManagement& InspectionandUtilities.ConstructionManagement&Inspectionmanagesconstructionofmajorprojects,inspectionand oversightofprivatedevelopmentgrading,stormwaterandimprovementsinspectionandoversightofallactivityinthe publicrightͲofͲway.EnvironmentalSustainabilityoverseestheclimateactionplanprogram,thehabitatmanagement planprogram,thesustainablematerialsmanagementprogram,solidwaste,andprovidescoordinationofthemunicipal componentoftheNationalPollutantDischargeEliminationSystemMunicipalStormWaterPermit.Fleet&Facilities supportsthemaintenanceofcityvehiclesandfacilities.TheTransportationDepartmentcaresforroadinfrastructureand projects,keepspeopleandtrafficmoving,maintainsstreetsandstormdrains,maintainsstreetlighting,andprovides incidentresponseforcityandprivateproperty. x Water(16%) TheCarlsbadMunicipalWaterDistrict(CMWD),asubsidiaryofthecity,providespotableandrecycledwaterserviceto approximately29,000connectionswithina32.3squaremileservicearea.CMWDpurchases100%ofitspotablewater, whichincludesalocalsupplyofdesalinatedseawater,astreatedwaterfromtheMetropolitanWaterDistrictandthe SanDiegoCountyWaterAuthority.CMWDalsoprovidesrecycledwaterforirrigationpurposeswhichisproducedatthe CarlsbadWaterRecyclingFacility,aswellaspurchasedfromtheVallecitosWaterDistrict. x GolfCourse(3%) Thecityopenedamunicipalgolfcourseinthesummerof2007,furtherenhancingtherecreationalactivitiesthecity offers.Themunicipalgolfcourse,TheCrossingsatCarlsbad,isan18Ͳholegolfcoursesetintherollinghillsandcanyons ofCarlsbad.Withoceanviews,ahighͲqualitygolfexperience,afirstͲclassrestaurantandclubhouse,andconnectionsto hikingtrails,TheCrossingsatCarlsbadisadestinationforgolfersandnonͲgolfersalike. 10Feb. 11, 2025 Item #2 Page 47 of 224 x Wastewater(5%) Thecityownsawastewatersystemthatprovideswastewaterservicetoroughlytwothirds(2/3)ofthecity’spopulation consistingof24,000seweraccountsandisresponsibleforthecollectionandconveyanceofsewerdischargestothe EncinaWaterPollutionControlFacility(EWPCF).TheEWPCFisjointlyownedbythecitiesofCarlsbad,Vista,Encinitas, theBuenaSanitationDistrict,VallecitosWaterDistrict,andLeucadiaWastewaterDistrictandprovidesfullsecondary treatment,sludgehandling,anddisposalthroughadeepoceanoutfallthatextendsalongtheoceanfloortoapoint 1.5milesoffshore. x SolidWaste(1%) TheSolidWasteDivisionadministersandmonitorsthesolidwastecontractandthePalomarTransferStationagreement andisresponsibleforensuringthewastereductionandrecyclingcomponentsoftheSourceReductionandRecycling ElementandHouseholdHazardousWasteElementcomplywithstatemandateddiversionanddisposalrequirements. AlsoincludedinthissectionistheStormWaterProtectionProgram,whosegoalistoprovideleadershipandstewardship ofthecity’sresourcesprotectingthecity’sbeaches,creeksandlagoons. ThefollowingsectionsprovideinformationabouttheoperationsofthegovernmentalandbusinessͲtypeactivities. GovernmentalActivities Theincreaseinnetpositionforgovernmentalactivitieswas$22.8million.Totalrevenuesfromgovernmentalactivitieswere $305.5million($67.4millioninprogramrevenuesand$238.1millioningeneralrevenues)andwereoffsetby$282.4million intotalcostsofgovernmentalactivitiesand$0.3millionintransfersout. Thetablebelowpresentsthetotalcostofeachofthecity’smajorprograms,aswellaseachprogram’srevenue (feesgeneratedbytheactivities,contributions,andintergovernmentalfunding).Thenetcost(thedifferencebetween adjoiningbarsinthegraph)showsthefinancialburdenthatwasplacedonthecity’staxpayersbyeachoftheseprograms (costscoveredbygeneralrevenues). 11Feb. 11, 2025 Item #2 Page 48 of 224 Revenuesaregeneratedthroughseveralsourcestocoverthecostofthecity’sprograms.Totalrevenuesof$305.5million includefeesandchargespaidbythosewhodirectlybenefitfromtheprograms($18.0million),grantsandcontributionsfrom othergovernments,organizationsandpropertyownerswhichsubsidizecertainprogramsandprojects($49.4million),and taxesandotherrevenues(suchasincomefrompropertyandinvestments)receivedbythecitytopayforthe“publicbenefit” portionofthecity’sservices($238.1million). CommunityServicesrevenuesarederivedfromdevelopmentactivitiesthroughoutthecity,housingassistanceprograms, parksandrecreationfees,andlibraryfees.AlargeportionofCommunityServicesrevenuesarecomprisedofhousing assistanceprograms(Section8RentalAssistance,affordablehousingloanrepayments,anddeveloperspayingintothe AffordableHousingTrustFund)aswellaschargesfordevelopmentrelatedservices.Asexpected,developmentactivity reflectedamoderatedecreasefromthepriorfiscalyear,offsettingonlyaportionoftheprogramexpenses. ThemajorityofPublicWorksrevenuesareusedtoacquireandbuildcapitalassets(versuscoveringoperatingexpenses).In addition,thedonationofcapitalassetsfromdevelopersisreflectedintheprogramrevenuesforPublicWorks.Capitalassets aregenerallyconstructedorpurchasedoncesufficientfundshaveaccumulatedtopayfortheentireassetcost.Severalyears ago,thecityenteredanewstageofitslifecycle,fromadevelopingorgrowingstage,toamatureandmaintenancefocused stage.Asthecitycontinuestomatureandapproachbuildout,therewillbefewermasterplannedprojects.Inpastyears, theseprojectsconstructednewfacilities,roads,parks,andothercityͲownedinfrastructure.Thecityisshiftingitsfocus towardsmaintenanceofexistingfacilitiesandwillusefundingsourcessuchastheInfrastructureReplacementFundto maintainandreplacetheseassets. 12Feb. 11, 2025 Item #2 Page 49 of 224 BusinessͲtypeActivities Programrevenuesforthecity’sbusinessͲtypeactivitiestotaled$90.2millionfortheyear,whileprogramexpensesequaled $97.5million. Waterprogramrevenuesaregeneratedprimarilyfromthesaleofwater,butalsofromdeveloperdonatedassetsandgrants. Whileprogramexpenseswerehigherthanrevenues,thefiscalyearendedwithapositivechangeinnetpositionthewater programfrom$5.4millioningeneralrevenuescombinedwithhigherinterestratesandgainoninvestments.Revenuesmostly increasedfromannualwaterratesinJanuary2023and2024aswatersaleswereflat.Expensesweredrivenby9.6%increases forthecostofpurchasedwater. Wastewaterprogramrevenuesof$24.7millionwerehigherthanprogramexpensesof$19.1million.Anincreaseinrevenue wasdrivenbyannualrateincreases,combinedwithcapitalcontributionsfromnewdevelopment.Expensesarehighermostly fromEncinaoperationsanddepreciationfromnewandreplacementassets. Thecity’sgolfcourseenterprisewasinits17thfullyearofoperationandfinishedthefiscalyearwithanetincomeof $1.4million.Thedemandforgolfhasremainedsignificantintheregionandatthecity’smunicipalcourse.Thecourse witnessedover70,900roundsplayedwhichsignificantlycontributedtothegolfcourserevenuessufficientlyfundingnormal golfcourseoperatingexpenses(i.e.,excludingdepreciationexpense). Solidwasterevenuesareprimarilygeneratedfromfeeschargedtowasteremovalservicescustomerstosupportthecity’s integratedwastemanagementplanwhichincluderecyclingeffortsandproperwastedisposalprograms.Expenseswere plannedtosurpassrevenuesasmanywastemanagementprogramshaveincreasedinlevelofeffortandcost,suchassolid waste,recycling,andorganicsmanagementservices,householdhazardouswastecollectionanddisposal,andenvironmental outreachandeducation.Despitethecurrentyearlossof$2.0million,thefundhassufficientreserves. 13Feb. 11, 2025 Item #2 Page 50 of 224 Capitalconstructionexpensesarespreadoverthelifeofanassetasannualdepreciationcharges(programexpenses)andare notreflectedasanexpenseintheyearacquired. AmoredetaileddiscussionofeachoftheenterprisescanbefoundintheProprietaryFundsSection. FinancialAnalysisoftheCity’sFunds Asnotedearlier,thecityusesfundaccountingtoensurecompliancewithfinancerelatedlegalrequirements.Inthecurrent AnnualComprehensiveFinancialReport,thehasimplementedallGASBstatementseffectiveJune30,2024.WhileGASBdid notissueanynewpronouncementseffectiveduringfiscalyear2023Ͳ24,moreinformationonsignificantaccountingcanbe foundinNote1ofthefinancialstatements. GovernmentalFunds Thefocusofthecity’sgovernmentalfundsistoprovideinformationonnearͲterminflows,outflows,andbalancesof spendableresources.Thisinformationisusefulinassessingthecity’sfinancingrequirements.Inparticular,unassignedfund balancesmayserveasausefulmeasureofagovernment’snetresourcesavailableforspendingattheendofthefiscalyear. Therearefivefundbalanceclassifications:nonspendable,restricted,committed,assigned,andunassigned.Thesefund balanceclassificationscompriseahierarchybasedprimarilyontheextenttowhichagovernmentisboundtoobserve constraintsimposedupontheuseoftheresourcesreportedingovernmentalfunds.Attheendofthecurrentfiscalyear,the city’sgovernmentalfundsreportedcombinedendingfundbalancesof$625.4million,up$34.7millionfromtheyearbefore. Approximately0.2%($1.5million)constitutesnonspendablefundbalances,mostlycomprisedofadvancesandloanstoother funds.Restrictedfundbalancescanonlybespentforaspecificpurposestipulatedbylawandmakeupabout 42.8%($267.7million).Assignedfundbalancesareintendedtobeusedbythecityforspecificpurposes,butdonotmeetthe criteriatobeclassifiedasrestrictedorcommitted.Thesemakeupover30.8%($192.3million)ofthecity’sfundbalance. Unassignedfundbalanceis24.8%($155.4million)oftheoverallfundbalance,whichisavailableforspendingattheCity Council’sdiscretion. TheGeneralFundisthemainoperatingfundofthecity,andattheendofthefiscalyearhadatotalfundbalanceof $200.6million,anincreaseof$17.8millionfromthepriorfiscalyear.Theincreaseinnetpositionwasdrivenbyseveral factors,includinghigherinflationͲsupportedconsumerdemandboostingsalestaxandtransientoccupancytaxrevenues,an increaseingrantfundingforhousingandtransportationprograms,andsignificantgrowthininvestmentincomeandfair marketvalueadjustmentscomparedtothepriorfiscalyear.Thesegainswerepartiallyoffsetbyrisingexpenditures influencedbyinflation. 14Feb. 11, 2025 Item #2 Page 51 of 224 TheunassignedfundbalanceportionoftheGeneralFundwas$155.5million,anincreaseof$18.7millionfromlastfiscal year.Thisincreaseresultedfrom(beforetransfersout)revenuesmorethanexpendituresofapproximately$51.1million.In FY2023Ͳ24,theCityCouncilapprovedatotalof$10.2millionand$1.3millionofadditionaltransfertotheRiskManagement andWorkersCompensationFunds,respectively,toaddressacombinationofanincreaseinreserve,andhighervolumeand costofbothexistingandnewclaims.Ofthetotal$33.4millionintransfersoutoftheGeneralFund,$20.0millionwereused tofundfuturecapitalprojects,$1.9millionwereusedforoperatingsubsidies. Thecity’sGeneralFundReservePolicy,outlinedinCityCouncilPolicyNo.74,commitsthecitytomaintainingGeneralFund reservesatatargetof40%ofGeneralFundannualoperatingexpenditures.Thetotalreservelevelistobecalculatedusing thepriorfiscalyear’sadoptedGeneralFundbudgetedexpendituresandisoutlinedbelow: AsummaryoftheGeneralFund’srevenues,expendituresandchangesinfundbalanceisshownbelow. 15Feb. 11, 2025 Item #2 Page 52 of 224 TheCommunityFacilitiesDistrictNo.1Fundbalanceincreased$6.9millionfromcontinuedcollectionofassessmentsforthe futureconstructionofcityinfrastructureandfacilitieswhichincludesprojectssuchasVeteran’sPark,acentralized maintenanceandoperationscenterforPublicWorksandParksMaintenanceandthereplacementofthecityhallcomplex. ThiswasslightlyoffsetbyuseoffundsrelatedtodesigncostsforVeteran’sPark. ThefundbalanceintheInfrastructureReplacementFunddecreased$0.6millionfrom$10.6millionincapitaloutlaymostly relatedtoconstructionofthePoliceandFireHeadquarterswhichisinuseduringFY2024.Thiswasoffsetbycontinued contributionsof$5.6millionandtransferof$4.0millioninfundsfromtheGeneralFundforthefuturereplacementofexisting infrastructureandfacilities.OngoingprojectsfortheyearincludedafuelislandattheFleetServiceCenter,FleetMaintenance Renovationsandvariousotherinfrastructureimprovementprojects. 16Feb. 11, 2025 Item #2 Page 53 of 224 TheGeneralCapitalConstructionFundusedaportionofitsexistingfundbalancetowardsthecompletionofthe refurbishmentofthePoliceandFireHeadquartersbuilding,andvariousotherprojects.Theexpenditureswerepartiallyoffset byatransferfromtheGeneralFundforfutureprojects. TheTechnologyInvestmentFund,whichisfundedbyanannualtransferoffundsfromtheGeneralFund,isusedfor investmentsinfuturedigitaltransformationandtechnologyprojects.Projectsduringfiscalyear2023Ͳ24includedaudiovisual upgradesintheseniorcenterandcityconferencerooms;softwareupgradesandreplacementsforcityprojects,enterprise assetmanagement,andvendorcompliance;computeraideddispatchsystemcamerasinpublicsafety;andothervarious informationtechnologystudiesandprojects. Duringtheyear,thecitycontinuedtosetasidemoneyfortheconstructionofvariousprojectswithintheseandother governmentalfunds.Historically,thecityhasnotissueddebttofundtheconstructionofcapitalprojectsandsetsasidefunds onanannualbasisuntilsufficientfundshavebeencollectedfortheconstructionofspecificprojects.Inaddition,projectswill notbeconstructeduntilanticipatedannualoperatingcostscanbeabsorbedintothecity’sbudgetwithoutcreatingadeficit. ProprietaryFunds Thepurposeofthecity’sproprietaryfundsectionsistoprovideshortͲtermandlongͲtermfinancialinformationaboutthe city’sbusinessͲtypeactivities.Theanalysisfocusesonthedeterminationofoperatingincome,changesinnetposition (costrecovery),financialposition,andcashflows. TheCarlsbadMunicipalWaterDistrict(CMWD)fundsexperiencedanoperatinglossofapproximately$15.6millionforthe year.Operatingrevenueswereapproximately$47.7millionandoperatingexpenseswereapproximately$63.3million.Water purchaseswasoneofthelargerfactorsintheoperatinglossandcausedbycostincreasesofwaterpurchasedfromthe MetropolitanWaterDistrictandtheSanDiegoCountyWaterAuthority(suppliersoftheCMWD’spotablewater).Thiswas offsetbya2%increaseinCMWD’swaterrateseffectiveJanuary2024.Watersaleswererelativelyflat,throughouttheyear. Nonoperatingincomeincludedpropertyandinvestmentsof$5.2millionandpropertytaxesof$5.4million.Incomebefore transfers,capitalcontributionsandspecialitemsfortheyearwas($3.2)million. TheWastewaterFundhadanannualoperatingincomeof$4.4millionforthefiscalyear.Totalrevenuesfromoperations wereup$3.9millionfromtheprioryear,dueprimarilytorateincreases.Operatingexpensesweredown$0.9millionand wereprimarilytheresultoftheincreasedcapitalimprovementsoffsetbyadecreaseinadministrationandgeneraland depreciationcomparedtothepreviousfiscalyear.Nonoperatingrevenuesresultedina$0.4milliongaindrivenbyahigher valuemarketvalueadjustmentforthecity’sinvestment. Intheseventeenthyearofoperation,theGolfCourseFundhadanoperatingincomeof$0.9million.Excludingdepreciation oftheenterprise'sassets($0.7million),theGolfCourseFund’snetincomewas$1.6million.Revenuesexceededexpectations inthecurrentyearduetoacontinuedstrongdemandforroundscombinedwithanincreaseingreenfeesduringtheyear. Whilerevenueincreased,golfrelatedcostsaregenerallyfixedinnatureanddidnotincreaseatthesamerate. SolidWasteOperationsandStormWaterProgramsarecombinedonthecity’sfinancialreportsandshowedanetoperating lossof$3.0millionfortheyear.Revenueslightlydecreasedfromhigherstategrantsinprioryearexpenseswerecomparable topriorfiscalyear.Nonoperatingrevenuesresultedina$0.7millionincreasetothe$3.0millionoperatinglossbefore transfersandcapitalcontributions. TheunrestrictednetpositionfortheWater,GolfCourse,WastewaterandSolidWasteOperationsattheendoftheyear amountedto$65.0million,orapproximately12%ofthetotalenterprisefundsnetposition.Thisunrestrictedbalance increasedmostlyfrompositiveoperatingperformanceexcludingdepreciation.Eachfund’sunrestrictednetpositionmaybe usedforfluctuationsinoperatingexpenses,andunforeseenrepairsandmaintenance.Approximately$136.6million,or24%, ofthenetpositionofalltheproprietaryfundsarerestrictedpertheutilitiesreservepolicy.Thisincludesreservesforfuture capitalconstructionofnewandreplacementwaterandwastewaterinfrastructureassets,daysofoperatingcosts,rate stabilization,debtserviceandemergencycapital.Sincefundingforthereplacementofinfrastructureassetsisnotrestricted, 17Feb. 11, 2025 Item #2 Page 54 of 224 itisreflectedintheStatementofNetPositionasunrestricted.Thecitydoes,however,accountforandmonitortheseamounts inseparatefundstoensurethatwaterandwastewaterassetscanbereplacedwhenneeded. Thecity’sUtilitiesReservePolicy,outlinedinCityCouncilPolicyNo.96,isdesignedtoestablishguidelinestoensurethefiscal stabilityofthepotablewater,recycledwaterandwastewaterfunds.Theannualbudgetprocessandthesettingofutilityuser ratesandchargeswillbeusedtoachieveandmaintainthevarioustargetreservelevels.Thepolicyaimstomaintainminimum andtargetreservesforthefollowingareas: x OperatingReserveͲminimumof90daysandtargetof120daysofoperatingcostsfortheoperatingfundsofpotable water,recycledwaterandwastewaterfunds x DebtServiceReserveͲ100%ofrequiredannualdebtserviceforpotablewater,recycledwaterandwastewater x CapitalConstructionReserveͲminimum50%andtargetof100%forpotableandrecycledwaterandaminimum25% andatargetof50%ofwastewaterofthefiveͲyearrollingaverageofannualspendingoncapitalimprovement projects x EmergencyCapitalReserveͲminimumof0.5%andtargetof1%ofsystemreplacementvalueforwater,recycled waterandwastewater x RateStabilizationReserveͲminimum10%andtargetof20%ofraterevenuesforpotableandrecycledwateranda minimum5%andatargetof10%ofraterevenuesforwastewater 18Feb. 11, 2025 Item #2 Page 55 of 224 GeneralFundBudgetaryHighlightsforFiscalYear2023Ͳ24 Managementmonitorsrevenuesduringtheyearandupdatesestimatedrevenuefigureswhennewinformationisreceived. GeneralFundrevenueestimateswererevisedminimallyduringtheyear,ascomparedtotheoriginallybudgetedestimates. Someofthefactorsthatledtothe$0.5millionincreaseinrevenueestimatesincluded: x Adultliteracyandfamilyliteracygrantfundsreceivedduringtheyear x Ambulanceservicesgrantrevenuefundsreceivedduringtheyear x Developerdepositsreceivedduringtheyeartobeusedtopayfordeveloperfundedstudiesandreports Theincreasefromthetotaloriginalexpenditureandtransfersadoptedbudgettothefinalbudgetamountedto$18.5million forexpendituresand$11.5millionfortransfersandwasprimarilydueto: x Transfersof$11.5milliontofundincreasedactuarialclaimestimatesintheWorker’sCompensationandRisk ManagementInternalServiceFunds x $468,000forthePublicProviderGroundEmergencyMedicalTransportationIntergovernmentalTransfer(PPͲGEMT IGT)program,areimbursementprogramtohelpoffsetuncompensatedcostsforprovidingMediͲCalambulance transports. x $200,000forcoststoincreasepublicsecuritymeasuresaswellasincreasethenumberofconcertsinthecity’sannual TGIFconcertseries. x Theappropriationofnewgrantmoneyreceivedduringthefiscalyear x Developerfundedreportsandstudies x OutstandingpurchaseordersatJune30,2023totaling$13.5millioncarriedforwardintofiscalyear2023Ͳ24 x TheapprovedcarryforwardofotherunspentfundsatJune30,2023intheamountof$3.8millionplannedtobe usedfor: o Replacementofambulancegurneysforthefiredepartment o Remainingbudgetof$560KfortheSafterStreetsTogetherprogramsupport o AdditionalPolicetakehomevehicleprogramcosts o Policeincarvideosystems o Policetaserreplacements o Policeservicescommunitysurvey o SustainableMobilityPlanupdatewithVisionZero o ActiveTransportationMonitoringReport o FundsremainingonaCaliforniaStateLibraryfamilyliteracygrant o Fundsremainingonastatecommunitycorrectionofficerswellnessgrant o Unspentdeveloperfundsreceivedfordeveloperfundedstudiesandreports o Anticipatedmaintenanceonpermanentpublicart o TrailimprovementsatLakeCalaveraPreserve o Contractincreasesforschoolcrossingguards Thedifferenceof$24.8millionbetweenthefinalbudgetedexpendituresplustransfersandtheactualexpendituresplus transfersfortheyear,onabudgetarybasis,canbegenerallysummarizedasfollows: x $8.4millioninoutstandingencumbrancesasofJune30,2024thatwerecarriedforwardtofiscalyear2024Ͳ25. x Unspentfundsof$5.2millionfortheVillagerailroadtrenchingproject.ThisamountwasrequestedforCityCouncil approvaltobecarriedforwardintofiscalyear2023Ͳ24aspartofthecity’scarryforwardprocess. x UnspentcapitaloutlaybudgetforvehiclesandequipmentinthePoliceDepartmentintheamountof$850,000.This amountwasrequestedforCityCouncilapprovaltobecarriedforwardintofiscalyear2023Ͳ24aspartofthecity’s carryforwardprocess. x Unspentbudgetforthecity’sSaferStreetsTogetherlocalstateofemergencyintheamountof$380,000.This amountwasrequestedforCityCouncilapprovaltobecarriedforwardintofiscalyear2024Ͳ25aspartofthecity’s carryforwardprocess. 19Feb. 11, 2025 Item #2 Page 56 of 224 x Savingsbyvariousmajorserviceareaswithinthecitymakeuptheremainingdifference.Currentyearsavingswere generatedfrom: o Theclosureofpurchaseordersthathadnoactivityduringthepast12months o UnspentCityCouncilcontingencyfundsintheamountof$492,000 o Unfilledstaffvacanciesacrossthecity o Unspentlegalbudgetintheamountof$880,000 o Unspentprofessionalservicesintheamountof$1.3million o Overallawarenessoffiscalresponsibilitythroughoutthecity CapitalAssetandDebtAdministration CapitalAssets Attheendoffiscalyear2023Ͳ24,thecityhadrecordedinvestmentsofover$1.2billioninabroadrangeofcapitalassets, includingparkfacilities,land,buildings,roads,bridges,drainagefacilities,waterandwastewaterlines,PoliceandFire vehicles,andothermaintenanceequipment.Thisnumberincludesinfrastructureassetsofthegeneralgovernmentwhichare requiredperGASB. Someofthisyear’smajorcapitalassetadditionsincluded: x RefurbishmentofPoliceandFireHeadquarters x WideningofAvenidaEncinasSouthofPalomar AirportRoad x SidewalkAdditionsonGarfieldStreet,MonroeStreet andTamarackAve x CarlsbadBoulevardPedestrianImprovements x ADAParkingLotImprovements x TrafficCalmingatVariousLocations x WideningofElCaminoRealfromCassiaRoadto CaminoVidaRoble x TrafficSignalatTamarackAvenueandValleyStreet x InformationTechnologyServiceSoftware x WaterPressureReducingStationReplacement x WaterPipelineReplacementatVariousLocations x 34PoliceTakeͲHomeVehicleswithOutfitting x InͲCarVideoSystemsforPoliceVehicles x FireStationNo.5ResperatorySupplies x AmbulanceGurneyReplacement Total Percentage Change Change 2023 2024 2023 2024 2023 2024 2023Ͳ24 2023Ͳ24 Land $159.7 $160.2 $9.4 $9.4 $169.1 $169.6 $0.5 0.3% Constructioninprogress 33.724.314.318.648.042.8(5.2) Ͳ10.8% Buildingsandotherstructures 154.0153.844.144.2198.1198.1(0.0)0.0% Improvementsotherthanbuild 111.9138.056.456.5168.3194.526.215.5% Machineryandequipment 60.466.414.214.474.680.86.38.4% Infrastructure 754.8757.0410.6421.61,165.51,178.713.21.1% Wastewatertreatmentfacility Ͳ Ͳ69.068.869.068.8(0.2) Ͳ0.3% Intangibles 11.514.2Ͳ Ͳ11.514.22.824.3% 1,286.11,313.9617.9633.61,904.01,947.543.52.3% Accumulateddepreciation (473.8)(502.6)(254.4)(265.2)(728.2)(767.9)(39.6)5.4% Total $812.3 $811.3 $363.5 $368.4 $1,175.8 $1,179.6 $3.8 0.3% Activities Activities Total CITYOFCARLSBAD'SCAPITALASSETS (inmillionsofdollars) Governmental BusinessͲType 20Feb. 11, 2025 Item #2 Page 57 of 224 Inadditiontocarryingforwardappropriationsof$257.6millionforpreviouslybudgetedprojects,thecity’sfiscalyear 2023Ͳ24capitalimprovementbudgetappropriatedanadditional$97.7millionforcapitalprojects. Theseadditionalappropriationswereprincipallyforthefollowingprojects:Veteran’sMemorialPark,ElCaminoRealwidening (ArenalRoadtoLaCostaAvenue),EncinaWastewatercapitalprojects,thecity’spavementmanagementandconcrete replacementprograms,VillageandBarriotrafficcircles,PoliceandFireHeadquartersrefurbishment,SCADAimprovements andwaterandsewersystemrehabilitationandreplacementprograms,thecity’sreservoirconditionassessmentandrepair program,CarlsbadBoulevardroadwayreconfiguration,Triestesloperepair,Fleetfuelislandupgrade,Barriostreetlighting projects,MonroeStreetpoolreplacement,SeniorCenterrepairsandroofreplacement,SchulmanAuditoriumandCannon ArtGalleryupgradesandrefurbishment,andFaradayAvenueandElCaminoRealSewerreplacement(OriontoPalomar AirportRoad). Theseprojectswillbefinancedbydevelopmentfees,infrastructureandreplacementtransfersfromtheGeneralFund,special districtfeesandtaxes,waterandwastewaterreplacementreservesandothersources,includinggrantsandcontributions fromotheragencies.Moredetailedinformationaboutthecity’scapitalassetsispresentedinNote6ofthefinancial statementsandinthecity’sCapitalImprovementProgram(CIP)document,whichcanbefoundonthecity’swebsiteor obtainedfromtheAdministrativeServicesDepartment. LongͲtermDebt AtfiscalyearͲend,thecityhad$18.2millioninloansandleases,anincreaseof$4.2millionfromlastyear,asshowninthe tableabove.Regularpaymentsweremadeonallthecity’soutstandingloans,leasesandsubscriptions.Moredetailaboutthe city’slongͲtermliabilitiesispresentedinNotes11and12ofthefinancialstatements. EconomicFactorsandNextYear’sBudgetsandRatesforFiscalYear2024Ͳ25 AtthetimeofadoptingtheFiscalYear2024Ͳ25Budget,thenation,stateandcityhadbeenfacingthelingeringeffectsof unprecedentedinflationarylevelschallengingtheeconomy.IntheCityofCarlsbad,highinflationarylevelshaveactually boostedsomeofthecity’srevenuesourceslikesalesandtransientoccupancytax,butthecity’sexpenditureshavealsobeen impactedbyinflation.TheFederalReservehastakenswiftactiontocombattheriseininflationbyincreasinginterestrate targets.AlthoughitisanticipatedtheFederalReservewillbegintoreducetargetratestowardtheendofcalendaryear2024 andinto2025,wehaveyettoseeinflationlevelsreturntomorehistoricallynormallevels.Asthecitymovesforward,andas thelevelofdisposableincome,personalsavingsandpentͲupdemandcontinuestodiminishasaresultofthesesustained inflationarylevels,uncertaintyaboutthecity’srevenueskeepingpacewithitsexpendituresincreases. Priortothepandemic,thecityboastedalowunemploymentrateof2.9%.Attheheightofthepandemic,unemployment spikedto13.8%.Overthepastthreeyears,theunemploymentratehashadsomecorrelationtotheprevalenceofCOVIDͲ19 intheregion.However,withthepandemic’seconomicimpactsbehindus,unemploymentratessettledbetween2%and3% duringcalendaryear2022andincreasedto3.5%in2023.Throughthefirstquarterofcalendaryear2024,macroͲtrendsin thetechindustrypushedunemploymentupnationally,butthelabormarketisstillconsideredtobeverytight.AsofMarch 2024,theunemploymentratewas5.3%atthestateleveland4.4%atthecountyandlocallevel. Nationalinterestrates,whichdroppedsignificantlyduringthepandemic,haveeclipsedpreͲpandemicratesforallcategories. OneͲyearratesarecurrentlyat5.10%,tenͲyearratesarecurrentlyat4.48%,and30Ͳyearratesareat4.64%.Followingthe 21Feb. 11, 2025 Item #2 Page 58 of 224 FederalReserve’sincreaseininterestratetargetsallthewayto5.25%Ͳ5.50%,inflationhasdecreasedbutnottodesired levelsof2%.TheFederalReserveisexpectedtobeginreducingratetargetslaterthiscalendaryearandinto2025.Asof May2024,localinflationhaddecreasedyearͲoverͲyearfrom5.2%to3.2%. Maintaininggoodfiscalhealthmustremainatoppriority.Meetingthisobjectivepreservesthecity’sabilitytocontinue providingimportantprogramsandservicestothecommunity.Pasteconomicchallengesandprudentfinancialplanninghave providedopportunitiesfordevelopingsolutionstoaddresslostrevenueswhilepreservingvitalservices.Thepositiveeffect ofinflationonsomeofthecity’srevenuesourceshavebeensignificantbutisconsideredoneͲtimeandsomethingtobevery closelymonitoredmovingforward.Asinflationislikelytodeclineinthefuture,sowillrevenuegrowth.Disciplinedspending andlongͲtermfinancialplanningremaincriticaltoensuringthefuturesustainabilityofimportantcityprogramsandservices. TheCarlsbadeconomyisdiverse,hasstrongindustryclustersandisaleaderininnovation.Accordingtothemostrecent biennialbusinesssurveyofCarlsbadbusinesses,fivekeyindustryclustersaredrivinggrowth: x Lifesciences x Information,communicationsandtechnologies x Cleantech x Sportsinnovationanddesign x Hospitalityandtourism ThegrossregionalproductforCarlsbadis$17.2billion,indicatingthatCarlsbadisthelargesteconomyinthecountybehind theCityofSanDiego.CompaniesthatcallCarlsbadhomeareattheforefrontinareasoftechnologyandinnovation,andthe city’shospitalityandtourismindustrygeneratethesecondͲhighestamountoftransientoccupancytaxamongthecounty’s 18cities. In2023,Carlsbad’seconomygrewbyroughly$600million,representingagrowthrateof3.6%,withatotalgrossregional productof$17.2billion.Thisgrowthwasseenacrossalmostallindustrycategoriesandwasledbymanufacturing,wholesale trade,hospitalityandprofessional,scientificandtechnicalservices. Carlsbadhomepriceshaveremainedrelativelysteadyoverthepastyear.Consumerdemandandlowinventoryhavekept mortgagerateselevated.Realestateexpertshavesuggestedthatfurtherinterestratedropswillbeneededbeforemortgage ratesdropfurtherandtransactionspickup.ThecurrentmedianhomepriceinCarlsbadis$1.52million,anincreaseof5% overthelastyear. TheCarlsbadofficemarketcontinuestoseeariseinavailablespaceasremoteandhybridworkcontinueimpactingoffice leases.Withuncertainworkforcedynamicsandtightcapitalmarkets,commercialdevelopersarestilllargelyholdingoffon newofficedevelopments.Thistrendispredictedtocontinueforthecoming12Ͳ18months.Thecurrentindustrialvacancy rateis6.8%,theofficevacancyrateis14.4%andtheretailvacancyrateis5.5%. Theimportanceofmonitoringeconomictrendsatglobalaswellaslocallevelsbecomesincreasinglyimportantasthecity navigatestheseuncertaintimes.Belowarebudgetaryexpectationsandhighlightsfromthefiscalyear2024Ͳ25adopted budget: Propertytax,thelargestsourceofGeneralFundrevenues,isexpectedtogrowby$3.1million,or3.4%,overlastyear’s estimates.WhiletheresidentialrealestatemarketinCarlsbadhasseensignificantincreasesinvaluesinrecentyears,the growthhascontinuedtocooloff.Commercialpropertyassessedvaluesareexpectedtoremainrelativelyflatastheincrease ininterestrateshascreatedimmenseuncertaintyinthesector.Inresponsetotheunprecedentedinflationaryincreases experiencedoverthelastthreeyears,theFederalReserve’sinterestratehikeshavemadepurchasingahomemoredifficult forborrowers.Whiledemandremainsrelativelyhighbothlocallyandaroundthestateandalthoughmedianhomevaluesin Carlsbadhaveincreasedto$1.5millionasofMarch2024,changestointerestratetargetswilllikelyhaveanimpactonhome valuesduringtheupcomingfiscalyear.Proposition8allowsownerstohavetheirpropertytemporarilyrevaluedifmarket valueislowerthanthefactoredbaseyearvalue,posingariskthatcommercialpropertyvaluescouldtemporarilydecrease. 22Feb. 11, 2025 Item #2 Page 59 of 224 Assessedvaluesontheresidentialrealestatesideareexpectedtogrowmodestly,cappedbyCalifornia’sProposition13. Adoptedin1978,Proposition13limitstheannualincreaseinassessedvaluesforproperty.Underthisproposition,assessed values(andtherelatedpropertytax)cangrowbynomorethan2%peryear.Thevalueuponwhichthetaxisbasedisonly increasedtothefullmarketvalueuponthesaleofaproperty.Inrecentyears,residentialactivityhasbeendrivenbylow interestratesonmortgages,pentͲupdemandthatbuiltduringtheshutdownandanincreaseintheabilitytoworkremotely. Now,increasingratesanddiminishingpentͲupdemandaswemovepastthepandemicwilllikelyhaveadverseimpacts comparedtopriorperiods.BasedonresaledatafromZillow,themedianpriceofasingleͲfamilyresidenceinCarlsbadis $1.5million,upby12.0%yearoveryearasofMarch2024. PropertytaxestendtogrowslowlyunlessthereisasignificantamountofdevelopmentͲrelatedactivity.Inpastdecadesthe cityhasseenrobustgrowthinpropertytaxrevenueduetonewdevelopment,highturnoverofexistinghomesand doubleͲdigitgrowthinhousingprices.However,asopportunitiesfornewdevelopmentandgrowthlessen,developmentͲ relatedrevenueshaveslowed.Inadditiontorecentinterestrateincreases,slowerdevelopmentcombinedwithminimal commercialpropertytransactionsandtaxreformhascausedaslowinginpropertytaxgrowthinthecity. SalesTaxrevenuesgenerallymoveinstepwitheconomicconditionsandoverall,Carlsbad’seconomyhasabsorbedthe inflationaryincreasesexperiencedsince2021.TherestrictionsresultingfromtheCOVIDͲ19pandemicledtoincreasesin segmentslikeautosales,construction,drugstoresales,chemicalproducts,foodmarketsandrecreationalproducts,while otherslikerestaurantsandgeneralretailtookamajorhit.Withthepandemicanditsfiscalimpactsbehindus,theuncertainty stemsfromlingeringinflation,whethertheriseininterestrateswilllowerinflationlevelsadequately,andthetimingforwhen theFederalReservewillbeginloweringinterestratetargetsinthefuture. Salestaxrevenuesimprovedmarkedlyupuntilfiscalyear2019Ͳ20,peakinginfiscalyear2018Ͳ19at$40.8million.Theonset ofthepandemicinMarch2020resultedinswiftreductionsinsalestaxrevenuesandthecityendedtheyearwith$38million insalestaxrevenues.Duringfiscalyear2020Ͳ21,salestaxlevelsgenerallycorrelatedwithshelterͲinͲplacemandates.As restrictionswerelifted,thecity’ssalestaxlevelsrecovered—thecityendedfiscalyear2020Ͳ21with$44millioninsalestax revenues.Fiscalyear2021Ͳ22experiencedthemostacceleratedrecovery,endingtheyearatahistorichighof$51.2million insalestaxrevenues.Thefiscalyear2022Ͳ23and2023Ͳ24salestaxestimatesreflecteduncertaintysurroundingmarketand economicconditionslikeinflationandimpactstodisposableincome.Despitethelevelsofinflation,growthhasbeenpositive overthisperiod;however,wearebeginningtoseesomeindustrygroupscooloffcomparedtopreviousperiods.Withinflation stillincreasingataratehigherthandesiredbytheFederalReserveaswellasexistingrecessionaryrisk,staffhaveproposed aconservativeestimateof$59.4millioninbudgetedrevenueforfiscalyear2024Ͳ25whichrepresentsanincreaseof $0.5million,or0.8%,overfiscalyear2023Ͳ24estimates. ThethirdhighestGeneralFundrevenuesourceisTransientOccupancyTax,alsoknownasTOTorhoteltax.TOTwasthe revenuecategorymostadverselyimpactedbyCOVIDͲ19.Fromhistorichighsof$26millioninfiscalyear2018Ͳ19,thecity experiencedyearͲoverͲyeardecreasesof27%and16%.Recoveryfromthepandemicwasestimatedconservatively;however, fiscalyear2021Ͳ22provedotherwise,reachingahistorichighof$32.4milliondrivenbytheeasingofrestrictions,pentͲup demandandanincreaseinaveragedailyroomrates.Thistrendcontinuedinfiscalyear2022Ͳ23,wherebyactualrevenues exceededconservativeestimatesthatwereappliedtoaccountforsustainedlevelsofunprecedentedinflation.Fiscalyear 2023Ͳ24isthefirstyearinwhichyearͲoverͲyearquarterlycomparisonsindicatearevenueslowdown.Itisestimatedthat fiscalyear2023Ͳ24revenueswillexceedtheprioryear,butfuturegrowthmaybetemperedbyinflation,tourismdemand anditsimpactonaveragedailyroomrates. Businesslicensetaxesarecloselytiedtothehealthofthelocaleconomyandareprojectedtoincreaseto$6.6millioninfiscal year2024Ͳ25.Thisrepresentsgrowthof$0.2millionor3%whencomparedtolastyear’scurrentestimates.Increasesin businesslicensetaxescorrelatewithsalestaxrevenueincreasesasbusinesseseitherpaytaxesbasedontheamountoftheir grossreceiptsorbasedonsetfees.Therearecurrentlyabout9,529licensedbusinessesintheCityofCarlsbad,63lessthan intheprioryearwith6,630ofthemlocatedinthecity. 