HomeMy WebLinkAbout2021-04-27; City Council; ; Economic and Financial Update for the Third Quarter of Fiscal Year 2020-21CA Review CKM
Meeting Date: April 27, 2021
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Laura Rocha, Deputy City Manager, Administrative Services
laura.rocha@carlsbadca.gov, 760-602-2415
Subject: Economic and Financial Update for the Third Quarter of Fiscal Year
2020-21
Districts: All
Recommended Action
Receive a report on the economic and financial update for the third quarter of fiscal year 2020-
21 and provide direction as appropriate.
Executive Summary
At the April 7, 2020, City Council meeting, the City Council voted unanimously to direct staff to
return to the City Council with financial expenditure reports relating to the city’s response to
the COVID-19 pandemic. The city manager further committed to provide quarterly updates to
the City Council on the economic outlook and an update on the city’s finances during the
adoption of the fiscal year 2020-21 operating and capital project budgets on June 23, 2020. For
these updates, staff will provide a presentation on the:
•National, state, regional and Carlsbad-specific economic data
•The city’s most recent financial data
•General progress and execution of the fiscal year 2020-21 annual budget
Discussion
The Carlsbad economy is diverse, has strong industry clusters and is a leader in innovation. The
city’s gross regional product was worth $15.3 billion in 2020, second only to the largest city in
the county, San Diego. Key industries driving this output are professional, scientific and
technical services, computer and electronic product manufacturing and other manufacturing.
The city also has a strong tourism industry that generates the second highest amount of
transient occupancy tax in the region.
The COVID-19 pandemic has led to fluctuating public health orders that have at times required
people to stay at home, limited or suspended business operations and reduced tourism and
travel. These restrictions have had disruptive effects on the economy, across the nation the
state and in Carlsbad. Locally, hotels and resorts and other hospitality businesses have been
particularly hard hit.
Before the COVID-19 pandemic, the economic outlook for the United States, California, the
County of San Diego and the City of Carlsbad was positive. The local gross regional product
April 27, 2021 Item #1 Page 1 of 24
continued to expand along with most of the rest of the nation. From 2018 to 2019, Carlsbad’s
gross regional product grew by $800 million. The National Bureau of Economic Research
determined that a peak in monthly economic activity occurred in the U.S. economy in February
2020, marking the end of the longest recorded U.S. expansion, which began in June 2009. The
pandemic brought on a global economic crisis and the impact on the U.S. economy was swift.
Compared to the other recessions that the U.S. experienced since 1980, the economic drop due
to COVID-19 was extreme.
As businesses were shuttered due to public health orders, unemployment numbers rose with
an estimated 20.5 million people in the U.S. out of work due to the pandemic, according to a
September 2020 Hamilton Project report. In Carlsbad, unemployment rose to a peak of 13.8%
in April 2020. Government stimulus from federal, state and county programs began to reverse
the downward trend in the economy though surging case rates and fluctuation health orders
and restrictions have caused continued uncertainty. The most recent unemployment data from
the California Employment Development shows state unemployment at 8.5%, San Diego
County’s at 7.2% and Carlsbad’s at 5.9% in February, after an uptick in December and January
correlating with a significant surge in COVID-19 cases and the state’s corresponding Regional
Stay at Home Order.
To ensure the city remains responsive to the changing situation and prepared to meet new
challenges head-on, staff have leveraged greater in-house economic data capabilities and
analytics developed over the past year to publish a quarterly economic scan (Exhibit 2). Staff
also maintain a new economic development website, Doing Business in Carlsbad, which is
dynamically updated with important economic development data for those wanting to do
business or find employment in Carlsbad or gain a better understanding of the city’s economy.
In conjunction with the existing Life in Action campaign, the city continues to develop tools to
understand the economy, attract businesses, cultivate talent and support data-driven economic
development decision-making.
The economic impact of COVID-19 has a direct impact on city revenues and budget. For the City
of Carlsbad, staff are forecasting declines in revenues in one of the city’s three primary revenue
streams: the transient occupancy tax from local lodging businesses. Revenue from sales tax
appears to have been bolstered by the economic stimulus payments, paycheck protection
program, and other economic measures intended to offset the impacts of COVID-19.
Revenue from the third major source, the city’s share of property taxes, is not expected to be
substantially impacted by COVID-19. However, as the stay-at-home orders continue, the city is
also seeing a significant drop in recreation lease and rental revenues.
The city’s three major revenue sources are property tax, sales tax and transient occupancy tax
which can be generally summarized as follows:
• Property taxes - The majority of property tax revenue is collected in December and April
each year. Through the third quarter, the majority of revenue received has been for
aircraft, supplemental and delinquent taxes.
• Sales taxes - To date, the majority of sales tax revenues represent funds collected for
the second, third and fourth calendar quarters of 2020 and the first advance of the city’s
first calendar quarter sales tax revenues of 2021.
April 27, 2021 Item #1 Page 2 of 24
• Transient occupancy taxes - For the first three quarters of the fiscal year, the city has
collected less of these taxes than normal because two of the city’s largest hotels have
remained fully or partially closed and occupancy rates overall have been greatly reduced
by the pandemic. The closing of the LEGOLAND California Resort has also reduced
tourism activity.
• Other General Fund revenues - Some other General Fund revenues have been
negatively impacted by the pandemic.
The city’s General Fund expenditures and encumbrances through March 2021 total 66% of the
working budget, or $126.3 million. The city is closely monitoring departmental spending,
focusing on reducing variable costs where possible and taking measures to limit current year
expenditures. City staff will continue to adjust the current year budget with the evolving public
health and economic situation.
During this difficult time, the city has not charged customers any late fees on their utility bills –
for water and wastewater and solid waste services – to continue to provide customers with
reliable water service. Additionally, water service disconnections for non-payment have been
suspended since March 2020 because of the pandemic and the governor’s subsequent
executive order (Order N-42-20). As a result, the city has seen an increase in overdue utility
billing balances.
The city’s municipal golf course, The Crossings at Carlsbad, has endured many fluctuations in its
business operations, including a full shutdown of operations, elimination of banquets and many
other limitations on food and beverage services. However, golf rounds and greens fees have
exceeded last year’s and budgeted estimates for the first three quarters of the fiscal year.
Fiscal Analysis
This is an informational item with no fiscal impact.
Next Steps
Staff will continue to provide quarterly updates through the COVID-19 emergency.
Environmental Evaluation (CEQA)
This informational report does not constitute a “project” within the meaning of the California
Environmental Quality Act under California Public Resources Code Section 21065 in that it has
no potential to cause either a direct physical change in the environment or a reasonably
foreseeable indirect physical change in the environment and therefore does not require
environmental review.
Public Notification
Public notice of this item was posted in keeping with the Ralph M. Brown Act and it was
available for public viewing and review at least 72 hours before the scheduled meeting date.
Exhibits
1. March 2021 Financial Status Report
2. March 2021 Economic Scan
April 27, 2021 Item #1 Page 3 of 24
This report summarizes the City of Carlsbad’s General Fund revenues and expenditures through March
31, 2021. It compares revenues and expenditures for the first three quarters of fiscal year 2020-21 and
fiscal year 2019-20. In addition, the financial status of the Water and Wastewater Enterprises are
included. The figures presented here are unaudited and have not been prepared in accordance with
Generally Accepted Accounting Principles.
