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HomeMy WebLinkAbout; ; 2018-2019 CAFR; 2019-06-30Comprehensive Annual Financial Report FISCAL YEAR ENDED June 30, 2019 Fiscal Year Ended June 30, 2019 Comprehensive Annual Financial Report Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2019 Prepared by the Finance Department 1635 Faraday Ave. Carlsbad, CA 92008 www.carlsbadca.gov i CITY OF CARLSBAD Comprehensive Annual Financial Report Year Ended June 30, 2019 Table of Contents Page Introductory Section: Letter of Transmittal 1 Certificate of Achievement for Excellence in Financial Reporting, Government Finance Officers Association 30 Location Map 31 List of City Officials 32 Organization Chart 33 Financial Section: Independent Auditor’s Report 35 Management’s Discussion and Analysis 38 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 58 Statement of Activities 60 Fund Financial Statements: Balance Sheet – Governmental Funds 62 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 64 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 66 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 68 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 69 Statement of Net Position – Proprietary Funds 72 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 76 Statement of Cash Flows – Proprietary Funds 78 Statement of Net Position – Fiduciary Funds 82 Statement of Changes in Net Position – Fiduciary Funds 83 Notes to the Financial Statements 84 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period 130 Schedule of Plan Contributions 133 Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period 134 Schedule of Plan Contributions 137 ii Table of Contents (continued) Page Combining and Individual Fund Financial Statements and Schedules Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds 140 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds 144 Combining Schedule of Revenues and Expenditures – Budget and Actual (Budgetary Basis) – Special Revenue Funds 148 Combining Schedule of Revenue and Expenditures – Budget and Actual (Budgetary Basis) – Capital Project Funds 150 Combining Statement of Net Position – Internal Service Funds 152 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds 154 Combining Statement of Cash Flows – Internal Service Funds 156 Combining Statement of Changes in Assets and Liabilities – Agency Funds 160 Statement of Fiduciary Net Position – Private Purpose Trust Fund 162 Changes in Fiduciary Net Position – Private Purpose Trust Fund 163 Statistical Section: Financial Trends: Net Position by Component – Last Ten Fiscal Years 166 Changes in Net Position – Last Ten Fiscal Years 168 Fund Balances of Governmental Funds – Last Ten Fiscal Years 172 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 174 Revenue Capacity: General Governmental Tax Revenues by Source – Last Ten Fiscal Years 176 Water and Wastewater Rates – Last Ten Fiscal Years 177 Assessed Value of Taxable Property – Last Ten Fiscal Years 178 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years 179 Principal Property Taxpayers – Current Year and Nine Years Ago 181 Property Tax Levies and Collections – Last Ten Fiscal Years 182 Debt Capacity: Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 184 Schedule of Direct and Overlapping Bonded Debt – Current Fiscal Year 186 Direct and Overlapping Debt – Last Ten Fiscal Years 188 Legal Debt Margin Information – Last Ten Fiscal Years 190 Pledged-Revenue Coverage – Last Ten Fiscal Years 192 Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Fiscal Years 194 Principal Employers – Current Year and Nine Years Ago 196 Operating Information: Authorized Full and ¾ Time City Government Employees by Program Area –Last Ten Fiscal Years 198 Operating Indicators by Function/Program – Last Ten Fiscal Years 200 Capital Asset Statistics – Last Ten Fiscal Years 202 Introductory Section Introductory Section Introductory Section Introductory Section Administrative Services Department Finance Division 1635 Faraday Avenue  Carlsbad, CA 92008  760-602-2430 t www.carlsbadca.gov 760-602-8553 f 1 December 5, 2019 Honorable Mayor, City Council, and Citizens of the City of Carlsbad CITY OF CARLSBAD Carlsbad, CA 92008 LETTER OF TRANSMITTAL 2018-19 COMPREHENSIVE ANNUAL FINANCIAL REPORT Honorable Mayor, City Council, and Citizens: I am pleased to present the fiscal year 2018-19 Comprehensive Annual Financial Report (CAFR) for the City of Carlsbad (“city”). The information found in this report is provided by management to the City Council and the public to assist those interested in understanding the fiscal condition of the city as of June 30, 2019. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that has been established for this purpose. Because the cost of internal controls should not outweigh its benefits, the city’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. State law and the city’s Municipal Code require that an annual financial report is prepared. This report fulfills that obligation. It has been prepared in conformity with generally accepted accounting principles (GAAP) and with the financial reporting requirements prescribed by the Governmental Accounting Standards Board (GASB). The independent auditing firm, Davis Farr LLP, has issued an unmodified (“clean”) opinion on the city’s financial statements for the fiscal year that ended June 30, 2019. The independent auditor’s report is located at the front of the financial section of this report. Management’s Discussion & Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Also, as a recipient of federal and state financial assistance, the city is required to have a “Single Audit” performed by our independent audit firm. The Single Audit was designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require that the independent auditor report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the city’s separately issued Compliance Reports and Other Financial Information. The results of the city’s Single Audit for the fiscal year ended June 30, 2019 noted no material weaknesses in the framework of internal controls, or significant violations of applicable laws and regulations. 2 Profile of the City of Carlsbad Carlsbad incorporated in 1952 as a General Law City, although its “village” area dates back more than 100 years. In June 2008, the voters of Carlsbad overwhelmingly approved the city to change to a Charter City. Carlsbad is located on the southern California coast, about 35 miles north of the City of San Diego. The city is governed by a five-member City Council under the Council Manager form of government. The City Council is elected by district, on a staggered basis, for a term of four years. The city currently has four districts; however, the mayor is elected at large. The City Clerk and City Treasurer are also elected to four-year terms. The City Council appoints the City Manager and City Attorney. The city covers approximately 39 square miles and has a population of approximately 115,000, with an expected built out population of 120,000 residents. Commercial activities in the city include: a major regional shopping center, a specialty outlet center, a commercial center with upscale retail shops, 45 hotels offering 4,764 rooms, 268 short-term vacation rentals and 668 timeshares for tourist lodging, over 24 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. This report includes financial statements for the city, the Housing Authority of the City of Carlsbad, the Carlsbad Public Financing Authority, and the Carlsbad Municipal Water District. Through these entities, Carlsbad provides a full range of services to its citizens and customers including: • Police protection services • Development services • Fire and paramedic services • Street construction and maintenance • Water delivery system • Library and arts programs • Wastewater system • Recreation programming for all ages • Solid waste services • Park lands • Housing programs In addition to the full range of services normally associated with a municipality, Carlsbad offers programs to help residents and businesses. The city’s Housing Authority administers federal housing assistance to approximately 550 low-income households in Carlsbad, and older residents can take advantage of Carlsbad’s senior citizen programs. 3 Budget Process The City Council sets the overall policy direction for Carlsbad and helps staff prioritize programs, projects and services to support that direction. Public input plays a critical role in setting both the long-range policy direction of the city and decisions about day to day spending. Budgetary control for the city is maintained through its accounting systems. Expenditures may not exceed budgeted figures at the fund level. Monthly reports summarizing the results of operations for the city’s more significant funds are provided to the City Council. 4 Community Vision These nine core values make up the Carlsbad Community Vision. They were developed in collaboration with the community and drive both the day to day work of the city and its long-term planning. 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 and cutting-edge venues to host world class performances and celebrate Carlsbad’s cultural heritage in dedicated facilities and programs. High quality education and community services – Support quality, comprehensive education and lifelong learning opportunities, provide housing and community services for a changing population, and maintain a high standard for citywide public safety. Neighborhood revitalization, community design and livability – Revitalize neighborhoods and enhance citywide community design and livability. Promote a greater mix of uses citywide, more activities along the coastline and link density to public transportation. Revitalize the downtown Village as a community focal point and a unique and memorable center for visitors and rejuvenate the historic Barrio neighborhood. 5 City Council Strategic Policy Goals Become a leader in multimodal transportation systems and creative approaches to moving people and goods through and within Carlsbad. The City Council expects Carlsbad to become a leader in the broad array of plans and systems that support more efficient and effective means of moving people and goods around and through Carlsbad and the region, including technology that improves traffic signal coordination and vehicle operation. Major regional projects, including the McClellan-Palomar Airport master plan update, double tracking of the railroad, widening of I-5 and reconfiguration of the I-5/78 interchange, require continued policy-level involvement to ensure Carlsbad’s interests are reflected in project design and implementation. Plan for a new city hall that will meet the future workplace and operational needs of the city and the community. Plan for a new city hall that will be a point of pride for citizens while greatly improving efficiency and effectiveness by centralizing an employee base that is currently spread through many facilities. A strategic approach to locating city operational functions will provide better coordination among city functions and enhanced customer service. Promote education to increase civic engagement and attract and retain talent in Carlsbad. The City Council will take a stewardship role in encouraging the development of high-quality educational experiences that foster economic development, civic engagement and community leadership. This broad goal will be pursed through the continuation of ongoing programs and as new opportunities arise, and as such, no specific fiscal year 2018-19 Work Plan is proposed. Future status reporting will be provided on an as needed basis. Enhance Carlsbad’s coastline to ensure an exceptional experience in all the ways people want to enjoy it. The Carlsbad coastline is a critical element of the city’s identity. The City Council is committed to making policy decisions to ensure Carlsbad’s coastline maintains the character the community loves while enhancing access, amenities and mobility to a level consistent with Carlsbad’s high-quality community standards. This includes partnering with State Parks, which currently controls most of Carlsbad’s beaches. This goal also includes physical changes that will enhance natural beauty, better manage traffic flow, expand walking and biking opportunities, improve safety and create a uniquely Carlsbad experience. Lower the railroad tracks in a trench through the Village to improve safety, community connectivity, quality of life and economic value. The busy rail line that runs through the core of the community divides Carlsbad. Railroad traffic, which will increase significantly in coming years, has adverse effects on the City of Carlsbad, especially in the area between the Agua Hedionda and Buena Vista lagoons. With the planned addition of a second, parallel track through the Village and Barrio, the city has an opportunity to lower the tracks below street level, similar to what has been done in other coastal communities. Achieving this goal would improve safety and increase coastal access. Without this change, the future quality of life and business climate in the Village would be irreparably harmed, the Barrio would remain cut off from the coast, and public safety would be severely compromised. Enhance the health and vitality of the Village and Barrio, two neighborhoods that represent the historic heart of Carlsbad. The city has made significant investments in the revitalization of the Village and Barrio, starting with “Redevelopment” and continuing with public-private partnerships and city funded infrastructure improvements. A new Village and Barrio Master Plan is nearing completion, and achieving the vision developed with the community through the master planning process will require continued policy focus and investment. 6 Factors Affecting Financial Condition The Carlsbad economy generally moves in line with the county and the state. Property taxes for fiscal year 2018-19, increased by almost 5.8 percent compared to the previous year, as assessed values remain strong in real estate and additional development has entered the inventory. Transient Occupancy tax (TOT) paid by hotel guests increased by 8.6 percent for the same period, driven primarily by an increase in the average daily rate (ADR) that hotel guests are paying, the opening of the new LEGOLAND Hotel, the new Westin Hotel, higher occupancy rates, and additional short-term vacation rentals. Sales tax revenues ended fiscal year 2018-19 at $40.8 million, an improvement of 16.6 percent, due to continued strength in restaurants, traveler accommodations, new auto sales, department stores, and increased occupancy at the Shoppes at Carlsbad. In addition, the state changed the timing in which sales tax payments are remitted to the city. Overall, General Fund revenues ended the current year up 18.6 percent although some smaller revenue sources, such as those related to development, have fallen slightly during the year. In the last ten years, opportunities for development have and continue to diminish. Commercial and industrial development is tapering off, falling to an average of approximately 147,000 square feet per year over the next five fiscal years. Large industrial and commercial developments in the next five years include Carlsbad Senior Housing, the Omni La Costa ballroom expansion, continued development at the Carlsbad Oaks industrial park, continued expansion of the ViaSat campus, and the Summit Senior Care facility. Commercial office space vacancy has witnessed a decline over the past several years, falling from over 30 percent in the last quarter of 2009 to 15.1 percent in November 2019. Additional new industrial supply has increased the industrial vacancy rate to 12.8 percent (7.5 percent last year) and retail vacancy remains relatively stable at 2.5 percent (2.7 percent, last year), according to data from CoStar. With rising home prices contributing to an affordability crisis in California, the California Association of Realtors is predicting a weaker housing market in the later part of 2019. The association also added that the surge in home prices due to supply shortages is finally taking a toll on the market. Adding more uncertainty is outmigration, which is the result of the state’s affordability crisis, predicted to be a concern for the California housing market in 2019, should interest rates rise in the future. Meanwhile, home prices in San Diego County hit an all-time high in April 2019 in coastal North County, homes are selling at prices higher than during the housing bubble of the mid-2000s, especially in Carlsbad. The median sales prices in all four zip codes in Carlsbad from this time last year has increased 12.3 percent, according to the Market Watch report for North San Diego Association of Realtors. Looking beyond the near-term performance of the housing market, California’s newly elected governor, Gavin Newsom, and the state legislature have focused directly on the state’s chronic housing shortage, a problem that has been growing in magnitude for many years. California’s economic future, which is increasingly jeopardized by the high cost of housing, is at stake according to economists. As Sacramento searches for solutions, it is up against the reality that land use decisions, such as those related to new housing, have historically been under the purview of local officials and local zoning regulations. Growth and new development within the city pose both opportunities as well as challenges. Carlsbad is approaching “built out”, meaning that areas of undeveloped land in the city limits available for improvement are limited. The challenge is to focus on “in-fill” projects, consisting of smaller individual 0 200 400 600 800 1000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Thousands Fiscal Year Median Single Family Residence Home Prices 7 parcels of land dispersed throughout the city, or rebuilding of existing parcels whose current use may be enhanced by new development. The city’s goal is to preserve the quality of life for Carlsbad residents and provide a variety of balanced land uses via established standards for residential, commercial and industrial development. The city continues to address the overall impacts on the community of future development projects so that they remain manageable and environmentally balanced. The city’s Growth Management Plan was adopted by the residents to ensure that all necessary public facilities are 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. 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 Omni La Costa Resort & Spa. There are several other quality hotels and motels in the city, with the most recent additions being the Hilton Oceanfront Resort & Spa (recently renamed Cape Rey Carlsbad, a Hilton Resort) and the LEGOLAND California Resort. An additional 142 new rooms will be added to the inventory in fiscal year 2019-20 at the Home 2 Hotel. The City of Carlsbad opened a municipal golf course in the summer of 2007. 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 adjoining hiking trails, the Crossings at Carlsbad is a destination spot for golfers and non-golfers alike. General Fund revenue is projected to increase in fiscal year 2019-20 by 3.0 percent from the previous year. Most major sources of tax revenue are expected to increase, including property tax, which is expected to grow by 2.6 percent. Sales tax is projected to increase 1.3 percent and TOT revenues are projected to increase by almost 1.0 percent as occupancy and average daily rates and the number of available rooms increase. The forecast captures additional room inventory from the Home 2 Hotel in fiscal year 2019-20. Property values continue to appreciate, as mentioned earlier. Development related revenues are forecast to decrease by over 35 percent in fiscal year 2019-20, compared to the previous year, a trend that is expected to continue as buildout is approached. The State of California’s economy remains larger than all but four nations, with an annual gross domestic product (GDP) of nearly $3 trillion in 2018. The fiscal year 2019-20 state budget protects the hard-won recovery and is centered on making necessary investments for a more effective government, promoting affordability and opportunity, and supporting justice and dignity for all Californians. Data for 2018 reflect that the growth in California’s GDP continues to outpace the nation as a whole. However, this growth is taking place against a backdrop of increasing risks: the International Monetary Fund recently projected that 70 percent of the world’s economy would see a slowing of growth in 2019, and the Federal Reserve also projects slower U.S. growth. Federal tax reform has not resulted in increased wages for workers. Total wages and salaries in 2018 grew at almost one-half the rate of growth during the last period of low unemployment (2000). The state budget recognizes these risks and the inextricable linkage between fiscal prudence and the state’s ability to promote affordability and economic opportunity. Accordingly, it simultaneously expands the Governor's commitment to budget resiliency and increases support for California's most vulnerable populations and working families. The state budget projects short-term revenues of $3.2 billion above the Governor's Budget. However, most of the increased revenues are constitutionally obligated to reserves, debt repayment, and schools. Therefore, the budget surplus remains relatively unchanged. Despite the short- term gains, slower economic growth leads to a lower forecast in out-year revenues—$1.6 billion lower in 2022-23 compared to the forecast in January. The state has built a strong fiscal foundation by paying down liabilities and building up reserves that will help manage the effects of an economic downturn. Growing uncertainty related to the global political and economic climate, federal policies, rising costs, and the length of the current economic expansion require that the budget be prudent. The state budget forecast recognizes slower growth in the economy but does not predict a recession. The state must be prepared that even a moderate recession could result in revenue declines of nearly $70 billion and a budget deficit 8 of $40 billion over three years. Given the slowing economic forecast and the intensified risks, the state budget continues to save and prepare for uncertain times ahead. To maintain structural balance in each year over the forecast period, the state budget proposes to sunset certain program expansions at the end of December 31, 2021. This includes programs in which the growth of expenditures continues to outpace long-term revenue growth, and where the administration is committed to reforms that bend the cost curve. Long-Term Financial Planning In addition to the Growth Management Plan, the city also prepares a long-term financial model for both capital and operating needs. With a growing city such as Carlsbad, it is imperative that the city plan for the impacts of private development and constructing and operating new public facilities. 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 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 residents of Carlsbad can be assured that the proper maintenance and replacement will be performed on streets, parks, and many facilities for which the city is responsible. Employee retirement costs continue to require ongoing prudent fiscal management. Overall, levels of funding of the city’s plans and the CalPERS system have improved from higher than expected investment returns over the last two fiscal years. While this boosts the funding position, risks remain in the system. Required employer contributions will continue to increase over the next few years and actual contribution increases could exceed expectations if future experience is unfavorable. City Council issued a pension funding policy in June 2019 to codify its commitment to ensure that resources will be available to fulfill the city’s contractual retirement promises to its employees, and to minimize the chance that the funding of these benefits will interfere with providing essential services to the community. The policy outlines a funding discipline to ensure that adequate resources will be accumulated in a systematic and disciplined manner to fund the long-term cost of benefits to the plan participants and annuitants. With continued demand for enhancing services for the community, keeping up with technology demands and replacement of aging information technology infrastructure remains an issue. To maintain the city’s current and proposed standards of performance, and to protect computer systems from ever increasing outside attacks, viruses and new vulnerabilities, additional resources are continually needed to ensure systems remain stable and reliable for all users and protected against data intrusion or loss. Additional funding in the budget has been allocated for needed replacements, upgrades, and security. The forecast assumes limited growth in residential and commercial development over the foreseeable future and captures the expected revenue impacts from major projects that are expected to be completed during the forecast period. The operating costs of new city facilities projected in the Capital Improvement Program and supported by the General Fund, such as the Orion Center, are also captured in the forecast. Economic conditions at the national, state, and local level are expected to continue to improve at a modest rate and to provide a boost to most of the major revenue sources. Home prices, which saw large decreases during the recession, continue to recover and are providing support to city’s property tax revenues in the following years, and it appears that trend is continuing. Overall, the outlook for General Fund operating revenues continue to be positive and revenues are expected to exceed ongoing operating costs over the period of the forecast. 9 The forecast assumes that General Fund revenues will increase by 1.8 percent in fiscal year 2019-20, as economic conditions continue to improve, bolstering revenues from the property tax, sales tax, 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 forecast also captures increases in operating costs associated with planned capital improvements, such as future parks and civic facilities. The forecast assumes that the city’s cost for employee health care will increase by 7.5 percent in fiscal year 2019-20 and annual increases will be smaller in the later years of the forecast. CalPERS, the administrator of the city’s employee pension plan, will complete their initial stages of their risk mitigation strategy, which involved lowering the assumed rate of return on pension assets from 7.5 percent to 7.0 percent over a three-year period. The results of this drop in assumed rate of return on the mature pension plan will increase pension costs to the city in future years. Annual pension costs after fiscal year 2019-20 are less severe and are assumed to normalize at an annual increase of three percent. The City Council approved the payoff of approximately $20 million in the unfunded actuarial liability during the budget adoption process for fiscal year 2019-20. If similar actions are taken in future years, this will continue to decrease the city’s annual reserve contribution, holding all other variables that affect annual costs, such as investment returns, constant. CalPERS may take other actions in the future, to continue to make the statewide pension fund more fiscally sustainable, and such action will be captured in future forecasts. The statewide funded status for CalPERS hovers around 70 percent. The forecast does not consider increases in staffing levels beyond fiscal year 2019-20, except those that may be related to the operating costs of new city facilities supported by the General Fund. Negotiated salary increases and future salary growth projections are included in personnel costs in the forecast, to provide a conservative estimate of future costs. The contribution from the General Fund to the Infrastructure Replacement Fund and the General Capital Construction Fund are both forecasted to remain at 3.0 percent of General Fund revenues each. Finally, the forecast includes estimated operating costs for all capital projects in the timeframes shown in the Capital Improvement Program. Although the city prepares a ten-year forecast, the forecast loses accuracy past year five, due to the uncertainty of the variables used in the forecast. The forecast indicates revenues exceeding expenditures for the near future however, beyond year four, the forecast indicates expenditures exceeding revenues. In order to address later years in the forecast, the city may need to explore potential options to reduce expenditures or expand the revenue base of the General Fund. Carlsbad faces the same challenges that plague the national and state finances, including pension costs that are more volatile and the overall health of the economy. There are also factors that drive the forecast that are beyond the control of the city, such as inflation, global economic cycles, and emergencies. Despite these threats, responsible fiduciary stewardship and planning have placed the city in a position to benefit from even modest improvements in the economic environment. Capital Improvement Program The City of Carlsbad Capital Improvement Program reflects the city’s ongoing commitment to maintaining the highest standards of quality facilities for the community today and in the future. It is a planning document, not a commitment to spend funds. The 15-year program outlines the expenditure plan for future capital projects and the corresponding revenues to pay for those expenditures. Projects shown in the Capital Improvement Program are generally defined as any construction, rehabilitation or 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. 10 After City Council adopts the proposed annual Capital Improvement Program budget, projects receive an appropriation that authorizes spending in the amount specified for the adopted fiscal year only. Estimated budget information is shown for a 15-year period to provide the most comprehensive information about known future projects. Spending authority in future years is not granted until adoption of the annual proposed Capital Improvement Program budget associated with each year. Carlsbad’s philosophy is to take a proactive, long-range planning approach to building high quality facilities and infrastructure that support the needs and priorities of the community. I nvesting in Our Quality of Life 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 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 states that unless a standard level of facilities is available to meet new demands resulting from the city’s growth, development cannot proceed. 