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HomeMy WebLinkAbout; ; 2012-2013 OPERATING BUDGET AND CIP; 2012-07-012012-2013 Operating Budget & Capital Improvement ProgramCALIFORNIA CALIFORNIA City of Carlsbad 2012-13 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          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 2012-13 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 2012-13 budget figures are presented. If applicable, also included are narrative statements describing program activities, associated workload measures or performance objectives, key achievements for 2011-12 and key goals for 2012-13. 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 2012-13 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 City of Carlsbad provides exceptional, top quality services on a daily basis by proactively listening, engaging and responding to its residents. ¾ Balanced community development: Be a city that connects community, place and spirit, through balanced and economically sustainable land uses. ¾ Resident connection and partnership: Be a city that embraces community connectivity through the effective use of technological and interpersonal mediums. ¾ Communication: Ensure that community members, council and staff are well informed, continuing to be a more responsive government while providing a high level of citizen confidence in its government. ¾ Economic Development: Strengthen the city’s strong and diverse economy, supporting local businesses, attracting new businesses in targeted industries and solidifying the city’s position as a key employment hub. ¾ Environmental management: An environmentally sensitive community by focusing on conservation, storm water, sewage collection and treatment, solid waste, and cost effective and efficient use of energy including alternative energy sources. ¾ Financial health: Pursue and implement proactive strategies that support sustainable economic health and manage city resources effectively. ¾ Learning, culture and arts: Promote and support continuous learning, cultural opportunities and the arts within the community and the city organization. ¾ Parks, open spaces and trails: Acquire, develop and maintain a broad range of open space and recreational facilities that actively address citizen needs which are fiscally responsible, and are consistent with the general plan and growth management standards. ¾ Safe community: Maintain a safe and secure community through collaborative partnerships. Public safety providers support high standards, deliver protection of life and property and encourage community involvement in prevention and preparedness efforts. ¾ Transportation and circulation: Provide and support a safe and efficient transportation system that moves people, services and goods throughout the city. ¾ Water: Ensure, in the most cost-effective manner, water quality and reliability to the maximum extent practical, to deliver high quality potable and reclaimed water incorporating drought-resistant community principles. Carlsbad City Council 2012 Strategic Goals City Council continues to clarify and pursue the vision of Carlsbad that reflects the pride and quality of life. 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 107,674 to 117,000 once its 39 square miles are built out. Industries in the area include a major regional shopping center; a specialty outlet center; 34 hotels offering over 3,800 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’s Housing Authority administers federal housing assistance to 610 low-income households in Carlsbad. 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 SafetyCommissionUndergroundUtility AdvisoryCommitteeArtsCommissionHistoricPreservationCommissionLibrary BoardofTrusteesSerra CooperativeLibrary SystemAdvisory BoardParks & RecCommissionSeniorCommissionBeachPreservationCommitteeHousingCommissionHousing &RedevelopmentCommissionPlanningCommissionCarlsbad TourismB.I.D. AdvisoryBoardELECTORATECity ManagerCity TreasurerMayor & CouncilCity ClerkCity AttorneyAssistant City ManagerCommunity &Economic DevelopmentHousing & Neighborhood ServicesFirePoliceParks & RecreationLibrary & ArtsFinanceHuman ResourcesInformation TechnologyProperty & Environmental ManagementInternal ServicesPublic SafetyCommunity DevelopmentCommunity ServicesRevised Feb. 2011KEYElectedCouncil AppointedReporting RelationshipProgramsCity of CarlsbadOrganization ChartDeputy City ManagerTransportationUtilitiesPublic Worksiv Overview Overview CITY OF CARLSBAD BUDGET HIGHLIGHTS A-3 CITY OF CARLSBAD BUDGET HIGHLIGHTS FISCAL YEAR 2012-13 WHERE THE MONEY COMES FROM… ESTIMATED REVENUES $241.3 MILLION WHERE THE MONEY GOES… ADOPTED BUDGET $231.6 MILLION Taxes 43% Inter-Departmental 8% Licenses & Permits 1% Charges for Services 4% Income from Investments & Property 2% Inter-Governmental 4% Other 2% Utility Charges 25% Impact Fees/Special Taxes 11% Policy & Leadership 2% Internal Service 13% Public Safety 20% Capital Projects 12% Community Services 11% Comm. Dev. 7% Non Dept. & Contingency 6% Utilities 24% Public Works 5% 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 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 $202.7 million and is expected to generate $205.8 million in revenues. The CIP contains the current year budget allocation of $28.9 million and outlines approximately 265 future projects at a total cost of $413.1 million. Capital revenues for Fiscal Year 2012-13 are estimated at $35.5 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 2012-13 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 develop goals that help city staff prioritize programs, projects and services, as well as the resources required to fund them. Based on this direction, along with input received at public workshops, city staff finalizes the overall city work plan and develops the proposed annual budget for the coming fiscal year. 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. The legal level of budgetary control is at the fund level and budgetary control is maintained through the city’s accounting system. Expenditures may not exceed budgeted amounts at the fund level. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-5 This year, the Carlsbad City Council set strategic goals that will create jobs in a new economy through the support of local companies and the attraction of new companies; create a sustainable organization by being an adaptable, responsive and efficient organization that delivers cost effective, high quality services and retains a motivated, flexible and responsive staff; through the General Plan update, adapt city land use policies to address population and demographic trends, maintain the city’s high standards and balance a thriving community with the need for tranquil, natural open spaces; meet the community’s changing recreation needs, including more for active seniors and young people, consider accelerating the schedule for building new parks and community centers, and an expanded trails system and open space; begin to adapt Carlsbad streets to accommodate and encourage all modes of transportation, not just cars; and foster the next generation of community leaders. 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 continues to grow at a lackluster pace. Gross domestic product (GDP), the primary measure of US output, increased by 3 percent in the final quarter of 2011 and, according to initial estimates released by the Bureau of Economic Analysis, fell to 2.2 percent in the first quarter of 2012. The employment situation in the US appears to be improving, as new payroll jobs increased in January and February by 227,000 and 284,000, respectively, bringing the unemployment rate down to 8.3 percent in February. Although national unemployment is still high, this is the first time this measure has dipped below 9 percent since 2008. The UCLA Anderson Forecast does not expect marked improvement in the economic picture in the next few years, as unemployment is expected to stay above 8 percent until 2014 and GDP is expected to remain below a growth rate of 3 percent, annually, during the same forecast period. Several factors are contributing to the tepid forecast, including the looming expiration of the Bush era tax cuts and the temporary payroll tax reduction in the coming year. Additionally, Europe is in a recession, which will have a chilling effect on US exports. The national housing outlook for the coming year may be a source of mild optimism among economists. The Case-Shiller Home Price Indices released for February indicate that home prices continue to decline, nationally, but at a slower rate, indicating that we may be nearing the bottom of the trough. Historically low interest rates, increases in real rents (up to 10 percent in some markets), and modest improvements in employment and real wages may signal coming improvement in the housing market. The national economy appears to be recovering slowly, but numerous challenges lie ahead. Financial instability in Europe continues to be a threat, but domestic fiscal policy also clouds the economic outlook for the US. Federal deficits are expected to top $500 billion per year for the CITY OF CARLSBAD BUDGET HIGHLIGHTS A-6 foreseeable future, eroding the fiscal stability of the US. Likewise, increasing gasoline prices and uncertainty over tax policy in the US threaten the slow recovery. The outlook for California’s economy is very slow growth over the next few years. Unemployment in California is currently hovering around 11 percent and is expected to improve in the coming years, falling to a little over 8 percent in 2014, according to economists at UCLA. This decrease in the unemployment rate, which had remained above 12 percent since late 2009, indicates some unexpected strength in California’s labor statistics, as the labor force has actually grown in the past years. A falling unemployment rate coupled with an increase in the labor force means that the additional jobs have been created. Employment gains in California have been most pronounced in the Silicon Valley and the San Francisco Bay Area, although Orange County and San Diego have outpaced national employment growth. Economic growth in California is expected to be slow over the coming years, as our economy is linked to the sale of goods and services nationwide, and US consumer demand is not expected to grow rapidly. There are bright spots in the economic outlook, however. According to the California New Car Dealers Association (CNCDA), new car dealers sold 1.3 million cars in 2011, an increase of almost 10 percent over the prior year. Foreclosures have also decreased, as notices of default dropped by almost 12 percent compared to the fourth quarter of 2010. Taxable sales are expected to increase by slightly more than 3 percent in 2012, according to the UCLA Anderson Forecast, and grow by approximately 4 percent in 2013 and 2014. The outlook for the San Diego economy continues to be positive. Unemployment fell from 10.5 percent in July 2011 to 9 percent in December, although it edged back up to 9.5 percent in March. The county saw the addition of 5,400 jobs in February, with the largest gains in education and health services and government. The USD Index of Leading Economic Indicators continued a two-year trend, increasing by almost six percent compared to January 2011. Following minor decreases in August and October, the index has climbed steadily through January. Home prices continue to be depressed in San Diego county and, according to DataQuick, the median single family residence fell by 2.8 percent (to $345,000) in the first quarter of 2012, compared to same period in 2011. Residential building permits started 2012 very slowly, especially compared to an increase of 56 percent in 2011. The most recent Case-Shiller Home Price Indices show a drop in San Diego home prices of 3.9 percent, between February 2011 and 2012. However, this report also indicated that prices increased by 0.2 percent month-over-month in February, which may indicate that San Diego, like the nation, is nearing the bottom. 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 remains positive. Carlsbad’s economy is tied closely to that of the San Diego region. For FY 2011-12, property taxes decreased by less than one percent, compared to the prior year. Transient Occupancy Tax (TOT), a gauge of the health of local tourism, is expected to end FY 2011-12 with an 8.4 percent increase over last year. Last years’ TOT was abnormally low due, in part, to change of CITY OF CARLSBAD BUDGET HIGHLIGHTS A-7 ownership in one of the city’s major resorts and a remodel at another resort. Sales taxes are expected to end FY 2011-12 with an increase of 4.5 percent due to the continuing strength in retail and auto sales. Despite positive growth in our three major General Fund revenue sources, revenues will be flat compared to FY 2011-12, as we have experienced a decrease in interest earnings and the expiration of the Vehicle License Fee (VLF). Housing prices in Carlsbad continued their downward trend during the last year. Data on single family residence (SFR) sales from DataQuick indicate that the median sales price fell to approximately $580,000 in the first quarter of 2012, a decrease of over 8 percent compared to the same quarter in 2011. Only one zip code, 92011, showed an increase in this time period. The total assessed values in the city are close to $24 billion, a decrease of less than one percent compared to the prior fiscal year (FY 2010-11). According to recent growth projections prepared for the city, Carlsbad will add 903 residential units over the next five fiscal years. From 1992 to 2008, 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 approximately 270,000 square feet per year over the next five fiscal 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 two years, falling from over 30 percent in the last quarter of 2009 to just over 23 percent in the first quarter of 2012. Industrial vacancy remained stable at around 15 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. A new Lowe’s is expected to open in summer 2013. 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. A new Hilton will open in summer 2012 at Ponto Beach. 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 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012Thousands Fiscal Year Median SFR Home Prices CITY OF CARLSBAD BUDGET HIGHLIGHTS A-8 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. 