COVID-19 Pandemic
The pandemic of the COVID-19 disease has led to public health orders requiring people to stay at home aside from
essential trips or jobs and forced many businesses across the state to suspend or reduce operations. These
restrictions have had disruptive effects on the economy, across the nation, the state and in Carlsbad. Consumers
have postponed making major purchases as well as changed routine shopping habits. Businesses deemed
nonessential have had to close or suspend operations. Hotels, resorts and other hospitality businesses have been
particularly hard hit. For the City of Carlsbad, staff is forecasting a significant decline in transient occupancy tax
revenues. Revenue from the city’s largest revenue source, the city’s share of property taxes, is not expected to be
substantially impacted by COVID-19 and revenues from sales tax have been uplifted by the federal stimulus
packages. As the shelter-in-place orders continue, the city is seeing a significant drop in recreation and lease/rental
revenues.
General Fund Revenues
Property Taxes ($47.0 million) The majority of property tax revenue is collected in
December and April each year. According to the County of San Diego Assessor’s
Office, assessed values in Carlsbad have increased by 4.76% for fiscal year 2020-21.
This is the eighth year in a row that Carlsbad’s assessed values have increased from
year to year, and in line with assessed value increases with other cities in San Diego
County for the year. This reflects continued strength in the housing market and new
construction. The increase in this year’s assessed values was due to a large increase in the assessed values of
commercial and industrial properties in the city; the city saw smaller increases in residential property values for
the year. This is the sixth year in a row since the Great Recession ended that the city saw increases in assessed
values in all three property components (residential, commercial and industrial).
The primary reasons property taxes for the first three quarters of the fiscal year have increased by 11% as
compared to the prior fiscal year are:
•Current taxes are up by $3,880,000 or 11% primarily due to timing of collections and higher assessed
values.
•Aircraft taxes are up by $317,000 or 23% due to an increase in the number of aircraft being housed at the
airport.
March 31, 2021
11%
Exhibit 1
April 27, 2021 Item #1 Page 4 of 24
Monthly Financial Report ________________________________________________________________ 2
• Payments for previous year’s taxes are up by $278,000 due to collections of previous year’s property taxes.
Property owners were given an extension to pay their property taxes due last fiscal year due to the COVID-
19 pandemic, and the city began receiving those taxes in the current fiscal year.
• Supplemental property taxes are $63,000 higher when compared with the prior year due to a slight
increase in property resales.
• Property taxes received from the former redevelopment area (both the Village and South Coastal Carlsbad
areas) are up by $132,000.
• Unitary taxes received for property used for regional utilities are up by $96,000 or 18% percent.
Sales Taxes ($30.1 million) For the first nine months of the fiscal year, sales tax
revenues are $267,000 (or 1%) lower than the same period in the previous fiscal
year. Sales tax revenues for the year represent the city’s first advance for the first
calendar quarter of 2021, the city’s sales tax revenues for the third and fourth
calendar quarters of 2020, a large portion of the city’s second calendar quarter of
2020 sales tax revenues, a portion of the clean-up for the first quarter of calendar
year 2020, and clean-up revenue from calendar year 2019.
Small businesses in the State of California were given additional time to remit their first and second calendar
quarter 2020 sales tax payments. The city saw payments for those deferrals in the first half of the current fiscal
year, helping to offset the expected decrease in revenues due to COVID-19. A similar program was offered again
in December 2020 for payments and returns due from December 2020 through April 2021, which may be
impacting the city’s sales tax revenues.
For sales occurring in the fourth calendar quarter of 2020 (the most recent data available), key gains were seen in
automobile dealers, general merchandise stores, including warehouse clubs and supercenters, clothing stores,
jewelry, luggage and leather goods stores, and shoe stores. During the same period, key declines were seen in
restaurants and other eateries, other miscellaneous store retailers, gasoline stations, petroleum and coal products
manufacturing, navigational manufacturing, and control instruments manufacturing. The largest economic
segments in the city are automobile dealers, general merchandise stores, restaurants, clothing stores and grocery
stores. Together, they generate 66% of the city’s sales tax revenues.
Transient Occupancy Tax ($8.5 million) The city’s third highest General Fund
revenue source on an annual basis is Transient Occupancy Tax (TOT or hotel tax),
estimated at $18.5 million for the current fiscal year. A tax of 10% of the rent
amount is collected on all occupancies less than 30 days (transient) in duration and
remitted to the city one month in arrears. TOT collected for the first nine months
of the new fiscal year reflects a decrease of $10.1 million, 54% less than the
previous year. Due to the COVID-19 pandemic, many hotels have remained closed or partially closed during some
or all of the first nine months of the fiscal year including three of the largest hotels – the Omni La Costa, the Park
Hyatt Aviara and the LEGOLAND hotels. Additionally, the LEGOLAND park remained closed and group events have
been canceled, which have had a large impact on leisure and business travel. Year-to-date TOT figures represent
taxes collected on hotel receipts through the month of February.
Currently, there are 4,812 hotel rooms (an increase in the current year due to the opening of Home2Suites by
Hilton), 668 timeshares and 317 registered short-term vacation rentals. Of the total hotel rooms, 4,666 were
available in February 2021. The average occupancy of hotel rooms over the most recent 12 months has been 36%,
which is lower than last year’s average of 69% for the 12 month period ending March 2020.
54%
1%
April 27, 2021 Item #1 Page 5 of 24
Monthly Financial Report ________________________________________________________________ 3
Business License Tax ($4.1 million) All entities doing business in the City of Carlsbad
are required to have a valid business license. Business license revenue is estimated
at $5.0 million for the current fiscal year. Business license revenues are $205,000
higher than the previous fiscal year. The year over year increase was caused by an
increase in the revenue used to calculate some business license taxes, partially
offset by the fact that some businesses have closed due to COVID-19.
There are currently 9,514 licensed businesses operating within the city, 416 less than the prior year. The majority,
6,375, of taxed businesses are located in Carlsbad, with 2,662 of these businesses being home-based businesses.
Interdepartmental Charges ($3.8 million) Interdepartmental charges are $139,000,
or 5%, higher than last year. These charges are generated through engineering
services charged to capital projects (up $36,000 due to additional staff time charged
to capital projects); reimbursed work for other funds (up $23,000 for more repair
work performed and charged to the Carlsbad Municipal Water District); and
miscellaneous interdepartmental expenses charged to funds outside the General
Fund for services performed by departments within the General Fund (up $80,000), the result of increased
maintenance, operations and associated personnel costs.
Income from Investments and Property ($3.6 million) For the first eight months of
the new fiscal year, income from investments and property is down $1.9 million
compared to the previous fiscal year.