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. Facilities such as community centers, parks, and fire stations have been constructed and opened to the public under this program. The Capital Improvement Program (CIP) 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 fiscal year 2019-20 CIP, compliance with the Growth Management Plan is continued. In recent years, there has also been an increased demand for resources to modernize, repair, and replace existing infrastructure. Prudent financial planning has ensured ongoing funding for these projects. About half of Carlsbad’s comprehensive Capital Improvement Plan encompasses numerous asset management programs, which ensure adequate inspection, maintenance, and replacement of buildings and parks, water, sewer and drainage systems, bridges, and roadways systems. 11 Project Evaluation Development of the Capital Improvement Program is a team effort involving all operational departments, the city manager’s office, City Council, and the community. Many factors are considered when putting together projects for the 15-year program. As the Capital Improvement Program is implemented throughout the year, staff continually re-evaluate projects’ scopes, costs and schedules to responsibly and cost-effectively manage infrastructure assets at the required levels of service throughout their lifecycle. Project charters are updated to include project description, location, summary of need, justification including any legislative or policy citations, cost estimates and project scores. Community feedback on infrastructure needs is considered and incorporated as appropriate. The Capital Improvement Program is then fully vetted at multiple levels of the city organization by appropriate staff using an inclusive and transparent process and reviewed on a quarterly basis. Capital Improvement Program Public Health and Safety City mission, Vision and Organizational Values Community Values City Council Goals Governing and Policy Documents Funding Availability Environmental Review 12 F iscal Year 2019-20 Appropriations In the fiscal year 2019-20 CIP, there are approximately 246 continuing and new projects planned over the next 15 years. The fiscal year 2019-20 Capital Improvement Program outlines approximately $53.6 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 $51.4 million. Civic Buildings and Facility Maintenance $10.4 million This category includes a variety of facilities such as fire stations, libraries and the new City Hall. Costs include repair, maintenance, and replacement of civic buildings. Parks $1.1 million Projects include improvements and enhancements to existing parks, such as playground resurfacing, picnic areas and other needs identified by the community and in recently updated parks master plans. Drainage $2.5 million 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. As the city continues to age, it is increasingly necessary to balance repairing and replacing the existing lines with enhancing the current infrastructure to accommodate future needs. Sewer $11.3 million The city’s sewer, or wastewater, projects include numerous pipeline construction and rehabilitation projects, as well as improvements to the Encina Wastewater Treatment facility. Most new lines are built and paid for with impact fees collected with new development. Water and Recycled Water $10.6 million Future water and recycled water projects include construction of new pipe lines, replacement of existing waterlines and reservoir improvements. In fiscal year 2019-20, Carlsbad Municipal Water District celebrates its thirtieth year producing and delivering recycled water. Streets and Circulation System $17.0 million People of all ages and abilities want to go places safely and conveniently in Carlsbad, whether they drive, walk, bike, or ride a bus or train. Carlsbad continues to invest in modernizing roads, leveraging technology to improve traffic systems, and making timely repairs and rehabilitation of the roadways, bridges, sidewalks and other assets in public rights of way throughout the city. 13 N ew CIP Projects Avenida Encinas Pedestrian Access Improvements Category: Circulation system Funding Source: Gas Tax Managing Department: Transportation Funding Design $ 8,000 Construction $ 67,000 TOTAL $ 75,000 About This Project To connect area businesses and restaurants, a new crosswalk featuring rapid rectangular flashing beacons will be installed. The project will also create pedestrian access at the intersection of Palomar Airport Road and Avenida Encinas by modifying the traffic signal and restriping the road. Project Need The General Plan Mobility Element seeks to increase transportation options and improve connectivity within the city for all modes of travel. These improvements will enhance safe pedestrian access to area businesses and restaurants. Location Avenida Encinas north of Palomar Airport Road 14 Aviara and Hidden Canyon Parks Playground Safety Resurfacing Category: Park Development Funding Source: Infrastructure Replacement Managing Department: Parks & Recreation Funding Study $ 10,000 Design $ 35,000 Construction $ 555,000 TOTAL $ 600,000 About This Project The existing poured-in-place safety surfacing at both playgrounds will be removed and replaced with new poured-in-place surfacing. Project Need The existing playground surfacing is deteriorating and requiring increased amounts of patching and maintenance. It is also getting toward the end of its life span and if replacement is delayed, it may no longer provide the shock absorption necessary to meet safety specifications. Location Aviara Park: 6435 Ambrosia Lane | Hidden Canyon Park: 2685 Vancouver St. Hidden Canyon Park Aviara Community Park 15 Calavera Hills Community Center Refurbishment Category: Facilities Funding Source: Infrastructure Replacement Managing Department: General Services Funding Design $ 45,000 Construction $ 640,000 TOTAL $ 685,000 About This Project The 18,000 square foot Calavera Hills Community Center is in need of a roof replacement as well as the replacement of exterior siding and painting. Project Need A facilities condition assessment was performed in 2018 that identified these maintenance needs. By keeping up with building maintenance, the city prolongs the useful life of its facilities and helps ensure attractive and safe amenities are available for the community. Location Calavera Hills Community Park, 2997 Glasgow Drive 16 Cannon Road at Sage Creek Rehabilitation Category: Circulation system Funding Source: Gas Tax Managing Department: Transportation Funding Study $ 25,000 Environmental $ 15,000 Design $ 115,000 Construction $ 520,000 TOTAL $ 675,000 About This Project The road has settled in this area requiring the city to investigate the cause and repair the damaged area. Project Need Maintaining city streets and addressing potential problem areas quickly helps ensure safety and prevents more costly and significant repairs in the future. Location Cannon Road east of College Boulevard 17 Citywide Street Lighting Program Category: Circulation system Funding Source: Gas Tax Managing Department: Transportation Funding Design $ 30,000 Construction $ 120,000 TOTAL $ 150,000 About This Project The city maintains and operates more than 7,000 streetlights throughout Carlsbad. From time to time, new streetlights are needed. Project Need This program sets aside funding so the city can provide a timely response when new needs are identified. Location Citywide 18 Citywide Thermoplastic Pavement Marking Program Category: Circulation system Funding Source: Gas Tax Managing Department: Transportation Funding Construction $ 100,000 TOTAL $ 100,000 About This Project This project will design and install a special type of pavement marking on city streets throughout the city. The thermoplastic materials increase reflectivity and visibility of pavement markings like crosswalks and street legends. Need Better visibility of pavement markings improves safety for drivers, bicyclists and pedestrians, supporting the city’s goal of facilitating all modes of travel. Location Citywide 19 Dove Library Parking Lot Accessibility Category: Facilities Funding Source: General Capital Construction Managing Department: General Services Funding Design $ 50,000 TOTAL $ 50,000 About This Project Design and cost estimates will be developed to relocate accessibility parking closer to the library entrance. Project Need Patrons have requested the city examine relocating existing accessibility parking to enhance convenience and safety. Location Carlsbad City Library, 1775 Dove Lane 20 Fleet Service Center Fuel Island Evaluation Category: Facilities Funding Source: Infrastructure Replacement Managing Department: General Services Funding Environmental $ 140,000 Design $ 10,000 TOTAL $ 150,000 About This Project This condition assessment of the existing fuel island will include an examination of underground conditions and recommendations for possible modifications that will modernize systems and equipment. Project Need The fuel island is located between the existing Fleet Maintenance facility and the proposed Orion Center. Evaluation of the fuel island ensures the entire property is comprehensively examined prior to construction of planned improvements to the Fleet Maintenance facility and the future Orion Center. Location Fleet Maintenance facility, 2480 Impala Street 21 Intelligent Traffic Control Devices Category: Circulation system Funding Source: Gas Tax Managing Department: Transportation Funding Construction $ 200,000 TOTAL $ 200,000 About This Project Traffic control devices, such as school flashing beacons and speed feedback signs, will be upgraded so that they can be programmed remotely, monitored from the city’s Traffic Management Center and have historical data stored. Project Need The ability to control traffic control devices remotely will improve efficiency and save money on maintenance activities. It will also allow the city to collect data on the effectiveness of various traffic control measures and be more responsive to community feedback. Location Citywide 22 Leo Carrillo Ranch Roof Repairs Category: Facilities Funding Source: Infrastructure Replacement Fund Managing Department: Parks & Recreation Funding Study $ 225,000 Environmental $ 25,000 TOTAL $ 250,000 About This Project Roof conditions on these historic buildings will be assessed, and a cost estimate will be developed for recommended roof replacements throughout the park. Project Need Through the course of routine maintenance and repair work, a need was identified to take a more comprehensive, efficient approach to addressing roof conditions and replacements at this historic park. Location Leo Carrillo Ranch Historic Park, 6200 Flying Leo Carrillo Way 23 Recycled Water Cathodic Protection Program Category: Recycled Water Funding Source: Recycled Water Replacement Managing Department: Utilities Funding Study $ 20,000 Design $ 20,000 Construction $ 120,000 TOTAL $ 160,000 About This Project The city has an extensive network of recycled water pipelines throughout Carlsbad. Recycled water is wastewater that has been treated to a level suitable for irrigation and other non-drinking uses. Because recycled water is kept separate from the drinking water system, it is delivered through its own set of pipes, which are purple to distinguish them from other water and wastewater infrastructure. The system is in need of corrosion control improvements. Project Need Maintaining recycled water pipelines and other infrastructure in good working order helps prevent more costly repairs later and potential interruptions in service. Location Citywide 24 Sewer Line Capacity Improvements Category: Sewer Funding Source: Sewer Replacement Managing Department: Utilities Funding Design $ 130,000 Construction $ 840,000 TOTAL $ 970,000 About This Project Various sections of sewer pipeline throughout the city that have existing or buildout capacity issues will be demolished and upsized. Project Need The Sewer Master Plan identifies sections of sewer pipelines that need to be upsized to increase capacity and avoid sewer spills. Location Citywide 25 Sewer Modeling Category: Sewer Funding Source: Sewer Connection Managing Department: Utilities Funding Study $ 2,400,000 TOTAL $ 2,400,000 About This Project This project sets aside funding for as-needed contracted professional services to review hydraulic sewer modeling requests from private developments Project Need Private developers are required to submit plans to the city for review to determine if adequate, legal and safe sewer systems are included in the design. Location Citywide 26 Vallecitos Interceptor Sewer Cleaning and Monitoring Category: Sewer Funding Source: Sewer Replacement Managing Department: Utilities Funding Environmental $ 35,000 Design $ 15,000 Construction $ 200,000 TOTAL $ 250,000 About This Project The project sets aside funding for sewer cleaning and closed-circuit TV monitoring activities for a portion of sewer interceptor pipe line shared with the Vallecitos Water District. Project Need The City of Carlsbad shares ownership of the pipe line with Vallecitos Water District and is responsible for a portion of the maintenance and operations costs. Location Palomar Airport Road from El Camino Real to the Encina Wastewater Treatment Facility on Avenida Encinas 27 Water Modeling Category: Water Funding Source: Water Connection Managing Department: Utilities Funding Study $ 2,400,000 TOTAL $ 2,400,000 About This Project This project sets aside funding for as-needed contracted professional services to review hydraulic water modeling requests from private developments. Project Need Private developers are required to submit plans to the city for review to determine if adequate, legal and safe water and fire sewer systems are included in the design. Location Citywide 28 F uture Projects The Capital Improvement Program for fiscal year 2019-20 to fiscal year 2033-34 outlines approximately 246 projects at a cost of $614.9 million. Long-range planning and responsible asset management play key roles in the development of future capital projects. Using data from various infrastructure master plans, ongoing asset condition assessments, technical modelling, field inspections as well as community feedback, the information provided for future years reflects the most comprehensive snapshot of known or anticipated future projects as well as associated estimated costs. Unfunded Projects There are six projects identified in the Capital Improvement Program 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 external 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. Two projects are partially funded by the Traffic Impact Fee (TIF) Program approved by the City Council on May 12, 2009. The program was planned to generate enough revenue to pay for 20 percent of the total costs of these projects, leaving the remaining 80 percent unfunded. A wards and Acknowledgements The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to the city for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018. This was the 21st consecutive year that the city has achieved this prestigious award. To be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both GAAP and applicable legal requirements. Streets/Circulation 20% Civic Projects 14% Wastewater 26% Parks 7% Water 27% Drainage 3% Other (loans) 3% Future Project Costs by Type Fiscal Year 2019-20 to Fiscal Year 2032-33 $614.9 million 29 A Certificate of Achievement is valid for a period of one year only. The city strives to annually produce a CAFR which will continue to meet the Certificate of Achievement Program’s requirements. This report will be also submitted to GFOA to determine eligibility for another certificate. This report has been a comprehensive effort by many people from many different areas of responsibility. It could not have been accomplished without their help and the dedicated efforts of all of the finance staff, especially Ryan Green, Assistant Finance Director and Jill Moya, Senior Accountant. I also appreciate the staff of Davis Farr LLP for the professional way in which the audit of this financial report was conducted. It has been a pleasure to work with them. Additionally, I would like to thank the City Council, the City Manager and the city’s Executive Management Team for their leadership and unfailing support in maintaining the highest standards of professionalism in the management of the city’s finances. Respectfully submitted, Kevin Branca Finance Director 30 31 32 Elected Officials Matt Hall, Mayor Priya Bhat-Patel, Mayor Pro Tem Keith Blackburn, Council Member Cori Schumacher, Council Member Barbara Hamilton, Council Member Barbara Engleson, City Clerk Craig Lindholm, City Treasurer Leadership Team Scott Chadwick, City Manager Celia Brewer, City Attorney Elaine Lukey, Chief Operations Officer Debbie Fountain, Community & Economic Development Director Gary Barberio, Deputy City Manager, Community Services Heather Pizzuto, Library & Cultural Arts Director James Wood, Environmental Manager Jason Haber, Assistant to the City Manager John Maashoff, Public Works Manager Judy von Kalinowski, Human Resources Director Kevin Branca, Finance Director Kristina Ray, Communication Manager Kyle Lancaster, Parks & Recreation Director Laura Rocha, Deputy City Manager, Administrative Services Maria Callander, Information Technology Director Marshall Plantz, Transportation Director Michael Calderwood, Fire Chief Morgen Fry, Secretary to the City Manager Neil Gallucci, Police Chief Paz Gomez, Deputy City Manager, Public Works Sheila Cobian, City Clerk Services Manager Vicki Quiram, Utilities Director Boards and Commission Chairs Laurenn Barker, Arts Commission Linda Petrucci, Beach Preservation Committee Timothy Stripe, Carlsbad Golf Lodging Business Improvement District Timothy Stripe, Carlsbad Tourism Business Improvement District Board Chad Majer, Historic Preservation Commission Vacant, Housing Commission Art Larson, Library Board of Trustees Matt Simons, Parks & Recreation Commission Carolyn Luna, Planning Commission Ray Pearson, Senior Commission Chuck Hunter, Traffic Safety Commission Vacant, Underground Utility Advisory Committee 33 This p a g e is intentionally left blank. 34 Financial Section Financial Section Financial SectionFinancial Section INDEPENDENT AUDITOR’S REPORT City Council City of Carlsbad Carlsbad, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information of the City of Carlsbad, California, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 35 City Council City of Carlsbad, California Page Two Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Carlsbad as of June 30, 2019, and the respective changes in financial position and, where applicable, cash flows and the statement of revenues, expenditures and changes in fund balance - budget to actual of the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described further in note 20 to the financial statements, during the year ended June 30, 2019, the City made prior period adjustments to correct beginning net position. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period, Schedule of Pension Plan Contributions, Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period and Schedule of OPEB Plan Contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Carlsbad's basic financial statements. The combining and individual non-major fund financial statements and schedules, the introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the 36 City Council City of Carlsbad, California Page Three combining and individual non-major fund financial statement and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and the statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 5, 2019 on our consideration of the City of Carlsbad's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Carlsbad’s internal control over financial reporting and compliance. Irvine, California December 5, 2019 37  38 Management’s Discussion and Analysis Management of the City of Carlsbad (“city”) provides readers this overview and analysis of the financial activities of the city for the fiscal year ended June 30, 2019. The intent is to assist the reader of these financial statements in better understanding the impact of financial decisions made by the city. This analysis will focus on the significant changes in an effort to explain the city’s overall financial condition. The information presented here should be considered in conjunction with the additional information furnished in the letter of transmittal. Overview of the Financial Statements This section of the annual report consists of four parts – management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non-major governmental funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the city. • The first two statements are Government-wide Financial Statements that provide both long-term and short-term information about the city’s overall financial status. • The remaining statements are Fund Financial Statements that focus on individual parts of the city government, reporting the city’s operations in more detail than the Government-wide Statements. o The Governmental Funds Financial Statements detail how general government services, such as public safety, were financed in the short-term, as well as what remains for future spending. o Proprietary Funds Statements offer short- and long-term financial information about the activities the city operates like businesses, such as providing water and wastewater services. o Fiduciary Funds Statements provide information about the financial relationships – such as contractor and miscellaneous deposits – in which the city acts solely as a trustee or agent for the benefit of others to whom the resources belong. The financial statements also include notes that explain some of the information in the financial statements and provide greater detail. The statements are accompanied by required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements is the combining fund statements section that provides financial information about the non-major governmental funds, internal service funds, and fiduciary funds, which are added together and presented in single columns in the basic financial statements. The remainder of this overview section of management’s discussion and analysis (MD&A) explains the structure and content of each of the statements. Government-wide Financial Statements The Government-wide Financial Statements report information about the city as a whole, using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the city’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the Statement of Activities, regardless of when cash is received or paid. The two Government-wide Financial Statements report the city’s net position and how it has changed. Net position – the difference between the city’s assets and liabilities – is one way to measure the city’s financial health, or position. Over time, increases or decreases in the city’s net position are an indicator of whether the city’s financial health is improving or deteriorating, respectively. Additional non-financial factors should be considered, such as changes in the city’s property tax base and the condition of the city’s infrastructure, to assess the overall health of the city.  39 The Government-wide Financial Statements of the city are divided into two categories: • Governmental activities – Most of the city’s basic services, such as police, fire, public works, community services, and internal services are included here. Taxes, revenues from other governments and agencies, income from property and investments, grants and contributions, and charges for services finance most of these activities. • Business-type activities – The city charges fees to customers to cover the cost of certain services it provides. The city’s water, wastewater, solid waste and municipal golf course operations are the primary business-type activities. Fund Financial Statements The Fund Financial Statements provide more detailed information about the city’s most significant funds – not the city as a whole. Funds are accounting devices used by the city to keep track of specific sources of funding and spending for particular purposes. Some funds are required by state law and bond covenants, while the city establishes other funds to control and manage money for particular purposes (such as the developer impact fee funds) or to show that it is properly using certain taxes and grants (such as the Section 8 Rental Assistance Fund). The city has three kinds of funds: • Governmental funds – Most of the city’s basic services are included in governmental funds. These funds are used to account for (1) cash and other financial assets that can readily be converted to cash flow in and out, and (2) balances left at year-end that are available for future spending. Consequently, the Governmental Funds Statement provide a detailed short-term view that helps the reader determine the amount of financial resources that can be spent in the near future to finance the city’s programs. The statements are presented on a modified accrual basis of accounting. A reconciliation between the long-term and short-term focus of the Government-wide Financial Statements is provided immediately following each statement. There are currently three governmental fund types being used by the city: the General Fund, special revenue funds, and capital project funds. • Proprietary funds – Services for which the city charges customers a fee are generally reported in proprietary funds. Proprietary funds, like Government-wide Financial Statements, provide both long- and short-term financial information, and are presented on an accrual basis of accounting. There are two types of propriety funds, enterprise funds and internal service funds: o Enterprise funds are used to report activities that provide business-type services, generally to external customers – such as water, wastewater, solid waste, and golf services. In both the Government-wide Financial Statements and the Fund Financial Statements, these funds are shown under business-type activities. o Internal service funds are used to report activities that provide services and supplies for the city’s other programs and activities – such as fleet, workers’ compensation, risk/liability, and information technology.  40 • Fiduciary funds – These funds are used to account for situations where the city’s role is purely custodial, such as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. All of the city’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position. These activities are excluded from the city’s Government-wide Financial Statements because the city cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Position The city’s combined net position as of June 30, 2019, as shown below, was $1.811 billion. The city’s net position increased by $45.1 million as compared to the prior fiscal year. This increase was in large part due to the impacts of the city recording the annual pension activities as required by Government Accounting Standards Board (GASB) 68 (a large decrease in the net pension liability and smaller changes in deferred inflows and outflows). Current and other assets were impacted by revenues exceeding expenses by $45.1 million, leading to an increase in cash and investments of $44.2 million. The increase in revenues is predominantly due to higher interest received (the yield on the treasurer’s portfolio is up for the year, higher cash balances, and the impacts of GASB 31), an increase in tax revenues (property, sales and transient occupancy taxes) partially offset by decreased water revenues due to a rainier winter, and a reduction in developer impact fees due to a slowdown in development. The decrease in capital assets is discussed in more detail in the capital asset section of this MD&A. As noted earlier, over time, net position may serve as a useful indicator of the city’s financial position. For the city, assets currently exceed liabilities by $1.811 billion at the close of the most recent fiscal year. A large portion of the city’s net position (62.6 percent) reflects its net investment in capital assets (i.e. land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding. The city uses these capital assets to provide services to residents; consequently, these assets are not available for future spending. Although the city’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves would not be used to pay for these liabilities. Total Percentage Change 2018 2019 2018 2019 2018 2019 2018-19 Current and other assets $640.2 $672.2 $155.2 $167.4 $795.4 $839.6 5.6% Capital assets 793.7 787.4 364.5 363.4 1,158.2 1,150.8 -0.6% Total assets 1,433.9 1,459.6 519.7 530.8 1,953.6 1,990.4 1.9% Deferred outflows 60.3 59.0 5.6 3.8 65.9 62.8 -4.7% Other liabilities 27.7 28.8 17.1 23.6 44.8 52.4 17.0% Net OPEB liability 1.5 1.5 1.0 0.7 2.5 2.2 -12.0% Net pension liability 167.4 152.9 14.0 10.1 181.4 163.0 -10.1% Long-term debt outstanding 0.6 0.4 14.9 16.8 15.5 17.2 11.0% Total liabilities 197.2 183.6 47.0 51.2 244.2 234.8 -3.8% Deferred inflows 5.8 7.1 0.7 0.8 6.5 7.9 21.5% Net position Net investment in capital assets 793.1 787.0 349.5 346.6 1,142.6 1,133.6 -0.8% Restricted 236.1 251.9 39.5 38.5 275.6 290.4 5.4% Unrestricted 262.0 289.0 88.6 97.5 350.6 386.5 10.2% Total net position $1,291.2 $1,327.9 $477.6 $482.6 $1,768.8 $1,810.5 2.4% CITY OF CARLSBAD'S NET POSITION (in millions of dollars) Governmental Business-Type Activities Activities Total  41 An additional portion of the city’s net position (16 percent) represents resources that are subject to external restrictions on usage. The remaining balance of unrestricted net position ($386.5 million) may be used to meet the city’s ongoing obligations to residents and creditors. Just over 35 percent of the $289 million in unrestricted governmental activities net position is attributable to the General Fund. This is an increase from the previous fiscal year, due to strong revenue growth, primarily in property, sales, transient occupancy, franchise and business license taxes. In addition, the yield on the treasurer’s portfolio continues to increase, the city’s cash balances continue to grow, and there was a positive impact from GASB 31 in the current fiscal year, creating additional income from property and investments. The net investment in capital assets for the city decreased slightly during fiscal year 2018-19, due primarily to a drop off in developer donated assets (streets, sidewalks, streetlights, water and wastewater lines) combined with higher depreciation charges, netted with an increase in outstanding debt (primarily Recycled Water). A portion of business-type net position represents the city’s municipal golf course. At the end of fiscal year 2018-19, there is a large deficit in unrestricted net position for the Golf Course Fund. This is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course and partially subsidizing the operations of the course in prior fiscal years. The condensed summary of activities shows that net position increased by $45.1 million during the year. This increase occurs when spending is less that the revenues received. There were several reasons for the increase in net position: $22.4 million in “savings” in the General Fund is being carried forward into the new fiscal year by various major service areas within the city to enhance and provide for future services and programs (indicating spending levels less than budgeted expenditures); revenues outpacing budgeted projections due to strong economic conditions; the build-up of cash reserves in the city’s capital project and enterprise funds for future capital project construction and acquisition, as well as rate stabilization efforts due to the purchasing of more expensive water from the desalination facility; revenues received in the city’s special revenue funds for future services and programs; and the donation of infrastructure assets from developers.  