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 a portion of General Fund revenues 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. A strong tourism industry is served by Legoland and a host of resorts and hotels, as mentioned previously. All of these factors, combined with relatively stable property values, provide a strong revenue base to support the high level of city services for our residents. In FY 2012-13, the city is expected to generate over $90 million, or 78 percent of General Fund revenues, from three sources: property taxes, sales taxes, and transient occupancy taxes (TOT). Overall, for FY 2012-13, General Fund revenue is projected to increase by 1.3 percent from the previous year’s estimates. Most sources of tax revenue are expected to increase slightly in FY 0 20 40 60 80 100 2004 2007 2010 2013e$ MillionsFiscal Year General Fund Revenues (Top 5) Other Franchise SDG&E Franchise TOT Property Tax Sales Tax CITY OF CARLSBAD BUDGET HIGHLIGHTS A-9 2012-13, although property taxes are projected to decrease slightly by less than 1 percent. Sales tax is expected to increase by a little more than 4 percent and TOT revenues are projected to increase by over 7 percent due, in part, to the addition of the Ponto Hilton. Home values, as discussed earlier, continue to decline, and we expect assessed values to decrease slightly again in FY 2012-13. Development related revenue items have been decreased for FY 2012-13, in anticipation of slower building activity. More information on all of the city’s revenues and programs can be found in the later sections of the document. State of California – Governor Jerry Brown continues to face the ongoing budgetary crisis that has plagued California since the economic downturn. 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. In January, the Governor released his proposed budget for Fiscal Year 2012-13. The proposed budget forecasts a deficit of $9.2 billion through Fiscal Year 2012-13, as the state continues to face challenges presented by a sluggish economy, high unemployment, and a myriad of structural budget issues, including high levels of debt and increasing pension liabilities. Temporary tax revenues of $4.4 billion are included in the proposed budget and assume passage in November of initiatives that would increase income taxes on high earners and raise the sales tax rate by one-half percent. The remainder of the deficit is addressed through additional spending cuts and program realignments. As in the previous year, the proposed budget includes trigger cuts of $5.4 billion, which provide for additional expenditure reductions if revenues do not materialize as forecast. Most of these cuts, over $4.8 billion, would come from schools and community colleges. The deficit projected in the proposed budget grew to $16 billion in May, indicating that lawmakers may have been optimistic in projecting revenues for the current year. In June 2011, the state legislature passed ABx1 26 and ABx1 27, dissolving Redevelopment Agencies (RDA) in the state of California. In December 2011, the California Supreme Court upheld ABx1 26 and invalidated ABx1 27, which upheld the California legislature’s decision to dissolve RDAs and eliminated alternative options allowed under ABx1 27. Local RDAs were required to transfer all assets and obligations to successor agencies, effective February 1, 2012, as the wind down process begins. 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. The ten-year forecast is updated frequently to avoid potential pitfalls and to ensure that we identify and resolve fiscal challenges and continue to develop a balanced and responsible budget. 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 and hourly full-time equivalent (FTE) positions, delaying the construction of non-essential capital projects, reducing the funding for capital outlay and goal projects, CITY OF CARLSBAD BUDGET HIGHLIGHTS A-10 reducing and/or eliminating cost of living salary increases, requiring employees to pay a larger portion of their retirement costs, 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. Overall, General Fund revenues are expected to cover ongoing costs in the coming decade, as depicted in the graph above. 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. Ongoing transfers to the Carlsbad Crossings Golf Course are expected to continue over the forecast period; however, the transfer decreased from $1.4 million in the current fiscal year to approximately $950,000 in FY 2012-13, and is expected to decrease to $700,000 by FY 2015- 16. The operating costs of new city facilities supported by the General Fund, such as Alga Norte Park and the City of Carlsbad’s Safety Training Center, 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 revenue. Home sales, however, are not expected to increase in the next fiscal year and values will continue to subdue property tax receipts. The forecast assumes that General Fund revenues will increase by less than two percent in FY 2012-13, as improving economic conditions buoy revenues from sales taxes and TOT. To project the expenditures, all known changes in personnel and maintenance and operations costs are accounted for. However, the effects of future negotiations with employee bargaining units are not contemplated in the current ten-year forecast. The city is currently undertaking an CITY OF CARLSBAD BUDGET HIGHLIGHTS A-11 evaluation of services in order to pursue a managed competition process, known as Best Value Services. The financial impact of a change in service delivery is also not considered in the ten- year forecast. The forecast assumes that the city’s cost for employee health care will increase by 5 percent, annually, over the life of the forecast. Pension plan costs will increase in FY 2012-13 by approximately 3.25 percent for miscellaneous employees and 3.5 percent for safety employees, due primarily to investment losses sustained by CalPERS in FY 2008-09 and updated actuarial assumptions. The forecast also assumes that $1.8 million is set aside in FY 2012-13 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, except those that may be related to the operating costs of new city facilities supported by the General Fund. Negotiated salary step increases and cost of living increases between 0.5 percent and 2 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 above graph, the General Fund is balanced for FY 2012-13 and modest surpluses are anticipated after that. However, Carlsbad still faces economic challenges from a fluctuating economy, continued fixed costs increases, and concerns over the impact that budget decisions at the state and federal levels could have on the city’s financial situation. While the ten-year forecast employs conservative estimates, these modest surpluses could evaporate if the economy stumbles. FINANCIAL POLICIES The city has formally adopted a number of financial policies to not only safeguard city assets, but also to assist in ensuring long-term financial stability. The city’s General Fund reserve policy 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 may be used for cash flow needs necessitated by unforeseen emergencies, while reserves in excess of the minimum will be used only for one-time uses associated with unexpected events, such as economic downturns or temporary reductions in revenues. In general, General Fund reserves will be used for one-time uses only. The reserve level, which includes undesignated, unreserved fund balance, will be calculated using the prior fiscal year's Adopted General Fund Budgeted expenditures. The city has also established a formal Investment Policy. It is the policy of the City of Carlsbad to invest public funds not required for immediate day to day operations in safe, liquid and medium-term investments that shall yield an acceptable return while conforming to all California statutes. It is intended that the policy cover the investment activities of all contingency reserves and inactive cash under the direct authority of the city. Investments of the city and its component units will be made on a pooled bases; however, investments of bond proceeds will be held separately if required. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-12 2012-13 OPERATING REVENUES BY FUND TYPE $205.8 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 $116.1 million for Fiscal Year 2012-13. 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 TAX 41% TRANSFER TAXES 1%SALES TAX 25% BUS LIC TAX 3% LICENSES & PERMITS 1% CHARGES FOR SERVICES 5% OTHER REVENUE 5% INTERGOVERNMENT 1% FRANCHISE TAX 4% TRANSIENT TAX 12%INCOME FROM INVESTMENTS & PROPERTY 2% 2012-13 GENERAL FUND REVENUES $116.1 MILLION CITY OF CARLSBAD BUDGET HIGHLIGHTS A-13 Property taxes, at $47.8 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. Sales tax is the second largest source of revenue for the General Fund. Sales taxes are estimated to bring in $28.8 million for Fiscal Year 2012-13. Automobile and retail sales are the most significant contributors to the category of sales tax. Transient occupancy taxes (hotel taxes) are estimated at $13.5 million and represent the third largest revenue source for the city. Franchise taxes, transfer taxes, and business license taxes make up the remaining $9.5 million in tax revenues estimated to be collected in Fiscal Year 2012-13. 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 approximately $900,000 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 $6.2 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 $5.4 million Special Revenue Funds Revenues from Special Revenue funds are estimated at $11.3 million for Fiscal Year 2012-13. 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 $58.6 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 $17.7 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 Obligation Retirement Funds The Redevelopment Obligation Retirement Fund (RORF) revenues are expected to total $2.1 million in the upcoming year. On June 29, 2011, California Governor Jerry Brown signed ABX1 26 to dissolve all redevelopment agencies within the State of California. All agencies were subsequently dissolved as of February 1, 2012, and a Successor Agency was designated to complete the work of the Carlsbad Redevelopment Agency (RDA) and satisfy the financial obligations. A Recognized Obligation Payment Schedule (ROPS) was prepared by the Successor Agency in April 2012 which must ultimately be approved by the Oversight Board, the CITY OF CARLSBAD BUDGET HIGHLIGHTS A-14 County of San Diego and the State of California. The initial ROPS identified financial commitments of the former RDA which will be paid from semi-annual tax increment revenue received by the Successor Agency. Every six months a new ROPS must be prepared and approved by the Oversight Board, the County of San Diego and the State of California in order to receive additional tax increment. Due to the dissolving of the RDA, the RORF will only receive tax increment revenues and interest earnings on any cash balances. Tax increment revenues are projected to decrease due to the increase in County of San Diego administrative costs which are netted against the tax increment revenues received by the Successor Agency. Operating Budget By Program The total Operating Budget adopted for the city for FY 2012-13 equals $202.7 million, which is approximately 4.6 percent higher than the Operating Budget adopted for FY 2011-12. The Operating Budget includes funding for the General Fund as well as all other city funds, and can be categorized by main functional area. Six main functional areas that represent the key businesses of the city have been identified, as well as a Non-Departmental component which includes fund transfers as well as items that benefit the city as a whole. The graph below shows the percentage of the Operating Budget applicable to each of the functional areas. Total funding allocated for the Policy and Leadership Group for 2012-13 is $5.4 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 $30.4 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 $45.6 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. Policy/ Leadership 3%Internal Services 15% Public Safety 22% Non- Departmental 7% Community Services 12% Community Development 8% Public Works 33% 2012-13 OPERATING EXPENDITURES $202.7 MILLION CITY OF CARLSBAD BUDGET HIGHLIGHTS A-15 Community Development, with a budget of $16.4 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. Community Services, with a budget of $24.6 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 $66.3 million. Public Works is responsible for the provision of utility services as well as the building and maintenance of all of the city’s streets and roadways. It is comprised of the water, sewer, and solid waste enterprise funds, as well as the Transportation Department and lighting and landscaping special assessment districts. The Non-Departmental and Contingency accounts total $13.9 million and include transfers to other funds, programs benefiting the city as a whole, such as community promotions, community contributions, assessment services, and the City Council’s contingency account. Included in the non-departmental group is a $7.5 million transfer to the Infrastructure Replacement Fund. This program sets aside funds for the replacement of the city’s base infrastructure. Also included is a $1.8 million transfer to the city’s self-insured benefits fund to assist with anticipated future pension rate increases. The City Council contingency account, which is available for emergencies and unforeseen program needs that arise during the year, is budgeted at $1.5 million. The contingency account amounts to 1.3 percent of the FY 2012-13 General Fund budget. Staffing The FY 2012-13 Operating Budget reflects a total net decrease of 9.75 full-time positions. The net decrease in part-time staff totaled 7.16 of hourly full-time equivalent positions. These changes result in a city workforce of 674.5 full and three-quarter time employees and 132.58 hourly FTE. 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 2012-13 totals $28.9 million in new appropriations and an estimated $201.7 million in continuing appropriations, for a total appropriation of $230.6 million. Some of the notable capital projects which are planned in the next five years are discussed on the following pages. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-16 Park Development Projects Alga Norte Community 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. Amenities include: A 56 meter Olympic sized competition pool with viewing bleachers A 25 meter, 12 lane swim instruction pool A 10 by 25 foot therapeutic pool with jets A 22 foot diameter 6 inch deep kids pool A “spray-ground” play area for young children Three lighted softball/baseball fields One lighted full basketball court and one half court Batting cages and a concession stand at the ball fields Picnic areas with barbecues Playground with 100 percent universally accessible play equipment An off-leash dog park divided into areas for larger and smaller dogs, including obstacle course-type play equipment A 18,500-square-foot lighted skate park that will include a "street course" section, an area with challenging elements for more skilled skateboarders and a beginners’ area The swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. Construction of Phase 1 will begin in the summer of 2012. 