Interest income is down $755,000 for the year due to a 36.3% decrease in the
average yield on the portfolio for the year (a decrease in the yield from 2.1842% last
fiscal year to 1.3913% in the current fiscal year) offset partially by a 2.0% increase in
the average cash balance. In March 2020, the Federal Reserve effectively cut its benchmark rate by a full
percentage point to zero. In December 2020, the Federal Reserve maintained its target for the federal funds rate
at a range of 0% to 0.25%. This is a decrease from the prior year from a range of 1% to 1.25%. The city is seeing
many of their higher rate bonds and notes being called, causing the city to have to invest in lower yield securities.
This will continue to drive the yield on the portfolio lower in the upcoming months.
Income from property sales and rentals is down by $1.2 million for the year, primarily due the sale of the former
Fire Station 3 to a private party last fiscal year as well as the impact of COVID-19 on park, facility and pool rentals.
Other Intergovernmental Revenues ($2.5 million) Other intergovernmental
revenues include miscellaneous receipts received from the state or federal
governments, as well as local school districts. Included in the funding received this
year is $1,427,000 in COVID-19 CARES Act assistance, $317,000 for Operation
Collaboration, a $250,000 homeless program grant, $173,000 in homeowners’
exemption, $133,000 of senior nutrition grants, $53,000 for a library literacy services
grant, $35,000 for a State Coastal Grant, $33,000 for mandated costs from the State
of California and some smaller intergovernmental revenues.
Franchise Taxes ($2.3 million) Franchise taxes are generated from public utility
sources, such as San Diego Gas & Electric (SDG&E), trash collection franchises, and
cable franchises conducting business within city limits. Franchise tax revenue is
estimated at $5.5 million for the current fiscal year. Year-to-date franchise taxes are
$17,000, or 1%, higher than the same period last year.
1%
35%
4%
5%
219%
April 27, 2021 Item #1 Page 6 of 24
Monthly Financial Report ________________________________________________________________ 4
The increase is primarily driven by an increase in trash collection revenue of $13,000, an increase of $8,000 in
Cable television franchise revenues (Spectrum and AT&T) and a $6,000 increase in other franchise taxes when
compared to the same period in the prior fiscal year. These increases are partially offset by the reclassification of
fiber optic antenna system lease payment fees from franchise fees (last fiscal year) to income from investments
and property (current fiscal year) resulted in a $10,000 decrease in revenue from the prior year.
Approximately 47% of the total franchise tax revenue anticipated for the year will be collected from SDG&E during
the month of April 2021.
Development Related Revenues ($2.2 million) Development related revenues,
which include building permits, planning fees, building department fees, and
engineering fees reflect a significant, but expected decrease for the first nine
months of the new fiscal year.
Development related fees are paid by developers to cover the cost of reviewing and
monitoring development activities, such as plan checks and inspections. Engineering plan check fees are one of
the first fees paid during the initial stages of development.
One source of development related revenue is building permits, which are 9% lower than last fiscal year’s revenues
levels. Building permit revenue is derived from the combination of a decrease in the valuation of new construction
and a decrease in commercial/industrial permitting, offset by an increase in the number of new residential permits
to date. The year-to-date valuation of new construction in the current fiscal year is $163.0 million, while it was
$174.8 million in the previous fiscal year, a 7% decrease. In March, Carlsbad issued building permits for 20
residential units, a decrease from the 30 residential units permitted in during the month of February 2021. In the
northwest quadrant, building permits were issued for 11 residential dwelling units: six permits were issued for
single family homes; and five permits were issued for second-dwelling units. In the southeast quadrant, residential
building permits were issued for two second-dwelling units. In the southwest quadrant, building permits were
issued for seven residential dwelling units, all seven were for condominiums as part of Phase 17 at Poinsettia 61
Treviso. For the current fiscal year, 210 residential permits have been issued, as compared to 198 residential
permits issued during the same period last year.
During the month of March, no commercial or industrial space permits were issued compared to 127,492 square
feet of commercial/industrial permits issued during the same period last year.
Ambulance Fees ($1.9 million) The city bills any individual who is transported in
one of the city’s ambulances. Through March 2021, receipts from ambulance fees
are down $272,000, or 12%, compared to last fiscal year. The decrease in revenue
is caused by a decrease in the number of transports during the first nine months of
fiscal year 2020-21 (3,898) versus fiscal year 2019-20 (4,388).
Other Revenue Sources ($1.3 million) Other revenue sources have increased by
$125,000 when compared to the prior year and include revenues received by the
city to offset the costs of special studies or projects for developers; reimbursements
for damage done to city streets, rights-of-way, and other city-owned property;
donations; reimbursement from the Gas Tax Fund for traffic signal maintenance;
and miscellaneous reimbursed expenses and refunds of prior year fees. The
increase to date was primarily driven by additional miscellaneous reimbursed expenses related to Innovate 78
($190,000), the Carlsbad Connector ($99,000), a settlement payment from Verizon ($78,000). The increase was
partially offset by an increase in miscellaneous accounts receivable write-offs, and reductions in loss recovery
revenues and miscellaneous revenues through the first nine months of the new fiscal year.
17%
12%
10%
April 27, 2021 Item #1 Page 7 of 24
Monthly Financial Report ________________________________________________________________ 5
Transfer Taxes ($1.1 million) When real property is sold, the County Assessor’s
Office charges a transfer tax. The transfer tax rate in San Diego County is $0.0011
multiplied by the selling price of the property. The city receives 50% of the transfer
tax charged for sales within the City of Carlsbad. Year-to-date revenues represent
six payments received by the city thus far in the fiscal year and have increased
significantly compared to the prior year receipts for the same period. Due to the
pent-up demand of sales hindered by COVID-19, extremely low interest rates and a nationwide shift to a more
remote workforce, the housing market is extremely strong in Southern California, impacting revenues to date.
Recreation Fees ($1.0 million) Recreation fees are generated through instructional
classes, camps, youth and adult sports, special events, parent participation
preschool, senior programs, and various aquatic programs. Recreation revenues
are down $1.1 million compared to last year at this time. This decrease was due to
cancellations across all programs due to the COVID-19 pandemic.
Other Charges or Fees ($834,000) Other charges or fees are generated through the
sale of city documents, such as staff reports, blueprints and copies; general fees
collected for false alarms, easements and agreements, weed abatement and kiosk
signs; audio/visual rental fees; and general services, such as mutual aid response,
mall police services, emergency response services, reports, etc. The increase from
the prior year of $382,000 was caused by an increase in mutual aid response
reimbursements and the timing of the city’s administrative fee for its work on
assessment districts and community facility districts. The increases were partially offset by decreases in copies,
audio visual fees at the libraries (as these fees were eliminated in 2019), and various other charges or fees.
Other Licenses and Permits ($754,000) Other licenses and permits consist of fire
protection services, right-of-way, lagoon, grading, hazardous uses, and other
miscellaneous permit revenues. These permits usually increase or decrease along
with increases or decreases in development activity and can vary significantly
throughout the year. The decrease to date was derived from lower right-of-way
permits, coastal development permits, grading permits, hazardous uses permits, fire
protection system permits, habitat mitigation plan permits and lagoon permits through March as compared to
last year at this time.
