HomeMy WebLinkAbout2024-05-14; City Council; ; Economic and Financial Update for the Third Quarter of Fiscal Year 2023-24CA Review AZ
Meeting Date: May 14, 2024
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Zach Korach, Finance Director
zach.korach@carlsbadca.gov, 442-339-2127
Matt Sanford, Economic Development Manager
matt.sanford@carlsbadca.gov, 442-339-5987
Subject: Economic and Financial Update for the Third Quarter of Fiscal Year 2023-
24
Districts: All
Recommended Actions
1. Receive a report on the economic and financial update for the third quarter of fiscal
year 2023-24 and provide direction as appropriate.
2. Adopt a resolution authorizing the City Manager or designee to appropriate $5,200,000
from the General Fund to transfer to the Risk Management Fund and to appropriate
$5,200,000 from the Risk Management Fund for claims, settlement and reserves costs
to the Fiscal Year 2023-24 Operating Budget.
Executive Summary
The City Manager has committed to providing quarterly updates to the City Council on the city’s
economic outlook and finances. The update reviews the city’s economic and fiscal health and
serves as a measure of budgetary performance.
In this report, staff will provide a presentation on:
• National, state, regional and Carlsbad-specific economic data
• The city’s most recent financial data
This report also details recent economic trends and information on current impacts on our local
economy. In line with regional trends, Carlsbad experienced increases in revenues in almost all
categories when compared to the same quarter in the previous fiscal year, and expenditures
are in line with the prior year’s rate of spending.
May 14, 2024 Item #11 Page 1 of 31
Explanation & Analysis
Economic update
Carlsbad’s economy is diverse, has strong industry clusters and is a leader in innovation. The
City is home to five key industry clusters that are driving growth:
•Life sciences
•Information and communications technologies
•Clean technology1
•Sports innovation and design
•Hospitality and tourism
Carlsbad ended 2022 with a gross regional product of $17.1 billion, indicating that Carlsbad has
the largest economy in the county behind the City of San Diego. This marks 9.9% growth over
the previous year. In addition, among the county's 18 cities, Carlsbad’s hospitality and tourism
industry generates the second-highest amount of transient occupancy tax, the tax assessed on
local hotel, motel and short-term vacation rental stays.
Despite a few notable layoff announcements, the unemployment rate remains at a relatively
low 4.4% to end the quarter. The sentiment shared by business leaders suggests that the layoffs
that are occurring are a “right-sizing” of operations and that once they are conducted,
companies would be in a position to resume growth. Job posting data would suggest this trend
is accurate. In the first quarter, there were 1,100 more jobs posted in Carlsbad than the
previous quarter, totaling 8,856 unique job postings.
The labor market remains exceptionally tight, with a current ratio of approximately 1.5 open
jobs for every available worker. Overall, regional economic indicators suggest a healthy
economy with a positive outlook for the coming year, underpinned by strong labor demand and
strategic adjustments within key industries.
Commercial office and industrial vacancies have ticked up slightly in the last quarter. On the
industrial side, a few large properties account for the majority of the increase, and commercial
brokers have not expressed any concern about future leasing. The increase in office properties
is partially attributable to employers reducing office space to meet their current needs, leading
to an average reduction of about 15%. This is a trend taking place across the country as hybrid
work continues. Carlsbad has fared better than most cities in this area, which have experienced
a hollowing out in their office tenants, but staff will continue to monitor this trend.
As a whole, the U.S. economy continues to grow, up by 1.6% according to the advance estimate
for the first quarter of 2024. Nationally, consumer spending has remained stronger than most
forecasts had predicted. This has resulted in inflation increasing slightly to 3.5% nationally while
continuing to decrease at the local level, to 3.6% for San Diego County. Both rates are elevated
above the Federal Reserve’s target level of 2%. Many economists describe the current inflation
as stubborn and theorize interest rates will remain at their current level for the foreseeable
future, until inflation decreases further.
Some speculation among economists suggests the tumultuous nature of inflation in recent
months may be because investors tried to get ahead of a Federal Reserve decision on adjusting
1 Clean technology refers to a broad range of technologies that are intended to reduce or eliminate negative
environmental impacts and protect natural resources.
May 14, 2024 Item #11 Page 2 of 31
interest rates. This resulted in financial institutions prematurely lowering rates, which triggered
renewed consumer confidence and spending, which then resulted in a rise in inflation.
Despite the elevated interest rates, home values in Carlsbad continue to rise. The current
median home price in the city is $1.54 million, which is a 12% gain in the last year.
To ensure the city remains responsive to the changing landscape, staff have capitalized on
greater in-house economic data capabilities and analytics developed over the past year to
publish a quarterly economic scan. The complete economic scan for the third quarter of fiscal
year 2023-24 is provided as Exhibit 2.
Staff also publish relevant data on the city’s economic development site,
carlsbadca.gov/doingbusiness.
Financial update
The COVID-19 pandemic created immense uncertainty in the city’s revenues, most notably
those from the sales tax and transient occupancy tax. The fiscal year 2021-22 adopted budget
anticipated continued adverse impacts from the pandemic with moderate recovery. However,
General Fund revenues, specifically property, sales and transient occupancy tax revenues,
reached historically high levels in fiscal years 2021-22 and 2022-23. This was mainly due to the
staggered removal of COVID-19 restrictions, coupled with pent-up demand and inflationary
increases.
During the development of the fiscal year 2022-23 adopted budget, unprecedented inflationary
increases and its anticipated impacts on disposable income, personal savings, tourism and the
housing market drove the need for conservative revenue estimating and budget tightening. As
fiscal year 2022-23 came to a close, the primary revenue sources for the city’s General Fund
continued to persevere through the high inflationary period, sustained by strong consumer
demand.
Despite the recent positive historical revenue performance, as we continue through fiscal year
2023-24, monitoring the city’s revenues and expenditures and taking necessary proactive steps
toward mitigating economic uncertainty is critical.
The March 2024 Financial Status Report is provided as Exhibit 3.
May 14, 2024 Item #11 Page 3 of 31
Revenues
The General Fund’s top three revenue sources – property, sales and transient occupancy tax –
reached historic highs in fiscal year 2022-23. The fiscal year 2023-24 adopted budget took a
conservative approach at estimating these revenue sources because revenue growth appears to
be leveling off. However, year-over-year increases for property and sales taxes through the first
three quarters of the year are notably positive, given the amount of uncertainty in the
economy. The table below shows the differences in revenue when comparing the first half of
fiscal year 2023-24 with the same period in the prior fiscal year.
Fiscal year 2023-24 year-to-date revenues as of March 2024
compared to fiscal year 2022-23 as of March 2023
Revenue category Change ($) Change (%)
Transient occupancy tax -$1,178,041 -4%
Property tax $3,687,255 7%
Sales tax $2,459,972 6%
Charges for services $1,292,607 14%
Investments, property income $1,661,827 36%
Interdepartmental charges $252,715 6%
Licenses and permits -$41,508 -2%
Other revenue sources -$434,474 -42%
Fines and forfeitures 18,189 6%
Intergovernmental $741,039 85%
Other taxes -$40,212 -0%
Total revenues $8,419,369 6%
Major revenue sources
Property tax
The majority of property tax revenue is collected in December and April each year. Increases of
$3.7 million for the first three quarters of the fiscal year are due to an 8.1% increase in assessed
property values when compared to last year. Revenue from aircraft taxes has also increased
due to an increase in aircraft assessed values combined with an increase in the number of
aircrafts housed at the county’s Palomar-McCellan Airport.
Sales tax
For the first three quarters of the fiscal year, sales tax revenue is $2.5 million higher than the
same period in the previous fiscal year. To date, sales tax revenue represents receipts that were
collected for the third and fourth quarters of calendar year 2023 as well as the first advance of
the city’s sales tax revenue from the first calendar quarter of 2024.
The city experienced accelerated recovery in fiscal year 2021-22, after the impacts of the
COVID-19 pandemic. During fiscal year 2022-23, the city experienced historically high levels of
sales tax revenue driven by inflation and sustained by unwavering consumer demand. Staff are
anticipating that this growth in sales will level off and slow down this fiscal year.
May 14, 2024 Item #11 Page 4 of 31
The largest economic segments in the city are automobile dealers, general retail stores and
restaurants. Together, they generate approximately 70% of the city’s sales tax revenue. For
sales occurring in the fourth calendar quarter of 2023, the most recent data available shows key
year-over-year gains in new auto sales.
A significant portion of the year-over-year increase is attributed to the auto sales sector, and a
correction in methodology for how one taxpayer’s respective sales were being assigned and
reported to the California Department of Tax and Fee Administration. Staff have determined
that this correction will be applied to future reporting quarters (i.e., this correction results in
additional on-going revenue).
Although sales tax revenues have increased in total, growth has been tempered in numerous
industry groups. As of March 2024, the sale of general retail and food products remained
virtually unchanged from the previous year, while construction and business-to-business saw
notable declines. Staff will continue to monitor sales tax performance, particularly as inflation is
anticipated to continue dropping, and provide reports to the City Council accordingly.
Transient occupancy tax
Year-to-date transient occupancy tax figures represent taxes collected on overnight hospitality
stays through the month of February 2024. The revenue received in the first three quarters
represents a decrease of $1.2 million, or -4% when compared to the same year-to-date period
last year.
Occupancy rates in January, February and March 2024 averaged 70.6%, and represented
nominal change over the previous year, and average daily room rates were about 1% less than
the previous year. While occupancy rates remain stable, particularly compared to the decline
experienced during the second quarter, it will be important to monitor the impact of average
daily room rate fluctuations on occupancy rates moving forward.