23Feb. 11, 2025 Item #2 Page 60 of 224 Toensurethecitycontinuestomaintainabalancedbudgetandanalyzeitsuseoftaxpayerdollars,theCityManagerasked departmentstoreducetheirexistingbudgetsforfiscalyear2023Ͳ24anddecreasediscretionaryspendingwhereverpossible. Whileadministrativeleadership’sdirectionforthefiscalyear2024Ͳ25budgetcycledidnotproposeamandatedbudget reductionbyeachdepartment,itcontinuedtheexpectationthatstaffincorporateopportunitiestodobusinessmore efficientlyandfocusonspendingareasthatcanbereducedwithlittletonoimpactonthecommunity.InresponsetoCity Councilfeedbackrequestingstaffidentifywaystocontainongoingoperationalcostswithintheorganization,staffconducted areviewofstaffinglevels,workloadandexistingvacanciesinanefforttofindnewopportunitiesforsavings.Asaresult, 12fullͲtimeequivalentpositionswereeliminatedaspartofthefiscalyear2024Ͳ25budget.Thisdirectivecameafterbudget reductionsofnearly2%and3%wereachievedinfiscalyear2022Ͳ23and2023Ͳ24,respectively.Theseeffortscontributedto thecity’sabilitytopresentabalancedbudgetinfiscalyear2024Ͳ25pushtheprojecteddeficitfurtherouttothefuture.The reductionsproposedwerecarefullyevaluatedtoensureongoingservicelevelimpactsweremitigatedasmuchaspossible. InsupportofCalPERSstrategiesforplansustainabilityandaspartofthecity’sstrategic,longͲtermapproachtofinancial management,thecityactivelymanagesitsunfundedpensionliability.Sincefiscalyear2016Ͳ17,theCityCouncilhasapproved additionaldiscretionarycontributionsof$56.4milliontodecreasefuturecostsofthecity’sunfundedactuarialliabilityand achieveafundedstatusof80%inaccordancewithCityCouncilPolicy86.Infiscalyear2023Ͳ24,theCityCouncilalsoapproved theestablishmentofaSection115PensionTrustanda$10.0millioninitialcontribution.Assetsinthetrustwillbeavailable tothecitytomaintainan80%fundedstatus,mitigatepensionratevolatilityandpotentiallyearnahigherrateofreturnthan ifthefundswereleftintheGeneralFund.Thisactivemanagementhelpsensurethatresourcesareavailabletofulfillthe city’scontractualpromisestoitsemployeesandminimizesthechancethatfundingthesepensionbenefitswillinterferewith thecity’sabilitytoprovideessentialpublicservices.Fiscalyear2024Ͳ25reflects$12.7millionofcitycontributionsrequired tomakeupforCalPERS’abysmalinvestmentperformanceinfiscalyear2021Ͳ22.Thisrepresentsanincreaseof$2.5million, or25%comparedtothepreviousfiscalyear. Thesefactorswereconsideredwhenadoptingthecity’sGeneralFundbudgetforfiscalyear2024Ͳ25.Budgetedexpenditures increasedby10.0%to$238.5million.Thetotalpersonnelbudgetforfiscalyear2024Ͳ25is$134.7million,whichis3.6%more thanthepreviousyear’spersonnelbudgetof$130.1million.Thetotalmaintenanceandoperationsbudgetforfiscalyear 2024Ͳ25is$65.6million,whichis1.3%higherthanthepreviousyear’sbudgetof$64.9millionThetotalcapitaloutlaybudget forfiscalyear2024Ͳ25is$0.5million,$0.4millionmorethanthepreviousyear. TransfersoutoftheGeneralFundarebudgetedat$37.5million,a$15.6millionincreasefromthepriorfiscalyear.Perthe city’sLongTermGeneralFundCapitalFundingPolicy,aminimumof6%ofbudgetedGeneralFundrevenuesaretransferred tothecapitalprojectfundstofundmajornewconstruction,maintenanceandreplacementofcityinfrastructureandfacilities andthecity’sfuturemajortechnologyneeds.TheincreasethisyearismainlyaresultfromaoneͲtimetransferof$7.0million toincreasetheWorker’sCompensationFund’sprogramreservestoachieveafundedstatusof85%asperthemostrecent actuarialreport.TheremainingincreaseintransfersisattributabletoanadditionaloneͲtimetransfermadetotheGeneral CapitalConstructionFundinordertoassistwithfundingthecity’sgeneralcapitalconstructionintothefuture. Thecity’sbusinessͲtypeactivitiesreflectthefollowing: ThePotableWaterandRecycledWaterfundscontinuetooperateandmaintaincriticalinfrastructuresystemsandprovide thesafedeliveryofdrinkingwater,conservationoutreachandtreatedirrigationwater.Thecostofpurchasedwatercontinues toincrease,causinganoverallincreaseinthePotableWaterbudget. TheWastewaterfundprovidesreliablewastewatercollectionservices.Thebudgetforthisfund’sincreaseisprimarilydueto anincreaseinthetransfersouttofunditsrelatedcapitalimprovementfund.Theseincreaseintransferswasneededtoinvest inmaintainingwastewaterinfrastructurethathasreachedtheendofitsexpectedlistandincreasesincostofmaterialsand suppliesneededtooperatingsystems. TheGolfCourseFundprojectedaslightincreaseinrevenuesfromanincreasefoodandbeveragerevenuedrivenbythe continueddemandprivateevents.Operatingexpenseshaveremainedconsistentandcapitaloutlayexpensesareprojected tobelowerinfiscalyear2024Ͳ25duetolessequipmentreplacementsscheduledwhencomparedtolastfiscalyear. 24Feb. 11, 2025 Item #2 Page 61 of 224 ContactingtheCity’sFinancialManagement ThisfinancialreportisdesignedtoprovidetheCityofCarlsbad’sresidents,taxpayers,customers,investors,andcreditors withageneraloverviewofthecity’sfinancesandtodemonstratethecity’saccountabilityforthemoneyitreceives.Ifyou haveanyquestionsaboutthisreportorneedadditionalinformation,contacttheFinanceDepartment,1635FaradayAvenue, Carlsbad,CA92008,442Ͳ339Ͳ2430,orfindadditionalinformationatwww.carlsbadca.gov. 25Feb. 11, 2025 Item #2 Page 62 of 224 GGovernment-Wide Financial Statements Feb. 11, 2025 Item #2 Page 63 of 224 Feb. 11, 2025 Item #2 Page 64 of 224 BBasic Financial Statements Feb. 11, 2025 Item #2 Page 65 of 224 Feb. 11, 2025 Item #2 Page 66 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Net Position Governmental Business-Type Activities Activities Total ASSETS Cash and investments 661,198,679$ 203,391,337$ 864,590,016$ Receivables (net of uncollectibles): Accounts 292,087 12,921,382 13,213,469 Taxes 16,559,868 44,018 16,603,886 Accrued interest 7,790,691 1,139,532 8,930,223 Due from other governments 3,186,317 3,878,047 7,064,364 Notes and loans 27,915,454 - 27,915,454 Leases 13,416,082 5,404,732 18,820,814 Other 2,275,257 576,995 2,852,252 Internal balances (4,390,001) 4,390,001 - Restricted assets: Cash and investments 10,849,413 - 10,849,413 Inventories 264,352 1,141,739 1,406,091 Land held for resale 1,335,026 - 1,335,026 Prepaid costs 1,877,082 120,308 1,997,390 Capital assets (not being depreciated)184,480,026 27,938,306 212,418,332 Capital assets (net of accumulated depreciation/amortization)626,816,404 340,504,153 967,320,557 Total assets 1,553,866,737 601,450,550 2,155,317,287 DEFERRED OUTFLOWS OF RESOURCES Pension-related 78,758,506 5,648,378 84,406,884 OPEB-related 3,283,792 585,363 3,869,155 Total deferred outflows of resources 82,042,298 6,233,741 88,276,039 LIABILITIES Due to other governments 1,526 8,249,905 8,251,431 Accrued liabilities 20,649,322 4,650,380 25,299,702 Accrued interest 51,280 21,586 72,866 Deposits payable 10,160,506 1,272,774 11,433,280 Unearned revenue 2,437,556 467,436 2,904,992 Noncurrent liabilities: Due within one year: loans, leases, subscriptions, and claims 17,159,871 2,079,013 19,238,884 Due in more than one year: Net pension liability 202,790,178 14,987,875 217,778,053 Net OPEB liability 1,109,894 146,341 1,256,235 Loans, leases, subscriptions, and claims 18,410,461 12,502,115 30,912,576 Total liabilities 272,770,594 44,377,425 317,148,019 DEFERRED INFLOWS OF RESOURCES Pension-related 627,801 99,991 727,792 OPEB-related 1,841,388 271,017 2,112,405 Lease-related 12,764,636 5,114,305 17,878,941 Total deferred inflows of resources 15,233,825 5,485,313 20,719,138 NET POSITION Net investment in capital assets 803,799,951 351,799,156 1,155,599,107 Restricted: Affordable housing 43,111,858 - 43,111,858 Lighting and landscaping districts 10,955,309 - 10,955,309 Capital projects 198,176,980 46,446,258 244,623,238 General government 494,514 - 494,514 Public safety 282,024 - 282,024 Community services 3,853,542 - 3,853,542 Pension section 115 trust 10,849,413 - 10,849,413 Utilities Reserve - 90,178,516 90,178,516 Unrestricted 276,381,025 69,397,623 345,778,648 Total net position 1,347,904,616$ 557,821,553$ 1,905,726,169$ June 30, 2024 Primary Government See Notes to Financial Statements. 26Feb. 11, 2025 Item #2 Page 67 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Activities For the Year Ended June 30, 2024 Operating Capital Charges for Contributions Contributions Expenses Services and Grants and Grants Functions/Programs: Primary government: Governmental activities: General government 30,026,991$ 335,227$ 3,520,742$ 528,023$ Public safety 109,769,130 7,334,670 6,975,325 2,976,905 Community services 78,846,282 7,100,832 15,058,289 243,339 Public works 63,779,456 3,268,654 2,744,094 17,390,939 Interest on long-term debt 40,778 - - - Total governmental activities 282,462,637 18,039,383 28,298,450 21,139,206 Business-type activities: Carlsbad Municipal Water District 62,464,131 47,637,921 - 4,226,053 Golf Course 10,526,883 11,410,738 - - Wastewater 19,060,329 23,720,583 - 1,012,147 Solid Waste 5,403,098 2,261,958 11,040 - Total business-type activities 97,454,441 85,031,200 11,040 5,238,200 Total primary government 379,917,078$ 103,070,583$ 28,309,490$ 26,377,406$ General revenues and transfers: General revenues: Property taxes Sales taxes Transient occupancy taxes Franchise taxes Business licenses taxes Other taxes Use of money and property Other Gain on sale of capital asset Transfers Total general revenues and transfers Change in net position Net position-beginning Net position-ending Program Revenues See Notes to Financial Statements. 27Feb. 11, 2025 Item #2 Page 68 of 224 Governmental Business-Type Activities Activities Total (25,642,999)$ -$ (25,642,999)$ (92,482,230) - (92,482,230) (56,443,822) - (56,443,822) (40,375,769) - (40,375,769) (40,778) - (40,778) (214,985,598) - (214,985,598) - (10,600,157) (10,600,157) - 883,855 883,855 - 5,672,401 5,672,401 - (3,130,100) (3,130,100) - (7,174,001) (7,174,001) (214,985,598) (7,174,001) (222,159,599) 93,958,783 5,411,555 99,370,338 57,855,060 - 57,855,060 34,040,324 - 34,040,324 8,066,789 - 8,066,789 6,446,074 - 6,446,074 1,346,764 - 1,346,764 35,554,330 10,226,677 45,781,007 398,622 902,590 1,301,212 463,971 (7,511) 456,460 (340,000) 340,000 - 237,790,717 16,873,311 254,664,028 22,805,119 9,699,310 32,504,429 1,325,099,497 548,122,243 1,873,221,740 1,347,904,616$ 557,821,553$ 1,905,726,169$ Primary Government Net (Expenses) Revenues and Changes in Net Position See Notes to Financial Statements. 28Feb. 11, 2025 Item #2 Page 69 of 224 Feb. 11, 2025 Item #2 Page 70 of 224 FFund Financial Statements Feb. 11, 2025 Item #2 Page 71 of 224 CITY OF CARLSBAD, CALIFORNIA Balance Sheet Governmental Funds June 30, 2024 Total Total Nonmajor Governmental General Funds Funds ASSETS Cash and cash equivalents 185,474,535$ 101,405,643$ 111,170,710$ 189,005,501$ 587,056,389$ Receivables (net of allowance for uncollectible): Accounts 280,489 1,806 --282,295 Taxes 16,556,576 3,292 --16,559,868 Accrued interest 1,064,167 566,636 621,261 5,162,041 7,414,105 Due from other governments 184,479 --3,001,838 3,186,317 Notes and loans 234,757 --27,680,697 27,915,454 Leases 9,111,942 1,120,742 -3,183,398 13,416,082 Other 1,605,858 --669,399 2,275,257 Inventories 13,170 --6,199 19,369 Prepaid costs 13,010 --52,333 65,343 Land held for resale ---1,335,026 1,335,026 Advances to other funds 1,187,173 620,777 -4,550,000 6,357,950 Restricted assets: Cash and cash equivalents 10,849,413 ---10,849,413 Total assets 226,575,569$ 103,718,896$ 111,791,971$ 234,646,432$ 676,732,868$ LIABILITIES Accrued liabilities 6,606,212$ 39,574$ 1,107,174$ 4,566,133$ 12,319,093$ Unearned revenues 1,051,624 --1,385,932 2,437,556 Deposits payable 9,672,489 13,000 -474,017 10,159,506 Due to other governments ---1,526 1,526 Advances from other funds ---6,357,950 6,357,950 Total liabilities 17,330,325 52,574 1,107,174 12,785,558 31,275,631 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 19,448 --7,243,290 7,262,738 Lease-related 8,586,139 1,047,501 -3,130,996 12,764,636 Total deferred inflows of resources 8,605,587 1,047,501 - 10,374,286 20,027,374 FUND BALANCES (DEFICITS) Nonspendable 1,448,110 --58,532 1,506,642 Restricted 10,849,413 102,618,821 -154,249,207 267,717,441 Committed 8,500,000 ---8,500,000 Assigned 24,295,122 -110,684,797 57,362,666 192,342,585 Unassigned 155,547,012 --(183,817) 155,363,195 Total fund balances (deficits)200,639,657 102,618,821 110,684,797 211,486,588 625,429,863 Total liabilities, deferred inflows of resources, and fund balances (deficits)226,575,569$ 103,718,896$ 111,791,971$ 234,646,432$ 676,732,868$ Capital Projects Funds Community Facilities District #1 Infrastructure Replacement Fund See Notes to Financial Statements. 29Feb. 11, 2025 Item #2 Page 72 of 224 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2024 Amounts reported for governmental activities in the Statement of Net Position are different because: Total fund balances - governmental funds 625,429,863$ 785,479,582 Deferred outflows-pension related 75,564,336 Deferred outflows-OPEB related 3,091,618 Deferred inflows-pension related (571,256) Deferred inflows-OPEB related (1,713,948) Total deferred outflows and inflows related to postemployment benefits 76,370,750 Long-term receivables 7,262,738 Total other long-term assets 7,262,738 49,084,094 Leases and subscriptions payable (390,109) Net pension liability (194,314,505) Net OPEB liability (1,017,797) Total long-term liabilities (195,722,411) Net position of governmental activities 1,347,904,616$ Long-term liabilities that are not due and payable in the current period, and therefore, are not reported in the funds. CITY OF CARLSBAD, CALIFORNIA Capital assets, net of accumulated depreciation/amortization, used in governmental activities are not financial resources and, therefore, are not reported in the funds. Differences between expected and actual experiences, assumption changes and net differences between projected and actual earnings, and contributions subsequent to the measurement date for the postretirement benefits (pension and OPEB) are recognized as deferred outflows of resources and deferred inflows of resources on the Statement of Net Position. Other long-term assets that are not available to pay for current period expenditures and, therefore, are either labeled unavailable or not reported in the funds. Internal service funds provide services to other funds on a cost-reimbursement basis. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the Statement of Activities. See Notes to Financial Statements. 30Feb. 11, 2025 Item #2 Page 73 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2024 Total Total Nonmajor Governmental General Funds Funds REVENUES Taxes 200,944,357$ 769,437$ -$ -$ 6,112,009$ 207,825,803$ Licenses and permits 3,041,177 - - - - 3,041,177 Intergovernmental 2,523,819 - - - 19,713,845 22,237,664 Contribution from property owners - 1,715,046 - - 6,840,434 8,555,480 Charges for services 13,436,342 - - - 4,390,906 17,827,248 Use of money and property 13,388,133 4,818,399 5,615,495 - 9,239,194 33,061,221 Fines and forfeitures 415,642 - - - 456,178 871,820 Contributions 57,095 - - - - 57,095 Miscellaneous 288,362 - - - 120,464 408,826 Total revenues 234,094,927 7,302,882 5,615,495 - 46,873,030 293,886,334 EXPENDITURES Current: General government 22,269,613 42,736 - - 309,569 22,621,918 Less: interdepartmental charges (6,081,404) - - - - (6,081,404) Public safety 91,095,692 - - - 604,632 91,700,324 Community services 48,067,650 - - - 19,737,769 67,805,419 Public works 22,637,150 - - - 1,603,339 24,240,489 Capital outlay 4,905,368 371,993 10,587,913 - 31,134,016 46,999,290 Debt service:- - - - Principal 61,026 - - - 280,322 341,348 Interest and fiscal charges 527 - - - 40,251 40,778 Total expenditures 182,955,622 414,729 10,587,913 - 53,709,898 247,668,162 Excess (deficiency) of revenues over (under) expenditures 51,139,305 6,888,153 (4,972,418) - (6,836,868) 46,218,172 OTHER FINANCING SOURCES (USES) Transfers in - - 4,400,000 - 17,570,000 21,970,000 Transfers out (33,410,000) - - - (400,000) (33,810,000) Subscription proceeds 58,863 - - - 260,223 319,086 Proceeds from sales of capital assets 2,243 - - - - 2,243 Total other financing sources (uses)(33,348,894) - 4,400,000 - 17,430,223 (11,518,671) Net change in fund balances 17,790,411 6,888,153 (572,418) - 10,593,355 34,699,501 Fund balances-beginning, as previously reported 182,849,246 95,730,668 111,257,215 8,928,517 191,964,716 590,730,362 Changes within financial reporting entity - - - (8,928,517) 8,928,517 - Fund balances (deficit)-beginning, as restated 182,849,246 95,730,668 111,257,215 - 200,893,233 590,730,362 Fund balances (deficit)-ending 200,639,657$ 102,618,821$ 110,684,797$ -$ 211,486,588$ 625,429,863$ Capital Projects Funds Community Facilities District #1 Infrastructure Replacement Fund Formerly Major Fund Park Development See Notes to Financial Statements. 31Feb. 11, 2025 Item #2 Page 74 of 224 Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2024 Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances - total governmental funds:34,699,501$ Capital outlay 22,622,723 Depreciation/amortization expense (24,642,790) Total adjustment (2,020,067) Earned but unavailable tax revenues 98,636 Earned but unavailable grant revenues 2,395,522 Earned but unavailable other revenues 658,849 Total adjustment 3,153,007 Donations of capital assets (110,810) Loss/(gain) on disposal of capital assets (546,618) Total adjustment (657,428) Subscriptions and leases issued 319,086 Principal payments (267,652) Total adjustment 51,434 7,006,614 Changes in pension liabilities and related deferred outflows and inflows of resources (19,331,638) Changes in OPEB liabilities and related deferred outflows and inflows of resources (96,304) Total adjustment (19,427,942) Change in net position of governmental activities 22,805,119$ Internal service funds provide services to other funds on a cost-reimbursement basis. The net revenue of certain activities of internal service funds is reported with governmental activities. Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. CITY OF CARLSBAD, CALIFORNIA Governmental funds report capital outlays are expenditures. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation/amortization expense. This is the amount by which capital outlays exceeded depreciation/amortization expense in the current period. Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade- ins, and donations) is to increase/(decrease) net position. Bond and other debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of bond and other debt principal is an expenditure in the governmental funds, but repayment reduces long-term liabilities in the Statement of Net Position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. See Notes to Financial Statements. 32Feb. 11, 2025 Item #2 Page 75 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Net Position Proprietary Funds June 30, 2024 Governmental Activities Other Total Enterprise Enterprise Internal Funds Funds Service Funds ASSETS Current assets: Cash and cash equivalents 137,257,243$ 48,984,513$ 17,149,581$ 203,391,337$ 74,142,290$ Receivables (net of uncollectibles): Accounts, net of allowances 8,596,236 4,319,264 5,882 12,921,382 9,792 Taxes 44,018 - - 44,018 - Accrued interest 774,528 273,742 91,262 1,139,532 376,586 Lease 184,099 - 61,236 245,335 - Other - - 576,995 576,995 - Prepaid costs - - 120,308 120,308 1,811,739 Due from other governments 3,235,647 642,400 - 3,878,047 - Inventories 926,342 15,390 200,007 1,141,739 244,983 Total current assets 151,018,113 54,235,309 18,205,271 223,458,693 76,585,390 Noncurrent: Leases Receivable, Noncurrent 3,978,414 - 1,180,983 5,159,397 - Capital assets, net 206,362,494 141,089,355 20,990,610 368,442,459 25,816,848 Total noncurrent assets 210,340,908 141,089,355 22,171,593 373,601,856 25,816,848 Total assets 361,359,021 195,324,664 40,376,864 597,060,549 102,402,238 DEFERRED OUTFLOWS OF RESOURCES Pension-related 3,366,828 1,484,035 797,515 5,648,378 3,194,170 OPEB-related 412,368 100,364 72,631 585,363 192,174 Total deferred outflows of resources 3,779,196 1,584,399 870,146 6,233,741 3,386,344 LIABILITIES Current liabilities: Accrued liabilities 3,323,675 479,337 847,368 4,650,380 8,330,229 Accrued Interest 21,586 - - 21,586 51,280 Unearned revenue - - 104,561 104,561 - Deferred revenue - 10,000 352,875 362,875 - Deposits payable 108,873 135,313 1,028,588 1,272,774 1,000 Due to other governments 7,838,657 411,248 - 8,249,905 - Loans and subscriptions 2,079,013 - - 2,079,013 1,090,982 Claims and judgments - - - - 15,951,353 Total current liabilities 13,371,804 1,035,898 2,333,392 16,741,094 25,424,844 Noncurrent liabilities: Claims and judgments - - - - 16,039,102 Loans and subscriptions 12,491,934 10,181 - 12,502,115 2,098,786 Net pension liability 8,933,821 3,937,862 2,116,192 14,987,875 8,475,673 Net OPEB liability 87,194 21,696 37,451 146,341 92,097 Total noncurrent liabilities 21,512,949 3,969,739 2,153,643 27,636,331 26,705,658 Total liabilities 34,884,753 5,005,637 4,487,035 44,377,425 52,130,502 DEFERRED INFLOWS OF RESOURCES Pension-related 59,602 26,271 14,118 99,991 56,545 OPEB-related 175,917 54,081 41,019 271,017 127,440 Lease-related 3,933,805 - 1,180,500 5,114,305 - Total deferred inflows of resources 4,169,324 80,352 1,235,637 5,485,313 183,985 NET POSITION Net investments in capital assets 189,850,422 140,958,124 20,990,610 351,799,156 22,627,080 Restricted for capital projects 34,846,391 11,599,867 - 46,446,258 - Restricted for reserves 76,726,002 13,452,514 - 90,178,516 - Unrestricted 24,661,325 25,812,569 14,533,728 65,007,622 30,847,015 Total net position 326,084,140$ 191,823,074$ 35,524,338$ 553,431,552 53,474,095$ Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterprise funds over time 4,390,001 Net position of business-type activities 557,821,553$ Business-Type Activities Carlsbad Municipal Water District Wastewater See Notes to Financial Statements. 33Feb. 11, 2025 Item #2 Page 76 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Other Total Enterprise Enterprise Internal Funds Funds Service Funds OPERATING REVENUES Sales and service charges 46,818,163$ -$ -$ 46,818,163$ -$ Wastewater service charges - 23,720,583 - 23,720,583 - Golf course operations - - 11,410,738 11,410,738 Other charges for services 819,758 - 2,261,958 3,081,716 37,597,825 Miscellaneous 39,744 162,104 561,011 762,859 719,685 Total operating revenues 47,677,665 23,882,687 14,233,707 85,794,059 38,317,510 OPERATING EXPENSES Administration and general 23,745,950 7,425,952 5,807,441 36,979,343 16,075,955 Encina plant operations 1,698,526 5,342,333 - 7,040,859 - Purchased water 31,173,357 - - 31,173,357 - Golf course operations - - 9,793,756 9,793,756 - Depreciation/amortization 6,650,195 6,752,479 733,127 14,135,801 6,606,283 Claims and premiums - - - - 21,107,595 Fuels and supplies - - - - 1,726,446 Small equipment purchases - - - - 1,357,703 Total operating expenses 63,268,028 19,520,764 16,334,324 99,123,116 46,873,982 Operating income (loss)(15,590,363) 4,361,923 (2,100,617) (13,329,057) (8,556,472) NONOPERATING REVENUES (EXPENSES) Taxes 5,411,555 - - 5,411,555 - Intergovernmental - - 125,969 125,969 - Interest expense (198,458) - 1,018,341 819,883 (110,048) Investment income (loss)7,221,287 2,011,851 - 9,233,138 2,606,774 Gain (loss) on disposal of capital assets (7,511) - - (7,511) 168,701 Total nonoperating revenues (expenses)12,426,873 2,011,851 1,144,310 15,583,034 2,665,427 Income (loss) before capital contributions and transfers (3,163,490) 6,373,774 (956,307) 2,253,977 (5,891,045) Transfers In - - 340,000 340,000 11,500,000 Capital contributions: Capital restricted fees and grants 3,826,241 655,380 - 4,481,621 - Developer constructed assets 399,812 356,767 - 756,579 3,263,700 Change in net position 1,062,563 7,385,921 (616,307) 7,832,177 8,872,655 Net position-beginning 325,021,577 184,437,153 36,140,645 44,601,440 Net position-ending 326,084,140$ 191,823,074$ 35,524,338$ 53,474,095$ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds 1,867,133 Changes in net position of business-type activities 9,699,310$ Business-Type Activities Carlsbad Municipal Water District Wastewater See Notes to Financial Statements.34Feb. 11, 2025 Item #2 Page 77 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Other Enterprise Internal Funds Totals Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 45,769,218$ 23,320,447$ 14,118,888$ 83,208,553$ -$ Receipts from internal service - - - - 38,028,243 Payments to suppliers and service providers (53,613,734) (16,013,860) (5,326,841) (74,954,435) (3,284,986) Payments to employees for salaries and benefits - (196,888) (10,070,596) (10,267,484) (16,026,236) Claims - - - - (17,676,273) Other receipts (payments)819,758 162,104 549,755 1,531,617 657,988 Net cash provided by (used for) operating activities (7,024,758) 7,271,803 (728,794) (481,749) 1,698,736 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - - 340,000 340,000 11,500,000 Interest paid on non-capital debt (7,739) - - (7,739) - Taxes 5,420,083 - 125,969 5,546,052 - Net cash provided by (used for) noncapital financing activities 5,412,344 - 465,969 5,878,313 11,500,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from capital debt 5,517,186 10,181 - 5,527,367 2,678,533 Capital contributions 3,860,765 655,380 - 4,516,145 - Acquisition and construction of capital assets (11,345,502) (4,233,499) (423,205) (16,002,206) (4,889,701) Principal paid on capital debt (1,738,406) - - (1,738,406) (2,417,349) Interest paid on capital debt (198,458) - - (198,458) (93,281) Proceeds from sales of assets 758,678 404,751 29,533 1,192,962 205,069 Net cash provided by (used for) capital and related financing activities (3,145,737) (3,163,187) (393,672) (6,702,596) (4,516,729) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 6,564,620 1,923,877 461,842 8,950,339 2,375,524 Leasing activities 347,012 - 516,515 863,527 89,451 Net cash provided by (used for) investing activities 6,911,632 1,923,877 978,357 9,813,866 2,464,975 Net increase (decrease) in cash and cash equivalents 2,153,481 6,032,493 321,860 8,507,834 11,146,982 Cash and cash equivalents-beginning 135,103,762 42,952,020 16,827,721 194,883,503 62,995,308 Cash and cash equivalents-ending 137,257,243$ 48,984,513$ 17,149,581$ 203,391,337$ 74,142,290$ Business-Type Activities Carlsbad Municipal Water District Wastewater See Notes to Financial Statements. 35Feb. 11, 2025 Item #2 Page 78 of 224 CITY OF CARLSBAD, CALIFORNIA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Other Enterprise Internal Funds Totals Service Funds Business-Type Activities Carlsbad Municipal Water District Wastewater RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss)(15,590,363)$ 4,361,923$ (2,100,617)$ (13,329,057)$ (8,556,472)$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation/amortization expense 6,650,195 6,752,479 733,127 14,135,801 6,606,283 Residual nonoperating revenues and expenses - (3,319,642) - (3,319,642) - (Increase) decrease in accounts receivable (1,090,273) (366,803) (39,314) (1,496,390) (5,380) (Increase) decrease in inventories 485,544 217 (21) 485,740 (9,126) (Increase) decrease in prepaid items 15,433 - (27,238) (11,805) (191,711) Increase (decrease) in accounts payable - 73,850 - 73,850 - Increase (decrease) in accrued liabilities 720,585 (612,662) 6,555 114,478 (473,964) Increase (decrease) in deposits payable 1,584 (33,333) 474,250 442,501 - Increase (decrease) in compensated absences 837,573 - - 837,573 - Increase (decrease) in claims and judgments - - - - 3,431,322 Increase (decrease) in net pension liability 936,958 412,995 221,942 1,571,895 888,906 Increase (decrease) in net OPEB liability 8,006 2,779 2,522 13,307 8,878 Total adjustments 8,565,605 2,909,880 1,371,823 12,847,308 10,255,208 Net cash provided by (used for) operating activities (7,024,758)$ 7,271,803$ (728,794)$ (481,749)$ 1,698,736$ SCHEDULE OF NON-CASH NONCAPITAL, CAPITAL, AND INVESTING ACTIVITIES Unrealized gain/(loss) on fair value of investments 3,180,866$ 856,698$ 369,076$ 4,406,640$ 1,043,390$ Purchase of capital assets on account 548,635 17,016 - 565,651 - Contributions of capital assets 399,812 356,767 - 756,579 3,263,700 See Notes to Financial Statements. 36Feb. 11, 2025 Item #2 Page 79 of 224 Private Purpose Custodial Trust Fund Funds ASSETS Cash and cash equivalents 223,823$ 5,528,793$ Restricted assets: Cash and investments - 2,447,924 Receivables: Assessments, net of allowance for uncollectible - 845,519 Accrued interest 1,251 31,323 Taxes - 9,907 Loans receivable 4,645,308 - Total assets 4,870,382 8,863,466 LIABILITIES Accrued liabilities - 2,168,758 Due to bondholders - 6,694,708 Total liabilities - 8,863,466 NET POSITION Restricted for: Redevelopment obligation retirement purposes 4,870,382 - Total net position 4,870,382$ -$ CITY OF CARLSBAD, CALIFORNIA Statement of Fiduciary Net Position Fiduciary Funds June 30, 2024 See Notes to Financial Statements. 37Feb. 11, 2025 Item #2 Page 80 of 224 Private Purpose Custodial Trust Fund Funds ADDITIONS Assessment district collections -$ 10,917,943$ Income from property and investments 62,232 731,441 Taxes 5,000 1,396,977 Interest on housing loans 113,129 - Miscellaneous -27,594 Total additions 180,361 13,073,955 DEDUCTIONS Distributions to beneficiaries -16,149,802 Administrative expenses -554,085 Bond interest expense and fees 8,832 1,352,037 Principal expense -2,035,000 Total deductions 8,832 20,090,924 Net increase (decrease) in fiduciary net position 171,529 (7,016,969) Net position-beginning 4,698,853 7,016,969 Net position-ending 4,870,382$ -$ CITY OF CARLSBAD, CALIFORNIA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2024 See Notes to Financial Statements. 38Feb. 11, 2025 Item #2 Page 81 of 224 Feb. 11, 2025 Item #2 Page 82 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Carlsbad, California (“City”), was incorporated on July 16, 1952. The City was a general law city until 2008, when the citizens in Carlsbad voted and approved the City to become a charter city. The City operates under a Council-Manager form of government and provides the following services: general government, public safety, community services and public works. The accounting policies of the City and its component units conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The following is a summary of the more significant policies: A. Description and Scope of the Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements present the financial position of the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent upon the City (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statements to be misleading or incomplete. Based upon the above criteria, the component units of the City are the Housing Authority of the City of Carlsbad, the City of Carlsbad Public Improvement Corporation, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. The City does not issue separate financial statements for these component units. Since the City Council serves as the governing board for these component units and there is either a financial benefit/burden relationship between the component unit and City or the management of the City has the operational responsibility for the component unit, all of the City’s component units are considered to be blended component units. Blended component units, although legally separate entities, are in substance part of the City’s operations, and so data from these units is reported with the interfund data of the primary government. B. Government-wide and Fund Financial Statements The Government-wide Financial Statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the City and its blended component units. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on user fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable to a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly classified as program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the Government-wide Financial Statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the Fund Financial Statements. 39Feb. 11, 2025 Item #2 Page 83 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The Government-wide Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Fiduciary Fund Financial Statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the individual programs are used as guidance. Property taxes are recognized as revenues in the year for which they are levied. Governmental Fund Financial Statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting, as long as the expenditure reflects a near-term cash outflow. Principal and interest on long-term debt are recorded as fund liabilities when due. Revenues that are accrued include real property taxes, sales tax, transient occupancy taxes (TOT), franchise taxes, highway users’ tax, interest, and some state and federal grants. Real property taxes are levied on October 15 against property owners of record on January 1 of that year. The taxes are due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Tax liens attach annually as of 12:01 a.m. on the first day of January in the fiscal year for which the taxes are levied. Under the provisions of NCGA (National Council on Government Accounting) Interpretation 3, property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Custodial funds, which are a type of fiduciary fund, account for assets held by the City for other governments or individuals. These funds report using an economic resources measurement focus and include all inflows, outflows and balances reflecting the fund’s net position. The City reports the following major governmental funds: x The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. x The Community Facilities District (CFD) No. 1 capital project fund is used to account for the receipt of taxes and fees charged to developers that are restricted for civic facilities, parks, and road segments. x The Infrastructure Replacement (IRF) capital project fund is used to account for transfers from the General Fund and expenditures for the replacement of major infrastructure throughout the City. The City reports the following major enterprise funds: x The Carlsbad Municipal Water District (CMWD) enterprise funds are used to account for the operation, maintenance, and capital facility financing of the City’s potable and recycled water systems. x The Wastewater enterprise funds are used to account for the operation, maintenance, and capital facility financing of the City’s wastewater system. 40Feb. 11, 2025 Item #2 Page 84 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Additionally, the City reports the following fund types: x Internal Service funds account for fleet maintenance and replacement, self-insured benefits, information technology, risk management and workers’ compensation services provided to other departments or agencies of the City. x The Custodial funds account for assets held by the City for other governments or individuals. These funds include debt service transactions on assessment district bonds for which the City is not obligated and the City’s Carlsbad Tourism Business Improvement District. x The Private-Purpose Trust fund accounts for the activities of the Redevelopment Obligation Retirement Fund, which accumulates resources for obligations previously incurred by the former City of Carlsbad Redevelopment Agency (RDA). As a general rule, the effect of interfund activity has been eliminated from the Government-wide Financial Statements. An exception to this general rule is the charges between the Carlsbad Municipal Water District and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s proprietary funds are charges to customers for sales and services. The City also recognizes new account charges, late fees, and contributions from other agencies as operating revenues. Operating expenses for enterprise and internal service funds include the cost of sales and services, general and administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, restricted revenue will be applied first. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the policy is to apply committed fund balance first, then assigned fund balance and finally unassigned fund balance. D. Cash and Investments Cash includes amounts in demand and time deposits. Investments are reported in the accompanying balance sheet at fair value, except for certain investment contracts that are reported at cost because they are not transferable, and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as income from property and investments reported for that fiscal year. Income from property and investments includes interest earnings; changes in fair value; any gains or losses realized upon the liquidation, maturity, or sale of investments; property rentals and the sale of City owned property. The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds on a monthly basis, based on each fund’s average cash and investments balance. Restricted cash and investments represent amounts that are restricted under the terms of debt agreements as well as amounts held in the City’s Section 115 Pension Trust. 41Feb. 11, 2025 Item #2 Page 85 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Inventories and Prepaid Expenses The City uses the consumption method to record changes in prepaid and inventory items; they are recorded at cost as assets in the period which they are purchased and recognized as expenditures or expense in the period they are consumed. Inventories consist of materials and supplies and are recorded as expenditures or expense on a average cost basis when consumed. F. Compensated Absences Compensated absences are comprised of vacation payable for all City employees and banked overtime (comp time). Vacation pay and comp time are payable to employees at the time used or upon termination of employment. For governmental funds, the cost of accumulated vacation and comp time expected to be paid in the next 12 months is recorded as a liability in the Self-Insured Benefits internal service fund. Since the City caps the amount of vacation and comp time employees are allowed to have on the books at any point in time, for compensated absences recorded at June 30, 2024, all balances are expected to be paid within the following 12 months. For proprietary funds, the cost of vacation and comp time is recorded as a liability when earned. G. Risk Management The City accounts for its general liability and workers’ compensation activities in internal service funds. The funds are responsible for collecting premiums from other City funds and departments and paying claims, settlements, and insurance premiums. Interfund premiums are based on the insured fund’s claims experience. Incurred but not reported claims are accrued at year-end if material. H. Unbilled Services Unbilled water and wastewater revenues of the enterprise funds are recognized as earned when the services are used. I. Capital Assets Capital assets, which include land (including right-of-way), buildings, equipment, lease assets, subscription assets, and infrastructure assets (e.g., roads, bridges, traffic signals, water and wastewater systems, and related items), are reported in the applicable governmental or business-type activities columns in the Government-wide Financial Statements. Capital assets are defined by the City as machinery and equipment and capital construction with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year; and intangible assets such as computer software with an initial cost of more than $100,000, and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of an asset or materially extend an asset’s useful life are not capitalized. Construction in progress costs are transferred to their respective capital asset category upon completion. 42Feb. 11, 2025 Item #2 Page 86 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Depreciation and amortization on right-to-use assets is charged to operations using the straight-line method based on the estimated useful life of an asset. The estimated useful lives of depreciable assets are as follows: Buildings and other structures 10 50 Improvements other than buildings 10 50 Infrastructure 10 100 Intangible assets 5 10 Machinery and equipment 5 20 Wastewater treatment facility (including equipment) 5 75 Lease and subscription assets Years Term of agreement or life of asset, whichever is shorter The City has capitalized all general infrastructure assets acquired or constructed. In addition, the land upon which the streets and roads are constructed (right-of-way) has also been valued and capitalized. J. Unearned Revenue The unearned revenue reported in the City’s financial statements represents money received during the current or previous fiscal years that has not been earned by the City as of the end of the fiscal year. These monies will be recognized as revenues in subsequent fiscal years once the revenue has been earned. K. Deferred Outflows In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has pension-related and other postemployment benefits related items in this category. L. Deferred Inflows In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has three types of items that qualify for reporting in this category. The first item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: interest on advances and loans and grants. This amount is deferred and recognized as an inflow of resources in the period that the amount becomes available. The second item is reported in the government-wide and proprietary funds’ respective statements of net position. The City has pension related and other postemployment benefits related items in this category. The third item is reported in the governmental funds’ balance sheet and the government-wide and proprietary funds’ respective statements of net position. The City has lease related items in this category. M. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (short-term interfund loans), or “advances to/from other funds” (long-term interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-wide Financial Statements as “internal balances.” 43Feb. 11, 2025 Item #2 Page 87 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The portion of fund balance associated with amounts that have been disbursed to other funds in the form of long-term interfund advances have been classified as nonspendable unless the funds associated with repayment of the advance are otherwise restricted for a specific purpose. N. Receivables and Payables All trade, service and tax receivables are shown net of an allowance for uncollectibles. The utility billing receivable allowance is equal to 1% of outstanding billings at June 30, 2024, the ambulance billing receivable allowance is equal to 40% of outstanding billings at June 30, 2024, and the trade and false alarm receivable allowance is equal to 23% of the total of all outstanding receivable balance at June 30, 2024. The only exceptions to these rules are receivables that were subsequently paid or were known to be collectible at year-end, which were not reserved for at June 30, 2024, and any receivables due from other public agencies. O. Loan and Reimbursement Receivable The accompanying financial statements reflect the recording of certain loans receivable that represent loans made to various organizations and individuals. In certain cases, the amount of collection is dependent upon future residual receipts to be generated by the property or contingent upon the ability of the owner to sell the property at an amount sufficient to pay all liens against the property, including the obligation to the City. All loan and reimbursement receivables are shown net of an allowance for uncollectibles. P. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Unexpended and unencumbered appropriations lapse at fiscal year-end unless City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year. Q. Net Position Net position represents the differences between assets and deferred outflows, and liabilities and deferred inflows. Net investment in capital assets, consist of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings, used for the acquisition, construction or improvement of those assets. Net investment in capital assets excludes unspent debt proceeds. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. R. Cash Flows Statements of cash flows are presented for proprietary fund types. Cash and cash equivalents include all unrestricted and restricted highly liquid investments with original purchase maturities of three months or less. Pooled cash and investments in the City’s Treasury represent monies in a cash management pool and such accounts are similar in nature to demand deposits. S. Long-term Obligations In the Government-wide Financial Statements, and proprietary fund types in the Fund Financial Statements, long- term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. 44Feb. 11, 2025 Item #2 Page 88 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Pensions For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Valuation Date (VD)June 30, 2022 Measurement Date (MD)June 30, 2023 Measurement Period (MP)July 1, 2022 to June 30, 2023 U. Other Postemployment Benefits (OPEB) For purposes of measuring the net OPEB asset/liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan), the assets of which are held by the California Employers’ Retiree Benefit Trust (CERBT), and additions to and deductions from the OPEB Plan’s fiduciary net position have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. Generally accepted accounting principles require that the reported results must pertain to liability and fiduciary net position information within certain defined timeframes. For this report, the following timeframes are used: Valuation Date (VD)June 30, 2023 Measurement Date (MD)June 30, 2023 Measurement Period (MP)July 1, 2022 to June 30, 2023 V. Fair Value Measurements Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. 45Feb. 11, 2025 Item #2 Page 89 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies including: x Quoted prices for similar assets or liabilities in active markets; x Quoted prices for identical or similar assets or liabilities in markets that are inactive; x Inputs other than quoted prices that are observable for the asset or liability; and x Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data. W. Fund Balances Nonspendable Fund Balance includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments). Restricted Fund Balance includes amounts that can be spent only for specific purposes stipulated by the constitution, external resource providers, or through enabling legislation. If the City Council action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted. Committed Fund Balance includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. It includes legislation (council action) that can only be overturned by new legislation requiring the same type of voting consensus that created the original action. Therefore, if the City Council action limiting the use of the funds is separate from the action (legislation) that created (enables) the funding source, then it is committed, not restricted. The City considers a resolution to constitute the formal action of the City Council that is necessary to commit fund balance. Assigned Fund Balance includes amounts that are designated or expressed by the City Council but does not require a formal action like a resolution or ordinance. The City Council has delegated the authority for the City Manager to carry forward certain unspent budget amounts for specific one-time purposes if the amount is equal or less than $100,000 per item to the next fiscal year. The City Council has authorized, through resolution, that all outstanding encumbrances at the end of the fiscal year and certain unspent budgeted amounts over $100,000 per item be carried forward into the next fiscal year. The assigned fund balance also includes an assignment for economic uncertainty and an assignment of General Fund budget surplus for the railroad trenching project and the remainder of program funds in the safer streets program, all of which were approved by the City Council through a resolution. These amounts are shown as assigned fund balance at the end of the fiscal year: x General Government – unspent funds for a general City fee study update, general election expenses, a pilot program for SizeUp, an online platform to assist the small business community. Encumbrances rolled forward include financial audit services, sales tax auditing services, recruitment and background investigation services, website content and social media management services for economic development and various smaller professional service contracts for communications, human resources, finance and the City manager’s office. 46Feb. 11, 2025 Item #2 Page 90 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) x Public Safety – unspent funds for the replacement of the fire department’s mechanical CPR devices and medic gear for the police SWAT medic team and unspent grant funds on a police officer wellness and mental health grant. Encumbrances rolled forward include the purchase and outfitting of in car camera video systems for police patrol vehicles, school crossing guard services, the purchase of a new fire engine, contracted weed abatement services and a professional agreement for public outreach services. x Community Services – unspent funds for state library grants, public art maintenance costs and contract funds for developer funded studies and reports. Encumbrances rolled forward include engineering and building plan check services, real estate advisory services, a public art collaborative project and homeless outreach and case management services. x Public Works – unspent funds for an irrigation system upgrade at the City’s safety training center facility, weeding services at the Manzanita Preserve Vernal Pool and unspent contract funds for professional services for the City’s Climate Action Plan update and construction inspection services. Encumbrances rolled forward include open contracts for habitat management plan preserve steward services, a green business network coordinator, Citywide roof inspection services, Citywide pest control services and professional agreements for traffic engineering services and the implementation of the City’s sustainable mobility plan. x Capital Projects – includes various Citywide infrastructure replacement projects, village and barrio street lighting and traffic circles, Buena Vista Creek channel fencing, beach access repairs, Kelly Drive channel repair, Fleet Service Center renovation, completion of the Police and Fire Headquarters refurbishment, Hosp Grove playground refurbishment, Alga Norte Pool replastering, and upgrades to the Fleet service center fuel island. x Risk Management – City Council assigned general fund surplus from fiscal year 2023-24 to the City’s Risk Management Internal Service Fund in order to increase the reserve balance for several large claims. x Workers’ Compensation – City Council assigned general fund surplus from fiscal year 2023-24 to the City’s Workers’ Compensation Internal Service Fund in order to address increases in claim volume and average claim costs. x Safer Streets Program – City Council assigned a general fund surplus of $2 million to address traffic safety during fiscal year 2022-23. The remaining unspent funds of $436,636 at the end of fiscal year 2023-24 will be used for continuing activities and expenses as detailed in the City’s Safer Streets Together Plan. x Railroad trenching project – Carlsbad is exploring ways to address safety, traffic, environmental and quality of like concerns regarding train traffic, including options to lower the railroad tracks below street level. The City is working with the San Diego Association of Governments, the agency that oversees the railway, to identify funding and grant opportunities. In June 2023, the City Council approved the allocation of $5.22 million from General Fund reserves in order to advance the project. This amount remains in the assigned General Fund balance at June 30, 2024. 47Feb. 11, 2025 Item #2 Page 91 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) x Economic Uncertainty – City Council assigned reserve that can be utilized via City Council resolution to mitigate general revenue losses during times of economic downturns. Unassigned Fund Balance – this includes the remaining spendable amounts which are not included in one of the other classifications. The General Fund is the only fund that reports a positive unassigned fund balance amount. It is the City’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the City Council. X. Leases Lessee: The City is a lessee for a noncancellable lease of buildings and land improvements. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $5,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. x The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for leases. x The lease term includes the non-cancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position. Lessor: The City is a lessor for noncancellable leases of buildings and land. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. x The City uses its estimated incremental borrowing rate as the discount rate for leases. x The lease term includes the non-cancellable period of the lease. Lease receipts included in the measurement of the lease receivable are composed of fixed payments from the lessee. 48Feb. 11, 2025 Item #2 Page 92 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. Y. Subscription-Based Information Technology Arrangements The City is a subscriber for a noncancellable subscription of information technology services. The City recognizes subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government-wide financial statements. The City recognizes subscription liabilities with an initial, individual value of $5,000 or more. At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to subscriptions include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) lease term, and (3) subscription payments. x The City uses the interest rate charged by the vendor as the discount rate. When the interest rate charged by the vendor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for subscriptions. x The subscription term includes the non-cancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the City is certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. Subscription assets are reported with other capital assets and subscription liabilities are reported with long-term debt on the statement of net position. Z. New GASB Pronouncements Effective during Fiscal Year The following Government Accounting Standards Board (GASB) pronouncements were effective for and/or early implemented for the fiscal year ended June 30, 2024: 1. GASB Statement No. 100, Accounting Changes and Error Corrections The requirements of this Statement will improve the clarity of the accounting and financial reporting requirements for accounting changes and error corrections, which will result in greater consistency in application in practice. In turn, more understandable, dependable, relevant, consistent, and comparable information will be provided to financial statement users for making decisions or assessing accountability. In addition, the display and note disclosure requirements will result in more consistent, decision useful, understandable, and comprehensive information for users about accounting changes and error corrections. 49Feb. 11, 2025 Item #2 Page 93 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Data The City follows these procedures in establishing its budgetary data: x During May or June, the City Manager submits a proposed operating, strategic digital transformation investment program and capital improvement program budgets for the fiscal year commencing the following July 1 to the City Council. The budget includes estimated revenues and proposed expenditures on a departmental and/or project basis. x In June, a public hearing is conducted at a City Council meeting to obtain citizens’ comments. x Prior to July 1, the budget is enacted legally through passage of an appropriation resolution. x For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses pursuant to GASB. Actual expenditures have been adjusted to include encumbrances outstanding. Annual budgets are adopted for the General Fund, special revenue funds and capital project funds. The City Manager is authorized to make transfers of appropriated amounts from one department to another within a fund. The legal level of budgetary control is at the fund level. Revisions that alter the total appropriations of any fund must be approved by the City Council with the exception of budget adjustments that involve offsetting revenues and expenditures, increases in General Liability and Workers’ Compensation Fund claims expenses, increases in Encina Wastewater Authority expenses, increases of 15% or less to purchasing authority for capital outlay items requiring the City Council to act as the awarding authority as approved in the budget process, increases in earned leave accrual expenses and liabilities, increases in unforeseen legal expenses and liabilities and adjustments to increase the appropriation for Mutal Aid expenses in an amount equal to the increases in amounts to be reimbursed by other agencies. The City Manager is authorized to increase or decrease an appropriation for a specific purpose where the appropriation is offset by unbudgeted revenue, which is designated for said specific purpose. Quarterly financial reports are provided to the City Council during the year, and any changes to the adopted budget are approved by the City Council as necessary. During the year, several supplementary appropriations were necessary. Budgets for governmental type funds are adopted on the modified accrual basis except that encumbrances are treated as budgeted expenditures in the year purchases are committed. Expenditures may not exceed budgeted appropriations at the fund level. All appropriations lapse at fiscal year-end unless the City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year or, if the appropriation is less than $100,000, the City Manager may approve to continue the appropriation into the following fiscal year. B. Deficit Fund Equity The Following funds reported deficits in fund balances or net position as of June 30, 2024: Special revenue funds: Habitat and Agricultural Management (183,817) Deficit balance The deficit of $183,817 in the Habitat and Agricultural Management Special Revenue Fund is the result of the General Fund advancing money for the purchase of habitat mitigation credits in a prior fiscal year. The advance is returned to the General Fund in periodic payments as developer impact fees are collected in the Habitat and Agricultural Management Fund. 50Feb. 11, 2025 Item #2 Page 94 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 3: CASH AND INVESTMENTS Cash resources of the individual funds are combined to form a pool of cash and investments. The City maintains a formal Investment Policy Statement, which is reviewed by the Investment Review Committee and adopted annually by the City Council. All investments held in the Treasurer’s Pool are consistent with the City’s Investment Policy Statement objectives of safety of principal, sufficient liquidity, and to realize a return on investment. The risk disclosures on the next page apply to the City’s internal investment pool. Portfolio investments are exposed to five types of risk: custodial (investments and cash deposits), concentration, default, event, and market or interest rate risk. The City and its agencies invest a portion of the funds in an external investment pool known as the Local Agency Investment Fund (LAIF). Management and oversight are the responsibility of the California State Treasurer. As of June 30, 2024, the LAIF performance report shows a fair value factor of 0.996316042. The City’s position in the LAIF pool is calculated as a percentage of the fair value of the City’s shares to the fair value of the pooled shares. The City and its agencies invest a portion of the funds in an external investment pool known as the California Asset Management Program (CAMP). CAMP is a California Joint Powers Authority directed by a Board of Trustees, which is made up of local government finance directors and treasurers. Investments held outside the Treasurer’s Pool consist mainly of required reserve funds for various bond issues. They are held by trustees and are not available for the City’s general expenditures. The City established an IRS Section 115 Trust in 2023 for the purpose of setting funding aside for the City's unfunded pension liability. In December 2023, $10 million was deposited into the trust. At June 30, 2024, the market value of the assets held in trust is $10,849,413. The assets of the trust are reported as restricted cash and investments in the City's General Fund, with a corresponding restriction in the City's General Fund fund balance. Cash and investments as of June 30, 2024, are classified in the accompanying financial statements as follows: Statement of Net Position Cash and investments 864,590,016$ Restricted: Cash and investments 10,849,413 Statement of Fiduciary Net Position Cash and cash equivalents 5,752,616 Restricted: Cash and investments 2,447,924 Total cash and investments 883,639,969$ Deposits with financial institutions 15,171,405$ Investments 855,164,496 Pension trust 10,849,413 Petty cash 6,730 Restricted: Cash and investments 2,447,925 Total cash and investments 883,639,969$ 51Feb. 11, 2025 Item #2 Page 95 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 3: CASH AND INVESTMENTS (CONTINUED) A. Fair Value Measurement The City categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2024: Investment Type Total Level 1 Level 2 Uncategorized U.S. Treasury obligations 53,401,850$ 53,401,850$ -$ -$ U.S. agency securities 336,219,140 - 336,219,140 - Certificates of deposit 21,681,219 - 21,681,219 - Medium-term notes 118,114,447 - 118,114,447 - Municipal investments 95,882,867 - 95,882,867 - Mortgage pass-through securities 74,537,563 - 74,537,563 - Supranational Secrurites 21,264,562 - 21,264,562 - California Asset Management Program 132,222,972 - - 132,222,972 Local Agency Investment Fund 1,839,876 - - 1,839,876 Total 855,164,496$ 53,401,850$ 667,699,798$ 134,062,848$ Input Category B. Custodial Credit Risk (Investments) The City uses a third-party bank for its custody and safekeeping service for its investment securities. Custodial credit risk is the risk that the City will not be able to recover the value of its investments in the event of the custodian’s failure. All City investments held in custody and safekeeping are held in the name of the City and are segregated from securities owned by the bank. This is the lowest level of custodial credit risk exposure. Investments are settled on Delivery vs. Payment (DVP) in accordance with the third-party custodial agreement. C. Custodial Credit Risk (Deposits) The City maintains cash accounts at one major banking institution. At the conclusion of each business day and if advantageous to the City, balances in these accounts are “swept” into overnight pooled investments, which are pooled into funds collateralized with U.S. government securities (guaranteed) or U.S. agency securities (government- sponsored). The California Code authorizes both of these types of investments. Amounts up to $250,000 are Federal Deposit Insurance Corporation (FDIC) insured. All funds in non-interest-bearing transaction accounts are fully insured under the Dodd-Frank Wall Street Reform and Consumer Protection Act. D. Concentration Credit Risk Concentration credit risk is the heightened risk of potential loss when investments are concentrated in one issuer. The California state code and the City’s Investment Policy Statement require that total investments in medium-term corporate notes of all issuers not exceed 30% of the portfolio. For concentration of investments, the City’s Investment Policy Statement requires that no more than 5% of investments in corporate notes or passthrough securities be in any one issuer. There is no similar requirement in either the state code or the City’s Investment Policy Statement for U.S. agencies. As of June 30, 2024, the portfolio was in compliance with this requirement. 52Feb. 11, 2025 Item #2 Page 96 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 3: CASH AND INVESTMENTS (CONTINUED) E. Default Credit Risk Default credit risk is the risk that the issuer of the security does not pay either the interest or principal when due. Debts of most U.S. agencies are not backed by the full faith and credit of the federal government. These agencies are U.S. government sponsored. In August 2011, Standard and Poor’s Investor’s Service downgraded U.S. long-term debt one step to AA+. Competing agencies, Moody’s Investors Service, and Fitch Ratings, maintained their AAA rating on U.S. debt. Although the default credit risk of these investments has increased, the City believes the risk of default remains low. California state code limits investments in medium-term corporate notes to the top three credit ratings (AAA, AA, and A). California state code and the City’s Investment Policy Statement allow the City Treasurer to determine the course of action to correct exceptions to the Investment Policy Statement. It is the intent of the City Treasurer to hold these investments in the portfolio until maturity unless events indicate they should be sold. The default credit risk for corporate notes with a credit rating of single A is considered by the City Treasurer to be within acceptable limits for purposes of holding to maturity. A credit rating of single A is within state code purchase requirements. The Local Agency Investment Funds (LAIF) is an external investment pool managed by the California State Treasurer. The California Asset Management Program (CAMP) is an external investment pool managed by PFM Asset Management LLC. These investments are short-term and follow the investment requirements of the State. LAIF is not rated; however, the City Treasurer considers the default credit risk to be minimal. CAMP is rated AAA by Standard and Poor’s Investor Services. Money market funds held by bond trustees are rated AAA. Investment contracts held by bond trustees are not rated by rating agencies. The table below is the minimum rating (where applicable) of the California state code, the City’s investment policy, or debt agreements, and the actual rating at June 30, 2024 for each investment type by S&P Investor’s Service: Minimum Exempt or Investment Type Total Legal Rating Aaa Aa A Not Rated U.S. Treasury obligations 53,401,850$ Exempt -$ -$ -$ 53,401,850$ U.S. agency securities 336,219,140 Exempt - - - 336,219,140 Supranational Securities 21,264,562 AA 21,264,562 Municipal investments 95,882,867 AA/A 12,815,661 72,062,495 1,042,313 9,962,398 Mortgage pass-through securities 74,537,563 AA 74,537,563 - - - Medium-term notes 118,114,447 AA/A 28,154,005 40,436,178 49,524,264 - Local Agency Investment Fund 1,839,876 Not Rated - - - 1,839,876 Certificates of deposit 21,681,219 Not Rated - - - 21,681,219 California Asset Management Program 132,222,972 Not Rated 132,222,972 Total 855,164,496$ -$ 136,771,791$ 112,498,673$ 50,566,577$ 555,327,455$ Moody's Rating as of Fiscal Year End Notes for this schedule: x Certificates of Deposit are FDIC insured. x As of June 30, 2024, one investment in medium term notes had credit ratings of single A (A) which is below the single A/double (AA) ratings required by the City’s Investment Policy. This investment was initially made in accordance with the City's Investment Policy. California state code and the City's Investment Policy allow the City Treasurer to determine the course of action to correct exceptions to the policy. It is the intent of the City Treasurer to hold these assets in the portfolio until maturity unless events indicate a sale should be made. These investments are paying interest at the required times and their principal is considered secure. 