Fines and Forfeitures ($293,000) Fines and forfeitures represent fees collected for
code violations, parking citations, overdue fines, and returned checks. The city
recognizes revenues when payment of the fine or forfeiture is received, as opposed
to when the fine is imposed. The decrease to date is due to a large decrease in
parking citations, overdue fines (the libraries have been closed for in-person activity
due to the COVID-19 pandemic) and vehicle fines, offset partially by increases in
code violation and short-term vacation rental code violation revenue.
Vehicle License Fees ($84,000) Although the city is no longer receiving vehicle
license fee (VLF) revenues from the state, the revenues received in the current
fiscal year represent a retroactive clean-up payment received by the city for prior
fiscal years.
A detailed schedule of General Fund revenues is provided below.
51%
30%
30%
45%
85%
8%
April 27, 2021 Item #1 Page 8 of 24
Monthly Financial Report ________________________________________________________________ 6
REVENUE
REVENUE EXPECTED ACTUAL ACTUAL CHANGE FROM
ESTIMATE THROUGH FY 2020 FY 2021 YTD 2020 TO PERCENT
AS OF 03/31/21 03/31/21 AS OF 03/31/20 AS OF 03/31/21 YTD 2021 CHANGE
TAXES
PROPERTY TAX $74,218,000 $43,367,097 $42,240,241 $46,969,704 $4,729,463 11%
SALES TAX 36,393,200 29,370,123 30,331,626 30,064,901 (266,725)-1%
TRANSIENT OCCUPANCY TAX 18,463,000 18,148,663 18,576,576 8,521,128 (10,055,448)-54%
FRANCHISE TAX 5,512,000 2,171,907 2,310,454 2,327,411 16,957 1%
BUSINESS LICENSE TAX 4,990,000 3,611,049 3,918,091 4,123,326 205,235 5%
TRANSFER TAX 1,204,000 756,897 784,066 1,133,707 349,641 45%
TOTAL TAXES 140,780,200 97,425,735 98,161,054 93,140,177 (5,020,877)-5%
INTERGOVERNMENTAL
VEHICLE LICENSE FEES 50,000 50,000 91,208 83,951 (7,257)-8%
HOMEOWNERS EXEMPTIONS 350,000 175,175 179,589 173,248 (6,341)-4%
OTHER 593,008 113,020 554,531 2,371,900 1,817,369 328%
TOTAL INTERGOVERNMENTAL 993,008 338,195 825,328 2,629,099 1,803,771 219%
LICENSES AND PERMITS
BUILDING PERMITS 795,000 625,615 1,137,826 1,031,246 (106,580)-9%
OTHER LICENSES & PERMITS 1,019,000 845,611 1,073,532 753,932 (319,600)-30%
TOTAL LICENSES & PERMITS 1,814,000 1,471,225 2,211,358 1,785,178 (426,180)-19%
CHARGES FOR SERVICES
PLANNING FEES 367,000 303,866 295,075 254,604 (40,471)-14%
BUILDING DEPARTMENT FEES 850,000 696,343 783,294 620,155 (163,139)-21%
ENGINEERING FEES 565,000 435,199 477,796 338,652 (139,144)-29%
AMBULANCE FEES 2,830,000 2,245,355 2,183,676 1,911,247 (272,429)-12%
RECREATION FEES 2,195,000 2,185,318 2,083,964 1,011,116 (1,072,848)-51%
OTHER CHARGES OR FEES 608,000 386,929 451,225 833,542 382,317 85%
TOTAL CHARGES FOR SERVICES 7,415,000 6,253,010 6,275,030 4,969,316 (1,305,714)-21%
FINES AND FORFEITURES 515,000 412,832 419,096 293,400 (125,696)-30%
INCOME FROM INVESTMENTS & PROPERTY 7,482,000 3,465,008 5,547,554 3,608,923 (1,938,631)-35%
INTERDEPARTMENTAL CHARGES 4,955,962 3,614,862 3,684,605 3,823,986 139,381 4%
OTHER REVENUE SOURCES 1,108,000 790,835 1,188,098 1,312,651 124,553 10%
TRANSFERS IN 10,000 10,000 10,000 10,000 0 0%
TOTAL GENERAL FUND $165,073,170 $113,781,703 $118,322,123 $111,572,730 ($6,749,393)-6%
(1)
(1) Calculated General Fund revenues are 2 percent below estimates as of March 31, 2021.
GENERAL FUND
REVENUE COMPARISON
April 27, 2021 Item #1 Page 9 of 24
Monthly Financial Report ________________________________________________________________ 7
Expenditures
Total General Fund expenditures and encumbrances through the month of March 2021 are $126.3 million,
compared to $138.4 million at the same time last year. This leaves $66.1 million, or 34.4%, available through the
end of the 2020-21 fiscal year. If funds were spent in the same proportion as the previous year, the General Fund
would have 31.3% available.
Several transfers out of the General Fund were done earlier last year than this year contributing to the available
balance variance. Excluding the transfers out, contingencies, and non-departmental charges, the percentage
available at March 31, 2021 is 28.6%, slightly less than the 29.7% available at March 31, 2020.
The adopted General Fund budget for fiscal year 2020-21 decreased by $3.5 million due to the following factors:
• Increased personnel costs (increase of $3.7 million):
o $4.9 million in additional salary costs associated with previously negotiated and anticipated wage
increases
o $1.2 million decrease in other personnel costs (workers compensation, Medicare, unemployment and
disability benefits)
• Decreased maintenance and operations costs (decrease of $2.8 million):
o Small increase in internal service charges
o Decreases in:
▪ Travel
▪ Training
▪ Conferences
• Decreased transfers out of the General Fund:
o Decrease of $4.1 million in the annual transfer to the Infrastructure Replacement Fund
o Decrease of $600,000 in the annual transfer to the General Capital Construction Fund
o Increase of $500,000 for a transfer to the Golf Course Fund
o Decrease of $250,000 in the annual transfers to the city’s Lighting and Landscaping District #1 Funds
A detailed schedule of General Fund expenditures is provided on the following page.
