HomeMy WebLinkAbout; ; 2004-2005 CAFR; 2005-06-30Comprehensive Annual Financial Report
for the fiscal year ended June 30, 2005
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FISCAL YEAR ENDED
JUNE 30, 2005
1635 Faraday Avenue, Carlsbad, CA 92008
Website: www.carlsbadca.gov
Prepared by the Finance Department
Cover design by: Nancy Lucore
CITY OF CARLSBAD
Comprehensive Annual Financial Report
Year Ended June 30, 2005
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION:
Table of Contents i
City Council's Five-Year Vision Statements 1
Letter of Transmittal 3
Certificate of Achievement for Excellence in Financial Reporting, Government Finance Officers
Association 13
Location Map 14
List of City Officials 15
Organization Chart 1 6
FINANCIAL SECTION:
Independent Auditor's Report 17
Management's Discussion and Analysis 19
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets 34
Statement of Activities 36
Fund Financial Statements:
Balance Sheet - Governmental Funds 38
Reconciliation of the Balance Sheet of Governmental Funds to the Statement
of Net Assets 40
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 42
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 44
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual - General Fund 46
Statement of Net Assets - Proprietary Funds 48
Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds 52
Statement of Cash Flows - Proprietary Funds 54
Statement of Fiduciary Assets and Liabilities - Agency Funds 58
Notes to the Financial Statements 59
Supplementary Information
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds 86
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances - Nonmajor Governmental Funds 90
Combining Schedule of Revenues and Expenditures - Budget and Actual
(Budgetary Basis) - Special Revenue Funds 94
Combining Schedule of Revenue and Expenditures - Budget and Actual
(Budgetary Basis) - Debt Service Funds 96
Combining Statement of Net Assets - Internal Service Funds 98
Combining Statement of Revenues, Expenses and Changes in Net Assets -
Internal Service Funds 1 00
Combining Statement of Cash Flows - Internal Service Funds 102
Combining Statement of Changes in Assets and Liabilities - Agency Funds 106
Schedule of Annual Debt Service Requirements 108
CITY OF CARLSBAD
Comprehensive Annual Financial Report
Year Ended June 30, 2005
TABLE OF CONTENTS (CONTINUED)
Page
STATISTICAL SECTION:
(Not covered by Independent Auditor's Report)
Government-wide Information:
Government-wide Expenses by Function 112
Government-wide Revenues 114
Fund Information:
General Governmental Expenditures by Function - Last Ten Fiscal Years 116
General Governmental Revenues by Source - Last Ten Fiscal Years 118
Computation of Legal Debt Margin 120
Schedule of Direct and Overlapping Bonded Debt 121
Construction and Business Activity - Last Ten Fiscal Years 122
Water Enterprise - Revenue Bond Coverage - Last Ten Fiscal Years 123
Schedule of Assessed Valuation - Last Ten Fiscal Years 124
Demographic Statistics - Last Ten Fiscal Years 126
Property Tax Levies and Collections - Last Ten Fiscal Years 127
Principal Employers, 2004-05 128
Principal Taxpayers, 2004-05 129
Top 30 Sales Tax Generators, 2004-05 130
Miscellaneous Statistical Information, 2004-05 131
INTRODUCTORY SECTION
Carlsbad City Council
2005
Five-Year Vision Statements
City Council continues to clarify and pursue the vision of
Carlsbad that reflects the pride and quality of life for all who live,
work, and play here.
Carlsbad...
> Provides a diverse and healthy economic base that creates opportunities for
employment to the residents of Carlsbad, economic vitality to the community, and
the necessary revenues to support City services.
> Provides programs, policies and decisions to implement the General Plan, enforce
the Growth Management Plan, maintain the safety and security of its citizens, and
are based on what is best for Carlsbad.
> Occupies a leadership role in local and regional planning, (e.g., water, beach,
circulation, and environmental issues) important to local governments actively
involves addressing governmental issues at the local, state and national levels.
> Provides an open government leading to the betterment of the community and
encourages in a non-partisan manner active citizen participation and involvement
with the City Council and the City's Boards and Commissions.
And Carlsbad Efficiently and Effectively...
> Delivers top-quality public services.
> Manages its environment proactively, including:
0 Open space
0 Wildlife habitats
0 Water quality/conservation
0 Beach preservation
0 Air quality
0 Resource conservation and waste reduction
> Promotes a safe and efficient integrated transportation system.
> Maintains citywide "small town" community spirit.
> Provides a community where continuous and life-long learning is supported and
encouraged for people of all ages.
> Looks ahead and works to anticipate changes that are required now in order to
make a better future for its citizens.
City of Carlsbad
Finance Department
October 7, 2005
Honorable Mayor, City Council,
and Citizens of the City of Carlsbad
CITY OF CARLSBAD
Carlsbad, California
LETTER OF TRANSMITTAL
2004-05 COMPREHENSIVE ANNUAL FINANCIAL REPORT
I am pleased to present the 2004-05 Comprehensive Annual Financial Report of the City of Carlsbad. The
information found in this report is provided by management to the City Council and the public to assist
those interested in understanding the fiscal condition of the City as of June 30, 2005.
Management assumes full responsibility for the completeness and reliability of the information contained in
this report, based upon a comprehensive framework of internal controls that it has established for this
purpose. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive
framework of internal controls has been designed to provide reasonable rather than absolute assurance that
the financial statements will be free from material misstatement.
State law and the City's Municipal Code require that an annual financial report is prepared. This report
fulfills that obligation. It has been prepared in conformity with generally accepted accounting principles
(GAAP) and with the financial reporting requirements prescribed by the Governmental Accounting
Standards Board (GASB). The independent auditing firm of McGladrey & Pullen, LLP has issued an
unqualified ("clean") opinion on the City of Carlsbad's financial statements for the year ended June 30,
2005. The independent auditor's report is located at the front of the financial section of this report.
Management's discussion & analysis (MD&A) immediately follows the independent auditor's report and
provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A
complements this letter of transmirtal and should be read in conjunction with it.
Also, as a recipient of federal and state financial assistance, the City is required to have a "Single Audit"
performed by our independent audit firm. The Single Audit was designed to meet the special needs of
federal grantor agencies. The standards governing Single Audit engagements require that the independent
auditor report not only on the fair presentation of the financial statements, but also on the audited
government's internal controls and compliance with legal requirements, with special emphasis on internal
controls and legal requirements involving the administration of federal awards. These reports are available
in the City's separately issued Single Audit Report. The results of the City's Single Audit for the fiscal year
ended June 30, 2005 noted no material weaknesses in the framework of internal controls, or significant
violations of applicable laws and regulations.
PROFILE OF THE CITY OF CARLSBAD
Carlsbad incorporated in 1952 as a General Law city, although its "village" area dates back more than 100
years. It is located about 35 miles north of the city of San Diego on the southern California coast. The City
is governed by a five-member City Council under the Council/Manager form of government. The City
Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer
1635 Faraday Avenue • Carlsbad, CA 92008-7314 • (760) 6O2-243O • FAX (760) 602-8553
www.ci.carlsbad.ca.us • Business License (760) 602-2495 • Utility Billing (760) 602-242O •
Purchasing (760) 602-246O - FAX (760) 602-8556 - Bid Line (760) 602-2464
are also elected to four-year terms. The City Council appoints the City
Manager and City Attorney.
The City covers approximately 42 square miles and has a population of
95,146, with an expected build-out population of 110,000 residents.
Industries in the City include 3 shopping centers; a regional mall, a specialty
outlet center and a community center; a major family theme park; an auto
mall; over 30 hotels offering 3,500 rooms for tourist lodging; high-
technology, multimedia, communication, and biomedical businesses;
electronics, golf apparel, and equipment manufacturers; several business and
light-industry parks; and numerous land developers.Carlsbad
This report includes financial statements for the City, the Housing Authority
of the City of Carlsbad, the Carlsbad Public Improvement Corporation, the
Carlsbad Redevelopment Agency, and the Carlsbad Municipal Water District. Through these entities,
Carlsbad provides a full range of services to its citizens and customers including:
Police protection services
Development services
Fire and paramedic services
Street construction and maintenance
Water delivery system
Library and arts programs
Sewer system
Recreation programming for all ages
Solid waste services
Park lands
Housing programs
School programs and facilities
are provided by four different
school districts located, in
part, within the City
boundaries. Although the City
Council has no direct control
over these school districts, the
City Council recognizes the
importance of quality school
facilities and programs to
Carlsbad's residents. The City
Council has worked closely
with the schools in the past to
provide assistance.
Budget Process
The Carlsbad Municipal Code
requires that the City Manager
annually prepare a budget for
the City Council with a
message describing important
features, and assume
responsibility for the budget's
administration after adoption.
The budget process begins in
January each year with a
review and update of the City
Council's five-year vision
City of Carlsbad 2004-05 Strategic Goals
Top-Quality Services - Be a city that provides exceptional services on a daily
basis.
Transportation/Circulation - Provide and support a safe and efficient
transportation system that moves goods, services, and people through Carlsbad.
Balanced Community Development - Be a city that connects community,
place, and spirit through balanced and well-designed land uses.
Parks/Open Space/Trails - Acquire, develop, and maintain a broad range of
open space and recreational facilities that actively address citizen needs, which are
fiscally responsible, and are consistent with the General Plan and Growth
Management Standards.
Water — Ensure, in the most cost-effective manner reliable, water quality and
reliability to the maximum extent practicable, to deliver high-quality potable and
reclaimed water incorporating drought-resistant community principles.
Environmental Management — Be an environmentally sensitive community by
focusing on: clean storm water, sewage collection and treatment, solid waste, and
cost-effective and efficient use of energy including alternative energy sources.
Financial Health — Pursue and implement proactive strategies that support
sustainable economic health and manage fiscal resources effectively.
Communication — Ensure that community members, Council and staff are well
informed, continuing to be a more responsive government and a high level of
citizen confidence in government.
Learning, Culture & Arts — Promote and support continuous learning, cultural
opportunities and the arts within the community and the City organization.
Citizen Connection — Be a city that embraces Community connectivity through
the effective use of technological and interpersonal mediums.
statements and strategic goals for the City. The goals outline the methods used to achieve the vision and call out
areas upon which the City Council would like to place special emphasis during the year. Once these are
developed, staff develops operational goals based on the City Council's direction. These operational goals are
the basis for the development of the annual budget.
Budgetary control for the City is maintained through its accounting systems. The City Council adopts the formal
budget at the beginning of each fiscal year and may amend it throughout the year as necessary. Expenditures
may not exceed budgeted figures at the fund level. Monthly reports summarizing the results of operations for
the City's more significant funds are provided to the City Council.
FACTORS AFFECTING FINANCIAL CONDITION
Economic Profile
ISO
148
146
144
142
140
138
136
134
132
130
Index of Leading Economic Indicators
San Diego County 2001-2005
'"'"• -.,
- • ;• ,."-„ •"* "-. .•' '" "-.' ...... - .
T '' .......
01 02 03 04 05
Diversification of San Diego County's employment base
after the recession of the early 1990's has helped the
region to weather the ups and downs of the business
cycles without the dramatic declines seen in recent years
in other parts of the State. The University of San Diego
(USD) tracks the San Diego economy through its Index
of Leading Economic Indicators. The USD index tracks
six items to evaluate growth trends in the San Diego
economy: unemployment filings, want ads, local stock
prices, consumer confidence, building permits and the
strength of the national economy. The index declined
in April 2005 by .5%, which makes the fourth
consecutive monthly decline in the index. It was led by
a sharp drop in consumer confidence. Four of the other
components—building permits, initial claims for
unemployment insurance, local stock prices, and the
outlook for the national economy—were down by small to moderate amounts. Only one component, help wanted
advertising, was positive, but only by a small amount. USD has indicated, "the breadth of the decline continues
to be broad. For the third straight month, five of the six components were negative. Although a downturn in the
local economy is unlikely in 2005, the outlook is for a weakening to occur in the second half of the calendar
year. Job growth will remain positive, but the local unemployment rate is likely to rise by the end of the year."
Other factors contributing to the weakening outlook is the high price of gasoline and the uncertainties caused by
the fiscal crisis in the City of San Diego.
Carlsbad's economy is tied closely to that of the San Diego region, although development patterns may differ.
Carlsbad experienced strong growth in the past year in revenues from property and sales taxes as well as
Transient Occupancy Taxes (TOT). Property taxes are expected to grow by over 10% in fiscal year 2005-06,
reflecting the continuing escalation in housing prices as well as new development. Sales taxes should add an
additional $ 1 million for the upcoming fiscal year, due to good consumer demand and new sites in the City such
as The Forum, a new retail center in southern Carlsbad. Transient Occupancy Taxes, the City's gauge of the
tourism industry, ended the year showing a 14% gain with a large part of that coming from the reopening of one
of Carlsbad's premiere resorts.
With supply relatively low, housing prices have continued to escalate. The median price for single-family homes
in Carlsbad was $725,000 for calendar year 2004, a 22% increase from the previous year. Total assessed values
in the City stand at close to $ 16 billion; double what they were just five years ago. With the new developments
Median SFD Home Prices
within the City starting to sell this year, the City has projected it will add about 3,300 more residential units and
an additional 4.5 million square feet of commercial/industrial development over the next five years. The City's
residential housing stock is about 88%
built out, with approximately 5,700
housing units remaining to develop.
$800,000 -,
Carlsbad's residential real estate market
has continued strong throughout the
year. The City expects to issue 1,350
residential permits this year, slightly
higher than the 1,276 in the previous
year. The impediment to higher
development is mainly due to the lack of
supply rather than a lack of demand.
There are a number of new residential
communities under construction or in the
final phases of development that will add
significantly to the residential housing stock in Carlsbad. Home sales are under way in the Calavera Hills
project in northeast Carlsbad, with 331 single-family homes and 358 multi-family units planned. The Villages
of La Costa projects known as the Oaks, the Greens and the Ridge are under construction and will add
approximately 1,700 single-family and 550 multi-family units. The Bressi Ranch area is also under construction
with 523 single-family and 100 multi-family units to be developed. And finally, the Robertson Ranch area,
which is expected to contain over 1,000 residential units, is finishing up its master plan. The completion of
these planned communities will signal an end to the large-scale residential developments in Carlsbad.
Commercial and industrial development has been sluggish in the past few years, adding well under a million
square feet per year. This is expected to pick up over the next five years to average 900,000 square feet per
year. Some of the major businesses in town include the Gemological Institute of America, ViaSat, Invitrogen,
Callaway, Taylor Made, Upper Deck, and many others.
2000 2001 2002 2003 2004
Commercial development has
brought much needed
entertainment and shopping
venues to citizens and visitors
alike, and has generated
additional sales taxes to help
pay for City services. Carlsbad
is home to Car Country
Carlsbad - an auto mall; the
Carlsbad Premium Outlets - a
specialty outlet center; Plaza
Camino Real - a regional
shopping mall; a Costco center;
and the most recent addition;
the Forum at Carlsbad - a
commercial center with retail
shops, restaurants and other
commercial uses.
General Fund Revenues
97 98 99 00 01 02 03 04 05e 06e
H Property Tax | Sales Tax QTOT QVLF Q Franchise Fees (All Others
Development has also enhanced Carlsbad's reputation as a destination resort for tourism. The City is host to a
major family theme park: Legoland, and has two luxury resorts available for its visitors: the Four Seasons Resort
at Aviara and the La Costa Resort & Spa. There are also a number of other quality hotels and motels in the City
with the most recent addition being the Extended Stay America, which opened in fall 2002 bringing the total
available hotel rooms in the City to about 3,500.
For the future, there are several new tourist-serving projects in development. An 86-room hotel is under
construction expecting to open in 2005-06. The La Costa Resort received approval to develop up to 197
commercial resort villas on their site. These are expected to be phased in over the next several years adding
over $1.5 million in TOT when completed. In addition, a new project next to Legoland has been approved for
350 hotel rooms and 350 timeshare units. This project will also be phased in over time and is expected to
generate an additional $2 million per year in TOT.
For fiscal year 2005-06, the City's revenue projections reflect continued growth in sales taxes of about 5.5%
plus additional amounts due to new retail sites opening in the next year. The growth in housing prices is
expected to level out as interest rates rise with assessed values increasing 11.6% according to the County
Assessor. New building permits are predicted to slow slightly as new housing developments come on line and
absorption rates drag out. And finally, tourism is expected to continue strong, with TOT receipts surpassing
2001 's level by the end of 2005 and growing in the future with the addition of more available rooms.
For fiscal year 2004-05, the City's revenue projections reflect increasing consumer confidence and the return of
job growth. Increases are expected in most of the tax revenues with overall General fund revenues increasing by
5%. The most significant area of risk in the forecast for Carlsbad is in the impact of the State of California's
budget deficit discussed below.
State of California Budget
In addition to the risk of a housing bubble burst or a slow down in the economy, the state of
California's fiscal problems also cast a shadow on the City's economic future. The state of
California has been in a severe fiscal crisis for a number of years. Through a variety of loans,
one-time revenues, interfund borrowings and raids on city, county and special district funds, it
has been able to manage its cash flows and stay solvent. However, more drastic measures will be
needed for the State to finally get its budget in balance.
According to the Legislative Analyst's Office (LAO), the State is facing significant deficits in future years
despite the stronger revenues seen in the past few months. The LAO's report states that while the Governor's
budget proposal for 2005-06 would balance the budget for the next two years, a $3 to 4 billion shortfall will still
exist in future years. The ongoing budget shortfalls result from the high reliance in the near term on one-time
savings and loans that will need to be repaid in the future. The State has balanced its budget by taking city
money in the past, and the risk is that they may find a way to make it happen again.
In fiscal year 2004, the State took approximately $1.5 million in Vehicle License Fees from the City's General
fund with the promise to pay it back in the future. Then, in November 2003, a ballot measure was passed
authorizing what is known as the "Triple Flip". This is a complicated method of securing payment for the
Deficit Reduction Bonds, issued by the State to balance their budget. It is essentially a temporary swap of a %
cent of the cities' sales tax in return for property tax. It should have no effect on the amount of tax revenues the
cities receive but it will result in the loss of some interest earnings due to the delay in the timing of the receipt of
the taxes.
As a result of the continued attacks on cities revenues, a coalition of cities, counties and special districts got a
measure placed on the November 2004 ballot to put some protections in place for local governments. The
measure included the following provisions:
• Permanently reduces the vehicle license fee (VLF) rate to its current .65% and provides property taxes to
cities and counties to offset the loss on a dollar for dollar basis.
• Guarantees repayment in fiscal year 2007 of the of VLF amounts taken by the State.
• Guarantees that the "Triple Flip" will be reversed when the bonds are repaid.
• Prevents the Legislature from reducing the combined property tax shares of cities, special districts, and the
county, except to borrow the funds on a temporary basis to address a "severe state fiscal hardship".
• Provides for mandate relief if the State does not pay the mandated costs.
All of this in return for a contribution to the State totaling $1.3 billion in both the 2005 and 2006 fiscal years
from cities, counties and special districts.
The measure passed and as a result, the City of Carlsbad will give the State $1.8 million from the General fund
and $220,000 from its Redevelopment Agency in fiscal years 2004-05 and 2005-06. However, in exchange for
this two year "contribution" to the State, the cities have gained protection from further raids on their major tax
revenues by the State.
Long-Term Financial Planning
It is the City Council's goal to ensure that the City remains in good financial health, and the City has taken a
number of steps to attain that goal. One of these is the Growth Management Plan. This plan was adopted by the
citizens to ensure that all necessary public facilities are either constructed along with development or that a
financing plan is in place to pay for the facilities prior to the development of the property. Thus, the initial
capital facilities needed to support the growing population are provided without financially impacting the City or
its current residents. The City also prepares a 15+ year Capital Improvement Program. As part of the Capital
Improvement Program, the amounts needed to pay for the various projects as well as the operating budget
impacts are calculated. In this way, we can anticipate the effects of development from both a capital and an
operating perspective.
In order to assure that the City has the funds to replace these facilities as they age, an Infrastructure Replacement
fund was created. With this fund, the City is setting aside money on an annual basis for major maintenance and
replacement of its infrastructure. Much of the City's infrastructure is relatively new; therefore, the City has not
felt the full impact of maintenance. By setting aside funds now, the citizens of Carlsbad can be assured that the
proper maintenance and replacement, when needed, will be performed on streets, parks, and the many facilities
for which the City is responsible.
In addition to these steps, the City prepares ten-year forecasts for the General fund each year in order to
understand the effects of actions taken today on the City's future. The City has experienced remarkable revenue
growth over the past ten years due to the development of the majority of its commercial sites. The future will
bring a few more commercial sites but at a slower pace, while residential development will continue for a
number of years. There are also quite a few City facilities - mainly parks and civic facilities - planned in the
future to serve the growing population. The new facilities will add operating costs to the City's General fund
budget as they are completed and opened for use.
These factors alone will cause the General fund costs to escalate at a higher rate than inflation. In addition, a
number of other factors - mainly rising retirement and health care costs - have created upward pressure on
expenditures, especially over the past several years. These factors have been incorporated into the General fund
forecast shown on the next page and projected over the next ten years. While no forecast is ever totally
accurate, it does represent a likely scenario given the assumptions on which it is built.
This forecast assumes that revenue growth will continue at a moderate pace in 2006 and into the future. To
project the expenditures, it includes all known personnel costs, most of which have been negotiated with the
employee groups. The City has multi-year agreements with all the major employee groups so the effects can be
projected fairly accurately for the next several years.
Inrrillicns
200
180
160
140
120
100
80
60
General Find
Revenues ewer Expencftues
The forecast assumes 15% increases
in health care costs in the near future,
slowing to 5% in the future. It also
assumes personnel growth (new
positions) to remain rather flat at no
more than 2% per year. Cost of living
increases between 3 and 5% have
been added to personnel costs.
Pension plan costs are anticipated to
remain essentially at current levels.
And finally, it includes estimated
operating costs for all capital projects
in the timeframes shown in the
Capital Improvement Program (CIP).
One of the biggest assumptions in the
forecast is that services remain the
same. No new services have been
anticipated although growth in current services to match the growing population has been incorporated.
The results show that the General fund is balanced into the future with a slight surplus in each year of less than
5%. This achieves the goal set out by Council to maintain a balanced budget.
The situation was different just a couple of years ago when the forecast projected that the City was headed for
deficits unless corrective measures were taken. For the past two years, Council and staff have worked to bring
the forecast back into balance. Through a combination of enhancing revenue sources and finding more efficient
methods of providing services (and with the help of a strong local economy), the City was able to turn the
forecast around from heading into deficits to a healthy balance.
40
BFBflvJUES HEXFBJDTRJRES
2005 2006 2007 2038 2009 2010 2011 2012 2013 2014 2015 2016
Millions
$15
$10
Forecast Comparison
One of the more significant
revenue enhancements that
occurred over the past year was
the passage of the reauthorization
of Transnet revenues. Transnet is
a !/4 cent additional sales tax
collected countywide and used to
improve the transportation
systems. The current
authorization for the sales tax was
to end in 2008. SANDAG, the
San Diego Association of
Governments, placed a measure
on the November 2004 ballot to
reauthorize the sales tax for
another 40 years. The measure
passed providing the City over
$1.5 million in annual taxes to be
spent on street repair, maintenance and construction, in addition to other potential project funds.
The ability to understand the future impacts of both changes in revenue sources as well as program needs is
crucial to ensure that the City has the funds available to make its future plans come true. The General fund
-$io
-$15
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Net Revenues over (under) Expenditures
forecast is a tool available to the City to achieve the goal of managing its fiscal resources effectively and
monitoring the achievement of sustainable economic health for the City of Carlsbad.
Cash Management
The City Treasurer is charged with the design of an effective cash management and investment program
consistent with legal requirements and the Carlsbad Investment Policy. The City annually adopts a
comprehensive investment policy specifying, among other things, investment objectives and strategy, type, and
term of investments, reporting requirements, and investment oversight. The City's investments generally
include federal agencies, corporate notes, and investments in the State Treasurer's investment pool. The
modified duration of the investments in the City's investment pool as of June 30, 2005 was 1.89. The average
return realized on the pooled investments rose from 3.43% in fiscal year 2003-04 to 3.55% for fiscal year 2004-
05.
Investment income shown in the financial statements includes changes in the fair value of investments as
required under GAAP. Increases or declines in fair value during the current year, however, do not necessarily
represent trends that will continue, nor is it always possible to realize such amounts. This is especially true as
the City holds most of its
investments to maturity rather
than selling them at fair value.
The graph at the right shows
the amount of unrealized
income (loss) reflected in the
portfolio over the last few
years. As of June 30, 2005,
the market value is essentially
equal to the amortized cost of
the portfolio. Thus, the
investment income for the
2004-05 fiscal year includes a
slight reduction as a result in
the decline in the market
value of the portfolio. This is
discussed more thoroughly in
the MD&A.