53Feb. 11, 2025 Item #2 Page 97 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 3: CASH AND INVESTMENTS (CONTINUED) F. Interest Rate Risk Interest rate risk is the risk that investments will lose market value because of increases in market interest rates. A rise in market interest rates will cause the market value of investments made earlier at lower interest rates to lose value. The reverse will cause a gain in market value. As of June 30, 2024, the portfolio had a 2.8% loss in market value based on cost. The City’s Investment Policy Statement has adopted two means of limiting its exposure to market value losses caused by rising market interest rates: (1) limiting total portfolio investments to a maximum modified duration of 2.2; and requiring liquid investments (LAIF and bank accounts) and investments maturing within one year to be equal to an amount that is not less than two-thirds of the current fiscal year’s operating budget. The City met those requirements as follows: x As of June 30, 2024, the modified duration of the portfolio was 1.59. Modified duration is a prospective measure of the sensitivity of a fixed-income security’s value to changes in market rates of interest. Modified duration identifies the potential gain/loss in value before it actually occurs. For example, a modified duration of 1.5 indicates that when and if a 1.0% change in market interest rates occurs, a 1.5% change in the security’s value will result. Investments with modified durations of one to three are considered to be conservative. x As of June 30, 2024, maturities within one year exceeded the required minimum of $251,509,071 (two-thirds of current year operating budget for the City per the Fiscal Year 2023-2024 operating budget adopted by the City Council). x As of June 30, 2024, the weighted average maturity of the LAIF underlying debt securities was 217 days. As of June 30, 2024, LAIF had a 0.00368% loss in market value. NOTE 4: LEASE RECEIVABLES As of June 30, 2024, the City had 18 active leases. The leases have receipts that range from $9,750 to $173,449 and interest rates that range from 0.6480% to 2.6160%. As of June 30, 2024, the total combined value of the lease receivable is $18,820,813, the total combined value of the short-term lease receivable is $782,298, and the combined value of the deferred inflow of resources is $17,878,941. Lease Lease Lease Lease Type Term Range Receivable Revenue Interest Land 5 - 19 years 10,206,442$ 220,026$ 64,461$ Buildings 2 - 80 years 3,209,640 418,553 281,444 Subtotal - governmental activities 13,416,082 638,579 345,905 Lease Lease Lease Lease Type Term Range Receivable Revenue Interest Land 5 - 19 years 2,218,544 - - Buildings 2 - 80 years 3,186,188 234,857 147,677 Subtotal - business-type activities 5,404,732 234,857 147,677 Total 18,820,814$ 873,436$ 493,582$ Governmental Activities Business-type Activities 54Feb. 11, 2025 Item #2 Page 98 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 4: LEASE RECEIVABLES (CONTINUED) Future receivable principal and interest payments expected to be received through maturity are as follows: Fiscal Year Principal Payments Interest Payments Total Payments 2025 245,335 109,305 354,640 2026 254,704 106,114 360,818 2027 215,156 102,962 318,118 2028 213,124 100,056 313,180 2029 220,825 97,032 317,857 2030 - 2034 1,110,586 436,897 1,547,483 2035 - 2039 873,773 324,558 1,198,331 2040 - 2044 192,335 260,618 452,953 2045 - 2049 156,737 243,377 400,114 2050 - 2054 232,688 220,005 452,693 2055 - 2059 325,747 186,433 512,180 2060 - 2064 439,081 140,404 579,485 2065 - 2069 576,389 79,245 655,634 2070 - 2072 348,252 11,110 359,362 Total Principal Payments 5,404,732 Total Remaining Receivable 5,404,732 Fiscal Year Principal Payments Interest Payments Total Payments 2025 536,962 282,916 819,878 2026 560,731 275,814 836,545 2027 518,499 268,614 787,113 2028 535,118 261,481 796,599 2029 579,188 253,882 833,070 2030 - 2034 2,123,007 1,169,981 3,292,988 2035 - 2039 1,666,799 943,248 2,610,047 2040 - 2044 928,162 784,753 1,712,915 2045 - 2049 1,056,070 670,034 1,726,104 2050 - 2054 849,010 539,646 1,388,656 2055 - 2059 783,373 448,341 1,231,714 2060 - 2064 1,055,920 337,649 1,393,569 2065 - 2069 1,386,121 190,570 1,576,691 2070 - 2072 837,122 26,718 863,840 Total Principal Payments 13,416,082 Total Remaining Receivable 13,416,082 Business-Type Activities Governmental Activities 55Feb. 11, 2025 Item #2 Page 99 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 5: ACCRUED LIABILITIES A. Summary The balance of accrued liabilities at June 30, 2024, is composed of the following: Community Infrastructure Other Internal Total Facilities Replacement Governmental Service Governmental Classification General Fund District #1 Fund Funds Funds Actives Accounts payable 3,328,819$ 39,574$ 723,121$ 3,176,603$ 804,413$ 8,072,530$ Retentions payable 13,137 - 384,053 1,307,278 - 1,704,468 Accrued wages 1,814,813 - - 24,258 142,202 1,981,273 Employee benefits 645,303 - - - - 645,303 Pension payable 750,075 - - - - 750,075 Compensated absences - - - - 7,382,349 7,382,349 Other 54,065 - - 57,994 1,265 113,324 Total 6,606,212$ 39,574$ 1,107,174$ 4,566,133$ 8,330,229$ 20,649,322$ Carlsbad Other Total Municipal Enterprise Business-type Custodial Water District Wastewater Funds Activities Funds Accounts payable 2,211,380$ 250,124$ 222,867$ 2,684,371$ 2,140,667$ Retentions payable 548,635 17,016 - 565,651 - Accrued wages 90,357 43,106 26,184 159,647 - Compensated absences 418,084 168,995 102,291 689,370 - Other 55,219 96 496,026 551,341 28,091 Total 3,323,675$ 479,337$ 847,368$ 4,650,380$ 2,168,758$ B. Compensated Absences Compensated absences are liquidated by the internal service funds, Carlsbad Municipal Water District, Wastewater, and other enterprise funds. There is no fixed repayment schedule for compensated absences, and it is the policy of the City to treat compensated absences as a current liability. The compensated absences activities for the year ended June 30, 2024, are as follows: Balance Net Balance July 1, 2023 Change June 30, 2024 Governmental activities 6,949,494$ 432,855$ 7,382,349$ Business-type activities 610,357 79,013 689,370 Total 7,559,851$ 511,868$ 8,071,719$ 56Feb. 11, 2025 Item #2 Page 100 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 6: CAPITAL ASSETS A. Governmental Activities Governmental activities’ capital assets for the year ended June 30, 2024, was as follows: Balance Balance July 1, 2023 Adjustments Additions Deletions Transfers June 30, 2024 Governmental activities: Capital assets, not being depreciated/amortized Land 159,748,658$ -$ 468,267$ -$ -$ 160,216,925$ Construction-in-progress 33,715,490 - 9,183,108 (859,612) (17,775,885) 24,263,101 Total capital assets, not being depreciated/amortized 193,464,148 - 9,651,375 (859,612) (17,775,885) 184,480,026 Capital assets, being depreciated/amortized Buildings and structures 153,994,393 - 85,083 (256,758) - 153,822,718 Machinery, equipment, and vehicles 60,409,833 - 7,628,382 (1,746,130) 88,681 66,380,766 Leased assets - land 263,673 - 319,086 (4,115) - 578,644 Subscription assets 4,854,577 - 2,676,770 (374,090) - 7,157,257 Intangible assets 6,342,357 - - - 170,466 6,512,823 Land improvements 111,917,344 - 9,048,608 (95,797) 17,084,575 137,954,730 Infrastructure 754,827,942 - 1,775,209 - 432,163 757,035,314 Total capital assets, being depreciated/amortized 1,092,610,119 - 21,533,138 (2,476,890) 17,775,885 1,129,442,252 Less accumulated depreciation/amortization Buildings and structures (54,349,613) - (3,391,744) 232,887 - (57,508,470) Machinery, equipment, and vehicles (34,424,104) - (5,234,642) 1,719,164 - (37,939,582) Leased assets - land (29,033) 29,033 (140,847) - - (140,847) Subscription assets (1,407,481) (3,488) (2,356,174) 374,090 - (3,393,053) Intangible assets (4,637,805) - (752,636) - - (5,390,441) Land improvements (47,012,370) - (4,222,932) 95,797 - (51,139,505) Infrastructure (331,963,853) - (15,150,097) - - (347,113,950) Total accumulated depreciation/amortization (473,824,259) 25,545 (31,249,072) 2,421,938 - (502,625,848) Total capital assets, being depreciated/amortized, net 618,785,860 25,545 (9,715,934) (54,952) 17,775,885 626,816,404 Total governmental activities capital assets 812,250,008$ 25,545$ (64,559)$ (914,564)$ -$ 811,296,430$ Depreciation/amortization expense was charged to the functions/programs of the governmental activities of the primary government as follows: General government 866,444$ Public safety 2,069,288 Community services 5,735,114 Public works 15,971,943 Internal service funds*6,606,283 Total depreciation/amortization expense 31,249,072$ * Depreciation and amortization of capital assets held by the City’s internal service funds are charged to the various functions based on their usage of the assets. 57Feb. 11, 2025 Item #2 Page 101 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 6: CAPITAL ASSETS (CONTINUED) B. Business-type Activities Business-type activities’ capital assets for the year ended June 30, 2024, was as follows: Balance Balance July 1, 2023 Adjustments Additions Deletions Transfers June 30, 2024 Business-type activities: Capital assets, not being depreciated/amortized Land 9,353,943$ -$ 571$ -$ -$ 9,354,514$ Construction-in-progress 14,308,963 - 7,156,159 (968,097) (1,913,233) 18,583,792 Total capital assets, not being depreciated/amortized 23,662,906 - 7,156,730 (968,097) (1,913,233) 27,938,306 Capital assets, being depreciated/amortized Buildings and structures 44,072,605 - 158,498 - - 44,231,103 Machinery, equipment, and vehicles 14,155,274 - 329,404 (42,984) - 14,441,694 Wastewater treatment facility 69,030,165 - - (217,356) - 68,812,809 Land improvements 56,378,084 - 120,502 - - 56,498,586 Infrastructure 410,646,986 - 9,142,474 (54,503) 1,913,233 421,648,190 Total capital assets, being depreciated/amortized 594,283,114 - 9,750,878 (314,843) 1,913,233 605,632,382 Less accumulated depreciation/amortization Buildings and structures (14,871,594) - (703,513) - - (15,575,107) Machinery, equipment, and vehicles (7,500,230) - (2,039,002) 42,984 - (9,496,248) Wastewater treatment facility (38,764,162) - 136,926 - - (38,627,236) Land improvements (50,272,030) - (300,382) - - (50,572,412) Infrastructure (142,994,030) - (11,229,830) 3,366,634 - (150,857,226) Total accumulated depreciation/amortization (254,402,046) - (14,135,801) 3,409,618 - (265,128,229) Total capital assets, being depreciated/amortized, net 339,881,068 - (4,384,923) 3,094,775 1,913,233 340,504,153 Total business-type activities capital assets 363,543,974$ -$ 2,771,807$ 2,126,678$ -$ 368,442,459$ Depreciation/amortization expense was charged to the functions/programs of the business-type activities of the primary government as follows: Water 6,650,195$ Golf 733,127 Wastewater 6,752,479 Total depreciation/amortization expense 14,135,801$ NOTE 7: PENSION PLANS The City contributes to two defined benefit pension plans. As of and for the year ended June 30, 2024, the two plans had the following balances reported in the government-wide financial statements: Net Pension Deferred Outflows Deferred Inflows Pension Liability of Resources of Resources Expense Miscellaneous Plan 109,082,046$ 41,109,010$ 727,792$ 23,958,062$ Safety Plan 108,696,007 43,297,874 - 22,770,191 Total pension plans 217,778,053$ 84,406,884$ 727,792$ 46,728,253$ 58Feb. 11, 2025 Item #2 Page 102 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) A. Plan Description, Benefits Provided, and Employees Covered All qualified permanent and probationary employees are eligible to participate in the City’s Safety (sworn police and fire) and Miscellaneous (all other) Plans (the Plans), agent multiple employer defined benefit pension plans administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. A full description of the Plans regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the Plan’s June 30, 2022 Annual Actuarial Valuation Reports (funding valuations). Details of the benefits provided can be obtained in Appendix B of the Actuarial Valuation Report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website. CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. The Plans’ provisions and benefits in effect at June 30, 2024, are summarized as follows: On or after Prior to November 28, 2011 to On or after Hire date November 28, 2011 December 31, 2012 January 1, 2013 Benefit formula 3% @ 60 2% @ 60 2% @ 62 Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 60 50 - 63 52 - 67 Monthly benefits as a % of eligible compensation 2% to 3% 1.092% to 2.418% 1.0% to 2.5% Required employee contribution rates 8.00% 7.00% 8.50% Required employer contribution rates 16.65%13.80% 8.48% Required employer payment of unfunded liability On or after Prior to November 28, 2011 to On or after Hire date November 28, 2011 December 31, 2012 January 1, 2013 Benefit formula 3% @ 50 2% @ 50 2% @ 57 Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57 Monthly benefits as a % of eligible compensation 3%2.0% to 2.7%2.0% to 2.7% Required employee contribution rates 9.00% 9.00% 13.50% Required employer contribution rates 26.93%23.39% 13.89% Required employer payment of unfunded liability Miscellaneous Safety $6,360,246 $5,935,778 59Feb. 11, 2025 Item #2 Page 103 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) As of the valuation date, June 30, 2022, the following employees were covered by the benefit terms for each Plan: Miscellaneous Safety Inactive employees or beneficiaries currently receiving benefits 703 295 Inactive employees or beneficiaries not yet receiving benefits 591 114 Active employees 581 225 1,875 634 B. Contribution Description Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Plan contributions for the year equaled $12,647,980 and $12,394,561 for miscellaneous and safety, respectively. C. Actuarial Methods and Assumptions Used to Determine Total Pension Liability The June 30, 2022 valuation was rolled forward to determine the June 30, 2023 total pension liability, based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Cost Method Actuarial Assumptions Discount rate 6.90% Inflation 2.50% Salary increases Varies by entry age and services Mortality rate table Derived using CalPERS’ membership data for all funds Post-retirement benefit increases The lesser of contract COLA or 2.50% until purchasing power protection allowance floor on purchasing power applies, 2.30% thereafter The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website. D. Long-term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. 60Feb. 11, 2025 Item #2 Page 104 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows: Assumed Asset Asset Class Allocation Real Return 1, 2 Global equity-cap-weighted 30.00% 4.54% Global equity-non-cap-weighted 12.00% 3.84% Private equity 13.00% 7.28% Treasury 5.00% 0.27% Mortgage-backed securities 5.00% 0.50% Investment grade corporates 10.00% 1.56% High yield 5.00% 2.27% Emerging market debt 5.00% 2.48% Private debt 5.00% 3.57% Real assets 15.00% 3.21% Leverage -5.00% -0.59% 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2021 Asset Liability Management study E. Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. F. Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. 61Feb. 11, 2025 Item #2 Page 105 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expenses. The amortization period differs depending on the source of the gain or loss: Net difference between projected 5-year straight-line amortization and actual earnings on pension plan investments All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. The EARSL for the plan for the measurement period ending June 30, 2023 is 4.9 years, which was obtained by dividing the total service years of 3,023 (the sum of remaining service lifetimes of the active employees) by 617 (the total number of participants: active, inactive, and retired). Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. G. Changes in the Net Pension Liability The following table shows the changes in net pension liability recognized over the measurement period: 1. Miscellaneous Plan Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2022 468,428,585$ 369,445,830$ 98,982,755$ Changes recognized for the measurement period: Service cost 9,384,087 - 9,384,087 Interest on total pension liability 32,306,074 - 32,306,074 Changes of benefit terms 493,430 - 493,430 Changes of assumptions - - - Differences between expected and actual experience 6,817,230 - 6,817,230 Net plan to plan resource movement 677 (677) Contributions-employer - 12,670,687 (12,670,687) Contributions-employee - 3,839,779 (3,839,779) Net investment income - 22,662,060 (22,662,060) Benefit payments, including refunds of (24,454,641) (24,454,641) - employee contributions Administrative expense - (271,673) 271,673 Net changes during 2022-23 24,546,180 14,446,889 10,099,291 Balance at June 30, 2023 492,974,765$ 383,892,719$ 109,082,046$ 62Feb. 11, 2025 Item #2 Page 106 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) 2. Safety Plan Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2022 382,089,565$ 282,544,849$ 99,544,716$ Changes recognized for the measurement period: Service cost 8,802,595 - 8,802,595 Interest on total pension liability 26,380,201 - 26,380,201 Changes of benefit terms 138,033 - 138,033 Changes of assumptions - - - Differences between expected and actual experience 5,815,319 - 5,815,319 Net plan to plan resource movement (677) 677 Contributions-employer - 11,378,178 (11,378,178) Contributions-employee - 3,328,710 (3,328,710) - 17,486,416 (17,486,416) Benefit payments, including refunds of employee contributions (20,244,938) (20,244,938) - Administrative expense - (207,770) 207,770 Net changes during 2022-23 20,891,210 11,739,919 9,151,291 Balance at June 30, 2023 402,980,775$ 294,284,768$ 108,696,007$ H. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liabilities calculated using the discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.90%) or 1-percentage-point higher (7.90%) than the current rate: Discount Rate Current Discount Rate -1 Percent Discount Rate +1 Percent (5.90%) (6.90%) (7.90%) Misc. Plan's net pension liability/(asset) 173,055,058$ 109,082,046$ 56,144,411$ Safety Plan's net pension liability/(asset) 165,532,003 108,696,007 62,382,060 Total 338,587,061$ 217,778,053$ 118,526,471$ 63Feb. 11, 2025 Item #2 Page 107 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) I. Pension Expense and Deferred Outflows and Deferred Inflows of Resources For the fiscal year ended June 30, 2024, the City recognized $8,979,471 and $10,352,167 in pension expense for the Miscellaneous and Safety plans, respectively, for a total amount of pension expense of $19,331,638. The following table presents deferred outflows and deferred inflows of resources related to pensions as of the June 30, 2024: 1. Miscellaneous Plan Deferred Outflows Deferred Inflows of Resources of Resources Contributions subsequent to the measurement date 12,647,980$ -$ Changes of assumptions 5,376,602 727,792 Differences between expected and actual experience 5,065,926 - Net difference between projected and actual earnings on pension plan investments 18,018,502 - Total 41,109,010$ 727,792$ Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Deferred Outflows/(Inflows) Fiscal year ended June 30, of Resources 2025 9,322,895$ 2026 5,129,385 2027 12,777,768 2028 503,190 2029 - Total 27,733,238$ 64Feb. 11, 2025 Item #2 Page 108 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 7: PENSION PLANS (CONTINUED) 2. Safety Plan Deferred Outflows Deferred Inflows of Resources of Resources Contributions subsequent to the measurement date 12,394,561$ -$ Changes of assumptions 7,679,671 - Differences between expected and actual experience 9,478,882 - Net difference between projected and actual earnings on pension plan investments 13,744,760 - Total 43,297,874$ -$ Amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Deferred Outflows/(Inflows) Fiscal year ended June 30, of Resources 2025 8,975,038$ 2026 7,327,307 2027 13,176,079 2028 1,424,889 2029 - Total 30,903,313$ J. IRS Section 115 Pension Trust The City holds investments in an IRS Section 115 Trust for pension stabilization. The current market value of the trust is $10,849,413. This trust fund is not included in the calculation of the net pension liability, as the assets are not in the custody of the plan administrator, CalPERS. Refer to Note 3 for additional information 65Feb. 11, 2025 Item #2 Page 109 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 8: OTHER POSTEMPLOYMENT BENEFIT (OPEB) OBLIGATIONS The City offers other postemployment benefits in the form of health benefits to two employee groups: City of Carlsbad employees and former CMWD employees. The majority of City and former CMWD employees are under the City defined benefit agent multiple-employer plan. A. Benefit Description by Employee Group 1. Former Carlsbad Municipal Water District (CMWD) employees The benefit plan is for active and retired employees who were employed with CMWD at the time CMWD was acquired by the City. Per Resolution No. 614, all former employees of CMWD (including dependents) are eligible for postretirement health care benefits if they voluntarily retire after the age of fifty, with no less than five years of service and whose age, combined with years of service, equals seventy or more. The City pays for 100% of the health insurance premiums which is coordinated with Medicare and other benefits provided by federal and state law, when available, to the extent it reduces the cost of insurance premiums. CalPERS administers this plan. 2. City of Carlsbad employees City employees are offered health insurance coverage under the Public Employees’ Medical and Hospital Care Act (PEMHCA), which is administered by CalPERS. Under PEMHCA, the City is required to pay a small portion of the monthly medical premiums of retired employees (considered a subsidy), if the retired employees continue their medical coverage under PEMHCA. Surviving spouses and domestic partners of eligible retirees are eligible for the City subsidy. Surviving spouses and domestic partners of deceased active members are eligible for the City subsidy only if the employee had attained age 50 with five years of service. The City pays a monthly subsidy per eligible employee/retiree regardless of coverage elected: Calendar Year 2022 149$ Calendar Year 2023 151 Calendar Year 2024 157 Thereafter, the subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. 3. California Public Employer’s Retiree Benefit Trust Program The City is participating in the California Employer’s Retiree Benefit Trust Program (CERBT) through irrevocable trust agreements for both plans. CERBT is administered by CalPERS. The City’s OPEB fiduciary net position is included in the CERBT Schedule of Changes in Fiduciary Net Position by Employer report. That report may be obtained on the California Public Employees’ Retirement System website at www.calpers.ca.gov under forms and publications. B. Employees Covered As of the June 30, 2023, the measurement date, the following employees were covered by the benefit terms for each benefit tier: Inactive employees or beneficiaries currently receiving benefits 290 Inactive employees or beneficiaries not yet receiving benefits 326 Active employees 784 Total 1,400 66Feb. 11, 2025 Item #2 Page 110 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 8: OTHER POSTEMPLOYMENT BENEFIT (OPEB) OBLIGATIONS (CONTINUED) C. Contributions The obligation of CMWD to contribute to the CMWD plan is established and may not be amended by the CMWD Board. The obligation of the City to contribute to the City plan is established, and as long as the City is a member of PEMCHA, may not be amended by the City Council. The City Council does have the authority to change health insurance coverage outside of PEMHCA, which could change the funding obligation for City employees. Employees are not required to contribute to the plan. The City and CMWD’s contributions are based on the actuarially determined contribution (ADC), an amount actuarially determined in accordance with the parameters of GASB. The ADC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years on a “closed” basis. The City’s and CMWD’s contributions are as follows: Fiscal Year 2023-24 Cash Contributions 714,414$ Fiscal Year 2023-24 Estimated Implied Subsidy Payments 465,948 Non-trust Admin Expenses 10,320 Total 1,190,682$ D. Net OPEB Liability The City’s net OPEB liability was measured as of June 30, 2023, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2023, based on the actuarial methods and assumptions shown below: Acturial Cost Method:Entry Age Normal Acturial Assumptions: Discount Rate 6.25% Inflation 2.50% Salary Increases 2.75% Investment Rate of Return 6.25% with a 45% to 50% confidence based on Bartel Associates modeling for CERBT Strategy 1 Mortality Rate (1)Derived using CalPERS Membership Data for all funds. Pre-Retirement Turnover (2)Derived using CalPERS Membership Data for all funds. Healthcare Trend Rate (3)Based in part on premium experience. Notes: 1 Based on CalPERS 2000-2019 Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 2 Based on CalPERS 2000-2019 Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 3 Short-Term healthcare trends were developed in consultation with Axene Health Partner's healthcare actuaries. Long-term healthcare trend development using Society of Actuaries' Getzen Model of Long-Run Medical Cost Trends. 67Feb. 11, 2025 Item #2 Page 111 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 8: OTHER POSTEMPLOYMENT BENEFIT (OPEB) OBLIGATIONS (CONTINUED) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Target Long-Term Expected Allocation Real Rate of Return Global Equity 49% 4.56% Fixed Income 23% 1.56% TIPS 5% -0.08% Commodities 3% 1.22% REIT's 20% 4.06% Total 100% Notes: 1 The long-term expected rate of return is 6.25% 2 Assumed long-term rate of inflation is 2.5% CERBT Strategy 1 Asset Class E. Discount Rate The discount rate used to measure the total OPEB liability was 6.25%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB Plans’ fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB Plans investments was applied to all periods of projected benefit payments to determine the total OPEB liability. The changes in the net OPEB (asset)/liability are shown below: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2022 20,671,337$ 17,702,797$ 2,968,540$ Changes recognized for the measurement period: Service cost 778,330 - 778,330 Interest on total OPEB liability 1,304,885 - 1,304,885 Actual vs. expected experience (1,152,348) - (1,152,348) Assumption changes (368,751) - (368,751) Contributions-employer - 1,153,114 (1,153,114) Contributions-employee - - - Net investment income - 1,136,537 (1,136,537) Benefit payments, including refunds of (1,143,026) (1,143,026) - employee contributions Administrative expense - (15,230) 15,230 Net changes during 2022-23 (580,910) 1,131,395 (1,712,305) Balance at June 30, 2023 20,090,427$ 18,834,192$ 1,256,235$ 68Feb. 11, 2025 Item #2 Page 112 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 8: OTHER POSTEMPLOYMENT BENEFIT (OPEB) OBLIGATIONS (CONTINUED) F. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of CMWD and City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2023: Discount Rate Current Discount Rate -1 Percent Discount Rate +1 Percent (5.25%) (6.25%) (7.25%) Plan's net OPEB liability/(asset) 3,640,889$ 1,256,235$ (736,336)$ G. Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the CMWD and City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2023: Current 1 Percent Heathcare 1 Percent Decrease Trend Rate Increase Plan's net OPEB liability/(asset) (965,246)$ 1,256,235$ 3,967,075$ H. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expenses. The initial recognition period is five years. I. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the City recognized OPEB expense of $1,309,171. As of June 30, 2024, the City reported deferred outflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Contributions subsequent to the measurement date 1,190,682$ -$ Changes of assumptions 959,476 478,898 Differences between expected and actual experience 537,009 1,633,507 Net difference between projected and actual earnings on OPEB plan investments 1,181,988 - Total 3,869,155$ 2,112,405$ 69Feb. 11, 2025 Item #2 Page 113 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 8: OTHER POSTEMPLOYMENT BENEFIT (OPEB) OBLIGATIONS (CONTINUED) The $1,190,682 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2023 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2025. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows: Deferred Outflows/(Inflows) Fiscal year ended June 30, of Resources 2025 293,289$ 2026 186,938 2027 841,050 2028 10,550 2029 (220,574) Thereafter (545,185) Total 566,068$ NOTE 9: SIGNIFICANT COMMMITMENTS A. Water Purchase Agreements On August 5, 2003, CMWD entered into a 22-year agreement with the Vallecitos Water District, to purchase three million gallons per day (3,360-acre feet) of recycled water for uses throughout CMWD’s boundaries. Per the agreement, there is an annual reconciliation that trues up the monthly payments to the actual cost for the water purchased each fiscal year. The recycled water cost is adjusted every July 1st and shall not exceed 75% of the wholesale cost of potable water from SDCWA. The agreement also stipulates that CMWD will pay for its share of the actual operating costs (up to a maximum cost of 75% of the wholesale cost of potable water from the San Diego County Water Authority) of the Mahr Reservoir, which produces the water. The estimated operating costs paid by CMWD for the period ended June 30, 2024, are $2,687,721. B. Golf Course Advances The Golf Course Fund previously showed an advance from other funds balance in the amount of $47,031,506 representing loans received from the City’s General Fund that were used to fund the initial course construction and some operating costs. For financial statement purposes, these loans were reclassified to “Transfers In” in fiscal year 2022 recognizing that the repayment of these loans is not scheduled to happen in the near and near future. The City has not forgiven the loans and the advances are now being disclosed as a contingent liability of the Golf Course Fund. The balance of these loans is $55,458,868 in total, $47,031,506 of principal and $8,427,362 of interest. The City discontinued accruing interest on the advances in fiscal year 2013-14. Should sufficient resources in the golf course become available to make repayments in the future, those repayments of this contingent liability will take place, and will be recorded as transfers out from the Golf Course Fund at that time. 70Feb. 11, 2025 Item #2 Page 114 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 9: SIGNIFICANT COMMMITMENTS (CONTINUED) C. Encumbrances As of June 30, 2024, City commitments for outstanding encumbrances (purchase orders and contracts for goods and services not yet delivered) by major governmental fund and nonmajor funds in the aggregate are as follows: Outstanding Encumbrances Governmental activities General fund 8,415,609$ Communicty Facilities District No. 1 5,718,878 Infrastructure Replacement Fund 9,105,252 Internal Service Funds 6,242,491 Non-major governmental funds 17,830,629 Subtotal - governmental activities 47,312,859 Business-type activities Carlsbad Municipal Water District 12,604,022 Wastewater 3,242,931 Non-major enterprise funds 611,277 Subtotal - business-type activities 16,458,230 Total 63,771,089$ NOTE 10: RISK MANAGEMENT The City is exposed to various risks of loss related to its operations, including losses associated with errors and omissions and injuries to employees and members of the public. The City uses a Risk Management Self-Insurance Fund and a Workers’ Compensation Fund (all internal service funds) to account for and finance its uninsured risks of loss. All other funds of the City make payments to these funds based on annual estimates of the amounts needed to pay prior and current year claims and to establish a reserve for catastrophic losses. Beginning July 1, 2019, the City joined the California Insurance Pool Authority (CIPA) for excess general liability coverage. This coverage was purchased directly through the pool’s manager, Kiser & Company. Under this program, the City’s coverage is a maximum of $43,000,000 per occurrence with a self-insured retention of $1,000,000. CIPA has been in existence since 1978. At June 30, 2024, the unrestricted fund equity for the Risk Management Self- Insurance Fund was $96,799. Revenues of the risk management fund, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. The City is self-insured for workers’ compensation claims for claims up to $1,500,000 and insured by Safety National thereafter and up to statutory limits. At June 30, 2024, the unrestricted fund equity for the Workers’ Compensation Self-Insurance Fund was $196,962. Revenues of the workers' compensation fund, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. The estimated claims payable reported at June 30, 2024 is based on the requirements of GASB, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Settled cases did not exceed insurance coverage during the past three fiscal years. All claims are considered non-current per their estimated settlement dates. 71Feb. 11, 2025 Item #2 Page 115 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 10: RISK MANAGEMENT (CONTINUED) Changes in the estimated claims payable amounts in fiscal years 2022-23 and 2023-24 for the two internal service funds are as follows: Expense and Beginning Changes in Claim Ending Balance Estimates Payments Balance Risk Management Fund: 2022-23 4,669,826$ 6,819,188$ 4,832,299$ 6,656,715$ 2023-24 6,656,715 4,395,800 4,650,919 6,401,596 Workers' Compensation Fund: 2022-23 12,239,989 14,186,202 4,523,773 21,902,418 2023-24 21,902,418 8,334,235 5,124,301 25,588,858 Total 2022-23 16,909,815 21,005,390 9,356,072 28,559,133 2023-24 28,559,133 12,730,035 9,775,220 31,990,454 Claims NOTE 11: LEASES AND SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS A. Leases Payable The City has entered into two lease agreements as lessee for the acquisition and use of land and right of way. The terms of these leasing arrangements range from 8 to 12 years. As of June 30, 2024, the total value of the lease liability was $212,468. The City is required to make monthly principal and interest payments ranging from $2,690 to $30,600. The leases have interest rates ranging from 1.604% to 3.206%. Information on the lease assets as of June 30, 2024 are as follows: Asset Class Lease Asset Value Accumulated Amortization Land 259,558$ 55,537$ Governmental Activities The future principal and interest lease payments as of June 30, 2024, were as follows: Fiscal Year Ending June 30, Principal Interest Total 2025 28,051$ 6,157$ 34,208$ 2026 29,884 5,269 35,153 2027 31,803 4,324 36,127 2028 33,815 3,316 37,131 2029 35,922 2,242 38,164 2030-2032 52,993 1,224 54,217 Totals 212,468$ 22,532$ 235,000$ 72Feb. 11, 2025 Item #2 Page 116 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 11: LEASES AND SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS (CONTINUED) B. Subscription-Based Information Technology Arrangements The City has entered into various SBITAs as the subscriber for the use of various software as services. An initial subscription liability was recorded in the amount of $4,854,577 during the current fiscal year. The terms of these subscriptions range from 13 months to 5 years. As of June 30, 2024, the total value of the subscription liability was $3,367,406. The City is required to make annual payments ranging from $0 to $670,888. The subscriptions have interest rates ranging from 0.6360% to 3.712%. Information on the subscription assets as of June 30, 2024 are as follows: The future principal and interest lease payments as of June 30, 2024, were as follows: Fiscal Year Ending June 30, Principal Interest Total 2025 2,214,680$ 92,609$ 2,307,289$ 2026 854,487 32,707 887,194 2027 159,818 9,412 169,230 2028 138,421 4,410 142,831 Totals 3,367,406$ 139,138$ 3,506,544$ Asset Class Subscription Asset Value Accumulated Amortization Software 7,476,343 3,478,363 Governmental Activities 73Feb. 11, 2025 Item #2 Page 117 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 12: LONG-TERM LIABILITIES A. Private-Placement Loans The City entered into private-placement loan agreements with the State Water Resources Control Board to provide funds for the acquisition and construction of major capital facilities. These loans have been issued for the Carlsbad Municipal Water District and the City’s Wastewater enterprise. These loans are direct obligations and pledge the full faith and credit of the City. These loans pay principal and interest annually. Private-placement loans outstanding at June 30, 2024, are as follows: Original Interest Final Outstanding Borrowing Rates Maturity at Year-End Business-type activities Private-placement loan 2005 State Water Resources Control Board 4812-550-0 9,694,504$ 2.50%2025 631,082$ 2006 State Water Resources Control Board 05-721-550-0 20,763,473 2.30%2027 3,525,468 2014 State Water Resources Control Board 14820-550-0 22,150,000 1.00%2054 10,414,398 2023 State Water Resources Control Board 06-8605-110 4,601,000 2.45%2046 10,181 Total private-placement loans 14,581,129$ B. Debt without Government Commitment In the opinion of City officials, the bonds listed below are not payable from any revenues or assets of the City, and neither the full faith and credit nor the taxing power of the City, the State of California, nor any political subdivision thereof, is obligated to the payment of the principal or interest on the bond. Accordingly, no liability has been recorded in the accompanying financial statements. 