42 Changes in Net Position Approximately 66.7 percent of the revenues of the city’s governmental funds are generated through taxes collected (property tax, sales tax, transient occupancy tax (TOT), etc.), and approximately 80 percent of the city’s business-type revenue is generated through charges for services. The chart on the following page graphically depicts the city’s revenue sources. Total Percentage Change 2018 2019 2018 2019 2018 2019 2018-19 Revenues Program revenues Charges for services $21.0 $21.8 $75.4 $71.9 $96.4 $93.7 -2.8% Operating grants and contributions 13.1 17.3 1.6 1.2 14.7 18.5 25.9% Capital grants and contributions 23.0 13.8 5.5 4.9 28.5 18.7 -34.4% General revenues Property taxes 66.5 70.0 3.7 4.0 70.2 74.0 5.4% Sales and use taxes 33.7 38.5 - - 33.7 38.5 14.2% Other taxes 36.5 39.5 - - 36.5 39.5 8.2% Income from property and investments 2.5 20.7 1.0 7.8 3.5 28.5 714.3% Other 0.5 0.4 - 0.1 0.5 0.5 0.0% Total revenues 196.8 222.0 87.2 89.9 284.0 311.9 9.8% Expenses General government 25.2 22.2 - - 25.2 22.2 -11.9% Public safety 62.6 68.0 - - 62.6 68.0 8.6% Community services 51.9 58.0 - - 51.9 58.0 11.8% Public works 36.9 36.9 - - 36.9 36.9 0.0% Carlsbad Municipal Water District - - 51.7 51.6 51.7 51.6 -0.2% Golf course - - 10.5 11.0 10.5 11.0 4.8% Wastewater - - 13.5 15.2 13.5 15.2 12.6% Solid waste - - 3.1 3.9 3.1 3.9 25.8% Total expenses 176.6 185.1 78.8 81.7 255.4 266.8 4.5% Excess (deficiency) before transfers 20.2 36.9 8.4 8.2 28.6 45.1 57.7% Transfers (0.1) (0.2) 0.1 0.2 - - 0.0% Increase (decrease) in net position 20.1 36.7 8.5 8.4 28.6 45.1 57.7% Beginning position, as restated 1,271.1 1,291.2 469.1 474.2 1,740.2 1,765.4 1.4% Ending net position $1,291.2 $1,327.9 $477.6 $482.6 $1,768.8 $1,810.5 2.4% Activities Activities Total CITY OF CARLSBAD'S CHANGES IN NET POSITION (in millions of dollars) Governmental Business-Type  43 The city’s revenues have continued to remain strong during this exceptionally long economic expansion since the “Great Recession.” The city’s “big three” revenue sources are sales, property, and transient occupancy taxes. In the most recent four fiscal years, property taxes have shown significant growth. An increase in assessed values of 5.4 percent in total for residential, commercial and industrial properties led to higher property tax revenues. This was the fourth year in a row since the recession (a lagging indicator of the financial health of the city) that the city saw growth in all three assessed value components (residential, commercial and industrial). Sales tax revenues were up significantly for the year. The state recently implemented a new system that impacted the timing of sales tax revenues for the year. Sales tax revenues for the previous fiscal year were artificially low due to this system conversion; however, the city was made whole in fiscal year 2018-19. Until the state has been operating the new remittance program for a year, it will be challenging to compare sales tax revenues by quarter, as there are still some timing differences. Transient occupancy tax continues to grow through increased occupancy, increased average daily rates and new hotel rooms. Higher room and occupancy rates throughout the city, as well as the addition of two new hotels (the second LEGOLAND Hotel and the Westin Hotel) led to higher transient occupancy taxes for the year. The city implemented a new business license system in November 2016, creating timing differences in the receipt of license revenues. Fiscal year 2018-19 saw the second full year using the new system. During this transition to the new system, additional staff were added to the team to ensure timely processing of new business license applications and renewals, generating additional revenues for the fiscal year as compared to the prior fiscal year. As expected, development slowed down during fiscal year 2018-19, but remained relatively strong for the year. The city saw infill residential development as well as some of the last remaining master planned community development. There was very little commercial and industrial development during the year. Income from property and investments were heavily impacted by three factors: the unrealized gains created by adjusting the city’s investments to their fair market value at June 30, 2019 (as required by GASB), an increase in the average yield on the treasurer’s portfolio for the year (an increase in the yield from 1.6 percent last fiscal year to 2.0 percent in the current fiscal year), and a 5.5 percent increase in the average daily cash balance in the General Fund for the year. These three factors combined to create a significant increase in income from property and investments. Flat water and wastewater rates combined with a reduction in water led to a reduction in charges for services for the year. A decrease in the donation of developer constructed assets (roads, pipelines, sidewalks, etc.) and a reduction in developer impact fees due to lower level of development throughout the city led to the decrease in capital grants and contributions. The total cost of all programs and services was approximately $266.8 million in fiscal year 2018-19. This was moderately higher (4.5 percent) than the fiscal year 2017-18 figure of $255.4 million. During the fiscal year the city changed its budget practices, changing the policy surrounding carrying forward unspent appropriations at the end of the fiscal year. With this change, city departments focused on completing projects that were in process and procuring planned capital outlay items by the end of the fiscal year. This accelerated the costs that were incurred in fiscal year 2018-19 as compared to previous fiscal years. There were several other factors that influenced the change in expenses during the fiscal year. General government expenses were lower from a smaller supplementary CalPERS payment made on the city’s  44 miscellaneous plan ($5.2 million less than fiscal year 2017-18), partially offset by higher personnel costs due to personnel increases. The variance in public safety expenses was driven predominantly by two factors: the additional CalPERS payment of $14.2 million partially offset by the annual pension accounting adjustments required by GASB 68. Community services expenses were impacted by the annual pension accounting adjustments required by GASB 68, general salary and benefit increases, and additional focus on code enforcement. Normal salary and benefit increases combined with inflationary impacts on maintenance, operations and capital expenses played a predominant role in higher business-type activities expenses for the year. • General Government (8 percent) This segment of the city is divided into three major groups: Policy and Leadership, Administrative Services and non- departmental charges. The Policy and Leadership group encompasses all elected officials, the chief executive offices for the city, and the Community Outreach and Engagement team. The Administrative Services group includes Finance, Human Resources (including Workers’ Compensation and Self-Insured Benefits), Information Technology, and Risk Management. Non-departmental also includes any special projects directed by City. • Public Safety (25 percent) Public Safety remains a top City Council priority. This major service area includes the Police Department, whose mission is to protect and serve the community with integrity, professionalism, and valor. The Fire Department is the other component of this major service area with a mission to enhance the quality of life by delivering exceptional services in safeguarding lives, property, and the environment. • Community Services (22 percent) Community Services consists of Library and Cultural Arts, Parks and Recreation, City Clerk Services, and Community and Economic Development. Library and Cultural Arts provides educational, informational and cultural arts services for all community residents, which contribute to quality of life by supporting lifelong learning, the pursuit of knowledge, and creating the availability of community gathering places. Parks and Recreation offers comprehensive opportunities for meeting the recreational and social needs and interests of the community by providing programs for all segments of the population. The mission of Community and Economic Development is helping people build a strong community by guiding and facilitating high quality projects, preserving the environment, providing for and maintaining a strong economic and employment base, and strengthening neighborhoods through partnerships and collaboration to improve or enhance the quality of life and sense of community within Carlsbad. Community and Economic Development encompasses Land Use Planning, Economic Development, the Hiring Center, Housing and Neighborhood Services, Land Development Engineering, and Building. City Clerk Services includes minutes  45 preparation, election administration, agenda preparation, legal noticing and publishing, maintaining the Carlsbad Municipal Code, ensuring public records are archived, preserved, and accessible to the public, and developing and implementing citywide records management and document management programs. • Public Works (14 percent) Public Works is responsible for building and maintaining all the infrastructure assets of the city. This service area includes Transportation, Construction Management and Inspection, Storm Drain Engineering, Asset Management, the Buena Vista Channel, Street Lighting, Property and Fleet Management, and Environmental Management. • Golf Course (4 percent) The city opened a municipal golf course in the summer of 2007, further enhancing the tourist attractions the city offers. The municipal golf course, The Crossings at Carlsbad, is an 18-hole golf course set in the rolling hills and canyons of Carlsbad. With ocean views, a high-quality golf experience, a first-class restaurant and clubhouse, and connections to hiking trails, The Crossings at Carlsbad is a destination for golfers and non-golfers alike. • Solid Waste (1 percent) The Solid Waste Division of the Utilities Department administers and monitors the solid waste contract and the Palomar Transfer Station agreement, and is responsible for ensuring the waste reduction and recycling components of the Source Reduction and Recycling Element and Household Hazardous Waste Element comply with state mandated diversion and disposal requirements. Also included in this section is the Storm Water Protection Program, whose goal is to provide leadership and stewardship of the city’s resources protecting the city’s beaches, creeks and lagoons. • Water Operations (20 percent) The Carlsbad Municipal Water District (CMWD), a subsidiary of the city, provides potable and recycled water service to approximately 85 percent of the city (approximately 29,700 customers). CMWD purchases 100 percent of its potable water, which includes a new local supply of desalinated seawater, as treated water from the Metropolitan Water District and the San Diego County Water Authority. CMWD also provides recycled water for irrigation purposes. • Wastewater Operations (6 percent) The city operates and maintains a sanitary wastewater collection system, which covers approximately 65 percent of the geographic area of the city. Wastewater is treated by the Encina Wastewater Treatment Plant, a facility jointly owned by the cities of Carlsbad, Vista and Encinitas; the Leucadia Wastewater District; the Vallecitos Water District; and the Buena Sanitation District. The following sections will provide information about the operations of the governmental and business-type activities separately.  46 Governmental Activities The increase in net position for governmental activities was $36.7 million. This increase was generated by total governmental activities revenues of $222 million ($52.9 million in program revenues and $169.1 million in general revenues) offset by $185.1 million in total costs of governmental activities, and $200,000 in transfers to the Solid Waste Fund. The table below presents the total cost of each of the city’s major programs, as well as each program’s revenue (fees generated by the activities, contributions, and intergovernmental funding. The net cost (the difference between adjoining bars in the graph) shows the financial burden that was placed on the city’s taxpayers by each of these programs (costs covered by general revenues). Revenues are generated through several sources to cover the cost of the city’s programs. These revenues include fees and charges paid by those who directly benefit from the programs ($21.8 million), grants and contributions from other governments and organizations which subsidize certain programs ($31.1 million), and taxes and other revenues (such as income from property and investments) received by the city to pay for the “public benefit” portion, totaling $169.1 million. Community Services revenues are derived from development activities throughout the city, housing assistance programs, parks and recreation fees, and library fees. A large portion of Community Services revenues are comprised of housing assistance programs (Section 8 Rental Assistance, affordable housing loan repayments, and developers paying into the Affordable Housing Trust Fund) as well as charges for development related services. As expected, development activity reflected a substantial decrease from the prior fiscal year, offsetting a portion of the program expenses. The majority of Public Works revenues are used to acquire and build capital assets (versus covering operating expenses). In addition, the donation of capital assets from developers is reflected in the program revenues for Public Works. Capital assets are generally constructed or purchased once sufficient funds have been accumulated to pay for the cost. Several years ago, the city entered a new stage of its lifecycle, from a developing or growing stage, to a mature stage. As the city  47 continues to mature and approach build-out, there will be fewer master planned projects. In past years, these projects constructed new facilities, roads, parks, and other city-owned infrastructure. The city is shifting its focus towards maintenance of existing facilities and will use funding sources such as the Infrastructure Replacement Fund to maintain and replace these assets. There are still some master planned communities that were recently completed or are near completion, including the La Costa Oaks Industrial Park, Uptown Bressi, Poinsettia 61 and Zone 15. The developers of these communities have dedicated or will dedicate infrastructure to the city, a requirement for development. Business-type Activities Program revenues for the city’s business-type activities totaled $78.1 million for the year, while program expenses equaled $81.7 million. Water program revenues are lower than program expenses primarily due to decreased demand for potable and recycled water resulting from increased rainfall compared to the previous year. In addition, there was no increase in water rates (water and delivery charges) for calendar year 2019. Water program expenses were higher than last year, due to the enterprise making an additional CalPERS payment to the operator of the recycled water facility to address the unfunded liability and partially offset by the net effect of reduced water purchases. The city’s golf course enterprise was in its twelfth full year of operation and finished the fiscal year with a net loss of $2.8 million. However, excluding depreciation expenses, golf course revenues were sufficient to fund normal golf course operating expenses,. Wastewater program revenues were slightly below program expenses due to making an additional CalPERS payment to address the unfunded liability. Capital construction expenses are spread over the life of an asset as annual depreciation charges (program expenses) and are not reflected as an expense in the year acquired. A more detailed discussion of each of the enterprises can be found in the Proprietary Funds Section.  48 Financial Analysis of the City’s Funds As noted earlier, the city uses fund accounting to ensure compliance with finance related legal requirements. In the current Comprehensive Annual Financial Report (CAFR), the implementation of a prior GASB pronouncement resulted in the Community Activity Grants Fund being combined with the General Fund for financial statement presentation. Governmental Funds The focus of the city’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. This information is useful in assessing the city’s financing requirements. In particular, unassigned fund balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. There are five fund balance classifications: non-spendable, restricted, committed, assigned, and unassigned. These fund balance classifications comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detail of the fund balances by classification is shown in Note 10 of the financial statements. As of the end of the current fiscal year, the city’s governmental funds reported combined ending fund balances of $599.7 million, up $33.3 million from the year before. Approximately 8 percent ($49.6 million) constitutes non-spendable fund balances, mostly comprised of advances and loans to other funds. Restricted fund balances can only be spent for a specific purpose stipulated by law and make up about 42 percent ($251.9 million). Assigned fund balances are intended to be used by the city for specific purposes, but do not meet the criteria to be classified as restricted or committed. These make up 33 percent ($195.5 million) of the city’s fund balance. Approximately 17 percent ($101.7 million) of the fund balance is unassigned, which is available for spending at the city council’s discretion. Of the $101.7 million unassigned fund balance, the City Council has set aside $19.1 million for economic uncertainty purposes. However, accounting standards require that the $19.1 million set aside be shown as part of the city’s unassigned fund balance.  49 Total Increase Percentage (Decrease)Change 2018 2019 Revenues Taxes $136.2 $148.8 $12.6 9.3% Intergovernmental 1.3 1.9 0.6 46.2% Licenses and permits 3.0 2.7 (0.3)-10.0% Charges for services 10.0 9.1 (0.9)-9.0% Fines and forfeitures 0.7 0.6 (0.1)-14.3% Income from property and investments 3.0 9.6 6.6 220.0% Miscellaneous 1.4 1.5 0.1 7.1% Total revenues 155.6 174.2 18.6 12.0% Expenditures General government 25.9 23.7 (2.2)-8.5% Interdepartmental charges (3.2)(4.6)(1.4)43.8% Public safety 58.0 77.3 19.3 33.3% Community services 38.6 41.5 2.9 7.5% Public works 15.9 16.8 0.9 5.7% Total expenses 135.2 154.7 19.5 14.4% Excess (deficiency) before transfers 20.4 19.5 Transfers in 0.2 0.3 Transfers out (12.9)(13.2) Increase (decrease) in fund balance 7.7 6.6 Beginning fund balance 171.4 179.1 Ending fund balance $179.1 $185.7 2018-19 Total STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND (in millions of dollars) The General Fund is the main operating fund of the city, and at the end of the fiscal year had a total fund balance of $185.7 million, an increase of $6.6 million. The unassigned fund balance portion of the General Fund was $101.7 million, an increase of $19.1 million from last fiscal year. During the fiscal year, the City Council approved a new budget surplus policy that changed how unspent appropriations from one fiscal year are carried forward into the next fiscal year. This new policy reduced the amount of carry forward budgets from fiscal year 2018-19 to fiscal year 2019-20 by $6.9 million. Also, the city made an additional $20 million CalPERS payment during the fiscal year, of which $19.3 million was charged to the General Fund ($700,000 was charged to the Water and Wastewater Funds). The city used $5.5 million of funds previously set aside (assigned) for CalPERS stability to help make this payment. A major factor in the decrease in General Government expenditures is the result of an additional CalPERS payment made last year of $9.7 million versus $5.1 million in fiscal year 2018-19 (General Government’s portion of the $20 million CalPERS payment). Another change driving the General Government variance was the change made in the accounting for billing services provided by the Finance Department for the city’s enterprises. This also impacted the change in interdepartmental charges. Public Safety expenditures were also impacted by the additional CalPERS payment of $20 million, as $14.2 million was charged to this program. Community Services were impacted by the full year operation of the Pine Avenue Community Center, additional focus on homeless programs, higher nuisance abatement costs, new library programs, and an update of the Schulman Auditorium sound system. These additional expenditures were heavily offset by the growth in several key revenues during the year: property taxes, transient occupancy tax, sales tax, business license taxes, franchise fees, income from property and investments. The economy continues to remain strong. This was evident as all the tax  50 revenues in the city saw moderate to significant growth during the year. As expected, development activity within the city saw a moderate decrease (charges for services and licenses and fees), after a relatively strong 2017-18 fiscal year. With the city approaching buildout, several of the remaining large residential master planned communities and industrial/commercial parks saw a reduction in construction activity as they neared completion, leaving only a small portion of the city undeveloped. This slower pace is projected to continue and cause a further revenue decline for the foreseeable future as the city approaches buildout. In the city’s fiscal year 2018-19 budget, expenditures were expected to increase 6.9 percent over the fiscal year 2017-18 budget to $155.8 million. The total personnel budget for fiscal year 2018-19 was $92.9 million, which was 2.5 percent more than the previous year’s personnel budget of $90.4 million. The total maintenance and operations (M&O) budget for fiscal year 2018-19 was $49.5 million, which was 15.9 percent higher than the previous year’s budget of $42.7 million. The increase in personnel budgets was based on previously negotiated salary and benefit increases, the net addition of 13.3 new staff members (8.0 full-time, a decrease of 3.0 limited-term positions, a transfer of 5.0 full-time staff to the Information Technology Internal Service Fund, and 3.3 part-time staff), projected retirement rate increases, and increases in workers compensation costs. Health insurance costs were projected to remain flat for the year. All General Fund departments assumed a 2.5 percent M&O escalator. In total, General Fund M&O costs were expected to increase by 15.9 percent due to general increases in internal service charges, a change made in the accounting for billing services by the Finance Department for the city’s enterprises, increases for tuition reimbursement and citywide training/ development, staff development and succession planning consulting services, costs associated with the implementation of the Cultural Arts Master Plan, operating costs associated with new park facilities, a new Pest Management Plan, and additional traffic signal maintenance costs. Transfers out of the General Fund were budgeted at $13.2 million, a $700,000 increase from the prior fiscal year. This increase was due primarily to increases in the transfers from the General Fund to the Infrastructure Replacement Fund ($700,000). Adding to the adopted budget of $155.8 million for the General Fund, approximately $25.2 million in unspent fiscal year 2017-18 budgeted expenditures was carried over to fiscal year 2018-19, and there were $8.1 million in open encumbrances as of June 30, 2018. The Community Facilities District Number 1 Fund continues to collect assessments for the future construction of city infrastructure and facilities. The General Capital Construction Fund used a portion of its existing fund balance to fund public beach access improvements, finish the Park Drive drainage and street improvements project, and Fire Station No. 5 storage building and roof replacement. The fund balance in the Infrastructure Replacement Fund increased, as the city continued the annual transfer of funds from the General Fund for the future replacement of existing infrastructure and facilities. During the year, several projects were funded within the Infrastructure Replacement Fund, including: the La Costa Avenue storm drain replacement; preventive maintenance activities such as deck sealing, concrete patching, and repairing spall to increase the life of bridge structures; and replacing corrugated metal pipe storm drain pipelines with alternative materials. The Park Development Fund and the Public Facilities Construction Fund used a portion of their existing fund balances for the Aviara Community Park gathering space, picnic area, and warming kitchen; as well as the restoration of the historic horse stables, reconstruction of a chicken coop and new restrooms at Leo Carrillo Park. During the year, the city continued to set aside money for the construction of various projects within these funds. Historically, the city has not issued debt to fund the construction of capital projects and sets aside funds on an annual basis until sufficient funds have been collected for the construction of specific projects. In addition, projects will not be constructed until anticipated annual operating costs can be absorbed into the city’s budget without creating a deficit.  51 Proprietary Funds The purpose of the city’s proprietary fund sections is to provide short- and long-term financial information about the city’s business-type activities. The analysis focuses on the determination of operating income, changes in net position (cost recovery), financial position, and cash flows. CMWD funds had an operating loss of approximately $3.9 million for the year. Operating revenues were approximately $47.5 million and operating expenses were approximately $51.4 million. One of the larger factors in the operating loss was the decrease in volume of water sales, which was directly attributable to almost three times more rainfall in the current year. Water rates were increased in January 2017 and held flat during 2018 and 2019. The cost of purchased water from the Metropolitan Water District and the San Diego County Water Authority (suppliers of the CMWD’s potable water) continued to increase. The decrease in purchased water, and the purchase of costlier desalinated water, were offset primarily by increased pension costs of the operator of the recycled water facility. Increases in income from property and investments (higher yield on the treasurer’s portfolio, higher average cash balances, and the impacts of GASB 31) and property taxes (an increase in assessed values of 5.4 percent) resulted in income before transfers and capital contributions of $5.2 million. In the twelfth year of operation, the Golf Course Fund had an operating loss of $3.1 million, primarily due to depreciating the enterprise's assets ($3.5 million). If golf course operating revenues are not sufficient to cover golf course operating expenses (excluding depreciation), the General Fund will make contributions in the form of lease payments to pay for the shortfall. Revenues remained strong in the current year, but an increase in course maintenance and personnel expenses drove a lower operating result. The Wastewater Funds had an annual operating loss of $1.1 million for the fiscal year. Total revenues from operations were up by $223,000, due primarily to development throughout the city. The increase in operating expenses was predominantly due to increased CalPERS costs and a depreciation true-up at the operator of the wastewater treatment facility. Non-operating revenues related to income from property and investments added $1.7 million to the operating income (an increase in the yield on the treasurer’s portfolio, an increase in average cash balances, and the impacts of GASB 31), resulting in a net gain of $593,000 before transfers and capital contributions. Solid Waste Operations and Storm Water Programs are combined on the city’s financial reports and showed a net operating loss of $256,000 for the year. Revenues were essentially the same as the previous fiscal year, and expenses increased due to planned increases in outside professional service costs (higher fats, oil and grease inspection services as well as pipeline maintenance costs). The operating loss was more than offset by income from property and investments (an increase in the yield on the treasurer’s portfolio, an increase in average cash balances, and the impacts of GASB 31), and resulted in a net gain before transfers and capital contributions of $294,000. The unrestricted net position for the Water, Golf Course, Wastewater, and Solid Waste Operations at the end of the year amounted to $96.6 million, or approximately 20 percent of the total enterprise funds net position. The unrestricted net position may be used for rate stabilization, fluctuations in operating expenses, and unforeseen repairs and maintenance. Approximately $38.5 million, or 8 percent, of the net position of all the proprietary funds are restricted for the future capital construction of new and replacement water and wastewater infrastructure assets. Since the funding for the replacement of infrastructure assets is not restricted, it is reflected in the Statement of Net Position as unrestricted. The city does, however, account for and monitor these amounts in separate funds to ensure that water and wastewater assets can be replaced when needed. The large unrestricted net deficit in the Golf Course Fund represents funds advanced from the city’s General Fund that were used to fund construction, former operating losses and debt expenses of the municipal golf course.  