Historical Unrealized Gains/Losses
as Percent of Amortized Cost
4.00% T
3.00%
2.00%
1.00%
0.00%
-1.00% J
Jun-01 Jun-02 Jun-03 Jun-04 Jun-05
Major Initiatives
Public safety has always been, and remains, a top Council priority. After reviewing the current staffing
requirements and the population growth in the City, it was evident that there was a need to add new Police
personnel to maintain the current service levels in the community. In 2005-06 additional staff will be hired to
enhance the department's ability to provide community-oriented policing, to provide data and statistics allowing
for increased efficiencies and smarter policing, and to provide school crossing guards that were previously
provided through a contract with a temporary agency. In addition, the Fire Department will be purchasing and
placing into service a new ladder truck in 2005-06. The new vehicle will provide better service coverage to the
citizens of Carlsbad as the City continues towards buildout.
Construction of the Recycled Water Facility and supporting infrastructure are near completion. This $45 million
project included construction of a four-million-gallons-per-day treatment plant, distribution pipelines, a flow
equalization storage facility, and pump stations. Although the construction of the treatment plant is complete,
timing of the plant operations is dependent upon completion of Encina's Flow Equalization project. The facility
10
is being tested and should begin operations during fiscal year 2005-06. The pipelines will also be completed by
that time, and the pump stations and Mahr Reservoir will become operational around July 2006. Funds for this
project came from a combination of grants and loans from State and Federal agencies. The loans will be repaid
from revenues generated by the plant.
Several significant parks are in design and scheduled for construction over the next few years. These include:
• Alga Norte Park and Aquatic Complex, scheduled to open in 2007.
This 33-acre park site will include ball fields, picnic areas, tot lots, a skate
park, a dog park, and an aquatic complex. Total cost estimated at over
$57 million. Funded by impact fees and the General fund.
• Senior Center 1st floor remodeling to include additional amenities for the
senior community. The 2nd floor will be remodeled to house City offices.
The estimated cost for the renovation is just under $1 million. Funded by Redevelopment bonds and
the General fund.
• Pine Park Community Center design work is expected to begin in fiscal year 2008-09. This
community facility and gymnasium will include basketball, volleyball, gymnastics, multi-purpose
rooms, meeting rooms, a teen center and office space. Total cost of $7.6 million. Funded by impact
fees.
• Poinsettia Park Community Center is a 20,000 square foot community facility and gymnasium.
Amenities include an enclosed soccer field, tot lot, picnic areas, tennis complex including a clubhouse
and stadium court, and additional parking. Total cost of $11.6 million. The construction of seven
tennis courts is scheduled to begin in 2005-06 and the remainder of the project will be completed in
2009-10. Funded by impact fees.
• Lake Calavera Trails construction is scheduled to begin in the next year. The public, multi-use
recreational trail system is planned on property located at Lake Calavera in the northeast quadrant of
the City. The project expects to use volunteers to construct approximately 2.5 miles of the proposed 5
miles of trails.
• Municipal Golf Course, expected opening in spring 2007. The City began the initial clearing and
grubbing operation this fall in anticipation of constructing an 18-hole championship course. Total costs
estimated at over $55 million. Funding to come from a combination of General fund advances and tax
exempt bonds.
In addition to the numerous park projects, the City has embarked on an initiative with the
ultimate goal of connecting community, place, and spirit. The initiative was kicked off
with a conference held in March 2003, which brought together a wide range of
community members as well as City staff to begin a collective dialogue about the future.
Based on the community's input and Council's direction, there is a goal included in the
2005-06 Budget to begin the design of the hardscape (place) portion of the vision. The
Centre City Gateway project will be developing a land use vision and strategy process for
the coastal area near the center of the City. While the heart of the City may always be the Village area, the
Gateway area is developing into the nerve center containing the commercial and industrial core of the City. The
2005-06 Operating Budget contains $100,000 to continue work on the land use planning while the Capital
Improvement Program contains funding for the preliminary design of a City/Safety Training facility, a Public
Works center and, ultimately, a Civic Center Plaza.
11
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate
of Achievement for Excellence in Financial Reporting to the City of Carlsbad for its Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30, 2004. This was the seventh consecutive year that
the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government
unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This
report must satisfy both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current Comprehensive
Annual Financial Report continues to meet the Certificate of Achievement Program's requirements, and we are
submitting it to GFOA to determine its eligibility for another certificate.
This report has been a joint effort by many people from many different areas of responsibility. It could not have
been accomplished without their help and the dedicated efforts of all of the accounting staff, especially Helga
Stover, Senior Accountant. I also appreciate the staff of McGladrey & Pullen, LLP for the professional way in
which the audit of this financial report was conducted. It has been a pleasure to work with them throughout this
period. Additionally, I would like to thank the City Council and the City's Leadership Team for their leadership
and unfailing support in maintaining the highest standards of professionalism in the management of the City of
Carlsbad's finances.
Respectfully submitted,
KEVIN BRANCA
Assistant Finance Director
12
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Carlsbad,
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2004
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
13
ORANGE
COUNTY
SOLANA BEACH
DEL MAR I "1-5
SAN DIEGO
IMPERIAL BEACH
TIJUANA
14
CITY OF CARLSBAD
ELECTED CITY OFFICIALS
Claude A. "Bud" Lewis, Mayor
Matt Hall, Mayor Pro Tern
Ann J. Kulchin, Council Member
Mark Packard, Council Member
Norine Sigafoose, Council Member
Lorraine M. Wood, City Clerk
James M. Stanton, City Treasurer
ADMINISTRATION AND DEPARTMENT HEADS
Raymond R. Patchett, City Manager
Lisa Hildabrand, Assistant City Manager
James F. Elliott, Administrative Services Director
Lloyd Hubbs, Public Works Director
Sandra Holder, Community Development Director
Torn Zoll, Police Chief
Kevin Crawford, Fire Chief
Ron Ball, City Attorney
Julie Clark, Human Resources Director
Greg Clavier, Deputy Public Works Director, General Services
ffm,: Debbie Fountain, Housing & Redevelopment Director
Robert J. Greaney, Deputy Public Works Director, Maintenance and Operations
- VACANT, Finance Director
Marcella Escobar-Eck, Planning Director
Pat Kelley, Principal Building Inspector
Heather Pizzuto, Library Director
Erin Letsch, Risk Manager
Ken Price, Recreation Director
Glenn Pruim, Deputy Public Works Director, Engineering Services
Aletha L. Rautenkranz, Information Systems Director
CHAIRPERSONS, COMMISSIONS AND BOARDS
Gary Hill Arts Commission
Richard Erhardt Beach Preservation Committee
Bob Bender Community Television Foundation
Courtney Heineman Design Review Board
German Gutierrez Historic Preservation Commission
Edward Scarpelli Housing Commission
Claude A. Lewis Housing and Redevelopment Commission
Rob Swette Library Board of Trustees
Jim Comstock Parks and Recreation Commission
Donald Martin Personnel Board
Jeff Segall Planning Commission
VACANT Senior Commission
VACANT Serra Cooperative Library System Advisory Board
Christine Petrou Sister City Committee
Gorden Cress Traffic Safety Commission
VACANT Underground Utility Advisory Committee
15
CITY OF CARLSBAD ORGANIZATION CHART Arts
Commission
Sister City
Committee
Historic
Preservation
CommissionELECTORATE
Library Board
of
Trustees
Serra Cooperative
Library System
Advisory Board
Parks & Rec
Commission
Cl TY MANAGER Cl TY ATTORNEY
Senior
Commission
PUBLIC
SAFETY
ADMINISTRA TIVE
SERVICES
PUBLIC
WORKS
COMMUNITY
SERVICES
ADMINISTRATION
HUMAN
RESOURCES
ENGINEERING
SERVICES
ECONOMIC
DEVELOPMENT
INFORMATION
TECHNOLOGY
GENERAL
SERVICES
GEOGRAPHIC
INFO SYSTEMS RECREATION
RISK
MANAGEMENT
MAINTENANCE &
OPERATIONS
HOUSING AND
REDEVELOPMENT
SENIOR
CENTER
RECORDS
MANAGEMENT
Personnel
Board
Beach
Preservation
Committee
Community
Television
Foundation
Traffic
Safety
Commission
Underground
Committee
I
i-
i
1t
I
1
^
1
V
1
1
Elected
Council Appointed TZ
Staff Support
Reporting Relationship
Programs l~~l
FINANCIAL SECTION
McGladrey&Pullen
Certified Public Accountants
Independent Auditor's Report
The Honorable Mayor and
Members of the City Council
City of Carlsbad, California
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund and the aggregate remaining fund information of the City of Carlsbad, California, (the City) as of and
for the year ended June 30, 2005, which collectively comprise the City's basic financial statements as listed in the
table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to
express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund and the aggregate
remaining fund information of the City as of June 30, 2005, and the respective changes in financial position and cash
flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then
ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated October 7,2005 on our
consideration of the City's internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards and should be considered
in assessing the results of our audit.
The Management's Discussion and Analysis, as listed in the table of contents, is not a required part of the basic
financial statements but is supplementary information required by accounting principles generally accepted in the
United States of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary information.
However, we did not audit the information and express no opinion on it.
McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.
17
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City's basic financial statements. The combining and individual nonmajorfund financial statements and other
schedules, listed in the table of contents as supplementary information, are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a whole.
The accompanying introductory and statistical sections, as listed in the table of contents, are presented for purposes
of additional analysis and are not a required part of the basic financial statements. This information has not been
subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we
express no opinion on it.
San Diego, California
October 7, 2005
18
Management's Discussion and Analysis
As management of the City of Carlsbad ("City"), we offer readers of the City's financial statements this narrative
overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2005. Our intent is to
assist the reader of these financial statements in better understanding the impact of financial decisions made by the
City. This analysis will focus on the significant changes in an effort to explain the City's overall financial condition.
We encourage readers to consider the information presented here in conjunction with the additional information
furnished in our letter of transmittal.
Overview of the Financial Statements
Required Components of the City of Carlsbad's
Annual Financial Report
Management 's
Discussion
and
Analysis
\
\
Basic
Financial
Statements
1
Required
Supplementary
Information
This section of the annual report consists of
four parts - management's discussion and
analysis (this section), the basic financial
statements, required supplementary
information, and an optional section that
presents combining statements for non-
major governmental funds and internal
service funds. The basic financial
statements include two kinds of statements
that present different views of the City.
• The first two statements are
Government-wide Financial Statements
that provide both long-term and short-
term information about the City's
overall financial status.
• The remaining statements are Fund
Financial Statements that focus on
individual parts of the City government,
reporting the City's operations in more
detail than the Government-wide
Statements.
> The Governmental Funds
Statements detail how general
government services such as public
safety were financed in the short term as well as what remains for future spending.
> Propriety Fund Statements offer short- and long-term financial information about the activities the City
operates like businesses, such as the water and sewer services.
> Fiduciary Fund Statements provide information about the financial relationships - such as contractor and
miscellaneous deposits - in which the City acts solely as a trustee or agent for the benefit of others to
whom the resources belong.
The financial statements also include notes that explain some of the information in the financial statements and
provide more detailed data. The statements are followed by a section of required supplementary information that
further explains and supports the information in the financial statements. In addition to these required elements, we
have included a section with combining statements that provide detail about our non-major governmental funds,
internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic
financial statements.
The remainder of this overview section of management's discussion and analysis explains the structure and contents
of each of the statements.
• ;-"--, ," "-"-"i?:-
1 1
Government-
wide Financial
Statements
Fund
Financial
Statements
:-- ::, :,.;-, ; ,"
-
Notes
to the
Financial
Statements
Summary c>Detail
19
Government-wide Financial Statements
The Government-wide Financial Statements report information about the City as a whole using accounting methods
similar to those used by private-sector companies. The Statement of Net Assets includes all of the City's assets and
liabilities. All of the current year's revenues and expenses are accounted for in the Statement of Activities
regardless of when cash is received or paid.
The two Government-wide Financial Statements report the City's net assets and how they have changed. Net assets
• the difference between the City's assets and liabilities - are one way to measure the City's financial health, or
position. Over time, increases or decreases in the City's net assets are an indicator of whether the City's financial
health is improving or deteriorating, respectively. One needs to consider additional non-financial factors, such as
changes in the City's property tax base and the condition of the City's infrastructure, to assess the overall health of
the City.
The Government-wide Financial Statements of the City are divided into two categories:
• Governmental activities - Most of the City's basic services, such as police, fire, public works, community
services, community development, and general administration, are included here. Taxes, revenues from other
governments and agencies, income from property and investments, grants and contributions, and charges for
services finance most of these activities.
• Business-type activities - The City charges fees to customers to cover the costs of certain services it provides.
The City's water, sewer, and trash services are the primary business-type activities.
Fund Financial Statements
The Fund Financial Statements provide more detailed information about the City's most significant funds - not the
City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and
spending for particular purposes.
Some funds are required by State law and bond covenants, while the City establishes other funds to control and
manage money for particular purposes (such as the developer impact fee funds) or to show that it is properly using
certain taxes and grants (such as the Section 8 Rental Assistance fund).
The City has three kinds of funds:
• Governmental funds - Most of the City's basic services are included in governmental funds. These funds are
used to account for (1) cash and other financial assets that can readily be converted to cash flow in and out,
and (2) balances left at year-end that are available for spending. Consequently, the Governmental Funds
Statements provide a detailed short-term view that helps the reader determine the amount of financial resources
that can be spent in the near future to finance the City's programs. A reconciliation between the long-term and
short-term focus of the Government-wide Financial Statements is provided immediately following each
statement.
• Proprietary funds - Services for which the City charges customers a fee are generally reported in proprietary
funds. Proprietary funds, like the Government-wide Financial Statements, provide both long- and short-term
financial information.
> There are two types of proprietary funds: enterprise funds and internal service funds.
> We use enterprise funds to report activities that provide business-type services, generally to external
customers - such as water, sewer and trash services. In both the Government-wide Financial Statements
and the Fund Financial Statements, these funds are shown under business-type activities.
^ We use internal service funds to report activities that provide services and supplies for the City's other
programs and activities - such as fleet, self-insured benefits, and information technology.
20
• Fiduciary funds - These funds are used to account for situations where the City's role is purely custodial, such
as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private
organizations, or other governments. All of the City's fiduciary activities are reported in a separate Statement
of Fiduciary Assets and Liabilities. We exclude these activities from the City's Government-wide Financial
Statements because the City cannot use these assets to finance its operations.
Financial Analysis of the City as a Whole
Net Assets
The City's combined net assets for the fiscal year ended June 30, 2005, as shown below, were $1.1 billion. The
capital asset figure for governmental activities does not include all of the City's infrastructure assets, since the City
has not completed its inventory of infrastructure assets. Under GASB 34, the City has until fiscal year 2005-06 in
which to complete a full accounting of its infrastructure.
The City's net assets increased by $125.7 million during the current fiscal year. Approximately 27% of this increase
represents the degree to which increases in operating revenues have exceeded increases in operating expenses.
Approximately 73% represents one-time capital grants and contributions received by the City for the purchase and
acquisition of infrastructure and other capital assets.
CITY OF CARLSBAD'S NET ASSETS
(in millions of dollars)
Governmental Business-Type
Activities
Current and other assets
Capital assets
Total assets
Long-term debt outstanding
Other liabilities
Total liabilities
Net assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
2004
$370.3
298.4
668.7
15.2
19.3
34.5
282.7
195.7
155.8
$634.2
2005
$419.1
356.8
775.9
14.2
23.6
37.8
342.2
243.3
152.6
$738.1
Activities
2004
$129.9
193.9
323.8
8.1
12.1
20.2
183.2
102.6
17.8
$303.6
2005
$125.8
220.2
346.0
7.4
13.2
20.6
209.0
100.6
15.8
$325.4
Total
2004
$500.2
492.3
992.5
23.3
31.4
54.7
465.9
298.3
173.6
$937.8
2005
$544.9
577.0
1,121.9
21.6
36.8
58.4
551.2
343.9
168.4
$1,063.5
Total
Percentage
Change
2004-05
8.9%
17.2%
13.0%
-7.3%
17.2%
6.8%
18.3%
15.3%
-3.0%
13.4%
As noted earlier, net assets may serve over time as a useful indicator of the City's financial position. For the City of
Carlsbad, assets currently exceed liabilities by $1.1 billion at the close of the most recent fiscal year.
A large portion of the City's net assets (52%) reflects its investment in capital assets (i.e., land, buildings,
machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding.
The City uses these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the City's investment in its capital assets is reported net of related debt, it should be
noted that the resources needed to repay this debt must be provided from other sources since the capital assets
themselves usually won't be used to liquidate these liabilities.
An additional portion of the City's net assets (32%) represents resources that are subject to external restrictions on
how they may be used. The remaining balance of unrestricted net assets ($168.4 million) may be used to meet the
government's ongoing obligations to citizens and creditors.
Just under 52% of the $152.6 million in unrestricted governmental activities net assets is attributable to the General
fund. Although the unrestricted net assets of our business-type activities total $15.8 million, these resources cannot
21
be used to help fund governmental activities. The City can only use these net assets to finance the continuing
operations of the City's enterprises: water, sewer, trash, and golf operations.
Changes in Net Assets
The condensed summary of activities, which follows, shows that net assets increased by $125.7 million during the
year. This increase occurs when spending is less than the revenues received. There were several reasons for the
increase in net assets: an emphasis on efficiencies resulting in a reduction in expenses/expenditures, $1.35 million in
"savings" in the General fund being carried forward into the new fiscal year by various major service areas within
the City to enhance and provide for future services and programs, the build-up of cash reserves in the City's capital
project and enterprise funds for future capital project construction and acquisition, revenues received in the City's
special revenue funds for future services and programs, and the donation of infrastructure assets from developers.
CITY OF CARLSBAD'S CHANGES IN NET ASSETS
(in millions of dollars)
Governmental Business-type
Activities
Revenues
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Property taxes
Sales and use taxes
Other taxes
Income from property and investments
Other
Total revenues
Expenses
General government
Public safety
Community development
Community services
Public works
Interest on long-term debt
Carlsbad Municipal Water District
Sewer
Other business-type activities
Total expenses
Excess (deficiency) before transfers
Transfers
Increase (decrease) in net assets
Beginning net assets
Ending net assets
2004
$15.1
14.6
42.2
33.9
24.6
18.3
3.1
4.8
156.6
8.6
30.9
13.8
15.1
19.5
1.0
-
-
-
88.9
67.7
1.0
68.7
565.5
$634.2
2005
$17.0
12.8
74.4
41.5
24.7
20.4
9.9
2.4
203.1
11.3
34.4
14.4
16.0
22.1
1.0
-
-
-
99.2
103.9
-
103.9
634.2
$738.1
Activities
2004
$26.7
1.5
17.4
1.9
-
-
1.2
-
48.7
-
-
-
-
-
-
21.0
6.9
1.3
29.2
19.5
(1.0)
18.5
285.1
$303.6
2005
$27.5
0.5
17.1
2.0
-
-
4.2
0.6
51.9
-
-
-
-
-
-
21.4
7.2
1.5
30.1
21.8
-
21.8
303.6
$325.4
Total
2004
$41.8
16.1
59.6
35.8
24.6
18.3
4.3
4.8
205.3
8.6
30.9
13.8
15.1
19.5
1.0
21.0
6.9
1.3
118.1
87.2
-
87.2
850.6
$937.8
2005
$44.5
13.3
91.5
43.5
24.7
20.4
14.1
3.0
255.0
11.3
34.4
14.4
16.0
22.1
1.0
21.4
7.2
1.5
129.3
125.7
-
125.7
937.8
$1,063.5
Total
Percentage
Change
2004-05
6.5%
-17.4%
53.5%
21.5%
0.4%
11.5%
227.9%
-37.5%
24.2%
31.4%
11.3%
4.3%
6.0%
13.3%
0.0%
1.9%
4.3%
15.4%
9.5%
44.2%
-100.0%
44.2%
10.3%
13.4%
22
City of Carlsbad
Sources of Revenue for Fiscal Year 2004-05
$255 Million
Other (1%)
Grants/
Contributions (32%)
Income from Property and
Investments (5%)
Other Taxes (4%)
TOT (4%)
Property Taxes (17%)
Charges for Services (18%)
Federal Aid (7%)
Just over 42% of the revenues of the
City's governmental funds are
generated through taxes collected
(property, sales, transient occupancy
tax, etc.), and almost 54% of the City's
business-type revenue is generated
through charges for services. The
following chart graphically depicts the
City's revenue sources.
The large increase in income from
property and investments was primarily
the result of a 4% rise in the average
interest rate earned on the City's cash
portfolio for the year and an average
portfolio that was 10% higher during
the fiscal year. In addition, the
difference in the unrealized loss from
last fiscal year to the current fiscal year was $10.1 million when reporting the value of the City's investments on a
market value basis. This "paper loss", however, will never materialize, as the City holds its investments until
maturity.
The total cost of all programs and services was just over $129.3 million in fiscal year 2004-05. The City's expenses
cover a range of services:
• General Government (9%)
This segment of the City is divided into two major groups, the Policy and Leadership group and the
Administrative Services group. The Policy and Leadership group encompasses all elected officials and the
chief executive offices for the City
State Aid (2%)
Sales Tax (10%)
City of Carlsbad
Functional Expenses for Fiscal Year 2004-05
$129.3 Million
Sewer
6%
General
Government
9%
Public Safety (26%)
Public Safety has always been a top City Council
priority. The major service area includes the Police
Department, whose goal is to provide quality service to
the community to ensure the preservation of life and
property and the maintenance of law and order. The Fire
Department is also part of this major service area with a
mission to enhance the quality of life by delivering
exceptional services in safeguarding lives, property, and
our environment.
Community Development (11%)
The mission of Community Development is to guide and
facilitate the development of the City of Carlsbad. This
is accomplished by ensuring the development of high-
quality projects and public facilities, preservation of the
local environment, diverse housing, employment and
enrichment opportunities, and a strong and stable
economic base. Community Development encompasses
the Hiring Center, Geographic Information Systems
(GIS), Economic Development, Community Promotion, Land Use Planning, Housing and Redevelopment, and
Building Inspection.
Public Safety
26%
Public Works
17%
Community
Services
12%
Community
Development
11%
23
• Community Services (12%)
Community Services consist of the Libraries, Cultural Arts, Recreation, Park Planning, and Senior Citizen
programs. These programs are provided to a wide range of people and assist in their education and cultural
development.
• Public Works (17%)
Public Works is responsible for building and maintaining all of the infrastructure assets of the City. This
service area includes Engineering, Parks, Streets, Median, Street Tree, Buena Vista Channel, and Facilities
Maintenance, Building Maintenance, Street Lighting and Traffic Sign and Signal Maintenance programs.
• Water Operations (17%)
The Carlsbad Municipal Water District, a subsidiary of the City of Carlsbad, provides potable water service to
approximately 85% of the City (78,000 customers). The District purchases 100% of its potable water as
treated water from the Metropolitan Water District and the San Diego County Water Authority. The District
also provides recycled water for irrigational purposes.
• Sewer Operations (6%)
The City of Carlsbad operates and maintains a sanitary sewer collection system, which covers approximately
65% of the geographic area of the City. Sewage is treated by the Encina Wastewater Treatment Plant, a
facility jointly owned by the Cities of Carlsbad and Vista, the Leucadia County Water District, the Vallecitos
Water District, the Buena Vista Sanitation District, and the Encinitas Sanitary District.
• Other Expenses (2%)
Other expenses include costs associated with the City's Solid Waste division, the City's Storm Water
Protection Program, development of a municipal golf course, and interest expense of the City's long-term debt
that is associated with governmental activities.
The following sections will provide information about the operations of the governmental and business-type
activities separately.
Governmental Activities
The increase in net assets for governmental activities was $103.9 million. This increase was generated by total
revenues of governmental activities of $203.1 million ($104.3 million in program revenues and $98.9 million in
general revenues) offset by $99.2 million in total costs of governmental activities.
The following table presents the total cost of each of the City's major programs, as well as each function's program
revenue (fees generated by the activities, contributions, and intergovernmental aid). The net cost (the difference
between adjoining bars in the graph) shows the financial burden that was placed on the City's taxpayers by each of
these functions (costs covered by general revenues).
24
$80 T
$70
$60
$50
$40 -
$30
$20 -
$10 -
Governmental Activities
Program Revenues and Expenses
Fiscal Year 2004-05
(in millions)
"
-
--
--
~iii
(™*|| ~™« f™fji j^«~Ji F*** ^-""-M J fecrM P'"'"
SsH
1
Q Program Revenues
B Expenses
General Public Safety Community Community Public Works
Government Development Services
Revenues are generated through several sources to cover the cost of the City's programs. These revenues include
fees and charges paid by those who directly benefit from the programs ($17 million), grants and contributions from
other governments and organizations which subsidize certain programs ($87.3 million), and taxes and other
revenues (such as income from property and investments and vehicle license fees) received by the City to pay for the
"public benefit" portion, totaling $99.2 million.