1. Limited Obligation Improvement Bonds As of June 30, 2024, the City has two series of assessment district bonds outstanding in the amount of $16,765,000. These bonds were issued under the provisions of the Improvement Bond Act of 1915 and were used to finance public infrastructure improvement projects. The City collects assessments to pay the bond debt. These monies are accounted for in the assessment districts’ custodial funds. 2. Special Tax Bonds As of June 30, 2024, the City has two series Community Facilities District (CFD) bonds outstanding in the amount of $15,420,000. These bonds were issued under the provisions of the Mello-Roos Community Facilities Act of 1982 and were used to finance public infrastructure improvement projects. The City collects special taxes to pay the bond debt. These monies are accounted for in the CFDs’ custodial funds. 3. Mortgage Revenue Bonds Multi-Family Housing Revenue Bonds are issued to provide construction and permanent financing to developers of multi-family residential rental projects located in the City which will be partially occupied by persons of low or moderate income. The total amount of mortgage revenue bonds outstanding as of June 30, 2024, is $3,500,000. The bonds, together with interest thereon, are limited obligations of the City payable solely from bond proceeds, revenues and other amounts derived solely from home mortgage and developer loans secured by first deeds of trust, irrevocable letters of credit, and irrevocable surety bonds. 74Feb. 11, 2025 Item #2 Page 118 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 12: LONG-TERM LIABILITIES (CONTINUED) C. Revenue Rate Covenants The City and Carlsbad Municipal Water District (CMWD) loan agreements with the State Water Resources Control Board requires that City and CMWD set its charges for services and rates for fees each year at rates sufficient to produce net revenues (after paying the operating and maintenance expenses of City and CMWD, excluding depreciation) of at least one times debt service for that year. All of the wastewater revenue of the City and water revenues of CMWD are pledged to meet these rate covenants and to secure related debt. All rate covenants requirements were met for the fiscal year ended June 30, 2024. D. Pledged Revenue The City of Carlsbad and Carlsbad Municipal Water District has pledged water and wastewater revenues to secure debt obligations for infrastructure improvements, with the debt maturing in 2054. The pledged revenues in accordance with the terms of the loan represent water and wastewater fund revenues, net of certain expenses, as June 30, 2024. The annual amount of revenues is $24,194,581, of which $2,736,674 is pledged revenues exceeded the $2,280,670 million in principal and interest payments for the year. The pledge will remain in place until the debt is fully repaid. Description of Annual Amount of Pledged Annual Debt Pledged Revenue as Annual amount of revenues Pledged Revenue Revenue (Net of Expenses) Service Payments a Percentage of Debt (net of expenses) Water revenues 2,736,024$ 2,280,020$ 120%3,983,680$ Wastewater revenues 293,749 293,749 100%20,210,901 E. Change in Long-Term Liabilities Changes in the City’s long-term liabilities for the year ended June 30, 2024, are as follows: Amount Balance Balance Due Within July 1, 2023 Additions Deletions June 30, 2024 One Year Governmental activities Leases 238,385$ -$ 25,917$ 212,468$ 28,051$ Subscriptions 2,928,584 2,997,621 2,558,795 3,367,410 2,214,680 Claims 28,559,133 12,730,035 9,298,714 31,990,454 14,917,140 Total governmental activities 31,726,102$ 15,727,656$ 11,883,426$ 35,570,332$ 17,159,871$ Business-type activities Private-placement loans 10,792,169$ 5,527,365$ 1,738,406$ 14,581,128$ 2,079,013$ 75Feb. 11, 2025 Item #2 Page 119 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 12: LONG-TERM LIABILITIES (CONTINUED) The debt service requirements for the City’s loans are as follows: June 30 Principal Interest 2025 2,079,013 201,007 2026 1,477,342 155,819 2027 1,507,790 126,021 2028 308,877 95,312 2029 311,971 92,217 2030-2034 1,607,377 413,565 2035-2039 2,037,681 387,449 2040-2044 1,793,728 227,214 2045-2049 1,882,758 135,583 2050-2054 1,574,591 39,561 Totals 14,581,128$ 1,873,748$ Business-Type Activities Private-Placement Loans NOTE 13: FUND BALANCE A. General Fund Balance Policy Pursuant to City Council Policy 74, the City is committed to maintaining General Fund reserves at a target of 40% of General Fund annual operating expenditures. The total reserve level is calculated using the prior fiscal years adopted General Fund budgeted expenditures. This reserve is for unforeseen emergencies or catastrophic impacts upon the City. Reserves are evaluated annually in conjunction with the development of the City’s annual operating budget process. Staff report to the City Council annually on the status of the reserve levels relative to this policy. 76Feb. 11, 2025 Item #2 Page 120 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 13: FUND BALANCE (CONTINUED) B. Fund Balance Classifications At June 30, 2024, the governmental funds report the following fund balance classifications: Community Total Total Facilities Infrastructure Nonmajor Governmental General District No. 1 Replacement Funds Funds Nonspendable Notes and loans receivable 234,757$ -$ -$ -$ 234,757$ Inventories 13,170 - - 6,199 19,369 Prepaid costs 13,010 - - 52,333 65,343 Advances to other funds 1,187,173 - - - 1,187,173 Total nonspendable 1,448,110 - - 58,532 1,506,642 Restricted Affordable housing - - - 43,111,858 43,111,858 Lighting and landscaping districts - - - 10,955,309 10,955,309 Capital projects - 102,618,821 - 95,558,159 198,176,980 General government - - - 494,514 494,514 Public safety - - - 282,024 282,024 Community services - - - 3,847,343 3,847,343 Pension section 115 trust 10,849,413 - - - 10,849,413 Total restricted 10,849,413 102,618,821 - 154,249,207 267,717,441 Committed Community activity grants 1,000,000 - - - 1,000,000 Pension section 115 trust 7,500,000 - - - 7,500,000 Total committed 8,500,000 - - - 8,500,000 Assigned General government 1,221,003 - - - 1,221,003 Public safety 2,764,067 - - - 2,764,067 Community services 3,308,707 - - - 3,308,707 Public works 1,708,800 - - - 1,708,800 Capital projects - - 110,684,797 57,362,666 168,047,463 Safer streets program 436,636 - - - 436,636 Railroard trenching project 5,220,000 - - - 5,220,000 Economic uncertainty 9,635,909 - - - 9,635,909 Total assigned 24,295,122 - 110,684,797 57,362,666 192,342,585 Unassigned 155,547,012 - - (183,817) 155,363,195 Total fund balances (deficits)200,639,657$ 102,618,821$ 110,684,797$ 211,486,588$ 625,429,863$ 77Feb. 11, 2025 Item #2 Page 121 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 14: INTERFUND ACTIVITIES 1. Advances to/from Other Funds Receivable Fund Payable Fund Amount Non-major governmental funds General Fund 6,357,950$ Total 6,357,950$ Advances to and from other funds are primarily long-term advances used to fund capital projects in advance of related revenues. The advance between the General Fund and the Habitat & Agricultural Management Fund, a non-major governmental fund, is estimated to be repaid from future Habitat Mitigation Fees. Interest on the advance will compound annually at the average interest rate earned by the Treasurer’s Pool during the fiscal year. The advance between the Community Facilities District No. 1 Fund and the Traffic Impact Projects Fund, a non-major governmental fund, is estimated to be repaid over a 10–15-year period as Traffic Impact Fees are collected. The advance between the non-major Public Facilities Fees Fund and the non-major Park Development Funds is estimated to be repaid at build-out. B. Interfund Transfers Transfers in and out of other funds Transfers In Transfers Out Amount Infrastructure Replacement Fund General Fund 4,400,000$ Non-major governmental funds General Fund 17,170,000 Non-major governmental funds Non-major governmental funds 400,000 Non-major proprietary funds General Fund 340,000 Internal service funds General Fund 11,500,000 33,810,000$ Transfers are used to: (1) move revenues and expenditures to the appropriate funds; (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with Council authorizations; and (3) move excess cash collected for future capital replacement in accordance with Council authorization. The $4,400,000 transfer to the Infrastructure Replacement Fund from the General Fund is to fund major construction and replacement of City infrastructure and facilities. This transfer is in line with the requirements set forth in City Council Policy No. 91-Long Term General Fund Capital Funding Policy. 78Feb. 11, 2025 Item #2 Page 122 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 14: INTERFUND ACTIVITIES (CONTINUED) The $17,170,000 transfer is split to three special revenue funds, all of which are nonmajor governmental funds, from the General Fund. These transfers include, $11,600,000 to the General Capital Construction Fund to fund major new construction of City infrastructure and facilities, $4,000,000 to the Technology Investment Capital Fund to fund major technology projects and $1,570,000 to the Financing Districts Fund to cover annual operating expenditures in excess of annual assessments on the City’s median and street tree assessment districts. The $400,000 transfer between the non-major governmental funds is a transfer from the Other Special Revenue Funds to the Technology Investment Capital Fund to fund major technology projects and a transfer from the Affordable Housing Fund to the Section 8 Rental Assistance Fund to cover cash shortfalls in the Housing Choice Voucher program due to timing and receipt of federal funding. The $340,000 transfer to the Solid Waste Fund, a non-major enterprise fund, from the General Fund is to reimburse the Solid Waste Fund for the General Fund’s portion of annual storm water expenses. The $11,500,000 transfer to internal service funds from the General Fund represents two transfers from the General Fund which include: $1,300,000 to the Worker’s Compensation Internal Service Fund to increase the estimated claims liability in accordance with recent actuarial reports and $10,200,000 to the Risk Management Internal Service Fund to bring the fund out of a fund deficit. NOTE 15: CONTINGENCIES The City participates in various federal grant programs, the principal of which are subject to program compliance audits pursuant to the Single Audit Act as amended. Accordingly, the City’s compliance with applicable grant requirements will be established at a future date. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the City anticipates such amounts, if any, will be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s legal counsel, the resolution of these matters will not have a material adverse effect on the financial condition of the City. NOTE 16: PRIOR PERIOD ADJUSTMENTS A. Changes to or within the Reporting Entity The Park Development fund was previously reported as a major governmental fund during the prior fiscal year. Due to a significant decrease in liabilities of the fund during the year, it met the requirements of being presented as a nonmajor fund, in accordance with GASB Statement No. 34, during the fiscal year ended June 30, 2024. The effects of that change to or within the financial reporting entity are shown in the table below. 79Feb. 11, 2025 Item #2 Page 123 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 16: PRIOR PERIOD ADJUSTMENTS (CONTINUED) B. Adjustments to and Restatements of Beginning Balances During fiscal year 2024, changes to or within the financial reporting entity and the change in accounting principle resulted in adjustments to and restatements of beginning net position and fund net position, as follows: June 30, 2023 Changes to or Changes in As Previously within the Error Accounting June 30, 2023 Reported Reporting Entity Correction Principle As Restated Governmental funds Major funds General fund 182,849,246$ -$ -$ -$ 182,849,246$ Community Facilities District #1 95,730,668 - - - 95,730,668 Infrastructure Replacement Fund 111,257,215 - - - 111,257,215 Park Development 8,928,517 (8,928,517) - - - Nonmajor funds 191,964,716 8,928,517 - - 200,893,233 Total governmental funds 590,730,362$ -$ -$ -$ 590,730,362$ NOTE 17: JOINT VENTURES A.Encina Water Pollution Control Facilities The Encina Water Pollution Control Facilities (the facilities) are wastewater facilities owned jointly by the cities of Carlsbad, Vista and Encinitas and the Leucadia Wastewater District, the Buena Vista Sanitation District, and the Vallecitos Water District. The Encina Wastewater Authority (EWA) is a joint powers authority established to operate and administer the facilities. It is responsible for the management, maintenance, and operations of the joint system. Each member agency has a specified percentage of ownership in the various components of the Encina Water Pollution Control Facilities that varies from component to component. Accordingly, each member agency reports its undivided interest in the facilities as a part of that member agency’s capital assets. As of June 30, 2024, the undivided interest of each member agency in the various components of the Encina Water Pollution Control Facilities aggregated as follows: City of Vista 25% City of Carlsbad 24% Vallecitos Water District 23% Leucadia Wastewater District 17% Buena Sanitation District 7% City of Encinitas 4% EWA does not recognize net income or loss. Net operating expenditures in excess of users’ assessments are treated as accounts receivable on EWA’s books and charged to users’ accounts in the following year. Conversely, users’ assessments in excess of net operating expenditures are treated as a liability and credited against users’ accounts, also in the following year. Under this basis, net operating loss (before member billings) for EWA totaled $159,040 in fiscal year 2022-23. The financial statements of EWA can be obtained at www.encinajpa.com. 80Feb. 11, 2025 Item #2 Page 124 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Financial Statements For the Year Ended June 30, 2024 NOTE 18: SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER DEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the bill”) which provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit. The bill provides that upon dissolution of a redevelopment agency, either the City or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the bill as part of City Council Resolution No. 2012-013 and Housing and Redevelopment Commission Resolution No. 519. After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations, or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of the dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). In future years, successor agencies will only be allowed revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. On March 7, 2014, the City received notice from the California Department of Finance that the loans previously made by the City to the former redevelopment agency are enforceable obligations and that they were made for legitimate redevelopment purposes. This approval allowed the City to list repayment of these loans on future Redevelopment Obligation Payment Schedules (ROPS). In accordance with the timeline set forth in the bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as legal entities as of February 1, 2012. A. Long-Term Debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2024: Amount Balance Balance Due Within July 1, 2023 Additions Deletions June 30, 2024 One Year Bonds payable Bonds payable 1,000,000$ -$ 1,000,000$ -$ -$ The 1993 Carlsbad Housing and Redevelopment Commission Tax Allocation Bonds were issued totaling $15,495,000. Principal is due in amounts ranging from $900,000 to $1,000,000 on September 1 of each year through 2024. Interest is payable on March 1 and September 1 at a rate of 5.30% per annum. Bonds are payable from redevelopment property tax increment revenues and interest income. As of June 30, 2024, the bonds are fully matured, with $0 outstanding. NOTE 19: SUBSEQUENT EVENTS The City evaluated subsequent events for recognition and disclosure through December 13, 2024, the date on which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2024, that required recognition or disclosure in these financial statements. 81Feb. 11, 2025 Item #2 Page 125 of 224 Feb. 11, 2025 Item #2 Page 126 of 224 RRequired Supplementary Information Feb. 11, 2025 Item #2 Page 127 of 224 Feb. 11, 2025 Item #2 Page 128 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Taxes 183,318,173$ 183,318,173$ 200,944,357$ 17,626,184$ Licenses and permits 2,100,500 2,100,500 3,041,177 940,677 Intergovernmental 1,833,951 1,857,456 2,523,819 666,363 Charges for services 11,789,845 12,257,845 13,436,342 1,178,497 Use of money and property 5,928,225 5,928,225 13,388,133 7,459,908 Fines and forfeitures 276,200 276,200 415,642 139,442 Contributions 18,000 18,000 57,095 39,095 Miscellaneous 967,000 1,019,905 288,362 (731,543) Total revenues 206,231,894 206,776,304 234,094,927 27,318,623 EXPENDITURES Current: General government 24,017,443 26,721,978 22,269,613 4,452,365 Less: interdepartmental charges (5,746,232) (5,746,232) (6,081,404) 335,172 Public safety 93,497,456 95,297,860 91,095,692 4,202,168 Community development 54,270,414 58,856,132 48,067,650 10,788,482 Public works 23,228,291 26,013,022 22,637,150 3,375,872 Capital outlay -6,653,029 4,905,368 1,747,661 Debt service: Principal expense -- 61,026 (61,026) Bond interest expense and fees --527 (527) Total expenditures 189,267,372 207,795,789 182,955,622 24,840,167 Excess (deficiency) of revenues over (under) expenditures 16,964,522 (1,019,485) 51,139,305 52,158,790 OTHER FINANCING SOURCES (USES) Transfers in 10,000 10,000 -(10,000) Transfers out (21,910,000) (33,410,000) (33,410,000) - Subscriptions issued -- 58,863 58,863 Proceeds from sale of capital assets --2,243 2,243 Total other financing sources (uses)(21,900,000) (33,400,000) (33,348,894) 51,106 Net change in fund balances (4,935,478)$ (34,419,485)$ 17,790,411 52,209,896$ Fund balances-beginning 182,849,246 Fund balances-ending 200,639,657$ 82Feb. 11, 2025 Item #2 Page 129 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Changes in Net Pension Liability and Related Ratios Miscellaneous Plan As of June 30, for the Last Ten Fiscal Years 2024 2023 2022 2021 Measurement Date 6/30/2023 6/30/2022 6/30/2021 6/30/2020 TOTAL PENSION LIABILITY Service cost 9,384,087$ 8,937,350$ 8,267,207$ 7,748,623$ Interest on total pension liability 32,306,074 30,675,372 29,773,920 28,392,127 Changes of benefit terms 493,430 - - - Changes of assumptions - 13,648,298 - - Difference between expected and actual experience 6,817,230 (1,847,457) 3,459,759 1,167,225 Benefit payments, including refunds of employee contributions (24,454,641) (22,572,119) (21,477,657) (19,590,424) Net change in total pension liability 24,546,180 28,841,444 20,023,229 17,717,551 Total pension liability-beginning 468,428,585 439,587,141 419,563,912 401,846,361 Total pension liability-ending (a)492,974,765 468,428,585 439,587,141 419,563,912 PLAN FIDUCIARY NET POSITION Contributions-employer 12,670,687 14,517,690 16,551,765 10,637,969 Contributions-employee 3,839,779 3,756,998 3,436,290 3,338,003 Net investment income 22,662,060 (30,545,136) 74,476,234 15,901,834 Benefit payments, including refunds of employee contributions (24,454,641) (22,572,119) (21,477,657) (19,590,424) Net plan to plan resource movement 677 - - - Administrative expense (271,673) (252,005) (331,533) (454,014) Other miscellaneous income/(expense)- - - - Net change in fiduciary net position 14,446,889 (35,094,572) 72,655,099 9,833,368 Plan fiduciary net position-beginning 369,445,830 404,540,402 331,885,303 322,051,935 Plan fiduciary net position-ending (b)383,892,719 369,445,830 404,540,402 331,885,303 Net pension liability/(asset) (a) - (b)109,082,046$ 98,982,755$ 35,046,739$ 87,678,609$ Plan fiduciary net position as a percentage of the total pension liability 77.9%78.9%92.0%79.1% Covered payroll 47,442,298$ 44,376,116$ 44,068,269$ 40,357,411$ Plan net pension liability/(asset) as a percentage of covered payroll 229.9% 223.1%79.5%217.3% Notes to Schedule of Changes in the Net Pension Liability and Related Ratios: Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the measurement date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. Changes of Assumptions: None in 2020-2022. In 2019, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Assumptions December 2017. There were no changes in the discount rate. In 2018, the discount rate was reduced from 7.65% to 7.15%. In 2017, there were no changes. In 2016, amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2015, amounts reported were based on the 7.50% discount rate. 83Feb. 11, 2025 Item #2 Page 130 of 224 2020 2019 2018 2017 2016 2015 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 7,393,365$ 7,642,062$ 7,836,970$ 6,836,445$ 6,674,982$ 6,908,307$ 27,175,110 25,874,546 25,085,808 24,192,948 23,142,961 21,793,340 - - - - - - - (2,662,243) 20,988,178 - (5,737,798) - 2,338,341 (3,023,977) (3,079,012) (2,605,228) 1,300,520 - (18,193,803) (16,887,970) (15,327,609) (14,344,528) (12,791,734) (11,614,664) 18,713,013 10,942,418 35,504,335 14,079,637 12,588,931 17,086,983 383,133,348 372,190,930 336,686,595 322,606,958 310,018,027 292,931,044 401,846,361 383,133,348 372,190,930 336,686,595 322,606,958 310,018,027 17,745,975 22,114,923 14,677,334 9,562,926 8,434,882 8,004,157 3,040,423 3,005,761 2,820,046 2,833,466 2,703,715 3,039,951 19,551,424 22,720,698 26,893,994 1,330,196 5,362,753 35,526,156 (18,193,803) (16,887,970) (15,327,609) (14,344,528) (12,791,734) (11,614,664) - 3,388 (2,793) - (298,989) - (214,173) (421,336) (356,827) (147,759) (273,288) - 670 (800,124) - - - - 21,930,516 29,735,340 28,704,145 (765,699) 3,137,339 34,955,600 300,121,419 270,386,079 241,681,934 242,447,633 239,310,294 204,354,694 322,051,935 300,121,419 270,386,079 241,681,934 242,447,633 239,310,294 79,794,426$ 83,011,929$ 101,804,851$ 95,004,661$ 80,159,325$ 70,707,733$ 80.1%78.3%72.6%71.8%75.2%77.2% 37,238,668$ 37,956,006$ 37,336,682$ 35,303,101$ 33,730,770$ 32,856,020$ 214.3% 218.7% 272.7% 269.1% 237.6% 215.2% 84Feb. 11, 2025 Item #2 Page 131 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Changes in Net Pension Liability and Related Ratios Safety Plan As of June 30, for the Last Ten Fiscal Years 2024 2023 2022 2021 Measurement Date 6/30/2023 6/30/2022 6/30/2021 6/30/2020 TOTAL PENSION LIABILITY Service cost 8,802,595$ 8,397,439$ 7,535,523$ 6,578,451$ Interest on total pension liability 26,380,201 24,991,969 23,741,151 22,410,699 Changes of benefit terms 138,033 - - - Changes of assumptions - 13,165,149 5,936,553 4,071,899 Difference between expected and actual experience 5,815,319 3,204,494 - - Benefit payments, including refunds of employee contributions (20,244,938) (18,607,148) (17,230,615) (16,362,437) Net change in total pension liability 20,891,210 31,151,903 19,982,612 16,698,612 Total pension liability-beginning 382,089,565 350,937,662 330,955,050 314,256,438 Total pension liability-ending (a)402,980,775 382,089,565 350,937,662 330,955,050 PLAN FIDUCIARY NET POSITION Contributions-employer 11,378,178 13,322,734 14,253,531 10,321,371 Contributions-employee 3,328,710 3,020,571 2,861,027 2,581,027 Net investment income 17,486,416 (23,360,492) 56,569,028 12,053,297 Benefit payments, including refunds of employee contributions (20,244,938) (18,607,148) (17,230,615) (16,362,437) Net plan to plan resource movement (677) - - - Administrative expense (207,770) (192,091) (251,893) (343,854) Other miscellaneous income/(expense)- - - - Net change in fiduciary net position 11,739,919 (25,816,426) 56,201,078 8,249,404 Plan fiduciary net position-beginning 282,544,849 308,361,275 252,160,197 243,910,793 Plan fiduciary net position-ending (b)294,284,768 282,544,849 308,361,275 252,160,197 Net pension liability/(asset) (a) - (b)108,696,007$ 99,544,716$ 42,576,387$ 78,794,853$ Plan fiduciary net position as a percentage of the total pension liability 73.0%73.9%87.9%76.2% Covered payroll 28,368,016$ 26,557,367$ 28,368,016$ 22,082,749$ Plan net pension liability/(asset) as a percentage of covered payroll 383.2% 374.8% 150.1% 356.8% Notes to Schedule of Changes in the Net Pension Liability and Related Ratios: Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the measurement date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. Changes of Assumptions:None in 2020-2022. In 2019, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Assumptions December 2017. There were no changes in the discount rate. In 2018, the discount rate was reduced from 7.65% to 7.15%. In 2017, there were no changes. In 2016, amounts reported reflect an adjustment of the discount rate from 7.50% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). In 2015, amounts reported were based on the 7.50% discount rate. 85Feb. 11, 2025 Item #2 Page 132 of 224 2020 2019 2018 2017 2016 2015 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6,317,755$ 5,985,155$ 5,825,080$ 5,209,900$ 5,048,529$ 5,425,425$ 21,269,278 20,248,091 19,305,098 18,557,781 17,775,039 16,876,220 - - - - - - 2,425,561 (1,332,336) 16,661,943 - (4,517,683) - - 2,726,755 (705,417) (941,378) 638,786 - (15,288,250) (13,797,333) (13,034,483) (12,197,119) (11,264,768) (10,529,479) 14,724,344 13,830,332 28,052,221 10,629,184 7,679,903 11,772,166 299,532,094 285,701,762 257,649,541 247,020,357 239,340,454 227,568,288 314,256,438 299,532,094 285,701,762 257,649,541 247,020,357 239,340,454 23,119,896 8,675,370 12,379,181 6,836,098 6,491,856 6,141,746 2,380,740 2,169,504 1,922,500 1,933,363 1,726,785 1,853,365 14,331,677 17,250,148 20,385,351 990,545 4,107,305 27,905,516 (15,288,250) (13,797,333) (13,034,483) (12,197,119) (11,264,768) (10,529,479) - (4,566) 2,793 - - - (156,656) (321,256) (272,813) (114,168) (210,908) - 508 (610,070) - - - - 24,387,915 13,361,797 21,382,529 (2,551,281) 850,270 25,371,148 219,522,878 206,161,081 184,778,552 187,329,833 186,479,563 161,108,415 243,910,793 219,522,878 206,161,081 184,778,552 187,329,833 186,479,563 70,345,645$ 80,009,216$ 79,540,681$ 72,870,989$ 59,690,524$ 52,860,891$ 77.6%73.3%72.2%71.7%75.8%77.9% 20,905,182$ 19,820,362$ 19,072,985$ 18,658,097$ 18,020,162$ 18,629,989$ 336.5%403.7%417.0%390.6%331.2%283.7% 86Feb. 11, 2025 Item #2 Page 133 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Changes in Net OPEB Liability and Related Ratios As of June 30, for the Last Ten Fiscal Years 1 2024 2023 2022 Measurement Date 6/30/2023 6/30/2022 6/30/2021 TOTAL OPEB LIABILITY Service cost 778,330$ 757,499$ 669,651$ Interest on total pension liability 1,304,885 1,248,183 1,347,382 Changes of benefit terms - - - Changes of assumptions (368,751) - 625,021 Difference between expected and actual experience (1,152,348) - (922,167) Benefit payments, including refunds of employee contributions (1,143,026) (1,095,532) (1,074,741) Net change in total OPEB liability (580,910) 910,150 645,146 Total OPEB liability-beginning 20,671,337 19,761,187 19,116,041 Total OPEB liability-ending (a)20,090,427 20,671,337 19,761,187 PLAN FIDUCIARY NET POSITION Contributions-employer 1,153,114 1,102,669 1,180,559 Contributions-employee - - - Net investment income 1,136,537 (2,735,878) 4,387,820 Benefit payments, including refunds of employee contributions (1,143,026) (1,095,532) (1,074,741) Net plan to plan resource movement - - - Administrative expense (15,230) (12,314) (11,858) Other miscellaneous income/(expense)- - - Net change in fiduciary net position 1,131,395 (2,741,055) 4,481,780 Plan fiduciary net position-beginning 17,702,797 20,443,852 15,962,072 Plan fiduciary net position-ending (b)18,834,192 17,702,797 20,443,852 Net OPEB liability/(asset) (a) - (b)1,256,235$ 2,968,540$ (682,665)$ Plan fiduciary net position as a percentage of the total OPEB liability 93.7%85.6% 103.5% Covered-employee payroll 86,120,975$ 90,161,596$ 70,276,885$ Plan net OPEB liability/(asset) as a percentage of covered-employee payroll 1.5%3.3%-1.0% Notes to Schedule of Changes in the Net OPEB Liability and Related Ratios: 1 Fiscal year 2018 was the first year of GASB Statement No. 75 implementation; therefore only seven years are shown. Benefit Changes : None Changes of Assumptions : None 87Feb. 11, 2025 Item #2 Page 134 of 224 2021 2020 2019 2018 6/30/2020 6/30/2019 6/30/2018 6/30/2017 657,941$ 536,124$ 520,509$ 505,348$ 1,301,716 1,167,930 1,113,646 1,064,137 - - - - (281,685) 1,232,232 - - - (203,116) - - (999,866) (887,656) (860,894) (893,899) 678,106 1,845,514 773,261 675,586 18,437,935 16,592,421 15,819,160 15,143,574 19,116,041 18,437,935 16,592,421 15,819,160 1,085,866 978,302 860,894 747,772 - - - - 541,912 887,132 1,064,150 1,281,487 (999,866) (887,656) (860,894) (893,899) - - - - (7,493) (3,078) (24,735) - - - - - 620,419 974,700 1,039,415 1,135,360 15,341,653 14,366,953 13,327,538 12,192,178 15,962,072 15,341,653 14,366,953 13,327,538 3,153,969$ 3,096,282$ 2,225,468$ 2,491,622$ 83.5%83.2%86.6%84.2% 66,834,422$ 61,458,568$ 56,982,964$ 54,810,859$ 4.7%5.0%3.9%4.5% 88Feb. 11, 2025 Item #2 Page 135 of 224 CITY OF CARLSBAD, CALIFORNIA Schedules of Plan Contributions As of June 30, for the Last Ten Fiscal Years 1 Covered/ Contribution as a Fiscal Year Actuarially Actual Contribution Covered- % of Covered/ Ending Determined Employer Deficiency Employee Covered Employee June 30, Contribution Contributions (Excess) Payroll Payroll 2024 12,670,687$ 12,647,980$ 22,707$ 47,442,298$ 26.7% 2023 11,317,690 14,517,690 (3,200,000) 44,376,116 32.7% 2022 11,148,625 16,551,765 (5,403,140) 44,068,269 37.6% 2021 10,637,969 10,637,969 - 40,357,411 26.4% 2020 11,966,625 17,745,975 (5,779,350) 37,238,668 47.7% 2019 10,456,115 22,114,923 (11,658,808) 37,956,006 58.3% 2018 10,338,549 14,677,334 (4,338,785) 37,336,682 39.3% 2017 9,562,926 9,562,926 - 35,303,101 27.1% 2016 8,434,882 8,434,882 - 33,730,770 25.0% 2015 8,004,157 8,004,157 - 32,856,020 24.4% 2024 11,378,178$ 12,394,561$ (1,016,383)$ 28,368,016$ 43.7% 2023 10,122,734 13,322,734 (3,200,000) 26,557,367 50.2% 2022 9,656,671 14,253,531 (4,596,860) 25,604,904 55.7% 2021 10,321,371 10,321,371 - 22,082,749 46.7% 2020 8,899,246 23,119,896 (14,220,650) 20,905,182 110.6% 2019 7,777,021 8,675,370 (898,349) 19,820,362 43.8% 2018 7,695,135 12,379,181 (4,684,046) 19,072,985 64.9% 2017 6,836,098 6,836,098 - 18,658,097 36.6% 2016 6,491,856 6,491,856 - 18,020,162 36.0% 2015 6,141,746 6,141,746 - 18,629,989 33.0% 2024 886,317$ 1,190,682$ (304,365)$ 87,159,981$ 1.4% 2023 791,699 1,153,114 (361,415) 86,120,975 1.3% 2022 768,612 1,102,669 (334,057) 90,161,596 1.2% 2021 962,244 1,180,557 (218,313) 70,276,885 1.7% 2020 941,129 1,085,864 (144,735) 66,834,422 1.6% 2019 788,383 978,302 (189,919) 61,458,568 1.6% 2018 770,693 860,894 (90,201) 56,982,964 1.5% 1 Fiscal year 2018 was the first year of GASB Statement No. 75 implementation; therefore only seven years are shown for the OPEB plan. Miscellaneous Agent, Multiple-Employer Pension Plan Safety Agent, Multiple-Employer Pension Plan OPEB Agent, Multiple-Employer Pension Plan 89Feb. 11, 2025 Item #2 Page 136 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Required Supplementary Information For the Year Ended June 30, 2024 NOTE 1: NOTES TO SCHEDULE OF PLAN CONTRIBUTIONS A. Pension Plans The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2023-24 were derived from the June 30, 2022, funding valuation reports, available at CalPERS’ website https://www.calpers.ca.gov/. B. Other Postemployment Benefits Plan The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2023-24 were derived from the June 30, 2023, actuarial valuation report. Acturial Cost Method:Entry Age Normal Acturial Assumptions: Discount Rate 6.25% Inflation 2.50% Salary Increases 2.50% Investment Rate of Return 6.25% with a 45% to 50% confidence based on Bartel Associates modeling for CERBT Strategy 1 Mortality Rate (1)Derived using CalPERS Membership Data for all funds. Pre-Retirement Turnover (2)Derived using CalPERS Membership Data for all funds. Healthcare Trend Rate (3)Based in part on premium experience. Notes: 1 Based on CalPERS 2000-2019 Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 2 Based on CalPERS 2000-2019 Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 3 Short-Term healthcare trends were developed in consultation with Axene Health Partner's healthcare actuaries. Long-term healthcare trend development using Society of Actuaries' Getzen Model of Long-Run Medical Cost Trends. Actuarial cost method: Entry age normal, level percentage of pay Amortization method/period: Level dollar; 25-year fixed period for 2022-23 Asset valuation method: Market value of assets Inflation: 2.50% Salary increases: Varies by entry age and service Payroll growth: 2.75% Investment rate of return: 6.25% Medical trend: Non-Medicare - 6.50% for 2023, decreaseing to an ultimate rate of 3.75% in 2076. Medicare (non-Kaiser) - 5.65% in 2023, decreasing to an ultimate rate of 3.75% in 2076. Medicare (Kaiser) - 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076. Mortality: CalPERS 2000-2019 Experience Study, projected fully generational with Scale MP-2021. 