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Home My WebLink About2008-08-12; City Council; 19547; Presentation Of Economic OverviewCITY OF CARLSBAD - AGENDA BILL 10 AB# 19,547 MTG. 8/12/08 DEPT. FIN PRESENTATION OF ECONOMIC OVERVIEW DEPT. HEAD ^fe^T1^ CITY ATTY. /&- CITYMGR. dtf fer RECOMMENDED ACTION: Accept presentation by the City of Carlsbad Finance Director and Manager of Economic Development & Real Estate regarding an overview of the economy. ITEM EXPLANATION: The United States is experiencing an economic slow down especially with respect to the housing market. It is important for the City of Carlsbad to be aware of the economic slow down and the potential impacts on the City of Carlsbad's finances. This presentation will help provide an overview of the national, state and local economies with specific information regarding the City of Carlsbad's economy as well as the impact of the slowing economy on Carlsbad and its neighboring cities. This information will help the City be aware and proactive as we move through this economic uncertainty. FISCAL IMPACT: None. ENVIRONMENTAL IMPACT: The proposed presentation does not constitute a "project" within the meaning of the California Environmental Quality Act and, therefore, do not require environmental review. EXHIBITS: None. DEPARTMENT CONTACT: Lisa Irvine and Cynthia Haas 760-602-2430 lirvin@ci.carlsbad.ca.us or chaas@ci.carlsbad.ca.us FOR CITY CLERKS USE ONLY. COUNCIL ACTION:APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D D D D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER - SEE MINUTES aaaa Council received the presentation CarlsbadCarlsbadEconomic OverviewEconomic OverviewAugust 12, 2008August 12, 2008 Economic TrendsEconomic TrendsThat Impact That Impact The City of CarlsbadThe City of Carlsbad Necessity Items •Shelter•Food•ClothingSemi-Necessity Items•Transportation•HealthcareDiscretionary Spending•Entertainment•Recreation•Personal Care, Furnishings, etc•Other ExpensesSAVINGSSales TaxTOT RevenuesIncome minus Income minus Taxes Taxes = = $ Available to$ Available toSpend or SaveSpend or SaveJOBS = INCOMEConsumer Spending & City ServiceConsumer Spending & City ServiceFunding for City Services San Diego CountySan Diego CountyFactors Affecting Consumer ConfidenceFactors Affecting Consumer ConfidenceLocal (San Diego) Unemployment Rate at 12 year high.Local (San Diego) Unemployment Rate at 12 year high.––SD County Unemployment Rate at 5.5%.SD County Unemployment Rate at 5.5%.Construction lost > 8500 jobs.Construction lost > 8500 jobs.Financial Sector (incl. real estate) lost > 5400 jobs.Financial Sector (incl. real estate) lost > 5400 jobs.Hospitality gained >3500 jobs (Seasonal/low paying).Hospitality gained >3500 jobs (Seasonal/low paying).GovGov’’ttgained >1000 jobs (Caltrans construction jobs).gained >1000 jobs (Caltrans construction jobs).More job losses likely to come More job losses likely to come ––Banking SectorBanking Sector––Consumer ProductsConsumer Products––Manufacturing.Manufacturing.California tied with Mississippi for 3California tied with Mississippi for 3rdrdhighest jobless rate. highest jobless rate. Most new SD jobs tied to seasonal employment (JuneMost new SD jobs tied to seasonal employment (June--Sept).Sept).Significant increases in price for gasoline & food from 2007 levSignificant increases in price for gasoline & food from 2007 levels.els.Real estate prices/values in the County down more than 20% from Real estate prices/values in the County down more than 20% from 2007 levels.2007 levels. Food & GasolineFood & GasolineInflationInflationEggs Eggs ––up 35%up 35%Bananas Bananas ––up 17%up 17%Bread Bread ––up 16%up 16%Milk Milk ––up 13%up 13%Apples & Chicken Up Apples & Chicken Up 10%10%Ground beef up 7%Ground beef up 7%08/08/2007 Local Gas @ $2.89/gal = 39% increase08/08/2008Local Gas @ $4.02/gal Foreclosure ActivityForeclosure Activity2007/2008 Trustee Sales/To Auction2007/2008 Trustee Sales/To Auction7123571-500501001502002503003rd Qtr 074th Qtr 071st Qtr 082nd Qtr 08CarlsbadOceansideSan MarcosVistaEncinitasEncinitas3%Carlsbad11%Vista22%San Marcos19%Oceanside45%+103% +72% +66%2nd Qtr. Distribution of 640 Homes to Auction2831231437120+83% +33%Carlsbad Trustee Sales grew by 103% in to 2ndQuarter 2008 (June 30, 2008).July 1- Aug 8 new Foreclosure Sales = 6767 Price Inflation/Financial CrisisPrice Inflation/Financial CrisisWhat it could mean for CarlsbadWhat it could mean for Carlsbad……––Lower Discretionary Lower Discretionary Consumer SpendingConsumer Spending––Lower Tourism SpendingLower Tourism Spending––Greater Costs for BusinessGreater Costs for Business––Job Losses for local Job Losses for local residentsresidents––Lower/Flat House ValuesLower/Flat House Values––Greater Demand for Social Greater Demand for Social Services & Affordable Services & Affordable HousingHousing––Greater Demand for Safety Greater Demand for Safety ServicesServices––Greater Demand for Library Greater Demand for Library & Recreation Services& Recreation Services How Do We UseHow Do We UseEconomic Trends and Other Economic Trends and Other Information to Manage Information to Manage City Finances?City Finances? Federal/StateFederal/StateFederal Economy is weak with housing Federal Economy is weak with housing and unemployment primary concernsand unemployment primary concernsState of California is having difficulty State of California is having difficulty balancing their budget for FY 2008balancing their budget for FY 2008--2009 2009 ––May borrow local governmentsMay borrow local governments’’revenues to revenues to help balance Statehelp balance State’’s budgets budget––Borrowing Gas Tax cash flow for 5 monthsBorrowing Gas Tax cash flow for 5 months––May reduce CityMay reduce City’’s COPS grant, Booking Fees s COPS grant, Booking Fees and Redevelopment revenuesand Redevelopment revenues Sales TaxSales TaxHISTORIC SALES TAX BY GEOGRAPHIC AREABenchmark Year$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,00099/400/100/200/300/401/101/201/301/402/102/202/302/403/103/203/303/404/104/204/304/405/105/205/305/406/106/206/306/407/107/207/307/408/1Carlsbad Redevelopment AreaAuto MallPlaza Camino RealCrossroad Premium OutletsThe Forum Transient Occupancy TaxTransient Occupancy Tax010,00020,00030,00040,00050,00060,00070,00080,000Room NightsJan Feb Mar Apr May JunFY 2007FY 2008 General Fund RevenuesGeneral Fund RevenuesFY 2008FY 2008BudgetBudgetFY 2008FY 2008ProjectedProjectedChangeChangeProperty TaxProperty Tax50.050.047.147.1(2.9)(2.9)Sales TaxSales Tax28.528.528.028.0(0.5)(0.5)Transient Transient Occupancy TaxOccupancy Tax13.613.614.514.50.90.9TotalTotal92.192.189.689.6(2.6)(2.6)Total General Fund Revenues are expected to meet budget of $120 million for FY 2008. Ten Year Financial ForecastTen Year Financial ForecastFY 2008FY 2008--0909Adopted Budget00.511.522.533.54FY2008FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017AdoptedBudget SummarySummaryEconomy is Very UncertainEconomy is Very UncertainContinue LongContinue Long--Term PlanningTerm PlanningContinued Fiscal ConservatismContinued Fiscal ConservatismOngoing Monitoring and Regular Reports Ongoing Monitoring and Regular Reports to City Councilto City CouncilCautious BudgetCautious Budget CarlsbadCarlsbadEconomic OverviewEconomic OverviewAugust 12, 2008August 12, 2008