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Home My WebLink About; ; 2011-2012 OPERATING BUDGET AND CIP; 2011-07-012011-2012 Operating Budget & Capital Improvement Program City of Carlsbad 2011-12 Operating Budget and Capital Improvement Program Mayor Matt Hall City Council Ann Kulchin Mark Packard Keith Blackburn Farrah Douglas City Manager Lisa Hildabrand Assistant City Manager John Coates Deputy City Manager Cynthia Haas Prepared by the Finance Department Finance Director Chuck McBride Website: www.carlsbadca.gov Cover design by: Chantal Speas On the Cover: The pictures on the cover spotlight local businesses and highlight the diverse services and products offered in the city to support our residents and visitors. CITY OF CARLSBAD, CALIFORNIA 2011-2012 BUDGET TABLE OF CONTENTS Reader’s Guide to the Budget .................................................................................................................... i Council’s Five-Year Vision Statements ..................................................................................................... ii About the City of Carlsbad ....................................................................................................................... iii Organization Chart ................................................................................................................................... iv BUDGET OVERVIEW City Manager’s Transmittal Letter ......................................................................................................... A-1 2011-12 Budget Highlights .................................................................................................................... A-3 Budget Process ..................................................................................................................................... A-4 Community Vision ................................................................................................................................. A-4 Budget Summary ................................................................................................................................ A-21 Personnel Allocations ......................................................................................................................... A-22 2011-12 Budget Calendar ................................................................................................................... A-23 Budget Awards .................................................................................................................................... A-24 OPERATING BUDGET Overview ............................................................................................................................................... B-1 Projected Fund Balances .................................................................................................................... B-18 Revenue Estimates ............................................................................................................................. B-20 Budget Expenditure Schedule ............................................................................................................ B-26 PROGRAM SUMMARIES Policy & Leadership Group Policy and Leadership Group Summary ....................................................................................... C-1 City Council ................................................................................................................................... C-2 City Clerk ....................................................................................................................................... C-4 City Treasurer ............................................................................................................................... C-5 City Manager ................................................................................................................................. C-7 Communications ........................................................................................................................... C-9 City Attorney................................................................................................................................ C-11 Records Management ................................................................................................................. C-12 Internal Services Internal Services Summary ........................................................................................................... D-1 Finance Summary ......................................................................................................................... D-2 Finance ......................................................................................................................................... D-3 Risk Management ......................................................................................................................... D-6 Human Resources Summary ........................................................................................................ D-7 Workers’ Compensation ................................................................................................................ D-9 Self-Insured Benefits ................................................................................................................... D-10 Information Technology ............................................................................................................... D-11 Miscellaneous Non-Departmental ............................................................................................... D-13 Property & Environmental Management Summary ..................................................................... D-14 Property & Environmental Management ..................................................................................... D-15 Storm Water Protection ............................................................................................................... D-17 Vehicle Maintenance ................................................................................................................... D-19 Vehicle Replacement .................................................................................................................. D-21 CITY OF CARLSBAD, CALIFORNIA 2011-2012 BUDGET TABLE OF CONTENTS Community Development Community Development Summary ............................................................................................. E-1 Community & Economic Development Summary ......................................................................... E-2 Administration ............................................................................................................................... E-3 Economic Development ................................................................................................................ E-5 Land Development Engineering .................................................................................................... E-6 Land Use Planning & Planning Commission ................................................................................. E-8 Building ....................................................................................................................................... E-10 South Carlsbad Coastal Redevelopment Area ........................................................................... E-12 Housing & Neighborhood Services Summary ............................................................................. E-13 Neighborhood Services ............................................................................................................... E-14 Affordable Housing ...................................................................................................................... E-16 Rental Assistance ....................................................................................................................... E-17 Community Development Block Grant ........................................................................................ E-18 Redevelopment Operations Village Area .................................................................................... E-20 Low/Moderate Income Housing Village Area .............................................................................. E-22 Low/Moderate Income Housing South Carlsbad Coastal Area ................................................... E-23 Community Services Community Services Summary ..................................................................................................... F-1 Library Summary ........................................................................................................................... F-2 Georgina Cole Library ................................................................................................................... F-3 Carlsbad City Library ..................................................................................................................... F-5 Library Learning Center ................................................................................................................ F-7 Technical Services ........................................................................................................................ F-9 Collection Development & Acquisitions ....................................................................................... F-10 Community Relations .................................................................................................................. F-11 Cultural Arts Summary ................................................................................................................ F-13 Arts Office ................................................................................................................................... F-15 Sister City .................................................................................................................................... F-17 Cultural Arts Donations ............................................................................................................... F-18 Parks and Recreation Summary ................................................................................................. F-19 Park Planning & Recreation Management .................................................................................. F-22 Recreation – Fee Supported ....................................................................................................... F-24 Recreation – Aquatics ................................................................................................................. F-28 Recreation – Operations ............................................................................................................. F-31 Senior Programs ......................................................................................................................... F-34 Park Maintenance ....................................................................................................................... F-38 Trails ........................................................................................................................................... F-40 Street Tree Maintenance ............................................................................................................. F-42 Median Maintenance ................................................................................................................... F-43 Public Safety Public Safety Summary ................................................................................................................. G-1 Fire Summary ................................................................................................................................ G-2 Fire Administration ........................................................................................................................ G-4 Emergency Operations ................................................................................................................. G-5 Weed Abatement .......................................................................................................................... G-6 Emergency Preparedness ............................................................................................................. G-7 Support Services ........................................................................................................................... G-8 Prevention ..................................................................................................................................... G-9 Police Department Summary ...................................................................................................... G-10 CITY OF CARLSBAD, CALIFORNIA 2011-2012 BUDGET TABLE OF CONTENTS Public Safety (continued): Police Administration ................................................................................................................... G-12 Field Operations .......................................................................................................................... G-13 Community Services ................................................................................................................... G-14 Canine ......................................................................................................................................... G-16 Investigations/Field Evidence ...................................................................................................... G-17 Vice/Narcotics ............................................................................................................................. G-18 Youth/School Programs .............................................................................................................. G-19 Property and Evidence/Records ................................................................................................. G-20 Family Services ........................................................................................................................... G-21 Task Force .................................................................................................................................. G-22 Support Operations ..................................................................................................................... G-23 Communications Center .............................................................................................................. G-24 Police Asset Forfeiture ................................................................................................................ G-25 Citizens Option for Public Safety ................................................................................................. G-26 Police Grants............................................................................................................................... G-27 Public Works Public Works Summary ................................................................................................................. H-1 Transportation Summary ............................................................................................................... H-2 Administration and Construction Management & Inspection ........................................................ H-3 Storm Water Inspection ................................................................................................................. H-7 Street Maintenance ....................................................................................................................... H-9 Traffic Signal Maintenance .......................................................................................................... H-11 Street Lighting ............................................................................................................................. H-12 Lighting and Landscape District No. 2 ........................................................................................ H-13 Utilities Summary ........................................................................................................................ H-14 Storm Drain Engineering ............................................................................................................. H-15 Buena Vista Channel Maintenance ............................................................................................. H-16 Water Operations ........................................................................................................................ H-17 Wastewater Operations ............................................................................................................... H-20 Solid Waste Management ........................................................................................................... H-22 Storm Drain Maintenance ........................................................................................................... H-24 CAPITAL IMPROVEMENT PROGRAM – OPERATING BUDGET Overview ............................................................................................................................................... I-1 Project Evaluation ................................................................................................................................. I-2 Capital Projects – The Next Five Years ................................................................................................ I-2 Capital Projects through Buildout .......................................................................................................... I-5 Future Growth and Development .......................................................................................................... I-6 Revenues .............................................................................................................................................. I-8 Summary ............................................................................................................................................... I-9 Growth Management Plan .................................................................................................................. I-10 Capital Funds Projected Fund Balances for FY 2010-2011 ................................................................ I-11 Capital Funds Projected Fund Balances for FY 2011-2012 ................................................................ I-12 Capital Revenues Actual and Estimated ............................................................................................. I-13 Capital Funds Budget Expenditure Schedule .................................................................................... I-14 CITY OF CARLSBAD, CALIFORNIA 2011-2012 BUDGET TABLE OF CONTENTS Capital Projects Detail Schedule of Capital Projects by Category FY 2011-2012 ................................................... J-1 Fund Summary Capital Improvement Program Fund Summary ............................................................................. K-1 Glossary of Capital Project Funding Sources ............................................................................. K-14 APPENDICES Planned Major Capital Outlay Items 2011-2012 .................................................................................. L-1 Out of State Travel Requests 2011-2012 ............................................................................................ L-2 Miscellaneous Statistical Information ................................................................................................... L-4 Accounting Systems and Budgetary Control ....................................................................................... L-5 Resolutions Adopting the Budget ......................................................................................................... L-6 Gann Limit Resolution ........................................................................................................................ L-18 Glossary ............................................................................................................................................. L-38 Acronyms ........................................................................................................................................... L-40 READER’S GUIDE TO THE BUDGET i This budget document has been designed to provide the public concise and readable information about the City of Carlsbad’s 2011-12 budget. The budget is separated into three major sections: the Overview, the Operating budget, and the Capital Improvement Program. Overview The beginning of the budget document contains the City Manager’s transmittal letter and overview information. The overview information will provide summary data to the reader for the Operating budget and the Capital Improvement Program, as well as information on personnel allocations and debt management issues. Operating Budget The Operating budget section has seven tabbed sections. The first section provides a summary of the operating budget and the remaining six sections provide detailed budget information for six main functional areas. The summary section begins with a budget overview, including revenue assumptions, information on the policies used to develop the budget, and an overview of expenditures. The overview is followed by tables providing detailed information on fund balances, revenues and expenditures. The following six sections are separated by functional area, which are Policy and Leadership Group, Internal Services, Community Development, Community Services, Public Safety, and Public Works. Within these broad categories, the budget is organized on a department, or program group, basis. Summaries, financial and descriptive, are included for departments containing more than one program. The summary page is followed by detailed information for each program. Some departments consist of one program only, and thus only one page is included for them. For each summary and program, a financial history and the 2011-12 budget figures are presented. If applicable, also included are narrative statements describing program activities, associated workload measures or performance objectives, key achievements for 2010-11 and key goals for 2011-12. Capital Improvement Program The Capital Improvement Program (CIP) is located in the back of the budget document. An overview of the CIP provides general information about the process used in preparing the budget for capital projects and describes how development information is used to project future revenues that fund these projects. In addition, major CIP projects are highlighted and discussed. The next section contains summary revenue and expenditure tables by funding source and a detailed project expenditure schedule listing the cost and timing of each future and current CIP project. Following this schedule are fund summary pages, which list the revenues and detail expenditures by fund, thus providing cash flow information and annual projected fund balances for each Capital Improvement Program fund. Appendices The Appendices contain a detailed listing of the 2011-12 Planned Major Capital Outlay items by department. An Out-of-State Travel Detail is presented next. The last section of the Appendices provides information on the Gann Limit, budget process, accounting system and budgetary control, the adopted Resolutions for the budget, and a glossary. ii Carlsbad . . .  Provides a diverse and healthy economic base that creates opportunities for employment to the residents of Carlsbad, economic vitality to the community, and the necessary revenues to support City services.  Provides programs, policies and decisions to implement the General Plan, enforce the Growth Management Plan, maintain the safety and security of its citizens, and are based on what is best for Carlsbad.  Occupies a leadership role in local and regional planning, (e.g., water, beach, circulation, and environmental issues) important to local governments actively involves addressing governmental issues at the local, state and national levels.  Provides an open government leading to the betterment of the community and encourages in a non-partisan manner active citizen participation and involvement with the City Council and the City’s Boards and Commissions. And Carlsbad Efficiently and Effectively…  Delivers top-quality public services.  Manages its environment proactively, including: ◊ Open space ◊ Wildlife habitats ◊ Water quality/conservation ◊ Beach preservation ◊ Air quality ◊ Resource conservation and waste reduction  Promotes a safe and efficient integrated transportation system.  Maintains citywide “small town” community spirit.  Provides a community where continuous and life-long learning is supported and encouraged for people of all ages.  Looks ahead and works to anticipate changes that are required now in order to make a better future for its residents. Carlsbad City Council 2011 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. ABOUT THE CITY OF CARLSBAD iii The City of Carlsbad is a unique coastal community located 35 miles north of the City of San Diego and surrounded by mountains, lagoons, and the Pacific Ocean. The City is governed by a five-member City Council under the Council/Manager form of government. Although the “village” dates back more than 100 years, Carlsbad incorporated in 1952 as a General Law city, and in 2008 became a Charter city. Currently, the City is over two-thirds developed and is expected to grow from a population of 106,555 to 117,000 once its 42 square miles are built out. Industries in the area include a major regional shopping center; a specialty outlet center; 34 hotels offering over 3,600 rooms for tourist lodging; over 20 auto dealers; high technology, multimedia and biomedical businesses; electronics, golf apparel and equipment manufacturers; several business and light industry parks; and numerous land developers building single and multi-family housing in a variety of community settings. The City provides the full range of services normally associated with a municipality including police, fire, parks and recreation, library, planning and zoning, building and engineering, various maintenance services, and administration. The City provides water services through the Carlsbad Municipal Water District, a subsidiary district of the City. The City Council serves as the Board of Directors for the Carlsbad Municipal Water District. Solid waste collection is provided through a franchise agreement with a local refuse collection service. In addition to the usual City services, Carlsbad offers a wide variety of programs to help local residents and businesses. The City has a Redevelopment Agency with two active areas: the Village Redevelopment area that encompasses 0.4 square miles of the downtown area; and the South Carlsbad Coastal Redevelopment area, which is just south of the Village Redevelopment area and fronts the Pacific Ocean. The City’s Housing Authority administers federal housing assistance to 606 low-income Carlsbad families. Older Carlsbad residents receive assistance through the City’s senior citizen programs. School programs and facilities are provided by four different school districts located within the City boundaries. The City Council has no direct control over these school districts; however, the Council recognizes the importance of quality school facilities and programs to Carlsbad’s residents. Thus, the Council and staff work with the school districts on a regular basis. # # # # 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 N e v a d a O r e g o n C a l i f o r n i a C a l i f o r n i a P a c i f i c O c e a n P a c i f i c O c e a n A r i z o n a C a r l s b a d C a r l s b a d Traffic Safety Commission Underground Utility Advisory Committee ArtsCommission HistoricPreservationCommission Library BoardofTrustees Serra CooperativeLibrary SystemAdvisory Board Parks & RecCommission SeniorCommission BeachPreservationCommittee Housing Commission Housing & Redevelopment Commission Planning Commission Carlsbad Tourism B.I.D. Advisory Board ELECTORATE City Manager City TreasurerMayor & CouncilCity Clerk City Attorney Assistant City Manager Community & Economic Development Housing & Neighborhood Services Fire Police Parks & Recreation Library & Arts Finance Human Resources Information Technology Property & Environmental Management Internal Services Public Safety Community Development Community Services Revised Feb. 2011 KEY Elected Council Appointed Reporting Relationship Programs City of CarlsbadOrganization Chart Deputy City Manager Transportation Utilities Public Worksiv Overview CITY OF CARLSBAD BUDGET HIGHLIGHTS A-3 CITY OF CARLSBAD BUDGET HIGHLIGHTS FISCAL YEAR 2011-12 WHERE THE MONEY COMES FROM… ESTIMATED REVENUES $230.6 MILLION WHERE THE MONEY GOES… ADOPTED BUDGET $258.5 MILLION Taxes 44% Inter-Departmental 8% Licenses & Permits 1% Charges for Services 4% Income from Investments & Property 2% Inter-Governmental 4% Other 2% Utility Charges 24% Impact Fees/Special Taxes 11% Policy & Leadership 2% Internal Service 10% Public Safety 18% Capital Projects 25% Community Services 10% Comm. Dev. 7% Non Dept. & Contingency 4% Utilities 20% Public Works 4% CITY OF CARLSBAD BUDGET HIGHLIGHTS A-4 City of Carlsbad Community Vision Small town feel, beach community character and connectedness Enhance Carlsbad’s defining attributes—its small town feel and beach community character. Build on the city’s culture of civic engagement, volunteerism and philanthropy. Open space and the natural environment Prioritize protection and enhancement of open space and the natural environment. Support and protect Carlsbad’s unique open space and agricultural heritage. Access to recreation and active, healthy lifestyles Promote active lifestyles and community health by furthering access to trails, parks, beaches and other recreation opportunities. The local economy, business diversity and tourism Strengthen the city’s strong and diverse economy and its position as an employment hub in north San Diego County. Promote business diversity, increased specialty retail and dining opportunities, and Carlsbad’s tourism. Walking, biking, public transportation and connectivity Increase travel options through enhanced walking, bicycling and public transportation systems. Enhance mobility through increased connectivity and intelligent transportation management. Sustainability Build on the city’s sustainability initiatives to emerge as a leader in green development and sustainability. Pursue public/private partnerships, particularly on sustainable water, energy, recycling and foods. History, the arts and cultural resources Emphasize the arts by promoting a multitude of events and productions year round. Cutting edge venues to host world class performances, and celebrate Carlsbad’s cultural heritage in dedicated facilities and programs. High quality education and community services Support quality, comprehensive education and lifelong learning opportunities, provide housing and community services for a changing population, and maintain a high standard for citywide public safety. Neighborhood revitalization, community design and livability Revitalize neighborhoods and enhance citywide community design and livability. Promote a greater mix of uses citywide, more activities along the coastline and link density to public transportation. Revitalize the downtown Village as a community focal point and a unique and memorable center for visitors, and rejuvenate the historic Barrio neighborhood. The city’s budget is comprised of two pieces; the operating budget and the capital improvement program budget (CIP). The CIP provides the funds to build the parks, roads, buildings, and other infrastructure of the city while the operating budget provides the money to staff and operate the facilities and infrastructure as well as provide important services to the citizens and visitors of Carlsbad. The operating budget totals $193.8 million and is expected to generate $197.2 million in revenues. The CIP contains the current year budget allocation of $64.7 million and outlines approximately 265 future projects at a total cost of $451 million through buildout of the city. Capital revenues for Fiscal Year 2011-12 are estimated at $33.4 million. The capital projects include parks, civic facilities, as well as infrastructure needs anticipated for the future that are not expected to be constructed by developers. The budget overview on the following pages will provide the reader with a good understanding of the budget process and the economic profile of the city as well as with a broad overview of the services and projects planned for the 2011-12 Fiscal Year. This section also addresses debt management, including a schedule of the outstanding bond issues. More detail on the city’s numerous programs and projects can be found throughout the remainder of the document. BUDGET PROCESS At the beginning of each year, the City Council meets to review and update the Council’s five-year vision statements and to develop citywide strategic goals. This direction helps staff prioritize city programs, projects and services, as well as the resources required to fund them. This year, the Carlsbad City Council set strategic goals that maintain top quality services in the most efficient manner and position the city to benefit from a strong and diverse local economy. A number of priorities were established to support economic development, including a program to attract and retain businesses and to improve the amount and quality of information available to businesses. To promote financial health, we will continue to streamline city operations and related processes and to maximize the value of CITY OF CARLSBAD BUDGET HIGHLIGHTS A-5 city-owned assets. Other key strategic goals address safe and efficient transportation and circulation, ongoing acquisition and maintenance of parks and open space, and a continued commitment to balanced development, cultural arts, and a safe community. Based on this direction, as well as input received at public workshops, city staff finalizes the overall city work plan and develops the annual budget. The City Council adopts the formal budget for all funds prior to the beginning of each fiscal year and may amend those budgets throughout the year as necessary. Expenditures may not exceed budgeted amounts at the fund level. Budgetary Control is maintained through the city’s accounting system. Carlsbad’s operating budget is a tool that guides the achievement of Council’s vision, goals, and priority projects for the city. The budget allocates resources to city programs in accordance with priorities established by residents and the Council. Thus, it is an integral part of making Carlsbad a wonderful community in which to live, work and play. In addition, the budget is fiscally conservative and balanced, and provides a blueprint to effectively sustain the community and essential city services far into the future. ECONOMIC PROFILE The US economy began to show signs of recovery last year, indicated by a 3.1 percent increase in the gross domestic product (GDP) in the final quarter of 2010 and unemployment figures receding from a high mark of almost ten percent. The tepid recovery appeared to stall in the first quarter of 2011, however, as GDP increased by only 1.8 percent and unemployment edged up slightly. This slowdown in the recovery, however, may reflect the effects of bad weather and the earthquake and tsunami in Japan. Fears about deflation have subsided as food and energy commodity prices have pushed the Consumer Price Index (CPI) higher in the past year, as indicated by a 3.2 percent increase, year over year, in April. Economists maintain a modestly optimistic outlook for recovery and, according to the most recent UCLA Anderson Forecast, real GDP should grow at three percent over the next three years and unemployment should continue to fall slowly, dipping below eight percent in 2013. A continuing threat to the economic recovery is the housing market, as prices continue to dip, nationwide. The Case-Shiller Home Price Indices reflected a decrease of 3.3 percent in February (year-over-year); prompting concern that housing may continue to be a drag on the recovery. David M. Blitzer, Chairman of the Index Committee at Standard & Poors, said, ―There is very little, if any, good news about housing. The 20-City Composite is within a hair’s breadth of a double dip.‖ The national economy appears to be recovering slowly, but numerous challenges lie ahead. The Zero Interest Rate Policy (ZIRP) pursued by the Federal Reserve for the past two years is expected to end in 2012, as employment improves and inflation reaches normal rates. Long-term interest rates are expected to begin creeping up in 2011, but economists caution that movements in interest rates are difficult to forecast, given the current level of federal deficits. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-6 The outlook for California’s economy is very slow growth over the next few years. Unemployment, which has remained above 12 percent since late 2009, is not expected to fall below double-digit levels until 2013. The state has shed 1.3 million jobs during the recession, and many of these jobs, in sectors such as construction and finance, are not expected to return. California’s recovery will be led by increases in education, health care, exports, technology, and some modest activity in residential construction. However, the recovery will be bifurcated, with early economic recovery in coastal California and much slower economic growth inland. According to the UCLA Anderson Forecast, employment in 2011 is expected to grow at 1.1 percent and begin accelerating in 2012 and 2013, as California capitalizes on increases in U.S. consumption levels and greater exports to support growing economies in Asia. Taxable sales are forecast to increase slightly (1.2 percent) in 2011 and begin rising faster in 2012 and 2013, to 5.1 and 4.7 percent, respectively. As economic activity increases, real personal income is expected to grow by a modest 1.3 percent in 2011 and increase to 3.7 percent and 4.1 percent, respectively, in 2012 and 2013. The San Diego economy outlook is positive, as the county appears to be slowly emerging from an economic morass. Unemployment fell from a high of 10.9 percent to 10.2 percent in March, and 24,700 jobs were added since March 2010. Professional and business services have posted large gains in recent months, as have the leisure and hospitality sector. However, recovery in the San Diego labor market is slow and, assuming the same growth in employment seen in March, it will take four years to get back to levels of unemployment seen in December 2007. The USD Index of Leading Economic Indicators continued a two-year trend, increasing by almost six percent compared to March 2010. An increase in residential unit permits issued buoyed the Indicator, as multi-family units authorized increased almost three-fold compared to the first quarter of 2010. Other positive economic news included falling initial claims for unemployment, down for the third month in a row, and help wanted advertising continued to increase during the same period. Also, local consumer confidence increased for the 11th consecutive month. Modest improvement in the San Diego employment numbers contributed to a drop in office space vacancy, which fell by 1.4 percent, to 16.8 percent, compared to the first quarter of 2010. CBRE Econometric Advisors indicate positive growth in office workers through the end of 2012. The chart above reflects historical movement in the USD’s Leading Economic Indicators. Despite relatively high unemployment and weak housing sales indicators, the economic outlook for the county is positive. Carlsbad’s economy is tied closely to that of the San Diego region. For FY 2010-11, property taxes are expected to decline by approximately 2.6 percent over the previous year. Transient Occupancy Tax (TOT), a gauge of the tourism industry, is expected to end FY 2010-11 showing a 2.2 percent decrease due to lower revenues at the city’s two largest resorts, and sales taxes are expected to end FY 2010-11 with an increase of 15.4 percent due to the slowly recovering economy, mainly in retail and auto sales. Overall the city is anticipated to end FY 2010-11 with a 1.2 percent decline or $1.4 million less in General Fund revenue compared to FY 2009-10. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-7 Housing prices in Carlsbad continued their downward trend during the last year. According to DataQuick, the median price for a Carlsbad home fell to $626,000 in April, down over eight percent compared to last year. The total assessed values in the city are close to $24 billion, a decrease of approximately one percent compared to the prior fiscal year (FY 2009-10). According to recent growth projections prepared for the city, Carlsbad will add 1,033 units over the next five fiscal years and develop an additional 1.6 million square feet of commercial and industrial space. Since 1992, commercial and industrial development in Carlsbad averaged approximately 1.1 million square feet per year. As opportunities for new development diminish, commercial and industrial development is tapering off, falling to an average of slightly under 300 square feet per year over the next five fiscal years. Due to the economic recession, commercial and industrial development now is expected to average 300,000 square feet per year over the next five years. Large industrial commercial developments in the next five years include Bressi Ranch, Carlsbad Raceway and Palomar Forum, Dos Colinas Retirement Community, and the Floral Trade Center. Commercial office space vacancy has witnessed a decline over the past year, falling from over 30 percent in the last quarter of 2009 to just over 24 percent in the first quarter of 2011. Industrial vacancy fell for the same period, from almost 14 percent to 13 percent. 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 Park Hyatt 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. It is the Council’s goal to ensure that the city remains in good financial health, and there are a number of steps the city has taken to attain that goal. One of the steps is the Growth Management Plan. This plan was adopted by the citizens to ensure that all necessary public facilities were constructed along with development. It also ensures that a financing plan is in place to pay for the facilities prior to the development of the property. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-8 In addition to the Growth Management Plan, the city also prepares a long-term financial model for both the capital and operating needs of the city. With a growing city such as Carlsbad, it is imperative that we plan for the impacts of the economy, serving new development and operating new public facilities, as well as planning for capital needed to build them. Thus, the city prepares a ten-year operating forecast for the General Fund, and a 15+ year Capital Improvement Program. As part of the Capital Improvement Program, the city annually calculates the amounts needed to pay for the various projects, and calculates the anticipated operating budget impacts. In this way, the city can anticipate the effects of development from both a capital and an operating perspective. One important initiative the city has undertaken to ensure its financial health is the development of an Infrastructure Replacement Fund. With this fund, the city sets aside money on an annual basis for major maintenance and replacement of its infrastructure. Much of the city’s infrastructure is relatively new; thus, the city is just now experiencing the impact of maintenance requirements. By setting aside funds now, the citizens of Carlsbad can be assured that the proper maintenance and replacement, as needed, will be performed on streets, parks and many facilities for which the city is responsible. As national and local economic conditions begin to improve, Carlsbad is well positioned to reap the benefits of a diverse business composition. Over the past decade, the city has developed an economic base that attracts business, tourism, and retail consumers. The city hosts four regional shopping areas within its boundaries; an auto mall, a large regional mall, an outlet center, and a high-end retail center in the southern part of the city called The Forum. The city is also host to Legoland, a family theme park, and a number of renowned resorts, including the Park Hyatt and La Costa Spa and Resort. All of these factors, combined with relatively stable residential home values, provide a strong revenue base to support the high level of city services for our residents. In FY 2011-12, the city is expected to generate over $87 million, or 75 percent of General Fund revenues, from three sources: property taxes, sales taxes, and transient occupancy taxes (TOT). Overall, for FY 2011-12, General Fund revenue is projected to increase by approximately two percent from the previous year’s estimates. Most sources of tax revenue, with the exception of property taxes, are expected to increase slightly in FY 2011-12. Sales tax and TOT revenues are projected to increase by approximately three and five percent, respectively, due to the improved local economic conditions experienced to date. Home values, however, continue to decline, and the County Assessor has estimated that the city should expect assessed values to decrease by almost 0.2 percent for FY 2011-12. New building permits are expected to decrease slightly and the development related revenue items have been adjusted accordingly for Fiscal Year 2011-12. More information on all of the city’s revenues and programs can be found in the later sections of the document. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-9 STATE OF CALIFORNIA – In January, California swore in Governor Jerry Brown, who inherited an ongoing budgetary crisis that has been exacerbated by the most severe economic downturn since the Great Depression. The State of California has been in a severe fiscal crisis for a number of years and has relied on a number of dubious strategies to balance its budget, including reliance on one-time revenues, borrowing from various state funds, and raiding city, county and special district funds. Federal and state maintenance of effort requirements, legal constraints and the passage of several State propositions in the November elections have further limited the state’s options for addressing the ongoing structural imbalance. In May, the Governor released the revised budget for Fiscal Year 2011-12. The revised budget forecasts a deficit of $12 billion through Fiscal Year 2011-12, an improvement over January estimates of $26.6 billion. This improvement was due, in part, to an additional $6.6 billion in higher-than-expected tax revenues. An additional $2.4 billion in solutions are currently pending in the Legislature and, combined with a proposed reserve of $1.2 billion, this leaves a projected deficit of $10.8 billion. Solutions proposed by the Governor include five-year extensions to the temporary one percent state sales and use tax rate and the 0.5 percent Vehicle License Fees (VLF), as well as a four-year extension to the 0.25 percent surcharge on income tax. The Governor also proposes the elimination of redevelopment agencies and a onetime shift of $1.7 billion in property tax increment for state purposes. If the proposed extension of the VLF is approved this would allow for the continued funding of the Citizens’ Option for Public Safety and booking fee subvention programs. As a result of continued attacks on cities’ revenues, a coalition of cities, counties and special districts supported Proposition 22, which was approved by the voters in November 2010. The measure included a provision to stop the Legislature from raiding local government and gas tax funds that are programmed at the local level for vital services. Proposition 22, along with 2004 Proposition 1A, should provide added protection to local agencies in the future. Also passed in the November election were Propositions 25 and 26. Proposition 25 requires forfeiture of legislative pay if the June 15 Constitutional deadline for passing a budget in missed. This measure provides greater incentive for the timely adoption of the state budget, allowing local governments to include the effects of state decisions in their budgets. Proposition 26 expanded the definition of ―tax,‖ leaving state and local governments with less discretion in implementing new revenue sources. LOOKING FORWARD In order to strategically address the future needs of the city and to ensure that we maintain a structurally balanced budget in the long term, the city prepares a ten-year financial forecast. Revenue projections are developed based on current and forecasted economic variables at the national, state, and local levels, and provide city leaders with some measurement of future capacity to support city programs and services. In recent years, revenue growth has become more difficult to project in the long-term, as we find ourselves in an economic climate that changes rapidly and unpredictably, and the forecast allows decision makers to adjust for these changes. For example, as the city was preparing its ten-year forecast in FY 2006-07, it appeared that General Fund revenues were going to continue on a path of strong annual growth and were forecast to provide sufficient resources for expenditures in the General Fund. The upper line on the graph on the following page reflects the growth in General Fund expenditures as originally projected in the ten-year forecast back in FY 2006-07. The lower line on the chart reflects the projected General Fund revenues as currently projected in the FY 2011-12 ten-year forecast. The difference between the two lines indicates the potential deficit the city would have experienced in the General Fund if changes had not been made. The ten-year forecast enabled the city to correct for reduced revenues resulting from the recent downturn in the economy and make changes that avoided potential deficits. The ten-year forecast is updated continuously to CITY OF CARLSBAD BUDGET HIGHLIGHTS A-10 avoid these potential pitfalls and to ensure that we identify and resolve fiscal challenges and continue to develop a balanced and responsible budget. 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Proj. Exp. (2007)140,901 147,265 153,961 160,980 168,220 174,948 181,946 189,224 196,793 204,665 Proj. Rev. (2012)113,567 117,726 122,967 128,052 135,883 143,831 149,360 157,131 162,785 170,524 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000 Dollars (In Thousands)Fiscal Years PROJECTED EXPENDITURES (2007 FORECAST) VS. PROJECTED REVENUES (2012 FORECAST) Proj. Exp. (2007) Proj. Rev. (2012) ($27,334) ($29,539) ($32,928) ($30,994) ($32,337) ($31,117) ($32,586) ($32,093) ($34,008) ($34,141) Over the past several years, the city has addressed the budgetary challenges brought on by the recent recession and taken deliberate measures to continue to allocate resources in a responsible manner, minimizing the impact to users of city services. These measures included a reduction in full-time equivalent (FTE) positions, delaying the construction of non-essential capital projects, reducing the funding for capital outlay and goal projects, reducing and/or eliminating cost of living salary increases, using technology and other tools to create efficiencies, and reducing certain non-essential service levels with a minimal impact to the community. The ability to anticipate changes in revenue sources and to balance those resources against the costs related to ongoing and future programs, services, and infrastructure requirements is critical to the financial health of the city. The city relies on the General Fund forecast to effectively manage fiscal resources and map a sustainable and responsible path for attaining the goals of the community. The tumultuous economic environment experienced in the past few years makes this long-term perspective even more important. The forecast assumes limited growth in residential and commercial development over the next decade and captures the expected revenue impacts from major projects that are expected to be completed during the forecast period. The forecast also assumes that the Carlsbad Crossings Golf Course will require an ongoing subsidy from the General Fund and, while this subsidy is expected to decrease over time, it is no longer treated as a loan. The operating costs of new city facilities supported by the General Fund, such as Alga Norte Park, are also captured in the ten-year forecast. Economic conditions at the national, state, and local level are expected to continue improving at a modest rate and to provide a boost to most of our major sources of CITY OF CARLSBAD BUDGET HIGHLIGHTS A-11 revenue. Home sales, however, are not expected to increase in the next fiscal year and values will continue to subdue property tax receipts. Overall, General Fund revenues are expected to cover ongoing costs in the coming decade, as depicted on the following graph: The forecast assumes that General Fund revenues will increase slightly, almost two percent, in FY 2011-12, assuming unforeseen events do not derail a tepid economic recovery. To project the expenditures, all known changes in personnel and maintenance and operations costs are accounted for. However, the city was still in negotiations with its General Employee association at the time of budget adoption, and the results of those negotiations have not been contemplated in the current ten-year forecast. The forecast assumes that the city’s cost for employee health care will increase by five percent, annually, over the life of the forecast. Pension plan costs are projected to increase by approximately 1.3 percent for miscellaneous employees, due primarily to investment losses sustained by CalPERS in FY 2008-09 and updated actuarial assumptions. Pension costs for safety employees increase in FY 2011-12 by approximately 3.8 percent. The forecast also assumes that $1.4 million is set aside to stabilize future CalPERS increases or to address unfunded liabilities in both the safety and miscellaneous retirement plans. The forecast further assumes that no new positions are authorized until FY 2013-14. Negotiated salary step increases and cost of living increases between 0.5 percent and 3.5 percent have been added to personnel costs. The contribution from the General Fund to the Infrastructure Replacement Fund is forecasted to remain at 6.5 percent of General Fund revenues. Finally, the forecast includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program (CIP). As indicated in the previous graph, the General Fund is balanced for FY 2011-12 and modest surpluses are anticipated after that. However, the fragile economic recovery currently underway faces many threats in the coming years and, while the ten-year forecast employs conservative estimates, these modest surpluses could evaporate if the economy stumbles. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-12 2011-12 OPERATING REVENUES BY FUND TYPE $197.2 MILLION OPERATING BUDGET Revenue Projections The city’s operations are divided into various funds. Each fund has been established because of certain restrictions placed on the use of the resources received by that fund. Any unrestricted funds are placed in the General Fund. Estimated revenues for the city’s five fund types are shown on the accompanying graph. General Fund The fund receiving the largest slice of the revenues is the General Fund, with estimated revenues of $113.6 million for Fiscal Year 2011-12. The General Fund pays for most of the city services available to city residents. The majority of the General Fund revenues are derived from taxes. The following graph illustrates the sources of revenue to the General Fund. PROPERTY TAX43% TRANSFER TAXES 1%SALES TAX24% BUS LIC TAX3% LICENSES & PERMITS1% CHARGES FOR SERVICES5% OTHER REVENUE5% INTERGOVERNMENT1% FRANCHISE TAX4% TRANSIENT TAX11%INCOME FROM INVESTMENTS & PROPERTY2% 2011-12 GENERAL FUND REVENUES$113.6 MILLION Property taxes, at $48.3 million, are the largest General Fund revenue. The city receives only about 18 percent of the property taxes paid by its citizens. The remainder of the tax goes to the school districts, the state, and other various agencies. General 57% Special Revenue 6% Redevelopment 2% Enterprise 27% Internal Service 8% CITY OF CARLSBAD BUDGET HIGHLIGHTS A-13 Sales tax is the second largest source of revenue for the General Fund. Sales taxes are estimated to bring in $27.1 million for Fiscal Year 2011-12. Automobile and retail sales are the most significant contributors to the category of sales tax. Transient occupancy taxes (hotel taxes) are estimated at $12 million and are the third largest revenue source for the city. Franchise taxes, transfer taxes, and business license taxes make up the remaining $9.2 million in tax revenues estimated to be collected in Fiscal Year 2011-12. Intergovernmental revenues are revenues collected by the State and other governmental agencies and allocated to the city based on a formula. Examples of intergovernmental revenues include motor vehicle license fees, State mandated cost reimbursements, and homeowner’s exemptions. Intergovernmental revenues are estimated at $1.6 million for the upcoming year. Licenses and permits account for $1.4 million of the General Fund revenues and include building permits and other development-related permits. Charges for services are estimated to be $5.9 million and include fees for engineering, planning, building, recreation, and ambulance services. Income from investments and property are estimated at $2.6 million. Other General Fund revenue sources include charges collected from other departments, fines and forfeitures, and miscellaneous revenues. Those sources total $5.6 million Special Revenue Funds Revenues from Special Revenue funds are estimated at $11.3 million for Fiscal Year 2011-12. Funds collected in this category are legally restricted to specified purposes. Examples of funding resources include donations, grants, and special assessments. The types of functions supported with Special Revenue funds include programs such as Section 8 Housing Assistance, Housing Trust Fund, Community Development Block Grants (CDBG), and maintenance and assessment districts. Enterprise Funds Enterprise funds revenues make up the second largest revenue group, totaling $52.8 million. Enterprise funds operate similar to a business in that they charge fees to cover the cost of their services. Examples of the city’s enterprises include water and wastewater services and solid waste management. Internal Service Funds Internal Service fund revenues, projected to be $16 million, are derived from charges to the city programs that benefit from the services rendered. The funds collected must be used specifically to support the internal service. Examples of the city’s Internal Service funds include General Liability, Self Insured Benefits, Information Technology, Workers’ Compensation, and Vehicle Maintenance and Replacement. Redevelopment Agency Redevelopment Agency revenues, estimated at $3.5 million, come mainly from property taxes collected within the redevelopment area. Carlsbad has two redevelopment areas. The original area consists of 204 acres located in the downtown “Village Area” of the city. The second area encompasses the land on which the Encina power plant is located as well as additional parcels south of the plant. Funds collected within the redevelopment areas must be used to repay the debt incurred and administration of the Agency. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-14 Operating Budget By Program The total Operating Budget for the city for Fiscal Year 2011-12 equals $193.8 million, which is approximately 2.9 percent higher than the FY 2010-11 Adopted Budget. The changes in each of the city’s programs will be discussed below. The Operating Budget is categorized by main functional area. Six functional areas that represent the key businesses of the city have been identified. The graph on the following page shows the Operating Budget for each of the functional areas. Total funding allocated for the Policy and Leadership Group for 2011-12 is 5.3 million. This group encompasses all elected officials and the chief executive offices for the city. These include the offices of the City Council, City Manager, City Clerk, City Attorney, and City Treasurer, as well as the communications and records management functions. Internal Services, with a budget of $21.2 million, includes finance, purchasing, human resources, information technology, property and environmental management, fleet maintenance and replacement, self insured benefits, risk management, and workers’ compensation. These areas mainly provide services to internal city departments. Public Safety services are funded at $45.3 million and include all of the police and fire programs such as police patrol, vice/narcotics, juvenile diversion and DARE programs, fire emergency operations, fire prevention and emergency preparedness. Community Development, with a budget of $17.3 million, provides the services that guide and oversee the planning and development of Carlsbad as depicted in the city's General Plan. The General Plan is the base document that expresses the goals and public policy relative to future land use. It acts as a "constitution" for development and is the foundation upon which all land use decisions are based. Also included under Community Development are building and code enforcement, volunteer programs, neighborhood services, and housing and redevelopment programs. Policy/ Leadership 3%Internal Services 11% Public Safety 23% Non- Departmental 6% Community Services 13% Community Development 9% Public Works 35% 2011-12 OPERATING EXPENDITURES$193.8 MILLION CITY OF CARLSBAD BUDGET HIGHLIGHTS A-15 Community Services, with a budget of $25.0 million, is made up of the library, parks and recreation, cultural arts, and seniors programs. These programs are provided to a wide range of people and assist in their education and cultural development. The functional area requiring the largest amount of funds is Public Works, with a budget of $68.7 million. Public Works is responsible for the building and maintenance of all of the city’s streets and roadways, and for the provision of utility services. It is comprised of the transportation department, lighting and landscaping districts, as well as utilities services, such as the water, sewer, and solid waste enterprise funds. The Non-Departmental and Contingency accounts total $11 million and include programs benefiting the city as a whole, such as community promotions, community contributions, assessment services, transfers to other funds, and the City Council’s contingency account. Included in the non-departmental group is a $7.4 million transfer to the Infrastructure Replacement Fund. This program sets aside funds for the replacement of the city’s base infrastructure. The City Council contingency account, which is available for emergencies and unforeseen program needs that arise during the year, is budgeted at $500,000. The contingency account amounts to less than 0.5 percent of the FY 2011-12 General Fund budget. Staffing The FY 2011-12 Operating budget reflects a total decrease of 14.75 full-time positions. The net increase in hourly staff totaled 0.8 of part-time staff. These changes result in a city workforce of 684.25 full and three-quarter time employees and 139.74 hourly FTE, although three of the full-time positions are not funded in the FY 2011-12 budget. The staffing changes in each of the city’s programs are discussed more fully in the Operating Budget Overview. CAPITAL IMPROVEMENT PROGRAM The City of Carlsbad’s Capital Improvement Program (CIP) is a long-range planning document, which outlines the expenditure plan for current and future capital projects and the corresponding revenues to pay for those expenditures. Projects in the CIP consist primarily of new construction or major maintenance and replacement of city facilities such as parks, roads, civic facilities such as libraries, police and fire stations, and sewer, water, and drainage facilities. The Capital Improvement Program for 2011-12 totals $64.7 million in new appropriations and an estimated $179.1 million in continuing appropriations, for a total appropriation of $243.8 million. The city’s Capital Projects are discussed more fully in the Capital Improvement Program section. Some of the notable capital projects include the following: Park Development Projects Alga Norte Park and Aquatic Center – The park site is located on 32 acres in the Southeast Quadrant along Poinsettia Lane between El Camino Real and Alicante Road. Planned amenities include lighted ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center featuring a 56-meter competition pool, a 25-meter 12-lane instruction pool, and a warm water therapy pool and a water play area for toddlers. The swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. Construction is expected to begin in the summer of 2012. The total cost of the park and aquatic center is currently budgeted at $50.4 million. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-16 Leo Carrillo Phase III – Phase III includes the renovation of additional buildings, construction of additional restrooms and an arboretum area. The total cost of the remainder of Phase III is approximately $1.9 million and design is expected to begin in FY 2014-15. Poinsettia Park Community Center – Phase III of this 42-acre park includes amenities such as a community facility, gymnasium, enclosed soccer field, tot lot, picnic areas, tennis complex, clubhouse, stadium court and additional parking. The cost is expected to be approximately $15 million. The timing of the design is scheduled to begin in FY 2013-14. Civic Projects Maintenance and Operations Center – The city has planned the construction of a Maintenance and Operations Center (M&O Center) to physically bring together the maintenance functions to a single facility. The M&O Center will be located on the available property adjacent to the Fleet Maintenance/Public Safety Center. It is anticipated that the M&O Center will include offices and support space, workshops, outside storage, warehouse and parking to accommodate the city’s maintenance personnel. This combined group of maintenance functions includes segments of the Utilities, Transportation, Parks and Recreation, and Property and Environmental Management departments. The cost of the project is approximately $28.1 million. Relocation of Fire Station No. 3 - Fire Station No. 3 is currently located at the corner of Chestnut and Catalina. As the city grows eastward, relocation of this station is needed to help ensure the six minute response time. The site for the new station is in Robertson Ranch. Total cost is projected at $9.2 million. Street Projects Traffic Signal Program – In keeping with the City Council’s goal of improving traffic flow, the FY 2011-12 CIP includes funding for the new Traffic Signal Program project. This project will upgrade traffic signal hardware and software in conjunction with the creation of a communications network that will be used to manage traffic signal operations and thereby improve the flow of traffic. A total of $5.6 million has been included in the CIP with a $2.3 million appropriation in FY 2011-12. Avenida Encinas Widening - Widening to full secondary arterial standards along Avenida Encinas from Palomar Airport Road to just south of Embarcadero Lane is scheduled for design in FY 2012-13. The CIP includes $5.4 million to fund this project. El Camino Real Widening – There are a number of projects that are scheduled over the next five years that will focus on the widening of El Camino Real to prime arterial roadway standards. The projects include widening from Cassia Road to Camino Vida Roble, Arenal Road to La Costa Avenue, Lisa Street to Crestview Drive and Tamarack to Chestnut. The total estimated costs for these projects are $19.5 million. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-17 Pavement Management – Carlsbad’s local streets are maintained on a regular cycle to ensure a good riding surface and to extend the life of the street. Part of the maintenance program is the sealing and overlay of the existing street surface. In addition, any problem areas are addressed as they are identified. The FY 2011-12 CIP has $3.7 million budgeted for this program. Poinsettia Lane Reach E - This project includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.9 million and the CIP program funding for design is scheduled for FY 2013-14. Sewer, Water, and Drainage Facility Projects Vista/Carlsbad Interceptor & Agua Hedionda Lift Station Replacement – This project consists of a set of individual projects that will ultimately construct a parallel sewer interceptor system to accommodate existing and future sewer flows from the cities of Vista and Carlsbad. The individual projects include a main in Jefferson Street, replacement of the Agua Hedionda Lift Station, and a main from the lift station to the Encina Wastewater Facility. The overall total cost estimate for this set of projects totals $55.1 million, of which $17.3 million is to be funded by the City of Carlsbad, with the remainder of $37.8 million to be funded by the City of Vista. Wastewater – Other major wastewater facilities scheduled for construction or replacement within the next five years include: o Buena Interceptor Sewer Improvements o Buena Vista Lift Station Improvements o Home Plant Lift Station Replacement and Forcemain o Simsbury Sewer Extension Water/Recycled Water Lines – Major water/recycled water facilities scheduled for construction or replacement within the next five years include: o Maerkle Floating Cover Replacement and Pump Station Improvements o Tri-Agencies Water Transmission Pipeline Replacement o Reservoir Repair/Maintenance Program o 12-inch Recycled Water Transmission Main – Carlsbad Water Recycling Facility to Chinquapin Maerkle Reservoir Storage – Construction of a buried 16 million gallon water storage reservoir next to the existing reservoir is planned in order to provide additional emergency storage and meet the 10-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. Agua Hedionda Channel – The project includes dredging approximately 40,000 cubic yards of accumulated sediment from the Agua Hedionda and Calavera Creek Channels adjacent to the Rancho Carlsbad Community. Current cost estimates have been updated to include the need to acquire and restore 6.53 acres of wetland mitigation. The total estimated cost of the project is $6.0 million. The funded portion of this project, however, is $5.5 million, and staff is pursuing grant funding to make up the difference. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-18 SUMMARY The FY 2011-12 budget focuses on the sustainability of core city services at their current levels by ensuring that expenditure budgets remain in line with anticipated revenues. While the City of Carlsbad has a diverse economic base, it is not immune to the weak economy. Over the past several years, the city has addressed the budgetary challenges brought on by the recent recession and has taken deliberate measures to continue to allocate resources in a responsible manner, minimizing the impact to users of city services. National, state, and local economies have shown slight growth over the last year, but at a very slow rate. Concerns linger over high unemployment levels and uncertainties in the housing market. Given the current economic concerns, the city has developed a balanced budget for FY 2011-12. The budget assumes no growth and should only have minimal impact on the provision of core city services to the citizens and visitors of Carlsbad. No new programs, services or positions are proposed to be added in the coming year. The City of Carlsbad continues to be a fiscally conservative and responsible city. Long-term planning and foresight by the City Council and residents have provided a sound economic base for the city to positively weather the current changes in the economic environment. The ten year forecast continues to be an important tool for the city to help project changes in revenue in order to adjust expenditures accordingly. In the FY 2011-12 budget, the city has taken into account the long-term impacts of the recession allowing for the creation of a sustainable community, while continuing to support the quality of life valued by those who live, work and play in Carlsbad. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-19 DEBT MANAGEMENT ISSUES The use of debt has always been a primary issue in the development of the Capital Improvement Program and the policies to implement the Growth Management Program. Over the years, the city has issued millions of dollars of bonds and Certificates of Participation (COPs) to fund streets, buildings, sewer and water facilities, open space acquisitions, and other infrastructure projects. The city is continually evaluating its outstanding debt as well as potential future issues to ensure that interest costs are kept at a minimum and the use of the bond funds is appropriate. Under state finance law, the city’s outstanding general obligation debt may not exceed 15 percent (as adjusted by 25%, per the law) of total assessed property value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds. For the last 10 years, the city’s general obligation debt has been under 5% of the total calculated debt limit. During fiscal year 2008-09, the city’s General Fund paid off the remaining balance of the $6.6 million debt issued in 1997 for Hosp Grove Refunding, Certificates of Participation. Prior to the retirement of this debt, average annual debt service payments for the General Fund were approximately $750,000. Since Fiscal Year 2008-09, no debt service payments have been required of the General Fund, and no new debt is anticipated for the General Fund in the coming year. Of the approximately $116 million of debt currently outstanding, none will be paid back using General Fund monies. Rather, the debts will be repaid from sewer revenues, golf course revenues and from property owners benefiting from the improvements built with bond proceeds. The city has no obligation to advance funds to the assessment districts if the property owners do not pay. The table on the following page provides additional information on debt issued by the City of Carlsbad. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-20 The following table identifies the debt the city has issued, the outstanding principal balance, the 2011-12 scheduled principal and interest payments, and the scheduled year of payoff. Bond Name Repayment Source Original Bond Issue Outstanding Principal At 6/30/11 2011-12 Payment P&I Final Payment FY Carlsbad Public Financing Authority Bonds Revenue Bonds Golf Course 18,540,000$ 17,670,000$ 1,110,750$ 2037 Enterprise Revenue 1997 Hosp Grove Refunding Certificates of General Fund 6,595,000$ $ -0-$ -0-PAID Participation 1996 Refunding Encina JPA Tax Allocation Sewer Enterprise 11,080,000$ 3,365,000$ 932,469$ 2015 Bonds Revenue 1993 Redevelopment Tax Allocation Redevelopment 15,495,000$ 9,735,000$ 1,038,765$ 2024 Bonds CFD #3 2006 -Improvement Area 1 Special Tax Special District 11,490,000$ 10,745,000$ 758,659$ 2037 Bonds CFD #3 2008-Improvement Area 2 Special Tax Special District 18,175,000$ 14,120,000$ 1,056,648$ 2039 Bonds Subtotals 81,375,000$ 55,635,000$ 4,897,291$ 2005 Poinsettia Lane East (AD 2002-1) Limited Obligation Assessment 33,085,000$ 29,975,000$ 2,131,490$ 2036 Improvement Bonds District 2003 College Boulevard-Cannon Road (AD 2003-1) Limited Obligation Assessment 11,760,000$ 10,605,000$ 834,088$ 2035 Improvement Bonds District 1997 Reassessment District ( ReAd 1997-1) (College & Alga)Assessment 18,475,000$ $ -0-$ -0-PAID Limited Obligation District Improvement Bonds 1997 Carlsbad Ranch (AD 95-1) Limited Obligation Assessment 10,175,438$ 6,055,000$ 693,660$ 2023 Improvement Bonds District 1998 Rancho Carrillo (AD 96-1) Limited Obligation Assessment 19,600,000$ 14,120,000$ 1,246,160$ 2029 Improvement Bonds District Subtotals 93,095,438$ 60,755,000$ 4,905,398$ Totals 174,470,438$ 116,390,000$ 9,802,689$ City of Carlsbad Debt Outstanding BUDGET SUMMARY A-21 FISCAL YEAR 2011-12 PROJECTED PROJECTED BALANCE ESTIMATED ADOPTED FUND TRANSFERS BALANCE PROGRAM AREA July 1, 2011 REVENUES BUDGET & CHANGES June 30, 2012 OPERATING BUDGET Policy / Leadership Group 5,283,434$ Internal Services 27,162,236 Community Development 17,282,485 Community Services 25,026,414 Public Safety 45,292,666 Public Works 62,786,928 Non Departmental & Contingencies 10,982,390 Golf Course - SUBTOTAL OPERATING 115,028,096$ 197,167,953$ 193,816,553$ -$ 118,379,496$ CAPITAL IMPROVEMENT PROGRAM Fiscal Year 2011-12 450,932,419$ 33,411,742$ 64,706,953$ 419,637,208$ 2010-11 Continuing Appropriations (179,061,964) Projected CIP Fund Balance at June 30, 2012 240,575,244 TOTAL OPERATING AND CAPITAL 565,960,515$ 230,579,695$ 258,523,506$ -$ 358,954,740$ FISCAL YEAR 2010-11 PROJECTED PROJECTED BALANCE PROJECTED ESTIMATED FUND TRANSFERS BALANCE PROGRAM AREA JULY 1, 2010 REVENUES EXPENDITURES & CHANGES JUNE 30, 2011 OPERATING BUDGET Policy / Leadership Group 5,211,047$ Internal Services 27,861,442 Community Development 19,273,677 Community Services 23,402,961 Public Safety 44,256,529 Public Works 61,876,170 Non Departmental & Contingencies 8,692,850 Golf Course (1,870,755) Changes in Reservations and Designations (1,393,173) SUBTOTAL OPERATING 112,494,596$ 196,372,104$ 190,574,676$ (3,263,928)$ 115,028,096$ CAPITAL IMPROVEMENT PROGRAM Fiscal Year 2010-11 414,326,656$ 75,238,869$ 40,503,861$ 1,870,755$ 450,932,419$ TOTAL OPERATING AND CAPITAL 526,821,252$ 271,610,973$ 231,078,537$ (1,393,173)$ 565,960,515$ A-22 FINAL FINAL FINAL BUDGET BUDGET BUDGET 2011-12 2009-10 2010-11 2011-12 CHANGES POLICY AND LEADERSHIP GROUP CITY COUNCIL 1.00 1.00 1.00 0.00 CITY TREASURER 0.75 0.75 0.75 0.00 CITY MANAGER 8.00 8.00 7.00 (1.00) COMMUNICATIONS 2.75 2.75 2.75 0.00 CITY ATTORNEY 7.00 7.00 7.00 0.00 RECORDS MANAGEMENT 8.00 8.00 6.25 (1.75) COMMUNITY AND ECONOMIC DEVELOPMENT COMMUNITY AND ECONOMIC DEVELOPMENT 56.00 54.00 50.00 (4.00) FINANCE FINANCE AND RISK MANAGEMENT 31.00 30.50 30.50 0.00 FIRE FIRE 88.75 88.75 87.75 (1.00) HOUSING AND NEIGHBORHOOD SERVICES HOUSING AND NEIGHBORHOOD SERVICES 11.00 11.00 13.00 2.00 HUMAN RESOURCES HUMAN RESOURCES & WORKERS COMP 10.00 9.00 9.00 0.00 INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY 23.00 22.50 22.50 0.00 LIBRARY & ARTS LIBRARY & ARTS 53.00 52.25 51.25 (1.00) PARKS AND RECREATION PARKS AND RECREATION 72.95 71.95 70.95 (1.00) POLICE POLICE 162.00 162.00 162.00 0.00 PROPERTY AND ENVIRONMENTAL MANAGEMENT PROPERTY AND ENVIRONMENTAL MANAGEMENT 43.25 41.60 39.60 (2.00) TRANSPORTATION TRANSPORTATION 62.35 58.40 54.40 (4.00) UTILITIES MAINTENANCE AND OPERATIONS 71.95 69.55 68.55 (1.00) FULL AND 3/4 TIME LABOR FORCE 712.75 699.00 684.25 (14.75) 2009-10 2010-11 2011-12 Difference Full Time Personnel 707.50 694.50 679.75 (14.75) 3/4 Time Personnel in Full Time Count 5.25 4.50 4.50 0.00 Limited Term Personnel 3.50 0.00 0.00 0.00 Unfunded Full Time Positions (12.00)(6.00)(3.00)N/A Hourly Full Time Equivalent Personnel 138.44 138.94 139.74 0.80 TOTAL LABOR FORCE*842.69 831.94 820.99 (13.95) PERSONNEL ALLOCATIONS SUMMARY OF REQUESTED LABOR FORCE BY CATEGORY 2011-12 BUDGET CALENDAR A-23 DECEMBER JANUARY FEBRUARY MARCH MAY JUNE • Capital Improvement Program (CIP) Kickoff Meeting • Request Capital Project submittals • Set budget policies • Departments submit CIP requests • Operating revenue is projected for the General Fund • Operating budget manual is distributed to departments • Budget preparer’s meeting • Growth