90Feb. 11, 2025 Item #2 Page 137 of 224 CITY OF CARLSBAD, CALIFORNIA Notes to the Required Supplementary Information For the Year Ended June 30, 2024 NOTE 2: BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: x During May or June, the City Manager submits a proposed operating, strategic digital transformation investment program and capital improvement program budgets for the fiscal year commencing the following July 1 to the City Council. The budget includes estimated revenues and proposed expenditures on a departmental and/or project basis. x In June, a public hearing is conducted at a City Council meeting to obtain citizens’ comments. x Prior to July 1, the budget is enacted legally through passage of an appropriation resolution. x For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses pursuant to GASB. Actual expenditures have been adjusted to include encumbrances outstanding. Annual budgets are adopted for the General Fund, special revenue funds and capital project funds. The City of Carlsbad does not distinguish between Basis of Budgeting and Basis of Accounting. The principles set forth as the Basis of Accounting are strictly observed in the budgeting process. A fund’s Basis of Budgeting and Basis of Accounting determines when a transaction or event is recognized; refer to Note 1 Summary of Significant Accounting Policies in the Notes to the Basic Financial Statements for more information. Only revenues and expenditures anticipated during the fiscal year are included in the budget. All appropriations lapse at fiscal-year end unless the City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year, or, if the appropriation is less than $100,000, the City Manager may approve to continue the appropriation into the following fiscal year. Budgetary control, the level at which expenditures cannot legally exceed the appropriated amount, is at the fund level. Council and Administrative policies provide guidelines on budget transfers and the authorization necessary to implement transfers. Generally, there are two types of budget transfers: x Budget adjustment: This is a transfer which does not change the total appropriated amount within a fund and does not require Council action. Approval is granted at the City Manager level. x Budget amendment: This is an adjustment to the total appropriated amount within a fund or business unit which was not included in the original budget. Revisions that alter the total appropriations of any fund must be approved by a simple majority of the City Council via a resolution with the exception of budget increases that involve offsetting revenues and expenditures. The City Manager is authorized to increase an appropriation for a specific purpose where the appropriation is offset by unbudgeted revenue, which is designated for said specific purpose. 91Feb. 11, 2025 Item #2 Page 138 of 224 CCombining and Individual Fund Statements and Schedules Feb. 11, 2025 Item #2 Page 139 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents 14,344,917$ 131,662$ 3,071,756$ 11,154,998$ Receivables (net of allowance for uncollectible): Accrued interest 4,178,253 736 17,167 62,344 Due from other governments -- -- Notes and loans 27,680,697 - -- Leases 236,885 2,946,513 -- Other 32,177 - -9,237 Inventories -- 6,199 - Prepaid costs -- -- Land held for resale 665,579 669,447 -- Advances to other funds -- -- Total assets 47,138,508 3,748,358 3,095,122 11,226,579 LIABILITIES Accrued liabilities 60,890 65,862 36,336 271,270 Unearned revenues -- -- Deposits payable -- -- Due to other governments -- -- Due to other funds -- -- Advances from other funds -- -- Total liabilities 60,890 65,862 36,336 271,270 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 4,415,872 - -- Lease-related 243,256 2,887,740 -- Total deferred inflows of resources 4,659,128 2,887,740 -- FUND BALANCES (DEFICITS) Nonspendable -- 6,199 - Restricted 42,418,490 794,756 3,052,587 10,955,309 Assigned -- -- Unassigned -- -- Total fund balances (deficits)42,418,490 794,756 3,058,786 10,955,309 Total liabilities, deferred inflows of resources, and fund balances (deficits)47,138,508$ 3,748,358$ 3,095,122$ 11,226,579$ Affordable Housing Community Development Block Grant Donations Financing Districts Special Revenue Funds 92Feb. 11, 2025 Item #2 Page 140 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectible): Accrued interest Due from other governments Notes and loans Leases Other Inventories Prepaid costs Land held for resale Advances to other funds Total assets LIABILITIES Accrued liabilities Unearned revenues Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Lease-related Total deferred inflows of resources FUND BALANCES (DEFICITS) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) Total liabilities, deferred inflows of resources, and fund balances (deficits) (Continued) 1,002,631$ 381,716$ 830,233$ 455,786$ 5,603 2,133 5,240 1,140 - - 128,787 133,699 - - - - - - - - - 122,469 - - - - - - - - - - - - - - - - - - 1,008,234 506,318 964,260 590,625 4,878 11,804 7,010 19,855 - - 584,425 - - - - 5,490 - - 92 1,434 - - - - 1,187,173 - - - 1,192,051 11,804 591,527 26,779 - - 90,824 - - - - - - - 90,824 - - - - - - 494,514 281,909 563,846 - - - - (183,817) - - - (183,817) 494,514 281,909 563,846 1,008,234$ 506,318$ 964,260$ 590,625$ Habitat and Agricultural Management Other Special Revenue Funds Police Grants and Asset Forfeiture Section 8 Rental Assistance Special Revenue Funds 93Feb. 11, 2025 Item #2 Page 141 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectible): Accrued interest Due from other governments Notes and loans Leases Other Inventories Prepaid costs Land held for resale Advances to other funds Total assets LIABILITIES Accrued liabilities Unearned revenues Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Lease-related Total deferred inflows of resources FUND BALANCES (DEFICITS) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) Total liabilities, deferred inflows of resources, and fund balances (deficits) 178,593$ 368,335$ 1,104,198$ 2,494,641$ - 2,060 6,310 13,942 - - 164,203 - - - - - - - - - 2,809 431,523 - - - - - - 2,698 - - - - - - - - - - - 184,100 801,918 1,274,711 2,508,583 17,090 296 151,316 - - 801,507 - - 42,348 - - 426,179 - - - - - - - - - - - - 59,438 801,803 151,316 426,179 - - 1,115,837 - - - - - - - 1,115,837 - 2,698 - - - 121,964 115 7,558 2,082,404 - - - - - - - - 124,662 115 7,558 2,082,404 184,100$ 801,918$ 1,274,711$ 2,508,583$ Assessment and Other Districts Housing and Homeless Grants Tyler Court Apartments California Opioid Settlement Special Revenue Funds Capital Projects Funds 94Feb. 11, 2025 Item #2 Page 142 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectible): Accrued interest Due from other governments Notes and loans Leases Other Inventories Prepaid costs Land held for resale Advances to other funds Total assets LIABILITIES Accrued liabilities Unearned revenues Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Lease-related Total deferred inflows of resources FUND BALANCES (DEFICITS) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) Total liabilities, deferred inflows of resources, and fund balances (deficits) (Continued) Gas Tax 1,943,850$ 18,616,162$ 44,633,130$ 631,088$ 10,863 103,822 249,426 10,083 - 788,541 - 1,406,959 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,954,713 19,508,525 44,882,556 2,048,130 - 806,808 1,714,564 162,089 - - - - - - - - - - - - - - - - - - - - - 806,808 1,714,564 162,089 - - - 1,406,959 - - - - - - - 1,406,959 - - - - 1,954,713 18,701,717 - 479,082 - - 43,167,992 - - - - - 1,954,713 18,701,717 43,167,992 479,082 1,954,713$ 19,508,525$ 44,882,556$ 2,048,130$ Bridge Thoroughfare Districts (BTD) General Capital Construction Grants and Other Capital Project Funds Capital Projects Funds 95Feb. 11, 2025 Item #2 Page 143 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectible): Accrued interest Due from other governments Notes and loans Leases Other Inventories Prepaid costs Land held for resale Advances to other funds Total assets LIABILITIES Accrued liabilities Unearned revenues Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Lease-related Total deferred inflows of resources FUND BALANCES (DEFICITS) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) Total liabilities, deferred inflows of resources, and fund balances (deficits) 15,112,963$ 5,005,402$ 32,478,142$ 4,678,643$ 84,457 27,972 181,499 26,332 - - - 379,649 - - - - - - - - - - - 71,184 - - - - - - - - - - - - - - 4,550,000 - 15,197,420 5,033,374 37,209,641 5,155,808 30,199 1,598 5,113 766,923 - - - - - - - - - - - - - - - - 4,550,000 - - - 4,580,199 1,598 5,113 766,923 - - - 213,798 - - - - - - - 213,798 - - - - 10,617,221 5,031,776 37,204,528 4,175,087 - - - - - - - - 10,617,221 5,031,776 37,204,528 4,175,087 15,197,420$ 5,033,374$ 37,209,641$ 5,155,808$ Formerly Major Fund Park Development Planned Local Drainage Facilities Public Facilities Construction Sales Tax/ TransNet Capital Projects Funds 96Feb. 11, 2025 Item #2 Page 144 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectible): Accrued interest Due from other governments Notes and loans Leases Other Inventories Prepaid costs Land held for resale Advances to other funds Total assets LIABILITIES Accrued liabilities Unearned revenues Deposits payable Due to other governments Due to other funds Advances from other funds Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Lease-related Total deferred inflows of resources FUND BALANCES (DEFICITS) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) Total liabilities, deferred inflows of resources, and fund balances (deficits) Total Nonmajor Funds 16,237,149$ 14,149,506$ 189,005,501$ 93,607 79,052 5,162,041 - - 3,001,838 - - 27,680,697 - - 3,183,398 - - 669,399 - - 6,199 - 49,635 52,333 - - 1,335,026 - - 4,550,000 16,330,756 14,278,193 234,646,432 398,348 33,884 4,566,133 - - 1,385,932 - - 474,017 - - 1,526 - - - 620,777 - 6,357,950 1,019,125 33,884 12,785,558 - - 7,243,290 - - 3,130,996 - - 10,374,286 - 49,635 58,532 15,311,631 - 154,249,207 - 14,194,674 57,362,666 - - (183,817) 15,311,631 14,244,309 211,486,588 16,330,756$ 14,278,193$ 234,646,432$ Traffic Impact Projects Technology Investment Capital Capital Projects Funds 97Feb. 11, 2025 Item #2 Page 145 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes -$ -$ -$ -$ Intergovernmental 378,477 499,501 - - Contribution from property owners 694,941 - - - Charges for services 10,134 - 8,404 2,599,469 Use of money and property 1,002,103 127,108 136,388 498,269 Contributions - - 456,178 - Miscellaneous - - 19,681 31,224 Total revenues 2,085,655$ 626,609$ 620,651$ 3,128,962$ EXPENDITURES Current: General government -$ - - - Public safety - - - - Community services 1,159,219 583,498 409,487 2,093,004 Public works - - - 1,547,708 Capital outlay - - - - Debt service: Principal expense - - - - Interest and fiscal charges - - - - Total expenditures 1,159,219 583,498 409,487 3,640,712 Excess (deficiency) of revenues over (under) expenditures 926,436 43,111 211,164 (511,750) OTHER FINANCING SOURCES (USES) Transfers in - - - 1,570,000 Transfers out (200,000) - - - Subscription proceeds - - - - Total other financing sources (uses)(200,000) - - 1,570,000 Net change in fund balances 726,436 43,111 211,164 1,058,250 Fund balances-beginning, as previously reported 41,692,054 751,645 2,847,622 9,897,059 Changes within financial reporting entity - - - - Fund balances (deficit)-beginning 41,692,054 751,645 2,847,622 9,897,059 Fund balances (deficit)-ending 42,418,490$ 794,756$ 3,058,786$ 10,955,309$ Special Revenue Funds Affordable Housing Community Development Block Grant Donations Financing Districts 98Feb. 11, 2025 Item #2 Page 146 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes Intergovernmental Contribution from property owners Charges for services Use of money and property Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community services Public works Capital outlay Debt service: Principal expense Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Subscription proceeds Total other financing sources (uses) Net change in fund balances Fund balances-beginning, as previously reported Changes within financial reporting entity Fund balances (deficit)-beginning Fund balances (deficit)-ending (Continued) -$ -$ -$ -$ - - 230,837 13,231,638 10,126 268,583 - - - - - - 60,871 34,175 30,033 514 - - - - - - - 15,552 70,997$ 302,758$ 260,870$ 13,247,704$ - 309,569$ - - - - 581,225 - 220,324 - - 12,954,684 - - - - - - - - - - - - 29,750 - - - 250,074 309,569 581,225 12,954,684 (179,077) (6,811) (320,355) 293,020 - - - 200,000 - (200,000) - - - - - - - (200,000) - 200,000 (179,077) (206,811) (320,355) 493,020 (4,740) 701,325 602,264 70,826 - - - - (4,740) 701,325 602,264 70,826 (183,817)$ 494,514$ 281,909$ 563,846$ Special Revenue Funds Habitat and Agricultural Management Other Special Revenue Funds Police Grants and Asset Forfeiture Section 8 Rental Assistance 99Feb. 11, 2025 Item #2 Page 147 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes Intergovernmental Contribution from property owners Charges for services Use of money and property Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community services Public works Capital outlay Debt service: Principal expense Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Subscription proceeds Total other financing sources (uses) Net change in fund balances Fund balances-beginning, as previously reported Changes within financial reporting entity Fund balances (deficit)-beginning Fund balances (deficit)-ending -$ -$ -$ -$ - - 1,703,647 - - - - - 872,084 - - - 6,617 9,989 5,331 117,083 - - - - - 23,407 - - 878,701$ 33,396$ 1,708,978$ 117,083$ - - - - - 23,407 - - 616,133 - 1,701,420 - - - - - 177,636 - - - - - - - - - - - 793,769 23,407 1,701,420 - 84,932 9,989 7,558 117,083 - - - - - - - - - - - - - - - - 84,932 9,989 7,558 117,083 39,730 (9,874) - 1,965,321 - - - - 39,730 (9,874) - 1,965,321 124,662$ 115$ 7,558$ 2,082,404$ Capital Projects Funds Housing and Homeless Grants Special Revenue Funds Tyler Court Apartments California Opioid Settlement Assessment and Other Districts 100Feb. 11, 2025 Item #2 Page 148 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes Intergovernmental Contribution from property owners Charges for services Use of money and property Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community services Public works Capital outlay Debt service: Principal expense Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Subscription proceeds Total other financing sources (uses) Net change in fund balances Fund balances-beginning, as previously reported Changes within financial reporting entity Fund balances (deficit)-beginning Fund balances (deficit)-ending (Continued) -$ 6,112,009$ -$ -$ - - - 508,894 - - - - - - - - 91,232 872,135 1,823,011 85,087 - - - - - - 30,600 - 91,232$ 6,984,144$ 1,853,611$ 593,981$ - - - - - - - - - - - - - - - 55,631 - 6,251,021 6,748,890 1,693,448 - - 23,934 - - - 6,666 - - 6,251,021 6,779,490 1,749,079 91,232 733,123 (4,925,879) (1,155,098) - - 11,600,000 - - - - - - - - - - - 11,600,000 - 91,232 733,123 6,674,121 (1,155,098) 1,863,481 17,968,594 36,493,871 1,634,180 - - - - 1,863,481 17,968,594 36,493,871 1,634,180 1,954,713$ 18,701,717$ 43,167,992$ 479,082$ Capital Projects Funds Bridge Thoroughfare Districts (BTD) Gas Tax General Capital Construction Grants and Other Capital Project Funds 101Feb. 11, 2025 Item #2 Page 149 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes Intergovernmental Contribution from property owners Charges for services Use of money and property Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community services Public works Capital outlay Debt service: Principal expense Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Subscription proceeds Total other financing sources (uses) Net change in fund balances Fund balances-beginning, as previously reported Changes within financial reporting entity Fund balances (deficit)-beginning Fund balances (deficit)-ending -$ -$ -$ -$ - - - 3,160,851 2,269,719 103,376 2,295,934 - - - - 900,815 749,074 246,839 1,391,478 395,936 - - - - - - - - 3,018,793$ 350,215$ 3,687,412$ 4,457,602$ - - - - - - - - - - - - - - - - 1,330,089 67,137 237,607 7,588,334 - - - - - - - - 1,330,089 67,137 237,607 7,588,334 1,688,704 283,078 3,449,805 (3,130,732) - - - - - - - - - - - - - - - - 1,688,704 283,078 3,449,805 (3,130,732) - 4,748,698 33,754,723 7,305,819 8,928,517 - - - 8,928,517 4,748,698 33,754,723 7,305,819 10,617,221$ 5,031,776$ 37,204,528$ 4,175,087$ Capital Projects Funds Formerly Major Fund Park Development Planned Local Drainage Facilities Public Facilities Construction Sales Tax/ TransNet 102Feb. 11, 2025 Item #2 Page 150 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 REVENUES Taxes Intergovernmental Contribution from property owners Charges for services Use of money and property Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community services Public works Capital outlay Debt service: Principal expense Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Subscription proceeds Total other financing sources (uses) Net change in fund balances Fund balances-beginning, as previously reported Changes within financial reporting entity Fund balances (deficit)-beginning Fund balances (deficit)-ending Total Nonmajor Funds -$ -$ 6,112,009$ - - 19,713,845 1,197,755 - 6,840,434 - - 4,390,906 1,075,261 480,660 9,239,194 - - 456,178 - - 120,464 2,273,016$ 480,660$ 46,873,030$ - - 309,569 - - 604,632 - - 19,737,769 - - 1,603,339 5,690,795 1,349,059 31,134,016 - 256,388 280,322 - 3,835 40,251 5,690,795 1,609,282 53,709,898 (3,417,779) (1,128,622) (6,836,868) - 4,200,000 17,570,000 - - (400,000) - 260,223 260,223 - 4,460,223 17,430,223 (3,417,779) 3,331,601 10,593,355 18,729,410 10,912,708 191,964,716 - - 8,928,517 18,729,410 10,912,708 200,893,233 15,311,631$ 14,244,309$ 211,486,588$ Capital Project Funds Technology Investment Capital Traffic Impact Projects 103Feb. 11, 2025 Item #2 Page 151 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Affordable Housing For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Contributions from property owners 247,000$ 247,000$ 694,941$ 447,941$ Intergovernmental 1,119,126 1,119,126 378,477 (740,649) Charges for services 5,000 5,000 10,134 5,134 Use of money and property 329,663 330,801 1,002,103 671,302 Miscellaneous - - - - Total revenues 1,700,789 1,701,927 2,085,655 383,728 EXPENDITURES Current: Community services 1,487,656 1,588,794 1,159,219 429,575 Capital outlay - 2,704,699 - 2,704,699 Total expenditures 1,487,656 4,293,493 1,159,219 3,134,274 Excess (deficiency) of revenues over (under) expenditures 213,133 (2,591,566) 926,436 3,518,002 OTHER FINANCING SOURCES (USES) Transfers out (300,000) (300,000) (200,000) 100,000 Total other financing sources (uses)(300,000) (300,000) (200,000) 100,000 Net change in fund balances (86,867)$ (2,891,566)$ 726,436 3,618,002$ Fund balances-beginning 41,692,054 Fund balances-ending 42,418,490$ 104Feb. 11, 2025 Item #2 Page 152 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Community Development Block Grant For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental 545,490$ 1,178,490$ 499,501$ (678,989)$ Use of money and property 39,785 39,785 127,108 87,323 Total revenues 585,275 1,218,275 626,609 (591,666) EXPENDITURES Current: Community services 702,305 2,035,305 583,498 1,451,807 Total expenditures 702,305 2,035,305 583,498 1,451,807 Net change in fund balances (117,030)$ (817,030)$ 43,111 860,141$ Fund balances-beginning 751,645 Fund balances-ending 794,756$ 105Feb. 11, 2025 Item #2 Page 153 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Donations For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Charges for services 8,000$ 8,000$ 8,404$ 404$ Use of money and property 28,624 28,624 136,388 107,764 Contributions 115,500 215,500 456,178 240,678 Miscellaneous 12,000 12,000 19,681 7,681 Total revenues 164,124 264,124 620,651 356,527 EXPENDITURES Current: Community services 732,235 905,063 409,487 495,576 Total expenditures 732,235 905,063 409,487 495,576 Net change in fund balances (568,111)$ (640,939)$ 211,164 852,103$ Fund balances-beginning 2,847,622 Fund balances-ending 3,058,786$ 106Feb. 11, 2025 Item #2 Page 154 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Financing Districts For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Charges for services 2,710,954$ 2,710,954$ 2,599,469$ (111,485)$ Use of money and property 119,700 119,700 498,269 378,569 Miscellaneous - - 31,224 31,224 Total revenues 2,830,654 2,830,654 3,128,962 298,308 EXPENDITURES Current: Community services 2,401,343 2,541,593 2,093,004 448,589 Public works 1,662,822 1,827,202 1,547,708 279,494 Total expenditures 4,064,165 4,368,795 3,640,712 728,083 Excess (deficiency) of revenues over (under) expenditures (1,233,511) (1,538,141) (511,750) 1,026,391 OTHER FINANCING SOURCES (USES) Transfers in 1,570,000 1,570,000 1,570,000 - Total other financing sources (uses)1,570,000 1,570,000 1,570,000 - Net change in fund balances 336,489$ 31,859$ 1,058,250 1,026,391$ Fund balances-beginning 9,897,059 Fund balances-ending 10,955,309$ 107Feb. 11, 2025 Item #2 Page 155 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Habitat and Agricultural Management For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property 13,000$ 13,000$ 60,871$ 47,871$ Contributions - - 10,126 10,126 Total revenues 13,000 13,000 70,997 57,997 EXPENDITURES Current: Community services - 595,993 220,324 375,669 Debt service: Interest expense - 29,750 29,750 - Total expenditures - 625,743 250,074 375,669 Net change in fund balances 13,000$ (612,743)$ (179,077) 433,666$ Fund balances-beginning (4,740) Fund balances-ending (183,817)$ 108Feb. 11, 2025 Item #2 Page 156 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Other Special Revenue Funds For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property 7,000$ 7,000$ 34,175$ 27,175$ Contributions 275,000 275,000 268,583 (6,417) Total revenues 282,000 282,000 302,758 20,758 EXPENDITURES Current: General government 338,956 400,470 309,569 90,901 Total expenditures 338,956 400,470 309,569 90,901 OTHER FINANCING SOURCES (USES) Transfers out (200,000) (200,000) (200,000) - Total other financing sources (uses)(200,000) (200,000) (200,000) - Net change in fund balances (256,956)$ (318,470)$ (206,811) 111,659$ Fund balances-beginning 701,325 Fund balances-ending 494,514$ 109Feb. 11, 2025 Item #2 Page 157 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Police Grants and Asset Forfeiture For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental 250,000$ 552,815$ 230,837$ (321,978)$ Use of money and properties 4,900 4,900 30,033 25,133 Total revenues 254,900 557,715 260,870 (296,845) EXPENDITURES Current: Public safety 370,298 1,032,239 581,225 451,014 Total expenditures 370,298 1,032,239 581,225 451,014 Net change in fund balances (115,398)$ (474,524)$ (320,355) 154,169$ Fund balances-beginning 602,264 Fund balances-ending 281,909$ 110Feb. 11, 2025 Item #2 Page 158 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Section 8 Rental Assistance For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental 11,029,823$ 12,873,202$ 13,231,638$ 358,436$ Use of money and property 1,854 1,854 514 (1,340) Miscellaneous 3,000 9,444 15,552 6,108 Total revenues 11,034,677 12,884,500 13,247,704 363,204 EXPENDITURES Current: Community services 11,339,700 13,249,981 12,954,684 295,297 Total expenditures 11,339,700 13,249,981 12,954,684 295,297 OTHER FINANCING SOURCES (USES) Transfers in 300,000 300,000 200,000 (100,000) Total other financing sources (uses)300,000 300,000 200,000 (100,000) Net change in fund balances (5,023)$ (65,481)$ 493,020 558,501$ Fund balances-beginning 70,826 Fund balances-ending 563,846$ 111Feb. 11, 2025 Item #2 Page 159 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Tyler Court Apartments For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Charges for services 772,982$ 942,337$ 872,084$ (70,253)$ Use of money and property 1,985 1,985 6,617 4,632 Total revenues 774,967 944,322 878,701 (65,621) EXPENDITURES Current: Community services 597,223 637,223 616,133 21,090 Capital outlay 7,300 176,655 177,636 (981) Total expenditures 604,523 813,878 793,769 20,109 Net change in fund balances 170,444$ 130,444$ 84,932 (45,512)$ Fund balances-beginning 39,730 Fund balances-ending 124,662$ 112Feb. 11, 2025 Item #2 Page 160 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual California Opioid Settlement For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ 8,595$ 9,989$ 1,394$ Miscellaneous - - 23,407 23,407 Total revenues - 8,595 33,396 24,801 EXPENDITURES Current: Public Safety 21,466 268,907 23,407 245,500 Total expenditures 21,466 268,907 23,407 245,500 Excess (deficiency) of revenues over (under) expenditures (21,466) (260,312) 9,989 270,301 Net change in fund balances (21,466)$ (260,312)$ 9,989 270,301$ Fund balances (deficit)-beginning (9,874) Fund balances (deficit)-ending 115$ 113Feb. 11, 2025 Item #2 Page 161 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Housing and Homeless Grants For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental -$ 2,850,085$ 1,703,647$ (1,146,438)$ Use of money and property - 37,979 5,331 (32,648) Total revenues - 2,888,064 1,708,978 (1,179,086) EXPENDITURES Current: Community services - 5,356,316 1,701,420 3,654,896 Total expenditures - 5,356,316 1,701,420 3,654,896 Net change in fund balances -$ (2,468,252)$ 7,558 2,475,810$ Fund balances (deficit)-beginning - Fund balances (deficit)-ending 7,558$ 114Feb. 11, 2025 Item #2 Page 162 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Community Facilities District #1 For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Property taxes 2,668,453$ 2,668,453$ 769,437$ (1,899,016)$ Use of money and property 173,875 173,875 4,818,399 4,644,524 Contributions 502,822 502,822 1,715,046 1,212,224 Total revenues 3,345,150 3,345,150 7,302,882 3,957,732 EXPENDITURES Current: General government 114,350 114,350 42,736 71,614 Capital outlay 70,749,845 70,749,845 371,993 70,377,852 Total expenditures 70,864,195 70,864,195 414,729 70,449,466 Net change in fund balances (67,519,045)$ (67,519,045)$ 6,888,153 74,407,198$ Fund balances-beginning 95,730,668 Fund balances-ending 102,618,821$ 115Feb. 11, 2025 Item #2 Page 163 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Infrastructure Replacement Fund For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 5,615,495$ 5,615,495$ Total revenues - - 5,615,495 5,615,495 EXPENDITURES Capital outlay 47,323,181 49,094,005 10,587,913 38,506,092 Total expenditures 47,323,181 49,094,005 10,587,913 38,506,092 Excess (deficiency) of revenues over (under) expenditures (47,323,181) (49,094,005) (4,972,418) 44,121,587 OTHER FINANCING SOURCES (USES) Transfers in 4,400,000 4,400,000 4,400,000 - Total other financing sources (uses)4,400,000 4,400,000 4,400,000 - Net change in fund balances (42,923,181)$ (44,694,005)$ (572,418) 44,121,587$ Fund balances-beginning 111,257,215 Fund balances-ending 110,684,797$ 116Feb. 11, 2025 Item #2 Page 164 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Assessment and Other Districts For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 117,083$ 117,083$ Total revenues - - 117,083 117,083 EXPENDITURES Capital Outlay 1,283,136 1,283,136 - 1,283,136 Total expenditures 1,283,136 1,283,136 - 1,283,136 Net change in fund balances (1,283,136)$ (1,283,136)$ 117,083 1,400,219$ Fund balances-beginning 1,965,321 Fund balances-ending 2,082,404$ 117Feb. 11, 2025 Item #2 Page 165 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Bridge Thoroughfare Districts (BTD) For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 91,232$ 91,232$ Total revenues - - 91,232 91,232 EXPENDITURES Capital outlay 383,035 383,035 - 383,035 Total expenditures 383,035 383,035 - 383,035 Net change in fund balances (383,035)$ (383,035)$ 91,232 474,267$ Fund balances-beginning 1,863,481 Fund balances-ending 1,954,713$ 118Feb. 11, 2025 Item #2 Page 166 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Gas Tax For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Other taxes 5,842,586$ 5,842,586$ 6,112,009$ 269,423$ Use of money and property - - 872,135 872,135 Total revenues 5,842,586 5,842,586 6,984,144 1,141,558 EXPENDITURES Capital outlay 24,949,184 24,905,242 6,251,021 18,654,221 Total expenditures 24,949,184 24,905,242 6,251,021 18,654,221 Net change in fund balances (19,106,598)$ (19,062,656)$ 733,123 19,795,779$ Fund balances-beginning 17,968,594 Fund balances-ending 18,701,717$ 119Feb. 11, 2025 Item #2 Page 167 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Capital Construction For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 1,823,011$ 1,823,011$ Miscellaneous - - 30,600 30,600 Total revenues - - 1,853,611 1,853,611 EXPENDITURES Capital outlay 34,228,543 36,036,543 6,748,890 29,287,653 Debt service: Principal expense - - 23,934 (23,934) Interest and fiscal charges - - 6,666 (6,666) Total expenditures 34,228,543 36,036,543 6,779,490 29,257,053 Excess (deficiency) of revenues over (under) expenditures (34,228,543) (36,036,543) (4,925,879) 31,110,664 OTHER FINANCING SOURCES (USES) Transfers in 11,600,000 11,600,000 11,600,000 - Total other financing sources (uses)11,600,000 11,600,000 11,600,000 - Net change in fund balances (22,628,543)$ (24,436,543)$ 6,674,121 31,110,664$ Fund balances-beginning 36,493,871 Fund balances-ending 43,167,992$ 120Feb. 11, 2025 Item #2 Page 168 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Grants and Other Capital Project Funds For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental 14,744,840$ 16,550,840$ 508,894$ (16,041,946)$ Use of money and property 13,000 13,000 85,087 72,087 Interest ioncome - - - - Total revenues 14,757,840 16,563,840 593,981 (15,969,859) EXPENDITURES Current: Public works 56,000 56,000 55,631 369 Capital outlay 16,311,790 16,311,790 1,693,448 14,618,342 Total expenditures 16,367,790 16,367,790 1,749,079 14,618,711 Net change in fund balances (1,609,950)$ 196,050$ (1,155,098) (1,351,148)$ Fund balances-beginning 1,634,180 Fund balances-ending 479,082$ 121Feb. 11, 2025 Item #2 Page 169 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Park Development For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 749,074$ 749,074$ Contributions 4,014,664 4,014,664 2,269,719 (1,744,945) Total revenues 4,014,664 4,014,664 3,018,793 (995,871) EXPENDITURES Capital outlay 5,987,935 6,170,935 1,330,089 4,840,846 Total expenditures 5,987,935 6,170,935 1,330,089 4,840,846 Net change in fund balances (1,973,271)$ (2,156,271)$ 1,688,704 3,844,975$ Fund balances-beginning 8,928,517 Fund balances-ending 10,617,221$ 122Feb. 11, 2025 Item #2 Page 170 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Planned Local Drainage Facilities For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 246,839$ 246,839$ Contributions 780,186 780,186 103,376 (676,810) Total revenues 780,186 780,186 350,215 (429,971) EXPENDITURES Capital outlay 310,766 310,766 67,137 243,629 Total expenditures 310,766 310,766 67,137 243,629 Net change in fund balances 469,420$ 469,420$ 283,078 (186,342)$ Fund balances-beginning 4,748,698 Fund balances-ending 5,031,776$ 123Feb. 11, 2025 Item #2 Page 171 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Public Facilities Construction For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property 67,872$ 67,872$ 1,391,478$ 1,323,606$ Contributions 2,879,391 2,879,391 2,295,934 (583,457) Total revenues 2,947,263 2,947,263 3,687,412 740,149 EXPENDITURES Capital outlay 4,379,136 4,963,839 237,607 4,726,232 Total expenditures 4,379,136 4,963,839 237,607 4,726,232 Net change in fund balances (1,431,873)$ (2,016,576)$ 3,449,805 5,466,381$ Fund balances-beginning 33,754,723 Fund balances-ending 37,204,528$ 124Feb. 11, 2025 Item #2 Page 172 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Sales Tax/TransNet For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Intergovernmental 4,926,000$ 4,926,000$ 3,160,851$ (1,765,149)$ Charges for services 960,000 960,000 900,815 (59,185) Use of money and property - - 395,936 395,936 Total revenues 5,886,000 5,886,000 4,457,602 (1,428,398) EXPENDITURES Capital outlay 34,331,041 34,331,041 7,588,334 26,742,707 Total expenditures 34,331,041 34,331,041 7,588,334 26,742,707 Net change in fund balances (28,445,041)$ (28,445,041)$ (3,130,732) 25,314,309$ Fund balances-beginning 7,305,819 Fund balances-ending 4,175,087$ 125Feb. 11, 2025 Item #2 Page 173 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Traffic Impact Projects For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 1,075,261$ 1,075,261$ Contributions 3,014,169 3,014,169 1,197,755 (1,816,414) Total revenues 3,014,169 3,014,169 2,273,016 (741,153) EXPENDITURES Capital outlay 21,150,018 21,150,018 5,690,795 15,459,223 Total expenditures 21,150,018 21,150,018 5,690,795 15,459,223 Net change in fund balances (18,135,849)$ (18,135,849)$ (3,417,779) 14,718,070$ Fund balances-beginning 18,729,410 Fund balances-ending 15,311,631$ 126Feb. 11, 2025 Item #2 Page 174 of 224 CITY OF CARLSBAD, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Technology Investment Capital For the Year Ended June 30, 2024 Variance with Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Use of money and property -$ -$ 480,660$ 480,660$ Total revenues - - 480,660 480,660 EXPENDITURES Capital outlay 10,837,640 10,828,009 1,349,059 9,478,950 Debt service: Principal - - 256,388 (256,388) Interest - - 3,835 (3,835) Total expenditures 10,837,640 10,828,009 1,609,282 9,218,727 Excess (deficiency) of revenues over (under) expenditures (10,837,640) (10,828,009) (1,128,622) 9,699,387 OTHER FINANCING SOURCES (USES) Transfers in 4,200,000 4,200,000 4,200,000 - Subscriptions issued - - 260,223 260,223 Total other financing sources (uses)4,200,000 4,200,000 4,460,223 260,223 Net change in fund balances (6,637,640)$ (6,628,009)$ 3,331,601 9,959,610$ Fund balances-beginning 10,912,708 Fund balances-ending 14,244,309$ 127Feb. 11, 2025 Item #2 Page 175 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2024 Totals ASSETS Current assets: Cash and investments 8,307,242$ 8,842,339$ 17,149,581$ Receivables: Accounts, net of allowances 5,882 - 5,882 Accrued interest 41,851 49,411 91,262 Lease 61,236 - 61,236 Other 11,570 565,425 576,995 Prepaid Expenses 120,308 - 120,308 Inventories 200,007 - 200,007 Total current assets 8,748,096 9,457,175 18,205,271 Noncurrent: Lease receivable 1,180,983 - 1,180,983 Capital assets, net 20,990,610 - 20,990,610 Total noncurrent assets 22,171,593 - 22,171,593 Total assets 30,919,689 9,457,175 40,376,864 DEFERRED OUTFLOWS OF RESOURCES Pension-related - 797,515 797,515 OPEB-related - 72,631 72,631 Total deferred outflows of resources - 870,146 870,146 LIABILITIES Current: Accrued liabilities 496,026 351,342 847,368 