During the 2004-05 fiscal year, the City received additional affordable housing revenue from shared appreciation,
when many of the participants in the various loan programs sold their homes for more than the original purchase
price. This one-time community development revenue resulted in program revenues exceeding expenses for the
fiscal year. In addition, development within the City grew at a fast pace during the year, pushing development
revenues from charges for services up by over $1.3 million when compared to last fiscal year.
Program revenues exceed expenses in Public Works. The majority of Public Works revenues are used to acquire
and build capital assets (versus covering operating expenses) that have not yet been constructed. Capital assets are
generally constructed or purchased once sufficient revenue has been accumulated to pay for the cost. The City is
currently in a developing or growing stage, and master plans are continuing to be designed to construct these new
facilities, roads, parks, and other City-owned infrastructure.
Business-Type Activities
Business-Type Activities
Program Revenues and Expenses
$25 1
$20
$15
$10
$5
$0
•=•••|~
SSX
Fiscal Year 2004-05
(in millions)
Water
KBSjjB^H
H^I-^F-TL.
Sewer Solid Waste
0 Program Revenues
ED Expenses
25
Program revenues for the City's business-type activities totaled $45.1 million for the year, while functional expenses
equaled $30.1 million. The City golf course is currently under construction, so the program revenues and functional
expenditures are still minimal, and therefore not shown on the previous page graph. The course is anticipated to be
operational in fiscal year 2007.
Program revenues are higher than program expenses primarily due to capital contributions in the form of capital
connection fees, developer constructed assets donated to the City, and Federal and State capital construction grants
earmarked to help fund the Recycled Water facilities. Capital construction expenses are spread over the life of an
asset as annual depreciation charges (program expenses). In addition, a small portion of the annual surplus is set
aside for rate stabilization and unanticipated events.
Financial Analysis of the City's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. In the current CAFR, several changes were made in the reporting of special revenue funds, including:
• Special Benefit Districts have been combined with the Business Improvement District in the Financing
Districts column.
• Habitat and Agricultural Management have been segregated from the Donations and Bequests column.
• State and Federal Grants have been combined with Police Asset Forfeiture.
Governmental Funds
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances
of spendable resources. Such information is useful in assessing the City's financing requirements. In particular,
unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the
end of the fiscal year.
Governmental Fund Balances
Reserved for Other Purposes (in mi»ions)
($33.8 million) $374.4 Million
Designated for Future Continuing
Reserved for Golf Course
($30.3 million) /'/••' "^^H^'-'• -^•""''. •'> ' v\ ^ Undesignated ($107.9 million)
Designated for Future Continuing
Appropriations
($90.4 million)
Designated for Approved
Capital Projects
Reserved to Liquidate Contracts and ' ($81.6 million)
Purchase Orders
($30.4 million)
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of
$374.4 million, an increase of $44.7 million in comparison with the prior year. Approximately 29% of this amount
($107.9 million) constitutes undesignated fund balance, which is available for spending at the government's
discretion based on the purpose for which it was received. The remainder of the fund balance is reserved or
designated to indicate that it is not available because it has already been committed (1) for future capital projects -
26
22%, (2) to liquidate contracts and purchase orders of the prior period - 8%, (3) for future programs - 24%, (4) the
future construction of a municipal golf course - 8% or (5) for a variety of other restricted purposes - 9%.
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
(in millions of dollars)
Total
Increase Percentage
Total (Decrease)
Revenues
Taxes
Intergovernmental
Licenses and permits
Charges for services
Income from property and investments
Interdepartmental charges
Miscellaneous
Total revenues
Expenses
General government
Public safety
Community development
Community services
Public works
Principal and interest
Total expenses
Excess (deficiency) before transfers
Transfers
Increase (decrease) in fund balance
Beginning fund balance
Ending fund balance
2004
$70.9
5.7
2.3
7.6
1.5
2.6
2.4
93.0
8.7
30.5
6.6
13.7
15.8
0.1
75.4
17.6
(4.7)
12.9
71.2
$84.1
2005
$75.0
9.8
3.4
8.0
3.0
2.6
2.0
103.8
11.3
33.6
7.0
14.6
16.4
0.0
82.9
20.9
(5.6)
15.3
84.1
$99.4
2004-05
$4.1
4.1
1.1
0.4
1.5
0.0
(0.4)
10.8^^^=^==
2.6
3.1
0.4
0.9
0.6
(0.1)
7.5
Change
5.8%
71.9%
47.8%
5.3%
100.0%
0.0%
-16.7%
11.6%
29.9%
10.2%
6.1%
6.6%
3.8%
-100.0%
9.9%
The General fund is the main
operating fund of the City, and at
the end of the fiscal year had a
total fund balance of $99.4
million, an increase of $15.3
million. The unreserved fund
balance portion of the General
fund was $54.4 million, of which
$15 million was designated for
future programs and service
enhancements.
The increase in revenues was
primarily due to four factors: the
effects of a strong housing
market on property and transfer
taxes, a rebound in the tourism
industry (higher transient
occupancy tax), the repayment of
the vehicle license fee backfill
from fiscal year 2003-04 by the
State of California, increased
development-related revenue
(building permits, planning fees
and building fees), and the
effects of higher interest rates
and a larger average cash balance in the General fund (increased income from property and investments).
The increase in General fund expenditures were driven by the following factors:
• Normal salary and benefit increases.
• PERS rates for our miscellaneous plan increased from 2.258% to 16.664%, and rates for the safety plan
increased from 9.367% to 27.573% for a total impact of $4.3 million.
• Significant costs to repair severe damage caused by the heavy rains from the 2005 winter storms.
• The inclusion of the Records Management department within the General fund this year (last year it was
classified as an internal service fund).
One major governmental fund, the Redevelopment debt service fund, had a negative fund balance of just under
$12.1 million. This deficit was created when the City's General fund loaned the agency money to cover debt service
charges during the period soon after the agency's bonds were issued, but prior to the agency being able to support
the debt service with property tax increment revenues alone. The agency has begun to repay the $13.1 million
advance back to the City's General fund, as the tax increment collected within the redevelopment area grows.
Five of the six remaining major governmental funds, which are all capital project funds, had increases in their fund
balances during the year. These increases in fund balances are all designated for the construction or purchase of
future capital assets. The Rancho Santa Fe Road Project fund had a decrease in fund balance due to the near
completion of construction of this major arterial roadway in the City of Carlsbad.
Proprietary Funds
The purpose of the City's proprietary funds is to provide short and long-term financial information about the City's
business-type activities. The analysis focuses on the determination of operating income, changes in net assets (cost
recovery), financial position, and cash flows.
27
The Carlsbad Municipal Water District funds had an operating loss of approximately $2.1 million for the year.
Heavy rains during the winter and spring led to a decrease in water sales revenue of 3% for the year. Increased
Metropolitan Water District and County Water Authority fixed charges (suppliers of the City's potable water), as
well as consulting expenses associated with a proposed new desalination plant, added to the operating loss for the
year. On the other hand, non-operating revenues (primarily property tax and investment earnings) more than offset
the operating loss, resulting in an overall gain of $1.5 million.
The Sewer funds had an annual operating loss of approximately $341,000 for the fiscal year. Total revenues from
charges for services increased 3% from the previous year; however, higher sewer plant operating costs led to an
operating loss for the year. Staffing costs rose almost 8% due to normal salary increases and an increase in
retirement and healthcare costs. In addition, there were higher outside services and maintenance expenditures
related to the rehabilitation and repair of sewer lines and pump stations. As with the water funds, the non-operating
revenue (investment earnings and a one-time gain on the sale of property) more than offset the operating loss,
resulting in an overall gain of $1.7 million.
Solid Waste operations and the Storm Water Protection Program are combined on the City's financial reports.
Revenues increased in the current year by approximately 48% due to the fact that the storm water protection fee was
collected for only a portion of the previous year (the fee went into effect in December 2003).
$25-
$20
$15-
$10-
$5-
$0
Business-Type Activities
Operating Revenues and Expenses
Fiscal Year 2004-05
(in millions)*~- — '
_-— -
-Tr*"""1?
JiH
Water
[^"•"•"fiS
rX*X"X'"^Si ^^^^"^^SLmmmmr^^p^^HL. 1 r*"Hl<<B_
Sewer Solid Waste
C3 Operating Revenues
S Operating Expenses
The new municipal golf course will begin construction in fiscal year 2005-06, and will be funded with a
combination of a loan from the General fund and bonds. The advance from the City and the bonds will be repaid
through fees charged to the users of the golf course.
Unrestricted net assets for the Water, Golf, Sewer, and Solid Waste operations at the end of the year amounted to
$15.8 million, or approximately 5% of the net assets of all proprietary funds. These assets will be used for future
rate stabilization efforts as well as for any emergency situation. Approximately 31% of the net assets are restricted
for future capital construction of new and replacement water and sewer infrastructure assets.
General Fund Budgetary Highlights
Management monitors revenues during the year and will update estimated revenue figures when new information is
received by the City. Estimated revenues were increased during this year by $3.5 million to reflect the following
changes:
• The impacts on TOT from a rebound in the tourism industry.
• Higher franchise taxes due in part to increased natural gas prices.
• Studies paid for by developers.
28
• Higher rate of residential and commercial/industrial development than anticipated.
• State and federal grants not originally budgeted.
• Donations received by the City.
• Additional State reimbursements for booking fees and mandated costs.
The increase from the total original expenditure budget to the final budget amounted to S2.6 million, due
predominantly to:
• Local emergency repair work from winter storms.
• Appropriating funds received from developers during the year for developer-funded studies.
• Budgeted expenditures associated with new grant revenues.
• Appropriating donations received.
• Appropriating transfers from police grants for the City's purchase and installation of a new Computer Aided
Dispatch (CAD) system.
• Traffic signal battery backup system.
The difference between the final budgeted expenditures and the actual expenditures for the year on a budgetary basis
of $17.3 million, can be generally summarized as follows:
• $15.3 million in "savings" by the various major service areas within the City. Current year savings were
generated from:
> Unfilled vacancies.
> Overall awareness of fiscal responsibility throughout the City.
> Planned delay in the purchase and installation of new library radio frequency identification system.
> Anticipated purchase of a fire ladder truck in the upcoming fiscal year.
> Projected costs in the next fiscal year for several key executive positions due to recent and anticipated
retirements.
> Upcoming renovation costs resulting from the purchase of the former Carlsbad Unified School District
building adjacent to the Senior Center.
> Expected expansion of the Senior Center.
> Future purchases of replacement radios for the Police Department.
> Funds accumulated for facility maintenance projects and traffic signal battery backup systems.
> Anticipated costs associated with updating the City's General Plan and Local Coastal Program, and
revising the associated Municipal Code.
• $2 million in unspent major capital outlay appropriations was not carried forward and remaining balances from
programs with a one-year life cycle, including:
> A fire engine not purchased.
> Unspent employee development and training funds.
> Unspent administrative special project funds.
> Unspent unfunded litigation funds.
> Unspent miscellaneous professional service fees for building inspection services.
> Unspent engineering plancheck funds.
> Remaining council and non-departmental contingency funds.
> Unspent budget for citywide goals.
For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses
pursuant to GASB 31; actual expenditures have been adjusted to include remaining encumbrances, and transfers out
have been adjusted to reflect any transfer that was approved through the budget process as an expenditure but
recorded as an advance in the financial statements.
29
Capital Asset and Debt Administration
Capital Assets
At the end of 2005, the City had recorded an investment of just over $666.1 million in a broad range of capital
assets, including park facilities, land, buildings, roads, bridges, water and sewer lines, police and fire vehicles, and
other maintenance equipment. This number does not include governmental infrastructure assets constructed prior to
July 1, 2001, as the City has not completed its inventory of these assets. Under GASB 34, the City has until fiscal
year 2005-06 to complete a full accounting of its infrastructure. New infrastructure purchased or constructed during
the last four fiscal years in the City's governmental funds has been added to the total capital asset figures.
CITY OF CARLSBAD'S CAPITAL ASSETS
(in millions of dollars)
Governmental Business-Type
Activities
Land
Buildings and other structures
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
Sewage treatment facility
Accumulated depreciation
Total
2004
$55.1
66.9
10.9
21.2
112.9
61.8
-
328.8
(30.4)
$298.4
2005
$57.1
69.2
17.6
21.9
155.8
72.2
-
393.8
(37.0)
$356.8
Activities
2004
$8.7
2.2
5.6
1.6
138.3
48.4
37.7
242.5
(48.6)
$193.9
2005
$8.7
16.2
5.6
1.5
159.7
40.3
40.3
272.3
(52.1)
$220.2
Total
2004
$63.8
69.1
16.5
22.8
251.2
110.2
37.7
571.3
(79.0)
$492.3
2005
$65.8
85.4
23.2
23.4
315.5
112.5
40.3
666.1
(89.1)
$577.0
Total
Percentage
Change
2004-05
$2.0
16.3
6.7
0.6
64.3
2.3
2.6
94.8
(10.1)
$84.7
Change
2004-05
3.1%
23.6%
40.6%
2.6%
25.6%
2.1%
6.9%
16.6%
12.8%
17.2%
This year's major capital asset additions included:
• The water recycling facility and the Vista-Carlsbad interceptor.
• The second phase of Leo Carrillo Park and the Poinsettia Park synthetic turf soccer field.
• Developer-dedicated streets, drainage facilities, water lines, sewer lines, streetlights, and drainage facilities at
Calavera Hills and Rancho Carrillo.
In addition to carrying forward appropriations of $139.4 million for previously budgeted projects, the City's fiscal
year 2005-06 capital budget appropriates an additional $88.7 million for capital projects. These additional
appropriations are principally for construction of the golf course, park development, a new fire station, the pavement
management program, street projects, enhancing the sewer collection system, additional water lines, traffic signals,
miscellaneous civic projects and loan repayments. These projects will be financed by development fees,
infrastructure and replacement transfers from the General fund, special district fees and taxes, water and sewer
replacement reserves, and other sources including grants and contributions from other agencies. More detailed
information about the City's capital assets is presented in Note 6 to the financial statements and in the City's Capital
Improvement Program document, which can be obtained from the Finance Department.
Long-Term Debt
At year-end, the City had $23.2 million in bonds, certificates of participation, loans, leases, and accrued assessments
payable, a decrease of $2 million from last year, as shown in the table below. More detail about the City's long-
term liabilities is presented in Note 8 to the financial statements.
30
CITY OF CARLSBAD'S OUTSTANDING DEBT
(in millions of dollars)
Governmental Business-Type
Activities
Bonds
Certificates of participation
Loans
Obligations under capital leases
Installment purchase agreement
Accrued assessments
Less: Deferred charges
Total
2004
$12.8
3.4
-
0.1
-
-
-
$16.3
2005
$12.5
2.7
-
-
-
-
-
$15.2
Activities
2004
$0.0
-
1.3
-
7.9
0.3
(0.6)
$8.9
2005
$0.0
-
1.2
-
7.3
-
(0.5)
$8.0
Total
2004
$12.8
3.4
1.3
0.1
7.9
0.3
(0.6)
$25.2
2005
$12.5
2.7
1.2
-
7.3
-
(0.5)
$23.2
Total
Percentage
Change
2004-05
-2.3%
-20.6%
-7.7%
-100.0%
-7.6%
-100.0%
-16.7%
($0.1)
Economic Factors and Next Year's Budgets and Rates
• The State of California adopted its 2005-06 annual budget with the following provisions affecting the City:
> Vehicle License Fee revenue will be reduced by 67%, and offset by an increase in property taxes in the
same amount.
> The City will be required to make a $ 1.8 million "contribution" to the State in the fiscal year.
> The State implemented the "Triple Flip" in fiscal year 2004-05, whereby the City's sales tax receipts were
reduced by one-quarter, and this reduction was made up with property taxes equating to the same amount.
This will continue in the 2005-06 fiscal year.
> Both the VLF and "Triple Flip" swaps will have no effect on the ultimate amount of revenue the City
receives, but it will result in a delay in the timing of the receipt of money by the City.
• Total assessed values in the City stand at almost $ 16 billion, almost double what they were just five years ago.
• PERS rates for our miscellaneous plan have increased for the 2005-06 fiscal year from 16.664% to 20.869%,
and have increased from 27.573% to 27.927% for our safety plan.
• Retail natural gas prices have increased recently due to the hurricanes that recently hit the Gulf Coast,
impacting our future franchise fee revenue.
• The Consumer Price Index (CPI) for the western region of the United States for urban households increased by
3.5% during the twelve months ended November 30, 2005.
• The total number of housing units in Carlsbad grew by 3.7% in calendar year 2004, impacting our budgeted
expenditures for fiscal year 2005-06.
• Median home prices increased by 22% in calendar year 2004.
All of these factors were considered when preparing the City of Carlsbad's General fund budget for the 2005-06
fiscal year. Budgeted expenditures are expected to increase 6.7% to $97.2 million. The increase is mainly due to
the increase in personnel costs. Personnel costs make up approximately 66% of the General fund budget so any
changes in these costs can have a significant effect on the total budget. In addition, just over $15.3 million in
unspent 2004-05 budgeted expenditures will be carried over to the 2005-06 fiscal year, as well as $3.8 million in
open encumbrances as of June 30, 2005.
During the current fiscal year, the unreserved fund balance in the General fund decreased to $39 million. This
decrease was the result of reserving an additional $15 million for the upcoming construction of an 18-hole
championship golf course. If the City's budget estimates are realized, the City's budgeted unreserved General fund
balance is expected to increase modestly by the close of fiscal year 2006.
The City's business-type activities reflect the following:
• No anticipated rate structure changes during the next fiscal year for water operations.
• Sewer rates will be increasing by 4% in fiscal year 2005-06.
• No projected significant changes in other revenue sources.
31
• Additional water personnel will be hired to operate and maintain the expanded recycled water distribution
system.
• The Solid Waste Management fund budget reflects a 20% increase, or $320,000, to fund costs associated with
negotiating a new solid waste contract, a loan repayment and street sweeping costs, which were previously,
funded elsewhere.
• Other changes in the Enterprise funds are the result of normal fluctuations in operations.
Contacting the City's Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general
overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have
any questions about this report or need additional information, contact the Finance Department,
1635 Faraday Avenue, Carlsbad, CA 92008, (760) 602-2430, or visit us online at www.carlsbadca.gov.
32
33
CITY OF CARLSBAD, CALIFORNIA
Statement of Net Assets
June 30, 2005
Primary Government
ASSETS
Cash and investments
Receivables:
Taxes
Accounts, net
Other
Due from other governments
Inventories
Prepaid items
Loan and reimbursement receivables
Restricted assets:
Cash and investments
Accrued interest
Internal balances
Capital assets:
Land
Buildings and other structures
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
Sewage treatment facility
Less accumulated depreciation
Total capital assets
Total assets
Governmental
Activities
$ 387,803,652
7,637,383
453,066
223,851
4,757,145
185,368
428,046
11,433,317
659,708
15,580
5,497,419
57,086,762
69,203,460
17,629,241
21,890,701
155,795,788
72,209,568
-
(37,035,990)
356,779,530
$ 775,874,065
Business-type
Activities
$ 123,414,224 1
37,105
3,864,943
-
2,051,677
546,224
-
437,510
953,706
21,300
(5,497,419)
8,663,600
16,208,704
5,556,571
1,535,443
159,709,825
40,328,185
40,318,093
(52,142,444)
220,177,977
$ 346,007,247
Total
$ 511,217,876
7,674,488
4,318,009
223,851
6,808,822
731,592
428,046
11,870,827
1,613,414
36,880
-
65,750,362
85,412,164
23,185,812
23,426,144
315,505,613
112,537,753
40,318,093
(89,178,434)
576,957,507
$ 1,121,881,312
The notes to the financial statements are an integral part of this statement.
34
CITY OF CARLSBAD, CALIFORNIA
Statement of Net Assets (Continued)
June 30,2005
Primary Government
LIABILITIES
Accrued liabilities
Accrued interest payable
Due to other governments
Estimated claims payable
Current portion of long-term debt
Deposits payable
Current liabilities payable from
restricted assets - accrued interest
Unearned revenue
Noncurrent liabilities:
Due in more than one year, net of deferred
charges and unamortized issuance costs
of $497,365
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Capital assets
Other purposes
Unrestricted
Total net assets
Governmental
Activities
$ 12,022,225
270,683
3,084,898
5,620,106
1,036,662
577,334
-
999,612
14,170,704
37,782,224
342,231,872
164,334,833
78,913,066
152,612,070
$ 738,091,841
Business-type
Activities
$ 6,595,730
-
4,421,084
-
639,079
574,168
157,169
860,410
7,391,155
20,638,795
208,964,249
100,597,456
-
15,806,747
$ 325,368,452
Total
$ 18,617,955
270,683
7,505,982
5,620,106
1,675,741
1,151,502
157,169
1,860,022
21,561,859
58,421,019
551,196,121
264,932,289
78,913,066
168,418,817
$ 1,063,460,293
The notes to the financial statements are an integral part of this statement.
35
CITY OF CARLSBAD
Statement of Activities
For the Year Ended June 30, 2005
Functions/Programs
Primary government:
Governmental activities:
General government
Public safety
Community development
Community services
Public works
Interest on long-term debt
Total governmental activities
Business-type activities:
Carlsbad Municipal Water District
Golf course
Sewer
Solid waste
Total business-type activities
Total primary government
Expenses
$ 11,352,893
34,366,093
14,362,610
16,033,363
22,064,209
1,013,773
99,192,941
21,422,207
25,344
7,234,986
1,488,109
30,170,646
$ 129,363,587
Charges for
Services
S 925,689
3,232,000
5,934,071
2,292,308
4,632,751
-
17,016,819
18,787,973
-
6,378,446
2,348,266
27,514,685
S 44,531,504
Program Revenues
Operating
Grants and
Contributions
$ 843,776
280,908
9,083,968
817,995
1,790,638
-
12,817,285
489,722
-
-
18,504
508,226
$ 13,325,511
Capital
Grants and
Contributions
$ 1,464,716
-
1,016,867
1,695,188
70,237,178
-
74,413,949
12,816,187
-
4,306,090
-
17,122,277
S 91,536,226
General revenues:
Property taxes
Sales and use taxes
Transient occupancy taxes
Franchise taxes
Business license taxes
Real property transfer taxes
Intergovernmental, unrestricted
Homeowners exemptions
Income from property and investments
Gain (loss) on sale of capital assets
Other general revenues
Transfers
Total general revenues and transfers
Change in net assets
Net assets at beginning of year
Net assets at end of year
The notes to the financial statements are an integral part of this statement.
36
Net Revenue (Expense) and
Changes in Net Assets
Primary Government
Governmental
Activities
$ (8,118,712)
(30,853,185)
1,672,296
(11,227,872)
54,596,358
(1,013,773)
5,055,112
-
-
-
-
5,055,112
41,478,809
24,758,792
10,072,278
5,682,953
2,889,989
1,646,331
2,136,364
357,240
9,910,572
(149,678)
81,997
98,865,647
103,920,759
634,171,082
_$ 738,091, 841
Business-type
Activities
$
-
-
-
-
-
-
10,671,675
(25,344)
3,449,550
878,661
14,974,542
14,974,542
2,025,306
-
-
-
-
-
-
-
4,162,386
229,400
348,863
6,765,955
21,740,497
303,627,955
$ 325,368,452
Total
$ (8,118,712)
(30,853,185)
1,672,296
(11,227,872)
54,596,358
(1,013,773)
5,055,112
10,671,675
(25,344)
3,449,550
878,661
14,974,542
20,029,654
43,504,115
24,758,792
10,072,278
5,682,953
2,889,989
1,646,331
2,136,364
357,240
14,072,958
79,722
430,860
105,631,602
125,661,256
937,799,037
$1,063,460,293
37
CITY OF CARLSBAD
Balance Sheet
Governmental Funds
June 30, 2005
ASSETS
Cash and investments
Receivables:
Taxes
Other
Accounts, net
Due from other funds
Due from other governments
Inventories
Prepaid items
Restricted cash and investments
Loans receivable
Deposits
Advances to other funds
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accrued liabilities
Due to other funds
Deposits payable
Due to other governments
Advances from other funds
Deferred revenue
Total liabilities
Redevelopment
General Debt
Fund Service Funds
S 85,055,541 $ 1,554,057
7,512,236 88,427
157,209
285,731
720,942
1,324,553
14,733
15,813
-
144,138
-
19,564,964
$114,795,860 $ 1,642,484
$ 4,175,784 $
-
455,350
5,585 53,776
13,688,294
10,763,017
15,399,736 13,742,070
Assessment Bridge and
and Other Thoroughfare
Districts Districts
$ 32,169,653 $ 7,922,706
-
66,642
-
-
-
-
-
-
-
-
-
$ 32,236,295 $ 7,922,706
$ 5,783 $ 492
-
-
-
790,854 3,643,344
-
796,637 3,643,836
Fund balances:
Reserved
Unreserved:
Designated, reported in:
Genera] Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
Undesignated, reported in:
General Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
Total fund balances
Total liabilities and fund balances
44,996,160
15,042,975
40,679 26,207
31,398,979 4,252,663
39,356,989
(12,099,586)
99,396,124 (12,099,586)31,439,658 4,278,870
S 114,795,860 $ 1,642,484 S 32,236,295 $ 7,922,706
The notes to the financial statements are an integral part of this statement.