projections completed • CIP analysis/review with departments. • Budgets for Internal Service Funds are prepared • Leadership Team meetings to provide status on CIP • CIP Revenue Projections • Departments submit operating budget requests • Finance department analyzes and compiles the operating budget submittals • Leadership Team – Final CIP Review • Leadership Team meetings to review operating budgets • CIP Budget Workshop: May 10 Council meeting • Leadership Team - Final Operating Budget review • Preliminary operating budget is sent to the printer • Program Options prepared • Operating Budget Workshop: June 7 Council meeting • Citizens Budget Workshop: June 9 • Council adopts final budget including Operating budget, Capital Improvement Program, and Annual Spending Limitation: June 21 Council meeting Operating Budget * CIP APRIL Operating Budget Operating Budget Operating Budget Summary Summary 2011-12 OPERATING BUDGET OVERVIEW B-1 The Operating Budget for Fiscal Year 2011-12 totals $193.8 million, with revenues for the year estimated at $197.2 million. General Fund revenues are estimated at $113.6 million and General Fund budgeted operating expenditures are $111.8 million. REVENUE The following table shows the total operating revenues the city anticipates receiving for the remainder of FY 2010-11, as well as those estimated for FY 2011-12. PROJECTED ESTIMATED $% 2010-11 2011-12 CHANGE CHANGE GENERAL FUND 111.3$ 113.6$ 2.3$ 2.1% SPECIAL REVENUE 14.9 11.3 (3.6) -24.2% ENTERPRISE 50.4 52.8 2.4 4.8% INTERNAL SERVICE 15.9 16.0 0.1 0.6% REDEVELOPMENT 3.8 3.5 (0.3) -7.9% TOTAL 196.3$ 197.2$ 0.9$ 0.5% REVENUE SUMMARY BY FUND TYPE (in Millions) FUND Revenue estimates for the Operating Budget indicate that the city will receive a total of $197.2 million in FY 2011-12, a $900,000, or 0.5 percent, increase over the prior year’s projections. The significant changes from the prior year include a $2.4 million, or 4.8 percent, increase in the Enterprise Funds due to proposed water and wastewater rate increases. The General Fund shows an increase of $2.3 million, and Special Revenue Funds show a decrease of $3.6 million from the prior year. More information on the city’s revenue sources can be found in the discussion that follows. General Fund General Fund revenues provide a representative picture of the local economy. These revenues are of particular interest as they fund basic city services, such as Police, Fire, Library, Street and Park Maintenance, and Recreation programs. The table below provides a summarized outlook for the major General Fund revenues. PROJECTED ESTIMATED $% FUND 2010-11 2011-12 CHANGE CHANGE PROPERTY TAX 48.4$ 48.3$ (0.1)$ -0.2% SALES TAX 26.3 27.1 0.8 3.0% TRANSIENT OCC. TAX 11.4 12.0 0.6 5.3% FRANCHISE TAXES 4.7 4.6 (0.1) -2.1% BUSINESS LICENSE TAX 3.4 3.5 0.1 2.9% DEVELOPMENT REVENUES 2.1 1.9 (0.2) -9.5% ALL OTHER REVENUE 15.0 16.2 1.2 8.0% TOTAL 111.3$ 113.6$ 2.3$ 2.0% SIGNIFICANT GENERAL FUND REVENUES (In Millions) 2011-12 OPERATING BUDGET OVERVIEW B-2 As we continue a slow recovery from the worst economic recession since the Great Depression, we are seeing improvement in most of the General Fund revenue sources. Several of the largest revenue sources in the General Fund are sensitive to fluctuations in economic variables. For example, continued weakness in the residential housing market (some economists believe we may be witnessing a double dip) is adversely affecting property tax receipts. However, the city’s sales taxes, transient occupancy taxes and development related revenues appear to be increasing in step with the economic recovery. In the upcoming fiscal year, it is expected that property taxes will be approximately $48.3 million, a 0.2 percent decrease over the projection for FY 2010-11. This is based on a 0.2 percent estimated decrease in assessed valuation, as provided by the County Assessor in May 2011, partially offset by new construction that has occurred over the past year. The median single family home price in Carlsbad is currently $626,000, which is down 8.1 percent over the same time a year ago. Property taxes tend to lag behind the rest of the economy, as the tax revenue for the upcoming fiscal year is based on assessed values from January. Thus, the taxes to be received for Fiscal Year 2011-12 are based on assessed values as of January 1, 2011. Proposition 13, adopted in 1978, limits the annual increase in assessed values for property. Under this proposition, assessed values (and the related property tax) can grow by no more than two percent per year. The value upon which the tax is based is only increased to the full market value upon the sale of the property. Thus, property taxes tend to grow slowly unless there is a significant amount of housing activity. In past decade, we have seen robust growth in property taxes due to new development, high turnover of existing homes, and double-digit growth in housing prices. Changes in sales tax revenue align more closely with changes in the overall condition of the economy, and are expected to increase as the current economic recovery gains steam. Sales taxes are expected to total $27.1 million for FY 2011-12, an increase of 3 percent compared to the FY 2010-11 projections. The City of Carlsbad has many car dealerships which historically generated approximately $6 million of sales tax each year. Car sales have slowed since FY 2008-09 but started to show slight gains in the 4th quarter of 2010, resulting in annual car sales projections of approximately $5.8 million for FY 2011-12. Over the past year, many national car manufacturers have seen double-digit growth, partially due to the incentives they have offered to lure customers (cash General Retail 41% Food Products 15% Transportation 27% Construction 2% Business to Business 14% Miscellaneous 1% Sales Tax by Category Fourth Quarter 2010 2011-12 OPERATING BUDGET OVERVIEW B-3 rebates and zero percent financing options, to name a few), as well as pent up demand. Although the city does not expect to see this continued level of growth in sales tax revenues from car sales in FY 2011-12, this growth signals that the economic recovery is well underway. The city’s auto mall, Car Country Carlsbad, is now fully leased up, which should also add to the growth in revenues generated from car sales. In addition, retail comprises over 40 percent of the sales tax generated in Carlsbad and with a recovering economy, it is anticipated there will be more discretionary purchases as compared to the past couple of years. As consumer confidence continues to increase, the city’s sales tax revenues are projected to continue to increase, but at a slower rate than what the city experienced in FY 2010-11. Included in the projected sales tax figures for FY 2011-12 is the opening of new stores at Paseo Carlsbad, new retail outlets in Bressi Ranch and a full year of sales tax revenues from two new auto dealerships in the city’s auto mall. Several years ago, the State of California implemented the “Triple Flip.” The “Triple Flip” is essentially a temporary swap of a ¼ cent of the cities’ sales taxes in return for property tax. It was done in order to give the state a revenue source against which they could issue deficit reduction bonds. The city’s sales tax estimates continue to classify this amount as sales tax. As can be seen in the chart on the previous page, the city’s sales tax base is heavily weighted in the transportation (predominantly new car sales) and retail sectors. These two sectors make up approximately 68 percent of the city’s sales tax base and were negatively impacted by the recent economic recession. During FY 2010-11, sales tax revenues, especially in the auto and retail sectors, increased rapidly as the economy began to recover. Sales tax estimates also include approximately $780,000 in Proposition 172 funds, which are earmarked for public safety service expenditures. Proposition 172 requires that the ½ cent increase in California sales taxes be allocated to local agencies to fund public safety services. The third highest General Fund revenue source is Transient Occupancy Taxes (TOT, or hotel taxes), estimated at $12 million for FY 2011-12, an increase of 5.3 percent compared to FY 2010-11 estimates. It is anticipated that there will be slight increases in the average daily rate in FY 2011-12, a flat occupancy rate compared to FY 2010-11, and the reopening of a section of the La Costa Resort, which was closed for a portion of FY 2010-11 due to renovations. In addition, the Park Hyatt Hotel, which took over operations of the Four Seasons Aviara Hotel in June 2010, is becoming more established, raising the expectations of higher TOT revenues in FY 2011-12. 2011-12 OPERATING BUDGET OVERVIEW B-4 One of the more volatile General Fund revenues is the Franchise Tax. Franchise taxes are paid by certain industries that use the city right-of-way to conduct their business. The city currently has franchise agreements for cable TV service, solid waste services, cell sites, fiber optic antenna systems and gas and electric services. The cable and solid waste franchises have been growing along with the growth in population, changes in their rate structures, and the continued growth of the city’s newest cable franchisee, AT&T. Overall, franchise tax revenues are projected to decrease by approximately 2 percent, primarily due to decreased receipts from gas and electric services, which are paid by San Diego Gas and Electric (SDG&E). SDG&E pays franchise taxes for the use of the public land over which they transport gas and electricity. The city also receives an “in-lieu” franchise tax based on the value of gas and electricity transported on SDG&E lines, but purchased from another source. The “in-lieu” tax captures the franchise taxes on gas and electricity that is transported using public lands but which would not otherwise be included in the calculations for franchise taxes, due to deregulation of the power industry. The majority of the “in-lieu” taxes received is attributable to Cabrillo Power, the operator of the Encina power plant, and is based on the gas used in the generation of electricity. The continued reduction in operations at the Encina power plant is projected to negatively impact the “in-lieu” franchise tax paid by SDG&E, leading to the projected decrease in franchise taxes. Development-related revenues include planning, engineering and building permits, and fees paid by developers to cover the cost of reviewing and monitoring development activities such as plan checks and inspections. These revenues are difficult to predict, as many of the planning and engineering activities occur months or years before any actual development. During FY 2009-10, development related revenues began to turn around from historic lows experienced in FY 2008-09. Although not as high as FY 2009-10, FY 2010-11 development related revenues are projected to end the year higher than the historic lows experienced in previous years. In FY 2011-12, development-related revenues are anticipated to decrease slightly as a result of the depressed housing market activity. In FY 2009-10, there were 339 units permitted for residential housing. For FY 2010-11, 212 residential units have been permitted through April 2011. For FY 2011-12, 187 permits are projected to be issued for residential housing. The commercial and industrial building activity remained weak for FY 2009- 10 and FY 2010-11, and is expected to continue to be weak in the coming fiscal year. Due to subdued activity in residential and commercial development, building-related revenues are expected to drop by 9.5 percent in FY 2011-12 Business license taxes are closely tied to the health of the local economy and are projected to increase by 2.9 percent to an estimated $3.5 million. There are currently about 8,800 licensed businesses in Carlsbad, with just under 2,600 of them home-based. All other revenues include vehicle license fees, transfer taxes, interest earnings, ambulance fees, recreation fees, and other charges and fees. The estimate for Fiscal Year 2011-12 totals $16.2 million, a $1.2 million increase from the previous year. 2011-12 OPERATING BUDGET OVERVIEW B-5 Interdepartmental charges are generated through engineering services charged to capital projects, reimbursed work from other funds and miscellaneous interdepartmental expenses charged to funds outside the General Fund for services performed by departments within the General Fund. In previous fiscal years, the city charged miscellaneous interdepartmental expenses based on guidelines used for federal grant reimbursement, which did not allocate the expenses for all services performed by the General Fund. In FY 2011-12, the city changed the method for calculating the costs of services provided by the General Fund to other funds. This new method will more accurately allocate all costs, including those associated with legislative services provided by the City Council, City Manager, City Clerk, City Treasurer, and Records Management. Transfer taxes are those taxes paid to the county upon the transfer of interests in real estate. The tax is 55 cents per $500 of property value, and is split equally between the county and the city. Carlsbad expects to receive approximately $1.1 million in transfer taxes for FY 2011-12, which is a $271,000 increase over FY 2010-11. This is mainly due to the increase in the sale of new homes as well as an increase in distressed home sales. Income from investments and property includes interest earnings, as well as rental income from city-owned land and facilities. The city is expected to earn about $1.6 million in interest on its General Fund investments for Fiscal Year 2011-12 (a projected 2.1 percent yield on the city’s investment portfolio). General Fund Revenues Overall, as reflected in the bar chart, General Fund revenues are expected to be up 2.1 percent from FY 2010-11 estimates due to the increase in sales and transient occupancy taxes and an increase in interdepartmental charges resulting from the change in the cost allocation methodology. Although the city experienced revenue growth between 9 and 17 percent in the late 1990’s, it was not sustainable growth. Much of those increases were due to the opening of new hotels, restaurants, retail centers, and new home development. As new development slows, it will be increasingly more difficult to produce double-digit growth in revenues. Due to the slow pace of the current economic recovery, limited growth of is anticipated in the next fiscal year and beyond. Other Funds Revenues from Special Revenue funds are expected to total $11.3 million in FY 2011-12, a $3.6 million decrease from FY 2010-11. The types of programs supported within Special Revenue funds are those funded by specific revenue streams such as: Grants (Rental Assistance-Section 8 and Community Development Block Grants) Special fees and assessments (Affordable Housing and Maintenance Assessment Districts) Donations (Library, Cultural Arts, Recreation and Senior Donations) 0 20 40 60 80 100 120 140 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011e FY 2012 +2.1% +16.3%-1.9%-3.6%-1.3%+2.1% $ Millions -3.2% 2011-12 OPERATING BUDGET OVERVIEW B-6 The most noteworthy changes in the Special Revenue funds occurred in the Street Lighting and the Community Development Block Grant (CDBG) funds. Estimated revenues decreased approximately $1.5 million and $1.8 million, respectively, from FY 2010-11. During FY 2010-11, the city received approximately $1.5 million in American Recovery and Reinvestment Act (ARRA) funds from the California Energy Commission (low interest loan). The city does not anticipate drawing down any additional loan funds in FY 2011-12. These revenues are one-time monies which are being used towards the City’s street light retrofit project. The street light retrofit project will replace the city’s high-pressure sodium vapor lights with induction lights. During FY 2010-11, the Villa Loma low income housing project paid ground lease payments that were in arrears going back to 1999, in full, to the CDBG Fund. This was a one-time event that will not recur in FY 2011-12. Enterprise fund revenues for FY 2011-12 are projected at $52.8 million, an increase of $2.4 million, or 4.7 percent, over current year projections. The increase in revenues is primarily due to the proposed rate increases for Water and Wastewater funds. Enterprise funds are similar to a business, in that rates are charged to support the operations that supply the service. Carlsbad Enterprise funds include water and recycled water delivery, wastewater services, and solid waste management. The Water Enterprise Fund revenue is estimated at $38.2 million, an increase of $1.4 million, or 3.7 percent over the current year estimate. These revenues reflect $4.5 million in increased sales revenue due to proposed rate increases, combined with a decrease in other revenues. In FY 2010-11, the District received a one-time settlement in the amount of $3.2 million related to the Marbella lawsuit, causing an anomalous increase in other revenues. The proposed rate increases have not yet been approved by the Board of Directors of the Carlsbad Municipal Water District, and staff will be requesting that a Public Hearing be scheduled at a future date in order to consider the proposed rate increases. Anticipated increases paid to the San Diego County Water Authority include a 9 percent increase to the wholesale purchase cost of water (from $887 to $967 per acre foot, effective January 1, 2012), and an 18.7 percent increase in the fixed charges for water purchases (from $4.3 million to $5.1 million) for FY 2011-12. In addition to paying for the wholesale and fixed water costs, the FY 2011-12 Operating Budget 2011-12 OPERATING BUDGET OVERVIEW B-7 includes funding for replacement of Carlsbad’s water infrastructure, ongoing meter replacements, and building a sufficient operating reserve. Estimated revenues for Wastewater are $11.2 million, $913,600 over the current year estimate. The revenue increase reflects proposed rate increases to fund the ongoing cost of operations, maintenance, and funding for replacement of infrastructure, as well as providing a sufficient operating reserve. The rate increases have not yet been approved by the City Council, and staff will be requesting that a Public Hearing be set at a future date to consider proposed rate increases. Internal Service funds show estimated revenues of $16 million for FY 2011-12, an increase of about $150,000, or 1 percent, from FY 2010-11 projections. Internal Service funds provide services within the City itself, and include programs such as the self-insurance funds for Workers’ Compensation and General Liability (Risk Management), as well as Vehicle Maintenance and Replacement, and Information Technology. Departments pay for services provided by these funds; therefore, the rates charged for the services are based on the cost to provide the service. The goal of the Internal Service funds is to match their budgeted expenses with charges to the departments, after allowing for a certain level of reserves within the fund. The more significant changes occurred in Workers Compensation, Vehicle Replacement, and Information Technology. In Workers Compensation, increased claims resulted in a higher rate charged out to departments. For the Vehicle Replacement Fund, the decrease reflects extending the useful lives and the replacement schedule for various vehicles. For Information Technology, increased costs of technology equipment result in higher charges to departments. More discussion on the costs can be found in the Expenditures section of this report. Redevelopment revenues are expected to total $3.5 million in the upcoming year, a decrease of 7.9 percent, or $300,000, from the projections from the previous year. This decrease is the result of the repayment of the Villa Loma low and moderate income housing loan of $437,000 in FY 2010-11 that was made in a prior year. This was a one-time event that will not occur in FY 2011-12. The City has a General Fund reserve policy that sets a minimum reserve of 30 percent of the General Fund Operating Expenditures. In addition, the policy sets a target reserve of 40 percent to 50 percent of General Fund Operating Expenditures. The minimum reserve would provide approximately three to four months of operating expenditures for unforeseen emergencies. At the end of FY 2009-10, the undesignated and unreserved General Fund balance was approximately $51.4 million. At the end of FY 2010-11 the reserve is projected to be approximately $53.2 million, or 47 percent, of the FY 2010-11 Budget. The reserve amount is consistent with Council Policy 74: General Fund Reserve Guidelines. 