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HomeMy WebLinkAbout; ; 2019-2020 CAFR; 2020-06-30FISCAL YEAR ENDED JUNE 30, 2020 COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2020 Comprehensive Annual Financial Report Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2020 Prepared by the Finance Department 1635 Faraday Ave. Carlsbad, CA 92008 www.carlsbadca.gov i CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2020 Table of Contents Page Introductory Section: Letter of Transmittal 1 Certificate of Achievement for Excellence in Financial Reporting, Government Finance Officers Association 16 Location Map 17 List of City Officials 18 Organization Chart 19 Financial Section: Independent Auditor’s Report 21 Management’s Discussion and Analysis 24 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 46 Statement of Activities 48 Fund Financial Statements: Balance Sheet – Governmental Funds 50 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 52 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 54 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 56 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 58 Statement of Net Position – Proprietary Funds 60 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 64 Statement of Cash Flows – Proprietary Funds 66 Statement of Net Position – Fiduciary Funds 70 Statement of Changes in Net Position – Fiduciary Funds 71 Notes to the Financial Statements 72 Required Supplementary Information 119 Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period 120 Schedule of Pension Plan Contributions 125 Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period 126 Schedule of OPEB Plan Contributions 129 ii Table of Contents (continued) Page Combining and Individual Fund Financial Statements and Schedules 131 Combining Balance Sheet – Nonmajor Governmental Funds 132 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds 136 Combining Schedule of Revenues and Expenditures – Budget and Actual (Budgetary Basis) – Special Revenue Funds 140 Combining Schedule of Revenue and Expenditures – Budget and Actual (Budgetary Basis) – Capital Project Funds 142 Combining Statement of Net Position – Internal Service Funds 144 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds 146 Combining Statement of Cash Flows – Internal Service Funds 148 Combining Statement of Changes in Assets and Liabilities – Agency Funds 152 Statistical Section: Table of Contents 155 Financial Trends Net Position by Component – Last Ten Fiscal Years 156 Changes in Net Position – Last Ten Fiscal Years 158 Fund Balances of Governmental Funds – Last Ten Fiscal Years 162 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 164 Revenue Capacity General Governmental Tax Revenues by Source – Last Ten Fiscal Years 166 Water and Wastewater Rates – Last Ten Fiscal Years 167 Assessed Value of Taxable Property – Last Ten Fiscal Years 168 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years 169 Principal Property Taxpayers – Current Year and Nine Years Ago 171 Property Tax Levies and Collections – Last Ten Fiscal Years 172 Debt Capacity Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 174 Schedule of Direct and Overlapping Bonded Debt – Current Fiscal Year 176 Direct and Overlapping Debt – Last Ten Fiscal Years 178 Legal Debt Margin Information – Last Ten Fiscal Years 180 Pledged-Revenue Coverage – Last Ten Fiscal Years 182 Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years 184 Principal Employers – Current Year and Nine Years Ago 186 Operating Information Authorized Full and ¾ Time City Government Employees by Program Area – Last Ten Fiscal Years 188 Operating Indicators by Function/Program – Last Ten Fiscal Years 190 Capital Asset Statistics – Last Ten Fiscal Years 192 Introductory Section Introductory Section Introductory SectionIntroductory Section Administrative Services Branch Finance Department 1635 Faraday Avenue  Carlsbad, CA 92008  760-602-2430 t www.carlsbadca.gov 760-602-8553 f 1 November 20, 2020 Honorable Mayor, City Council, and Residents of the City of Carlsbad CITY OF CARLSBAD Carlsbad, CA 92008 LETTER OF TRANSMITTAL 2019-20 COMPREHENSIVE ANNUAL FINANCIAL REPORT Honorable Mayor, City Council, and Residents: I am pleased to present the fiscal year 2019-20 Comprehensive Annual Financial Report (CAFR) for the City of Carlsbad (“city”). The information found in this report is provided by management to the City Council and the public to assist those interested in understanding the fiscal condition of the city as of June 30, 2020. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that has been established for this purpose. Because the cost of internal controls should not outweigh its benefits, the city’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. State law and the city’s Municipal Code require that an annual financial report is prepared. This report fulfills that obligation. It has been prepared in conformity with generally accepted accounting principles (GAAP) and with the financial reporting requirements prescribed by the Governmental Accounting Standards Board (GASB). The independent auditing firm, Davis Farr LLP, has issued an unmodified (“clean”) opinion on the city’s financial statements for the fiscal year that ended June 30, 2020. The independent auditor’s report is located at the front of the financial section of this report. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. As a recipient of federal and state financial assistance, the city is required to have a “Single Audit” performed by an independent audit firm. The Single Audit was designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require that the independent auditor report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Due to COVID-19, there has been a delay in obtaining these reports; however, once completed they will be available in the city’s separately issued Compliance Reports and Other Financial Information. 2 Profile of the City of Carlsbad Carlsbad incorporated in 1952 as a General Law City, although its “village” area dates back more than 100 years. In June 2008, the voters of Carlsbad overwhelmingly approved the city to change to a Charter City. Carlsbad is located on the southern California coast, about 35 miles north of the City of San Diego. The city is governed by a five-member City Council under the Council Manager form of government. The City Council is elected by district, on a staggered basis, for a term of four years. The city currently has four districts; however, the mayor is elected at large. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The city covers approximately 39 square miles and has a population of approximately 115,000, with an expected built out population of 120,000 residents. Commercial activities in the city include: a major regional shopping center, a specialty outlet center, a commercial center with upscale retail shops, 46 hotels offering 4,764 rooms, 268 short-term vacation rentals and 668 timeshares for tourist lodging, over 24 auto dealers, high technology, multimedia and biomedical businesses, electronics, golf apparel and equipment manufacturers, several business and light industry parks, and numerous land developers building single and multi-family housing in a variety of community settings. This report includes financial statements for the city, the Housing Authority of the City of Carlsbad, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: • Police protection services • Development services • Fire and paramedic services • Street construction and maintenance • Water delivery system • Library and arts programs • Wastewater system • Recreation programming for all ages • Solid waste services • Park lands • Housing programs In addition to the full range of services normally associated with a municipality, Carlsbad offers programs to help residents and businesses. The city’s Housing Authority administers federal housing assistance to approximately 527 low-income households in Carlsbad, and older residents can take advantage of Carlsbad’s senior citizen programs. 3 Budget Process The City Council sets the overall policy direction for Carlsbad and helps staff prioritize programs, projects and services to support that direction. Public input plays a critical role in setting both the long-range policy direction of the city and decisions about day to day spending. Budgetary control for the city is maintained through its accounting systems. Expenditures may not exceed budgeted figures at the fund level. Monthly reports summarizing the results of operations for the city’s more significant funds are provided to the City Council. 4 Community Vision These nine core values make up the Carlsbad Community Vision. They were developed in collaboration with the community and drive both the day to day work of the city and its long-term planning. Small town feel, beach community character and connectedness – Enhance Carlsbad’s defining attributes—its small town feel and beach community character. Build on the city’s culture of civic engagement, volunteerism and philanthropy. Open space and the natural environment – Prioritize protection and enhancement of open space and the natural environment. Support and protect Carlsbad’s unique open space and agricultural heritage. Access to recreation and active, healthy lifestyles – Promote active lifestyles and community health by furthering access to trails, parks, beaches and other recreation opportunities. The local economy, business diversity and tourism – Strengthen the city’s strong and diverse economy and its position as an employment hub in north San Diego County. Promote business diversity, increased specialty retail and dining opportunities, and Carlsbad’s tourism. Walking, biking, public transportation and connectivity – Increase travel options through enhanced walking, bicycling and public transportation systems. Enhance mobility through increased connectivity and intelligent transportation management. Sustainability – Build on the city’s sustainability initiatives to emerge as a leader in green development and sustainability. Pursue public/private partnerships, particularly on sustainable water, energy, recycling and foods. History, the arts and cultural resources – Emphasize the arts by promoting a multitude of events and productions year-round and cutting-edge venues to host world class performances and celebrate Carlsbad’s cultural heritage in dedicated facilities and programs. High quality education and community services – Support quality, comprehensive education and lifelong learning opportunities, provide housing and community services for a changing population, and maintain a high standard for citywide public safety. Neighborhood revitalization, community design and livability – Revitalize neighborhoods and enhance citywide community design and livability. Promote a greater mix of uses citywide, more activities along the coastline and link density to public transportation. Revitalize the downtown Village as a community focal point and a unique and memorable center for visitors and rejuvenate the historic Barrio neighborhood. 5 Economic and Fiscal Issues Facing the City This has been an unprecedented time for the City of Carlsbad, the nation, and the entire world, due to the impacts of the Coronavirus Disease 2019 (“COVID-19”). The World Health Organization (WHO) declared COVID-19 a global pandemic on March 11, 2020. The city subsequently declared a local emergency on March 17, 2020, and a countywide stay-at-home order began on March 19, 2020. The stay-at-home order has been extended and is currently in effect with some easing of restrictions since the initial order. At the time of developing the Fiscal Year 2020-21 Proposed Budget, the world was grappling with the effects of COVID-19. The economic impacts of COVID-19 to the federal, state, and regional economies have been unparalleled and continue to remain uncertain. Since the pandemic began, almost 40 million Americans lost their jobs and filed for unemployment benefits, including more than 4.8 million Californians. In April 2020, the statewide unemployment rate climbed to 15.5%. In Carlsbad, some businesses closed, and thousands of residents lost their jobs. The stock market lost several trillion dollars in a few short weeks; the Federal Open Market Committee reacted sharply with a 50-basis-point reduction in the Federal Funds Discount Rate (Discount Rate) on March 3, 2020 and again on March 15, 2020 with an additional 100-basis-point reduction, impacting the city’s investment income. Preparing a budget for a full-service city always has its share of unknown variables. Doing so in the midst of an economic shutdown during a global pandemic elevates the task to a new level of uncertainty. It requires reprioritizing and adapting as the economy recovers. As restrictions are lifted in phases, the city will have a clearer picture of the revenue outlook and whether the city will be reimbursed for additional expenses related to the crisis response. It is impossible to anticipate, at this point, the depth and duration of the economic downturn caused by the pandemic. Yet, Carlsbad’s conservative approach to budgeting has withstood the test of time, allowing for cautious optimism. At the federal level, the city is observing a reluctance to provide financial relief to cities like Carlsbad with populations less than 500,000 in any of the federal stimulus aid packages. This critical help is needed because the long-term ability to maintain police, fire, road, and park services at today’s service levels has no safety net. Carlsbad relies almost entirely on the success of the local economy via tax revenues to fund 70% of these services. While the city has been advocating strongly to include smaller cities in each iteration of the federal aid from the start, there is no relief in sight. Residents and business are as deserving of federal help to protect their public services as larger cities are. Maintaining good fiscal health remains a significant priority. Meeting this objective preserves the city’s ability to continue providing important programs and services to the community. Past economic challenges have provided opportunities for developing solutions to address lost revenues while preserving vital services. Expenditure reductions and shifting of priorities to maintain service levels provide the needed measure of stability to offset the declines in the economic activity the city is currently experiencing due to the COVID-19 pandemic. Although revenues will need to be closely monitored as a result, disciplined spending and long-term financial planning remain critical to ensuring the future sustainability of important city programs and services. Long -Term Financia l Planning Strategic planning begins with determining the city's fiscal capacity based upon long-term financial forecasts of recurring available revenues and future financial obligations. Prior to the adoption of the annual budget, the finance department will prepare and present to the City Council a Ten-Year Financial Forecast (“Forecast”) that evaluates known internal and external issues impacting the city's financial condition. The Forecast is intended to help the city achieve the following: 1. Attain and maintain financial sustainability; 2. Provide sufficient long-term information to guide financial decisions; 3. Ensure availability of sufficient resources to provide programs and services for the stakeholders; 6 4. Identify potential risks to on-going operations in the long-term financial planning process and communicate these risks on an annual basis; 5. Establish mechanisms to identify early warning indicators; and 6. Identify changes in expenditure or revenue structures needed to deliver services or to meet the goals adopted by the City Council. It is important to stress that the Forecast is not a budget. It does not make expenditure decisions, but rather highlights the need to prioritize the allocation of city resources, to ensure the continuation of core city services. The purpose of the plan is to provide the City Council, key stakeholders and the public an overview of the city’s fiscal health based on various financial and service level assumptions over the next ten years; and allow for the discussion of necessary steps to be initiated during the development and implementation of future budgets. The Forecast is intended to look beyond the annual budget cycle and serve as a planning tool to bring a long-term perspective to the budget process. The Forecast should also take into consideration any City Council Policies that need to be met on an annual basis including General Fund reserve guidelines and pension funding guidelines. Should projected expenditures exceed projected revenues in any given year, the City Manager will need to identify steps to mitigate the shortfalls prior to presenting a balanced budget to the City Council for consideration during the annual budget development process. It should be noted that the Forecast is a snapshot in time and will change as additional information is made available and incorporated into the fiscal projections. The city prepares a long-term financial model for both capital and operating needs. With a growing city such as Carlsbad, it is imperative that the city plan for the impacts of development, constructing and operating new public facilities, and planning resources needed to build them. The city prepares a ten-year operating forecast for the General Fund, and a 15-year Capital Improvement Program. As part of the Capital Improvement Program, the city annually calculates the amounts needed to pay for the various projects and calculates the anticipated operating budget impacts. In this way, the city can anticipate the effects of development from both a capital and an operating perspective. One important initiative the city has undertaken to ensure its financial health is the development of an Infrastructure Replacement Fund. With this fund, the city sets aside a portion of General Fund revenues on an annual basis for major maintenance and replacement of its infrastructure. Much of the city’s infrastructure is relatively new; thus, the city is only beginning to experience the impact of maintenance requirements. By setting aside funds now, the residents of Carlsbad can be assured that the proper maintenance and replacement, as needed, will be performed on streets, parks, and many facilities for which the city is responsible. Employee retirement costs continue to require ongoing prudent fiscal management. Overall, levels of funding of the city’s plans and the CalPERS system have improved from higher-than-expected investment returns over the last two fiscal years. While this boosts the funding position, risks remain in the system. Required employer contributions will continue to increase over the next few years and actual contribution increases could exceed expectations if future experience is unfavorable. The City Council issued a pension funding policy to codify its commitment to ensure that resources will be available to fulfill the city’s contractual retirement promises to its employees, and to minimize the chance that the funding of these benefits will interfere with providing essential services to the community. The policy outlines a funding discipline to ensure that adequate resources will be accumulated in a systematic and disciplined manner to fund the long-term cost of benefits to the plan participants and annuitants. With continued demand for enhancing services for the community, keeping up with technology demands and replacement of aging infrastructure remains an issue. To maintain the city’s current and proposed standards of performance, and to protect computer systems from ever-increasing outside attacks, viruses and new vulnerabilities, additional resources are continually needed to ensure systems remain stable and reliable for all users and protected against data intrusion or loss. Additional funding in this budget has been made for needed replacements, upgrades and security. 7 Connected Carlsbad As the adoption of new technology expands, expectations from the public and what they demand from government is changing too. Carlsbad is quickly becoming a leader in deploying advanced technological and data tools to provide better services for the community. Connected Carlsbad: An Inclusive Smart Community Roadmap, recently presented to the City Council, is designed to provide a high-level, organized guide to the work the city will do in using data and technology. This customized strategic roadmap is based on City Council approved projects, existing city documents, previous IT assessments, and interviews with departments, combined with a global scan of other cities and best practices that have emerged from leading smart city thinkers and Carlsbad-specific community engagement. The roadmap is organized into five primary goal areas to: • Modernize and Strengthen IT Infrastructure • Build Capacity for Data-Driven Government • Foster a Vibrant Civic Engagement Culture • Enhance Accessibility and Transparency • Promote Safety and Sustainability Through Connectivity The city will continue to stay abreast of the economic climate and variables effecting the national, state, and local levels. Updated financial forecasts and maintaining a structurally balanced budget for the long term will allow the City Council and decision makers to adjust for potential pitfalls and to ensure fiscal challenges are identified and resolved. FINANCIAL MANAGEMENT POLICIES Revenue Policies The development and maintenance of balanced and reliable revenue streams will be the primary revenue objective of the city. Efforts will be directed to optimize existing revenue sources while periodically reviewing potential new revenue sources. The need to promote a healthy business climate is recognized as one method to maximize existing revenue sources. Revenue estimates will be prepared on an annual basis during the preparation of the budget, and major revenue categories will be projected on a ten-year basis. Revenues will be estimated conservatively using accepted standards and estimates provided by the state and other governmental agencies. Alternative revenue sources will be periodically evaluated to determine their applicability to meet identified city needs. Sources of revenue will be evaluated and modified as necessary to assure a diversified and growing revenue base that improves the city’s ability to handle fluctuations in individual sources. Revenues from “one-time” or limited duration revenue sources will not be used for ongoing operating expenses. Fees and charges for services will be evaluated and, if necessary, adjusted annually to ensure that they generate sufficient revenues to meet service delivery costs. The city will establish user charges at a level generally related to the full cost (operating, direct, indirect, and capital costs) of providing the service, unless the City Council determines that a subsidy from the General Fund is in the public interest. The city will also consider market rates and charges levied by other municipalities of similar size for like services in establishing rates, fees, and charges. Enterprise and Internal Service Funds will be self-supporting. Expenditure and Budget Policies Major expenditure categories will be projected on a ten-year basis. The city will operate on a current funding basis. Expenditures will be budgeted and controlled so as not to exceed current revenues plus the planned use of any accumulated fund balances. Annual budgeted operating expenditures shall not exceed annual operating revenues, including budgeted use of reserves. The city manager shall prepare and submit to the City Council annually a proposed operating and capital budget by June 1st of each year, and the budget will be adopted by June 30th of each year. Budget status reports are prepared monthly, distributed to all departments, and posted on the city’s website. Because the budget is based on estimates, from time to time, it is necessary to make adjustments to fine-tune the 8 line-items within it. Various levels of administrative control are utilized to maintain the budget’s integrity. Program managers are accountable for the line-item level of control of their individual program budgets. Department heads are accountable for the fund level of control for funds within their departments. Finance oversees the general level of accountability related to budgetary integrity through systems checks and balances and various internal controls. The city’s General Fund Surplus Policy - Council Policy No. 87 outlines the use of surplus funds resulting from unrestricted General Fund actual revenues exceeding total actual expenditures, encumbrances, and commitments for a given fiscal year. It is the intent of the city to use all surplus funds generated to meet reserve policies, and the reduction or avoidance of long-term liabilities. The city will not use year-end surplus funds to fund ongoing operations unless otherwise approved by the City Council. The city will use surplus funds to replenish any General Fund deficiencies, up to the minimum level as set forth in the General Fund Reserve - Council Policy No. 74 and then any pension liability deficiencies, as defined in City Council Policy No. 86 - Pension Funding Policy. The city manager is authorized to approve the carryforward of any unspent and unencumbered budget for a particular item equal to or less than $100,000 into the following fiscal year. These items will be one-time expenditures and not for on-going services, programs or personnel. Any remaining surplus funds in excess of reserve and pension liability deficiencies and items equal to or greater than $100,000 will be brought forward for the City Council’s approval. The city adheres to long-range financial planning which forecasts revenues and expenditures over a long- term period, using assumptions about economic conditions, future spending scenarios, and other salient variables. Financial planning allows the city to execute overall strategies to support the process of aligning financial capacity with long-term service objectives. Financial forecasts are updated at least once a year, or more often, if unexpected changes in economic conditions or other unforeseen circumstances exist. Any significant changes will be reported to the city manager and the City Council. Otherwise, these financial forecasts will be used as a tool during the development of the annual budget process and to set utility rates as needed. Reserve Policies The city formally mandates the levels at which reserves shall be maintained for the General Fund and informally sets minimum target levels for the Enterprise and Internal Service Funds. The General Fund Reserve Guidelines - Council Policy No. 74 was most recently updated and approved by the City Council in June 2019. The purpose of the policy is to establish a target minimum level of designated reserves in the General Fund to: • Reduce the risk of financial impacts resulting from a natural disaster or other catastrophic events; • Respond to the challenges of a changing economic environment, including prolonged downturns in the local, state or national economy; and • Demonstrate continued prudent fiscal management and creditworthiness. The city commits to maintaining General Fund reserves (the term reserve refers to any unassigned fund balance) at a target of 40% of General Fund annual operating expenditures. The total reserve level will be calculated using the prior year’s adopted General Fund budgeted expenditures. At the discretion of the City Council, reserve levels in excess of the 40% target requirement may be used for one-time opportunity cost purposes. Reserve funds will not be spent for any function other than the specific direction in the annual budget or by a separate City Council action. As a general budget principle concerning the use of reserves, the City Council decides whether or not to appropriate funds from reserves. Reserve funds will not be spent for any function other than the specific purpose of the reserve account from which they are drawn without specific direction in the annual budget; or by a separate City Council action. 9 The Wastewater and Water Operating Fund Reserves will target a reserve funding level of 40%. The reserve amount is calculated by dividing unassigned fund balance by total budgeted operating expenses plus replacement transfers plus budgeted debt service payments. The annual budget process and setting utility user rates and charges will be used to achieve and maintain the target reserve level. The city’s Workers’ Compensation Fund will maintain a minimum reserve equal to the estimated outstanding claims as calculated by a third-party administrator. Additional reserve amounts may be set aside as deemed appropriate based on a third-party actuarial study completed at two-year intervals. During the annual budget process, the target confidence level will be compared with the projected fund balance, and, if the projected fund balance is greater than or lesser than the target, a plan to adjust the fund balance will be considered, using either or both increasing revenues through interdepartmental charges and one- time cash contributions from those funds contributing to the shortfall. The Risk Management Fund (General Liability) will maintain a minimum reserve equal to the estimated outstanding claims as calculated by a third-party administrator. Additional reserve amounts may be set aside as deemed appropriate based on a third-party actuarial study completed at two-year intervals. During the annual budget process, the reserve level will be compared with the projected fund balance, and, if the projected fund balance is greater than or lesser than the target, a plan to adjust the fund balance will be considered, using either or both increasing revenues through interdepartmental charges and one-time cash contributions from those funds contributing to the shortfall. The Information Technology Asset Replacement Fund shall maintain a minimum reserve level defined as the amount of accumulated depreciation of capitalized assets based on the original cost of each capitalized asset, and up to a maximum reserve level defined as the accumulated depreciation based on the estimated replacement cost of each capitalized asset. The Vehicle Asset Replacement Fund shall maintain a minimum reserve level defined as the amount of accumulated depreciation of capitalized fleet assets based on the original cost of each capitalized asset, and up to a maximum reserve level defined as the accumulated depreciation based on the estimated replacement cost of each capitalized asset. Investment Policy The city has established a formal Investment Policy. It is the policy of the City of Carlsbad to invest public funds not required for immediate day to day operations in safe, liquid and medium-term investments that yield an acceptable return while conforming to all California statutes. It is intended that the policy cover the investment activities of all contingency reserves and inactive cash under the direct authority of the city. Investments of the city and its component units will be made on a pooled basis; however, investments of bond proceeds will be held separately if required. Pension Funding Policy The city’s Pension Funding Policy - Council Policy No. 86 embodies funding and accounting principles to ensure that resources will be available to fulfill the city’s contractual promises to its employees. The policy objectives include using actuarially determined contributions (ADC) provided by CalPERS, funding the full amount of the ADC each year, maintaining no less than a combined minimum of 80% funded ratio, and demonstrating accountability and transparency by communicating all information necessary for assessing the city’s progress toward meeting its pension funding objectives. In the event the city is unable to meet the minimum combined pension funded ratio of 80% with current resources (i.e. without borrowing or using reserves), the finance director will identify a reasonable period to return to a minimum 80% funded ratio status. 