38
Community General Public
Facilities Capital Facilities
District No. 1 Construction Construction
$ 45,136,300 $ 49,953,725 $ 40,096,627
3,489
.
.
-
.
.
.
.
-
3,220,854
$ 45,139,789 $ 53,174,579 $ 40,096,627
Rancho Santa Other
Fe Road Governmental
Project Funds
$ 16,401,484 $ 89,027,343
33,231
-
166,085
-
1,939,441 738,283
-
412,233
675,288
11,289,179
3,643,344
$ 18,340,925 $ 105,984,986
Total
Governmental
Funds
$367,317,436
7,637,383
223,851
451,816
720,942
4,002,277
14,733
428,046
675,288
11,433,317
26,429,162
$419,334,251
$ 5,116 $ 75,305 $ 898,770
-
57,472
-
-
135,060 481,112
5,116 210,365 1,437,354
110,992 4,876,997 7,694,786
.
.
45,023,681 10,417,756 30,964,487
_
.
-
37,669,461
45,134,673 52,964,214 38,659,273
$ 45,139,789 $ 53,174,579 $ 40,096,627
$ 1,955,729 $ 1,006,289
720,942
64,512
3,025,537
2,809,251
113,190
4,981,266 4,714,184
10,837,169 25,996,244
4,676,767
31,304
2,522,490 27,634,680
-
25,354,399
751,019
16,826,389
13,359,659 101,270,802
$ 18,340,925 $ 105,984,986
$ 8,123,268
720,942
577,334
3,084,898
20,931,743
11,492,379
44,930,564
94,579,234
15,042,975
4,676,767
31,304
152,214,736
39,356,989
25,354,399
(11,348,567)
54,495,850
374,403,687
$419,334,251
39
CITY OF CARLSBAD
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30,2005
Total fund balances - governmental funds.
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds.
Governmental funds
Internal service funds
Total capital assets
Internal service funds are used by management to charge the costs of fleet
management, self insured benefits, information technologies, records management,
risk management and workers' compensation to individual funds. The assets
and liabilities of the internal service funds are included in governmental
activities in the statement of net assets.
Total internal service fund net assets
Internal service fund net assets included as part of total capital assets
Internal service fund net assets less capital assets
Accrued interest is not due and payable in the current period and, therefore,
is not reported in the funds.
Retentions payable are not due and payable in the current period and, therefore,
are not reported in the funds.
Interest receivable on advances to other funds is not a current financial
resource and, therefore, is not recognized as revenue in the funds until received.
A portion of the taxes receivable is not available to pay for current-period
expenditures and, therefore, is deferred in the funds.
A portion of accounts receivables are not available to pay for current-period
expenditures and, therefore, is deferred in the funds.
Long-term liabilities, including bonds payable, are not due and payable
in the current period and, therefore, are not reported in the funds.
Governmental funds
Net assets of governmental activities.
S 374,403,687
351,153,119
5,626,411
356,779,530
17,857,899
(5,626,411)
12,231,488
(270,683)
(337,582)
9,566,209
813,368
113,190
(15,207,366)
$ 738,091,841
The notes to the financial statements are an integral part of this statement.
40
41
CITY OF CARLSBAD
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2005
Revenues:
Taxes
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Income from property and investments
Interdepartmental charges
Contributions from property owners
Donations
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Community development
Community services
Public works
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits) at beginning of year
Fund balances (deficits) at end of year
General
Fund
$ 75,003,646
9,815,218
3,392,682
8,023,260
950,813
2,956,876
2,565,543
-
-
1,066,032
103,774,070
11,341,515
33,544,123
6,999,415
14,561,441
16,397,864
-
32,577
2,894
82,879,829
20,894,241
139,765
(5,695,430)
(5,555,665)
15,338,576
84,057,548
$ 99,396,124
Redevelopment
Debt
Service Funds
$ 2,001,511
-
-
-
-
67,468
-
-
-
-
2,068,979
19,854
-
-
-
-
-
380,000
1,356,804
1,756,658
312,321
-
(1,942,000)
(1,942,000)
(1,629,679)
(10,469,907)
$ (12,099,586)
Assessment
and Other
Districts
$
-
-
-
-
627,137
-
28,860,361
-
-
29,487,498
81,003
-
-
-
-
12,550,955
-
-
12,631,958
16,855,540
2,365,679
(18,288)
2,347,391
19,202,931
12,236,727
$ 31,439,658
The notes to the financial statements are an integral part of this statement.
42
Bridge and
Thoroughfare
Districts
$
187,407
1,737,242
12,241
1,936,890
282,015
282,015
1,654,875
106,363
106,363
1,761,238
2,517,632
$ 4,278,870
Community General Public Rancho Santa
Facilities District Capital Facilities Fe Road
No. 1 Construction Construction Project
$ 4,752,799 $ - $ $
3,964,980
1,173,525 1,417,863 1,254,156 448,343
1,174,399 3,919 8,769,052 765,572
738 12,447
7,100,723 1,421,782 10,023,946 5,191,342
60,643 - 39,699
47,910 1,569,012 7,987,387 9,432,679
108,553 1,569,012 8,027,086 9,432,679
6,992,170 (147,230) 1,996,860 (4,241,337)
1,037,535
(2,365,679)
1,037,535 - (2,365,679)
6,992,170 890,305 1,996,860 (6,607,016)
38,142,503 52,073,909 36,662,413 19,966,675
$ 45,134,673 $52,964,214 $38,659,273 $13,359,659
Other
Governmental
Funds
$ 2,307,151
10,465,043
2,410,032
132,885
2,609,063
134,000
8,135,280
164,264
14,981
26,372,699
570,689
275,041
7,319,551
182,094
2,338,781
14,549,661
627,559
141,494
26,004,870
367,829
6,578,995
(206,940)
6,372,055
6,739,884
94,530,918
$101,270,802
Total
Governmental
Funds
$ 84,065,107
24,245,241
3,392,682
10,433,292
1,083,698
10,741,838
2,699,543
49,445,825
164,264
1,106,439
187,377,929
12,113,403
33,819,164
14,318,966
14,743,535
18,736,645
46,419,619
1,040,136
1,501,192
142,692,660
44,685,269
10,228,337
(10,228,337)
.
44,685,269
329,718,418
$ 374,403,687
43
CITY OF CARLSBAD
Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the Statement of Activities
For the Year Ended June 30, 2005
Net change in fund balances - total governmental funds.44,685,269
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense.
Purchase of capital assets
Depreciation expense
46,079,631
(6,126,640)
Governmental funds do not reflect the donation of capital assets as revenues.18,328,564
Governmental funds report the entire proceeds from the sale of capital assets as revenue.
However, in the statement of activities, the net gain or loss from the sale of capital
assets is reported.(149,678)
The repayment of the principal of long-term debt consumes the current financial
resources of governmental funds but has no effect on net assets.1,040,136
Some expenses reported in the statement of activities do not require the use
of current financial resources, and therefore are not reported as expenditures
in governmental funds.18,016
Unpaid interest income on advances to other funds is not a current financial
resource, and therefore is not recognized as revenue in the funds.469,403
A portion of sales and use taxes is not available to pay for current-period
expenditures and, therefore, is deferred in the funds.
A portion of accounts receivables is not available to pay for current-period
expenditures and, therefore, is deferred in the funds.
The net revenue of activities of internal service funds is reported
with governmental activities.
Change in net assets of governmental activities.
143,238
113,190
(680,370)
$ 103,920,759
The notes to the financial statements are an integral part of this statement.
44
45
CITY OF CARLSBAD
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
General Fund
For the Year Ended June 30, 2005
Revenues:
Taxes
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Income from property and investments
Interdepartmental charges
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Community development
Community services
Public works
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balance at beginning of year
Fund balance at end of year
Budgeted
Original
$ 72,586,000
6,220,000
2,880,000
7,080,000
950,000
2,910,000
2,700,000
750,000
96,076,000
15,885,678
36,782,752
9,795,205
19,371,980
19,587,791
32,577
2,894
101,458,877
(5,382,877)
-
(5,765,751)
(5,765,751)
(11,148,628)
84,057,548
$ 72,908,920
Amounts
Final
$ 74,487,000
6,767,000
3,000,000
7,778,000
900,000
3,010,000
2,600,000
1,000,000
99,542,000
17,158,714
37,125,031
9,970,360
19,730,580
20,001,480
32,577
2,894
104,021,636
(4,479,636)
139,765
(6,031,181)
(5,891,416)
(10,371,052)
84,057,548
$ 73,686,496
Actual Amounts
(Budgetary Basis)
$ 75,003,646
9,815,218
3,392,682
8,023,260
950,813
3,279,619
2,565,543
1,066,032
104,096,813
12,596,632
33,886,092
7,519,772
15,002,701
17,636,459
32,577
2,894
86,677,127
17,419,686
139,765
(6,031,181)
(5,891,416)
11,528,270
84,057,548
S 95,585,818
Variance With
Final Budget -
Over
(Under)
$ 516,646
3,048,218
392,682
245,260
50,813
269,619
(34,457)
66,032
4,554,813
(4,562,082)
(3,238,939)
(2,450,588)
(4,727,879)
(2,365,021)
-
-
(17,344,509)
21,899,322
-
-
.
$ 21,899,322
The notes to the financial statements are an integral part of this statement.
46
CITY OF CARLSBAD
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
General Fund (Continued)
For the Year Ended June 30, 2005
BUDGET-TO-GAAP RECONCILIATION
Actual Amounts
(Budgetary Basis)
Revenues
Actual amounts (budgetary basis) "available for appropriation" from
the budgetary comparison schedule (previous page).
The recording of unrealized gains and losses on the City's investments
are shown for financial reporting purposes (pursuant to GASB 3 1 ),
but are not shown for budgetary purposes.
Expenditures
Actual amounts (budgetary basis) "total charges to appropriations"
from the budgetary comparison schedule (previous page).
Differences - budget to GAAP:
Encumbrances are shown in the year encumbered for budgetary purposes,
but in the year paid for financial reporting purposes.
Other financing sources (uses)
Actual amounts (budgetary basis) "total other financing sources (uses)"
from the budgetary comparison schedule (previous page).
Differences - budget to GAAP:
Some advances are budgeted for as transfers out for budgetary purposes,
but reflected as advances for financial reporting purpes.
$ 104,096,813
(322,743)
S 103,774,070
$ 86,677, 1 27
(3,797,298)
S 82,879,829
S (5,891,416)
335,75 1
S (5,555,665)
The notes to the financial statements are an integral part of this statement.
47
CITY OF CARLSBAD
Statement of Net Assets
Proprietary Funds
June 30, 2005
Business-type Activities -
ASSETS
Carlsbad
Municipal
Water District
Golf
Course Sewer
Current assets:
Cash and investments
Receivables:
Taxes
Accounts, net
Due from other governments
Inventories
Total current assets
Noncurrent assets:
Restricted assets:
Cash and investments
Accrued interest
Total restricted assets
Loans and reimbursement receivables
Capital assets:
Land
Buildings and other structures
Improvements other than buildings
Machinery and equipment
Infrastructure
Construction in progress
Sewage treatment facility
Less accumulated depreciation
Total capital assets (net of accumulated
depreciation)
Total noncurrent assets
Total assets
$ 53,208,003 $782,834 $ 62,840,949
37,105
2,379,085
1,331,007
538,721
57,493,921
-
1,583
-
-
784,417
-
818,998
720,670
7,503
64,388,120
-
-
953,706
21,300
975,006
-
1,909,565
16,208,704
2,185,604
963,255
101,057,201
24,899,289
-
(25,875,801)
121,347,817
121,347,817
$ 178,841,738 :
437,510
5,075,228 1,678,807
-
3,370,967
572,188
58,652,624
6,628,570 8,800,326
40,318,093
(26,266,643)
11,703,798 87,126,362
11,703,798 88,538,878
S 12,488,215 $ 152,926,998
The notes to the financial statements are an integral part of this statement.
48
Enterprise Funds
Solid
Waste Totals
Governmental
Activities -
Internal
Service
Funds
$ 6,582,438 $ 123,414,224 20,486,216
665,277
37,105
3,864,943
2,051,677
546,224
1,250
754,868
170,635
7,247,715 129,914,173 21,412,969
953,706
21,300
-
-
975,006
437,510
8,663,600
16,208,704
5,556,571
1,535,443
159,709,825
40,328,185
40,318,093
(52,142,444)
220,177,977
221,590,493
$ 7,247,715 $ 351,504,666
-
_
-
-
15,175,787
-
-
-
(9,549,376)
5,626,41 1
5,626,41 1
S 27,039,380
(Continued)
49
CITY OF CARLSBAD
Statement of Net Assets
Proprietary Funds (Continued)
June 30, 2005
Business-type Activities -
LIABILITIES
Current liabilities:
Accrued liabilities
Due to other governments
Estimated claims payable
Current portion of long-term debt
Deposits payable
Total current liabilities
Carlsbad
Municipal
Water District
$ 4,128,797
4,421,084
-
124,072
148,012
8,821,965
Golf
Course
$ 84,093 !
-
-
-
4,749
88,842
Sewer
S 2,022,384
-
-
515,007
421,407
2,958,798
Current liabilities payable from restricted assets:
Accrued interest
Noncurrent liabilities:
Advance from other funds
Deferred revenue
Loan payable
Installment purchase agreement, net of deferred
charges of 3497,365
Total noncurrent liabilities
Total liabilities
1,098,527
4,137,200
157,169
860,410
6,292,628
1,098,527
9,920,492
4,137,200
4,226,042
7,153,038
10,269,005
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Capital assets
Unrestricted
Total net assets
120,125,218
45,691,348
3,104,680
$ 168,921,246 <
7,566,598
-
695,575
5 8,262,173
81,272,433
54,906,108
6,479,452
S 142,657,993
The notes to the financial statements are an integral part of this statement.
50
Enterprise Funds
Solid
Waste
$ 360,456
360,456
Total
Proprietary
Funds
$ 6,595,730
4,421,084
639,079
574,168
12,230,061
Governmental
Activities -
Internal
Service
Funds
$ 3,561,375
5,620,106
9,181,481
157,169
1,360,219
1,360,219
1,720,675
5,497,419
860,410
1,098,527
6,292,628
13,748,984
26,136,214
-
-
9,181,481
5,527,040
$ 5,527,040
208,964,249
100,597,456
15,806,747
$ 325,368,452
5,626,411
12,231,488
$ 17,857,899
51
CITY OF CARLSBAD
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
For the Year Ended June 30, 2005
Business-type Activities -
Operating revenues:
Water sales
Sewer service charges
Other charges for services
Contributions from other government agencies
Miscellaneous
Total operating revenues
Operating expenses:
Scwcr plant operations
Purchased water
Depreciation
Fuel and supplies
Claims expense
Small equipment purchases
General and administrative
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Income from property and investments
Interest expense and fees
Gain on sale of property
Property taxes
Other financing sources
Total nonoperating revenues
Carlsbad
Municipal Golf
Water District Course
$ 18,018,649 S - $
-
769,324
489,722
25,580
19,303,275
-
10,945,363
1,874,504
-
-
-
8,565,428 25,344
21,385,295 25,344
(2,082,020) (25,344)
1,638,447 130,735
(36,912)
1,413
2,025,306
223,858
3,628,254 354,593
Sewer
>
6,296,639
81,807
-
99,425
6,477,871
2,416,863
-
1,716,859
-
-
-
2,685,149
6,818,871
(341,000)
1,851,325
(54,651)
227,987
-
-
2,024,661
Income (loss) before transfers and capital
contributions
Transfers in
Transfers out
Capital contributions
Change in net assets
Total net assets at beginning of year
Total net assets at end of year
1,546,234
12,816,187
14,362,421
154,558,825
329,249
329,249
7,932,924
1,683,661
4,306,090
5,989,751
136,668,242
168,921,246 $ 8,262,173 S 142,657,993
The notes to the financial statements are an integral part of this statement.
52
Enterprise Funds
Solid Waste
$
-
2,348,266
18,504
-
2,366,770
-
-
-
-
-
1,488,109
1,488,109
878,661
180,415
-
-
-
-
180,415
Totals
$ 18,018,649
6,296,639
3,199,397
508,226
125,005
28,147,916
2,416,863
10,945,363
3,591,363
-
-
-
12,764,030
29,717,619
(1,569,703)
3,800,922
(91,563)
229,400
2,025,306
223,858
6,187,923
Governmental
Activities -
Internal
Service Funds
S
-
11,430,764
-
70,158
11,500,922
-
1,565,152
753,122
4,767,377
99,309
6,571,258
13,756,218
(2,255,296)
454,685
-
58,218
-
-
512,903
1,059,076 4,618,220 (1,742,393)
17,122,277 1,062,023
1,059,076
4,467,964
21,740,497
303,627,955
(680,370)
18,538,269
S 5,527,040 S 325,368,452 S 17,857,899
53
CITY OF CARLSBAD
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2005
Business-type Activities -
Cash flows from operating activities:
Receipts from customers and users
Payments to suppliers
Payments to employees
Internal activity - payments to other funds
Claims paid
Other receipts (payments)
Increase (decrease) in deposits payable
Net cash provided by operating activities
Cash flows from noncapital financing activities:
Operating subsidies and transfers to other funds
Cash flows from capital and related financing activities:
Capital contributions
Purchases of capital assets
Principal paid on capital debt
Interest and other fees paid
Property taxes received
Net cash (used in) capital and related financing
activities
Cash flows from investing activities:
Interest on investments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Carlsbad
Municipal
Water District
$ 18,578,390 !
(13,601,798)
(2,565,594)
(2,199,506)
-
515,302
(3,478)
723,316
-
12,132,093
(13,999,950)
(120,575)
(38,953)
2,023,644
(3,741)
1,638,447
2,358,022
50,849,981
$ 53,208,003 :
Golf
Course
5 - :
(25,344)
-
-
-
20,212
-
(5,132)
1,400,000
-
(2,805,120)
(33,195)
-
-
(2,838,315)
130,735
(1,312,712)
2,095,546
5 782,834 1
Sewer
5 6,238,209
(3,162,449)
(1,070,642)
(1,020,795)
-
206,249
-
1,190,572
-
2,237,672
(7,573,916)
(550,000)
(394,169)
-
(6,280,413)
1,851,750
(3,238,091)
66,093,165
$ 62,855,074
The notes to the financial statements are an integral part of this statement.
54
Enterprise Funds
Solid Waste
S 2,265,749
(643,288)
(619,752)
(179,441)
-
51,563
-
874,831
Totals
$ 27,082,348
(17,432,879)
(4,255,988)
(3,399,742)
-
793,326
(3,478)
2,783,587
Governmental
Activities -
Internal
Service Funds
$ 11,430,638
(3,580,900)
(2,623,977)
(845,747)
(2,754,701)
225,842
-
1,851,155
1,400,000
-
-
-
-
180,415
1,055,246
5,527,192
$ 6,582,438
14,369,765
(24,378,986)
(703,770)
(433,122)
2,023,644
(9,122,469)
3,801,347
(1,137,535)
124,565,884
S 123,428,349
(1,193,452)
(1,732)
-
-
(1,195,184)
456,967
1,112,938
19,373,278
S 20,486,216
(Continued)
55
CITY OF CARLSBAD
Statement of Cash Flows
Proprietary Funds (Continued)
For the Year Ended June 30, 2005
Business-type Activities -
Carlsbad
Municipal
Water District
Golf
Course Sewer
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization
Change in assets and liabilities:
(Increase) decrease in receivables
(Increase) in inventories
Decrease in prepaid items
(Decrease) increase in accrued liabilities
Increase in due to other governments
Increase in estimated claims payable
Increase in deposits payable
Net cash provided by operating activities
Noncash capital financing activities:
Capital assets contributed by other sources
Reconciliation of cash and cash equivalents to amounts
reported on the balance sheet:
Reported on the balance sheet:
Cash and investments
Restricted assets:
Cash and investments
Less investments not meeting the definition of cash
equivalents:
Investment contracts
Cash and cash equivalents at end of year
$ (2,082,020) $
1,874,504
S 3,707,480
(25,344) S (341,000)
1,716,859
(209,584)
32,596
(209,703)
1,321,001
(3,478)
$ 723,316 $
(1,583)
21,795
_
(5,132) $
(140,237)
(99)
(151,775)
106,824
1,190,572
S 1,700,072
$ 53,208,003 $782,834 $ 62,840,949
953,706
(939,581)
S 53,208,003 $782,834 S 62,855,074
The notes to the financial statements are an integral part of this statement.
56
Enterprise Funds
Solid Waste Totals
Governmental
Activities -
Internal
Service Funds
878,661 $ (1,569,703) $ (2,255,296)
3,591,363 1,565,152
(49,458)
-
-
45,628
-
-
-
(400,862)
32,497
-
(294,055)
1,321,001
-
103,346
(783)
(68,065)
2,679
594,792
-
2,012,676
-
S 874,831 2,783,587 S 1,851,155
S 5,407,552 307,155
$ 6,582,438 123,414,224 $ 20,486,216
953,706
(939,581)
S 6,582,438 S 123,428,349 $ 20,486,216
57
CITY OF CARLSBAD
Statement of Fiduciary Assets and Liabilities
Agency Funds
June 30, 2005
ASSETS
Current assets:
Cash and investments $ 22,614,737
Other receivables 142,472
Total current assets 22,757,209
Restricted assets:
Cash and investments 7,200,334
Accrued interest 88,335
Total restricted assets 7,288,669
Total assets S 30,045,878
LIABILITIES
Accrued liabilities $ 3,105,475
Deposits held for others 26,940,403
Total liabilities S 30,045,878
The notes to the financial statements are an integral part of this statement.
58
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies
The City of Carlsbad, California, (City) was incorporated on July 16, 1952. The City operates under a Council-Manager
form of government and provides the following services: general government, public safety, community development,
community services and public works.
The accounting policies of the City and its component units conform to accounting principles generally accepted in the
United States of America as applicable to governmental units. The following is a summary of the more significant
policies:
Description and scope of the reporting entity
As required by accounting principles generally accepted in the United States of America, these financial statements
present the financial position of the City and its component units, entities for which the City is considered to be financially
accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority
of that organization's governing body and the City is able to impose its will on that organization or there is a potential for
that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also
considered to be financially accountable for an organization if that organization is fiscally dependent upon the City (i.e., it
is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In
certain cases, other organizations are included as component units if the nature and significance of their relationship with
the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete.
Based upon the above criteria, the component units of the City are the Housing Authority of the City of Carlsbad, the City
of Carlsbad Public Improvement Corporation, the Carlsbad Redevelopment Agency and the Carlsbad Municipal Water
District (District).
Since the City Council serves as the governing board for these component units, all of the City's component units are
considered to be blended component units. Blended component units, although legally separate entities, are in substance
part of the City's operations, and so data from these units is reported with the interfund data of the primary government.
Only the City of Carlsbad Public Improvement Corporation and the Carlsbad Redevelopment Agency issue separate
component unit financial statements. Upon their completion, the financial statements of these component units can be
obtained from the Finance department.
Government-wide and Fund Financial Statements
The Government-wide Financial Statements (i.e., the Statement of Net Assets and the Statement of Changes in Net Assets)
report information on all of the nonfiduciary activities of the City and its blended component units. For the most part, the
effect of interfund activity has been removed from these statements. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a
significant extent on user fees and charges for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset
by program revenues. Direct expenses are those that are clearly identifiable to a specific function or segment. Program
revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items not properly classified as
program revenues are reported as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the
latter are excluded from the Government-wide Financial Statements. Major individual governmental funds and major
individual enterprise funds are reported in separate columns in the Fund Financial Statements.
59
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Measurement focus, basis of accounting, and financial statement presentation
The Government-wide Financial Statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the Proprietary Fund and Fiduciary Fund Financial Statements. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. In applying
the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the individual
programs are used as guidance. Property taxes are recognized as revenues in the year for which they are levied.