Expenditures and encumbrances
Overview
Total General Fund expenditures and encumbrances – those funds either spent or committed
for specific expenses – through the month of March 2024 are $177.1 million, compared to
$165.3 million at the same time last year. The remaining budget available through the fiscal
year ending June 30, 2024, is $64.6 million, or 26.7%.
Excluding transfers out, contingencies, and non-departmental charges, the percentage of
available budget that is not earmarked for specific expenses, as of March 31, 2024, is 25.4%,
which is slightly less than the 28.3% available on March 31, 2023.
Pension funding
The costs of CalPERS, the state pension system for government employees and pension
funding, has been and will continue to be a challenge for participating agencies like the City of
Carlsbad. CalPERS administers the city’s defined benefit pension plan, and costs have been
increasing in past years as CalPERS addresses a structural shortfall in the plan’s assets to cover
unfunded liabilities.
In support of CalPERS strategies for plan sustainability and as part of the city’s strategic, long-
term approach to financial management, the city actively manages its unfunded pension
liability. The City Council has approved additional discretionary payments of $56.4 million since
May 14, 2024 Item #11 Page 5 of 31
fiscal year 2016-17 to decrease future costs related to the city’s unfunded actuarial liability and
strive to achieve a pension-funded status of 80% in accordance with City Council Policy 86.
As of June 30, 2022, CalPERS’ latest actuarial valuation report indicated the city had a combined
pension funded status of 74.6%, reduced from the prior year’s status of 86%. This reduction
was predominantly driven by CalPERS’ fiscal year 2021-22 investment loss of -6.1%. This
negative return will not impact the city’s required contributions until fiscal year 2024-25.
On Sept. 12, 2023, the City Council approved the establishment of a public agencies post-
employment benefits trust (known as a Section 115 Trust). This trust allows the city to stabilize
pension cost volatility, maintain local control over the city’s assets and earn a potentially higher
rate of return than if the assets were kept within the General Fund. The City Council approved
an initial trust contribution of $10 million on Sept. 26, 2023.
As of March 31, 2024, the city’s Section 115 Trust had a balance of $10,702,095, including the
initial $10 million contribution. Considering the assets held by CalPERS as well as the assets held
in the city’s trust, the combined pension funded status as of March 2024 is 75.8%. Staff will
continue to monitor the activities in the trust and report the city’s pension-funded status to the
City Council quarterly.
Enterprise funds
The city’s water and wastewater enterprise funds2 continue to operate in line with budgeted
expectations. Operations at the city’s municipal golf course, The Crossings at Carlsbad, have
remained relatively consistent year-over-year.
Risk Management Budget request
The city’s Risk Management Fund is responsible for the management of the city’s vehicle and
general liability insurance and associated insurance, claims, settlement and reserves expenses.
Risk management costs vary each year based on the number and type of claims. The majority of
claims are resolved quickly; however, some take multiple years to close.
The city closed several large claims during fiscal year 2023-24, some that began more than five
years ago. Additional funds and appropriations of $5,200,000 are needed for the fund to remain
solvent. Staff are requesting a one-time transfer from the General Fund to the Risk
Management Fund and that the necessary appropriations be allocated to the Risk Management
Fund to ensure sufficient funds and budget are available for the remainder of fiscal year 2023-
24.
2 Enterprise funds are government funds usually used to account for operations that are financed and operated in
a manner similar to private business enterprises, with the services provided paid for primarily through user
charges.
May 14, 2024 Item #11 Page 6 of 31
Fiscal Analysis
There is no fiscal impact associated with the third quarter financial update. However, if the
recommended action is approved, a $5,200,000 transfer from the General Fund to the Risk
Management Fund would be made. This transfer would be funded by the General Fund
Reserve, which, if approved, would have an estimated reserve ratio of 66% of the city’s General
Fund annual operating expenditures, or $56 million above the 40% reserve requirement set by
City Council Policy 74.
Next Steps
Staff will continue to develop tools to understand the economy, attract businesses and cultivate
talent and provide quarterly updates to the City Council on the economic outlook and the city’s
finances. Staff will return to the City Council in September 2024 to present a report on
carryforward budget items, which carry unspent funds budgeted to be spent in one fiscal year
into the budget for the following fiscal year. This report will also provide a comprehensive
review of fiscal year 2023-24’s fiscal activities.
With the City Council’s approval, The General Fund will transfer $5,200,000 to the Risk
Management Fund and appropriations for the increase in claims, settlement and reserves costs
will be allocated from the Risk Management Fund for the fiscal year 2023-24 operating budget.
Environmental Evaluation
This action does not require environmental review because it does not constitute a project
within the meaning of the California Environmental Quality Act under California Public
Resources Code Section 21065 in that it has no potential to cause either a direct physical
change or a reasonably foreseeable indirect physical change in the environment.
Exhibits
1.City Council Resolution
2.Carlsbad Economic Scan Third Quarter, Fiscal Year 2023-2024
3.March 2024 Financial Status Report
May 14, 2024 Item #11 Page 7 of 31
RESOLUTION NO. 2024-105
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER OR DESIGNEE TO
APPROPRIATE $5,200,000 FROM THE GENERAL FUND TO TRANSFER TO THE
RISK MANAGEMENT FUND AND TO APPROPRIATE $5,200,000 FROM THE
RISK MANAGEMENT FUND FOR CLAIMS, SETTLEMENT AND RESERVES
COSTS TO THE FISCAL YEAR 2023-24 OPERATING BUDGET.
WHEREAS, the City Council of the City of Carlsbad, California, has determined that risk
management costs related to claims, settlements and reserves have been increasing year over year in
recent history; and
WHEREAS, the city's Risk Management Fund has annual expenses that exceed the current
available funding sources, resulting in an annual fund deficit; and
WHEREAS, the Risk Management Fund requires additional funds and appropriations for the rest
of fiscal year 2023-24 in the amount of $5,200,000 to account for these increasing claims, settlements
and reserves costs.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the City Manager or designee shall be authorized to appropriate $5,200,000 to the
General Fund's 2023-24 operating budget to fund a transfer to the Risk Management
Fund.
3.That the City Manager or designee shall be authorized to appropriate $5,200,000 to the
Risk Management Fund's 2023-24 operating budget to ensure sufficient budget is
available_ for the additional claims, settlement and reserve costs incurred during fiscal
year 2023-24.
Exhibit 1
May 14, 2024 Item #11 Page 8 of 31
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 14th day of May, 2024, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
BLACKBURN, BHAT-PATEL, ACOSTA, BURKHOLDER, LUNA.
NONE.
NONE.
NONE.
KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
May 14, 2024 Item #11 Page 9 of 31
1
Third Quarter, Fiscal Year 2023-2024
The following scan provides an overview of key economic indicators for January, February, and March 2024
for the City of Carlsbad. This economic scan is updated quarterly to provide information that is relevant to
the health of Carlsbad’s economy. For regularly updated information regarding the Carlsbad economy and
economic development visit carlsbadca.gov/doingbusiness.
GROSS REGIONAL PRODUCT
Carlsbad GRP (Source: Lightcast, 2022. Data revised November 2023)
$17.1B In 2022, Carlsbad had the second largest gross regional product
in San Diego County at more than $17.1B (revised), only trailing
the City of San Diego. From 2021 to 2022, Carlsbad’s GRP grew by 9.9%. This growth was seen across almost all industry categories,
and was led by manufacturing, wholesale trade, hospitality, and
professional, scientific, and technical services.
JOBS
Unemployment Rate (Source: California Employment Development Department, March 2024 Report)
Carlsbad’s unemployment hovered ticked up to 4.7% early in the quarter, but then came back down to end the quarter at
4.4%. Nationally and locally, unemployment has remained fairly low. Despite a few notable layoffs, overall, unemployment in
Carlsbad remains low and employers continue to hire. Job opportunities continue to outnumber available workers, keeping
overall unemployment in Carlsbad and the San Diego region down. The unemployment rate in March was 5.3% at the state level
and 4.4% at the county level.
0
1
2
3
4
5
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Carlsbad Unemployment Rate 2022, 2023, 2024
2022 2023 2024
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Unemployment Rate Comparison Last 12-Months
San Diego County California
North County Avg w/o Carlsbad Carlsbad
Innovation + Economic Development Department
Gross Regional Product
Released May 14, 2024
May 14, 2024 Page 10 of 31
Exhibit 1
Exhibit 1
Exhibit 2
May 14, 2024 Item #11
2
Job Postings (Source: Lightcast, Jan. - March 2024)
8,856
There were 8,856 unique job postings in Carlsbad between January and March, an increase of about 1,100 jobs over the previous
quarter. Over the quarter, 1,508 different Carlsbad employers
posted open positions, an increase of about 100 employers. The
median advertised salary for these postings was $50,000, reversing
a trend of declining advertised wages. Of jobs posted, 70% indicated an education requirement of High School/GED or no requirement
listed. 68% of postings indicated less than a year of experience
or no experience was required, indicating there are a number of
entry-level jobs being posted.
TALENT + WORKFORCE
Education (Source: 2022 ACS 5-Year Estimates, the latest year available)
Carlsbad has established itself as having
the right workforce to fuel innovation
in tech and life sciences fields. Carlsbad
businesses can access talent from San
Diego County, Orange County, and even
southwest Riverside County. More than
60% of working-age residents hold a
bachelor’s degree, with nearly 25%
attaining an advanced degree. Outside of
some communities in central San Diego,
Carlsbad has the heaviest concentration
of households with degrees in science,
technology, engineering, and math
(STEM degrees). This local talent mix is
among the leading reasons that firms
choose Carlsbad.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Less than
High School
High School
Diploma
Some
College, no
Degree
Associate's
Degree
Bachelor's
Degree
Graduate or
Professional
Degree
Educational Attainment Comparison of
Population Over 25 Years Old
National California San Diego County Carlsbad
Nearby public and private universities
offer top-notch programs. Within a 30-
mile radius, more than a half-dozen
universities and colleges conferred
more than 40,100 degrees in 2023,
a number which continues to rise
on every campus in the region. The
Carlsbad business community works
closely with higher education partners
to align various education tracks
with local workforce needs.