10 Capital Improvement Program The City of Carlsbad Capital Improvement Program (CIP) reflects the city’s ongoing commitment to maintaining the highest standards of quality facilities for the community today and in the future. It is a planning document, not a commitment for spending. The 15-year program outlines the expenditure plan for future capital projects and the corresponding revenues to pay for those expenditures. Projects that are shown in the CIP are generally defined as any construction, rehabilitation or replacement of major infrastructure such as streets, libraries, parks, fire stations and administrative facilities, water, sewer and drainage facilities, and other facilities that are located on or in the ground. In most cases, the total construction cost of each of these assets is recorded and tracked as part of the city’s inventory of capital infrastructure assets and other city-owned property. Once the City Council adopts the proposed annual CIP budget, projects receive an appropriation that authorizes spending in the amount specified for the adopted fiscal year only. Estimated budget information is shown for a 15-year period to provide the most comprehensive information about known future projects. Spending authority in future years is not granted until adoption of the annual proposed CIP budget associated with each year. Carlsbad’s philosophy is to take a proactive, long-range planning approach to building high quality facilities and infrastructure that support the needs and priorities of the community. The CIP is organized by the following project classifications: I nvesting in Quality of Life As the city continues to grow and develop, there is a corresponding increase in the demand for development-related services and new facilities. To ensure that the necessary infrastructure and facilities are built on a schedule that meets or exceeds this demand, the citizens of Carlsbad adopted a Growth Management Plan in 1986. The plan was established to manage development within the city by linking residential, commercial, and industrial development directly to standards for availability of public services and facilities. Planning Study Plan Assessment Maintenance & Operations Technical master plans Repair Refurbishment/ Rehabilitation Modifications Improvements Maintenance Program Monitoring Replacement Upgrade Capital Projects Regulatory & Policy- Driven: Legal requirements, compliance with Growth Management Plan, Climate Action Plan, defined projects to implement policies, plans and goals adopted by City Council Community Enhancements: new facilities, expansions, parks & trails, traffic signals, coastal improvements Project Accounting CFD #1 Admin Open Space Acquisition Loans Repayment/Transfer 11 The Growth Management Plan states that unless a standard level of facilities is available to meet new demands resulting from the city’s growth, development cannot proceed. Recently, certain actions, such as imposing a moratorium, have been determined to be impermissible by the California Housing and Community Development Department, per Senate Bill 330, Housing Crisis Act of 2019, which became effective on Jan. 1, 2020. The detailed level of planning required by Growth Management has allowed Carlsbad’s Capital Improvement Program to anticipate the funding needed for capital improvements in the next 15 years. Facilities such as community centers, parks, and fire stations have been constructed and opened to the public under this program. The Capital Improvement Program has been designed to specifically address areas where new or expanded facilities will be needed to maintain compliance with the adopted performance standards. Compliance with the Growth Management Plan was continued with the adoption of the fiscal year 2020-21 CIP. Prudent financial planning has ensured ongoing funding to modernize, repair, and replace existing infrastructure projects through numerous asset management programs, which ensure adequate inspection, maintenance, and replacement of buildings and parks, water, sewer and drainage systems, bridges, and roadways systems. Project Evaluation Development of the CIP is a team effort involving all operational departments, the city manager’s office, the City Council, and the community. Community feedback on infrastructure needs is considered and incorporated. The CIP is fully vetted at multiple levels of the organization using an inclusive and transparent process, and reviewed quarterly. As the CIP is implemented throughout the year, staff continually reevaluate projects’ scopes, costs and schedules to responsibly and cost-effectively manage infrastructure assets at the required levels of service throughout their lifecycle. Recommendations for project funding considers current project status, project scheduling and sequencing requirements, project constraints and current staff capacity. Project charters are updated to include project description, location, summary of need, justification including any legislative or policy citations, cost estimates and project scores. In anticipation of revenue decreases in some capital funding sources, staff recommended funding adjustments in fiscal year 2020-21 that focused on matching existing resources with realistic and achievable project schedules. New project requests were minimized, and the city remains committed to continue work on projects that are already underway. Capital Improvement Program Public Health and Safety City mission, vision and organizational values Community values Environmental Review Governing and Policy Documents Funding availability City Council Goals 12 F iscal Year 20 20-21 A ppropriations In the fiscal year 2020-21 CIP, there are approximately 230 continuing and new projects planned over the next 15 years. The fiscal year 2020-21 CIP outlines $29.1 million in new appropriations to provide additional funding for the continuation of existing projects as well as funding for one new project. Projected revenues during the same fiscal year are estimated at $34.5 million. Civic Buildings and Facility Maintenance $4.3 million This category includes a variety of facilities such as fire stations, libraries and the new City Hall. Costs include repair, maintenance and replacement of civic buildings. Parks $755,000 Projects include improvements and enhancements to existing parks, such as playground resurfacing, picnic areas and other needs identified by the community and in recently updated parks master plans. Drainage $500,000 The city’s drainage infrastructure plays an important role in handling storm water runoff flows, as well as maintaining the water quality of the city’s creeks, lagoons and ocean. As the city continues to age, it is increasingly necessary to balance repairing and replacing the existing lines with enhancing the current infrastructure to accommodate future needs. Capital Projects 47% Maintenance & Operations 19% Project Accounting 34% FY 2020-21 Appropriations $29.1 million 13 Sewer $10.4 million The city’s sewer, or wastewater, projects include numerous pipeline construction and rehabilitation projects, as well as improvements to the Encina Wastewater Treatment facility. Most new lines are built and paid for with impact fees collected with new development. Water and Recycled Water $5.0 million Future water and recycled water projects include construction of new pipe lines, replacement of existing waterlines and reservoir improvements. The Carlsbad Municipal Water District has been producing and delivering recycled water for over 30 years. Streets and Circulation System $8.2 million People of all ages and abilities want to go places safely and conveniently in Carlsbad, whether they drive, walk, bike, or ride a bus or train. Carlsbad continues to invest in modernizing roads, leveraging technology to improve traffic systems, and making timely repairs and rehabilitation of the roadways, bridges, sidewalks and other assets in public rights of way throughout the city. N ew CIP P rojects Village H South Off Leash Dog Area and Trail Segment 5B Managing Department: Parks & Recreation Classification: Capital Project Funding Source: Public Facility Fees Budget FY21 FY23 TOTAL $ $ $ 375,000 872,800 1,247,800 About This Project The City of Carlsbad took ownership of a 61-acre piece of property, bisected at the corner of Carlsbad Village Drive and Victoria Avenue, as part of a lawsuit settlement involving the Quarry Creek housing project. The project anticipates approximately one acre of fenced, off-leash dog area, a parking lot and a pre-fabricated restroom. The project also includes the design and construction of the balance of Trail Segment 5B (Carlsbad Village Drive to Tamarack Avenue), as reflected in the Carlsbad Trails Master Plan. Project Need The City Council directed city staff to “initiate public outreach to engage residents in the development of a plan to integrate an off-leash dog run as part of the Village H property.” Taking into account community input, staff and Preserve Calavera created a conceptual plan to allow an off-leash dog area while protecting sensitive habitat preserves and providing for wildlife movement. 14 General Plan Consistency The project is consistent with Open Space, Conservation, and Recreation Element Goal 4-G.3 (“Protect environmentally sensitive lands, wildlife habitats, and rare, threatened or endangered plant and animal communities”) and Policy 4-P.41 (“Implement the projects recommended in the City of Carlsbad Trails Master Plan through the city’s capital improvement program, private development conditions and other appropriate mechanisms”). The project’s Open Space and Community Facilities land use designations support recreation and community-serving uses. Climate Action Plan Consistency The project is consistent with CAP Section 3.6 – Pedestrian Improvements Anticipated Environmental Review Potential Mitigated Negative Declaration or addendum to the Environmental Impact Report prepared for the Calavera Hills Master Plan Phase II. F u ture Projects The CIP for fiscal year 2020-21 to fiscal year 2034-35 outlines approximately 230 projects at a cost of $623.9 million. Long-range planning and responsible asset management play key roles in the development of future capital projects. Using data from various infrastructure master plans, ongoing asset condition assessments, technical modelling, field inspections as well as community feedback, the information provided for future years reflects the most comprehensive snapshot of known or anticipated future projects as well as associated estimated costs. Unfunded Projects There are six projects identified in the Capital Improvement Program for which there is no identifiable funding source and, in some cases, where only partial funding has been identified. The city will investigate obtaining possible external funding, such as federal and state grants, loans, or other financing sources. Once funding is identified for these projects, the project costs will have to be reviewed and updated to reflect 15 actual cost estimates. The unfunded projects do not receive annual inflationary increases. Two projects are partially funded by the Traffic Impact Fee Program. The program was planned to generate enough revenue to pay for 20% of the total costs of these projects, leaving the remaining 80% unfunded. A wards and Acknowledg ements The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the city for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. This was the 22nd consecutive year that the city has achieved this prestigious award. To be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The city strives to annually produce a CAFR which will continue to meet the Certificate of Achievement Program’s requirements. This report will be also submitted to GFOA to determine eligibility for another certificate. This report has been a comprehensive effort by many people from many different areas of responsibility. It could not have been accomplished without their help and the dedicated efforts of all of the finance staff, especially Ryan Green, Assistant Finance Director and Kim Riboni, Senior Accountant. I also appreciate the staff of Davis Farr LLP for the professional way in which the audit of this financial report was conducted. It has been a pleasure to work with them. Additionally, I would like to thank the City Council, the City Manager and the city’s Executive Management Team for their leadership and unfailing support in maintaining the highest standards of professionalism in the management of the city’s finances. Respectfully submitted, Kevin Branca Finance Director Business Park Recreational Facility (Partial Funding)6,600,000$ Cannon Lake Park (6.7 Acres)2,243,000 Carlsbad Blvd. Mountain View To Northerly City Limits (Partial Funding)6,905,600 Carlsbad Blvd./ Palomar Airport Road (Partial Funding)14,109,600 Carlsbad Blvd. Realignment - Segments 3-5 26,100,000 College Boulevard Extension 30,000,000 TOTAL UNFUNDED PROJECTS 85,958,200$ 16 17 18 Elected Officials Matt Hall, Mayor Keith Blackburn, Mayor Pro Tem – At-Large Cori Schumacher, Council Member – District 1 Priya Bhat-Patel, Council Member – District 3 Vacant, Council Member – District 4 Barbara Engleson, City Clerk Craig Lindholm, City Treasurer Leadership Team Scott Chadwick, City Manager Celia Brewer, City Attorney Geoff Patnoe, Assistant City Manager Gary Barberio, Deputy City Manager, Community Services Laura Rocha, Deputy City Manager, Administrative Services Paz Gomez, Deputy City Manager, Public Works Michael Calderwood, Fire Chief Neil Gallucci, Police Chief James Wood, Environmental Manager Jason Haber, Intergovernmental Affairs Director Jeff Murphy, Community Development Director John Maashoff, Public Works Manager Judy von Kalinowski, Human Resources Director Kevin Branca, Finance Director Kristina Ray, Communication & Engagement Director Kyle Lancaster, Parks & Recreation Director Maria Callander, Information Technology Director Morgen Fry, Executive Assistant to the City Manager Sheila Cobian, City Clerk Services Manager Suzanne Smithson, Library & Cultural Arts Director Vicki Quiram, Utilities Director Boards and Commissions Chairs Eric Larson, Agricultural Conversion Mitigation Fee Ad Hoc Citizens’ Advisory Committee Laurenn Barker, Arts Commission Linda Petrucci, Beach Preservation Commission Timothy Stripe, Carlsbad Golf Lodging Business Improvement District Timothy Stripe, Carlsbad Tourism Business Improvement District Board Chad Majer, Historic Preservation Commission John Nguyen-Cleary, Housing Commission Carolyn Luna, Housing Element Advisory Committee Art Larson, Library Board of Trustees Michael Luna, Parks & Recreation Commission Velyn Anderson, Planning Commission John Rodenhausen, Senior Commission Monica Gocan, Traffic & Mobility Commission 19 20 Financial Section Financial Section Financial SectionFinancial Section INDEPENDENT AUDITOR’S REPORT City Council City of Carlsbad Carlsbad, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information of the City of Carlsbad, California, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements 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, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 21 City Council City of Carlsbad, California Page Two Opinions 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 of Carlsbad as of June 30, 2020, and the respective changes in financial position and, where applicable, cash flows and the statement of revenues, expenditures and changes in fund balance - budget to actual of the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter The financial statements for the year ended June 30, 2020 reflect a prior period adjustment as described further in note 20 to the financial statements. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period, Schedule of Pension Plan Contributions, Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period and Schedule of OPEB Plan Contributions be presented to supplement the basic financial statements. Such information, 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Carlsbad's basic financial statements. The combining and individual non-major fund financial statements and schedules, the introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 22 City Council City of Carlsbad, California Page Three auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non-major fund financial statement and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and the statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 19, 2020 on our consideration of the City of Carlsbad'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 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 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 of Carlsbad’s internal control over financial reporting and compliance. Irvine, California November 19, 2020 23 24 Management’s Discussion and Analysis Management of the City of Carlsbad (“city”) provides readers this overview and analysis of the financial activities of the city for the fiscal year ended June 30, 2020. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the city. This analysis will focus on the significant changes to explain the city’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts – management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non-major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the city. • The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the city’s overall financial status. • The remaining statements are Fund Financial Statements that focus on individual parts of the city government, reporting the city’s operations in more detail than the Government-wide Statements. o The Governmental Funds Financial Statements detail how general government services, such as public safety, were financed in the short-term, as well as what remains for future spending. o Proprietary Funds Statements offer short- and long-term financial information about the activities the city operates like businesses, such as providing water and wastewater services. o Fiduciary Funds Statements provide information about the financial relationships – such as contractor and miscellaneous deposits – in which the city acts solely as a trustee or agent for the benefit of others to whom the resources belong. The financial statements also include notes that explain some of the information in the financial statements and provide greater detail. The statements are accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements is the combining fund statements section that provides financial information about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis (MD&A) explains the structure and content of each of the statements. Government-wide Financial Statements The Government-wide Financial Statements report information about the city as a whole, using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the city’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the Statement of Activities, regardless of when cash is received or paid. The two Government-wide Financial Statements report the city’s net position and how it has changed. Net position – the difference between the city’s assets and liabilities – is one way to measure the city’s financial health, or position. Over time, increases or decreases in the city’s net position are an indicator of whether the city’s financial health is improving or deteriorating, respectively. Additional non-financial factors should be considered, such as changes in the city’s property tax base and the condition of the city’s infrastructure, to assess the overall health of the city. 25 The Government-wide Financial Statements of the city are divided into two categories: • Governmental activities – Most of the city’s basic services, such as police, fire, public works, community services, and internal services are included here. Taxes, revenues from other governments and agencies, income from property and investments, grants and contributions, and charges for services finance most of these activities. • Business-type activities – The city charges fees to customers to cover the cost of certain services it provides. The city’s water, wastewater, solid waste and municipal golf course operations are the primary business-type activities. Fund Financial Statements The Fund Financial Statements provide more detailed information about the city’s most significant funds – not the city as a whole. Funds are accounting devices used by the city to keep track of specific sources of funding and spending for particular purposes. Some funds are required by state law and bond covenants, while the city establishes other funds to control and manage money for particular purposes (such as the developer impact fee funds) or to show that it is properly using certain taxes and grants (such as the Section 8 Rental Assistance Fund). The city has three kinds of funds: • Governmental funds – Most of the city’s basic services are included in governmental funds. These funds are used to account for (1) cash and other financial assets that can readily be converted to cash flow in and out, and (2) balances left at year-end that are available for future spending. Consequently, the Governmental Funds Statement provide a detailed short-term view that helps the reader determine the amount of financial resources that can be spent in the near future to finance the city’s programs. The statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement. There are currently three governmental fund types being used by the city: the General Fund, special revenue funds, and capital project funds. • Proprietary funds – Services for which the city charges customers a fee are generally reported in proprietary funds. Proprietary funds, like Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of propriety funds, enterprise funds and internal service funds: o Enterprise funds are used to report activities that provide business-type services, generally to external customers – such as water, wastewater, solid waste, and golf services. In both the Government-wide Financial Statements and the Fund Financial Statements, these funds are shown under business-type activities. o Internal service funds are used to report activities that provide services and supplies for the city’s other programs and activities – such as fleet, workers’ compensation, risk/liability, and information technology. 26 • Fiduciary funds – These funds are used to account for situations where the city’s role is purely custodial, such as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. All of the city’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position. These activities are excluded from the city’s Government-wide Financial Statements because the city cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Position The city’s combined net position as of June 30, 2020, as shown below, was $1.829 billion. The city’s net position increased by $18.9 million as compared to the prior fiscal year. This increase was heavily impacted by revenues exceeding expenses for the year which resulted in an increase in citywide cash balances ($29.2 million). Other factors leading to the higher net position included the impacts of the city recording the annual pension activities (a large decrease in the net pension liability and smaller changes in deferred inflows and outflows), an increase in capital assets (donated infrastructure was up for the year) and a reduction in outstanding debt. These increases were partially offset by an increase in other liabilities (higher accrued liabilities and estimated claims payable). The increase in capital assets is discussed in more detail in the capital asset section of this MD&A. As noted earlier, over time, net position may serve as a useful indicator of the city’s financial position. For the city, assets currently exceed liabilities by $1.829 billion at the close of the most recent fiscal year. A large portion of the city’s net position (62.4%) reflects its net investment in capital assets (i.e. land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding. The city uses these capital assets to provide services to residents; consequently, these assets are not available for future spending. Although the city’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves would not Total Percentage Change 2019 2020 2019 2020 2019 2020 2019-20 Current and other assets $672.2 $699.2 $167.4 $167.5 $839.6 $866.7 3.2% Net OPEB asset 0.0 0.0 0.0 0.8 0.0 0.8 100.0% Capital assets 787.4 791.3 363.4 366.5 1,150.8 1,157.8 0.6% Total assets 1,459.6 1,490.5 530.8 534.8 1,990.4 2,025.3 1.8% Deferred outflows 59.0 33.5 3.8 2.2 62.8 35.7 -43.2% Other liabilities 28.8 33.8 23.6 25.3 52.4 59.1 12.8% Net OPEB liability 1.5 3.7 0.7 0.2 2.2 3.9 77.3% Net pension liability 152.9 139.2 10.1 11.0 163.0 150.2 -7.9% Long-term debt outstanding 0.4 0.0 16.8 13.6 17.2 13.6 -20.9% Total liabilities 183.6 176.7 51.2 50.1 234.8 226.8 -3.4% Deferred inflows 7.1 4.4 0.8 0.4 7.9 4.8 -39.2% Net position Net investment in capital assets 787.0 791.1 346.6 351.2 1,133.6 1,142.3 0.8% Restricted 251.9 265.4 38.5 41.2 290.4 306.6 5.6% Unrestricted 289.0 286.4 97.5 94.1 386.5 380.5 -1.6% Total net position $1,327.9 $1,342.9 $482.6 $486.5 $1,810.5 $1,829.4 1.0% Total CITY OF CARLSBAD'S NET POSITION (in millions of dollars) Governmental Activities Business-Type Activities 27 be used to pay for these liabilities. The net investment in capital assets for the city increased slightly during fiscal year 2019-20, due primarily to additional developer donated assets (streets, sidewalks, streetlights, water and wastewater lines) netted with a decrease in outstanding debt (primarily Recycled Water). A portion of the city’s net position (16.8%) represents resources that are subject to external restrictions on usage. The remaining balance of unrestricted net position ($380.5 million) may be used to meet the city’s ongoing obligations to residents and creditors. Just over 35.8% of the $286.4 million in unrestricted governmental activities net position is attributable to the General Fund. This is a small increase from the previous fiscal year due to cash balances increasing from revenues exceeding expenses for the year; a large loan payment received by the General Fund from the former redevelopment agency; a positive unrealized gain on investments in the current fiscal year; the addition of capital assets; a positive impact from the additional payments made to CalPERS in previous fiscal years; and payments made on the city’s debt. A portion of business-type net position represents the city’s municipal golf course. At the end of fiscal year 2019-20, there is a large deficit in unrestricted net position for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course and partially subsidizing the operations of the course in prior fiscal years. On the following page, the condensed summary of activities shows that net position increased by $18.9 million during the year. This increase occurs when spending is less that the revenues received. There were several reasons for the increase in net position: • “Savings” in the General Fund totaling $20.5 million is being carried forward into fiscal year 2020-21 by various major service areas within the city to enhance and provide for future services and programs (indicating that spending levels in fiscal year 2019-20 were less than budgeted expenditures) • Fiscal discipline implemented by the city due to the COVID-19 pandemic delaying new programs, hiring efforts, closing out older purchase orders, and cost containment efforts • Revenues received in the city’s special revenue funds for future services and programs, and • Donations of infrastructure assets from developers. 28 Changes in Net Position Approximately 65.3% of the revenues of the city’s governmental funds are generated through taxes collected (i.e. property tax, sales tax, transient occupancy tax (TOT), etc.), and approximately 81.6% of the city’s business-type revenue is generated through charges for services. The chart on the following page graphically depicts the city’s revenue sources. Total Percentage Change 2019 2020 2019 2020 2019 2020 2019-20 Revenues Program revenues Charges for services $21.8 $19.2 $71.9 $70.4 $93.7 $89.6 -4.4% Operating grants and contributions 17.3 18.5 1.2 0.4 18.5 18.9 2.2% Capital grants and contributions 13.8 16.8 4.9 6.3 18.7 23.1 23.5% General revenues Property taxes 70.0 73.9 4.0 4.2 74.0 78.1 5.5% Sales and use taxes 38.5 36.5 - - 38.5 36.5 -5.2% Other taxes 39.5 31.4 - - 39.5 31.4 -20.5% Income from property and investments 20.7 20.2 7.8 5.0 28.5 25.2 -11.6% Other 0.4 0.6 0.1 - 0.5 0.6 20.0% Total revenues 222.0 217.1 89.9 86.3 311.9 303.4 -2.7% Expenses General government 22.2 24.3 - - 22.2 24.3 9.5% Public safety 68.0 75.2 - - 68.0 75.2 10.6% Community services 58.0 60.8 - - 58.0 60.8 4.8% Public works 36.9 41.4 - - 36.9 41.4 12.2% Carlsbad Municipal Water District - - 51.6 51.2 51.6 51.2 -0.8% Golf course - - 11.0 10.3 11.0 10.3 -6.4% Wastewater - - 15.2 16.9 15.2 16.9 11.2% Solid waste - - 3.9 4.4 3.9 4.4 12.8% Total expenses 185.1 201.7 81.7 82.8 266.8 284.5 6.6% Excess (deficiency) before transfers 36.9 15.4 8.2 3.5 45.1 18.9 -58.1% Transfers (0.2) (0.3) 0.2 0.3 - - 0.0% Increase (decrease) in net position 36.7 15.1 8.4 3.8 45.1 18.9 -58.1% Beginning position, as restated 1,291.2 1,327.8 474.2 482.7 1,765.4 1,810.5 2.6% Ending net position $1,327.9 $1,342.9 $482.6 $486.5 $1,810.5 $1,829.4 1.0% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET POSITION (in millions of dollars) Governmental Business-Type 29 The city’s revenues were projected to be at their highest levels since incorporation prior to the COVID-19 pandemic which significantly impacted TOT, sales tax, parks and recreation, and lease revenues. Due to the COVID-19 emergency, a majority of the city’s hotels were closed for a portion of March, all of April and started opening up in May. However, most of the larger hotels continued to be closed for the fourth quarter of the fiscal year. One indicator of the magnitude that the pandemic had on the city’s TOT revenues is that during the month of May 2020, the average occupancy in the city’s hotels was 42%, compared to 81% in May 2019. As a result, transient occupancy tax revenues decreased steeply in the fiscal year. Similarly, sales tax revenues were down significantly for the year. Small businesses in the State of California were given additional time to remit their second calendar quarter 2020 sales tax payments. The city saw this impact during the year as well as the impacts of the shelter-in-place orders in the fourth quarter of the fiscal year, which shut down all non-essential businesses during a majority of that period. The city’s largest revenue source, a lagging indicator of the financial health of the city, property taxes, increased due to assessed values increasing by 6.2% in total for residential, commercial and industrial properties. This was the fifth year in a row that the city had growth in all three assessed value components (residential, commercial and industrial). The city experienced an increase in business license renewal volumes as various federal COVID-19 business assistance programs required businesses to have an active and valid business license in order to receive assistance. Development remained relatively strong for the year, although it expectedly slowed when compared to the prior fiscal year. The city saw infill residential development (especially in the Village area of the city) as well as some of the last remaining master planned community development. There was very little commercial and industrial development during the year, similar to the prior fiscal year. Income from property and investments were heavily impacted by five factors: unrealized gains created by adjusting the city’s investments to their fair market value at June 30, 2020, a loss on the early disposal of the Maerkle reservoir cover, an increase in the average yield on the treasurer’s portfolio for the year (up 12 basis points from last fiscal year to 2.08%), the sale of Fire Station No. 3, and a 0.8% increase in the average cash balance. These factors combined to create a decrease in income from property and investments when compared to the prior fiscal year. A reduction in total water consumption was driven primarily by lower commercial and residential customer demand which consequently resulted in a reduction in commercial wastewater charges (as their fees are based on water consumption). These two factors led to a reduction in charges for services for the year for both water and wastewater. An increase in the donation of developer constructed assets (roads, pipelines, sidewalks, etc.), and an increase in utility related developer impact fees partially offset the decrease in operating revenues. Sources of Revenue for Fiscal Year 2019-20 Charges for Services Property Tax Sales Tax Income from Property & Investments Contributions form Property Owners TOT Other Taxes State Aid Federal Aid Other Revenues 30% 26% 12% 8% 8% 6% 4% 3% 3% .2% $303.4 Million Sources of Revenue for Fiscal Year 2019-20 Charges for Services Property Tax Sales Tax Income from Property & Investments Contributions form Property Owners TOT Other Taxes State Aid Federal Aid Other Revenues 30% 26% 12% 8% 8% 6% 4% 3% 3% 0.2% $303.4 Million 30 The total cost of all programs and services was $284.5 million in fiscal year 2019-20 which was moderately higher (6.6%) than prior fiscal year costs of $266.8 million. The majority of the increase in program costs came from the salary, benefit and retirement costs related to the citywide addition of approximately 55 staff members. In addition, the costs associated with hiring the additional staff members including vehicles, computers, etc. added to the increase. The increase in expenses would have been much higher for the year, but when the COVID-19 pandemic hit in March 2020 departments were asked to curtail spending, new positions and programs were put on hold, and the city embarked on a program to close outdated purchase orders. During the prior fiscal year, the city changed its budget practices and the policy surrounding carrying forward unspent appropriations at the end of the fiscal year. With this change, city departments focused on completing projects in process and procuring planned capital outlay items by the end of the fiscal year. This policy continued into fiscal year 2019-20, thereby reducing the amount of carryforward budgets into the 2020-21 fiscal year. This accelerated the costs that were incurred in fiscal year 2018-19 as compared to previous fiscal years. Although the city anticipated higher expense levels during fiscal year 2019-20 due to the addition new staff members, city departments focused on reducing spending levels when the COVID-19 pandemic hit in March 2020. Departments were asked to eliminate travel, postpone trainings, delay new programs, defer the hiring of new staff members, and to be additionally prudent in their spending of city funds. At the same time, the city embarked on a major program to close out older purchase orders. This program enabled the city to close out over $3 million in old purchase orders that were no longer needed. Without these savings efforts, the fiscal year 2020-21 citywide expenses would have been much higher. • General Government (8%) This segment of the city is divided into three major groups: Policy and Leadership, Administrative Services and non- departmental charges. The Policy and Leadership group encompasses all elected officials, the chief executive offices for the city, the Community Outreach and Engagement team, and the Innovation Team. The Administrative Services group includes Finance, Human Resources (including Workers’ Compensation and Self-Insured Benefits), Information Technology, and Risk Management. Non-departmental also includes any special projects directed by the City Council. • Public Safety (26%) Public Safety remains a top City Council priority. This major service area includes the Police Department, whose mission is to protect and serve the community with integrity, professionalism, and valor. The Fire Department is the other component of this major service area with a mission to enhance the quality of life by delivering exceptional services in safeguarding lives, property, and the environment. 31 • Community Services (21%) Community Services consists of Library and Cultural Arts, Parks and Recreation, City Clerk Services, and Community and Economic Development. Library and Cultural Arts provides educational, informational and cultural arts services for all community residents, which contribute to quality of life by supporting lifelong learning, the pursuit of knowledge, and creating the availability of community gathering places. Parks and Recreation offers comprehensive opportunities for meeting the recreational and social needs and interests of the community by providing programs for all segments of the population. The mission of Community and Economic Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for and maintaining a strong economic and employment base, and strengthening neighborhoods through partnerships and collaboration to improve or enhance the quality of life and sense of community within Carlsbad. Community and Economic Development encompasses Land Use Planning, Economic Development, the Hiring Center, Housing and Neighborhood Services, Land Development Engineering, and Building. City Clerk Services includes minutes preparation, election administration, agenda preparation, legal noticing and publishing, maintaining the Carlsbad Municipal Code, ensuring public records are archived, preserved, and accessible to the public, and developing and implementing citywide records management and document management programs. • Public Works (15%) Public Works is responsible for building and maintaining all city infrastructure assets. This service area includes Public Works Administration, Transportation (transportation and storm drain engineering; asset management of transportation drainage, and other city infrastructure; construction management and inspection; traffic and mobility; the Buena Vista Creek Channel Maintenance Assessment District; and Lighting and Landscape District No. 2), General Services (maintenance of streets; storm drains; street lighting; city facilities; fleet; and the Safety Training Center), Environmental Management (oversees the Climate Action Plan Program; the Habitat Management Plan Program; the recycling program; solid waste; and provides coordination of the municipal component of the National Pollutant Discharge Elimination System Municipal Storm Water Permit), and Utilities (potable water, recycled water and wastewater operations). • Golf Course (4%) The city opened a municipal golf course in the summer of 2007, further enhancing the tourist attractions the city offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high-quality golf experience, a first-class restaurant and clubhouse, and connections to hiking trails, The Crossings at Carlsbad is a destination for golfers and non-golfers alike. • Solid Waste (2%) The Solid Waste Division of the Utilities Department administers and monitors the solid waste contract and the Palomar Transfer Station agreement and is responsible for ensuring the waste reduction and recycling components of the Source Reduction and Recycling Element and Household Hazardous Waste Element comply with state mandated diversion and disposal requirements. Also included in this section is the Storm Water Protection Program, whose goal is to provide leadership and stewardship of the city’s resources protecting the city’s beaches, creeks and lagoons. • Water Operations (18%) The Carlsbad Municipal Water District (CMWD), a subsidiary of the city, provides potable and recycled water service to approximately 85% of the city (approximately 30,400 customers). CMWD purchases 100% of its potable water, which includes a local supply of desalinated seawater, as treated water from the Metropolitan Water District and the San Diego County Water Authority. CMWD also provides recycled water for irrigation purposes. 