Governmental Fund Financial Statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting, as long as the expenditure reflects a near-term cash outflow. Principal and interest on long-term
debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for
payments to be made early in the following year.
Revenues that are accrued generally include real property taxes, sales tax, transient occupancy taxes, franchise taxes,
vehicle license fees, highway users tax, interest, and some state and federal grants.
Real property taxes are levied on October 15 against property owners of record on January 1 of that year. The taxes are
due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10,
respectively. Tax liens attach annually as of 12:01 a.m. on the first day of January in the fiscal year for which the taxes are
levied. Under the provisions of NCGA Interpretation 3, property tax revenue is recognized in the fiscal year for which the
taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Homewoner exemption
revenues reflect the property taxes associated with the $7,000 assessed value credit given to owner-occupied residences by
the State of California, which are reimbursed to the City by the State.
Fiduciary fund types are custodial in nature (assets equal liabilities) and do not involve measurement of results of
operations. Fiduciary fund assets and liabilities are accounted for on the accrual basis of accounting.
The City reports the following major governmental funds:
The General fund is the City's primary operating fund. It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
The Redevelopment Debt Service funds are used to account for the accumulation of resources for, and payment of,
principal and interest on the Carlsbad Redevelopment Agency's bonds and other debt, used to finance improvements for
the redevelopment areas of the City.
The Assessment and Other Districts capital project funds are used to account for capital projects financed by the
issuance of assessment and community facility district bonds.
The Bridge and Thoroughfare Districts capital project funds are used to account for the receipt of fees charged to
developers and expenditures for streets within designated district boundaries.
The Community Facilities District No. 1 capital project fund is used to account for civic facilities, freeway interchanges,
and road segments financed by Community Facilities District No. 1 "special tax revenues" (Mello Roos).
The General Capital Construction capital project fund is used to account for transfers from the General fund and
expenditures for various capital projects not financed through another capital project fund.
The Public Facilities Construction capital project fund is used to account for the receipt of fees charged to developers,
and expenditures for specific public facilities such as libraries and fire stations necessitated by growth.
The Rancho Santa Fe Road Project capital project fund is used to account for the amounts paid by developers and costs
for the construction and improvements related to Rancho Santa Fe Road .
60
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Measurement focus, basis of accounting, and financial statement presentation (continued)
The City reports the following major enterprise funds:
The Carlsbad Municipal Water District enterprise fund is used to account for the operation, maintenance, and capital
facility financing of the City's water system.
The Golf Course enterprise fund is used to account for revenues and expenses for the construction activities of the City's
new municipal golf course.
The Sewer enterprise fund is used to account for the operation, maintenance, and capital facility financing of the City's
sewer system.
The Solid Waste enterprise fund is used to account for the revenues and expenses of the City's solid waste source-
reduction, recycling and storm water programs.
Additionally, the City reports the following fund types:
Internal Service funds account for fleet management, self insured benefits, information technology, records management,
risk management and workers' compensation services provided to other departments or agencies of the City.
The Fiduciary funds account for assets held by the City for other funds, governments or individuals. These funds include
contractors' deposits for future development, miscellaneous deposits, as well as debt service transactions on assessment
district bonds for which the City is not obligated.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in
both the Government-wide and with the enterprise funds within the Proprietary Fund Financial Statements to the extent
that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board
(GASB). Governments also have the option of following subsequent private-sector guidance for their business-type
activities and enterprise funds, subject to this same limitation. The City has elected to follow the standards set by the
GASB as opposed to subsequently issued private-sector guidance.
As a general rule, the effect of interfund activity has been eliminated from the Government-wide Financial Statements.
Exceptions to this general rule are payments of special taxes (CFD #1) by the golf course and charges between the
Carlsbad Municipal Water District and various other functions of the City. Elimination of these charges would distort the
direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges
provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources,
such as taxes, are reported as general revenues rather than as program revenues.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund's
principal ongoing operations. The principal operating revenues of the City's proprietary funds are charges to customers
for sales and services. The City also recognizes new account charges, late fees and contributions from other agencies as
operating revenues. Operating expenses for enterprise and internal service funds include the cost of sales and services,
general and administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first,
then unrestricted resources as they are needed.
61
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Cash and investments
Cash includes amounts in demand and time deposits. Investments are reported in the accompanying balance sheet at fair
value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not
transferable and they have terms that are not affected by changes in market interest rates.
Changes in fair value that occur during a fiscal year are recognized as income from property and investments reported for
that fiscal year. Income from property and investments includes interest earnings; changes in fair value; any gains or
losses realized upon the liquidation, maturity, or sale of investments; property rentals and the sale of City owned property.
The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is
displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled
investments is allocated to the various funds on a monthly basis, based on each fund's average cash and investments
balance.
Restricted cash and investments represent amounts that are restricted under the terms of debt agreements.
Inventories
Inventories consist of materials and supplies that are valued at cost and are recorded as expenses or expenditures on a first-
in, first-out basis when consumed.
Compensated absences
Compensated absences are comprised of vacation payable for all City employees and vested sick benefits for certain
former District employees. Vacation pay is payable to employees at the time used or upon termination of employment.
For governmental funds, the cost of accumulated vacation expected to be paid in the next 12 months is recorded as a
liability in the Self Insured Benefits Special Revenue fund. For compensated absences recorded at June 30, 2005, all
balances are expected to be paid within the following 12 months. For proprietary funds, the cost of vacation is recorded as
a liability when earned.
Risk management
The City accounts for its general liability, a portion of its health insurance, and workers' compensation activities in
internal service funds. The funds are responsible for collecting premiums from other City funds and departments and
paying claims settlements and insurance premiums. Interfund premiums are based on the insured fund's claims
experience. Incurred but not reported claims are accrued at year-end, if material.
Unbilled services
Unbilled water revenue of the enterprise funds is recognized as earned when the water is consumed.
Capital assets
Capital assets, which include land, buildings, equipment and infrastructure assets (e.g., roads, bridges, traffic signals,
water and sewer systems, and similar items), are reported in the applicable governmental or business-type activities
columns in the Government-wide Financial Statements. Capital assets are defined by the City as assets with an initial,
individual cost of more than $10,000 and an estimated useful life in excess of one year. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair
market value at the date of donation.
The cost of normal maintenance and repairs that do not add to the value of an asset or materially extend an asset's useful
life are not capitalized. Construction in progress costs are transferred to their respective fixed asset category upon
completion.
62
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Depreciation is charged to operations using the straight-line method based on the estimated useful life of an asset. The
estimated useful lives of depreciable assets are as follows:
Years
Buildings and other structures 10 — 50
Improvements other than buildings 20 — 50
Machinery and equipment 3—20
Infrastructure 10 - 100
Sewage treatment facility 50
The City capitalized all general infrastructure assets acquired during the four years ended June 30, 2005. No infrastructure
assets acquired prior to that time have been capitalized. In addition the land upon which the streets and roads are
constructed (right-of-way) has not been valued and capitalized. It will be addressed when the remaining infrastructure
assets are capitalized and placed on the City's books. According to GASB 34, the City has until June 30, 2006 to record
its general infrastructure assets.
Deferred revenue
The deferred revenue reported in the City's financial statements represents money received during the current or previous
fiscal years that has not been earned by, or is not available to, the City as of the end of the fiscal year. These monies will
be recognized as revenues in subsequent fiscal years, once the revenue has been earned or becomes available.
Receivables and payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year
are referred to as either "due to/from other funds" (short-term interfund loans) or "advances to/from other funds" (long-
term interfund loans). Any residual balances outstanding between the governmental activities and business-type activities
are reported in the Government-wide Financial Statements as "internal balances."
Advances between funds, as reported in the Fund Financial Statements, are offset by a fund balance reserve account in the
applicable governmental fund to indicate that they are not available for appropriation and are not expendable available
financial resources.
All trade, service and tax receivables are shown net of an allowance for uncollectibles. The utility billing receivable
allowance is equal to 1% of outstanding billings at June 30, 2005, the ambulance billing receivable allowance is equal to
40% of outstanding billings at June 30, 2005, and the trade and false alarm receivable allowance is equal to the total of all
outstanding receivables that are over 90 days past due plus 30% of all remaining balances.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies
are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal
budgetary integration in the governmental funds. Unexpended and unencumbered appropriations lapse at fiscal year-end
unless City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year.
Encumbrances at year end are a portion of the reserved fund balance and are reappropriated the following year.
Net Assets
Net assets represent the differences between assets and liabilities. Net assets invested in capital assets, net of related debt,
consist of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings, used for
the acquisition, construction or improvement of those assets. Net assets invested in capital assets, net of related debt,
excludes unspent debt proceeds. Net assets are reported as restricted when there are limitations imposed on their use either
through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws
or regulations of other governments. Restricted resources are used first to fund appropriations. The City first applies
restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are
available.
63
CITY OF CARLSBAD
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies (Continued)
Cash flows
Statements of cash flows are presented for proprietary fund types. Cash and cash equivalents include all unrestricted and
restricted highly liquid investments with original purchase maturities of three months or less. Pooled cash and investments
in the City's Treasury represent monies in a cash management pool and such accounts are similar in nature to demand
deposits.
Long-term obligations
In the Government-wide Financial Statements, and proprietary fund types in the Fund Financial Statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type
activities, or proprietary fund type Statement of Net Assets. Bond premiums, discounts, and issuance costs are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term
of the related debt.
In the Fund Financial Statements, governmental fund types recognize bond premiums, discounts, and issuance costs
during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on
debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
Fund equity
In the Fund Financial Statements, governmental funds report reservations of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund
balance represent tentative management plans, and are subject to change.
Pronouncements issued, not yet effective
The GASB has issued several pronouncements that have effective dates that may impact future financial presentations.
Management has not currently determined what, if any, impact implementation of the following statements may have on
the financial statements of the City.
• GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and
Insurance Recoveries.
» GASB Statement No. 44, Economic Condition Reporting: The Statistical Section.
» GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits
Other Than Pensions.
» GASB Statement No. 46, Net Assets Restricted for Enabling Legislation (An Amendment of GASB Statement
No. 34).
« GASB Statement No. 47, Accounting for Termination Benefits.
Note 2. Budgetary Data
The City follows these procedures in establishing its budgetary data:
» During May or June, the City Manager submits to the City Council a proposed operating and capital budget
for the fiscal year commencing the following July 1. The budget includes estimated revenues and proposed
expenditures on a departmental and/or project basis.
» Public hearings are conducted at City Council meetings to obtain citizens' comments during June.
64
CITY OF CARLSBAD
Notes to the Financial Statements
Note 2. Budgetary Data (Continued)
« Prior to July 1, the budget is enacted legally through passage of an appropriation resolution.
The City Manager is authorized to make transfers of appropriated amounts from one department to another within a fund.
The legal level of budgetary control is at the fund level. Revisions that alter the total appropriations of any fund must be
approved by the City Council with the exception of budget adjustments that involve offsetting revenues and expenditures.
The City Manager is authorized to increase or decrease an appropriation for a specific purpose where the appropriation is
offset by unbudgeted revenue, which is designated for said specific purpose. Monthly reports are provided to the City
Council during the year, and any changes to the adopted budget are approved by the City Council as necessary. During
the year, several supplementary appropriations were necessary.
Budgets for governmental type funds are adopted on the modified accrual basis except that encumbrances are treated as
budgeted expenditures in the year purchases are committed.
Expenditures may not exceed budgeted appropriations at the fund level. All appropriations lapse at fiscal year-end unless
City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year.
For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses
pursuant to GASB 31, actual expenditures have been adjusted to include encumbrances outstanding, and transfers out have
been adjusted to reflect any transfer that was approved through the budget process as an expenditure but recorded as an
advance in the financial statements. Annual budgets are adopted for the General fund, special revenue funds except for the
Tyler Court Apartments fund, and debt service funds except for the Hosp Grove COPs. Accordingly, the revenues and
expenditures for these two funds have been excluded from the budget basis financial statements. Annual operating
budgets are not adopted for the capital projects funds; therefore, budget basis financial statements have not been prepared
because a comparison of such budgetary amounts to annual revenues and expenditures is not meaningful.
Note 3. Deposit and Investment Risk
Cash resources of the individual funds are combined to form a pool of cash and investments. The City maintains a formal
investment policy, which is reviewed by the Investment Committee and adopted annually by the City Council. All
investments held in the Treasurer's Pool are consistent with the City's investment policy objectives of safety of principal,
adequacy of liquidity, and achievement of an average market rate of return. The risk disclosures below apply to the City's
internal investment pool. Portfolio investments are exposed to four types of risk: custodial (investments and cash
deposits); default; concentration; and market or interest rate risk.
Investments held outside the Treasurer's Pool consist mainly of required reserve funds for various bond issues. They are
held by trustees, and are not available for the City's general expenditures.
65
CITY OF CARLSBAD
Notes to the Financial Statements
Note 3. Deposit and Investment Risk (Continued)
As of June 30, 2005 the City had the following investments in its portfolio:
Treasurer's Pool investments
U.S. agencies:
Federal Home Loan Mortgage Corporation
Federal Home Loan Bank
Federal National Mortgage Association
Federal Farm Credit Bank
Federal National Mortgage Association Notes
Subtotal U.S. agencies
Corporate notes:
Medium-term corporate notes
Commercial paper
Subtotal corporate notes
LAIF
Cash accounts
Total Treasurer's Pool
Investments held outside the Treasurer's Pool
Debt Service funds/bond proceeds
Other deposits
Petty cash funds
Total cash and investments
Statement of Net Assets, Primary Government
Cash and investments
Restricted cash and investments
Statement of Fiduciary Assets and Liabilities, Agency Funds
Cash and investments
Restricted cash and investments
Total cash and investments
Fair Market
Value
131,246,267
124,826,229
95,608,062
5,990,847
3,384,675
361,056,080
68,406,662
9,941,000
78,347,662
64,208,499
5,218,106
508,830,347
33,498,536
311,415
6,063
S 542,646,36T
$ 511,217,876
1,613,414
22,614,737
7,200,334
$ 542,646,361
% of
Total
Modified
Duration
25.8%
24.5%
18.8%
1.2%
0.7%
71.0%
2.733
2.176
2.659
1.940
0.144
2.483
13.4%
2.0%
15.4%
12.6%
1.0%
100.0%
1.097
0.171
0.978
-
-
1.89
Custodial credit risk (investments)
The City uses Union Bank of California (UBC) as a third-party custody and safekeeping service for its investment
securities. Custodial credit risk is the risk that the City will not be able to recover the value of its investments in the event
of a UBC failure. All City investments held in custody and safekeeping by UBC are held in the name of the City and are
segregated from securities owned by the bank. This is the lowest level of custodial credit risk exposure.
Custodial credit risk (deposits)
The City maintains cash accounts at Wells Fargo Bank (WFB) and UBC. At the conclusion of each business day,
balances in these accounts are "swept" into overnight pooled investments, which are in either pooled U.S. government
securities (guaranteed) or in pooled U.S. agency securities (government sponsored). The California Code and the City's
Investment Policy authorize both of these types of investments. A small amount of cash is not swept from the WFB
checking accounts to cover checks that may be presented for payment. Amounts up to $100,000 are Federal Deposit
Insurance Corporation (FDIC) insured.
66
CITY OF CARLSBAD
Notes to the Financial Statements
Note 3. Deposit and Investment Risk (Continued)
Concentration credit risk
Concentration credit risk is the heightened risk of potential loss when investments are concentrated in one issuer. The
California state code requires that total investments in medium-term corporate notes of all issuers not exceed 30% of the
portfolio. As of June 30, 2005, approximately 13% of the City's total portfolio investments, based on cost, were in
medium-term corporate notes.
For concentration of investments in any one issuer, the City's Investment Policy requires that no more than 5% of
investments in corporate notes be in any one issuer. There is no similar requirement in either the state code or the City's
Investment Policy for U.S. agencies. As of June 30, 2005, the portfolio was in compliance with this requirement.
Default credit risk
Default credit risk is the risk that the issuer of the security does not pay either the interest or the principal when due. The
debts of most U.S. agencies are not backed by the full faith and credit of the federal government; however, because the
agencies are U.S. Government-sponsored, they carry AAA credit ratings. The default credit risk of these investments is
minimal.
California state code limits investments in medium-term corporate notes to the top three credit ratings (AAA, AA, and A).
It is the City's policy, however, to limit investments to the top two credit ratings (AAA and AA). As of June 30, 2005,
approximately 46% of the investments in medium-term corporate notes did not have one of these two credit ratings,
however, these investments had credit ratings of at least an A rating. All of these investments were made when the credit
ratings were either AAA or AA. California state code and the City's Investment Policy allow the City Treasurer to
determine the course of action to correct exceptions to the Policy. It is the intent of the City Treasurer to hold these
investments in the portfolio until maturity unless events indicate they should be sold. The default credit risk for corporate
notes with a credit rating of single A is lower than U.S. federal agencies, but is considered by the City Treasurer to be
within acceptable limits for purposes of holding to maturity. A credit rating of single A is within State code requirements.
The Local Agency Investment Fund (LAIF) is an investment pool managed by the California State Treasurer. Its
investments are short-term and follow the investment requirements of the State. As of June 30, 2005, the average maturity
of the LAIF investments was 151 days. LAIF is not rated; however, the City Treasurer considers the default credit risk of
LAIF to be minimal.
Interest rate risk
Interest rate risk is the risk that investments will lose market value because of increases in market interest rates. A rise in
market interest rates will cause the market value of investments made earlier at lower interest rates to lose value. The
reverse will cause a gain in market value. As of June 30, 2005, the portfolio had a 0.2% loss in market value.
The City's investment policy has adopted two means of limiting its exposure to market value losses caused by rising
market interest rates: (1) limiting total portfolio investments to a maximum modified duration of 2.2, and (2) requiring
maturing investments within one year be equal to an amount that is not less than the current fiscal year's operating budget.
The City met those requirements as follows:
1. As of June 30, 2005, the modified duration of the portfolio was 1.89. Modified duration is a measure of the
sensitivity that the value of a fixed-income security has to changes in market rates of interest. Modified duration
identifies the potential gain/loss in value before the gain/loss actually occurs. It is a prospective measurement,
e.g., a modified duration of 1.5 indicates that when and if a 1% change in market interest rates occurs, a 1.5%
change in the value of a security will result. Investments with modified durations of one to three are considered
to be relatively conservative.
2. As of June 30, 2005, maturities within one year exceeded the required minimum of $148,000,000 (total operating
budget for the City per the 2004-05 Operating Budget adopted by the City Council).
67
CITY OF CARLSBAD
Notes to the Financial Statements
Note 4. Due to and from Other Funds
The following table shows amounts due from funds within the City to other funds within the City at June 30, 2005:
Due to Due from
Other Funds Other Funds
General $ - $ 720,942
Special Revenue Funds:
Community Development Block Grant 49,000
Section 8 Rental Assistance 288,000
Capital Project Funds:
Grants and Other Funds - Intermodal Surface Transportation Efficiency Act 200,865
Grants and Other Funds - Air Pollution Control District 169,906
Grants and Other Funds - City of Encinitas 13,171
Totals $ 720,942 $ 720,942
These balances resulted from expenditures being incurred prior to receipt of the related revenue source.
Note 5. Advances to and from Other Funds
The following table shows amounts advanced from governmental funds within the City to other funds within the City at
June 30, 2005:
Advances From Advances To Amount
General Fund Redevelopment Debt Service Funds $ 13,688,294
General Fund Financing Districts Special Revenue Fund 379,251
General Fund Enterprise Funds
Golf Course 4,137,200
Solid Waste 1,360,219
Special Revenue Funds:
Gas Tax Bridge and Thoroughfare Districts Capital Project Funds 3,643,344
Capital Projects Funds: Capital Projects Funds:
General Capital Construction Assessment and Other Districts 790,854
Park Development 2,430,000
$ 26,429,162
Advances to and from other funds are primarily long term advances used to fund capital projects in advance of related
revenues.
68
CITY OF CARLSBAD
Notes to the Financial Statements
Note 6. Capital Assets
Capital asset activity was as follows for the
Governmental activities:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets,
not being depreciated
Capital assets, being depreciated:
Buildings
Improvements
Machinery and equipment
Infrastructure
Total capital assets,
being depreciated
Less accumulated depreciation for:
Buildings
Improvements
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets
being depreciated, net
year ended June 30, 2005:
Balance at
July 1 , 2004
$ 55,152,578 5
61,768,235
116,920,813
66,853,662
10,873,878
21,209,462
112,905,006
211,842,008
(12,938,049)
(2,833,303)
(12,154,961)
(2,490,134)
(30,416,447)
181,425,561
Increases
5 1,934,184
44,616,786
46,550,970
2,349,798
6,755,363
2,262,599
42,890,782
54,258,542
(1,376,347)
(430,784)
(2,185,749)
(3,698,912)
(7,691,792)
46,566,750
Balance at
Decreases June 30, 2005
$ - S 57,086,762
(34,175,453) 72,209,568
(34,175,453) 129,296,330
69,203,460
17,629,241
(1,581,360) 21,890,701
155,795,788
(1,581,360) 264,519,190
(14,314,396)
(3,264,087)
1,072,249 (13,268,461)
(6,189,046)
1,072,249 (37,035,990)
(509,111) 227,483,200
Governmental activities
capital assets, net $298,346,374 $93,117,720 $(34,684,564) $356,779,530
69
CITY OF CARLSBAD
Notes to the Financial Statements
Note 6. Capital Assets (Continued)
Balance at
July 1,2004 Increases Decreases
Balance at
June 30, 2005
Business-type activities:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being
depreciated
Capital assets, being depreciated:
Buildings
Improvements, other than buildings
Machinery and equipment
Infrastructure
Sewage treatment facility
Total capital assets, being
depreciated
Less accumulated depreciation for:
Buildings
Improvements
Machinery and equipment
Infrastructure
Sewage treatment facility
Total accumulated depreciation
Total capital assets
being depreciated, net
Business-type activities
capital assets, net
8,663,600 $ - $ - $ 8,663,600
48,438,902 21,344,539 (29,455,256) 40,328,185
57,102,502
2,258,064
5,556,571
1,568,847
138,271,570
37,738,531
185,393,583
(831,263)
(1,988,203)
(1,224,502)
(33,916,698)
(10,621,559)
(48,582,225)
136,811,358
21,344,539
13,950,640
-
-
21,438,255
3,072,245
38,461,140
(55,445)
(148,770)
(67,265)
(2,581,033)
(738,850)
(3,591,363)
34,869,777
(29,455,256) 48,991,785
16,208,704
5,556,571
(33,404) 1,535,443
159,709,825
(492,683) 40,318,093
(526,087) 223,328,636
(886,708)
(2,136,973)
31,144 (1,260,623)
(36,497,731)
(11,360,409)
31,144 (52,142,444)
(494,943) 171,186,192
$193,913,860 $56,214,316 $(29,950,199) $220,177,977
70
CITY OF CARLSBAD
Notes to the Financial Statements
Note 6. Capital Assets (Continued)
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 532,957
Community development 174,714
Public safety 451,503
Community services 1,121,431
Public works 3,846,035
Capital assets held by the internal service funds
(charged to various functions based on
their usage of the assets) 1,565,152
Total depreciation expense - governmental activities $ 7,691,792
Business-type activities:
Sewer $ 1,716,859
Water 1,874,504
Total depreciation expense - business-type activities $ 3,591,363
71
CITY OF CARLSBAD
Notes to the Financial Statements
Note 7. Accrued Liabilities
Accrued liabilities were as follows at June 30, 2005:
Governmental activities:
General Fund
Assessment and Other
Districts
Bridge and Thoroughfare
Districts
Community Facilities
District No. 1
General Capital Construction
Public Facilities
Construction
Rancho Santa Fe Road Project
Other Governmental Funds
Total governmental
activities
Business-type activities:
Enterprise funds:
Carlsbad Municipal Water
District
Golf Course
Sewer
Solid Waste
* Internal Service Funds
Total business-type
activities
Salaries and IFD Refuse
Vendors Benefits Payable Disposal
$1,768,680 $2,325,358 $ 81,746 $
5,783
492 -
5,116
75,305
898,770
1,955,729
936,822 69,467
$5,646,697 $2,394,825 $ 81,746 $
Total
$ 4,175,784
5,783
492
5,116
75,305
898,770
1,955,729
1,006,289
$ 8,123,268
$3,694,431
84,093
1,954,367
81,827
678,517
$6,493,235
$ 434,366 $
-
68,017
39,331
2,882,858
$3,424,572 $
$ - $ 4,128,797
84,093
2,022,384
239,298 360,456
3,561,375
$ 239,298 $10,157,105
""Internal service funds have been included with governmental activities on the Government-wide Statement of Net Assets.