Talent Pipeline
Job Postings This Quarter
May 14, 2024 Item #11 Page 11 of 31
3
CAPITAL
Interest Rates (Source: U.S. Department of the Treasury, March 2024)
The Federal Reserve maintained interest rates over the quarter, as both economic output and inflation remained higher
than expected. The Fed has signaled reluctance to pursue rate reductions until inflation decreases further, which may be
possible in 2024 if the economy slows and consumer spending decreases. In March, one-year rates were 5.03%. Ten-year
rates were 4.2%. 30-year rates were 4.34%. As of March, inflation figures for the San Diego area decreased to 3.6% (3.8%
less food and energy) over the past year. Nationally, inflation in March was 3.5% (3.8% less food and energy).
March 2023
One-year interest rate 4.64%
10-year interest rate 3.48%
30-year interest rate 3.67%
March 2024
One-year interest rate 5.03%
10-year interest rate 4.20%
30-year interest rate 4.34%
COMMERCIAL REAL ESTATE
Market Vacancy Rates and Rent per Square Foot (Source: CoStar, March 2023)
Commercial vacancy rates dropped across all three categories
this quarter. The industrial vacancy rate in March was 8.2%. The
office vacancy rate in March was 13%. Retail vacancy in March
was 5.4%.
Rental rates were relatively steady across all categories. Average
market rents per square foot, per year for office rates in March
were $38.07. Industrial rates in March were $22.42. Retail rates
in March were $46.18.
While Carlsbad office markets have remained relatively stable,
remote and hybrid work are predicted to continue impacting
office leases. With uncertain workforce dynamics and tight capital
markets, commercial developers are still largely holding off on
new office developments. This trend is predicted to continue.
8.2%
Industrial vacancy rate
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2021 2022 2023 2024
Carlsbad Commercial Vacancy Rates
Carlsbad Retail Carlsbad Office Carlsbad Industrial
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Retail Office Industrial Retail Office Industrial
Carlsbad North County w/o Carlsbad
Vacancy Rate Comparison
2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3
2022 Q4 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1
May 14, 2024 Item #11 Page 12 of 31
4
TOURISM
Occupancy averaged 66.16% in the third quarter, which is an increase over the same quarter for 2022 (65.3%). Over the past
year, data indicates a gradual normalizing in the hospitality sector, aligning with broader travel trends and consumer behaviors.
42 With 42 hotels in Carlsbad, tourism is a major industry in terms of
employment and economic impact. It is also a major contributor
to city revenue, through TOT and sales tax generation. Below
are several indicators reflecting the health of the city’s tourism economy.
Hotel Occupancy (Source: Smith Travel Research, March 2024 Report)
Carlsbad’s average daily room rate (ADR) remains higher than pre-pandemic levels, but is lower than the same quarter of 2023.
ADR averaged $193.81 in the third quarter, compared to $195.63 for the same quarter in 2023. Overall, the ADR trends through
the past year indicate a strategic pricing approach by hotels in Carlsbad to navigate the evolving travel landscape, balancing
between maximizing revenue during high demand periods and attracting guests during slower months.
Hotel Average Daily Room Rate (Source: Smith Travel Research, March 2024 Report)
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
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2020 2021 2022 2023 2024
Hotel Average Daily Rate Trend
0
10
20
30
40
50
60
70
80
90
100
Ja
n
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r
Ma
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2020 2021 2022 2023 2024
Hotel Occupancy Trend
0
20
40
60
80
100
Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24
Hotel Occupancy Last 12-Months
City of Carlsbad San Diego County, CA City of Oceanside, CA City of Newport Beach, CA
50
100
150
200
250
300
350
400
450
Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24
Average Daily Rate Last 12-Months
City of Carlsbad San Diego County, CA City of Oceanside, CA
Hotels in Carlsbad
May 14, 2024 Item #11 Page 13 of 31
5
INCOME + HOUSING
Median Household Income (Source: 2022 ACS 5-Year Estimates, the latest year available)
Median household income in Carlsbad continues to exceed county income levels. The median income for a household in
Carlsbad in 2022 was $146,596, (adjusted for inflation), which was $21,927 higher than the previous year, and $47,668
more than the county median household income. Carlsbad has generally outpaced the region in terms of household
income growth.
Median Home Price (Source: Zillow Home Value Index - March 2024)
There was a moderate rise in home values this quarter despite elevated interest rates. Steady consumer demand kept
values on an upward trajectory for most of the year. The current median home price is $1.54 million, an increase of 12%
over the last year. Residential Realtors expect an uptick in home sales over the next quarter as home buyers start to resume
looking for new homes, reversing a trend of home buyers holding off until interest rate decreases.
$600,000.00
$700,000.00
$800,000.00
$900,000.00
$1,000,000.00
$1,100,000.00
$1,200,000.00
$1,300,000.00
$1,400,000.00
$1,500,000.00
$1,600,000.00
2020 2021 2022 2023 2024
Carlsbad Median Home Price
$-
$200,000.00
$400,000.00
$600,000.00
$800,000.00
$1,000,000.00
$1,200,000.00
$1,400,000.00
$1,600,000.00
$1,800,000.00
Median Home Price Comparison, Last 12-Months
Carlsbad Escondidio Oceanside San Marcos Vista
May 14, 2024 Item #11 Page 14 of 31
6
BUSINESS ACTIVITY
Building Permits (Source: City of Carlsbad, March 2024)
Between January and March, permit activity continued to
decrease for residential building permits (769). Residential
permits issued continues to fall, a trend largely attributable
to a decline in demand for new photo-voltaic systems as a
result of the State of California’s changes to net-metering
rules.
Commercial permits issued (89) marked a slight increase
over the same quarter of 2022.
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600
800
1000
1200
1400
1600
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2021 2022 2023 2024
Building Permits Issued
Q1 Q2 Q3 Q4
Business Licenses (Source: City of Carlsbad, March 2024)
There were a total of 2,316 business licenses issued last quarter,
including 1,024 non-residential, 585 residential, and 707 outside-the-
city licenses. This is an overall decrease of 181 total businesses over
the same quarter of 2023.
The number of licenses issued does not reflect the number of businesses
in Carlsbad as a business may carry multiple licenses, short-term
vacation rentals are required to get a license, and businesses outside of
Carlsbad that do business in the city or with the city are required to get
a license. It is estimated that there are approximately 6,630 businesses
in Carlsbad, an increase of 241 total businesses over the previous year.
0
500
1000
1500
2000
2500
3000
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2022 2023 2024
Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
Carlsbad Businesses by City Council District
Business License Activity by District
May 14, 2024 Item #11 Page 15 of 31
7
BUSINESS ACTIVITY Continued
Largest Employers (Source: City of Carlsbad, March 2024)
The following is a list of the largest employers by City Council district based on information about total employment as
submitted by a business during the business license process.
New Businesses in Carlsbad (Source: City of Carlsbad, March 2024)
New business are defined as entities that have received a license for a location where they previously did not exist. This could also include existing businesses that have changed ownership or business license type. The information below
includes new non-home-based businesses in the city according to business license filings.
District 1
• Pretty Please Fashion
• Carlsbad Village Yoga Co-Op• Laguna Estates
• Carlsbad By the Sea
• Bayshire Carlsbad
District 2
• Viasat Inc
• Legoland California• Thermo Fisher
• lonis Pharmaceuticals
• North Coast Medical
District 3
• Costco
• Aerotek
• Hilton Garden Inn
• The Neurology Center of SoCal• Vons
District 4
• Omni La Costa
• La Costa Glen Carlsbad CCRC
• Glenbrook HC
• Ralphs Grocery Company• Vons
Harding Street Apartments The Exercise Coach of Carlsbad
Poki Poki-boba and Brewski
Paradise Pizza
Prim and Pawper
Edible Arrangements Campground
Kirstyn Odle Therapy Aesthetic Rituals
Hair by Sue Carcione
Happy Healthy Food
Ashley Aga
Cv Beauty Collective Sheilene Caron
Retro Nostalgia Collectibles Seaside Holistic Healing
Faded Barbershop
Super Fun Bungee
Lashed by Malia
Vuori Inc
Axiom Materials
The Mini Donut Company
Generations Escrow Corporation
Tires by the Sea
Fidelity National Title Company
Hyderabad Cafe Indian Cusine
Pho Central
Anna Crooks
Resonance Partners Consulting
Schingler Law
Gwl Direct 3209 Lionshead
Balanced Beast Physical Therapy
Nicole Heeren
Blessed Beyond Entertainment
Shoppiego
Paige Thompson Psyd Psychologist
June Skin Therapy
Hanjitech
Styles by Diana
Angie’s Place
Sugar Plus Shine
Modern Blonde Salon
Reece Roman Law
Siren Floral Co
Lateral Flow Consulting
O959 Solaris
Partow Technologies
Grantyougreatness Licensed Clinical
Social Worker
Sunset Therapy
Mainstrem West Bar and Grill
Valeries Taco Shop
United Medical Doctors Firstlight Homecare of Carlsbad
Happy Trails Auto Sales
Freedom Jiu Jitsu Academy
Sandip Madhav Md Medical CorpTherapy Up
Searchablecopy
United Surgery Center Carlsbad
A Line Boutique Megan Bendett About Face
District 1
District 4
District 3
District 2
May 14, 2024 Item #11 Page 16 of 31
8
INDUSTRY CLUSTERS
Life Sciences (Source: 2022 Biennial Business Survey and Industry Cluster Update)
The Life Sciences industry cluster employs 6,657 workers across 134 firms and experienced a 2.6% increase in employment
between 2018 and 2020. The cluster is 5.51 times more concentrated in Carlsbad than the national average and annual
wages per worker average $123,702.