52 General Fund Budgetary Highlights for Fiscal Year 2018-19 Management monitors revenues during the year and updates estimated revenue figures when new information is received. General Fund revenue estimates were revised moderately during the year, as compared to the originally budgeted estimates. Some of the factors that led to the $3.5 million increase in revenue estimates included: • several new federal and state grants were applied for and received during the year; • increased sales tax revenues due to the State of California changing the timing in remitting sales tax revenues to the city; • increased transient occupancy taxes from the addition of two new hotels, higher occupancy rates, and higher average daily rates; • additional disaster relief from the California Office of Emergency Services for the 2014 Poinsettia Fire; • higher interest rates earned on larger than planned cash balances; and • several new master planned communities and higher than originally budgeted industrial/commercial development that led to higher building permit and associated revenues (licenses and permits, as well as charges for services) than originally budgeted. The increase from the total original expenditure budget to the final budget amounted to $20.9 million primarily due to: • a $19.3 million supplemental payment made to CalPERS to help stabilize future retirement costs; • the appropriation of grant money received; • sales tax audit expenses; • developer funded studies; • the appropriation of mutual aid response overtime reimbursements received; • the implementation of the North Beach lifeguard program; • additional unfunded litigation and expert expenses related to the Safety Training; and • maintenance for newly acquired Village H property. The difference between the final budgeted expenditures and the actual expenditures for the year (on a budgetary basis) of $31.8 million can be generally summarized as follows: • Interdepartmental charges were $234,000 below estimates, which are offset against expenditures for reporting purposes in the financial statements. • Savings by various major service areas within the city totaling $31.6 million. Current year savings were generated from: o unfilled staff vacancies; o overall awareness of fiscal responsibility throughout the city; o deferral of projects; and o accumulated savings set aside for future technology and innovation enhancements. o Of the $31.6 million in savings, $22.4 million will be carried forward into fiscal year 2019-20 and is planned to be used for: ✓ innovation projects throughout the city; ✓ Police memorandum of understanding (MOU) increases; ✓ Safety Center air handler replacement; ✓ Parks & Recreation master plan updates; ✓ backfile conversion; ✓ replace Schulman Auditorium sound system; ✓ community public art projects; ✓ three Police vehicles;  53 ✓ invasive species mitigation; ✓ unfunded litigation; ✓ outfitting of a new fire engine; ✓ business process and training documentation; ✓ outfitting vehicles; ✓ increased costs for five vehicles: ✓ climate action plan; ✓ crossing guard contract increase; ✓ resident satisfaction/opinion survey; ✓ contracted grant writing; ✓ Harding Community Center office remodel; ✓ Dove Library wayfinding: ✓ retail study; and ✓ talent assessment and succession planning. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses in investments pursuant to GASB; actual expenditures have been adjusted to include remaining encumbrances. Capital Asset and Debt Administration Capital Assets At the end of fiscal year 2018-19, the city had recorded investments of over $1.1 billion in a broad range of capital assets, including park facilities, land, buildings, roads, bridges, drainage facilities, water and sewer lines, Police and Fire vehicles, and other maintenance equipment. This number includes infrastructure assets of the general government which are required per GASB. Some of this year’s major capital asset additions included:  • improvements to public beach access along Ocean Street; • completion of the Fire Station No. 5 storage building roof; • completion of the Faraday building refurbishment project; • completion of the Leo Carrillo Park Phase III project; • completion of various Americans with Disabilities Act improvement projects including accessibility improvements to sidewalks, curb ramps and pedestrian signals; Total Percentage Change Change 2018 2019 2018 2019 2018 2019 2018-19 2018-19 Land $153.2 $153.7 $9.4 $9.4 $162.6 $163.1 $0.5 0.3% Construction in progress 10.0 16.8 41.6 46.1 51.6 62.9 11.3 21.9% Buildings and other structures 135.9 136.4 41.0 41.0 176.9 177.4 0.5 0.3% Improvements other than buildings 81.5 84.3 52.3 52.3 133.8 136.6 2.8 2.1% Machinery and equipment 43.4 46.0 12.6 12.9 56.0 58.9 2.9 5.2% Infrastructure 721.9 726.2 342.2 350.4 1,064.1 1,076.6 12.5 1.2% Wastewater treatment facility - - 57.8 58.1 57.8 58.1 0.3 0.5% Intangibles 5.0 5.0 - - 5.0 5.0 - 0.0% 1,150.9 1,168.4 556.9 570.2 1,707.8 1,738.6 30.8 1.8% Accumulated depreciation (357.2) (381.1) (192.4) (206.7) (549.6) (587.8) (38.2) 7.0% Total $793.7 $787.3 $364.5 $363.5 $1,158.2 $1,150.8 ($7.4)-0.6% Activities Activities Total CITY OF CARLSBAD'S CAPITAL ASSETS (in millions of dollars) Governmental Business-Type  54 • expansion of the recycled water facility; • Taylor Morrison of California donated assets (waterlines, improvements to existing street); • Army Navy Athletic Field donated assets (water lines, sewer lines, improvements to existing streets); • Miles Pacific Subdivision donated assets (sewer lines, water lines, improvements to existing streets); • Coastal Living 10 donated assets (waterlines, improvements on existing streets); • Shoppes at Carlsbad donated assets (waterlines); • Sohaei Minor Subdivision donated assets (waterlines, improvements to existing roadway); • 33 vehicles; • one transit cargo van; • six police SUV vehicles; • one sewer inspection truck; • three trailers; • one jet ski; • one full size wheel loader; • five Hostile Vehicle Mitigation (barrier) systems; • fixed license plate recognition system; • one police canine; • Motorola two-way radios; • information technology security system and performance enhancement equipment; • several sewer line projects; and • several storm drain projects. In addition to carrying forward appropriations of $230.4 million for previously budgeted projects, the city’s fiscal year 2019-20 capital improvement budget appropriates an additional $53.6 million for capital projects. These additional appropriations are principally for the following projects: reconstruction of Fire Station No. 2; trail connectivity to Tamarack State Beach; replacement of Monroe Street Pool; Senior Center refurbishment; Stagecoach Park synthetic turf replacement; Hosp Grove Park improvements; various channel clearing and storm drain improvements; improvements at the Encina Water Pollution Control Facility; Supervisory Control and Data Acquisition (SCADA) improvements; sewer lift station repairs and upgrades; wastewater line refurbishments/replacements at various locations throughout the city; water valve repair/replacements; Avenida Encinas widening south of Palomar Airport Road; Terramar area coastal improvements; village decorative lighting; the ongoing pavement management program; additional water and recycled water lines and continuation of the water valve repair/replacement program and the northwest quadrant storm drain improvement program. These projects will be financed by development fees, infrastructure and replacement transfers from the General Fund, special district fees and taxes, water and wastewater replacement reserves and other sources, including grants and contributions from other agencies. More detailed information about the city’s capital assets is presented in Note 6 to the financial statements and in the city’s Capital Improvement Program (CIP) document, which can be found on the city’s website or obtained from the Administrative Services Department.  55 Long Term Debt At fiscal year-end, the city had $17.2 million in capital leases and loans, an increase of $1.7 million from last year, as shown in the table above. Regular payments were made on all the city’s outstanding capital leases and loans, and the city made an additional draw on the loan with the State Water Resources Control Board. More detail about the city’s long-term liabilities is presented in Note 7 to the financial statements. Economic Factors and Next Year’s Budgets and Rates for Fiscal Year 2019-20 • The State of California adopted its fiscal Year 2019-20 Annual Budget with the following provisions affecting the city: o The state budget projects short-term revenues of $3.2 billion above the Governor’s Budget. Most of increased revenues are constitutionally obligated to reserves, debt repayment and schools. Therefore, the budget surplus remains relatively unchanged. o The state has built a strong fiscal foundation by paying down liabilities and building up reserves that will help manage the effects of an economic downturn.The state budget forecast recognizes slower growth in the economy but does not predict a recession. o In November 2014, California voters approved Proposition 2, which sets aside additional revenues, primarily from capital gains, to address future economic downturns, instead of increasing ongoing expenditures. This set aside is also referred to the “rainy day” fund. o California voters approved to make permanent the income tax increases under Prop 30. • Net assessed values in the city stand at over $35 billion, a 6.2 percent increase from the prior fiscal year, due to new construction and escalating home and commercial/industrial property values. • Sales tax revenues are projected to increase by 3.6 percent. A factor in the projected increase in sales tax revenues are the newly renovated Shoppes at Carlsbad. Westfield (the former owner of the mall) sold this property in 2015. The new owners (Brookfield) continue to renovate the mall. In addition, the city continues to see increased internet sales tax revenues (Wayfair decision), a new Tesla dealership opened in the city in October 2019, new restaurant and retail establishments, and general increases in sales tax revenues. • The new Home 2 Hotel (142 rooms) is expected to open in March 2020 adding to the city’s transient occupancy tax revenues. • CalPERS is addressing a structural shortfall by lowering the discount rate used to determine the city’s annual pension costs. The reduction in the discount rate is being phased in over several years. The impact in the fiscal year 2019- 20 budget is a citywide increase in pension costs of 5.1 percent. • Median home prices for single-family residences in Carlsbad have increased by 14.6 percent from January 2018 ($814,000) to January 2019 ($989,000). • City departments were not given an automatic budget increase, but rather were asked to request a budget for fiscal year 2019-20 that would be adequate to fund changes in the Consumer Price Index (CPI), any additional funding for existing contractual obligations, and to make requests for any new programs. • The city added a net 41 full-time positions and a net 14.1 part-time positions to better align staffing with the services the city provides. Total Percentage Change 2018 2019 2018 2019 2018 2019 2018-19 Loans $0.0 $0.0 $14.9 $16.8 $14.9 $16.8 12.8% Capital Leases 0.6 0.4 0.0 0.0 0.6 0.4 -33.3% Total $0.6 $0.4 $14.9 $16.8 $15.5 $17.2 11.0% CITY OF CARLSBAD'S OUTSTANDING DEBT Total (in millions of dollars) Governmental Activities Business-Type Activities  56 • Through Memorandums of Understanding (MOUs): o The Carlsbad City Employees’ Association (CCEA) employees will receive 3.0 percent salary increases on January 1, 2020. o Fire Management and General Management employees will receive 3.0 percent salary increases on January 1, 2020. o Carlsbad Police Management Association (CPMA) employees will receive an average 5.5 percent total compensation increases in December 2019. o The Carlsbad Police Officers Association (CPOA) received an average of a 5.5 percent total compensation increases on October 10, 2019. o The Carlsbad Firefighters Association (CFA) is currently in negotiations and any salary increase will be appropriated from either the City Council contingency or the General Fund reserves in fiscal year 2019-20. These factors were considered when preparing the city’s General Fund budget for fiscal year 2019-20. Budgeted expenditures are expected to increase 7.3 percent to $167.1 million. The total personnel budget for fiscal year 2019-20 is $101.4 million, which is 9.1 percent more than the previous year’s personnel budget of $92.9 million. The total maintenance and operations (M&O) budget for fiscal year 2018-19 is $53.8 million, which is 8.6 percent higher than the previous year’s budget of $49.5 million. The total capital outlay budget for fiscal year 2019-20 is $600,000, $400,000 higher than the previous year. The increase in personnel budgets is based on previously negotiated salary and benefit increases, and the net addition of 34 new full-time and 11.37 part-time staff. Increases in retirement costs (CalPERS rates), health insurance rates, and worker’s compensation rates also contributed to the increase in budgeted personnel costs. The maintenance and operations budget for fiscal year 2019-20 includes appropriations for general increases in internal service charges, general price increases, general contract increases, and costs associated with new programs (i.e. homeless response program, North Beach lifeguard program, and costs associated with the hiring of new employees (vehicles, computer, training, etc.). Transfers out of the General Fund are budgeted at $11.5 million, a $1.7 million decrease from the prior fiscal year. This decrease is due primarily to the elimination of a budget transfer to the Workers Compensation Fund for fiscal year 2019-20 (a $1.5 million transfer was done in fiscal year 2018-19). Adding to the adopted budget of $167.1 million for the General Fund, approximately $22.4 million in unspent fiscal year 2018-19 budgeted expenditures will be carried over to fiscal year 2018-19, as well as $11 million in open encumbrances as of June 30, 2019. During the current fiscal year, the unassigned fund balance in the General Fund increased by $19.1 million to $101.7 million. Although originally projected to grow by $9.5 million according to the fiscal year 2018-19 adopted budget, the city made an additional $20 million payment to CalPERS to help stabilize future retirement costs, the city adopted a new General Fund Surplus Policy which reduced the amount of assigned carry forwards made by the city, and actual General Fund Revenues (including the $3.3 million impact of GASB 31), all contributing to the increased in the unassigned fund balance for the year. Based on fiscal year 2019-20 projections, the unassigned General Fund balance is expected to grow by approximately $3.4 million. The city took an additional step in fiscal year 2018-19 to prepare to weather economic downturns. An additional General Fund set aside of $9.1 million was made by the City Council as an Economic Uncertainty Reserve, which can be used to shore up revenue shortfalls during normal recessions. This was added to the existing $10 million Economic Uncertainty Reserve for a new total of $19.1 million. Projected revenues are currently sufficient to build the projects listed in the fiscal year 2019-20 CIP. The city’s business-type activities reflect the following: • The effective increase in purchase costs for CMWD is projected to be approximately 3.5 percent. The cost of water purchased from the San Diego County Water Authority is projected to increase significantly due to decreased county- wide demand and increases in Metropolitan Water District’s water rates, inter alia; however, cost increases are being partially mitigated through planned draws on San Diego County Water Authority’s rate stabilization fund. Draws from Carlsbad Municipal Water District’s rate stabilization fund have allowed CMWD to keep rates low during fiscal year 2019-20 with rate increases of 1% beginning in January 2020 and 2% in January 2021.  57 • Wastewater rates have been held flat for the past four years; however, increases of 3 percent for calendar year 2020 and 3 percent for calendar year 2021 are needed to offset increased pension costs of the operator of the wastewater treatment facility, increased energy and chemical costs, and increased capital repair costs. Better than anticipated financial results in fiscal year 2018-19, healthy reserves, and a positive outlook for the fund mitigated the need for a rate increase. • The golf course bonds were paid off in September 2016. As a result, the operation will continue to see improvements in their cash flows going forward. • There are no projected significant changes in other revenue sources. Contacting the City’s Financial Management This financial report is designed to provide the residents, taxpayers, customers, investors, and creditors with a general overview of the city’s finances and to demonstrate the city’s accountability for the money it receives. If you have any questions about this report or need additional information, contact the Administrative Services Department, 1635 Faraday Avenue, Carlsbad, CA 92008, 760-602-2430, or at www.carlsbadca.gov. June 30, 2019 Governmental Business-Type ASSETS Activities Activities Total Cash and investments 571,277,668 $ 205,782,306 $ 777,059,974 $ Receivables: Interest 2,940,613 1,029,750 3,970,363 Taxes 10,643,829 41,356 10,685,185 Other 1,290,304 831,083 2,121,387 Accounts, net of allowances 101,138 10,065,231 10,166,369 Due from other governments 1,110,079 3,335,169 4,445,248 Inventories 475,716 817,594 1,293,310 Prepaid items 185,098 49,582 234,680 Land held for resale 617,247 - 617,247 Loan and reimbursement receivables, net of allowances 21,706,518 - 21,706,518 Due from Successor Agency 7,255,238 - 7,255,238 Deposits 25,000 - 25,000 Internal balances 54,574,353 (54,574,353) - Subtotal 672,202,801 167,377,718 839,580,519 Capital assets: Land 153,680,535 9,375,975 163,056,510 Construction in progress 16,752,652 46,142,826 62,895,478 Buildings and other structures 136,441,283 40,952,166 177,393,449 Improvements other than buildings 84,333,943 52,278,030 136,611,973 Machinery and equipment 46,038,742 12,933,255 58,971,997 Infrastructure 726,181,012 350,381,308 1,076,562,320 Wastewater treatment facility - 58,126,463 58,126,463 Intangible assets 5,017,448 - 5,017,448 Less accumulated depreciation (381,102,511) (206,735,250) (587,837,761) Total capital assets 787,343,104 363,454,773 1,150,797,877 Total assets 1,459,545,905 530,832,491 1,990,378,396 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 632,012 346,290 978,302 Deferred outflows of resources - pension related items 58,403,901 3,453,624 61,857,525 Total deferred outflows of resources 59,035,913 3,799,914 62,835,827 Statement of Net Position Primary Government The notes to the financial statements are an integral part of this statement. 58 June 30, 2019 Governmental Business-Type LIABILITIES Activities Activities Total Accrued liabilities 13,965,477 $ 4,848,932 $ 18,814,409 $ Accrued interest payable - 58,553 58,553 Due to other governments 491 13,084,321 13,084,812 Estimated claims payable 13,115,781 - 13,115,781 Deposits payable 518,704 5,439,254 5,957,958 Unearned revenue 1,186,260 94,236 1,280,496 Noncurrent liabilities: Due within one year 222,373 1,582,886 1,805,259 Due in more than one year: Loans payable and capital leases 155,922 15,243,719 15,399,641 Net OPEB liability 1,506,060 719,407 2,225,467 Net pension liability 152,900,419 10,120,726 163,021,145 Total liabilities 183,571,487 51,192,034 234,763,521 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 243,247 126,373 369,620 Deferred inflows of resources - pension related items 6,902,220 637,005 7,539,225 Total deferred inflows of resources 7,145,467 763,378 7,908,845 NET POSITION Net investment in capital assets 786,964,809 346,628,168 1,133,592,977 Restricted for: Capital assets 194,434,512 38,539,621 232,974,133 Lighting and landscaping districts 8,025,279 - 8,025,279 Affordable housing 43,588,233 - 43,588,233 Habitat and agricultural mitigation management 1,523,598 - 1,523,598 Other purposes 4,328,537 - 4,328,537 Unrestricted 288,999,896 97,509,204 386,509,100 Total net position 1,327,864,864 $ 482,676,993 $ 1,810,541,857 $ The notes to the financial statements are an integral part of this statement. Primary Government Statement of Net Position (continued) 59 Statement of Activities For the Year Ended June 30, 2019 Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government 22,234,445 $ 1,678,967 $ 1,492,116 $ 1,860 $ Public safety 67,968,386 4,784,327 357,651 479,803 Community services 57,977,650 10,754,858 10,622,607 3,595,644 Public works 36,897,256 4,573,777 4,834,664 9,764,553 Interest and fiscal charges on long-term debt 3,614 - - - Total governmental activities 185,081,351 21,791,929 17,307,038 13,841,860 Business-type activities: Carlsbad Municipal Water District 51,637,830 46,430,864 1,055,502 3,977,628 Golf course 11,034,686 7,978,896 - - Wastewater 15,238,408 14,098,783 73,299 886,365 Solid waste 3,840,148 3,440,551 131,444 - Total business-type activities 81,751,072 71,949,094 1,260,245 4,863,993 Total primary government 266,832,423 $ 93,741,023 $ 18,567,283 $ 18,705,853 $ General revenues: Property taxes Sales and use taxes Transient occupancy taxes Franchise taxes Business license taxes Real property transfer taxes Income from property and investments Other general revenues Transfers Total general revenues and transfers Change in net position Net position at beginning of year, as restated Net position at end of year The notes to the financial statements are an integral part of this statement. Program Revenues 60 Governmental Business-type Activities Activities Total (19,061,502) $ -$ (19,061,502) $ (62,346,605) - (62,346,605) (33,004,541) - (33,004,541) (17,724,262) - (17,724,262) (3,614) - (3,614) (132,140,524) - (132,140,524) - (173,836) (173,836) - (3,055,790) (3,055,790) - (179,961) (179,961) - (268,153) (268,153) - (3,677,740) (3,677,740) (132,140,524) (3,677,740) (135,818,264) 69,951,948 4,002,341 73,954,289 38,510,186 - 38,510,186 26,320,645 - 26,320,645 6,099,806 - 6,099,806 5,321,779 - 5,321,779 1,714,782 - 1,714,782 20,695,305 7,784,199 28,479,504 438,929 112,475 551,404 (219,274) 219,274 - 168,834,106 12,118,289 180,952,395 36,693,582 8,440,549 45,134,131 1,291,171,282 474,236,444 1,765,407,726 1,327,864,864 $ 482,676,993 $ 1,810,541,857 $ Net Revenue (Expense) and Changes in Net Position Primary Government 61 Balance SheetGovernmental FundsJune 30, 2019 Community General General Facilities Capital ASSETS Fund District No. 1 Construction Cash and investments 130,019,545 $ 87,332,793 $ 42,557,818 $ Receivables: Interest 740,112 437,869 214,256 Taxes 10,641,242 2,587 - Other 916,855 - 181,951 Accounts, net of allowances 82,341 - - Due from other funds 270,083 - - Due from other governments 111,397 - - Inventories 17,659 - - Prepaid items - - - Land held for resale - - - Loans receivable, net of allowances 77,781 - - Deposits 25,000 - - Due from Successor Agency 7,255,238 - - Advances to other funds 55,673,726 1,943,710 - Total assets 205,830,979 $ 89,716,959 $ 42,954,025 $ LIABILITIES Accrued liabilities 5,698,852 $ 60,989 $ 287,781 $ Due to other funds - - - Deposits payable 47,164 5,000 - Due to other governments 491 - - Advances from other funds - - - Unearned revenue 991,531 - - Total liabilities 6,738,038 65,989 287,781 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - grants - - - Unavailable revenue - interest on advances 13,416,611 - - Total deferred inflows of resources 13,416,611 - - FUND BALANCES Nonspendable 49,607,793 - - Restricted - 89,650,970 - Committed 1,000,000 - - Assigned 33,367,567 - 42,666,244 Unassigned 101,700,970 - - Total fund balances 185,676,330 89,650,970 42,666,244 Total liabilities, deferred inflows of resources, and fund balances 205,830,979 $ 89,716,959 $ 42,954,025 $ The notes to the financial statements are an integral part of this statement. 62 Public Other Total Infrastructure Park Facilities Governmental Governmental Replacement Development Construction Funds Funds 119,108,006 $ 11,801,451 $ 27,396,401 $ 103,958,794 $ 522,174,808 $ 597,061 59,153 137,383 512,340 2,698,174 - - - - 10,643,829 - - - 191,498 1,290,304 - - 5,657 6,538 94,536 - - - - 270,083 - - - 998,682 1,110,079 - - - - 17,659 - - - 992 992 - - - 617,247 617,247 - - - 21,628,737 21,706,518 - - - - 25,000 - - - - 7,255,238 - - 5,650,000 - 63,267,436 119,705,067 $ 11,860,604 $ 33,189,441 $ 127,914,828 $ 631,171,903 $ 232,652 $ 64,941 $ 362,387 $ 1,487,666 $ 8,195,268 $ - - - 270,083 270,083 - - - 465,540 517,704 - - - - 491 - 5,650,000 - 2,113,310 7,763,310 - - - 194,729 1,186,260 232,652 5,714,941 362,387 4,531,328 17,933,116 - - - 107,028 107,028 - - - - 13,416,611 - - - 107,028 13,523,639 - - - 992 49,608,785 - 6,145,663 32,827,054 123,275,480 251,899,167 - - - - 1,000,000 119,472,415 - - - 195,506,226 - - - - 101,700,970 119,472,415 6,145,663 32,827,054 123,276,472 599,715,148 119,705,067 $ 11,860,604 $ 33,189,441 $ 127,914,828 $ 631,171,903 $ 63 Reconciliation of the Balance Sheet of Governmental Fundsto the Statement of Net Position June 30, 2019 Total fund balances - governmental funds 599,715,148 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental funds 774,307,940 Internal service funds 13,035,164 Total capital assets 787,343,104 Deferred outflows are not an available resource and therefore, are not reported in the funds. Governmental funds 57,398,467 Internal service funds 1,637,446 Total deferred outflows 59,035,913 Internal service funds are used by management to charge the costs of fleet management, self insured benefits, information technologies, records management, risk management and workers' compensation to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Total internal service fund net position 38,292,450 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.(929,773) Internal service fund net position included as part of total capital assets (13,035,164) Internal service fund net position included as part of deferred outflows (1,637,446) Internal service fund net position included as part of long-term liabilities 6,889,653 Internal service fund net position included as part of deferred inflows 597,581 Net internal service fund net position 30,177,301 Interest receivable on advances to other funds is not a current financial resource and therefore, is not recognized as revenue in the funds until received.13,416,611 A portion of deferred grant revenues are not available to pay for current period expenditures and therefore, are not recognized in the funds.107,028 Long-term liabilities, including net pension liability, are not due and payable in the current period and therefore, are not reported in the funds. Governmental funds (147,895,121) Internal service funds (6,889,653) Total long-term liabilities (154,784,774) Deferred inflows represent an acquisition of net position that applies to a future period so it will not be recognized until that time. Governmental funds (6,547,886) Internal service funds (597,581) Total deferred inflows (7,145,467) Net position of governmental activities.1,327,864,864 $ The notes to the financial statements are an integral part of this statement. 64 This p a g e is intentionally left blank. 65 Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2019 Community General General Facilities District Capital Fund No. 1 Construction Revenues: Taxes 148,748,285 $ 1,455,868 $ -$ Intergovernmental 1,938,204 - - Licenses and permits 2,668,048 - - Charges for services 9,135,341 - - Fines and forfeitures 539,537 - - Income from property and investments 9,643,049 3,287,293 - Contributions from property owners - 1,352,729 - Donations - - - Miscellaneous 1,505,358 - 1,077,525 Total revenues 174,177,822 6,095,890 1,077,525 Expenditures: Current: General government 23,660,389 103,419 - Less: interdepartmental charges (4,581,303) - - Public safety 77,247,700 - - Community services 41,501,728 - - Public works 16,808,876 - - Capital outlay - 562,112 3,095,395 Debt service: Principal retirement 10,475 - - Interest and fiscal charges 1,807 - - Total expenditures 154,649,672 665,531 3,095,395 Excess (deficiency) of revenues over (under) expenditures 19,528,150 5,430,359 (2,017,870) Other financing sources (uses): Transfers in 270,000 - - Transfers out (13,175,274) - (260,000) Total other financing sources (uses)(12,905,274) - (260,000) Net change in fund balances 6,622,876 5,430,359 (2,277,870) Fund balances at beginning of year 179,053,454 84,220,611 44,944,114 Fund balances at end of year 185,676,330 $ 89,650,970 $ 42,666,244 $ The notes to the financial statements are an integral part of this statement. 66 Public Other Total Infrastructure Park Facilities Governmental Governmental Replacement Development Construction Funds Funds -$ -$ -$ 4,468,867 $ 154,673,020 $ - - - 12,708,617 14,646,821 - - - - 2,668,048 - - - 4,085,716 13,221,057 - - - 41,771 581,308 4,392,019 475,883 1,107,239 4,369,763 23,275,246 - 2,858,952 2,566,524 3,522,672 10,300,877 - - - 1,384,386 1,384,386 - - - 733,560 3,316,443 4,392,019 3,334,835 3,673,763 31,315,352 224,067,206 - - - 269,204 24,033,012 - - - - (4,581,303) - - - 302,424 77,550,124 - - - 11,448,914 52,950,642 - - - 1,570,630 18,379,506 1,963,002 2,889,559 4,996,962 7,196,314 20,703,344 - - - - 10,475 - - - 3,637 5,444 1,963,002 2,889,559 4,996,962 20,791,123 189,051,244 2,429,017 445,276 (1,323,199) 10,524,229 35,015,962 10,681,000 - - 930,248 11,881,248 - - - (165,248) (13,600,522) 10,681,000 - - 765,000 (1,719,274) 13,110,017 445,276 (1,323,199) 11,289,229 33,296,688 106,362,398 5,700,387 34,150,253 111,987,243 566,418,460 119,472,415 $ 6,145,663 $ 32,827,054 $ 123,276,472 $ 599,715,148 $ 67 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended June 30, 2019 Net change in fund balances - total governmental funds 33,296,688 $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Purchase of capital assets 15,392,073 Loss on the disposal of capital assets (25,000) Depreciation expense (22,546,514) Governmental funds do not reflect the donation of capital assets as revenues.656,541 Unpaid interest income on advances to other funds is not a current financial resource, and therefore is not recognized as revenue in the funds.125,145 Revenues that are recorded in the funds that are not recorded in the statement of activities due to measurement differences (2,226,048) The issuance of long-term debt (e.g., leases) provides current financial resources to governmental funds, the repayment of the principal of long-term debt consumes the current financial resources of governmental funds.10,475 The net revenue of activities of internal service funds is reported with governmental activities.890,557 Adjustments made to the net pension and net OPEB liabilities do not use current financial resources and therefore, are not recognized in the funds.11,223,641 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.