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. Civic Facilities Civic facilities include a variety of facilities from which the city can offer its services to the public. Fire Station No. 3 Relocation – 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 a six minute response time. The land was previously acquired in the Robertson Ranch site, and the remaining construction cost is estimated at $8.6 million. Maintenance and Operations Center – The city has planned the construction of a Maintenance and Operations Center (M&O Center) to physically bring together the citywide maintenance functions into 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 space and parking to accommodate the city’s maintenance personnel. This combined group of maintenance functions may include segments of the Utilities, Transportation, Parks and Recreation, and Property and Environmental Management departments. The cost of the project is approximately $28.1 million. Facilities Maintenance – As the city facilities begin to age, maintenance and repair projects are needed to keep them in good condition. Four projects have currently been identified at a total CITY OF CARLSBAD BUDGET HIGHLIGHTS A-17 cost of about $700,000. Included are roof renovation and replacement projects, City Hall electrical upgrades, and exterior waterproofing at the Safety Center. Street Projects Traffic congestion continues to be one of the top concerns among citizens. To help improve the flow of traffic throughout Carlsbad and to keep the city’s streets in top condition, there are a number of street projects expected to be completed in the next five years. Some of the larger street projects include: Traffic Signal Program – In keeping with the City Council’s goal of improving traffic flow, the FY 2012-13 CIP includes additional funding of $2.5 million for the Traffic Signal Program. 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. Another area of focus is a concept called “complete streets” which encourages the use of street design to create a sense of place and community through green spaces, medians and signage, while encouraging a healthier, less vehicle dependent lifestyle. The City Council identified complete streets as a top priority. One project which incorporates these concepts could begin this fall with construction of a traffic circle “roundabout” along the northern end of Carlsbad Boulevard next to Buena Vista Lagoon, making it easier for vehicles, pedestrians and bicyclists to move through the intersection. 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 2014-15. The CIP includes $5.4 million to fund this project in the next five years. 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 cost for these projects is $19.7 million. 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 streets. 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 2012-13 CIP has $3.7 million budgeted for this program. 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 million. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-18 Water and Wastewater Projects The city’s water and wastewater projects are vital 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. In the next five years additional funding, in excess of $67 million is scheduled for these 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 an estimated $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. Other major wastewater facilities scheduled for construction or replacement within the next five years include: Buena Interceptor Sewer Improvements Foxes Landing Lift Station and Forcemain Home Plant Lift Station Replacement and Forcemain Terramar Sewer Replacement Vancouver Sewer Extension Water/Recycled Water Lines Major water/recycled water facilities scheduled for construction or replacement within the next five years include: College Boulevard – Cannon to Badger Lane Maerkle Floating Cover Replacement and Pump Station Improvements Robertson Ranch Water Transmission Main Tri-Agencies Water Transmission Pipeline Replacement Reservoir Repair/Maintenance Program Recycled Water Service to South Carlsbad 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. Northwest Quadrant and Park Drive Drainage Improvements – The next five years include continued improvements to drainage systems in the older parts of Carlsbad, particularly the northwest quadrant, with an additional $2.3 million programed. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-19 SUMMARY The FY 2012-13 budget was prepared against the backdrop of a mildly improving economy, especially at the regional level. City revenues, especially those derived from taxable sales and tourism, are expected to continue improving over the coming year. Increasing revenues, coupled with the ongoing effects of budget reductions implemented in past years, positions Carlsbad to benefit from future improvements in economic conditions. The city is also in the midst of a comprehensive review of our service delivery methods, and is focused on providing services at the best value, identifying services that can be provided in a more efficient manner by the city or outsourced to private vendors. National, state, and local economies showed slight improvements in the past year, but the slow recovery could face challenges, from instability in Europe to the domestic uncertainty surrounding future tax rates in the United States. Unemployment remains stubbornly high and housing markets are showing only marginal improvement, indicating that the economy will continue to creep along at a sluggish pace for the foreseeable future. Although our forecast indicates improving conditions in the coming years, the FY 2012-13 budget maintains the fiscal discipline exercised by the city over the past several years. No new programs, services or positions are proposed to be added in the coming year. The City of Carlsbad continues to exercise fiscal responsibility. The city continues to plan for the long-term and uses a ten-year financial forecast in creating the budget. This long-term planning tool allows us to model the effects of ongoing fiscal impacts from new facilities, economic conditions, and changes in personnel costs. The FY 2012-13 budget presents our continued dedication to the provision of excellent city services and the quality of life valued by those who live, work and play in Carlsbad. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-20 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. 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 $113 million of debt currently outstanding, none will be paid back using General Fund monies. Rather, the debts will be repaid from sewer revenues, golf course revenues and from property owners benefiting from the improvements built with bond proceeds. The city has no obligation to advance funds to the assessment districts if the property owners do not pay. The table on the following page provides additional information on debt issued by the City of Carlsbad. CITY OF CARLSBAD BUDGET HIGHLIGHTS A-21 The following table identifies the debt the city has issued, the outstanding principal balance, the 2012-13 scheduled principal and interest payments, and the scheduled year of payoff. Bond Name Repayment Source Original Bond Issue Outstanding Principal At 6/30/12 2012-13 Payment P&I Final Payment FY Carlsbad Public Financing Authority Bonds Revenue Bonds Golf Course 18,540,000$ 17,345,000$ 1,111,600$ 2037 Enterprise Revenue 1996 Refunding Encina JPA Tax Allocation Sewer Enterprise 11,080,000$ 2,585,000$ 931,469$ 2015 Bonds Revenue 1993 Redevelopment Tax Allocation Redevelopment 15,495,000$ 9,195,000$ 1,039,627$ 2024 Bonds CFD #3 2006 -Improvement Area 1 Special Tax Special District 11,490,000$ 10,540,000$ 758,996$ 2037 Bonds CFD #3 2008-Improvement Area 2 Special Tax Special District 18,175,000$ 13,895,000$ 1,056,293$ 2039 Bonds Subtotals 74,780,000$ 53,560,000$ 4,897,985$ 2005 Poinsettia Lane East (AD 2002-1) Limited Obligation Assessment 33,085,000$ 29,315,000$ 2,130,421$ 2036 Improvement Bonds District 2003 College Boulevard-Cannon Road (AD 2003-1) Limited Obligation Assessment 11,760,000$ 10,385,000$ 832,948$ 2035 Improvement Bonds District 1997 Carlsbad Ranch (AD 95-1) Limited Obligation Assessment 10,175,438$ 5,705,000$ 693,140$ 2023 Improvement Bonds District 1998 Rancho Carrillo (AD 96-1) Limited Obligation Assessment 19,600,000$ 13,635,000$ 1,245,163$ 2029 Improvement Bonds District Subtotals 74,620,438$ 59,040,000$ 4,901,672$ Totals 149,400,438$ 112,600,000$ 9,799,657$ City of Carlsbad Debt Outstanding FINAL FINAL FINAL BUDGET BUDGET BUDGET 2012-13 2010-11 2011-12 2012-13 CHANGES CITY ATTORNEY 7.00 7.00 7.00 0.00 CITY COUNCIL 1.00 1.00 1.00 0.00 CITY MANAGER 8.00 7.00 7.00 0.00 CITY TREASURER 0.75 0.75 0.75 0.00 COMMUNICATIONS 2.75 2.75 2.75 0.00 COMMUNITY AND ECONOMIC DEVELOPMENT 54.00 50.00 47.00 (3.00) FINANCE AND RISK MANAGEMENT 30.50 30.50 30.50 0.00 FIRE 88.75 87.75 87.75 0.00 HOUSING AND NEIGHBORHOOD SERVICES 11.00 13.00 10.00 (3.00) HUMAN RESOURCES & WORKERS COMP 9.00 9.00 9.00 0.00 INFORMATION TECHNOLOGY 22.50 22.50 22.50 0.00 LIBRARY & ARTS 52.25 51.25 51.25 0.00 PARKS AND RECREATION 71.95 70.95 68.40 (2.55) POLICE 162.00 162.00 161.00 (1.00) PROPERTY AND ENVIRONMENTAL MANAGEMENT 41.60 39.60 40.55 0.95 RECORDS MANAGEMENT 8.00 6.25 6.00 (0.25) TRANSPORTATION 58.40 54.40 54.40 0.00 UTILITIES 69.55 68.55 67.65 (0.90) FULL AND 3/4 TIME LABOR FORCE 699.00 684.25 674.50 (9.75) 2010-11 2011-12 2012-13 Difference Full Time Personnel 694.50 679.75 669.00 (10.75) 3/4 Time Personnel in Full Time Count 4.50 4.50 4.50 0.00 Limited Term Personnel 0.00 0.00 1.00 1.00 Unfunded Full Time Positions (6.00) (3.00)0.00 3.00 Hourly Full Time Equivalent Personnel 138.94 139.74 132.58 (7.16) TOTAL LABOR FORCE*831.94 820.99 807.08 (13.91) PERSONNEL ALLOCATIONS SUMMARY OF REQUESTED LABOR FORCE BY CATEGORY A-23 2012-13 BUDGET CALENDAR A-24 DECEMBER JANUARY FEBRUARY MARCH MAY JUNE Budget policies are set Capital Improvement Program (CIP) kickoff meeting Departments submit Capital Project requests Operating revenue is projected for the General Fund Operating budget manual is distributed to departments Operating Budget kickoff meeting Growth projections completed CIP analysis/review with departments. Budgets for Internal Service Funds are prepared Leadership Team meetings to review CIP CIP revenue projections Departments submit Operating Budget requests Finance department analyzes and compiles Operating Budget submittals Leadership Team – Final CIP Review Leadership Team meetings to review Operating Budgets CIP Budget Workshop: May 22 Council meeting City Manager’s Team - Final Operating Budget reviews Preliminary Operating Budget is sent to the printer City Council Program Options prepared Operating Budget Workshop: June 5 Council meeting Citizens Budget Workshop: June 7 Council adopts final budget including Operating Budget, Capital Improvement Program, and Annual Spending Limitation: June 26 Council meeting Operating Budget Capital Improvement Program (CIP) APRIL 2012-2013 Operating Budget & Capital Improvement ProgramCALIFORNIA Operating Budget Operating Budget Operating Budget Operating Budget Summary Summary Operating Budget SummarySummary 2012-13 OPERATING BUDGET OVERVIEW B-1 The Operating Budget for Fiscal Year 2012-13 totals $199.4 million, with revenues for the year estimated at $205.8 million. General Fund revenues are estimated at $116.1 million and General Fund budgeted operating expenditures are $115.1 million. REVENUE The following table shows the total operating revenues anticipated to be received by the city for FY 2011-12, as well as those estimated for FY 2012-13. PROJECTED ESTIMATED $% 2011-12 2012-13 CHANGE CHANGE GENERAL FUND 114.6$ 116.1$ 1.5$ 1.3% SPECIAL REVENUE 12.0 11.3 (0.7) -5.8% ENTERPRISE 54.4 58.6 4.2 7.7% INTERNAL SERVICE 15.9 17.7 1.8 11.3% REDEV. OBLIG. RETIREMENT 3.1 2.1 (1.0) -32.3% TOTAL 200.0$ 205.8$ 5.8$ 2.9% FUND REVENUE SUMMARY BY FUND TYPE (in Millions) Revenue estimates for the Operating Budget indicate that the city will receive a total of $205.8 million in FY 2012-13, a $5.8 million, or 2.9 percent, increase over the prior year’s projections. The significant changes from the prior year include a $4.2 million, or 7.7 percent, increase in the Enterprise Funds due to proposed water and wastewater rate increases. The General Fund shows an increase of $1.5 million, or 1.3 percent, and Special Revenue Funds show a decrease of $700,000, or 5.8 percent, 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 $% 2011-12 2012-13 CHANGE CHANGE PROPERTY TAX 48.1$ 47.8$ (0.3)$ -0.6% SALES TAX 27.6 28.8 1.2 4.4% TRANSIENT OCCUPANCY TAX 12.5 13.5 1.0 8.0% FRANCHISE TAXES 4.8 4.9 0.1 2.1% BUSINESS LICENSE TAX 3.7 3.6 (0.1) -2.7% DEVELOPMENT REVENUES 2.3 2.0 (0.3) -13.0% ALL OTHER REVENUE 15.6 15.5 (0.1) -0.6% TOTAL 114.6$ 116.1$ 1.5$ 1.2% SIGNIFICANT GENERAL FUND REVENUES (In Millions) 2012-13 OPERATING BUDGET OVERVIEW B-2 General Fund revenue sources indicate that Carlsbad is benefitting from an improving state and local economic climate. Two of our largest revenue sources, sales tax and transient occupancy tax (TOT) have exhibited healthy growth in FY 2011-12 and are expected to continue that trend in the coming fiscal year. Revenues from sales tax and TOT increase are highly sensitive to changes in the economic activity, unlike property tax revenues, which tend to lag behind economic growth and remain relatively stable over time. Home prices in Carlsbad have continued to fall over the past year and, in FY 2012-13, property taxes are expected to decrease slightly, providing approximately $47.8 million to the General Fund, compared to $48.1 million in FY 2011-12. This is based on a 1.2 percent estimated decrease in assessed valuation, as provided by the County Assessor in May 2012, partially offset by new construction that has occurred over the past year. The median single family home sales price in Carlsbad is fell to $580,000 in March 2012, down over 7 percent from last year. 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 2012-13 are based on assessed values as of January 1, 2012. 