San Diego County and California have experienced parallel employment growth in the Life Sciences cluster between
2010 and 2020. In the same ten-year period, employment in Carlsbad grew by 75%. Between 2016 and 2018, Carlsbad
experienced over 40% growth. Over the past two years (2018-2020), however, employment growth tapered off compared
to years prior.
Technology (Source: 22022 Biennial Business Survey and Industry Cluster Update)
The Information and Communications Technologies (ICT) cluster employs 9,008 workers across 343 firms in Carlsbad and is
2.75 times more concentrated in Carlsbad than the national average. Annual wages per worker average $136,254, and the
ICT industry cluster experienced a 3.3% increase in the number of jobs between 2018 and 2020.
San Diego County and California experienced steady parallel growth in the ICT cluster between 2010 and 2020. In the same ten-year period, Carlsbad experienced an initial decline in employment between 2012 and 2015; between 2015 and 2020,
employment in the ICT cluster has steadily trended upwards.
Cleantech (Source: 2022 2022 Biennial Business Survey and Industry Cluster Update)
Between 2018 and 2020, the number of workers employed at Cleantech firms increased by 22.2%. By 2019, the 48
Cleantech firms in Carlsbad employed more than 872 people. The average annual wage per worker is $109,779, and the
Cleantech industry cluster in Carlsbad is 4.66 times more concentrated than the national average.
Between 2010 and 2012, Carlsbad experienced an initial employment drop for the Cleantech industry followed by steady
growth between 2012 and 2020. Employment growth in California peaked in 2013 and has been on a steady decline since.
Growth in San Diego County also peaked in 2013, dropping by over 25% between 2013 and 2017. Since 2017, employment
in the Cleantech cluster for San Diego County has been on a steady increase.
Sports Innovation & Design (Source: 2022 Biennial Business Survey and Industry Cluster Update)
The Sports Innovation & Design industry cluster employs 1,804 workers across 116 firms and experienced a 16.3% decrease
in employment between 2018 and 2020. The cluster is 5.06 times more concentrated in Carlsbad than the national average
and annual wages per worker average $75,652.
Employment in the Sports Innovation & Design cluster has steadily declined since 2013 in Carlsbad. Both San Diego County
and California have declined steadily since 2015 and experienced sharp declines between 2019 and 2020, likely due to the
COVID-19 pandemic.
Hospitality & Tourism (Source: 2022 Biennial Business Survey and Industry Cluster Update)
Carlsbad’s Hospitality & Tourism cluster is about 1.35 times more concentrated in Carlsbad than the national average and
employs 9,179 people across 467 businesses. Hospitality & Tourism experienced a sharp 34% decrease in employment
between 2018 and 2020, driven by the effects of the COVID-19 pandemic between 2019 and 2020. Average annual wages
per worker remain low relative to other key industry clusters, with workers earning $31,315 on average.
Carlsbad, San Diego County, and California experienced sharp declines between 2019 and 2020, during which sub-clusters
like Theater Companies and Dinner Theaters, Amusement and Theme Parks, and Amusement Arcades were shut down to
mitigate the effects of the COVID-19 pandemic.May 14, 2024 Item #11 Page 17 of 31
9
INDUSTRY IMPACT
Largest Industries (Source: Lightcast, March 2024)
Carlsbad’s economy significantly exceeds the national average for jobs in manufacturing, accommodation & food services,
and professional, scientific & technical services. These sectors, which would include tech, life sciences, and other innovation
industries are generally more resilient to recessions, also represent significant job growth in the economy.
GRP by Industry
Industry size by employment
May 14, 2024 Item #11 Page 18 of 31
10
INNOVATION
Patents (Source: 2024 Carlsbad Patent Study)
The Carlsbad innovation economy is powered by the key industry clusters of Life Sciences, Information & Communications
Technology, Sports Innovation & Design and Clean Technology. The figure below shows consistently strong patent activity
over the past decade with an elevated level from 2017-2020. Patents are a key indicator of economic competitiveness and
growth. In the case of Carlsbad it also demonstrates the diversity of the economy along with other economic drivers such
as tourism.
Carlsbad Patents by Industry
0
200
400
600
800
1000
1200
1400
1600
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Carlsbad Patents by Year, 2013-2023
The highest number of patents
are issued in the broad
manufacturing category which
includes technology, electronics,
apparel, sporting goods, and
transportation. Complimenting
this are the patents issued in
the information category which
includes satellite, wireless, and
wired telecommunications.
Patents in these two categories
demonstrate a vibrant innovation
ecosystem.
Released May 14, 2024
The quarterly economic scan is developed by the City of Carlsbad Innovation & Economic Development Department.
For more information, visit carlsbadca.gov/doingbusiness, or contact the team at business@carlsbadca.gov.
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Patent Count per Year by Industry (2013-2023)
Administrative and Support and Waste Management and Remediation Services Agriculture, Forestry, Fishing and Hunting
Arts, Entertainment, and Recreation Construction
Educational Services Health Care and Social Assistance
Information Manufacturing
Professional, Scientific, and Technical Services Real Estate and Rental and Leasing
Retail Trade Transportation and Warehousing
May 14, 2024 Item #11 Page 19 of 31
Exhibit 3
This report summarizes the City of Carlsbad’s General Fund revenues and expenditures through March 31,
2024. It compares revenues and expenditures for the first nine months of fiscal year 2023-24 and fiscal year
2022-23. In addition, the financial status of the Water, Wastewater and Golf Course Enterprise Funds are
included. This report is for internal use only. The figures presented here are unaudited and have not been
prepared in accordance with Generally Accepted Accounting Principles.
General Fund Revenues
Property Taxes ($56.4 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 6.26% for fiscal
year 2023-24. This is the 11th 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. The increase in this year’s assessed values
is due to increases in the assessed values of residential and commercial properties in the city; the city saw a
smaller increase in industrial property values for the year. This is the ninth 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). Although increases in residential assessed values were recorded for fiscal year 2023-24, the
county is now experiencing historically low for-sale housing inventory with housing prices remaining steady.
The property taxes for the nine months of the fiscal year have increased by 7% as compared to the prior fiscal
year. The primary reasons for the increase are:
•Current taxes are up by $1.6 million or 8.1% mainly due to increased assessed property values.
•Aircraft taxes are also up $1.1 or 55% due to an increase in aircraft assessed values (32%) combined with
an increase in the number of aircrafts being housed at the airport.
Sales Taxes ($44.8 million) – For the nine months of the fiscal year, sales tax
revenues are $2.5 million higher than the same period in the previous fiscal year.
Sales tax revenues to date for the current fiscal year represent the city’s sales tax
revenues for the second, third and fourth calendar quarters of calendar year 2023
and the first advance for the first calendar quarter of 2024.
In fiscal year 2021-22, the city experienced accelerated recovery after the impacts
of the COVID-19 pandemic. Fiscal year 2022-23 saw historically high levels of sales tax revenues driven by
inflation and sustained by consumer demand. The city is anticipating that this growth in sales will level off and
slowdown this fiscal year.
For sales occurring in the fourth calendar quarter of 2023 (the most recent data available), key year-over-year
gains were seen in new auto sales. The largest economic segments in the city are automobile dealers, general
retail stores, and restaurants. Together, they generate approximately 70% of the city’s sales tax revenues.
March 31, 2024
7%
6%
May 14, 2024 Item #11 Page 20 of 31
Quarterly Financial Report _______________________________________________________________ 2
A significant portion of the year-over-year increase is attributed to the auto sales sector and a correction in
methodology for how respective sales were being assigned and reported. It has been determined that this
correction will be applied to future reporting quarters, i.e., this correction results in additional on-going revenue.
Although sales tax revenues have increased in total, growth has been tempered in numerous industry groups.
As of March 2024, general retail and food products remained virtually unchanged from the previous year and
construction and business-to-business saw notable declines. Staff will continue to monitor sales tax
performance, particularly as inflation is anticipated to continue dropping, and report out to the City Council
accordingly.
Transient Occupancy Tax ($25.3 million) – The city’s third highest General Fund
revenue source on an annual basis is Transient Occupancy Tax (TOT or hotel tax),
estimated at $32.8 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.
Year-to-date TOT figures represent taxes collected on hotel receipts through the
month of February 2024. TOT collected for the first half of the fiscal year
reflects a decrease of $1.2 million or 4%, when compared to the previous year.
Currently, there are 4,768 hotel rooms in service (5,059 total rooms built in the city) and 446 registered short-
term vacation rentals. The average occupancy of hotel rooms over the most recent 12 months has been 70.6%
which is essentially the same percentage when compared to this time last year (70.9% last year). Average daily
room rates in January, February and March of 2024 were 1% lower than the previous year on average. While
occupancy rates remain stable, it will be important to monitor the impact of average daily room rate fluctuations
on occupancy rates moving forward.
Business License Tax ($4.9 million) – All entities doing business in the City of
Carlsbad are required to have a valid business license. Business license revenue is
estimated at $6.4 million for the current fiscal year. Business license revenues are
up $159,700, or 3%, from the previous fiscal year. The increase is due to an
increase in license renewal revenue offset by a slight reduction in penalty revenue
from overdue business license renewals when compared to the prior year.