2011-12 OPERATING BUDGET OVERVIEW B-8 EXPENDITURES The city’s Operating Budget for FY 2011-12 totals $193.8 million, which represents an increase of about $5.5 million, or 2.9 percent, as compared to the adopted FY 2010-11 Budget. The changes in each of the city’s programs will be discussed below. Budgetary Policies The theme behind this year’s budget development was to provide a balanced budget for the coming fiscal year and set the city on a path to long-term financial health, ensuring that forecast costs can be covered by tepid revenue growth. All known and ongoing operating expenses were incorporated in the FY 2011-12 operating budget, as well as in long-term financial forecast. For FY 2011-12, operating subsidies for the municipal golf course were budgeted as ongoing operating expenses and will no longer be accounted for as advances from the General Fund. This ongoing subsidy results in an additional $1.8 million in expenditures for the General Fund Operating Budget in FY 2011-12. Responsible management of the city’s resources includes maintaining a focus on a sustainable future by ensuring the city remains in good financial health. Today’s decisions will impact future spending levels and, although economic conditions appear to be improving, the following policies for FY 2011-12 were established in line with conservative revenue growth estimates: Continue to minimize service level impacts to our residents. No new positions and no growth in maintenance and operations. No new programs unless required under a legal mandate. Significant known personnel increases should be included in departmental budget projections. Personnel and operating reductions should be identified in order to offset known budget increases. Exercise prudence in budgeting. Consider cost containment measures and budget discretionary items at minimum levels. The city uses an “Expenditure Control Budget” (ECB) process in budgeting, where each department is given a block appropriation containing sufficient funds to provide the current level of services for the upcoming year. Typically, each year the block is increased by an index for growth and inflation. However, as a result of the economic recession, in both FY 2008-09 and FY 2009-10 block budgets were decreased in response to decreasing revenues. For FY 2010- 11 the city realigned its organizational structure allowing for increased efficiencies with fewer resources. Block growth remained flat, with overall operations costs remaining at FY 2009-10 levels. For FY 2011-12, in order to meet rising General Fund expenses, some vacant positions were eliminated, related service delivery was restructured, and departments were once again asked to identify operational reductions to absorb necessary increases in their block budgets. No additional appropriations are expected during the fiscal year, except in the case of a significant unanticipated event. As in past years, amounts that are unspent at the end of the fiscal year will be carried forward to the next year. At the end of FY 2010-11, the amounts carried forward by each department will be capped at no more than 10 percent of the previous year’s Adopted Budget. 2011-12 OPERATING BUDGET OVERVIEW B-9 Budgeted Expenditures Through the application of these guidelines and policies, the FY 2011-12 Operating Budget of $193.8 million was developed. Position Changes A decrease of 14.75 full-time positions is reflected in the FY 2011-12 Operating Budget, as compared to the FY 2010-11 Adopted Budget. The total decrease includes the elimination of 10.75 positions identified through the city’s expenditure reduction efforts as well as the elimination of four positions that had previously been unfunded. The FY 2011-12 Operating Budget includes the elimination of the following 14.75 full-time positions: 1.0 Assistant Planner 1.0 Associate Engineer 2.0 Custodians 1.0 Deputy City Engineer 1.0 Fire Marshal 1.0 Graphic Artist 2.0 Maintenance Aides 1.0 Management Analyst 1.0 Parks Maintenance Worker 0.75 Records Manager 1.0 Senior Building Inspector 1.0 Senior Office Specialist 1.0 Utility Worker In addition to the eliminated positions mentioned above, three other positions in the city are projected to remain unfunded for FY 2011-12. The unfunded positions provide an opportunity for departments to realize salary savings while still maintaining a count for the vacant position, which could be budgeted again in a future year once the economy improves. The net increase in hourly staff totaled 0.8 FTE. This increase is due to a 0.3 FTE increase in the Utilities Department for part-time Utility Workers and a 0.5 FTE increase in the Records Department for a part-time Office Assistant. These increases are to provide partial replacements for two of the full-time positions shown as eliminated above. These changes result in a city workforce of 684.25 full and three-quarter time employees, and 139.74 hourly, full-time equivalent positions. As mentioned above, three of the full-time positions are not funded in the FY 2011-12 Budget. New Facilities The city has a number of major capital projects scheduled to be built over the next five years. As the city completes these projects, the costs of maintaining and operating the facilities, including additional personnel if necessary, are added to departmental operating budgets. The Carrillo Ranch Barn Restoration project is scheduled for completion in the Spring of 2011. Additional funds for maintaining this facility will be incorporated in the FY 2011-12 budget for the Property and Environmental Management Department. Additional funds have also been added to the Parks and Recreation budget for landscape maintenance of the new Madison Street expansion of Pine Avenue Park. 2011-12 OPERATING BUDGET OVERVIEW B-10 Budget by Fund Type The table below shows the changes in the Operating Budget for FY 2011-12, as compared to the Adopted Budget for FY 2010-11. BUDGET BUDGET $% FUND 2010-11 2011-12 CHANGE CHANGE GENERAL FUND 109.4$ 111.8$ 2.4$ 2.2% SPECIAL REVENUE 10.9 11.4 0.5 4.6% ENTERPRISE 51.6 53.5 1.9 3.7% INTERNAL SERVICE 14.3 15.3 1.0 7.0% REDEVELOPMENT 2.1 1.8 (0.3) -14.3% TOTAL 188.3$ 193.8$ 5.5$ 2.9% BUDGET EXPENDITURE SUMMARY BY FUND TYPE (In Millions) The General Fund contains most of the discretionary revenues that support basic core city services. However, this should not diminish the importance of the other operating funds, as they also contribute to the array of services available within Carlsbad. The remainder of this section will provide more information about budgeted expenditures by fund and program. GENERAL FUND SUMMARY GENERAL FUND SUMMARY BY EXPENDITURE TYPE BY EXPENDITURE TYPE BUDGET BUDGET $% 2010-11 2011-12 CHANGE CHANGE PERSONNEL 72.5$ 72.8$ 0.3$ 0.4% M & O 29.3 29.4 0.1 0.3% CAPITAL OUTLAY - 0.1 0.1 0.0% TRANSFERS 7.6 9.5 1.9 25.0% TOTAL 109.4$ 111.8$ 2.4$ 2.2% (In Millions) General Fund The total budget for the General Fund for FY 2011-12 is $111.8 million, which is 2.2 percent greater than the previous year’s adopted budget of $109.4 million. The total increase is mainly attributable to a $0.3 million, or 0.4 percent, net increase in personnel costs and a $1.9 million, or 25 percent, overall increase in transfers out of the General Fund to other city funds, as can be seen in the table above. These changes are discussed in more detail below. Personnel costs make up approximately 65 percent of the General Fund budget so any changes in these costs can have a significant effect on the total budget. The total personnel budget for FY 2011-12 is $72.8 million, which is $0.3 million, or 0.4 percent, more than the previous year’s total personnel budget of $72.5 million. The overall increase was due to several factors, as discussed on the following page. 2011-12 OPERATING BUDGET OVERVIEW B-11 GENERAL FUND GENERAL FUND PERSONNEL COSTS PERSONNEL COSTS (In Millions) BUDGET BUDGET $% 2010-11 2011-12 CHANGE CHANGE SALARIES 50.8$ 50.3$ (0.5)$ -1.0% HEALTH INSURANCE 6.1 6.5 0.4 6.6% RETIREMENT 13.3 13.6 0.3 2.3% WORKERS COMP 1.2 1.3 0.1 8.3% OTHER PERSONNEL 1.1 1.1 0.0 0.0% TOTAL 72.5$ 72.8$ 0.3$ 0.4% The table above shows the breakdown of personnel costs for the General Fund. Overall, total personnel costs are projected to increase by $0.3 million, or 0.4 percent, for FY 2011-12 as compared to FY 2010-11. Salaries include full and part-time staff costs and are expected to decrease in FY 2011-12. As part of the city’s efforts to reduce costs in FY 2011-12, the elimination of 14.75 full-time positions resulted in approximately $1.0 million in total personnel savings, with about $700,000 of that in reduced salary costs. The salary savings are somewhat offset by increases in salaries scheduled to occur in FY 2011-12 due to previously negotiated labor contracts, netting to an overall decrease of $0.5 million, or one percent, in total salary costs. Retirement rates, as projected by CalPERS, will increase in FY 2011-12 by about 1.25 percent of salary for General and Management employees, representing a 5.9 percent increase, and by about 4 percent of salary for Safety employees, representing a 14.5 percent increase. Rate increases are partially offset by decreases in the city’s share of retirement costs as a result of prior year public safety employee contract negotiations and by the elimination of positions, as mentioned above, resulting in an overall increase of $0.3 million, or 2.3 percent, in total retirement costs. Health insurance rates are projected to increase by about 5 percent, while Worker’s Compensation rates are projected to increase by about 10 percent due to increases in claims. These increased costs are partially offset by decreases due to a reduction in the overall number of city personnel. Miscellaneous other personnel costs are projected to remain flat for FY 2011- 12, with small increases offset by the overall personnel decreases previously mentioned. Contract negotiations for the city’s General employees were underway, but not yet complete, at the time the Budget was adopted by the City Council. No actions resulting from those negotiations have been assumed in the Fiscal Year 2011-12 Adopted Budget. Maintenance & Operations costs (or M&O) represent about 26 percent of the total General Fund budget, and include the budgets for all program expenses other than personnel, capital outlay and transfers. For FY 2011-12, potential large increases in overall M&O costs were offset by departmental cost reduction efforts, resulting in overall maintenance and operations costs remaining relatively flat for FY 2011-12, as compared to FY 2010-11. Maintenance and Operations costs are discussed more fully by program later in the report. 2011-12 OPERATING BUDGET OVERVIEW B-12 Capital Outlay includes budgeted equipment purchases over $1,000. One major capital outlay purchase is planned in the General Fund for FY 2011-12, namely $110,000 for the replacement of three portable EKG monitors for the Fire Department’s emergency medical services team. Transfers are amounts anticipated to be transferred from the General Fund to another city fund. The transfers included in this year’s proposed budget are to the following funds: $7.4 million to the Infrastructure Replacement Fund for major maintenance and replacement of city infrastructure. This represents 6.5 percent of the General Fund Revenues, the same as the percentage transfer for FY 2010-11. $215,000 to the Storm Water Program for reimbursement for the General Fund portion of Storm Water expenses. $473,000 to the Median Maintenance and Street Tree Maintenance Special Revenue Funds to cover cash shortfalls, as annual assessments collected from property owners do not cover operating expenditures. $1.4 million to the city’s municipal golf course for debt service and operations. The Golf Course’s budget and financials are on a calendar year basis. The Carlsbad Public Financing Authority approved the calendar year 2011 Golf Course Budget, including this funding from the General Fund. Advances are amounts anticipated to be transferred from the General Fund to another city fund and are expected to be repaid to the General Fund in future years. The advances included in this year’s proposed budget are to the following funds: $85,000 to the South Carlsbad Coastal Redevelopment Area (SCCRA) – The SCCRA is not projecting to generate tax increment for FY 2011-12. However, there are activities that need to be performed to help generate tax increment producing projects within the area, such as the Ponto Development and the proposed new desalination project. Once more development occurs in this area, it is anticipated that the SCCRA will be able to repay the General Fund advances. The General Fund has advanced money to several funds over the years. There are no anticipated advance repayments to the General Fund included in the FY 2011-12 General Fund budget. Another way of looking at the General Fund budget is by program. The chart on the following page compares the total FY 2011-12 General Fund Operating Budget to the amounts adopted in the previous year. A brief description of each department and its services, as well as a summary of significant department budget changes in the FY 2011-12 Preliminary Operating Budget, are noted below the chart. 2011-12 OPERATING BUDGET OVERVIEW B-13 GENERAL FUND EXPENDITURES GENERAL FUND EXPENDITURES BY DEPARTMENT BY DEPARTMENT (In Millions) BUDGET BUDGET $% FUND 2010-11 2011-12 CHANGE CHANGE POLICY/LEADERSHIP 5.3$ 4.9$ (0.4)$ -7.6% COMMUNITY & ECONOMIC DEV 7.4 7.2 (0.2)-2.7% FINANCE 3.3 3.4 0.1 3.0% FIRE 16.2 16.9 0.7 4.3% HOUSING & NGHBRHD SRVCS 0.4 0.5 0.1 25.0% HUMAN RESOURCES 2.4 2.3 (0.1)-4.2% LIBRARY & ARTS 10.4 10.4 0.0 0.0% PARKS AND RECREATION 12.4 13.0 0.6 4.8% POLICE 28.2 28.2 0.0 0.0% PROPERTY & ENVIRO MGT 4.8 4.7 (0.1)-2.1% STORM DRAIN ENGINEERING 0.3 0.3 0.0 0.0% TRANSPORTATION 9.1 8.9 (0.2)-2.2% NON-DEPARTMENTAL 9.2 11.1 1.9 20.7% TOTAL 109.4$ 111.8$ 2.4$ 2.2% The Policy & Leadership Group consists of all elected officials, the City Manager’s Office, the City Attorney’s Office, and Communications and Records Management functions. The $400,000, or 7.6 percent, decrease for FY 2011-12 is primarily due to the elimination of one position in the City Manager’s Office and 1.75 positions in the Records Department, as well as a reduction in election expenses in the City Clerk’s Office as compared to the prior year. The Community and Economic Development Department includes economic development, planning, development services, building inspection, and land use engineering. The decrease of about $200,000, or 2.7 percent, is mainly due to the transfer of Code Enforcement duties, including two positions, to the Housing and Neighborhood Services Department. Department personnel cost increases in health and pension benefits were offset by the elimination of two positions. The Finance Department provides the accounting, financial reporting, collections, fiscal oversight, capital and operating budgeting, and long-term financial planning for the city. The increase of about $100,000, or three percent, is due to personnel cost increases, as well as an increase in ambulance billing and credit card fees. The Carlsbad Fire Department is one of the cornerstones of the city’s public safety efforts. Services include emergency operations, emergency preparedness, and fire prevention. The $600,000, or 3.7 percent, increase for FY 2011-12 is primarily due to contractual increases in personnel costs, increases in the city’s public safety pension rates, and increases in the city’s health insurance rates. Other increases include an increase in Internal Service Fund charges due to continued rising costs of replacing fleet equipment for Fire Safety and an increase of $110,000 for a capital outlay purchase to replace three portable EKG machines for emergency services. The elimination of one position in the department offset some of the increases mentioned. 2011-12 OPERATING BUDGET OVERVIEW B-14 The Housing and Neighborhood Services Department includes the city’s neighborhood services, hiring center and volunteer programs. Code enforcement duties were also added in the FY 2011-12 budget. The net increase of approximately $100,000, or 25 percent, is primarily due to the transfer of Code Enforcement, including two positions, from the Community and Economic Development Department; this increase is partially offset by savings from unfunding one of these positions. The Human Resources Department supports the city with staffing and recruitment, employee development, performance management, and compensation and labor relations services. The department’s budget will decrease by about $100,000, or 4.2 percent, from FY 2010-11 to FY 2011-12, mainly from reducing costs related to an Organizational Development consultant. Budgets for tuition reimbursement and training were also reduced. The Library and Arts Department provides staffing and a wide variety of programming for two library branches, a library learning center, and a cultural arts office. The department’s budget is projected to remain flat from FY 2010-11 to FY 2011-12. Projected personnel and Internal Service Fund charge increases are mostly offset by the elimination of one position and a reduction in the department’s budget for purchasing new materials. The Parks and Recreation Department plans, staffs and maintains the city’s parks and recreational facilities, provides an assortment of recreational programs for all ages, maintains landscaping at facilities throughout the city, and manages the city’s open space areas. The department’s budget increased by $600,000, or 4.8 percent, from the prior year, mainly as a result of adding $335,000 for Habitat Maintenance costs related to the city’s municipal golf course and the assumption of landscaping and maintenance services at some city facilities previously budgeted in the Property and Environmental Management Department. Various personnel increases in the department are offset by eliminating one position, a reduction in tree maintenance programs, and savings in ball field lighting. The Carlsbad Police Department provides high quality public safety services to the community to ensure the preservation of life and property and the maintenance of law and order in the City of Carlsbad. Overall, the Preliminary Operating Budget shows the department’s costs remaining flat for FY 2011-12 as compared to FY 2010-11, as projected budget increases were offset by reductions realized through lower pension costs for some staff and savings in both Fleet and Information Technology maintenance and replacement costs. Contracted personnel increases include the impact of a two percent salary increase that was effective January 1, 2011, an increase in the city’s public safety pension rates, and an increase in the city’s health insurance rates. Additional budget of $250,000 was provided for Police Booking Fees, expected to be charged by San Diego County due to funding decreases. The Property and Environmental Management Department manages all city-owned property, including real estate, buildings and vehicles. The department also manages the city’s environmental programs, which include storm water, habitat and other environmental maintenance and monitoring programs. The approximately $100,000, or 2.1 percent, decrease from the prior year’s budget is primarily due to the transfer of landscaping and maintenance services to Parks and Recreation, as mentioned above. 