(103,976) Change in net position of governmental activities.36,693,582 $ The notes to the financial statements are an integral part of this statement. 68 General Fund Variance With Final Budget - Actual Amounts Over Original Final (Budgetary Basis)(Under) Revenues: Taxes 142,666,000 $ 143,646,000 $ 148,748,285 $ 5,102,285 $ Intergovernmental 879,635 1,602,000 1,938,204 336,204 Licenses and permits 1,864,000 2,301,000 2,668,048 367,048 Charges for services 8,330,000 8,624,000 9,135,341 511,341 Fines and forfeitures 706,000 500,000 539,537 39,537 Income from property and investments 4,323,000 5,515,000 6,343,468 828,468 Miscellaneous 940,000 1,000,000 1,505,358 505,358 Total revenues 159,708,635 163,188,000 170,878,241 7,690,241 Expenditures: Current: General government 41,821,064 46,936,060 26,233,606 (20,702,454) Less: interdepartmental charges (4,697,257) (4,347,000) (4,581,303) (234,303) Public safety 66,088,047 80,877,142 79,675,188 (1,201,954) Community services 49,917,481 50,570,461 45,038,586 (5,531,875) Public works 23,350,786 23,350,786 19,235,168 (4,115,618) Total expenditures 176,480,121 197,387,449 165,601,245 (31,786,204) Excess (deficiency) of revenues over (under) expenditures (16,771,486) (34,199,449) 5,276,996 39,476,445 Other financing sources (uses): Transfers in 10,000 10,000 270,000 260,000 Transfers out (13,203,101) (13,175,274) (13,175,274) - Total other financing sources (uses)(13,193,101) (13,165,274) (12,905,274) 260,000 Net change in fund balances (29,964,587) (47,364,723) (7,628,278) 39,736,445 $ Fund balance at beginning of year 179,053,454 179,053,454 179,053,454 Fund balance at end of year 149,088,867 $ 131,688,731 $ 171,425,176 $ The notes to the financial statements are an integral part of this statement. Budgeted Amounts For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - 69 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund (continued)For the Year Ended June 30, 2019 Actual Amounts (Budgetary Basis) Revenues Actual amounts (budgetary basis) “available for appropriation” from the budgetary comparison schedule (previous page).170,878,241 $ The recording of unrealized gains and losses on the city's investments are shown for financial reporting purposes (pursuant to GASB 31), but are not shown for budgetary purposes.3,299,581 174,177,822 $ Expenditures Actual amounts (budgetary basis) “total charges to appropriations” from the budgetary comparison schedule (previous page).165,601,245 $ Differences - budget to GAAP: Encumbrances are shown in the year encumbered for budgetary purposes, but in the year paid for financial reporting purposes.(10,951,573) 154,649,672 $ The notes to the financial statements are an integral part of this statement. BUDGET-TO-GAAP RECONCILIATION 70 This p a g e is intentionally left blank. 71 Statement of Net PositionProprietary FundsJune 30, 2019 Carlsbad Municipal Golf ASSETS Water District Course Wastewater Current assets: Cash and investments 139,285,492 $ 2,539,295 $ 49,553,965 $ Receivables: Interest 701,836 6,534 248,845 Taxes 41,356 - - Other - 274,904 - Accounts, net of allowances 7,084,637 2,423 2,140,267 Due from other governments 81,940 - 3,253,229 Inventories 606,056 197,377 14,161 Prepaid items 12,163 37,419 - Total current assets 147,813,480 3,057,952 55,210,467 Capital assets: Land 1,905,206 4,841,667 2,629,102 Construction in progress 12,000,927 - 34,141,899 Buildings and other structures 20,781,715 20,170,451 - Improvements other than buildings 2,322,549 42,820,657 7,134,824 Machinery and equipment 10,838,808 1,762,491 331,956 Infrastructure 233,490,265 - 116,891,043 Wastewater treatment facility - - 58,126,463 Intangible assets - - - Less accumulated depreciation (84,349,131) (36,727,419) (85,658,700) Total capital assets (net of accumulated depreciation)196,990,339 32,867,847 133,596,587 Total noncurrent assets 196,990,339 32,867,847 133,596,587 Total assets 344,803,819 35,925,799 188,807,054 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 312,768 - 19,886 Deferred outflows of resources - pension related items 2,147,837 - 899,924 Total deferred outflows of resources 2,460,605 - 919,810 The notes to the financial statements are an integral part of this statement. Business-Type Activities - 72 Governmental Enterprise Funds Activities - Non-Major Internal Solid Service Waste Totals Funds 14,403,554 $ 205,782,306 $ 49,102,860 $ 72,535 1,029,750 242,439 - 41,356 - 556,179 831,083 - 837,904 10,065,231 6,602 - 3,335,169 - - 817,594 458,057 - 49,582 184,106 15,870,172 221,952,071 49,994,064 - 9,375,975 - - 46,142,826 101,076 - 40,952,166 - - 52,278,030 - - 12,933,255 30,267,594 - 350,381,308 - - 58,126,463 - - - 1,689,637 - (206,735,250) (19,023,143) - 363,454,773 13,035,164 - 363,454,773 13,035,164 15,870,172 585,406,844 63,029,228 13,636 346,290 33,805 405,863 3,453,624 1,603,641 419,499 3,799,914 1,637,446 (continued) 73 Statement of Net PositionProprietary Funds (continued)June 30, 2019 Carlsbad Municipal Golf LIABILITIES Water District Course Wastewater Current liabilities: Accrued liabilities 2,267,623 650,280 797,668 Accrued interest payable 58,553 - - Due to other governments 7,068,734 - 6,015,587 Estimated claims payable - - - Current portion of long-term debt 1,582,886 - - Total current liabilities 10,977,796 650,280 6,813,255 Noncurrent liabilities: Deposits payable 117,279 449,967 4,872,008 Advance from other funds - 55,504,126 - Unearned revenue - - 10,000 Net OPEB liability 639,526 - 47,387 Net pension liability 5,872,114 - 2,638,181 Capital lease payable - - - Loans payable 15,243,719 - - Total noncurrent liabilities 21,872,638 55,954,093 7,567,576 Total liabilities 32,850,434 56,604,373 14,380,831 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 113,471 - 7,654 Deferred inflows of resources - pension related items 330,630 - 209,814 Total deferred inflows of resources 444,101 - 217,468 NET POSITION Net investment in capital assets 180,163,734 32,867,847 133,596,587 Restricted for: Capital assets 33,863,308 - 4,676,313 Unrestricted 99,942,847 (53,546,421) 36,855,665 Total net position (deficit)313,969,889 $ (20,678,574) $ 175,128,565 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. Net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities - 74 Governmental Enterprise Funds Activities - Non-Major Internal Solid Service Waste Totals Funds 1,133,361 4,848,932 5,770,209 - 58,553 - - 13,084,321 - - - 13,115,781 - 1,582,886 211,114 1,133,361 19,574,692 19,097,104 - 5,439,254 1,000 - 55,504,126 - 84,236 94,236 - 32,494 719,407 80,559 1,610,431 10,120,726 6,450,028 - - 147,952 - 15,243,719 - 1,727,161 87,121,468 6,679,539 2,860,522 106,696,160 25,776,643 5,248 126,373 13,011 96,561 637,005 584,570 101,809 763,378 597,581 - 346,628,168 12,676,098 - 38,539,621 - 13,327,340 96,579,431 25,616,352 13,327,340 $ 481,747,220 38,292,450 $ 929,773 482,676,993 $ 75 Statement of Revenues, Expenses and Changes in Net PositionProprietary FundsFor the Year Ended June 30, 2019 Carlsbad Municipal Golf Water District Course Wastewater Operating revenues: Water sales 45,716,221 $ -$ -$ Wastewater service charges - - 14,098,783 Golf course operations - 7,978,896 - Other charges for services 714,643 - - Miscellaneous 1,055,502 - 73,299 Total operating revenues 47,486,366 7,978,896 14,172,082 Operating expenses: Encina plant operations 2,016,462 - 6,986,919 Purchased water 24,128,850 - - Golf course operations - 7,507,062 - Depreciation 5,502,191 3,527,563 5,303,919 Fuel and supplies - - - Claims and premiums expense - - - Small equipment purchases - - - General and administrative 19,703,001 - 3,027,481 Total operating expenses 51,350,504 11,034,625 15,318,319 Operating income (loss)(3,864,138) (3,055,729) (1,146,237) Nonoperating revenues (expenses): Income from property and investments 5,377,760 117,407 1,739,031 Miscellaneous - 112,475 - Interest expense and fees (323,352) (61) - Gain (loss) on sale of property - - - Property taxes 4,002,341 - - Total nonoperating revenues (expenses)9,056,749 229,821 1,739,031 Income (loss) before transfers and capital contributions 5,192,611 (2,825,908) 592,794 Transfers in - - - Capital contributions: Capital restricted fees and grants 3,396,615 - 611,757 Developer constructed assets 581,013 - 274,608 Other - - - Change in net position 9,170,239 (2,825,908) 1,479,159 Total net position (deficit) at beginning of year, as restated 304,799,650 (17,852,666) 173,649,406 Total net position (deficit) at end of year 313,969,889 $ (20,678,574) $ 175,128,565 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. Changes in net position of business-type activities The notes to the financial statements are an integral part of this statement. Business-Type Activities - 76 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds -$ 45,716,221 $ -$ - 14,098,783 - - 7,978,896 - 3,440,551 4,155,194 21,864,820 131,444 1,260,245 422,084 3,571,995 73,209,339 22,286,904 - 9,003,381 - - 24,128,850 - - 7,507,062 - - 14,333,673 2,512,781 - - 1,403,148 - - 7,412,274 - - 1,786,335 3,828,187 26,558,669 11,816,224 3,828,187 81,531,635 24,930,762 (256,192) (8,322,296) (2,643,858) 550,001 7,784,199 1,585,203 - 112,475 - - (323,413) (28,158) - - 25,601 - 4,002,341 - 550,001 11,575,602 1,582,646 293,809 3,253,306 (1,061,212) 219,274 219,274 1,500,000 - 4,008,372 - - 855,621 - - - 451,769 513,083 8,336,573 890,557 12,814,257 37,401,893 13,327,340 $ 38,292,450 $ 103,976 8,440,549 $ Enterprise Funds 77 Statement of Cash FlowsProprietary FundsFor the Year Ended June 30, 2019 Carlsbad Municipal Golf Water District Course Wastewater Cash flows from operating activities: Receipts from customers and users 47,646,208 $ 8,151,568 $ 14,066,685 $ Payments to suppliers (37,155,840) (7,722,350) (3,390,440) Payments to employees (5,374,439) - (2,322,432) Internal activity - payments to other funds (2,973,636) - (1,244,941) Claims and premiums paid - - - Other receipts 75,657 - 766,304 Net cash provided (used) by operating activities 2,217,950 429,218 7,875,176 Cash flows from noncapital financing activities: Operating subsidies and transfers from other funds - - - Advances to other funds - (22,782) - Net cash provided (used) by capital and related financing activities - (22,782) - Cash flows from capital and related financing activities: Proceeds from capital debt 3,428,908 - - Capital restricted fees 1,251,894 - 611,757 Purchase of capital assets (4,465,491) (287,266) (7,645,070) Gross proceeds from the sale of capital assets - - - Principal paid on capital debt (1,546,234) - - Interest and other fees paid (330,090) (61) - Proceeds from state and local grants 2,144,721 - - Property taxes received 3,994,524 - - Net cash (used in) capital and related financing activities 4,478,232 (287,327) (7,033,313) Cash flows from investing activities: Interest on investments 5,235,663 115,668 1,696,700 Net increase (decrease) in cash and cash equivalents 11,931,845 234,777 2,538,563 Cash and cash equivalents at beginning of year 127,353,647 2,304,518 47,015,402 Cash and cash equivalents at end of year 139,285,492 $ 2,539,295 $ 49,553,965 $ The notes to the financial statements are an integral part of this statement. Business-Type Activities - 78 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds 3,491,968 $ 73,356,429 $ 21,882,278 $ (1,602,207) (49,870,837) (9,380,709) (1,526,212) (9,223,083) (5,628,284) (656,865) (4,875,442) (234,302) - - (4,894,656) 131,444 973,405 - (161,872) 10,360,472 1,744,327 219,274 219,274 1,500,000 - (22,782) - 219,274 196,492 1,500,000 - 3,428,908 - - 1,863,651 - - (12,397,827) (1,892,913) - - 25,601 - (1,546,234) (198,810) - (330,151) (28,158) - 2,144,721 - - 3,994,524 - - (2,842,408) (2,094,280) 538,216 7,586,247 1,550,039 595,618 15,300,803 2,700,086 13,807,936 190,481,503 46,402,774 14,403,554 $ 205,782,306 $ 49,102,860 $ (continued) Enterprise Funds 79 Statement of Cash FlowsProprietary Funds (continued)For the Year Ended June 30, 2019 Carlsbad Municipal Golf Water District Course Wastewater Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss)(3,864,138) $ (3,055,729) $ (1,146,237) $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,502,191 3,527,563 5,303,919 Other non-operating revenues and expenses - 112,475 - Change in assets and liabilities: (Increase) decrease in receivables 1,215,344 60,197 (32,097) (Increase) decrease in due from other governments 269,120 - 1,056,979 (Increase) decrease in deposits - 2,012 (799,920) (Increase) decrease in inventories 3,835 (10,684) (2,215) (Increase) decrease in prepaid items 11,718 (12,969) - (Increase) decrease in deferred outflows - OPEB related items 14,115 - (3,930) (Increase) decrease in deferred outflows - pension related items 1,151,292 - 476,577 (Decrease) increase in accrued liabilities 285,066 115,580 59,861 (Decrease) increase in due to other governments 329,150 - 3,275,893 (Decrease) increase in estimated claims payable - - - (Decrease) increase in deposits payable (29,860) (309,227) 693,005 (Decrease) increase in unearned revenue - - - (Decrease) increase in net OPEB liability (260,951) - (155) (Decrease) increase in net pension liability (2,455,523) - (1,036,974) (Decrease) increase in deferred inflows - OPEB related items 5,718 - 358 (Decrease) increase in deferred inflows - pension related items 40,873 - 30,113 Net cash provided by operating activities 2,217,950 $ 429,218 $ 7,875,177 $ Noncash capital financing activities: Capital assets contributed by other sources 581,013 $ -$ 274,608 $ The notes to the financial statements are an integral part of this statement. Business-Type Activities - 80 Governmental Activities - Non-Major Internal Solid Waste Totals Service Funds (256,192) $ (8,322,296) $ (2,643,858) $ - 14,333,673 2,512,781 - 112,475 (30,148) (1,264) 1,242,180 4,922 - 1,326,099 - - (797,908) - - (9,064) (61,635) - (1,251) (184,106) (2,695) 7,490 (6,680) 205,954 1,833,823 730,581 169,906 630,413 548,911 - 3,605,043 - - - 2,250,350 - 353,918 - 52,681 52,681 - (107) (261,213) (264) (364,583) (3,857,080) (1,460,210) 245 6,321 607 34,183 105,169 83,076 (161,872) $ 10,360,473 $ 1,744,327 $ -$ 855,621 $ 451,769 $ Enterprise Funds 81 Statement of Net PositionFiduciary FundsJune 30, 2019 Agency Private Purpose ASSETS Funds Trust Funds Current assets: Cash and investments 20,968,099 $ 1,289,292 $ Receivables: Interest 135,405 18,837 Taxes 4,464 - Other 22,406 - Total current assets 21,130,374 1,308,129 Noncurrent assets: Loans receivable - 3,750,000 Restricted assets: Cash and investments 4,460,404 - Total noncurrent assets 4,460,404 3,750,000 Total assets 25,590,778 $ 5,058,129 $ LIABILITIES Current liabilities: Accrued liabilities 1,365,302 $ 2,598 $ Accrued interest payable - 79,718 Deposits held for others 24,225,476 - Current portion of long-term debt - 815,000 Total current liabilities 25,590,778 897,316 Noncurrent liabilities: Due to the City of Carlsbad - 7,255,238 Tax allocation bonds payable - 3,705,000 Total noncurrent liabilities - 10,960,238 Total liabilities 25,590,778 11,857,554 NET POSITION Held in trust for redevelopment obligation retirement purposes -$ (6,799,425) $ The notes to the financial statements are an integral part of this statement. 82 Statement of Changes in Net PositionFiduciary FundsFor the Fiscal Year Ended June 30, 2019 Private Pupose ADDITIONS Trust Funds Contributions: Tax increment 3,637,680 $ Income from property and investments 87,708 Total additions 3,725,388 DEDUCTIONS General and administrative 132,937 Community development 492,876 Interest expense and fees 368,753 Total deductions 994,566 Change in net position 2,730,822 Total net position (deficit) at beginning of year (9,530,247) Total net position (deficit) at end of year (6,799,425) $ The notes to the financial statements are an integral part of this statement. 83 Notes to the Financial Statements 84 Note 1. Summary of Significant Accounting Policies The City of Carlsbad, California (“city”), was incorporated on July 16, 1952. The city was a general law city until 2008, when the citizens in Carlsbad voted and approved the city to become a charter city. The city operates under a Council-Manager form of government and provides the following services: general government, public safety, community services and public works. The accounting policies of the city and its component units conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The following is a summary of the more significant policies: Description and scope of the reporting entity As required by accounting principles generally accepted in the United States of America, these financial statements present the financial position of the city and its component units, entities for which the city is considered to be financially accountable. The city is considered to be financially accountable for an organization if the city appoints a voting majority of that organization’s governing body and the city is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the city. The city is also considered to be financially accountable for an organization if that organization is fiscally dependent upon the city (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the city). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the city are such that their exclusion would cause the city’s financial statements to be misleading or incomplete. Based upon the above criteria, the component units of the city are the Housing Authority of the City of Carlsbad, the City of Carlsbad Public Improvement Corporation, the Carlsbad Public Financing Authority and the Carlsbad Municipal Water District (CMWD). The city does not issue separate financial statements for these component units. Since the City Council serves as the governing board for these component units and there is either a financial benefit/burden relationship between the component unit and city or the management of the city has the operational responsibility for the component unit, all of the city’s component units are considered to be blended component units. Blended component units, although legally separate entities, are in substance part of the city’s operations, and so data from these units is reported with the interfund data of the primary government. Government-wide and Fund Financial Statements The Government-wide Financial Statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the city and its blended component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on user fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable to a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly classified as program revenues are reported as general revenues. Notes to the Financial Statements 85 Note 1. Summary of Significant Accounting Policies (continued) Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the Government-wide Financial Statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the Fund Financial Statements. Measurement focus, basis of accounting, and financial statement presentation The Government-wide Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Private Purpose Trust Fund Financial Statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the individual programs are used as guidance. Property taxes are recognized as revenues in the year for which they are levied. Governmental Fund Financial Statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting, as long as the expenditure reflects a near-term cash outflow. Principal and interest on long-term debt are recorded as fund liabilities when due. Revenues that are accrued generally include real property taxes, sales tax, transient occupancy taxes (TOT), franchise taxes, highway users tax, interest, and some state and federal grants. Real property taxes are levied on October 15 against property owners of record on January 1 of that year. The taxes are due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Tax liens attach annually as of 12:01 a.m. on the first day of January in the fiscal year for which the taxes are levied. Under the provisions of NCGA (National Council on Government Accounting) Interpretation 3, property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Agency funds, which are a type of fiduciary funds, are custodial in nature (assets equal liabilities) and do not involve the recording of city revenues and expenses. Since revenues and expenses are not recognized, agency funds have no measurement focus, however, assets and liabilities are accounted for on the accrual basis of accounting. The city reports the following major governmental funds: • The General Fund is the city’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. • The Community Facilities District (CFD) No. 1 capital project fund is used to account for the receipt of taxes and fees charged to developers that are restricted for civic facilities, parks, and road segments. • The General Capital Construction (GCC) capital project fund is used to account for transfers from the General Fund and expenditures for various capital projects not financed through another capital project fund. • The Infrastructure Replacement (IRF) capital project fund is used to account for transfers from the General Fund and expenditures for the replacement of major infrastructure throughout the city. Notes to the Financial Statements 86 Note 1. Summary of Significant Accounting Policies (continued) • The Park Development Fund capital project funds are used to account for receipts of fees charged to developers for park acquisition and development. • The Public Facilities Construction (PFF) capital project fund is used to account for the receipt of fees charged to developers, and expenditures that are restricted for specific public facilities such as parks and fire stations necessitated by growth. The city reports the following major enterprise funds: • The Carlsbad Municipal Water District (CMWD) enterprise funds are used to account for the operation, maintenance, and capital facility financing of the city’s potable and recycled water systems. • The Golf Course enterprise fund is used to account for revenues and expenses for the construction, maintenance and operating activities of the city’s municipal golf course. • The Wastewater enterprise funds are used to account for the operation, maintenance, and capital facility financing of the city’s wastewater system. • The Solid Waste enterprise funds are used to account for the revenues and expenses of the city’s solid waste source-reduction, recycling and storm water programs. Additionally, the city reports the following fund types: • Internal Service funds account for fleet maintenance and replacement, self-insured benefits, information technology, risk management and workers’ compensation services provided to other departments or agencies of the city. • The Agency funds account for assets held by the city for other governments or individuals. These funds include contractors’ deposits for future development, miscellaneous deposits, as well as debt service transactions on assessment district bonds for which the city is not obligated. • The Trust funds account for the activities of the Redevelopment Obligation Retirement Funds, which accummulates resources for obligations previously incured by the former City of Carlsbad Redevelopment Agency (RDA). As a general rule, the effect of interfund activity has been eliminated from the Government-wide Financial Statements. An exception to this general rule are the charges between CMWD and various other functions of the city. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the city’s proprietary funds are charges to customers for sales and services. The city also recognizes new account charges, late fees and contributions from other agencies as operating revenues. Operating expenses for enterprise and internal service funds include the cost of sales and services, general and administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the city’s policy to use restricted resources first, then unrestricted resources as they are needed. When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, restricted revenue will be applied first. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the policy is to apply committed fund balance first, then assigned fund balance and finally unassigned fund balance. Notes to the Financial Statements 87 Note 1. Summary of Significant Accounting Policies (continued) Cash and investments Cash includes amounts in demand and time deposits. Investments are reported in the accompanying balance sheet at fair value, except for certain investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as income from property and investments reported for that fiscal year. Income from property and investments includes interest earnings; changes in fair value; any gains or losses realized upon the liquidation, maturity, or sale of investments; property rentals and the sale of city owned property. The city pools cash and investments of all funds, except for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds on a monthly basis, based on each fund’s average cash and investments balance. Restricted cash and investments represent amounts that are restricted under the terms of debt agreements. Inventories Inventories consist of materials and supplies that are valued at cost and are recorded as expenses or expenditures on a first-in, first-out basis when consumed. Compensated absences Compensated absences are comprised of vacation payable for all city employees, banked overtime (comp time) and vested sick benefits for certain former district employees. Vacation pay and comp time are payable to employees at the time used or upon termination of employment. For governmental funds, the cost of accumulated vacation and comp time expected to be paid in the next 12 months is recorded as a liability in the Self-Insured Benefits internal service fund. Since the city caps the amount of vacation and comp time employees are allowed to have on the books at any point in time, for compensated absences recorded at June 30, 2019, all balances are expected to be paid within the following 12 months. For proprietary funds, the cost of vacation and comp time is recorded as a liability when earned. Risk management The city accounts for its general liability and workers’ compensation activities in internal service funds. The funds are responsible for collecting premiums from other city funds and departments and paying claims, settlements and insurance premiums. Interfund premiums are based on the insured fund’s claims experience. Incurred but not reported claims are accrued at year-end, if material. Unbilled services Unbilled water, wastewater and solid waste revenues of the enterprise funds are recognized as earned when the services are used. Notes to the Financial Statements 88 Note 1. Summary of Significant Accounting Policies (continued) Capital assets Capital assets, which include land (including right-of-way), buildings, equipment and infrastructure assets (e.g., roads, bridges, traffic signals, water and wastewater systems, and similar items), are reported in the applicable governmental or business-type activities columns in the Government-wide Financial Statements. Capital assets are defined by the city as machinery and equipment and capital construction with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year; and intangible assets such as computer software with an initial cost of more than $100,000, and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of an asset or materially extend an asset’s useful life are not capitalized. Construction in progress costs are transferred to their respective capital asset category upon completion. Depreciation is charged to operations using the straight-line method based on the estimated useful life of an asset. The estimated useful lives of depreciable assets are as follows: Years Buildings and other structures 10 – 50 Improvements other than buildings 10 – 50 Machinery and equipment 3 – 20 Infrastructure 10 – 100 Wastewater treatment facility (including equipment) Intangible assets 5 – 75 5 – 10 The city has capitalized all general infrastructure assets acquired or constructed. In addition the land upon which the streets and roads are constructed (right-of-way) has also been valued and capitalized. Unearned revenue The unearned revenue reported in the city’s financial statements represents money received during the current or previous fiscal years that has not been earned by the city as of the end of the fiscal year. These monies will be recognized as revenues in subsequent fiscal years, once the revenue has been earned. Deferred outflows In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The city has pension-related and other postemployment benefits related items in this category. Deferred inflows In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The city has two types of items that qualify for reporting in this category. Notes to the Financial Statements 89 Note 1. Summary of Significant Accounting Policies (continued) The first item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: interest on advances and grants. This amount is deferred and recognized as an inflow of resources in the period that the amount becomes available. The second item, deferred inflows of resources, is reported in the proprietary funds balance sheet and the Statement of Net Position. The city has pension related and other postemployment benefits related items in this category. Interfund transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (short-term interfund loans), “advances to/from other funds” (long-term interfund loans) or “due from Successor Agency” (long-term trust fund loan). Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-wide Financial Statements as “internal balances.” The portion of fund balance associated with amounts that have been disbursed to other funds in the form of long- term interfund advances have been classified as nonspendable unless the funds associated with repayment of the advance are otherwise restricted for a specific purpose. Receivables and payables All trade, service and tax receivables are shown net of an allowance for uncollectibles. The utility billing receivable allowance is equal to two percent of outstanding billings at June 30, 2019, the ambulance billing receivable allowance is equal to 40 percent of outstanding billings at June 30, 2019, and the trade and false alarm receivable allowance is equal to the total of all outstanding receivables that are over 90 days past due plus 30 percent of all remaining balances. The only exceptions to these rules are receivables that were subsequently paid or were known to be collectible at year-end, which were not reserved for at June 30, 2019, and any receivables due from other public agencies. Loan and reimbursement receivable The accompanying financial statements reflect the recording of certain loans receivable that represent loans made to various organizations and individuals. In certain cases, the amount of collection is dependent upon future residual receipts to be generated by the property or contingent upon the ability of the owner to sell the property at an amount sufficient to pay all liens against the property, including the obligation to the city. All loan and reimbursement receivables are shown net of an allowance for uncollectibles. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Unexpended and unencumbered appropriations lapse at fiscal year-end unless City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year. Notes to the Financial Statements 90 Note 1. Summary of Significant Accounting Policies (continued) Net position Net position represents the differences between assets and deferred outflows, and liabilities and deferred inflows. Net investment in capital assets, consist of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings, used for the acquisition, construction or improvement of those assets. Net investment in capital assets excludes unspent debt proceeds. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the city or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. It is the city’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. Cash flows Statements of cash flows are presented for proprietary fund types. Cash and cash equivalents include all unrestricted and restricted highly liquid investments with original purchase maturities of three months or less. Pooled cash and investments in the city’s Treasury represent monies in a cash management pool and such accounts are similar in nature to demand deposits. Long-term obligations In the Government-wide Financial Statements, and proprietary fund types in the Fund Financial Statements, long- term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Pensions For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the city’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For this report, the following timeframes are used: Valuation Date (VD) June 30, 2017 Measurement Date (MD) June 30, 2018 Measurement Period (MP) July 1, 2017 to June 30, 2018 Other Postemployment Benefits (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the city’s plan (OPEB Plan), the assets of which are held by the California Employers’ Retiree Benefit Trust (CERBT), and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. Notes to the Financial Statements 91 Note 1. Summary of Significant Accounting Policies (continued) Generally accepted accounting principles require that the reported results must pertain to liability and fiduciary net position information within certain defined timeframes. For this report, the following timeframes are used: Valuation Date (VD) June 30, 2017 Measurement Date (MD) June 30, 2018 Measurement Period (MP) July 1, 2017 to June 30, 2018 Fair Value Measurements Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies including: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are inactive; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the city’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the city’s own data. Note 2. Budgetary Data The city follows these procedures in establishing its budgetary data: • During May or June, the city manager submits to the City Council a proposed operating and capital budget for the fiscal year commencing the following July 1. The budget includes estimated revenues and proposed expenditures on a departmental and/or project basis. • A public hearing is conducted at a City Council meeting to obtain citizens’ comments during June. • Prior to July 1, the budget is enacted legally through passage of an appropriation resolution. The city manager is authorized to make transfers of appropriated amounts from one department to another within a fund. The legal level of budgetary control is at the fund level. Revisions that alter the total appropriations of any fund must be approved by the City Council with the exception of budget adjustments that involve offsetting revenues and expenditures, and increases in General Liability and Workers’ Compensation Fund claims expenses. The city manager is authorized to increase or decrease an appropriation for a specific purpose where the appropriation is Notes to the Financial Statements 92 Note 2. Budgetary Data (continued) offset by unbudgeted revenue, which is designated for said specific purpose. Monthly reports are provided to the City Council during the year, and any changes to the adopted budget are approved by the City Council as necessary. During the year, several supplementary appropriations were necessary. Budgets for governmental type funds are adopted on the modified accrual basis except that encumbrances are treated as budgeted expenditures in the year purchases are committed. Expenditures may not exceed budgeted appropriations at the fund level. All appropriations lapse at fiscal year-end unless City Council takes action in the form of a resolution to continue the appropriation into the following fiscal year or if the appropriation is less than $100,000, the city manager may approve to continue the appropriation into the following fiscal year. For purposes of budgetary presentation, actual revenues have been adjusted to exclude unrealized gains and losses pursuant to GASB. Actual expenditures have been adjusted to include encumbrances outstanding. Annual budgets are adopted for the General Fund, special revenue funds except for the Tyler Court Apartments Fund, and a portion of the Parking-in-Lieu Capital Project Fund (Grants and Other Capital Project Funds). Accordingly, the revenues and expenditures for the Tyler Court Apartments Fund have been excluded from the budget basis financial statements. Annual operating budgets are not adopted for the capital projects funds except for the Parking-in-Lieu Fund; therefore, budget basis financial statements have not been prepared because a comparison of such budgetary amounts to annual revenues and expenditures is not meaningful. Note 3. Deposit and Investment Risk Cash resources of the individual funds are combined to form a pool of cash and investments. The city maintains a formal Investment Policy Statement (IPS), which is reviewed by the Investment Review Committee and adopted annually by the City Council. All investments held in the Treasurer’s Pool are consistent with the city’s IPS objectives of safety of principal, adequacy of liquidity, and achievement of an average market rate of return. The risk disclosures below apply to the city’s internal investment pool. Portfolio investments are exposed to five types of risk: custodial (investments and cash deposits), concentration, default, event, and market or interest rate risk. The city and its agencies invest a portion of the funds in an external investment pool known as the Local Agency Investment Fund (LAIF). Management and oversight are the responsibility of the California State Treasurer. As of June 30, 2019, the LAIF performance report shows a fair value factor of 1.001711790. The city’s position in the LAIF pool is calculated as a percentage of the fair value of the city’s shares to the fair value of the pooled shares. Investments held outside the Treasurer’s Pool consist mainly of required reserve funds for various bond issues. They are held by trustees, and are not available for the city’s general expenditures. Notes to the Financial Statements 93 Note 3. Deposit and Investment Risk (continued) As of June 30, 2019, the city had the following investments in its portfolio: Fair Market % of Modified Treasurer's Pool investments Value Total Duration U.S. agencies: United States Treasury Bills & Notes 80,311,926 $ 10.1%1.762 Federal Home Loan Mortgage Corporation 111,159,182 14.0%2.272 Federal National Mortgage Association 59,627,582 7.5%1.152 Federal Home Loan Bank 97,406,322 12.2%2.299 Federal Farm Credit Bank 83,848,917 10.5%2.248 Federal Agricultural Corporation 15,402,236 1.9%2.437 Supranational 19,773,613 2.5%2.822 Refunding Corporation 8,162,037 1.0%1.763 Financing Corporation 5,271,804 0.7%0.237 Tennessee Valley Authority 7,299,840 0.9%1.056 RFCO Strip Principal 2,922,810 0.4%1.280 Subtotal U.S. agencies 491,186,269 61.7%2.129 Corporate notes: Medium-term corporate notes 163,972,281 20.6%2.159 Subtotal corporate notes 163,972,281 20.6%2.159 LAIF 114,066,817 14.3%- Certificates of deposit 18,814,466 2.4%1.803 Cash accounts 8,085,527 1.0%- Total Treasurer’s Pool 796,125,360 100.0%1.815 Investments held outside the Treasurer’s Pool Money market funds 4,625,347 Guaranteed investment contracts 1,292,770 Subtotal debt service funds/bond proceeds 5,918,117 Other deposits 1,723,887 Petty cash funds 10,405 Total cash and investments 803,777,769 $ Statement of Net Position, Primary Government Cash and investments 777,059,974 $ Statement of Net Position, Fiduciary Funds Cash and investments 22,257,391 Restricted cash and investments 4,460,404 Total cash and investments 803,777,769 $ Notes to the Financial Statements 94 Note 3. Deposit and Investment Risk (continued) Fair Value Measurement The city categorizes its fair value investments within the fair value hierarchy established by generally accepted accounting principles. The city has the following recurring fair value measurements as of June 30, 2019: Level 1 Level 2 Level 3 Total U.S. Treasury Bills & Notes 80,311,926 $ -$ -$ 80,311,926 $ Refunding Corporation - 8,162,037 - 8,162,037 Federal Agency securities - 402,712,306 - 402,712,306 Medium-term corporate notes - 163,972,281 - 163,972,281 Certificates of Deposit - 18,814,466 - 18,814,466 Total Investments Reported at Fair Value 80,311,926 593,661,090 - 673,973,016 Cash accounts - - - 8,085,527 LAIF - - - 114,066,817 Money market funds - - - 4,625,347 Guaranteed investment contracts - - - 1,292,770 Other deposits - - - 1,723,887 Petty cash funds - - - 10,405 Total cash and investments 80,311,926 $ 593,661,090 $ -$ 803,777,769 $ Fair Value Hierarchy Custodial credit risk (investments) The city uses a third-party bank for its custody and safekeeping service for its investment securities. Custodial credit risk is the risk that the city will not be able to recover the value of its investments in the event of the custodian’s failure. All city investments held in custody and safekeeping are held in the name of the city and are segregated from securities owned by the bank. This is the lowest level of custodial credit risk exposure. Investments are settled on Delivery vs. Payment (DVP) in accordance with the third party custodial agreement. Custodial credit risk (deposits) The city maintains cash accounts at one major banking institution. At the conclusion of each business day, balances in these accounts are “swept” into overnight pooled investments, which are pooled into funds collateralized with U.S. government securities (guaranteed) or U.S. agency securities (government-sponsored). The California Code authorizes both of these types of investments. Amounts up to $250,000 are Federal Deposit Insurance Corporation (FDIC) insured. All funds in non-interest-bearing transaction accounts are fully insured under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Concentration credit risk Concentration credit risk is the heightened risk of potential loss when investments are concentrated in one issuer. The California state code requires that total investments in medium-term corporate notes of all issuers not exceed 30 percent of the portfolio. Notes to the Financial Statements 95 Note 3. Deposit and Investment Risk (continued) For concentration of investments, the city’s IPS requires that no more than five percent of investments in corporate notes be in any one issuer. There is no similar requirement in either the state code or the city’s IPS for U.S. agencies. As of June 30, 2019, the portfolio was in compliance with this requirement. Default credit risk Default credit risk is the risk that the issuer of the security does not pay either the interest or principal when due. Debts of most U.S. agencies are not backed by the full faith and credit of the federal government. These agencies are U.S. government-sponsored. In August 2011, Standard and Poor’s Investor’s Service downgraded U.S. long term debt one step to AA+. Competing agencies, Moody’s Investors Service and Fitch Ratings, maintained their AAA rating on U.S. debt. Although the default credit risk of these investments has increased, the city believes the risk of default remains low. California state code limits investments in medium-term corporate notes to the top three credit ratings (AAA, AA, and A). However, it is the city’s policy to limit investments to the top two credit ratings (AAA and AA). As of June 30, 2019, approximately 9.09 percent of the investments in medium-term corporate notes did not have one of these two credit ratings. These investments were made when the credit ratings were AA or higher. California state code and the city’s IPS allow the city treasurer to determine the course of action to correct exceptions to the IPS. It is the intent of the city treasurer to hold these investments in the portfolio until maturity unless events indicate they should be sold. The default credit risk for corporate notes with a credit rating of single A is considered by the city treasurer to be within acceptable limits for purposes of holding to maturity. A credit rating of single A is within state code purchase requirements. The LAIF is an external investment pool managed by the California State Treasurer. Its investments are short-term and follow the investment requirements of the State. LAIF is not rated; however, the city treasurer considers the default credit risk of LAIF to be minimal. Money market funds held by bond trustees are rated AAA. Investment contracts held by bond trustees are not rated by rating agencies. The table below is the minimum rating (where applicable) of the California state code, the city’s investment policy, or debt agreements, and the actual rating at June 30, 2019 for each investment type by Standard & Poor’s Investor’s Service: Minimum Exempt Rating as of Year End Legal from Not Investment Type Total Rating Disclosure AAA AA A Rated Treasury securities 80,311,926$ N/A 80,311,926$ -$ -$ -$ -$ Federal agency securities 410,874,343 N/A - - 410,874,343 - - Medium term notes 163,972,281 AA - 23,284,222 121,780,920 18,907,139 - Local Agency Investment Fund (LAIF)114,066,817 N/A - - - - 114,066,817 Certificates of deposit 18,814,466 N/A - - - - 18,814,466 Cash accounts 8,085,527 N/A - - - - 8,085,527 Other deposits 1,723,887 N/A - - - - 1,723,887 Petty cash funds 10,405 N/A - - - - 10,405 Investments with fiscal agent Money market funds 4,625,347 AA-m - 4,625,347 - - - Guaranteed investment contracts 1,292,770 N/A - - - - 1,292,770 803,777,769$ 80,311,926$ 27,909,569$ 532,655,263$ 18,907,139$ 143,993,872$ Notes to the Financial Statements 96 Note 3. Deposit and Investment Risk (continued) Interest rate risk Interest rate risk is the risk that investments will lose market value because of increases in market interest rates. A rise in market interest rates will cause the market value of investments made earlier at lower interest rates to lose value. The reverse will cause a gain in market value. As of June 30, 2019, the portfolio had a 0.40 percent gain in market value based on cost. The city’s IPS has adopted two means of limiting its exposure to market value losses caused by rising market interest rates: (1) limiting total portfolio investments to a maximum modified duration of 2.2; and (2) requiring liquid investments (LAIF and bank accounts) and investments maturing within one year to be equal to an amount that is not less than two-thirds of the current fiscal year’s operating budget. The city met those requirements as follows: 1. As of June 30, 2019, the modified duration of the portfolio was 1.815. Modified duration is a prospective measure of the sensitivity of a fixed-income security’s value to changes in market rates of interest. Modified duration identifies the potential gain/loss in value before it actually occurs. For example, a modified duration of 1.5 indicates that when and if a one percent change in market interest rates occurs, a 1.5 percent change in the security’s value will result. Investments with modified durations of one to three are considered to be relatively conservative. 2. As of June 30, 2019, maturities within one year exceeded the required minimum of $184,078,000 (two- thirds of current year operating budget for the city per the Fiscal Year 2018-19 Operating Budget adopted by the City Council). 3. As of June 30, 2019, the weighted average maturity of the LAIF underlying debt securities was 173 days. As of June 30, 2019, LAIF had a 0.1709 percent gain in market value. 4. As of June 30, 2019, the city’s investment portfolio included $20,205,000 of callable step-up notes at par. Note 4. Due To and From Other Funds The following table shows amounts due from funds within the city to other funds within the city at June 30, 2019. Due to Due from Other Funds Other Funds General Fund -$ 270,083 $ Other Governmental Funds: Community Development Block Grant 270,083 - Totals 270,083 $ 270,083 $ Notes to the Financial Statements 97 Note 5. Advances To and From Other Funds The following table shows amounts advanced from governmental funds within the city to other funds within the city at June 30, 2019: Advances To Amount General Fund Other Governmental Funds: Habitat Mitigation 169,600$ (1) General Fund Enterprise Funds: Golf Course 55,504,126 (2) Other Governmental Funds:Other Governmental Funds: CFD No. 1 Traffic Impact Projects 1,943,710 (3) Public Facilities Construction Park Development 5,650,000 (4) 63,267,436$ General Fund Fiduciary Funds: Redevelopment Obligation Retirement Trust Funds 7,255,238$ (5) Advances From Advances to and from other funds are primarily long term advances used to fund capital projects in advance of related revenues. (1) The advance between the General Fund and the Habitat & Agricultural Management Fund is estimated to be repaid from future Habitat Mitigation Fees. Interest on the advance will compound annually at the average interest rate earned by the Treasurer’s Pool during the fiscal year. (2) The advance between the General Fund and the Golf Course Enterprise Fund is estimated to be repaid through residual operating income from golf course operations. (3) The advance between the CFD No. 1 Fund and the Traffic Impact Projects Fund is estimated to be repaid over a 10-15 year period as Traffic Impact Fees are collected. (4) The advance between the PFF Fund and the Park Development Funds is estimated to be repaid at build-out. (5) The obligation of the Redevelopment Obligation Retirement Trust Funds represents the obligations of the custodian of the assets and liabilities of the former redevelopment agency (the Successor Agency) and is presented in the accompanying financial statements as Due from Successor Agency. Interest on the obligation will compound annually at three percent per Health and Safety Code Section 34191.4 which was amended by Senate Bill No. 107. Senate Bill No. 107 went into effect in September 2015. Notes to the Financial Statements 98 Note 6. Capital Assets Capital asset activity was as follows for the year ended June 30, 2019: Balance at Balance at June 30, 2018 Increases Decreases June 30, 2019 Governmental activities: Capital assets, not being depreciated: Land (including right-of-way)153,172,352$ 508,183$ -$ 153,680,535$ Construction in progress 10,042,054 8,213,289 (1,502,691) 16,752,652 Total capital assets, not being depreciated 163,214,406 8,721,472 (1,502,691) 170,433,187 Capital assets, being depreciated: Buildings 135,956,852 484,431 - 136,441,283 Improvements, other than buildings 81,453,044 2,880,899 - 84,333,943 Machinery and equipment 43,364,968 3,877,905 (1,204,131) 46,038,742 Infrastructure 721,892,857 4,288,155 - 726,181,012 Intangible assets 5,017,448 - - 5,017,448 Total capital assets, being depreciated 987,685,169 11,531,390 (1,204,131) 998,012,428 Less accumulated depreciation for: Buildings (40,084,330) (2,906,625) - (42,990,955) Improvements, other than buildings (30,896,443) (3,282,576) - (34,179,019) Machinery and equipment (26,617,510) (3,120,920) 1,179,131 (28,559,299) Infrastructure (256,625,450) (15,160,298) - (271,785,748) Intangible assets (2,998,616) (588,874) - (3,587,490) Total accumulated depreciation (357,222,349) (25,059,293) 1,179,131 (381,102,511) Total capital assets being depreciated, net 630,462,820 (13,527,903) (25,000) 616,909,917 Governmental activities capital assets, net 793,677,226$ (4,806,431)$ (1,527,691)$ 787,343,104$ Notes to the Financial Statements 99 Note 6. Capital Assets (continued) Balance at Balance at June 30, 2018 Increases Decreases June 30, 2019 Business-type activities: Capital assets, not being depreciated: Land (including right-of-way)9,375,975$ -$ -$ 9,375,975$ Construction in progress 41,621,369 4,521,457 - 46,142,826 Total capital assets, not being depreciated 50,997,344 4,521,457 - 55,518,801 Capital assets, being depreciated: Buildings 40,933,226 18,940 - 40,952,166 Improvements, other than buildings 52,278,030 - - 52,278,030 Machinery and equipment 12,648,604 284,651 - 12,933,255 Infrastructure 342,229,972 8,151,336 - 350,381,308 Wastewater treatment facility 57,806,075 320,388 - 58,126,463 Total capital assets, being depreciated 505,895,907 8,775,315 - 514,671,222 Less accumulated depreciation for: Buildings (10,433,757) (893,718) - (11,327,475) Improvements, other than buildings (34,509,916) (3,248,707) - (37,758,623) Machinery and equipment (1,835,648) (625,554) - (2,461,202) Infrastructure (108,974,787) (6,810,748) - (115,785,535) Wastewater treatment facility (36,647,469) (2,754,946) - (39,402,415) Total accumulated depreciation (192,401,577) (14,333,673) - (206,735,250) Total capital assets being depreciated, net 313,494,330 (5,558,358) - 307,935,972 Business-type activities capital assets, net 364,491,674$ (1,036,901)$ -$ 363,454,773$ Notes to the Financial Statements 100 Note 6. Capital Assets (continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government 1,229,434$ Public safety 1,353,967 Community services 4,480,759 Public works 15,482,352 Capital assets held by the internal service funds (charged to various functions based on their usage of the assets)2,512,781 Total depreciation expense - governmental activities 25,059,293$ Business-type activities: Carlsbad Municipal Water District 5,502,191$ Wastewater 5,303,919 Golf course 3,527,563 Total depreciation expense - business-type activities 14,333,673$ Note 7. Long-term Debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2019: Principal Principal Balance at Balance at Due Within July 1, 2018 Increases Decreases June 30, 2019 One Year Governmental activities: Obligations under capital lease 587,581 $ -$ 209,286 $ 378,295 $ 222,373 $ Total governmental activities 587,581 $ -$ 209,286 $ 378,295 $ 222,373 $ Principal Principal Balance at Balance at Due Within July 1, 2018 Increases Decreases June 30, 2019 One Year Business-type activities: Loans payable 14,943,931 $ 3,428,908 $ 1,546,234 $ 16,826,605 $ 1,582,886 $ Total business type activities 14,943,931 $ 3,428,908 $ 1,546,234 $ 16,826,605 $ 1,582,886 $ Notes to the Financial Statements 101 Note 7. Long-term Debt (continued) Long-term debt at June 30, 2019 is comprised of the following issues: Balance at Governmental long-term debt June 30, 2019 The city has entered into several office equipment lease-purchase agreements. As of June 30, 2019 the city has not purchased any of the copier equipment. All lease terms are for 60 months, with interest rates ranging from 6.0% to 7.2%.378,295 $ Sub-total governmental long-term debt 378,295 Less current portion (222,373) Total long-term portion of governmental debt 155,922 $ Balance at Business-type long-term debt June 30, 2019 2005 Carlsbad Municipal Water District loan agreement with the State Water Resources Control Board totaling $9,694,504. Principal is due in varying amounts ranging from $557,785 to $631,082 on June 1 of each year through 2025, interest payable on June 1 each year at 2.5% per annum. Payable from recycled water user fees.3,562,982$ 2006 Carlsbad Municipal Water District loan agreement with the State Water Resources Control Board totaling $19,382,546. Principal is due in varying amounts ranging from $1,025,101 to $1,201,977 on April 1 of each year through 2027, interest payable on April 1 of each year at 2.3% per annum. Payable from recycled water user fees. 8,892,233 2014 Carlsbad Municipal Water District loan agreement, as revised, with the State Water Resources Control Board authorized to $22,150,000. Principal and interest will not be due until December 2021. Interest is payable on December 31 of each year at 1.0% per anum. Principal due under the current amortiztion schedule ranges from $126,795 to $169,208. Payable from recycled water user fees.4,371,390 Subtotal business-type long-term debt 16,826,605 Less current portion (1,582,886) Total long-term portion of business-type debt 15,243,719 $ Notes to the Financial Statements 102 Note 7. Long-term Debt (continued) The aggregate maturities of long-term debt are as follows: Year ended June 30:Principal Interest 2020 222,373 $ 16,877 $ 2021 155,922 3,578 378,295 $ 20,455 $ Year ended June 30:Principal Interest 2020 1,582,886 $ 293,595 $ 2021 1,620,408 256,074 2022 1,784,490 261,767 2023 1,825,072 221,174 2024 1,866,600 179,634 2025-2029 4,817,012 367,299 2030-2034 694,154 154,130 2035-2039 729,563 118,404 2040-2044 766,778 80,856 2045-2049 805,891 41,392 2050-2051 333,751 5,059 16,826,605 $ 1,979,384 $ Business-type Activities Governmental Activities The aggregate maturities for the business-type activities reflect a recent $4,371,390 state water loan. The city is currently drawing down loan proceeds from an authorized $22.1 million for the expansion of the recycled water facility. The loan amount will continue to adjust as future draws are made. Note 8. Rate Covenants and Pledged Revenue Rate covenants The CMWD loan agreements with the State Water Resources Control Board requires that CMWD set its charges for services and rates for fees each year at rates sufficient to produce net revenues (after paying the operating and maintenance expenses of CMWD, excluding depreciation) of at least one times debt service for that year. All of the revenues of CMWD are pledged to meet these rate covenants and to secure related debt. All rate covenants requirements were met for the fiscal year ended June 30, 2019. Notes to the Financial Statements 103 Note 8. Rate Covenants and Pledged Revenue (continued) Pledged revenue The city has a number of debt issuances outstanding that are collateralized by the pledging of certain revenues. The purpose for which the proceeds of the related debt issuances were utilized are disclosed in the debt descriptions of the accompanying notes. For the current year, debt service payments as a percentage of the pledged gross revenue (net of certain expenses where so required by the debt agreement) are indicated in the table below. These percentages also approximate the relationship of debt service to pledged revenues for the remainder of the term of the commitment: Debt Service as a Description of Pledged Annual Amount of Pledged Annual Debt Service Percentage of Pledged Revenue Revenue (net of expenses)Payments Revenue Recycled water revenues 2,202,516$ 1,876,482$ 85% Note 9. Debt without Government Commitment In the opinion of city officials, the bonds listed below are not payable from any revenues or assets of the city, and neither the full faith and credit nor the taxing power of the city, the State of California, nor any political subdivision thereof, is obligated to the payment of the principal or interest on the bond. Accordingly, no liability has been recorded in the accompanying financial statements. Limited obligation improvement bonds As of June 30, 2019, the city has two series of assessment district bonds outstanding in the amount of $32,380,000. These bonds were issued under the provisions of the Improvement Bond Act of 1915 and were used to finance public infrastructure improvement projects. The city collects assessments to pay the bond debt. These monies are accounted for in the assessment districts’ agency funds. Special tax bonds As of June 30, 2019, the city has two series Community Facilities District (CFD) bonds outstanding in the amount of $19,715,000. These bonds were issued under the provisions of the Mello-Roos Community Facilities Act of 1982 and were used to finance public infrastructure improvement projects. The city collects special taxes to pay the bond debt. These monies are accounted for in the CFDs’ agency funds. Mortgage revenue bonds Multi-Family Housing Revenue Bonds are issued to provide construction and permanent financing to developers of multi-family residential rental projects located in the city which will be partially occupied by persons of low or moderate income. The total amount of mortgage revenue bonds outstanding as of June 30, 2019 is $19,876,148. The bonds, together with interest thereon, are limited obligations of the city payable solely from bond proceeds, revenues and other amounts derived solely from home mortgage and developer loans secured by first deeds of trust, irrevocable letters of credit, and irrevocable surety bonds. Notes to the Financial Statements 104 Note 10. Fund Balances The following is a summary of the components of fund balances as of June 30, 2019: Community General Facilities Capital Infrastructure Fund Balances General District No. 1 Construction Replacement Nonspendable: Inventory 17,659 $ -$ -$ -$ Prepaid items - - - - Loans receivable 77,781 - - - Due from Successor Agency*2,273,749 - - - Advances to other funds*47,238,604 - - - Totals 49,607,793 - - - Restricted for: Affordable housing - - - - Lighting and landscaping districts - - - - Habitat and agricultural mitigation/preservation - - - - Capital projects - 89,650,970 - - General government - - - - Public safety - - - - Community services - - - - Totals - 89,650,970 - - Committed to: Community activity grants 1,000,000 - - - Totals 1,000,000 - - - Assigned to: General government 18,505,261 - - - Public safety 5,474,886 - - - Community services 6,184,075 - - - Public works 3,203,345 - - - Capital projects - - 42,666,244 119,472,415 Totals 33,367,567 - 42,666,244 119,472,415 Unassigned: Unassigned 82,565,061 - - - Economic uncertainty 19,135,909 - - - Totals 101,700,970 - - - Total fund balances 185,676,330 $ 89,650,970 $ 42,666,244 $ 119,472,415 $ Governmental Funds * Only reflects that portion of fund balance invested in interfund advances and loans (the General Fund amount is net of $13,416,611 in unavailable revenue for measurable but unavailable interest earned on such advances and loans). Notes to the Financial Statements 105 Public Other Park Facilities Governmental Development Construction Funds Total -$ -$ -$ 17,659 $ - - 992 992 - - - 77,781 - - - 2,273,749 - - - 47,238,604 - - 992 49,608,785 - - 43,587,241 43,587,241 - - 8,025,279 8,025,279 - - 1,523,598 1,523,598 6,145,663 32,827,054 65,810,825 194,434,512 - - 842,903 842,903 - - 329,918 329,918 - - 3,155,716 3,155,716 6,145,663 32,827,054 123,275,480 251,899,167 - - - 1,000,000 - - - 1,000,000 - - - 18,505,261 - - - 5,474,886 - - - 6,184,075 - - - 3,203,345 - - - 162,138,659 - - - 195,506,226 - - - 82,565,061 - - - 19,135,909 - - - 101,700,970 6,145,663 $ 32,827,054 $ 123,276,472 $ 599,715,148 $ Governmental Funds Notes to the Financial Statements 106 Note 10. Fund Balances (continued) Fund balances are reported in the fund statements in the following classifications: Nonspendable Fund Balance Nonspendable Fund Balance – this includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments). Spendable Fund Balance Restricted Fund Balance – this includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. If the City Council action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted. Committed Fund Balance – this includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. It includes legislation (council action) that can only be overturned by new legislation requiring the same type of voting consensus that created the original action. Therefore, if the council action limiting the use of the funds is separate from the action (legislation) that created (enables) the funding source, then it is committed, not restricted. The city considers a resolution to constitute the formal action of the City Council that is necessary to commit fund balance. Assigned Fund Balance – this includes amounts that are designated or expressed by the City Council, but does not require a formal action like a resolution or ordinance. The City Council has delegated the authority for the city manager to carry forward certain unspent budget amounts for specific purposes if the amount is equal to or less than $100,000 to the next fiscal year. The City Council has authorized, through a resolution, that all outstanding encumbrances at the end of the fiscal year and certain unspent budgeted amounts above $100,000 to be carried forward into the next fiscal year. These amounts are shown as assigned fund balance at the end of the fiscal year: • General government – citywide back file conversion; unfunded litigation costs; climate action plan communications costs; resident satisfaction/opinion survey; data driven decision making platform; Smart City initiatives; implementation and maintenance of a learning management system; utility billing system upgrade; cashiering system upgrade; a new Enterpise Resource Planning system; and additional inovation-related projects. • Public safety – a three-year labor contract; crossing guard contract increase; outfitting of a new fire engine; fire station bay monitor displays; fire Citygate contract; the purchase and outfitting of five police vehicles; three marked police vehicles; school resource office vehicle and outfitting; and the outfitting of two former ambulances for police use.a taser replacement program; graffiti trackers; K-9 narcotics training; police license plate readers; new office furniture and space renovations; and additional part-time employees. Notes to the Financial Statements 107 Note 10. Fund Balances (continued) • Community services – housing element costs; replace Schulman Auditorium sound system; business processes and training documentation; contract for backfile conversion; community public art projects; parks and recreation master plan updates; third party geotech and traffic analysis; talent assessment and succession planning; Dove Library collections and technical services space reconfiguration; cultural arts mobile outreach; Dove Library wayfinding; Leo Carrillo Ranch surface repairs; and Harding Community Center office remodel. • Public works – invasive species mitigation; Safety Center air handlers replacement; PriSim replacement; security upgrade; and supplemental provisions update for public works contracts. • Capital projects – citywide infrastructure replacement projects; trail connectivity to Tamarack State Beach; construction of the Orion Center; refurbishments at City Hall and the Faraday Center; beach access repair/upgrades; Safety Center building improvements; replacement of Fire Station No. 2 and the Monroe Stree Pool; the ongoing pavement management program; Maerkle Reservoir floating cover replacement; Maerkle Reservoir transmission main; extension of Poinsettia Lane; sidewalk/street construction program; Kelly Drive and Park Drive road diet and multiuse trail; analysis and conceptual alignments for two double-track railroad trench alternatioves through the village area; Terramar area coastal improvements; additional water and recycled water lines; continuation of drainage and street improvements at the Encina Water Pollution Control Facility; and wastewater line refurbishments/replacements at various locations throughout the city. Unassigned Fund Balance – this includes the remaining spendable amounts which are not included in one of the other classifications. The General Fund is the only fund that reports a positive unassigned fund balance amount. It is the city’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the City Council. Note 11. General Fund Balance Policy Pursuant to Council Policy 74, the city is commited to maintaining General Fund reserves at a target of 40% of General Fund annual operating expenditures. The total reserve level is calculated using the prior fiscal years adopted General Fund budgeted expenditures. This reserve is for unforeseen emergencies or catastrophic impacts upon the city. Reserves are evaluated annually in conjunction with the development of the city’s annual operating budget process. Staff report to the City Council annually on the status of the reserve levels relative to this policy. Note 12. Accumulated Fund Deficits/Negative Net Position The following funds reported deficits in fund balances or net position as of June 30, 2019: Deficit Balance Enterprise Funds: Golf Course (20,678,574)$ The deficit in the Golf Course Fund is the result of the General Fund advancing money to the Golf Course Fund for the construction of the course and partially subsidizing the operations of the course in prior fiscal years. Notes to the Financial Statements 108 Note 13. Interfund Transfers Interfund transfers for the year ended June 30, 2019, consisted of the following: Transfers Out Amount General Fund Gas Tax Fund 10,000$ General Capital Construction 260,000 Capital Project Funds: Infrastructure Replacement General Fund 10,681,000 Enterprise Funds: Storm Water Protection General Fund 219,274 Internal Service Funds: Workers' Compensation General Fund 1,500,000 Special Revenue Funds: Affordable Housing Tyler Court Apartments 100,248 Financing Districts General Fund 775,000 Section 8 Rental Assistance Affordable Housing 55,000 13,600,522$ Transfers In Transfers are used to: (1) move revenues and expenditures to the appropriate funds; (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations; and (3) move excess cash collected for future capital replacement in accordance with Council authorization. Note 14. Risk Management The city is exposed to various risks of loss related to its operations, including losses associated with errors and omissions and injuries to employees and members of the public. The city uses a Risk Management Self-Insurance Fund, a Self-Insured Benefits Fund and a Workers’ Compensation Fund (all internal service funds) to account for and finance its uninsured risks of loss. All other funds of the city make payments to these funds based on annual estimates of the amounts needed to pay prior and current year claims and to establish a reserve for catastrophic losses. Beginning July 1, 2015, the city joined California State Association of Counties Excess Insurance Authority (CSAC-EIA) for excess general liability coverage. This coverage was purchased through the city’s broker, Alliant Insurance Services. Under this program, the city’s coverage is a maximum of $25,000,000 per occurrence with a self-insured retention (SIR) of $1,000,000. CSAC-EIA is one of the largest risk sharing pools of its kind in the country. At June 30, 2019, the unrestricted fund equity for the Risk Management Self-Insurance Fund was $1,382,629. Funds used by the Risk Management Fund to liquidate the claims liability predominantly come from the General Fund (85.70%), the Water funds (5.22%) and the Wastewater funds (2.50%). Notes to the Financial Statements 109 Note 14. Risk Management (continued) Through December 31, 2018, the city was self insured for dental insurance. Dental insurance coverage for city employees was administered by MetLife. Under the city’s previous agreement with MetLife, MetLife paid dental claims for each covered member, up to a maximum of $1,500 per calendar year. At June 30, 2019, it is estimated that there are claims still outstanding in the amount of $20,000. The city is insured for workers’ compensation claims by Safety National. Safety National provides coverage up to a maximum of $2,000,000 per occurrence for losses which exceed the city’s SIR of $1,250,000 for all employees. At June 30, 2019, the unrestricted fund equity for the Workers’ Compensation Self-Insurance Fund was $ $2,020,380. Funds used by the Workers’ Compensation Fund to liquidate the claims liability predominantly come from the General Fund (92.38%), the Water funds (2.43%) and the Wastewater funds (1.15%). The estimated claims payable reported at June 30, 2019 is based on the requirements of GASB, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Settled cases did not exceed insurance coverage during the past fiscal year. Changes in the estimated claims payable amounts in Fiscal Years 2018 and 2019 for the three internal service funds are as follows: Expense and Beginning Changes in Claim Ending Balance Estimates Payments Balance Self-Insured Benefits Fund: 2017-18 105,258$ 609,912$ 613,003$ 102,167$ 2018-19 102,167 269,946 352,113 20,000 Risk Management Fund: 2017-18 2,934,641 1,131,031 1,743,555 2,322,117 2018-19 2,322,117 1,158,709 582,838 2,897,988 Workers’ Compensation Fund: 2017-18 7,355,549 3,701,351 2,615,752 8,441,148 2018-19 8,441,148 4,634,755 2,878,110 10,197,793 Claims Note 15. Joint Ventures Encina Water Pollution Control Facilities The Encina Water Pollution Control Facilities (the facilities) are wastewater facilities owned jointly by the cities of Carlsbad, Vista and Encinitas and the Leucadia Wastewater District, the Buena Vista Sanitation District and the Vallecitos Water District. The Encina Wastewater Authority (EWA) is a joint powers authority established to operate and administer the facilities. It is responsible for the management, maintenance and operations of the joint system. Each member agency has a specified percentage of ownership in the various components of the Encina Water Pollution Control Facilities that varies from component to component. Accordingly, each member agency reports its undivided interest in the facilities as a part of that member agency’s capital assets. Notes to the Financial Statements 110 Note 15. Joint Ventures (continued) As of June 30, 2019, the undivided interest of each member agency in the various components of the Encina Water Pollution Control Facilities aggregated as follows: City of Carlsbad 24% City of Vista 25% Leucadia Wastewater District 17% Vallecitos Water District 23% Buena Sanitation District 7% City of Encinitas 4% EWA does not recognize net income or loss. Net operating expenditures in excess of users’ assessments are treated as accounts receivable on EWA’s books and charged to users’ accounts in the following year. Conversely, users’ assessments in excess of net operating expenditures are treated as a liability and credited against users’ accounts, also in the following year. Under this basis, net operating loss (before member billings) for EWA totaled $466 in Fiscal Year 2018. The financial statements of EWA can be obtained at 6200 Avenida Encinas, Carlsbad, California 92011 or at www.encinajpa.com. Encina Financing Joint Powers Authority The Encina Financing Joint Powers Authority (the Authority) was created on February 1, 1989 between the City of Carlsbad (Carlsbad), the City of Vista (Vista), the Buena Vista Sanitation District (Buena) and the Leucadia County Water District (Leucadia). The primary purpose of the Authority is to issue revenue bonds in order to finance the expansion of the facility. The Authority is governed by a Board of Directors, which consists of one director appointed by each member. The financial statements of the Authority can be obtained at the city’s Administrative Services Department. The city’s share in the accounts of the Authority is recorded in the Wastewater Enterprise Fund. The expansion of the facility is shown as a capital asset of the Wastewater Enterprise Fund. Note 16. Pension Plan Plan description, benefits provided and employees covered All qualified permanent and probationary employees are eligible to participate in the city’s Safety (sworn police and fire) and Miscellaneous (all other) Plans (the Plans), agent multiple-employer defined benefit pension plans administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. A full description of the Plans regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the Plan’s June 30, 2017 Annual Actuarial Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the Actuarial Valuation Report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website. Notes to the Financial Statements 111 Note 16. Pension Plan (continued) Benefits provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. The Plans’ provisions and benefits in effect at June 30, 2019, are summarized as follows: On or after Prior to November 28, 2011 to On or after Hire date November 28, 2011 December 31, 2012 January 1, 2013 Benefit formula 3% @ 60 2% @ 60 2% @ 62 Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 60 50 - 63 52 - 67 Monthly benefits, as a % of eligible compensation 2.0% to 3.0%1.092% to 2.418%1.0% to 2.5% Required employee contribution rates 8%7%6.75% Required employer contribution rates 12.343%12.343%12.343% Required employer payment of unfunded liability: Miscellaneous $7,126,004 On or after Prior to October 4, 2010 to On or after Hire date October 4, 2010 December 31, 2012 January 1, 2013 Benefit formula 3% @ 50 2% @ 50 2.7% @ 57 Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 - 55 50 - 57 Monthly benefits, as a % of eligible compensation 3%2.0% to 2.7%2.0% to 2.7% Required employee contribution rates 9%9%12% Required employer contribution rates 19.595%19.595%19.595% Required employer payment of unfunded liability: Safety $4,523,960 Notes to the Financial Statements 112 Note 16. Pension Plan (continued) Employees covered As of June 30, 2018, the following employees were covered by the benefit terms for each Plan: Miscellaneous Safety Inactive employees or beneficiaries currently receiving benefits 515 228 Inactive employees or beneficiaries currently not yet receiving benefits 457 98 Active employees 506 187 Total 1,478 513 Contribution description Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ending June 30, 2018 (the measurement date), the average active employee contribution rate ranged from 6.75 percent to 8.0 percent of annual pay for miscellaneous employees and 9.0 percent to 12.0 percent of annual pay for safety employees, and the average employer’s contribution rate is 12.343 percent of annual payroll for miscellaneous employees and 19.595 percent of annual payroll for safety employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Actuarial methods and assumptions used to determine total pension liability For the measurement period ending June 30, 2018 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2017 total pension liability determined in the June 30, 2017 actuarial accounting valuation. The June 30, 2018 total pension liability was based on the following actuarial methods and assumptions: Actuarial cost method Entry Age Normal in accordance with the requirements of GASB 68 Actuarial assumptions Discount rate 7.15% Inflation 2.50% Salary increases Varies by entry age and service Mortality rate table*Derived using CalPERS' membership data for all funds Post-retirement benefit increase Contract COLA up to 2.0% until Purchasing Power Protection Allowance Floor on purchasing power applies; 2.50% thereafter * The mortality table used was developed based on CalPERS' specific data. The table includes 15 years of mortality improvements used Society of Actuaries Scalee 90% of scale MP 2016. For more details on this table, please refer to the 2017 experience study report. Notes to the Financial Statements 113 Note 16. Pension Plan (continued) All other actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at the CalPERS website at www.calpers.ca.gov under Forms and Publications. Discount rate The discount rate used to measure the total pension liability was 7.15 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Long-term expected rate of return The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS staff took into account both short-term and long- term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short- term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. Current Target Real Return Real Return Asset Class¹Allocation Years 1 - 10²Years 11+3 Global equity 50.0%4.80%5.98% Fixed income 28.0 1.00 2.62 Inflation assets 0.0 0.77 1.81 Private equity 8.0 6.30 7.23 Real estate 13.0 3.75 4.93 Liquidity 1.0 0.00 (0.92) ¹ In the System's CAFR, fixed income is included in global debt securities; liquidity is included in short-term investment; inflation assets are included in both global equity securities and global debt securities. 2 An expected inflation of 2.0% used for this period. 3 An expected inflation of 2.92% used for this period. Notes to the Financial Statements 114 Note 16. Pension Plan (continued) Pension plan fiduciary net position CalPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained on the California Public Employees’ Retirement System website at www.calpers.ca.gov under forms and publications. Changes in net pension liability Miscellaneous Safety Plan Plan Total Net pension liability 83,011,929$ 80,009,216$ 163,021,145$ Deferred outflows of resources - pension related items 26,304,222 35,553,303 61,857,525 Deferred inflows of resources - pension related items (5,103,967) (2,435,258) (7,539,225) Pension expense 14,566,408 12,650,211 27,216,619 The following table shows the changes in net pension liability recognized over the measurement period. Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at: 6/30/2017 372,190,930$ 270,386,079$ 101,804,851$ Changes Recognized for the Measurement Period: • Service cost 7,642,062 - 7,642,062 • Interest on the Total Pension Liability 25,874,546 - 25,874,546 • Differences between expected and actual experience (3,023,977) - (3,023,977) • Changes of assumptions (2,662,243) - (2,662,243) • Plan to plan resource movement - 3,388 (3,388) • Contributions from the employer - 22,114,923 (22,114,923) • Contributions from employees - 3,005,761 (3,005,761) • Net investment income - 22,720,698 (22,720,698) • Benefit payments, including refunds of employee contributions (16,887,970) (16,887,970) - • Administrative expense - (421,336) 421,336 • Other Miscellaneous Income/(Expense)1 - (800,124) 800,124 Net Changes during 2017-18 10,942,418 29,735,340 (18,792,922) Balance at 6/30/2018 383,133,348$ 300,121,419$ 83,011,929$ 1During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time epense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). Increase (Decrease)Miscellaneous Plan Notes to the Financial Statements 115 Note 16. Pension Plan (continued) Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate: Discount Rate - 1%Current Discount Discount Rate + 1% (6.15%)Rate (7.15%)(8.15%) Plan's Net Pension Liability - Miscellaneous 133,945,784$ 83,011,929$ 40,881,618$ Plan's Net Pension Liability - Safety 122,063,576$ 80,009,216$ 45,649,075$ Recognition of gains and losses Notes to the Financial Statements 116 Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. Note 16. Pension Plan (continued) The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred inflows and deferred outflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss: Difference between projected and actual earnings on pension plan investments 5 year straight-line amortization All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired). The EARSL for the Miscellaneous Plan for the June 30, 2018 measurement date is 3.2 years, which was obtained by dividing the total service years of 4,778 (the sum of remaining service lifetimes of the active employees) by 1,478 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to zero. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. The EARSL for the Safety Plan for the June 30, 2018 measurement date is 4.5 years, which was obtained by dividing the total service years of 2,315 (the sum of remaining service lifetimes of the active employees) by 513 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to zero. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. Pension expense and deferred outflows and deferred inflows of resources related to Pensions For the measurement period ending June 30, 2018 (the measurement date), the city recognized a pension expense of $27,216,619 for the Plans. As of June 30, 2018, the city reports other amounts for the Miscellaneous Plan as deferred outflows and deferred inflows of resources related to pensions as follows: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date 17,733,606$ -$ Difference between expected and actual experience - (3,255,576) Change in allocation between programs 18,099 (18,099) Changes of assumptions 7,447,418 (1,830,292) Net difference between projected and actual earnings on pension plan investments 1,105,099 - Total 26,304,222$ (5,103,967)$ Notes to the Financial Statements 117 Note 16. Pension Plan (continued) As of June 30, 2018, the city reports other amounts for the Safety Plan as deferred outflows and deferred inflows of resources related to pension as follows: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date 23,119,790$ -$ Difference between expected and actual experience 2,215,947 (726,150) Changes of assumptions 9,417,619 (1,709,108) Net difference between projected and actual earnings on pension plan investments 799,947 - Total 35,553,303$ (2,435,258)$ For the Miscellaneous Plan, $17,733,606 reported as deferred outflows of resources related to employer contributions subsequent to the measurement date, and for the Safety Plan, $23,119,790 reported as deferred outflows of resources related to employer contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Miscellaneous Plan pensions will be recognized as pension expense as follows: Deferred Measurement Period Outflows/(Inflows) of Ended June 30:Resources 2019 7,341,929$ 2020 (333,645) 2021 (2,907,306) 2022 (634,329) 2023 - Thereafter - Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Safety Plan pensions will be recognized as pension expense as follows: Deferred Measurement Period Outflows/(Inflows) of Ended June 30:Resources 2019 5,651,008$ 2020 4,313,840 2021 416,671 2022 (383,264) 2023 - Thereafter - Notes to the Financial Statements 118 Note 17. Other Post Employment Benefits (OPEB) The city and former employees of CMWD are offered other postemployment benefits in the form of health benefits. The majority of city employees are under the city defined benefit agent multiple-employer plan. CMWD has a defined benefit agent multiple-employer plan. Plan descriptions Carlsbad Municipal Water District (CMWD) The first Plan is for active and retired employees who were employed with CMWD at the time CMWD was acquired by the city. Per Resolution No. 614, all former employees of CMWD (including dependents) are eligible for postretirement health care benefits if they voluntarily retire after the age of 50, with no less than five years of service and whose age, combined with years of service, equals 70 or more. The city pays for 100 percent of the premiums for health insurance which is coordinated with Medicare and other benefits provided by federal and state law, when available, to the extent it reduces the cost of insurance premiums. This Plan was previously administered by the Association of California Water Agencies (ACWA). Effective March 1, 2019, this Plan is now administed by CalPERS. City of Carlsbad City employees are offered health insurance coverage under the Public Employees’ Medical and Hospital Care Act (PEMHCA), which is administered by CalPERS. Under PEMHCA, the city is required to pay a small portion of the monthly medical premiums of retired employees (considered a subsidy), if the retired employees continue their medical coverage under PEMHCA. Surviving spouses of eligible retirees are eligible for the city subsidy. Surviving spouses/domestic partners of deceased active members are eligible for the city subsidy only if the employee had attained age 50 with five years of service. The city pays a monthly subsidy per eligible employee/retiree regardless of coverage elected: Calendar Year 2017 $128.00 Calendar Year 2018 133.00 Calendar Year 2019 136.00 Thereafter, the subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. California Public Employer’s Retiree Benefit Trust Program The city is participating in the California Employer’s Retiree Benefit Trust Program (CERBT) through irrevocable trust agreements for both Plans. CERBT is administered by CalPERS. The city’s OPEB fiduciary net position is included in the CERBT Schedule of Changes in Fiduciary Net Position by Employer report. That report may be obtained on the California Public Employees’ Retirement System website at www.calpers.ca.gov under forms and publications. Notes to the Financial Statements 119 Note 17. Other Post Employment Benefits (continued) Employees covered As of the June 30, 2018 measurement date, the following employees were covered by the benefit terms for each Plan: CMWD City Inactive employees or beneficiaries currently receiving benefits 18 210 Inactive employees or beneficiaries currently not yet receiving benefits - 315 Active employees 2 695 Total 20 1,220 Contributions The obligation of CMWD to contribute to the CMWD Plan is established, and may not be amended by the CMWD Board. The obligation of the city to contribute to the city Plan is established, and as long as the city is a member of PEMCHA, may not be amended by the City Council. The City Council does have the authority to change health insurance coverage outside of PEMHCA, which could change the funding obligation for city employees. Employees are not required to contribute to the Plans. The city and CMWD’s contributions are based on the actuarially determined contribution (ADC), an amount actuarially determined in accordance with the parameters of GASB. The ADC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years on a “closed” basis. The city’s and CMWD’s contributions for each Plan are as follows: CMWD City Fiscal Year 2018-19 Cash Contributions 239,547 $ 370,924 $ Fiscal Year 2018-2019 Estimated Implied Subisdy Payments 28,549 248,636 Fiscal Year 2018-19 Trust Contributions - 90,646 Total Contributions 268,096 $ 710,206 $ Notes to the Financial Statements 120 Note 17. Other Post Employment Benefits (continued) Net OPEB liability The city’s and CMWD’s net OPEB liability was measured as of June 30, 2018 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2017 that was rolled forward to determine the June 30, 2018 total OPEB liability, based on the actuarial methods and assumptions shown on the following page: Actuarial Cost Method: Entry Age Normal Actuarial Assumptions: Discount Rate 7.00% Inflation 2.75% Salary Increases 3.00% Investment Rate of Return 7.00% with a 45% to 50% confidence based on Bartel Associates modeling for CERBT Strategy 1. Mortality Rate1 Derived using CalPERS’ Membership Data for all funds. Pre-Retirement Turnover2 Derived using CalPERS’ Membership Data for all funds. Healthcare Trend Rate3 Based in part on premium experience. Notes: 1. Based on CalPERS 1997-2015 Experience Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 2. Based on CalPERS 1997-2015 Experience Study for Miscellaneous Employees. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications. 3. Short-term healthcare trend’s were developed in consultation with Axene Health Partner’s healcare actuaries. Long-term healthcare trend developed using Society of Actuaries’ Getzen Model of Long-Run Medical Cost Trends. Notes to the Financial Statements 121 Note 17. Other Post Employment Benefits (continued) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: CERBT Strategy 1 Asset Class Target Allocation Long-Term Expexted Real Rate of Return Global Equity 57% 4.82% Fixed Income 27% 1.47% TIPS 5% 1.29% Commodities 3% 0.84% REITS 8% 3.76% Total 100% Notes: 1. The long-term expected rate of return is 7.00%. 