There are currently 9,529 licensed businesses operating within the city, 63 less than the prior year. The
majority of taxed businesses (6,630 businesses) are located in Carlsbad, with 2,465 of these businesses home-
based. Interdepartmental Charges ($4.6 million) – Interdepartmental charges are up by
$252,700 when compared with the same period last year. These charges are
generated through engineering services charged to capital projects (up $166,000
due to more staff time charged to capital projects); reimbursed work from other
funds; and miscellaneous interdepartmental expenses charged to funds outside
the General Fund for services performed by departments within the General
Fund.
Income from Investments and Property ($6.3 million) – For the first nine
months of the fiscal year, income from investments and property is up $1.7
million compared to the previous fiscal year. This increase is due to several
factors including a 40% rise in yield from 1.75% as of March 2023 to 2.45% as of
March 2024 along with a 2.9% increase in the average cash balance held in the
General Fund as well as interest earned of $710,000 fiscal year to date on the
city’s Section 115 Pension Trust. The City Council approved the establishment of a Section 115
Pension Trust in 2023 for purposes of mitigating CalPERS’ volatility, maintaining local control over city assets and
6%
36%
3%
-4%
May 14, 2024 Item #11 Page 21 of 31
Quarterly Financial Report _______________________________________________________________ 3
preparing for potential future decreases in CalPERS’ discount rate. An initial contribution of $10 million was
authorized by the City Council and deposited to the trust.
Throughout the pandemic, the Federal Reserve had maintained an effective benchmark interest rate between 0
and 0.25%. However, inflation which had been on a historic rise for much 2022 and into 2023 which resulted in
the Federal Reserve increasing benchmark rates all the way to a target range of 5.25%-5.5% as of July 2023.
Recent indicators suggest that economic activity has been expanding at a solid pace, and although inflation has
eased over the past year and prices have started to come down, the Federal Reserve continues to hold interest
rates steady at the target range of 5.25 to 5.5%, the highest it has been in more than 20 years. It is expected that
rates will hold steady with the intent to reduce as inflation decreases.
Recreation Fees ($2.4 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 up by $166,500 compared to last year at this time. Half
of this increase is attributable to an increase in aquatic lesson revenue and the
other half is related to an increase in instructional class revenue.
Development Related Revenues ($3.1 million) – Development related revenues,
which include building permits, planning fees, building department fees, and
engineering fees, reflect a 10% decrease for the first nine months of the fiscal
year.
Development related fees are paid by developers to cover a portion of 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.
Activity during the third quarter fiscal year 2023-24 included permits associated with the new residential
construction of 12 second dwelling units, 15 condominiums (12 units for Garfield Beach Homes and three units
for The Roosevelt), one single family home and various homeowner improvements. There was no commercial
or industrial permit activity during the third quarter to report.
One source of development related revenue is building permits, which are $1.4 million for the current fiscal year
compared to $1.5 million from the prior fiscal year, an 11% decrease. The year-to-date valuation of new
construction in the current fiscal year is $243 million. This represents a $49 million, or 25%, increase in valuation
over the previous fiscal year.
Franchise Tax ($2.6 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 to be at $7.1 million for the current fiscal year. Year-to-
date franchise taxes are $30,000 higher when compared to the same period last
year.
Cable television franchise revenues (Spectrum and AT&T) are down $90,500 representing a decrease in the
number of subscription service subscribers (premium video, equipment rental, on-demand, and programming
services). An increase in trash collection revenue of $155,700 resulted from the city’s most recent contract with
Republic Services, the city’s waste services provider.
SDG&E pays franchise taxes for the use of public land over which they transport gas and electric services. In
addition, SDG&E pays an “in-lieu” franchise tax based on the value of gas and electricity transported through
SDG&E lines but purchased from another source. The “in-lieu” tax was put in place to capture the franchise taxes
on gas and electricity that is transported using public lands, but which would not otherwise be included in the
7%
-10%
1%
May 14, 2024 Item #11 Page 22 of 31
Quarterly Financial Report _______________________________________________________________ 4
calculations for franchise taxes. Approximately 46% of the city’s franchise taxes are anticipated to be received
from SDG&E in April 2024.
Ambulance Fees ($5.0 million) – The city bills any individual who is transported
in one of the city’s ambulances. Through March 2024, receipts from ambulance
fees are up $1.1 million, or 29%, compared to last fiscal year. The increase in
revenue for the first nine months of the fiscal year is mainly due to changes to
the ambulance fee schedule that the City Council approved in June 2023 along
with an increase in the number of billable transports, 5,525 in the first nine
months of fiscal year 2023-24 versus 5,639 at the same time in the prior fiscal
year.
Other Revenue Sources ($595,100) – Other revenue sources have decreased by
$435,000 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; and
miscellaneous reimbursed expenses. The decrease to date is related to lower
amounts received for developer funded studies and miscellaneous reimbursed
expenses in the current fiscal year when compared to the current fiscal year.
Other Licenses and Permits ($864,100) – 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/decrease along
with increases/decreases in development activity. Other licenses and permit
revenues can vary throughout the year. To date, the increase of $140,000 over
the prior year is primarily a result of increased right of way, coastal development
and grading permits when compared to the same period last year.
Fines and Forfeitures ($319,600) – Fines and forfeitures represent fees
collected for code violations, parking citations, overdue fines, and returned
checks. The city recognizes revenues when the citizen pays the fine or forfeiture,
as opposed to when the fine is imposed. The increase to date of $18,200 is
mainly due to increases in code violation assessments ($8,900) and parking
citations ($9,800) when compared to the previous fiscal year.
Intergovernmental Revenues ($1.6 million) – Intergovernmental revenues
include homeowners property tax exemption revenue and miscellaneous
receipts and grants received from the state or federal governments, as well as
local school districts. Various miscellaneous receipts comprise the $1.6 million
received this year which represents an increase of 85% over the same period last
year. This increase is mainly due to state reimbursements received for two
planning related state grant awards and one state fire reimbursement.
Transfer Taxes ($229,600) – 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. Revenues have
decreased over the same period last year due to a decrease in property
transfers.
29%
19%
-25%
-42%
85%
6%
May 14, 2024 Item #11 Page 23 of 31
Quarterly Financial Report _______________________________________________________________ 5
Other Charges or Fees ($1.2 million) – 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; and general services, such as mutual aid response,
mall police services, emergency response services, reports, etc. These fees are
up by $171,300, or 17% mainly due to an increase in false alarm response fees
and mutual aid response reimbursements when compared to the prior fiscal
year.
A detailed schedule of General Fund revenues is provided on the following below:
REVENUE
REVENUE EXPECTED ACTUAL ACTUAL CHANGE FROM
BUDGETED THROUGH FY 2023 FY 2024 YTD 2023 TO PERCENT
FOR FY 2023-24 03/31/24 AS OF 03/31/23 AS OF 03/31/24 YTD 2024 CHANGE
TAXES
PROPERTY TAX $84,246,868 $50,888,295 $52,678,138 $56,365,393 $3,687,255 7%
SALES TAX 51,064,943 38,486,313 42,346,454 44,806,426 2,459,972 6%
TRANSIENT OCCUPANCY TAX 32,861,193 25,367,244 26,462,680 25,284,639 (1,178,041)-4%
FRANCHISE TAX 7,084,717 2,372,608 2,623,485 2,653,170 29,685 1%
BUSINESS LICENSE TAX 6,435,502 4,778,218 4,719,788 4,879,458 159,670 3%
TRANSFER TAX 1,624,950 1,110,107 934,212 704,645 (229,567) -25%
TOTAL TAXES 183,318,173 123,002,785 129,764,757 134,693,731 4,928,974 4%
INTERGOVERNMENTAL
VEHICLE LICENSE FEES 83,951 83,951 118,477 141,689 23,212 20%
HOMEOWNERS EXEMPTIONS 353,000 174,824 168,461 162,187 (6,274)-4%
OTHER REIMBURSEMENT 616,084 178,941 587,742 1,311,843 724,101 123%
TOTAL INTERGOVERNMENTAL 1,053,035 437,716 874,680 1,615,719 741,039 85%
LICENSES AND PERMITS
BUILDING PERMITS 1,250,000 895,507 1,577,122 1,395,822 (181,300) -11%
OTHER LICENSES & PERMITS 850,500 625,413 724,367 864,159 139,792 19%
TOTAL LICENSES & PERMITS 2,100,500 1,520,920 2,301,489 2,259,981 (41,508)-2%
CHARGES FOR SERVICES
PLANNING FEES 442,000 296,080 395,491 568,619 173,128 44%
BUILDING DEPARTMENT FEES 861,000 677,440 750,031 515,531 (234,500) -31%
ENGINEERING FEES 774,000 591,760 757,505 635,716 (121,789) -16%
AMBULANCE FEES 6,798,000 6,096,337 3,917,891 5,055,891 1,138,000 29%
RECREATION FEES 2,598,600 1,857,220 2,235,009 2,401,480 166,471 7%
OTHER CHARGES OR FEES 1,584,245 1,186,294 993,975 1,165,272 171,297 17%
TOTAL CHARGES FOR SERVICES 13,057,845 10,705,131 9,049,902 10,342,509 1,292,607 14%
FINES AND FORFEITURES 276,200 206,622 301,440 319,629 18,189 6%
INCOME FROM INVESTMENTS & PROPERTY 5,948,225 4,009,212 4,655,445 6,317,272 1,661,827 36%
INTERDEPARTMENTAL CHARGES 5,746,232 4,190,026 4,368,935 4,621,650 252,715 6%
OTHER REVENUE SOURCES 987,000 478,991 1,029,582 595,108 (434,474) -42%
TRANSFERS IN 10,000 0 0 0 0 0%
TOTAL GENERAL FUND $212,497,210 $144,551,403 152,346,230 $160,765,599 $8,419,369 6%
(1)
(1) Calculated General Fund revenues are 11% above estimates as of March 31, 2024.
