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Home My WebLink About; ; 2008-2009 CAFR; 2009-06-30CARLSBAD C A L I F O R N I A Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2009 ...it’s the ever-evolving ci ty! City of Carlsbad COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2009 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.carlsbadca.gov Prepared by the Finance Department COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2009 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.carlsbadca.gov Prepared by the Finance Department COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2009 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.carlsbadca.gov Prepared by the Finance Department COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2009 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.carlsbadca.gov Prepared by the Finance Department Cover design by: Kelly Hock Cover design by: Kelly Hock Cover design by: Kelly Hock Cover design by: Kelly Hock COUNCIL VISION STATEMENTS Carlsbad . . . ¾ 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. ¾ 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. ¾ 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. ¾ 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… ¾ Delivers top-quality public services. ¾ Manages its environment proactively, including: ◊ Open space ◊ Wildlife habitats ◊ Water quality/conservation ◊ Beach preservation ◊ Air quality ◊ Resource conservation and waste reduction ¾ Promotes a safe and efficient integrated transportation system. ¾ Maintains citywide “small town” community spirit. ¾ Provides a community where continuous and life-long learning is supported and encouraged for people of all ages. ¾ Looks ahead and works to anticipate changes that are required now in order to make a better future for its citizens. Carlsbad City Council 2009 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. COUNCIL VISION STATEMENTS Carlsbad . . . ¾ 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. ¾ 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. ¾ 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. ¾ 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… ¾ Delivers top-quality public services. ¾ Manages its environment proactively, including: ◊ Open space ◊ Wildlife habitats ◊ Water quality/conservation ◊ Beach preservation ◊ Air quality ◊ Resource conservation and waste reduction ¾ Promotes a safe and efficient integrated transportation system. ¾ Maintains citywide “small town” community spirit. ¾ Provides a community where continuous and life-long learning is supported and encouraged for people of all ages. ¾ Looks ahead and works to anticipate changes that are required now in order to make a better future for its citizens. Carlsbad City Council 2009 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. 1 COUNCIL VISION STATEMENTS Carlsbad . . . ¾ 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. ¾ 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. ¾ 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. ¾ 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… ¾ Delivers top-quality public services. ¾ Manages its environment proactively, including: ◊ Open space ◊ Wildlife habitats ◊ Water quality/conservation ◊ Beach preservation ◊ Air quality ◊ Resource conservation and waste reduction ¾ Promotes a safe and efficient integrated transportation system. ¾ Maintains citywide “small town” community spirit. ¾ Provides a community where continuous and life-long learning is supported and encouraged for people of all ages. ¾ Looks ahead and works to anticipate changes that are required now in order to make a better future for its citizens. Carlsbad City Council 2009 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. COUNCIL VISION STATEMENTS Carlsbad . . . ¾ 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. ¾ 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. ¾ 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. ¾ 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… ¾ Delivers top-quality public services. ¾ Manages its environment proactively, including: ◊ Open space ◊ Wildlife habitats ◊ Water quality/conservation ◊ Beach preservation ◊ Air quality ◊ Resource conservation and waste reduction ¾ Promotes a safe and efficient integrated transportation system. ¾ Maintains citywide “small town” community spirit. ¾ Provides a community where continuous and life-long learning is supported and encouraged for people of all ages. ¾ Looks ahead and works to anticipate changes that are required now in order to make a better future for its citizens. Carlsbad City Council 2009 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. 1 2 2 3 3 Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The City covers approximately 42 square miles and has a population of 103,406, with an expected build-out population of 117,000 residents. Industries in the City include three shopping centers; a regional mall, a specialty outlet center and a community center; a major family theme park; an auto mall; over 3,600 hotel 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. 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, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: Police protection services Development services Fire and paramedic services Street construction and maintenance Water delivery system Library and arts programs Wastewater system Recreation programming for all ages Solid waste services Park lands Housing programs 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 statements and strategic goals * * * * S a n F r a n c i s c o L o s A n g e l e s S a n D i e g o Oregon N e v a d a P a c i f i c O c e a n N E W S Carlsbad City of Carlsbad Strategic Goals Balanced Community Development –A city that connects community, place, and spirit through balanced and economically sustainable land uses. Citizen Connection & Partnership –A city that embraces community connectivity through the effective use of technological and interpersonal mediums. Communication –Ensure that community members, Council and staff are well informed, continuing to be a more responsive government while providing a high level of citizen confidence in its government. Environmental Management –An environmentally sensitive community focusing on: conservation, storm water, wastewater 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 City resources effectively. Learning, Culture & Arts –Promote and support continuous learning, cultural opportunities and the arts within the community and the City organization. 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. Safe Community –Maintain a safe and secure community through collaborative partnerships. Public safety providers support high standards, deliver protection of life and property, and encourage community involvement in prevention and preparedness efforts. Transportation/Circulation –Provide and support a safe and efficient transportation system that moves people, services, and goods throughout Carlsbad. Water –Ensure, in the most cost-effective manner, water quality and reliability to the maximum extent practical, to deliver high-quality potable and reclaimed water incorporating drought-resistant community principles. Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The City covers approximately 42 square miles and has a population of 103,406, with an expected build-out population of 117,000 residents. Industries in the City include three shopping centers; a regional mall, a specialty outlet center and a community center; a major family theme park; an auto mall; over 3,600 hotel 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. 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, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: Police protection services Development services Fire and paramedic services Street construction and maintenance Water delivery system Library and arts programs Wastewater system Recreation programming for all ages Solid waste services Park lands Housing programs 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 statements and strategic goals * * * * S a n F r a n c i s c o L o s A n g e l e s S a n D i e g o Oregon N e v a d a P a c i f i c O c e a n N E W S Carlsbad City of Carlsbad Strategic Goals Balanced Community Development –A city that connects community, place, and spirit through balanced and economically sustainable land uses. Citizen Connection & Partnership –A city that embraces community connectivity through the effective use of technological and interpersonal mediums. Communication –Ensure that community members, Council and staff are well informed, continuing to be a more responsive government while providing a high level of citizen confidence in its government. Environmental Management –An environmentally sensitive community focusing on: conservation, storm water, wastewater 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 City resources effectively. Learning, Culture & Arts –Promote and support continuous learning, cultural opportunities and the arts within the community and the City organization. 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. Safe Community –Maintain a safe and secure community through collaborative partnerships. Public safety providers support high standards, deliver protection of life and property, and encourage community involvement in prevention and preparedness efforts. Transportation/Circulation –Provide and support a safe and efficient transportation system that moves people, services, and goods throughout Carlsbad. Water –Ensure, in the most cost-effective manner, water quality and reliability to the maximum extent practical, to deliver high-quality potable and reclaimed water incorporating drought-resistant community principles. 4 Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The City covers approximately 42 square miles and has a population of 103,406, with an expected build-out population of 117,000 residents. Industries in the City include three shopping centers; a regional mall, a specialty outlet center and a community center; a major family theme park; an auto mall; over 3,600 hotel 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. 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, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: Police protection services Development services Fire and paramedic services Street construction and maintenance Water delivery system Library and arts programs Wastewater system Recreation programming for all ages Solid waste services Park lands Housing programs 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 statements and strategic goals * * * * S a n F r a n c i s c o L o s A n g e l e s S a n D i e g o Oregon N e v a d a P a c i f i c O c e a n N E W S Carlsbad City of Carlsbad Strategic Goals Balanced Community Development –A city that connects community, place, and spirit through balanced and economically sustainable land uses. Citizen Connection & Partnership –A city that embraces community connectivity through the effective use of technological and interpersonal mediums. Communication –Ensure that community members, Council and staff are well informed, continuing to be a more responsive government while providing a high level of citizen confidence in its government. Environmental Management –An environmentally sensitive community focusing on: conservation, storm water, wastewater 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 City resources effectively. Learning, Culture & Arts –Promote and support continuous learning, cultural opportunities and the arts within the community and the City organization. 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. Safe Community –Maintain a safe and secure community through collaborative partnerships. Public safety providers support high standards, deliver protection of life and property, and encourage community involvement in prevention and preparedness efforts. Transportation/Circulation –Provide and support a safe and efficient transportation system that moves people, services, and goods throughout Carlsbad. Water –Ensure, in the most cost-effective manner, water quality and reliability to the maximum extent practical, to deliver high-quality potable and reclaimed water incorporating drought-resistant community principles. Council is elected at large on a staggered basis for a term of four years. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The City covers approximately 42 square miles and has a population of 103,406, with an expected build-out population of 117,000 residents. Industries in the City include three shopping centers; a regional mall, a specialty outlet center and a community center; a major family theme park; an auto mall; over 3,600 hotel 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. 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, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: Police protection services Development services Fire and paramedic services Street construction and maintenance Water delivery system Library and arts programs Wastewater system Recreation programming for all ages Solid waste services Park lands Housing programs 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 statements and strategic goals * * * * S a n F r a n c i s c o L o s A n g e l e s S a n D i e g o Oregon N e v a d a P a c i f i c O c e a n N E W S Carlsbad City of Carlsbad Strategic Goals Balanced Community Development –A city that connects community, place, and spirit through balanced and economically sustainable land uses. Citizen Connection & Partnership –A city that embraces community connectivity through the effective use of technological and interpersonal mediums. Communication –Ensure that community members, Council and staff are well informed, continuing to be a more responsive government while providing a high level of citizen confidence in its government. Environmental Management –An environmentally sensitive community focusing on: conservation, storm water, wastewater 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 City resources effectively. Learning, Culture & Arts –Promote and support continuous learning, cultural opportunities and the arts within the community and the City organization. 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. Safe Community –Maintain a safe and secure community through collaborative partnerships. Public safety providers support high standards, deliver protection of life and property, and encourage community involvement in prevention and preparedness efforts. Transportation/Circulation –Provide and support a safe and efficient transportation system that moves people, services, and goods throughout Carlsbad. Water –Ensure, in the most cost-effective manner, water quality and reliability to the maximum extent practical, to deliver high-quality potable and reclaimed water incorporating drought-resistant community principles. 4 for the City. The City Council also provides the City with its top priority projects, which further defines the Council’s vision. The goals and priority projects 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 the vision and priority projects 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 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 increased in August 2009 by 0.6%, which makes the 5th consecutive monthly increase after over 30 months of decline. The increase was primarily led by consumer confidence, local stock prices and the outlook for the national economy. It is anticipated that based on the small increase in the indicator over the past several months that the economy may be recovering. Carlsbad’s economy is tied closely to that of the San Diego region and is feeling the effects of the economic recession. During Fiscal Year 2008-09, the City lowered its annual General Fund revenue estimates by $4.6 million due to a significant slowdown in sales tax, transient occupancy taxes (TOT) and overall development activity. Due to the lag time between the payment of property taxes and the housing decline, for Fiscal Year 2008-09 property taxes grew by 7%. TOT, the City’s gauge of the tourism industry, ended Fiscal Year 2008-09 showing a 10.7% decline even though there was growth in the number of hotel rooms during Fiscal Year 2008-09. Sales taxes ended Fiscal Year 2008-09 with a decline of 11.6% due to the slow economy especially the decline in auto sales. Overall the City ended Fiscal Year 2008-09 with a 4.5% decline or $5.4 million less in revenue compared to Fiscal Year 2007-08. Carlsbad’s residential real estate market has slowed significantly throughout Fiscal Year 2008-09. For Fiscal Year 2008-09 the City has issued 107 dwelling units as compared to 339 dwelling units for Fiscal for the City. The City Council also provides the City with its top priority projects, which further defines the Council’s vision. The goals and priority projects 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 the vision and priority projects 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 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 increased in August 2009 by 0.6%, which makes the 5th consecutive monthly increase after over 30 months of decline. The increase was primarily led by consumer confidence, local stock prices and the outlook for the national economy. It is anticipated that based on the small increase in the indicator over the past several months that the economy may be recovering. Carlsbad’s economy is tied closely to that of the San Diego region and is feeling the effects of the economic recession. During Fiscal Year 2008-09, the City lowered its annual General Fund revenue estimates by $4.6 million due to a significant slowdown in sales tax, transient occupancy taxes (TOT) and overall development activity. Due to the lag time between the payment of property taxes and the housing decline, for Fiscal Year 2008-09 property taxes grew by 7%. TOT, the City’s gauge of the tourism industry, ended Fiscal Year 2008-09 showing a 10.7% decline even though there was growth in the number of hotel rooms during Fiscal Year 2008-09. Sales taxes ended Fiscal Year 2008-09 with a decline of 11.6% due to the slow economy especially the decline in auto sales. Overall the City ended Fiscal Year 2008-09 with a 4.5% decline or $5.4 million less in revenue compared to Fiscal Year 2007-08. Carlsbad’s residential real estate market has slowed significantly throughout Fiscal Year 2008-09. For Fiscal Year 2008-09 the City has issued 107 dwelling units as compared to 339 dwelling units for Fiscal 5 for the City. The City Council also provides the City with its top priority projects, which further defines the Council’s vision. The goals and priority projects 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 the vision and priority projects 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 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 increased in August 2009 by 0.6%, which makes the 5th consecutive monthly increase after over 30 months of decline. The increase was primarily led by consumer confidence, local stock prices and the outlook for the national economy. It is anticipated that based on the small increase in the indicator over the past several months that the economy may be recovering. Carlsbad’s economy is tied closely to that of the San Diego region and is feeling the effects of the economic recession. During Fiscal Year 2008-09, the City lowered its annual General Fund revenue estimates by $4.6 million due to a significant slowdown in sales tax, transient occupancy taxes (TOT) and overall development activity. Due to the lag time between the payment of property taxes and the housing decline, for Fiscal Year 2008-09 property taxes grew by 7%. TOT, the City’s gauge of the tourism industry, ended Fiscal Year 2008-09 showing a 10.7% decline even though there was growth in the number of hotel rooms during Fiscal Year 2008-09. Sales taxes ended Fiscal Year 2008-09 with a decline of 11.6% due to the slow economy especially the decline in auto sales. Overall the City ended Fiscal Year 2008-09 with a 4.5% decline or $5.4 million less in revenue compared to Fiscal Year 2007-08. Carlsbad’s residential real estate market has slowed significantly throughout Fiscal Year 2008-09. For Fiscal Year 2008-09 the City has issued 107 dwelling units as compared to 339 dwelling units for Fiscal for the City. The City Council also provides the City with its top priority projects, which further defines the Council’s vision. The goals and priority projects 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 the vision and priority projects 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 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 increased in August 2009 by 0.6%, which makes the 5th consecutive monthly increase after over 30 months of decline. The increase was primarily led by consumer confidence, local stock prices and the outlook for the national economy. It is anticipated that based on the small increase in the indicator over the past several months that the economy may be recovering. Carlsbad’s economy is tied closely to that of the San Diego region and is feeling the effects of the economic recession. During Fiscal Year 2008-09, the City lowered its annual General Fund revenue estimates by $4.6 million due to a significant slowdown in sales tax, transient occupancy taxes (TOT) and overall development activity. Due to the lag time between the payment of property taxes and the housing decline, for Fiscal Year 2008-09 property taxes grew by 7%. TOT, the City’s gauge of the tourism industry, ended Fiscal Year 2008-09 showing a 10.7% decline even though there was growth in the number of hotel rooms during Fiscal Year 2008-09. Sales taxes ended Fiscal Year 2008-09 with a decline of 11.6% due to the slow economy especially the decline in auto sales. Overall the City ended Fiscal Year 2008-09 with a 4.5% decline or $5.4 million less in revenue compared to Fiscal Year 2007-08. Carlsbad’s residential real estate market has slowed significantly throughout Fiscal Year 2008-09. For Fiscal Year 2008-09 the City has issued 107 dwelling units as compared to 339 dwelling units for Fiscal 5 Year 2007-08. For industrial and commercial, the City has permitted 237,935 square feet for Fiscal Year2008-09, compared to 1,237,000 square feet for Fiscal Year 2007-08. The number of permits is very slow due to the stagnant economy. While development has slowed significantly, there are a number of new residential communities under construction or in the final phases of development that will add to the residential housing stock in Carlsbad albeit the timing has been delayed due to the economy. The Villages of La Costa projects known as the Oaks North, the Greens and the Ridge are either complete or under construction, and will ultimately add approximately 1,769 single-family and multi-family units when complete. In addition, the Robertson Ranch area, which is expected to contain over 1,000 residential units, has pulled permits to begin building the model homes. The completion of these master planned communities will signal an end to the large-scale residential developments in Carlsbad. As the housing market has cooled, the housing prices have declined as well. The median price for single-family homes in Carlsbad was $639,000 for March 2009, a decrease of 8% from the previous year. The total assessed values in the City stand at over $24 billion; an increase of nearly 50% over what they were just five years ago. The City is projecting it will add about 749 more residential units and an additional 1.8 million square feet of commercial/industrial development over the next five years. The City’s residential housing stock is about 90% built out, with approximately 4,980 housing units remaining to develop. Commercial and industrial development has been averaging 1,129,000 square feet per year over the last five years. Due to the economic recession, it is expected that commercial and industrial development will average 509,000 square feet per year over the next five years with the large industrial developments including Carlsbad Raceway and Palomar Forum, Dos Colinas Retirement Community, El Paseo Retail and Restaurants and the desalination plant. Some of the major companies in town include the Gemological Institute of America, ViaSat, Life Technologies (formerly Invitrogen), Callaway, Taylor Made, Upper Deck, and many others. Commercial development has brought much needed entertainment and shopping venues to citizens and visitors alike, as well as generating 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 Forum at Carlsbad – a commercial center with upscale retail shops, restaurants and other commercial uses. 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 additions being the Sheraton Carlsbad Resort and Spa, Homewood Suites and Hampton Inn. The City of Carlsbad opened a municipal golf course in the summer of 2007 which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. The City’s sales taxes are projected to decline by 12.5% for Fiscal Year 2009-10 due to the slow economy and the significant decline in auto sales. In addition, due to the decline in housing prices, the County Assessor has estimated that the City should expect property tax revenues to decrease by approximately 1% Source: Retail Sales Survey $0 $100 $200 $300 $400 $500 $600 $700 $800 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year Median SFD Home Prices ThousandsYear 2007-08. For industrial and commercial, the City has permitted 237,935 square feet for Fiscal Year2008-09, compared to 1,237,000 square feet for Fiscal Year 2007-08. The number of permits is very slow due to the stagnant economy. While development has slowed significantly, there are a number of new residential communities under construction or in the final phases of development that will add to the residential housing stock in Carlsbad albeit the timing has been delayed due to the economy. The Villages of La Costa projects known as the Oaks North, the Greens and the Ridge are either complete or under construction, and will ultimately add approximately 1,769 single-family and multi-family units when complete. In addition, the Robertson Ranch area, which is expected to contain over 1,000 residential units, has pulled permits to begin building the model homes. The completion of these master planned communities will signal an end to the large-scale residential developments in Carlsbad. As the housing market has cooled, the housing prices have declined as well. The median price for single-family homes in Carlsbad was $639,000 for March 2009, a decrease of 8% from the previous year. The total assessed values in the City stand at over $24 billion; an increase of nearly 50% over what they were just five years ago. The City is projecting it will add about 749 more residential units and an additional 1.8 million square feet of commercial/industrial development over the next five years. The City’s residential housing stock is about 90% built out, with approximately 4,980 housing units remaining to develop. Commercial and industrial development has been averaging 1,129,000 square feet per year over the last five years. Due to the economic recession, it is expected that commercial and industrial development will average 509,000 square feet per year over the next five years with the large industrial developments including Carlsbad Raceway and Palomar Forum, Dos Colinas Retirement Community, El Paseo Retail and Restaurants and the desalination plant. Some of the major companies in town include the Gemological Institute of America, ViaSat, Life Technologies (formerly Invitrogen), Callaway, Taylor Made, Upper Deck, and many others. Commercial development has brought much needed entertainment and shopping venues to citizens and visitors alike, as well as generating 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 Forum at Carlsbad – a commercial center with upscale retail shops, restaurants and other commercial uses. 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 additions being the Sheraton Carlsbad Resort and Spa, Homewood Suites and Hampton Inn. The City of Carlsbad opened a municipal golf course in the summer of 2007 which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. The City’s sales taxes are projected to decline by 12.5% for Fiscal Year 2009-10 due to the slow economy and the significant decline in auto sales. In addition, due to the decline in housing prices, the County Assessor has estimated that the City should expect property tax revenues to decrease by approximately 1% Source: Retail Sales Survey $0 $100 $200 $300 $400 $500 $600 $700 $800 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year Median SFD Home Prices Thousands6 Year 2007-08. For industrial and commercial, the City has permitted 237,935 square feet for Fiscal Year2008-09, compared to 1,237,000 square feet for Fiscal Year 2007-08. The number of permits is very slow due to the stagnant economy. While development has slowed significantly, there are a number of new residential communities under construction or in the final phases of development that will add to the residential housing stock in Carlsbad albeit the timing has been delayed due to the economy. The Villages of La Costa projects known as the Oaks North, the Greens and the Ridge are either complete or under construction, and will ultimately add approximately 1,769 single-family and multi-family units when complete. In addition, the Robertson Ranch area, which is expected to contain over 1,000 residential units, has pulled permits to begin building the model homes. The completion of these master planned communities will signal an end to the large-scale residential developments in Carlsbad. As the housing market has cooled, the housing prices have declined as well. The median price for single-family homes in Carlsbad was $639,000 for March 2009, a decrease of 8% from the previous year. The total assessed values in the City stand at over $24 billion; an increase of nearly 50% over what they were just five years ago. The City is projecting it will add about 749 more residential units and an additional 1.8 million square feet of commercial/industrial development over the next five years. The City’s residential housing stock is about 90% built out, with approximately 4,980 housing units remaining to develop. Commercial and industrial development has been averaging 1,129,000 square feet per year over the last five years. Due to the economic recession, it is expected that commercial and industrial development will average 509,000 square feet per year over the next five years with the large industrial developments including Carlsbad Raceway and Palomar Forum, Dos Colinas Retirement Community, El Paseo Retail and Restaurants and the desalination plant. Some of the major companies in town include the Gemological Institute of America, ViaSat, Life Technologies (formerly Invitrogen), Callaway, Taylor Made, Upper Deck, and many others. Commercial development has brought much needed entertainment and shopping venues to citizens and visitors alike, as well as generating 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 Forum at Carlsbad – a commercial center with upscale retail shops, restaurants and other commercial uses. 