32 • Wastewater Operations (6%) The city operates and maintains a sanitary wastewater collection system, which covers approximately 74% of the geographic area of the city. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad, Vista and Encinitas; the Leucadia Wastewater District; the Vallecitos Water District; and the Buena Sanitation District. The following sections will provide information about the operations of the governmental and business-type activities separately. Governmental Activities The increase in net position for governmental activities was $15 million. This increase was generated by total revenues from governmental activities of $217 million ($54.4 million in program revenues and $162.6 million in general revenues) offset by $201.7 million in total costs of governmental activities, and a $0.3 million transfer to the Solid Waste Fund. The table below presents the total cost of each of the city’s major programs, as well as each program’s revenue (fees generated by the activities, contributions, and intergovernmental funding). The net cost (the difference between adjoining bars in the graph) shows the financial burden that was placed on the city’s taxpayers by each of these programs (costs covered by general revenues). Revenues are generated through several sources to cover the cost of the city’s programs. Total revenues of $162.6 million include fees and charges paid by those who directly benefit from the programs ($19.2 million), grants and contributions from other governments and organizations which subsidize certain programs ($35.2 million), and taxes and other revenues (such as income from property and investments) received by the city to pay for the “public benefit” portion. Community Services revenues are derived from development activities throughout the city, housing assistance programs, parks and recreation fees, and library fees. A large portion of Community Services revenues are comprised of housing assistance programs (Section 8 Rental Assistance, affordable housing loan repayments, and developers paying into the $3.4 $6.3 $21.0 $23.8 $24.3 $75.2 $60.8 $41.4 0 10 20 30 40 50 60 70 80 General Government Public Safety Community Services Public Works Program Revenues $54.5 Program Expenses $201.7 Governmental Activities Program Revenues and Expenses Fiscal Year 2019-20 (in millions) 33 Affordable Housing Trust Fund) as well as charges for development related services. As expected, development activity reflected a moderate decrease from the prior fiscal year, offsetting only a small portion of the program expenses. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient funds have accumulated to pay for the entire asset cost. Several years ago, the city entered a new stage of its lifecycle, from a developing or growing stage, to a mature stage. As the city continues to mature and approach buildout, there will be fewer master planned projects. In past years, these projects constructed new facilities, roads, parks, and other city-owned infrastructure. The city is shifting its focus towards maintenance of existing facilities and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. There are still some master planned communities that were recently completed or are near completion, including the La Costa Oaks Industrial Park, Uptown Bressi, and Poinsettia 61. The developers of these communities have dedicated or will dedicate infrastructure to the city, a requirement for development. Business-type Activities Program revenues for the city’s business-type activities totaled $77.1 million for the year, while program expenses equaled $82.7 million. Water program revenues are generated primarily from the sale of water, but also from developer donated assets and grants. Revenues for the fiscal year were slightly higher than program expenses due primarily to an influx developer donated assets of water lines (e.g. Haymar Drive, Chase Court, etc.) and an increase in water rates of 1% beginning in January 2020. These increases were partially offset by a decrease in demand for water resulting from a large drop in commercial water consumption due to COVID-19. Water program expenses were lower than expectations due to lower than planned water purchases. Wastewater program revenues finished below program expenses due to lower commercial water consumption resulting from COVID-19. (Commercial water consumption is the driver of their wastewater rates.) Higher operating expenses 52.0 14.8 6.6 3.7 51.2 16.9 10.3 4.4 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Water Wastewater Golf Course Solid Waste Program Revenues $77.1 Program Expenses $82.7 Business-Type Activities Program Revenues and Expenses Fiscal Year 2019-20 (in millions) 34 were primarily the result of increased wastewater plant costs and increased depreciation expense on recently added capital assets. The city’s golf course enterprise was in its thirteenth full year of operation and finished the fiscal year with a net loss of $3.5 million. Beginning in March 2020, the golf course was significantly impacted by the partial and complete shutdown due to COVID-19. Despite the challenges, golf course revenues were sufficient to fund normal golf course operating expenses when depreciation expenses are excluded. Solid waste revenues are primarily generated from fees charged to waste removal services customers to support the city’s integrated waste management plan which include recycling efforts and proper waste disposal programs. Expenses were planned to surpass revenues as many waste management programs have increased in level of effort and cost, such as solid waste, recycling, and organics management services, household hazardous waste collection and disposal, and environmental outreach and education. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses) and are not reflected as an expense in the year acquired. A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section. Financial Analysis of the City’s Funds As noted earlier, the city uses fund accounting to ensure compliance with finance related legal requirements. In the current Comprehensive Annual Financial Report (CAFR), the city did not implement any new GASB pronouncements. Governmental Funds The focus of the city’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. This information is useful in assessing the city’s financing requirements. In particular, unassigned fund balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. There are five fund balance classifications: nonspendable, restricted, committed, assigned, and unassigned. These fund balance classifications comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detail of the fund balances by classification is shown in Note 10 of the financial statements. At the end of the current fiscal year, the city’s governmental Governmental Fund Balances for Fiscal Year 2019-20 Nonspendable Restricted Purposes Committed Assigned Unassigned 7.9% 42.7% 0.2% 31.5% 17.7% $621.3 Million Governmental Fund Balances for Fiscal Year 2019-20 Nonspendable Restricted Purposes Committed Assigned Unassigned 7.9% 42.7% 0.2% 31.5% 17.7% $621.3 Million 35 funds reported combined ending fund balances of $621.3 million, up $21.6 million from the year before. Approximately 8% ($49.0 million) constitutes nonspendable fund balances, mostly comprised of advances and loans to other funds. Restricted fund balances can only be spent for a specific purpose stipulated by law and make up about 43% ($265.4 million). Assigned fund balances are intended to be used by the city for specific purposes, but do not meet the criteria to be classified as restricted or committed. These make up almost 32% ($196.0 million) of the city’s fund balance. Approximately 18% ($110.1 million) of the fund balance is unassigned, which is available for spending at the City Council’s discretion. Of the unassigned fund balance, the City Council has $11.1 million set aside for economic uncertainty purposes. However, accounting standards require that the $11.1 million set aside be shown as part of the city’s unassigned fund balance. The city’s General Fund Reserve Policy, outlined in City Council Policy No. 74, commits the city to maintaining General Fund reserves at a target of 40% of General Fund annual operating expenditures. The total reserve level is to be calculated using the prior fiscal year’s adopted General Fund budgeted expenditures and is outlined below: Actual Target Unassigned General Fund balance $110.1 NA Economic uncertainty set aside 11.1 NA Unassigned fund balance, excluding economic uncertainty 99.0 66.8 Fiscal year 2019-20 adopted General Fund budgeted expenditures 167.1 167.1 General Fund reserve percentage 59%40% GENERAL FUND RESERVE BALANCE (in millions of dollars) 36 The General Fund is the main operating fund of the city, and at the end of the fiscal year had a total fund balance of $190.8 million, an increase of $5.2 million. The unassigned fund balance portion of the General Fund was $110.1 million, an increase of $8.4 million from last fiscal year. During the previous fiscal year, the City Council approved a new budget surplus policy that changed how unspent appropriations from one fiscal year are carried forward into the next fiscal year. This new policy once again reduced the amount of carry forward budgets from fiscal year 2019-20 to fiscal year 2020-21 by $5.9 million. The city used a portion of the $19.1 million in funds identified in the unassigned portion of the General Fund: $3.0 million of the economic set aside was used to cover COVID-19 related costs and $5.0 million was used to implement a business revitalization program. A major factor in the decrease in General Government expenditures is the result of an additional CalPERS payment made last year of $20 million, impacting the city’s retirement costs for fiscal year 2019-20, the closing out of approximately $1.7 million of old purchase orders, and a fiscal awareness that was heightened due to the pandemic. These savings completely offset the addition of 34 new full-time positions and 11.37 part-time positions that were added across all departments during the fiscal year. Originally, it was expected that maintenance and operations expenses across all programs would increase due to the additional headcount and new programs; however, once the COVID-19 pandemic hit in March 2020, programs were deferred or cut, expenditures were reduced, and city staff were asked to more stringently scrutinize all expenditures. At the same time, the city embarked on a program to close out older purchase orders in the city. This program was able to save the General Fund approximately $2 million. In order to keep the General Fund in balance and to offset the decrease in revenues affected by the COVID-19 pandemic, Total Increase Percentage (Decrease)Change 2019 2020 Revenues Taxes $148.8 $141.3 ($7.5)-5.0% Intergovernmental 1.9 3.4 1.5 78.9% Licenses and permits 2.7 2.7 0.0 0.0% Charges for services 9.1 7.5 (1.6)-17.6% Fines and forfeitures 0.6 0.5 (0.1)-16.7% Income from property and investments 9.6 12.0 2.4 25.0% Miscellaneous 1.5 1.7 0.2 13.3% Total revenues 174.2 169.1 (5.1)-2.9% Expenditures General government 23.7 25.2 1.5 6.3% Interdepartmental charges (4.6)(5.1)(0.5)10.9% Public safety 77.3 70.5 (6.8)-8.8% Community services 41.5 43.2 1.7 4.1% Public works 16.8 18.6 1.8 10.7% Total expenditures 154.7 152.4 (2.3)-1.5% Excess (deficiency) before transfers 19.5 16.7 Transfers in 0.3 0.0 Transfers out (13.2)(11.5) Increase (decrease) in fund balance 6.6 5.2 Beginning fund balance, as restated 179.1 185.6 Ending fund balance $185.7 $190.8 2019-20 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) 37 city departments decreased spending during the last quarter of the fiscal year; reduced the amount of transfers out of the General Fund; closed out open and aged encumbrances, reducing the assigned balances for these purchase orders; and reduced carryforwards of unspent General Fund budgets. With the city approaching buildout, several of the remaining large residential master planned communities and industrial/commercial parks saw a reduction in construction activity as they neared completion, leaving only a small portion of the city undeveloped. This slower pace is projected to continue and cause a further revenue decline for the foreseeable future as the city approaches buildout. In the city’s fiscal year 2019-20 budget, expenditures were expected to increase 7.3% over the fiscal year 2018-19 budget to $167.1 million. The total personnel budget for fiscal year 2019-20 was $101.4 million, which was 9.1% more than the previous year’s personnel budget of $92.9 million. The total maintenance and operations (M&O) budget for fiscal year 2019-20 was $53.8 million, which was 8.6% higher than the previous year’s budget of $49.5 million. The increase in personnel budgets was based on previously negotiated salary and benefit increases, the net addition of 45.37 new staff members (34.0 full-time and a net increase of 11.37 part-time staff), projected retirement increases (due to the increase in personnel) and increases in workers’ compensation costs. Health insurance cost increases also factored into the higher personnel costs. The increase in the M&O General Fund budget was driven by general increases in internal service charges and increases for new programs (i.e. homeless response program; North Beach lifeguard program; general price increases; and costs associated with the hiring of new employees, including vehicles, computers, training; and general contract increases). Transfers out of the General Fund were budgeted at $11.5 million, a $1.7 million decrease from the prior fiscal year. The decrease was due to the Workers’ Compensation Fund not needing a transfer, as was need in the prior fiscal year. Adding to the adopted budget of $167.1 million for the General Fund was approximately $22.4 million in unspent fiscal year 2018-19 budgeted expenditures and $11.3 million in open encumbrances as of June 30, 2019. The Community Facilities District Number 1 Fund continues to collect assessments for the future construction of city infrastructure and facilities. The General Capital Construction Fund used a portion of its existing fund balance to acquire open space property at Aura Circle and the refurbishment of City Hall. The fund balance in the Infrastructure Replacement Fund increased as the city continued the annual transfer of funds from the General Fund for the future replacement of existing infrastructure and facilities. Projects for the year included the replacement of synthetic turf at Stagecoach Park. The Park Development Fund and the Public Facilities Construction Fund used a portion of their existing fund balances for improvements to Poinsettia Park including pickleball courts, multi-sport arena and playground refurbishment. During the year, the city continued to set aside money for the construction of various projects within these funds. Historically, the city has not issued debt to fund the construction of capital projects and sets aside funds on an annual basis until sufficient funds have been collected for the construction of specific projects. In addition, projects will not be constructed until anticipated annual operating costs can be absorbed into the city’s budget without creating a deficit. 38 Proprietary Funds The purpose of the city’s proprietary fund sections is to provide short- and long-term financial information about the city’s business-type activities. The analysis focuses on the determination of operating income, changes in net position (cost recovery), financial position, and cash flows. The Carlsbad Municipal Water District (CMWD) funds experienced an operating loss of approximately $4.7 million for the year. Operating revenues were approximately $46.5 million and operating expenses were approximately $51.2 million. One of the larger factors in the operating loss was the decrease in volume of water sales, which was primarily attributable to higher than expected rainfall in the current year and the impacts of COVID-19 on commercial water consumption. A 1% increase in CMWD’s water rates took effect in January 2020 and partially offset the lower water consumption. Water purchases and other variable costs decreased, but these decreases were largely offset by cost increases of water purchased from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the CMWD’s potable water) as well as increased depreciation cost of CMWD infrastructure. Nonoperating income from property and investments of $5.0 million and property taxes of $4.2 million were offset by a loss on the early disposal of the Maerkle reservoir cover. Income before transfers and capital contributions for the year were $2.0 million. The Wastewater Fund had an annual operating loss of $3.2 million for the fiscal year. Total revenues from operations were down from the prior year and budget, due primarily to lower commercial water consumption, the rate determining factor for commercial customers. Higher operating expenses were primarily the result of increased wastewater plant costs and increased depreciation expense on recently added capital assets. Nonoperating revenues related to income from property and investments added $1.5 million to the operating income, resulting in a net loss of $1.7 million before transfers and capital contributions. In the thirteenth year of operation, the Golf Course Fund had an operating loss of $3.5 million, primarily due to the depreciation of the enterprise's assets ($3.6 million). Revenues fell short of expectations in the current year due to the partial and complete closure of operations due to COVID-19, but costs were also curbed, and no transfers were required in the current year. If golf course operating revenues were not able to cover golf course operating expenses (excluding depreciation) or major capital projects, the General Fund would have made contributions to pay for the shortfall. Solid Waste Operations and Storm Water Programs are combined on the city’s financial reports and showed a net operating loss of $0.8 million for the year. Revenues were slightly higher than the previous fiscal year, and expenses increased due to planned outside professional service costs: for solid waste, recycling, and organics management services, household hazardous waste collection and disposal, and environmental outreach and education. The operating loss was partially offset by income from property and investments, and resulted in a net loss before transfers and capital contributions of $0.3 million. The unrestricted net position for the Water, Golf Course, Wastewater, and Solid Waste Operations at the end of the year amounted to $92.5 million, or approximately 19% of the total enterprise funds net position. Each fund’s respective unrestricted net position may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately $41.2 million, or 9%, of the net position of all the proprietary funds are restricted for future capital construction of new and replacement water and wastewater infrastructure assets. Since funding for the replacement of infrastructure assets is not restricted, it is reflected in the Statement of Net Position as unrestricted. The city does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net deficit in the Golf Course Fund represents funds advanced from the city’s General Fund that were used to fund construction, former operating losses and debt expenses of the municipal golf course. 39 General Fund Budgetary Highlights for Fiscal Year 2019-20 Management monitors revenues during the year and updates estimated revenue figures when new information is received. General Fund revenue estimates were revised moderately during the year, as compared to the originally budgeted estimates. Some of the factors that led to the $6.4 million decrease in revenue estimates included: • several new federal and state grants were applied for and received during the year • a large decrease in transient occupancy tax revenues due to impacts of COVID-19, forcing the closure of the city’s hotels for a period of time • decreased sales tax revenues due to the stay at home orders issued by the Governor of the State of California during the later portion of the fiscal year due to the COVID-19 pandemic • COVID-19 CARES Act assistance • increased development throughout the city affecting building permit revenues • the cancellation of all in-person parks and recreation activities from March 2020 through May 2020 • additional interest payments received from the former redevelopment agency, and • the sale of the former Fire Station No. 3. The increase from the total original expenditure budget to the final budget amounted to $6.9 million primarily due to: • the appropriation of $3 million for COVID-19 related expenditures • the appropriation for a COVID-19 business revitalization program • Community Choice Energy start-up costs • the appropriation of grant money received • sales tax audit expenses • developer funded studies • the addition of a community service officer and related costs • Carlsbad Fire Association memorandum of understanding salary and benefit increases • housing element and general plan maintenance project costs, and • costs associated to implement the updated Carlsbad Community Forest Management Plan. The difference between the final budgeted expenditures and the actual expenditures for the year, on a budgetary basis, of $29.2 million can be generally summarized as follows: • Interdepartmental charges were $0.2 million below estimates, which are offset against expenditures for reporting purposes in the financial statements. • Savings by various major service areas within the city totaling $29.0 million. Current year savings were generated from: o the closure of purchase orders resulting from an audit completed on purchase orders that had no activity during the past 12 months o departments cutting back on expenditures due to the COVID-19 pandemic o unfilled staff vacancies o overall awareness of fiscal responsibility throughout the city o deferral of projects, and o accumulated savings set aside for future technology and innovation enhancements. Of the $29.0 million in savings, $20.5 million will be carried forward into fiscal year 2020-21 and is planned to be used for: ✓ innovation projects throughout the city ✓ COVID-19 related costs ✓ business revitalization costs associated with the COVID-19 pandemic 40 ✓ public art ✓ outfitting ten safety vehicles ✓ additional unfunded litigation costs ✓ wildfire evacuation sheltering ✓ State Homeless Program Grant ✓ maintenance for the Schulman Auditorium AV systems ✓ Dove Library wayfinding signs ✓ additional climate action plan costs ✓ unfunded litigation ✓ de-escalation training ✓ redistricting contractor services ✓ unspent developer deposits ✓ preventative health screenings for chronic conditions, and ✓ COVID-19 related cleaning services. Outstanding purchase orders at June 30, 2020 totaling $10.1 million will also be carried forward into fiscal year 2020-21. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB; actual expenditures have been adjusted to include remaining encumbrances. Capital Asset and Debt Administration Capital Assets At the end of fiscal year 2019-20, the city had recorded investments of over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and wastewater lines, Police and Fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB. Some of this year’s major capital asset additions included: • partial completion of the Agua Hedionda Lift Station • replacement of the Maerkle reservoir cover • completion of Phase III of the Poinsettia Park project • replacement of the Foxes Landing pump • completion of Phase II of the Aviara Park project • acquisition of a parcel of land known as Aura Circle Total Percentage Change Change 2019 2020 2019 2020 2019 2020 2019-20 2019-20 Land $153.7 $155.9 $9.3 $9.3 $163.0 $165.2 $2.2 1.3% Construction in progress 16.8 16.2 46.1 24.8 62.9 41.0 (21.9) -34.8% Buildings and other structures 136.4 138.3 41.0 41.1 177.4 179.4 2.0 1.1% Improvements other than buildings 84.3 93.8 52.3 53.2 136.6 147.0 10.4 7.6% Machinery and equipment 46.0 51.7 12.9 13.9 58.9 65.6 6.7 11.4% Infrastructure 726.2 734.3 350.4 379.6 1,076.6 1,113.9 37.3 3.5% Wastewater treatment facility - - 58.1 60.3 58.1 60.3 2.2 3.8% Intangibles 5.0 5.0 - - 5.0 5.0 - 0.0% 1,168.4 1,195.2 570.1 582.2 1,738.5 1,777.4 38.9 2.2% Accumulated depreciation (381.1) (403.9) (206.7) (215.7) (587.8) (619.6) (31.8) 5.4% Total $787.3 $791.3 $363.4 $366.5 $1,150.7 $1,157.8 $7.1 0.6% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type 41 • refurbishments of City Hall • replacement of the synthetic turf at Stagecoach Park • completion of the adaptive traffic signal project • Toll Brothers donated assets (wastewater lines, water lines, drainage, traffic signals, street lights, landscaping and streets) • Presidio Pebble Creek donated assets (waterlines, wastewater lines, improvements to existing street) • Built to Suit Limited donated assets (water lines, drainage and landscaping) • TMS Investments donated assets (water lines, wastewater lines and improvements to existing streets) • MR Carlsbad II donated assets (water lines and improvements on existing streets) • LMV Carlsbad donated assets (water and wastewater lines) • Grand Madison donated assets (improvements to existing streets) • Shea Homes donated assets (wastewater lines, water lines, drainage and improvements to existing streets) • J.E Grant General Contractors donated assets (water lines and improvements to existing streets) • 63 vehicles • one fire truck • four trailers • four motorcycles • one boat • one Bobcat loader • one pool cover • one projector • one utility four-wheeler • one mobile watch tower • emergency response gurneys • several wastewater line projects, and • several storm drain projects. In addition to carrying forward appropriations of $256.2 million for previously budgeted projects, the city’s fiscal year 2020-21 capital improvement budget appropriated an additional $29.1 million for capital projects. These additional appropriations were principally for the following projects: remodel of Fire Station No. 4 to expand services; widen El Camino Real Bridge at Cannon Road over Agua Hedionda Creek; ongoing pavement management; installations of Village and Barrio traffic circles; improvements to drainage and replacement of manholes on portions of wastewater lines; wastewater line refurbishments/replacements at various locations throughout the city; repair and upgrade of beach access stairways from Pine Avenue to Tamarack; acquisition of open space and trails; improvements to the Carlsbad Water Recycling Facility; improvements to east of College Boulevard and Cannon Road intersection; and an assessment of all parking lot and post mounted safety lights at all city properties. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves and other sources, including grants and contributions from other agencies. More detailed information about the city’s capital assets is presented in Note 6 of the financial statements and in the city’s Capital Improvement Program (CIP) document, which can be found on the city’s website or obtained from the Administrative Services Department. 42 Long-term Debt At fiscal year-end, the city had $15.5 million in loans and capital leases, a decrease of $1.7 million from last year, as shown in the table above. Regular payments were made on all the city’s outstanding loans and capital leases. More detail about the city’s long-term liabilities is presented in Note 7 of the financial statements. Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2020-21 • The State of California adopted its fiscal Year 2020-21 Annual Budget with the following provisions affecting the city: o The state budget is projecting a $54.3 billion deficit caused by the COVID-19 Recession. The budget closes this gap and brings the state’s resources and spending into balance while preserving reserves for future years. o The state will close the $54.3 billion budget deficit at the same time setting aside $2.6 billion in the Special Revenue Fund for Economic Uncertainties by: ➢ drawing down $8.8 billion in reserves from the Rainy Day Fund, the Safety Net Reserve and all of the funds in the Public School System Stabilization Account ➢ reductions and deferrals of $11.1 billion ➢ the budget relies on $10.1 billion in federal funds that provide General Fund relief, including $8.1 billion already received ➢ the budget temporarily suspends the use of net operating losses for medium and large businesses ➢ the budget relies on $9.3 billion in fund borrowing and transfers, as well as other deferrals for K-14 schools, and ➢ the remaining $10.6 billion includes cancelled expansions, updated assumptions, and other solutions. • Property tax, the largest source of General Fund revenues, is expected to grow by 2.5% in fiscal year 2020-21, as assessed values are expected to grow modestly. However, due to the recession that has been created from the COVID-19 crisis, the city is projecting that delinquent ad valorem property taxes will increase by 2%. The median price of a single-family residence (SFR), based on resale data from Zillow, was up by 5.7% year over year in February 2020. • Sales Tax revenues generally move in step with economic conditions and have been heavily impacted by the shelter- in-place and subsequent recession created by the COVID-19 pandemic. Until fiscal year 2019-20, sales tax revenues had improved markedly, peaking in fiscal year 2018-19 at $40.8 million. However, on March 19, 2020, Governor Gavin Newsom issued a shelter-in-place order for the State of California, shutting down retail establishments, dine- in restaurants, and non-essential businesses. • The city projected that the shelter-in-place order would be partially lifted during the month of June 2020, but the national economy would then fall into a recession. Without the shelter-in-place impacting sales tax revenues, and with small businesses beginning to pay their deferred sales tax to the state, sales tax revenue for fiscal year 2020-21 is expected to decrease by 2% to $36.3 million. This is still below the sales tax peak of $40.8 million in fiscal year 2018-19. Some of the decrease in sales tax revenues will be partially offset by an increase in internet sales revenue generated from the Wayfair or AB147 law that went into effect in October 2019. • Transient Occupancy Tax (TOT, or hotel tax) is forecasted to decrease by 30% in fiscal year 2020-21 when compared to fiscal year 2018-19 actuals. This downward trend began in fiscal year 2019-20, due to the impacts of COVID-19 on Carlsbad’s tourism industry. Many hotels had to shut down during this time; however, it was anticipated that hotels Total Percentage Change 2019 2020 2019 2020 2019 2020 2018-19 Loans $0.0 $0.0 $16.8 $15.3 $16.8 $15.3 -8.9% Capital leases 0.4 0.2 - - 0.4 0.2 -50.0% Total $0.4 $0.2 $16.8 $15.3 $17.2 $15.5 -9.9% Activities Activities Total CITY OF CARLSBAD'S OUTSTANDING DEBT (in millions of dollars) Governmental Business-Type 43 will slowly begin to recover in fiscal year 2020-21. The recessionary impacts on tourism were expected to at least last until December 2021. • The city is still expecting to see the opening of the Home2 Suites and the Springhill Suites during fiscal year 2020-21 adding to the city’s transient occupancy tax revenues. • In response to projected reduced revenues due to the COVID-19 pandemic and the resulting stay-at-home order, departments were asked to re-evaluate their budget requests for fiscal year 2020-21 and decrease discretionary spending wherever possible. General funded departments were able to reduce their maintenance and operations budget requests by 8% overall. Many of these reductions were in non-mandated employee training and in state conference travel budgets which were reduced by 49% and out of state travel for training and conferences was reduced by 83%. Other discretionary spending, such as equipment, office supplies and professional and outside services were reduced when possible with a focus on those that would have the smallest impact on city services to the community. • Due to the current environment resulting from the COVID-19 pandemic, no new full or part-time positions are proposed for the next fiscal year. The city reduced 13.28 FTE in part-time seasonal positions, mainly from the Parks & Recreation department due to reductions made in response to the COVID-19 pandemic. • CalPERS is addressing a structural shortfall by lowering the discount rate used to determine the city’s annual pension costs. The reduction in the discount rate is being phased in over several years. The city has also made significant additional payments to CalPERS during the past fiscal years. Through these efforts, the city is projecting lower citywide pension costs in fiscal year 2020-21. • Through Memorandums of Understanding (MOUs): o The Carlsbad City Employees’ Association (CCEA) employees will receive a 2.0% salary increase on Jan. 1, 2021. o The City Council has not determined what Fire Management and General Management employees will receive in salary increases on Jan. 1, 2021. o Carlsbad Police Management Association (CPMA) employees will receive a range between 3.75% and 5.3% in salary increases, dependent on position, on Jan. 1, 2021. o The Carlsbad Police Officers Association (CPOA) will receive a salary increase between 2.0% with a 2.5% stipend to a high of 4.5% on January 1, 2021, based on position. o The Carlsbad Firefighters Association (CFA) will receive a 4.0% salary increase on Jan. 1, 2021. These factors were considered when preparing the city’s General Fund budget for fiscal year 2020-21. Budgeted expenditures are expected to decrease 2.1% to $163.6 million. The total personnel budget for fiscal year 2020-21 is $105 million, which is 3.6% more than the previous year’s personnel budget of $101.4 million. The total maintenance and operations budget for fiscal year 2020-21 is $51.2 million, which is 4.8% lower than the previous year’s budget of $53.8 million. The total capital outlay budget for fiscal year 2020-21 is $0.4 million, $0.2 million lower than the previous year. The increase in personnel budget is based on previously negotiated salary and benefit increases with no additional full- time staff and a decrease of 13.78 part-time staff. There were no changes in retirement costs (CalPERS rates), but higher health insurance rates, netted with a small decrease in workers’ compensation rates, contributed to the increase in budgeted personnel costs. The maintenance and operations budget for fiscal year 2020-21 includes appropriations for internal service charges, which decreased from the prior year, and general contract increases. However, due to the COVID-19 pandemic and reduced General Fund revenue projections, departments were asked to reduce their maintenance and operations budgets. These reductions resulted in a 4.8% budget decrease for fiscal year 2020-21 as compared to the previous fiscal year. Transfers out of