Deferred Revenue 104,561 - 104,561 Unearned revenues - 352,875 352,875 Deposits payable 1,028,588 - 1,028,588 Total current liabilities 1,629,175 704,217 2,333,392 Noncurrent liabilities: Net pension liability - 2,116,192 2,116,192 Net OPEB liability - 37,451 37,451 Total noncurrent liabilities - 2,153,643 2,153,643 Total liabilities 1,629,175 2,857,860 4,487,035 DEFERRED INFLOWS OF RESOURCES Pension-related - 14,118 14,118 OPEB-related - 41,019 41,019 Lease-related 1,180,500 - 1,180,500 Total deferred inflows of resources 1,180,500 55,137 1,235,637 NET POSITION Invested in capital assets 20,990,610 - 20,990,610 Unrestricted 7,119,404 7,414,324 14,533,728 Total net position 28,110,014$ 7,414,324$ 35,524,338$ Golf Course Solid Waste 128Feb. 11, 2025 Item #2 Page 176 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenses and Changes in Net Position Non-Major Proprietary Funds For the Year Ended June 30, 2024 OPERATING REVENUES Golf course operations 11,410,738$ -$ 11,410,738$ Other charges for services - 2,261,958 2,261,958 Miscellaneous 11,256 549,755 561,011 Total operating revenues 11,421,994 2,811,713 14,233,707 OPERATING EXPENSES Administration and general - 5,807,441 5,807,441 Depreciation/amortization 733,127 - 733,127 Golf course operations 9,793,756 - 9,793,756 Total operating expenses 10,526,883 5,807,441 16,334,324 Operating income (loss)895,111 (2,995,728) (2,100,617) NONOPERATING REVENUES (EXPENSES) Intergovernmental - 125,969 125,969 Investment income (loss)478,506 539,835 1,018,341 Total nonoperating revenues (expenses)478,506 665,804 1,144,310 Income (loss) before transfers 1,373,617 (2,329,924) (956,307) Transfers In - 340,000 340,000 Change in net position 1,373,617 (1,989,924) (616,307) Net position-beginning 26,736,397 9,404,248 36,140,645 Net position-ending 28,110,014$ 7,414,324$ 35,524,338$ Totals Golf Course Solid Waste 129Feb. 11, 2025 Item #2 Page 177 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 11,574,745$ 2,544,143$ 14,118,888$ Payments to suppliers and service providers (5,278,521) (48,320) (5,326,841) Payments to employees for salaries and benefits (4,487,619) (5,582,977) (10,070,596) Other receipts (payments)- 549,755 549,755 Net cash provided by (used for) operating activities 1,808,605 (2,537,399) (728,794) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - 340,000 340,000 Taxes - 125,969 125,969 Net cash provided by (used for) noncapital financing activities - 465,969 465,969 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (423,205) - (423,205) Proceeds from sales of assets 29,533 - 29,533 Net cash provided by (used for) capital and related financing activities (393,672) - (393,672) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 461,842 - 461,842 Leasing activities (18,781) 535,296 516,515 Net cash provided by (used for) investing activities 443,061 535,296 978,357 Net increase (decrease) in cash and cash equivalents 1,857,994 (1,536,134) 321,860 Cash and cash equivalents-beginning 6,449,248 10,378,473 16,827,721 Cash and cash equivalents-ending 8,307,242$ 8,842,339$ 17,149,581$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss)895,111$ (2,995,728)$ (2,100,617)$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation/amortization expense 733,127 - 733,127 (Increase) decrease in accounts receivable 1,111 (40,425) (39,314) (Increase) decrease in inventories (21) - (21) (Increase) decrease in prepaid items (27,238) - (27,238) Increase (decrease) in accrued liabilities 54,875 (48,320) 6,555 Increase (decrease) in deposits payable 151,640 322,610 474,250 Increase (decrease) in net pension liability - 221,942 221,942 Increase (decrease) in net OPEB liability - 2,522 2,522 Total adjustments 913,494 458,329 1,371,823$ Net cash provided by (used for) operating activities 1,808,605$ (2,537,399)$ (728,794)$ SCHEDULE OF NON-CASH NONCAPITAL, CAPITAL, AND INVESTING ACTIVITIES Unrealized gain/(loss) on fair value of investments 75,612$ 293,464$ 369,076$ Business-Type Activities Golf Course Solid Waste 130Feb. 11, 2025 Item #2 Page 178 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Net Position Internal Service Funds June 30, 2024 Total Internal Service Funds ASSETS Current assets: Cash and cash equivalents 24,333,554$ 6,757,386$ 10,287,159$ 6,922,318$ 25,841,873$ 74,142,290$ Receivables: Accounts, net of allowances 9,792 - - - - 9,792 Accrued interest 135,983 - 57,506 38,684 144,413 376,586 Prepaid costs - - 1,811,739 - - 1,811,739 Inventories 244,983 - - - - 244,983 Total current assets 24,724,312 6,757,386 12,156,404 6,961,002 25,986,286 76,585,390 Noncurrent: Capital assets, net 18,235,958 - 7,580,890 - - 25,816,848 Total assets 42,960,270 6,757,386 19,737,294 6,961,002 25,986,286 102,402,238 DEFERRED OUTFLOWS OF RESOURCES Pension-related 604,302 - 2,318,548 168,547 102,773 3,194,170 OPEB-related 43,456 - 136,793 8,242 3,683 192,174 Total deferred outflows of resources 647,758 - 2,455,341 176,789 106,456 3,386,344 LIABILITIES Current liabilities: Accrued liabilities 324,252 6,757,386 1,041,643 178,809 28,139 8,330,229 Accrued Interest - - 51,280 - - 51,280 Deposits payable - - - 1,000 - 1,000 Subscriptions - - 1,090,982 - - 1,090,982 Claims and judgments - - - 1,456,597 14,494,756 15,951,353 Total current liabilities 324,252 6,757,386 2,183,905 1,636,406 14,522,895 25,424,844 Noncurrent liabilities: Claims and judgments - - - 4,945,000 11,094,102 16,039,102 Subscriptions - - 2,098,786 - - 2,098,786 Net pension liability 1,603,505 - 6,152,227 447,236 272,705 8,475,673 Net OPEB liability 17,985 - 68,741 3,194 2,177 92,097 Total noncurrent liabilities 1,621,490 - 8,319,754 5,395,430 11,368,984 26,705,658 Total liabilities 1,945,742 6,757,386 10,503,659 7,031,836 25,891,879 52,130,502 DEFERRED INFLOWS OF RESOURCES Pension-related 10,698 - 41,044 2,984 1,819 56,545 OPEB-related 31,342 - 87,844 6,172 2,082 127,440 Total deferred inflows of resources 42,040 - 128,888 9,156 3,901 183,985 NET POSITION Net investment in capital assets 18,235,958 - 4,391,122 - - 22,627,080 Unrestricted 23,384,288 - 7,168,966 96,799 196,962 30,847,015 Total net position 41,620,246$ -$ 11,560,088$ 96,799$ 196,962$ 53,474,095$ Fleet Management Self Insured Benefits Information Technology Risk Management Workers Compensation 131Feb. 11, 2025 Item #2 Page 179 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2024 Total Internal Service Funds OPERATING REVENUES Other charges for services 7,486,663$ -$ 17,136,762$ 7,065,890$ 5,908,510$ 37,597,825$ Miscellaneous 61,697 - 3,637 61,584 592,767 719,685 Total operating revenues 7,548,360 - 17,140,399 7,127,474 6,501,277 38,317,510 OPERATING EXPENSES Administrative and general 2,420,923 - 12,789,228 595,619 270,185 16,075,955 Claims and premiums - - - 12,664,714 8,442,881 21,107,595 Depreciation/amortization 2,936,997 - 3,669,286 - - 6,606,283 Fuel and supplies 1,726,446 - - - - 1,726,446 Small equipment purchases 1,279 - 1,356,424 - - 1,357,703 Total operating expenses 7,085,645 - 17,814,938 13,260,333 8,713,066 46,873,982 Operating income (loss)462,715 - (674,539) (6,132,859) (2,211,789) (8,556,472) NONOPERATING REVENUES (EXPENSES) Interest expense - - (110,048) - - (110,048) Investment income (loss)1,046,751 - 403,879 113,481 1,042,663 2,606,774 Gain (loss) on disposal of capital assets 173,202 - (4,501) - - 168,701 Total nonoperating revenues (expenses)1,219,953 - 289,330 113,481 1,042,663 2,665,427 Income (loss) before capital contributions and transfers 1,682,668 - (385,209) (6,019,378) (1,169,126) (5,891,045) Capital contributions 3,080,430 - 183,270 - - 3,263,700 Transfers in - - - 10,200,000 1,300,000 11,500,000 Change in net position 4,763,098 - (201,939) 4,180,622 130,874 8,872,655 Net position-beginning 36,857,148 - 11,762,027 (4,083,823) 66,088 44,601,440 Net position-ending 41,620,246$ -$ 11,560,088$ 96,799$ 196,962$ 53,474,095$ Fleet Management Self Insured Benefits Information Technology Risk Management Workers Compensation 132Feb. 11, 2025 Item #2 Page 180 of 224 CITY OF CARLSBAD, CALIFORNIA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2024 Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from internal service 7,542,980$ 374,101$ 17,136,762$ 7,065,890$ 5,908,510$ 38,028,243$ Payments to suppliers and service providers (1,736,851) - (1,548,135) - - (3,284,986) Payments to employees for salaries and benefits (2,242,689) - (12,589,156) (963,421) (230,970) (16,026,236) Claims and premiums - - - (12,919,832) (4,756,441) (17,676,273) Other receipts (payments)- - 3,637 61,584 592,767 657,988 Net cash provided by (used for) operating activities 3,563,440 374,101 3,003,108 (6,755,779) 1,513,866 1,698,736 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - - - 10,200,000 1,300,000 11,500,000 Net cash provided by (used for) noncapital financing activities - - - 10,200,000 1,300,000 11,500,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from capital debt - - 2,678,533 - - 2,678,533 Acquisition and construction of capital assets (2,282,365) - (2,607,336) - - (4,889,701) Principal paid on capital debt - - (2,417,349) - - (2,417,349) Interest paid on capital debt - - (93,281) - - (93,281) Proceeds from sales of assets 78,322 - 126,747 - - 205,069 Net cash provided by (used for) capital and related financing activities (2,204,043) - (2,312,686) - - (4,516,729) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 995,813 - 386,156 - 993,555 2,375,524 Leasing activities - - - 89,451 - 89,451 Net cash provided by (used for) investing activities 995,813 - 386,156 89,451 993,555 2,464,975 Net increase (decrease) in cash and cash equivalents 2,355,210 374,101 1,076,578 3,533,672 3,807,421 11,146,982 Cash and cash equivalents-beginning 21,978,344 6,383,285 9,210,581 3,388,646 22,034,452 62,995,308 Cash and cash equivalents-ending 24,333,554$ 6,757,386$ 10,287,159$ 6,922,318$ 25,841,873$ 74,142,290$ RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION Cash and investments 24,333,554$ 6,757,386$ 10,287,159$ 6,922,318$ 25,841,873$ 74,142,290$ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss)462,715$ -$ (674,539)$ (6,132,859)$ (2,211,789)$ (8,556,472)$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation/amortization expense 2,936,997 - 3,669,286 - - 6,606,283 (Increase) decrease in accounts receivable (5,380) - - - - (5,380) (Increase) decrease in inventories (9,126) - - - - (9,126) (Increase) decrease in prepaid items - - (191,711) - - (191,711) Increase (decrease) in accrued liabilities 8,081 374,101 (451,530) (415,054) 10,438 (473,964) Increase (decrease) in claims and judgments - - - (255,118) 3,686,440 3,431,322 Increase (decrease) in pension and related items 168,173 - 645,231 46,905 28,597 888,906 Increase (decrease) in OPEB and related items 1,980 - 6,371 347 180 8,878 Total adjustments 3,100,725 374,101 3,677,647 (622,920) 3,725,655 10,255,208$ Net cash provided by (used for) operating activities 3,563,440$ 374,101$ 3,003,108$ (6,755,779)$ 1,513,866$ 1,698,736$ SCHEDULE OF NON-CASH NONCAPITAL, CAPITAL, AND INVESTING ACTIVITIES Unrealized gain/(loss) on fair value of investments 459,583$ -$ 185,737$ (20,853)$ 418,923$ 1,043,390$ Donated capital assets 3,080,430 - 183,270 - - 3,263,700 Fleet Management Self Insured Benefits Information Technology Risk Management Workers Compensation 133Feb. 11, 2025 Item #2 Page 181 of 224 Total Custodial Funds ASSETS Cash and cash equivalents 4,223,774$ 1,305,019$ 5,528,793$ Restricted assets: Cash and investments 2,447,924 - 2,447,924 Receivables: Assessments, net of allowance for uncollectible - 845,519 845,519 Accrued interest 24,235 7,088 31,323 Taxes 9,907 - 9,907 Total assets 6,705,840 2,157,626 8,863,466 LIABILITIES Accrued liabilities 11,132 2,157,626 2,168,758 Due to bondholders 6,694,708 - 6,694,708 Total liabilities 6,705,840 2,157,626 8,863,466 NET POSITION Restricted for: Individuals, organizations and other governments - - - Total net position -$ -$ -$ Business Improvement Districts CITY OF CARLSBAD, CALIFORNIA Combining Statement of Fiduciary Net Position Fiduciary Funds - Custodial Funds June 30, 2024 Assessment Districts 134Feb. 11, 2025 Item #2 Page 182 of 224 Total Custodial Funds ADDITIONS Assessment district collections 2,046,858$ 8,871,085$ 10,917,943$ Income from property and investments 241,431 490,010 731,441 Taxes 1,396,977 -1,396,977 Miscellaneous 27,594 -27,594 Total additions 3,712,860 9,361,095 13,073,955 DEDUCTIONS Distributions to beneficiaries -16,149,802 16,149,802 Administrative expenses 325,823 228,262 554,085 Bond interest expense and fees 1,352,037 -1,352,037 Principal expense 2,035,000 -2,035,000 Total deductions 3,712,860 16,378,064 20,090,924 Net increase (decrease) in fiduciary net position -(7,016,969) (7,016,969) Net position-beginning -7,016,969 7,016,969 Net position-ending -$-$-$ CITY OF CARLSBAD, CALIFORNIA Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Custodial Funds For the Year Ended June 30, 2024 Assessment Districts Business Improvement Districts 135Feb. 11, 2025 Item #2 Page 183 of 224 Feb. 11, 2025 Item #2 Page 184 of 224 StatisticalSection ThissectionoftheCityofCarlsbad’sAnnualComprehensiveFinancialReportpresentsdetailedinformationasacontext forunderstandingwhattheinformationinthefinancialstatements,notedisclosures,andrequiredsupplementary informationsaysaboutthecity’soverallfinancialhealth. TableofContents Page FinancialTrends136 Theseschedulescontaintrendinformationtohelpthereaderunderstandhowthecity’sfinancial performanceandwellͲbeinghavechangedovertime. RevenueCapacity148 Theseschedulescontaininformationtohelpthereaderassessthecity’swaterandwastewaterrevenue sourcesaswellasthecity’smostsignificantlocalrevenuesource,propertytaxes. DebtCapacity153 Theseschedulespresentinformationtohelpthereaderassesstheaffordabilityofthecity’scurrentlevels ofoutstandingdebt,andthecity’sabilitytoissueadditionaldebtinthefuture. DemographicandEconomicInformation162 Theseschedulesofferdemographicandeconomicindicatorstohelpthereaderunderstandthe environmentwithinwhichthecity’sfinancialactivitiestakeplace. OperatingInformation164 Theseschedulescontainserviceandinfrastructuredatatohelpthereaderunderstandhowthe informationinthecity’sfinancialreportrelatestotheservicesthecityprovidesandtheactivitiesit performs. Sources:Unlessotherwisenoted,theinformationintheseschedulesisderivedfromtheAnnualComprehensive FinancialReportsfortherelevantyear. Feb. 11, 2025 Item #2 Page 185 of 224 Net Position by Component Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 Governmental activities Net investment in capital assets 783,298$ 788,035$ 788,078$ 793,090$ Restricted for: Capital projects 178,228 176,279 183,245 182,811 Lighting and landscaping districts 5,263 5,921 6,527 7,307 Affordable housing 39,544 40,390 40,528 41,500 Habitat and agricultural mitigation management 1,708 1,758 1,805 1,640 Pension section 115 trust ---- Other purposes 3,059 2,948 2,818 2,800 Unrestricted 223,522 245,078 249,816 262,023 Total governmental activities net position 1,234,622$ 1 1,260,409$ 1,272,817$ 1,291,171$ Business-type activities Net investment in capital assets 307,122$ 317,927$ 344,836$ 349,548$ Restricted for: Capital projects 47,315 45,950 40,098 39,522 Utilities reserve ---- Unrestricted 69,922 73,285 85,153 88,576 Total business-type activities net position 424,359$ 1 437,162$ 470,087$ 477,646$ Total government Net investment in capital assets 1,090,420$ 1,105,962$ 1,132,914$ 1,142,638$ Restricted for: Capital projects 225,543 222,229 223,343 222,333 Lighting and landscaping districts 5,263 5,921 6,527 7,307 Affordable housing 39,544 40,390 40,528 41,500 Habitat and agricultural mitigation management 1,708 1,758 1,805 1,640 Pension section 115 trust ---- Utilities reserve ---- Other purposes 3,059 2,948 2,818 2,800 Unrestricted 293,444 318,363 334,969 350,599 Total net position 1,658,981$ 1,697,571$ 1,742,904$ 1,768,817$ Source: City of Carlsbad Annual Comprehensive Financial Reports 1 Net position for the prior year was restated in FY 2014-15, to reflect the application of GASB 68, Accounting & Financial Reporting for Pensions. 2 Habitat and agricultural mitigation management was combined with other purposes in FY 2019-20 due to immateriality. 3 In FY 2020-21 a transfer of $47 million was made from the General Fund to the Golf Course Fund. The recorded advance from the General Fund to the Golf Course Fund was removed as it was determined that repayment of the advance is not projected in the near or foreseeable future. 4 Pension section 115 trust was established during FY 2023-24. 5 Utilities reserve for operations, rate stablization, debt service and emergency capital per Council Policy 96. 136Feb. 11, 2025 Item #2 Page 186 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 786,965$ 791,124$ 789,335$ 808,515$ 809,083$ 803,800$ 194,434 206,067 212,636 191,967 192,629 198,176 8,025 8,967 9,225 9,635 9,897 10,955 43,588 44,885 40,988 41,413 41,801 43,112 1,524 - 2 - - - - - - - - - 10,849 4,329 5,444 6,251 6,254 4,903 4,631 289,000 286,386 249,699 3 263,633 266,786 276,381 1,327,865$ 1,342,873$ 1,308,134$ 1,321,417$ 1,325,099$ 1,347,904$ 346,628$ 351,153$ 361,477$ 355,487$ 352,494$ 351,799$ 38,540 41,244 41,462 38,949 38,437 46,446 - - - - - 90,179 97,509 94,140 149,954 3 151,766 157,191 69,398 482,677$ 486,537$ 552,893$ 546,202$ 548,122$ 557,822$ 1,133,593$ 1,142,277$ 1,150,812$ 1,164,002$ 1,161,577$ 1,155,599$ 232,974 247,311 254,098 230,916 231,066 244,622 8,025 8,967 9,225 9,635 9,897 10,955 43,588 44,885 40,988 41,413 41,801 43,112 1,524 - 2 - - - - - - - - - 10,849 - - - - - 90,179 4,329 5,444 6,251 6,254 4,903 4,631 386,509 380,526 399,653 415,399 423,977 345,779 1,810,542$ 1,829,410$ 1,861,027$ 1,867,619$ 1,873,221$ 1,905,726$ 137Feb. 11, 2025 Item #2 Page 187 of 224 Changes in Net Position Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 Expenses Governmental activities General government 16,108$ 16,147$ 18,374$ 25,192$ Public safety 48,856 50,463 55,994 62,630 Community services 48,630 51,191 54,212 51,897 Public works 36,273 37,464 34,317 36,875 Interest and fiscal charges on long-term debt -1 3 2 Total governmental activities 149,867 155,266 162,900 176,596 Business-type activities Carlsbad Municipal Water District 40,897 39,458 45,219 51,658 Golf course 10,538 10,545 10,211 10,560 Wastewater 12,629 12,613 12,626 13,495 Solid waste 2,973 2,997 3,272 3,089 Total business-type activities 67,037 65,613 71,328 78,802 Total government 216,904$ 220,879$ 234,228$ 255,398$ Program Revenues Governmental activities Charges for services: General government 1,382$296$327$816$ Public safety 4,220 3,980 4,647 4,805 Community services 10,534 10,711 12,154 11,588 Public works 4,014 4,152 3,952 3,768 Operating contributions and grants 12,242 11,912 12,630 13,054 Capital contributions and grants 19,105 12,042 1 22,789 22,993 Total governmental activities 51,497 43,093 56,499 57,024 Business-type activities Charges for services: Carlsbad Municipal Water District 47,461 39,854 2 44,817 50,095 Golf course 6,709 6,988 7,119 7,973 Wastewater 12,875 12,963 13,467 13,885 Solid waste 3,245 3,206 3,302 3,427 Operating contributions and grants 59 5,646 2,471 1,611 Capital contributions and grants 5,879 2,011 13,322 5,484 Total business-type activities 76,228 70,668 84,498 82,475 Total government 127,725$ 113,761$ 140,997$ 139,499$ Net (Expense)/Revenue: Governmental activities (98,370)$ (112,173)$ (106,401)$ (119,572)$ Business-type activities 9,191 5,055 13,170 3,673 Total government net expense (89,179)$ (107,118)$ (93,231)$ (115,899)$ 138Feb. 11, 2025 Item #2 Page 188 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 22,234$ 24,267$ 20,003$ 14,806$ 22,768$ 30,027$ 67,968 75,249 80,295 81,130 99,484 109,769 57,978 60,771 57,654 58,954 76,374 78,846 36,897 41,419 35,481 39,204 54,124 63,780 4 2 -14 21 41 185,081 201,708 193,433 194,108 252,771 282,463 51,638 51,198 56,319 53,598 54,178 62,464 11,035 10,252 10,280 11,708 12,198 10,527 15,238 16,931 9,063 17,905 20,194 19,060 3,840 4,382 5,086 4,738 5,405 5,403 81,751 82,763 80,748 87,949 91,975 97,454 266,832$ 284,471$ 274,181$ 282,057$ 344,746$ 379,917$ 1,679$ 1,030$ 1,260$627$ 634$ 335$ 4,784 4,711 5,020 5,899 6,505 7,335 10,755 9,324 8,080 8,671 9,423 7,101 4,574 4,142 5,662 4,247 3,505 3,269 17,307 18,437 26,459 20,382 14,060 28,298 13,842 16,802 9,565 9,922 12,967 21,139 52,941 54,446 56,046 49,748 47,094 67,477 46,431 46,332 49,668 49,194 46,102 47,638 7,979 6,637 8,108 10,424 10,967 11,411 14,099 13,849 14,027 16,282 19,616 23,720 3,440 3,563 3,387 3,684 2,245 2,262 1,260 399 3,484 183 209 11 4,864 6,327 7,601 858 5,189 5,238 78,073 77,107 86,275 80,625 84,328 90,280 131,014$ 131,553$ 142,321$ 130,373$ 131,422$ 157,757$ (132,140)$ (147,262)$ (137,387)$ (144,360)$ (205,677)$ (214,986)$ (3,678)(5,656)5,527 (7,324)(7,647)(7,174) (135,818)$ (152,918)$ (131,860)$ (151,684)$ (213,324)$ (222,160)$ 139Feb. 11, 2025 Item #2 Page 189 of 224 Changes in Net Position (CONTINUED) Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 General Revenues and Other Changes in Net Position Governmental activities Taxes: Property taxes 55,992$ 58,945$ 63,988$ 66,524$ Sales and use taxes 32,146 34,843 33,999 33,674 Transient occupancy taxes 19,713 20,943 22,267 24,233 Franchise taxes 5,427 5,632 5,475 5,812 Business license taxes 4,548 4,895 4,328 5,026 Real property transfer taxes 1,406 1,546 1,393 1,463 Use of money and property 4,564 11,910 3 1,975 2,551 Other general revenues 609 486 451 519 Extraordinary gain/(loss)---- Special items-Golf Course debt ---- Transfers (1,264)(1,240)(15,067)(136) Total governmental activities 123,141 137,960 118,809 139,666 Business type activities Property taxes 3,133 3,306 3,569 3,743 Use of money and property 1,870 3,163 749 986 Other general revenues 623 39 370 3 Transfers 1,264 1,240 15,067 136 Special items-Golf Course debt ---- Total business-type activities 6,890 7,748 19,755 4,868 Total government 130,031$ 145,708$ 138,564$ 144,534$ Change in Net Position Governmental activities 24,771$ 25,787$ 12,408$ 20,094$ Business-type activities 16,081 12,803 32,925 8,541 Total government 40,852$ 38,590$ 45,333$ 28,635$ Source: City of Carlsbad Annual Comprehensive Financial Reports 1 2 The decrease in FY 2015-16 was a result of a decrease in water sales during the fiscal year from drought conservation measures. 3 4 5 6 7 Decrease in investment income for FY 2021-22 is due to the required fair value adjustment at fiscal year end (per GASB 31). The decrease in FY 2015-16 was a result of one-time funds received from the federal government in the previous fiscal year for the 2014 Poinsettia Fire, as well as the receipt of retroactive mandated cost reimbursements. future. The increase in FY 2015-16 is a result of higher cash balances that generate interest, an increase in investment earnings, and interest received The increase in FY 2017-18 is mainly due to changes in the city's pension discount rate. The decrease is FY 2020-21 in income from property and investments was caused by unrealized losses created by adjusting the city's investments to fair market value at June 30, 2021 and a decrease in the average yield on the treasurer's portfolio for the year. In FY 2020-21 a transfer of $47 million was made from the General Fund to the Golf Course Fund. The recorded advance from the General Fund to the Golf Course Fund was removed as it was determined that repayment of the advance is not projected in the near or foreseeable from the California Department of Finance earned on unpaid mandated costs. 140Feb. 11, 2025 Item #2 Page 190 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 69,952$ 73,885$ 78,239$ 81,012$ 88,196$ 93,959$ 38,510 36,491 42,579 51,175 56,187 57,855 26,320 18,898 15,584 32,403 34,280 34,040 6,100 5,864 5,774 6,371 7,834 8,067 5,322 5,414 5,705 6,619 6,357 6,446 1,715 1,247 1,786 2,179 1,367 1,347 20,695 20,239 5,036 5 (22,063) 7 10,988 35,554 439 559 516 1,262 4,483 863 - - - - - - - - (8,427) 6 - - - (219) (303) (47,273) 6 (1,316) (332) (340) 168,834 162,294 99,519 157,642 209,360 237,791 4,002 4,226 4,491 4,715 5,130 5,412 7,784 4,963 639 5 (7,656) 7 2,579 10,227 113 - - 2,258 1,526 894 219 303 47,273 6 1,316 332 340 - - 8,427 6 - - - 12,118 9,492 60,830 633 9,567 16,873 180,952$ 171,786$ 160,349$ 158,275$ 218,927$ 254,664$ 36,694$ 15,032$ (37,868)$ 13,282$ 3,683$ 22,805$ 8,440 3,836 66,357 (6,691) 1,920 9,699 45,134$ 18,868$ 28,489$ 6,591$ 5,603$ 32,504$ 141Feb. 11, 2025 Item #2 Page 191 of 224 Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 2018-19 General Fund Nonspendable 56,381$ 55,324$ 53,751$ 51,628$ 49,608$ Restricted ----- Committed 1,000 1,000 1,000 1,000 1,000 Assigned 40,865 42,692 38,439 43,855 33,367 Unassigned 80,274 94,404 78,191 82,570 101,701 Total General Fund 178,520$ 193,420$ 171,381$ 179,053$ 185,676$ All Other Governmental Funds Nonspendable Special revenue funds 3$4$1$1$1$ Capital project funds ----- Restricted Special revenue funds 66,300 51,013 1 51,677 53,246 57,465 Capital project funds 161,499 176,280 1 183,245 182,812 194,434 Assigned Capital project funds 136,237 131,939 146,994 151,306 162,139 Unassigned Special revenue funds ----- Capital project funds ----- Total all other governmental funds 364,039$ 359,236$ 381,917$ 387,365$ 414,039$ Source: City of Carlsbad Annual Comprehensive Financial Reports 1 Beginning in FY 2015-16, the Gas Tax fund balance was reclassified from a Special Revenue fund to a Capital Project fund. 2 In FY 2019-20, the General Fund advanced money to the Habitat Mitigation Fund, a Special Revenue fund, to be repaid to the General Fund once funds are available. 3 In FY 2020-21 a transfer of $47 million was made from the General Fund to the Golf Course Fund. The recorded advance from the General Fund to the Golf Course Fund was removed as it was determined that repayment of the advance is not projected in the near or foreseeable future. 4 Pension section 115 trust was established during FY 2023-24. 142Feb. 11, 2025 Item #2 Page 192 of 224 2019-20 2020-21 2021-22 2022-23 2023-24 49,008$ 3,446$ 3 2,211$ 1,799$ 1,448$ - - - - 10,849 1,000 1,000 1,000 1,000 8,500 30,733 56,115 48,982 43,210 24,295 110,122 99,260 109,946 136,840 155,547 190,863$ 159,821$ 162,139$ 182,849$ 200,639$ 1$ 1$ 3$ -$ 9$ - - 157 376 50 59,295 56,465 57,302 56,603 58,691 206,067 212,635 191,967 192,629 198,177 165,267 166,206 164,349 158,288 168,048 (234) 2 (228) (17) (15) (184) - - (885) - - 430,396$ 435,079$ 412,876$ 407,881$ 424,791$ 143Feb. 11, 2025 Item #2 Page 193 of 224 Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 Revenues: Taxes 123,411$ 2 129,617$ 134,165$ 141,118$ Intergovernmental 10,359 11,290 11,963 11,608 Licenses and permits 2,369 2,467 3,034 2,999 Charges for services 13,181 12,913 14,309 14,145 Fines and forfeitures 837 854 740 679 Use of money and property 6,442 9,970 3,845 4,622 Contributions from property owners 10,688 8,009 13,330 12,898 Contributions 440 417 349 332 Miscellaneous 2,550 1,503 1,467 1,991 Total revenues 170,277 177,040 183,202 190,392 Expenditures: Current: General government 17,903 17,221 27,925 26,625 Less: Interdepartmental charges (3,807) (3,471) (3,345) (3,160) Public safety 48,915 52,015 57,329 58,568 Community services 44,501 46,298 48,930 49,039 Public works 16,350 17,465 17,349 17,220 Capital outlay 20,050 34,669 17,603 26,885 Debt service: Principal retirement ---10 Interest and fiscal charges 5 6 5 7 Total expenditures 143,917 164,203 165,796 175,194 Excess (deficiency) of revenues over (under) expenditures 26,360 12,837 17,406 15,198 Other financing sources (uses): Transfers in 14,857 9,970 20,849 11,513 Transfers out (16,420) (12,710) (37,613) 3 (13,590) Proceeds from sale of capital asset ---- Proceeds from leases ---- Subscription proceeds ---- Total other financing sources (uses)(1,563) (2,740) (16,764) (2,077) Net change in fund balances 24,797$ 10,097$ 642$13,121$ Debt service as percentage of noncapital expenditures1 0.00%0.00%0.00%0.01% Source: City of Carlsbad Annual Comprehensive Financial Reports 1 Noncapital expenditures are total expenditures less capital outlay (to the extent capitalized for the Government-wide Statement of Net Position) and expenditures for capitalized assets included within the functional expenditure categories. 2 3 Includes a transfer out to the Golf Course Fund in the amount of $14.8 million for the defeasance of the golf course construction bonds 4 Increase in investment income for FY 2018-19 is due to an increase in the average yield on the investment portfolio for the year as well as an 5 Increase in public safety expenditures in FY 2018-19 is due to a voluntary $14.2 million additional payment to CalPERS to reduce the city's 6 Decrease in tax revenue for sales and transient occupancy taxes for FY 2020-21 is due to the effects of the COVID-19 pandemic and 7 Decrease in investment income for FY 2021-22 is due to the required fair value adjustment done on investments (per GASB 31). Increase in taxes in FY 2014-15 due to growth in property and TOT taxes. during FY 2016-17. increase due to the required fair value adjustment done on investments at fiscal year end (per GASB 31). unfunded pension liability in the safety plan. resulting stay at home orders on sales and transient occupancy taxes. 144Feb. 11, 2025 Item #2 Page 194 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 154,673$ 147,535$ 6 155,462$ 184,832$ 199,742$ 207,826$ 14,647 15,505 23,653 20,933 16,724 22,238 2,668 2,739 2,399 3,233 3,710 3,041 13,221 11,525 11,615 14,959 15,163 17,827 581 760 429 346 390 871 23,275 4 24,989 7,018 (20,118) 7 11,066 33,061 10,301 6,623 5,850 3,200 4,915 8,556 1,385 426 321 381 314 57 3,316 2,641 1,786 1,262 3,969 409 224,067 212,743 208,533 209,028 255,993 293,886 24,033 25,762 22,450 22,433 23,428 22,622 (4,581) (5,052) (5,146) (5,315) (5,991) (6,081) 77,550 5 70,997 78,731 82,225 85,829 91,700 52,951 56,931 53,267 59,491 65,514 67,805 18,380 19,995 19,991 22,056 25,337 24,241 20,703 22,171 21,390 47,015 35,578 46,999 10 11 8 3 -341 5 12 17 15 22 41 189,051 190,827 190,708 227,923 229,717 247,668 35,016 21,916 17,825 (18,895) 26,276 46,218 11,881 11,183 9,760 25,974 13,428 21,970 (13,600) (11,486) (57,073) (27,189) (24,368) (33,810) - --200 379 2 - --25 -- - ----319 (1,719) (303) (47,313)(990) (10,561)(11,519) 33,297$ 21,613$ (29,488)$ (19,885)$ 15,715$ 34,699$ 0.01%0.01%0.01%0.01%0.01%0.15% 145Feb. 11, 2025 Item #2 Page 195 of 224 General Governmental Tax Revenues by Source Last Ten Fiscal Years (dollars in thousands) Fiscal Year Property Tax * Sales and Use Taxes Transient Occupancy Taxes Franchise Taxes Business License Taxes Real Property Transfer Taxes Gas Tax Total Tax Revenue 2014-15 55,992$ 33,202$ 19,713$ 5,427$ 4,548$ 1,406$ 3,123$ 123,411$ 2015-16 58,946 35,232 20,943 5,632 4,895 1,545 2,424 129,617 2016-17 63,988 34,543 22,267 5,475 4,328 1,393 2,171 134,165 2017-18 66,523 34,972 24,234 5,812 5,026 1,463 3,088 141,118 2018-19 69,952 40,795 26,320 6,100 5,322 1,715 4,469 154,673 2019-20 73,889 37,585 18,898 5,864 5,414 1,247 4,638 147,535 2020-21 78,247 43,726 15,584 5,774 5,705 1,786 4,640 155,462 2021-22 81,012 51,175 32,403 6,371 6,619 2,179 5,073 184,832 2022-23 88,196 56,187 34,280 7,834 6,357 1,367 5,521 199,742 2023-24 93,959 57,855 34,040 8,067 6,446 1,347 6,112 207,826 Percentage change from FY 2014-15 to FY 2023-24: 68%74%73%49% 42%-4% 96%68% 1 The increase in property tax in FY 2016-17 reflects improvement in the housing market and new construction. 2 The increase in TOT in FY 2016-17 is due to higher room rates throughout most of the city's hotels and an increase in available rooms. 3 The increase in TOT in FY 2017-18 is due to higher room rates throughout most of the city's hotels and an opening of a new hotel. 4 The increase in Business License Taxes in FY 2017-18 is due to a significant number of delinquent payments being collected. 5 The increase in Gas Taxes in FY 2017-18 is due to new ongoing allocations received from the state's Road Maintenance and Rehabilitation Account. 6 The increase in Sales and Use Taxes in FY 2018-19 is due to overall growth and the ending of the state's sales and use tax "triple flip" in FY 2017-18. 7 The decreases in tax revenue for sales tax for FY 2019-20 and transient occupancy taxes for FY 2019-20 and FY 2020-21 is due to the effects of the COVID-19 pandemic and resulting stay at home orders on sales and transient occupancy taxes. * Property Tax category also includes Vehicle License Fees (VLF) in lieu, surplus property tax increment and CFD No. 1 special taxes. Source: City of Carlsbad Annual Comprehensive Financial Reports $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Total General Governmental Tax Revenues - Last Ten Fiscal Years (in thousands) Property Tax Sales and Use Taxes TOT Other 146Feb. 11, 2025 Item #2 Page 196 of 224 Water and Wastewater Rates Last Ten Fiscal Years Wastewater Fiscal Year Monthly Delivery Charge Base Price Per Unit1 Monthly Base Rate 2014-15 $21.08 $3.35 $26.03 2015-16 22.19 3.53 27.81 2016-17 24.11 3.84 27.81 2017-18 24.72 3.94 27.81 2018-19 24.72 3.94 27.81 2019-20 25.02 4.04 28.66 2020-21 25.52 4.13 29.52 2021-22 27.81 3.84 35.93 2022-23 28.37 3.92 43.11 2023-24 28.94 4.00 51.74 Source: City of Carlsbad Rates shown for Wastewater are for a single family residential customer. 1 Water Note: Rates shown for Water are for a 5/8" meter, which is the standard household meter size. One unit of water equals 748 gallons. The base price shown is for tier 1, which applies to the first 12 units of usage per month at a single family residence. 147Feb. 11, 2025 Item #2 Page 197 of 224 Feb. 11, 2025 Item #2 Page 198 of 224 Assessed Value of Taxable Property Last Ten Fiscal Years (dollars in millions) Fiscal Year Residential Property Commercial Property Industrial Property Exemptions and Other Taxable Property1 Net Assessed Valuation Change From Prior Year Estimated Property Tax Revenue2 Total Direct Tax Rate3 2014-15 19,450$ 3,603$ 1,847$ 589$ 25,489$ 8.36%49 0.1927% 2015-16 20,431 3,973 1,909 612 26,925 5.63 52 0.1927 2016-17 21,472 4,238 2,092 622 28,424 5.57 55 0.1927 2017-18 22,707 4,355 2,378 555 29,995 5.53 58 0.1927 2018-19 24,077 4,528 2,541 490 31,636 5.47 61 0.1927 2019-20 25,379 4,964 2,673 640 33,656 6.39 65 0.1927 2020-21 26,507 5,224 2,809 677 35,217 4.64 68 0.1927 2021-22 27,697 5,325 2,883 457 36,362 3.25 70 0.1927 2022-23 29,579 5,698 3,141 748 39,166 7.71 75 0.1927 2023-24 31,276 5,917 3,492 749 41,434 5.79 80 0.1927 1 Other property includes farm, rural, institutional, recreational, state secured property, unsecured property, personal property and fixtures. 2 Estimated property tax revenues do not include special assessments, redevelopment tax increment or community facilities district revenues. 