GENERAL FUNDREVENUE COMPARISON
17%
May 14, 2024 Item #11 Page 24 of 31
Quarterly Financial Report _______________________________________________________________ 6
Expenditures
Total General Fund expenditures and encumbrances-those funds either spent or committed for specific
expenses- through the month of March 2024 (the first nine months of the fiscal year) are $177.1 million,
compared to $165.3 million at the same time last year. The remaining budget available through the fiscal year
ending June 30, 2024, is $64.6 million, or 26.7%. If funds were spent in the same proportion as the previous year,
the General Fund would have 27.6% or $62.9 million available. Excluding transfers out, contingencies, and non-
departmental charges, the percentage available on March 31, 2024, is 25.4%, 2.9% less than the 28.3% available
on March 31, 2023.
The fiscal year 2023-24 budget was developed with a focus on resiliency over the long-term and reflects a call
for departments to increase efficiency and find new ways to reduce ongoing spending. In addition to lowering
base spending in the General Fund by $2.3 million at a time when inflation is 6%, the adopted budget reduced
city staffing by the equivalent of 12 positions.
With the development and adoption of the city’s fiscal year 2023-24 budget, the city forecasted that ongoing
spending would exceed ongoing revenues as soon as fiscal year 2025-26. Since the adoption of this year’s budget
and the close of fiscal year 2022-23, staff presented an updated forecast at the City Council meeting on October
24, 2023, that showed this shortfall is now projected to occur in fiscal year 2028-29, which was primarily driven
by stronger-than-expected revenue performance. This year’s budget scales back custodial services, nonessential
park maintenance, printing and other administrative expenses, travel and training for city staff, and city cell
phone use, among other areas expected to have a minimal impact on the community.
The adopted General Fund budget for fiscal year 2023-24 increased by 9.3% or $18.5 million when compared to
last fiscal year due to:
• Increased personnel costs (increase of $6 million or 4.8%):
o $5.2 million in salaries and wages due to negotiated salary increases offset by a reduction in total full-
time equivalent positions of 12.06.
o $0.2 million in health insurance and retirement benefits costs.
o $0.6 million increase in other personnel costs (Medicare, unemployment and disability benefits).
• Increased maintenance and operations costs (increase of $5.6 million):
o Overall, total maintenance and operations costs are projecting an increase, however, this category
includes a one-time appropriation of $5.22 million from General Fund reserves toward regional efforts
to lower the railroad tracks in Carlsbad. Excluding this one-time use of reserves, the maintenance and
operations costs are projected to increase just 0.7% for fiscal year 2023-24 when compared to fiscal year
2022-23. With year-over-year increases in inflation of 8.2% and 6.4%, respectively, this relatively minor
increase in maintenance and operations is a tremendous achievement that was accomplished through a
strategic analysis of budget reductions.
• Increase in transfers to other city funds (increase of $8.3 million):
o The city annually budgets 6% of General Fund revenues as a transfer to the Infrastructure Replacement
Fund, General Capital Construction Fund and The Technology Investment Capital Fund to help fund
major new construction, maintenance and replacement of city infrastructure and facilities and the city’s
future technology needs.
o $7.4 million in additional transfers was budgeted for the General Capital Construction Fund and
funded by the General Fund’s budgeted operating surplus. The General Capital Construction Fund is
funded by the General Fund and includes many capital projects programmed in the future. The level of
funding necessary to fully fund these projects is an increasing concern. This one-time transfer amount
will assist with funding the city’s general capital construction into the future.
May 14, 2024 Item #11 Page 25 of 31
Quarterly Financial Report _______________________________________________________________ 7
CalPERS and pension funding has been and will continue to be a challenge for participating agencies. CalPERS
administers the city’s defined benefit pension plan and costs have been increasing in past years as CalPERS
addresses a structural shortfall in plan assets to cover unfunded liabilities. In support of CalPERS strategies for
plan sustainability and as part of the city’s strategic, long-term approach to financial management, the city
actively manages its unfunded pension liability. Since fiscal year 2016-17, the City Council has approved
additional discretionary payments of $56.4 million to decrease future costs of the city’s unfunded actuarial
liability and strive to achieve a funded status of 80% in accordance with City Council Policy Statement No. 86.
CalPERS latest actuarial valuation report (as of June 30, 2022), the city had a combined pension funded status of
74.6%, reduced from the prior year’s status of 86%. This reduction was predominantly driven by CalPERS’ fiscal
year 2021-22 investment loss of -6.1%. This negative return will not impact the city’s required contributions until
fiscal year 2024-25.
The City Council approved the establishment of a Public Agencies Post-Employment Benefits Trust (Section 115
Trust) on September 12, 2023. This trust allows the city to stabilize pension cost volatility, maintain local control
over the city’s assets and earn a potentially higher rate of return than if the assets were kept within the General
Fund. The City Council approved an initial trust contribution of $10 million on September 26, 2023. As of March
31, 2024, the city’s Section 115 Trust had a balance of $10,702,095. Considering the assets held by CalPERS as
well as the assets held in the city’s trust, the combined pension funded status as of March 2023 is 75.8%.
City staff will continue to provide regular financial updates to the City Council throughout fiscal year 2023-24.
Identifying a potential structural deficit early has allowed the city to take a thoughtful approach to solutions,
exploring new ways to reduce spending and increase revenue.
A detailed schedule of General Fund expenditures is provided on the next page.
May 14, 2024 Item #11 Page 26 of 31
Quarterly Financial Report _______________________________________________________________ 8
ADOPTED WORKING
BUDGET BUDGET AMOUNT AVAILABLE %
DEPARTMENT DESCRIPTION FY 2023-24 FY 2023-24 (a)COMMITTED (b)BALANCE AVAILABLE (c)
POLICY AND LEADERSHIP GROUP
CITY ATTORNEY $2,115,596 $2,115,596 $1,596,773 $518,823 24.5%
CITY CLERK 1,274,455 1,298,267 896,218 402,049 31.0%
CITY COUNCIL 607,078 612,882 391,038 221,844 36.2%
CITY MANAGER 2,184,823 2,298,394 1,784,703 513,691 22.3%
CITY TREASURER 279,149 279,149 152,208 126,941 45.5%
COMMUNICATIONS & ENGAGEMENT 1,953,098 2,265,467 1,617,660 647,807 28.6%
TOTAL POLICY AND LEADERSHIP GROUP 8,414,199 8,869,755 6,438,600 2,431,155 27.4%
ADMINISTRATIVE SERVICES
ADMINISTRATION 784,107 807,692 549,237 258,455 32.0%
FINANCE 5,323,368 5,726,992 4,084,393 1,642,599 28.7%
HUMAN RESOURCES 5,029,995 5,238,274 3,480,629 1,757,645 33.6%
INNOVATION & ECONOMIC DEVELOPMENT 2,608,489 2,812,757 1,954,713 858,044 30.5%
TOTAL ADMINISTRATIVE SERVICES 13,745,959 14,585,715 10,068,972 4,516,743 31.0%
PUBLIC SAFETY
POLICE 55,615,155 60,637,415 45,612,315 15,025,100 24.8%
FIRE 37,882,886 41,689,777 32,483,244 9,206,533 22.1%
TOTAL PUBLIC SAFETY 93,498,041 102,327,192 78,095,559 24,231,633 23.7%
COMMUNITY SERVICES
COMMUNITY SERVICES ADMINISTRATION 585,411 733,802 598,266 135,536 18.5%
COMMUNITY DEVELOPMENT 11,012,958 13,516,576 9,972,137 3,544,439 26.2%
HOUSING & HOMELESS SERVICES 2,765,195 3,224,743 2,355,440 869,303 27.0%
LIBRARY & CULTURAL ARTS 13,637,285 14,374,638 10,184,181 4,190,457 29.2%
PARKS & RECREATION 21,055,565 22,052,001 16,844,605 5,207,396 23.6%
TOTAL COMMUNITY SERVICES 49,056,414 53,901,760 39,954,629 13,947,131 25.9%
PUBLIC WORKS
PUBLIC WORKS ADMINISTRATION 1,562,272 1,595,344 1,166,854 428,490 26.9%
CONSTRUCTION MANAGEMENT & INSPECTIONS 3,257,906 3,341,081 2,260,427 1,080,654 32.3%
ENVIRONMENTAL SUSTAINABILITY 1,178,783 1,580,542 1,116,630 463,912 29.4%
FACILITIES 7,497,115 8,752,270 6,758,630 1,993,640 22.8%
TRANSPORTATION 9,732,215 10,896,475 7,789,819 3,106,656 28.5%
TOTAL PUBLIC WORKS 23,228,291 26,165,712 19,092,360 7,073,352 27.0%
NON-DEPARTMENTAL & CONTINGENCY
(d)OTHER NON-DEPARTMENTAL 1,356,700 1,912,213 703,865 1,208,348 63.2%
VILLAGE TRENCHING 5,220,000 5,220,000 0 5,220,000 100.0%
OPERATING TRANSFERS OUT 21,910,000 28,210,000 22,732,497 5,477,503 19.4%
CONTINGENCY 500,000 492,000 0 492,000 100.0%
TOTAL NON-DEPT & CONTINGENCY 28,986,700 35,834,213 23,436,362 12,397,851 34.6%
TOTAL GENERAL FUND $216,929,604 $241,684,347 $177,086,482 $64,597,865 26.7%
(a) Working budget includes the adopted budget, open encumbrances from the end of the prior fiscal year,
approved carry forwards of the prior fiscal year and all other mid-yearcouncil approvals.