the General Fund are budgeted at $7.0 million, a $4.5 million decrease from the prior fiscal year. This decrease is due primarily to a reduction in the annual transfer to the Infrastructure Replacement Fund, as the fund was determined to have adequate fund reserves to cover anticipated future CIP projects. Adding to the adopted budget of $163.6 million for the General Fund, approximately $16.5 million in unspent fiscal year 2019-20 budgeted expenditures will be carried over to fiscal year 2020-21, as well as $10.2 million in open encumbrances as of June 30, 2020. During the current fiscal year, the unassigned fund balance in the General Fund increased by $8.5 million to $110.1 million, although originally projected to grow by $5.5 million according to the fiscal year 2019-20 adopted budget. However, due to fiscal discipline, expenditures were below the budget by $29.2 million; through the closure of older purchase orders, the unassigned fund balance grew by approximately $2.0 million; and by not carrying forward as much 44 in savings from fiscal year 2019-20 to fiscal year 2020-21. This was accomplished despite the city spending and/or assigning $8.0 million of the economic set aside portion of the unassigned balance during the fiscal year for COVID-19 related costs. Based on fiscal year 2020-21 projections, the unassigned General Fund balance is expected to grow by approximately $3.6 million. Although the city spent and set aside $8.0 million of the original $19.2 million portion of the General Fund’s unassigned fund balance identified for economic uncertainty during the year, the city is actively pursuing additional state and federal assistance to assist in the rebuilding of the funds used during the pandemic. Projected revenues are currently sufficient to build the approved projects listed in the fiscal year 2020-21 CIP. The city’s business-type activities reflect the following: Water revenues are expected to remain relatively flat and wastewater revenues are projected to decline slightly due to stabilizing customer demand and a shift of demand from commercial to residential customers. The effective increase in purchase costs for CMWD is projected to be approximately 3.6%. The cost of water purchased from the San Diego County Water Authority is projected to increase due to decreased countywide demand and increases in Metropolitan Water District’s water rates, inter alia. Cost increases are being partially mitigated through planned draws on San Diego County Water Authority’s rate stabilization fund. Healthy reserves have allowed CMWD to keep local rates low during fiscal year 2020-21 with rate increases of 2% in January 2021. Wastewater rates increased 3% for calendar year 2020 and will increase by 3% for calendar year 2021. The increases are needed to offset increasing costs of the operator of the wastewater treatment facility, increased energy and chemical costs, and increased capital repair costs. Solid Waste revenues are projected to increase moderately and the fund expects to run a deficit due to increasing waste management requirements imposed by the state. Sufficient reserves are able to sustain the increase costs without significant price increases in the short term. The Golf Course Fund projected a major increase in revenues due to the expected lifting of COVID-19 stay-at-home orders that were in place from March through May of 2020. As a result, the operation expected to see improvements in their cash flows going forward. Contacting the City’s Financial Management This financial report is designed to provide the residents, taxpayers, customers, investors, and creditors with a general overview of the city’s finances and to demonstrate the city’s accountability for the money it receives. If you have any questions about this report or need additional information, contact the Administrative Services Department, 1635 Faraday Avenue, Carlsbad, CA 92008, 760-602-2430, or at www.carlsbadca.gov. 45 June 30, 2020 Governmental Business-Type ASSETS Activities Activities Total Cash and investments 604,513,421 $ 201,780,096 $ 806,293,517 $ Receivables: Interest 2,567,999 853,214 3,421,213 Taxes 8,430,882 39,439 8,470,321 Other 558,465 573,394 1,131,859 Accounts, net of allowances 396,318 11,563,934 11,960,252 Due from other governments 649,516 5,755,040 6,404,556 Inventories 530,439 706,007 1,236,446 Prepaid items 2,335,669 77,605 2,413,274 Land held for resale 1,280,044 - 1,280,044 Loan and reimbursement receivables, net of allowances 21,408,569 - 21,408,569 Due from Successor Agency 2,681,689 - 2,681,689 Deposits 25,000 - 25,000 Internal balances 53,823,213 (53,823,213) - Subtotal 699,201,224 167,525,516 866,726,740 Noncurrent assets: Net OPEB asset - 844,526 844,526 Capital assets: Land 155,896,231 9,330,718 165,226,949 Construction in progress 16,236,468 24,786,724 41,023,192 Buildings and other structures 138,281,470 41,103,821 179,385,291 Improvements other than buildings 93,825,851 53,224,688 147,050,539 Machinery and equipment 51,645,978 13,890,645 65,536,623 Infrastructure 734,252,385 379,576,446 1,113,828,831 Wastewater treatment facility - 60,308,682 60,308,682 Intangible assets 5,017,448 - 5,017,448 Less accumulated depreciation (403,876,548) (215,742,222) (619,618,770) Total capital assets 791,279,283 366,479,502 1,157,758,785 Total assets 1,490,480,507 534,849,544 2,025,330,051 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 2,763,450 519,302 3,282,752 Deferred outflows of resources - pension related items 30,691,696 1,723,434 32,415,130 Total deferred outflows of resources 33,455,146 2,242,736 35,697,882 The notes to the financial statements are an integral part of this statement. Primary Government Statement of Net Position 46 June 30, 2020 Governmental Business-Type LIABILITIES Activities Activities Total Accrued liabilities 17,782,731 $ 5,991,164 $ 23,773,895 $ Accrued interest payable - 51,497 51,497 Due to other governments 24,112 12,576,838 12,600,950 Estimated claims payable 14,320,432 - 14,320,432 Deposits payable 527,192 4,959,339 5,486,531 Unearned revenue 958,661 95,009 1,053,670 Noncurrent liabilities: Due within one year 155,922 1,620,408 1,776,330 Due in more than one year: Loans payable and capital leases - 13,706,185 13,706,185 Net OPEB liability 3,742,310 198,491 3,940,801 Net pension liability 139,184,295 10,955,776 150,140,071 Total liabilities 176,695,655 50,154,707 226,850,362 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 104,395 56,015 160,410 Deferred inflows of resources - pension related items 4,262,830 344,567 4,607,397 Total deferred inflows of resources 4,367,225 400,582 4,767,807 NET POSITION Net investment in capital assets 791,123,361 351,152,909 1,142,276,270 Restricted for: Capital assets 206,067,178 41,244,371 247,311,549 Lighting and landscaping districts 8,966,732 - 8,966,732 Affordable housing 44,885,181 - 44,885,181 Other purposes 5,444,224 - 5,444,224 Unrestricted 286,386,097 94,139,711 380,525,808 Total net position 1,342,872,773 $ 486,536,991 $ 1,829,409,764 $ The notes to the financial statements are an integral part of this statement. Primary Government Statement of Net Position (continued) 47 Statement of Activities For the Year Ended June 30, 2020 Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government 24,266,836 $ 1,030,034 $ 2,373,818 $ 1,345 $ Public safety 75,249,145 4,710,934 1,519,399 36,534 Community services 60,771,080 9,324,183 9,872,294 1,754,712 Public works 41,419,093 4,142,057 4,671,753 15,009,214 Interest and fiscal charges on long-term debt 2,046 - - - Total governmental activities 201,708,200 19,207,208 18,437,264 16,801,805 Business-type activities: Carlsbad Municipal Water District 51,198,176 46,332,089 198,372 5,459,352 Golf course 10,251,978 6,637,350 - - Wastewater 16,931,494 13,848,722 66,272 867,897 Solid waste 4,381,684 3,562,906 134,447 - Total business-type activities 82,763,332 70,381,067 399,091 6,327,249 Total primary government 284,471,532 $ 89,588,275 $ 18,836,355 $ 23,129,054 $ General revenues: Property taxes Sales and use taxes Transient occupancy taxes Franchise taxes Business license taxes Real property transfer taxes Income from property and investments Other general revenues Transfers Total general revenues and transfers Change in net position Net position at beginning of year, as restated Net position at end of year The notes to the financial statements are an integral part of this statement. Program Revenues 48 Governmental Business-type Activities Activities Total (20,861,639) $ -$ (20,861,639) $ (68,982,278) - (68,982,278) (39,819,891) - (39,819,891) (17,596,069) - (17,596,069) (2,046) - (2,046) (147,261,923) - (147,261,923) - 791,637 791,637 - (3,614,628) (3,614,628) - (2,148,603) (2,148,603) - (684,331) (684,331) - (5,655,925) (5,655,925) (147,261,923) (5,655,925) (152,917,848) 73,884,532 4,225,825 78,110,357 36,491,171 - 36,491,171 18,898,325 - 18,898,325 5,863,614 - 5,863,614 5,414,291 - 5,414,291 1,247,217 - 1,247,217 20,239,314 4,962,972 25,202,286 558,494 - 558,494 (303,052) 303,052 - 162,293,906 9,491,849 171,785,755 15,031,983 3,835,924 18,867,907 1,327,840,790 482,701,067 1,810,541,857 1,342,872,773 $ 486,536,991 $ 1,829,409,764 $ Primary Government Changes in Net Position Net Revenue (Expense) and 49 Balance Sheet Governmental Funds June 30, 2020 Community General General Facilities Capital Infrastructure ASSETS Fund District No. 1 Construction Replacement Cash and investments 139,772,454 $ 92,735,242 $ 42,863,816 $ 123,517,563 $ Receivables: Interest 812,528 394,336 - 524,943 Taxes 8,428,906 1,976 - - Other 369,007 - - - Accounts, net of allowances 330,599 - - - Due from other funds 82,003 - - - Due from other governments 98,284 - - - Inventories 13,959 - - - Prepaid items 648,696 - - - Land held for resale - - - - Loans receivable, net of allowances 77,656 - - - Deposits 25,000 - - - Due from Successor Agency 2,681,689 - - - Advances to other funds 56,713,054 1,943,710 - - Total assets 210,053,835 $ 95,075,264 $ 42,863,816 $ 124,042,506 $ LIABILITIES Accrued liabilities 7,221,769 $ 56,582 $ 589,888 $ 1,049,375 $ Due to other funds - - - - Deposits payable 54,345 13,000 - - Due to other governments 24,112 - - - Advances from other funds - - - - Unearned revenue 764,137 - - - Total liabilities 8,064,363 69,582 589,888 1,049,375 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - grants - - - - Unavailable revenue - interest on advances 11,126,810 - - - Total deferred inflows of resources 11,126,810 - - - FUND BALANCES Nonspendable 49,008,244 - - - Restricted - 95,005,682 - - Committed 1,000,000 - - - Assigned 30,732,761 - 42,273,928 122,993,131 Unassigned 110,121,657 - - - Total fund balances 190,862,662 95,005,682 42,273,928 122,993,131 Total liabilities, deferred inflows of resources, and fund balances 210,053,835 $ 95,075,264 $ 42,863,816 $ 124,042,506 $ The notes to the financial statements are an integral part of this statement. 50 Public Other Total Park Facilities Governmental Governmental Development Construction Funds Funds 12,812,297 $ 29,345,641 $ 109,902,932 $ 550,949,945 $ 54,459 124,737 458,132 2,369,135 - - - 8,430,882 - - 189,458 558,465 - 3,314 - 333,913 - - - 82,003 - - 551,232 649,516 - - - 13,959 - - 951 649,647 - - 1,280,044 1,280,044 - - 21,330,913 21,408,569 - - - 25,000 - - - 2,681,689 - 5,650,000 - 64,306,764 12,866,756 $ 35,123,692 $ 133,713,662 $ 653,739,531 $ -$ 41,424 $ 1,895,530 $ 10,854,568 $ - - 82,003 82,003 - - 458,847 526,192 - - - 24,112 5,650,000 - 3,197,895 8,847,895 - - 194,729 958,866 5,650,000 41,424 5,829,004 21,293,636 - - 60,494 60,494 - - - 11,126,810 - - 60,494 11,187,304 - - 951 49,009,195 7,216,756 35,082,268 128,057,658 265,362,364 - - - 1,000,000 - - - 195,999,820 - - (234,445) 109,887,212 7,216,756 35,082,268 127,824,164 621,258,591 12,866,756 $ 35,123,692 $ 133,713,662 $ 653,739,531 $ 51 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2020 Total fund balances - governmental funds 621,258,591 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental funds 773,335,967 Internal service funds 17,943,316 Total capital assets 791,279,283 Deferred outflows are not an available resource and therefore, are not reported in the funds. Governmental funds 32,298,522 Internal service funds 1,156,624 Total deferred outflows 33,455,146 Internal service funds are used by management to charge the costs of fleet management, self insured benefits, information technologies, records management, risk management and workers' compensation to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Total internal service fund net position 46,909,425 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.(1,635,657) Internal service fund net position included as part of total capital assets (17,943,316) Internal service fund net position included as part of deferred outflows (1,156,624) Internal service fund net position included as part of long-term liabilities 6,548,151 Internal service fund net position included as part of deferred inflows 420,017 Net internal service fund net position 33,141,996 Interest receivable on advances to other funds is not a current financial resource and therefore, is not recognized as revenue in the funds until received.11,126,810 A portion of deferred grant revenues are not available to pay for current period expenditures and therefore, are not recognized in the funds.60,699 Long-term liabilities, including net pension liability, are not due and payable in the current period and therefore, are not reported in the funds. Governmental funds (136,534,376) Internal service funds (6,548,151) Total long-term liabilities (143,082,527) Deferred inflows represent an acquisition of net position that applies to a future period so it will not be recognized until that time. Governmental funds (3,947,208) Internal service funds (420,017) Total deferred inflows (4,367,225) Net position of governmental activities.1,342,872,773 $ The notes to the financial statements are an integral part of this statement. - 52 53 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2020 Community General General Facilities District Capital Fund No. 1 Construction Revenues: Taxes 141,297,579 $ 1,599,290 $ -$ Intergovernmental 3,389,625 - - Licenses and permits 2,739,549 - - Charges for services 7,487,311 - - Fines and forfeitures 522,814 - - Income from property and investments 12,016,826 3,235,393 - Contributions from property owners - 901,732 - Donations - - - Miscellaneous 1,664,585 - - Total revenues 169,118,289 5,736,415 - Expenditures: Current: General government 25,214,894 88,325 - Less: interdepartmental charges (5,051,580) - - Public safety 70,461,936 - - Community services 43,166,572 - - Public works 18,592,470 - - Capital outlay - 293,378 5,503,816 Debt service: Principal retirement 11,259 - - Interest and fiscal charges 1,023 - - Total expenditures 152,396,574 381,703 5,503,816 Excess (deficiency) of revenues over (under) expenditures 16,721,715 5,354,712 (5,503,816) Other financing sources (uses): Transfers in 10,000 - 5,111,500 Transfers out (11,476,052) - - Total other financing sources (uses)(11,466,052) - 5,111,500 Net change in fund balances 5,255,663 5,354,712 (392,316) Fund balances at beginning of year, as restated 185,606,999 89,650,970 42,666,244 Fund balances at end of year 190,862,662 $ 95,005,682 $ 42,273,928 $ The notes to the financial statements are an integral part of this statement. 54 Public Other Total Infrastructure Park Facilities Governmental Governmental Replacement Development Construction Funds Funds -$ -$ -$ 4,638,051 $ 147,534,920 $ - - - 12,115,603 15,505,228 - - - - 2,739,549 - - - 4,037,315 11,524,626 - - - 237,478 760,292 4,257,845 428,488 1,049,581 4,000,998 24,989,131 - 1,032,247 2,390,200 2,298,968 6,623,147 - - - 425,718 425,718 - - - 976,282 2,640,867 4,257,845 1,460,735 3,439,781 28,730,413 212,743,478 - - - 458,616 25,761,835 - - - - (5,051,580) - - - 534,898 70,996,834 - - - 13,764,294 56,930,866 - - - 1,402,354 19,994,824 5,848,629 389,642 1,184,567 8,951,544 22,171,576 - - - - 11,259 - - - 11,015 12,038 5,848,629 389,642 1,184,567 25,122,721 190,827,652 (1,590,784) 1,071,093 2,255,214 3,607,692 21,915,826 5,111,500 - - 950,000 11,183,000 - - - (10,000) (11,486,052) 5,111,500 - - 940,000 (303,052) 3,520,716 1,071,093 2,255,214 4,547,692 21,612,774 119,472,415 6,145,663 32,827,054 123,276,472 599,645,817 122,993,131 $ 7,216,756 $ 35,082,268 $ 127,824,164 $ 621,258,591 $ 55 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2020 Net change in fund balances - total governmental funds 21,612,774 $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Purchase of capital assets 13,911,690 Depreciation expense (22,175,822) Governmental funds do not reflect the donation of capital assets as revenues.7,246,902 Unpaid interest income on advances to other funds is not a current financial resource, and therefore is not recognized as revenue in the funds.118,460 Received interest income on advances to other funds is not a current financial resource, and therefore is recognized as revenue in the funds.(2,408,056) Revenues that are recorded in the funds that are not recorded in the statement of activities due to measurement differences (46,535) The issuance of long-term debt (e.g., leases) provides current financial resources to governmental funds, the repayment of the principal of long-term debt consumes the current financial resources of governmental funds.11,259 The net revenue of activities of internal service funds is reported with governmental activities.8,616,974 Adjustments made to the net pension and net OPEB liabilities do not use current financial resources and therefore, are not recognized in the funds.(11,149,780) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.(705,883) Change in net position of governmental activities.15,031,983 $ The notes to the financial statements are an integral part of this statement. 56 57 General Fund Variance With Final Budget - Actual Amounts Over Original Final (Budgetary Basis)(Under) Revenues: Taxes 148,257,000 $ 139,593,000 $ 141,297,579 $ 1,704,579 $ Intergovernmental 917,000 1,136,000 3,389,625 2,253,625 Licenses and permits 1,224,000 2,495,000 2,739,549 244,549 Charges for services 8,233,000 7,059,000 7,487,311 428,311 Fines and forfeitures 689,000 480,000 522,814 42,814 Income from property and investments 5,543,000 7,152,000 9,244,776 2,092,776 Miscellaneous 940,000 1,450,000 1,664,585 214,585 Total revenues 165,803,000 159,365,000 166,346,239 6,981,239 Expenditures: Current: General government 42,358,998 46,300,119 27,814,411 (18,485,708) Less: interdepartmental charges (4,612,000) (4,898,000) (5,051,580) (153,580) Public safety 73,274,644 73,891,587 72,034,066 (1,857,521) Community services 50,896,314 53,190,317 46,333,146 (6,857,171) Public works 22,883,709 23,248,607 21,425,140 (1,823,467) Total expenditures 184,801,665 191,732,630 162,555,183 (29,177,447) Excess (deficiency) of revenues over (under) expenditures (18,998,665) (32,367,630) 3,791,056 36,158,686 Other financing sources (uses): Transfers in 10,000 10,000 10,000 - Transfers out (11,473,000) (11,476,052) (11,476,052) - Total other financing sources (uses)(11,463,000) (11,466,052) (11,466,052) - Net change in fund balances (30,461,665) (43,833,682) (7,674,996) 36,158,686 $ Fund balance at beginning of year, as restated 185,606,999 185,606,999 185,606,999 Fund balance at end of year 155,145,334 $ 141,773,317 $ 177,932,003 $ The notes to the financial statements are an integral part of this statement. Budgeted Amounts For the Year Ended June 30, 2020 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - 58 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund (continued) For the Year Ended June 30, 2020 Actual Amounts (Budgetary Basis) Revenues Actual amounts (budgetary basis) “available for appropriation” from the budgetary comparison schedule (previous page).166,346,239 $ The recording of unrealized gains and losses on the city's investments are shown for financial reporting purposes (pursuant to GASB 31), but are not shown for budgetary purposes.2,772,050 169,118,289 $ Expenditures Actual amounts (budgetary basis) “total charges to appropriations” from the budgetary comparison schedule (previous page).162,555,183 $ Differences - budget to GAAP: Encumbrances are shown in the year encumbered for budgetary purposes, but in the year paid for financial reporting purposes.(10,158,609) 152,396,574 $ The notes to the financial statements are an integral part of this statement. BUDGET-TO-GAAP RECONCILIATION 59 Statement of Net Position Proprietary Funds June 30, 2020 Carlsbad Municipal Golf ASSETS Water District Course Wastewater Current assets: Cash and investments 136,786,815 $ 1,563,623 $ 48,986,619 $ Receivables: Interest 580,948 3,110 208,149 Taxes 39,439 - - Other - 5,512 - Accounts, net of allowances 8,371,496 10,925 2,187,956 Due from other governments 2,809,880 - 2,945,160 Inventories 543,845 148,361 13,801 Prepaid items 8,412 69,193 - Total current assets 149,140,835 1,800,724 54,341,685 Noncurrent assets: Net OPEB asset 844,526 - - Capital assets: Land 1,914,871 4,786,745 2,629,102 Construction in progress 15,042,606 - 9,744,118 Buildings and other structures 20,933,370 20,170,451 - Improvements other than buildings 2,322,549 43,767,315 7,134,824 Machinery and equipment 10,989,380 1,833,277 1,067,988 Infrastructure 241,550,461 - 138,025,985 Wastewater treatment facility - - 60,308,682 Intangible assets - - - Less accumulated depreciation (89,987,816) (40,281,426) (85,472,980) Total capital assets (net of accumulated depreciation)202,765,421 30,276,362 133,437,719 Total noncurrent assets 203,609,947 30,276,362 133,437,719 Total assets 352,750,782 32,077,086 187,779,404 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 372,729 - 86,950 Deferred outflows of resources - pension related items 1,031,718 - 433,531 Total deferred outflows of resources 1,404,447 - 520,481 The notes to the financial statements are an integral part of this statement. Business-Type Activities - 60 Governmental Enterprise Funds Activities - Non-Major Internal Solid Service Waste Totals Funds 14,443,039 $ 201,780,096 $ 53,563,476 $ 61,007 853,214 198,864 - 39,439 - 567,882 573,394 - 993,557 11,563,934 62,405 - 5,755,040 - - 706,007 516,480 - 77,605 1,686,022 16,065,485 221,348,729 56,027,247 - 844,526 - - 9,330,718 - - 24,786,724 3,086,644 - 41,103,821 - - 53,224,688 - - 13,890,645 34,484,039 - 379,576,446 - - 60,308,682 - - - 1,689,637 - (215,742,222) (21,317,004) - 366,479,502 17,943,316 - 367,324,028 17,943,316 16,065,485 588,672,757 73,970,563 59,623 519,302 147,814 258,185 1,723,434 1,008,810 317,808 2,242,736 1,156,624 (continued) 61 Statement of Net Position Proprietary Funds (continued) June 30, 2020 Carlsbad Municipal Golf LIABILITIES Water District Course Wastewater Current liabilities: Accrued liabilities 3,507,963 509,093 701,145 Accrued interest payable 51,497 - - Due to other governments 6,964,099 - 5,612,739 Estimated claims payable - - - Current portion of loans payable 1,620,408 - - Total current liabilities 12,143,967 509,093 6,313,884 Noncurrent liabilities: Deposits payable 108,646 304,973 4,545,720 Advance from other funds - 55,458,869 - Unearned revenue - - 10,000 Net OPEB liability - - 117,749 Net pension liability 6,527,185 - 2,880,579 Loans payable 13,706,185 - - Total noncurrent liabilities 20,342,016 55,763,842 7,554,048 Total liabilities 32,485,983 56,272,935 13,867,932 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 50,478 - 3,285 Deferred inflows of resources - pension related items 158,866 - 134,012 Total deferred inflows of resources 209,344 - 137,297 NET POSITION Net investment in capital assets 187,438,828 30,276,362 133,437,719 Restricted for: Capital assets 36,008,851 - 5,235,520 Unrestricted 98,012,223 (54,472,211) 35,621,417 Total net position (deficit)321,459,902 $ (24,195,849) $ 174,294,656 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. Net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities - 62 Governmental Enterprise Funds Activities - Non-Major Internal Solid Service Waste Totals Funds 1,272,964 5,991,165 6,928,163 - 51,497 - - 12,576,838 - - - 14,320,432 - 1,620,408 147,952 1,272,964 20,239,908 21,396,547 - 4,959,339 1,000 - 55,458,869 - 85,009 95,009 - 80,742 198,491 200,173 1,548,012 10,955,776 6,200,026 - 13,706,185 - 1,713,763 85,373,669 6,401,199 2,986,727 105,613,577 27,797,746 2,252 56,015 5,584 51,689 344,567 414,433 53,941 400,582 420,017 - 351,152,909 17,795,364 - 41,244,371 - 13,342,625 92,504,054 29,114,060 13,342,625 $ 484,901,334 46,909,424 $ 1,635,657 486,536,991 $ 63 Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2020 Carlsbad Municipal Golf Water District Course Wastewater Operating revenues: Water sales 45,753,489 $ -$ -$ Wastewater service charges - - 13,848,722 Golf course operations - 6,558,857 - Other charges for services 578,600 - - Miscellaneous 198,372 78,493 66,272 Total operating revenues 46,530,461 6,637,350 13,914,994 Operating expenses: Encina plant operations 1,013,865 - 3,341,283 Purchased water 25,322,143 - - Golf course operations - 6,697,971 - Depreciation 6,566,816 3,554,007 4,989,852 Fuel and supplies - - - Claims and premiums expense - - - Small equipment purchases - - - General and administrative 18,309,444 - 8,821,881 Total operating expenses 51,212,268 10,251,978 17,153,016 Operating income (loss)(4,681,807) (3,614,628) (3,238,022) Nonoperating revenues (expenses): Income from property and investments 4,988,026 107,018 1,538,717 Interest expense and fees (369,480) - - Gain (loss) on sale of property (2,165,641) - (2,501) Property taxes 4,225,825 - - Total nonoperating revenues (expenses)6,678,730 107,018 1,536,216 Income (loss) before transfers and capital contributions 1,996,923 (3,507,610) (1,701,806) Transfers in - - - Capital contributions: Capital restricted fees and grants 3,875,117 - 484,351 Developer constructed assets 1,584,234 - 383,546 Other - - - Change in net position 7,456,274 (3,507,610) (833,909) Total net position (deficit) at beginning of year, as restated 314,003,628 (20,688,239) 175,128,565 Total net position (deficit) at end of year 321,459,902 $ (24,195,849) $ 174,294,656 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. Changes in net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities - 64 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds -$ 45,753,489 $ -$ - 13,848,722 - - 6,558,857 - 3,562,906 4,141,506 24,145,185 134,447 477,584 313,131 3,697,353 70,780,158 24,458,316 - 4,355,148 - - 25,322,143 - - 6,697,971 - - 15,110,675 2,803,166 - - 1,353,138 - - 5,669,730 - - 322,205 4,482,473 31,613,798 11,397,612 4,482,473 83,099,735 21,545,851 (785,120) (12,319,577) 2,912,465 497,353 7,131,114 1,531,727 - (369,480) (15,854) - (2,168,142) 44,982 - 4,225,825 - 497,353 8,819,317 1,560,855 (287,767) (3,500,260) 4,473,320 303,052 303,052 - - 4,359,468 - - 1,967,780 - - - 4,143,654 15,285 3,130,040 8,616,974 13,327,340 38,292,450 13,342,625 $ 46,909,424 $ 705,883 3,835,923 $ Enterprise Funds 65 Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2020 Carlsbad Municipal Golf Water District Course Wastewater Cash flows from operating activities: Receipts from customers and users 45,045,230 $ 6,898,241 $ 13,801,033 $ Payments to suppliers (35,205,459) (6,966,911) (8,964,685) Payments to employees (4,979,979) - (2,167,353) Internal activity - payments to other funds (3,254,637) - (1,303,706) Claims and premiums paid - - - Other receipts 189,739 - - Other disbursements - - (260,016) Net cash provided (used) by operating activities 1,794,894 (68,670) 1,105,273 Cash flows from noncapital financing activities: Transfers from other funds - - - Net cash provided (used) by capital and related financing activities - - - Cash flows from capital and related financing activities: Proceeds from capital debt 39,160 - - Capital restricted fees 1,059,425 - 484,351 Purchase of capital assets (12,913,640) (1,017,444) (3,736,383) Gross proceeds from the sale of capital assets - - - Principal paid on capital debt (1,582,886) - - Interest and other fees paid (332,822) - - Proceeds from state and local grants 76,462 - - Property taxes received 4,227,742 - - Net cash (used in) capital and related financing activities (9,426,559) (1,017,444) (3,252,032) Cash flows from investing activities: Interest on investments 5,108,914 110,442 1,579,413 Net increase (decrease) in cash and cash equivalents (2,522,751) (975,672) (567,346) Cash and cash equivalents at beginning of year, as restated 139,309,566 2,539,295 49,553,965 Cash and cash equivalents at end of year 136,786,815 $ 1,563,623 $ 48,986,619 $ The notes to the financial statements are an integral part of this statement. Business-Type Activities - 66 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds 3,396,323 $ 69,140,827 $ 25,405,221 $ (1,938,657) (53,075,712) (7,536,423) (1,651,227) (8,798,559) (6,469,865) (713,334) (5,271,677) (229,939) - - (4,247,979) 134,447 324,186 - - (260,016) - (772,448) 2,059,049 6,921,015 303,052 303,052 - 303,052 303,052 - - 39,160 - - 1,543,776 - - (17,667,467) (3,828,678) - - 50,090 - (1,582,886) (211,114) - (332,822) (15,854) - 76,462 - - 4,227,742 - - (13,696,035) (4,005,556) 508,881 7,307,650 1,545,157 39,485 (4,026,284) 4,460,616 14,403,554 205,806,380 49,102,860 14,443,039 $ 201,780,096 $ 53,563,476 $ (continued) Enterprise Funds 67 Statement of Cash Flows Proprietary Funds (continued) For the Year Ended June 30, 2020 Carlsbad Municipal Golf Water District Course Wastewater Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss)(4,681,807) $ (3,614,628) $ (3,238,022) $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 6,566,816 3,554,007 4,989,852 Changes in assets and liabilities: (Increase) decrease in receivables (1,286,859) 260,890 (47,689) (Increase) decrease in due from other governments 11,290 - 308,069 (Increase) decrease in inventories 62,211 49,016 360 (Increase) decrease in prepaid items 3,751 (31,774) - (Increase) decrease in OPEB asset (844,526) - - (Increase) decrease in deferred outflows - OPEB related items (59,961) - (413,645) (Increase) decrease in deferred outflows - pension related items 1,116,119 - 812,974 (Decrease) increase in accrued liabilities 1,240,340 (141,187) 23,185 (Decrease) increase in due to other governments (104,635) - (1,236,112) (Decrease) increase in estimated claims payable - - - (Decrease) increase in deposits payable (8,633) (144,994) (326,288) (Decrease) increase in unearned revenue - - - (Decrease) increase in OPEB liability (639,526) - 70,362 (Decrease) increase in net pension liability 655,071 - 242,398 (Decrease) increase in deferred inflows - OPEB related items (62,993) - 126,358 (Decrease) increase in deferred inflows - pension related items (171,764) - (206,529) Net cash provided by operating activities 1,794,894 $ (68,670) $ 1,105,273 $ Noncash capital financing activities: Capital assets contributed by other sources 1,584,234 $ -$ 383,546 $ The notes to the financial statements are an integral part of this statement. Business-Type Activities - 68 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds (785,120) $ (12,319,577) $ 2,912,465 $ - 15,110,675 2,803,166 (167,356) (1,241,014) (25,654) - 319,359 - - 111,587 (58,423) - (28,023) (1,501,916) - (844,526) - (45,987) (519,593) (114,009) 147,678 2,076,771 594,831 139,603 1,261,941 1,329,828 - (1,340,747) - - - 1,288,677 - (479,915) - 773 773 - 48,248 (520,916) 119,615 (62,419) 835,050 (250,001) (2,996) 60,369 (7,427) (44,872) (423,165) (170,137) (772,448) $ 2,059,049 $ 6,921,015 $ -$ 1,967,780 $ 4,143,654 $ Enterprise Funds 69 Statement of Net Position Fiduciary Funds June 30, 2020 Agency Private Purpose ASSETS Funds Trust Funds Current assets: Cash and investments 22,388,946 $ 2,061,426 $ Receivables: Interest 107,331 22,376 Taxes 2,967 - Other 22,535 - Total current assets 22,521,779 2,083,802 Noncurrent assets: Loans receivable - 3,750,000 Restricted assets: Cash and investments 4,460,404 - Total noncurrent assets 4,460,404 3,750,000 Total assets 26,982,183 $ 5,833,802 $ LIABILITIES Current liabilities: Accrued liabilities 1,799,300 $ 1,432 $ Accrued interest payable - 65,455 Deposits held for others 25,182,883 - Current portion of long-term debt - 855,000 Total current liabilities 26,982,183 921,887 Noncurrent liabilities: Due to the City of Carlsbad - 2,681,689 Tax allocation bonds payable - 2,850,000 Total noncurrent liabilities - 5,531,689 Total liabilities 26,982,183 6,453,576 NET POSITION Held in trust for redevelopment obligation retirement purposes -$ (619,774) $ The notes to the financial statements are an integral part of this statement. 70 Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2020 Private Purpose ADDITIONS Trust Funds Contributions: Tax increment 5,006,144 $ Other income 1,398,878 Income from property and investments 105,206 Total additions 6,510,228 DEDUCTIONS General and administrative 98,195 Interest expense and fees 232,382 Total deductions 330,577 Change in net position 6,179,651 Total net position (deficit) at beginning of year (6,799,425) Total net position (deficit) at end of year (619,774) $ The notes to the financial statements are an integral part of this statement. 71 Notes to the Financial Statements 72 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: 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 (CMWD). 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. 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. For the most part, 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. Notes to the Financial Statements 73 Note 1. Summary of Significant Accounting Policies (continued) 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. 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 Private Purpose Trust 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 generally 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 generally 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. Agency funds, which are a type of fiduciary funds, are custodial in nature (assets equal liabilities) and do not involve the recording of city revenues and expenses. Since revenues and expenses are not recognized, agency funds have no measurement focus, however, assets and liabilities are accounted for on the accrual basis of accounting. The city reports the following major governmental funds: • 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. • 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. • The General Capital Construction (GCC) capital project fund is used to account for transfers from the General Fund and expenditures for various capital projects not financed through another capital project fund. • 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. Notes to the Financial Statements 74 Note 1. Summary of Significant Accounting Policies (continued) • The Park Development Fund capital project funds are used to account for receipts of fees charged to developers for park acquisition and development. • The Public Facilities Construction (PFF) capital project fund is used to account for the receipt of fees charged to developers, and expenditures that are restricted for specific public facilities such as parks and fire stations necessitated by growth. The city reports the following major enterprise funds: • 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. • The Golf Course enterprise fund is used to account for revenues and expenses for the construction, maintenance and operating activities of the city’s municipal golf course. • The Wastewater enterprise funds are used to account for the operation, maintenance, and capital facility financing of the city’s wastewater system. • The Solid Waste enterprise funds are used to account for the revenues and expenses of the city’s solid waste source-reduction, recycling and storm water programs. Additionally, the city reports the following fund types: • 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. • The Agency funds account for assets held by the city for other governments or individuals. These funds include contractors’ deposits for future development, miscellaneous deposits, as well as debt service transactions on assessment district bonds for which the city is not obligated. • The Trust funds account for the activities of the Redevelopment Obligation Retirement Funds, 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 are the charges between CMWD 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 generally 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. Notes to the Financial Statements 75 Note 1. Summary of Significant Accounting Policies (continued) 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. Inventories Inventories consist of materials and supplies that are valued at cost and are recorded as expenses or expenditures on a first-in, first-out basis when consumed. 