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 additions being the Sheraton Carlsbad Resort and Spa, Homewood Suites and Hampton Inn. The City of Carlsbad opened a municipal golf course in the summer of 2007 which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. The City’s sales taxes are projected to decline by 12.5% for Fiscal Year 2009-10 due to the slow economy and the significant decline in auto sales. In addition, due to the decline in housing prices, the County Assessor has estimated that the City should expect property tax revenues to decrease by approximately 1% Source: Retail Sales Survey $0 $100 $200 $300 $400 $500 $600 $700 $800 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year Median SFD Home Prices ThousandsYear 2007-08. For industrial and commercial, the City has permitted 237,935 square feet for Fiscal Year2008-09, compared to 1,237,000 square feet for Fiscal Year 2007-08. The number of permits is very slow due to the stagnant economy. While development has slowed significantly, there are a number of new residential communities under construction or in the final phases of development that will add to the residential housing stock in Carlsbad albeit the timing has been delayed due to the economy. The Villages of La Costa projects known as the Oaks North, the Greens and the Ridge are either complete or under construction, and will ultimately add approximately 1,769 single-family and multi-family units when complete. In addition, the Robertson Ranch area, which is expected to contain over 1,000 residential units, has pulled permits to begin building the model homes. The completion of these master planned communities will signal an end to the large-scale residential developments in Carlsbad. As the housing market has cooled, the housing prices have declined as well. The median price for single-family homes in Carlsbad was $639,000 for March 2009, a decrease of 8% from the previous year. The total assessed values in the City stand at over $24 billion; an increase of nearly 50% over what they were just five years ago. The City is projecting it will add about 749 more residential units and an additional 1.8 million square feet of commercial/industrial development over the next five years. The City’s residential housing stock is about 90% built out, with approximately 4,980 housing units remaining to develop. Commercial and industrial development has been averaging 1,129,000 square feet per year over the last five years. Due to the economic recession, it is expected that commercial and industrial development will average 509,000 square feet per year over the next five years with the large industrial developments including Carlsbad Raceway and Palomar Forum, Dos Colinas Retirement Community, El Paseo Retail and Restaurants and the desalination plant. Some of the major companies in town include the Gemological Institute of America, ViaSat, Life Technologies (formerly Invitrogen), Callaway, Taylor Made, Upper Deck, and many others. Commercial development has brought much needed entertainment and shopping venues to citizens and visitors alike, as well as generating 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 Forum at Carlsbad – a commercial center with upscale retail shops, restaurants and other commercial uses. 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 additions being the Sheraton Carlsbad Resort and Spa, Homewood Suites and Hampton Inn. The City of Carlsbad opened a municipal golf course in the summer of 2007 which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. The City’s sales taxes are projected to decline by 12.5% for Fiscal Year 2009-10 due to the slow economy and the significant decline in auto sales. In addition, due to the decline in housing prices, the County Assessor has estimated that the City should expect property tax revenues to decrease by approximately 1% Source: Retail Sales Survey $0 $100 $200 $300 $400 $500 $600 $700 $800 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year Median SFD Home Prices Thousands6 for Fiscal Year 2009-10. New building permits are expected to continue to slow and the development related revenue items have been reduced accordingly for Fiscal Year 2009-10 budget. And finally, tourism is expected to be impacted by the lower consumer confidence and job losses, so transient occupancy tax receipts are projected to decline by 10.2%. For Fiscal Year 2009-10, the General Fund revenue is projected to decline by 6.2% from the previous year’s estimates. One of the continued primary areas of risk for Carlsbad is the impact of the State of California’s budget deficit discussed below. State of California In addition to the economic recession and the uncertainty on when the economy will begin to recover, 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 are necessary for the state to finally balance its budget. The state adopted the budget for Fiscal Year 2009-10 which attempted to balance a $60 billion deficit. California’s Department of Finance recently reported that although the budget is balanced for Fiscal Year 2009-10, the state is projecting the budget deficit will be $7 to $8 billion for Fiscal Year 2010-11 and even larger deficits are projected in future years. The budget includes deep cuts to state programs and services including education and health and human services. The budget also includes waiving Proposition 1A (discussed below) thereby enabling the borrowing of $2 billion from local governments. This is approximately $4.8 million from the City of Carlsbad. The City of Carlsbad is participating in a financing mechanism with most other local government agencies, at no cost to the City, to securitize the state’s promise to pay back the City’s loan in Fiscal Year 2013. The securitization transaction will allow the City to receive the $4.8 million payback during Fiscal Year 2009-10 without having to wait until Fiscal Year 2012-13. This will eliminate the negative impact of the State of California borrowing the City’s money. The State of California is also planning to take $1.6 million from the City of Carlsbad’s Village Redevelopment Agency over the next two years. This action is being legally challenged by the California Redevelopment Association. As a result of previous attacks on cities’ revenues, a coalition of cities, counties and special districts supported Proposition 1A which was approved by the voters in November 2004. The measure included a provision to help prevent 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.” According to Proposition 1A, if the state borrows funds from local governments, the state is required to pay back the funds within three years including interest. The state can only borrow two times within a ten-year period and is required to pay back the first loan before another borrowing can occur. 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, the City can anticipate the effects of development from both a capital and an operating perspective. Source: Retail Sales Survey for Fiscal Year 2009-10. New building permits are expected to continue to slow and the development related revenue items have been reduced accordingly for Fiscal Year 2009-10 budget. And finally, tourism is expected to be impacted by the lower consumer confidence and job losses, so transient occupancy tax receipts are projected to decline by 10.2%. For Fiscal Year 2009-10, the General Fund revenue is projected to decline by 6.2% from the previous year’s estimates. One of the continued primary areas of risk for Carlsbad is the impact of the State of California’s budget deficit discussed below. State of California In addition to the economic recession and the uncertainty on when the economy will begin to recover, 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 are necessary for the state to finally balance its budget. The state adopted the budget for Fiscal Year 2009-10 which attempted to balance a $60 billion deficit. California’s Department of Finance recently reported that although the budget is balanced for Fiscal Year 2009-10, the state is projecting the budget deficit will be $7 to $8 billion for Fiscal Year 2010-11 and even larger deficits are projected in future years. The budget includes deep cuts to state programs and services including education and health and human services. The budget also includes waiving Proposition 1A (discussed below) thereby enabling the borrowing of $2 billion from local governments. This is approximately $4.8 million from the City of Carlsbad. The City of Carlsbad is participating in a financing mechanism with most other local government agencies, at no cost to the City, to securitize the state’s promise to pay back the City’s loan in Fiscal Year 2013. The securitization transaction will allow the City to receive the $4.8 million payback during Fiscal Year 2009-10 without having to wait until Fiscal Year 2012-13. This will eliminate the negative impact of the State of California borrowing the City’s money. The State of California is also planning to take $1.6 million from the City of Carlsbad’s Village Redevelopment Agency over the next two years. This action is being legally challenged by the California Redevelopment Association. As a result of previous attacks on cities’ revenues, a coalition of cities, counties and special districts supported Proposition 1A which was approved by the voters in November 2004. The measure included a provision to help prevent 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.” According to Proposition 1A, if the state borrows funds from local governments, the state is required to pay back the funds within three years including interest. The state can only borrow two times within a ten-year period and is required to pay back the first loan before another borrowing can occur. 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, the City can anticipate the effects of development from both a capital and an operating perspective. Source: Retail Sales Survey 7 for Fiscal Year 2009-10. New building permits are expected to continue to slow and the development related revenue items have been reduced accordingly for Fiscal Year 2009-10 budget. And finally, tourism is expected to be impacted by the lower consumer confidence and job losses, so transient occupancy tax receipts are projected to decline by 10.2%. For Fiscal Year 2009-10, the General Fund revenue is projected to decline by 6.2% from the previous year’s estimates. One of the continued primary areas of risk for Carlsbad is the impact of the State of California’s budget deficit discussed below. State of California In addition to the economic recession and the uncertainty on when the economy will begin to recover, 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 are necessary for the state to finally balance its budget. The state adopted the budget for Fiscal Year 2009-10 which attempted to balance a $60 billion deficit. California’s Department of Finance recently reported that although the budget is balanced for Fiscal Year 2009-10, the state is projecting the budget deficit will be $7 to $8 billion for Fiscal Year 2010-11 and even larger deficits are projected in future years. The budget includes deep cuts to state programs and services including education and health and human services. The budget also includes waiving Proposition 1A (discussed below) thereby enabling the borrowing of $2 billion from local governments. This is approximately $4.8 million from the City of Carlsbad. The City of Carlsbad is participating in a financing mechanism with most other local government agencies, at no cost to the City, to securitize the state’s promise to pay back the City’s loan in Fiscal Year 2013. The securitization transaction will allow the City to receive the $4.8 million payback during Fiscal Year 2009-10 without having to wait until Fiscal Year 2012-13. This will eliminate the negative impact of the State of California borrowing the City’s money. The State of California is also planning to take $1.6 million from the City of Carlsbad’s Village Redevelopment Agency over the next two years. This action is being legally challenged by the California Redevelopment Association. As a result of previous attacks on cities’ revenues, a coalition of cities, counties and special districts supported Proposition 1A which was approved by the voters in November 2004. The measure included a provision to help prevent 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.” According to Proposition 1A, if the state borrows funds from local governments, the state is required to pay back the funds within three years including interest. The state can only borrow two times within a ten-year period and is required to pay back the first loan before another borrowing can occur. 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, the City can anticipate the effects of development from both a capital and an operating perspective. Source: Retail Sales Survey for Fiscal Year 2009-10. New building permits are expected to continue to slow and the development related revenue items have been reduced accordingly for Fiscal Year 2009-10 budget. And finally, tourism is expected to be impacted by the lower consumer confidence and job losses, so transient occupancy tax receipts are projected to decline by 10.2%. For Fiscal Year 2009-10, the General Fund revenue is projected to decline by 6.2% from the previous year’s estimates. One of the continued primary areas of risk for Carlsbad is the impact of the State of California’s budget deficit discussed below. State of California In addition to the economic recession and the uncertainty on when the economy will begin to recover, 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 are necessary for the state to finally balance its budget. The state adopted the budget for Fiscal Year 2009-10 which attempted to balance a $60 billion deficit. California’s Department of Finance recently reported that although the budget is balanced for Fiscal Year 2009-10, the state is projecting the budget deficit will be $7 to $8 billion for Fiscal Year 2010-11 and even larger deficits are projected in future years. The budget includes deep cuts to state programs and services including education and health and human services. The budget also includes waiving Proposition 1A (discussed below) thereby enabling the borrowing of $2 billion from local governments. This is approximately $4.8 million from the City of Carlsbad. The City of Carlsbad is participating in a financing mechanism with most other local government agencies, at no cost to the City, to securitize the state’s promise to pay back the City’s loan in Fiscal Year 2013. The securitization transaction will allow the City to receive the $4.8 million payback during Fiscal Year 2009-10 without having to wait until Fiscal Year 2012-13. This will eliminate the negative impact of the State of California borrowing the City’s money. The State of California is also planning to take $1.6 million from the City of Carlsbad’s Village Redevelopment Agency over the next two years. This action is being legally challenged by the California Redevelopment Association. As a result of previous attacks on cities’ revenues, a coalition of cities, counties and special districts supported Proposition 1A which was approved by the voters in November 2004. The measure included a provision to help prevent 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.” According to Proposition 1A, if the state borrows funds from local governments, the state is required to pay back the funds within three years including interest. The state can only borrow two times within a ten-year period and is required to pay back the first loan before another borrowing can occur. 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, the City can anticipate the effects of development from both a capital and an operating perspective. Source: Retail Sales Survey 7 While the City of Carlsbad has a long-term history of maintaining sufficient reserves, the City Council took formal action during Fiscal Year 2007-08 to adopt a reserve policy. The General Fund Reserve Policy sets a minimum reserve of 30% of the General Fund expenditures and also establishes a target reserve of 40% to 50%. This reserve can be used by the City Council for emergencies or one-time purposes. 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. During Fiscal Year 2010, the City Council approved allocating $6.5 million or 6.0% of the General Fund revenues to the Infrastructure Replacement Fund. In addition to these steps, the City prepares a ten-year financial forecast for the General Fund each year, in order to understand the effects of actions taken today on the City’s future. The City has experienced strong revenue growth over the past ten years due to the development of the majority of its commercial sites. The future will bring a few more commercial sites but at a slower pace, while residential development is expected to slow over the next few years especially with the current weak housing market. There are also quite a few City facilities – mainly parks and civic facilities – planned in the future to serve the growing population. The new facilities will add operating costs to the City’s General Fund budget as they are completed and opened for use. These new facility operating costs have been incorporated into the General Fund forecast shown at the bottom of this page and projected over the next ten years. The emphasis will continue to be maintaining existing infrastructure. New civic facilities will be planned when there is anticipated financial capacity to operate and maintain those new facilities when they are opened. While no forecast is ever totally accurate, it does represent a likely scenario given the assumptions on which it is built. The forecast assumes that revenue growth will be negative through Fiscal Year 2009-10 and then very little growth for the following two years, assuming the economic slowdown will last two to three years. To project the expenditures, it includes all known personnel costs, most of which have been negotiated with the employee groups through December 2009. 0 20 40 60 80 100 120 140 160 180 2006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-18$ MillionsFiscal Year General Fund Revenues and Expenditures Ten Year Financial Forecast REVENUES TOTAL EXPENDITURES While the City of Carlsbad has a long-term history of maintaining sufficient reserves, the City Council took formal action during Fiscal Year 2007-08 to adopt a reserve policy. The General Fund Reserve Policy sets a minimum reserve of 30% of the General Fund expenditures and also establishes a target reserve of 40% to 50%. This reserve can be used by the City Council for emergencies or one-time purposes. 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. During Fiscal Year 2010, the City Council approved allocating $6.5 million or 6.0% of the General Fund revenues to the Infrastructure Replacement Fund. In addition to these steps, the City prepares a ten-year financial forecast for the General Fund each year, in order to understand the effects of actions taken today on the City’s future. The City has experienced strong revenue growth over the past ten years due to the development of the majority of its commercial sites. The future will bring a few more commercial sites but at a slower pace, while residential development is expected to slow over the next few years especially with the current weak housing market. There are also quite a few City facilities – mainly parks and civic facilities – planned in the future to serve the growing population. The new facilities will add operating costs to the City’s General Fund budget as they are completed and opened for use. These new facility operating costs have been incorporated into the General Fund forecast shown at the bottom of this page and projected over the next ten years. The emphasis will continue to be maintaining existing infrastructure. New civic facilities will be planned when there is anticipated financial capacity to operate and maintain those new facilities when they are opened. While no forecast is ever totally accurate, it does represent a likely scenario given the assumptions on which it is built. The forecast assumes that revenue growth will be negative through Fiscal Year 2009-10 and then very little growth for the following two years, assuming the economic slowdown will last two to three years. To project the expenditures, it includes all known personnel costs, most of which have been negotiated with the employee groups through December 2009. 0 20 40 60 80 100 120 140 160 180 2006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-18$ MillionsFiscal Year General Fund Revenues and Expenditures Ten Year Financial Forecast REVENUES TOTAL EXPENDITURES 8 While the City of Carlsbad has a long-term history of maintaining sufficient reserves, the City Council took formal action during Fiscal Year 2007-08 to adopt a reserve policy. The General Fund Reserve Policy sets a minimum reserve of 30% of the General Fund expenditures and also establishes a target reserve of 40% to 50%. This reserve can be used by the City Council for emergencies or one-time purposes. 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. During Fiscal Year 2010, the City Council approved allocating $6.5 million or 6.0% of the General Fund revenues to the Infrastructure Replacement Fund. In addition to these steps, the City prepares a ten-year financial forecast for the General Fund each year, in order to understand the effects of actions taken today on the City’s future. The City has experienced strong revenue growth over the past ten years due to the development of the majority of its commercial sites. The future will bring a few more commercial sites but at a slower pace, while residential development is expected to slow over the next few years especially with the current weak housing market. There are also quite a few City facilities – mainly parks and civic facilities – planned in the future to serve the growing population. The new facilities will add operating costs to the City’s General Fund budget as they are completed and opened for use. These new facility operating costs have been incorporated into the General Fund forecast shown at the bottom of this page and projected over the next ten years. The emphasis will continue to be maintaining existing infrastructure. New civic facilities will be planned when there is anticipated financial capacity to operate and maintain those new facilities when they are opened. While no forecast is ever totally accurate, it does represent a likely scenario given the assumptions on which it is built. The forecast assumes that revenue growth will be negative through Fiscal Year 2009-10 and then very little growth for the following two years, assuming the economic slowdown will last two to three years. To project the expenditures, it includes all known personnel costs, most of which have been negotiated with the employee groups through December 2009. 0 20 40 60 80 100 120 140 160 180 2006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-18$ MillionsFiscal Year General Fund Revenues and Expenditures Ten Year Financial Forecast REVENUES TOTAL EXPENDITURES While the City of Carlsbad has a long-term history of maintaining sufficient reserves, the City Council took formal action during Fiscal Year 2007-08 to adopt a reserve policy. The General Fund Reserve Policy sets a minimum reserve of 30% of the General Fund expenditures and also establishes a target reserve of 40% to 50%. This reserve can be used by the City Council for emergencies or one-time purposes. 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. During Fiscal Year 2010, the City Council approved allocating $6.5 million or 6.0% of the General Fund revenues to the Infrastructure Replacement Fund. In addition to these steps, the City prepares a ten-year financial forecast for the General Fund each year, in order to understand the effects of actions taken today on the City’s future. The City has experienced strong revenue growth over the past ten years due to the development of the majority of its commercial sites. The future will bring a few more commercial sites but at a slower pace, while residential development is expected to slow over the next few years especially with the current weak housing market. There are also quite a few City facilities – mainly parks and civic facilities – planned in the future to serve the growing population. The new facilities will add operating costs to the City’s General Fund budget as they are completed and opened for use. These new facility operating costs have been incorporated into the General Fund forecast shown at the bottom of this page and projected over the next ten years. The emphasis will continue to be maintaining existing infrastructure. New civic facilities will be planned when there is anticipated financial capacity to operate and maintain those new facilities when they are opened. While no forecast is ever totally accurate, it does represent a likely scenario given the assumptions on which it is built. The forecast assumes that revenue growth will be negative through Fiscal Year 2009-10 and then very little growth for the following two years, assuming the economic slowdown will last two to three years. To project the expenditures, it includes all known personnel costs, most of which have been negotiated with the employee groups through December 2009. 0 20 40 60 80 100 120 140 160 180 2006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-172017-18$ MillionsFiscal Year General Fund Revenues and Expenditures Ten Year Financial Forecast REVENUES TOTAL EXPENDITURES 8 The forecast assumes 5% annual increases in health care costs. It also assumes no personnel growth (new positions) until Fiscal Year 2012-13. Negotiated salary step increases and cost of living increases between 0.5% and 3.5% have been added to personnel costs. In order to help maintain a balanced ten-year forecast, position growth has been limited. Pension plan costs are anticipated to increase by 5% for general employees and 10% for safety employees in Fiscal Year 2011-12 as a result of the significant investment losses CalPERS has sustained this last year. It assumes that the contribution from the General Fund to the Infrastructure Replacement Fund is 6.5% of General Fund revenues, except during Fiscal Year 2009-10 where it has been lowered to 6.0% to help offset the projected negative growth in revenue. And finally, it includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program (CIP). One of the significant assumptions in the forecast is that the recession will last approximately three years with slow recovery beginning in Fiscal Year 2010-11. The results show that while the General Fund is balanced for Fiscal Year 2009-10, there are deficits projected for the following two years. More budget solutions will be pursued to help balance those years as well. In addition, for the years that appear to be balanced, there are much smaller surpluses than in previous years’ forecasts. This reflects the current economic recession and uncertainty. 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 realize its future plans. The General Fund 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. When there is economic uncertainty, this long-term perspective becomes even more important. 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, 2009 was 1.478. The average return realized on the pooled investments declined from 4.45% in Fiscal Year 2007-08 to 3.72% for Fiscal Year 2008-09. 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 reflected in the portfolio over the last few years. The total portfolio had an unrealized gain of 1.4% for Fiscal Year 2008-09. According to the City Treasurer, “It is likely that a downward trend will occur in Fiscal Year 2009-10 as investments with higher interest rates are called and reinvested at today’s lower market rates.” The forecast assumes 5% annual increases in health care costs. It also assumes no personnel growth (new positions) until Fiscal Year 2012-13. Negotiated salary step increases and cost of living increases between 0.5% and 3.5% have been added to personnel costs. In order to help maintain a balanced ten-year forecast, position growth has been limited. Pension plan costs are anticipated to increase by 5% for general employees and 10% for safety employees in Fiscal Year 2011-12 as a result of the significant investment losses CalPERS has sustained this last year. It assumes that the contribution from the General Fund to the Infrastructure Replacement Fund is 6.5% of General Fund revenues, except during Fiscal Year 2009-10 where it has been lowered to 6.0% to help offset the projected negative growth in revenue. And finally, it includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program (CIP). One of the significant assumptions in the forecast is that the recession will last approximately three years with slow recovery beginning in Fiscal Year 2010-11. The results show that while the General Fund is balanced for Fiscal Year 2009-10, there are deficits projected for the following two years. More budget solutions will be pursued to help balance those years as well. In addition, for the years that appear to be balanced, there are much smaller surpluses than in previous years’ forecasts. This reflects the current economic recession and uncertainty. 