(b) Actual expenditures on a budgetary basis include encumbrances and exclude non-budgeted items.
(c) Amount available would be 27.6% if funds were spent in the same proportion as the previous year.
(d) Other non-departmental includes property tax administration fees, assessment district administration, citywide litigation expenses,
and other items not attributed to a specific department.
AS OF 03/31/24
EXPENDITURE STATUS BY DEPARTMENTGENERAL FUND
May 14, 2024 Item #11 Page 27 of 31
Quarterly Financial Report _______________________________________________________________ 9
Council Contingency
The City Council has allocated $500,000 out of the General Fund budget for unanticipated emergencies or
unforeseen program needs. Below is a listing of the City Council’s contingency:
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, that have been accepted
during fiscal year 2023-24:
CONTINGENCY ACCOUNT
USE OF FUNDS
EXPLANATION AMOUNT
ADOPTED BUDGET $500,000
USES:
Transfer to City Council travel budget (Resolution 2023-279)(3,000)
Winning Teams Grant for Carlsbad High School Lancer Dancers Team (5,000)
TOTAL USES (8,000)
AVAILABLE BALANCE $492,000
Note 1 - City Council Policy 51 gives authorization to the City Manager, or designee,
to approve Winning Teams and Community Spirit Grants up to $5,000 per grant.
Department Intention Qtr. 1 Qtr. 2 Jan.Feb Mar Qtr. 3 Total
Parks & Recreation Leo Carrillo Ranch Cash Donations $3,500 $4,341 $383 $505 $7,117 $8,005 $15,846
Parks & Recreation Opportunity Grant Donations 2,011 1,896 453 838 2,334 3,625 7,532
Parks & Recreation Senior Center Cash Donations 629 1,408 30 1,000 385 1,415 3,452
Parks & Recreation Senior Meals Cash Donations 6,399 7,166 2,478 1,826 2,823 7,127 20,692
Parks & Recreation Senior Transportation Cash Donations 403 461 281 153 134 568 1,432
Parks & Recreation Special Events Cash Donations 1,000 0 0 0 0 0 1,000
Parks & Recreation Teen Program Cash Donations 1 2 45 660 1,495 2,200 2,203
Parks & Recreation Parks Maintenance Cash Donations 1,850 0 0 0 0 0 1,850
Subtotal - Parks & Recreation $15,793 $15,274 $3,670 $4,982 $14,288 $22,940 $54,007
Library & Cultural Arts Book Purchases $0 $100 $0 $0 $1,500 $1,500 $1,600
Library & Cultural Arts Support Library Programs and Services 102 4,387 0 25 13 38 4,527
Subtotal - Library & Cultural Arts $102 $4,487 $0 $25 $1,513 $1,538 $6,127
Fire Food gifts for crews $24 $880 $0 $0 $0 $0 $904
Fire Stuffed animals for ambulances 0 90 0 0 0 0 90
Fire Clothing 0 0 4,000 0 0 4,000 4,000
Fire Fire prevention books 0 0 0 0 100 100 100
Subtotal - Fire $24 $970 $4,000 $0 $100 $4,100 $5,094
Total Donations $15,919 $20,731 $7,670 $5,007 $15,901 $28,578 $65,228
Donations Fiscal Year 2023 - 24
May 14, 2024 Item #11 Page 28 of 31
Quarterly Financial Report _______________________________________________________________ 10
Water Enterprise
Revenues
• Increase in water operating revenues due to increase in user rates effective January 2024, offset
by 1.9% decrease in water volume sales.
• Interest earnings increased due to a 35.2% increase in the yield of the Treasurer’s portfolio
offset by an 8.1% decrease in the monthly average cash balance.
• The increase in misc. service charges is due to reimbursement for interdepartmental labor
charges.
• The decrease in other revenues is from higher revenue in prior year due to a loss recovery.
• The decrease in property taxes is primarily due to an allocation to recycled water starting July
2023 offset by an increase in assesed property values.
Expenses
• The increase in staffing expenses due to negotiated increases in salary.
• Higher interdepartmental expenses resulted from increased personnel related costs, and
general liability insurance.
• Purchased water expenses have increased from the prior year due to a 9% rate increase in the
variable cost of water purchased from the San Diego County Water Authority (SDCWA) offset
by a 0.1% decrease in the amount of water purchased.
• Outside services decreased from asphalt repairs in prior year.
• Miscellanous expense decreased due to decrease in parts purchased.
• Captial outlay increase due to excavator purchase.
CHANGE FROM
BUDGET YTD*YTD*YTD 2022-23 TO PERCENT
FY 2023-24 3/31/2023 3/31/2024 YTD 2023-24 CHANGE
REVENUES:
WATER DELIVERY 41,688,000$ 29,881,589$ 30,039,349$ 157,760$ 0.5%
INTEREST 389,000 393,020 555,324 162,304 41.3%
MISC. SERVICE CHARGES 441,000 228,511 294,889 66,378 29.0%
PROPERTY TAXES 4,729,000 3,138,013 1,916,969 (1,221,044) -38.9%
FINES, FORFEITURES & PENALTIES 411,000 283,142 296,737 13,595 4.8%
OTHER REVENUES 491,000 383,125 344,090 (39,035) -10.2%
TOTAL OPERATING REVENUE 48,149,000 34,307,400 33,447,358 (860,042) -2.5%
EXPENSES:
STAFFING 4,782,779 3,143,919 3,464,154 320,235 10.2%
INTERDEPARTMENTAL SERVICES 3,765,584 2,371,338 2,824,607 453,269 19.1%
PURCHASED WATER 30,805,000 18,674,264 20,885,056 2,210,791 11.8%
MWD/CWA FIXED CHARGES 7,550,000 5,098,290 5,206,689 108,399 2.1%
OUTSIDE SERVICES/MAINTENANCE 3,141,059 619,764 598,367 (21,397) -3.5%
DEPRECIATION/REPLACEMENT 5,000,000 3,749,999 3,739,460 (10,539) -0.3%
MISCELLANEOUS EXPENSES 986,543 641,638 525,470 (116,168) -18.1%
CAPITAL OUTLAY 194,302 32,776 60,936 28,160 85.9%
TOTAL OPERATING EXPENSES 56,225,267 34,331,989 37,304,739 2,972,750 8.7%
OPERATING INCOME/(LOSS)(8,076,267)$ (24,589)$ (3,857,381)$ (3,832,792)$ 15587.6%
*Adjusted to reflect timing differences for water purchases and depreciation.
WATER OPERATIONS FUND
March 31, 2024
8.7%
-2.5%
May 14, 2024 Item #11 Page 29 of 31
Quarterly Financial Report _______________________________________________________________ 11
Wastewater Enterprise
Revenues
• Charges for current services are higher than in the prior year due primarily to a 20% rate increase
that went into effect in January 2024.
• Interest earnings increased due to a 35.2% increase in the yield of the Treasurer’s portfolio
combined with a 29.7% increase in the monthly average cash balance.
• The increase in other revenues reimbursement for interdepartmental labor charges.
Expenses
• The increase in staffing expenses is driven by negotiated salary increases.
• Higher interdepartmental expenses resulted from increased personnel related costs, and
general liability insurance.
• Lower miscellaneous expenses from purchase of parts.
CHANGE FROM
BUDGET YTD* YTD*YTD 2022-23 TO PERCENT
FY 2023-24 3/31/2023 3/31/2024 YTD 2023-24 CHANGE
REVENUES:
CHARGES FOR CURRENT SERVICES 21,939,000 13,953,238 16,682,573 2,729,335 19.6%
INTEREST 110,000 107,439 215,230 107,791 100.3%
OTHER REVENUES 307,000 280,600 355,650 75,050 26.7%
TOTAL OPERATING REVENUE 22,356,000 14,341,277 17,253,453 2,912,176 20.3%
EXPENSES:
STAFFING 3,322,088 2,000,376 2,400,788 400,412 20.0%
INTERDEPARTMENTAL SERVICES 1,929,134 1,133,334 1,445,754 312,420 27.6%
ENCINA PLANT SERVICES 6,000,000 4,423,161 4,802,145 378,984 8.6%
OUTSIDE SERVICES/MAINTENANCE 1,993,412 291,529 314,523 22,994 7.9%
DEPRECIATION/REPLACEMENT 5,300,000 3,974,999 3,962,481 (12,518) -0.3%
MISCELLANEOUS EXPENSES 827,614 507,183 491,067 (16,116) -3.2%
CAPITAL OUTLAY 24,651 0 572 572 100.0%
TOTAL OPERATING EXPENSES 19,396,899 12,330,582 13,417,330 1,086,748 8.8%
OPERATING INCOME/LOSS 2,959,101 2,010,695 3,836,123 1,825,428 90.8%
* Adjusted to reflect timing differences for Encina quarterly invoices and depreciation.
WASTEWATER OPERATIONS FUND
March 31, 2024
20.3 %
8.8%
May 14, 2024 Item #11 Page 30 of 31
Quarterly Financial Report _______________________________________________________________ 12
Golf Course Enterprise
Revenues
• Primary operating revenues at the golf course have remained relatively consistent year over
year. Slight decrease in demand offset by increase in rates.
• Other revenues increased notably over the prior period due to timing adjustments related to
interest earnings on cash and investments on hand.
Expenses
• General & Administrative costs increased over the prior period as a result of cost of living
increases and lingering inflation.
• This increase was absorbed by prudent operational spend over grounds maintenance and the
pro shop.
• Depreciation has decresed by 78% when compared to the prior year. This is due to the fact that
the original course land improvements are now fully depreciated.