3 The total direct tax rate is the city's proportionate share of Proposition 13 property taxes collected within the tax rate area. Source: County of San Diego, California Auditor and Controller's Office Notes: Information about estimated actual value of property is not available; the assessed value is based on the most recent sales value and includes secured property only. $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Taxable Assessed Property Value Last Ten Fiscal Years (in millions) Residential Property Commercial Property Industrial Property 148Feb. 11, 2025 Item #2 Page 199 of 224 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $100 of assessed value) Fiscal Year City of Carlsbad Total Direct Rate2 Carlsbad Unified School District San Diego County Educational Revenue Augmentation Fund Mira Costa Community College Tri City Hospital District All Other Rates Total Prop 13 Rate3 Voter Approved Debt4 Total Tax Rate5 2014-15 0.1927% 0.3412% 0.1576% 0.1497% 0.0937% 0.0198% 0.0453% 1.0000% 0.0710% 1.0710% 2015-16 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0681 1.0681 2016-17 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0563 1.0563 2017-18 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0791 1.0791 2018-19 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0758 1.0758 2019-20 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.1015 1.1015 2020-21 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0999 1.0999 2021-22 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0961 1.0961 2022-23 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0827 1.0827 2023-24 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0782 1.0782 1 Area 09000 was chosen as the most representative for the city. 2 The city has no general obligation bonds; therefore the Basic Tax Rate is the same as the Total Direct Tax Rate. 3 In 1978, California voters passed Proposition 13 which limited property taxes to a total maximum rate of 1.00% based on the assessed value of each property being taxed. This 1.00% is shared by all taxing agencies within a tax rate area. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the purchase price of the property becomes the new assessed value. 4 The majority of voter approved debt is related to various school district and hospital bonds. 5 The Total Tax Rate is the 1.00% Proposition 13 rate plus the Voter Approved Debt rate. Allocation of 1% Ad Valorem Property Taxes Overlapping Rates for Tax Rate Area 090001 Source: County of San Diego, California Auditor and Controller's Office The tax rate history above is for Tax Rate Area 09000, which has the highest total assessed value of the all the tax rate areas in the city. Tax Rate 149Feb. 11, 2025 Item #2 Page 200 of 224 Direct and Overlapping Property Tax Rates (continued) Last Ten Fiscal Years (rate per $100 of assessed value) Total Tax Rates1 County Tax Rate Areas2 Carlsbad Unified Schools Oceanside Unified Schools San Marcos Unified Schools Vista Unified Schools Encinitas Union Schools Mira Costa Comm. College Palomar Comm. College Palomar Health District MWD / SDCWA3 Total Voter Approved Rates4 1.0511% 1 0.0000% 0.0000% 0.0000% 0.0000% 0.0394% 0.0116% 0.0000% 0.0000% 0.0000% 0.0511% 1.0546 35 - - - - 0.0394 0.0116 - - 0.0035 0.0546 1.0608 3 - - - - 0.0394 -0.0179 -0.0035 0.0608 1.0661 1 - - 0.0509 - - 0.0116 - - 0.0035 0.0661 1.0723 24 - - 0.0509 - -- 0.0179 -0.0035 0.0723 1.0747 3 0.0630 - - - - 0.0116 - - - 0.0747 1.0782 54 0.0630 - - - - 0.0116 - - 0.0035 0.0782 1.0815 5 - - - 0.0601 -- 0.0179 -0.0035 0.0815 1.0844 3 0.0630 - - - --0.0179 -0.0035 0.0844 1.0991 1 - - 0.0509 - - 0.0116 -0.0330 0.0035 0.0991 1.1053 11 - - 0.0509 - -- 0.0179 0.0330 0.0035 0.1053 1.1054 1 -0.0903 - - -0.0116 - - 0.0035 0.1054 1.1112 1 0.0630 - - - - 0.0116 -0.0330 0.0035 0.1112 1 The Total Tax Rate is the 1.00% Proposition 13 rate plus the Voter Approved Debt rate. 2 Tax rate areas are determined by the County of San Diego. There are currently thirteen tax rates distributed among the 143 tax rate areas of the city. The table above shows the number of tax rate areas affected by each of the rates. 3 MWD is the Metropolitan Water District and SDCWA is the San Diego County Water Authority. 4 The majority of voter approved debt is related to various school district and hospital bonds. Fiscal Year 2023-24 Voter Approved Debt Tax Rates for all Rate Areas Source: County of San Diego, California Auditor and Controller's Office 150Feb. 11, 2025 Item #2 Page 201 of 224 Principal Property Taxpayers Current Year and Nine Years Ago Taxpayer Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Poseidon Water Desalination Plant 369,871,049$ 1 0.89%-$0.00% Legoland California, LLC 344,202,475 2 0.83 165,231,945 4 0.65 La Costa Glen Retirement Community 302,229,776 3 0.73 238,709,403 2 0.94 La Costa Resort & Spa 270,625,251 4 0.65 252,289,800 1 0.99 Ionis Pharmaceuticals 200,000,000 5 0.48 Levine Investments Limited Partnership 192,035,406 6 0.46 The Forum Shopping Center 188,700,000 7 0.46 184,226,154 3 0.72 The Shoppes at Carlsbad 187,683,865 8 0.45 Grand Pacific Carlsbad 182,110,700 9 0.44 La Costa Town Center, LLC 170,980,031 10 0.41 Pacific View Apartments 159,762,387 5 0.63 Park Hyatt Aviara Resort 143,850,000 6 0.56 Carlsbad Premium Outlets 119,788,973 7 0.47 Westfield Plaza Camino Real 106,613,847 8 0.32 HG Fenton Company 82,618,417 9 0.32 Eaves by Avalon Apartment Homes 81,406,809 10 0.32 Total 2,408,438,553$ 5.81% 1,534,497,735$ 6.02% Net assessed valuation 41,434,016,999$ 25,489,468,151$ Source: County of San Diego, California Assessor's Office 2024 2015 151Feb. 11, 2025 Item #2 Page 202 of 224 Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Total Tax Levy for Fiscal Year1 Amount2 Percentage of Levy Collections in Subsequent Years Amount Percentage of Levy 2014-15 $60,266,230 $59,509,285 98.74% $553,695 $60,062,980 99.66% 2015-16 63,363,527 62,595,504 98.79 499,982 63,095,486 99.58 2016-17 67,116,590 66,233,111 98.68 584,339 66,817,450 99.55 2017-18 70,221,876 69,383,391 98.81 577,617 69,961,008 99.63 2018-19 74,560,530 73,518,065 98.60 630,773 74,148,838 99.45 2019-20 78,446,259 77,076,471 98.25 997,224 78,073,695 99.53 2020-21 82,787,902 81,504,185 98.45 771,509 82,275,694 99.38 2021-22 86,318,392 84,678,789 98.10 713,656 85,392,445 98.93 2022-23 93,757,415 91,921,624 98.04 859,363 92,780,987 98.96 2023-24 99,570,834 97,794,917 98.22 N/A 97,794,917 98.22 1 Includes real property transfer taxes, homeowner exemptions and Proposition 172 public safety sales taxes. 2 Total collections include secured, unsecured, homeowners' exception and supplementary amounts distributed by the county. Collections within the Fiscal Year of the Levy Total Collections to Date Source: County of San Diego, California Auditor and Controller's Office $0 $20 $40 $60 $80 $100 $120 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Property Tax Levies & Collections Last Ten Fiscal Years (in millions) Total Tax Levy for Fiscal Year1 Total Collections to Date 152Feb. 11, 2025 Item #2 Page 203 of 224 Feb. 11, 2025 Item #2 Page 204 of 224 Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands except per capita) Fiscal Year Leases Subscription Based Information Technology Arrangements Bonds/ Special Debt1 Installment Purchase Agreements Loan Payable2 Total Percentage of Personal Income Per Capita 2014-15 -$-$16,260$ -$18,429$ 34,689$ 0.71%313.49$ 2015-16 970 - 16,058 - 17,670 34,698 0.60 307.25 2016-17 784 --3 -15,901 16,685 0.28 146.71 2017-18 588 --- 14,944 15,532 0.24 135.51 2018-19 378 --- 16,827 17,205 0.25 149.30 2019-20 156 --- 15,327 15,483 0.25 135.27 2020-21 ---- 13,750 13,750 0.18 119.05 2021-22 22 --- 12,444 12,466 0.14 107.85 2022-23 238 2,929 -- 10,792 13,959 0.14 121.86 2023-24 212 3,367 -- 14,581 18,160 0.16 158.85 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Sources: MuniServices, LLC, California Department of Finance and US Census Data Governmental Activities Business-Type Activities 1 Bond/Special Debt is net of amortized premiums. 2 The State Water Resources Control Board issued low interest loans for the Carlsbad Water Recycling Facility in 2005, 2006 and 2014. Varying amounts of principal and interest are due annually. Payments are funded from recycled water user fees. 3 The Carlsbad Municipal Golf Course issued revenue bonds in 2006-07 for $18.5 million, which were defeased during FY 2016-17. $313 $307 $147 $136 $149 $135 $119 $108 $122 $159 $0 $200 $400 $600 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Outstanding Debt per Capita Last Ten Fiscal Years (in dollars) 153Feb. 11, 2025 Item #2 Page 205 of 224 Schedule of Direct and Overlapping Bonded Debt Current Fiscal Year Fiscal Year 2023-24 Assessed Valuation:$41,434,016,999 Total Debt City’s Share of Overlapping Tax and Assessment Debt:06/30/24 Debt 6/30/24 Metropolitan Water District $18,210,000 1.12%$204,316 Mira Costa Community College District 359,270,000 27.51 98,845,955 Palomar Community College District 627,562,522 2.61 16,379,382 Carlsbad Unified School District 290,282,848 98.25 285,202,898 Carlsbad Unified School District Community Facilities District No. 1 855,000 100.00 855,000 Oceanside Unified School District 328,021,451 0.00 9,841 Vista Unified School District 216,419,882 0.82 1,772,479 Encinitas Union School District 39,845,765 29.07 11,581,570 San Marcos Unified School District 263,560,519 17.30 45,590,699 San Marcos Unified School District Community Facilities District No. 4 11,010,000 32.63 3,592,673 San Marcos Unified School District Community Facilities District No. 5 9,305,000 100.00 9,305,000 San Dieguito Union High School District 408,120,000 8.54 34,869,773 San Dieguito Union High School District Community Facilities District No. 94-2 21,065,000 98.34 20,715,953 San Dieguito Union High School District Community Facilities District No. 95-2 5,190,000 8.81 457,395 Palomar Health District 391,373,366 1.59 6,234,578 Olivenhain Municipal Water District, Assessment District No. 96-1 3,720,000 23.54 875,614 City of Carlsbad Community Facilities District No. 3, I.A. No. 1 & No. 2 15,420,000 100.00 15,420,000 City of Carlsbad 1915 Act Bonds 16,765,000 100.00 16,765,000 Total Overlapping Tax and Assessment Debt $3,025,996,353 $568,678,126 Source: MuniServices, LLC and County of San Diego, California Auditor and Controller's Office 1 Percentage of overlapping agency's assessed valuation located within boundaries of the city. Percent Applicable1 154Feb. 11, 2025 Item #2 Page 206 of 224 Schedule of Direct and Overlapping Bonded Debt (CONTINUED) Current Fiscal Year Total Debt City’s Share of Overlapping General Fund Obligation Debt:06/30/24 Debt 6/30/24 San Diego County General Fund Obligations $374,600,000 6.18%$23,157,772 San Diego County Pension Obligation Bonds 211,225,000 6.18 13,057,930 San Diego County Superintendent of Schools General Fund Obligations 6,050,000 6.18 374,011 Mira Costa Community College District Certificates of Participation 49,425,000 27.51 13,598,300 Palomar Community College District General Fund Obligations 1,175,000 2.61 30,668 Carlsbad Unified School District General Fund Obligations 55,415,000 98.25 54,445,238 Oceanside Unified School District General Fund Obligation 38,090,000 0.00 1,143 San Marcos Unified School District General Fund Obligations 88,669,368 17.30 15,338,027 Vista Unified School District Certificates of Participation 35,555,000 0.82 291,195 San Dieguito Union High School District General Fund Obligations 12,730,000 8.54 1,087,651 Total Overlapping General Fund Obligation Debt $872,934,368 $121,381,935 Total Overlapping Debt:$3,898,930,721 $690,060,061 City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations 6,579,878$ 100.00 6,579,878$ Total City of Carlsbad Direct Debt 6,579,878$ 6,579,878$ Combined Total Debt $3,905,510,599 $696,639,939 Source: MuniServices, LLC and County of San Diego, California Auditor and Controller's Office 1 Percentage of overlapping agency's assessed valuation located within boundaries of the city. 2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds. Ratios to FY 2023-24 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.37% Ratios to FY 2023-24 Adjusted Assessed Valuation: Governmental Activities Direct Debt 0.0086% Combined Total Debt 1.67% Percent Applicable1 155Feb. 11, 2025 Item #2 Page 207 of 224 Direct and Overlapping Debt Last Ten Fiscal Years (rate per $1,000 of assessed value) 2014-15 2015-16 2016-17 Overlapping Tax and Assessment Debt: Metropolitan Water District 0.049$ 0.039$ 0.030$ Mira Costa Community College District - - - Palomar Community College District 0.562 0.520 0.619 Carlsbad Unified School District 7.073 6.370 5.816 Carlsbad Unified School District CFD No. 1 - - - Oceanside Unified School District - - - Vista Unified School District 0.025 0.022 0.024 Encinitas Union School District 0.385 0.515 0.551 San Marcos Unified School District 2.087 1.922 1.797 San Marcos Unified School District Facility Improvement District 0.035 0.027 0.020 San Marcos Unified School District CFD No. 4 0.254 0.232 0.199 San Marcos Unified School District CFD No. 5 0.690 0.626 0.566 San Dieguito Union High School District 0.967 0.906 1.031 San Dieguito Union HS District CFD No. 94-1 0.003 0.003 0.003 San Dieguito Union HS District CFD No. 94-2 0.928 0.855 0.983 San Dieguito Union HS District CFD No. 95-2 0.021 0.019 0.017 Palomar Health District 0.308 0.285 0.258 Olivenhain Municipal Water District, Assess. Dist. No. 96-1 0.031 0.102 0.091 City of Carlsbad CFD No. 3, I.A. No. 1 & No. 2 0.903 0.836 0.750 City of Carlsbad 1915 Act Bonds 1.727 1.564 1.379 Total Overlapping Tax and Assessment Debt 16.048$ 14.843$ 14.134$ Overlapping General Fund Obligation Debt: San Diego County General Fund Obligations 0.857$ 0.709$ 0.648$ San Diego County Pension Obligation Bonds 1.664 1.497 1.347 San Diego City Superintendent of Schools General Fund Obligations 0.036 0.031 0.025 Mira Costa Community College District Certificates of Participation 0.018 0.014 0.119 Palomar Community College District General Fund Obligations 0.005 0.004 0.003 Carlsbad Unified School District General Fund Obligations 1.846 1.692 1.598 Oceanside Unified School District General Fund Obligations - - - San Marcos Unified School District General Fund Obligations 0.407 0.376 0.378 Vista Unified School District Certificates of Participation 0.001 0.001 0.001 San Dieguito Union High School District General Fund Obligations 0.047 0.044 0.041 Total Overlapping General Fund Obligation Debt 4.881$ 4.368$ 4.160$ Overlapping Tax Increment Debt (Successor Agency):0.290$ 0.250$ 0.212$ Total Overlapping Debt:21.219 19.461 18.506 City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations -0.036 0.028 Total City of Carlsbad Direct Debt -$ 0.036$ 0.028$ Combined Total Debt 21.219$ 19.497$ 18.534$ Source: MuniServices, LLC and County of San Diego, California Auditor and Controller's Office 156Feb. 11, 2025 Item #2 Page 208 of 224 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 0.023$ 0.017$ 0.013$ 0.009$ 0.006$ 0.006$ 0.005$ 0.918 0.750 0.590 2.414 2.210 2.653 2.386 0.571 0.530 0.493 0.498 0.485 0.438 0.395 5.298 7.474 6.944 8.861 7.916 7.049 6.883 0.051 0.045 0.039 0.035 0.030 0.025 0.021 - -- - - - - 0.018 0.028 0.027 0.027 0.052 0.049 0.043 0.506 0.461 0.421 0.389 0.364 0.315 0.280 1.706 1.571 1.521 1.414 1.343 1.209 1.100 0.014 0.009 0.004 - - - - 0.132 0.164 0.146 0.132 0.121 0.105 0.087 0.360 0.456 0.404 0.360 0.322 0.273 0.225 1.087 0.956 0.925 1.087 1.030 0.921 0.842 - -- - - - - 0.678 0.800 0.736 0.678 0.631 0.555 0.500 0.015 0.018 0.017 0.015 0.014 0.012 0.011 0.196 0.228 0.212 0.196 0.187 0.167 0.150 0.079 0.069 0.058 0.040 0.035 0.028 0.021 0.684 0.623 0.561 0.513 0.473 0.417 0.372 1.240 1.024 0.892 0.786 0.686 0.457 0.405 13.576$ 15.223$ 14.003$ 17.454$ 15.905$ 14.679$ 13.726$ 0.572$ 0.510$ 0.436$ 0.379$ 0.424$ 0.367$ 0.559$ 1.168 1.016 0.860 0.716 0.590 0.444 0.315 0.023 0.020 0.018 0.015 0.013 0.011 0.009 0.005 0.001 - - - - 0.328 0.002 0.002 0.001 0.001 0.001 0.001 0.001 1.447 1.313 1.176 1.065 1.663 1.464 1.314 - -- - - - 0.000 0.459 0.421 0.401 0.368 0.346 0.305 0.370 - -- - 0.008 0.008 0.007 0.039 0.036 0.034 0.032 0.031 0.028 0.026 3.715$ 3.319$ 2.926$ 2.576$ 3.076$ 2.628$ 2.936$ 0.177$ 0.143$ 0.110$ 0.090$ 0.058$ 0.026$ -$ 17.468 18.685 17.039 20.120 19.039 17.333 16.662 0.020 0.012 0.005 - 0.001 0.081 0.086 0.020$ 0.012$ 0.005$ -$ 0.001$ 0.081$ 0.086$ 17.488$ 18.697$ 17.044$ 20.120$ 19.040$ 17.414$ 16.749$ 157Feb. 11, 2025 Item #2 Page 209 of 224 Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands) 2014-15 2015-16 2016-17 2017-18 Net assessed valuation 25,489,468$ 26,924,891$ 28,423,782$ 29,994,964$ Debt limit (25% x 15%)955,855 1,009,683 1,065,892 1,124,811 Less amount of debt applicable to limit: Bonded debt 16,260 15,855 -1 - Loan payable ---- Lease obligations -970 785 588 Subscription based information technology arrangements ---- Total net debt applicable to limit 16,260 16,825 785 588 Legal debt margin 939,595$ 992,858$ 1,065,107$ 1,124,223$ Total net debt applicable to the limit as a percentage of debt limit 1.70%1.67%0.07%0.05% Source: City of Carlsbad Annual Comprehensive Financial Reports 1 The golf course bonds were defeased during FY 2016-17. Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15% (as adjusted by 25% per the law) of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. 1.70%1.67% 0.07%0.05%0.03%0.01%0.00%0.00% 0.22%0.23% 0.00% 1.00% 2.00% 3.00% 4.00% 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Percentt off Debtt Applicablee too thee Legall Debtt Limit Last Ten Fiscal Years 158Feb. 11, 2025 Item #2 Page 210 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 31,635,528$ 33,655,907$ 35,217,379$ 36,362,069$ 39,165,588$ 41,434,017$ 1,186,332 1,262,097 1,320,652 1,363,578 1,468,710 1,553,776 - --- - - - --- - - 378 156 -22 238 212 - --- 2,929 3,367 378 156 -22 3,167 3,579 1,185,954$ 1,261,941$ 1,320,652$ 1,363,556$ 1,465,543$ 1,550,197$ 0.03%0.01%0.00%0.00%0.22%0.23% 159Feb. 11, 2025 Item #2 Page 211 of 224 Pledged-Revenue Coverage Last Ten Fiscal Years 2014-15 2015-16 2016-17 2017-18 Wastewater Revenue Bonds Gross revenues 1, 5 13,723,835$ 13,723,835$ -$-$ Less expenses 2, 5 7,249,798 7,249,798 -- Net available revenue 6,474,037$ 6,474,037$ -$-$ Debt service Principal 5 905,000$ 905,000$ -$-$ Interest 5 23,191 --- Total debt service 928,191$ 905,000$ -$-$ Coverage 6.97 7.15 n/a n/a Wastewater Loan Gross revenues 1, 7 -$-$-$-$ Less expenses 2, 7 ---- Net available revenue -$-$-$-$ Debt service Principal -$-$-$-$ Interest ---- Total debt service -$-$-$-$ Coverage n/a n/a n/a n/a Recycled Water Loans Gross revenues 3 9,210,258$ 8,216,362$ 8,371,467$ 9,869,958$ Less expenses 4 3,826,699 4,679,706 4,863,054 5,559,509 Net available revenue 5,383,559$ 3,536,656$ 3,508,413$ 4,310,449$ Debt service Principal 1,407,932$ 1,441,301$ 1,475,461$ 1,510,433$ Interest 468,550 435,182 401,021 366,049 Total debt service 1,876,482$ 1,876,483$ 1,876,482$ 1,876,482$ Coverage 2.87 1.88 1.87 2.30 Golf Course Revenue Bonds Gross revenues 1, 6 8,428,375$ 8,196,853$ -$-$ Less expenses 2, 6 6,302,019 6,273,320 -- Net available revenue 2,126,356$ 1,923,533$ -$-$ Debt service Principal 6 385,000$ 405,000$ -$-$ Interest 6 739,088 721,313 -- Total debt service 1,124,088$ 1,126,313$ -$-$ Coverage 1.89 1.71 n/a n/a Source: City of Carlsbad Annual Comprehensive Financial Reports 1 Includes operating and non-operating revenues and transfers in from the General Fund. 2 Includes operating and non-operating expenses, excluding interest expense and depreciation. 5 Debt service on the wastewater revenue bonds was completed during FY 2015-16. 6 The golf course bonds were defeased during FY 2016-17. 7 Includes wastewater operating and non-operating expenses, excluding interest expense and depreciation. 3 Includes water (potable and recycled) operating and non-operating revenues and fees. In FY 2020-21 the State Water Resources Board confirmed the pledged revenue includes potable, which was excluded in prior years. 4 Includes water (potable and recycled) operating and non-operating expenses, excluding interest expense and depreciation. In FY 2020-21 the State Water Resources Board confirmed the pledged revenue includes potable, which was excluded in prior years. 160Feb. 11, 2025 Item #2 Page 212 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 -$-$ -$ -$-$-$ ------ -$-$ -$ -$-$-$ -$-$ -$ -$-$-$ ------ -$-$ -$ -$-$-$ n/a n/a n/a n/a n/a n/a -$-$ -$ -$-$25,201,718$ - ----4,990,817 -$-$ -$ -$-$20,210,901$ -$-$ -$ -$-$181,024$ - ----112,725 -$-$ -$ -$-$293,749$ n/a n/a n/a n/a n/a 68.80 8,198,882$ 7,557,893$ 56,446,838$ 3,4 56,363,973$ 55,494,378$ 58,196,451$ 6,472,817 5,926,215 50,079,801 3,4 53,308,298 48,058,823 54,212,771 1,726,065$ 1,631,678$ 6,367,037$ 3,055,675$ 7,435,555$ 3,983,680$ 1,546,234$ 1,582,886$ 1,620,408$ 1,658,821$ 1,738,405$ 2,079,014$ 330,248 293,596 256,074 217,661 138,077 201,007 1,876,482$ 1,876,482$ 1,876,482$ 1,876,482$ 1,876,482$ 2,280,020$ 0.92 0.87 3.39 1.63 3.96 1.75 -$ -$ -$ -$ -$ -$ - - - - - - -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ - - - - - - -$ -$ -$ -$ -$ -$ n/a n/a n/a n/a n/a n/a 161Feb. 11, 2025 Item #2 Page 213 of 224 Demographic and Economic Statistics Last Ten Fiscal Years Year Total Population % of S.D. County Population % Change from Previous Year % High School Graduate % Bachelor's Degree or Higher Median Age 2014-15 110,653 3.43%0.44%96.0%51.9%41.1 2015-16 112,930 3.43 2.06 95.6 54.8 42.1 2016-17 113,725 3.43 0.70 95.8 54.2 41.9 2017-18 114,622 3.43 0.79 95.7 55.0 42.3 2018-19 115,241 3.44 0.54 95.7 58.1 42.6 2019-20 114,463 3.42 -0.68 95.0 59.5 44.4 2020-21 115,501 3.48 0.91 95.2 59.5 42.9 2021-22 115,585 3.52 0.07 97.1 60.4 41.8 2022-23 114,549 3.50 -0.90 100.0 62.6 40.5 2023-24 114,319 3.47 -0.20 97.2 67.9 43.4 Sources: MuniServices, LLC/Avenu Insights & Analytics, U.S. Census Bureau Population projections are from the California Department of Finance 2 Unemployment increase in FY 2019-20 is due to the COVID-19 pandemic. Educational Attainment 1 Personal income is the estimated total aggregate income for the total population. Unemployment rate estimates are from the California Employment Development Department, Bureau of Labor Statistics. Household and demographic characteristics estimates are from the United States Census Data Sets Tables. 162Feb. 11, 2025 Item #2 Page 214 of 224 Average Household Size Personal Income (millions) 1 Per Capita Personal Income City Unemployment Rate 2.30 4,907$ 44,345$ 4.3% 2.68 5,741 50,838 5.20 2.58 6,060 53,285 4.20 2.60 6,496 56,675 3.00 2.60 6,889 59,780 2.60 2.60 6,101 53,300 13.50 2 2.38 7,751 67,111 8.11 2.39 8,910 77,085 2.40 2.50 10,299 89,912 3.50 2.57 11,486 100,474 3.60 163Feb. 11, 2025 Item #2 Page 215 of 224 Feb. 11, 2025 Item #2 Page 216 of 224 Principal Employers Current Fiscal Year and Nine Years Ago Employer Industry Employees Rank % of Total City Employment Employees Rank % of Total City Employment ViaSat, Inc.Information Technology 4,135 1 5.23%1,800 1 2.39% Legoland California Hospitality/Tourism 2,300 2 2.91%1,600 2 2.12% Thermo Fisher Scientific Life Sciences 1,982 3 2.51%1,454 3 1.93% Carlsbad Unified School District Education 1,268 4 1.60%931 4 1.24% Ionis Pharmaceuticals Life Sciences 910 5 1.15% Omni La Costa Resort & Spa Hospitality/Tourism 900 6 1.14%919 5 1.22% City of Carlsbad Government 808 7 1.02%670 8 0.89% Gemological Institute of America Research/Education 772 8 0.98%893 6 1.18% Park Hyatt Aviara Hospitality/Tourism 622 9 0.79% TaylorMade Golf Company Action Sports 514 10 0.65%750 7 1.00% OptumRx, Inc.Pharmaceutical 668 9 0.89% Genoptix, Inc.Pharmaceutical 613 10 0.81% Subtotal Employees 14,211 17.97%10,298 13.66% Total Employees Citywide (estimate)79,065 75,375 Source: City of Carlsbad Business License Data Fiscal Year 2023-24 Fiscal Year 2014-15 164Feb. 11, 2025 Item #2 Page 217 of 224 Authorized Full-Time and 3/4-Time City Government Employees by Program Area Last Ten Fiscal Years Program Area 2014-15 2015-16 2016-17 2017-18 Policy and Leadership Group City Attorney 7.00 7.00 6.00 7.00 City Clerk Services 5.00 5.00 5.00 6.00 City Council 1.00 1.00 1.00 1.00 City Manager 7.00 7.00 8.00 8.00 City Treasurer 0.75 0.75 0.75 0.75 Communications & Engagement 4.75 1 5.00 5.00 5.00 Administrative Services Administration ---- Finance 31.50 32.50 33.00 32.00 Human Resources 11.00 11.00 11.00 11.00 Information Technology 22.50 19.50 20.00 27.00 Innovation & Economic Development ---- Public Safety Police 162.00 168.00 168.00 168.00 Fire 89.00 89.00 90.00 90.00 Community Services Community Services Administration ---- Community Development 44.00 44.00 44.00 44.00 Housing & Homeless Services 12.00 13.00 13.00 13.00 Library & Cultural Arts 50.25 1 50.50 50.50 50.50 Parks & Recreation 61.60 1 58.15 57.15 57.00 Public Works Construction Management & Inspection ---- Environmental Management -8.50 2 9.50 2 9.70 Fleet & Facilities ---- General Services 39.90 28.10 2 51.30 2 52.00 Public Works Administration -8.05 2 9.85 2 12.30 Transportation 55.90 57.35 2 33.00 2 32.00 Utilities 64.60 60.85 2 60.20 2 59.00 Limited Term Personnel (Full-Time)-3.75 6.75 7.75 Total Full Time Authorized Employees 669.75 678.00 683.00 693.00 Net Increase/(decrease) over prior year -8.25 5.00 10.00 Source: City of Carlsbad Operating Budget Notes: Table Includes both full-time and 3/4 time employees A full-time employee is scheduled to work 2,080 hours per year (including vacation and sick-leave). A 3/4 time employee is scheduled to work 1,560 hours per year (including vacation and sick-leave). 1 During FY 2014-15, the Policy and Leadership and Community Services divisions were reorganized. 2 During FY 2015-16, FY 2016-17, FY 2019-20 and FY 2020-21, the Public Works division restructured divisions. 3 During FY 2018-19, Police IT was consolidated with city IT, resulting in the transfer of 5.0 FTEs. 4 During FY 2018-19, Housing & Neighborhood Services was combined with Community Development. 5 During FY 2020-21, employees were moved from City Manager and Community Development to create a new office of Innovation & Economic Development and Community Services Administration. 6 During FY 2021-22, Housing & Homeless Services was established. 7 During FY 2022-23, all Business Systems Specialists were transferred from several separate departments to the Information Technology Department. Separately, all employees in the Geographic Information Systems division in the Information Technology Department were transferred to the Innovation & Economic Development Department. 8 During FY 2022-23, one 5-year Limited Term Park Planner position was added to the Parks & Recreation Department and one 5-year Limited Term Senior Engineer position was added to the Fleet & Facilities Department. 165Feb. 11, 2025 Item #2 Page 218 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 7.00 8.00 8.00 8.00 8.00 8.00 6.00 7.00 7.00 7.00 7.00 7.00 1.00 2.00 2.00 2.00 2.00 2.00 9.00 12.00 7.00 5 7.00 5 7.00 7.00 0.75 1.00 1.00 1.00 1.00 1.00 5.00 7.00 7.00 9.00 9.00 9.00 - -- 3.00 3.00 3.00 32.00 31.00 31.00 28.00 26.00 26.00 11.00 17.00 17.00 17.00 18.00 18.00 32.00 3 35.00 37.00 37.00 43.00 7 43.00 -2.00 4.00 5 4.00 5 9.00 7 9.00 169.00 3 184.00 184.00 186.00 187.00 187.00 90.00 97.75 97.75 112.00 123.00 124.00 - -3.00 5 3.00 5 3.00 2.00 58.00 4 63.00 61.75 5 53.00 5 52.00 52.00 -4 - - 14.00 16.00 16.00 50.50 52.50 52.50 53.00 51.00 53.00 55.00 55.00 55.00 55.00 58.00 58.00 - -15.20 2 15.20 2 16.20 15.00 9.60 11.05 11.95 17.95 17.60 17.50 - -34.05 2 37.05 2 33.95 34.95 53.00 47.85 2 - - - - 7.65 7.60 7.85 7.85 5.90 6.00 35.00 44.15 2 41.75 41.75 43.60 43.80 61.75 62.10 61.95 63.95 64.50 63.50 4.75 0.75 - - 2.00 8 2.00 698.00 747.75 747.75 782.75 806.75 807.75 5.00 49.75 - 35.00 24.00 1.00 166Feb. 11, 2025 Item #2 Page 219 of 224 Operating Indicators by Function/Program Last Ten Fiscal Years 2014-15 2015-16 2016-17 2017-18 General Government Number of applications processed (full and part-time) 8,551 8,037 9,544 9,455 Number of external new hires (full and part-time) 299 260 292 311 Number of internal promotions / transfers (full-time only) 41 31 58 44 Business licenses processed 10,735 11,449 8,142 3 11,267 Number of outgoing payments processed 40,663 41,398 41,304 41,869 Public Safety Police Calls for service 91,314 92,061 84,858 90,760 Average priority one response (minutes)6.5 6.1 5.9 5.8 Cases 8,349 9,253 8,884 8,643 Fire Incidents 9,830 11,455 12,183 12,520 Response time: arrivals on scene within goal standard 63%64%78%76% Turnout time: time from request to first unit in-route within standard ---- Community Development Affordable housing units completed ---- Financial assistance to affordable housing projects 2,646,000$ -$ 1,280,000$ -$ Building permits issued 1,600 3,000 4,500 4,392 Building inspections conducted 21,000 23,000 27,000 22,671 Final inspections (residential dwelling units) 200 200 600 289 Final inspections (commercial square feet) 60,000 60,000 95,000 155,292 Code Enforcement Actions (activities) 5,389 10,994 n/a 4 9,538 Community Services Library - total material circulation 1,293,282 1,103,090 1,243,228 1,169,247 Library - patron visits 804,003 609,679 2 720,205 685,188 Cultural Arts - number of events 80 88 79 82 Arts - attendance of events 87,000 85,000 79,067 65,817 Recreation - youth sports participants 1,000 1,000 968 1,003 Recreation - adult sports participants 6,150 5,600 4,500 4,800 Recreation - enrichment class enrollees 19,030 1 19,632 17,402 12,996 Recreation - special events participants 17,841 1 19,474 12,150 11,645 Recreation - aquatics classes conducted 1,224 684 733 778 Trees trimmed 2,018 1,965 1,971 1,954 Public Works Streets Centerline road miles resurfaced with overlay or slurry seal 14.8 18.1 20.0 23.8 Carlsbad Municipal Water District Average consumption (millions of gallons per day) 14.6 12.1 13.1 14.3 Annual water deliveries (acre feet)16,368 13,578 14,616 5 16,032 Water connections 29,190 29,190 29,782 30,054 Wastewater Sewage pumped (millions of gallons per day) 5.90 6.17 5.82 6.32 Annual flow (millions of gallons) 2,152 2,252 2,125 2,306 Wastewater connections 23,431 23,431 23,747 23,863 Source: City of Carlsbad 1 Increases in the number of enrichment class and special events participants are the results of overall higher attendance and including recategorized classes previously not classified or included as enrichment classes or special events in prior years. 2 The decrease in patron visits is due to the temporary closures of library facilities for remodeling during FY 2015-16. 3 The decrease is due to the time involved with the implementation of a new licensing system during FY 2016-17. 4 Reporting of information is not available for FY 2016-17 due to the implementation of a new permitting system. 5 Beginning in FY 2016-17, 2,500 acre feet of contracted desalinated water is included in the water purchase totals. 6 FY 2019-20 and FY 2020-21 had decreases in some public facing programs and services due to the impacts of the COVID-19 pandemic. 7 Beginning in FY 2022-23, the Fire Department began reporting turnout time instead of response time as a performance measure. 8 FY2021-22 and FY2022-23 enrichment class enrollees was adjusted to exclude session that were not deemed enrichment in FY2023-24. 167Feb. 11, 2025 Item #2 Page 220 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 8,495 8,012 5,469 6,578 5,524 5,454 345 248 198 376 354 266 66 66 24 79 84 54 9,546 10,180 10,164 9,736 9,652 10,208 43,520 44,128 41,164 41,315 41,746 43,767 99,562 112,323 110,448 107,156 103,192 114,786 5.7 5.5 5.2 5.2 5.1 6.2 8,705 8,774 8,222 8,704 8,348 8,389 12,833 13,331 12,345 13,837 15,298 15,100 76%75%75%70%- 7 - - - - - 93.7%7 93.0% -157 119 48 - 70 -$ -$ 8,300,000$ 5,250,000$ 2,265,000$ -$ 4,884 4,464 4,645 4,562 5,633 4,186 21,527 21,209 17,044 14,664 16,693 16,971 215 268 309 323 365 99 2,350,975 365,644 403,397 141,285 567,745 71,213 8,154 7,360 6,443 8,065 9,732 14,278 1,185,390 975,024 6 536,078 6 1,033,006 1,118,282 1,320,777 668,973 483,233 6 20,214 6 372,671 426,470 492,600 96 51 6 135 6 159 202 210 61,531 37,913 6 9,724 6 20,844 14,758 24,635 1,260 993 6 - 6 1,428 3,763 4,059 4,800 2,400 6 - 6 1,714 890 911 17,900 9,641 6 3,270 6 6,637 8 8,064 8 7,935 9,600 3,705 6 300 6 8,575 8,675 7,272 830 770 6 715 6 1,061 754 850 4,340 4,678 4,500 3,025 4,179 4,803 25.8 8.3 14.9 - 24.5 17.8 13.0 12.7 13.5 13.2 12.0 12.1 14,563 14,249 14,731 14,787 13,451 13,600 30,131 30,265 30,439 29,446 29,426 29,469 6.03 6.31 6.27 5.75 6.22 5.94 2,200 2,305 2,288 2,097 2,270 2,167 23,959 24,040 24,103 24,096 24,079 24,119 168Feb. 11, 2025 Item #2 Page 221 of 224 Capital Asset Statistics Last Ten Fiscal Years 2014-15 2015-16 2016-17 2017-18 Community Services Number of parks and community fields 33 33 33 33 Acres of developed parks and community fields 319 319 319 319 Acres of open space and community fields 728 728 728 728 Miles of open space trails 47 47 47 47 Number of pools 3 3 3 3 Number of community centers 4 4 4 5 Number of libraries 3 3 3 3 Number of Materials in Library Collections 574,775 563,581 491,956 477,149 Public Safety Fire Protection Number of stations 6 6 6 6 Number of fire trucks 12 12 12 13 Number of ambulances 7 6 5 5 Number of other fire vehicles 15 18 20 20 Police Protection Number of patrol and other vehicles 114 106 106 96 Number of motorcycles 14 15 12 13 Public Works Carlsbad Municipal Water District Miles of pipeline 534 559 559 559 Wastewater Miles of sewers 288 288 288 288 Streets Miles of streets 347 348 349 349 Number of street lights 7,262 7,265 7,334 7,337 Number of traffic signals 177 177 177 178 Source: City of Carlsbad 1 During FY 2018-19, the number of vehicles was updated to include both active and reserve vehicles. 2 In FY 2019-20, a change in the reporting methodology was implemented to include all first responder vehicles. 3 In FY 2019-20, only active lines were counted. Prior years included abandoned and future lines. 169Feb. 11, 2025 Item #2 Page 222 of 224 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 33 33 33 34 34 34 319 319 322 339 339 339 787 802 817 963 963 963 52 52 67 51 52 52 3 3 3 3 3 3 5 5 5 5 5 5 3 3 3 3 3 3 473,154 477,042 497,407 478,825 316,962 296,940 6 1 6 6 6 7 7 14 1 13 2 13 15 14 14 5 1 6 2 6 10 12 12 25 1 25 2 27 27 26 27 119 1 119 119 134 164 179 13 1 15 15 15 14 14 559 535 3 535 549 554 554 288 272 265 265 273 273 349 349 349 349 349 349 7,388 7,520 7,527 8,838 8,841 8,874 179 181 181 194 198 198 170Feb. 11, 2025 Item #2 Page 223 of 224 Feb. 11, 2025 Item #2 Page 224 of 224