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Home My WebLink About2010-11-09; City Council; 20395; PRESENTATION OF LOCAL ECONOMINC UPDATE AND STATUSCITY OF CARLSBAD - AGENDA BILL AB# MTG. DEPT. 20,395 11/09/10 FIN PRESENTATION OF LOCAL ECONOMIC UPDATE AND FINANCIAL STATUS DEPT. DIRECTOR CITY ATTORNEY CITY MANAGER (// RECOMMENDED ACTION: Accept presentation regarding an update of the local economy and the impact on the City of Carlsbad's revenues. ITEM EXPLANATION: The United States has been experiencing an economic slowdown for several years, especially with respect to the housing and financial markets. It is important for the City of Carlsbad to be aware of the economic slowdown and the potential impacts on the City of Carlsbad's finances. This presentation will help provide an overview of the 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: Chuck McBride 760-602-2430 chuck.mcbride(5)carlsbadca.gov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D D D D CONTINUED TO DATE SPECIFIC D CONTINUED TO DATE UNKNOWN D RETURNED TO STAFF D OTHER -SEE MINUTES ^ r.oiiNriT. RF.r.KTVFn THF, PRFSF.NTATTON. Economic Overview and Financial Status Chuck McBride and Kevin Branca Nov. 9, 2010 Agenda •Economic Outlook National State Local •General Fund: Results for Q1 FY 2010-11 National Economy -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 I II III IV I II III IV I II III IV I II III f 2007 2008 2009 2010 Real GDP Quarter-to-Quarter Growth in Real GDP Percent What Ails the US Economy •“Balance Sheet” Recession •Frugal Consumers •Monetary & Fiscal Policies •UNCERTAINTY The California Economy •Housing Markets •Bifurcated Recovery •Unemployment California’s Budget •State budget closed a gap of $17.9 billion and provided a reserve of $0.3 billion •No takeaways from local government •Propositions Local Economic Indicators USD Index of Leading Economic Indicators 80 90 100 110 120 130 140 150 2008 2009 2010 Carlsbad Market Area Foreclosures 2008 -Current -Auctioned 0 100 200 300 400 500 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Carlsbad Oceanside Vista San Marcos Encinitas •Carlsbad –171 •Oceanside –374 •Vista –175 •San Marcos –199 Encinitas –79 Unemployment Rate: September 2010 •National 9.2% •California 12.2% •San Diego County 10.6% Carlsbad Vacancy Rates Fourth Quarter 2009 San Diego Carlsbad •Office 18.3%31.2% •Industrial 10.3%13.9% •Retail 6.9%7.0% Carlsbad/SD County Housing •Median single family home price in SD County for September 2010: $330,500 –($574,000 in May 2006) Median Single Family Home Price Zip Code 2009 2010 Change •92008 $525,000 $570,100 +8.6% •92009 $575,000 $587,900 +2.2% •92010 $445,000 $482,400 +8.4% •92011 $609,000 $640,500 +5.2% First Quarter Results Fiscal Year 2010-11 Revenue Sources •Four largest revenue sources = 81% of General Fund: –Property taxes (44%) –Sales taxes (21%) –Transient occupancy taxes (11%) –Franchise taxes (5%) General Fund First Quarter Revenues –Fiscal Year 2010-11 ACTUAL FY 2010 EXPECTED FY 2011 ACTUAL FY 2011 CHANGE FROM EXPECTED Taxes $12,623,095 $12,768,263 $13,251,137 $482,874 Intergovernmental 257,027 289,861 466,226 176,365 Licenses/Permits 293,288 280,306 336,491 56,185 Charges for Services 2,167,112 2,066,588 1,954,500 (112,088) Fines/Forfeitures 301,794 321,524 208,276 (113,248) Income from Invest.1,273,399 719,665 640,614 (79,051) Interdepartmental 947,448 661,411 754,302 92,891 Other/Transfers In 1,012,414 399,470 186,422 (213,048) $18,875,577 $17,507,088 $17,797,968 $290,880 Difference of 1.7% Property Taxes •Property taxes are up $225,000 (8%) for first quarter •Carlsbad assessed values have decreased by 1.3% Property Taxes •Major factors in the increase: –Current taxes (up $75,000) –Aircraft taxes (up $150,000) –Delinquent taxes (flat) –Supplemental taxes (flat) Property Tax Revenues (in millions) 0 5 10 15 20 25 $0 $10 $20 $30 $40 $50 $60 '03 '04 '05 '06 '07 08 09 10 11e AV Com/Indust AV Residential Property Taxes MillionsBillions City of Carlsbad YTD Revenues -$4.5 Million (up 8%) Estimated FY 2010-11 Revenues -$22.9 Million (up 0.3%) Sales Tax Revenues (in millions) $0 $5 $10 $15 $20 $25 $30 FY 2004- 05 FY 2005- 06 FY 2006- 07 FY 2007- 08 FY 2008- 09 FY 2009- 10 Proj FY 2010-11 Down 19% from the peak in FY 2007-08 Transient Occupancy Taxes •5% increase •Increase has been driven by an increase in occupancy for the first quarter •Avg. occupancy most recent 3 months: 73% •Avg. occupancy for same time last year: 68% Development Related Revenues •Building permits •Planning fees •Building plan check fees •Engineering plan check fees Development Related Revenues (in millions) $0 $2,000 $4,000 $6,000 $8,000 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 Proj. FY 2010-11 Building Permits Planning Fees Building Plan Check Fees Engineering Plan Check Fees Down 72% from the peak in FY 2004-05 Other Revenue Factors •Drop in the yield on the treasurer’s portfolio affecting interest income for the year •Impact of reduced code violations on fines and forfeiture revenues •Volatility of VLF revenues Economic Overview and Financial Status Chuck McBride and Kevin Branca Nov. 9, 2010