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 $28.8 million for FY 2012-13, an increase of 4.4 percent compared to the FY 2011-12 projections. Approximately 25 percent of Carlsbad’s sales tax revenue is historically generated from automobile sales, which slumped significantly during the recent economic downturn. New auto sales are expected to stabilize at around $5.7 million in FY 2012-13, as Carlsbad recognized substantial growth in auto sales of around 18 percent in CY 2011. California auto dealers, in general, sold 1.3 million cars, an annual improvement of almost 10 percent and trucks in 2011, with the Honda Civic being the top seller. Much of this growth was attributed to latent demand, which is unlikely to continue this rate of growth. General retail sales tax, which comprises approximately 40 percent of annual sales tax revenue, grew by 8.1 percent in CY General Retail 40% Food Products 14% Transportation 30% Construction 2% Business to Business 13% Miscellaneous 1% Sales Tax by Category Fourth Quarter 2011 2012-13 OPERATING BUDGET OVERVIEW B-3 2011, outpacing the statewide growth rate of 4.5 percent. Like auto sales, retail sales tax receipts are expected to grow at a slower rate in FY 2012-13. The budget for FY 2012-13 includes additional sales tax revenues generated from new retail activity, such as the opening of the Ponto Hilton. 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 show this amount as sales tax since the amount is reflective of what the city would receive. 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 70 percent of the city’s sales tax base and were negatively impacted by the recent economic recession. During FY 2011-12, sales tax revenues, especially in the auto and retail sectors, increased as a slow economic recovery took root in San Diego. Sales tax estimates also include approximately $800,000 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 $13.5 million for FY 2012-13, an increase of 8 percent compared to FY 2011-12 estimates. Growth in the TOT base (existing hotels) is expected to increase by 3.5 percent in FY 2012-13, driven primarily by forecast increases in the average daily rate paid for rooms. The Ponto Hilton, a new hotel, is also expected to open in the summer of 2012 and add additional TOT revenues. TOT revenues peaked in FY 2007-08 at $14.3 million and, during the economic downturn, fell to a low of $11.5 million in FY 2009-10. As the graph indicates, this sector appears to be on the mend. 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 0 5 10 15 2005 2007 2009 2011 2013e $ Millions Fiscal Year Transient Occupancy Taxes 0 1 2 3 4 5 6 2005 2007 2009 2011 2013e $ Millions Fiscal Year Franchise Taxes Other Franchise SDG&E Franchise 2012-13 OPERATING BUDGET OVERVIEW B-4 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 franchises, AT&T and Time Warner. Overall, franchise tax revenues are projected to increase by approximately 2.1 percent, primarily due to increased receipts from cable and trash services, partially offset by a decrease in gas and electrical 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 paid by SDG&E. 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. During FY 2010-11, development related revenues continued to strengthen, especially on the non-residential side with the permitting of the new Isis Pharmaceuticals headquarters and the Hilton Beachfront Hotel. Although not as high as FY 2010-11, development related revenues are projected to end the year very strong in FY 2011- 12, with the development of several master planned residential communities and the development of the new Legoland Hotel. In FY 2010-11, there were 260 units permitted for residential housing. For FY 2011-12, 336 residential units have been permitted through April 2012. For FY 2012-13, 183 permits are projected to be issued for residential housing. Although commercial and industrial building activity weakened in FY 2011-12 as compared to FY 2010- 11, it is expected that activity will pick up again in FY 2012-13 with the projected development of the new Lowes and La Costa Town Square shopping centers. Due to projected subdued residential activity as compared to the strong residential development in FY 2011-12, building- related revenues are expected to drop by 13 percent in FY 2012-13. Although Business license taxes are closely tied to the health of the local economy, due to some one-time revenues received during FY 2011-12, they are projected to decrease by 2.7 percent to an estimated $3.6 million. There are currently about 8,900 licensed businesses in Carlsbad, with just over 2,500 of them home-based. All other revenues include transfer taxes, interest earnings, ambulance fees, recreation fees, and other charges and fees. The estimate for Fiscal Year 2012-13 totals $15.5 million, a $100,000, or 0.6 percent, decrease from the previous year. 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. 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 2012-13 OPERATING BUDGET OVERVIEW B-5 city. Carlsbad expects to receive approximately $1.1 million in transfer taxes for FY 2012-13, which is a $136,000 increase over FY 2011-12. 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 $1.4 million in interest on its General Fund investments for Fiscal Year 2012-13 (a projected 1.7 percent yield on the city’s investment portfolio) as well an additional $200,000 in interest earnings from a loan repayment from the former Redevelopment Agency. General Fund Revenues Overall, as reflected in the bar chart, General Fund revenues are expected to be up 1.2 percent from FY 2011- 12 estimates due to the increase in sales and transient occupancy taxes. 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. 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 2010-11, the unassigned General Fund balance was approximately $57.5 million. At the end of FY 2011-12 the reserve is projected to be approximately $59.1 million, or 51 percent, of the FY 2012-13 Budget. The reserve amount is consistent with Council Policy 74: General Fund Reserve Guidelines. Other Funds Revenues from Special Revenue funds are expected to total $11.3 million in FY 2012-13, a $700,000, or 5.8 percent, decrease from FY 2011-12. 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 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY2012e FY2013e +15.2%-2.7% -3.4%-2.7% -0.1% $ Millions +1.9%+1.3% 2012-13 OPERATING BUDGET OVERVIEW B-6 Rental Assistance 51% Affordable Housing 11% Maintenance Districts 25% Donations and Grants 9% All Others 4% SPECIAL REVENUE FUNDS 2012-13 PROJECTED REVENUES The most noteworthy changes in the Special Revenue funds occurred in the Affordable Housing Trust Fund, the Street Lighting Fund and the Rental Assistance Fund. Estimated revenues decreased approximately $1 million, $241,000 and $130,000, respectively, from FY 2011- 12. During FY 2011-12, the city received approximately $1.4 million in one-time affordable housing credits. In order to meet the inclusionary housing obligations for certain areas of the city (e.g., the southeast and southwest quadrants), units related to developments such as Villa Loma and Cassia Heights were made available as affordable housing credits for housing developers to purchase. Due to the small size of certain projects and the difficulty in obtaining financing, some developers/applicants have opted to purchase affordable housing credits instead of constructing units. During FY 2011-12, the city received approximately $205,000 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 2012-13. 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. The Federal government is reducing the amount of reimbursements for administrative expenses for their Section 8 Rental Assistance Program, which is reflected in the reduced estimated revenues for the Rental Assistance Program in FY 2012-13. Enterprise fund revenues for FY 2012-13 are projected at $58.6 million, an increase of $4.2 million, or 7.7 percent, over current year projections. The increase in revenues is primarily due to the planned 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 $43.2 million, an increase of $3.4 million, or 8.5 percent over the current year estimate. These revenues reflect $3.4 million in increased sales revenue due to proposed rate increases. In December 2011, two year rate increases 2012-13 OPERATING BUDGET OVERVIEW B-7 were approved by the Board of Directors of the Carlsbad Municipal Water District. The maximum rate increase approved for January 1, 2013 is 10 percent. Anticipated increases paid to the San Diego County Water Authority include an 11 percent increase to the wholesale purchase cost of water (from $957 to $1,063 per acre foot, effective January 1, 2013), and an 8.5 percent increase in the fixed charges for water purchases (from $5.1 million to $5.6 million) for FY 2012-13. In addition to paying for the wholesale and fixed water costs, the FY 2012-13 Operating Budget includes funding for replacement of Carlsbad’s water infrastructure, ongoing meter replacements, and building a sufficient operating reserve. Estimated revenues for Wastewater are $11.9 million, $610,000 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. In December 2011, two year rate increases were approved by the Carlsbad City Council. The maximum rate increase approved for January 1, 2013 is 6 percent. Internal Service funds show estimated revenues of $17.7 million for FY 2012-13, an increase of about $1.8 million, or 11.3 percent, from FY 2011-12 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 most significant change occurred in the Self-Insured Benefits Fund. Included in the FY 2012-13 revenues is a $1.8 million transfer from the General Fund to be set aside to assist in the stabilization of future CalPERS retirement costs. The Redevelopment Obligation Retirement Fund (RORF) revenues are expected to total $2.1 million in the upcoming year, a decrease of 32.3 percent, or $1 million, from the projections from the previous year. On June 29, 2011, California Governor Jerry Brown signed ABX1 26 to dissolve all redevelopment agencies within the State of California. All agencies were subsequently dissolved as of February 1, 2012, and a Successor Agency was designated to complete the work of the Carlsbad Redevelopment Agency (RDA) and satisfy the financial obligations. A Recognized Obligation Payment Schedule (ROPS) was prepared by the Successor Agency in April 2012 which must ultimately be approved by the Oversight Board, the County of San Diego and the State of California. The initial ROPS identified financial commitments of the former RDA which will be paid from semi-annual tax increment revenue received by the Successor Agency. Every six months a new ROPS must be prepared and approved by the Oversight Board, the County of San Diego and the State of California in order to receive additional tax increment. Due to the dissolving of the RDA, the RORF will only receive tax increment revenues and interest earnings on any cash balances. Tax increment revenues are projected to decrease due to the increase in County of San Diego administrative costs which are netted against the tax increment revenues received by the Successor Agency. 2012-13 OPERATING BUDGET OVERVIEW B-8 EXPENDITURES The city’s Operating Budget for FY 2012-13 totals $202.7 million, which represents an increase of about $8.9 million, or 4.6 percent, as compared to the adopted FY 2011-12 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 for the city to continue to provide the very best services to the community while finding operating efficiencies and reducing costs wherever possible. The goal was to achieve a balanced budget for the coming fiscal year while still maintaining the city’s long-term financial health, ensuring that future costs can be met without negatively impacting the services provided to the community. All known and ongoing operating expenses were incorporated in the FY 2012-13 Operating Budget, as well as in the long-term financial forecast. The FY 2012-13 Operating Budget also sets aside $1.8 million as a transfer from the General Fund to the Self Insured Benefits Fund in order to address the current unfunded pension liability as well as to help stabilize future pension costs. Responsible management of the city’s resources includes maintaining a focus on a sustainable future by ensuring the city remains in good financial health, as today’s decisions will impact future spending levels. Although the city is entering the new fiscal year in a solid financial position, future economic challenges remain. The following policies for FY 2012-13 were established in line with conservative estimates for future revenue growth: Continue to minimize service level impacts to our residents. No increase in the number of positions and no growth in maintenance and operations, unless required for new facilities. 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. 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. The city realigned its organizational structure in FY 2010-11, allowing for increased efficiencies with fewer resources, with overall operations costs remaining at FY 2009-10 levels. For both FY 2011-12 and FY 2012-13, in order to meet rising General Fund expenses, some positions were eliminated, related service delivery was restructured, and departments were 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, or will increase the city’s reserves. At the end of FY 2011- 12, the amounts carried forward by each department will be capped at no more than 10 percent of the previous year’s Adopted Budget. 2012-13 OPERATING BUDGET OVERVIEW B-9 Budgeted Expenditures Through the application of these guidelines and policies, the FY 2012-13 Operating Budget of $202.7 million was developed. Position Changes A net decrease of 9.75 full-time positions is reflected in the FY 2012-13 Operating Budget, as compared to the FY 2011-12 Adopted Budget. Total position decreases include the elimination of 5.75 positions identified through expenditure reduction efforts, the elimination of two positions as a result of losing redevelopment funding from the State of California, and the elimination of three positions that had previously been unfunded, for a total of 10.75 position eliminations, resulting in approximately $600,000 in total personnel savings citywide for the coming year. These eliminations are partially offset by the addition of one full-time, limited term position for facility management at the new Carlsbad Safety Training Center. The FY 2012-13 Preliminary Operating Budget includes the elimination of the following 10.75 full-time positions: 1.0 Assistant Planner 1.0 Building Inspector II 1.0 Code Compliance Specialist II 1.0 Maintenance Aide 1.0 Meter Reader 1.0 Office Specialist II 1.0 Parks Maintenance Worker II 1.0 Planning Technician 0.25 Records Manager 1.0 Senior Building Inspector 1.5 Tree Trimmer II The FY 2012-13 Preliminary Operating Budget includes the addition of the following full-time, limited term position: 1.0 Safety Training Center Facility Manager The net decrease in hourly staff totals 7.16 FTE. This includes decreases of 5.16 hourly FTE in Parks and Recreation, 1.0 hourly FTE in Community and Economic Development, 1.0 hourly FTE in Library and Arts, and 0.75 hourly FTE in Human Resources. These decreases are offset by an increase of 0.75 hourly FTE in Property and Environmental Management for new facility building maintenance and custodial services for the City of Carlsbad’s Safety Training Center. These changes result in a city workforce of 674.50 full and three-quarter time employees, and 132.58 hourly, full-time equivalent positions. 