April 27, 2021 Item #1 Page 10 of 24
Monthly Financial Report ________________________________________________________________ 8
ADOPTED WORKING
BUDGET BUDGET AMOUNT AVAILABLE %
DEPT DESCRIPTION FY 2020-21 FY 2020-21 (a)COMMITTED (b)BALANCE AVAILABLE (c)
POLICY AND LEADERSHIP GROUP
CITY ATTORNEY $1,987,318 $1,987,318 $1,379,000 $608,318 30.6%
CITY CLERK SERVICES 1,263,159 1,463,103 916,057 547,046 37.4%
CITY COUNCIL 586,317 612,717 328,011 284,706 46.5%
CITY MANAGER 2,153,294 2,278,723 1,521,413 757,310 33.2%CITY TREASURER 244,090 244,090 167,282 76,808 31.5%
COMMUNITY OUTREACH AND ENGAGEMENT 1,692,761 2,081,603 1,384,513 697,090 33.5%
TOTAL POLICY AND LEADERSHIP GROUP 7,926,939 8,667,554 5,696,276 2,971,278 34.3%
ADMINISTRATIVE SERVICES
FINANCE 5,989,716 6,814,074 4,633,553 2,180,521 32.0%
HUMAN RESOURCES 5,010,104 5,349,666 3,519,127 1,830,539 34.2%
INNOVATION AND ECONOMIC DEVELOPMENT 1,131,877 1,499,868 1,084,511 415,357 27.7%
TOTAL ADMINISTRATIVE SERVICES 12,131,697 13,663,608 9,237,191 4,426,417 32.4%
PUBLIC SAFETY
POLICE 44,593,457 46,589,732 34,331,497 12,258,235 26.3%
FIRE 27,173,120 27,908,566 21,613,152 6,295,414 22.6%
TOTAL PUBLIC SAFETY 71,766,577 74,498,298 55,944,649 18,553,649 24.9%
COMMUNITY SERVICES
COMMUNITY SERVICES ADMINISTRATION 581,849 641,849 452,537 189,312 29.5%
COMMUNITY DEVELOPMENT 10,781,168 12,348,755 8,800,963 3,547,792 28.7%
LIBRARY AND CULTURAL ARTS 13,291,868 14,027,630 8,959,270 5,068,360 36.1%
PARKS AND RECREATION 17,993,237 19,156,548 13,400,594 5,755,954 30.0%
TOTAL COMMUNITY SERVICES 42,648,122 46,174,782 31,613,364 14,561,418 31.5%
PUBLIC WORKS
PUBLIC WORKS ADMINISTRATION 1,786,198 1,986,625 1,460,042 526,583 26.5%
CONSTRUCTION MANAGEMENT & INSPECTIONS 2,893,903 3,019,590 2,053,919 965,671 32.0%
ENVIRONMENTAL MANAGEMENT 808,946 1,258,796 841,531 417,265 33.1%
FACILITIES 5,862,683 7,648,492 5,541,931 2,106,561 27.5%
TRANSPORTATION 7,410,972 8,160,301 5,558,005 2,602,296 31.9%
TOTAL PUBLIC WORKS 18,762,702 22,073,804 15,455,428 6,618,376 30.0%
NON-DEPARTMENTAL & CONTINGENCY
(d)OTHER NON-DEPARTMENTAL 1,876,000 18,902,522 3,178,472 15,724,050 83.2%
OPERATING TRANSFERS OUT 7,009,000 7,009,000 5,200,000 1,809,000 25.8%
CONTINGENCY 1,500,000 1,450,000 0 1,450,000 100.0%
TOTAL NON-DEPT & CONTINGENCY 10,385,000 27,361,522 8,378,472 18,983,050 69.4%
TOTAL GENERAL FUND $163,621,037 $192,439,568 $126,325,380 $66,114,188 34.4%
(a) Working budget includes the adopted budget, open encumbrances from the end of the prior fiscal year, and any carry forwards.
(b) Actual expenditures on a budgetary basis include encumbrances and exclude non-budgeted items.
(c) Amount available would be 31.3% if funds were spent in the same proportion as the previous year.
(d) Other non-departmental includes technology innovation, property tax administration fees, assessment district administration,
citywide litigation expenses, and other items not attributed to a specific department.
AS OF 03/31/21
EXPENDITURE STATUS BY DEPARTMENT
GENERAL FUND
April 27, 2021 Item #1 Page 11 of 24
Monthly Financial Report ________________________________________________________________ 9
Council Contingency
The City Council has allocated $1.5 million out of the General Fund budget for unanticipated emergencies or
unforeseen program needs. As of March 31, 2021, nothing has been authorized out of the council contingency
account; however, $50,000 was transferred to Community Development for an affordable housing gap analysis/
study as a result of resolution 2020-081, dated May 5, 2020 that was not previously appropriated.
Donations
Carlsbad Municipal Code 2.08.100 authorizes the city manager to accept donations on behalf of the city in an
amount or of value of up to $5,000 per donation. These donations shall be used in accordance with the donor’s
intent or added to the city’s contingency account. Below is a listing of all donations, excluding minor food
donations such as donuts, that have been accepted during fiscal year 2020-21:
Department Intention Qtr. 1 Qtr. 2 Jan.Feb Mar Qtr. 3 Total
Parks & Recreation Congregate Meals/Guest Donation $3,145 $4,059 $923 $988 $1,094 $3,005 $10,209
Parks & Recreation Home Meals Donation 4,478 4,593 931 1,613 1,453 3,997 13,068
Parks & Recreation Leo Carrillo Ranch Contribution Revenue Fund 877 998 45 192 5,916 6,153 8,028
Parks & Recreation Opportunity Grant Donations 2,646 1,535 341 394 1,253 1,988 6,169
Parks & Recreation Parks Maintenance Contribution Revenue Fund 1,900 2,750 350 3,400 4,125 7,875 12,525
Parks & Recreation Senior Center Contribution Revenue Fund 0 3,000 0 0 0 0 3,000
Subtotal - Parks & Recreation $13,046 $16,935 $2,590 $6,587 $13,841 $23,018 $52,999
Library & Cultural Arts Annual Friends Direct Donation $88,200 $0 $0 $0 $0 $0 $88,200
Library & Cultural Arts Book purchases 1,000 1,500 50 1,100 50 1,200 3,700
Library & Cultural Arts Gallery, TGIF and Arts Education support 38,400 0 0 0 0 0 38,400
Library & Cultural Arts Genealogy-related material 0 100 0 50 0 50 150
Library & Cultural Arts Library learning center's literacy program 0 1,000 0 0 0 0 1,000
Library & Cultural Arts Support for "A Very Jazzy Holiday with Jazzy
Ash"
0 6,800 0 0 0 0 6,800
Library & Cultural Arts No preference 120 2,100 100 0 0 100 2,320
Subtotal - Library & Cultural Arts $127,720 $11,500 $150 $1,150 $50 $1,350 $140,570
Fire Personal protective equipment $0 $200 $0 $0 $0 $0 $200
Fire Food for crews 700 3,503 110 140 0 250 4,453
Subtotal - Fire $700 $3,703 $110 $140 $0 $250 $4,653
Facilities Hand Sanitizer $0 $0 $0 $0 $1,649 $1,649 $1,649
Subtotal - Fire $0 $0 $0 $0 $1,649 $1,649 $1,649
Total Donations $141,466 $32,138 $2,850 $7,877 $15,540 $26,267 $199,871
Donations
April 27, 2021 Item #1 Page 12 of 24
Monthly Financial Report ________________________________________________________________ 10
Water Enterprise
Revenues
• A 3% increase in water volume sales and 2% increase in water rates (beginning in January 2021)
have led to higher water delivery revenues.
• Interest earnings have decreased year-over-year due to a 36.3% decrease in the yield of the
Treasurer’s portfolio coupled with a slight decrease in the average cash balance.
• An increase in property taxes from higher current year property valuations as well as increased
collections of previous year’s property taxes.
• The decrease in fines, forfeitures and penalties was driven by lower late fee revenue. Under the Governor’s
COVID-19 executive order, the Carlsbad Municipal Water District has not been shutting water off for
nonpayment. Also, Carlsbad Municipal Water District has been waiving all late fees as a result of COVID-19.