2011-12 OPERATING BUDGET OVERVIEW B-15 This reduction is somewhat offset by departmental personnel increases. The department is also eliminating two Custodian positions that were unfunded in a previous year. The Utilities Department in the General Fund consists of Storm Drain Engineering activities. No significant change is expected from FY 2011-12 as compared to the FY 2010-11 budget appropriation. The Transportation Department manages all streets, traffic and other city-wide transportation services. The department shows an overall decrease of about $200,000, or 2.2 percent, for FY 2011-12 as compared to the FY 2010-11 budget. The decrease is largely the result of eliminating four positions, including two that were previously unfunded. Non-departmental expenses include the transfers previously discussed, as well as administrative and other expenses not associated with any one department. The increase of $1.9 million, or 20.7 percent, is mainly attributed to a $1.8 million increase in transfers from the General Fund to other city funds, primarily for operational and debt service funding for the city’s municipal golf course. The Council Contingency account is available to the City Council for unanticipated emergencies or unforeseen program needs during the year. It is budgeted at $500,000 for FY 2011-12, which is equal to the budget for this item in FY 2010-11. The budgeted amount represents less than one percent of the FY 2011-12 General Fund Budget. General Fund Budgeted Expenditures 95 100 105 110 115 120 FY2007 $106.4M FY2008 $116.5M FY2009r $112.7M FY2010 $109.1M FY2011 $109.4M FY2012 $111.8M +9.5% +9.5% (3.2%)+<1% $ Millions (3.3%)+2.2% A history of General Fund budgeted expenditures is reflected in the chart above. The city began to slow its expenditure growth after FY 2007-08, due to the economic slowdown and subsequent recession. The chart shows that the FY 2008-09 budget, as revised by a mid-year reduction made in January 2009, was 3.3 percent less than the adopted budget for the prior year. A further 3.2 percent budget reduction was made in FY 2009-10 in order to reduce expenditures in line with declines in General Fund revenues. For FY 2010-11 budgeted expenditures remained relatively flat in anticipation of a flat economy. General Fund expenditures are expected to increase by $2.4 million, or 2.2 percent, in FY 2011-12, supported by projected revenue increases. 2011-12 OPERATING BUDGET OVERVIEW B-16 Changes in Other Funds Special Revenue funds, at $11.4 million, are up $500,000, or 4.6 percent, from the prior year. This is mainly due to spending increases in the city’s Police Asset Forfeiture, Street Lighting, and Buena Vista Channel Maintenance Funds. Enterprise funds total $53.5 million, which is an increase of $1.9 million, or 3.8 percent, over the FY 2010-11 Adopted Budget. The most significant change in Water Operations is due to the increase in the cost of water purchased from the San Diego County Water Authority (18.7 percent increase in fixed costs and a 9 percent increase in variable costs due to a proposed increase from $887 to $967 per acre foot effective January 1, 2012). In addition, the cost of purchasing recycled water is anticipated to increase up to 30 percent when compared to the Adopted Budget for FY 2010-11. Carlsbad customers continue to conserve water, and therefore the quantities purchased are expected to decrease in comparison to the adopted FY 2010-11 budget. The Operating Budget also includes additional funding for depreciation replacement transfers related to growth in the water infrastructure system. Wastewater operations are projected to increase 5.2 percent, or $550,000, over the Adopted Budget for FY 2010-11. The operating budget includes additional funding for depreciation replacement transfers related to growth in the wastewater infrastructure system. . The Internal Service funds total $15.3 million, an increase of $1.0 million, or 7.5 percent, from the prior year. The Internal Service funds are self-supporting through user charges. Changes occurred in a number of these funds, including the following: The Workers Compensation Fund budget shows an increase of approximately $150,000, or 8.4 percent, based on higher claims in the fund. The Self Insured Benefits budget shows an increase of approximately $150,000 based on projected increases in health related expenses paid from the fund. The Vehicle Replacement Fund budget varies from year to year depending on the vehicles to be replaced. The budget for the fund is about $400,000 more than the previous year, or a 31 percent increase, due to more vehicles being due for replacement than in the previous year. A list of the requested replacement vehicles can be found at the end of this document. The Information Technology Fund shows an increase in the department’s budget of approximately $400,000, or 6.8 percent, from FY 2010-11 to FY 2011-12. This is mostly due to more technology equipment being due for replacement than in the prior year. The Redevelopment Agency budgets have decreased about $400,000, or 17.7 percent, from the previous year, mainly due to a reduction in the previously required SERAF payment for the Village Redevelopment area. 2011-12 OPERATING BUDGET OVERVIEW B-17 SUMMARY The Operating Budget for FY 2011-12 provides a balanced budget for the coming fiscal year while maintaining a long-term plan to sustain a balanced budget in future years, given continued economic uncertainty. The city’s budget continues to emphasize the maintenance and operations of current city infrastructure as well as maintaining core city services at their current levels. Significant ongoing operating expenses were identified and incorporated in the FY 2011- 12 where necessary, to ensure the budget reflects the ongoing financial obligations of the city. Being conscious of continued economic uncertainty, no new programs or expanded levels of service are included in the budget. The Carlsbad economy is starting to improve, with new business investment in the city and recent gains in city sales tax revenues. However, revenues and expenditures will continue to need close monitoring, as sluggish housing sales and high unemployment rates persist. In addition, concerns continue over the impact that budget decisions at the state level could have on the city’s financial situation. The ten-year financial forecast is a useful tool to help manage our way through this continued economic uncertainty. The City of Carlsbad is in a good economic position but is not immune to the impacts of a fluctuating economy. Careful planning and responsible management have allowed the city to maintain an excellent quality of life for its residents and has provided a sound economic base for the future. Fiscal conservatism, which has consistently been the city’s overall approach to managing its finances, is even more important during these economically uncertain times. The city is in an excellent position to take advantage of new economic opportunities due to careful planning and maintaining a sound financial footing. 2011-12 OPERATING BUDGET OVERVIEW B-17 SUMMARY The Operating Budget for FY 2011-12 provides a balanced budget for the coming fiscal year while maintaining a long-term plan to sustain a balanced budget in future years, given continued economic uncertainty. The city’s budget continues to emphasize the maintenance and operations of current city infrastructure as well as maintaining core city services at their current levels. Significant ongoing operating expenses were identified and incorporated in the FY 2011- 12 where necessary, to ensure the budget reflects the ongoing financial obligations of the city. Being conscious of continued economic uncertainty, no new programs or expanded levels of service are included in the budget. The Carlsbad economy is starting to improve, with new business investment in the city and recent gains in city sales tax revenues. However, revenues and expenditures will continue to need close monitoring, as sluggish housing sales and high unemployment rates persist. In addition, concerns continue over the impact that budget decisions at the state level could have on the city’s financial situation. The ten-year financial forecast is a useful tool to help manage our way through this continued economic uncertainty. The City of Carlsbad is in a good economic position but is not immune to the impacts of a fluctuating economy. Careful planning and responsible management have allowed the city to maintain an excellent quality of life for its residents and has provided a sound economic base for the future. Fiscal conservatism, which has consistently been the city’s overall approach to managing its finances, is even more important during these economically uncertain times. The city is in an excellent position to take advantage of new economic opportunities due to careful planning and maintaining a sound financial footing. Policy Ldrshp Policy and Leadership Group Internal Srvcs Internal Services Comm Dev Community Development Comm Srvcs Community Services Public Safety Public Safety Public Works Public Works Capital Improvement Program Capital Improvement Program Overview Overview 2011-12 CAPITAL IMPROVEMENT PROGRAM I-1 OVERVIEW The City of Carlsbad Capital Improvement Program (CIP) is a planning document that outlines the expenditure plan for future capital projects and the corresponding revenues to pay for those expenditures. The CIP is a financial planning document, not a commitment for spending. All construction costs are estimates and are reviewed and further refined each year. Spending authorization is given only at the time the City Council formally adopts the proposed budget, and, at that time, funds are only appropriated for the following fiscal year. Information is shown in subsequent years to provide the most comprehensive snapshot of all the known future facilities the City of Carlsbad plans to construct. The Fiscal Year (FY) 2011-12 Capital Improvement Program outlines approximately $64.7 million in new appropriations to provide additional funding for the continuation of existing projects as well as funding for new projects. Projected revenues during the same fiscal year are estimated at $33.4 million. Revenues are collected as building permits are issued; as the need for facilities arises, the money is used to fund the new facilities. As the City continues to grow and develop, there is a corresponding increase in the demand for development-related services and new facilities. To ensure that the necessary infrastructure and facilities are built on a schedule that meets or exceeds this demand, the citizens of Carlsbad adopted a Growth Management Plan in 1986. The Growth Management Plan states that unless a standard level of facilities is available to meet new demands resulting from the City’s growth, development cannot proceed. This Plan is the foundation for making decisions about the timing and prioritization of the capital projects under consideration. A discussion of the City's Growth Management Plan is located at the end of this report. The remainder of the report explains the process and the results of the City’s plans for its capital facilities. In previous years the City experienced a significant increase in the cost of construction materials, pushing up the cost of projects. With the economic recession, the increases in the cost of construction materials have moderated, this is expected to continue over the next couple of years. Proposition C was approved by the voters of Carlsbad in November 2002. It allowed the City to expend over $1 million (per project) of general funds to help finance the following projects: • City/Safety Training Center • A portion of Cannon Road – East of College (Reach 4) • Trails and Open Space • A Swimming Pool Complex After the voters approved the ballot initiative, the City set aside $35 million for Proposition C projects. Currently, $16.2 million has been appropriated for Alga Norte Park, $13.7 million has been appropriated for the Joint First Responders Training Facility, and $100,000 is allocated for design of a City Administrative Training Facility. A balance of approximately $5.0 million has been allocated to help fund the remaining Proposition C projects. It is still anticipated that the City will meet its growth management standards. This reflects the Council’s continued commitment to construct the facilities as needed to serve the current and anticipated development occurring throughout the City. 2011-12 CAPITAL IMPROVEMENT PROGRAM I-2 PROJECT EVALUATION What is the definition of a CIP project? Projects that are shown in the CIP are generally defined as any construction (or reconstruction/replacement) of major infrastructure such as streets, libraries, parks, fire stations and administrative facilities, water, sewer and drainage facilities, and other facilities that are located on or in the ground. In most cases, the total construction cost of each of these assets is recorded and tracked as part of the City’s inventory of capital infrastructure assets and other City-owned property. The CIP and the Operating Budget are integral parts of the total City financing plan. Staff began the process by evaluating the construction schedules for City facilities in conjunction with the workload of the staff needed to complete the projects. Staff also met with the City Council to identify their priorities. In the FY 2011-12 CIP, there are approximately 265 continuing and new projects planned in the next 15 years. All projects were analyzed using the criteria shown in the table. Project timing was reviewed, and an evaluation of the availability of capital construction funds as well as operating funds was then factored into the evaluation process. CAPITAL PROJECTS The following two sections provide information about the major capital projects. The first section focuses on projects planned in the next five years, and the second section contains an overview of the entire expenditure plan through the FY 2025-26 (the next 15 years). All construction costs are estimates and only projects scheduled for FY 2011-12 are appropriated. The information shown in the future years reflect the most comprehensive snapshot of the known future facilities and their associated cost at this point in time. THE NEXT FIVE YEARS… PARK PROJECTS The City has planned a number of park projects over the next five years which will enhance the recreational opportunities for Carlsbad’s residents and allow the City to meet the standards for park acreage as set forth in the growth management plan. Some of the more significant projects are listed below. Alga Norte Park and Aquatic Center – The park site is located on 32 acres in the Southeast Quadrant along Poinsettia Lane between El Camino Real and Alicante Road. Planned amenities include lighted ball fields, soccer fields, picnic areas, tot lots, a skate park, a dog park, restrooms, parking facilities, and an aquatic center featuring a 56-meter competition pool, a 25-meter 12-lane instruction pool, and a warm water therapy pool and a water play area for toddlers. The swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. Construction is expected to begin in the summer of 2012. The total cost of the park and aquatic center is currently budgeted at $50.4 million. Leo Carrillo Phase III –Phase III includes the renovation of additional buildings, construction of additional restrooms and an arboretum area. The total cost of the remainder of Phase III is approximately $1.9 million and design is expected to begin in FY 2014-15. Project Ranking Criteria 1. Is the project required to ensure the health and safety of the citizens, as the result of a legal mandate, or to maintain compliance with the City’s Growth Management Plan? Are operating funds available to operate the facility? 2. Is the project needed soon for growth management compliance? 3. Is the project needed now for other City standards (example: ball field standards)? 4. Does the project complete or provide part of the basic infrastructure (example: a linking road segment)? 5. Are there other reasons to construct the project (example: Council priority, timing or funding opportunity, public demand)? 2011-12 Poinsetti commun clubhousmillion. T CIVIC FACivic fac Many of several y Center) Center wCenter. outside s This comParks an the proje STREET Traffic coflow of t number o street pro Avenida from Pal2012-13. El Camin years tha projects Avenue, these pro Pavemen good ridi sealing aas they a 2 CAPITAL a Park Com ity facility, se, stadium The timing o ACILITIES ilities include these are s years. to physically will be locateIt is anticipa storage, wa mbined groupnd Recreatio ect is approx T PROJECTS ongestion coraffic throug of street pro ojects includ Encinas Wid omar Airpor. The CIP in no Real Wid at will focus include widLisa Street ojects are $1 nt Managem ing surface and overlay oare identified IMPROVE mmunity Cen gymnasium, court and adof the design e a variety o still in the pr Filo ea mR Mco y bring toge ed on the avated that the rehouse an p of maintenon, and Prop imately $28. S ontinues to bghout Carlsb ojects expec de: Traffic Sig improving Traffic Sig hardware communicoperations has been 12. dening - Wid rt Road to jncludes $5.4 ening – The on the wide ening from to Crestview 19.5 million. ment – Carls and to exte of the existind. The FY 20 EMENT PRO nter – Phase , enclosed dditional parn is schedule of facilities fr reliminary de ire Station ocated at the astward, relo minute responanch. Total Maintenance onstruction ether the m vailable prope M&O Cent d parking to nance functioperty and En .1 million. be one of thbad and to cted to be c gnal Progra traffic flow,gnal Progra and softw cations netws and thereb included in dening to ful just south o4 million to fu ere are a num ning of El C Cassia Roaw Drive and bad’s local s nd the life o ng street su011-12 CIP OGRAM I-3 e III of this 4 soccer field rking. The ed to begin in rom which th esign stage No. 3 Reloe corner of C ocation of th nse time. T cost is proje and Operatof a Maint maintenance perty adjaceter will includ o accommo ons includesnvironmenta he top concekeep the C ompleted in am – In ke , the FY 20am project. ware in c work that wby improve the CIP with l secondary of Embarcadund this proje mber of proj amino Real ad to CaminTamarack t streets are m of the street rface. In adhas $3.7 mi 42-acre park d, tot lot, p cost is expen FY 2013-1 he City can and will be ocation – FiChestnut an his station is he site for thected at $9.2 tions Centertenance an functions t nt to the Flede offices an odate the C s segments l Manageme erns amongity’s streets n the next fiv eeping with 011-12 CIP This proje conjunction will be usethe flow of h a $2.3 mil y arterial stan dero Lane isect. jects that are to prime art no Vida Robto Chestnut. maintained o t. Part of the ddition, any llion budget k includes am picnic areas ected to be a14. offer its serv e further defi re Station Nd Catalina. needed to h he new stati2 million. r – The Citynd Operatio to a single eet Maintenand support s ity’s mainte of the Utilitieent departm citizens. To in top cond ve years. S h the City includes fuect will upg with the ed to manatraffic. A to lion appropr ndards along s scheduled e scheduled terial roadwa ble, Arenal The total e on a regular e maintenan problem areed for this p menities suc s, tennis co approximate vices to the ined over th No. 3 is cu As the city help ensure on is in Rob y has plannons Center facility. The ance/Public space, work enance pers es, Transpoents. The o help improdition, there Some of the Council’s g nding for thrade traffic creation age traffic otal of $5.6 riation in FY g Avenida E d for design d over the ne ay standards Road to La estimated co r cycle to en nce program eas are addrogram. ch as a omplex, ely $15 public. he next urrently grows the six bertson ned the (M&O e M&O Safety kshops, onnel. rtation, cost of ove the e are a e larger goal of he new signal of a signal million