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 grand opening of the City of Carlsbad’s Safety Training Center occurred in May 2012. Additional funds for operating the facility have been incorporated in the FY 2012-13 Operating Budget in the Property and Environmental Management Department. Additional staffing has also been added to operate and maintain the facility, as mentioned in the position changes noted above. Also, about $5,000 has been added to the Parks and Recreation Department budget to fund a full year of landscape maintenance of the Madison Street expansion of Pine Avenue Park, completed mid-year of FY 2011-12, and about $6,000 has been added to the Transportation Department budget for technical support in FY 2012-13 for the completed portions of the city’s traffic signal program. 2012-13 OPERATING BUDGET OVERVIEW B-10 Budget by Fund Type The table below shows the changes in the Operating Budget for FY 2012-13, as compared to the Adopted Budget for FY 2011-12. BUDGET BUDGET $% FUND 2011-12 2012-13 CHANGE CHANGE GENERAL FUND 111.8$ 115.1$ 3.3$ 3.0% SPECIAL REVENUE 11.4 10.9 (0.5) -4.4% ENTERPRISE 53.5 57.2 3.7 6.9% INTERNAL SERVICE 15.3 18.1 2.8 18.3% REDEV. OBLIG. RETIREMENT 1.8 1.4 (0.4) -22.2% TOTAL 193.8$ 202.7$ 8.9$ 4.6% 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 the budgeted expenditures by fund and program. GENERAL FUND SUMMARY BY EXPENDITURE TYPE BUDGET BUDGET $% 2011-12 2012-13 CHANGE CHANGE PERSONNEL 72.8$ 73.3$ 0.5$ 0.7% MAINTENANCE & OPERATIONS 29.4 30.7 1.3 4.4% CAPITAL OUTLAY 0.1 0.1 - 0.0% TRANSFERS 9.5 11.0 1.5 15.8% TOTAL 111.8$ 115.1$ 3.3$ 3.0% (In Millions) General Fund The total Operating Budget for the General Fund for FY 2012-13 is $115.1 million, which is three percent greater than the previous year’s Adopted Budget of $111.8 million. The total increase is mainly attributable to a $1.3 million, or 4.4 percent, net increase in Maintenance and Operations costs and a $1.5 million, or 15.8 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 64 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 2012-13 is $73.3 million, which is $500,000, or 0.7 percent, more than the previous year’s total personnel budget of $72.8 million. The overall increase was due to several factors, as discussed on the following page. 2012-13 OPERATING BUDGET OVERVIEW B-11 GENERAL FUND PERSONNEL COSTS (In Millions) BUDGET BUDGET $% 2011-12 2012-13 CHANGE CHANGE SALARIES 50.3$ 51.0$ 0.7$ 1.4% RETIREMENT 13.6 13.1 (0.5)-3.7% HEALTH INSURANCE 6.5 6.7 0.2 3.1% WORKERS COMP 1.3 1.4 0.1 7.7% OTHER PERSONNEL 1.1 1.1 0.0 0.0% TOTAL 72.8$ 73.3$ 0.5$ 0.7% The table above shows the breakdown of personnel costs for the General Fund. Overall, total personnel costs are projected at $73.3 million, an increase of about $500,000, or 0.7 percent, for FY 2012-13 as compared to FY 2011-12. Salaries include full and part-time staff costs and are expected to increase in FY 2012-13 by $700,000, or 1.4 percent. The increase is mainly due to previously negotiated wage increases scheduled to occur in FY 2012-13, as well as the addition of staff to operate and maintain the new Carlsbad Safety Training Center. Total wage and staffing increases were somewhat offset by the elimination of 10.75 full-time positions citywide as part of the city’s efforts to reduce costs in FY 2012-13. Retirement rates, as projected by CalPERS, will increase in FY 2012-13 by about 0.73 percent of salary for General and Management employees, representing a 3.25 percent increase, and by about 1.13 percent of salary for Safety employees, representing a 3.5 percent increase. These rate increases for the city were offset by retirement cost decreases due to prior year General, Management and Safety employee labor negotiations, and due to decreases from position eliminations, resulting in an overall decrease of $500,000, or 3.7 percent, in total retirement costs. In addition to the retirement costs noted here, an additional $1.8 million has been budgeted as a transfer to the City’s Self-Insured Benefits Fund as a set aside to help address anticipated future pension rate increases from CalPERS. Health insurance rates are projected to increase by about 5 percent in January 2013, while Worker’s Compensation rates are projected to increase by about 3 percent for the fiscal year. These increased costs are partially offset by decreases due to a reduction in the overall number of city personnel, resulting in only slight increases in both areas for the coming year. Miscellaneous other personnel costs are projected to remain flat for FY 2012-13, with small increases offset by the overall personnel decreases previously mentioned. Maintenance & Operations costs (or M&O) represent about 27 percent of the total General Fund budget, and include the budgets for all program expenses other than personnel, capital outlay and transfers. Overall, total M&O costs are projected at $30.7 million, an increase of about $1.3 million, or 4.4 percent, for FY 2012-13 as compared to FY 2011-12. Maintenance and Operations costs are discussed more fully by program later in the report. 2012-13 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 2012-13, namely $110,000 for the replacement of three portable EKG monitors for the Fire Department’s emergency medical services team. This is in addition to the three EKG monitors that were budgeted in the FY 2011-12 Operating Budget. Transfers are amounts anticipated to be transferred from the General Fund to another city fund. The transfers included in this year’s Operating Budget are to the following funds: $7.5 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 2011-12. $210,000 to the Storm Water Program for reimbursement for the General Fund portion of Storm Water expenses. $527,746 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 annual operating expenditures. $945,000 to the city’s municipal golf course for debt service. The budget and financial reports for The Crossings Golf Course are on a calendar year basis. In December 2011, the Carlsbad Public Financing Authority approved The Crossings Golf Course Budget for calendar year 2012, including this transfer for debt service funding from the General Fund. At that time, there was no anticipated need for a golf course operations transfer from the General Fund for Calendar Year 2012. $1.8 million to the City’s Self-Insured Benefits Fund as a set aside to address anticipated future pension rate increases from CalPERS. Advances are amounts anticipated to be transferred from the General Fund to another city funds and are expected to be repaid to the General Fund in future years. No General Fund advances are included in this year’s Operating Budget. Another way of looking at the General Fund budget is by program. The chart on the following page compares the total FY 2012-13 Budget to the amounts adopted in the previous year. A brief description of each department and its services and a summary of significant department budget changes in the FY 2012-13 Operating Budget, are noted below the chart. 2012-13 OPERATING BUDGET OVERVIEW B-13 GENERAL FUND EXPENDITURES BY DEPARTMENT (In Millions) BUDGET BUDGET $% DEPARTMENT 2011-12 2012-13 CHANGE CHANGE POLICY/LEADERSHIP 4.9$ 5.0$ 0.1$ 2.0% COMMUNITY & ECONOMIC DEV 7.2 7.1 (0.1)-1.4% FINANCE 3.4 3.5 0.1 2.9% FIRE 16.9 17.5 0.6 3.6% HOUSING & NGHBRHD SRVCS 0.6 0.6 0.0 0.0% HUMAN RESOURCES 2.3 2.3 0.0 0.0% LIBRARY & ARTS 10.4 10.3 (0.1) -1.0% PARKS & RECREATION 13.1 12.7 (0.4) -3.1% POLICE 28.1 27.9 (0.2) -0.7% PROPERTY & ENVIRO MGT 4.7 5.1 0.4 8.5% STORM DRAIN ENGINEERING 0.3 0.3 0.0 0.0% TRANSPORTATION 8.9 8.9 0.0 0.0% NON-DEPARTMENTAL 11.0 13.9 2.9 26.4% TOTAL 111.8$ 115.1$ 3.3$ 3.0% 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 $100,000, or 2 percent, net increase for FY 2012-13 is primarily due to an increase in the City Clerk’s Office for increased election expenses anticipated in the coming year. The Community and Economic Development Department includes economic development, planning, development services, building inspection, and land use engineering. The decrease of about $100,000, or 1.4 percent, is mainly due to personnel changes. The department eliminated one vacant full-time Building Inspector II position and a net total of one hourly FTE position. Some of these savings were used to absorb costs previously charged to the South Coastal Carlsbad Redevelopment Area, as well as to fund increases in economic development activity. The department also eliminated two additional positions that had been unfunded in a prior year. The Finance Department provides the services of accounting, financial reporting, capital and operating budgeting, payroll, billing and collections, citywide mail processing, purchasing and receiving, fiscal oversight, and long-term financial planning for the city. The increase of about $100,000, or 2.9 percent, is mainly due to personnel cost increases, as well as an increase in ambulance billings. The Carlsbad Fire Department provides emergency operations, emergency preparedness, and fire prevention services to safeguard lives, property and the environment in the City of Carlsbad. The FY 2012-13 increase of $600,000, or 3.6 percent, is primarily due to contractual wage increases approved in FY 2011-12, as well as increases in public safety pension rates and health insurance rates. Increases were slightly offset by $50,000 of budget reductions in overtime, training, travel and vehicle costs for the department due to the opening of Carlsbad’s Safety Training Center. 2012-13 OPERATING BUDGET OVERVIEW B-14 The Housing and Neighborhood Services Department includes the city’s neighborhood services, code enforcement, hiring center and volunteer programs. Budgeted expenditures for the department are expected to remain flat from FY 2011-12 to FY 2012-13. In the General Fund, the department is eliminating one vacant, full-time Code Compliance Specialist that had been unfunded in the prior year. The Human Resources Department supports the city with staffing and recruitment, employee development, performance management, and compensation and labor relations services. An increase in contractual services for staff training and development is offset by a decrease of a 0.75 hourly FTE position. In total for the department, no significant change is expected for FY 2012-13, as compared to the FY 2011-12 budget. 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 decrease by $100,000, or 1 percent, from FY 2011- 12 to FY 2012-13. This is partially due to the downgrading of two full-time positions and the elimination of a net total of 1.0 hourly FTE position. 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. Overall, the department’s budget is decreasing by $400,000, or 3.1 percent, from the prior year, largely due to the elimination of 3.5 full-time and 0.16 hourly FTE positions in parks and tree maintenance, due to the modification of maintenance operations schedules in the Parks division. In addition, a net total of 5 hourly FTE positions are being eliminated in Recreation by altering service delivery methods and by coordinating duties between staff in the Parks and Recreation divisions. These personnel decreases amounted to almost $500,000 in savings for the department. Also, a decrease of $200,000 was made to the budget for instructional classes to better reflect actual expenses incurred over the last few years. These decreases were somewhat offset by a total $200,000 increase to the budget for a comprehensive City Trails Master Plan update and for a needs assessment study to address future park and recreation programming needs. In addition, the department budget increased by about $100,000 due to the transfer of the Special Events division from the Police Department, including one full-time position. The Carlsbad Police Department provides high quality public safety services to the community by enforcing laws and ordinances, preserving the peace, and providing for the protection of life and property. Overall, the department’s costs are decreasing by $200,000, or 0.7 percent, for FY 2012-13 as compared to FY 2011-12. Approximately $100,000 of the decrease is due to the transfer of the Special Events division, including one full-time position, to the Parks and Recreation Department. Also, in FY 2012-13, the budget is being reduced by $250,000 for booking fees not anticipated to be charged by the County and by another $150,000 in overtime, training, travel and vehicle costs due to savings anticipated from the opening of the City of Carlsbad’s Safety Training Center. These reductions are offset by previously approved contractual wage increases, increases in public safety pension rates, health insurance rates, General Liability insurance and Fleet Replacement costs. 2012-13 OPERATING BUDGET OVERVIEW B-15 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 $400,000, or 8.5 percent, increase from the prior year’s budget is primarily due to additional costs associated with the opening of the City of Carlsbad’s Safety Training Center, including the addition of one full-time and 0.75 hourly FTE positions. The Utilities Department in the General Fund consists of Storm Drain Engineering activities. No significant change is expected for FY 2012-13 as compared to the FY 2011-12 budget appropriation. The Transportation Department manages all streets, traffic and other city-wide transportation services, including city traffic engineering, traffic signal monitoring and maintenance, and maintenance of all city streets and roadways. The department budget is expected to remain relatively flat from FY 2011-12 to FY 2012-13. Non-departmental expenses include the transfers previously discussed, the Council Contingency account, and administrative and other expenses not associated with any one department. The non-departmental budget is expected to increase by $2.9 million, or 26.4 percent, in FY 2012-13. The increase is largely attributed to budgeting a $1.8 million transfer to the city’s Self Insured Benefits Fund to assist with anticipated future pension rate increases. The Council Contingency is a budgeted amount that is available to the City Council to address unanticipated emergencies or unforeseen program needs during the fiscal year. Prior to the economic recession, the Council Contingency budget provided between 2 and 2.5 percent of the General Fund Operating Budget for these unforeseen costs. The Council Contingency was reduced significantly during the last three years to ensure a balanced budget during the economic recession. For FY 2012-13, the Contingency is budgeted at 1.3 percent of the General Fund Operating Budget, or $1.5 million, which is a $1.0 million increase compared to the FY 2011-12 budget. History of General Fund Adopted Budgeted Expenditures As reflected in the chart to the left, the city’s expenditures were reduced significantly with the City Council’s revised budget in FY 2008-09, reflecting a 3.3 percent decrease from the FY 2007-08 Adopted Budget. A further 3.2 percent reduction was made in FY 2009-10 in order to reduce expenditures in line with continued General Fund revenue declines. Expenditure projections for FY 2010-11 remained relatively flat, with growth of less than one percent, in anticipation of a flat economy. For FY 2011-12 General Fund expenditures showed a slight increase of 2.2 percent, supported by projected revenue increases. For FY 2012-13 General Fund expenditures are expected to increase by $3.3 million, or 3 percent, based on projections of continued economic growth. 