• The increase in other revenues was due to $1.7M refund from the San Diego County Water Authority for the
Carlsbad Municipal Water District’s share of damages awarded for rates that were unlawfully assessed between
2011 and 2014.
Expenses
• The decrease in staffing expenses was driven by the allocation of workers’ compensation partially
offset by a increased overtime hours and temporary labor.
• Higher interdepartmental expenses have resulted from increased personnel related costs, and
maintenance and operations costs for shared services.
• Purchased water expenses have increased from the prior year due to a 2.8% rate increase in the
variable cost of water purchased from the San Diego County Water Authority (SDCWA) combined
with an increase of 2.1% in the amount of water purchased.
• Outside services decreased due to a nonrecurring pipeline repair and valve replacement on Avenida Encinas.
• Miscellaneous expense decreased from higher purchases in office equipment and parts in prior year.
• A planned purchase for an industrial vacuum truck increased capital outlays as compared to prior year.
CHANGE FROM
BUDGET YTD (*) YTD (*) YTD 2019-20 TO PERCENT
FY 2020-21 3/31/2020 3/31/2021 YTD 2020-21 CHANGE
REVENUES:
WATER DELIVERY 40,113,000$ 29,571,808$ 30,796,226$ 1,224,418$ 4.1%
INTEREST 550,000 479,178 322,615 (156,563) -32.7%
MISC. SERVICE CHARGES 322,000 239,637 231,957 (7,680) -3.2%
PROPERTY TAXES 3,827,600 2,476,706 2,793,273 316,567 12.8%
FINES, FORFEITURES & PENALTIES 303,000 201,339 4,415 (196,924) -97.8%
OTHER REVENUES 469,000 343,722 2,018,304 1,674,582 487.2%
TOTAL OPERATING REVENUE 45,584,600 33,312,390 36,166,790 2,854,400 8.6%
EXPENSES:
STAFFING 3,653,470 2,708,020 2,691,952 (16,068) -0.6%
INTERDEPARTMENTAL SERVICES 2,744,695 1,985,668 2,036,122 50,454 2.5%
PURCHASED WATER 25,400,000 17,168,748 18,012,390 843,643 4.9%
MWD/CWA FIXED CHARGES 6,860,000 4,826,974 5,035,472 208,498 4.3%
OUTSIDE SERVICES/MAINTENANCE 2,962,302 709,368 616,696 (92,672) -13.1%
DEPRECIATION/REPLACEMENT 4,200,000 2,932,500 3,150,000 217,500 7.4%
MISCELLANEOUS EXPENSES 961,476 610,614 478,956 (131,658) -21.6%
CAPITAL OUTLAY 430,712 16,826 413,198 396,372 2355.7%
TOTAL OPERATING EXPENSES 47,212,655 30,958,718 32,434,786 1,476,068 4.8%
OPERATING INCOME/(LOSS)(1,628,055)$ 2,353,672$ 3,732,004$ 1,378,332$ 58.6%
(*) Adjusted to reflect timing differences for water purchases and depreciation.
MARCH 31, 2021
WATER OPERATIONS FUND
9%
3%
April 27, 2021 Item #1 Page 13 of 24
Monthly Financial Report ________________________________________________________________ 11
Wastewater Enterprise
Revenues
• Charges for current services were lower than in the prior year due primarily to lower commercial
customer water usage related to COVID-19 restrictions. Commercial/industrial wastewater rates in
Carlsbad are based on water usage. The decrease was partially offset by a 3% rate increase that
began in January 2021, and an increase in development throughout the city.
• Interest earnings decreased due to the combination of a 36.3% decrease in the yield of the
Treasurer’s portfolio and a 12.2% decrease in the average cash balance.
• The increase in other revenues is primarily due to a one-time reimbursement from the City of Oceanside for
wastewater bypass services rendered during a storm event.
Expenses
• The decrease in staffing expenses was due primarily to a decrease in workers’ compensation and
health insurance expense.
• Encina plant services to date was a combination of actual expenses and an estimate of the annual
Encina expense prorated monthly.
• The increase in outside services was due to sewer rehabilitation costs for three sewer mains in
need of service.
• The decrease in miscellaneous expenses is due to decreases in conferenece travel and lower heat and light
utility expenses as compared to prior year, offset by increases in parts and chemicals.
• The decrease in capital outlay expenses was due to a nonrecurring vehicle purchases in the prior fiscal year.
CHANGE FROM
BUDGET YTD*YTD*YTD 2019-20 TO PERCENT
FY 2020-21 3/31/2020 3/31/2021 YTD 2020-21 CHANGE
REVENUES:
CHARGES FOR CURRENT SERVICES 14,039,000 10,709,714 10,223,262 (486,452) -4.5%
INTEREST 75,000 156,553 96,559 (59,994) -38.3%
OTHER REVENUES 203,000 120,572 243,311 122,739 101.8%
TOTAL OPERATING REVENUE 14,317,000 10,986,839 10,563,132 (423,707) -3.9%
EXPENSES:
STAFFING 2,462,740 1,658,221 1,628,425 (29,796) -1.8%
INTERDEPARTMENTAL SERVICES 1,427,715 978,328 1,046,497 68,169 7.0%
ENCINA PLANT SERVICES 4,300,000 2,663,818 3,225,000 561,182 21.1%
OUTSIDE SERVICES/MAINTENANCE 1,429,361 264,219 273,958 9,739 3.7%
DEPRECIATION/REPLACEMENT 5,000,000 2,737,500 3,750,000 1,012,500 37.0%
MISCELLANEOUS EXPENSES 794,090 424,802 386,614 (38,188) -9.0%
CAPITAL OUTLAY 104,000 46,243 28,987 (17,256) -37.3%
TOTAL OPERATING EXPENSES 15,517,906 8,773,131 10,339,481 1,566,350 17.9%
OPERATING INCOME/LOSS (1,200,906) 2,213,708 223,651 (1,990,057) -89.9%
(*) Adjusted to reflect timing differences for Encina quarterly invoices and depreciation.
MARCH 31, 2021
WASTEWATER OPERATIONS FUND
4%
18%
April 27, 2021 Item #1 Page 14 of 24
1
Third Quarter, Fiscal Year 2020-2021 April 20, 2021
The following scan provides an overview of key economic indicators for January, February, and March 2021
2
Job Postings (Source: EMSI, January - March 2021)
10,607
There were 10,607 unique job pos���in Carlsbad between January and March, an increase of 1,065 pos���from the previous
3
According to an April 2021 sen��nt survey of Carlsbad
businesses with 168 responses, access to capital con���
to be a serious concern. Two of the top three challenges for
businesses are related to lack of revenue: lack of customers
and access to capital.