72
CITY OF CARLSBAD
Notes to the Financial Statements
Note 8. Long-term Debt
The folowing is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2005:
Governmental activities:
Bonds
Certificates of participation
Obligations under capital leases
Total governmental
activities
Business-type activities:
Installment purchase agreement
Loan payable
Accrued assessments
Less deferred charges
Total business type activities
Entity-wide total
Principal
Balance at
June 30, 2004 Additions
$ 12,840,000 $
3,360,000
78,507
16,278,507
7,855,000
1,343,173
257,053
9,455,226
(559,305)
8,895,921
Reductions
$ 380,000
620,000
71,141
1,071,141
550,000
120,574
257,053
927,627
(61,940)
865,687
Principal
Balance at
June 30, 2005
$12,460,000
2,740,000
7,366
15,207,366
7,305,000
1,222,599
-
8,527,599
(497,365)
8,030,234
Due Within
One Year
$ 395,000
635,000
6,662
1,036,662
575,000
124,072
-
699,072
(59,993)
639,079
$25,174,428 S SI,936,828 $23,237,600 $1,675,741
73
CITY OF CARLSBAD
Notes to the Financial Statements
Note 8. Long-term Debt (Continued)
Long-term debt at June 30, 2005 is comprised of the following issues:
Governmental long-term debt
Balance at
Jure 30, 2005
1993 Carlsbad Housing and Redevelopment Commission Tax Allocation
Bonds, principal due in amounts ranging from $395,000 to $1,000,000 on
September 1 of each year through 2024. Interest payable on March 1 and
September 1 at rates varying from 5.25% to 5.30% per annum. The City
posted a surety bond in lieu of cash reserve in the amount of $1,055,953.
1997 Hosp Grove Refunding Certificates of Participation, principal due in
amounts ranging from $635,000 to $735,000 on August 1 of each year
through 2009, interest payable on August 1 and February 1 at rates varying
from 4.40% to 4.70% per annum. Payable from the General Fund, with a
required reserve amount of $659,500.
The City has entered into two office equipment lease-purchase
agreements. As of June 30, 2004, the City has purchased copier equipment
totaling $50,500. All lease terms are for 60 months, with interest rates
ranging from 15.5% to 16.8%.
Sub-total governmental long-term debt
Less current portion
Total long-term portion of governmental debt
Business-type long-term debt
$ 12,460,000
2,740,000
7,366
15,207,366
1,036,662
$ 14,170,704
Balance at
June 30, 2005
1997 Encina Financing Joint Powers Authority (EFJPA) Installment Purchase
Agreement, principal due in varying amounts ranging from $575,000 to
$905,000 on August 1 of each year through 2015, interest payable on
February 1 and August 1 each year at rates varying from 4.90% to 5.50% per
annum. The required reserve amount is $939,581.
1993 Carlsbad Municipal Water District loan agreement with the State
Water Resources Control Board. Principal is due in varying amounts
ranging from $123,222 to $151,558 on November 30 of each year through
2013, interest payable on November 30 of each year at 2.90% per annum.
Subtotal business-type long-term debt
Less unamortized discounts, issuance costs and deferred charges
Less current portion
Total long-term portion of business-type debt
7,305,000
1,222,599
8,527,599
497,365
639,079
$ 7,391,155
74
CITY OF CARLSBAD
Notes to the Financial Statements
Note 8. Long-term Debt (Continued)
The aggregate maturities of long-term debt are as follows:
Governmental Activities Business-type Activities
Year ended June 30:
2006
2007
2008
2009
2010
2011-2015
2016-2020
2021-2024
Principal
1,036,662
1,090,704
1,140,000
1,200,000
490,000
2,855,000
3,690,000
3,705,000
$ 15,207,366 3
Interest
756,499
706,060
652,310
595,182
552,840
2,340,394
1,485,825
405,582
i 7,494,692
Principal
699,072
732,670
771,372
810,182
844,102
4,670,201
-
-
$ 8,527,599 S
Interest
396,849
360,801
323,661
286,514
248,432
586,246
-
-
i 2,202,503
Note 9. Rate Covenants
The 1997 Encina Financing Joint Powers Authority Installment Purchase Agreement (Wastewater Revenue Bonds) require
that the District set its charges for services each year at rates sufficient to produce net revenues (after paying the operating
and maintenance expenses of the District, excluding depreciation) of at least 1.25 times debt service for that year.
Note 10. Debt without Government Commitment
Special assessment bonds
As of June 30, 2005, the City has six series of Assessment District Bonds outstanding in the amount of $76,626,843.
These bonds were issued under the provisions of the Improvement Bond Acts of 1911 and 1915 and were used to finance
public infrastructure improvement projects. The City collects assessments to pay the bond debt. These monies are
accounted for in the Assessment Districts Agency funds.
Mortgage revenue bonds
Multi-Family Housing Revenue Bonds are issued to provide construction and permanent financing to developers of multi-
family residential rental projects located in the City which will be partially occupied by persons of low or moderate
income. The total amount of mortgage revenue bonds outstanding as of June 30, 2005 is $48,477,000. The bonds,
together with interest thereon, are limited obligations of the City payable solely from bond proceeds, revenues and other
amounts derived solely from home mortgage and developer loans secured by first deeds of trust, irrevocable letters of
credit, and irrevocable surety bonds.
Industrial development bonds
The Industrial Development Authority (Authority) of the City has issued $3,172,500 in Industrial Development Revenue
Bonds. Any costs relating to the issuance of the Bonds, as well as the principal and interest payments, are to be paid by
the private party benefiting from the bond issue.
In the opinion of City officials, the above bonds are not payable from any revenues or assets of the City, and neither the
full faith and credit nor the taxing power of the City of Carlsbad, the State of California, nor any political subdivision
thereof, is obligated to the payment of the principal or interest on the bonds. Accordingly, no liability has been recorded
in the accompanying financial statements.
75
CITY OF CARLSBAD
Notes to the Financial Statements
Note 11. Fund Balances
The following is a summary of reserved and unreserved but designated fund balances as of June 30, 2005:
Governmental Funds
Fund Balances
Reserved for:
Loans receivable
Inventory
Prepaid items
General
$ 144,138
14,733
15,813
Redevelopment
Debt Service
Funds
$
-
-
Assessment
and Other
Districts
S
-
-
Bridge and
Thoroughfare
Districts
$
-
-
Debt service
Advances to other other funds*
Flower fields preservation
Library endowment
Low and moderate income housing
Habitat mitigation
Golf course
Encumbrances
Totals
Unreserved:
Designated for approved capital
projects
Designated for continuing
appropriations
Totals
Undesignated
Total fund balances
9,998,755
725,423
30,300,000
3,797,298
44,996,160
-
-
40,679
40,679
-
-
26,207
26,207
15,042,975
4,540,311
26,858,668
15,042,975
39,356,989 (12,099,586)
3,469,400
783,263
31,398,979 4,252,663
S 99,396,124 $ (12,099,586) S 31,439,658 S 4,278,870
* Only reflects that portion of fund balance invested in interfund advances (the General fund amount is net of $9,566,209
in deferred revenue for measurable but unavailable interest earned on such advances).
76
CITY OF CARLSBAD
Notes to the Financial Statements
Note 11. Fund Balances (Continued)
44,945,652
Governmental Funds
Community General Public Rancho Santa Other
Facilities Capital Facilities Fe Road Governmental
District No. 1 Construction Construction Project Funds
$ - $ - $ - $ - $ 11,289,179
-
412,233
659,500
3,220,854 - - 3,643,344
935,000
251,000
2,571,516
.
.
110,992 1,656,143 7,694,786 10,837,169 6,234,472
110,992 4,876,997 7,694,786 10,837,169 25,996,244
Total
$ 11,433,317
14,733
428,046
659,500
16,862,953
935,000
251,000
2,571,516
725,423
30,300,000
30,397,746
94,579,234
9,241,621 19,374,687 81,571,671
78,029
45,023,681
_
10,417,756
10,417,756
37,669,461
21,722,866
30,964,487
.
2,522,490
2,522,490
.
12,968,064
32,342,751
42,931,807
90,394,111
171,965,782
107,858,671
$ 45,134,673 $ 52,964,214 $ 38,659,273 $ 13,359,659 $ 101,270,802 S 374,403,687
77
CITY OF CARLSBAD
Notes to the Financial Statements
Note 11. Fund Balances (Continued)
Reserves for loan receivables, inventory, prepaid items and advances to other funds, net of accrued interest recorded as
deferred revenue, are established to show that certain assets are already committed to other purposes and are not available
for discretionary expenditures.
Reserves for debt service represent resources legally restricted to the payment of long-term debt principal and interest
maturing in future years.
Reserves for flower-fields preservation represent resources set aside to support floriculture research for the preservation of
the "Flower Fields" located in Carlsbad.
Reserves for library endowment represent resources set aside to support programs in the Dove Library auditorium.
Reserves for habitat mitigation represent resources set aside as security for the construction of wetland habitat to ensure
the mitigation of certain species required as part of the Cannon Road West project.
Reserves for the golf course represent resources set aside for a future loan to the Golf Course Enterprise fund for the
construction of a municipal golf course.
Reserves for encumbrances represent commitments related to unperformed contracts for services and undelivered goods.
Unreserved-undesignated and unrestricted represents the fund balance or net assets remaining after reduction for reserved
and designated fund balances or net assets.
Note 12. Accumulated Fund Deficits/Negative Net Assets
The following funds reported deficits in fund balances or net assets as of June 30, 2005:
Deficit Balance
Debt Service Funds:
Redevelopment Areas $ (12,099,586)
Internal Service Funds:
Risk Management (563,867)
Workers' Compensation (108,203)
78
CITY OF CARLSBAD
Notes to the Financial Statements
Note 13. Interfund Transfers
Interfund transfers for the year ended June 30, 2005, consisted of the following:
Fund
Transfers Transfers
In From Out To
Other Funds Other Funds
Major Funds:
General
Redevelopment, Debt Service Funds
Capital Project Funds:
Assessment and Other Districts
Bridge and Thoroughfare Districts
General Capital Construction
Rancho Santa Fe Road Project
Nonmajor Governmental Funds
139,765 S 5,695,430
1,942,000
2,365,679 18,288
106,363
1,037,535
2,365,679
6,578.995 206,940
Totals 10,228,337 10,228,337
Transfers are used to (1) move receipts restricted to debt service from the funds collecting the receipts to the debt service
fund as debt service payments become due, (2) move the remaining fund balances of closed funds to the General fund, (3)
move revenues and expenditures to the appropriate funds, and (4) use unrestricted revenues collected in the General fund
to finance various programs accounted for in other funds in accordance with budgetary authorizations.
Risk Management
The City is exposed to various risks of loss related to its operations, including losses associated with errors and omissions
and injuries to employees and members of the public. The City uses a Risk Management Self-Insurance fund, a Self
Insured Benefits fund and a Workers' Compensation fund (all internal service funds) to account for and finance its
uninsured risks of loss. All funds of the City make payments based on estimates of the amounts needed to pay prior and
current year claims and to establish a reserve for catastrophe losses.
Since July I, 1999, the City has been a member of the California Municipal Excess Liability Program, a group purchase
program for general liability coverage. Under this program, the pool provides coverage up to a maximum of 510,000,000
per occurrence with a self-insured retention provided by the City in the amount of S500.000. At June 30, 2005, the
unencumbered fund equity for the Risk Management Self-Insurance fund was approximately (5564,000) due to the large
increase in estimated claims payable reserves. Although there is currently insufficient cash in the fund to pay all existing
and anticipated expenditures at June 30, 2005, additional cash will be available in the fund to cover these claims through
the rates being charged during the 2005-06 fiscal year. The existing deficit will also be addressed through the rates set in
the 2005-06 annual budget, as well as future budgets.
The City is a defendant in a substantial property damage claim resulting from the heavy rains that occurred in fiscal year
2005. In the opinion of the City's legal counsel, this claim is without substantial merit and should not result in a
judgement which would have a material adverse effect on the City's financial statements. However, should the adverse
parties prevail, the City will be financially obligated. It is not possible at this time to determine the ultimate amount, if any,
for which the City may be obligated.
Dental insurance coverage for City employees is administered by CoreSourcc. Under the City's agreement with
CoreSource, CoreSource will pay dental claims for each covered member, up to a maximum of S1,500 per calendar year.
The City is insured for workers' compensation claims by Continental Casualty. Continental Casualty provides coverage
for losses which exceed the City's self-insured retention of $1,000,000 per claim. At June 30, 2005, the unencumbered
fund equity for the Workers' Compensation Self-Insurance fund was approximately ($108,000) due to the large increase in
estimated claims payable reserves. Although there is currently insufficient cash in the fund to pay all existing and
79
CITY OF CARLSBAD
Notes to the Financial Statements
Note 14. Risk Management (Continued)
anticipated expenditures at June 30, 2005, additional cash will be available in the fund to cover these claims through the
rates being charged during the 2005-06 fiscal year. The existing deficit will also be addressed through the rates set in the
2005-06 annual budget.
The estimated claims payable reported at June 30, 2005 is based on the requirements of Governmental Accounting
Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the
issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial
statements and the amount of the loss can be reasonably estimated. Settled claims have not exceeded insurance coverage
in any of the past three fiscal years. Changes in the estimated claims payable amounts in fiscal years 2004 and 2005 for
the three internal service funds are as follows:
Claims
Beginning
Balance
Expense and
Changes in
Estimates
Claim
Payments
Ending
Balance
Self-Insured Benefits fund:
2003-2004 $ 300,949 $ 379,151 $ (602,237) $ 77,863
2004-2005 S 77,863 $ 403,965 S (403,342) S 78,486
Risk Management fund:
2003-2004 $ 704,403 $ 211,010 $ (294,735) $ 620,678
2004-2005 $ 620,678 $ 1,537,137 $ (229,972) $ 1,927,843
Workers' Compensation fund:
2003-2004 $ 2,010,491 $ 2,094,932 $ (1,196,533) S 2,908,890
2004-2005 $ 2,908,890 $ 1,838,796 $ (1,133,909) $ 3,613,777
Note 15. Joint Ventures
Encina Water Pollution Control Facility
The Encina Water Pollution Control Facility (the Facility) is a sewer facility owned jointly by the Cities of Carlsbad, Vista
and Encinitas and the Leucadia County Water District, the Buena Vista Sanitation District and the Vallecitos Water
District. The Encina Wastewater Authority (EWA) is a joint powers authority established to operate and administer the
facility. It is responsible for the management, maintenance and operations of the joint system. Ownership interests in the
facility are determined by joint agreement at the time the assets are acquired. As of June 30, 2005, the Cities and Districts
have the following approximate ownership interest:
City of Carlsbad 24%
City of Vista 25%
Leucadia County Water District 17%
Vallecitos Water District 23%
Buena Vista Sanitation District 7%
City of Encinitas 4%
EWA's financial statements for the fiscal year ended June 30, 2004 (the latest available) incorporated the provisions of
GASB 34 and reflect the following:
Total assets $ 55,482,902
Total liabilities 3,417,513
Net assets $ 52,065,389
80
CITY OF CARLSBAD
Notes to the Financial Statements
Note 15. Joint Ventures (Continued)
The EWA does not recognize net income or loss. Net operating expenditures in excess of users' assessments are treated as
accounts receivable on EWA's books and charged to users' accounts in the following year. Conversely, users'
assessments in excess of net operating expenditures are treated as a liability and credited against users' accounts, also in
the following year. Under this basis, net operating expense for the EWA totaled $22,511 in fiscal year 2004. The
financial statements of the EWA can be obtained at 6200 Avenida Encinas, Carlsbad, California 92011.
Encina Financing Joint Powers Authority
The Encina Financing Joint Powers Authority (the Authority) was created on February 1, 1989 between the City of
Carlsbad (Carlsbad), the City of Vista (Vista), the Buena Vista Sanitation District (Buena) and the Leucadia County Water
District (Leucadia). The primary purpose of the Authority is to issue revenue bonds in order to finance the expansion of
the Facility.
The Authority is governed by a Board of Directors, which consists of one director appointed by each member. The
financial statements of the Authority can be obtained at the City of Carlsbad's Finance department.
In August 1989, the Authority issued $33,500,000 of revenue bonds and executed installment purchase agreements for
approximately the same amount. In February 1997, bonds were issued by the Authority to refinance and defease the
outstanding bonds. Two of the members (Buena and Vista) defeased their 1989 obligations through available funds; while
Carlsbad and Leucadia refinanced their obligations. Repayment of the bonds will be accomplished through payments
made by Carlsbad and Leucadia pursuant to the new installment purchase agreements. The individual agreements set forth
the purchase price and specify the debt service requirements for each member.
The following is a table of the outstanding balance owed as of June 30, 2005:
Agreement
Member Balance
City of Carlsbad $ 7,305,000
Leucadia County Water District 4,980,000
$ 12,285,000
The installment balances are secured by a pledge of the revenues from each member's wastewater system, net of a
deduction for maintenance and operating costs. Significant covenants within the agreements require the members to
maintain insurance on the facility, and establish wastewater rates which are sufficient to pay the operating costs and debt
service on the bonds and which will result in net revenues equal to at least 1.25 times the annual installment payments due.
The City's share in the accounts of the Authority is recorded in the Sewer Enterprise fund. The expansion of the Facility
is shown as a fixed asset of the Sewer Enterprise fund.
Note 16. Retirement Plan
Plan description
The City of Carlsbad contributes to the California Public Employees' Retirement System (PERS), an agent multiple-
employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-
living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and
administrative agent for participating public entities within the State of California. Benefit provisions, and all other
requirements, are established by state statutes and city ordinances. Copies of PERS' annual financial report may be
obtained from their executive office: Lincoln Plaza, 400 Q Street, Sacramento, California 95814.
Funding policy
Participants are required to contribute 8% (9% for safety employees) of their annual covered salary. The City makes 7%
of the required 8% contributions for non-safety employess, and 8% of the required 9% contributions for the City's safety
81
CITY OF CARLSBAD
Notes to the Financial Statements
Note 16. Retirement Plan (Continued)
employees. The City is required to contribute at an actuarially determined rate. For the year ended June 30, 2005, the
employer contribution rate for the City of Carlsbad (as a percentage of covered payroll) was 27.573% for safety employees
and 6.938% for miscellaneous employees for the first half of the fiscal year, and 16.664% for the second half of the fiscal
year. The contribution requirements of plan members and the City are established by PERS.
In October 2004, the City was notified by PERS that the employer contribution rate for the City of Carlsbad (as a
percentage of payroll) will be 27.927% for safety employees and 20.869% for miscellaneous employees for the fiscal year
ended June 30, 2006.
Annual pension cost
For 2005, the City's annual pension cost (employer contribution) of $3,917,550 for safety and $3,112,596 for
miscellaneous to PERS was equal to the City's required and actual contributions. For 2005, the member contributions
paid by the City and its employees were $1,307,527 for safety and $2,018,559 for miscellaneous. The required
contribution was determined as part of the June 30, 2002, actuarial valuation using the entry age normal actuarial cost
method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b)
projected annual salary increases of 3.25% to 14.45% depending on age, service and type of employment, (c) 3.0%
inflation factor, (d) payroll growth of 3.25%, and (e) individual salary growth that utilizes a merit scale varying by
duration of employment coupled with an assumed annual inflation growth of 3.0% and an annual production growth of
0.25%. Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into
CalPERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20-year period. Gains
and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of
about 6% of unamortized gains and losses each year. If the plan's accrued liability exceeds the acturial value of plan
assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a
30 year amortization period.
Three-year trend information for PERS (safety)
Fiscal Year
Ending
Annual Pension
Cost (Employer
Contribution)
Percentage of
APC Contributed
Net Pension
Obligation
6/30/03
6/30/04
6/30/05
441,058
1,704,651
3,917,550
Three-year trend information for PERS (miscellaneous)
100%
100%
100%
Fiscal Year
Ending
Annual Pension
Cost (Employer
Contribution)
Percentage of
APC Contributed
Net Pension
Obligation
6/30/03
6/30/04
6/30/05
579,190
3,112,596
100%
100%
100%
82
CITY OF CARLSBAD
Notes to the Financial Statements
Note 16. Retirement Plan (Continued)
Required supplementary information
Funded status of plan (safety)
Valuation
Date
6/30/02
6/30/03
6/30/04
Entry Age
Normal
Accrued
Liability
$ 92,896,916
$ 99,827,853
$ 110,306,847
Actuarial
Value
of Assets
$ 83,572,239
$ 85,963,105
$ 92,529,369
Unfunded
Liability/
(Excess
Assets)
$ 9,324,677
$ 13,864,748
$ 17,777,478
Funded
Status
90.0%
86.1%
83.9%
Annual
Covered
Payroll
$ 12,110,117
$ 12,709,908
$ 13,382,181
UAAL
Asa%
of Payroll
77.0%
109.1%
132.8%
Funded status of plan (miscellaneous)
Valuation
Date
6/30/02
6/30/03
6/30/04
Entry Age
Normal
Accrued
Liability
$ 88,036,696
$ 121,455,280
$ 132,074,893
Actuarial
Value
of Assets
$ 95,730,136
$ 98,339,566
$ 105,423,856
Unfunded
Liability/
(Excess
Assets)
$ (7,693,440)
$ 23,115,714
$ 26,651,037
Funded
Status
108.7%
81.0%
79.8%
Annual
Covered
Payroll
$ 23,279,207
$ 25,059,422
$ 26,476,671
UAAL
Asa%
of Pay roll
(33.0%)
92.2%
100.7%
Note 17. Postretirement Health Care
In addition to the pension benefits described herein, per Resolution 614, all former employees of the Carlsbad Municipal
Water District (including dependents) are eligible for postretirement health care benefits if they voluntarily retire after the
age of 50 with no less than 5 years of service and whose age, combined with years of service, equals 70 or more.
Currently, fourteen retirees meet these eligibility requirements and are receiving benefits.
The City pays for 100% of the premiums for health insurance which is coordinated with Medicare and other benefits
provided by federal and state law, when available, to the extent it reduces the cost of insurance premiums. Expenditures
for postretirement health care benefits are funded on a pay-as-you-go basis. Expenditures were approximately $109,308
for post-retirement health care costs during fiscal year 2004-05. Based on an actuarial valuation performed as of
November 1991, the District's liability for the current and past service costs of these benefits is approximately $ 1,600,000.
83
CITY OF CARLSBAD
Notes to the Financial Statements
Note 18. Commitments and Contingencies
Operating lease
In June 1988, the Carlsbad Redevelopment Agency entered into an agreement to lease a parking lot on State Street from a
private party. The lease requires monthly rental payments, adjusted annually based upon an increase in the consumer price
index, not to exceed 6% of the previous year's rents, and re-adjusted in years 10 and 15 based upon market rental values,
through August 2007.
Minimum future rental payments under the operating lease as of June 30, 2005 are:
2006 S 83,700
2007 83,700
2008 7,000
Total minimum future rental payments $ 174,400
84
SUPPLEMENTARY INFORMATION
85
CITY OF CARLSBAD
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2005
Special Revenue Funds
ASSETS
Cash and investments
Receivables:
Taxes
Accounts, net
Due from other governments
Prepaid items
Restricted assets, cash and investments
Loan receivables
Advances to other funds
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accrued liabilities
Due to other funds
Deposits payable
Advances from other funds
Deferred revenue
Total liabilities
Community
Affordable Development
Housing Block Grant
$ 10,650,367 $ 902
-
-
67,847
-
-
9,197,895
-
$ 19,848,262 $ 68,749
$ 15,710 $ 19,749
49,000
-
-
-
15,710 68,749
Donations and
Endowments
$ 1,736,650
-
31,085
-
-
-
-
-
$ 1,767,735
$ 19,362
-
-
-
-
19,362
Financing
Districts
$2,834,880
11,125
1,007
-
-
-
-
-
$2,847,012
$ 140,319
-
-
379,251
-
519,570
Gas
Tax
$ 7,608,842
-
-
-
-
-
-
3,643,344
$ 11,252,186
$ 51,339
-
-
-
-
51,339
Fund balances:
Reserved for:
Loans receivable
Prepaid items
Debt service
Advances to other funds
Flower fields preservation
Library endowment
Low and moderate income housing
Encumbrances
Unreserved:
Designated for approved capital projects
Designated for continuing appropriations
Undesignated
Total fund balances
Total liabilities and fund balances
9,197,895
3,643,344
-
1,420,000
22,116
_
-
9,192,541
19,832,552
$ 19,848,262
-
-
190,664
_
-
(190,664)
.