100 105 110 115 120 FY 2007-08 $116.5m FY 2008-09r $112.7m FY 2009-10 $109.1m FY 2010-11 $109.4m FY 2011-12 $111.8m FY 2012-13 $115.1m +9.5% (3.3%) (3.2%) +2.2% +3.0% $ Millions +0.3% 2012-13 OPERATING BUDGET OVERVIEW B-16 Changes in Other Funds Special Revenue funds, at $10.9 million, are down $500,000, or 4.4 percent, from the prior year. This is mainly due to reduced funding for rental assistance and administration for the federal Community Development Block Grant program. Enterprise funds total $57.1 million, which is an increase of $3.6 million, or 6.7 percent, over the FY 2011-12 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 (11 percent increase in fixed costs and a 8.5 percent increase in variable costs due to a proposed increase from $957 to $1,063 per acre foot effective January 1, 2012). In addition, the cost of purchasing recycled water is anticipated to increase up to 11.5 percent when compared to the Adopted Budget for FY 2011-12. Carlsbad customers have decreased water consumption for several years; however, in FY 2011-12 the quantities purchased began to level off and even increase slightly. The quantities purchased are expected to stay the same in FY 2012-13 as in FY 2011- 12. The Operating Budget also includes additional funding for depreciation replacement transfers related to growth and aging of the water infrastructure system. Wastewater operations are projected to increase 2.1 percent, or $231,000, over the Adopted Budget for FY 2011-12. The operating budget includes additional funding for depreciation replacement transfers related to growth in the wastewater infrastructure system. The Internal Service funds total $14.9 million, a decrease of $400,000, or 2.6 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 a decrease of approximately $350,000, or 17.1 percent, based on lower claims projected for the fund, as compared to the prior fiscal years. The Self Insured Benefits budget shows a decrease of approximately $100,000, or 10 percent, based on a projected decrease in the city’s annual required contribution for post-employment health benefits 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 less than the previous year, or a 25.8 percent decrease, due to fewer 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 $200,000, or 3.5 percent, from FY 2011-12 to FY 2012-13. This is mostly due to more technology equipment being due for replacement than in the prior year. The budgets for the Redevelopment Obligation Retirement Funds (RORF) budgets have decreased by $400,000 or 22.2 percent, from the Redevelopment Agency Fund budgets shown in the previous year. On June 29, 2011, California Governor Jerry Brown signed ABX1 26 to dissolve all redevelopment agencies within the State of California. All agencies were subsequently dissolved as of February 1, 2012, and a Successor Agency was designated to complete the work of the Carlsbad Redevelopment Agency (RDA) and satisfy the financial obligations. The FY 2012-13 Preliminary Operating Budget reflects the initial Recognized Obligation Payment Schedule (ROPS) that was prepared by the Successor Agency in April 2012, but which must ultimately be approved by the Oversight Board, the County of San Diego 2012-13 OPERATING BUDGET OVERVIEW B-17 and the State of California. The initial ROPS identified financial commitments of the former RDA, including $250,000 in administrative costs, which will be paid from semi-annual tax increment revenue received by the Successor Agency. Every six months a new ROPS must be prepared and approved by the Oversight Board, the County of San Diego and the State of California in order to receive additional tax increment. The city eliminated two full-time positions as a result of the dissolution of the Carlsbad Redevelopment Agency. SUMMARY This Operating Budget for FY 2012-13 provides a balanced budget for the coming fiscal year while continuing with a long-term plan to sustain a balanced budget in future years. Significant ongoing operating expenses were identified and incorporated in the FY 2012-13 Operating Budget to ensure the budget reflects the ongoing financial obligations of the city. The Carlsbad economy is starting to improve, including new corporate headquarters and major hotel, retail and commercial projects which will strengthen the local economy. In addition, revenues are improving in the city, with continued gains seen in city sales and hotel tax revenues. However, Carlsbad still faces economic challenges from a fluctuating economy, an unsteady real estate market, continued commodity and utility cost increases, and concerns over the impact that budget decisions at the state and federal levels could have on the city’s financial situation. To meet these challenges, the city has initiated a program to evaluate all city operations looking for opportunities to reduce costs through efficiencies, shared services or contracting out services in some areas when that makes sense. The city has already seen results from these efforts. As fixed costs like utilities, insurance, and supplies have increased, departments have been able to reduce costs in other areas to maintain a balanced budget without impacting services provided to the community. The City of Carlsbad is entering the new fiscal year in a solid financial position and focused on the future. Careful planning and responsible management have allowed the city to not only maintain core services, but to also move ahead on community projects and other investments that contribute to an excellent quality of life in our community. Promoting a strong local economy and bringing more jobs to the city is a top priority. Due to continued fiscally conservative practices, the city is in an excellent position to take advantage of new economic opportunities that will allow our community to thrive now and for many years in the future. CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 GENERAL FUND TAXES PROPERTY TAX $48,409,518 $48,107,000 $47,805,000 -0.6%($302,000) SALES TAX 26,386,132 27,561,000 28,782,000 4.4%1,221,000 TRANSIENT TAX 11,568,576 12,545,000 13,482,000 7.5%937,000 FRANCHISE TAX 4,649,535 4,785,000 4,883,000 2.1%98,000 BUSINESS LICENSE TAX 3,581,368 3,689,000 3,556,000 -3.6%(133,000) TRANSFER TAX 910,976 950,000 1,086,000 14.3%136,000 TOTAL TAXES 95,506,105 97,637,000 99,594,000 2.0%1,957,000 INTERGOVERNMENTAL VEHICLE LICENSE FEES 483,273 53,000 0 -100.0%(53,000) HOMEOWNERS EXEMPTION 372,945 375,000 377,000 0.5%2,000 OTHER INTERGOVERNMENTAL 1,066,496 799,000 496,000 -37.9%(303,000) TOTAL INTERGOVERNMENTAL 1,922,714 1,227,000 873,000 -28.9%(354,000) LICENSES AND PERMITS BUILDING PERMITS 767,581 665,000 596,000 -10.4%(69,000) OTHER LICENSES & PERMITS 822,704 870,000 780,000 -10.3%(90,000) TOTAL LICENSES & PERMITS 1,590,285 1,535,000 1,376,000 -10.4%(159,000) CHARGES FOR SERVICES PLANNING FEES 285,268 350,000 314,000 -10.3%(36,000) BUILDING DEPT. FEES 681,264 628,000 563,000 -10.4%(65,000) ENGINEERING FEES 668,756 640,000 573,000 -10.5%(67,000) AMBULANCE FEES 2,471,422 2,525,000 2,581,000 2.2%56,000 RECREATION FEES 1,694,304 1,500,000 1,527,000 1.8%27,000 OTHER CHARGES OR FEES 660,770 673,000 685,000 1.8%12,000 TOTAL CHARGES FOR SERVICES 6,461,784 6,316,000 6,243,000 -1.2%(73,000) FINES AND FORFEITURES 1,001,462 900,000 916,000 1.8%16,000 INCOME FROM INVESTMENTS AND PROPERTY*2,219,842 2,321,000 2,574,000 10.9%253,000 INTERDEPARTMENTAL CHARGES 3,015,094 3,700,000 3,675,000 -0.7%(25,000) OTHER REVENUE SOURCES 2,652,756 977,000 855,000 -12.5%(122,000) TOTAL GENERAL FUND $114,370,042 $114,613,000 $116,106,000 1.3%$1,493,000 * INTEREST IS CALCULATED ON AN AMORTIZED COST BASIS B-20 CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 SPECIAL REVENUE FUNDS AFFORDABLE HOUSING AFFORDABLE HOUSING FEES $69,730 $1,720,000 $174,000 -89.9%($1,546,000) FEDERAL GRANT 89,988 24,350 580,000 2281.9%555,650 STATE GRANT 1,000 0 980 0.0%980 INTEREST 199,045 60,000 260,000 333.3%200,000 OTHER 601,205 460,000 220,000 -52.2%(240,000) TOTAL AFFORDABLE HOUSING 960,968 2,264,350 1,234,980 -45.5%(1,029,370) BUENA VISTA CHANNEL MAINTENANCE BUENA VISTA FEES 82,679 100,000 100,000 0.0%0 INTEREST 17,632 25,700 21,950 -14.6%(3,750) TOTAL BUENA VISTA CHANNEL MAINTENANCE 100,311 125,700 121,950 -3.0%(3,750) CITIZEN'S OPTION FOR PUBLIC SAFETY STATE FUNDING (AB3229)104,732 83,000 110,388 33.0%27,388 INTEREST 6 1,000 0 -100.0%(1,000) TOTAL CITIZENS OPTION FOR PUBLIC SAFETY 104,738 84,000 110,388 31.4%26,388 COMMUNITY ACTIVITY GRANTS INTEREST 13,753 5,000 15,000 200.0%10,000 TOTAL COMMUNITY ACTIVITY GRANTS 13,753 5,000 15,000 200.0%10,000 COMMUNITY DEVELOPMENT BLOCK GRANT FEDERAL GRANT 405,785 0 0 0.0%0 INTEREST 950,929 24,000 0 -100.0%(24,000) OTHER 1,032,304 0 0 0.0%0 TOTAL COMMUNITY DEVELOPMENT BLOCK GRANT 2,389,018 24,000 0 -100.0%(24,000) CULTURAL ARTS DONATIONS DONATIONS 41,690 23,000 34,000 47.8%11,000 INTEREST 1,623 400 0 -100.0%(400) OTHER 5,000 6,000 7,500 25.0%1,500 TOTAL CULTURAL ARTS DONATIONS 48,313 29,400 41,500 41.2%12,100 LIBRARY AND ARTS ENDOWMENT FUND INTEREST 3,450 1,000 4,000 300.0%3,000 TOTAL LIBRARY AND ARTS ENDOWMENT FUND 3,450 1,000 4,000 300.0%3,000 LIBRARY GIFTS/BEQUESTS GIFTS/BEQUESTS 195,312 128,600 120,000 -6.7%(8,600) INTEREST 2,589 1,000 0 -100.0%(1,000) TOTAL LIBRARY GIFTS/BEQUESTS 197,901 129,600 120,000 -7.4%(9,600) LIGHTING AND LANDSCAPING DISTRICT NO. #2 LLD #2 FEES 415,424 412,500 489,632 18.7%77,132 INTEREST 16,118 20,000 28,399 42.0%8,399 TOTAL LIGHTING AND LANDSCAPING DIST. NO. #2 431,542 432,500 518,031 19.8%85,531 LOCAL CABLE INFRASTRUCTURE FUND CABLE FEES 356,330 326,000 362,000 11.0%36,000 INTEREST 6,507 3,000 7,000 133.3%4,000 TOTAL LOCAL CABLE INFRASTRUCTURE FUND 362,837 329,000 369,000 12.2%40,000 MEDIAN MAINTENANCE MEDIAN MAINTENANCE FEES 358,994 359,000 358,029 -0.3%(971) INTEREST 148 0 0 0.0%0 OTHER 253,850 359,500 378,089 5.2%18,589 TOTAL MEDIAN MAINTENANCE 612,992 718,500 736,118 2.5%17,618 POLICE ASSET FORFEITURE ASSET FORFEITURES 49,473 50,000 50,000 0.0%0 INTEREST 10,521 3,000 12,000 300.0%9,000 TOTAL POLICE ASSET FORFEITURE 59,994 53,000 62,000 17.0%9,000 POLICE GRANTS FEDERAL GRANT 247,572 185,000 668,615 261.4%483,615 INTEREST (2,197) 0 0 0.0%0 TOTAL POLICE GRANTS 245,375 185,000 668,615 261.4%483,615 B-21 CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 SPECIAL REVENUE FUNDS - CONTINUED PUBLIC ART INTEREST $2,182 $0 $0 0.0%$0 TOTAL PUBLIC ART 2,182 0 0 0.0%0 RECREATION DONATIONS DONATIONS & GRANTS 65,385 30,200 20,750 -31.3%(9,450) INTEREST 3,226 1,000 0 -100.0%(1,000) TOTAL RECREATION DONATIONS 68,611 31,200 20,750 -33.5%(10,450) RENTAL ASSISTANCE FEDERAL GRANT 6,620,340 5,879,000 5,703,538 -3.0%(175,462) INTEREST 20,440 3,000 16,704 456.8%13,704 OTHER 21,558 20,000 50,000 150.0%30,000 TOTAL RENTAL ASSISTANCE 6,662,338 5,902,000 5,770,242 -2.2%(131,758) SENIOR DONATIONS DONATIONS 12,956 8,000 8,000 0.0%0 INTEREST 2,632 1,000 2,000 100.0%1,000 OTHER 14,841 14,000 15,000 7.1%1,000 TOTAL SENIOR DONATIONS 30,429 23,000 25,000 8.7%2,000 STREET LIGHTING GOVERNMENT GRANTS AND LOANS 581,412 204,500 0 -100.0%(204,500) STREET LIGHTING FEES 732,058 879,200 730,557 -16.9%(148,643) OTHER 283,357 28,000 141,387 405.0%113,387 INTEREST (1,696) 13,800 12,230 -11.4%(1,570) TOTAL STREET LIGHTING 1,595,131 1,125,500 884,174 -21.4%(241,326) STREET TREE MAINTENANCE TREE MAINTENANCE FEES 466,663 465,000 461,493 -0.8%(3,507) INTEREST 4,989 1,500 0 -100.0%(1,500) OTHER 0 114,000 149,657 31.3%35,657 TOTAL STREET TREE MAINTENANCE 471,652 580,500 611,150 5.3%30,650 TOTAL SPECIAL REVENUE FUNDS $14,361,535 $12,043,250 $11,312,898 -6.1%($730,352) B-22 CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 ENTERPRISE FUNDS WATER OPERATIONS WATER SALES $18,160,522 $21,200,000 $23,300,000 9.9%$2,100,000 READY TO SERVE CHARGES 7,371,202 8,020,000 8,750,000 9.1%730,000 PROPERTY TAXES 2,755,099 2,930,000 2,930,000 0.0%0 NEW ACCOUNT CHARGES 123,440 100,000 100,000 0.0%0 BACK-FLOW PROGRAM FEES 120,051 125,000 125,000 0.0%0 PENALTY FEES 280,534 280,000 280,000 0.0%0 INTEREST (10,339) 2,800 1,000 -64.3%(1,800) ENGINEERING OVERHEAD 90,732 80,000 80,000 0.0%0 SERVICE CONNECTION FEES 89,560 90,000 90,000 0.0%0 OTHER 3,386,098 244,000 245,800 0.7%1,800 TOTAL WATER OPERATIONS 32,366,899 33,071,800 35,901,800 8.6%2,830,000 RECYCLED WATER OPERATIONS WATER SALES 4,038,481 4,912,000 5,404,000 10.0%492,000 READY-TO-SERVE CHARGE 525,300 575,000 625,000 8.7%50,000 RECYCLED WATER CREDITS 1,018,673 1,000,000 1,000,000 0.0%0 INTEREST 73,721 125,000 100,000 -20.0%(25,000) OTHER 288,304 106,650 136,650 28.1%30,000 TOTAL RECYCLED WATER OPERATIONS 5,944,479 6,718,650 7,265,650 8.1%547,000 WASTEWATER OPERATIONS SERVICE CHARGES 9,952,563 10,895,000 11,530,000 5.8%635,000 MISC SEWER 20,491 20,000 20,000 0.0%0 ENGINEERING OVERHEAD 185,353 185,000 175,000 -5.4%(10,000) PENALTY FEES 79,510 90,000 80,000 -11.1%(10,000) INTEREST 48,841 61,000 66,000 8.2%5,000 OTHER 237,374 80,000 70,000 -12.5%(10,000) TOTAL WASTEWATER OPERATIONS 10,524,132 11,331,000 11,941,000 5.4%610,000 SOLID WASTE MANAGEMENT INTEREST 127,950 163,000 160,000 -1.8%(3,000) RECYCLING FEES (AB939)277,451 275,000 275,000 0.0%0 PENALTY FEES 54,286 53,000 53,000 0.0%0 TRASH SURCHARGE 2,683,658 2,600,000 2,700,000 3.9%100,000 OTHER 296,556 218,943 265,200 21.1%46,257 TOTAL SOLID WASTE MANAGEMENT 3,439,901 3,309,943 3,453,200 4.3%143,257 TOTAL ENTERPRISE FUNDS $52,275,411 $54,431,393 $58,561,650 7.6%$4,130,257 B-23 CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 INTERNAL SERVICE FUNDS WORKERS' COMPENSATION INTERDEPARTMENTAL $1,327,400 $1,457,230 $1,500,830 3.0%$43,600 INTEREST 88,873 115,574 0 -100.0%(115,574) OTHER 1,099,703 4,280 0 -100.0%(4,280) TOTAL WORKERS' COMPENSATION 2,515,976 1,577,084 1,500,830 -4.8%(76,254) RISK MANAGEMENT INTERDEPARTMENTAL 1,563,720 1,656,970 1,858,560 12.2%201,590 INTEREST 8,985 0 0 0.0%0 OTHER 28,493 25,000 0 -100.0%(25,000) TOTAL RISK MANAGEMENT 1,601,198 1,681,970 1,858,560 10.5%176,590 SELF-INSURED BENEFITS INTERDEPARTMENTAL 799,077 832,878 874,522 5.0%41,644 OTHER 76,411 38,072 1,838,072 4727.9%1,800,000 TOTAL SELF-INSURED BENEFITS 875,488 870,950 2,712,594 211.5%1,841,644 