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 realize its future plans. The General Fund 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. When there is economic uncertainty, this long-term perspective becomes even more important. 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, 2009 was 1.478. The average return realized on the pooled investments declined from 4.45% in Fiscal Year 2007-08 to 3.72% for Fiscal Year 2008-09. 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 reflected in the portfolio over the last few years. The total portfolio had an unrealized gain of 1.4% for Fiscal Year 2008-09. According to the City Treasurer, “It is likely that a downward trend will occur in Fiscal Year 2009-10 as investments with higher interest rates are called and reinvested at today’s lower market rates.” 9 The forecast assumes 5% annual increases in health care costs. It also assumes no personnel growth (new positions) until Fiscal Year 2012-13. Negotiated salary step increases and cost of living increases between 0.5% and 3.5% have been added to personnel costs. In order to help maintain a balanced ten-year forecast, position growth has been limited. Pension plan costs are anticipated to increase by 5% for general employees and 10% for safety employees in Fiscal Year 2011-12 as a result of the significant investment losses CalPERS has sustained this last year. It assumes that the contribution from the General Fund to the Infrastructure Replacement Fund is 6.5% of General Fund revenues, except during Fiscal Year 2009-10 where it has been lowered to 6.0% to help offset the projected negative growth in revenue. And finally, it includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program (CIP). One of the significant assumptions in the forecast is that the recession will last approximately three years with slow recovery beginning in Fiscal Year 2010-11. The results show that while the General Fund is balanced for Fiscal Year 2009-10, there are deficits projected for the following two years. More budget solutions will be pursued to help balance those years as well. In addition, for the years that appear to be balanced, there are much smaller surpluses than in previous years’ forecasts. This reflects the current economic recession and uncertainty. 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 realize its future plans. The General Fund 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. When there is economic uncertainty, this long-term perspective becomes even more important. 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, 2009 was 1.478. The average return realized on the pooled investments declined from 4.45% in Fiscal Year 2007-08 to 3.72% for Fiscal Year 2008-09. 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 reflected in the portfolio over the last few years. The total portfolio had an unrealized gain of 1.4% for Fiscal Year 2008-09. According to the City Treasurer, “It is likely that a downward trend will occur in Fiscal Year 2009-10 as investments with higher interest rates are called and reinvested at today’s lower market rates.” The forecast assumes 5% annual increases in health care costs. It also assumes no personnel growth (new positions) until Fiscal Year 2012-13. Negotiated salary step increases and cost of living increases between 0.5% and 3.5% have been added to personnel costs. In order to help maintain a balanced ten-year forecast, position growth has been limited. Pension plan costs are anticipated to increase by 5% for general employees and 10% for safety employees in Fiscal Year 2011-12 as a result of the significant investment losses CalPERS has sustained this last year. It assumes that the contribution from the General Fund to the Infrastructure Replacement Fund is 6.5% of General Fund revenues, except during Fiscal Year 2009-10 where it has been lowered to 6.0% to help offset the projected negative growth in revenue. And finally, it includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program (CIP). One of the significant assumptions in the forecast is that the recession will last approximately three years with slow recovery beginning in Fiscal Year 2010-11. The results show that while the General Fund is balanced for Fiscal Year 2009-10, there are deficits projected for the following two years. More budget solutions will be pursued to help balance those years as well. In addition, for the years that appear to be balanced, there are much smaller surpluses than in previous years’ forecasts. This reflects the current economic recession and uncertainty. 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 realize its future plans. The General Fund 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. When there is economic uncertainty, this long-term perspective becomes even more important. 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, 2009 was 1.478. The average return realized on the pooled investments declined from 4.45% in Fiscal Year 2007-08 to 3.72% for Fiscal Year 2008-09. 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 reflected in the portfolio over the last few years. The total portfolio had an unrealized gain of 1.4% for Fiscal Year 2008-09. According to the City Treasurer, “It is likely that a downward trend will occur in Fiscal Year 2009-10 as investments with higher interest rates are called and reinvested at today’s lower market rates.” 9 Major Initiatives Due to the economic uncertainty there were very few changes to the Fiscal Year 2009-10 operating budget. Several significant projects are in design or under construction over the next few years. Some of the notable capital projects include the following: Alga Norte Park and Aquatic Center – This park site consists of 30 acres in the Southeast Quadrant with planned amenities that include ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center. The aquatic center will include a 55-meter competition pool, a 12-lane instructional pool and a therapy pool as well as a water play area for toddlers (Phase I). In addition, a moving river, water slides and wet play structure are planned for Phase II. A swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. The total cost of the park and aquatic center, Phase I, is estimated to be $39.8 million. Total appropriation for the park and Phase I and Phase II of the aquatic center is currently at $50.4 million. Leo Carrillo Park – Phase III – The third phase of this historic park facility includes renovation of additional buildings, construction of additional restrooms, an arboretum area, and transformation of a barn into a community theater. The total cost is approximately $2.4 million and design is expected to begin in Fiscal Year 2013-14. The Public Works Center will include offices, shops, a yard, warehouse and parking to accommodate the Public Works Department. The estimated cost to complete the project is approximately $28.1 million. The Joint First Responders Training Facility project was authorized under Proposition C, which was approved in 2002. Preliminary design work for this facility is currently underway and preliminary plans include a 25 lane shooting range, a four-story fire training tower, a two-story residential training facility, and an outdoor seating pavilion. The estimated cost to complete the project is approximately $24.5 million. The Relocation of Fire Station No. 3, which is currently located at the corner of Chestnut and Catalina, is needed to help ensure a five-minute response time as the City grows eastward. The new station is budgeted as a 6,200 square foot facility and the current proposed site is in Robertson Ranch. Total cost is projected at $7.5 million. The Carlsbad Boulevard Encinas Creek Bridge Replacement project includes replacement of the existing bridge, originally constructed in 1913. The project is planned in the next five years at an estimated cost of $2.5 million. Poinsettia Lane Reach E is a project which includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.5 million and the City expects to begin the design in Fiscal Year 2013-14. Major Initiatives Due to the economic uncertainty there were very few changes to the Fiscal Year 2009-10 operating budget. Several significant projects are in design or under construction over the next few years. Some of the notable capital projects include the following: Alga Norte Park and Aquatic Center – This park site consists of 30 acres in the Southeast Quadrant with planned amenities that include ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center. The aquatic center will include a 55-meter competition pool, a 12-lane instructional pool and a therapy pool as well as a water play area for toddlers (Phase I). In addition, a moving river, water slides and wet play structure are planned for Phase II. A swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. The total cost of the park and aquatic center, Phase I, is estimated to be $39.8 million. Total appropriation for the park and Phase I and Phase II of the aquatic center is currently at $50.4 million. Leo Carrillo Park – Phase III – The third phase of this historic park facility includes renovation of additional buildings, construction of additional restrooms, an arboretum area, and transformation of a barn into a community theater. The total cost is approximately $2.4 million and design is expected to begin in Fiscal Year 2013-14. The Public Works Center will include offices, shops, a yard, warehouse and parking to accommodate the Public Works Department. The estimated cost to complete the project is approximately $28.1 million. The Joint First Responders Training Facility project was authorized under Proposition C, which was approved in 2002. Preliminary design work for this facility is currently underway and preliminary plans include a 25 lane shooting range, a four-story fire training tower, a two-story residential training facility, and an outdoor seating pavilion. The estimated cost to complete the project is approximately $24.5 million. The Relocation of Fire Station No. 3, which is currently located at the corner of Chestnut and Catalina, is needed to help ensure a five-minute response time as the City grows eastward. The new station is budgeted as a 6,200 square foot facility and the current proposed site is in Robertson Ranch. Total cost is projected at $7.5 million. The Carlsbad Boulevard Encinas Creek Bridge Replacement project includes replacement of the existing bridge, originally constructed in 1913. The project is planned in the next five years at an estimated cost of $2.5 million. Poinsettia Lane Reach E is a project which includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.5 million and the City expects to begin the design in Fiscal Year 2013-14. 10 Major Initiatives Due to the economic uncertainty there were very few changes to the Fiscal Year 2009-10 operating budget. Several significant projects are in design or under construction over the next few years. Some of the notable capital projects include the following: Alga Norte Park and Aquatic Center – This park site consists of 30 acres in the Southeast Quadrant with planned amenities that include ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center. The aquatic center will include a 55-meter competition pool, a 12-lane instructional pool and a therapy pool as well as a water play area for toddlers (Phase I). In addition, a moving river, water slides and wet play structure are planned for Phase II. A swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. The total cost of the park and aquatic center, Phase I, is estimated to be $39.8 million. Total appropriation for the park and Phase I and Phase II of the aquatic center is currently at $50.4 million. Leo Carrillo Park – Phase III – The third phase of this historic park facility includes renovation of additional buildings, construction of additional restrooms, an arboretum area, and transformation of a barn into a community theater. The total cost is approximately $2.4 million and design is expected to begin in Fiscal Year 2013-14. The Public Works Center will include offices, shops, a yard, warehouse and parking to accommodate the Public Works Department. The estimated cost to complete the project is approximately $28.1 million. The Joint First Responders Training Facility project was authorized under Proposition C, which was approved in 2002. Preliminary design work for this facility is currently underway and preliminary plans include a 25 lane shooting range, a four-story fire training tower, a two-story residential training facility, and an outdoor seating pavilion. The estimated cost to complete the project is approximately $24.5 million. The Relocation of Fire Station No. 3, which is currently located at the corner of Chestnut and Catalina, is needed to help ensure a five-minute response time as the City grows eastward. The new station is budgeted as a 6,200 square foot facility and the current proposed site is in Robertson Ranch. Total cost is projected at $7.5 million. The Carlsbad Boulevard Encinas Creek Bridge Replacement project includes replacement of the existing bridge, originally constructed in 1913. The project is planned in the next five years at an estimated cost of $2.5 million. Poinsettia Lane Reach E is a project which includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.5 million and the City expects to begin the design in Fiscal Year 2013-14. Major Initiatives Due to the economic uncertainty there were very few changes to the Fiscal Year 2009-10 operating budget. Several significant projects are in design or under construction over the next few years. Some of the notable capital projects include the following: Alga Norte Park and Aquatic Center – This park site consists of 30 acres in the Southeast Quadrant with planned amenities that include ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center. The aquatic center will include a 55-meter competition pool, a 12-lane instructional pool and a therapy pool as well as a water play area for toddlers (Phase I). In addition, a moving river, water slides and wet play structure are planned for Phase II. A swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. The total cost of the park and aquatic center, Phase I, is estimated to be $39.8 million. Total appropriation for the park and Phase I and Phase II of the aquatic center is currently at $50.4 million. Leo Carrillo Park – Phase III – The third phase of this historic park facility includes renovation of additional buildings, construction of additional restrooms, an arboretum area, and transformation of a barn into a community theater. The total cost is approximately $2.4 million and design is expected to begin in Fiscal Year 2013-14. The Public Works Center will include offices, shops, a yard, warehouse and parking to accommodate the Public Works Department. The estimated cost to complete the project is approximately $28.1 million. The Joint First Responders Training Facility project was authorized under Proposition C, which was approved in 2002. Preliminary design work for this facility is currently underway and preliminary plans include a 25 lane shooting range, a four-story fire training tower, a two-story residential training facility, and an outdoor seating pavilion. The estimated cost to complete the project is approximately $24.5 million. The Relocation of Fire Station No. 3, which is currently located at the corner of Chestnut and Catalina, is needed to help ensure a five-minute response time as the City grows eastward. The new station is budgeted as a 6,200 square foot facility and the current proposed site is in Robertson Ranch. Total cost is projected at $7.5 million. The Carlsbad Boulevard Encinas Creek Bridge Replacement project includes replacement of the existing bridge, originally constructed in 1913. The project is planned in the next five years at an estimated cost of $2.5 million. Poinsettia Lane Reach E is a project which includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.5 million and the City expects to begin the design in Fiscal Year 2013-14. 10 The El Camino Real Widening – Tamarack to Chestnut project is for the widening of El Camino Real to prime arterial roadway standards and includes the acquisition of additional roadway right-of-way and the design of the retaining walls along both sides of the roadway. The total estimated cost of the project is $12.3 million. The Pavement Management Program helps ensure that Carlsbad’s local streets are maintained on a regular cycle to ensure a good riding surface and to extend the life of the street. Applying seals and overlays when roadways are beginning to show signs of distress can minimize the more expensive repair/reactive maintenance activities. The proactive approach consists of the scheduled application of a seal or overlay once every seven years, allowing the City to efficiently maintain over 344 miles of public roadways at an annual cost of approximately $3.5 million. In addition, any problem areas are addressed as they are identified. The Fiscal Year 2009-10 CIP has $4.5 million budgeted for this program which includes an advance of $1.0 million from the Fiscal Year 2010-11 funding program to complete the overlay of College Boulevard from Faraday Avenue to Palomar Airport Road in a timely manner and will reduce the amount of costly removal and reconstruction work that could result from delays. Reaches 1 to 5, and 11 to 15, and the Agua Hedionda lift station of the Vista/Carlsbad Interceptor are scheduled over the next five years. These projects are required to handle buildout flows and replace deteriorated pipelines. The projects are predominantly funded by the City of Vista. The total estimated costs for all of the projects are approximately $47.4 million. The City of Vista’s share of the costs is approximately $32.7 million, or 69% of the total costs. The Maerkle Reservoir Storage project is for the construction of a buried 16 million gallon water storage reservoir next to the existing reservoir in order to provide additional emergency storage and to meet the ten-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. The Hydroelectric Pressure Reducing Station project at the Maerkle Reservoir is an electricity generating project that will provide a renewable energy source for the City. The cost estimate for this project is approximately $1.3 million. 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, 2008. This was the eleventh 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. The City strives to develop a Comprehensive Annual Financial Report which will continue to meet the Certificate of Achievement Program’s requirements, and this report will be submitted to GFOA to determine its eligibility for another certificate. The El Camino Real Widening – Tamarack to Chestnut project is for the widening of El Camino Real to prime arterial roadway standards and includes the acquisition of additional roadway right-of-way and the design of the retaining walls along both sides of the roadway. The total estimated cost of the project is $12.3 million. The Pavement Management Program helps ensure that Carlsbad’s local streets are maintained on a regular cycle to ensure a good riding surface and to extend the life of the street. Applying seals and overlays when roadways are beginning to show signs of distress can minimize the more expensive repair/reactive maintenance activities. The proactive approach consists of the scheduled application of a seal or overlay once every seven years, allowing the City to efficiently maintain over 344 miles of public roadways at an annual cost of approximately $3.5 million. In addition, any problem areas are addressed as they are identified. The Fiscal Year 2009-10 CIP has $4.5 million budgeted for this program which includes an advance of $1.0 million from the Fiscal Year 2010-11 funding program to complete the overlay of College Boulevard from Faraday Avenue to Palomar Airport Road in a timely manner and will reduce the amount of costly removal and reconstruction work that could result from delays. Reaches 1 to 5, and 11 to 15, and the Agua Hedionda lift station of the Vista/Carlsbad Interceptor are scheduled over the next five years. These projects are required to handle buildout flows and replace deteriorated pipelines. The projects are predominantly funded by the City of Vista. The total estimated costs for all of the projects are approximately $47.4 million. The City of Vista’s share of the costs is approximately $32.7 million, or 69% of the total costs. The Maerkle Reservoir Storage project is for the construction of a buried 16 million gallon water storage reservoir next to the existing reservoir in order to provide additional emergency storage and to meet the ten-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. The Hydroelectric Pressure Reducing Station project at the Maerkle Reservoir is an electricity generating project that will provide a renewable energy source for the City. The cost estimate for this project is approximately $1.3 million. 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, 2008. This was the eleventh 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. The City strives to develop a Comprehensive Annual Financial Report which will continue to meet the Certificate of Achievement Program’s requirements, and this report will be submitted to GFOA to determine its eligibility for another certificate. 11 The El Camino Real Widening – Tamarack to Chestnut project is for the widening of El Camino Real to prime arterial roadway standards and includes the acquisition of additional roadway right-of-way and the design of the retaining walls along both sides of the roadway. The total estimated cost of the project is $12.3 million. The Pavement Management Program helps ensure that Carlsbad’s local streets are maintained on a regular cycle to ensure a good riding surface and to extend the life of the street. Applying seals and overlays when roadways are beginning to show signs of distress can minimize the more expensive repair/reactive maintenance activities. The proactive approach consists of the scheduled application of a seal or overlay once every seven years, allowing the City to efficiently maintain over 344 miles of public roadways at an annual cost of approximately $3.5 million. In addition, any problem areas are addressed as they are identified. The Fiscal Year 2009-10 CIP has $4.5 million budgeted for this program which includes an advance of $1.0 million from the Fiscal Year 2010-11 funding program to complete the overlay of College Boulevard from Faraday Avenue to Palomar Airport Road in a timely manner and will reduce the amount of costly removal and reconstruction work that could result from delays. Reaches 1 to 5, and 11 to 15, and the Agua Hedionda lift station of the Vista/Carlsbad Interceptor are scheduled over the next five years. These projects are required to handle buildout flows and replace deteriorated pipelines. The projects are predominantly funded by the City of Vista. The total estimated costs for all of the projects are approximately $47.4 million. The City of Vista’s share of the costs is approximately $32.7 million, or 69% of the total costs. The Maerkle Reservoir Storage project is for the construction of a buried 16 million gallon water storage reservoir next to the existing reservoir in order to provide additional emergency storage and to meet the ten-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. The Hydroelectric Pressure Reducing Station project at the Maerkle Reservoir is an electricity generating project that will provide a renewable energy source for the City. The cost estimate for this project is approximately $1.3 million. 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, 2008. This was the eleventh 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. The City strives to develop a Comprehensive Annual Financial Report which will continue to meet the Certificate of Achievement Program’s requirements, and this report will be submitted to GFOA to determine its eligibility for another certificate. The El Camino Real Widening – Tamarack to Chestnut project is for the widening of El Camino Real to prime arterial roadway standards and includes the acquisition of additional roadway right-of-way and the design of the retaining walls along both sides of the roadway. The total estimated cost of the project is $12.3 million. The Pavement Management Program helps ensure that Carlsbad’s local streets are maintained on a regular cycle to ensure a good riding surface and to extend the life of the street. Applying seals and overlays when roadways are beginning to show signs of distress can minimize the more expensive repair/reactive maintenance activities. The proactive approach consists of the scheduled application of a seal or overlay once every seven years, allowing the City to efficiently maintain over 344 miles of public roadways at an annual cost of approximately $3.5 million. In addition, any problem areas are addressed as they are identified. The Fiscal Year 2009-10 CIP has $4.5 million budgeted for this program which includes an advance of $1.0 million from the Fiscal Year 2010-11 funding program to complete the overlay of College Boulevard from Faraday Avenue to Palomar Airport Road in a timely manner and will reduce the amount of costly removal and reconstruction work that could result from delays. Reaches 1 to 5, and 11 to 15, and the Agua Hedionda lift station of the Vista/Carlsbad Interceptor are scheduled over the next five years. These projects are required to handle buildout flows and replace deteriorated pipelines. The projects are predominantly funded by the City of Vista. The total estimated costs for all of the projects are approximately $47.4 million. The City of Vista’s share of the costs is approximately $32.7 million, or 69% of the total costs. The Maerkle Reservoir Storage project is for the construction of a buried 16 million gallon water storage reservoir next to the existing reservoir in order to provide additional emergency storage and to meet the ten-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. The Hydroelectric Pressure Reducing Station project at the Maerkle Reservoir is an electricity generating project that will provide a renewable energy source for the City. The cost estimate for this project is approximately $1.3 million. 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, 2008. This was the eleventh 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. The City strives to develop a Comprehensive Annual Financial Report which will continue to meet the Certificate of Achievement Program’s requirements, and this report will be submitted to GFOA to determine its eligibility for another certificate. 