Eighty percent of respondents indicated a decrease
in revenue related to COVID-19. Sixty-six percent of
respondents indicated they experienced a decrease in
revenue of more than 25%. Both of these indicators are
higher than responses to a similar survey in November
2020, con����the e�ects of the pandemic are s��
4
INCOME + HOUSING
Median Household Income (Source: 2018 ACS 5-Year Estimates, the latest year available)
5
TOURISM
6
BUSINESS ACTIVITY
Business Licenses (Source: City of Carlsbad)
7
COMMERCIAL REAL ESTATE
Market Vacancy Rates and Rent per Square Foot (Source: CoStar, March 2021)
Commercial vacancy rates have generally improved through the
pandemic. The industrial vacancy rate is now at 9.3%, compared
8
INDUSTRIES
Largest Industries (Source: EMSI)
9
INDUSTRY CLUSTERS
Life Sciences (Source: 2019 Biennial Business Report and 2020 Carlsbad Industry Cluster Update)
10
INNOVATION
Patents (Source: 2020 Carlsbad Industry Cluster Patent Update)
Economic and Financial Update
Third Quarter –Fiscal Year 2020-21
Laura Rocha, Deputy City Manager, Administrative Services
Matt Sanford, Economic Development Manager
Ryan Green, Finance Director
April 27, 2021
Economic Update
•Timeframe analyzed
–Third quarter FY2020-2021 (January –March 2021)
•National Context
•State Context
•Local Data
National Trends
•After a significant recovery in the third quarter, the fourth
quarter shrank considerably due to a COVID-19 case surge
–Improving employment and activity throughout the country
this quarter are positive indicators that we will see
improvement moving forward
•Personal income and consumer spending has fluctuated wildly,
with a notable spike in January due to stimulus payments
•Forecasting is still difficult but because of rapid vaccine roll out,
most projections show continued recovery
U.S. Gross Domestic Product
•GDP
Real GDP: Perc,ent Change from Preceding Quarte-r
35
25
15
5
-5
-15
-25
-35
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018
U.S. Bureau of Economic Analysis
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020
Seasonally adjusted at annual rates
GDP by StateReal GDP: Percent Change at Annual Rate, 2020:Q3-2020:Q4
U.S. Bureau of Economic Analysis
MA
4 .7
Quintile growth rates
• 5.6% to 9.9%
• 4. 7 % to 5.6%
• 3.8 % to 4 . 7%
D 3.4% to 3.8%
D 1.2% to 3.4%
U .S. growth rate = 4 .3%
Personal Income by StatePersonal Income: Percent Change at Annual Rate, 2020:Q3-2020:Q4
,o ~-1>Cc,
HI I'\.
-1s.4 V
U.S. Bureau of Economic Analysis
MA-13.8
Quintile growth rates
• 1.0% to 16.7%
-l.0%to 1.0%
D -6.6% to -1.0%
D -11.2% to -6.6%
D -16.1% to -11.2%
U.S. growth rate= -6.8%
Changes to Personal IncomeMonth-to-Month Change in Cons1um1er Spending
9
8
7
i6
5
+,.II 4
C: 3 w u 2 L.. w a.. 1
0 ----1
-2
-3
-4
Oct" Nov ..
• Consumer spending
U.S. Bureau of Economic Anafysis
Dec" Jan. Feb.
■ Go1ods ■ Services
Season a I ly adjusted
Economic Uncertainty
•Declining case rate and rapid vaccine deployment have yielded
positive outlooks, with the county of San Diego now in the
Orange tier
•Reopening continues in all sectors
•June 15 end-date for moving beyond the tiered reopening
blueprint may result in more summer activity than last year
•Innovation economy sectors, like life-sciences, technology, and
manufacturing continue to expand
•Employment trends vary by sector, with some noting difficulty
in rehiring
Carlsbad Economy
•Carlsbad’s GRP was $15.3 billion in 2020
•GRP increased $800 million from the previous year
•Certain industry clusters, like life sciences continue to do well
$15.3 Billion
Carlsbad Unemployment
•California unemployment rate 8.3% -a 0.2% monthly increase
•County unemployment rate 6.9% -a 0.3% monthly increase
•Carlsbad unemployment rate 5.6 % -a 0.3% monthly increase
0.00%
5.00%
10.00%
15.00%
20.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Unemployment Rate Comparison
Carlsbad North County Avg w/o Carlsbad
San Diego County California
0.00%
5.00%
10.00%
Jan Feb Mar
North County Unemployment Rate Q1 -2021
Carlsbad Escondido
Oceanside San Marcos
Vista North County Avg w/o Carlsbad
San Diego County Califonia
Carlsbad Jobs
•October through December saw 10,607 unique job postings
•Increase of 1,065 from previous quarter
•Continued upswing in hiring in
–Manufacturing
–Administrative Services
–Professional, Scientific & Technical
•Some employers in Accommodation and Food Services are
noting trouble filling jobs
Carlsbad Tourism
•Private events are allowed as of April 15
•Compared to March 2019
–Occupancy is still down 21%
–Average Daily Room Rate is down nearly $52
0.0
20.0
40.0
60.0
80.0
100.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Hotel Occupancy 2020, 2021 YTD
City of Carlsbad San Diego County, CA
City of Oceanside, CA City of Newport Beach, CA
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Average Daily Room Rate, 2020, 2021 YTD
City of Carlsbad San Diego County, CA
City of Oceanside, CA City of Newport Beach, CA
Commercial Real Estate
•Vacancy rates for industrial properties are down to 9.3%
•Vacancy rates for office properties are up to 14.7%
•Vacancy rates for retail properties are up to 8.6%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1
Vacancy Rates
Retail Office Industrial
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Retail Office Industrial Retail Office Industrial
Carlsbad North County w/o Carlsbad
Vacancy Rates Comparison
2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1
Residential Real Estate
•Carlsbad home values continue to rise, with home values now at $1.04 million
•Zillow’s forecast predicts there will be a rise of 4.6% this year
•The continued rise in home values is generally attributed to constrained
supply, low interest rates, and a strong demand in the region
$800,000
$850,000
$900,000
$950,000
$1,000,000
$1,050,000
$1,100,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Median Home Price
2019 2020 2021
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Median Home Price Comparison
Carlsbad North County Avg w/o Carlsbad
Key Insights
•Most indicators are pointing to continued economic recovery
–Reduced restrictions on businesses
•San Diego County in “Orange Tier”
•Tiered reopening set to expire on June 15
–Low case rates
•2.3% testing positivity
–Rapid vaccine distribution
•Seventy percent of goal (1.39 million San Diegans) have received one dose
•Forty-six percent of goal (936,000 San Diegans) are fully vaccinated
–Continued relief programs
•PPP, EIDL, California Stimulus Grant have funds remaining
Key Insights
•The economic toll has had disparate impacts
•Many employers are feeling confident about the future but
have catching up to do
•Innovation firms continue to expand
•Tourism firms may take longer to fully recover
–Leisure travel could rebound to near-normal levels soon
–Group travel likely to take longer to recover
–Impacts city revenue that is received in sales tax and TOT
General Fund revenues
17
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
Property tax Sales tax Transient
occupancy tax
Other taxes Income from
inv. and
property
Development
related
revenue
Other revenues
FY 2019-20