VEHICLE MAINTENANCE INTERDEPARTMENTAL 2,638,434 2,885,809 2,720,170 -5.7%(165,639) INTEREST 3,078 6,369 0 -100.0%(6,369) OTHER 30,272 19,637 32,000 63.0%12,363 TOTAL VEHICLE MAINTENANCE 2,671,784 2,911,815 2,752,170 -5.5%(159,645) VEHICLE REPLACEMENT INTERDEPARTMENTAL 2,167,436 1,862,321 1,820,012 -2.3%(42,309) INTEREST 202,480 213,232 300,000 40.7%86,768 OTHER 45,691 3,494 0 -100.0%(3,494) TOTAL VEHICLE REPLACEMENT 2,415,607 2,079,047 2,120,012 2.0%40,965 INFORMATION TECHNOLOGY INTERDEPARTMENTAL 6,514,147 6,682,808 6,639,381 -0.7%(43,427) INTEREST 58,255 15,000 68,000 353.3%53,000 OTHER 60,667 15,000 400 -97.3%(14,600) TOTAL INFORMATION TECHNOLOGY 6,633,069 6,712,808 6,707,781 -0.1%(5,027) TOTAL INTERNAL SERVICE FUNDS $16,713,122 $15,833,674 $17,651,947 11.5%$1,818,273 B-24 CITY OF CARLSBAD OPERATING FUNDS REVENUE ESTIMATES ACTUAL PROJECTED ESTIMATED AS %DIFFERENCE REVENUE REVENUE REVENUE OF FY 11-12 2011-12 TO REVENUE SOURCE 2010-11 2011-12 2012-13 PROJECTED 2012-13 REDEVELOPMENT OBLIGATION RETIREMENT FUNDS VILLAGE RDA OBLIGATION RETIREMENT FUND RENTAL INCOME $14,862 $8,800 $0 -100.0%($8,800) TAX INCREMENT 2,820,708 2,665,000 2,130,000 -20.1%(535,000) INTEREST 40,155 10,000 15,000 50.0%5,000 OTHER 7,718 2,800 0 -100.0%(2,800) TOTAL VILLAGE OPERATIONS / DEBT SERVICE 2,883,443 2,686,600 2,145,000 -20.2%(541,600) VILLAGE LOW AND MODERATE INCOME HOUSING TAX INCREMENT 705,177 399,680 0 -100.0%(399,680) INTEREST 357,718 17,000 0 -100.0%(17,000) OTHER 0 15,000 0 -100.0%(15,000) TOTAL VILLAGE LOW AND MOD INCOME HOUSING 1,062,895 431,680 0 -100.0%(431,680) SCC RDA OBLIGATION RETIREMENT FUND INTEREST 96,129 15,000 0 -100.0%(15,000) OTHER 0 3,300 0 -100.0%(3,300) TOTAL SCCRDA OPERATIONS / DEBT SERVICE 96,129 18,300 0 -100.0%(18,300) SCC LOW AND MODERATE INCOME HOUSING INTEREST 3,380 1,000 0 -100.0%(1,000) TOTAL SCCRDA LOW AND MOD INCOME HOUSING 3,380 1,000 0 -100.0%(1,000) TOTAL REDEVELOPMENT FUNDS $4,045,847 $3,137,580 $2,145,000 -31.6%($992,580) TOTAL OPERATING FUNDS $201,765,957 $200,058,897 $205,777,495 2.9%$5,718,598 B-25 Policy Ldrshp Policy and Leadership Group Policy Ldrshp Policy and Leadership Group C-1 PROGRAM: POLICY AND LEADERSHIP FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $3,861,613 $3,673,460 $3,694,798 $3,688,230 MAINTENANCE & OPERATIONS 1,305,760 1,474,534 1,536,004 1,618,321 CAPITAL OUTLAY 94,264 78,635 52,632 104,762 GRAND TOTAL $5,261,637 $5,226,629 $5,283,434 $5,411,313 FULL TIME POSITIONS 27.50 27.50 24.75 24.50 HOURLY/FTE POSITIONS 0.00 0.00 0.50 0.50 CITY COUNCIL 7%CITY CLERK 3% TREASURER 4% CITY MANAGER 28% COMMUNICATIONS 20% RECORDS MANAGEMENT 15% CITY ATTORNEY 25% C-4 PROGRAM: CITY TREASURER FUND: GENERAL PROGRAM GROUP: CITY TREASURER ACCT NO. 0010310 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $105,520 $106,976 $109,511 $106,587 MAINTENANCE & OPERATIONS 84,375 74,286 88,411 88,225 CAPITAL OUTLAY 0 0 0 0 GRAND TOTAL $189,895 $181,262 $197,922 $194,812 FULL TIME POSITIONS 0.75 0.75 0.75 0.75 HOURLY/FTE POSITIONS 0.00 0.00 0.00 0.00 PROGRAM GROUP DESCRIPTION: The Office of the City Treasurer is an elected position which has the mission of providing professional cash management for the City of Carlsbad and all of its agencies including, among others, the Carlsbad Municipal Water District and the Carlsbad Redevelopment Obligation Retirement Fund. PROGRAM ACTIVITIES: Cash Management Develop projections of cash receipts and cash expenditures from various city and external sources. Maintain records of cash receipts and cash disbursements into the Treasury. Retrieve daily on-line bank statements and return check listing, verify receipt of anticipated deposits, ensure that all checks paid by the bank were valid city checks. Transfer cash daily into or out of the general checking account to ensure that appropriate balances are maintained for the anticipated activity of the next day. Execute all electronic wires of funds, ensuring that all are signed by authorized personnel and are supported by proper documentation. Develop contracts for cost-effective banking, both retail and custody services. Arrange for lines of credit and short-term loans as needed. Develop, maintain, and ensure compliance with all Treasury internal controls. Investment Management Develop and maintain the city’s Investment Policy and present annually, or as necessary, to the City Council for approval. Incorporate in the Investment Policy any changes in the city’s financial requirements that affect investments. Ensure compliance with the California Government Code. Develop and maintain a pool of investments for the city and its agencies. Research daily international and national financial markets and the financial forecasts. Determine daily the type of investments that should be made, considering the current cash position and financial markets. Determine the dollar amount of the investment and the desired maturity date. Solicit telephone bids from approved financial institutions/brokers for available investments. Evaluate investment alternatives and effect investment purchases. Prepare trade authorizations and arrange for payment, delivery, and safekeeping of all purchases. Verify receipt and correctness of investments made. Maintain record for all investments and investment income. Reconcile the custodian’s monthly report of investments held with Treasury records. Arrange for collateral contracts as required. Implementation of changes as mandated by the Dodd-Frank Act. C-5 PROGRAM: CITY TREASURER PAGE TWO FUND: GENERAL PROGRAM GROUP: CITY TREASURER ACCT NO. 0010310 PROGRAM ACTIVITIES (continued): Reporting and Oversight Develop and present to the City Council monthly reports of investment activities. In a timely manner, disclose to the City Council any information that could potentially threaten the safety and liquidity of the investment pool. Develop and present to the City Council annual reports summarizing and analyzing the financial markets and the portfolio performance for the past fiscal year. Compare the past fiscal year with the four preceding fiscal years to provide perspective. Develop investment data for the city’s Comprehensive Annual Financial Report. Develop investment data for the city’s annual financial audit conducted by an independent auditor. Develop agenda, convene, conduct, and record proceedings of the Investment Review Committee each quarter, or more frequently as needed. Meet frequently with Council and Leadership team to coordinate monetary policy with financial goals. WORKLOAD STATISTICS: (Est.) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Portfolio Balance (millions of $)$556 $563 $570 $574 $601 $603 Investment Activity Transactions 165 397 381 454 445 464 Average Buy (millions)$4.20 $1.91 $2.21 $2.29 $1.98 $2.98 181 percent increase in number of transactions between FY 2007 and FY 2012 KEY GOALS FOR 2012-13: Financial Health Anticipate and meet the changing investment needs of the city in order to optimize investment returns, consistent with maintaining safety of principal, and ensuring sufficient liquidity. Learning, Culture & Arts Offer speaking engagements on city cash management and investments. Further develop the Treasury page of the city’s website, informing the community of the mission of the Office of the Treasury, the city’s Investment Policy, and investment activities. Use the website as a forum to receive and respond to community comments and questions. SIGNIFICANT CHANGES: None          Internal Srvcs Internal Services Internal ServicesInternal Srvcs D-1 PROGRAM: INTERNAL SERVICES FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $11,192,551 $11,459,089 $11,634,680 $14,906,974 MAINTENANCE & OPERATIONS 12,068,937 15,262,482 14,157,676 14,420,884 CAPITAL OUTLAY 1,930,337 1,426,045 2,162,186 1,965,581 GRAND TOTAL $25,191,825 $28,147,616 $27,954,542 $31,293,439 FULL TIME POSITIONS 107.25 103.60 101.60 102.55 HOURLY/FTE POSITIONS 4.84 5.34 5.34 5.34 FINANCE 19% HUMAN RESOURCES 26% INFORMATION TECHNOLOGY 21% PROPERTY & ENVIROMENTAL MANAGEMENT 34% D-2 PROGRAM: FINANCE FUND: VARIOUS PROGRAM GROUP: FINANCE SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $3,034,291 $3,123,498 $3,192,173 $3,295,080 MAINTENANCE & OPERATIONS 2,049,395 3,332,213 2,364,886 2,738,598 CAPITAL OUTLAY 2,724 1,731 0 0 GRAND TOTAL $5,086,410 $6,457,442 $5,557,059 $6,033,678 FULL TIME POSITIONS 31.00 30.50 30.50 30.50 HOURLY/FTE POSITIONS 1.00 1.00 1.00 1.00 FINANCE 72% RISK MANAGEMENT 28% D-13 PROGRAM: PROPERTY & ENVIRONMENTAL MANAGEMENT FUND: VARIOUS PROGRAM GROUP: PROPERTY & ENVIRONMENTAL MANAGEMENT SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $4,322,105 $3,687,995 $3,871,993 $4,004,812 MAINTENANCE & OPERATIONS 3,830,465 4,560,021 5,167,049 5,391,302 CAPITAL OUTLAY 1,171,333 649,815 1,670,065 1,224,500 GRAND TOTAL $9,323,903 $8,897,831 $10,709,107 $10,620,614 FULL TIME POSITIONS 43.25 41.60 39.75 40.55 HOURLY/FTE POSITIONS 1.34 1.84 1.84 2.59 ADMINISTRATION, MANAGEMENT & MAINTENANCE 47% SAFETY TRAINING CENTER 4% STORM WATER PROTECTION 13% VEHICLE MAINTENANCE 27% VEHICLE REPLACEMENT 12% Comm Dev Community Development Comm Dev Community Development E-1 PROGRAM: COMMUNITY DEVELOPMENT FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $7,453,173 $6,914,615 $7,168,923 $6,777,043 MAINTENANCE & OPERATIONS 12,996,704 10,981,903 10,113,562 9,620,003 CAPITAL OUTLAY 4,422,210 -33,248 0 0 GRAND TOTAL $24,872,087 $17,863,270 $17,282,485 $16,397,046 FULL TIME POSITIONS 67.00 65.00 63.00 57.00 HOURLY/FTE POSITIONS 3.14 3.64 3.64 2.64 COMMUNITY & ECONOMIC DEVELOPMENT 43% HOUSING & NEIGHBORHOOD SERVICES 57% E-2 PROGRAM: COMMUNITY & ECONOMIC DEVELOPMENT FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $6,202,085 $5,724,072 $5,874,489 $5,631,652 MAINTENANCE & OPERATIONS 3,151,609 2,105,146 1,477,327 1,429,960 CAPITAL OUTLAY 284 28,615 0 0 GRAND TOTAL $9,353,978 $7,857,833 $7,351,816 $7,061,612 FULL TIME POSITIONS 56.00 54.00 50.00 47.00 HOURLY/FTE POSITIONS 2.50 3.00 3.00 2.00 ADMINISTRATION 9% LAND DEVELOPMENT ENGINEERING 24% PLANNING 40% BUILDING INSPECTION 21% Economic Development 4% E-13 PROGRAM: HOUSING & NEIGHBORHOOD SERVICES FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $1,251,088 $1,190,543 $1,294,434 $1,145,391 MAINTENANCE & OPERATIONS 9,845,095 8,876,757 8,636,235 8,190,043 CAPITAL OUTLAY 4,421,926 -61,863 0 0 GRAND TOTAL $15,518,109 $10,005,437 $9,930,669 $9,335,434 FULL TIME POSITIONS 11.00 11.00 13.00 10.00 HOURLY/FTE POSITIONS 0.64 0.64 0.64 0.64 NEIGHBORHOOD SERVICES 6% AFFORDABLE HOUSING 6% SECTION 8 66% CDBG 6% REDEVELOPMENT 15% Comm Srvcs Community Services Comm Srvcs Community Services F-1 PROGRAM: COMMUNITY SERVICES FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $14,224,438 $14,422,982 $14,846,860 $14,473,086 MAINTENANCE & OPERATIONS 9,598,816 9,487,608 10,275,192 10,150,696 CAPITAL OUTLAY 94,917 125,532 0 0 GRAND TOTAL $23,918,171 $24,036,122 $25,122,052 $24,623,782 FULL TIME POSITIONS 125.95 124.20 122.20 119.65 HOURLY/FTE POSITIONS 124.26 124.26 124.26 118.10 LIBRARY & ARTS 42% PARK & RECREATION 58% Public Safety Public Safety Public Safety Public Safety G-1 PROGRAM: PUBLIC SAFETY FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $35,869,983 $35,443,397 $36,019,199 $36,886,194 MAINTENANCE & OPERATIONS 8,257,572 8,566,207 8,993,106 8,615,357 CAPITAL OUTLAY 541,909 229,874 184,723 122,775 GRAND TOTAL $44,669,464 $44,239,478 $45,197,028 $45,624,326 FULL TIME POSITIONS 250.75 250.75 249.75 248.75 HOURLY/FTE POSITIONS 4.00 4.00 4.00 4.00 FIRE 38% POLICE 62% Public Works Public Works Public Works Public Works H-1 PROGRAM: PUBLIC WORKS FUND: VARIOUS PROGRAM GROUP: VARIOUS SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $12,027,292 $12,481,161 $13,246,125 $13,214,777 MAINTENANCE & OPERATIONS 45,860,152 44,455,197 49,529,093 53,106,005 CAPITAL OUTLAY 346,416 108,073 11,710 0 GRAND TOTAL $58,233,860 $57,044,431 $62,786,928 $66,320,782 FULL TIME POSITIONS 134.30 127.95 122.95 122.05 HOURLY/FTE POSITIONS 2.20 1.70 2.00 2.00 TRANSPORTATION 15% UTILITIES 85% H-2 PROGRAM: TRANSPORTATION FUND: VARIOUS PROGRAM GROUP: TRANSPORTATION SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $6,461,130 $5,503,828 $6,024,526 $5,918,342 MAINTENANCE & OPERATIONS 4,041,763 5,192,999 4,078,438 4,184,096 CAPITAL OUTLAY 22,745 75,510 0 0 GRAND TOTAL $10,525,638 $10,772,337 $10,102,964 $10,102,438 FULL TIME POSITIONS 62.35 58.40 54.40 54.40 HOURLY/FTE POSITIONS 2.00 1.00 1.00 1.00 ADMINISTRATION 49% STORMWATER INSPECTION 2% STREET MAINTENANCE 28% TRAFFIC SIGNAL MAINTENANCE 8%STREET LIGHTING 10%LIGHTING & LANDSCAPING DISTRICT NO. 2 2% H-14 PROGRAM: UTILITIES FUND: VARIOUS PROGRAM GROUP: UTILITIES SUMMARY 2009-10 ACTUAL 2010-11 ACTUAL 2011-12 BUDGET 2012-13 BUDGET PERSONNEL $5,566,162 $6,977,333 $7,221,599 $7,296,435 MAINTENANCE & OPERATIONS 41,818,389 39,262,198 45,450,655 48,921,909 CAPITAL OUTLAY 323,671 32,563 11,710 0 GRAND TOTAL $47,708,222 $46,272,094 $52,683,964 $56,218,344 FULL TIME POSITIONS 71.95 69.55 68.55 67.65 HOURLY/FTE POSITIONS 0.20 0.70 1.00 1.00 STORM DRAIN ENGINEERING 1% BV CHANNEL MAINTENANCE 1% WATER UTILITY 74% WASTEWATER UTILITY 19% SOLID WASTE 1% STORM DRAIN MAINTENANCE 3%          Capital Improvement Program Capital Improvement Program Capital Improvement Program Capital Improvement Program Overview Overview Overview Overview 2012-13 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 overview of all the known future facilities the City of Carlsbad plans to construct. The Fiscal Year (FY) 2012-13 Capital Improvement Program outlines approximately $28.9 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 $35.5 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 plan for its capital facilities. Proposition C was approved by the voters of Carlsbad in November 2002. It allowed the City to expend over $1 million (per project) of city 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. The balance of approximately $5 million has been allocated to Trails and Open Space. It is still anticipated that the city will continue to 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. 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. 2012-13 CAPITAL IMPROVEMENT PROGRAM I-2 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 2012-13 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 2026-27 (the next 15 years). All construction costs are estimates and only funding for projects scheduled for FY 2012-13 is 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 Community 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. Amenities include: A 56 meter Olympic sized competition pool with viewing bleachers A 25 meter, 12 lane swim instruction pool A 10 by 25 foot therapeutic pool with jets A 22 foot diameter 6 inch deep kids pool A “spray-ground” play area for young children Three lighted softball/baseball fields One lighted full basketball court and one half court Batting cages and a concession stand at the ball fields Picnic areas with barbecues Playground with 100 percent universally accessible play equipment An off-leash dog park divided into areas for larger and smaller dogs, including obstacle course-type play equipment An 18,500-square-foot lighted skate park that will include a "street course" section, an area with challenging elements for more skilled skateboarders and a beginners’ area 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)? 