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, 2020, 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. 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. Unbilled services Unbilled water, wastewater and solid waste revenues of the enterprise funds are recognized as earned when the services are used. Notes to the Financial Statements 76 Note 1. Summary of Significant Accounting Policies (continued) Capital assets Capital assets, which include land (including right-of-way), buildings, equipment and infrastructure assets (e.g., roads, bridges, traffic signals, water and wastewater systems, and similar 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. Depreciation 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: Years Buildings and other structures 10 – 50 Improvements other than buildings 10 – 50 Infrastructure 10 – 100 Intangible assets 5 – 10 Machinery and equipment 3 – 20 Wastewater treatment facility (including equipment) 5 – 75 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. 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. 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 position 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. 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 position 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 two types of items that qualify for reporting in this category. Notes to the Financial Statements 77 Note 1. Summary of Significant Accounting Policies (continued) 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 grants. This amount is deferred and recognized as an inflow of resources in the period that the amount becomes available. The second item, deferred inflows of resources, is reported in the proprietary funds balance sheet and the Statement of Net Position. The city has pension related and other postemployment benefits related items in this category. 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), “advances to/from other funds” (long-term interfund loans) or “due from Successor Agency” (long-term trust fund loan). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-wide Financial Statements as “internal balances.” 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. 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 2% of outstanding billings at June 30, 2020, the ambulance billing receivable allowance is equal to 40% of outstanding billings at June 30, 2020, and the trade and false alarm receivable allowance is equal to the total of all outstanding receivables that are over 90 days past due plus 30% of all remaining balances. 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, 2020, and any receivables due from other public agencies. 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. 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. Notes to the Financial Statements 78 Note 1. Summary of Significant Accounting Policies (continued) 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. 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. 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. 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. For this report, the following timeframes are used: Valuation Date (VD) June 30, 2018 Measurement Date (MD) June 30, 2019 Measurement Period (MP) July 1, 2018 to June 30, 2019 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/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. Notes to the Financial Statements 79 Note 1. Summary of Significant Accounting Policies (continued) 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, 2019 Measurement Date (MD) June 30, 2019 Measurement Period (MP) July 1, 2018 to June 30, 2019 Compensated absences, OPEB obligation and net pension liability The obligations for compensated absences, the OPEB obligation and net pension liability are primarily liquidated from the General Fund. There is no fixed payment schedule for these liabilities. 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. 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: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are inactive; • Inputs other than quoted prices that are observable for the asset or liability; and • 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. Note 2. Budgetary Data The city follows these procedures in establishing its budgetary data: • During May or June, the city manager submits to the City Council a proposed operating and capital budget for the fiscal year commencing the following July 1. The budget includes estimated revenues and proposed expenditures on a departmental and/or project basis. • A public hearing is conducted at a City Council meeting to obtain citizens’ comments during June. • Prior to July 1, the budget is enacted legally through passage of an appropriation resolution. Notes to the Financial Statements 80 Note 2. Budgetary Data (continued) 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, and increases in Encina Wastewater Authority expenses. 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. Monthly 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 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. 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 except for the Tyler Court Apartments Fund, and a portion of the Parking-in-Lieu Capital Project Fund (Grants and Other Capital Project Funds). Accordingly, the revenues and expenditures for the Tyler Court Apartments Fund have been excluded from the budget basis financial statements. Annual operating budgets are not adopted for the capital projects funds except for the Parking-in-Lieu Fund; therefore, budget basis financial statements have not been prepared because a comparison of such budgetary amounts to annual revenues and expenditures is not meaningful. Note 3. Deposit and Investment Risk Cash resources of the individual funds are combined to form a pool of cash and investments. The city maintains a formal Investment Policy Statement (IPS), 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 IPS objectives of safety of principal, adequacy of liquidity, and achievement of an average market rate of return. 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, 2020, the LAIF performance report shows a fair value factor of 1.004912795. 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. Notes to the Financial Statements 81 Note 3. Deposit and Investment Risk (continued) As of June 30, 2020, the city had the following investments in its portfolio: Fair % of Modified Treasurer's Pool investments Value Total Duration U.S. agencies: United States Treasury Bills & Notes 82,219,190 $ C 9.9%1.199 Federal Home Loan Mortgage Corporation 56,873,717 6.9%2.603 Federal National Mortgage Association 26,117,823 3.2%1.601 Federal Home Loan Bank 61,840,133 7.5%2.366 Federal Farm Credit Bank 79,269,097 9.6%3.110 Federal Agricultural Corporation 12,420,086 1.5%1.849 Supranational 40,575,352 4.9%2.897 Financing Corporation 2,684,625 0.3%3.826 Tennessee Valley Authority 3,067,980 0.4%0.611 RFCO Strip Principal 2,997,330 0.4%0.290 Subtotal U.S. agencies 368,065,333 44.6%2.035 Agency Backed Passthrough Securities Federal Home Loan Mortgage Corporation 3,208,350 0.4%2.022 Federal National Mortgage Association 4,018,762 0.5%1.232 Subtotal agency backed passthrough securities 7,227,112 0.9%1.582 Corporate notes: Medium-term corporate notes 240,987,959 29.1%2.276 Subtotal corporate notes 240,987,959 29.1%2.276 CAMP 1,004,415 0.1%- LAIF 185,227,581 22.4%- Certificates of deposit 18,956,503 2.3%- Cash accounts 6,857,307 0.8%- Total Treasurer’s Pool 828,326,210 100.0%1.773 Investments held outside the Treasurer’s Pool Money market funds 4,675,416 Guaranteed investment contracts 942,770 Subtotal debt service funds/bond proceeds 5,618,186 Other deposits 1,249,495 Petty cash funds 10,402 Total cash and investments 835,204,293 $ Statement of Net Position, Primary Government Cash and investments 806,293,517 $ Statement of Net Position, Fiduciary Funds Cash and investments 24,450,372 Restricted cash and investments 4,460,404 Total cash and investments 835,204,293 $ Notes to the Financial Statements 82 Note 3. Deposit and Investment Risk (continued) 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, 2020: 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. Custodial credit risk (deposits) The city maintains cash accounts at one major banking institution. At the conclusion of each business day, 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. Concentration credit risk Concentration credit risk is the heightened risk of potential loss when investments are concentrated in one issuer. The California state code requires that total investments in medium-term corporate notes of all issuers not exceed 30% of the portfolio. Level 1 Level 2 Level 3 Total U.S. Treasury Bills & Notes 82,219,190 $ -$ -$ 82,219,190 $ U.S. agencies - 285,846,143 - 285,846,143 Agency backed passthrough securities - 7,227,112 - 7,227,112 Medium-term corporate notes - 240,987,959 - 240,987,959 Certificates of deposit - 18,956,503 - 18,956,503 Subtotal investments reported at fair value 82,219,190 $ 553,017,717 $ -$ 635,236,907 Cash and investments not reported at fair value Cash accounts 6,857,307 CAMP 1,004,415 LAIF 185,227,581 Money market funds 4,675,416 Guaranteed investment contracts 942,770 Other deposits 1,249,495 Petty cash funds 10,402 Total cash and investments 835,204,293 $ Fair Value Hierarchy Notes to the Financial Statements 83 Note 3. Deposit and Investment Risk (continued) For concentration of investments, the city’s IPS 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 IPS for U.S. agencies. As of June 30, 2020, the portfolio was in compliance with this requirement. 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). However, it is the city’s policy to limit investments to the top two credit ratings (AAA and AA). As of June 30, 2020, approximately 27% of the investments in medium-term corporate notes did not have one of these two credit ratings. These investments were made when the credit ratings were AA or higher. California state code and the city’s IPS allow the city treasurer to determine the course of action to correct exceptions to the IPS. 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, 2020 for each investment type by Standard & Poor’s Investor’s Service: Minimum Exempt Legal from Not Investment Type Total Rating Disclosure AAA AA A Rated Treasury securities 82,219,190$ N/A 82,219,190$ -$ -$ -$ -$ Federal agency securities 285,846,143 N/A - - 285,846,143 - - Agency backed passthrough securities 7,227,112 AA - 7,227,112 - - - Medium term notes 240,987,959 AA - 30,799,800 145,114,027 65,074,132 - California Asset Management Program (CAMP)1,004,415 N/A - 1,004,415 - - - Local Agency Investment Fund (LAIF)185,227,581 N/A - - - - 185,227,581 Certificates of deposit 18,956,503 N/A - - - - 18,956,503 Cash accounts 6,857,307 N/A - - - - 6,857,307 Other deposits 1,249,495 N/A - - - - 1,249,495 Petty cash funds 10,402 N/A - - - - 10,402 Investments with fiscal agent Money market funds 4,675,416 AA-m - 4,675,416 - - - Guaranteed investment contracts 942,770 N/A - - - - 942,770 835,204,293$ 82,219,190$ 43,706,743$ 430,960,170$ 65,074,132$ 213,244,058$ Rating as of Year End Notes to the Financial Statements 84 Note 3. Deposit and Investment Risk (continued) 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, 2020, the portfolio had a 1.89% gain in market value based on cost. The city’s IPS 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 (2) 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: 1. As of June 30, 2020, the modified duration of the portfolio was 1.773. 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 relatively conservative. 2. As of June 30, 2020, maturities within one year exceeded the required minimum of $198,032,000 (two- thirds of current year operating budget for the city per the Fiscal Year 2019-20 Operating Budget adopted by the City Council). 3. As of June 30, 2020, the weighted average maturity of the LAIF underlying debt securities was 191 days. As of June 30, 2020, LAIF had a 0.4913% gain in market value. 4. As of June 30, 2020, the city’s investment portfolio included $3,246,000 of callable step-up notes at par. Note 4. Due To and From Other Funds The following table shows amounts due from funds within the city to other funds within the city at June 30, 2020. Due to Due from Other Funds Other Funds General Fund -$ 82,003 $ Other Governmental Funds: Community Development Block Grant 82,003 - Totals 82,003 $ 82,003 $ Notes to the Financial Statements 85 Note 5. Advances To and From Other Funds The following table shows amounts advanced from governmental funds within the city to other funds within the city at June 30, 2020: Advances to and from other funds are primarily long-term advances used to fund capital projects in advance of related revenues. 1 The advance between the General Fund and the Habitat & Agricultural Management 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. 2 The advance between the General Fund and the Golf Course Enterprise Fund is estimated to be repaid through residual operating income from golf course operations. 3 The advance between the CFD No. 1 Fund and the Traffic Impact Projects Fund is estimated to be repaid over a 10-15 year period as Traffic Impact Fees are collected. 4 The advance between the PFF Fund and the Park Development Funds is estimated to be repaid at build-out. 5 The obligation of the Redevelopment Obligation Retirement Trust Funds represents the obligations of the custodian of the assets and liabilities of the former redevelopment agency (the Successor Agency) and is presented in the accompanying financial statements as Due from Successor Agency. Interest on the obligation will compound annually at 3% per Health and Safety Code Section 34191.4 which was amended by Senate Bill No. 107. Senate Bill No. 107 went into effect in September 2015. Advances From Advances To Amount General Fund Other Governmental Funds: Habitat Mitigation 1,254,185$ 1 General Fund Enterprise Funds: Golf Course 55,458,869 2 Other Governmental Funds:Other Governmental Funds: CFD No. 1 Traffic Impact Projects 1,943,710 3 Public Facilities Construction Park Development 5,650,000 4 64,306,764$ General Fund Fiduciary Funds: Redevelopment Obligation Retirement Trust Funds 2,681,689$ 5 Notes to the Financial Statements  86  Note 6.  Capital Assets    Capital asset activity was as follows for the year ended June 30, 2020:           Balance at Balance at June 30, 2019 Increases Decreases June 30, 2020 Governmental activities: Capital assets, not being depreciated: Land (including right‐of‐way)153,725,792$    2,170,439$         ‐$                                155,896,231$    Construction in progress 16,752,652          10,344,184         (10,130,298)        16,966,538          Total capital assets,  not being depreciated 170,478,444       12,514,623         (10,130,298)        172,862,769       Capital assets, being depreciated: Buildings 136,441,283       1,840,187            ‐                                   138,281,470       Improvements, other than buildings 84,333,943          11,098,247         (1,606,339)           93,825,851          Machinery and equipment 46,038,742          6,210,958            (603,722)               51,645,978          Infrastructure 726,181,012       8,071,373            ‐                                   734,252,385       Intangible assets 5,017,448             ‐                                   ‐                                   5,017,448             Total capital assets,  being depreciated 998,012,428       27,220,765         (2,210,061)           1,023,023,132  Less accumulated depreciation for: Buildings (42,990,955)        (2,791,508)           ‐                                   (45,782,463)        Improvements, other than buildings (34,179,019)        (3,387,741)           1,606,339            (35,960,421)        Machinery and equipment (28,559,299)        (3,518,759)           598,615                 (31,479,443)        Infrastructure (271,785,748)     (15,147,326)        ‐                                   (286,933,074)     Intangible assets (3,587,490)           (133,657)               ‐                                   (3,721,147)           Total accumulated depreciation (381,102,511)     (24,978,991)        2,204,954            (403,876,548)     Total capital assets  being depreciated, net 616,909,917       2,241,774            (5,107)                     619,146,584       Governmental activities  capital assets, net 787,388,361$    14,756,397$      (10,135,405)$     792,009,353$    Notes to the Financial Statements 87 Note 6. Capital Assets (continued) Balance at Balance at June 30, 2019 Increases Decreases June 30, 2020 Business-type activities: Capital assets, not being depreciated: Land (including right-of-way)9,330,718$ -$ -$ 9,330,718$ Construction in progress 46,142,826 21,901,197 (43,257,299) 24,786,724 Total capital assets, not being depreciated 55,473,544 21,901,197 (43,257,299) 34,117,442 Capital assets, being depreciated: Buildings 40,952,166 151,655 - 41,103,821 Improvements, other than buildings 52,278,030 946,658 - 53,224,688 Machinery and equipment 12,933,255 957,390 - 13,890,645 Infrastructure 350,381,308 34,460,714 (5,265,576) 379,576,446 Wastewater treatment facility 58,126,463 5,188,489 (3,006,270) 60,308,682 Total capital assets, being depreciated 514,671,222 41,704,906 (8,271,846) 548,104,282 Less accumulated depreciation for: Buildings (11,327,475) (911,224) - (12,238,699) Improvements, other than buildings (37,758,623) (3,247,424) - (41,006,047) Machinery and equipment (2,461,202) (672,296) - (3,133,498) Infrastructure (115,785,535) (7,910,135) 3,097,433 (120,598,237) Wastewater treatment facility (39,402,415) (2,369,596) 3,006,270 (38,765,741) Total accumulated depreciation (206,735,250) (15,110,675) 6,103,703 (215,742,222) Total capital assets being depreciated, net 307,935,972 26,594,231 (2,168,143) 332,362,060 Business-type activities capital assets, net 363,409,516$ 48,495,428$ (45,425,442)$ 366,479,502$ Notes to the Financial Statements 88 Note 6. Capital Assets (continued) Depreciation expense was charged to functions/programs of the primary government as follows: Note 7. Long-term Debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2020: Governmental activities: General government 782,137$ Public safety 1,439,268 Community services 4,475,258 Public works 15,479,162 Capital assets held by the internal service funds (charged to various functions based on their usage of the assets)2,803,166 Total depreciation expense - governmental activities 24,978,991$ Business-type activities: Carlsbad Municipal Water District 6,566,816$ Wastewater 4,989,852 Golf course 3,554,007 Total depreciation expense - business-type activities 15,110,675$ Principal Principal Balance at Balance at Due Within July 1, 2019 Increases Decreases June 30, 2020 One Year Governmental activities: Obligations under capital lease 378,295 $ -$ 222,373 $ 155,922 $ 155,922 $ Total governmental activities 378,295 $ -$ 222,373 $ 155,922 $ 155,922 $ Principal Principal Balance at Balance at Due Within July 1, 2019 Increases Decreases June 30, 2020 One Year Business-type activities: Loans payable 16,826,605 $ 82,874 $ 1,582,886 $ 15,326,593 $ 1,620,408 $ Total business type activities 16,826,605 $ 82,874 $ 1,582,886 $ 15,326,593 $ 1,620,408 $ Notes to the Financial Statements 89 Note 7. Long-term Debt (continued) Long-term debt at June 30, 2020 is comprised of the following issues: Balance at Governmental long-term debt June 30, 2020 The city has entered into several lease-purchase agreements for office equipment valued at $1,029,574. This year, $205,914 was included in depreciation expense. As of June 30, 2020 the city has not purchased any of the copier equipment. All lease terms are for 60 months, with interest rates ranging from 6.0% to 7.2%.155,922 $ Sub-total governmental long-term debt 155,922 Less current portion (155,922) Total long-term portion of governmental debt -$ Balance at Business-type long-term debt June 30, 2020 2005 Carlsbad Municipal Water District loan agreement with the State Water Resources Control Board totaling $9,694,504. Principal is due in varying amounts ranging from $571,729 to $631,082 on June 1 of each year through 2025, interest payable on June 1 each year at 2.5% per annum. Payable from recycled water user fees.3,005,197$ 2006 Carlsbad Municipal Water District loan agreement with the State Water Resources Control Board totaling $19,382,546. Principal is due in varying amounts ranging from $1,048,679 to $1,201,977 on April 1 of each year through 2027, interest payable on April 1 of each year at 2.3% per annum. Payable from recycled water user fees. 7,867,132 2014 Carlsbad Municipal Water District loan agreement, as revised, with the State Water Resources Control Board authorized to $22,150,000. Principal and interest will not be due until Dec. 2021. Interest is payable on Dec. 31 of each year at 1.0% per annum. Principal due under the current amortization schedule ranges from $126,795 to $169,208. Payable from recycled water user fees.4,454,264 Subtotal business-type long-term debt 15,326,593 Less current portion (1,620,408) Total long-term portion of business-type debt 13,706,185 $ Notes to the Financial Statements 90 Note 7. Long-term Debt (continued) The aggregate maturities of long-term debt are as follows: The aggregate maturities for the business-type activities reflect a recent $39,160 interest increase in the state water loan. The city is currently drawing down loan proceeds from an authorized $22.1 million for the expansion of the recycled water facility. The loan amount will continue to adjust as future draws are made. Note 8. Rate Covenants and Pledged Revenue Rate covenants The CMWD loan agreements with the State Water Resources Control Board requires that 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 CMWD, excluding depreciation) of at least one times debt service for that year. All of the recycled revenues of CMWD are pledged to meet these rate covenants and to secure related debt. All rates were set to meet all covenants requirements; however, unplanned increases in water costs were realized in the current year and actual net revenues were lower than one times debt service. CMWD had a sufficient fund balance to mitigate the shortfall and will continue to set its charges for services and rates for fees to produce the required net revenues. Year ended June 30:Principal Interest 2021 155,922 $ 3,577 $ 155,922 $ 3,577 $ Year ended June 30:Principal Interest 2021 1,620,408 $ 256,074 $ 2022 1,786,873 262,204 2023 1,827,478 221,598 2024 1,869,031 180,046 2025 1,911,551 137,526 2026-2030 3,056,645 265,572 2031-2035 714,387 148,585 2036-2040 750,828 112,144 2041-2045 789,127 73,843 2046-2050 829,380 33,590 2051 170,885 1,709 15,326,593 $ 1,692,891 $ Business-type Activities Governmental Activities Notes to the Financial Statements 91 Note 8. Rate Covenants and Pledged Revenue (continued) Pledged revenue The city has a number of debt issuances outstanding that are collateralized by the pledging of certain revenues. The purpose for which the proceeds of the related debt issuances were utilized are disclosed in the debt descriptions of the accompanying notes. For the current year, debt service payments as a percentage of the pledged gross revenue (net of certain expenses where so required by the debt agreement) are indicated in the table below. These percentages also approximate the relationship of debt service to pledged revenues for the remainder of the term of the commitment: Note 9. 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. Limited obligation improvement bonds As of June 30, 2020, the city has two series of assessment district bonds outstanding in the amount of $30,020,000. 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’ agency funds. Special tax bonds As of June 30, 2020, the city has two series Community Facilities District (CFD) bonds outstanding in the amount of $18,890,000. 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’ agency funds. 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, 2020 is $16,625,000. The bonds, together with interest thereon, are limited obligations of the city payable solely from bond proceeds, revenues and other amounts derived solely from home mortgage and developer loans secured by first deeds of trust, irrevocable letters of credit, and irrevocable surety bonds. Description of Pledged Annual Amount of Pledged Annual Debt Service Pledged Revenue as a Revenue Revenue (net of expenses)Payments Percentage of Debt Service Recycled water revenues 1,631,678$ 1,876,482$ 87% Notes to the Financial Statements 92 Note 10. Fund Balances The following is a summary of the components of fund balances as of June 30, 2020: * Only reflects that portion of fund balance invested in interfund advances and loans (the General Fund amount is net of $11,126,810 in unavailable revenue for measurable but unavailable interest earned on such advances and loans). Community General Facilities Capital Infrastructure Fund Balances General District No. 1 Construction Replacement Nonspendable: Inventory 13,959 $ -$ -$ -$ Prepaid items 648,696 - - - Loans receivable 77,656 - - - Advances to other funds*48,267,933 - - - Totals 49,008,244 - - - Restricted for: Affordable housing - - - - Lighting and landscaping districts - - - - Capital projects - 95,005,682 - - General government - - - - Public safety - - - - Community services - - - - Totals - 95,005,682 - - Committed to: Community activity grants 1,000,000 - - - Totals 1,000,000 - - - Assigned to: General government 13,781,328 - - - Public safety 2,769,280 - - - Community services 4,135,394 - - - Public works 2,956,970 - - - COVID-19 7,089,789 - - - Capital projects - - 42,273,928 122,993,131 Totals 30,732,761 - 42,273,928 122,993,131 Unassigned: Unassigned 98,985,748 - - - Economic uncertainty 11,135,909 - - - Totals 110,121,657 - - - Total fund balances 190,862,662 $ 95,005,682 $ 42,273,928 $ 122,993,131 $ Governmental Funds 93 Public Other Park Facilities Governmental Development Construction Funds Total -$ -$ -$ 13,959 $ - - 951 649,647 - - - 77,656 - - - 48,267,933 - - 951 49,009,195 - - 44,884,230 44,884,230 - - 8,966,732 8,966,732 7,216,756 35,082,268 68,762,472 206,067,178 - - 974,683 974,683 - - 447,894 447,894 - - 4,021,647 4,021,647 7,216,756 35,082,268 128,057,658 265,362,364 - - - 1,000,000 - - - 1,000,000 - - - 13,781,328 - - - 2,769,280 - - - 4,135,394 - - - 2,956,970 - - - 7,089,789 - - - 165,267,059 - - - 195,999,820 - - (234,445) 98,751,303 - - - 11,135,909 - - (234,445) 109,887,212 7,216,756 $ 35,082,268 $ 127,824,164 $ 621,258,591 $ Governmental Funds Notes to the Financial Statements 94 Note 10. Fund Balances (continued) Fund balances are reported in the fund statements in the following classifications: Nonspendable Fund Balance 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). Spendable Fund Balance Restricted Fund Balance – this includes amounts that can be spent only for specific purposes stipulated by 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 – this 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 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 – this 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 purposes if the amount is equal to or less than $100,000 to the next fiscal year. The City Council has authorized, through a resolution, that all outstanding encumbrances at the end of the fiscal year and certain unspent budgeted amounts above $100,000 to be carried forward into the next fiscal year. These amounts are shown as assigned fund balance at the end of the fiscal year: • General government – citywide back file conversion; wildfire prevention campaign; unfunded litigation costs; COVID-19 related costs; a business revitalization plan; climate action plan communications costs; demographer contract for redistricting services; implementation and maintenance of a learning management system; a new Enterprise Resource Planning system; and additional innovation-related projects. • Public safety – NFPA 1582 medical tests; RMS and EMS database access for the NorthCom Dispatch JPA; wildfire evacuation sheltering; COVID-related cleaning services; unspent state homeless program grant; the outfitting of ten safety vehicles; de-escalation training SB230; equipment for Psychiatric Emergency Response Team; regional computer forensics lab; and GrayKey licensing. • Community services – unspent developer deposits; unspent state SB2 grant funds; maintenance for the Schulman Auditorium AV systems; public arts funding; Cannon Park playground refurbishment; Dove Library wayfinding; Leo Carrillo Ranch antique furniture restoration; Leo Carrillo Ranch self-guided audio tour; Pine Avenue Park/Senior Center public safety camera project; and arts and culture master plan. • Public works – street maintenance; fencing; unspent state green business network grant; electrical testing equipment; asset management software; and unused transportation demand management funds. Notes to the Financial Statements 95 Note 10. Fund Balances (continued) • Capital projects – citywide infrastructure replacement projects; beach access repairs; fleet maintenance renovation; Safety Center refurbishment; Faraday Center refurbishment; Monroe Street pool replacement; Hosp Grove playground refurbishment; parking lot maintenance program; replacement of Fire Station No. 2; emergency operations center reconfiguration; Lake Calavera outlet improvements; Terramar area coastal improvements; Ocean Street restroom; Cannon Park restroom; Calavera Park gateway improvements; Agua Hedionda south trail; Carlsbad Village decorative lighting; Barrio street lighting; Kelly Drive channel repair; Senior Center refurbishment; Village Arts building exterior and roof improvements; and Fire Station No. 4 expansion. 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. Note 11. General Fund Balance Policy Pursuant to 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. Note 12. Accumulated Fund Deficits/Negative Net Position The following funds reported deficits in fund balances or net position as of June 30, 2020: The deficit in the Habitat and Agricultural Management Fund is the result of the General Fund advancing money for the purchase of mitigation credits in the current fiscal year. The deficit in the Golf Course Fund is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course and partially subsidizing the operations of the course in prior fiscal years. The deficit in the Redevelopment Obligation Retirement Trust Fund is the result of the General Fund advancing money for redevelopment. Deficit Balance Special Revenue Funds: Habitat and Agricultural Management (234,445)$ Enterprise Funds: Golf Course (24,195,849) Fiduciary Funds: Redevelopment Obligation Retirement Trust Fund (619,774) Notes to the Financial Statements 96 Note 13. Interfund Transfers Interfund transfers for the year ended June 30, 2020, consisted of the following: Transfers Out Amount General Fund Gas Tax Fund 10,000$ Capital Project Funds: General Capital Construction General Fund 5,111,500 Infrastructure Replacement General Fund 5,111,500 Enterprise Funds: Storm Water Protection General Fund 303,052 Special Revenue Funds: Financing Districts General Fund 950,000 11,486,052$ Transfers In 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 budgetary authorizations; and (3) move excess cash collected for future capital replacement in accordance with Council authorization. Note 14. 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, 2020, the unrestricted fund equity for the Risk Management Self- Insurance Fund was $1,254,295. Funds used by the Risk Management Fund to liquidate the claims liability predominantly come from the General Fund (80.63%), the Water funds (8.17%) and the Wastewater funds (3.79%). Notes to the Financial Statements 97 Note 14. Risk Management (continued) Through December 31, 2018, the city was self-insured for dental insurance. Dental insurance coverage for city employees was administered by MetLife. Under the city’s previous agreement with MetLife, MetLife paid dental claims for each covered member, up to a maximum of $1,500 per calendar year. At June 30, 2020, there were no claims outstanding. The city is insured for workers’ compensation claims by Safety National. Safety National provides coverage up to a maximum of $2,000,000 per occurrence for losses which exceed the city’s self-insurance retention of $1,250,000 for all employees. At June 30, 2020, the unrestricted fund equity for the Workers’ Compensation Self-Insurance Fund was $ $2,400,062. Funds used by the Workers’ Compensation Fund to liquidate the claims liability predominantly come from the General Fund (95.77%), the Water funds (1.32%) and the Wastewater funds (0.60%). The estimated claims payable reported at June 30, 2020 is based on the requirements of GASB, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Settled cases did not exceed insurance coverage during the past fiscal year. Changes in the estimated claims payable amounts in Fiscal Years 2018-19 and 2019-20 for the two internal service funds are as follows: Note 15. Joint Ventures Encina Water Pollution Control Facilities The Encina Water Pollution Control Facilities (the facilities) are wastewater facilities owned jointly by the cities of Carlsbad, Vista and Encinitas and the Leucadia Wastewater District, the Buena Vista Sanitation District and the Vallecitos Water District. The Encina Wastewater Authority (EWA) is a joint powers authority established to operate and administer the facilities. It is responsible for the management, maintenance and operations of the joint system. Each member agency has a specified percentage of ownership in the various components of the Encina Water Pollution Control Facilities that varies from component to component. Accordingly, each member agency reports its undivided interest in the facilities as a part of that member agency’s capital assets. Expense and Beginning Changes in Claim Ending Balance Estimates Payments Balance Risk Management Fund: 2018-19 2,322,117$ 1,158,709$ 582,838$ 2,897,988$ 2019-20 2,897,988 1,284,264 718,182 3,464,070 Workers’ Compensation Fund: 2018-19 8,441,148$ 4,634,755$ 2,878,110$ 10,197,793$ 2019-20 10,197,793 2,993,863 2,335,294 10,856,362 Claims Notes to the Financial Statements 98 Note 15. Joint Ventures (continued) As of June 30, 2020, 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 $13,039 in Fiscal Year 2018-19. The financial statements of EWA can be obtained at www.encinajpa.com. Encina Financing Joint Powers Authority The Encina Financing Joint Powers Authority (the Authority) was created on February 1, 1989 between the City of Carlsbad (Carlsbad), the City of Vista (Vista), the Buena Vista Sanitation District (Buena) and the Leucadia County Water District (Leucadia). The primary purpose of the Authority is to issue revenue bonds in order to finance the expansion of the facility. The Authority is governed by a Board of Directors, which consists of one director appointed by each member. The financial statements of the Authority can be obtained at the city’s Administrative Services Department. The city’s share in the accounts of the Authority is recorded in the Wastewater Enterprise Fund. The expansion of the facility is shown as a capital asset of the Wastewater Enterprise Fund. Note 16. Pension Plan 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, 2018 Annual Actuarial Valuation Report (funding valuation). 