11 12 12 13 13 14 14 CITY OF CARLSBAD ELECTED CITY OFFICIALS Claude A. “Bud” Lewis, Mayor Ann J. Kulchin, Mayor Pro Tem Matt Hall, Council Member Mark Packard, Council Member Keith Blackburn, Council Member Lorraine M. Wood, City Clerk Harold “Mac” McSherry, City Treasurer LEADERSHIP TEAM Lisa Hildabrand, City Manager Vacant, Assistant City Manager James F. Elliott, Deputy City Manager Cynthia Haas, Deputy City Manager Glenn Pruim, Public Works Director Sandra Holder, Community Development Director Tom Zoll, Police Chief Kevin Crawford, Fire Chief Ron Ball, City Attorney CHAIRPERSONS, COMMISSIONS AND BOARDS Heath Fox Arts Commission Vacant Beach Preservation Committee April Shute Carlsbad Tourism Business Improvement District Board Vacant Design Review Board Wendy Hinman Historic Preservation Commission Vacant Housing Commission Claude A. Lewis Housing and Redevelopment Commission Vacant Library Board of Trustees Sally Lyons Parks and Recreation Commission Marty Montgomery Planning Commission Jack Nelson Senior Commission Vacant Serra Cooperative Library System Advisory Board Jacquie Thye Sister City Committee Vacant Traffic Safety Commission Vacant Underground Utility Advisory Committee CITY OF CARLSBAD ELECTED CITY OFFICIALS Claude A. “Bud” Lewis, Mayor Ann J. Kulchin, Mayor Pro Tem Matt Hall, Council Member Mark Packard, Council Member Keith Blackburn, Council Member Lorraine M. Wood, City Clerk Harold “Mac” McSherry, City Treasurer LEADERSHIP TEAM Lisa Hildabrand, City Manager Vacant, Assistant City Manager James F. Elliott, Deputy City Manager Cynthia Haas, Deputy City Manager Glenn Pruim, Public Works Director Sandra Holder, Community Development Director Tom Zoll, Police Chief Kevin Crawford, Fire Chief Ron Ball, City Attorney CHAIRPERSONS, COMMISSIONS AND BOARDS Heath Fox Arts Commission Vacant Beach Preservation Committee April Shute Carlsbad Tourism Business Improvement District Board Vacant Design Review Board Wendy Hinman Historic Preservation Commission Vacant Housing Commission Claude A. Lewis Housing and Redevelopment Commission Vacant Library Board of Trustees Sally Lyons Parks and Recreation Commission Marty Montgomery Planning Commission Jack Nelson Senior Commission Vacant Serra Cooperative Library System Advisory Board Jacquie Thye Sister City Committee Vacant Traffic Safety Commission Vacant Underground Utility Advisory Committee 1515 ELECTORATECITY CLERKMAYOR &COUNCILCITYTREASURERCITY MANAGERCITY ATTORNEYADMINISTRATIVESERVICESPUBLICSAFETYPUBLICWORKSCOMMUNITYDEVELOPMENTCOMMUNITY SERVICESHUMANRESOURCESINFORMATIONTECHNOLOGYPOLICEENGINEERINGSERVICESGENERAL SERVICESMAINTENANCE &OPERATIONSECONOMICDEVELOPMENTGEOGRAPHICINFO SYSTEMSPLANNINGRECREATIONBeachPreservationCommitteeCommunityTelevisionFoundationTrafficSafetyCommissionUndergroundUtility AdvisoryCommitteeHousing &RedevelopmentCommissionHousing CommissionDesignReviewBoardHistoricPreservationCommissionSister CityCommitteeCITY OF CARLSBAD ORGANIZATION CHARTArtsCommissionParks & RecCommissionSeniorCommissionElectedCouncil AppointedStaff SupportReporting RelationshipProgramsKEYHOUSING ANDREDEVELOPMENTLIBRARY &THE ARTSRISKMANAGEMENTPlanningCommissionLibrary Boardof TrusteesSerra CooperativeLibrary SystemAdvisory BoardFIREFINANCEADMINISTRATION & ENVIRONMENTALPROGRAMSBUILDINGRECORDSMANAGEMENTCarlsbad Tourism B.I.D. Advisory BoardRev 05/14/08ELECTORATECITY CLERKMAYOR &COUNCILCITYTREASURERCITY MANAGERCITY ATTORNEYADMINISTRATIVESERVICESPUBLICSAFETYPUBLICWORKSCOMMUNITYDEVELOPMENTCOMMUNITY SERVICESHUMANRESOURCESINFORMATIONTECHNOLOGYPOLICEENGINEERINGSERVICESGENERAL SERVICESMAINTENANCE &OPERATIONSECONOMICDEVELOPMENTGEOGRAPHICINFO SYSTEMSPLANNINGRECREATIONBeachPreservationCommitteeCommunityTelevisionFoundationTrafficSafetyCommissionUndergroundUtility AdvisoryCommitteeHousing &RedevelopmentCommissionHousing CommissionDesignReviewBoardHistoricPreservationCommissionSister CityCommitteeCITY OF CARLSBAD ORGANIZATION CHARTArtsCommissionParks & RecCommissionSeniorCommissionElectedCouncil AppointedStaff SupportReporting RelationshipProgramsKEYHOUSING ANDREDEVELOPMENTLIBRARY &THE ARTSRISKMANAGEMENTPlanningCommissionLibrary Boardof TrusteesSerra CooperativeLibrary SystemAdvisory BoardFIREFINANCEADMINISTRATION & ENVIRONMENTALPROGRAMSBUILDINGRECORDSMANAGEMENTCarlsbad Tourism B.I.D. Advisory BoardRev 05/14/0816 ELECTORATECITY CLERKMAYOR &COUNCILCITYTREASURERCITY MANAGERCITY ATTORNEYADMINISTRATIVESERVICESPUBLICSAFETYPUBLICWORKSCOMMUNITYDEVELOPMENTCOMMUNITY SERVICESHUMANRESOURCESINFORMATIONTECHNOLOGYPOLICEENGINEERINGSERVICESGENERAL SERVICESMAINTENANCE &OPERATIONSECONOMICDEVELOPMENTGEOGRAPHICINFO SYSTEMSPLANNINGRECREATIONBeachPreservationCommitteeCommunityTelevisionFoundationTrafficSafetyCommissionUndergroundUtility AdvisoryCommitteeHousing &RedevelopmentCommissionHousing CommissionDesignReviewBoardHistoricPreservationCommissionSister CityCommitteeCITY OF CARLSBAD ORGANIZATION CHARTArtsCommissionParks & RecCommissionSeniorCommissionElectedCouncil AppointedStaff SupportReporting RelationshipProgramsKEYHOUSING ANDREDEVELOPMENTLIBRARY &THE ARTSRISKMANAGEMENTPlanningCommissionLibrary Boardof TrusteesSerra CooperativeLibrary SystemAdvisory BoardFIREFINANCEADMINISTRATION & ENVIRONMENTALPROGRAMSBUILDINGRECORDSMANAGEMENTCarlsbad Tourism B.I.D. Advisory BoardRev 05/14/08ELECTORATECITY CLERKMAYOR &COUNCILCITYTREASURERCITY MANAGERCITY ATTORNEYADMINISTRATIVESERVICESPUBLICSAFETYPUBLICWORKSCOMMUNITYDEVELOPMENTCOMMUNITY SERVICESHUMANRESOURCESINFORMATIONTECHNOLOGYPOLICEENGINEERINGSERVICESGENERAL SERVICESMAINTENANCE &OPERATIONSECONOMICDEVELOPMENTGEOGRAPHICINFO SYSTEMSPLANNINGRECREATIONBeachPreservationCommitteeCommunityTelevisionFoundationTrafficSafetyCommissionUndergroundUtility AdvisoryCommitteeHousing &RedevelopmentCommissionHousing CommissionDesignReviewBoardHistoricPreservationCommissionSister CityCommitteeCITY OF CARLSBAD ORGANIZATION CHARTArtsCommissionParks & RecCommissionSeniorCommissionElectedCouncil AppointedStaff SupportReporting RelationshipProgramsKEYHOUSING ANDREDEVELOPMENTLIBRARY &THE ARTSRISKMANAGEMENTPlanningCommissionLibrary Boardof TrusteesSerra CooperativeLibrary SystemAdvisory BoardFIREFINANCEADMINISTRATION & ENVIRONMENTALPROGRAMSBUILDINGRECORDSMANAGEMENTCarlsbad Tourism B.I.D. Advisory BoardRev 05/14/0816 17 17 18 18 Management’s Discussion and Analysis Management of the City of Carlsbad (“City”) provides readers this overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the City. This analysis will focus on the significant changes in an effort to explain the City’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts –management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non- major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City. The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the City’s overall financial status. The remaining statements are Fund Financial Statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the Government-wide Statements. The Governmental FundsStatements detail how general government services such as public safety were financed in the short term as well as what remains for future spending. Proprietary Fund Statements offer short- and long-term financial information about the activities the City operates like businesses, such as the water and wastewater 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 accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, included is a section with combining fund statements that provides detail about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Management’sDiscussionand Analysis BasicFinancialStatements RequiredSupplementaryInformation Required Components of the City of Carlsbad’sAnnual Financial Report Notesto theFinancial Statements Government-wide Financial Statements Fund Financial Statements Summary Detail Management’s Discussion and Analysis Management of the City of Carlsbad (“City”) provides readers this overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the City. This analysis will focus on the significant changes in an effort to explain the City’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts –management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non- major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City. The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the City’s overall financial status. The remaining statements are Fund Financial Statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the Government-wide Statements. The Governmental FundsStatements detail how general government services such as public safety were financed in the short term as well as what remains for future spending. Proprietary Fund Statements offer short- and long-term financial information about the activities the City operates like businesses, such as the water and wastewater 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 accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, included is a section with combining fund statements that provides detail about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Management’sDiscussionand Analysis BasicFinancialStatements RequiredSupplementaryInformation Required Components of the City of Carlsbad’sAnnual Financial Report Notesto theFinancial Statements Government-wide Financial Statements Fund Financial Statements Summary Detail 19 Management’s Discussion and Analysis Management of the City of Carlsbad (“City”) provides readers this overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the City. This analysis will focus on the significant changes in an effort to explain the City’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts –management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non- major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City. The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the City’s overall financial status. The remaining statements are Fund Financial Statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the Government-wide Statements. The Governmental FundsStatements detail how general government services such as public safety were financed in the short term as well as what remains for future spending. Proprietary Fund Statements offer short- and long-term financial information about the activities the City operates like businesses, such as the water and wastewater 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 accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, included is a section with combining fund statements that provides detail about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Management’sDiscussionand Analysis BasicFinancialStatements RequiredSupplementaryInformation Required Components of the City of Carlsbad’sAnnual Financial Report Notesto theFinancial Statements Government-wide Financial Statements Fund Financial Statements Summary Detail Management’s Discussion and Analysis Management of the City of Carlsbad (“City”) provides readers this overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the City. This analysis will focus on the significant changes in an effort to explain the City’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts –management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non- major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City. The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the City’s overall financial status. The remaining statements are Fund Financial Statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the Government-wide Statements. The Governmental FundsStatements detail how general government services such as public safety were financed in the short term as well as what remains for future spending. Proprietary Fund Statements offer short- and long-term financial information about the activities the City operates like businesses, such as the water and wastewater 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 accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, included is a section with combining fund statements that provides detail about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Management’sDiscussionand Analysis BasicFinancialStatements RequiredSupplementaryInformation Required Components of the City of Carlsbad’sAnnual Financial Report Notesto theFinancial Statements Government-wide Financial Statements Fund Financial Statements Summary 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, wastewater, solid waste services and municipal golf course 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. These statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement.There are currently four governmental fund types being used by the City: the General Fund, special revenue funds, debt service funds and capital project funds. Proprietary funds – Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of 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, wastewater, trash and golf 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. 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, wastewater, solid waste services and municipal golf course 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. These statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement.There are currently four governmental fund types being used by the City: the General Fund, special revenue funds, debt service funds and capital project funds. Proprietary funds – Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of 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, wastewater, trash and golf 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 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, wastewater, solid waste services and municipal golf course 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. These statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement.There are currently four governmental fund types being used by the City: the General Fund, special revenue funds, debt service funds and capital project funds. Proprietary funds – Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of 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, wastewater, trash and golf 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. 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, wastewater, solid waste services and municipal golf course 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. These statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement.There are currently four governmental fund types being used by the City: the General Fund, special revenue funds, debt service funds and capital project funds. Proprietary funds – Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of 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, wastewater, trash and golf 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. These activities are excluded from the City’s Government-wide Financial Statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Assets The City’s combined net assets as of June 30, 2009, as shown below, were $1.6 billion. The City’s net assets increased by $55.1 million during the current fiscal year. Approximately 23% of this increase represents the degree to which operating revenues have exceeded operating expenses. Approximately 77% represents one-time capital grants and contributions received by the City for the purchase and acquisition of infrastructure and other capital assets. 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 $1.6 billion at the close of the most recent fiscal year. A large portion of the City’s net assets (65%) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that are 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 (17%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($297.3 million) may be used to meet the government’s ongoing obligations to citizens and creditors. Just over 48% of the $297.3 million in unrestricted governmental activities net assets is attributable to the General Fund. Net assets invested in capital assets net of related debt for the City’s governmental activities increased by $29.5 million during Fiscal Year 2008-09 due primarily to the receipt of developer donated assets during the year (infrastructure assets in La Costa Greens, La Costa Oaks and Calavera Hills) and the acquisition of land for the future development of a park. A portion of business-type net assets represents the City’s municipal golf course. At Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Current and other assets $502.9 $517.8 $89.2 $84.2 $592.1 $602.0 1.7% Capital assets 725.0 753.2 345.3 356.8 1,070.3 1,110.0 3.7% Total assets 1,227.9 1,271.0 434.5 441.0 1,662.4 1,712.0 3.0% Long-term debt outstanding 11.9 10.7 53.0 50.9 64.9 61.6 -5.1% Other liabilities 16.3 15.4 11.3 10.0 27.6 25.4 -8.0% Total liabilities 28.2 26.1 64.3 60.9 92.5 87.0 -5.9% Net assets Invested in capital assets, net of related debt 713.0 742.5 293.9 308.4 1,006.9 1,050.9 4.4% Restricted 235.8 233.6 44.5 43.2 280.3 276.8 -1.2% Unrestricted 250.9 268.8 31.8 28.5 282.7 297.3 5.2% Total net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Total CITY OF CARLSBAD'S NET ASSETS (in millions of dollars) Governmental Activities Business-Type Activities 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. These activities are excluded from the City’s Government-wide Financial Statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Assets The City’s combined net assets as of June 30, 2009, as shown below, were $1.6 billion. The City’s net assets increased by $55.1 million during the current fiscal year. Approximately 23% of this increase represents the degree to which operating revenues have exceeded operating expenses. Approximately 77% represents one-time capital grants and contributions received by the City for the purchase and acquisition of infrastructure and other capital assets. 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 $1.6 billion at the close of the most recent fiscal year. A large portion of the City’s net assets (65%) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that are 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 (17%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($297.3 million) may be used to meet the government’s ongoing obligations to citizens and creditors. Just over 48% of the $297.3 million in unrestricted governmental activities net assets is attributable to the General Fund. Net assets invested in capital assets net of related debt for the City’s governmental activities increased by $29.5 million during Fiscal Year 2008-09 due primarily to the receipt of developer donated assets during the year (infrastructure assets in La Costa Greens, La Costa Oaks and Calavera Hills) and the acquisition of land for the future development of a park. A portion of business-type net assets represents the City’s municipal golf course. At Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Current and other assets $502.9 $517.8 $89.2 $84.2 $592.1 $602.0 1.7% Capital assets 725.0 753.2 345.3 356.8 1,070.3 1,110.0 3.7% Total assets 1,227.9 1,271.0 434.5 441.0 1,662.4 1,712.0 3.0% Long-term debt outstanding 11.9 10.7 53.0 50.9 64.9 61.6 -5.1% Other liabilities 16.3 15.4 11.3 10.0 27.6 25.4 -8.0% Total liabilities 28.2 26.1 64.3 60.9 92.5 87.0 -5.9% Net assets Invested in capital assets, net of related debt 713.0 742.5 293.9 308.4 1,006.9 1,050.9 4.4% Restricted 235.8 233.6 44.5 43.2 280.3 276.8 -1.2% Unrestricted 250.9 268.8 31.8 28.5 282.7 297.3 5.2% Total net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Total CITY OF CARLSBAD'S NET ASSETS (in millions of dollars) Governmental Activities Business-Type Activities 21 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. These activities are excluded from the City’s Government-wide Financial Statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Assets The City’s combined net assets as of June 30, 2009, as shown below, were $1.6 billion. The City’s net assets increased by $55.1 million during the current fiscal year. Approximately 23% of this increase represents the degree to which operating revenues have exceeded operating expenses. Approximately 77% represents one-time capital grants and contributions received by the City for the purchase and acquisition of infrastructure and other capital assets. 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 $1.6 billion at the close of the most recent fiscal year. A large portion of the City’s net assets (65%) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that are 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 (17%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($297.3 million) may be used to meet the government’s ongoing obligations to citizens and creditors. Just over 48% of the $297.3 million in unrestricted governmental activities net assets is attributable to the General Fund. Net assets invested in capital assets net of related debt for the City’s governmental activities increased by $29.5 million during Fiscal Year 2008-09 due primarily to the receipt of developer donated assets during the year (infrastructure assets in La Costa Greens, La Costa Oaks and Calavera Hills) and the acquisition of land for the future development of a park. A portion of business-type net assets represents the City’s municipal golf course. At Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Current and other assets $502.9 $517.8 $89.2 $84.2 $592.1 $602.0 1.7% Capital assets 725.0 753.2 345.3 356.8 1,070.3 1,110.0 3.7% Total assets 1,227.9 1,271.0 434.5 441.0 1,662.4 1,712.0 3.0% Long-term debt outstanding 11.9 10.7 53.0 50.9 64.9 61.6 -5.1% Other liabilities 16.3 15.4 11.3 10.0 27.6 25.4 -8.0% Total liabilities 28.2 26.1 64.3 60.9 92.5 87.0 -5.9% Net assets Invested in capital assets, net of related debt 713.0 742.5 293.9 308.4 1,006.9 1,050.9 4.4% Restricted 235.8 233.6 44.5 43.2 280.3 276.8 -1.2% Unrestricted 250.9 268.8 31.8 28.5 282.7 297.3 5.2% Total net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Total CITY OF CARLSBAD'S NET ASSETS (in millions of dollars) Governmental Activities Business-Type Activities 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. These activities are excluded from the City’s Government-wide Financial Statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Assets The City’s combined net assets as of June 30, 2009, as shown below, were $1.6 billion. The City’s net assets increased by $55.1 million during the current fiscal year. Approximately 23% of this increase represents the degree to which operating revenues have exceeded operating expenses. Approximately 77% represents one-time capital grants and contributions received by the City for the purchase and acquisition of infrastructure and other capital assets. 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 $1.6 billion at the close of the most recent fiscal year. A large portion of the City’s net assets (65%) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that are 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 (17%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($297.3 million) may be used to meet the government’s ongoing obligations to citizens and creditors. Just over 48% of the $297.3 million in unrestricted governmental activities net assets is attributable to the General Fund. Net assets invested in capital assets net of related debt for the City’s governmental activities increased by $29.5 million during Fiscal Year 2008-09 due primarily to the receipt of developer donated assets during the year (infrastructure assets in La Costa Greens, La Costa Oaks and Calavera Hills) and the acquisition of land for the future development of a park. A portion of business-type net assets represents the City’s municipal golf course. At Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Current and other assets $502.9 $517.8 $89.2 $84.2 $592.1 $602.0 1.7% Capital assets 725.0 753.2 345.3 356.8 1,070.3 1,110.0 3.7% Total assets 1,227.9 1,271.0 434.5 441.0 1,662.4 1,712.0 3.0% Long-term debt outstanding 11.9 10.7 53.0 50.9 64.9 61.6 -5.1% Other liabilities 16.3 15.4 11.3 10.0 27.6 25.4 -8.0% Total liabilities 28.2 26.1 64.3 60.9 92.5 87.0 -5.9% Net assets Invested in capital assets, net of related debt 713.0 742.5 293.9 308.4 1,006.9 1,050.9 4.4% Restricted 235.8 233.6 44.5 43.2 280.3 276.8 -1.2% Unrestricted 250.9 268.8 31.8 28.5 282.7 297.3 5.2% Total net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Total CITY OF CARLSBAD'S NET ASSETS (in millions of dollars) Governmental Activities Business-Type Activities 21 the end of Fiscal Year 2008-09, there is a large deficit in unrestricted net assets for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course. Changes in Net Assets The condensed summary of activities, which follows, shows that net assets increased by $55.1 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, a mid-year “expenditure savings plan” adopted by the City Council, $18 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. Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Revenues Program revenues Charges for services $21.8 $14.2 $38.9 $42.0 $60.7 $56.2 -7.4% Operating grants and contributions 11.4 12.1 1.3 1.9 12.7 14.0 10.2% Capital grants and contributions 73.7 27.7 30.2 14.6 103.9 42.3 -59.3% General revenues Property taxes 52.7 55.3 2.7 2.8 55.4 58.1 4.9% Sales and use taxes 27.0 23.1 - - 27.0 23.1 -14.4% Other taxes 23.6 22.4 - - 23.6 22.4 -5.1% Income from property and investments 25.0 19.8 9.0 5.9 34.0 25.7 -24.4% Other 0.5 0.4 - 0.2 0.5 0.6 20.0% Total revenues 235.7 175.0 82.1 67.4 317.8 242.4 -23.7% Expenses General government 14.5 12.9 - - 14.5 12.9 -11.0% Public safety 42.8 44.6 - - 42.8 44.6 4.2% Community development 15.7 16.1 - - 15.7 16.1 2.5% Community services 18.9 20.3 - - 18.9 20.3 7.4% Public works 36.0 35.2 - - 36.0 35.2 -2.2% Interest on long-term debt 0.7 0.6 - - 0.7 0.6 -14.3% Carlsbad Municipal Water District - - 28.8 30.1 28.8 30.1 4.5% Golf course - - 7.3 13.1 7.3 13.1 79.5% Wastewater - - 10.0 11.8 10.0 11.8 18.0% Solid waste - - 2.6 2.6 2.6 2.6 0.0% Total expenses 128.6 129.7 48.7 57.6 177.3 187.3 5.6% Excess (deficiency) before transfers 107.1 45.3 33.4 9.8 140.5 55.1 -60.8% Transfers (2.6) (0.1) 2.6 0.1 - - Increase (decrease) in net assets 104.5 45.2 36.0 9.9 140.5 55.1 -60.8% Beginning net assets 1,095.2 1,199.7 334.2 370.2 1,429.4 1,569.9 9.8% Ending net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET ASSETS (in millions of dollars) Governmental Business-type the end of Fiscal Year 2008-09, there is a large deficit in unrestricted net assets for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course. Changes in Net Assets The condensed summary of activities, which follows, shows that net assets increased by $55.1 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, a mid-year “expenditure savings plan” adopted by the City Council, $18 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. Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Revenues Program revenues Charges for services $21.8 $14.2 $38.9 $42.0 $60.7 $56.2 -7.4% Operating grants and contributions 11.4 12.1 1.3 1.9 12.7 14.0 10.2% Capital grants and contributions 73.7 27.7 30.2 14.6 103.9 42.3 -59.3% General revenues Property taxes 52.7 55.3 2.7 2.8 55.4 58.1 4.9% Sales and use taxes 27.0 23.1 - - 27.0 23.1 -14.4% Other taxes 23.6 22.4 - - 23.6 22.4 -5.1% Income from property and investments 25.0 19.8 9.0 5.9 34.0 25.7 -24.4% Other 0.5 0.4 - 0.2 0.5 0.6 20.0% Total revenues 235.7 175.0 82.1 67.4 317.8 242.4 -23.7% Expenses General government 14.5 12.9 - - 14.5 12.9 -11.0% Public safety 42.8 44.6 - - 42.8 44.6 4.2% Community development 15.7 16.1 - - 15.7 16.1 2.5% Community services 18.9 20.3 - - 18.9 20.3 7.4% Public works 36.0 35.2 - - 36.0 35.2 -2.2% Interest on long-term debt 0.7 0.6 - - 0.7 0.6 -14.3% Carlsbad Municipal Water District - - 28.8 30.1 28.8 30.1 4.5% Golf course - - 7.3 13.1 7.3 13.1 79.5% Wastewater - - 10.0 11.8 10.0 11.8 18.0% Solid waste - - 2.6 2.6 2.6 2.6 0.0% Total expenses 128.6 129.7 48.7 57.6 177.3 187.3 5.6% Excess (deficiency) before transfers 107.1 45.3 33.4 9.8 140.5 55.1 -60.8% Transfers (2.6) (0.1) 2.6 0.1 - - Increase (decrease) in net assets 104.5 45.2 36.0 9.9 140.5 55.1 -60.8% Beginning net assets 1,095.2 1,199.7 334.2 370.2 1,429.4 1,569.9 9.8% Ending net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET ASSETS (in millions of dollars) Governmental Business-type 22 the end of Fiscal Year 2008-09, there is a large deficit in unrestricted net assets for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course. Changes in Net Assets The condensed summary of activities, which follows, shows that net assets increased by $55.1 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, a mid-year “expenditure savings plan” adopted by the City Council, $18 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. Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Revenues Program revenues Charges for services $21.8 $14.2 $38.9 $42.0 $60.7 $56.2 -7.4% Operating grants and contributions 11.4 12.1 1.3 1.9 12.7 14.0 10.2% Capital grants and contributions 73.7 27.7 30.2 14.6 103.9 42.3 -59.3% General revenues Property taxes 52.7 55.3 2.7 2.8 55.4 58.1 4.9% Sales and use taxes 27.0 23.1 - - 27.0 23.1 -14.4% Other taxes 23.6 22.4 - - 23.6 22.4 -5.1% Income from property and investments 25.0 19.8 9.0 5.9 34.0 25.7 -24.4% Other 0.5 0.4 - 0.2 0.5 0.6 20.0% Total revenues 235.7 175.0 82.1 67.4 317.8 242.4 -23.7% Expenses General government 14.5 12.9 - - 14.5 12.9 -11.0% Public safety 42.8 44.6 - - 42.8 44.6 4.2% Community development 15.7 16.1 - - 15.7 16.1 2.5% Community services 18.9 20.3 - - 18.9 20.3 7.4% Public works 36.0 35.2 - - 36.0 35.2 -2.2% Interest on long-term debt 0.7 0.6 - - 0.7 0.6 -14.3% Carlsbad Municipal Water District - - 28.8 30.1 28.8 30.1 4.5% Golf course - - 7.3 13.1 7.3 13.1 79.5% Wastewater - - 10.0 11.8 10.0 11.8 18.0% Solid waste - - 2.6 2.6 2.6 2.6 0.0% Total expenses 128.6 129.7 48.7 57.6 177.3 187.3 5.6% Excess (deficiency) before transfers 107.1 45.3 33.4 9.8 140.5 55.1 -60.8% Transfers (2.6) (0.1) 2.6 0.1 - - Increase (decrease) in net assets 104.5 45.2 36.0 9.9 140.5 55.1 -60.8% Beginning net assets 1,095.2 1,199.7 334.2 370.2 1,429.4 1,569.9 9.8% Ending net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET ASSETS (in millions of dollars) Governmental Business-type the end of Fiscal Year 2008-09, there is a large deficit in unrestricted net assets for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course. Changes in Net Assets The condensed summary of activities, which follows, shows that net assets increased by $55.1 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, a mid-year “expenditure savings plan” adopted by the City Council, $18 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. Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Revenues Program revenues Charges for services $21.8 $14.2 $38.9 $42.0 $60.7 $56.2 -7.4% Operating grants and contributions 11.4 12.1 1.3 1.9 12.7 14.0 10.2% Capital grants and contributions 73.7 27.7 30.2 14.6 103.9 42.3 -59.3% General revenues Property taxes 52.7 55.3 2.7 2.8 55.4 58.1 4.9% Sales and use taxes 27.0 23.1 - - 27.0 23.1 -14.4% Other taxes 23.6 22.4 - - 23.6 22.4 -5.1% Income from property and investments 25.0 19.8 9.0 5.9 34.0 25.7 -24.4% Other 0.5 0.4 - 0.2 0.5 0.6 20.0% Total revenues 235.7 175.0 82.1 67.4 317.8 242.4 -23.7% Expenses General government 14.5 12.9 - - 14.5 12.9 -11.0% Public safety 42.8 44.6 - - 42.8 44.6 4.2% Community development 15.7 16.1 - - 15.7 16.1 2.5% Community services 18.9 20.3 - - 18.9 20.3 7.4% Public works 36.0 35.2 - - 36.0 35.2 -2.2% Interest on long-term debt 0.7 0.6 - - 0.7 0.6 -14.3% Carlsbad Municipal Water District - - 28.8 30.1 28.8 30.1 4.5% Golf course - - 7.3 13.1 7.3 13.1 79.5% Wastewater - - 10.0 11.8 10.0 11.8 18.0% Solid waste - - 2.6 2.6 2.6 2.6 0.0% Total expenses 128.6 129.7 48.7 57.6 177.3 187.3 5.6% Excess (deficiency) before transfers 107.1 45.3 33.4 9.8 140.5 55.1 -60.8% Transfers (2.6) (0.1) 2.6 0.1 - - Increase (decrease) in net assets 104.5 45.2 36.0 9.9 140.5 55.1 -60.8% Beginning net assets 1,095.2 1,199.7 334.2 370.2 1,429.4 1,569.9 9.8% Ending net assets $1,199.7 $1,244.9 $370.2 $380.1 $1,569.9 $1,625.0 3.5% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET ASSETS (in millions of dollars) Governmental Business-type 22 Property Taxes (24%) Charges for Services (23%)Federal Aid (3%) State Aid (2%) Sales Tax (9%) Other Taxes (4%) Income from Property and Investments (11%) Contributions from Property Owners (19%) City of Carlsbad Sources of Revenue for Fiscal Year 2008-09$242.4 Million TOT (5%) Just under 58% of the revenues of the City’s governmental funds are generated through taxes collected (property, sales, transient occupancy tax, etc.), and just over 62% of the City’s business-type revenue is generated through charges for services.The chart to the right graphically depicts the City’s revenue sources. The current economic recession has significantly impacted sales tax revenues, transient occupancy taxes (other taxes), and development related revenues (charges for services). As development throughout the City has slowed down, developer impact fees (capital contributions) and developer contributed assets (capital contributions) have decreased dramatically as well. Over the past fiscal year, interest rates have been decreasing on a monthly basis impacting the yield on the Treasurer’s portfolio (income from property and investments). The total cost of all programs and services was just over $187 million in Fiscal Year 2008-09. Some of the significant factors affecting the change in expenses from Fiscal Year 2007-08 to Fiscal Year 2008-09 included the first year of depreciating the City’s new municipal golf course, the first debt service payments made on the golf course bonds, the large increase in the cost of purchased water, higher depreciation and operating costs associated with the expansion of the Encina Wastewater Treatment Facility, additional assistance provided through the Section 8 Rental Assistance Program and previously negotiated salary increases for police and fire employees.The City’s expenses cover a range of services: General Government (7%) 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, the chief executive offices for the City and the Communications team. The Administrative Services group includes Finance, Human Resources, Information Technology, Risk and Records Management.Also included in General Government are any Council directed special projects including repairing storm damages and sink hole repairs. Public Safety (24%) Public Safety has always been a top City Council priority. This major service area includes the Police Department, whose goal is to provide quality service to the community to ensure the preservation of life and General Government7% Public Safety24% Community Development9% Community Services11% Public Works19% Golf Course7% Solid Waste1% Water16% Wastewater6% City of Carlsbad Functional Expenses for Fiscal Year 2008-09$187.3 Million Property Taxes (24%) Charges for Services (23%)Federal Aid (3%) State Aid (2%) Sales Tax (9%) Other Taxes (4%) Income from Property and Investments (11%) Contributions from Property Owners (19%) City of Carlsbad Sources of Revenue for Fiscal Year 2008-09$242.4 Million TOT (5%) Just under 58% of the revenues of the City’s governmental funds are generated through taxes collected (property, sales, transient occupancy tax, etc.), and just over 62% of the City’s business-type revenue is generated through charges for services.The chart to the right graphically depicts the City’s revenue sources. The current economic recession has significantly impacted sales tax revenues, transient occupancy taxes (other taxes), and development related revenues (charges for services). As development throughout the City has slowed down, developer impact fees (capital contributions) and developer contributed assets (capital contributions) have decreased dramatically as well. Over the past fiscal year, interest rates have been decreasing on a monthly basis impacting the yield on the Treasurer’s portfolio (income from property and investments). The total cost of all programs and services was just over $187 million in Fiscal Year 2008-09. Some of the significant factors affecting the change in expenses from Fiscal Year 2007-08 to Fiscal Year 2008-09 included the first year of depreciating the City’s new municipal golf course, the first debt service payments made on the golf course bonds, the large increase in the cost of purchased water, higher depreciation and operating costs associated with the expansion of the Encina Wastewater Treatment Facility, additional assistance provided through the Section 8 Rental Assistance Program and previously negotiated salary increases for police and fire employees.The City’s expenses cover a range of services: General Government (7%) 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, the chief executive offices for the City and the Communications team. The Administrative Services group includes Finance, Human Resources, Information Technology, Risk and Records Management.Also included in General Government are any Council directed special projects including repairing storm damages and sink hole repairs. Public Safety (24%) Public Safety has always been a top City Council priority. This major service area includes the Police Department, whose goal is to provide quality service to the community to ensure the preservation of life and General Government7% Public Safety24% Community Development9% Community Services11% Public Works19% Golf Course7% Solid Waste1% Water16% Wastewater6% City of Carlsbad Functional Expenses for Fiscal Year 2008-09$187.3 Million 23 Property Taxes (24%) Charges for Services (23%)Federal Aid (3%) State Aid (2%) Sales Tax (9%) Other Taxes (4%) Income from Property and Investments (11%) Contributions from Property Owners (19%) City of Carlsbad Sources of Revenue for Fiscal Year 2008-09$242.4 Million TOT (5%) Just under 58% of the revenues of the City’s governmental funds are generated through taxes collected (property, sales, transient occupancy tax, etc.), and just over 62% of the City’s business-type revenue is generated through charges for services.The chart to the right graphically depicts the City’s revenue sources. The current economic recession has significantly impacted sales tax revenues, transient occupancy taxes (other taxes), and development related revenues (charges for services). As development throughout the City has slowed down, developer impact fees (capital contributions) and developer contributed assets (capital contributions) have decreased dramatically as well. Over the past fiscal year, interest rates have been decreasing on a monthly basis impacting the yield on the Treasurer’s portfolio (income from property and investments). The total cost of all programs and services was just over $187 million in Fiscal Year 2008-09. Some of the significant factors affecting the change in expenses from Fiscal Year 2007-08 to Fiscal Year 2008-09 included the first year of depreciating the City’s new municipal golf course, the first debt service payments made on the golf course bonds, the large increase in the cost of purchased water, higher depreciation and operating costs associated with the expansion of the Encina Wastewater Treatment Facility, additional assistance provided through the Section 8 Rental Assistance Program and previously negotiated salary increases for police and fire employees.The City’s expenses cover a range of services: General Government (7%) 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, the chief executive offices for the City and the Communications team. The Administrative Services group includes Finance, Human Resources, Information Technology, Risk and Records Management.Also included in General Government are any Council directed special projects including repairing storm damages and sink hole repairs. Public Safety (24%) Public Safety has always been a top City Council priority. This major service area includes the Police Department, whose goal is to provide quality service to the community to ensure the preservation of life and General Government7% Public Safety24% Community Development9% Community Services11% Public Works19% Golf Course7% Solid Waste1% Water16% Wastewater6% City of Carlsbad Functional Expenses for Fiscal Year 2008-09$187.3 Million Property Taxes (24%) Charges for Services (23%)Federal Aid (3%) State Aid (2%) Sales Tax (9%) Other Taxes (4%) Income from Property and Investments (11%) Contributions from Property Owners (19%) City of Carlsbad Sources of Revenue for Fiscal Year 2008-09$242.4 Million TOT (5%) Just under 58% of the revenues of the City’s governmental funds are generated through taxes collected (property, sales, transient occupancy tax, etc.), and just over 62% of the City’s business-type revenue is generated through charges for services.The chart to the right graphically depicts the City’s revenue sources. The current economic recession has significantly impacted sales tax revenues, transient occupancy taxes (other taxes), and development related revenues (charges for services). As development throughout the City has slowed down, developer impact fees (capital contributions) and developer contributed assets (capital contributions) have decreased dramatically as well. Over the past fiscal year, interest rates have been decreasing on a monthly basis impacting the yield on the Treasurer’s portfolio (income from property and investments). The total cost of all programs and services was just over $187 million in Fiscal Year 2008-09. Some of the significant factors affecting the change in expenses from Fiscal Year 2007-08 to Fiscal Year 2008-09 included the first year of depreciating the City’s new municipal golf course, the first debt service payments made on the golf course bonds, the large increase in the cost of purchased water, higher depreciation and operating costs associated with the expansion of the Encina Wastewater Treatment Facility, additional assistance provided through the Section 8 Rental Assistance Program and previously negotiated salary increases for police and fire employees.The City’s expenses cover a range of services: General Government (7%) 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, the chief executive offices for the City and the Communications team. The Administrative Services group includes Finance, Human Resources, Information Technology, Risk and Records Management.Also included in General Government are any Council directed special projects including repairing storm damages and sink hole repairs. Public Safety (24%) Public Safety has always been a top City Council priority. This major service area includes the Police Department, whose goal is to provide quality service to the community to ensure the preservation of life and General Government7% Public Safety24% Community Development9% Community Services11% Public Works19% Golf Course7% Solid Waste1% Water16% Wastewater6% City of Carlsbad Functional Expenses for Fiscal Year 2008-09$187.3 Million 23 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 (9%) The mission of Community Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for diverse housing and employment, and maintaining a strong economic base.Community Development encompasses the Land Use Planning, Geographic Information Systems (GIS), Economic Development and Real Estate Management, the Hiring Center, Housing and Redevelopment, and Building Inspection departments. Community Services (11%) Community Services consists 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 (19%) Public Works is responsible for building and maintaining all of the infrastructure assets of the City. This service area includes Engineering, Parks, Streets, Medians, Street Trees,the Buena Vista Channel, Facilities Maintenance, Building Maintenance, Street Lighting and Traffic Sign and Signal Maintenance programs. Golf Course (7%) The City of Carlsbad opened a municipal golf course in the summer of 2007, which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. Solid Waste (1%) The Solid Waste Division of the Public Works Department promotes cost-effective solid waste management programs through recycling, source reduction, composting, solid waste transfer, and other non-traditional programs. In addition, funding for Citywide programs related to storm water protection from pollution;coordination with local, state and federal governments; and compliance with the Existing Development section of the National Pollutant Discharge Elimination System (NPDES) Urban Storm Water Permit issued by the San Diego Regional Water Control Board are accomplished in this area. Water Operations (16%) The Carlsbad Municipal Water District, a subsidiary of the City of Carlsbad, provides potable and recycled water service to approximately 85% of the City (approximately 28,000 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 irrigation purposes. Wastewater Operations (6%) The City of Carlsbad operates and maintains a sanitary wastewater collection system, which covers approximately 65% of the geographic area of the City. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad and Vista, the Leucadia County Water District, the Vallecitos Water District, the Buena Vista Sanitation District, and the Encinitas Sanitary District. The following sections will provide information about the operations of the governmental and business-type activities separately. 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 (9%) The mission of Community Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for diverse housing and employment, and maintaining a strong economic base.Community Development encompasses the Land Use Planning, Geographic Information Systems (GIS), Economic Development and Real Estate Management, the Hiring Center, Housing and Redevelopment, and Building Inspection departments. Community Services (11%) Community Services consists 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 (19%) Public Works is responsible for building and maintaining all of the infrastructure assets of the City. This service area includes Engineering, Parks, Streets, Medians, Street Trees,the Buena Vista Channel, Facilities Maintenance, Building Maintenance, Street Lighting and Traffic Sign and Signal Maintenance programs. Golf Course (7%) The City of Carlsbad opened a municipal golf course in the summer of 2007, which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. Solid Waste (1%) The Solid Waste Division of the Public Works Department promotes cost-effective solid waste management programs through recycling, source reduction, composting, solid waste transfer, and other non-traditional programs. In addition, funding for Citywide programs related to storm water protection from pollution;coordination with local, state and federal governments; and compliance with the Existing Development section of the National Pollutant Discharge Elimination System (NPDES) Urban Storm Water Permit issued by the San Diego Regional Water Control Board are accomplished in this area. Water Operations (16%) The Carlsbad Municipal Water District, a subsidiary of the City of Carlsbad, provides potable and recycled water service to approximately 85% of the City (approximately 28,000 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 irrigation purposes. Wastewater Operations (6%) The City of Carlsbad operates and maintains a sanitary wastewater collection system, which covers approximately 65% of the geographic area of the City. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad and Vista, the Leucadia County Water District, the Vallecitos Water District, the Buena Vista Sanitation District, and the Encinitas Sanitary District. The following sections will provide information about the operations of the governmental and business-type activities separately. 24 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 (9%) The mission of Community Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for diverse housing and employment, and maintaining a strong economic base.Community Development encompasses the Land Use Planning, Geographic Information Systems (GIS), Economic Development and Real Estate Management, the Hiring Center, Housing and Redevelopment, and Building Inspection departments. Community Services (11%) Community Services consists 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 (19%) Public Works is responsible for building and maintaining all of the infrastructure assets of the City. This service area includes Engineering, Parks, Streets, Medians, Street Trees,the Buena Vista Channel, Facilities Maintenance, Building Maintenance, Street Lighting and Traffic Sign and Signal Maintenance programs. Golf Course (7%) The City of Carlsbad opened a municipal golf course in the summer of 2007, which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. Solid Waste (1%) The Solid Waste Division of the Public Works Department promotes cost-effective solid waste management programs through recycling, source reduction, composting, solid waste transfer, and other non-traditional programs. In addition, funding for Citywide programs related to storm water protection from pollution;coordination with local, state and federal governments; and compliance with the Existing Development section of the National Pollutant Discharge Elimination System (NPDES) Urban Storm Water Permit issued by the San Diego Regional Water Control Board are accomplished in this area. Water Operations (16%) The Carlsbad Municipal Water District, a subsidiary of the City of Carlsbad, provides potable and recycled water service to approximately 85% of the City (approximately 28,000 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 irrigation purposes. Wastewater Operations (6%) The City of Carlsbad operates and maintains a sanitary wastewater collection system, which covers approximately 65% of the geographic area of the City. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad and Vista, the Leucadia County Water District, the Vallecitos Water District, the Buena Vista Sanitation District, and the Encinitas Sanitary District. The following sections will provide information about the operations of the governmental and business-type activities separately. 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 (9%) The mission of Community Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for diverse housing and employment, and maintaining a strong economic base.Community Development encompasses the Land Use Planning, Geographic Information Systems (GIS), Economic Development and Real Estate Management, the Hiring Center, Housing and Redevelopment, and Building Inspection departments. Community Services (11%) Community Services consists 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 (19%) Public Works is responsible for building and maintaining all of the infrastructure assets of the City. This service area includes Engineering, Parks, Streets, Medians, Street Trees,the Buena Vista Channel, Facilities Maintenance, Building Maintenance, Street Lighting and Traffic Sign and Signal Maintenance programs. Golf Course (7%) The City of Carlsbad opened a municipal golf course in the summer of 2007, which has further enhanced the tourism attractions the City offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole, destination golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high quality golf experience, a first class restaurant and clubhouse, and linkages to hiking trails, The Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. Solid Waste (1%) The Solid Waste Division of the Public Works Department promotes cost-effective solid waste management programs through recycling, source reduction, composting, solid waste transfer, and other non-traditional programs. In addition, funding for Citywide programs related to storm water protection from pollution;coordination with local, state and federal governments; and compliance with the Existing Development section of the National Pollutant Discharge Elimination System (NPDES) Urban Storm Water Permit issued by the San Diego Regional Water Control Board are accomplished in this area. Water Operations (16%) The Carlsbad Municipal Water District, a subsidiary of the City of Carlsbad, provides potable and recycled water service to approximately 85% of the City (approximately 28,000 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 irrigation purposes. Wastewater Operations (6%) The City of Carlsbad operates and maintains a sanitary wastewater collection system, which covers approximately 65% of the geographic area of the City. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad and Vista, the Leucadia County Water District, the Vallecitos Water District, the Buena Vista Sanitation District, and the Encinitas Sanitary District. The following sections will provide information about the operations of the governmental and business-type activities separately. 24 Governmental Activities The increase in net assets for governmental activities was $45.2 million. This increase was generated by total revenues of governmental activities of $175 million ($54 million in program revenues and $121 million in general revenues) offset by $129.7 million in total costs of governmental activities and a $127,000 transfer to the Solid Waste Fund. The table below presents the total cost of each of the City’s major programs, as well as each 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). $0 $20 $40 $60 $80 General Government Public Safety Community Development Community Services Public Works Governmental Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses 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 ($14.2 million), grants and contributions from other governments and organizations which subsidize certain programs ($39.8 million), and taxes and other revenues (such as income from property and investments) received by the City to pay for the “public benefit” portion, totaling $120.9 million. Program revenues are almost equal to program expenses in Public Works. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient revenue has been accumulated to pay for the cost. The City is entering into a new stage of its lifecycle, from a developing or growing stage to a mature stage. As the City continues to mature and approach build-out, the City will not see as many master planned projects being developed. In past years, these projects have constructed new facilities, roads, parks, and other City-owned infrastructure.The City is now moving to a more maintenance oriented City and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. However, there were still several master planned communities that have recently been completed or are near completion (Bressi Ranch, La Costa Greens, La Costa Oaks and La Costa Ridge), and these developers recently dedicated infrastructure to the City as required to develop in the City. Governmental Activities The increase in net assets for governmental activities was $45.2 million. This increase was generated by total revenues of governmental activities of $175 million ($54 million in program revenues and $121 million in general revenues) offset by $129.7 million in total costs of governmental activities and a $127,000 transfer to the Solid Waste Fund. The table below presents the total cost of each of the City’s major programs, as well as each 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). $0 $20 $40 $60 $80 General Government Public Safety Community Development Community Services Public Works Governmental Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses 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 ($14.2 million), grants and contributions from other governments and organizations which subsidize certain programs ($39.8 million), and taxes and other revenues (such as income from property and investments) received by the City to pay for the “public benefit” portion, totaling $120.9 million. Program revenues are almost equal to program expenses in Public Works. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient revenue has been accumulated to pay for the cost. The City is entering into a new stage of its lifecycle, from a developing or growing stage to a mature stage. As the City continues to mature and approach build-out, the City will not see as many master planned projects being developed. In past years, these projects have constructed new facilities, roads, parks, and other City-owned infrastructure.The City is now moving to a more maintenance oriented City and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. However, there were still several master planned communities that have recently been completed or are near completion (Bressi Ranch, La Costa Greens, La Costa Oaks and La Costa Ridge), and these developers recently dedicated infrastructure to the City as required to develop in the City. 25 Governmental Activities The increase in net assets for governmental activities was $45.2 million. This increase was generated by total revenues of governmental activities of $175 million ($54 million in program revenues and $121 million in general revenues) offset by $129.7 million in total costs of governmental activities and a $127,000 transfer to the Solid Waste Fund. The table below presents the total cost of each of the City’s major programs, as well as each 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). $0 $20 $40 $60 $80 General Government Public Safety Community Development Community Services Public Works Governmental Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses 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 ($14.2 million), grants and contributions from other governments and organizations which subsidize certain programs ($39.8 million), and taxes and other revenues (such as income from property and investments) received by the City to pay for the “public benefit” portion, totaling $120.9 million. Program revenues are almost equal to program expenses in Public Works. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient revenue has been accumulated to pay for the cost. The City is entering into a new stage of its lifecycle, from a developing or growing stage to a mature stage. As the City continues to mature and approach build-out, the City will not see as many master planned projects being developed. In past years, these projects have constructed new facilities, roads, parks, and other City-owned infrastructure.The City is now moving to a more maintenance oriented City and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. However, there were still several master planned communities that have recently been completed or are near completion (Bressi Ranch, La Costa Greens, La Costa Oaks and La Costa Ridge), and these developers recently dedicated infrastructure to the City as required to develop in the City. Governmental Activities The increase in net assets for governmental activities was $45.2 million. This increase was generated by total revenues of governmental activities of $175 million ($54 million in program revenues and $121 million in general revenues) offset by $129.7 million in total costs of governmental activities and a $127,000 transfer to the Solid Waste Fund. The table below presents the total cost of each of the City’s major programs, as well as each 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). $0 $20 $40 $60 $80 General Government Public Safety Community Development Community Services Public Works Governmental Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses 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 ($14.2 million), grants and contributions from other governments and organizations which subsidize certain programs ($39.8 million), and taxes and other revenues (such as income from property and investments) received by the City to pay for the “public benefit” portion, totaling $120.9 million. Program revenues are almost equal to program expenses in Public Works. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient revenue has been accumulated to pay for the cost. The City is entering into a new stage of its lifecycle, from a developing or growing stage to a mature stage. As the City continues to mature and approach build-out, the City will not see as many master planned projects being developed. In past years, these projects have constructed new facilities, roads, parks, and other City-owned infrastructure.The City is now moving to a more maintenance oriented City and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. However, there were still several master planned communities that have recently been completed or are near completion (Bressi Ranch, La Costa Greens, La Costa Oaks and La Costa Ridge), and these developers recently dedicated infrastructure to the City as required to develop in the City. 25 Business-Type Activities $0 $10 $20 $30 $40 $50 Water Golf Course Wastewater Solid Waste Business-Type Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses Program revenues for the City’s business-type activities totaled $58.5 million for the year, while functional expenses equaled $57.6 million.The City’s golf course enterprise was in its second full year of operations. Golf Course operating expenses included interest on the advance from the General Fund and interest related to the golf course bonds issued for the construction of the course, and the first full year of depreciation related to the new golf course assets, resulting in operating losses in excess of $7 million. Water and wastewater program revenues are higher than program expenses primarily due to capital contributions in the form of capital connection fees and developer constructed assets donated to the City; the combined amount of these contributions was in excess of $14.6 million. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses). A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. In the current Comprehensive Annual Financial Report (CAFR),no changes were made in the reporting of any funds. 