Y 2011- Encinas in FY ext five s. The Costa osts for nsure a m is the ressed 2011-12 CAPITAL IMPROVEMENT PROGRAM I-4 Magnolia and Valley Sidewalk and Street Construction – Planned construction includes street widening and sidewalk improvements along portions of Valley Street and Magnolia Avenue in the vicinity of Carlsbad High School, Valley Middle School, and Magnolia Elementary School. The total cost is estimated at $2.0 million. Poinsettia Lane Reach E – This project includes completion of the final link along Poinsettia Lane between Cassia Road east to Skimmer Court. The total cost is approximately $13.9 million and the CIP program funding for design is scheduled for FY 2013-14. WATER/ WASTEWATER PROJECTS The City’s water and wastewater projects are a vital component to the continued health and welfare of its citizens. Most new lines are built and paid for by developers. As the City ages, it will become necessary to repair and replace the lines that already exist, and an increase in these projects is anticipated in future years. Vista/Carlsbad Interceptor & Agua Hedionda Lift Station Replacement – This project consists of a set of individual projects that will ultimately construct a parallel sewer interceptor system to accommodate existing and future sewer flows from the cities of Vista and Carlsbad. The individual projects include a main in Jefferson Street, replacement of the Agua Hedionda Lift Station, and a main from the lift station to the Encina Wastewater Facility. The overall total cost estimate for this set of projects totals $55.1 million, of which $17.3 million is to be funded by the City of Carlsbad, with the remainder of $37.8 million to be funded by the City of Vista. Wastewater – Other major wastewater facilities scheduled for construction or replacement within the next five years include: Buena Interceptor Sewer Improvements Buena Vista Lift Station Improvements Home Plant Lift Station Replacement and Forcemain Simsbury Sewer Extension Water/Recycled Water Lines – Major water/recycled water facilities scheduled for construction or replacement within the next five years include: Maerkle Floating Cover Replacement and Pump Station Improvements Tri-Agencies Water Transmission Pipeline Replacement Reservoir Repair/Maintenance Program 12-inch Recycled Water Transmission Main – Carlsbad Water Recycling Facility to Chinquapin Maerkle Reservoir Storage – Construction of a buried 16 million gallon water storage reservoir next to the existing reservoir is planned in order to provide additional emergency storage and meet the 10-day storage criteria based on ultimate demands. The total cost is estimated at $14.8 million. DRAINAGE PROJECTS The City’s drainage infrastructure plays an important role in handling storm water runoff flows, as well as maintaining the water quality of the City’s creeks, lagoons and ocean. Carlsbad supports programs that will ensure that all water bodies within the City are safe and clean, and where possible, open to the public at all times. The system consists of drainage pipes 30-inches or larger in diameter, large concrete and rock lined channels, permanent sedimentation basins and miscellaneous large facilities. As the City continues to age, it will become necessary to repair and replace the lines that already exist. An increase in these projects is anticipated in future years. Agua Hedionda Channel – The project includes dredging approximately 40,000 cubic yards of accumulated sediment from the Agua Hedionda and Calavera Creek Channels adjacent to the Rancho Carlsbad Community. Current cost estimates have been updated to include the need to acquire and restore 6.53 acres of wetland mitigation. The total estimated cost of the project is 2011-12 $6.0 mill grant fun CAPITA The CIP future pr below: Park and million. addition specific p Northwe Pine Ave SouthwePoinsetti Aviara C Citywide Veteran’sBusiness Aviara Cthe cons activity ro Veterans Aqua He Crossingimprovem area, par this parconferen amenities Approximprojects. 2 CAPITAL ion. The fu nding to mak AL PROJEC for FY 201rojects for a d recreation Park projecto when the projects not est Quadran nue Park Co est Quadrana Park Com ommunity F e Park and R s Memorial Ps Park Recre Community Fstruction of ooms, as we s Memorial P edionda Lag gs at Carlsbments: com rking and m k include ace center a s. mately 30% Projects in IMPROVE unded portio ke up the diff CTS THRO 1-12 to FY 2a total of 26 Project Streets Civic P Wastew Parks Water Drainag Other ( Total F C nal facility c cts planned we design and discussed e P nt ommunity Bui nt munity Build acility: 2022 Recreationa Park: 2022-2eational Fac Facility – Locan 18,000 ell as park of Park – This p goon adjace bad. The Mmmunity leisu maintenance an amphithnd numerou of future exnclude sever EMENT PRO on of this pr ference. UGH BUIL 2025-26 out65 projects a t Type s/Circulation Projects w ater ge (loans) Future CIP Projects - construction within all qud/or constru earlier in this PARK PROJ ilding: 2022- ding: 2013-1 2-26 al Project 26 ility: 2022-26 cated in thesquare foot ffices. project is loc ent to the Master Plan ure needs, o facility. Oth heater comus other act xpenditures ral road-wide OGRAM I-5 roject, howe LDOUT tlines approxat a cost of Percent 30% 19% 16% 14% 12% 4% 5% 100.0% All Future Pro and acquis adrants of tuction are ex report. JECTS BY Q 26 4 6 NoRo 20 So AlgAlg Le southwest t community cated south City golf c includes thopen space her suggest plex, sportstive/passive are plannedening projec ever, is $5.5 ximately 136f approxima Total Cos %136,321, %86,502, %69,677, %65,090, %55,274, %17,669, %20,492, %451,028, oject Costs sition projec he City are xpected to b QUADRANT orthwest Quobertson Ra 022-26 outheast Qu ga Norte Paga Note Aqu eo Carrillo Pa quadrant ofy facility tha and east of course, The he following interpretive ted uses for s complex, recreations d for street cts, and fund 5 million, and 6 continuingately $451.0 st ,547 ,205 ,586 ,900 ,066 ,053 ,799 ,156 cts total ap listed on thebegin. More T uadrant anch Park Si uadrant ark: 2012-13uatic Center ark Phase II f the City, that would inc f r and traffic sding for side d staff is pu g projects an million as pproximately e following pe detail follo te Developm r: 2012-13 II: 2014-15 his project include meetin signal constewalk constr ursuing nd 129 shown y $65.1 page in ows on ment: ncludes ng and ruction ruction, 2011-12 CAPITAL IMPROVEMENT PROGRAM I-6 concrete repair work and pavement management. Currently there are 18 traffic signals identified and recommended for construction in future years. Wastewater projects are expected to cost over $69.7 million, including funding for the repayment of bonds for the expansion of the Encina Wastewater Facility, and the Encina Water Pollution Control Facility projects. Future water projects include construction of new waterlines, both potable and recycled, concurrent with new development. Replacement of existing potable waterlines is also included in this category, and additional reservoirs are planned to increase storage for ultimate demands. A total of $55.3 million, or 12% of the total CIP, is planned for these projects. Construction of civic facilities such as libraries, administrative facilities, police and fire facilities are currently estimated at $86.5 million, or 19% of the total planned capital expenditures to build out. UNFUNDED PROJECTS There are several projects identified in the CIP for which there is no identifiable funding source and in some cases where only partial funding has been identified. The City will investigate obtaining possible outside funding such as Federal and State grants, loans, or other financing sources. Once funding is identified for these projects, the project costs will have to be reviewed and updated to reflect actual cost estimates. The unfunded projects do not receive annual inflationary increases. These projects are: • Agua Hedionda Channel(partial)** • Business Park Recreational Facility (partial) • Cannon Lake Park (6.7 acres) • Cannon Road - Reach 4B – Cannon Rd./College Boulevard to City Limits • Carlsbad Boulevard Widening Mountain View to Northerly City Limits (partial)* • Carlsbad Boulevard/Palomar Airport Road Improvements (partial)* • Carlsbad Boulevard Realignment, Segments 3-5 • Hosp Grove/Buena Vista Lagoon Improvements • Pine Avenue Park – Madison Property Phase 2 • Robertson Ranch (NE Quadrant) Park Development (partial) (*) These projects are in the Traffic Impact Fee (TIF) program approved by the City Council on May 12, 2009, which was planned to generate enough revenue to pay for 20% of the total cost of these projects, the remaining 80% is unfunded. (**) The Agua Hedionda Channel project is funded in part with Planned Local Drainage Area fees. The unfunded amount is listed in this section. FUTURE GROWTH AND DEVELOPMENT There are a variety of revenues that are used to fund the capital projects. In order to estimate future revenues from development, several assumptions about the rate and type of future development need to be made. These assumptions can change from year-to- year and correlate with the economic climate. Every year, City staff evaluates all existing and future private development projects and compares this information to the build out capacity of the City using adopted general plans. Information about existing development activity combined with estimates of how remaining net developable land might develop is then summarized to prepare future projections about when and where residential and non-residential development will occur. Finance Department staff prepares cash 2011-12 CAPITAL IMPROVEMENT PROGRAM I-7 flow schedules using current fund balances combined with future estimated fees paid by those developments, and then compares the available funds to the expenditure plan to ensure that funding will be sufficient for construction of the capital projects as planned in the CIP. In addition to evaluating whether or not capital funds are sufficient, significant operating cost impacts and availability of staff resources are also considered to evaluate the timing of projects. Where funding discrepancies occur, alternative financing methods and project timing are again evaluated and recommendations are made to resolve the discrepancies. Residential development has slowed significantly due to the economic recession. The number of annual building permits issued is projected to decline compared to the previous five-year period. The development schedules of the remaining vacant parcels are driving the timing of the future units. There are 4,014 units remaining before the City is predominantly built out. Residential development for FY 2011-12 is projected at 187 units with an average about 188 units per year over the next five years. This is compared to an average of over 289 units per year for the previous five-year period. The decline, particularly in the next five years, is due to the current economic downturn and the dwindling supply of developable land. The amount of non-residential development is also projected to decline over the next five years. The average annual square feet of non-residential development for the past five years was about 744,000 square feet. For FY 2011-12, the estimate is for 285,172 square feet, and the average annual development for the next five-year period is approximately 291,200 square feet per year. Projects include several neighborhood commercial/retail developments located in or near the areas where most of the residential development has occurred or where new development is planned over the next several years. In the southeast quadrant, commercial projects include retail and restaurants, and a daycare facility and church. A senior care facility is planned in the northeast quadrant. Additional commercial development is planned at Bressi Village and a 225 room hotel at Legoland is planned. Industrial development consists of various new office and industrial projects, as well as expansion of existing projects at Kelly/Tycoon Corporate Center. The desalination plant is also anticipated within the next five years. Development estimates provide the data and basis for estimating future fee revenues, which are calculated by multiplying each applicable development fee by the estimated number of dwelling units and/or square feet of construction expected during each year. The following table shows the number of residential units and non-residential square feet of development used in calculating estimated revenues for FY 2011-12 and subsequent years to build out. Residential and Nonresidential Construction Year Residential Units Non-Residential Square Feet 2011-12 187 285,172 2012-13 210 212,722 2013-14 192 223,138 2014-15 172 450,201 2015-16 177 284,888 Years 6-10 1,009 2,721,836 Years 11- 2,067 4,705,710 Totals 4,014 8,883,667 Projected Development 2011-12 REVENU Revenue million a CarlsbadThorough replacembond issu Approximdepende commerc Traffic ImConnecti as Comm compriseequal ap and sew City’s Geother tha agencies redevelo CALCUL The reve identified were appresidentia residentiavaluation 2 CAPITAL UES es for Capita nd are seg d, (2) speciahfare Benef ment funds (ues, and con mately 23% ent upon as cial/industria mpact Fees ion Fees (M munity Facil e 6% of the proximately wer facilities. eneral Fundan wastewat s and includ pment agen LATION OF F enue project d in the prev plied to estimal units is as al developmn used for co Infrastru Replace Trans 25% O IMPROVE al Projects f regated into al district fefit Districts), (other than wntributions fr of all capssumptions al square fee (TIF), Park-MFF), and Se lities Distric total. Wate26% of tota Infrastructu which are ter and wate de federal cy revenue, Capita FUTURE FE tions of the vious section mate future ssumed to b ment for eaomputing Pu ucture ement sfers % Other Agencies 20% EMENT PRO from now un o five major ees and tax(3) water a wastewaterrom other ag ital revenuemade abou et. Develop -In-Lieu Feeewer Conne ts (CFD) an er and wasteal revenues, ure replacem being set aser facilities. and state and contrib al ImprovemFY2011-$5 EES e Capital Im n. The follo developmenbe 35% and ach Local ublic Facilitie s OGRAM I-8 ntil build out r categories xes (Command wastewa and water)gencies. e is receiveut the City' pment reven es (PIL), Plaection charg nd Bridge a ewater replaand are use ment revenu side to pay The remain grants, the butions from ment Prog-12 to FY20543 million provement owing inform nt revenues.65%, respe Facilities Mes Fees is $1 t are estima s: (1) fees g unity Facilitater replace , and (5) ot ed as a re's annual g nues include anned Local es. Revenu and Thoroug cement reveed to pay for es, equal to for replacemning 20% co county sa cities and ot ram Reven025-26 n Program re mation deline . The mix ofectively, and Management180,437 per Deve ated to be ap generated b ties Districtsement funds ther sources esult of devgrowth in d e Public Fac Drainage (ue from spe ghfare Bene enues gener replacemen o 25%, are ment of majonsists of rev ales tax pro ther agencie nues eflect the gr eates how t f multi-familyreflects the t Zone. Thmulti-family eloper Fees 22% Fin Di Utili Replace Trans 26% pproximately by developm s and Bridg, (4) infrastr s including g velopment, dwelling unit cilities Fees PLD) Fees, ecial districts efit Districts rated by usent of existing transfers fro jor capital favenues from ogram (Tran es. rowth assum those assum y and single anticipated e building y dwelling un nancing istricts 6% ity ement fers % y $543 ment in ge and ructure grants, and is ts and (PFF), Water s, such (BTD) er fees g water om the acilities m other nsNet), mptions mptions e-family mix of permit nit, and 2011-12 CAPITAL IMPROVEMENT PROGRAM I-9 $319,912 per single-family dwelling unit. A building permit valuation of $42 per square foot of construction is used to calculate non-residential Public Facilities Fees. In order to calculate estimated revenues for Traffic Impact Fees (TIF), the number of average daily trips was computed for each type of development use. An attached multi-family residential dwelling unit is assigned either eight or six trips and a detached single-family unit is assigned 10 trips per day. The trips-per-day value for commercial and industrial buildings are 40 and eight trips per 1,000 square feet of development, respectively, although the actual volume of trips generated by commercial/industrial building can vary widely depending on the ultimate land use. Community Facilities District (CFD) No. 1 is a citywide district established to finance various civic facilities required under the City’s Growth Management Plan. CFD No. 3 was established for the Faraday Avenue and Melrose Drive Extensions east of El Camino Real, as well as the extension of El Fuerte. Park-in-Lieu Fees are collected for the purchase and development of parkland within each quadrant of the City, and the fees are based on the acquisition cost of parkland. Projects in the CIP funded with Park- in-Lieu Fees include future park site acquisition, development and restoration. Bridge and Thoroughfare Fee Districts (BTD), are formed by property owners to finance specific road construction projects located within the district boundaries. Poinsettia Lane - Aviara Parkway (BTD No. 2) was formed to finance the construction of Poinsettia Lane between Aviara Parkway and El Camino Real and Aviara Parkway between Palomar Airport Road and Poinsettia Lane. SUMMARY The FY 2011-12 CIP is being driven by the City’s commitment to ensure that facilities are available to serve the developing areas as well as the current residents. Carlsbad’s philosophy has been to build quality capital facilities, which meet, and at times exceed, Growth Management standards. Phasing projects over a period of years to match funding availability for construction and operations is often used to meet the needs of growth management. The FY 2011-12 Capital Improvement Program reflects the commitment of Carlsbad’s City Council and staff to continue providing its residents with a better quality of life. 2011-12 CAPITAL IMPROVEMENT PROGRAM I-10 GROWTH MANAGEMENT PLAN The Growth Management Plan was developed and voted into law by the citizens of Carlsbad in 1986. The plan was established to manage development within the City by linking residential, commercial, and industrial development directly to standards for availability of public services and facilities. The Growth Management Plan has established precise standards for eleven public facilities. Standards must be met at all times as growth occurs. Facilities for which standards have been established are as follows: - City Administrative - Library - Wastewater Treatment - Parks - Circulation - Drainage - Fire - Open Space - Schools - Sewer Collection - Water Distribution The plan requires that appropriate public facilities be available, in conformance with the adopted performance standards, as development occurs. Unless all of the 11 public facility standards have been met, no new development can occur. The Growth Management Plan impacts both the Operating Budget and the Capital Improvement Program. The detailed level of planning required by Growth Management has allowed Carlsbad’s Capital Improvement Program to anticipate the funding needed for capital improvements in the next 15 years. The timing of construction of facilities is governed by the rate of development and the 11 performance standards. New public facilities often require additional staffing and other resources, which affects the Operating Budget. Facilities such as community centers, parks, and fire stations have been constructed and opened to the public under this program. The Capital Improvement Program has been designed to specifically address areas where new or expanded facilities will be needed to maintain compliance with the adopted performance standards. With the adoption of the FY 2011-12 CIP, compliance with the Growth Management Plan is continued. Schedule of Capital Projects Capital Proj Fund Summary Fund Summary Appendices