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. Notes to the Financial Statements 99 Note 16. Pension Plan (continued) Benefits provided 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 fulltime employment. The Plans’ provisions and benefits in effect at June 30, 2020, 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 2.0% to 3.0%1.092% to 2.418%1.0% to 2.5% Required employee contribution rates 8%7%7.50% Required employer contribution rates 12.410%12.410%12.410% Required employer payment of unfunded liability: Miscellaneous $5,404,243 On or after Prior to October 4, 2010 to On or after Hire date October 4, 2010 December 31, 2012 January 1, 2013 Benefit formula 3% @ 50 2% @ 50 2.7% @ 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%9%12.75% Required employer contribution rates 20.410%20.410%20.410% Required employer payment of unfunded liability: Safety $5,283,319 Notes to the Financial Statements 100 Note 16. Pension Plan (continued) Employees covered As of June 30, 2018, the following employees were covered by the benefit terms for each Plan: Miscellaneous Safety Inactive employees or beneficiaries currently receiving benefits 556 241 Inactive employees or beneficiaries currently not yet receiving benefits 484 104 Active employees 492 192 Total 1,532 537 Contribution description Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be 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 the 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. For the measurement period ending June 30, 2019 (the measurement date), the average active employee contribution rate ranged from 7.0% to 8.0% of annual pay for miscellaneous employees and 9.0% to 12.75% of annual pay for safety employees, and the average employer’s contribution rate is 12.41% of annual payroll for miscellaneous employees and 20.41% of annual payroll for safety 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. Actuarial methods and assumptions used to determine total pension liability The June 30, 2018 valuation was rolled forward to determine the June 30, 2019 total pension liability, based on the following actuarial methods and assumptions: Actuarial cost method Entry Age Normal in accordance with the requirements of GASB 68 Actuarial assumptions Discount rate 7.15% Inflation 2.50% Salary increases Varies by entry age and service Mortality rate table*Derived using CalPERS' membership data for all funds Post-retirement benefit increase Contract COLA up to 2.0% until Purchasing Power Protection Allowance Floor on purchasing power applies; 2.50% thereafter * The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 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 December 2017 that can be found on the CalPERS website. Notes to the Financial Statements 101 Note 16. Pension Plan (continued) Discount rate The discount rate used to measure the total pension liability was 7.15%. 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 Plans’ 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. 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. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. The expected real rates of return by asset class are as follows: Current Target Real Return Real Return Asset Class¹Allocation Years 1 - 10²Years 11+3 Global equity 50.0%4.80%5.98% Fixed income 28.0 1.00 2.62 Inflation assets 0.0 0.77 1.81 Private equity 8.0 6.30 7.23 Real estate 13.0 3.75 4.93 Liquidity 1.0 0.00 (0.92) ¹ In the System's CAFR, fixed income is included in global debt securities; liquidity is included in short-term investment; inflation assets are included in both global equity securities and global debt securities. 2 An expected inflation of 2.0% used for this period. 3 An expected inflation of 2.92% used for this period. Notes to the Financial Statements 102 Note 16. Pension Plan (continued) Pension plan fiduciary net position CalPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained on the California Public Employees’ Retirement System website at www.calpers.ca.gov under forms and publications. Changes in net pension liability The following table shows the changes in net pension liability recognized over the measurement period. Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at: 6/30/2018 383,133,348$ 300,121,419$ 83,011,929$ Changes Recognized for the Measurement Period: • Service cost 7,393,365 - 7,393,365 • Interest on the Total Pension Liability 27,175,110 - 27,175,110 • Differences between expected and actual experience 2,338,341 - 2,338,341 • Changes of assumptions - - - • Plan to plan resource movement - - - • Contributions from the employer - 17,745,975 (17,745,975) • Contributions from employees - 3,040,423 (3,040,423) • Net investment income - 19,551,424 (19,551,424) • Benefit payments, including refunds of employee contributions (18,193,803) (18,193,803) - • Administrative expense - (214,173) 214,173 • Other Miscellaneous Income/(Expense)- 670 (670) Net Changes during 2018-19 18,713,013 21,930,516 (3,217,503) Balance at 6/30/2019 401,846,361$ 322,051,935$ 79,794,426$ Increase (Decrease)Miscellaneous Plan Miscellaneous Safety Plan Plan Total Net pension liability 79,794,426$ 70,345,645$ 150,140,071$ Deferred outflows of resources - pension related items 12,894,542 19,520,588 32,415,130 Deferred inflows of resources - pension related items (2,986,070) (1,621,327) (4,607,397) Pension expense 25,820,255 28,675,109 54,495,364 Notes to the Financial Statements 103 Note 16. Pension Plan (continued) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at: 6/30/2018 299,532,094$ 219,522,878$ 80,009,216$ Changes Recognized for the Measurement Period: • Service cost 6,317,755 - 6,317,755 • Interest on the Total Pension Liability 21,269,278 - 21,269,278 • Differences between expected and actual experience 2,425,561 - 2,425,561 • Changes of assumptions - - - • Plan to plan resource movement - - - • Contributions from the employer - 23,119,896 (23,119,896) • Contributions from employees - 2,380,740 (2,380,740) • Net investment income - 14,331,677 (14,331,677) • Benefit payments, including refunds of employee contributions (15,288,250) (15,288,250) - • Administrative expense - (156,656) 156,656 • Other Miscellaneous Income/(Expense)1 - 508 (508) Net Changes during 2018-19 14,724,344 24,387,915 (9,663,571) Balance at 6/30/2019 314,256,438$ 243,910,793$ 70,345,645$ Increase (Decrease) Safety Plan Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.15%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15%) or 1 percentage-point higher (8.15%) than the current rate: Recognition of gains and losses Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. Discount Rate - 1%Current Discount Discount Rate + 1% (6.15%)Rate (7.15%)(8.15%) Plan's Net Pension Liability - Miscellaneous 132,602,695$ 79,794,426$ 36,087,379$ Plan's Net Pension Liability - Safety 114,082,648$ 70,345,645$ 34,565,665$ Notes to the Financial Statements 104 Note 16. Pension Plan (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 inflows and deferred outflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss: Difference between projected and actual earnings on pension plan investments 5-year straight-line amortization 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 expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired). The EARSL for the Miscellaneous Plan for the June 30, 2019 measurement date is 3.1 years, which was obtained by dividing the total service years of 4,748 (the sum of remaining service lifetimes of the active employees) by 1,526 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to zero. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. The EARSL for the Safety Plan for the June 30, 2019 measurement date is 4.5 years, which was obtained by dividing the total service years of 2,427 (the sum of remaining service lifetimes of the active employees) by 537 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to zero. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. Pension expense and deferred outflows and deferred inflows of resources related to Pensions For the measurement period ending June 30, 2019 (the measurement date), the city recognized a pension expense of $54,495,364 for the Plans. As of June 30, 2019, the city reports other amounts for the Miscellaneous Plan as deferred outflows and deferred inflows of resources related to pensions as follows: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date 10,633,467$ -$ Difference between expected and actual experience 1,584,037 (1,233,313) Changes of assumptions 677,038 (998,341) Net difference between projected and actual earnings on pension plan investments - (754,416) Total 12,894,542$ (2,986,070)$ Notes to the Financial Statements 105 Note 16. Pension Plan (continued) As of June 30, 2019, the city reports other amounts for the Safety Plan as deferred outflows and deferred inflows of resources related to pension as follows: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date 10,323,721$ -$ Difference between expected and actual experience 3,401,410 (368,151) Changes of assumptions 5,795,457 (740,186) Net difference between projected and actual earnings on pension plan investments - (512,990) Total 19,520,588$ (1,621,327)$ For the Miscellaneous Plan, $10,633,467 reported as deferred outflows of resources related to employer contributions subsequent to the measurement date, and for the Safety Plan, $10,323,721 reported as deferred outflows of resources related to employer contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Miscellaneous Plan pensions will be recognized as pension expense as follows: Deferred Measurement Period Outflows/(Inflows) of Ended June 30:Resources 2020 812,221$ 2021 (1,761,440) 2022 (167,338) 2023 391,562 2024 - Thereafter - Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Safety Plan pensions will be recognized as pension expense as follows: Deferred Measurement Period Outflows/(Inflows) of Ended June 30:Resources 2020 5,188,291$ 2021 1,291,122 2022 491,187 2023 604,940 2024 - Thereafter - Notes to the Financial Statements 106 Note 17. Other Postemployment Benefits (OPEB) The city and former employees of CMWD are offered other postemployment benefits in the form of health benefits. The majority of city employees are under the city defined benefit agent multiple-employer plan. CMWD has a defined benefit agent multiple-employer plan. Plan descriptions Carlsbad Municipal Water District (CMWD) The first 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 50, with no less than five years of service and whose age, combined with years of service, equals 70 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. This plan is administered by CalPERS. City of Carlsbad 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 2018 $133.00 Calendar Year 2019 136.00 Calendar Year 2020 139.00 Thereafter, the subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. 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. Notes to the Financial Statements 107 Note 17. Other Postemployment Benefits (continued) Employees covered As of the June 30, 2019 measurement date, the following employees were covered by the benefit terms for each Plan: 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 plans. 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 for each plan are as follows: CMWD City Inactive employees or beneficiaries currently receiving benefits 19 238 Inactive employees or beneficiaries currently not yet receiving benefits - 280 Active employees 1 734 Total 20 1,252 CMWD City Fiscal Year 2019-20 Cash Contributions 152,560 $ 424,908 $ Fiscal Year 2019-20 Estimated Implied Subsidy Payments 24,841 397,555 Fiscal Year 2019-20 Trust Contributions - 86,000 Total Contributions 177,401 $ 908,463 $ Notes to the Financial Statements 108 Note 17. Other Postemployment Benefits (continued) Net OPEB (asset)/liability The city’s and CMWD’s net OPEB (asset)/liability was measured as of June 30, 2019 and the total OPEB (asset)/ liability used to calculate the net OPEB (asset)/liability was determined by an actuarial valuation dated June 30, 2019, based on the actuarial methods and assumptions shown on the following page: Actuarial Cost Method: Entry Age Normal Actuarial Assumptions: Discount Rate 7.00% Inflation 2.75% Salary Increases 3.00% Investment Rate of Return 7.00% with a 45% to 50% confidence based on Bartel Associates modeling for CERBT Strategy 1. Mortality Rate1 Derived using CalPERS’ Membership Data for all funds. Pre-Retirement Turnover2 Derived using CalPERS’ Membership Data for all funds. Healthcare Trend Rate3 Based in part on premium experience. Notes: 1. Based on CalPERS 1997-2015 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 1997-2015 Experience Study for Miscellaneous Employees. 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 developed using Society of Actuaries’ Getzen Model of Long-Run Medical Cost Trends. Notes to the Financial Statements 109 Note 17. Other Postemployment Benefits (continued) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: CERBT Strategy 1 Asset Class Target Allocation Long-Term Expected Real Rate of Return Global Equity 59% 4.82% Fixed Income 25% 1.47% TIPS 5% 1.29% Commodities 3% 0.84% REITs 8% 3.76% Total 100% Notes: 1. The long-term expected rate of return is 7.00%. 2. Assumed long-term rate of inflation is 2.75%. Discount rate The discount rate used to measure the total OPEB liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that city and CMWD 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. Changes in OPEB (asset)/liability 1 Net OPEB assets for the Carlsbad Municipal Water District Business-Type Activity include all of the CMWD Plan net OPEB assets and a portion of the City Plan net OPEB liability. CMWD Plan City Plan Total Net OPEB (asset)(1,109,038)$ -$ (1,109,038)$ 1 Net OPEB liability - 4,205,319 4,205,319 1 Deferred outflows of resources - OPEB related items 177,401 3,105,351 3,282,752 Deferred inflows of resources - OPEB related items (43,099) (117,311) (160,410) OPEB expense/(income)(1,336,501) 671,956 (664,545) Notes to the Financial Statements 110 Note 17. Other Postemployment Benefits (continued) The changes in the net OPEB (asset)/liability for the CMWD plan are shown below: The changes in the net OPEB (asset)/liability for the city Plan are shown below: Total OPEB Plan Fiduciary Net OPEB (Asset)/Liability Net Position (Asset)/Liability (a)(b)(c) = (a) - (b) Balance at 6/30/2019 (Measurement date of 6/30/2018)4,058,489$ 3,525,416$ 533,073$ Changes Recognized for the Measurement Period: • Service cost 12,973 - 12,973 • Interest on the total OPEB liability 275,619 - 275,619 • Actual versus actuarial expectations (1,428,595) - (1,428,595) • Actuarial assumption changes (17,263) - (17,263) • Contributions from the employer - 268,096 (268,096) • Net investment income - 217,504 (217,504) • Benefit payments, including refunds of employee contributions (268,096) (268,096) - • Administrative expense - (755) 755 Net Changes (1,425,362) 216,749 (1,642,111) Balance at 6/30/2020 (Measurement date of 6/30/2019)2,633,127$ 3,742,165$ (1,109,038)$ CMWD Plan Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB (Asset)/Liability Net Position (Asset)/Liability (a)(b)(c) = (a) - (b) Balance at 6/30/2019 (Measurement date of 6/30/2018)12,533,931$ 10,841,537$ 1,692,394$ Changes Recognized for the Measurement Period: • Service cost 523,151 - 523,151 • Interest on the total OPEB liability 892,311 - 892,311 • Actual versus actuarial expectations 1,225,479 - 1,225,479 • Actuarial assumption changes 1,249,495 - 1,249,495 • Contributions from the employer - 710,206 (710,206) • Net investment income - 669,628 (669,628) • Benefit payments, including refunds of employee contributions (619,560) (619,560) - • Administrative expense - (2,323) 2,323 Net Changes 3,270,876 757,951 2,512,925 Balance at 6/30/2020 (Measurement date of 6/30/2019)15,804,807$ 11,599,488$ 4,205,319$ City Plan Increase (Decrease) Notes to the Financial Statements 111 Note 17. Other Postemployment Benefits (continued) Sensitivity of the net OPEB (asset)/liability to changes in the discount rate The following presents the net OPEB (asset)/liability of the 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, 2019: Sensitivity of the net OPEB (asset)/liability to changes in the health care cost trend rates The following presents the net OPEB (asset)/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, 2019: 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 expense. The initial recognition period is five years. Discount Rate - 1%Current Discount Discount Rate + 1% (6.00%)Rate (7.00%)(8.00%) Plan's Net OPEB (Asset) - CMWD (843,321)$ (1,109,038)$ (1,333,289)$ Plan's Net OPEB Liability - City 6,247,041$ 4,205,319$ 2,520,291$ Health Care Cost Trend Rate - 1% Current Health Care Cost Trend Rate Health Care Cost Trend Rate + 1% (6.50%/5.50% decreasing to 3.00%) (7.50%/6.50% decreasing to 4.00%) (8.50%/7.50% decreasing to 5.00%) Plan's Net OPEB (Asset) - CMWD (1,332,840)$ (1,109,038)$ (846,816)$ Plan's Net OPEB Liability - City 2,325,913$ 4,205,319$ 6,522,977$ Notes to the Financial Statements 112 Note 17. Other Postemployment Benefits (continued) OPEB expense and deferred outflows/inflows of resources related to OPEB (CMWD) For the fiscal year ended June 30, 2020, the CMWD recognized OPEB income of $1,336,501. As of the fiscal year ended June 30, 2020, the CMWD reported deferred outflows and inflows of resources related to OPEB from the following sources: The $177,401 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2019 measurement date will be recognized as a reduction of the net OPEB (asset)/liability during the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows: OPEB expense and deferred outflows/inflows of resources related to OPEB (city) For the fiscal year ended June 30, 2020, the city recognized OPEB expense of $671,956. As of the fiscal year ended June 30, 2020, the city reported deferred outflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to measurement date 177,401$ -$ Net difference between projected and actual earnings on OPEB plan investments - (43,099) Total 177,401$ (43,099)$ Deferred Fiscal Year Outflows/(Inflows) Ended:of Resources 2021 (23,930)$ 2022 (23,930) 2023 (1,088) 2024 5,849 2025 - Thereafter - Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to measurement date 908,463$ -$ Difference between expected and actual experience 1,087,785 - Changes of assumptions 1,109,103 - Net difference between projected and actual earnings on OPEB plan investments - (117,311) Total 3,105,351$ (117,311)$ Notes to the Financial Statements 113 Note 17. Other Postemployment Benefits (continued) The $908,463 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2019 measurement date will be recognized as a reduction of the net OPEB (asset)/liability during the fiscal year ending June 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows: Note 18. Commitments and Contingencies Operating leases The city has two parking lot leases with North County Transit District. On June 15, 1976, the city entered into a month-to-month lease for the parking lot located to the east of the railroad tracks between Carlsbad Village Drive and Oak Avenue. The current lease amount is approximately $1,468 per month and payable monthly. On September 1, 1988, the city entered into a month-to-month lease for the parking lot located on Washington Street to the west of the railroad tracks between Carlsbad Village Drive and Oak Avenue. The current lease amount is approximately $2,492 per month and payable annually. Both parking lot leases may be increased annually by the Consumer Price Index – Average U.S. Cities. 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, 2020 is $1,975,340. Deferred Fiscal Year Outflows/(Inflows) Ended:of Resources 2021 211,318$ 2022 211,316 2023 276,462 2024 295,941 2025 278,087 Thereafter 806,453 Notes to the Financial Statements 114 Note 18. Commitments and Contingencies (continued) As of June 30, 2020, 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: Note 19. Successor Agency Trust for Assets of Former Redevelopment 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. Outstanding Encumbrances Governmental Activities General Fund 10,156,160 $ Community Facilities District No. 1 978,995 General Capital Construction 2,268,167 Infrastructure Replacement 2,733,702 Public Facilities Construction 185,872 Nonmajor Governmental Funds in the Aggregate 6,378,037 Subtotal Governmental Activities 22,700,933 Business Like Activities-Enterprise Funds Carlsbad Municipal Water District 11,054,419 Golf Course 124,322 Wastewater 4,135,718 Non-Major Solid Waste 1,412,932 Subtotal Enterprise Funds 16,727,391 Internal Service Funds 5,669,399 Total 45,097,723 $ Notes to the Financial Statements 115 Note 19. Successor Agency Trust for Assets of Former Redevelopment Agency (continued) 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 allows 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. Long-term debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2020: Principal Principal Balance at Balance at Due Within July 1, 2019 Increases Decreases June 30, 2020 One Year Bonds 4,520,000$ -$ 815,000$ 3,705,000$ 855,000$ Due to the City of Carlsbad 7,255,238 107,240 4,680,789 2,681,689 - Total 11,775,238$ 107,240$ 5,495,789$ 6,386,689$ 855,000$ Notes to the Financial Statements 116 Note 19. Successor Agency Trust for Assets of Former Redevelopment Agency (continued) The 1993 Carlsbad Housing and Redevelopment Commission Tax Allocation Bonds were issued totaling $15,495,000. Principal is due in amounts ranging from $855,000 to $1,000,000 on September 1 of each year through 2024. Interest is payable on March 1 and September 1 at rate of 5.30% per annum. The city posted a surety bond in lieu of a cash reserve in the amount of $1,055,953. Bonds are payable from redevelopment property tax increment revenues. Minimum annual debt service requirements have not been established for the obligation of the Successor Agency to the city. The aggregate maturities of long-term debt are as follows: Pledged revenue The Successor Agency has a debt issuance outstanding that is collateralized by the pledging of certain revenues. The amount and term of the remainder of this commitment is indicated in the debt service to maturity table presented on the previous page. The purpose for which the proceeds of the related debt issuance was utilized is disclosed in the debt description on the previous page. For the current year, debt service payments as a percentage of pledged gross revenue (net of certain expenses where so required by the debt agreement) are indicated in the table on the below. This percentage also approximates the relationship of debt service to pledged revenues for the remainder of the term of the commitment: Year ended June 30:Principal Interest 2021 855,000 $ 173,707 $ 2022 900,000 127,200 2023 950,000 78,175 2024 1,000,000 26,500 3,705,000 $ 405,582 $ Debt Service as a Description of Annual Amount of Annual Debt Service Percentage of Pledged Pledged Revenue Pledged Revenue Payments Revenue Tax increment (Village Area)5,111,350$ 1,032,759$ 20% Notes to the Financial Statements 117 Note 20. Prior Period Adjustments In 2014, the City Council agreed in Agenda Bill 46, Resolution No. 66 that lease revenue generated from the Lot 9 ground lease, a Golf Course Fund asset, was to be apportioned between the City of Carlsbad and the Carlsbad Municipal Water District based upon a per square foot ownership basis. The lot was leased in 2016 and revenues were first recognized in fiscal year 2018-19. By directing the revenue to the General Fund and Carlsbad Municipal Water District, control of the asset was effectively transferred and therefore the land should have been transferred as well. The resulting correction transferred the Lot 9 asset at historical cost and was reflected as a decrease in the advance owed to the General Fund. The effect on the beginning net position of the General Fund, Water Fund and Golf Course Fund is reflected in the table below. In 2016, the boundary of Lot 9 was adjusted, changing the proportional share of land between the General Fund and Carlsbad Municipal Water District. The revenue recognized in the General Fund in fiscal year 2019-20 was overstated and the revenue recognized in the Carlsbad Municipal Water District understated. The effects of reflecting the revenue correctly and impact to cash in the General Fund and Water Fund are reflected in the tables below: Carlsbad Municipal Golf General Water District Course Fund Net position at July 1, 2019 $ 313,969,889 $ (20,678,574) $ 185,676,330 Lot 9 lease revenue adjustment 24,074 - (24,074) Transfer Lot 9 land and adjust lot boundary 9,665 (9,665) (45,257) Net position at July 1, 2019, as restated $ 314,003,628 $ (20,688,239) $ 185,606,999 Governmental Business-Type Activities Activities Net position at July 1, 2019 $ 1,327,864,864 $ 482,676,993 Lot 9 lease revenue adjustment (24,074) 24,074 Transfer Lot 9 land and adjust lot boundary 45,257 (45,257) Adjust advance from General Fund to Golf Course (45,257) 45,257 Net position at July 1, 2019, as restated $ 1,327,840,790 $ 482,701,067 Carlsbad Municipal Enterprise Water District Funds Total Cash and cash equivalents at July 1, 2019 $ 139,285,492 $ 205,782,306 Lot 9 lease revenue adjustment 24,074 24,074 Cash and cash equivalents at July 1, 2019, as restated $ 139,309,566 $ 205,806,380 Proprietary Funds Statement of Cash Flows Statement of Activities Statement of Revenues, Expenses and Governmental Funds Changes in Fund Balances Proprietary Funds Changes in Net Position Statement of Revenues, Expenses and 118 Required Supplementary Information 119 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period Total Pension Liability Measurement Total Pension Service Changes of Period1 Liability - Beginning Cost Interest Benefit Terms Miscellaneous Plan 2013–14 292,931,044 $ 6,908,307 $ 21,793,340 $ -$ 2014–15 310,018,027 6,674,982 23,142,961 - 2015–16 322,606,958 6,836,445 24,192,948 - 2016–17 336,686,595 7,836,970 25,085,808 - 2017–18 372,190,930 7,642,062 25,874,546 - 2018–19 383,133,348 7,393,365 27,175,110 - Safety Plan 2013–14 227,568,288 $ 5,425,425 $ 16,876,220 $ -$ 2014–15 239,340,454 5,048,529 17,775,039 - 2015–16 247,020,357 5,209,900 18,557,781 - 2016–17 257,649,541 5,825,080 19,305,098 - 2017–18 285,701,762 5,985,155 20,248,091 - 2018–19 299,532,094 6,317,755 21,269,278 - ¹ Historical information is required only for measurement periods for which GASB 68 is applicable. 120 Difference Benefit Payments, Between Expected Including Refunds Net Change in and Actual Changes of of Employee Total Pension Total Pension Experience Assumptions Contributions Liability Liability - Ending (a) -$ -$ (11,614,664) $ 17,086,983 $ 310,018,027 $ 1,300,520 (5,737,798) (12,791,734) 12,588,931 322,606,958 (2,605,228) - (14,344,528) 14,079,637 336,686,595 (3,079,012) 20,988,178 (15,327,609) 35,504,335 372,190,930 (3,023,977) (2,662,243) (16,887,970) 10,942,418 383,133,348 2,338,341 - (18,193,803) 18,713,013 401,846,361 -$ -$ (10,529,479) $ 11,772,166 $ 239,340,454 $ 638,786 (4,517,683) (11,264,768) 7,679,903 247,020,357 (941,378) - (12,197,119) 10,629,184 257,649,541 (705,417) 16,661,943 (13,034,483) 28,052,221 285,701,762 2,726,755 (1,332,336) (13,797,333) 13,830,332 299,532,094 2,425,561 - (15,288,250) 14,724,344 314,256,438 121 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period (continued) Plan Fiduciary Net Position Plan Fiduciary Net Measurement Net Position Contributions Contributions Investment Period1 Beginning2 Employer Employee Income3 Miscellaneous Plan 2013–14 204,354,694 $ 8,004,157 $ 3,039,951 $ 35,526,156 $ 2014–15 239,310,294 8,434,882 2,703,715 5,362,753 2015–16 242,447,633 9,562,926 2,833,466 1,330,196 2016–17 241,681,934 14,677,334 2,820,046 26,893,994 2017–18 270,386,079 22,114,923 3,005,761 22,720,698 2018–19 300,121,419 17,745,975 3,040,423 19,551,424 Safety Plan 2013–14 161,108,415 $ 6,141,746 $ 1,853,365 $ 27,905,516 $ 2014–15 186,479,563 6,491,856 1,726,785 4,107,305 2015–16 187,329,833 6,836,098 1,933,363 990,545 2016–17 184,778,552 12,379,181 1,922,500 20,385,351 2017–18 206,161,081 8,675,370 2,169,504 17,250,148 2018–19 219,522,878 23,119,896 2,380,740 14,331,677 ¹ 2 3 4 During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pension (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). Historical information is required only for measurement periods for which GASB 68 is applicable. Net of administrative expenses. Includes any beginning of year adjustment. 122 Benefit Payments,Plan Net Pension Including Refunds Other Changes Net Change Plan Fiduciary Liability/(Asset) of Employee In Fiduciary in Fiduciary Net Position Ending Contributions Net Position4 Net Position Ending (b)(a) - (b) (11,614,664) $ -$ 34,955,600 $ 239,310,294 $ 70,707,733 $ (12,791,734) (572,277) 3,137,339 242,447,633 80,159,325 (14,344,528) (147,759) (765,699) 241,681,934 95,004,661 (15,327,609) (359,620) 28,704,145 270,386,079 101,804,851 (16,887,970) (1,218,072) 29,735,340 300,121,419 83,011,929 (18,193,803) (213,503) 21,930,516 322,051,935 79,794,426 (10,529,479) $ -$ 25,371,148 $ 186,479,563 $ 52,860,891 $ (11,264,768) (210,908) 850,270 187,329,833 59,690,524 (12,197,119) (114,168) (2,551,281) 184,778,552 72,870,989 (13,034,483) (270,020) 21,382,529 206,161,081 79,540,681 (13,797,333) (935,892) 13,361,797 219,522,878 80,009,216 (15,288,250) (156,148) 24,387,915 243,910,793 70,345,645 123 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period (continued) Plan Fiduciary Plan Net Pension Net Position Liability/(Asset) as a Percentage as a Percentage Measurement of the Total Covered of Covered - Period1 Liability Payroll Payroll Miscellaneous Plan 2013–14 77.19%32,960,515 $ 214.52% 2014–15 75.15% 33,609,704 238.50% 2015–16 71.78% 35,141,036 270.35% 2016–17 72.65% 35,845,774 284.01% 2017–18 78.33% 36,214,870 229.22% 2018–19 80.14% 39,130,545 203.92% Safety Plan 2013–14 77.91%18,013,144 $ 293.46% 2014–15 75.84% 18,378,393 324.79% 2015–16 71.72% 18,514,525 393.59% 2016–17 72.16% 18,965,085 419.41% 2017–18 73.29% 20,768,094 385.25% 2018–19 77.62% 22,328,023 315.06% ¹ Historical information is required only for measurement periods for which GASB 68 is applicable. Notes to Schedule: Benefit Changes: Changes of Assumptions: The figures above do not include any liability impact that may have resulted from plan changes which have occurred after June 30, 2018 valuation date. This applies for voluntary benefit changes as well as any offers of two years additional service credit (a.k.a. Golden Handshakes). In 2019,there were no changes.In 2018,demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017.There were no changes in the discount rate.In 2017,the accounting discount rate reduced from 7.65%to 7.15%.In 2016,there were no changes.In 2015,amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense)to 7.65% (without a reduction for pension plan administration expense). In 2014, amounts reported were based on the 7.5% discount rate. 124 Required Supplementary Information Schedule of Pension Plan Contributions¹ Contributions in Relation to Contributions Actuarially the Actuarially Contribution as a Percentage Fiscal Year Determined Determined Deficiency Covered of Covered Ending Contribution Contribution (Excess)Payroll Payroll Miscellaneous Plan 06/30/2014 8,004,157 $ (8,004,157) $ -$ 32,960,515 $ 24.28% 06/30/2015 8,434,882 (8,434,882) - 33,609,704 25.10% 06/30/2016 9,562,926 (9,562,926) - 35,141,036 27.21% 06/30/2017 10,338,549 (14,677,334) (4,338,785) 35,845,774 40.95% 06/30/2018 10,456,115 (22,114,923) (11,658,808) 36,214,870 61.07% 06/30/2019 11,966,625 (17,745,975) (5,779,350) 39,130,545 45.35% 06/30/2020 10,633,467 (10,633,467) - 42,138,677 25.23% Safety Plan 06/30/2014 6,141,746 $ (6,141,746) $ -$ 18,013,144 $ 34.10% 06/30/2015 6,491,856 (6,491,856) - 18,378,393 35.32% 06/30/2016 6,836,098 (6,836,098) - 18,514,525 36.92% 06/30/2017 7,695,135 (12,379,181) (4,684,046) 18,965,085 65.27% 06/30/2018 8,658,116 (8,658,116) - 20,768,094 41.69% 06/30/2019 8,899,136 (23,119,790) (14,220,654) 22,328,023 103.55% 06/30/2020 10,323,721 (10,323,721) - 24,695,745 41.80% ¹ Historical information is required only for measurement periods for which GASB 68 is applicable. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2019-20 were derived from the June 30, 2017 funding valuation reports. Actuarial Cost Method Entry Age Normal Amortization Method/Period For details, see June 30, 2017 Funding Valuation Report Asset Valuation Method Market Value of Assets. For details, see June 30, 2017 Funding Valuation Report. Inflation 2.75% Salary Increases Varies by entry age and service. Payroll Growth 3.00% Investment Rate of Return 7.375% net of pension plan investment and administrative expenses; includes inflation. Retirement Age The probabilities of retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Mortality The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. 125 Required Supplementary Information Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period Total OPEB Liability Measurement Total OPEB Service Changes of Period¹Liability - Beginning Cost Interest Benefit Terms CMWD Plan 2016–17 4,041,120 $ 12,228 $ 274,428 $ -$ 2017–18 4,061,904 12,595 275,029 - 2018–19 4,058,489 12,973 275,619 - City Plan 2016–17 11,102,453 $ 493,120 $ 789,709 $ -$ 2017–18 11,757,255 507,914 838,617 - 2018–19 12,533,931 523,151 892,311 - Plan Fiduciary Net Position Plan Fiduciary Net Measurement Net Position Contributions Contributions Investment Period¹Beginning Employer Employee Income² CMWD Plan 2016–17 3,077,703 $ 133,108 $ -$ 323,290 $ 2017–18 3,268,229 291,039 - 263,258 2018–19 3,525,416 268,096 - 217,504 City Plan 2016–17 9,114,475 $ 614,664 $ -$ 958,197 $ 2017–18 10,059,309 569,855 - 800,892 2018–19 10,841,537 710,206 - 669,628 ¹ Historical information is required only for measurement periods for which GASB 75 is applicable. 2 Net of administrative expenses. 126 Difference Benefit Payments, Between Expected Including Refunds Net Change in and Actual Changes of of Employee Total OPEB Total OPEB Experience Assumptions Contributions Liability Liability - Ending (a) -$ -$ (265,872) $ 20,784 $ 4,061,904 $ - - (291,039) (3,415) 4,058,489 (1,428,595) (17,263) (268,096) (1,425,362) 2,633,127 -$ -$ (628,027) $ 654,802 $ 11,757,255 $ - - (569,855) 776,676 12,533,931 1,225,479 1,249,495 (619,560) 3,270,876 15,804,807 Benefit Payments,Plan Net OPEB Including Refunds Other Changes Net Change Plan Fiduciary Liability/(Asset) of Employee In Fiduciary in Fiduciary Net Position Ending Contributions Net Position Net Position Ending (b)(a) - (b) (265,872) $ -$ 190,526 $ 3,268,229 $ 793,675 $ (291,039) (6,071) 257,187 3,525,416 533,073 (268,096) (755) 216,749 3,742,165 (1,109,038) (628,027) $ -$ 944,834 $ 10,059,309 $ 1,697,946 $ (569,855) (18,664) 782,228 10,841,537 1,692,394 (619,560) (2,323) 757,951 11,599,488 4,205,319 127 Required Supplementary Information Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period (Continued) Plan Fiduciary Plan Net OPEB Net Position Liability/(Asset) as a Percentage Covered - as a Percentage Measurement of the Total Employee of Covered - Period¹Liability Payroll Employee Payroll CMWD Plan 2016–17 80.46%165,769 $ 478.78% 2017–18 86.87%106,131 502.28% 2018–19 142.10%64,872 -1709.60% City Plan 2016–17 85.56%54,645,089 $ 3.11% 2017–18 86.50%56,876,833 2.98% 2018–19 73.40%61,393,696 6.00% ¹ Historical information is required only for measurement periods for which GASB 75 is applicable. 