$ 68,749
935,000
251,000
-
9,075
_
166,787
386,511
1,748,373
$ 1,767,735
-
-
198,033
_
447,855
1,681,554
2,327,442
$2,847,012
-
-
389,535
3,709,159
277,698
3,181,111
11,200,847
$ 11,252,186
86
Special Revenue Funds
Low and Other
Habitat and Moderate Special
Agricultural Income Revenue
Management Housing Funds
$ 6,802,147 $ 3,203,720 $1,226,228
22,106
2,091,284
$ 6,802,147 $ 5,317,110 $1,226,228
Police
Grants and Section 8 Tyler
Asset Rental Court
Forfeiture Assistance Apartments
$ 618,866 $ 2,050 $ 847,260
1,595 437
412,233
$ 618,866 $ 415,878 $ 847,697
Totals
$ 35,531,912
33,231
34,124
67,847
412,233
11,289,179
3,643,344
$ 51,011,870
$ - $ 5,616 $ 6,933
5,616 6,933
2,091,284
1,151,516
4,668 4,479 3,654
4,595
6,797,479 2,064,215 1,211,046
6,802,147 5,311,494 1,219,295
$ 6,802,147 $ 5,317,110 $1,226,228
$ 3,143 $ 18,090 $ 635
288,000
36,987 21,249
3,143 343,077 21,884
412,233
825
70,673
545,050 (340,257) 825,813
615,723 72,801 825,813
$ 618,866 $ 415,878 $ 847,697
$ 280,896
337,000
58,236
379,251
1,055,383
11,289,179
412,233
3,643,344
935,000
251,000
2,571,516
823,049
3,709,159
967,608
25,354,399
49,956,487
$ 51,011,870
(Continued)
87
CITY OF CARLSBAD
Combining Balance Sheet
Nonmajor Governmental Funds (Continued)
June 30, 2005
ASSETS
Cash and investments
Debt Service
Fund
Hosp Grove
COPs
$ 766,535
Capital Project Funds
Grants
and Other
Funds
$ 388,519
Infrastructure
Replacement
$ 18,433,808
Park
Development
$4,708,916
Planned
Local
Drainage
Facilities
$ 9,445,998
Receivables:
Taxes
Accounts, net
Due from other governments
Prepaid items
Restricted assets, cash and investments
Loan receivables
Advances to other funds
670,436
675,288
Fund balances:
Reserved for:
Loans receivable
Prepaid items
Debt service
Advances to other funds
Flower fields preservation
Library endowment
Low and moderate income housing
Encumbrances
Unreserved:
Designated for approved capital projects
Designated for continuing appropriations
Undesignated
Total fund balances
659,500
31,304
751,019
1,258,083
(834,330)
299,597
658,334
17,438,195
568,856
1,301,506
300,545
113,190
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accrued liabilities
Due to other funds
Deposits payable
Advances from other funds
Deferred revenue
Total liabilities
$ 1,441,823 $ 1,058,955
$ - $ 251,260
383,942
635,202
$ 18,433,808 $4,708,916
$ 37,682 $ 108,009
2,430,000
37,682 2,538,009
$ 9,559,188
$ 7,533
113,190
120,723
109,793
5,257,941
4,070,731
1,441,823 423,753 18,396,126 2,170,907 9,438,465
Total liabilities and fund balances 1,441,823 $ 1,058,955 $ 18,433,808 $4,708,916 $ 9,559,188
Capital Project Funds
Redevelopment
Agency
$ 640,021
_
18,771
-
-
-
-
-
$ 658,792
Traffic
Sales Tax/ Impact
TransNet Projects Totals
$ 9,300,627 S 9,811,007 $ 52,728,896
_
131,961
670,436
.
.
.
.
$ 9,300,627 S 9,811,007 $ 53,531,293
Total Other
Governmental
Funds
$ 89,027,343
33,231
166,085
738,283
412,233
675,288
11,289,179
3,643,344
$ 105,984,986
$ 14,078
-
6,276
-
-
20,354
-
-
-
-
-
-
158,546
,
257,368
222,524
638,438
$ 658,792
$ 288,302 $ 18,529 $ 725,393
383,942
6,276
2,430,000
113,190
288,302 18,529 3,658,801
-
.
.
.
-
_
2,912,987 103,561 5,411,423
2,455,548 6,650,533 15,665,528
3,643,790 3,038,384 11,969,152
16,826,389
9,012,325 9,792,478 49,872,492
S 9,300,627 S 9,811,007 S 53,531,293
$ 1,006,289
720,942
64,512
2,809,251
113,190
4,714,184
11,289,179
412,233
659,500
3,643,344
935,000
251,000
2,571,516
6,234,472
19,374,687
12,968,064
42,931,807
101,270,802
S 105,984,986
89
CITY OF CARLSBAD
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2005
Special Revenue Funds
Revenues:
Taxes
Intergovernmental
Charges for services
Fines and forfeitures
Income from property and investments
Interdepartmental charges
Contributions from property owners
Donations
Miscellaneous
Total revenues
Expenditures:
Current:
General government
Public safety
Community development
Community services
Public works
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficits) at beginning of year
Fund balances at end of year
Affordable
Housing
$
7,464
46,750
-
320,651
-
2,775,508
-
-
3,150,373
-
-
214,322
-
-
1,321,529
1,398
166
1,537,415
1,612,958
-
-
1,612,958
18,219,594
$19,832,552
Community
Development Donations and
Block Grant Endowments
$ - $
663,706
-
-
52,315
-
-
163,570
465
663,706 216,350
-
-
198,186 67,100
136,778
-
510,677
-
-
708,863 203,878
(45,157) 12,472
-
(113,978)
(113,978)
(45,157) (101,506)
45,157 1,849,879
$ - $ 1,748,373
Financing
Districts
$
-
1,922,038
-
77,060
134,000
15,000
-
-
2,148,098
-
-
7,408
-
2,338,781
-
-
-
2,346,189
(198,091)
-
-
(198,091)
2,525,533
$2,327,442
Gas
Tax
$ 1,748,474
-
-
-
204,667
-
2,550
-
-
1,955,691
-
-
-
-
-
1,305,419
-
-
1,305,419
650,272
.
(7,500)
(7,500)
642,772
10,558,075
$11,200,847
90
Special Revenue Funds
Low and
Habitat and Moderate
Agricultural Income
Management Housing
S - S 513,822
-
-
-
185,562 83,222
-
449,322
.
-
634,884 597,044
-
107,022
-
-
-
524
62
107,608
634,884 489,436
-
Other
Special
Revenue
Funds
$
27,934
-
-
35,273
-
-
694
4,000
67,901
49,605
-
-
45,316
-
-
_
-
94,921
(27,020)
-
Police
Grants and
Asset
Forfeiture
$
214,006
-
132,885
19,700
-
-
-
-
366,591
275,041
-
-
-
55,808
_
-
330,849
35,742
1,670
(1,670)
Section 8
Rental
Assistance
$
6,050,735
-
-
2,271
-
-
-
8,840
6,061,846
-
6,425,930
-
-
-
3,805
451
6,430,186
(368,340)
-
Tyler
Court
Apartments Totals
$ - $ 2,262,296
6,963,845
422,166 2,390,954
132,885
19,511 1,000,232
134,000
3,242,380
164,264
13,305
441,677 16,304,161
49,605
275,041
299,583 7,319,551
182,094
2,338,781
3,193,433
5,727
679
299,583 13,364,911
142,094 2,939,250
1,670
(123,148)
(121,478)
634,884 489,436
6,167,263 4,822,058
$6a802J47 $5,311,494
(27,020)
1,246,315
$ 1,219,295
35,742
579,981
S 615,723
(368,340)
441,141
S 72,801
142,094 2,817,772
683,719 47,138,715
$ 825,813 S 49,956,487
(Continued)
91
CITY OF CARLSBAD
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds (Continued)
For the Year Ended June 30, 2005
Revenues:
Taxes
Intergovernmental
Charges for services
Fines and forfeitures
Income from property and investments
Interdepartmental charges
Contributions from property owners
Donations
Miscellaneous
Total revenues
Debt Service
Fund
Grants
Hosp Grove and Other
COPs Funds
$ - $
842,768
-
-
61,601 10,389
-
44,960
-
-
61,601 898,117
Capital Project Funds
Infrastructure Park
Replacement
$ 44,855
-
-
-
530,575
-
-
-
-
575,430
Development
$
-
-
-
150,284
-
1,695,188
-
1,676
1,847,148
Planned
Local
Drainage
Facilities
$
-
-
-
262,145
-
1,449,296
-
-
1,711,441
Expenditures:
Current:
General government
Public safety
Community development
Community services
Public works
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (Uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
800,000
800,000
842,124 749,281 1,758,218
3,830,000
(83,792)
(83,792) 3,830,000
708,771
620,000 - ...
140,598 ....
760,598 842,124
(698,997) 55,993
749,281 1,758,218 708,771
(173,851) 88,930 1,002,670
101,003 (27,799) 3,656,149 88,930 1,002,670
1,340,820 451,552 14,739,977 2,081,977 8,435,795
$1,441,823 $ 423,753 818,396,126 $ 2,170,907 S 9,438,465
92
Capital Project Funds
Redevelopment Sales Tax/
Agency TransNet
$ - $ -
2,658,430
19,078
-
68,204 273.647
-
-
-
-
87,282 2,932,077
485,359
-
-
-
-
2,248,011 4,409,466
1,832
217
2,735,419 4,409,466
(2,648,137) (1,477,389)
1,942,000
-
1,942,000
(706,137) (1,477,389)
1,344,575 10,489,714
S 638,438 $ 9,012,325
Traffic
Impact
Projects
$
-
-
-
251,986
-
1,703,456
-
-
1,955,442
35,725
-
-
-
-
640,357
_
-
676,082
1,279,360
5,325
-
5,325
1,284,685
8,507,793
$9,792,478
Totals
$ 44,855
3,501,198
19,078
-
1,547,230
-
4,892,900
-
1,676
10,006,937
521,084
-
-
-
-
11,356,228
1,832
217
11,879,361
(1,872,424)
5,777,325
(83,792)
5,693,533
3,821,109
46,051,383
$ 49,872,492
Total Other
Governmental
Funds
$ 2,307,151
10,465,043
2,410,032
132,885
2,609,063
134,000
8,135,280
164,264
14,981
26,372,699
570,689
275,041
7,319,551
182,094
2,338,781
14,549,661
627,559
141,494
26,004,870
367,829
6,578,995
(206,940)
6,372,055
6,739,884
94,530,918
S 101,270,802
93
CITY OF CARLSBAD
Combining Schedule of Revenues and Expenditures
Budget and Actual (Budgetary Basis)
Special Revenue Funds
Year Ended June 30, 2005
Affordable Housing
Total revenues
Total expenditures
Net change in fund balance
Community Development Block Grant
Total revenues
Total expenditures
Net change in fund balance
Donations and Endowments
Total revenues
Total expenditures
Net change in fund balance
Financing Districts
Total revenues
Total expenditures
Net change in fund balance
Gas Tax
Total revenues
Total expenditures
Net change in fund balance
Habitat and Agricultural Management
Total revenues
Total expenditures
Net change in fund balance
Low and Moderate Income Housing
Total revenues
Total expenditures
Net change in fund balance
Budget
$ 3,376,597
1,619,799
1,756,798
626,247
1,385,335
(759,088)
175,000
436,311
(261,311)
2,161,538
2,992,079
(830,541)
1,849,277
5,681,811
(3,832,534)
4,668
(4,668)
559,875
171,972
387,903
Actual
Amounts
(Budgetary
Basis)
$ 3,191,511
1,559,531
1,631,980
663,706
899,527
(235,821)
223,583
212,953
10,630
2,158,894
2,544,222
(385,328)
1,984,377
1,694,954
289,423
660,479
4,668
655,811
608,817
112,087
496,730
Variance
Over
(Under)
$ (185,086)
(60,268)
(124,818)
37,459
(485,808)
523,267
48,583
(223,358)
271,941
(2,644)
(447,857)
445,213
135,100
(3,986,857)
4,121,957
660,479
660,479
48,942
(59,885)
108,827
94
CITY OF CARLSBAD
Combining Schedule of Revenues and Expenditures
Budget and Actual (Budgetary Basis)
Special Revenue Funds (Continued)
Year Ended June 30, 2005
Other Special Revenue Funds
Total revenues
Total expenditures
Net change in fund balance
Police Grants and Asset Forfeiture
Total revenues
Total expenditures
Net change in fund balance
Section 8 Rental Assistance
Total revenues
Total expenditures
Net change in fund balance
Totals
Total revenues
Total expenditures
Net change in fund balance
Budget
$ 70,634
105,986
(35,352)
214,300
483,260
(268,960)
6,252,735
6,482,198
(229,463)
15,286,203
19,363,419
$ (4,077,216)
Actual Amounts
(Budgetary
Basis)
$ 72,758
98,575
(25,817)
368,770
330,849
37,921
6,061,846
6,431,011
(369,165)
15,994,741
13,888,377
$ 2,106,364
Variance
Over
(Under)
$ 2,124
(7,411)
9,535
1 54,470
(152,411)
306,881
(190,889)
(51,187)
(139,702)
708,538
(5,475,042)
$ 6,183,580
95
CITY OF CARLSBAD
Combining Schedule of Revenues and Expenditures
Budget and Actual (Budgetary Basis)
Debt Service Funds
Year Ended June 30, 2005
Budget
Actual
Amounts
(Budgetary
Basis)
Variance
Over
(Under)
Redevelopment Areas
Total revenues
Total expenditures
Net change in fund balance
1,948,622
1,785,735
2,079,649
1,756,658
131,027
(29,077)
162,887 $322,991 $160,104
96
97
CITY OF CARLSBAD
Combining Statement of Net Assets
Internal Service Funds
June 30, 2005
ASSETS
Current assets:
Cash and investments
Receivables:
Accounts, net
Due from other governments
Inventory
Total current assets
Noncurrent assets:
Capital assets:
Machinery and equipment
Less accumulated depreciation
Total capital assets (net of accumulated
depreciation)
Total noncurrcnt assets
Total assets
LIABILITIES
Current liabilities:
Accrued liabilities
Estimated claims payable
Total current liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Unrestricted
Fleet Self Insured
Management Benefits
$ 8,513,298 $ 3,548,449
1,081 169
-
170,635
8,685,014 3,548,618
1 1 ,904,762
(6,791,469)
5,113,293
5,113,293
S 13,798,307 S 3,548,618
$ 337,074 S 2,645,532
78,486
337,074 2,724,018
337,074 2,724,018
5,113,293
8,347,940 824,600
Information
Technology
$ 3,441,543
-
754,868
-
4,196,411
3,271,025
(2,757,907)
513,118
513,118
$ 4,709,529
S 465,393
-
465,393
465,393
513,118
3,731,018
Total net assets $ 13,461,233 $824,600 $ 4,244,136
98
Risk
Management
Workers'
Compensation Total
1,470,911 3,512,015 S 20,486,216
1,250
754,868
170,635
1,470,911 3,512,015 21,412,969
15,175,787
(9,549,376)
5,626,411
5,626,41 1
1,470,911 S 3,512,015 S 27,039,380
S 106,935 $
1,927,843
2,034,778
2,034,778
6,441 !
3,613,777
3,620,218
3,620,218
E 3,561,375
5,620,106
9,181,481
9,181,481
(563,867)
$ (563,867) $
(108,203)
: (108,203) !
5,626,411
12,231,488
5 17,857,899
99
CITY OF CARLSBAD
Combining Statement of Revenues, Expenses and Changes in Net Assets
Internal Service Funds
For the Year Ended June 30, 2005
Operating revenues:
Other charges for services
Miscellaneous
Total operating revenues
Operating expenses:
Depreciation
Fuel and supplies
Claims expense
Small equipment purchases
General and administrative
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Income from property and investments
Gain (loss) on sale of property
Total nonoperating revenues (expenses)
Income (loss) before transfers and
capital contributions
Transfers in
Transfers out
Capital contributions
Change in net assets
Total net assets at beginning of year
Total net assets at end of year
Fleet Self Insured
Management Benefits
$ 3,263,168 $ 813,022
21,959
3,285,127 813,022
1,163,992
753,122
737,059
36,537
1,222,192 1,949
3,175,843 739,008
109,284 74,014
225,595 2,960
64,990
290,585 2,960
399,869 76,974
_
-
307,155
707,024 76,974
12,754,209 747,626
$ 13,461,233 $ 824,600
Information
Technology
$ 4,154,145
-
4,154,145
401,160
-
-
62,772
4,404,744
4,868,676
(714,531)
95,746
(6,772)
88,974
(625,557)
_
-
754,868
129,311
4,114,825
$ 4,244,136
100
Risk Workers'
Management Compensation Totals
$ 1,200,800 $
16,093
1,216,893
-
1,898,854
-
821,999
2,720,853
(1,503,960)
40,091
-
40,091
(1,463,869)
-
(1,463,869)
900,002
$ (563,867) J
1,999,629 5
32,106
2,031,735
-
2,131,464
-
120,374
2,251,838
(220,103)
90,293
-
90,293
(129,810)
-
(129,810)
21,607
J (108,203) !
5 11,430,764
70,158
11,500,922
1,565,152
753,122
4,767,377
99,309
6,571,258
13,756,218
(2,255,296)
454,685
58,218
512,903
(1,742,393)
1,062,023
(680,370)
18,538,269
J 17,857,899
101
CITY OF CARLSBAD
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2005
Cash flows from operating activities:
Receipts from customers and users
Payments to suppliers
Payments to employees
Internal activity - payments to other funds
Claims paid
Other receipts
Net cash provided by (used in) operating activities
Cash flows from noncapital financing activities:
Operating subsidies and transfers to other funds
Cash flows from capital and related financing activities:
(Purchases) sales of capital assets
Principal paid on capital debt
Net cash provided by (used in) capital and related
financing activities
Cash flows from investing activities:
Interest on investments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Fleet Self Insured
Management Benefits
S 3,263,042 $ 813,022
(955,040)
(621,891)
(272,171)
(736,436)
21,959 155,684
1,435,899 232,270
(797,278)
(797,278)
227,877 2,960
866,498 235,230
7,646,800 3,313,219
$ 8,513,298 $ 3,548,449
Information
Technology
$ 4,154,145
(2,192,947)
(1,722,030)
(412,833)
(173,665)
(396,174)
(U32)
(397,906)
95,746
(475,825)
3,917,368
$ 3,441,543
102
Risk Workers'
Management Compensation Total
$ 1,200,800 $ 1,999,629 !
(432,913)
(188,592) (91,464)
(131,780) (28,963)
(591,688) (1,426,577)
16,093 32,106
(128,080) 484,731
5 11,430,638
(3,580,900)
(2,623,977)
(845,747)
(2,754,701)
225,842
1,851,155
-
(1,193,452)
(1,732)
(1,195,184)
40,091 90,293
(87,989) 575,024
1,558,900 2,936,991
$ 1,470,911 $ 3,512,015 !
456,967
1,112,938
19,373,278
£ 20,486,216
103
CITY OF CARLSBAD
Combining Statement of Cash Flows
Internal Service Funds (Continued)
For the Year Ended June 30, 2005
Fleet Self Insured Information
Management Benefits Technology
Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities:
Operating income (loss)
Adjustments to reconcile operating income to net cash
provided by operting activities:
Depreciation and amortization
Change in assets and liabilities:
(Increase) decrease in receivables
(Increase) in inventory
Decrease in prepaid items
Increase (decrease) in accrued liabilities
Increase (decrease) in estimated claims payable
Net cash provided by (used in) operating activities
Noncash capital financing activities:
Capital assets contributed by other funds
109,284 $ 74,014 $ (714,531)
,163,992 401,160
(126)
(68,065)
2,679
228,135
-
(657)
-
-
158,290
623
-
-
-
139,706
-
1,435,899 S 232,270 S (173,665)
307,155 $S 754,868
104
Risk Workers'
Management Compensation Total
$ (1,503,960) $ (220,103) $ (2,255,296)
1,565,152
-
-
-
68,714
1,307,166
S (128,080) $
-
-
-
(53)
704,887
i 484,731 $
(783)
(68,065)
2,679
594,792
2,012,676
1,851,155
1,062,023
105
CITY OF CARLSBAD
Combining Statement of Changes in Assets and Liabilities
Agency Funds
June 30, 2005
Contractors' and Miscellaneous Deposits
ASSETS
Current assets:
Cash and investments
Accrued interest
Total current assets
LIABILITIES
Accrued liabilities
Deposits held for others
Total liabilities
Balance
July 1,2004
$ 13,675,836
11,730
$ 13,687,566
$ 314,791
13,372,775
S 13,687,566
Additions
$ 32,926,650
37,645
$ 32,964,295
$ 20,634,181
32,346,114
S 52,980,295
Deductions
S 29,061,677
13,756
S 29,075,433
$ 17,931,197
31,160,236
$ 49,091,433
Balance
June 30, 2005
S 17,540,809
35,619
S 17,576,428
$ 3,017,775
14,558,653
$ 17,576,428
Assessment Districts
ASSETS
Current assets:
Cash and investments
Accrued interest
Total current assets
Restricted assets:
Cash and investments
Accrued interest
Total restricted assets
Total assets
LIABILITIES
Accrued liabilities
Deposits held for others
Total liabilities
Balance
July 1 , 2004
$ 3,819,531
28,405
3,847,936
4,760,326
79,916
4,840,242
S 8,688,178
S 81,946
8,606,232
$ 8,688,178
Additions
S 5,927,946
106,852
6,034,798
2,472,364
97,634
2,569,998
$ 8,604,796
$ 251,221
8,119,152
$ 8,370,373
Deductions
$ 4,673,549
28,404
4,701,953
32,356
89,215
121,571
$ 4,823,524
S 245,467
4,343,634
$ 4,589,101
Balance
June 30, 2005
$ 5,073,928
106,853
5,180,781
7,200,334
88,335
7,288,669
$ 12,469,450
$ 87,700
12,381,750
$ 12,469,450
106
CITY OF CARLSBAD
Combining Statement of Changes in Assets and Liabilities
Agency Funds (Continued)
June 30, 2005
Total Agency Funds
ASSETS
Current assets:
Cash and investments
Accrued interest
Total current assets
Restricted assets:
Cash and investments
Accrued interest
Total current assets
Total assets
LIABILITIES
Accrued liabilities
Deposits held for others
Total liabilities
Balance
July 1,2004
$ 17,495,367
40,135
17,535,502
4,760,326
79,916
4,840,242
$ 22,375,744
S 396,737
21,979,007
S 22,375,744
Additions
$ 38,854,596
144,497
38,999,093
2,472,364
97,634
2,569,998
S 41,569,091
$ 20,885,402
40,465,266
S 61,350,668
Deductions
$ 33,735,226
42,160
33,777,386
32,356
89,215
121,571
S 33,898,957
$ 18,176,664
35,503,870
$ 53,680,534
Balance
June 30, 2005
$ 22,614,737
142,472
22,757,209
7,200,334
88,335
7,288,669
S 30,045,878
$ 3,105,475
26,940,403
$ 30,045,878
107
CITY OF CARLSBAD
Schedule of Annual Debt Service Requirements
$15,495,000 - 1993 Carlsbad Housing and
Redevelopment Commission Tax Allocation Bonds
Fiscal Year
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Totals
Interest Due
September 1
S 328,001 $
317,633
306,607
295,058
282,851
269,989
256,470
242,295
227,332
211,583
195,045
177,589
159,214
139,920
119,576
98,182
75,525
51,675
26,500
S 3,781,045 $
Interest Due
March 1
317,633
306,607
295,058
282,851
269,989
256,470
242,295
227,332
211,583
195,045
177,589
159,213
139,920
119,576
98,183
75,525
51,675
26,500
-
3,453,044
Total
Interest
$ 645,634
624,240
601,665
577,909
552,840
526,459
498,765
469,627
438,915
406,628
372,634
336,802
299,134
259,496
217,759
173,707
127,200
78,175
26,500
$ 7,234,089
Principal Due
September 1
$ 395,000
420,000
440,000
465,000
490,000
515,000
540,000
570,000
600,000
630,000
665,000
700,000
735,000
775,000
815,000
855,000
900,000
950,000
1,000,000
$ 12,460,000
Total Annual
Debt Service
S 1,040,634
1,044,240
1,041,665
1 ,042,909
1,042,840
1,041,459
1,038,765
1,039,627
1,038,915
1,036,628
1,037,634
1,036,802
1,034,134
1,034,496
1,032,759
1,028,707
1 ,027,200
1,028,175
1,026,500
$ 19,694,089
$6,595,000 -1997 Hosp Grove Certificates of Participation
(1988 Refunding)
Fiscal Year
Interest Due
August 1
Interest Due
February 1
Total
Interest
Principal Due
August 1
Total Annual
Debt Service
2005-06
2006-07
2007-08
2008-09
Totals
62,418
48,448
33,373
17,273
161,512
48,447
33,372
17,272
110,865
81,820
50,645
17,273
99,091 $
635,000
670,000
700,000
735,000
745,865
751,820
750,645
752,273
260,603 $ 2,740,000 $ 3,000,603
108
CITY OF CARLSBAD
Schedule of Annual Debt Service Requirements (Continued)
$11,080,000 - Encina Financing Joint Powers Authority
Installment Purchase Agreement
Fiscal Year
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Totals
Interest Due
August 1
188,603
172,791
156,153
139,353
122,816
105,191
86,228
66,241
45,228
23,190
$ 1,105,794
Interest Due
February 1
172,791
156,153
139,353
122,816
105,191
86,228
66,241
45,228
23,191
-
$ 917,192
Total
Interest
361,394
328,944
295,506
262,169
228,007
191,419
1 52,469
111,469
68,419
23,190
S 2,022,986
Principal Due
August 1
575,000
605,000
640,000
675,000
705,000
740,000
780,000
820,000
860,000
905,000
S 7,305,000
Total Annual
Debt Service
936,394
933,944
935,506
937,169
933,007
931,419
932,469
931,469
928,419
928,190
S 9,327,986
$2,331,489 - Carlsbad Municipal Water District
State Loan for Reclaimed Water Projects
Fiscal Year
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Interest Due
November 30
35,455
31,857
28,155
24,345
20,425
16,391
12,240
7,969
2,680
Principal Due
November 30
124,072
127,670
131,372
135,182
139,102
143,136
147,287
151,558
123,219
Total Annual
Debt Service
159,527
159,527
159,527
159,527
159,527
159,527
159,527
159,527
125,899
Totals 179.517 ,222,598 S 1,402,115
109
110
STATISTICAL SECTION
111
CITY OF CARLSBAD
Government-wide Expenses by Function
Fiscal
Year
2001-02(1)
2002-03
2003-04
2004-05
General
Government
$7,599,821
8,517,581
8,604,212
11,352,893
Public
Safety
$25,659,586
27,747,646
30,894,018
34,366,093
Community
Development
$10,539,139
12,351,779
13,814,331
14,362,610
Community
Services
$13,269,566
14,190,510
15,034,661
16,033,363
Public
Works
$15,015,344
16,825,872
19,533,596
22,064,209
Interest on
Long-Term
Debt
$1,673,516
1,048,264
995,895
1,013,773
(1) The City first began issuing Government-wide statements in fiscal year 2001-02.