2012-13 CAPITAL IMPROVEMENT PROGRAM I-3 The swimming pool complex was one of the projects approved by the voters through Proposition C in 2002. Construction of Phase 1 is expected to begin in the summer of 2012, at a total estimated cost of $40 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. CIVIC FACILITIES Civic facilities include a variety of facilities from which the city can offer its services to the public. Fire Station No. 3 Relocation – 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 a six minute response time. The land was previously acquired in the Robertson Ranch site, and the remaining construction cost is estimated at $8.6 million. Maintenance and Operations Center – The city has planned the construction of a Maintenance and Operations Center (M&O Center) to physically bring together the citywide maintenance functions into 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 space and parking to accommodate the city’s maintenance personnel. This combined group of maintenance functions may include segments of the Utilities, Transportation, Parks and Recreation, and Property and Environmental Management departments. The cost of the project is approximately $28.1 million. Facilities Maintenance – As the city facilities begin to age, maintenance and repair projects are needed to keep them in good condition. Four projects have currently been identified at a total cost of about $700,000. Included are roof renovation and replacement projects, City Hall electrical upgrades, and exterior waterproofing at the Safety Center. STREET PROJECTS Traffic congestion continues to be one of the top concerns among citizens. To help improve the flow of traffic throughout Carlsbad and to keep the city’s streets in top condition, there are a number of street projects expected to be completed in the next five years. Some of the larger street projects include: Traffic Signal Program – In keeping with the City Council’s goal of improving traffic flow, the FY 2012-13 CIP includes additional funding of $2.5 million for the Traffic Signal Program. 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. Another area of focus is a concept called “complete streets” which encourages the use of street design to create a sense of place and community through green spaces, medians and signage, while encouraging a healthier, less vehicle dependent 2012-13 CAPITAL IMPROVEMENT PROGRAM I-4 lifestyle. The City Council identified complete streets as a top priority. One project which incorporates these concepts could begin this fall with construction of a traffic circle “roundabout” along the northern end of Carlsbad Boulevard next to Buena Vista Lagoon, making it easier for vehicles, pedestrians and bicyclists to move through the intersection. 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 2014-15. The CIP includes $5.4 million to fund this project in the next five years. 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 cost for these projects is $19.7 million. 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 streets. 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 2012-13 CIP has $3.7 million budgeted for this program. 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 million. WATER/WASTEWATER PROJECTS The city’s water and wastewater projects are vital 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. In the next five years additional funding, in excess of $67 million is scheduled for these 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 an estimated $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 Foxes Landing Lift Station and Forcemain Home Plant Lift Station Replacement and Forcemain Terramar Sewer Replacement Vancouver Sewer Extension 2012-13 CAPITAL IMPROVEMENT PROGRAM I-5 Water/Recycled Water Lines Major water/recycled water facilities scheduled for construction or replacement within the next five years include: College Boulevard – Cannon to Badger Lane Maerkle Floating Cover Replacement and Pump Station Improvements Robertson Ranch Water Transmission Main Tri-Agencies Water Transmission Pipeline Replacement Reservoir Repair/Maintenance Program Recycled Water Service to South Carlsbad 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. Northwest Quadrant and Park Drive Drainage Improvements – The next five years include continued improvements to drainage systems in the older parts of Carlsbad, particularly the northwest quadrant, with an additional $2.3 million programed. CAPITAL PROJECTS THROUGH FISCAL YEAR 2026-27 The CIP for FY 2012-13 to FY 2026-27 outlines approximately 129 continuing projects and 136 future projects for a total of 265 projects at a cost of approximately $414.7 million as shown below: Project Type Percent Total Cost Streets/Circulation 31% 127,786,201 Civic Projects 14% 59,869,011 Wastewater 18% 74,205,787 Parks 19% 77,935,602 Water 9% 38,830,200 Drainage 4% 16,447,965 Other (loans)5% 19,622,799 Total Future 100% 414,697,565 CIP Projects - All Future Project Costs Park and recreational facility construction and acquisition projects total approximately $77.9 million, or 19 percent. During the next fiscal year, the Parks and Recreation Department is planning to reevaluate the future park needs in all quadrants of the city. Current projects planned are listed below, in addition to when the design and/or construction are expected to begin. 2012-13 CAPITAL IMPROVEMENT PROGRAM I-6 PARK PROJECTS BY QUADRANT Citywide Park and Recreational Project Veteran’s Memorial Park: FY 2023-27 Business Park Recreational Facility: FY 2023-27 Northwest Quadrant Pine Avenue Park Community Building: FY 2023-27 Northeast Quadrant Robertson Ranch Park Site Development: FY 2023-27 Southwest Quadrant Poinsettia Park Community Building: FY 2018-22 Aviara Community Facility: FY 2023-27 Southeast Quadrant Alga Norte Community Park: FY 2012-13 Alga Norte Community Park Phase II: FY 2018-22 Leo Carrillo Park Phase III: FY 2016-17 Aviara Community Facility – Located in the southwest quadrant of the city, this project includes the construction of an 18,000 square foot community facility that would include meeting and activity rooms, as well as park offices. Veterans Memorial Park – This project is located south and east of Aqua Hedionda Lagoon adjacent to the city golf course, The Crossings at Carlsbad. The Master Plan includes the following improvements: community leisure needs, open space interpretive area, parking and maintenance facility. Other suggested uses for this park include an amphitheater complex, sports complex, conference center and numerous other active/passive recreations amenities. Approximately 31 percent of future expenditures, or $127.8 million, are planned for street and traffic signal construction projects. Projects include several road-widening projects, and funding for sidewalk construction, concrete repair work and pavement management. Currently there are 16 traffic signals identified and recommended for construction in future years. Wastewater projects are expected to cost over $74.2 million, or 18 percent, for repayment of bonds for the expansion of the Encina Wastewater Facility, and the Encina Water Pollution Control Facility projects, and numerous pipeline construction and rehabilitation projects. Future water projects include construction of new waterlines, both potable and recycled, concurrent with new development. Replacement of existing potable waterlines and reservoir improvements are also included in this category. A total of $38.8 million, or 9 percent 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 $59.9 million, or 14 percent of the total planned capital expenditures to build out. 2012-13 CAPITAL IMPROVEMENT PROGRAM I-7 OPERATING COST FOR FUTURE CAPITAL PROJECTS In the next five years there are several capital construction projects which will require increases to the City’s annual operating budget once they are completed and put in service. The table below outlines the estimated net annual operating cost by year for those projects over the next five years. These projected operating costs have been included in the city’s financial forecasts. FY2013-14 FY2014-15 FY2015-16 FY2016-17 FY2017-18 Alga Norte Park 380,000$ 390,000$ 401,000$ 413,000$ 426,000$ Alga Norte Aquatic Complex 220,000$ 226,000$ 232,000$ 239,000$ 247,000$ Fire Station #3 (relocation)34,000$ 35,000$ 36,000$ 37,000$ Maintenance and Operations Center 404,000$ 415,000$ 427,000$ 441,000$ Poinsettia Park Phase 2 500,000$ 516,000$ Leo Carrillo Park Phase 3 150,000$ 155,000$ Annual Totals 600,000$ 1,054,000$ 1,083,000$ 1,765,000$ 1,822,000$ (*) The actual timing and cost will vary depending on construction schedules and operational requirements Estimated (*) Annual Operating Cost Major Capital Projects 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 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 Coastal Rail Trail Reach 1 Hosp Grove/Buena Vista Lagoon Improvements Pine Avenue Park – Madison Property Phase 2 Robertson Ranch (NE Quadrant) Park Development (partial) (*) The Agua Hedionda Channel project is funded in part with Planned Local Drainage Area fees. The unfunded amount is listed in this section. (**) 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 percent of the total cost of these projects, the remaining 80 percent is unfunded. 2012-13 CAPITAL IMPROVEMENT PROGRAM I-8 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 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. The following table shows the number of residential units and non-residential square feet of development used in calculating estimated revenues for FY 2012-13 and subsequent years. Year Residential Units Non-Residential Square Feet 2012-13 183 366,841 2013-14 169 130,067 2014-15 126 365,670 2015-16 223 232,972 2016-17 202 300,446 Years 2018-2022 1,027 2,655,977 Years 2023-2027 1,876 4,780,354 Totals 3,806 8,832,327 Projected Development Residential and Nonresidential Construction Finance Department staff prepares cash flow schedules using current fund balances combined with future estimated fees paid by those developments, and 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 3,806 units remaining before the city is predominantly built out. Residential development for FY 2012-13 is projected at 183 units, and, over the next five years will average 181 units annually. This is compared to an average of over 265 units per year for the previous five-year period. The decline, particularly in the next five years, is expected to continue, in part, due to the current economic downturn and also due to the decreasing 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 513,300 square feet. For FY 2012-13, the estimate is for 367,000 square feet, and the average annual development for the next five-year period is approximately 279,200 square feet per year. Projects include several neighborhood commercial/retail developments located in or near the areas where most of the 2012-13 CAPITAL IMPROVEMENT PROGRAM I-9 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 250 room hotel at Legoland is planned. Industrial development consists of various new office and industrial projects. 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. REVENUES Over the next 15 years, revenues for Capital Projects are an estimated $541 million and are segregated into five major funding sources: (1) fees generated by development in Carlsbad, (2) special district fees and taxes (Community Facilities Districts and Bridge and Thoroughfare Benefit Districts), (3) water and wastewater replacement funds, (4) infrastructure replacement funds (other than wastewater and water), and (5) other sources including grants, bond issues, and contributions from other agencies. Capital Improvement Program Revenues FY2012-13 to FY2026-27 $541 million Approximately 21 percent of all capital revenue is received as a result of development, and is dependent upon assumptions made about the city's annual growth in dwelling units and commercial/industrial square feet. Development revenues include Public Facilities Fees (PFF), Traffic Impact Fees (TIF), Park-In-Lieu Fees (PIL), Planned Local Drainage (PLD) Fees, Water Connection Fees (MFF), and Sewer Connection charges. Revenue from special districts, such as Community Facilities Districts (CFD) and Bridge and Thoroughfare Benefit Districts (BTD) comprise 6 percent of the total. Water and wastewater replacement revenues generated by user fees equal approximately 29 percent of total revenues, and are used to pay for replacement of existing water and sewer facilities. Infrastructure replacement revenues, equal to 24 percent, are transfers from the city’s General Fund which are being set aside to pay for replacement of major capital facilities other than wastewater and water facilities. The remaining 20 percent consists of Developer Fees 21% Financing Districts 6% Utility Replacement Transfers 29% Infrastructure Replacement Transfers 24% Other Agencies 20% 2012-13 CAPITAL IMPROVEMENT PROGRAM I-10 revenues from other agencies and include federal and state grants, the county sales tax program (TransNet), redevelopment agency revenue, and contributions from cities, developers, and other agencies. CALCULATION OF FUTURE FEES The revenue projections in the Capital Improvement Program reflect the growth assumptions identified in the previous section. The following information delineates how those assumptions were applied to estimate future development revenues. The mix of multi-family and single-family residential units is assumed to be 35 percent and 65 percent, respectively, and reflects the anticipated mix of residential development for each Local Facilities Management Zone. The building permit valuation used for computing Public Facilities Fees is $180,437 per multi-family dwelling unit, and $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 2012-13 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 2012-13 Capital Improvement Program reflects the commitment of Carlsbad’s City Council and staff to continue providing its residents with a better quality of life. 2012-13 CAPITAL IMPROVEMENT PROGRAM I-11 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 2012-13 CIP, compliance with the Growth Management Plan is continued.          Schedule of Capital Projects Capital Proj Schedule of Capital ProjectsCapital Proj                   Fund Summary Fund Summary Fund Summary Fund Summary          Appendices Appendices L-19