128 Required Supplementary Information Schedule of OPEB Pension Plan Contributions¹ Contributions in Relation to Contributions Actuarially the Actuarially Contribution Covered -as a Percentage Fiscal Year Determined Determined Deficiency Employee of Covered- Ending2 Contribution Contribution (Excess)Payroll Employee Payroll CMWD Plan 06/30/2018 77,750 $ (291,039) $ (213,289) $ 106,131 $ 274.23% 06/30/2019 78,177 (268,096) (189,919) 64,872 413.27% 06/30/2020 (88,340) (177,401) (265,741) 48,857 363.10% City Plan 06/30/2018 692,943 $ (569,855) $ 123,088 $ 56,876,833 $ 1.00% 06/30/2019 710,206 (710,206) - 61,393,696 1.16% 06/30/2020 1,029,469 (908,463) 121,006 66,785,565 1.36% ¹ Historical information is required only for measurement periods for which GASB 75 is applicable. 2 Represents the fiscal year ending for the measurement period. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2019-20 were derived from the June 30, 2019 funding valuation reports. Actuarial Cost Method Entry Age Normal, Level % of pay Amortization Method/Period Level dollar over 28-year fixed period Inflation 2.75% Salary Increases Varies by Entry Age and Service based on the CalPERS Experience Study for the period from 1997 to 2015. Payroll Growth 3.00% Investment Rate of Return 7.0% net of pension plan investment and administrative expenses, including inflation Retirement Age The probabilities of retirement are based on the CalPERS Experience Study for the period from 1997 to 2015. Mortality The probabilities of mortality are based on the CalPERS Experience Study for the period from 1997 to 2015. Mortality Improvement Post-retirement mortality projected fully generational with Scale MP-2019. 129 130 Combining and Individual Fund Statements and Schedules 131 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2020 Community Affordable Development Financing Housing Block Grant Donations Districts Cash and investments 23,178,105 $ 7 $ 2,775,833 $ 9,100,147 $ Receivables: Interest 96,955 - 11,806 35,901 Other - - - 22,814 Due from other governments - 128,668 - - Prepaid items - - - - Land held for resale - 1,280,044 - - Loan receivables, net of allowances 21,330,913 - - - Total assets 44,605,973 $ 1,408,719 $ 2,787,639 $ 9,158,862 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accrued liabilities 50,312 $ 68,525 $ 24,183 $ 192,130 $ Due to other funds - 82,003 - - Deposits payable - - - - Advances from other funds - - - - Unearned revenue - - - - Total liabilities 50,312 150,528 24,183 192,130 Deferred inflows of resources: Unavailable revenue - grants - - - - Fund balances: Nonspendable: Prepaid items - - - - Restricted: Affordable housing 44,555,661 - - - Lighting and landscaping districts - - - 8,966,732 Capital projects - - - - General government - - - - Public safety - - - - Community services 1,258,191 2,763,456 - Unassigned - - - - Total fund balances 44,555,661 1,258,191 2,763,456 8,966,732 Total liabilities, deferred inflows of resources and fund balances 44,605,973 $ 1,408,719 $ 2,787,639 $ 9,158,862 $ ASSETS Special Revenue Funds 132 Other Police Habitat and Special Grants and Section 8 Tyler Agricultural Revenue Asset Rental Court Management Funds Forfeiture Assistance Apartments Totals 1,015,295 $ 934,492 $ 435,643 $ 231,920 $ 232,668 $ 37,904,110 $ 4,445 3,972 2,550 563 4 156,196 - 75,739 - - 1,293 99,846 - - 76,019 - - 204,687 - - - - 951 951 - - - - - 1,280,044 - - - - - 21,330,913 1,019,740 $ 1,014,203 $ 514,212 $ 232,483 $ 234,916 $ 60,976,747 $ -$ 39,520 $ 5,824 $ 95,443 $ 9,768 $ 485,705 $ - - - - - 82,003 - - - 5,860 26,808 32,668 1,254,185 - - - - 1,254,185 - - - - - - 1,254,185 39,520 5,824 101,303 36,576 1,854,561 - - 60,494 - - 60,494 - - - - 951 951 - - - 131,180 197,389 44,884,230 - - - - - 8,966,732 - - - - - - - 974,683 - - - 974,683 - - 447,894 - - 447,894 - - - - - 4,021,647 (234,445) - - - - (234,445) (234,445) 974,683 447,894 131,180 198,340 59,061,692 1,019,740 $ 1,014,203 $ 514,212 $ 232,483 $ 234,916 $ 60,976,747 $ (continued) Special Revenue Funds 133 Combining Balance Sheet Nonmajor Governmental Funds (continued) June 30, 2020 Grants Assessment Bridge and and Other and Other Thoroughfare Gas Capital Districts Districts Tax Project Funds Cash and investments 3,466,956 $ 12,615,982 $ 16,148,562 $ 1,802,805 $ Receivables: Interest 10,650 53,625 68,656 7,769 Other - - - - Due from other governments - - 304,794 37,133 Prepaid items - - - - Land held for resale - - - - Loan receivables, net of allowances - - - - Total assets 3,477,606 $ 12,669,607 $ 16,522,012 $ 1,847,707 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accrued liabilities -$ -$ 284,861 $ -$ Due to other funds - - - - Deposits payable 426,179 - - - Advances from other funds - - - - Unearned revenue - - 194,729 - Total liabilities 426,179 - 479,590 - Deferred inflows of resources: Unavailable revenue - grants - - - - Fund balances: Nonspendable: Prepaid items - - - - Restricted: Affordable, low and moderate income housing - - - - Lighting and landscaping districts - - - - Capital projects 3,051,427 12,669,607 16,042,422 1,847,707 General government - - - - Public safety - - - - Community services - - - - Unassigned - - - - Total fund balances 3,051,427 12,669,607 16,042,422 1,847,707 Total liabilities, deferred inflows of resources and fund balances 3,477,606 $ 12,669,607 $ 16,522,012 $ 1,847,707 $ ASSETS Capital Project Funds 134 Planned Local Traffic Total Other Drainage Sales Tax/Impact Governmental Facilities TransNet Projects Totals Funds 5,670,129 $ 8,312,443 $ 23,981,945 $ 71,998,822 $ 109,902,932 $ 24,102 35,197 101,937 301,936 458,132 - 89,612 - 89,612 189,458 - 4,618 - 346,545 551,232 - - - - 951 - - - - 1,280,044 - - - - 21,330,913 5,694,231 $ 8,441,870 $ 24,083,882 $ 72,736,915 $ 133,713,662 $ 104,979 $ 922,713 $ 97,272 $ 1,409,825 $ 1,895,530 $ - - - - 82,003 - - - 426,179 458,847 - - 1,943,710 1,943,710 3,197,895 - - - 194,729 194,729 104,979 922,713 2,040,982 3,974,443 5,829,004 - - - - 60,494 - - - - 951 - - - - 44,884,230 - - - - 8,966,732 5,589,252 7,519,157 22,042,900 68,762,472 68,762,472 - - - - 974,683 - - - - 447,894 - - - - 4,021,647 - - - - (234,445) 5,589,252 7,519,157 22,042,900 68,762,472 127,824,164 5,694,231 $ 8,441,870 $ 24,083,882 $ 72,736,915 $ 133,713,662 $ Capital Project Funds 135 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2020 Community Affordable Development Financing Housing Block Grant Donations Districts Revenues: Taxes -$ -$ -$ -$ Intergovernmental - 742,101 - - Charges for services 26,235 - - 2,390,616 Fines and forfeitures - - - - Income from property and investments 877,998 217,353 92,472 284,411 Contributions from property owners 589,485 - - - Donations - - 425,718 - Miscellaneous 762,948 - 8,103 27,180 Total revenues 2,256,666 959,454 526,293 2,702,207 Expenditures: Current: General government - - - - Public safety - - - - Community services 868,050 324,155 291,552 1,906,873 Public works - - - 802,354 Capital outlay - - 4,109 1,527 Debt service: Interest and fiscal charges - - - - Total expenditures 868,050 324,155 295,661 2,710,754 Excess (deficiency) of revenues over (under) expenditures 1,388,616 635,299 230,632 (8,547) Other financing sources (uses): Transfers in - - - 950,000 Transfers out - - - - Total other financing sources (uses)- - - 950,000 Net change in fund balances 1,388,616 635,299 230,632 941,453 Fund balances at beginning of year 43,167,045 622,892 2,532,824 8,025,279 Fund balances at end of year 44,555,661 $ 1,258,191 $ 2,763,456 $ 8,966,732 $ Special Revenue Funds 136 Other Police Habitat and Special Grants and Section 8 Tyler Agricultural Revenue Asset Rental Court Management Funds Forfeiture Assistance Apartments Totals -$ -$ -$ -$ -$ -$ 227,552 - 399,682 7,496,947 - 8,866,282 - - - - 552,480 2,969,331 - - 237,478 - - 237,478 43,734 30,809 21,122 2,710 7,539 1,578,148 29,071 308,090 - - - 926,646 - - - - - 425,718 - - - 178,051 - 976,282 300,357 338,899 658,282 7,677,708 560,019 15,979,885 - 207,119 - - - 207,119 - - 534,898 - - 534,898 2,047,385 - - 7,832,254 494,025 13,764,294 - - - - - 802,354 - - 5,408 - 3,116 14,160 11,015 - - - - 11,015 2,058,400 207,119 540,306 7,832,254 497,141 15,333,840 (1,758,043) 131,780 117,976 (154,546) 62,878 646,045 - - - - - 950,000 - - - - - - - - - - - 950,000 (1,758,043) 131,780 117,976 (154,546) 62,878 1,596,045 1,523,598 842,903 329,918 285,726 135,462 57,465,647 (234,445) $ 974,683 $ 447,894 $ 131,180 $ 198,340 $ 59,061,692 $ (continued) Special Revenue Funds 137 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds (continued) For the Year Ended June 30, 2020 Grants Assessment Bridge and and Other and Other Thoroughfare Gas Capital Districts Districts Tax Project Funds Revenues: Taxes -$ -$ 4,638,051 $ -$ Intergovernmental - - 4,421 41,175 Charges for services - - - - Fines and forfeitures - - - - Income from property and investments 97,072 439,112 543,494 60,985 Contributions from property owners - - - 147,180 Donations - - - - Miscellaneous - - - - Total revenues 97,072 439,112 5,185,966 249,340 Expenditures: Current: General government - 203,950 - 47,547 Public safety - - - - Community services - - - - Public works - - 600,000 - Capital outlay - 270,036 3,083,328 41,175 Debt service: Interest and fiscal charges - - - - Total expenditures - 473,986 3,683,328 88,722 Excess (deficiency) of revenues over (under) expenditures 97,072 (34,874) 1,502,638 160,618 Other financing sources (uses): Transfers in - - - - Transfers out - - (10,000) - Total other financing sources (uses)- - (10,000) - Net change in fund balances 97,072 (34,874) 1,492,638 160,618 Fund balances at beginning of year 2,954,355 12,704,481 14,549,784 1,687,089 Fund balances at end of year 3,051,427 $ 12,669,607 $ 16,042,422 $ 1,847,707 $ Capital Project Funds 138 Planned Local Traffic Total Other Drainage Sales Tax/Impact Governmental Facilities TransNet Projects Totals Funds -$ -$ -$ 4,638,051 $ 4,638,051 $ - 3,203,725 - 3,249,321 12,115,603 - 1,067,984 - 1,067,984 4,037,315 - - - - 237,478 197,797 274,845 809,545 2,422,850 4,000,998 109,950 - 1,115,192 1,372,322 2,298,968 - - - - 425,718 - - - - 976,282 307,747 4,546,554 1,924,737 12,750,528 28,730,413 - - - 251,497 458,616 - - - - 534,898 - - - - 13,764,294 - - - 600,000 1,402,354 619,601 4,294,220 629,024 8,937,384 8,951,544 - - - - - 11,015 619,601 4,294,220 629,024 9,788,881 25,122,721 (311,854) 252,334 1,295,713 2,961,647 3,607,692 - - - - 950,000 - - - (10,000) (10,000) - - - (10,000) 940,000 (311,854) 252,334 1,295,713 2,951,647 4,547,692 5,901,106 7,266,823 20,747,187 65,810,825 123,276,472 5,589,252 $ 7,519,157 $ 22,042,900 $ 68,762,472 $ 127,824,164 $ Capital Project Funds 139 Combining Schedule of Revenues and Expenditures Budget and Actual (Budgetary Basis) Special Revenue Funds For the Year Ended June 30, 2020 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Affordable Housing Total revenues 1,716,000 $ 1,924,344 $ 208,344 $ Total expenditures 1,369,542 1,019,870 (349,672) Net change in fund balance 346,458 904,474 558,016 Community Development Block Grant Total revenues 821,700 959,454 137,754 Total expenditures 1,582,979 478,218 (1,104,761) Net change in fund balance (761,279) 481,236 1,242,515 Donations Total revenues 432,800 485,519 52,719 Total expenditures 764,331 341,269 (423,062) Net change in fund balance (331,531) 144,250 475,781 Financing Districts Total revenues 3,526,500 2,576,736 (949,764) Total expenditures 3,932,878 3,018,501 (914,377) Net change in fund balance (406,378) (441,765) (35,387) Habitat and Agricultural Management Total revenues 254,810 288,077 33,267 Total expenditures 2,125,219 2,058,400 (66,819) Net change in fund balance (1,870,409) (1,770,323) 100,086 Other Special Revenue Funds Total revenues 323,000 324,826 1,826 Total expenditures 532,402 308,589 (223,813) Net change in fund balance (209,402) $ 16,237 $ 225,639 $ (continued) 140 Combining Schedule of Revenues and Expenditures Budget and Actual (Budgetary Basis) Special Revenue Funds (continued) For the Year Ended June 30, 2020 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Police Grants and Asset Forfeiture Total revenues 837,200 $ 649,032 $ (188,168) $ Total expenditures 844,239 580,370 (263,869) Net change in fund balance (7,039) 68,662 75,701 Section 8 Rental Assistance Total revenues 7,550,000 7,675,326 125,326 Total expenditures 8,008,146 7,840,154 (167,992) Net change in fund balance (458,146) (164,828) 293,318 Totals Total revenues 15,462,010 14,883,314 (578,696) Total expenditures 19,159,736 15,645,371 (3,514,365) Net change in fund balance (3,697,726) $ (762,057) $ 2,935,669 $ 141 Combining Schedule of Revenues and Expenditures Budget and Actual (Budgetary Basis) Capital Project Funds For the Year Ended June 30, 2020 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Parking-in-Lieu (Grants and Other Capital Project Funds) Total revenues 155,880 $ 168,710 $ 12,830 $ Total expenditures 50,000 47,547 (2,453) Net change in fund balance 105,880 $ 121,163 $ 15,283 $ 142 143 Combining Statement of Net Position Internal Service Funds June 30, 2020 Fleet Self-Insured ASSETS Management Benefits Current assets: Cash and investments 18,411,002 $ 6,855,557 $ Receivables: Interest 78,267 - Accounts, net of allowances 13,032 - Inventories 516,480 - Prepaid items - - Total current assets 19,018,781 6,855,557 Noncurrent assets: Capital assets: Machinery and equipment 29,092,884 - Construction in progress - - Intangible assets - - Less accumulated depreciation (15,532,637) - Total capital assets (net of accumulated depreciation)13,560,247 - Total assets 32,579,028 6,855,557 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 33,848 - Deferred outflows of resources - pension related items 185,055 - Total deferred outflows of resources 218,903 - LIABILITIES Current liabilities: Accrued liabilities 448,647 5,021,394 Estimated claims payable - - Current portion of long-term debt - - Total current liabilities 448,647 5,021,394 Noncurrent liabilities: Deposits payable - - Net OPEB liability 45,838 - Net pension liability 1,172,977 - Total noncurrent liabilities 1,218,815 - 1,667,462 5,021,394 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 1,279 - Deferred inflows of resources - pension related items 44,065 - Total deferred inflows of resources 45,344 - NET POSITION Net investment in capital assets 13,560,247 - Unrestricted 17,524,878 1,834,163 31,085,125 $ 1,834,163 $ Total liabilities Total net position 144 Information Risk Workers’ Technology Management Compensation Total 9,835,374 $ 5,112,184 $ 13,349,359 $ 53,563,476 $ 41,560 21,647 57,390 198,864 - - 49,373 62,405 - - - 516,480 1,686,022 - - 1,686,022 11,562,956 5,133,831 13,456,122 56,027,247 5,391,155 - - 34,484,039 3,086,644 - - 3,086,644 1,689,637 - - 1,689,637 (5,784,367) - - (21,317,004) 4,383,069 - - 17,943,316 15,946,025 5,133,831 13,456,122 73,970,563 104,650 6,521 2,795 147,814 737,037 57,002 29,716 1,008,810 841,687 63,523 32,511 1,156,624 1,305,155 141,371 11,596 6,928,163 - 3,464,070 10,856,362 14,320,432 147,952 - - 147,952 1,453,107 3,605,441 10,867,958 21,396,547 - 1,000 - 1,000 141,719 8,831 3,785 200,173 4,500,406 327,157 199,486 6,200,026 4,642,125 336,988 203,271 6,401,199 6,095,232 3,942,429 11,071,229 27,797,746 3,953 246 106 5,584 352,748 384 17,236 414,433 356,701 630 17,342 420,017 4,235,117 - - 17,795,364 6,100,662 1,254,295 2,400,062 29,114,060 10,335,779 $ 1,254,295 $ 2,400,062 $ 46,909,424 $ 145 Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2020 Fleet Self-Insured Management Benefits Operating revenues: Other charges for services 5,219,169 $ -$ Miscellaneous 46,345 - Total operating revenues 5,265,514 - Operating expenses: Depreciation 2,140,698 - Fuel and supplies 1,353,138 - Claims and premiums expense - 66,103 Small equipment purchases 21,969 - General and administrative 1,596,401 - Total operating expenses 5,112,206 66,103 Operating income (loss)153,308 (66,103) Nonoperating revenues (expenses): Income from property and investments 624,471 - Interest expense - - Gain (loss) on sale of property 44,982 - Total nonoperating revenues (expenses)669,453 - Income (loss) before transfers and capital contributions 822,761 (66,103) Transfers in - - Capital contributions 1,137,497 - Change in net position 1,960,258 (66,103) Total net position at beginning of year 29,124,867 1,900,266 Total net position at end of year 31,085,125 $ 1,834,163 $ 146 Information Risk Workers’ Technology Management Compensation Totals 13,275,060 $ 2,195,820 $ 3,455,136 $ 24,145,185 $ 47,422 28,856 190,508 313,131 13,322,482 2,224,676 3,645,644 24,458,316 662,468 - - 2,803,166 - - - 1,353,138 - 2,044,389 3,559,238 5,669,730 300,236 - - 322,205 9,174,636 471,319 155,256 11,397,612 10,137,340 2,515,708 3,714,494 21,545,851 3,185,142 (291,032) (68,850) 2,912,465 296,026 162,698 448,532 1,531,727 (15,854) - - (15,854) - - - 44,982 280,172 162,698 448,532 1,560,855 3,465,314 (128,334) 379,682 4,473,320 - - - - 3,006,157 - - 4,143,654 6,471,471 (128,334) 379,682 8,616,974 3,864,308 1,382,629 2,020,380 38,292,450 10,335,779 $ 1,254,295 $ 2,400,062 $ 46,909,424 $ 147 Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2020 Fleet Self-Insured Management Benefits Cash flows from operating activities: Receipts from customers and users 5,259,084 $ 950,004 $ Payments to suppliers (1,870,825) - Payments to employees (908,548) - Internal activity - payments to other funds (138,847) - Claims and premiums paid - (86,103) Net cash provided by (used in) operating activities 2,340,864 863,901 Cash flows from capital and related financing activities: Purchase of capital assets (3,828,678) - Gross proceeds from the sale of capital assets 50,090 - Principal paid on capital debt - - Interest expense - - Net cash provided by (used in) capital and related financing activities (3,778,588) - Cash flows from investing activities: Interest on investments 640,951 - Net increase (decrease) in cash and cash equivalents (796,773) 863,901 Cash and cash equivalents at beginning of year 19,207,775 5,991,656 Cash and cash equivalents at end of year 18,411,002 $ 6,855,557 $ 148 Information Risk Workers’ Technology Management Compensation Total 13,322,477 $ 2,224,676 $ 3,648,980 $ 25,405,221 $ (5,511,168) (154,430) - (7,536,423) (5,141,535) (276,109) (143,673) (6,469,865) (62,628) (26,760) (1,704) (229,939) - (1,394,282) (2,767,594) (4,247,979) 2,607,146 373,095 736,009 6,921,015 - - - (3,828,678) - - - 50,090 (211,114) - - (211,114) (15,854) - - (15,854) (226,968) - - (4,005,556) 288,107 163,997 452,102 1,545,157 2,668,285 537,092 1,188,111 4,460,616 7,167,089 4,575,092 12,161,248 49,102,860 9,835,374 $ 5,112,184 $ 13,349,359 $ 53,563,476 $ (continued) 149 Combining Statement of Cash Flows Internal Service Funds (continued) For the Year Ended June 30, 2020 Fleet Self-Insured Management Benefits Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)153,308 $ (66,103) $ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 2,140,698 - Change in assets and liabilities: (Increase) decrease in receivables (6,430) 30,149 (Increase) in inventories (58,423) - (Increase) in prepaid items - - (Increase) in deferred outflows - OPEB related items (26,107) - (Increase) in deferred outflows - pension related items 113,969 - Increase (decrease) in accrued liabilities 76,323 919,855 Increase (decrease) in estimated claims payable - (20,000) Increase (decrease) in net OPEB liability 27,391 - Increase (decrease) in net pension liability (47,298) - Increase (decrease) in deferred inflows - OPEB related items (1,700) - Increase (decrease) in deferred inflows - pension related items (30,867) - Net cash provided by (used in) operating activities 2,340,864 $ 863,901 $ Noncash capital financing activities: Capital assets contributed by other funds 1,137,497 $ -$ 150 Information Risk Workers’ Technology Management Compensation Total 3,185,142 $ (291,032) $ (68,850) $ 2,912,465 $ 662,468 - - 2,803,166 - - (49,373) (25,654) - - - (58,423) (1,686,022) - 184,106 (1,501,916) (80,716) (5,030) (2,156) (114,009) 429,329 31,210 20,323 594,831 322,328 6,762 4,560 1,329,828 - 650,107 658,570 1,288,677 84,685 5,277 2,262 119,615 (181,467) (13,192) (8,044) (250,001) (5,259) (328) (140) (7,427) (123,342) (10,679) (5,249) (170,137) 2,607,146 $ 373,095 $ 736,009 $ 6,921,015 $ 3,006,157 $ -$ -$ 4,143,654 $ 151 Combining Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2020 Contractors’ and Miscellaneous Deposits Balance Balance ASSETS July 1, 2019 Additions Deductions June 30, 2020 Current assets: Cash and investments 16,303,287 $ 63,220,858 $ 61,802,119 $ 17,722,026 $ Receivables: Interest 81,653 68,797 81,653 68,797 Taxes - 337 323 14 Other - 449 244 205 Total current assets 16,384,940 $ 63,290,441 $ 61,884,339 $ 17,791,042 $ LIABILITIES Accrued liabilities 1,335,740 $ 65,472,290 $ 65,035,476 $ 1,772,554 $ Deposits held for others 15,049,200 6,192,388 5,223,100 16,018,488 Total liabilities 16,384,940 $ 71,664,678 $ 70,258,576 $ 17,791,042 $ Assessment Districts Balance Balance ASSETS July 1, 2019 Additions Deductions June 30, 2020 Current assets: Cash and investments 4,664,812 $ 5,546,230 $ 5,544,122 $ 4,666,920 $ Receivables: Interest 53,752 38,620 53,838 38,534 Taxes 4,464 2,953 4,464 2,953 Other 22,406 23,580 23,656 22,330 Total current assets 4,745,434 5,611,383 5,626,080 4,730,737 Restricted assets: Cash and investments 4,460,404 - - 4,460,404 Total restricted assets 4,460,404 - - 4,460,404 Total assets 9,205,838 $ 5,611,383 $ 5,626,080 $ 9,191,141 $ LIABILITIES Accrued liabilities 29,562 $ 9,000 $ 11,816 $ 26,746 $ Deposits held for others 9,176,276 5,224,288 5,236,169 9,164,395 Total liabilities 9,205,838 $ 5,233,288 $ 5,247,985 $ 9,191,141 $ (continued) 152 Combining Statement of Changes in Assets and Liabilities Agency Funds (continued) For the Year Ended June 30, 2020 Total Agency Funds Balance Balance ASSETS July 1, 2019 Additions Deductions June 30, 2020 Current assets: Cash and investments 20,968,099 $ 68,767,088 $ 67,346,241 $ 22,388,946 $ Receivables: Interest 135,405 107,417 135,491 107,331 Taxes 4,464 3,290 4,787 2,967 Other 22,406 24,029 23,900 22,535 Total current assets 21,130,374 68,901,824 67,510,419 22,521,779 Restricted assets: Cash and investments 4,460,404 - - 4,460,404 Total current assets 4,460,404 - - 4,460,404 Total assets 25,590,778 $ 68,901,824 $ 67,510,419 $ 26,982,183 $ LIABILITIES Accrued liabilities 1,365,302 $ 65,481,290 $ 65,047,292 $ 1,799,300 $ Deposits held for others 24,225,476 11,416,676 10,459,269 25,182,883 Total liabilities 25,590,778 $ 76,897,966 $ 75,506,561 $ 26,982,183 $ 153 154 Statistical SectionStatistical Section Statistical SectionStatistical Section 155 Statistical Section This section of the City of Carlsbad’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Table of Contents Page Financial Trends 156 These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. Revenue Capacity 166 These schedules contain information to help the reader assess the city’s water and wastewater revenue sources as well as the city’s most significant local revenue source, property taxes. Debt Capacity 174 These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt, and the city’s ability to issue additional debt in the future. Demographic and Economic Information 184 These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. Operating Information 188 These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. Net Position by Component Last Ten Fiscal Years (dollars in thousands) 2010-11 2011-12 2012-13 2013-14 Governmental activities Net investment in capital assets 774,269$ 780,727$ 782,500$ 784,210$ Restricted for: Capital assets 184,419 192,713 182,685 175,468 Lighting and landscaping districts 2,133 2,246 2,958 4,703 Affordable housing 40,005 38,434 37,390 39,317 Habitat and agricultural mitigation management 5,377 4,799 2,665 1,713 Other purposes 5,298 4,022 3,685 3,774 Unrestricted 284,825 308,470 1 319,317 328,602 Total governmental activities net position 1,296,326$ 1,331,411$ 1,331,200$ 1,337,787$ 2 Business-type activities Net investment in capital assets 314,691$ 311,392$ 307,000$ 305,681$ Restricted for: Capital assets 44,954 45,522 45,990 46,632 Unrestricted 38,278 47,530 55,758 66,083 Total business-type activities net position 397,923$ 404,444$ 408,748$ 418,396$ 2 Total government Net investment in capital assets 1,088,960$ 1,092,119$ 1,089,500$ 1,089,891$ Restricted for: Capital assets 229,373 238,235 228,675 222,100 Lighting and landscaping districts 2,133 2,246 2,958 4,703 Affordable housing 40,005 38,434 37,390 39,317 Habitat and agricultural mitigation management 5,377 4,799 2,665 1,713 Other purposes 5,298 4,022 3,685 3,774 Unrestricted 323,103 356,000 375,075 394,685 Total net position 1,694,249$ 1,735,855$ 1,739,948$ 1,756,183$ Source: City of Carlsbad Comprehensive Annual Financial Reports 1 The significant increase in FY 2011-12 is due to the dissolution of the city's Redevelopment Agency which created a large extraordinary gain for the year. 2 Net position for the prior year was restated in FY 2014-15, to reflect the application of GASB 68. 3 Habitat and agricultural mitigation management was combined with other purposes in FY 2019-20 due to immateriality. 156 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 783,298$ 788,035$ 788,078$ 793,090$ 786,965$ 791,124$ 178,228 176,279 183,245 182,811 194,434 206,067 5,263 5,921 6,527 7,307 8,025 8,967 39,544 40,390 40,528 41,500 43,588 44,885 1,708 1,758 1,805 1,640 1,524 - 3 3,059 2,948 2,818 2,800 4,329 5,444 223,522 245,078 249,816 262,023 289,000 286,386 1,234,622$ 2 1,260,409$ 1,272,817$ 1,291,171$ 1,327,865$ 1,342,873$ 307,122$ 317,927$ 344,836$ 349,548$ 346,628$ 351,153$ 47,315 45,950 40,098 39,522 38,540 41,244 69,922 73,285 85,153 88,576 97,509 94,140 424,359$ 2 437,162$ 470,087$ 477,646$ 482,677$ 486,537$ 1,090,420$ 1,105,962$ 1,132,914$ 1,142,638$ 1,133,593$ 1,142,277$ 225,543 222,229 223,343 222,333 232,974 247,311 5,263 5,921 6,527 7,307 8,025 8,967 39,544 40,390 40,528 41,500 43,588 44,885 1,708 1,758 1,805 1,640 1,524 - 3 3,059 2,948 2,818 2,800 4,329 5,444 293,444 318,363 334,969 350,599 386,509 380,526 1,658,981$ 1,697,571$ 1,742,904$ 1,768,817$ 1,810,542$ 1,829,410$ 157 Changes in Net Position Last Ten Fiscal Years (dollars in thousands) 2010-11 2011-12 2012-13 2013-14 Expenses Governmental activities General government 16,907$ 16,675$ 23,574$ 3 20,187$ Public safety 45,011 45,576 48,468 48,942 Community services 42,179 43,087 47,900 4 45,341 Public works 25,759 28,441 36,806 30,314 Interest and fiscal charges on long-term debt 453 298 4 1 Total governmental activities 130,309 134,077 156,752 144,785 Business-type activities Carlsbad Municipal Water District 34,978 35,985 41,626 43,547 Golf course 11,538 11,190 10,668 11,032 Wastewater 11,751 11,330 13,556 12,488 Solid waste 2,565 2,922 2,918 2,856 Total business-type activities 60,832 61,427 68,768 69,923 Total government 191,141$ 195,504$ 225,520$ 214,708$ Program Revenues Governmental activities Charges for services: General government 1,793$ 315$ 1,469$ 289$ Public safety 4,502 4,379 4,025 3,950 Community services 7,266 6,314 6,987 8,732 Public works 3,567 3,717 5,073 3,720 Operating grants and contributions 12,033 11,813 13,199 11,919 Capital grants and contributions 13,557 15,429 17,741 16,129 Total governmental activities 42,718 41,967 48,494 44,739 Business-type activities Charges for services: Carlsbad Municipal Water District 30,715 35,776 44,240 5 46,750 Golf course 5,850 6,127 6,278 6,635 Wastewater 10,053 10,989 12,402 12,896 Solid waste 3,015 2,961 3,060 3,320 Operating grants and contributions 1,263 1,201 38 90 Capital grants and contributions 5,640 4,560 2,855 3,198 Total business-type activities 56,536 61,614 68,873 72,889 Total government 99,254$ 103,581$ 117,367$ 117,628$ Net (Expense)/Revenue: Governmental activities (87,591)$ (92,110)$ (108,258)$ (100,046)$ Business-type activities (4,296) 187 105 2,966 Total government net expense (91,887)$ (91,923)$ (108,153)$ (97,080)$ 158 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 16,108$ 16,147$ 18,374$ 25,192$ 10 22,234$ 24,267$ 48,856 50,463 55,994 62,630 10 67,968 75,249 48,630 51,191 54,212 51,897 57,978 60,771 36,273 37,464 34,317 36,875 36,897 41,419 - 1 3 2 4 2 149,867 155,266 162,900 176,596 185,081 201,708 40,897 39,458 45,219 51,658 51,638 51,198 10,538 10,545 10,211 10,560 11,035 10,252 12,629 12,613 12,626 13,495 15,238 16,931 2,973 2,997 3,272 3,089 3,840 4,382 67,037 65,613 71,328 78,802 81,751 82,763 216,904$ 220,879$ 234,228$ 255,398$ 266,832$ 284,471$ 1,382$ 296$ 327$ 816$ 1,679$ 1,030$ 4,220 3,980 4,647 4,805 4,784 4,711 10,534 10,711 12,154 11,588 10,755 9,324 4,014 4,152 3,952 3,768 4,574 4,142 12,242 11,912 12,630 13,054 17,307 18,437 19,105 12,042 7 22,789 22,993 13,842 16,802 51,497 43,093 56,499 57,024 52,941 54,446 47,461 39,854 8 44,817 50,095 46,431 46,332 6,709 6,988 7,119 7,973 7,979 6,637 12,875 12,963 13,467 13,885 14,099 13,849 3,245 3,206 3,302 3,427 3,440 3,563 59 5,646 2,471 1,611 1,260 399 5,879 2,011 13,322 5,484 4,864 6,327 76,228 70,668 84,498 82,475 78,073 77,107 127,725$ 113,761$ 140,997$ 139,499$ 131,014$ 131,553$ (98,370)$ (112,173)$ (106,401)$ (119,572)$ (132,140)$ (147,262)$ 9,191 5,055 13,170 3,673 (3,678) (5,656) (89,179)$ (107,118)$ (93,231)$ (115,899)$ (135,818)$ (152,918)$ (continued) 159 Changes in Net Position (continued) Last Ten Fiscal Years (dollars in thousands) 2011 2012 2013 2014 General Revenues and Other Changes in Net Position Governmental activities Taxes: Property taxes 54,049$ 51,538$ 52,861$ 52,608$ Sales and use taxes 25,660 28,094 28,403 30,520 Transient occupancy taxes 11,569 12,872 14,702 17,472 Franchise taxes 4,650 4,852 5,118 4,907 Business license taxes 3,581 2,695 3,834 4,177 Real property transfer taxes 911 925 1,058 1,080 Vehicle license fees 483 53 1 55 - Income from property and investments 8,372 6,088 1,792 6,917 Other general revenues 328 419 426 429 Extraordinary gain/(loss)- 20,477 2 - (10,289) 6 Transfers (135) (1,810) (656) (1,188) Total governmental activities 109,468 126,203 107,593 106,633 Business type activities Property taxes 2,779 2,721 2,904 2,897 Income from property and investments 2,109 2,054 555 2,498 Other general revenues 3,599 106 85 99 Transfers 135 1,810 655 1,188 Total business-type activities 8,622 6,691 4,199 6,682 Total government 118,090$ 132,894$ 111,792$ 113,315$ Change in Net Position Governmental activities 21,877$ 34,093$ (665)$ 6,587$ Business-type activities 4,326 6,878 4,304 9,648 Total government 26,203$ 40,971$ 3,639$ 16,235$ Source: City of Carlsbad Comprehensive Annual Financial Reports 1 The State of California ceased sending the city vehicle license fee revenues in FY 2011-12. 2 The extraordinary gain in FY 2011-12 resulted from the transfers of the assets and liabilities of the former Redevelopment Agency to Successor Agency trust funds. 3 The large increase in FY 2012-13 includes a repayment to SANDAG of $1.4 million in excess Transnet Funds on inactive/closed projects and a transfer of $4.5 million in surplus construction funds from the Poinsettia Lane Assessment District to be used in the refunding of Reassessment District No. 2012-1. 4 The large increase in FY 2012-13 includes a $3.8 million transfer of an affordable housing loan receivable to the Successor Housing Agency trust fund as required by the California Department of Finance. 5 The increase in FY 2012-13 was the result of a combination of a 5% increase in the number of water units sold coupled with an average 8% increase in water rates charged to customers and a reimbursement from a lawsuit involving a landslide. 6 The extraordinary loss in FY 2013-14 resulted from the restatement of accrued interest on prior year advances made by the city to the Successor Housing Agency per California state mandate. 7 The decrease in FY 2015-16 was a result of one-time funds received from the federal government in the previous fiscal year for the 2014 Poinsettia Fire, as well as the receipt of retroactive mandated cost reimbursements. 8 The decrease in FY 2015-16 was a result of a decrease in water sales during the fiscal year from drought conservation measures. 9 The increase in FY 2015-16 is a result of higher cash balances that generate interest, an increase in investment earnings, and interest received from the California Department of Finance earned on unpaid mandated costs. 10 The increase in FY 2017-18 is mainly due to changes in the city's pension discount rate. 160 2015 2016 2017 2018 2019 2020 55,992$ 58,945$ 63,988$ 66,524$ 69,952$ 73,885$ 32,146 34,843 33,999 33,674 38,510 36,491 19,713 20,943 22,267 24,233 26,320 18,898 5,427 5,632 5,475 5,812 6,100 5,864 4,548 4,895 4,328 5,026 5,322 5,414 1,406 1,546 1,393 1,463 1,715 1,247 - - - - - - 4,564 11,910 9 1,975 2,551 20,695 20,239 609 486 451 519 439 559 - - - - - - (1,264) (1,240) (15,067) (136) (219) (303) 123,141 137,960 118,809 139,666 168,834 162,294 3,133 3,306 3,569 3,743 4,002 4,226 1,870 3,163 749 986 7,784 4,963 623 39 370 3 113 - 1,264 1,240 15,067 136 219 303 6,890 7,748 19,755 4,868 12,118 9,492 130,031$ 145,708$ 138,564$ 144,534$ 180,952$ 171,786$ 24,771$ 25,787$ 12,408$ 20,094$ 36,694$ 15,032$ 16,081 12,803 32,925 8,541 8,440 3,836 40,852$ 38,590$ 45,333$ 28,635$ 45,134$ 18,868$ 161 Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2010-111 2011-12 2012-13 2013-14 General Fund Nonspendable 53,943$ 54,228$ 57,719$ 56,707$ Committed 1,000 1,000 1,000 1,000 Assigned 23,584 22,955 26,200 27,838 Unassigned 57,533 61,384 69,578 75,615 Total General Fund 136,060$ 139,567$ 154,497$ 161,160$ All Other Governmental Funds Nonspendable Special revenue funds 433$ 440$ 435$ 430$ Capital project funds 250 - - - Restricted Special revenue funds 65,585 64,401 61,938 66,833 Capital project funds 171,214 177,372 167,009 3 157,712 3 Assigned Capital project funds 123,473 123,465 121,861 131,627 Unassigned Special revenue funds - - - - Debt service funds (18,658) - 2 - - Total all other governmental funds 342,297$ 365,678$ 351,243$ 356,602$ Source: City of Carlsbad Comprehensive Annual Financial Reports 1 GASB 54, which requires changes in the reporting categories for fund balances, was implemented in FY 2010-11. 2 AB1x26 and AB 1484 were implemented in FY 2011-12. The former Redevelopment Agency debt service funds were transferred to trust funds. 3 The large decreases in the restricted fund balance in the capital projects fund is a result of increased expenditures during FY 2012-13 and 2013-14 for the construction of Alga Norte Community Park. 4 Beginning in FY 2015-16, the Gas Tax fund balance was reclassified from a Special Revenue fund to a Capital Project fund. 5 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. 