• Miscellaneous expenses slightly decreased from prior year invoices for utility cost savings.
• Captial outlay higher from bunker rennovation in addition to mower and cart replacements.
CHANGE FROM
BUDGET YTD YTD YTD 2022-23 TO PERCENT
FY 2023-24 3/31/2023 3/31/2024 YTD 2023-24 CHANGE
REVENUES:
GOLF COURSE 5,271,000 3,981,050 4,024,589 43,539 1.1%
FOOD & BEVERAGE 4,025,000 3,466,250 3,506,753 40,503 1.2%
PRO SHOP 434,000 342,482 329,568 (12,914) -3.8%
PRACTICE CENTER 355,000 286,730 382,227 95,497 33.3%
OTHER REVENUES 164,500 250,471 451,066 200,595 80.1%
TOTAL OPERATING REVENUE 10,249,500 8,326,983 8,694,203 367,220 4.4%
EXPENSES:
GENERAL & ADMINISTRATIVE 5,801,000 2,974,230 3,343,778 369,548 12.4%
COURSE & GROUNDS 1,311,000 876,123 855,021 (21,102) -2.4%
FOOD & BEVERAGE 348,000 260,956 271,265 10,309 4.0%
PRO SHOP 97,000 69,342 54,486 (14,856) -21.4%
COST OF SALES 1,207,000 947,335 966,239 18,904 2.0%
DEPRECIATION/REPLACEMENT 750,000 2,550,001 562,500 (1,987,501) -77.9%
MISCELLANEOUS EXPENSES 347,040 190,150 137,748 (52,403) -27.6%
CAPITAL OUTLAY 1,092,226 412,144 714,196 302,052 73.3%
TOTAL OPERATING EXPENSES 10,953,266 8,280,281 6,905,233 (1,375,049) -16.6%
OPERATING INCOME/LOSS (703,766) 46,701 1,788,970 1,742,269 3730.7%
GOLF COURSE FUND
March 31, 2024
4.4%
-17%
May 14, 2024 Item #11 Page 31 of 31
David Graham, Chief Innovation Officer
Zach Korach, Finance Director
May 14, 2024
Economic and Financial
Update: Q3 FY 2023-24
TODAY’S PRESENTATION
•Today’s report will cover Fiscal Year 2023 – 2024, Third Quarter
o January through March 2024
•Economic update
•Financial update
ECONOMIC AND FINANCIAL UPDATE
2
CARLSBAD ECONOMY
•Carlsbad’s GRP was $17.1 billion in 2022
•Carlsbad’s economy grew by approximately
$1.5 billion from 2021 to 2022
•Last year business expansion, attraction, and
retention projects drew nearly $100m in investment
ECONOMIC AND FINANCIAL UPDATE
3
ECONOMIC ANALYSIS
•National and international factors continue to
affect the economy
o Uncertainty due to global turmoil
o Elevated interest rates
o High cost of capital
o Stubborn Inflation
ECONOMIC AND FINANCIAL UPDATE
4
ECONOMIC AND FINANCIAL UPDATE
5
INFLATION
Consumer Price Index for All Urban Consumers for San Diego-Carlsbad MSA
ECONOMIC ANALYSIS
•Macro disruptions continue to affect Carlsbad’s
businesses
o Cost of living and of doing business
o Ability to hire and retain workers
•Challenges can introduce uncertainty and
dampen growth
ECONOMIC AND FINANCIAL UPDATE
6
ECONOMIC AND FINANCIAL UPDATE
6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24
Unemployment Rate Comparison Last 12-Months
San Diego County California North County Avg w/o Carlsbad Carlsbad
CARLSBAD JOBS
•January through March saw 8,856 unique job
postings
o This is an increase of 1,100 jobs from the
previous quarter
•Average salary for posted jobs was $50,000
•Entry Level jobs account for about 68% of
available jobs
ECONOMIC AND FINANCIAL UPDATE
7
ECONOMIC AND FINANCIAL UPDATE
6
$1.54m
$600,000.00
$700,000.00
$800,000.00
$900,000.00
$1,000,000.00
$1,100,000.00
$1,200,000.00
$1,300,000.00
$1,400,000.00
$1,500,000.00
$1,600,000.00
2020 2021 2022 2023 2024
Carlsbad Median Home Price
DEVELOPMENT & BUSINESS ACTIVITY
•There are an estimated 6,630 current businesses in Carlsbad
•License activity remained consistently strong
ECONOMIC AND FINANCIAL UPDATE
11
0
500
1000
1500
2000
2500
3000
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2022 2023 2024
Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
ECONOMIC AND FINANCIAL UPDATE
11
0
200
400
600
800
1000
1200
1400
1600
Commercial Residential Commercial Residential Commercial Residential Commercial Residential
2021 2022 2023 2024
Building Permits Issued
Q1 Q2 Q3 Q4
ECONOMIC AND FINANCIAL UPDATE
6
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2021 2022 2023 2024
Carlsbad Commercial Vacancy Rates
Carlsbad Retail Carlsbad Office Carlsbad Industrial
13%
8.2%
5.4%
ECONOMIC AND FINANCIAL UPDATE
6
INNOVATION ECONOMY
ECONOMIC AND FINANCIAL UPDATE
6
0
10
20
30
40
50
60
70
80
90
100
Ja
n
Ma
r
Ma
y
Ju
l
Se
p
No
v
Ja
n
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r
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y
Ju
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Ja
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No
v
Ja
n
Ma
r
Ma
y
Ju
l
Se
p
No
v
Ja
n
Ma
r
2020 2021 2022 2023 2024
Hotel Occupancy Trend
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
Ja
n
Ma
r
Ma
y
Ju
l
Se
p
No
v
Ja
n
Ma
r
Ma
y
Ju
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Ja
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Ma
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Ju
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Se
p
No
v
Ja
n
Ma
r
2020 2021 2022 2023 2024
Hotel Average Daily Rate Trend
TOURISM
KEY TAKEAWAYS
•Macro and local trends have affected businesses
•Carlsbad’s diverse economy has remained vibrant
•Challenges around escalating cost and access to
capital are impacting businesses today but may
ease
•The labor market, while loosening, still presents
challenges
•Signs of a soft-landing are evident
•Targeted new programs in the EDSP are helping
ECONOMIC AND FINANCIAL UPDATE
12
GENERAL FUND REVENUES
fiscal year to date through third quarter
13
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
Property tax Sales tax Transient
occupancy tax
Other taxes Income from inv.
and prop.
Development
related revenue
Other revenues
FY 2022-23 Actual
FY 2023-24 Expected
FY 2023-24 Actual
GENERAL FUND REVENUES
Revenue category
Actual
FY 2022-23
Actual
FY 2023-24
$
difference
%
difference
Property tax $52.7 $56.4 $3.7 7%
Sales tax 42.3 44.8 2.5 6%
Transient occupancy tax 26.5 25.3 -1.2 -4%
Other taxes 8.3 8.2 -0.1 0%
Income from inv. and property 4.6 6.3 1.7 36%
Development related revenue 3.5 3.1 -0.4 -10%
Other revenues 14.4 16.6 2.2 13%
Total $152.3 $160.7 $8.4 6%
fiscal year to date through third quarter (in millions)
14
GENERAL FUND BUDGET
ECONOMIC AND FINANCIAL UPDATE
•Adopted budget of $216.9 million
•Working budget of $241.7 million
•Available budget remaining of $64.6 million, or 27%
•Includes actual expenditures through March 2024
•Includes open purchase order commitments
15
GENERAL FUND EXPENDITURES & ENCUMBRANCES
fiscal year to date through third quarter
16 $0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
Personnel Maintenance & operations Transfers out Other
FY 2023-24 Budget
Q3 FY 2022-23 Actual
Q3 FY 2023-24 Actual
GENERAL FUND EXPENDITURES
fiscal year to date through third quarter (in millions)
Category
FY 2023-24
Appropriation
As of Qtr. 3
FY 2023-24
% of Budget
Spent to Date
OPEN POs
at 03/31/24
Personnel $130.1 $95.3 73%$0.0
Maintenance & operations 71.0 41.1 58%11.2
Transfers out 28.2 22.7 81%0.0
Capital outlay 6.7 4.3 3%2.5
Village Trenching 5.2 0.0 0%0.0
Contingency 0.5 0.0 0%0.0
Total $241.7 $163.4 68%$13.7
17
WATER AND WASTEWATER
ECONOMIC AND FINANCIAL UPDATE
Compared to prior year through Quarter 3:
•Water revenues are down 2% and
expenses are up 9%
•Wastewater revenues are up 20% and expenses are up 9%
18
GOLF COURSE
ECONOMIC AND FINANCIAL UPDATE
Compared to prior year through Quarter 3:
•Net income $1.7M higher than last year
•Golf Course revenues are up 4% and
expenses are down 16%
19
BUDGET REVIEW
Risk Management Fund:
•Several large claims closed during fiscal year 2023-24
•Requesting additional appropriations and General Fund
transfer of $5.2 million to ensure sufficient funds are
available for the remainder of the fiscal year
ECONOMIC AND FINANCIAL UPDATE
12
RECOMMENDED ACTION
•Receive report on economic and financial update
•Adopt resolution authorizing appropriations and
General Fund transfer for the Risk Management Fund
ECONOMIC AND FINANCIAL UPDATE
12
NEXT STEPS
•Monitor revenues and expenditures
•Publish economic and financial status reports:
carlsbadca.gov/doingbusiness
carlsbadca.gov/departments/finance/financial-reports
•FY 2024-25 Preliminary operating and capital budget presented to the City Council on May 21
ECONOMIC AND FINANCIAL UPDATE
20