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 balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Business-Type Activities $0 $10 $20 $30 $40 $50 Water Golf Course Wastewater Solid Waste Business-Type Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses Program revenues for the City’s business-type activities totaled $58.5 million for the year, while functional expenses equaled $57.6 million.The City’s golf course enterprise was in its second full year of operations. Golf Course operating expenses included interest on the advance from the General Fund and interest related to the golf course bonds issued for the construction of the course, and the first full year of depreciation related to the new golf course assets, resulting in operating losses in excess of $7 million. Water and wastewater program revenues are higher than program expenses primarily due to capital contributions in the form of capital connection fees and developer constructed assets donated to the City; the combined amount of these contributions was in excess of $14.6 million. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses). A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. In the current Comprehensive Annual Financial Report (CAFR),no changes were made in the reporting of any funds. 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 balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. 26 Business-Type Activities $0 $10 $20 $30 $40 $50 Water Golf Course Wastewater Solid Waste Business-Type Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses Program revenues for the City’s business-type activities totaled $58.5 million for the year, while functional expenses equaled $57.6 million.The City’s golf course enterprise was in its second full year of operations. Golf Course operating expenses included interest on the advance from the General Fund and interest related to the golf course bonds issued for the construction of the course, and the first full year of depreciation related to the new golf course assets, resulting in operating losses in excess of $7 million. Water and wastewater program revenues are higher than program expenses primarily due to capital contributions in the form of capital connection fees and developer constructed assets donated to the City; the combined amount of these contributions was in excess of $14.6 million. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses). A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. In the current Comprehensive Annual Financial Report (CAFR),no changes were made in the reporting of any funds. 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 balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Business-Type Activities $0 $10 $20 $30 $40 $50 Water Golf Course Wastewater Solid Waste Business-Type Activities Program Revenues and ExpensesFiscal Year 2008-09(in millions) Program Revenues Expenses Program revenues for the City’s business-type activities totaled $58.5 million for the year, while functional expenses equaled $57.6 million.The City’s golf course enterprise was in its second full year of operations. Golf Course operating expenses included interest on the advance from the General Fund and interest related to the golf course bonds issued for the construction of the course, and the first full year of depreciation related to the new golf course assets, resulting in operating losses in excess of $7 million. Water and wastewater program revenues are higher than program expenses primarily due to capital contributions in the form of capital connection fees and developer constructed assets donated to the City; the combined amount of these contributions was in excess of $14.6 million. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses). A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. In the current Comprehensive Annual Financial Report (CAFR),no changes were made in the reporting of any funds. 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 balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. 26 As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $465.4 million, an increase of $12.4 million in comparison with the prior year. Approximately 27% of this amount ($127.6 million) consti- tutes undesignated fund balance, which is avail- able 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 - 22%, (2) for future programs - 30%, (3) advances to other funds - 13%, (4) to liquidate contracts and purchase orders of the prior period - 3%, or (5) for a variety of other restricted purposes - 5%. Designated for Future Continuing Appropriations ($141.7 million) 30% Reserved to Liquidate Contracts and Purchase Orders ($13.9 million) 3% Reserved for Advances to Other Funds ($59 million) 13% Reserved for Other Purposes ($20.9 million) 5% Undesignated ($127.6 million) 27% Designated for Approved Capital Projects ($102.3 million) 22% Total Increase Percentage (Decrease)Change 2008 2009 Revenues Taxes $98.4 $97.3 ($1.1)-1.1% Intergovernmental 3.3 1.8 (1.5)-45.5% Licenses and permits 2.0 1.0 (1.0)-50.0% Charges for services 7.5 6.2 (1.3)-17.3% Fines and forfeitures 1.3 1.3 0.0 0.0% Income from property and investments 5.1 4.3 (0.8)-15.7% Miscellaneous 0.9 0.9 0.0 0.0% Total revenues 118.5 112.8 (5.7)-4.8% Expenditures General government 13.8 12.6 (1.2)-8.7% Interdepartmental charges (2.3)(3.7)(1.4)60.9% Public safety 43.5 44.8 1.3 3.0% Community development 7.5 7.5 0.0 0.0% Community services 16.9 17.2 0.3 1.8% Public works 22.1 21.5 (0.6)-2.7% Total expenses 101.5 99.9 (1.6)-1.6% Excess (deficiency) before transfers 17.0 12.9 Transfers in 0.6 0.1 Transfers out (19.2)(8.4) Increase (decrease) in fund balance (1.6)4.6 Beginning fund balance 122.6 121.0 Ending fund balance $121.0 $125.6 2008-09 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $465.4 million, an increase of $12.4 million in comparison with the prior year. Approximately 27% of this amount ($127.6 million) consti- tutes undesignated fund balance, which is avail- able 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 - 22%, (2) for future programs - 30%, (3) advances to other funds - 13%, (4) to liquidate contracts and purchase orders of the prior period - 3%, or (5) for a variety of other restricted purposes - 5%. Designated for Future Continuing Appropriations ($141.7 million) 30% Reserved to Liquidate Contracts and Purchase Orders ($13.9 million) 3% Reserved for Advances to Other Funds ($59 million) 13% Reserved for Other Purposes ($20.9 million) 5% Undesignated ($127.6 million) 27% Designated for Approved Capital Projects ($102.3 million) 22% Total Increase Percentage (Decrease)Change 2008 2009 Revenues Taxes $98.4 $97.3 ($1.1)-1.1% Intergovernmental 3.3 1.8 (1.5)-45.5% Licenses and permits 2.0 1.0 (1.0)-50.0% Charges for services 7.5 6.2 (1.3)-17.3% Fines and forfeitures 1.3 1.3 0.0 0.0% Income from property and investments 5.1 4.3 (0.8)-15.7% Miscellaneous 0.9 0.9 0.0 0.0% Total revenues 118.5 112.8 (5.7)-4.8% Expenditures General government 13.8 12.6 (1.2)-8.7% Interdepartmental charges (2.3)(3.7)(1.4)60.9% Public safety 43.5 44.8 1.3 3.0% Community development 7.5 7.5 0.0 0.0% Community services 16.9 17.2 0.3 1.8% Public works 22.1 21.5 (0.6)-2.7% Total expenses 101.5 99.9 (1.6)-1.6% Excess (deficiency) before transfers 17.0 12.9 Transfers in 0.6 0.1 Transfers out (19.2)(8.4) Increase (decrease) in fund balance (1.6)4.6 Beginning fund balance 122.6 121.0 Ending fund balance $121.0 $125.6 2008-09 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) 27 As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $465.4 million, an increase of $12.4 million in comparison with the prior year. Approximately 27% of this amount ($127.6 million) consti- tutes undesignated fund balance, which is avail- able 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 - 22%, (2) for future programs - 30%, (3) advances to other funds - 13%, (4) to liquidate contracts and purchase orders of the prior period - 3%, or (5) for a variety of other restricted purposes - 5%. Designated for Future Continuing Appropriations ($141.7 million) 30% Reserved to Liquidate Contracts and Purchase Orders ($13.9 million) 3% Reserved for Advances to Other Funds ($59 million) 13% Reserved for Other Purposes ($20.9 million) 5% Undesignated ($127.6 million) 27% Designated for Approved Capital Projects ($102.3 million) 22% Total Increase Percentage (Decrease)Change 2008 2009 Revenues Taxes $98.4 $97.3 ($1.1)-1.1% Intergovernmental 3.3 1.8 (1.5)-45.5% Licenses and permits 2.0 1.0 (1.0)-50.0% Charges for services 7.5 6.2 (1.3)-17.3% Fines and forfeitures 1.3 1.3 0.0 0.0% Income from property and investments 5.1 4.3 (0.8)-15.7% Miscellaneous 0.9 0.9 0.0 0.0% Total revenues 118.5 112.8 (5.7)-4.8% Expenditures General government 13.8 12.6 (1.2)-8.7% Interdepartmental charges (2.3)(3.7)(1.4)60.9% Public safety 43.5 44.8 1.3 3.0% Community development 7.5 7.5 0.0 0.0% Community services 16.9 17.2 0.3 1.8% Public works 22.1 21.5 (0.6)-2.7% Total expenses 101.5 99.9 (1.6)-1.6% Excess (deficiency) before transfers 17.0 12.9 Transfers in 0.6 0.1 Transfers out (19.2)(8.4) Increase (decrease) in fund balance (1.6)4.6 Beginning fund balance 122.6 121.0 Ending fund balance $121.0 $125.6 2008-09 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $465.4 million, an increase of $12.4 million in comparison with the prior year. Approximately 27% of this amount ($127.6 million) consti- tutes undesignated fund balance, which is avail- able 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 - 22%, (2) for future programs - 30%, (3) advances to other funds - 13%, (4) to liquidate contracts and purchase orders of the prior period - 3%, or (5) for a variety of other restricted purposes - 5%. Designated for Future Continuing Appropriations ($141.7 million) 30% Reserved to Liquidate Contracts and Purchase Orders ($13.9 million) 3% Reserved for Advances to Other Funds ($59 million) 13% Reserved for Other Purposes ($20.9 million) 5% Undesignated ($127.6 million) 27% Designated for Approved Capital Projects ($102.3 million) 22% Total Increase Percentage (Decrease)Change 2008 2009 Revenues Taxes $98.4 $97.3 ($1.1)-1.1% Intergovernmental 3.3 1.8 (1.5)-45.5% Licenses and permits 2.0 1.0 (1.0)-50.0% Charges for services 7.5 6.2 (1.3)-17.3% Fines and forfeitures 1.3 1.3 0.0 0.0% Income from property and investments 5.1 4.3 (0.8)-15.7% Miscellaneous 0.9 0.9 0.0 0.0% Total revenues 118.5 112.8 (5.7)-4.8% Expenditures General government 13.8 12.6 (1.2)-8.7% Interdepartmental charges (2.3)(3.7)(1.4)60.9% Public safety 43.5 44.8 1.3 3.0% Community development 7.5 7.5 0.0 0.0% Community services 16.9 17.2 0.3 1.8% Public works 22.1 21.5 (0.6)-2.7% Total expenses 101.5 99.9 (1.6)-1.6% Excess (deficiency) before transfers 17.0 12.9 Transfers in 0.6 0.1 Transfers out (19.2)(8.4) Increase (decrease) in fund balance (1.6)4.6 Beginning fund balance 122.6 121.0 Ending fund balance $121.0 $125.6 2008-09 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) 27 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 $125.6 million, an increase of $4.6 million. The unreserved fund balance portion of the General Fund was $66.3 million, of which $18 million was designated for future programs and service enhancements. The decrease in revenues was primarily due to reimbursements received from the Office of Emergency Services (OES) and the Federal Highway Administration (FHWA) for the 2005 winter storm damage in the City during the prior fiscal year; the impacts of the current recession facing the world on consumer confidence (a reduction in sales and transient occupancy taxes); the effects of a weak housing market (both resales and the construction of new homes) on development related services revenues (charges for services), building permits, miscellaneous licenses and permits, and real property transfer taxes; and a reduction in the yield on the Treasurer’s portfolio (decreased income from property and investments). These decreases were partially offset by an increase in assessed property values throughout the City (higher property tax revenues) and a spike in natural gas prices in the summer of 2008 (an increase in the franchise fee paid by San Diego Gas and Electric). The decrease in General Fund expenditures was driven by a mid-year “expenditure savings plan” that was adopted by the City Council. During the month of January 2009, due to the economic recession, staff brought forward to Council a proposed “expenditure savings plan” for Fiscal Year 2008-09. This plan was approved by the City Council on January 27, 2009. Estimated General Fund revenues were reduced by $4.6 million and $5.3 million in appropriation reductions in the General Fund were also approved. These adjustments were made so that the City could continue to maintain a balanced budget. In addition, the reduction in transfers out for the year was the result of the General Fund partially funding the Joint First Responders Training Facility in the prior fiscal year and a reduction in funding for the Infrastructure Replacement Fund. One major governmental fund, the Redevelopment Debt Service Fund, had a negative fund balance of just under $11.2 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. Over the past couple of fiscal years, the agency has begun to repay the $15.5 million advance back to the City’s General Fund, as the tax increment collected within the redevelopment area grows. Of the four remaining major governmental funds, only one fund saw their fund balance decline during the fiscal year, the General Capital Construction Fund (GCC). The GCC continued the development of the Joint First Responders Training Facility, the Library Learning Center and the Leo Carrillo Barn restoration, drawing down on the beginning fund balance. The four 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 predominantly designated for the construction or purchase of future capital assets. 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. 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 $125.6 million, an increase of $4.6 million. The unreserved fund balance portion of the General Fund was $66.3 million, of which $18 million was designated for future programs and service enhancements. The decrease in revenues was primarily due to reimbursements received from the Office of Emergency Services (OES) and the Federal Highway Administration (FHWA) for the 2005 winter storm damage in the City during the prior fiscal year; the impacts of the current recession facing the world on consumer confidence (a reduction in sales and transient occupancy taxes); the effects of a weak housing market (both resales and the construction of new homes) on development related services revenues (charges for services), building permits, miscellaneous licenses and permits, and real property transfer taxes; and a reduction in the yield on the Treasurer’s portfolio (decreased income from property and investments). These decreases were partially offset by an increase in assessed property values throughout the City (higher property tax revenues) and a spike in natural gas prices in the summer of 2008 (an increase in the franchise fee paid by San Diego Gas and Electric). The decrease in General Fund expenditures was driven by a mid-year “expenditure savings plan” that was adopted by the City Council. During the month of January 2009, due to the economic recession, staff brought forward to Council a proposed “expenditure savings plan” for Fiscal Year 2008-09. This plan was approved by the City Council on January 27, 2009. Estimated General Fund revenues were reduced by $4.6 million and $5.3 million in appropriation reductions in the General Fund were also approved. These adjustments were made so that the City could continue to maintain a balanced budget. In addition, the reduction in transfers out for the year was the result of the General Fund partially funding the Joint First Responders Training Facility in the prior fiscal year and a reduction in funding for the Infrastructure Replacement Fund. One major governmental fund, the Redevelopment Debt Service Fund, had a negative fund balance of just under $11.2 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. Over the past couple of fiscal years, the agency has begun to repay the $15.5 million advance back to the City’s General Fund, as the tax increment collected within the redevelopment area grows. Of the four remaining major governmental funds, only one fund saw their fund balance decline during the fiscal year, the General Capital Construction Fund (GCC). The GCC continued the development of the Joint First Responders Training Facility, the Library Learning Center and the Leo Carrillo Barn restoration, drawing down on the beginning fund balance. The four 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 predominantly designated for the construction or purchase of future capital assets. 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. 28 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 $125.6 million, an increase of $4.6 million. The unreserved fund balance portion of the General Fund was $66.3 million, of which $18 million was designated for future programs and service enhancements. The decrease in revenues was primarily due to reimbursements received from the Office of Emergency Services (OES) and the Federal Highway Administration (FHWA) for the 2005 winter storm damage in the City during the prior fiscal year; the impacts of the current recession facing the world on consumer confidence (a reduction in sales and transient occupancy taxes); the effects of a weak housing market (both resales and the construction of new homes) on development related services revenues (charges for services), building permits, miscellaneous licenses and permits, and real property transfer taxes; and a reduction in the yield on the Treasurer’s portfolio (decreased income from property and investments). These decreases were partially offset by an increase in assessed property values throughout the City (higher property tax revenues) and a spike in natural gas prices in the summer of 2008 (an increase in the franchise fee paid by San Diego Gas and Electric). The decrease in General Fund expenditures was driven by a mid-year “expenditure savings plan” that was adopted by the City Council. During the month of January 2009, due to the economic recession, staff brought forward to Council a proposed “expenditure savings plan” for Fiscal Year 2008-09. This plan was approved by the City Council on January 27, 2009. Estimated General Fund revenues were reduced by $4.6 million and $5.3 million in appropriation reductions in the General Fund were also approved. These adjustments were made so that the City could continue to maintain a balanced budget. In addition, the reduction in transfers out for the year was the result of the General Fund partially funding the Joint First Responders Training Facility in the prior fiscal year and a reduction in funding for the Infrastructure Replacement Fund. One major governmental fund, the Redevelopment Debt Service Fund, had a negative fund balance of just under $11.2 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. Over the past couple of fiscal years, the agency has begun to repay the $15.5 million advance back to the City’s General Fund, as the tax increment collected within the redevelopment area grows. Of the four remaining major governmental funds, only one fund saw their fund balance decline during the fiscal year, the General Capital Construction Fund (GCC). The GCC continued the development of the Joint First Responders Training Facility, the Library Learning Center and the Leo Carrillo Barn restoration, drawing down on the beginning fund balance. The four 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 predominantly designated for the construction or purchase of future capital assets. 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. 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 $125.6 million, an increase of $4.6 million. The unreserved fund balance portion of the General Fund was $66.3 million, of which $18 million was designated for future programs and service enhancements. The decrease in revenues was primarily due to reimbursements received from the Office of Emergency Services (OES) and the Federal Highway Administration (FHWA) for the 2005 winter storm damage in the City during the prior fiscal year; the impacts of the current recession facing the world on consumer confidence (a reduction in sales and transient occupancy taxes); the effects of a weak housing market (both resales and the construction of new homes) on development related services revenues (charges for services), building permits, miscellaneous licenses and permits, and real property transfer taxes; and a reduction in the yield on the Treasurer’s portfolio (decreased income from property and investments). These decreases were partially offset by an increase in assessed property values throughout the City (higher property tax revenues) and a spike in natural gas prices in the summer of 2008 (an increase in the franchise fee paid by San Diego Gas and Electric). The decrease in General Fund expenditures was driven by a mid-year “expenditure savings plan” that was adopted by the City Council. During the month of January 2009, due to the economic recession, staff brought forward to Council a proposed “expenditure savings plan” for Fiscal Year 2008-09. This plan was approved by the City Council on January 27, 2009. Estimated General Fund revenues were reduced by $4.6 million and $5.3 million in appropriation reductions in the General Fund were also approved. These adjustments were made so that the City could continue to maintain a balanced budget. In addition, the reduction in transfers out for the year was the result of the General Fund partially funding the Joint First Responders Training Facility in the prior fiscal year and a reduction in funding for the Infrastructure Replacement Fund. One major governmental fund, the Redevelopment Debt Service Fund, had a negative fund balance of just under $11.2 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. Over the past couple of fiscal years, the agency has begun to repay the $15.5 million advance back to the City’s General Fund, as the tax increment collected within the redevelopment area grows. Of the four remaining major governmental funds, only one fund saw their fund balance decline during the fiscal year, the General Capital Construction Fund (GCC). The GCC continued the development of the Joint First Responders Training Facility, the Library Learning Center and the Leo Carrillo Barn restoration, drawing down on the beginning fund balance. The four 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 predominantly designated for the construction or purchase of future capital assets. 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. 28 $0 $10 $20 $30 $40 Water Golf Course Wastewater Solid Waste Business-Type Activities Operating Revenues and ExpensesFiscal Year 2008-09(in millions) Operating Revenues Operating Expenses The Carlsbad Municipal Water District (CMWD) funds had an operating loss of approximately $3.1 million for the year. Impacted by the fact that water rates increased by 20% in January 2009 residents cut back on water usage by about 7% during the year. The State of California has been in a drought for the past seven years, so the CMWD has continued their conservation outreach efforts in order to achieve a reduction in water usage throughout the District.Operating expenses of $29.5 million exceeded operating revenues by $3.1 million. The largest factor in the increase in expenses can be attributed to a 10% per unit cost increase for purchased water and a 10% increase in fixed charges from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the District’s potable water). In addition to the increases in purchased water, depreciation expense continued to rise as newly acquired/constructed water infrastructure assets have been added to the water delivery system and a cost of service study was performed during the year to aid in the implementation of a new tiered rate structure.Investment earnings and property tax receipts completely offset the operating loss, resulting in income before transfers and capital contributions of $2.1 million. In the second year of operation, the Golf Course Fund had an operating loss of $4.5 million, largely due to the first full year of depreciation expenses on the newly constructed golf course assets.When golf course operating revenues are not sufficient to cover golf course operating expenses, the General Fund will make contributions in the form of lease payments to pay for the shortfall. Although food and beverage sales at the golf course restaurant (The Canyons) were strong, golf rounds were below anticipated levels due to the economic recession. The Wastewater Funds had an annual operating loss of approximately $3.2 million for the fiscal year. Total revenues from operations increased 4.7% from the previous year, the result of a 9% rate increase. However, this increase in revenues was offset by a 15.4% increase in wastewater expenses including costs passed through from Encina, and increased depreciation expenses as a result of recently acquired/constructed wastewater infrastructure. In addition, general and administrative costs were higher because of new positions approved in the prior year in conjunction with implementation of new wastewater discharge mandates. In the prior fiscal year, those positions were budgeted for only six months to factor in the time it takes to hire additional staff; in Fiscal Year 2008-09 those positions were budgeted for the full year. Solid Waste operations and Storm Water Programs are combined on the City’s financial reports, and showed a net operating income of $560,000 for the year. Revenues increased in the current year by approximately 38%, primarily due to increased trash surcharge revenue. In Fiscal Year 2008, there were only three quarterly payments recorded instead of four (a timing difference), which amounted to about half of the increase in service charges overall. Unrestricted net assets for the Water,Golf Course, Wastewater, and Solid Waste operations at the end of the year amounted to $28.5 million, or approximately 7.5% of the total enterprise fund net assets.The unrestricted net assets may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately 11.4% of the net assets of all the proprietary funds are restricted for future capital construction of new and replacement water and wastewater infrastructure assets.Since the funding for the replacement of $0 $10 $20 $30 $40 Water Golf Course Wastewater Solid Waste Business-Type Activities Operating Revenues and ExpensesFiscal Year 2008-09(in millions) Operating Revenues Operating Expenses The Carlsbad Municipal Water District (CMWD) funds had an operating loss of approximately $3.1 million for the year. Impacted by the fact that water rates increased by 20% in January 2009 residents cut back on water usage by about 7% during the year. The State of California has been in a drought for the past seven years, so the CMWD has continued their conservation outreach efforts in order to achieve a reduction in water usage throughout the District.Operating expenses of $29.5 million exceeded operating revenues by $3.1 million. The largest factor in the increase in expenses can be attributed to a 10% per unit cost increase for purchased water and a 10% increase in fixed charges from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the District’s potable water). In addition to the increases in purchased water, depreciation expense continued to rise as newly acquired/constructed water infrastructure assets have been added to the water delivery system and a cost of service study was performed during the year to aid in the implementation of a new tiered rate structure.Investment earnings and property tax receipts completely offset the operating loss, resulting in income before transfers and capital contributions of $2.1 million. In the second year of operation, the Golf Course Fund had an operating loss of $4.5 million, largely due to the first full year of depreciation expenses on the newly constructed golf course assets.When golf course operating revenues are not sufficient to cover golf course operating expenses, the General Fund will make contributions in the form of lease payments to pay for the shortfall. Although food and beverage sales at the golf course restaurant (The Canyons) were strong, golf rounds were below anticipated levels due to the economic recession. The Wastewater Funds had an annual operating loss of approximately $3.2 million for the fiscal year. Total revenues from operations increased 4.7% from the previous year, the result of a 9% rate increase. However, this increase in revenues was offset by a 15.4% increase in wastewater expenses including costs passed through from Encina, and increased depreciation expenses as a result of recently acquired/constructed wastewater infrastructure. In addition, general and administrative costs were higher because of new positions approved in the prior year in conjunction with implementation of new wastewater discharge mandates. In the prior fiscal year, those positions were budgeted for only six months to factor in the time it takes to hire additional staff; in Fiscal Year 2008-09 those positions were budgeted for the full year. Solid Waste operations and Storm Water Programs are combined on the City’s financial reports, and showed a net operating income of $560,000 for the year. Revenues increased in the current year by approximately 38%, primarily due to increased trash surcharge revenue. In Fiscal Year 2008, there were only three quarterly payments recorded instead of four (a timing difference), which amounted to about half of the increase in service charges overall. Unrestricted net assets for the Water,Golf Course, Wastewater, and Solid Waste operations at the end of the year amounted to $28.5 million, or approximately 7.5% of the total enterprise fund net assets.The unrestricted net assets may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately 11.4% of the net assets of all the proprietary funds are restricted for future capital construction of new and replacement water and wastewater infrastructure assets.Since the funding for the replacement of 29 $0 $10 $20 $30 $40 Water Golf Course Wastewater Solid Waste Business-Type Activities Operating Revenues and ExpensesFiscal Year 2008-09(in millions) Operating Revenues Operating Expenses The Carlsbad Municipal Water District (CMWD) funds had an operating loss of approximately $3.1 million for the year. Impacted by the fact that water rates increased by 20% in January 2009 residents cut back on water usage by about 7% during the year. The State of California has been in a drought for the past seven years, so the CMWD has continued their conservation outreach efforts in order to achieve a reduction in water usage throughout the District.Operating expenses of $29.5 million exceeded operating revenues by $3.1 million. The largest factor in the increase in expenses can be attributed to a 10% per unit cost increase for purchased water and a 10% increase in fixed charges from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the District’s potable water). In addition to the increases in purchased water, depreciation expense continued to rise as newly acquired/constructed water infrastructure assets have been added to the water delivery system and a cost of service study was performed during the year to aid in the implementation of a new tiered rate structure.Investment earnings and property tax receipts completely offset the operating loss, resulting in income before transfers and capital contributions of $2.1 million. In the second year of operation, the Golf Course Fund had an operating loss of $4.5 million, largely due to the first full year of depreciation expenses on the newly constructed golf course assets.When golf course operating revenues are not sufficient to cover golf course operating expenses, the General Fund will make contributions in the form of lease payments to pay for the shortfall. Although food and beverage sales at the golf course restaurant (The Canyons) were strong, golf rounds were below anticipated levels due to the economic recession. The Wastewater Funds had an annual operating loss of approximately $3.2 million for the fiscal year. Total revenues from operations increased 4.7% from the previous year, the result of a 9% rate increase. However, this increase in revenues was offset by a 15.4% increase in wastewater expenses including costs passed through from Encina, and increased depreciation expenses as a result of recently acquired/constructed wastewater infrastructure. In addition, general and administrative costs were higher because of new positions approved in the prior year in conjunction with implementation of new wastewater discharge mandates. In the prior fiscal year, those positions were budgeted for only six months to factor in the time it takes to hire additional staff; in Fiscal Year 2008-09 those positions were budgeted for the full year. Solid Waste operations and Storm Water Programs are combined on the City’s financial reports, and showed a net operating income of $560,000 for the year. Revenues increased in the current year by approximately 38%, primarily due to increased trash surcharge revenue. In Fiscal Year 2008, there were only three quarterly payments recorded instead of four (a timing difference), which amounted to about half of the increase in service charges overall. Unrestricted net assets for the Water,Golf Course, Wastewater, and Solid Waste operations at the end of the year amounted to $28.5 million, or approximately 7.5% of the total enterprise fund net assets.The unrestricted net assets may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately 11.4% of the net assets of all the proprietary funds are restricted for future capital construction of new and replacement water and wastewater infrastructure assets.Since the funding for the replacement of $0 $10 $20 $30 $40 Water Golf Course Wastewater Solid Waste Business-Type Activities Operating Revenues and ExpensesFiscal Year 2008-09(in millions) Operating Revenues Operating Expenses The Carlsbad Municipal Water District (CMWD) funds had an operating loss of approximately $3.1 million for the year. Impacted by the fact that water rates increased by 20% in January 2009 residents cut back on water usage by about 7% during the year. The State of California has been in a drought for the past seven years, so the CMWD has continued their conservation outreach efforts in order to achieve a reduction in water usage throughout the District.Operating expenses of $29.5 million exceeded operating revenues by $3.1 million. The largest factor in the increase in expenses can be attributed to a 10% per unit cost increase for purchased water and a 10% increase in fixed charges from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the District’s potable water). In addition to the increases in purchased water, depreciation expense continued to rise as newly acquired/constructed water infrastructure assets have been added to the water delivery system and a cost of service study was performed during the year to aid in the implementation of a new tiered rate structure.Investment earnings and property tax receipts completely offset the operating loss, resulting in income before transfers and capital contributions of $2.1 million. In the second year of operation, the Golf Course Fund had an operating loss of $4.5 million, largely due to the first full year of depreciation expenses on the newly constructed golf course assets.When golf course operating revenues are not sufficient to cover golf course operating expenses, the General Fund will make contributions in the form of lease payments to pay for the shortfall. Although food and beverage sales at the golf course restaurant (The Canyons) were strong, golf rounds were below anticipated levels due to the economic recession. The Wastewater Funds had an annual operating loss of approximately $3.2 million for the fiscal year. Total revenues from operations increased 4.7% from the previous year, the result of a 9% rate increase. However, this increase in revenues was offset by a 15.4% increase in wastewater expenses including costs passed through from Encina, and increased depreciation expenses as a result of recently acquired/constructed wastewater infrastructure. In addition, general and administrative costs were higher because of new positions approved in the prior year in conjunction with implementation of new wastewater discharge mandates. In the prior fiscal year, those positions were budgeted for only six months to factor in the time it takes to hire additional staff; in Fiscal Year 2008-09 those positions were budgeted for the full year. Solid Waste operations and Storm Water Programs are combined on the City’s financial reports, and showed a net operating income of $560,000 for the year. Revenues increased in the current year by approximately 38%, primarily due to increased trash surcharge revenue. In Fiscal Year 2008, there were only three quarterly payments recorded instead of four (a timing difference), which amounted to about half of the increase in service charges overall. Unrestricted net assets for the Water,Golf Course, Wastewater, and Solid Waste operations at the end of the year amounted to $28.5 million, or approximately 7.5% of the total enterprise fund net assets.The unrestricted net assets may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately 11.4% of the net assets of all the proprietary funds are restricted for future capital construction of new and replacement water and wastewater infrastructure assets.Since the funding for the replacement of 29 infrastructure assets is not restricted, it is reflected in the Statement of Net Assets as unrestricted. The City does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net assets deficit balance in the Golf Course Fund represents funds advanced from the City’s General Fund that were used to fund construction and pre-opening costs, as well as operating losses of the municipal golf course. General Fund Budgetary Highlights for Fiscal Year 2009 Management monitors revenues during the year and updates estimated revenue figures when new information is received by the City. In January 2009, due to the severe economic recession the City was facing, the City Council approved an “expenditure savings plan” reducing the General Fund budget by $5.3 million. At the same time, estimated revenues were reduced by a total of $4.6 million, to more accurately reflect the impact of the recession on the estimated General Fund revenues for the year: A retroactive change in the method in which aircraft are taxed positively impacting property tax revenues. A slowing down in residential (both construction and resales), industrial and commercial development impacting development related revenues and real property transfer taxes. A reduction in new car sales, a large contributor to the City’s sales tax base and vehicle license fee revenues. The impacts on TOT from a decline in tourism as a result of a drop in consumer confidence. Impacts of the recession on trash franchise fees. The decrease in interest rates affecting the treasurer’s portfolio. Strong sales levels for Carlsbad businesses in the prior fiscal year affecting current year business license revenues (the majority of business license revenues are based on prior year’s sales). The decrease from the total original expenditure budget to the final budget amounted to $6.1 million, due predominantly to: The “expenditure savings plan” approved by the City Council that reduced total General Fund appropriations by $5.3 million. An updated cost allocation plan affecting interdepartmental charges. The closing out of outstanding appropriations for the 2005 winter storms and the Tamarack Avenue sinkhole repairs. The difference between the final budgeted expenditures and the actual expenditures for the year on a budgetary basis of $18 million can be generally summarized as follows: $18 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. Deferral of projects. $18 million in “savings” are planned to be used for: Human resources information system software upgrade. Fire apparatus equipment. Library automation system upgrade and equipment replacement. Innovation projects throughout the City. Public outreach efforts regarding Envision Carlsbad and the proposed power plant. Building improvements at the Dove Library. Technology purchases in Public Works to assist with mapping, inventory, and to improve efficiencies. Future replacement of the Police Department’s 800 MHz radios. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB 31; actual expenditures have been adjusted to include remaining encumbrances. infrastructure assets is not restricted, it is reflected in the Statement of Net Assets as unrestricted. The City does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net assets deficit balance in the Golf Course Fund represents funds advanced from the City’s General Fund that were used to fund construction and pre-opening costs, as well as operating losses of the municipal golf course. General Fund Budgetary Highlights for Fiscal Year 2009 Management monitors revenues during the year and updates estimated revenue figures when new information is received by the City. In January 2009, due to the severe economic recession the City was facing, the City Council approved an “expenditure savings plan” reducing the General Fund budget by $5.3 million. At the same time, estimated revenues were reduced by a total of $4.6 million, to more accurately reflect the impact of the recession on the estimated General Fund revenues for the year: A retroactive change in the method in which aircraft are taxed positively impacting property tax revenues. A slowing down in residential (both construction and resales), industrial and commercial development impacting development related revenues and real property transfer taxes. A reduction in new car sales, a large contributor to the City’s sales tax base and vehicle license fee revenues. The impacts on TOT from a decline in tourism as a result of a drop in consumer confidence. Impacts of the recession on trash franchise fees. The decrease in interest rates affecting the treasurer’s portfolio. Strong sales levels for Carlsbad businesses in the prior fiscal year affecting current year business license revenues (the majority of business license revenues are based on prior year’s sales). The decrease from the total original expenditure budget to the final budget amounted to $6.1 million, due predominantly to: The “expenditure savings plan” approved by the City Council that reduced total General Fund appropriations by $5.3 million. An updated cost allocation plan affecting interdepartmental charges. The closing out of outstanding appropriations for the 2005 winter storms and the Tamarack Avenue sinkhole repairs. The difference between the final budgeted expenditures and the actual expenditures for the year on a budgetary basis of $18 million can be generally summarized as follows: $18 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. Deferral of projects. $18 million in “savings” are planned to be used for: Human resources information system software upgrade. Fire apparatus equipment. Library automation system upgrade and equipment replacement. Innovation projects throughout the City. Public outreach efforts regarding Envision Carlsbad and the proposed power plant. Building improvements at the Dove Library. Technology purchases in Public Works to assist with mapping, inventory, and to improve efficiencies. Future replacement of the Police Department’s 800 MHz radios. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB 31; actual expenditures have been adjusted to include remaining encumbrances. 30 infrastructure assets is not restricted, it is reflected in the Statement of Net Assets as unrestricted. The City does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net assets deficit balance in the Golf Course Fund represents funds advanced from the City’s General Fund that were used to fund construction and pre-opening costs, as well as operating losses of the municipal golf course. General Fund Budgetary Highlights for Fiscal Year 2009 Management monitors revenues during the year and updates estimated revenue figures when new information is received by the City. In January 2009, due to the severe economic recession the City was facing, the City Council approved an “expenditure savings plan” reducing the General Fund budget by $5.3 million. At the same time, estimated revenues were reduced by a total of $4.6 million, to more accurately reflect the impact of the recession on the estimated General Fund revenues for the year: A retroactive change in the method in which aircraft are taxed positively impacting property tax revenues. A slowing down in residential (both construction and resales), industrial and commercial development impacting development related revenues and real property transfer taxes. A reduction in new car sales, a large contributor to the City’s sales tax base and vehicle license fee revenues. The impacts on TOT from a decline in tourism as a result of a drop in consumer confidence. Impacts of the recession on trash franchise fees. The decrease in interest rates affecting the treasurer’s portfolio. Strong sales levels for Carlsbad businesses in the prior fiscal year affecting current year business license revenues (the majority of business license revenues are based on prior year’s sales). The decrease from the total original expenditure budget to the final budget amounted to $6.1 million, due predominantly to: The “expenditure savings plan” approved by the City Council that reduced total General Fund appropriations by $5.3 million. An updated cost allocation plan affecting interdepartmental charges. The closing out of outstanding appropriations for the 2005 winter storms and the Tamarack Avenue sinkhole repairs. The difference between the final budgeted expenditures and the actual expenditures for the year on a budgetary basis of $18 million can be generally summarized as follows: $18 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. Deferral of projects. $18 million in “savings” are planned to be used for: Human resources information system software upgrade. Fire apparatus equipment. Library automation system upgrade and equipment replacement. Innovation projects throughout the City. Public outreach efforts regarding Envision Carlsbad and the proposed power plant. Building improvements at the Dove Library. Technology purchases in Public Works to assist with mapping, inventory, and to improve efficiencies. Future replacement of the Police Department’s 800 MHz radios. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB 31; actual expenditures have been adjusted to include remaining encumbrances. infrastructure assets is not restricted, it is reflected in the Statement of Net Assets as unrestricted. The City does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net assets deficit balance in the Golf Course Fund represents funds advanced from the City’s General Fund that were used to fund construction and pre-opening costs, as well as operating losses of the municipal golf course. General Fund Budgetary Highlights for Fiscal Year 2009 Management monitors revenues during the year and updates estimated revenue figures when new information is received by the City. In January 2009, due to the severe economic recession the City was facing, the City Council approved an “expenditure savings plan” reducing the General Fund budget by $5.3 million. At the same time, estimated revenues were reduced by a total of $4.6 million, to more accurately reflect the impact of the recession on the estimated General Fund revenues for the year: A retroactive change in the method in which aircraft are taxed positively impacting property tax revenues. A slowing down in residential (both construction and resales), industrial and commercial development impacting development related revenues and real property transfer taxes. A reduction in new car sales, a large contributor to the City’s sales tax base and vehicle license fee revenues. The impacts on TOT from a decline in tourism as a result of a drop in consumer confidence. Impacts of the recession on trash franchise fees. The decrease in interest rates affecting the treasurer’s portfolio. Strong sales levels for Carlsbad businesses in the prior fiscal year affecting current year business license revenues (the majority of business license revenues are based on prior year’s sales). The decrease from the total original expenditure budget to the final budget amounted to $6.1 million, due predominantly to: The “expenditure savings plan” approved by the City Council that reduced total General Fund appropriations by $5.3 million. An updated cost allocation plan affecting interdepartmental charges. The closing out of outstanding appropriations for the 2005 winter storms and the Tamarack Avenue sinkhole repairs. The difference between the final budgeted expenditures and the actual expenditures for the year on a budgetary basis of $18 million can be generally summarized as follows: $18 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. Deferral of projects. $18 million in “savings” are planned to be used for: Human resources information system software upgrade. Fire apparatus equipment. Library automation system upgrade and equipment replacement. Innovation projects throughout the City. Public outreach efforts regarding Envision Carlsbad and the proposed power plant. Building improvements at the Dove Library. Technology purchases in Public Works to assist with mapping, inventory, and to improve efficiencies. Future replacement of the Police Department’s 800 MHz radios. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB 31; actual expenditures have been adjusted to include remaining encumbrances. 30 Capital Asset and Debt Administration Capital Assets At the end of Fiscal Year 2008-09, the City had recorded investments of just over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and sewer lines, police and fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB 34. This year’s major capital asset additions included: Developer-dedicated streets, drainage facilities, traffic signals, water and sewer lines and streetlights. Completion of the Senior Center expansion. Acquisition of 13.5 acres of land for the future development of the Robertson Ranch Park. Acquisition of two acres of land for the future relocation of Fire Station No. 3. Continued expansion at the Encina facility. Several waterline projects. Completion of the Palomar Airport Road/El Camino Real Pump Station. In addition to carrying forward appropriations of $155.1 million for previously budgeted projects, the City’s Fiscal Year 2009-10 capital budget appropriates an additional $70.4 million for capital projects.These additional appropriations are principally for the pavement management program, the widening of El Camino Real, installation of medians on El Camino Real, the replacement of a bridge on Carlsbad Boulevard near the power plant, miscellaneous street projects, development of a hydroelectric pressure reducing station at Maerkle Reservoir, enhancing the wastewater collection system, additional water lines, several drainage projects, and miscellaneous civic projects, loans and repayments. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves, and other sources including grants and contributions from other agencies. More detailed information about the City’s capital assets is presented in Note 6 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 $61.6 million in bonds, loans, capital leases and agreements,a decrease of $3.3 million from last year, as shown in the table on the following page. Loan payments made on all of the City’s outstanding debt created this reduction in the City’s debt. More detail about the City’s long-term liabilities is presented in Note 8 to the financial statements. Total Percentage Change Change 2008 2009 2008 2009 2008 2009 2008-09 2008-09 Land $128.1 $139.7 $8.7 $9.5 $136.8 $149.2 $12.4 9.1% Construction in progress 134.2 142.9 13.4 15.4 147.6 158.3 10.7 7.2% Buildings and other structures 70.5 72.4 40.2 40.2 110.7 112.6 1.9 1.7% Improvements other than buildings 39.2 39.2 53.0 53.0 92.2 92.2 - 0.0% Machinery and equipment 27.0 26.9 2.5 2.4 29.5 29.3 (0.2) -0.7% Infrastructure 494.1 514.3 256.0 274.5 750.1 788.8 38.7 5.2% Wastewater treatment facility - - 49.9 50.7 49.9 50.7 0.8 1.6% 893.1 935.4 423.7 445.7 1,316.8 1,381.1 64.3 4.9% Accumulated depreciation (168.1) (182.2) (79.6) (88.9) (247.7) (271.1) (23.4) 9.4% Total $725.0 $753.2 $344.1 $356.8 $1,069.1 $1,110.0 $40.9 3.8% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type Capital Asset and Debt Administration Capital Assets At the end of Fiscal Year 2008-09, the City had recorded investments of just over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and sewer lines, police and fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB 34. This year’s major capital asset additions included: Developer-dedicated streets, drainage facilities, traffic signals, water and sewer lines and streetlights. Completion of the Senior Center expansion. Acquisition of 13.5 acres of land for the future development of the Robertson Ranch Park. Acquisition of two acres of land for the future relocation of Fire Station No. 3. Continued expansion at the Encina facility. Several waterline projects. Completion of the Palomar Airport Road/El Camino Real Pump Station. In addition to carrying forward appropriations of $155.1 million for previously budgeted projects, the City’s Fiscal Year 2009-10 capital budget appropriates an additional $70.4 million for capital projects.These additional appropriations are principally for the pavement management program, the widening of El Camino Real, installation of medians on El Camino Real, the replacement of a bridge on Carlsbad Boulevard near the power plant, miscellaneous street projects, development of a hydroelectric pressure reducing station at Maerkle Reservoir, enhancing the wastewater collection system, additional water lines, several drainage projects, and miscellaneous civic projects, loans and repayments. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves, and other sources including grants and contributions from other agencies. More detailed information about the City’s capital assets is presented in Note 6 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 $61.6 million in bonds, loans, capital leases and agreements,a decrease of $3.3 million from last year, as shown in the table on the following page. Loan payments made on all of the City’s outstanding debt created this reduction in the City’s debt. More detail about the City’s long-term liabilities is presented in Note 8 to the financial statements. Total Percentage Change Change 2008 2009 2008 2009 2008 2009 2008-09 2008-09 Land $128.1 $139.7 $8.7 $9.5 $136.8 $149.2 $12.4 9.1% Construction in progress 134.2 142.9 13.4 15.4 147.6 158.3 10.7 7.2% Buildings and other structures 70.5 72.4 40.2 40.2 110.7 112.6 1.9 1.7% Improvements other than buildings 39.2 39.2 53.0 53.0 92.2 92.2 - 0.0% Machinery and equipment 27.0 26.9 2.5 2.4 29.5 29.3 (0.2) -0.7% Infrastructure 494.1 514.3 256.0 274.5 750.1 788.8 38.7 5.2% Wastewater treatment facility - - 49.9 50.7 49.9 50.7 0.8 1.6% 893.1 935.4 423.7 445.7 1,316.8 1,381.1 64.3 4.9% Accumulated depreciation (168.1) (182.2) (79.6) (88.9) (247.7) (271.1) (23.4) 9.4% Total $725.0 $753.2 $344.1 $356.8 $1,069.1 $1,110.0 $40.9 3.8% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type 31 Capital Asset and Debt Administration Capital Assets At the end of Fiscal Year 2008-09, the City had recorded investments of just over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and sewer lines, police and fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB 34. This year’s major capital asset additions included: Developer-dedicated streets, drainage facilities, traffic signals, water and sewer lines and streetlights. Completion of the Senior Center expansion. Acquisition of 13.5 acres of land for the future development of the Robertson Ranch Park. Acquisition of two acres of land for the future relocation of Fire Station No. 3. Continued expansion at the Encina facility. Several waterline projects. Completion of the Palomar Airport Road/El Camino Real Pump Station. In addition to carrying forward appropriations of $155.1 million for previously budgeted projects, the City’s Fiscal Year 2009-10 capital budget appropriates an additional $70.4 million for capital projects.These additional appropriations are principally for the pavement management program, the widening of El Camino Real, installation of medians on El Camino Real, the replacement of a bridge on Carlsbad Boulevard near the power plant, miscellaneous street projects, development of a hydroelectric pressure reducing station at Maerkle Reservoir, enhancing the wastewater collection system, additional water lines, several drainage projects, and miscellaneous civic projects, loans and repayments. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves, and other sources including grants and contributions from other agencies. More detailed information about the City’s capital assets is presented in Note 6 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 $61.6 million in bonds, loans, capital leases and agreements,a decrease of $3.3 million from last year, as shown in the table on the following page. Loan payments made on all of the City’s outstanding debt created this reduction in the City’s debt. More detail about the City’s long-term liabilities is presented in Note 8 to the financial statements. Total Percentage Change Change 2008 2009 2008 2009 2008 2009 2008-09 2008-09 Land $128.1 $139.7 $8.7 $9.5 $136.8 $149.2 $12.4 9.1% Construction in progress 134.2 142.9 13.4 15.4 147.6 158.3 10.7 7.2% Buildings and other structures 70.5 72.4 40.2 40.2 110.7 112.6 1.9 1.7% Improvements other than buildings 39.2 39.2 53.0 53.0 92.2 92.2 - 0.0% Machinery and equipment 27.0 26.9 2.5 2.4 29.5 29.3 (0.2) -0.7% Infrastructure 494.1 514.3 256.0 274.5 750.1 788.8 38.7 5.2% Wastewater treatment facility - - 49.9 50.7 49.9 50.7 0.8 1.6% 893.1 935.4 423.7 445.7 1,316.8 1,381.1 64.3 4.9% Accumulated depreciation (168.1) (182.2) (79.6) (88.9) (247.7) (271.1) (23.4) 9.4% Total $725.0 $753.2 $344.1 $356.8 $1,069.1 $1,110.0 $40.9 3.8% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type Capital Asset and Debt Administration Capital Assets At the end of Fiscal Year 2008-09, the City had recorded investments of just over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and sewer lines, police and fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB 34. This year’s major capital asset additions included: Developer-dedicated streets, drainage facilities, traffic signals, water and sewer lines and streetlights. Completion of the Senior Center expansion. Acquisition of 13.5 acres of land for the future development of the Robertson Ranch Park. Acquisition of two acres of land for the future relocation of Fire Station No. 3. Continued expansion at the Encina facility. Several waterline projects. Completion of the Palomar Airport Road/El Camino Real Pump Station. In addition to carrying forward appropriations of $155.1 million for previously budgeted projects, the City’s Fiscal Year 2009-10 capital budget appropriates an additional $70.4 million for capital projects.These additional appropriations are principally for the pavement management program, the widening of El Camino Real, installation of medians on El Camino Real, the replacement of a bridge on Carlsbad Boulevard near the power plant, miscellaneous street projects, development of a hydroelectric pressure reducing station at Maerkle Reservoir, enhancing the wastewater collection system, additional water lines, several drainage projects, and miscellaneous civic projects, loans and repayments. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves, and other sources including grants and contributions from other agencies. More detailed information about the City’s capital assets is presented in Note 6 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 $61.6 million in bonds, loans, capital leases and agreements,a decrease of $3.3 million from last year, as shown in the table on the following page. Loan payments made on all of the City’s outstanding debt created this reduction in the City’s debt. More detail about the City’s long-term liabilities is presented in Note 8 to the financial statements. Total Percentage Change Change 2008 2009 2008 2009 2008 2009 2008-09 2008-09 Land $128.1 $139.7 $8.7 $9.5 $136.8 $149.2 $12.4 9.1% Construction in progress 134.2 142.9 13.4 15.4 147.6 158.3 10.7 7.2% Buildings and other structures 70.5 72.4 40.2 40.2 110.7 112.6 1.9 1.7% Improvements other than buildings 39.2 39.2 53.0 53.0 92.2 92.2 - 0.0% Machinery and equipment 27.0 26.9 2.5 2.4 29.5 29.3 (0.2) -0.7% Infrastructure 494.1 514.3 256.0 274.5 750.1 788.8 38.7 5.2% Wastewater treatment facility - - 49.9 50.7 49.9 50.7 0.8 1.6% 893.1 935.4 423.7 445.7 1,316.8 1,381.1 64.3 4.9% Accumulated depreciation (168.1) (182.2) (79.6) (88.9) (247.7) (271.1) (23.4) 9.4% Total $725.0 $753.2 $344.1 $356.8 $1,069.1 $1,110.0 $40.9 3.8% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type 31 Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2010 The State of California adopted its Fiscal Year 2009-10 Annual Budget with the following provisions affecting the City: 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 2009-10 Fiscal Year. The “Triple Flip” swap 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. The City will be required to “contribute” approximately $1.7 million from its Village Area Redevelopment Funds to the State’s Education Revenue Augmentation Fund.This “contribution” is currently being challenged in the court system by the California Redevelopment Association (CRA). The State will “borrow” approximately $4.5 million in property tax revenues which will be repaid in three years per the voter approved Proposition 1A.The City of Carlsbad has been able to securitize their share of the “borrowing,” therefore, the City will not see any fiscal impact during Fiscal Year 2009-10 due to the “borrowing.” Net assessed values in the City stand at almost $24.1 billion, a 1% decrease from the prior fiscal year. Due to the economic recession, sales tax revenues are forecasted to decrease by over 5% in the Fiscal Year 2009-10 Budget. PERS rates for the miscellaneous plan have increased slightly for Fiscal Year 2009-10 from 20.8% to 21.2%, and have decreased slightly from 29.6% to 28.4% for the safety plan. The prior downward reassessment of the Encina power plant due to a reduction in electricity generated continues to affect tax increment revenues in the South Coastal Carlsbad Redevelopment Area and the franchise fees received by the City. Median home prices in Carlsbad have decreased by 8% from March 2008 ($695,000) to March 2009 ($639,000). Due to the slow economy, forecasted revenues for sales taxes, transient occupancy taxes and development related activities have been reduced significantly. Due to the overall downturn in the economy, City departments were not given additional maintenance and operational funding to cover changes in the Consumer Price Index (CPI) and growth in the City, minimal new capital outlay, and additional personnel funding for only existing contractual obligations. Through Memorandum of Understandings (MOUs), the Carlsbad City Employees’ Association (CCEA) will receive a 3.2% salary increase January 1, 2010; the Carlsbad Police Officers’ Association (CPOA) and the Carlsbad Firefighters’ Association are currently negotiating new contracts, with the expiration of their existing contracts on December 31, 2009. These factors were considered when preparing the City of Carlsbad’s General Fund budget for Fiscal Year 2009-10.Budgeted expenditures are expected to decrease 3.2% to $109.1 million. Due to budget reductions and a planned slow down in spending, all expenditure categories (personnel, maintenance and operations, and capital outlay) have decreased, with the largest dollar decrease of $1.9 million in maintenance and operations costs.Personnel costs make up approximately 68% of the General Fund budget so any changes in these costs can have a significant effect Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Bonds $11.2 $10.7 $18.5 $18.3 $29.7 $29.0 -2.4% Certificates of participation 0.7 - - - 0.7 - -100.0% Loans - - 28.5 27.1 28.5 27.1 -4.9% Installment purchase agreement - - 5.5 4.8 5.5 4.8 -12.7% Obligations under capital leases - - 1.0 0.7 1.0 0.7 -30.0% Less: Deferred charges/discounts - - (0.5) - (0.5) - -100.0% Total $11.9 $10.7 $53.0 $50.9 $64.9 $61.6 -5.1% Activities Activities Total CITY OF CARLSBAD'S OUTSTANDING DEBT (in millions of dollars) Governmental Business-Type Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2010 The State of California adopted its Fiscal Year 2009-10 Annual Budget with the following provisions affecting the City: 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 2009-10 Fiscal Year. The “Triple Flip” swap 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. The City will be required to “contribute” approximately $1.7 million from its Village Area Redevelopment Funds to the State’s Education Revenue Augmentation Fund.This “contribution” is currently being challenged in the court system by the California Redevelopment Association (CRA). The State will “borrow” approximately $4.5 million in property tax revenues which will be repaid in three years per the voter approved Proposition 1A.The City of Carlsbad has been able to securitize their share of the “borrowing,” therefore, the City will not see any fiscal impact during Fiscal Year 2009-10 due to the “borrowing.” Net assessed values in the City stand at almost $24.1 billion, a 1% decrease from the prior fiscal year. Due to the economic recession, sales tax revenues are forecasted to decrease by over 5% in the Fiscal Year 2009-10 Budget. PERS rates for the miscellaneous plan have increased slightly for Fiscal Year 2009-10 from 20.8% to 21.2%, and have decreased slightly from 29.6% to 28.4% for the safety plan. The prior downward reassessment of the Encina power plant due to a reduction in electricity generated continues to affect tax increment revenues in the South Coastal Carlsbad Redevelopment Area and the franchise fees received by the City. Median home prices in Carlsbad have decreased by 8% from March 2008 ($695,000) to March 2009 ($639,000). Due to the slow economy, forecasted revenues for sales taxes, transient occupancy taxes and development related activities have been reduced significantly. Due to the overall downturn in the economy, City departments were not given additional maintenance and operational funding to cover changes in the Consumer Price Index (CPI) and growth in the City, minimal new capital outlay, and additional personnel funding for only existing contractual obligations. Through Memorandum of Understandings (MOUs), the Carlsbad City Employees’ Association (CCEA) will receive a 3.2% salary increase January 1, 2010; the Carlsbad Police Officers’ Association (CPOA) and the Carlsbad Firefighters’ Association are currently negotiating new contracts, with the expiration of their existing contracts on December 31, 2009. These factors were considered when preparing the City of Carlsbad’s General Fund budget for Fiscal Year 2009-10.Budgeted expenditures are expected to decrease 3.2% to $109.1 million. Due to budget reductions and a planned slow down in spending, all expenditure categories (personnel, maintenance and operations, and capital outlay) have decreased, with the largest dollar decrease of $1.9 million in maintenance and operations costs.Personnel costs make up approximately 68% of the General Fund budget so any changes in these costs can have a significant effect Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Bonds $11.2 $10.7 $18.5 $18.3 $29.7 $29.0 -2.4% Certificates of participation 0.7 - - - 0.7 - -100.0% Loans - - 28.5 27.1 28.5 27.1 -4.9% Installment purchase agreement - - 5.5 4.8 5.5 4.8 -12.7% Obligations under capital leases - - 1.0 0.7 1.0 0.7 -30.0% Less: Deferred charges/discounts - - (0.5) - (0.5) - -100.0% Total $11.9 $10.7 $53.0 $50.9 $64.9 $61.6 -5.1% Activities Activities Total CITY OF CARLSBAD'S OUTSTANDING DEBT (in millions of dollars) Governmental Business-Type 32 Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2010 The State of California adopted its Fiscal Year 2009-10 Annual Budget with the following provisions affecting the City: 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 2009-10 Fiscal Year. The “Triple Flip” swap 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. The City will be required to “contribute” approximately $1.7 million from its Village Area Redevelopment Funds to the State’s Education Revenue Augmentation Fund.This “contribution” is currently being challenged in the court system by the California Redevelopment Association (CRA). The State will “borrow” approximately $4.5 million in property tax revenues which will be repaid in three years per the voter approved Proposition 1A.The City of Carlsbad has been able to securitize their share of the “borrowing,” therefore, the City will not see any fiscal impact during Fiscal Year 2009-10 due to the “borrowing.” Net assessed values in the City stand at almost $24.1 billion, a 1% decrease from the prior fiscal year. Due to the economic recession, sales tax revenues are forecasted to decrease by over 5% in the Fiscal Year 2009-10 Budget. PERS rates for the miscellaneous plan have increased slightly for Fiscal Year 2009-10 from 20.8% to 21.2%, and have decreased slightly from 29.6% to 28.4% for the safety plan. The prior downward reassessment of the Encina power plant due to a reduction in electricity generated continues to affect tax increment revenues in the South Coastal Carlsbad Redevelopment Area and the franchise fees received by the City. Median home prices in Carlsbad have decreased by 8% from March 2008 ($695,000) to March 2009 ($639,000). Due to the slow economy, forecasted revenues for sales taxes, transient occupancy taxes and development related activities have been reduced significantly. Due to the overall downturn in the economy, City departments were not given additional maintenance and operational funding to cover changes in the Consumer Price Index (CPI) and growth in the City, minimal new capital outlay, and additional personnel funding for only existing contractual obligations. Through Memorandum of Understandings (MOUs), the Carlsbad City Employees’ Association (CCEA) will receive a 3.2% salary increase January 1, 2010; the Carlsbad Police Officers’ Association (CPOA) and the Carlsbad Firefighters’ Association are currently negotiating new contracts, with the expiration of their existing contracts on December 31, 2009. These factors were considered when preparing the City of Carlsbad’s General Fund budget for Fiscal Year 2009-10.Budgeted expenditures are expected to decrease 3.2% to $109.1 million. Due to budget reductions and a planned slow down in spending, all expenditure categories (personnel, maintenance and operations, and capital outlay) have decreased, with the largest dollar decrease of $1.9 million in maintenance and operations costs.Personnel costs make up approximately 68% of the General Fund budget so any changes in these costs can have a significant effect Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Bonds $11.2 $10.7 $18.5 $18.3 $29.7 $29.0 -2.4% Certificates of participation 0.7 - - - 0.7 - -100.0% Loans - - 28.5 27.1 28.5 27.1 -4.9% Installment purchase agreement - - 5.5 4.8 5.5 4.8 -12.7% Obligations under capital leases - - 1.0 0.7 1.0 0.7 -30.0% Less: Deferred charges/discounts - - (0.5) - (0.5) - -100.0% Total $11.9 $10.7 $53.0 $50.9 $64.9 $61.6 -5.1% Activities Activities Total CITY OF CARLSBAD'S OUTSTANDING DEBT (in millions of dollars) Governmental Business-Type Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2010 The State of California adopted its Fiscal Year 2009-10 Annual Budget with the following provisions affecting the City: 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 2009-10 Fiscal Year. The “Triple Flip” swap 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. The City will be required to “contribute” approximately $1.7 million from its Village Area Redevelopment Funds to the State’s Education Revenue Augmentation Fund.This “contribution” is currently being challenged in the court system by the California Redevelopment Association (CRA). The State will “borrow” approximately $4.5 million in property tax revenues which will be repaid in three years per the voter approved Proposition 1A.The City of Carlsbad has been able to securitize their share of the “borrowing,” therefore, the City will not see any fiscal impact during Fiscal Year 2009-10 due to the “borrowing.” Net assessed values in the City stand at almost $24.1 billion, a 1% decrease from the prior fiscal year. Due to the economic recession, sales tax revenues are forecasted to decrease by over 5% in the Fiscal Year 2009-10 Budget. PERS rates for the miscellaneous plan have increased slightly for Fiscal Year 2009-10 from 20.8% to 21.2%, and have decreased slightly from 29.6% to 28.4% for the safety plan. The prior downward reassessment of the Encina power plant due to a reduction in electricity generated continues to affect tax increment revenues in the South Coastal Carlsbad Redevelopment Area and the franchise fees received by the City. Median home prices in Carlsbad have decreased by 8% from March 2008 ($695,000) to March 2009 ($639,000). Due to the slow economy, forecasted revenues for sales taxes, transient occupancy taxes and development related activities have been reduced significantly. Due to the overall downturn in the economy, City departments were not given additional maintenance and operational funding to cover changes in the Consumer Price Index (CPI) and growth in the City, minimal new capital outlay, and additional personnel funding for only existing contractual obligations. Through Memorandum of Understandings (MOUs), the Carlsbad City Employees’ Association (CCEA) will receive a 3.2% salary increase January 1, 2010; the Carlsbad Police Officers’ Association (CPOA) and the Carlsbad Firefighters’ Association are currently negotiating new contracts, with the expiration of their existing contracts on December 31, 2009. These factors were considered when preparing the City of Carlsbad’s General Fund budget for Fiscal Year 2009-10.Budgeted expenditures are expected to decrease 3.2% to $109.1 million. Due to budget reductions and a planned slow down in spending, all expenditure categories (personnel, maintenance and operations, and capital outlay) have decreased, with the largest dollar decrease of $1.9 million in maintenance and operations costs.Personnel costs make up approximately 68% of the General Fund budget so any changes in these costs can have a significant effect Total Percentage Change 2008 2009 2008 2009 2008 2009 2008-09 Bonds $11.2 $10.7 $18.5 $18.3 $29.7 $29.0 -2.4% Certificates of participation 0.7 - - - 0.7 - -100.0% Loans - - 28.5 27.1 28.5 27.1 -4.9% Installment purchase agreement - - 5.5 4.8 5.5 4.8 -12.7% Obligations under capital leases - - 1.0 0.7 1.0 0.7 -30.0% Less: Deferred charges/discounts - - (0.5) - (0.5) - -100.0% Total $11.9 $10.7 $53.0 $50.9 $64.9 $61.6 -5.1% Activities Activities Total CITY OF CARLSBAD'S OUTSTANDING DEBT (in millions of dollars) Governmental Business-Type 32 on the total budget. The total personnel budget for Fiscal Year 2009-10 is $74.5 million, which is 0.7% less than the previous year’s revised personnel budget of $75 million. Eliminating or unfunding full-time positions and proposed citywide personnel savings from vacancies and other efficiencies result in approximately $1.4 million of reduced costs in salaries. Other reductions also occurred in part-time salaries and management incentive pay. These total reductions are somewhat offset by the increases in salaries budgeted to occur in Fiscal Year 2009-10 due to labor contracts. There is no major capital outlay purchases planned in the General Fund for Fiscal Year 2009-10. Adding to the adopted budget of $109.1 million for the General Fund, just under $18 million in unspent Fiscal Year 2008-09budgeted expenditures will be carried over to Fiscal Year 2009-10, as well as $7.5 million in open encumbrances as of June 30, 2009. As the City is approaching the buildout of its remaining vacant land, the City is now ushering in a new era focusing on maintaining the City’s infrastructure rather than building it. In an effort to address this issue, the City has developed an Infrastructure Replacement Fund (IRF). With this fund, the City sets aside money on an annual basis for major maintenance and replacement of its infrastructure. In the Fiscal Year 2009-10 Operating Budget, the City has budgeted a $6.5 million transfer from the General Fund to the IRF to meet future needs. During the current fiscal year, the unreserved, undesignated fund balance in the General Fund increased by $2.2 million to $48.3 million due to fiscal discipline and the mid-year “expenditure savings plan” adopted by the City Council. There appears to be sufficient revenues projected to build the projects listed in the Fiscal Year 2009-10 Capital Improvement Program (CIP). In the 2008-09 CIP, the Public Facilities Construction Fund (PFF) and the Planned Local Drainage Funds (PLDA), projected fund deficits by build-out of the City.Through revised growth estimates (which impact future revenues), an increase in PLDA fees approved by the City Council, and updating future costs of projects in these funds, these two funds are no longer projected to have deficits at build-out. The City’s business-type activities reflect the following: The combined fixed and variable cost of water purchased from the San Diego County Water Authority is projected to rise over 21% in Fiscal Year 2009-10. Therefore, subsequent to the budget adoption in June 2009, the CMWD Board of Directors approved an average water rate increase of 15.5%.At the same time, the Board approved a new tiered rate structure in order to incentivize water conservation. An increase in wastewater rates of 9% was also approved subsequent to the budget adoption. This rate increase was needed to assist with higher costs associated with the Encina Wastewater Plant, higher depreciation expenses from the addition of completed facilities to the inventory, and to maintain an adequate reserve balance. The golf course budget is brought forward on a calendar year basis in December of each year.The Calendar Year 2009 budget reflects a projected operating loss of over $1.3 million and habitat maintenance and monitoring costs of over $500,000.This projected deficit will require additional advances from the City’s General Fund during the calendar year. No projected significant changes in other revenue sources. Contacting the City’s Financial Management This financial report is designed to provide the 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. on the total budget. The total personnel budget for Fiscal Year 2009-10 is $74.5 million, which is 0.7% less than the previous year’s revised personnel budget of $75 million. Eliminating or unfunding full-time positions and proposed citywide personnel savings from vacancies and other efficiencies result in approximately $1.4 million of reduced costs in salaries. Other reductions also occurred in part-time salaries and management incentive pay. These total reductions are somewhat offset by the increases in salaries budgeted to occur in Fiscal Year 2009-10 due to labor contracts. There is no major capital outlay purchases planned in the General Fund for Fiscal Year 2009-10. Adding to the adopted budget of $109.1 million for the General Fund, just under $18 million in unspent Fiscal Year 2008-09budgeted expenditures will be carried over to Fiscal Year 2009-10, as well as $7.5 million in open encumbrances as of June 30, 2009. As the City is approaching the buildout of its remaining vacant land, the City is now ushering in a new era focusing on maintaining the City’s infrastructure rather than building it. In an effort to address this issue, the City has developed an Infrastructure Replacement Fund (IRF). With this fund, the City sets aside money on an annual basis for major maintenance and replacement of its infrastructure. In the Fiscal Year 2009-10 Operating Budget, the City has budgeted a $6.5 million transfer from the General Fund to the IRF to meet future needs. During the current fiscal year, the unreserved, undesignated fund balance in the General Fund increased by $2.2 million to $48.3 million due to fiscal discipline and the mid-year “expenditure savings plan” adopted by the City Council. There appears to be sufficient revenues projected to build the projects listed in the Fiscal Year 2009-10 Capital Improvement Program (CIP). In the 2008-09 CIP, the Public Facilities Construction Fund (PFF) and the Planned Local Drainage Funds (PLDA), projected fund deficits by build-out of the City.Through revised growth estimates (which impact future revenues), an increase in PLDA fees approved by the City Council, and updating future costs of projects in these funds, these two funds are no longer projected to have deficits at build-out. The City’s business-type activities reflect the following: The combined fixed and variable cost of water purchased from the San Diego County Water Authority is projected to rise over 21% in Fiscal Year 2009-10. Therefore, subsequent to the budget adoption in June 2009, the CMWD Board of Directors approved an average water rate increase of 15.5%.At the same time, the Board approved a new tiered rate structure in order to incentivize water conservation. An increase in wastewater rates of 9% was also approved subsequent to the budget adoption. This rate increase was needed to assist with higher costs associated with the Encina Wastewater Plant, higher depreciation expenses from the addition of completed facilities to the inventory, and to maintain an adequate reserve balance. The golf course budget is brought forward on a calendar year basis in December of each year.The Calendar Year 2009 budget reflects a projected operating loss of over $1.3 million and habitat maintenance and monitoring costs of over $500,000.This projected deficit will require additional advances from the City’s General Fund during the calendar year. No projected significant changes in other revenue sources. Contacting the City’s Financial Management This financial report is designed to provide the 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. 33 on the total budget. The total personnel budget for Fiscal Year 2009-10 is $74.5 million, which is 0.7% less than the previous year’s revised personnel budget of $75 million. Eliminating or unfunding full-time positions and proposed citywide personnel savings from vacancies and other efficiencies result in approximately $1.4 million of reduced costs in salaries. Other reductions also occurred in part-time salaries and management incentive pay. These total reductions are somewhat offset by the increases in salaries budgeted to occur in Fiscal Year 2009-10 due to labor contracts. There is no major capital outlay purchases planned in the General Fund for Fiscal Year 2009-10. Adding to the adopted budget of $109.1 million for the General Fund, just under $18 million in unspent Fiscal Year 2008-09budgeted expenditures will be carried over to Fiscal Year 2009-10, as well as $7.5 million in open encumbrances as of June 30, 2009. As the City is approaching the buildout of its remaining vacant land, the City is now ushering in a new era focusing on maintaining the City’s infrastructure rather than building it. In an effort to address this issue, the City has developed an Infrastructure Replacement Fund (IRF). With this fund, the City sets aside money on an annual basis for major maintenance and replacement of its infrastructure. In the Fiscal Year 2009-10 Operating Budget, the City has budgeted a $6.5 million transfer from the General Fund to the IRF to meet future needs. During the current fiscal year, the unreserved, undesignated fund balance in the General Fund increased by $2.2 million to $48.3 million due to fiscal discipline and the mid-year “expenditure savings plan” adopted by the City Council. There appears to be sufficient revenues projected to build the projects listed in the Fiscal Year 2009-10 Capital Improvement Program (CIP). In the 2008-09 CIP, the Public Facilities Construction Fund (PFF) and the Planned Local Drainage Funds (PLDA), projected fund deficits by build-out of the City.Through revised growth estimates (which impact future revenues), an increase in PLDA fees approved by the City Council, and updating future costs of projects in these funds, these two funds are no longer projected to have deficits at build-out. The City’s business-type activities reflect the following: The combined fixed and variable cost of water purchased from the San Diego County Water Authority is projected to rise over 21% in Fiscal Year 2009-10. Therefore, subsequent to the budget adoption in June 2009, the CMWD Board of Directors approved an average water rate increase of 15.5%.At the same time, the Board approved a new tiered rate structure in order to incentivize water conservation. An increase in wastewater rates of 9% was also approved subsequent to the budget adoption. This rate increase was needed to assist with higher costs associated with the Encina Wastewater Plant, higher depreciation expenses from the addition of completed facilities to the inventory, and to maintain an adequate reserve balance. The golf course budget is brought forward on a calendar year basis in December of each year.The Calendar Year 2009 budget reflects a projected operating loss of over $1.3 million and habitat maintenance and monitoring costs of over $500,000.This projected deficit will require additional advances from the City’s General Fund during the calendar year. No projected significant changes in other revenue sources. Contacting the City’s Financial Management This financial report is designed to provide the 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. on the total budget. The total personnel budget for Fiscal Year 2009-10 is $74.5 million, which is 0.7% less than the previous year’s revised personnel budget of $75 million. Eliminating or unfunding full-time positions and proposed citywide personnel savings from vacancies and other efficiencies result in approximately $1.4 million of reduced costs in salaries. Other reductions also occurred in part-time salaries and management incentive pay. These total reductions are somewhat offset by the increases in salaries budgeted to occur in Fiscal Year 2009-10 due to labor contracts. There is no major capital outlay purchases planned in the General Fund for Fiscal Year 2009-10. Adding to the adopted budget of $109.1 million for the General Fund, just under $18 million in unspent Fiscal Year 2008-09budgeted expenditures will be carried over to Fiscal Year 2009-10, as well as $7.5 million in open encumbrances as of June 30, 2009. As the City is approaching the buildout of its remaining vacant land, the City is now ushering in a new era focusing on maintaining the City’s infrastructure rather than building it. In an effort to address this issue, the City has developed an Infrastructure Replacement Fund (IRF). With this fund, the City sets aside money on an annual basis for major maintenance and replacement of its infrastructure. In the Fiscal Year 2009-10 Operating Budget, the City has budgeted a $6.5 million transfer from the General Fund to the IRF to meet future needs. During the current fiscal year, the unreserved, undesignated fund balance in the General Fund increased by $2.2 million to $48.3 million due to fiscal discipline and the mid-year “expenditure savings plan” adopted by the City Council. There appears to be sufficient revenues projected to build the projects listed in the Fiscal Year 2009-10 Capital Improvement Program (CIP). In the 2008-09 CIP, the Public Facilities Construction Fund (PFF) and the Planned Local Drainage Funds (PLDA), projected fund deficits by build-out of the City.Through revised growth estimates (which impact future revenues), an increase in PLDA fees approved by the City Council, and updating future costs of projects in these funds, these two funds are no longer projected to have deficits at build-out. The City’s business-type activities reflect the following: The combined fixed and variable cost of water purchased from the San Diego County Water Authority is projected to rise over 21% in Fiscal Year 2009-10. Therefore, subsequent to the budget adoption in June 2009, the CMWD Board of Directors approved an average water rate increase of 15.5%.At the same time, the Board approved a new tiered rate structure in order to incentivize water conservation. An increase in wastewater rates of 9% was also approved subsequent to the budget adoption. This rate increase was needed to assist with higher costs associated with the Encina Wastewater Plant, higher depreciation expenses from the addition of completed facilities to the inventory, and to maintain an adequate reserve balance. The golf course budget is brought forward on a calendar year basis in December of each year.The Calendar Year 2009 budget reflects a projected operating loss of over $1.3 million and habitat maintenance and monitoring costs of over $500,000.This projected deficit will require additional advances from the City’s General Fund during the calendar year. No projected significant changes in other revenue sources. Contacting the City’s Financial Management This financial report is designed to provide the 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. 33 34 34 35 0123456789 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152