162 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 56,381$ 55,324$ 53,751$ 51,628$ 49,608$ 49,008$ 1,000 1,000 1,000 1,000 1,000 1,000 40,865 42,692 38,439 43,855 33,367 30,733 80,274 94,404 78,191 82,570 101,701 110,122 178,520$ 193,420$ 171,381$ 179,053$ 185,676$ 190,863$ 3$ 4$ 1$ 1$ 1$ 1$ - - - - - - 66,300 51,013 4 51,677 53,246 57,465 59,295 161,499 176,280 4 183,245 182,812 194,434 206,067 136,237 131,939 146,994 151,306 162,139 165,267 - - - - - (234) 5 - - - - - - 364,039$ 359,236$ 381,917$ 387,365$ 414,039$ 430,396$ 163 Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2010-11 2011-12 2012-13 2013-14 Revenues: Taxes 103,660$ 105,595$ 109,447$ 114,996$ Intergovernmental 12,847 9,603 11,513 10,602 Licenses and permits 1,590 1,852 2,016 2,184 Charges for services 9,938 10,092 10,261 11,278 Fines and forfeitures 1,051 892 861 876 Income from property and investments 9,278 6,253 2,362 7,604 Contributions from property owners 5,473 9,927 12,029 9,042 Donations 310 206 411 210 Miscellaneous 2,521 697 1,969 1,219 Total revenues 146,668 145,117 150,869 158,011 Expenditures: Current: General government 16,937 16,992 23,072 21,471 Less: Interdepartmental charges (3,015) (3,750) (3,858) (3,566) Public safety 44,157 44,915 46,162 47,333 Community services 39,540 40,402 40,899 41,505 Public works 13,078 11,773 11,299 15,442 Capital outlay 20,985 17,367 28,602 18,702 Debt service: Principal retirement 515 851 316 159 Interest and fiscal charges 935 308 6 5 Total expenditures 133,132 128,858 146,498 141,051 Excess (deficiency) of revenues over (under) expenditures 13,536 16,259 4,371 16,960 Other financing sources (uses): Proceeds from the sale of property - - - - Issuance of debt 581 - - - Transfers in 9,802 19,887 8,087 11,477 Transfers out (10,937) (23,097) (14,792) (16,415) Extraordinary gain (loss)- 12,847 2 - - Total other financing sources (uses)(554) 9,637 (6,705) (4,938) Net change in fund balances 12,982$ 25,896$ (2,334)$ 12,022$ Debt service as percentage of noncapital expenditures1 1.26%0.99%0.24%0.13% Source: City of Carlsbad Comprehensive Annual 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 With the dissolution of Redevelopment Agencies state-wide, the former Redevelopment Agency debt service funds were transferred to trust funds in FY 2011-12. 3 Increase in taxes in FY 2014-15 due to growth in property and TOT taxes. 4Includes a transfer out to the Golf Course Fund in the amount of $14.8 million for the defeasance of the golf course construction bonds during FY 2016-17. 5 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 increase due to the fair value adjustment done on investments at fiscal year end (per GASB 31). 6 Increase in public safety expenditures in FY 2018-19 is due to a voluntary $14.2 million additional payment to CalPERS to reduce the city's unfunded pension liability in the safety plan. 7 Decrease in tax revenue for sales and transient occupancy taxes for FY 2020-21 is due to the effects of the COVID-19 pandemic and resulting stay at home orders on sales and transient occupancy taxes. 164 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 123,411$ 3 129,617$ 134,165$ 141,118$ 154,673$ 147,535$ 7 10,359 11,290 11,963 11,608 14,647 15,505 2,369 2,467 3,034 2,999 2,668 2,739 13,181 12,913 14,309 14,145 13,221 11,525 837 854 740 679 581 760 6,442 9,970 3,845 4,622 23,275 5 24,989 10,688 8,009 13,330 12,898 10,301 6,623 440 417 349 332 1,385 426 2,550 1,503 1,467 1,991 3,316 2,641 170,277 177,040 183,202 190,392 224,067 212,743 17,903 17,221 27,925 26,625 24,033 25,762 (3,807) (3,471) (3,345) (3,160) (4,581) (5,052) 48,915 52,015 57,329 58,568 77,550 6 70,997 44,501 46,298 48,930 49,039 52,951 56,931 16,350 17,465 17,349 17,220 18,380 19,995 20,050 34,669 17,603 26,885 20,703 22,171 - - - 10 10 11 5 6 5 7 5 12 143,917 164,203 165,796 175,194 189,051 190,827 26,360 12,837 17,406 15,198 35,016 21,916 - - - - - - - - - - - - 14,857 9,970 20,849 11,513 11,881 11,183 (16,420) (12,710) (37,613) 4 (13,590) (13,600) (11,486) - - - - - - (1,563) (2,740) (16,764) (2,077) (1,719) (303) 24,797$ 10,097$ 642$ 13,121$ 33,297$ 21,613$ 0.00%0.00%0.00%0.01%0.01%0.01% 165 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 2010-11 54,049$ 26,386$ 11,569$ 4,650$ 3,581$ 911$ 2,514$ 103,660$ 2011-12 51,538 1 28,733 2 12,872 2 4,852 3,669 925 3,006 3 105,595 2012-13 52,888 29,301 14,702 4 5,118 3,834 1,058 2,546 109,447 2013-14 52,607 31,464 17,472 4 4,907 4,178 1,080 3,288 114,996 2014-15 55,992 5 33,202 19,713 6 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 5 34,543 22,267 7 5,475 4,328 1,393 2,171 134,165 2017-18 66,523 34,972 24,234 8 5,812 5,026 9 1,463 3,088 10 141,118 2018-19 69,952 40,795 11 26,320 6,100 5,322 1,715 4,469 154,673 2019-20 73,889 37,585 12 18,898 12 5,864 5,414 1,247 4,638 147,535 Percentage change from FY 2010-11 to FY 2019-20: 37%42%63%26%51%37%84%42% 1 Primarily the result of commercial and industrial property reassessments and lower amounts received from delinquent taxes. Beginning February 1, 2012, tax increment revenue from the former Redevelopment Agency is recorded in the Successor Agency Trust Fund. 2 Reflects improvement in the economy. 3 The large increases are due to state Section 2103 allocations which became effective in FY 2010-11 to allocate funds from a motor vehicle fuel excise tax that replaced previous city and county allocations from the Proposition 42 sales tax on gasoline. 4 The increase in TOT in FY 2012-13 and FY 2013-14 is due to the opening of two new hotels and higher occupancy and room rates citywide. 5 Reflects improvement in the housing market and new construction. 6 The increase in TOT in FY 2014-15 is due to the openings of several new hotels and higher occupancy and room rates throughout the city. 7 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. 8 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. 9 The increase in Business License Taxes in FY 2017-18 is due to a significant number of delinquent payments being collected. 10 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. 11 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. 12 The decreases in tax revenue for sales and transient occupancy taxes for FY 2020 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, property tax increment and CFD No. 1 special taxes. Source: City of Carlsbad Comprehensive Annual Financial Reports $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Total General Governmental Tax Revenues -Last Ten Fiscal Years (in thousands) Property Tax Sales and Use Taxes TOT Other 166 Water and Wastewater Rates Last Ten Fiscal Years Wastewater Fiscal Year Monthly Delivery Charge Base Price Per Unit1 Monthly Base Rate 2010-11 $18.00 $2.70 $23.03 2011-12 19.80 2.97 24.53 2012-13 21.38 3.20 25.02 2013-14 20.07 3.19 25.52 2014-15 21.08 3.35 26.03 2015-16 22.19 3.53 27.81 2016-17 24.11 3.84 27.81 2017-18 24.72 3.94 27.81 2018-19 24.72 3.94 27.81 2019-20 25.02 4.04 28.66 Source: City of Carlsbad Water 1 One unit of water equals 748 gallons. The base price shown is for tier 1, which applies to the first 12 units of usage per month at a single family residence. Note: Rates shown are for a 5/8" meter, which is the standard household meter size. 167 Assessed Value of Taxable Property Last Ten Fiscal Years (dollars in millions) Fiscal Year Residential Property Commercial Property Industrial Property Exemptions and Other Taxable Property1 Net Assessed Valuation Change From Prior Year Estimated Property Tax Revenue2 Total Direct Tax Rate3 2010-11 16,946$ 3,355$ 2,111$ 601$ 23,013$ -0.96%44$ 0.1927% 2011-12 17,306 3,133 1,983 560 22,982 -0.13 44 0.1927 2012-13 17,222 3,237 1,884 614 22,957 -0.11 44 0.1927 2013-14 17,774 3,298 1,871 580 23,523 2.47 45 0.1927 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 25,597 4,328 2,953 2,231 35,109 10.98 68 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 data, Muniservices, LLC/Avenu Insights & Analytics 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 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Taxable Assessed Property Value Last Ten Fiscal Years (in millions) Residential Property Commercial Property Industrial Property 168 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 2010-11 0.1927% 0.3412% 0.1576% 0.1497% 0.0937% 0.0198% 0.0453% 1.0000% 0.0432% 1.0432% 2011-12 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0748 1.0748 2012-13 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0768 1.0768 2013-14 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0743 1.0743 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 Allocation of 1% Ad Valorem Property Taxes Overlapping Rates for Tax Rate Area 090001 Source: County of San Diego Auditor and Controller's Office 1 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 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. 169 Direct and Overlapping Property Tax Rates (continued) Last Ten Fiscal Years (rate per $100 of assessed value) Total Tax Rates1 County Tax Rate Areas2 Carlsbad Unified Schools Oceanside Unified Schools San Marcos Unified Schools Vista Unified Schools Encinitas Union Schools Mira Costa Comm. College Palomar Comm. College Palomar Health District MWD / SDCWA3 Total Voter Approved Rates4 1.0548% 1 0.0000% 0.0000% 0.0000% 0.0000% 0.0548% 0.0000% 0.0000% 0.0000% 0.0000% 0.0548% 1.0583 37 - - - - 0.0418 0.0130 - - 0.0035 0.0583 1.0670 3 - - - - 0.0418 - 0.0217 - 0.0035 0.0670 1.0883 2 - - 0.0718 - - 0.0130 - - 0.0035 0.0883 1.0970 24 - - 0.0718 - - - 0.0217 - 0.0035 0.0970 1.0980 3 0.0850 - - - - 0.0130 - - - 0.0980 1.1015 54 0.0850 - - - - 0.0130 - - 0.0035 0.1015 1.1023 1 - 0.0858 - - - 0.0130 - - 0.0035 0.1023 1.1102 5 - - - 0.0850 - - 0.0217 - 0.0035 0.1102 1.1102 3 - - - - - 0.0217 - 0.0217 0.0434 1.1173 1 - - 0.0718 - - 0.0130 - 0.0290 0.0035 0.1173 1.1260 11 - - 0.0718 - - - 0.0217 0.0290 0.0035 0.1260 1.1305 1 0.0850 - - - - 0.0130 - 0.0290 0.0035 0.1305 Fiscal Year 2019-20 Voter Approved Debt Tax Rates for all Rate Areas Source: County of San Diego Auditor and Controller's Office 1 The Total Tax Rate is the 1.00% Proposition 13 rate plus the Voter Approved Debt rate. 2 Tax rate areas are determined by the County of San Diego. There are currently thirteen tax rates distributed among the 146 tax rate areas of the city. The table above shows the number of tax rate areas affected by each of the rates. 3 MWD is the Metropolitan Water District and SDCWA is the San Diego County Water Authority. 4 The majority of voter approved debt is related to various school district and hospital bonds. 170 Principal Property Taxpayers Current Year and Nine Years Ago Taxpayer Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Poseidon Water Desalination Plant 435,303,442$ 1 1.24%-$ 0.00% Grand Pacific Carlsbad LP 356,844,999 2 1.02 205,925,469 3 0.89 La Costa Glen Retirement Community 269,065,704 3 0.77 229,289,820 1 1.00 Legoland California, LLC 253,190,367 4 0.72 123,022,648 5 0.00 La Costa Resort & Spa 239,566,369 5 0.68 203,859,602 4 0.89 Levine Investments Limited Partnership 218,530,656 6 0.62 - - The Forum Shopping Center 202,532,608 7 0.58 84,074,846 10 0.37 The Shoppes at Carlsbad 173,987,418 8 0.50 101,354,271 8 0.44 Park Hyatt Aviara Resort 157,395,000 9 0.45 215,939,676 2 0.94 La Costa Town Center, LLC 146,563,211 10 0.42 - - Carlsbad Premium Outlets - 113,760,447 7 0.49 Pacific View Apartments - 121,152,686 6 0.53 Callaway Golf Company - 95,444,058 9 0.41 Total 2,452,979,774$ 6.99% 1,493,823,523$ 6.49% Net assessed valuation 35,109,400,875$ 23,012,997,313$ Source: County of San Diego Offices of the Auditor and Controller and County Assessor 2020 2011 171 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 2010-11 $56,792,002 $53,953,149 95.00%$884,845 $54,837,994 96.56% 2011-12 53,682,809 52,778,359 98.32 747,743 53,526,102 99.71 2012-13 54,469,819 53,677,921 98.55 574,299 54,252,220 99.60 2013-14 55,883,499 55,042,944 98.50 524,247 55,567,191 99.43 2014-15 60,266,230 59,509,285 98.74 543,544 60,052,829 99.65 2015-16 63,363,527 62,595,504 98.79 478,495 63,073,999 99.54 2016-17 67,116,590 66,233,111 98.68 542,629 66,775,740 99.49 2017-18 70,221,876 69,383,391 98.81 498,921 69,882,312 99.52 2018-19 74,560,530 72,869,105 97.73 474,096 73,343,201 98.37 2019-20 77,782,836 75,764,088 97.40 N/A 75,764,088 97.40 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 Office of the Auditor and Controller $0 $20 $40 $60 $80 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Property Tax Levies & Collections Last Ten Fiscal Years (in millions) Total Tax Levy for Fiscal Year1 Total Collections to Date 172 173 Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands except per capita) Fiscal Year Bonds/Special Debt4 Certificates of Participation Capital Leases Loans Payable 2010-11 9,735$ 1 -$ -$ 581$ 2011-12 - - - 475 2012-13 - - - 159 2013-14 - - - - 2014-15 - - - - 2015-16 - - 970 - 2016-17 - - 784 - 2017-18 - - 588 - 2018-19 - - 378 - 2019-20 - - 156 - Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Governmental Activities Sources: MuniServices, LLC, California Department of Finance and US Census Data 1 The 1993 Carlsbad Housing & Redevelopment Commission Tax Allocation Bonds were transferred to a trust fund due to the dissolution of the Redevelopment Agency in FY 2011-12. 2 During FY 2006-07, Carlsbad Municipal Golf Course Revenue Bonds were issued for $18.5 million. 3 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. 4 The Bond/Special Debt is net of amortized premiums and the Loan Payable is net of unamortized discounts. 5 The Carlsbad Municipal Golf Course Revenue Bonds were defeased during FY 2016-17. $525 $402 $373 $339 $313 $307 $147 $136 $149 $135 $0 $200 $400 $600 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Outstanding Debt per Capita Last Ten Fiscal Years (in dollars) 174 Bonds/Special Debt4 Installment Purchase Agreements Loan Payable3 Capital Leases Total Percentage of Personal Income Per Capita 17,670$ 2 3,365$ 24,290$ 256$ 55,897$ 1.38%524.58$ 17,345 2,585 22,830 14 43,249 1.00 401.67 17,237 1,697 21,335 - 40,428 0.92 373.48 16,645 905 19,837 - 37,387 0.77 339.36 16,260 - 18,429 - 34,689 0.71 313.49 16,058 - 17,670 - 34,698 0.60 307.25 - 5 - 15,901 - 16,685 0.28 146.71 - - 14,944 - 15,532 0.24 135.51 - - 16,827 - 17,205 0.25 149.30 - - 15,327 - 15,483 0.25 135.27 Business-Type Activities 175 Schedule of Direct and Overlapping Bonded Debt Current Fiscal Year Fiscal Year 2019-20 Assessed Valuation:$35,109,400,875 Redevelopment Incremental Valuation:1,459,125,344 Adjusted Assessed Valuation:$33,650,275,531 Total Debt City’s Share of Overlapping Tax and Assessment Debt:06/30/20 Debt 6/30/20 Metropolitan Water District 37,300,000$ 1.141%425,593$ Mira Costa Community College District 71,270,000 27.864 19,858,673 Palomar Community College District 610,657,763 2.715 16,579,358 Carlsbad Unified School District 238,049,662 98.165 233,681,451 Carlsbad Unified School District Community Facilities District No 1 1,325,000 100 1,325,000 Oceanside Unified School District 239,595,394 0.004 9,584 Vista Unified School District 134,624,882 0.684 920,834 Encinitas Union School District 46,395,383 30.534 14,166,366 San Marcos Unified School District 285,225,402 17.941 51,172,289 San Marcos Unified School District School Facility Improvement District 683,194 19.412 132,622 San Marcos Unified School District CFD No. 4 14,985,000 32.779 4,911,933 San Marcos Unified School District CFD No. 5 13,580,000 100 13,580,000 San Dieguito Union High School District 347,365,000 8.962 31,130,851 San Dieguito Union HS District CFD No. 94-2 25,175,000 98.346 24,758,606 San Dieguito Union HS District CFD No. 95-2 5,970,000 9.338 557,479 Palomar Health District 422,024,019 1.688 7,123,765 Olivenhain Municipal Water District, Assess. Dist. No. 96-1 8,865,000 22.073 1,956,771 City of Carlsbad CFD No. 3, I.A. No. 1 & No. 2 18,890,000 100 18,890,000 City of Carlsbad 1915 Act Bonds 30,020,000 100 30,020,000 Total Overlapping Tax and Assessment Debt 2,552,000,699$ 471,201,175$ Source: MuniServices, LLC and County of San Diego Office of the Auditor and Controller 1 Percentage of overlapping agency's assessed valuation located within boundaries of the city. Percent Applicable1 176 Schedule of Direct and Overlapping Bonded Debt (continued) Current Fiscal Year Total Debt City’s Share of Overlapping General Fund Obligation Debt:06/30/20 Debt 6/30/20 San Diego County General Fund Obligations 231,350,000$ 6.34%14,676,844$ San Diego County Pension Obligation Bonds 456,040,000 6.344 28,931,178 San Diego County Superintendent of Schools General Fund Obligations 9,350,000 6.344 593,164 Mira Costa Community College District Certificates of Participation - 27.65 - Palomar Community College District General Fund Obligations 1,675,000 2.715 45,476 Carlsbad Unified School District General Fund Obligations 40,300,000 98.165 39,560,495 San Marcos Unified School District General Fund Obligations 75,119,715 17.941 13,477,228 Vista Unified School District Certificates of Participation 1,455,000 0.684 9,952 San Dieguito Union High School District General Fund Obligations 12,730,000 8.962 1,140,863 Total Overlapping General Fund Obligation Debt 828,019,715$ 98,435,200$ Overlapping Tax Increment Debt (Successor Agency):3,705,000 100 3,705,000 2 Total Overlapping Debt:3,383,725,414$ 573,341,375$ City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations 155,922$ 100 155,922$ Total City of Carlsbad Direct Debt 155,922$ 155,922$ Combined Total Debt 3,383,881,336$ 573,497,297$ 3 Source: MuniServices, LLC and County of San Diego Office of the Auditor and Controller 1 Percentage of overlapping agency's assessed valuation located within boundaries of the city. 2 Created by the dissolution of the Redevelopment Agency in FY 2011-12. 3 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds. Ratios to FY 2019-20 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.3421% Ratios to FY 2019-20 Adjusted Assessed Valuation: Governmental Activities Direct Debt 0.0005% Combined Total Debt 1.7043% Percent Applicable1 177 Direct and Overlapping Debt Last Ten Fiscal Years (rate per $1,000 of assessed value) 2010-11 2011-12 2012-13 2013-14 Overlapping Tax and Assessment Debt: Metropolitan Water District 0.129$ 0.110$ 0.080$ 0.062$ Mira Costa Community College District - - - - Palomar Community College District 0.447 0.448 0.375 0.361 Carlsbad Unified School District 8.660 8.527 8.312 7.921 Carlsbad Unified School District CFD No. 1 0.192 0.149 0.103 0.052 Oceanside Unified School District 0.001 0.001 0.001 - Vista Unified School District 0.039 0.038 0.031 0.028 Encinitas Union School District 0.357 0.338 0.454 0.426 San Marcos Unified School District - 3.103 1.711 2.248 San Marcos Unified School District Facility Improvement District 0.202 0.176 0.076 0.057 San Marcos Unified School District CFD No. 4 0.241 0.236 0.230 0.292 San Marcos Unified School District CFD No. 5 0.979 0.950 0.918 0.864 San Dieguito Union High School District - - 0.621 0.607 San Dieguito Union HS District CFD No. 94-1 0.004 0.004 0.004 0.004 San Dieguito Union HS District CFD No. 94-2 1.093 1.106 1.082 1.032 San Dieguito Union HS District CFD No. 95-2 0.022 0.022 0.022 0.023 San Dieguito Union HS District combined CFD 0.215 - - - Palomar Health District 0.444 0.434 0.353 0.336 Olivenhain Municipal Water District, Assess. Dist. No. 96-1 0.147 0.142 0.138 0.139 City of Carlsbad CFD No. 3, I.A. No. 1 & No. 2 1.080 1.063 1.045 1.000 City of Carlsbad 1915 Act Bonds 2.640 2.569 2.107 2.018 Total Overlapping Tax and Assessment Debt 16.892$ 19.416$ 17.663$ 17.470$ Overlapping General Fund Obligation Debt: San Diego County General Fund Obligations 1.133$ 1.155$ 1.070$ 0.983$ San Diego County Pension Obligation Bonds 2.410 2.300 2.017 1.865 San Diego City Superintendent of Schools General Fund Obligations 0.059 0.055 0.047 0.042 Mira Costa Community College District Certificates of Participation 0.036 0.032 0.028 0.023 Palomar Community College District General Fund Obligations 0.009 0.008 0.006 0.006 Carlsbad Unified School District General Fund Obligations 2.089 2.028 1.967 2.086 San Marcos Unified School District General Fund Obligations 0.831 0.837 0.458 0.441 Vista Unified School District Certificates of Participation - - 0.001 0.001 San Dieguito Union High School District General Fund Obligations 0.049 0.059 0.051 0.049 Other Unified School District Certificates of Participation 0.002 0.002 - - Total Overlapping General Fund Obligation Debt 6.618$ 6.476$ 5.645$ 5.496$ Overlapping Tax Increment Debt (Successor Agency):-$ -$ 0.376$ 0.341$ Total Overlapping Debt:23.510 25.892 23.684 23.307 City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations 0.025 0.021 0.007 - Total City of Carlsbad Direct Debt 0.025$ 0.021$ 0.007$ -$ Combined Total Debt 23.535$ 25.913$ 23.691$ 23.307$ Source: MuniServices, LLC and California Municipal Statistics, Inc. 178 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 0.049$ 0.039$ 0.030$ 0.023$ 0.017$ 0.013$ - - - 0.918 0.750 0.590 0.562 0.520 0.619 0.571 0.530 0.493 7.073 6.370 5.816 5.298 7.474 6.944 - - - 0.051 0.045 0.039 - - - - - - 0.025 0.022 0.024 0.018 0.028 0.027 0.385 0.515 0.551 0.506 0.461 0.421 2.087 1.922 1.797 1.706 1.571 1.521 0.035 0.027 0.020 0.014 0.009 0.004 0.254 0.232 0.199 0.181 0.164 0.146 0.690 0.626 0.566 0.509 0.456 0.404 0.967 0.906 1.031 1.032 0.956 0.925 0.003 0.003 0.003 0.003 - - 0.928 0.855 0.983 0.908 0.800 0.736 0.021 0.019 0.017 0.016 0.018 0.017 - - - - - - 0.308 0.285 0.258 0.244 0.228 0.212 0.031 0.102 0.091 0.079 0.069 0.058 0.903 0.836 0.750 0.684 0.623 0.561 1.727 1.564 1.379 1.240 1.024 0.892 16.048$ 14.843$ 14.134$ 14.001$ 15.223$ 14.003$ 0.857$ 0.709$ 0.648$ 0.572$ 0.510$ 0.436$ 1.664 1.497 1.347 1.168 1.016 0.860 0.036 0.031 0.025 0.023 0.020 0.018 0.018 0.014 0.119 0.005 0.001 - 0.005 0.004 0.003 0.002 0.002 0.001 1.846 1.692 1.598 1.447 1.313 1.176 0.407 0.376 0.378 0.459 0.421 0.401 0.001 0.001 0.001 - - - 0.047 0.044 0.041 0.039 0.036 0.034 - - - - - - 4.881$ 4.368$ 4.160$ 3.715$ 3.319$ 2.926$ 0.290$ 0.250$ 0.212$ 0.177$ 0.143$ 0.110$ 21.219 19.461 18.506 17.893 18.685 17.039 - 0.036 0.028 0.020 0.012 0.005 -$ 0.036$ 0.028$ 0.020$ 0.012$ 0.005$ 21.219$ 19.497$ 18.534$ 17.913$ 18.697$ 17.044$ 179 Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands) 2010-11 2011-12 2012-13 2013-14 Net assessed valuation 23,012,997$ 22,982,172$ 22,956,650$ 23,522,746$ Debt limit (25% x 15%)862,987 861,831 860,874 882,103 Less amount of debt applicable to limit: Bonded debt 27,405 17,345 1 17,005 16,645 Loan payable 581 475 159 - Obligations under capital leases 256 14 - - Total net debt applicable to limit 28,242 17,834 17,164 16,645 Legal debt margin 834,745$ 843,997$ 843,710$ 865,458$ Total net debt applicable to the limit as a percentage of debt limit 3.27%2.07%1.99%1.89% Source: City of Carlsbad Comprehensive Annual Financial Reports 2 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 The 1993 Carlsbad Housing & Redevelopment Commission Tax Allocation Bonds were transferred to a trust fund due to the dissolution of the Redevelopment Agency in FY 2011-12. 3.27% 2.07%1.99%1.89%1.70%1.67% 0.07%0.05%0.03%0.01%0.00% 1.00% 2.00% 3.00% 4.00% 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Percent of Debt Applicable to the Legal Debt Limit Last Ten Fiscal Years 180 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 25,489,468$ 26,924,891$ 28,423,782$ 29,994,964$ 31,635,528$ 35,109,401$ 955,855 1,009,683 1,065,892 1,124,811 1,186,332 1,316,603 16,260 15,855 - 2 - - - - - - - - - - 970 785 588 378 156 16,260 16,825 785 588 378 156 939,595$ 992,858$ 1,065,107$ 1,124,223$ 1,185,954$ 1,316,447$ 1.70%1.67%0.07%0.05%0.03%0.01% 181 Pledged-Revenue Coverage Last Ten Fiscal Years 2010-11 2011-12 2012-13 2013-14 Wastewater Revenue Bonds Gross revenues 1, 5 11,564,398$ 12,391,225$ 12,599,601$ 13,699,286$ Less expenses 2, 5 6,060,142 6,645,436 7,094,310 6,989,194 Net available revenue 5,504,256$ 5,745,789$ 5,505,291$ 6,710,092$ Debt service Principal 5 740,000$ 780,000$ 820,000$ 860,000$ Interest 5 191,419 152,468 111,469 68,419 Total debt service 931,419$ 932,468$ 931,469$ 928,419$ Coverage 5.91 6.16 5.91 7.23 Recycled Water Loans Gross revenues 3 5,942,531$ 7,002,009$ 8,160,109$ 9,392,061$ Less expenses 4 3,629,787 4,133,530 4,019,176 3,640,786 Net available revenue 2,312,744$ 2,868,479$ 4,140,933$ 5,751,275$ Debt service Principal 1,282,018$ 1,312,398$ 1,343,498$ 1,375,337$ Interest 594,463 564,084 532,983 501,144 Total debt service 1,876,481$ 1,876,482$ 1,876,481$ 1,876,481$ Coverage 1.23 1.53 2.21 3.06 Golf Course Revenue Bonds Gross revenues 1, 6 7,582,458$ 7,863,951$ 6,777,292$ 7,747,116$ Less expenses 2, 6 6,356,592 6,177,438 5,954,896 6,125,159 Net available revenue 1,225,866$ 1,686,513$ 822,396$ 1,621,957$ Debt service Principal 6 305,000$ 325,000$ 340,000$ 360,000$ Interest 6 798,350 785,750 771,600 755,850 Total debt service 1,103,350$ 1,110,750$ 1,111,600$ 1,115,850$ Coverage 1.11 1.52 0.74 1.45 Source: City of Carlsbad Comprehensive Annual 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. 3 Includes recycled water operating and non-operating revenues and fees. 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. 4 Includes recycled water operating and non-operating expenses, excluding interest expense and depreciation. In FY 2019-20, a reconciling expense related to FY 2018-19 was received; this amount has been allocated to the appropriate fiscal year. 182 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 13,723,835$ 13,723,835$ -$ -$ -$ -$ 7,249,798 7,249,798 - - - - 6,474,037$ 6,474,037$ -$ -$ -$ -$ 905,000$ 905,000$ -$ -$ -$ -$ 23,191 - - - - - 928,191$ 905,000$ -$ -$ -$ -$ 6.97 7.15 n/a n/a n/a n/a 9,210,258$ 8,216,362$ 8,371,467$ 9,869,958$ 8,198,882$ 7,557,893$ 3,826,699 4,679,706 4,863,054 5,559,509 6,472,817 5,926,215 5,383,559$ 3,536,656$ 3,508,413$ 4,310,449$ 1,726,065$ 1,631,678$ 1,407,932$ 1,441,301$ 1,475,461$ 1,510,433$ 1,546,234$ 1,582,886$ 468,550 435,182 401,021 366,049 330,248 293,596 1,876,482$ 1,876,483$ 1,876,482$ 1,876,482$ 1,876,482$ 1,876,482$ 2.87 1.88 1.87 2.30 0.92 0.87 8,428,375$ 8,196,853$ -$ -$ -$ -$ 6,302,019 6,273,320 - - - - 2,126,356$ 1,923,533$ -$ -$ -$ -$ 385,000$ 405,000$ -$ -$ -$ -$ 739,088 721,313 - - - - 1,124,088$ 1,126,313$ -$ -$ -$ -$ 1.89 1.71 n/a n/a n/a n/a 183 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 2010-11 106,555 3.42%1.43%96.2%51.6%39.4 2011-12 107,674 3.43 1.05 95.3 50.6 40.3 2012-13 108,246 3.44 0.53 88.5 35.4 39.3 2013-14 110,169 3.45 1.78 95.6 51.3 40.3 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 Sources: MuniServices, LLC 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. 184 Average Household Size Personal Income (millions) 1 Per Capita Personal Income City Unemployment Rate 2.53 4,048$ 37,985$ 6.80% 2.58 4,304 39,975 6.30 2.63 4,403 40,672 5.90 2.53 4,862 44,134 6.30 2.30 4,907 44,345 4.30 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 13.5 2 185 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 2,345 1 2.97%2,114 3 3.88% Legoland California Hospitality/Tourism 2,300 2 2.91%1,140 6 2.09% Thermo Fisher Scientific Life Sciences 1,982 3 2.51%4,121 1 7.56% Omni La Costa Resort & Spa Hospitality/Tourism 1,300 4 1.64%871 9 1.60% Carlsbad Unified School District Education 1,056 5 1.34%1,004 7 1.84% TaylorMade Golf Company Action Sports 960 6 1.21%2,498 2 4.58% Gemological Institute of America Research/Education 856 7 1.08%1,206 5 2.21% City of Carlsbad Government 748 8 0.95%699 10 1.28% Nortek Security & Control Information Technology 637 9 0.81%- -- HM Electronics, Inc.Information Technology 571 10 0.72%- -- Optum RX, Inc.Mail Order Pharmacy 571 10 0.72%- -- Callaway Golf Company Action Sports - --1,637 4 3.00% Genoptix, Inc.Life Sciences - --984 8 1.81% Subtotal Employees 13,326 16.86%16,274 29.86% Total Employees Citywide (estimate)79,030 54,500 Source: City of Carlsbad Business License Data Fiscal Year 2019-20 Fiscal Year 2010-11 186 187 Authorized Full-Time and 3/4-Time City Government Employees by Program Area Last Ten Fiscal Years Program Area 2010-11 2011-12 2012-13 2013-14 Policy and Leadership Group City Attorney 7.00 7.00 7.00 7.00 City Clerk and Records Management 8.00 6.25 6.00 5.00 City Council 1.00 1.00 1.00 1.00 City Manager 8.00 7.00 7.00 7.00 City Treasurer 0.75 0.75 0.75 0.75 Communications & Engagement 2.75 2.75 2.75 2.75 Administrative Services Finance & Risk Management 30.50 30.50 30.50 31.50 Human Resources & Workers Comp.9.00 9.00 9.00 9.00 Information Technology 22.50 22.50 22.50 22.50 Public Safety Police 162.00 162.00 161.00 161.00 Fire 88.75 87.75 87.75 88.00 Community Services Community and Economic Development 54.00 50.00 47.00 44.00 Housing and Neighborhood Services 11.00 13.00 10.00 10.00 Library and Arts 52.25 51.25 51.25 51.25 Parks and Recreation 71.95 70.95 68.40 67.60 Public Works Environmental Management - - - - General Services 41.60 39.60 39.55 40.60 Public Works Administration - - - - Transportation 58.40 54.40 54.40 53.40 Utilities 69.55 68.55 67.65 65.40 Limited Term Personnel (Full-Time)- - 1.00 2.00 Total Full Time Authorized Employees 699.00 684.25 674.50 669.75 Net Increase/(decrease) over prior year (17.25) (14.75) (9.75) (4.75) 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 and FY 2019-20, 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 and Neighborhood Services was combined with Community and Economic Development. 188 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 7.00 7.00 6.00 7.00 7.00 8.00 5.00 5.00 5.00 6.00 6.00 7.00 1.00 1.00 1.00 1.00 2.00 2.00 7.00 7.00 8.00 8.00 9.00 12.00 0.75 0.75 0.75 0.75 0.75 1.00 4.75 1 5.00 5.00 5.00 7.00 7.00 31.50 32.50 33.00 32.00 32.00 33.00 11.00 11.00 11.00 11.00 11.00 14.00 22.50 19.50 20.00 27.00 32.00 3 35.00 162.00 168.00 168.00 168.00 170.00 3 183.00 89.00 89.00 90.00 90.00 92.00 97.75 44.00 44.00 44.00 44.00 59.00 4 67.00 12.00 13.00 13.00 13.00 - - 50.25 1 50.50 50.50 50.50 50.50 52.50 61.60 1 58.15 57.15 57.00 55.00 55.00 - 8.50 2 9.50 2 9.70 9.60 11.05 39.90 28.10 2 51.30 2 52.00 53.00 47.85 2 - 8.05 2 9.85 2 12.30 7.40 7.60 55.90 57.35 2 33.00 2 32.00 35.00 44.15 2 64.60 60.85 2 60.20 2 59.00 61.75 62.10 - 3.75 6.75 7.75 4.75 0.75 669.75 678.00 683.00 693.00 704.75 747.75 - 8.25 5.00 10.00 11.75 43.00 189 Operating Indicators by Function/Program Last Ten Fiscal Years 2010-11 2011-12 2012-13 2013-14 General Government Number of applications processed (full and part-time)2,416 1,998 10,904 1 9,527 Number of external new hires (full and part-time)31 16 151 1 284 Number of internal promotions / transfers (full-time only)5 6 6 47 Business licenses processed 9,539 9,303 9,422 10,327 Number of outgoing payments processed 41,344 39,075 38,441 39,310 Public Safety Police Calls for service 97,414 93,248 90,122 87,976 Average priority one response (minutes)5.5 5.9 5.8 5.8 Cases 8,188 7,963 8,314 8,296 Fire Emergency responses 9,084 9,106 10,755 9,925 Response time: arrivals on scene within goal standard 71%72%71%63% Community Development Affordable housing units completed 5 - 59 - Financial assistance to affordable housing projects 525,000$ 780,000$ 7,408,000$ -$ Building permits issued 2,600 1,400 1,500 1,400 Building inspections conducted 19,500 19,000 24,000 19,000 Final inspections (residential dwelling units)260 271 440 190 Final inspections (commercial square feet)n/a n/a n/a 45,000 Code Enforcement Actions (activities)4,320 3,827 4,943 4,794 Community Services Library - total material circulation 1,362,700 1,358,839 1,348,333 1,369,369 Library - patron visits 858,788 858,422 821,045 791,533 Cultural Arts - number of events 44 50 50 62 Arts - attendance of events 80,000 75,000 80,000 75,000 Recreation - youth sports participants 1,200 1,200 1,200 2,292 2 Recreation - adult sports participants 5,400 5,450 5,200 5,600 Recreation - enrichment class enrollees 13,300 12,650 12,200 10,350 Recreation - special events participants 9,000 10,000 13,000 13,600 Recreation - aquatics classes conducted 470 557 575 1,018 2 Trees trimmed 2,221 1,863 1,936 1,920 Public Works Streets Centerline road miles resurfaced with overlay or slurry seal 3.8 25.2 24.3 14.8 Carlsbad Municipal Water District Average consumption (millions of gallons per day)14.1 14.4 15.4 15.9 Annual water deliveries (acre feet)15,786 16,104 17,248 17,801 Water connections 27,978 28,379 28,947 29,045 Wastewater Sewage pumped (millions of gallons per day)7.57 6.92 6.65 6.53 Annual flow (millions of gallons)2,762 2,524 2,426 2,384 Wastewater connections 22,342 22,631 22,955 23,282 Source: City of Carlsbad 1 Beginning in FY 2012-13, part-time applicants were added to the number of applicants and new hires. 2 Increases in the number of participants is the result of the opening of the Alga Norte Community Park in FY 2013-14. 3 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. 4 The decrease in patron visits is due to the temporary closures of library facilities for remodeling during FY 2015-16. 5 The decrease is due to the time involved with the implementation of a new licensing system during FY 2016-17. 6 Restated in FY 2019-20. Various large commercial, industrial and residential projects were permitted. 7 Reporting of information is not available for FY 20167-17 due to the implementation of a new permitting system. 8 Beginning in FY 2016-17, 2,500 acre feet of contracted desalinated water is included in the water purchase totals. 10 Data is for the calendar year. 11 FY 2019-20 had decreases in some public facing programs and services due to the impacts of the COVID-19 pandemic. 190 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 8,551 8,037 9,544 9,455 8,495 8,012 299 260 292 311 345 248 41 31 58 44 66 66 10,735 11,449 8,142 (5)11,267 9,546 10,180 40,663 41,398 41,304 41,869 43,520 44,128 91,314 92,061 84,858 90,760 99,562 112,323 6.5 6.1 5.9 5.8 5.7 5.5 8,349 9,253 8,884 8,643 8,705 8,774 9,830 11,455 12,183 6 12,520 6 12,833 6 13,331 6 63%64%78%6 76%6 76%6 75%6 - - - - - 157 10 2,646,000$ -$ 1,280,000$ -$ -$ -$ 1,600 3,000 4,500 4,392 4,468 6 4,884 21,000 23,000 27,000 22,671 21,205 6 21,527 200 200 600 289 268 6 215 60,000 60,000 95,000 155,292 2,350,975 6 365,644 5,389 10,994 n/a 7 9,538 7,226 6 8,660 1,293,282 1,103,090 1,243,228 1,169,247 1,185,390 975,024 11 804,003 609,679 4 720,205 685,188 668,973 483,233 11 80 88 79 82 96 51 11 87,000 85,000 79,067 65,817 61,531 37,913 11 1,000 1,000 968 1,003 1,260 993 11 6,150 5,600 4,500 4,800 4,800 2,400 11 19,030 3 19,632 17,402 12,996 17,900 9,641 11 17,841 3 19,474 12,150 11,645 9,600 3,705 11 1,224 684 733 778 830 770 11 2,018 1,965 1,971 1,954 4,340 4,678 18.1 20.0 23.8 25.8 8.3 14.9 14.6 12.1 13.1 14.3 13.0 12.7 16,368 13,578 14,616 8 16,032 14,563 14,249 29,190 29,190 29,782 30,054 30,131 30,265 5.90 6.17 5.82 6.32 6.03 6.31 2,152 2,252 2,125 2,306 2,200 2,305 23,431 23,431 23,747 23,863 23,959 24,040 191 Capital Asset Statistics Last Ten Fiscal Years 2010-11 2011-12 2012-13 2013-14 Community Services Number of parks and community fields 31 31 31 33 Acres of developed parks and community fields 183 183 183 281 Acres of open space and community fields 790 790 755 728 Miles of open space trails 47 47 47 47 Number of pools 1 1 1 3 Number of community centers 4 4 4 4 Number of libraries 3 3 3 3 Number of Materials in Library Collections 645,414 645,414 625,893 581,865 Public Safety Fire Protection Number of stations 6 6 6 6 Number of fire trucks 11 12 12 13 Number of ambulances 5 5 6 8 Number of other fire vehicles 14 15 15 16 Police Protection Number of patrol and other vehicles 90 90 88 114 Number of motorcycles 11 11 13 13 Public Works Carlsbad Municipal Water District Miles of lines and mains 518 527 534 534 Wastewater Miles of sewers 284 288 288 288 Streets Miles of streets 340 340 343 346 Number of street lights 7,126 7,142 7,179 7,236 Number of traffic signals 172 172 174 174 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. 192 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 33 33 33 33 33 33 319 319 319 319 319 319 728 728 728 728 787 802 47 47 47 47 52 52 3 3 3 3 3 3 4 4 4 5 5 5 3 3 3 3 3 3 574,775 563,581 491,956 477,149 473,154 477,042 6 6 6 6 6 1 6 12 12 12 13 14 1 13 2 7 6 5 5 5 1 6 2 15 18 20 20 25 1 25 2 114 106 106 96 119 1 142 14 15 12 13 13 1 20 534 559 559 559 559 535 3 288 288 288 288 288 272 347 348 350 350 350 350 7,262 7,265 7,334 7,337 7,388 7,520 177 177 177 178 179 181 193