FY 2020-21 Expected
FY 2020-21 Actual
General Fund revenues vs. expectations
18
Revenue category
Expected
FY 2020-21
Actual
FY 2020-21 $ difference % difference
Property tax $43,367,097 $46,969,704 $3,602,607 8%
Sales tax 29,370,123 30,064,901 694,778 2%
Transient occupancy tax 18,148,663 8,521,128 (9,627,535)-53%
Other taxes 6,539,853 7,584,444 1,044,591 16%
Income from inv. and property 3,465,008 3,608,923 143,915 4%
Development related revenue 2,061,023 2,244,657 183,634 9%
Other revenues 10,829,936 12,578,973 1,749,037 16%
Total $113,781,703 $111,572,730 ($2,208,973)-2%
General Fund revenues through March 31
19
Revenue category FY 2019-20 FY 2020-21 $ change % change
Property tax $42,240,241 $46,969,704 $4,729,463 11%
Sales tax 30,331,626 30,064,901 (266,725)-1%
Transient occupancy tax 18,576,576 8,521,128 (10,055,448)-54%
Other taxes 7,012,611 7,584,444 571,833 8%
Income from inv. and property 5,547,554 3,608,923 (1,938,631)-35%
Development related revenue 2,693,991 2,244,657 (449,334)-17%
Other revenues 11,919,524 12,578,973 659,449 6%
Total $118,322,123 $111,572,730 ($6,749,393)-6%
Property tax
20
•Majority of property taxes collected in December and April
•Assessor’s Office: assessed values in Carlsbad increased by 4.76%
•Increase in property tax revenue partially due to timing
differences and has been driven by increases in:
–Aircraft taxes –Delinquent taxes
–Unsecured taxes –Unitary taxes
–Redevelopment areas
•We expect property taxes for the fiscal year to exceed the
originally projected amount
Sales tax
21
•To date, the city has received:
–Clean-up payments from Q4 of 2019 and Q1 of 2020
–A large portion of Q2 2020 payments
–Payments from Q3 and Q4 of 2020
–First advance of Q1 2021 projected revenue
•Small decrease in FY 2020-21 through March was driven by:
–COVID-19 related economic impacts
–Offset by collection of Q2 deferrals, increased county pool
revenues
•Driven by stronger economic conditions, Avenu now projecting
that revenues will slightly exceed forecast for the year
Transient Occupancy Tax
22
•Revenues to date represent:
–Hotel stays through February
–Average occupancy during last 12 months: 36% compared to
69% for the same period in previous year
•Majority of TOT collected is from tourists vs. group events
•TOT revenues now projected to fall far short of original
expectations due to prolonged travel restrictions, closure of
LEGOLAND
Other taxes
23
Business license tax
•Proceeds moderately up when compared to the same period in the prior year
•Increase in gross receipts for some businesses where gross receipts is the factor to determine tax
•Offset partially by some businesses that have closed
Franchise taxes
•Majority comes in April from SDG&E
•Essentially the same as last year at this time
Transfer taxes
•Up significantly due to housing resale market and timing differences
Income from investment, property
24
•Down 35% for the year:
–Drop in yield on the portfolio of 36.3%
–Small increase in average cash balance of 2.0%
–Drop in property sales and rentals:
•Sale of Fire Station #3 last fiscal year
•Decrease in rentals (parks, facilities, etc.) of
$412,000
Development-related revenues
25
•In total, development related revenues are down by 17%
–Budget for these revenues were projected to be down by
24% for the fiscal year
•Residential permits issued for the year are 210 compared to 198
last year
•Commercial/industrial square feet of permits issued are 216,834
square feet as compared to 350,803 square feet last year
•Planning, building and engineering fees are all down for the year,
creating the negative variance
Other General Fund revenues
26
•Other intergovernmental revenues up due to COVID-19
CARES Act assistance and a homeless program grant
•Recreation revenues down $1 million compared to the
prior year due to reductions across all programs
•Ambulance fees are down $272,000 due to a decrease
in the number of billable transports
•Other General Fund revenues are up by $187,000
General Fund Expenditures Through Q3
27
$0M
$20M
$40M
$60M
$80M
$100M
$120M
Personnel Maintenance &
operations
Capital outlay Transfers out Innovation &
COVID-19
City Council
Contingency
Budget FY 2020-21
75% of Budget FY 2020-21
Expended & committed FY 2020-21
Expenditure type
(in millions)
Budget
FY 2020-21
75% of
Budget
Expended & committed
$.%
Personnel $105.1 $78.8 $75.4 72%
Maintenance &
operations 61.0 45.8 42.2 69%
Capital outlay 1.6 1.2 1.2 75%
Transfers out 7.0 5.3 5.2 74%
Innovation & COVID-
19 16.2 12.2 2.3 14%
City Council
contingency 1.5 1.1 0.0 0%
Total $192.4 $144.3 $126.3 66%
General Fund expenditures through Q3
28 *Expended and committed from July 1, 2019 through March 31, 2020
General Fund expenditures
29
•Adopted budget of $163.4 million plus encumbrances and other City Council directed additions to budget totals $192.4 million for FY 2020-21
•Through March, expenditures and encumbrances total $126.3 million compared to $142.1 million at same time last year
–Spend to date includes $8 million upfront CalPERS payment
–Departmental spending is continuously monitored and the city performs regular reviews of open encumbrances
Water and Wastewater Funds
30
Water
•When compared to same period in the year, revenues are up 9% and
expenses are up 5%
•Net operating income continues to be above plan due to share of
refunded damages awarded for unlawfully assessed rates in 2011-14,
higher water delivery revenue and lower outside services and
purchased water costs
Wastewater
•Revenues down 4%, expenses up 18% when compared to same period
in the year
•Net operating income ahead of plan due to and lower outside services
Golf Course Fund
31
Category FY 2019-20 FY 2020-21 $ change % change
Golf revenue $3,191,221 $4,472,607 1,281,386 40%
Food & beverage revenue 2,526,352 1,220,776 (1,305,576)-52%
Total revenue 5,717,573 5,693,383 (24,190)0%
Expenses, excluding depreciation 6,161,933 4,769,945 (1,391,987)-23%
Net cash activity ($444,360)$923,437 $1,367,797 308%
Category
Budgeted
FY 2020-21
Actual
FY 2020-21 $ change % change
Golf revenue $3,047,996 $4,472,607 $1,424,610 47%
Food & beverage revenue 1,339,867 1,220,776 (119,091)-9%
Total revenue 4,387,864 5,693,383 1,305,519 30%
Expenses, excluding depreciation 4,716,429 4,769,945 53,516 1%
Net cash activity ($328,565)$923,437 $1,252,003 381%
Next Steps
32
•Continue to monitor revenues and expenses
•Continue to issue monthly financial status report
•Continue quarterly updates to City Council through the end of
the local emergency
Questions & Discussion
33
Economic and Financial Update
Third Quarter –Fiscal Year 2020-21
Q2 General Fund revenues
34
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
Property tax Sales tax Transient
occupancy tax
Other taxes Income from
inv. and
property
Development
related
revenue
Other revenues
FY 2019-20
FY 2020-21 Expected
FY 2020-21 Actual
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
Property tax Sales tax Transient
occupancy tax
Other taxes Income from
inv. and
property
Development
related
revenue
Other revenues
FY 2019-20
FY 2020-21 Expected
FY 2020-21 Actual
Q1 General Fund Revenues
35