GOVERNMENT-WIDE EXPENSES BY FUNCTION
2004-05
Carlsbad Municipal
Water District
17%
Interest on Long-
Term Debt
1%
Public Works
17%
Sewer
6%
General
Government
9%
Public Safety
26%
Community
Services
12%
Community
Development
11%
Source: City of Carlsbad Comprehensive Annual Financial Reports
112
Carlsbad
Municipal
Water Golf Solid
District Course Sewer Waste Total
$19,310,792 $98,565 $6,168,690 $212,605 $99,547,624
19,261,199 93,341 6,103,668 218,014 106,357,874
20,950,012 53,916 6,890,389 1,300,281 118,071,311
21,422,207 25,344 7,234,986 1,488,109 129,363,587
113
CITY OF CARLSBAD
Government-wide Revenues
PROGRAM REVENUES
Fiscal
Year
2001-02(l)
2002-03
2003-04
2004-05
Charges for
Services
$40,142,313
42,464,001
41,845,765
44,531,504
Operating Grants
and
Contributions
$8,562,412
11,406,166
16,073,559
13,325,511
Capital Grants
and
Contributions
$43,007,215
64,719,339
59,591,648
91,536,226
(1*The City first began issuing Government-wide statements in fiscal year 2001-02.
GOVERNMENT-WIDE REVENUES BY FUNCTION
2004-05
Taxes
35%
Income from
Property and
Investments
5%
Intergov.
(Unrestricted)
1%
Charges for
Services
17%
Operating
Grants and
Contributions
5%
Other
1%
Capital Grants
and
Contributions
36%
Source: City of Carlsbad Comprehensive Annual Financial Reports
114
GENERAL REVENUES
Income from
Intergovernmental Property and
Taxes (Unrestricted) Investments Miscellaneous Total
$70,676,433 $4,675,269 $25,105,269 $1,564,886 $193,733,797
74,398,635 5,066,902 19,182,978 598,688 217,836,709
78,668,757 4,124,672 4,316,430 650,724 205,271,555
88,554,458 2,136,364 14,072,958 867,822 255,024,843
115
CITY OF CARLSBAD
General Governmental Expenditures by Function'1'
Last Ten Fiscal Years
Fiscal
Year(2)
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
Total
$ 59,802,924
65,943,032
80,045,280
112,156,205
105,655,384
92,884,485
112,513,403
108,662,936
115,234,046
142,692,660
General
Government
$ 5,850,829
6,961,469
6,909,151
6,784,525
7,382,909
9,022,218
8,414,743
8,805,313
9,745,019
12,113,403
Public
Safety
$ 16,850,087
17,410,033
18,631,042
21,927,751
21,799,386
23,627,184
25,598,466
26,797,864
30,798,786
33,819,164
Community
Development
$ 7,363,194
7,431,539
7,894,536
8,636,634
11,538,444
9,351,917
10,315,783
12,146,247
13,644,301
14,318,966
(1)Includes General, Special Revenue, Debt Service, and Capital Projects Funds.
Beginning in fiscal year 1997-98, Park Maintenance expenditures are included in Public Works instead of Community Services.
GENERAL GOVERNMENTAL EXPENDITURES
BY FUNCTION
2004-05
Capital Projects
33%
Public Works
13%
Debt Service
2%General
Government
8%
Community
Services
10%
Source: City of Carlsbad Comprehensive Annual Financial Reports
Public Safety
24%
Community
Development
10%
116
Community
Services
$ 7,590,363
8,390,009
6,672,810
7,541,378
9,088,264
11,571,249
12,448,725
13,026,341
13,914,997
14,743,535
Public
Works
$ 8,956,757
8,816,767
11,437,101
12,689,683
13,822,429
14,402,096
15,404,566
18,176,697
18,044,784
18,736,645
Capital
Outlay
$ 9,654,082
13,556,164
23,693,412
52,106,587
39,543,074
22,066,731
37,503,175
26,410,483
26,405,614
46,419,619
Debt
Service
$3,537,612
3,377,051
4,807,228
2,469,647
2,480,878
2,843,090
2,827,945
3,299,991
2,680,545
2,541,328
SPENDING ON CAPITAL PROJECTS
LAST TEN YEARS
TOTAL EXPENDITURES
LAST TEN YEARS
Fiscal Year
117
CITY OF CARLSBAD
General Governmental Revenues by Source0'
Last Ten Fiscal Years
Fiscal
Year
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
Total(2)
$74,611,395
98,645,130
122,653,159
145,393,991
115,252,270
136,244,948
131,323,111
141,617,437
147,362,099
187,377,929
Property
Taxes
$13,576,407
14,516,474
15,226,827
17,121,586
19,916,613
23,143,014
28,495,155
31,410,575
33,948,756
35,649,689
Sales
Taxes
$11,542,970
12,495,143
14,817,057
17,129,474
19,493,247
21,196,726
21,660,902
25,542,844
25,571,192
26,330,537
Transient
Occupancy
Taxes
$3,406,917
3,675,472
6,046,092
7,010,249
8,333,196
9,269,484
8,533,329
8,387,388
8,813,426
10,072,278
Business
Licenses
$1,491,159
1,510,462
1,603,744
1,737,850
1,863,514
2,300,367
2,440,387
2,305,178
2,871,715
2,889,989
Other
Taxes
$8,621,717
10,824,890
15,290,601
14,508,643
12,661,882
14,237,832
10,398,486
6,510,259
8,327,952
9,122,614
(1)
(2)
Includes General, Special Revenue, Debt Service, and Capital Projects Funds.
Includes interdepartmental services, donations, and miscellaneous revenues.
GENERAL GOVERNMENTAL REVENUE
LAST TEN YEARS
PROPERTY TAX
AND SALES TAX REVENUE
LAST TEN YEARS
200 i
Fiscal Year
Source: City of Carlsbad Comprehensive Annual Financial Reports
Fiscal Year
D Property Tax • Sales Tax
118
Licenses
Inter-
Governmental
$ 6,426,262
11,764,760
17,091,140
17,801,614
14,094,118
14,285,677
14,266,527
19,775,324
22,505,969
24,245,241
and Charges for
Permits Services
$4,178
5,609
6,484
3,826
3,320
3,409
1,998
2,042
844 $ 6,805,386
730 10,707,653
025 7,614,902
686 6,805,147
851 5,749,416
156 6,427,307
210 7,751,065
,529 10,058,671
2,328,524 9,899,183
3,392 682 10,433,292
TRANSIENT OCCUPANCY TAX
LAST TEN YEARS
10 -f
c
1 4"l=3Q 2-'
0 -W-
VO
£
^lH^^r^i
1
111 1
^aa^M^pa— msfta<- ao
0\ Ov
. . . . .
i i n i i _Kl|lln Hrylrll «t f t
5 0 0 O O 0O\ O 0 O O 0
Income from
Fines and Property and
Forfeitures Investments
$ 335,395 $ 4,862,050
317,892 6,075,188
331,318 8,632,261
935,955 8,925,565
839,831 10,495,817
888,608 20,384,618
947,183 18,700,470
923,068 14,801,549
1,092,380 3,901,415
1,083,698 10,741,838
Contributions
from Property
Owners
$ 9,359,802 $
15,450,861
25,861,948
45,763,304
14,733,063
15,982,528
11,250,770
14,546,966
23,682,348
49,445,825
Other(2>
4,004,486
5,696,605
3,653,244
3,827,918
3,750,722
4,719,631
4,880,627
5,313,086
4,419,239
3,970,246
CHARGES FOR SERVICES
LAST TEN YEARS
12 - '
n 10-'B0
3 8 •'
"5 I
D ! -I
i z
,e
-
L
[- 0
y\ c
fj*.
r^B
litf
jj U U U U 1
) 9\ O ^^ fS f)IN ON O O O Or\ ff\ O O O O
-
.
.
jjy_ j
Tt IT)0 0O O
Fiscal Year Fiscal Year
119
CITY OF CARLSBAD
Computation of Legal Debt Margin
June 30, 2005
Net assessed valuation $ 15.741.121.590
Debt limit (15% of 25% of net assessed valuation as adjusted) 590,292.060
Amount of debt applicable to debt limit:
Bonded debt 12,460,000
Certificates of participation 2,740,000
Obligations under capital leases 7.366
Total amount of debt applicable to debt limit 15.207.366
Legal debt margin $ 575.084.694
Percent of debt limit 2.6%
Source: County of San Diego Office of the Auditor and Controller
120
CITY OF CARLSBAD
Schedule of Direct and Overlapping Bonded Debt
June 30, 2005
2004-05 Assessed Valuation: $16,13 8,026,027
Redevelopment Incremental Valuation: 240,373,237
Adjusted Assessed Valuation: $15,897,652,790
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/30/05
Metropolitan Water District 1.198 $ 5,024,292
Carlsbad Unified School District 97.811 21,118,431
Carlsbad Unified School District Community Facilities District No. 1 100.000 9,095,000
Oceanside Unified School District 0.007 5,107
Vista Unified School District 0.064 72,397
Encinitas Union School District 30.374 7,408,740
San Marcos Unified School District School Facilities Improvement District 36.564 7,050,643
San Marcos Unified School District Community Facilities District No. 5 100.000 26,395,000
San Dieguito Union High School District Community Facilities District No. 94-1 100.000 284,113
San Dieguito Union High School District Community Facilities District No. 94-2 98.327 20,430,827
San Dieguito Union High School District Community Facilities District No. 95-2 36.882 315,924
San Dieguito Union High School District combined Community Facilities District 28.740 13,921,656
Olivenhain Municipal Water District, Assessment District No. 96-1 22.168 4,390,372
City of Carlsbad 1915 Act Bonds 100.000 76.315.000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $191,827,502
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
San Diego County General Fund Obligations 6.295% $ 29,201,033
San Diego County Pension Obligations 6.295 78,828,692
San Diego County Superintendent of Schools General Fund Obligations 6.295 807,176
Mira Costa Community College District Certificates of Participation 26.851 1,343,893
Carlsbad Unified School District General Fund Obligations 97.811 55,991,907
San Marcos Unified School District General Fund Obligations 31.320 1,923,048
Encinitas Union School District Certificates of Participation 30.374 498,134
Other School District Certificates of Participation Various 242,377
City of Carlsbad General Fund Obligations 100.000 2,740.000
TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $ 171,576,260
COMBINED TOTAL DEBT $363,403,762(l)
'''Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease
obligations.
Ratios to 2004-05 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 1.19%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($2,740,000) 0.02%
Combined Total Debt 2.29%
SHARE OF AUTHORIZED AND UNSOLD GENERAL OBLIGATION BONDS:
Oceanside Unified School District $3,535
Vista Unified School District $17,690
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/3Q/05: $0
Source: California Municipal Statistics, Inc.
121
Fiscal
Year
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
CITY OF CARLSBAD
Construction and Business Activity
Last Ten Fiscal Years
Building
Permit
Revenue
£ 917,788
1,262,177
2,094,523
2,524,063
2,156,584
2,102,074
1,085,819
986,890
1,282,126
2,031,708
Percent
Change
42.4
37.6
65.9
20.5
(14.6)
(2.5)
(48.3)
(9.1)
29.9
58.5
Estimated
Valuation
$162,116,427
305,247,426
479,909,805
588,527,417
468,596,775
513,763,904
272,671,912
265,175,025
323,157,350
530,149,898
Business
License
Revenue
$1,491,159
1,510,462
1,603,744
1,737,850
1,863,514
2,300,367
2,440,387
2,305,178
2,871,715
2,889,989
ESTIMATED VALUATION OF BUILDING
PERMITS ISSUED - LAST TEN YEARS
Fiscal Year
Percent
Change
19.7
1.3
6.2
8.4
7.2
23.4
6.1
(5.5)
24.6
0.1
Source: City of Carlsbad Comprehensive Annual Financial Reports
122
CITY OF CARLSBAD
Water Enterprise
Revenue Bond Coverage
Last Ten Fiscal Years
Fiscal
Year
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
Gross
Revenue(l)
$ 17,147,790
18,911,511
18,356,555
19,942,226
22,178,880
23,187,752
24,925,994
23,791,166
22,640,030
22,968,441
Total
Expenses'2'
$ 13,998,346
14,692,531
14,583,879
16,732,975
18,609,221
18,027,298
19,310,792
19,261,199
20,950,012
21,422,207
Net Revenue
Available for
Debt Service
$3,149,444
4,218,980
3,772,672
3,209,251
3,569,659
5,160,454
5,615,202
4,529,967
1,690,018
1,546,234
Principal
$ 880,000
1,040,000
955,000
995,000
1,040,000
1,075,000
1,120,000
1,175,000
0
0
Debt Service
Interest
$ 644,822
494,954
264,695
227,450
187,650
145,010
99,860
51,700
0
0
Requirements
Total
$ 1,524,822
1,534,954
1,219,695
1,222,450
1,227,650
1,220,010
1,219,860
1,226,700
0
0
Coverage
2.07
2.75
3.09
2.63
2.91
4.23
4.60
3.69
N/A
N/A
(1)
(2)
Includes operating and non-operating revenues.
Includes operating and non-operating expenses.
WATER ENTERPRISE GROSS REVENUE
VS. TOTAL EXPENSES
LAST TEN YEARS
Fiscal Year
D GROSS REVENUE • TOTAL EXPENSES
WATER ENTERPRISE REVENUE
AVAILABLE FOR DEBT SERVICE
LAST TEN YEARS
Fiscal Year
Source: City of Carlsbad Comprehensive Annual Financial Reports
123
CITY OF CARLSBAD
Schedule of Assessed Valuation
Last Ten Fiscal Years
Fiscal Year
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
Secured Property
$ 5,676,061,219
5,811,751,594
6,232,883,670
7,154,426,710
8,675,347,964
10,289,895,123
11,586,003,633
12,801,430,765
14,054,283,700
15,473,484,241
Unsecured Property
$ 310,402,764
348,706,124
352,854,173
424,962,226
419,824,253
422,862,440
519,294,090
487,682,538
559,694,669
600,161,425
Less Property
Exemptions
$ 46,279,594
55,138,448
57,681,797
78,827,023
85,462,447
95,111,634
115,461,551
131,448,341
153,968,422
175,992,876
(i)Does not include redevelopment incremental valuation or State-assessed unitary values.
Source: County of San Diego Office of the Auditor and Controller
124
Total
Assessed Valuation*1'
$ 5,940,184,389
6,105,319,270
6,528,056,046
7,500,561,913
9,009,709,770
10,617,645,929
11,989,836,172
13,157,664,962
14,460,009,947
15,897,652,790
$16 -ix
$14 -'
ti $12 -x
o
3 $10 -x
PS
.S $8 - x
J3 $6-'
"o .Q $4 -x
$2 •'"'
Homeowner's
Exemptions
$ 98,488,810
100,249,766
103,825,400
108,623,200
119,026,600
127,530,200
139,157,200
147,953,400
156,595,600
156,531,200
Net Assessed Percentage
Valuation Change
$ 5,841,695,579 0.3
6,005,069,504 2.8
6,424,230,646 7.0
7,391,938,713 15.1
8,890,683,170 20.3
10,490,115,729 18.0
11,850,678,972 13.0
13,009,711,562 9.8
14,303,050,347 9.9
15,741,121,590
NET TAXABLE VALUE
LAST TEN YEARS
BlUVO l~ 00 ON OON ON ON ON oON ON ON ON o
._.
i-
ipl J
e o0 O
-
m
j$^
\\f _W .
V ^t^t •& mO O 0O O 0
10.1
^
Fiscal Year
125
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2010 (Estimate)
2020 (Estimate)
Square
Miles
42.2
42.2
42.2
42.2
42.2
42.2
42.2
42.2
42.2
42.2
42.2
42.2
Population(1)
68,010
70,532
73,688
77,550
82,030
83,469
88,013
90,271
92,995
95,146
104,070<2)
109,185(2)
CITY OF CARLSBAD
Demographic Statistics
Last Ten Fiscal Years
Population
Percent
Change
2.3
3.7
4.5
5.2
5.8
1.8
5.4
2.6
3.0
2.3
9.4
4.9
County
Population*l)
2,682,093
2,724,437
2,794,785
2,853,258
2,911,468
2,883,595
2,918,300
2,961,579
3,017,204
3,051,280
3,258,951(3)
3,633,572(3)
City
Population
Percent
of County
2.5
2.6
2.6
2.7
2.8
2.9
3.0
3.0
3.1
3.1
3.2
3.0
(1) Source: State Department of Finance.
(2) Source: Based on City of Carlsbad projected residential construction estimates in 2005-06 Capital Improvement Program.
(3) Source: State Department of Finance Population Projections (May 2004).
POPULATION
LAST TEN YEARS
100,000 -|
90,000
80,000
70,000 -
60,000 -
50,000 -
40,000 -
30,000
20,000 •
10,000 •
Fiscal Year
126
CITY OF CARLSBAD
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal
Year
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
Total
Current Levy
$11,891,199
12,227,583
13,277,486
15,115,611
17,923,250
20,959,581
23,554,392
26,220,028
32,215,674
43,164,454
Total Current
Collections
$11,164,134
11,551,981
12,636,654
14,421,616
17,110,252
20,085,365
22,705,762
25,200,220
30,859,058
41,246,613
% of Levy
Collected
93.9
94.5
95.2
95.4
95.5
95.8
96.4
96.1
95.8
95.6
PROPERTY TAX LEVIES & COLLECTIONS
LAST TEN FISCAL YEARS
$45 -f
ao
oO
Fiscal Year
DLEVIES • COLLECTIONS
Source: County of San Diego Office of the Auditor and Controller
127
CITY OF CARLSBAD
Principal Employers
2004-05
FIRM
Manufacturing.
Callaway Golf
Invitrogen
Taylor Made Golf- Adidas Golf Company
ViaSat
Acushnet Golf
Zimmer Dental
Beckman Coulter
Melles Griot
Schumacher
Respironics, Inc
Non-Manufacturing
Four Seasons Resort - Aviara
Carlsbad Unified School District
La Costa Resort & Spa
Gemological Institute of America
City of Carlsbad
ISIS Pharmaceuticals
LEGOLAND, California
24-Hour Fitness
Modern Postcard/The Iris Group Inc.
Grand Pacific Resorts
PRODUCT/SERVICE
Golf Equipment
Research Supplies
Golf Equipment
Data Communications
Golf Equipment
Dental Implants
Medical Supplies
Semiconductors
Chemicals for Semiconductors
Medical/Orthopedic Devices
Resort
Education
Hotel/Health Spa
Gemological School
Municipal Government
Research and Development
Family Theme Park
Health Club Headquarters
Software Distributor
Hotel/Resort
EMPLOYEES
2,000
1,000
645
624
535
391
260
256
250
200
1,030
950
720
660
635
510
490
450
270
200
Source: City of Carlsbad, Chamber of Commerce
128
Taxpayer
Callaway Golf Company
La Costa Hotel & Spa Corporation
Continuing Life
Legoland California, Inc.
Bressi Gardenlane LLC
Prentiss Properties
Borders, Inc.
H. G. Fenton Company
Real Estate Collateral Mgmt. Co.
Gemological Institute
Universe Institutional
CITY OF CARLSBAD
Principal Taxpayers
2004-05
Type of Business
(i)Net assessed valuation for 2004-05:
Manufacturer
Hotel & Health Spa
Senior Retirement Community
Family Theme Park
Real Estate
Real Estate
Retail Sales
Distribution Warehouse
Real Estate
Gemological School
Residential Apartment Rentals
$15,741,121,590
Valuation
$159,353,837
132,292,486
125,451,962
105,000,000
76,495,927
71,845,631
68,001,543
63,028,919
62,493,519
55,520,616
52,549,615
$972,034,055
Percentage of Net
Assessed
Valuation0}
1.0%
0.8%
0.8%
0.7%
0.5%
0.5%
0.4%
0.4%
0.4%
0.4%
0.3%
62%
Source: County of San Diego Office of the Auditor and Controller
129
CITY OF CARLSBAD
Top 30 Sales Tax Generators
2004-05
Firm Product/Service
Banana Republic
Bob Baker Chrysler Jeep
Bob Baker Volkswagen
Carlsbad Fuels Service Station
Carlsbad Volvo
Costco Wholesale
Four Seasons Resort Aviara
Hoehn Acura
Hoehn Honda
Invitrogen Corporation
J C Penney Company
Ken Grody Ford
Ken Grody GMC Pontiac
La Costa Resort & Spa
Legoland
Lexus Carlsbad
Macy's Department Store
North County Hyundai
Pacific Sales Kitchen & Bath
Reliable Wholesale Lumber
Robinsons-May Department Store
Rorick Buick/Cadillac
Sears Roebuck & Company
Townsend Lincoln/Mercury
Toyota Carlsbad
Toyota Motor Credit
Vons Grocery Company
Weseloh Chevrolet
Worthington Dodge
* Companies are listed in alphabetical order.
Clothing Store
Car Dealership
Car Dealership
Fuel Service Station
Car Dealership
General Stores
Hotel/Food Sales/Spa
Car Dealership
Car Dealership
Manufacturer of Research Supplies
Department Store
Car Dealership
Car Dealership
Hotel/Food Sales/Spa
Family Theme Park
Car Dealership
Department Store
Car Dealership
Furniture/Appliance
Building Materials
Department Store
Car Dealership
Department Store
Car Dealership
Car Dealership
Automobile Lessor
Grocery/Food Markets
Car Dealership
Car Dealership
Source: MBIA MuniServices Company
130
CITY OF CARLSBAD
Miscellaneous Statistical Information
2004-05
Date of Incorporation July 16, 1952
Type of City General Law
Form of Government Council/Manager
Area 42.19 sq. miles
Population (CA Dept. of Finance Report 1/1/05) 95,146
Net Assessed Valuation $ 15,741,121,590
Streets:
Number of Street Lights 6,445
Miles of Streets 295
Fire Protection:
Number of Stations 6
Number of Firefighters & Officers 73
Police Protection:
Number of Stations 1
Number of Sworn Police Officers 109
Municipal Water District:
Number of Customers 83,400
Number of Water Connections 25,900
Average Daily Consumption (in Millions of Gallons) 19.1
Miles of Lines and Mains 434
Miles of Sewers 254
Recreation and Culture:
Number of Parks 39
Acres of Parks (Improved Community & Special Use Areas) 295
Acres of Open Space (Special Resource Areas & General
City-Owned Open Space) 625
Number of Pools 1
Number of Libraries 2
Number of Materials in Circulation 373,998
Total Number of Authorized Full-Time City Employees 635
Source: City of Carlsbad, Finance Department
131
132