2. Assumed long-term rate of inflation is 2.75%. Discount rate The discount rate used to measure the total OPEB liability was 7.00 percent. The projection of cash flows used to determine the discount rate assumed that city and CMWD contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB Plans’ fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB Plans investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Changes in OPEB liability CMWD City Plan Plan Total Net OPEB liability 533,073$ 1,692,394$ 2,225,467$ Deferred outflows of resources - OPEB related items 268,096 710,206 978,302 Deferred inflows of resources - OPEB related items (96,278) (273,342) (369,620) OPEB expense 35,351 577,075 612,426 Notes to the Financial Statements 122 Note 17. Other Post Employment Benefits (continued) The changes in the net OPEB liability for the CMWD plan are shown below: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at: 6/30/2018 (Measurement Date: 6/30/2017) 4,061,904$ 3,268,229$ 793,675$ Changes Recognized for the Measurement Period: • Service cost 12,595 - 12,595 • Interest on the total OPEB liability 275,029 - 275,029 • Contributions from the employer - 291,039 (291,039) • Net investment income - 263,258 (263,258) • Benefit payments, including refunds of employee contributions (291,039) (291,039) - • Administrative expense - (6,071) 6,071 Net Changes (3,415) 257,187 (260,602) Balance at 6/30/2019 (Measurement Date: 6/30/2018)4,058,489$ 3,525,416$ 533,073$ CMWD Plan Increase (Decrease) The changes in the net OPEB liability for the city Plan are shown below: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability/(Asset) (a)(b)(c) = (a) - (b) Balance at: 6/30/2018 (Measurement Date: 6/30/2017) 11,757,255$ 10,059,309$ 1,697,946$ Changes Recognized for the Measurement Period: • Service cost 507,914 - 507,914 • Interest on the total OPEB liability 838,617 - 838,617 • Contributions from the employer - 569,855 (569,855) • Net investment income - 800,892 (800,892) • Benefit payments, including refunds of employee contributions (569,855) (569,855) - • Administrative expense - (18,664) 18,664 Net Changes 776,676 782,228 (5,552) Balance at 6/30/2019 (Measurement Date: 6/30/2018)12,533,931$ 10,841,537$ 1,692,394$ City Plan Increase (Decrease) Notes to the Financial Statements 123 Note 17. Other Post Employment Benefits (continued) Sensitivity of the net OPEB liability to changes in the discount rate The following presents the net OPEB liability of the CMWD and city if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2018: Discount Rate - 1%Current Discount Discount Rate + 1% (6.00%)Rate (7.00%)(8.00%) Plan's Net OPEB Liability - CMWD 1,011,141$ 533,073$ 139,507$ Plan's Net OPEB Liability - City 3,310,813$ 1,692,394$ 355,733$ Sensitivity of the net OPEB liability to changes in the health care cost trend rates The following presents the net OPEB liability of the CMWD and city if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2018: Health Care Cost Trend Rate - 1% Current Health Care Cost Trend Rate Health Care Cost Trend Rate + 1% (6.50%/5.50% decreasing to 3.00%) (7.50%/6.50% decreasing to 4.00%) (8.50%/7.50% decreasing to 5.00%) Plan's Net OPEB Liability - CMWD 103,929$ 533,073$ 1,049,904$ Plan's Net OPEB Liability - City 99,135$ 1,692,394$ 3,661,929$ OPEB plan fiduciary net position The CERBT issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained from the California Public Employees’ Retirement System, CERBT, P.O. Box 942703, Sacramento, CA 94429-2703. Recognition of deferred outflows and deferred inflows of resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The initial recognition period is five years. Notes to the Financial Statements 124 Note 17. Other Post Employment Benefits (continued) OPEB expense and deferred outflows/inflows of resources related to OPEB (CMWD) For the fiscal year ended June 30, 2019, the CMWD recognized OPEB expense of $35,351. As of the fiscal year ended June 30, 2019, the CMWD reported deferred outflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to measurement date 268,096$ -$ Net difference between projected and actual earnings on OPEB plan investments - (96,278) Total 268,096$ (96,278)$ The $268,096 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2018 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2020. Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows: Deferred Fiscal Year Outflows/(Inflows) Ended:of Resources 2020 (29,780)$ 2021 (29,780) 2022 (29,780) 2023 (6,938) 2024 - Thereafter - OPEB expense and deferred outflows/inflows of resources related to OPEB (city) For the fiscal year ended June 30, 2019, the city recognized OPEB expense of $577,075. As of the fiscal year ended June 30, 2019, the city reported deferred outflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to measurement date 710,206$ -$ Net difference between projected and actual earnings on OPEB plan investments - (273,342) Total 710,206$ (273,342)$ Notes to the Financial Statements 125 Note 17. Other Post Employment Benefits (continued) The $710,206 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2018 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2020. Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows: Deferred Fiscal Year Outflows/(Inflows) Ended:of Resources 2020 (84,621)$ 2021 (84,621) 2022 (84,623) 2023 (19,477) 2024 - Thereafter - Note 18. Commitments and Contingencies Operating leases The city has two parking lot leases with North County Transit District. On June 15, 1976, the city entered into a month-to-month lease for the parking lot located to the east of the railroad tracks between Carlsbad Village Drive and Oak Avenue. The current lease amount is approximately $1,433 per month and payable monthly. On September 1, 1988, the city entered into a month-to-month lease for the parking lot located on Washington Street to the west of the railroad tracks between Carlsbad Village Drive and Oak Avenue. The current lease amount is approximately $2,411 per month and payable annually. Both parking lot leases may be increased annually by the Consumer Price Index – Average U.S. Cities. Water purchase agreements On March 25, 1991, CMWD entered into a twenty year agreement with the Leucadia Wastewater District (LWD), to purchase recycled water to be used primarily for irrigation at the La Costa Resort & Spa golf course, and for other appropriate uses within the CMWD boundaries. CMWD agreed to purchase a minimum of about 394 acre feet (AF) of recycled water per fiscal year (with actual amounts varying based on seasonal demands), at 99 percent of the retail potable water charged to residential users within the CMWD boundary. The cost per that agreement was $1,222.84 per AF or a minimum of $481,800 per fiscal year. On September 1, 2013, CMWD and LWD revised the original agreement and extended the term of the agreement for a minimum of five years. The revised agreement removed the required minimum quantity to be delivered (394 AF). The agreement was to continue year-to-year beyond the five year term unless either party provides notice of termination. CMWD provided notice to LWD that the agreement would terminate effective August 30, 2018, and the agreement was terminated. During the term of the revised agreement, CMWD and the LWD shared equally all rebates or other incentive payments from the Metropolitan Water District, San Diego County Water Authority, and any other governmental agency for recycled water produced by LWD for CMWD. On August 5, 2003, CMWD entered into a twenty-two year agreement with the Vallecitos Water District, to purchase three million gallons per day (3,360 acre feet) of recycled water for uses throughout CMWD’s boundaries. Per the agreement, there is an annual reconciliation that trues up the monthly payments to the actual cost for the water Notes to the Financial Statements 126 Note 18. Commitments and Contingencies (continued) purchased each fiscal year. The recycled water cost is adjusted every July 1st and shall not exceed 75 percent of the wholesale cost of potable water from SDCWA. The agreement also stipulates that CMWD will pay for its share of the actual operating costs (up to a maximum cost of 75 percent of the wholesale cost of potable water from the San Diego County Water Authority) of the Mahr Reservoir, which produces the water. The estimated operating costs paid by CMWD for the period ended June 30, 2019 is $1,277,618. As of June 30, 2019, city commitments for outstanding encumbrances (purchase orders and contracts for goods and services not yet delivered) by major governmental fund and nonmajor funds in the aggregate are as follows: Outstanding Encumbrances General Fund 10,951,573 $ Community Facilities District No. 1 1,125,354 General Capital Construction 1,855,743 Infrastructure Replacement 1,886,839 Park Development 388,667 Public Facilities Construction 1,161,981 Nonmajor Governmental Funds in the Aggregate 4,662,715 Total 22,032,872 $ Note 19. Successor Agency Trust for Assets of Former Redevelopment Agency On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the bill”) which provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the city that previously had reported a redevelopment agency within the reporting entity of the city as a blended component unit. The bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and local government. On January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the bill as part of City Council Resolution No. 2012-013 and Housing and Redevelopment Commission Resolution No. 519. After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of the dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). In future years, successor agencies will only be allowed revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. Notes to the Financial Statements 127 Note 19. Successor Agency Trust for Assets of Former Redevelopment Agency (continued) On March 7, 2014, the city received notice from the California Department of Finance that the loans previously made by the city to the former redevelopment agency are enforceable obligations and that they were made for legitimate redevelopment purposes. This approval allows the city to list repayment of these loans on future Redevelopment Obligation Payment Schedules (ROPS). In accordance with the timeline set forth in the bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entities as of February 1, 2012. Long-term Debt The following is a summary of changes in the principal balance of long-term debt for the year ended June 30, 2019: Principal Principal Balance at Balance at Due Within July 1, 2018 Increases Decreases June 30, 2019 One Year Bonds 5,295,000$ -$ 775,000$ 4,520,000$ 815,000$ Due to the City of Carlsbad 9,103,922 122,820 1,971,504 7,255,238 - 14,398,922$ 122,820$ 2,746,504$ 11,775,238$ 815,000$ The 1993 Carlsbad Housing and Redevelopment Commission Tax Allocation Bonds were issued totaling $15,495,000. Principal is due in amounts ranging from $815,000 to $1,000,000 on September 1 of each year through 2024. Interest is payable on March 1 and September 1 at rates varying from 5.25% to 5.30% per annum. The city posted a surety bond in lieu of a cash reserve in the amount of $1,055,953. Bonds are payable from redevelopment property tax increment revenues. Minimum annual debt service requirements have not been established for the obligation of the Successor Agency to the city. The aggregate maturities of long-term debt are as follows: Year ended June 30:Principal Interest 2020 815,000 $ 217,759 $ 2021 855,000 173,707 2022 900,000 127,200 2023 950,000 78,175 2024 1,000,000 26,500 4,520,000 $ 623,341 $ Notes to the Financial Statements 128 Note 19. Successor Agency Trust for Assets of Former Redevelopment Agency (continued) Pledged Revenue The Successor Agency has a debt issuance outstanding that is collateralized by the pledging of certain revenues. The amount and term of the remainder of this commitment is indicated in the debt service to maturity table presented above. The purpose for which the proceeds of the related debt issuance was utilized is disclosed in the debt description above. For the current year, debt service payments as a percentage of pledged gross revenue (net of certain expenses where so required by the debt agreement) are indicated in the table on the following page. This percentage also approximates the relationship of debt service to pledged revenues for the remainder of the term of the commitment: Debt Service as a Description of Annual Amount of Annual Debt Service Percentage of Pledged Pledged Revenue Pledged Revenue Payments Revenue Tax increment (Village Area)3,725,388$ 1,034,496$ 28% Note 20. Prior Period Adjustment In 2016, the city’s Wastewater Fund received a construction deposit from the City of Vista. These funds were incorrectly recorded as a deposit (asset) from the City of Vista instead of a deposit (liability) from the City of Vista with offsetting revenue recognition. The effect of reflecting this liability and revenue correctly on the beginning net position of the Wastewater Fund is reflected below. Wastewater Net position at July 1, 2018 $ 176,963,234 Recognize liability for deposit made by the City of Vista (3,313,828) Net position at July 1, 2018, as restated $ 173,649,406 Business-Type Activities Net position at July 1, 2018 $ 477,646,405 Recognize liability for deposit made by the City of Vista (3,313,828) Net position at July 1, 2018, as restated $ 474,332,577 Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Statement of Net Position Required Supplementary Information 129 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period Total Pension Liability Measurement Total Pension Service Changes of Period Liability - Beginning Cost Interest Benefit Terms Miscellaneous Plan 2013–14¹292,931,044 $ 6,908,307 $ 21,793,340 $ -$ 2014–15¹ 310,018,027 6,674,982 23,142,961 - 2015–16¹ 322,606,958 6,836,445 24,192,948 - 2016–17¹ 336,686,595 7,836,970 25,085,808 - 2017–18¹ 372,190,930 7,642,062 25,874,546 - Safety Plan 2013–14¹227,568,288 $ 5,425,425 $ 16,876,220 $ -$ 2014–15¹ 239,340,454 5,048,529 17,775,039 - 2015–16¹ 247,020,357 5,209,900 18,557,781 - 2016–17¹ 257,649,541 5,825,080 19,305,098 - 2017–18¹ 285,701,762 5,985,155 20,248,091 - Plan Fiduciary Net Position Plan Fiduciary Net Measurement Net Position Contributions Contributions Investment Period Beginning4 Employer Employee Income² Miscellaneous Plan2013–14¹204,354,694 $ 8,004,157 $ 3,039,951 $ 35,526,156 $ 2014–15¹ 239,310,294 8,434,882 2,703,715 5,362,753 2015–16¹ 242,447,633 9,562,926 2,833,466 1,330,196 2016–17¹ 241,681,934 14,677,334 2,820,046 26,893,994 2017–18¹ 270,386,079 22,114,923 3,005,761 22,720,698 Safety Plan 2013–14¹161,108,415 $ 6,141,746 $ 1,853,365 $ 27,905,516 $ 2014–15¹ 186,479,563 6,491,856 1,726,785 4,107,305 2015–16¹ 187,329,833 6,836,098 1,933,363 990,545 2016–17¹ 184,778,552 12,379,181 1,922,500 20,385,351 2017–18¹ 206,161,081 8,675,370 2,169,504 17,250,148 ¹ Historical information is required only for measurement periods for which GASB 68 is applicable. ² Net of administrative expenses. 3 During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). 4 Includes any beginning of year adjustment. 130 Difference Benefit Payments, Between Expected Including Refunds Net Change in and Actual Changes of of Employee Total Pension Total Pension Experience Assumptions Contributions Liability Liability - Ending (a) -$ -$ (11,614,664) $ 17,086,983 $ 310,018,027 $ 1,300,520 (5,737,798) (12,791,734) 12,588,931 322,606,958 (2,605,228) - (14,344,528) 14,079,637 336,686,595 (3,079,012) 20,988,178 (15,327,609) 35,504,335 372,190,930 (3,023,977) (2,662,243) (16,887,970) 10,942,418 383,133,348 -$ -$ (10,529,479) $ 11,772,166 $ 239,340,454 $ 638,786 (4,517,683) (11,264,768) 7,679,903 247,020,357 (941,378) - (12,197,119) 10,629,184 257,649,541 (705,417) 16,661,943 (13,034,483) 28,052,221 285,701,762 2,726,755 (1,332,336) (13,797,333) 13,830,332 299,532,094 Benefit Payments,Plan Net Pension Including Refunds Other Changes Net Change Plan Fiduciary Liability/(Asset) of Employee In Fiduciary in Fiduciary Net Position Ending Contributions Net Position3 Net Position Ending (b)(a) - (b) (11,614,664) $ -$ 34,955,600 $ 239,310,294 $ 70,707,733 $ (12,791,734) (572,277) 3,137,339 242,447,633 80,159,325 (14,344,528) (147,759) (765,699) 241,681,934 95,004,661 (15,327,609) (359,620) 28,704,145 270,386,079 101,804,851 (16,887,970) (1,218,072) 29,735,340 300,121,419 83,011,929 (10,529,479) $ -$ 25,371,148 $ 186,479,563 $ 52,860,891 $ (11,264,768) (210,908) 850,270 187,329,833 59,690,524 (12,197,119) (114,168) (2,551,281) 184,778,552 72,870,989 (13,034,483) (270,020) 21,382,529 206,161,081 79,540,681 (13,797,333) (935,892) 13,361,797 219,522,878 80,009,216 131 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios During Measurement Period (continued) Plan Fiduciary Plan Net Pension Net Position Liability/(Asset) as a Percentage as a Percentage Measurement of the Total Covered of Covered - Period Liability Payroll PayrollMiscellaneous Plan 2013–14¹77.19%32,856,020 $ 215.20%2014–15¹75.15% 33,730,770 237.64% 2015–16¹71.78% 35,303,101 269.11% 2016–17¹72.65% 37,336,682 272.67% 2017–18¹78.33% 36,214,870 229.22% Safety Plan 2013–14¹77.91%18,629,989 $ 283.74% 2014–15¹75.84% 18,020,162 331.24% 2015–16¹71.72% 18,658,097 390.56% 2016–17¹72.16% 19,072,985 417.03%2017–18¹73.29% 20,768,094 385.25% Notes to Schedule: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which have occurred after June 30, 2016 valuation date. This applies for voluntary benefit changes as well as any offers of two years additional service credit (a.k.a. Golden Handshakes). Changes of Assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administration expense). In 2014, amounts reported were based on the 7.5 percent discount rate. 132 Required Supplementary Information Schedule of Plan Contributions¹ Contributions in Relation to Contributions Actuarially the Actuarially Contribution as a Percentage Fiscal Year Determined Determined Deficiency Covered of Covered Ending Contribution Contribution (Excess)Payroll Payroll Miscellaneous Plan 06/30/14 8,004,157 $ (8,004,157) $ -$ 32,856,020 $ 24.36% 06/30/15 8,434,882 (8,434,882) - 33,730,770 25.01% 06/30/16 9,562,926 (9,562,926) - 35,303,101 27.09% 06/30/17 10,338,549 (14,677,334) (4,338,785) 37,336,682 39.31%06/30/18 11,083,979 (22,092,810) (11,008,831) 36,214,870 61.00% 06/30/19 11,954,252 (17,733,606) (5,779,354) 39,130,545 45.32% Safety Plan 06/30/14 6,141,746 $ (6,141,746) $ -$ 18,629,989 $ 32.97% 06/30/15 6,491,856 (6,491,856) - 18,020,162 36.03% 06/30/16 6,836,098 (6,836,098) - 18,658,097 36.64%06/30/17 7,695,135 (12,379,181) (4,684,046) 19,072,985 64.90% 06/30/18 8,658,116 (8,658,116) - 20,768,094 41.69%06/30/19 8,899,136 (23,119,790) (14,220,654) 22,328,023 103.55% ¹ Historical information is required only for measurement periods for which GASB 68 is applicable. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2018-19 were derived from the June 30, 2016 funding valuation reports. Actuarial Cost Method Entry Age Normal Amortization Method/Period For details, see June 30, 2015 Funding Valuation Report Asset Valuation Method Market Value of Assets. For details, see June 30, 2015 Funding Valuation Report. Inflation 2.75 percent Salary Increases Varies by entry age and service. Payroll Growth 3.00 percent Investment Rate of Return 7.375 percent net of pension plan investment and administrative expenses; includes inflation. Retirement Age The probabilities of retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Mortality The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. 133 Required Supplementary Information Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period Total OPEB Liability Measurement Total OPEB Service Changes of Period¹Liability - Beginning Cost Interest Benefit Terms CMWD Plan 2016–17 4,041,120 $ 12,228 $ 274,428 $ -$ 2017–18 4,061,904 12,595 275,029 - City Plan 2016–17 11,102,453 $ 493,120 $ 789,709 $ -$ 2017–18 11,757,255 507,914 838,617 - Plan Fiduciary Net Position Plan Fiduciary NetMeasurementNet Position Contributions Contributions Investment Period¹Beginning Employer Employee Income² CMWD Plan2016–17 3,077,703 $ 133,108 $ -$ 323,290 $ 2017–18 3,268,229 291,039 - 263,258 City Plan 2016–17 9,114,475 $ 614,664 $ -$ 958,197 $ 2017–18 10,059,309 569,855 - 800,892 134 Difference Benefit Payments, Between Expected Including Refunds Net Change in and Actual Changes of of Employee Total OPEB Total OPEB Experience Assumptions Contributions Liability Liability - Ending (a) -$ -$ (265,872) $ 20,784 $ 4,061,904 $ - - (291,039) (3,415) 4,058,489 -$ -$ (628,027) $ 654,802 $ 11,757,255 $ - - (569,855) 776,676 12,533,931 Benefit Payments,Plan Net OPEB Including Refunds Other Changes Net Change Plan Fiduciary Liability/(Asset)of Employee In Fiduciary in Fiduciary Net Position Ending Contributions Net Position Net Position Ending (b)(a) - (b) (265,872) $ -$ 190,526 $ 3,268,229 $ 793,675 $ (291,039) (6,071) 257,187 3,525,416 533,073 (628,027) $ -$ 944,834 $ 10,059,309 $ 1,697,946 $ (569,855) (18,664) 782,228 10,841,537 1,692,394 135 Required Supplementary Information Schedule of Changes in Net OPEB Liability and Related Ratios During Measurement Period (continued) Plan Fiduciary Plan Net OPEBNet Position Liability/(Asset) as a Percentage Covered - as a Percentage Measurement of the Total Employee of Covered -Period¹Liability Payroll Employee Payroll CMWD Plan 2016–17 80.46%165,769 $ 478.78%2017–18 86.87%106,131 502.28% City Plan 2016–17 85.56%54,645,089 $ 3.11%2017–18 86.50%55,473,250 3.05% ¹ Historical information is required only for measurement periods for which GASB 75 is applicable.² Net of administrative expenses. 136 Required Supplementary Information Schedule of Plan Contributions¹ Contributions in Relation to Contributions Actuarially the Actuarially Contribution Covered -as a Percentage Fiscal Year Determined Determined Deficiency Employee of Covered- Ending2 Contribution Contribution (Excess)Payroll3 Employee Payroll CMWD Plan 06/30/18 77,750 $ (291,039) $ (213,289) $ 106,131 $ 274.23%06/30/19 78,177 (268,096) (189,919) 64,872 413.27% City Plan 06/30/18 692,943 $ (569,855) $ 123,088 $ 55,473,250 $ 1.03% 06/30/19 710,206 (710,206) - 61,393,696 1.16% ¹ Historical information is required only for measurement periods for which GASB 75 is applicable. 2 Represents the fiscal year ending for the measurement period. 3 Represents payroll for the following fiscal year end. Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2018-19 were derived from the June 30, 2017 funding valuation reports. Actuarial Cost Method Entry Age Normal Amortization Method/Period Level dollar over closed 30 year period Inflation 2.75 percent Salary Increases Varies by Entry Age and Service Payroll Growth 3.00 percent Investment Rate of Return 7.0 percent net of pension plan investment and administrative expenses, including inflation Retirement Age The probabilities of retirement are based on the CalPERS Experience Study for the period from 1997 to 2015. Mortality The probabilities of mortality are based on the CalPERS Experience Study for the period from 1997 to 2015. 137 This p a g e is intentionally left blank. 138 Combining and Individual Fund Statements and Schedules 139 Combining Balance SheetNonmajor Governmental Funds June 30, 2019 Community Affordable Development Financing Housing Block Grant Donations Districts Cash and investments 21,527,399 $ -$ 2,611,503 $ 8,181,379 $ Receivables: Interest 105,214 - 13,098 41,050 Other - - 1,530 15,452 Accounts, net of allowances - - - 4,985 Due from other governments - 515,525 - - Prepaid items - - - - Land held for resale - 617,247 - - Loan receivables, net of allowances 21,628,737 - - - Total assets 43,261,350 $ 1,132,772 $ 2,626,131 $ 8,242,866 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accrued liabilities 94,305 $ 239,797 $ 93,307 $ 217,587 $ Due to other funds - 270,083 - - Deposits payable - - - - Advances from other funds - - - - Unearned revenue - - - - Total liabilities 94,305 509,880 93,307 217,587 Deferred inflows of resources: Unavailable revenue - grants - - - - Fund balances: Nonspendable: Prepaid items - - - - Restricted: Affordable housing 43,167,045 - - - Lighting and landscaping districts - - - 8,025,279 Habitat and agricultural mitigation/preservation - - - - Capital projects - - - - General government - - - - Public safety - - - - Community services - 622,892 2,532,824 - Total fund balances 43,167,045 622,892 2,532,824 8,025,279 Total liabilities, deferred inflows of resources and fund balances 43,261,350 $ 1,132,772 $ 2,626,131 $ 8,242,866 $ ASSETS Special Revenue Funds 140 Other Police Habitat and Special Grants and Section 8 Tyler Agricultural Revenue Asset Rental Court Management Funds Forfeiture Assistance Apartments Totals 1,684,657 $ 796,101 $ 358,893 $ 319,108 $ 187,234 $ 35,666,274 $ 8,541 3,991 2,299 - 505 174,698 - 77,716 - - 1,101 95,799 - - - 1,553 - 6,538 - - 107,028 - - 622,553 - - - - 992 992 - - - - - 617,247 - - - - - 21,628,737 1,693,198 $ 877,808 $ 468,220 $ 320,661 $ 189,832 $ 58,812,838 $ -$ 34,905 $ 31,274 $ 20,249 $ 29,695 $ 761,119 $ - - - - - 270,083 - - - 14,686 24,675 39,361 169,600 - - - - 169,600 - - - - - - 169,600 34,905 31,274 34,935 54,370 1,240,163 - - 107,028 - - 107,028 - - - - 992 992 - - - 285,726 134,470 43,587,241 - - - - - 8,025,279 1,523,598 - - - - 1,523,598 - - - - - - - 842,903 - - - 842,903 - - 329,918 - - 329,918 - - - - - 3,155,716 1,523,598 842,903 329,918 285,726 135,462 57,465,647 1,693,198 $ 877,808 $ 468,220 $ 320,661 $ 189,832 $ 58,812,838 $ (continued) Special Revenue Funds 141 Combining Balance SheetNonmajor Governmental Funds (continued) June 30, 2019 Grants Assessment Bridge and and Other and Other Thoroughfare Gas Capital Districts Districts Tax Project Funds Cash and investments 3,368,498 $ 12,641,114 $ 14,615,864 $ 1,685,803 $ Receivables: Interest 12,036 63,367 73,146 8,451 Other - - - - Accounts, net of allowances - - - - Due from other governments - - 375,138 - Prepaid items - - - - Land held for resale - - - - Loan receivables, net of allowances - - - - Total assets 3,380,534 $ 12,704,481 $ 15,064,148 $ 1,694,254 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accrued liabilities -$ -$ 319,635 $ 7,165 $ Due to other funds - - - - Deposits payable 426,179 - - - Advances from other funds - - - - Unearned revenue - - 194,729 - Total liabilities 426,179 - 514,364 7,165 Deferred inflows of resources: Unavailable revenue - grants - - - - Fund balances: Nonspendable: Prepaid items - - - - Restricted: Affordable, low and moderate income housing - - - - Lighting and landscaping districts - - - - Habitat and agricultural mitigation/preservation - - - - Capital projects 2,954,355 12,704,481 14,549,784 1,687,089 General government - - - - Public safety - - - - Community services - - - - Total fund balances 2,954,355 12,704,481 14,549,784 1,687,089 Total liabilities, deferred inflows of resources and fund balances 3,380,534 $ 12,704,481 $ 15,064,148 $ 1,694,254 $ ASSETS Capital Project Funds 142 Planned Local Traffic Total Other Drainage Sales Tax/Impact Governmental Facilities TransNet Projects Totals Funds 5,948,993 $ 7,395,475 $ 22,636,773 $ 68,292,520 $ 103,958,794 $ 29,825 37,182 113,635 337,642 512,340 - 95,699 - 95,699 191,498 - - - - 6,538 - 991 - 376,129 998,682 - - - - 992 - - - - 617,247 - - - - 21,628,737 5,978,818 $ 7,529,347 $ 22,750,408 $ 69,101,990 $ 127,914,828 $ 77,712 $ 262,524 $ 59,511 $ 726,547 $ 1,487,666 $ - - - - 270,083 - - - 426,179 465,540 - - 1,943,710 1,943,710 2,113,310 - - - 194,729 194,729 77,712 262,524 2,003,221 3,291,165 4,531,328 - - - - 107,028 - - - - 992 - - - - 43,587,241 - - - - 8,025,279 - - - - 1,523,598 5,901,106 7,266,823 20,747,187 65,810,825 65,810,825 - - - - 842,903 - - - - 329,918 - - - - 3,155,716 5,901,106 7,266,823 20,747,187 65,810,825 123,276,472 5,978,818 $ 7,529,347 $ 22,750,408 $ 69,101,990 $ 127,914,828 $ Capital Project Funds 143 Combining Statement of Revenues, Expenditures and Changes in Fund BalancesNonmajor Governmental FundsFor the Year Ended June 30, 2019 Community Affordable Development Financing Housing Block Grant Donations Districts Revenues: Taxes -$ -$ -$ -$ Intergovernmental - 625,448 - - Charges for services 30,687 - - 2,408,304 Fines and forfeitures - - - - Income from property and investments 1,179,139 200,665 79,149 278,611 Contributions from property owners 734,556 - - - Donations - - 1,384,386 - Miscellaneous 492,876 - 14,998 18,564 Total revenues 2,437,258 826,113 1,478,533 2,705,479 Expenditures: Current: General government - - - - Public safety - - - - Community services 649,105 509,404 413,978 1,791,280 Public works - - - 970,630 Capital outlay - - 70,244 - Debt service: Interest and fiscal charges - - - - Total expenditures 649,105 509,404 484,222 2,761,910 Excess (deficiency) of revenues over (under) expenditures 1,788,153 316,709 994,311 (56,431) Other financing sources (uses): Transfers in 100,248 - - 775,000 Transfers out (55,000) - - - Total other financing sources (uses)45,248 - - 775,000 Net change in fund balances 1,833,401 316,709 994,311 718,569 Fund balances at beginning of year 41,333,644 306,183 1,538,513 7,306,710 Fund balances at end of year 43,167,045 $ 622,892 $ 2,532,824 $ 8,025,279 $ Special Revenue Funds 144 Other Police Habitat and Special Grants and Section 8 Tyler Agricultural Revenue Asset Rental Court Management Funds Forfeiture Assistance Apartments Totals -$ -$ -$ -$ -$ -$ - - 808,269 7,494,252 - 8,927,969 - - - - 529,511 2,968,502 - - 41,771 - - 41,771 70,118 26,130 16,752 213 8,166 1,858,943 17,202 424,979 - - - 1,176,737 - - - - - 1,384,386 - - - 207,122 - 733,560 87,320 451,109 866,792 7,701,587 537,677 17,091,868 - 211,387 - - - 211,387 - - 302,424 - - 302,424 199,893 - - 7,479,465 405,789 11,448,914 - - - - - 970,630 - 59,262 527,044 - 54,531 711,081 3,637 - - - - 3,637 203,530 270,649 829,468 7,479,465 460,320 13,648,073 (116,210) 180,460 37,324 222,122 77,357 3,443,795 - - - 55,000 - 930,248 - - - - (100,248) (155,248) - - - 55,000 (100,248) 775,000 (116,210) 180,460 37,324 277,122 (22,891) 4,218,795 1,639,808 662,443 292,594 8,604 158,353 53,246,852 1,523,598 $ 842,903 $ 329,918 $ 285,726 $ 135,462 $ 57,465,647 $ (continued) Special Revenue Funds 145 Combining Statement of Revenues, Expenditures and Changes in Fund BalancesNonmajor Governmental Funds (continued)For the Year Ended June 30, 2019 Grants Assessment Bridge and and Other and Other Thoroughfare Gas Capital Districts Districts Tax Project Funds Revenues: Taxes -$ -$ 4,468,867 $ -$ Intergovernmental - - 396,575 956,847 Charges for services - - - - Fines and forfeitures - - - - Income from property and investments 111,164 468,437 542,930 65,467 Contributions from property owners - 302,370 23,644 22,480 Donations - - - - Miscellaneous - - - - Total revenues 111,164 770,807 5,432,016 1,044,794 Expenditures: Current: General government 17 - - 46,100 Public safety - - - - Community services - - - - Public works - - 600,000 - Capital outlay - - 3,441,492 47,005 Debt service: Interest and fiscal charges - - - - Total expenditures 17 - 4,041,492 93,105 Excess (deficiency) of revenues over (under) expenditures 111,147 770,807 1,390,524 951,689 Other financing sources (uses): Transfers in - - - - Transfers out - - (10,000) - Total other financing sources (uses)- - (10,000) - Net change in fund balances 111,147 770,807 1,380,524 951,689 Fund balances at beginning of year 2,843,208 11,933,674 13,169,260 735,400 Fund balances at end of year 2,954,355 $ 12,704,481 $ 14,549,784 $ 1,687,089 $ Capital Project Funds 146 Planned Local Traffic Total Other Drainage Sales Tax/Impact Governmental Facilities TransNet Projects Totals Funds -$ -$ -$ 4,468,867 $ 4,468,867 $ 22,895 2,404,331 - 3,780,648 12,708,617 - 1,117,214 - 1,117,214 4,085,716 - - - - 41,771 241,988 257,890 822,944 2,510,820 4,369,763 234,094 - 1,763,347 2,345,935 3,522,672 - - - - 1,384,386 - - - - 733,560 498,977 3,779,435 2,586,291 14,223,484 31,315,352 - 11,700 - 57,817 269,204 - - - - 302,424 - - - - 11,448,914 - - - 600,000 1,570,630 1,122,365 1,549,809 324,562 6,485,233 7,196,314 - - - - - 3,637 1,122,365 1,561,509 324,562 7,143,050 20,791,123 (623,388) 2,217,926 2,261,729 7,080,434 10,524,229 - - - - 930,248 - - - (10,000) (165,248) - - - (10,000) 765,000 (623,388) 2,217,926 2,261,729 7,070,434 11,289,229 6,524,494 5,048,897 18,485,458 58,740,391 111,987,243 5,901,106 $ 7,266,823 $ 20,747,187 $ 65,810,825 $ 123,276,472 $ Capital Project Funds 147 Combining Schedule of Revenues and ExpendituresBudget and Actual (Budgetary Basis)Special Revenue FundsYear Ended June 30, 2019 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Affordable Housing Total revenues 1,434,000 $ 2,077,873 $ 643,873 $ Total expenditures 1,042,989 760,871 (282,118) Net change in fund balance 391,011 1,317,002 925,991 Community Development Block Grant Total revenues 412,500 822,037 409,537 Total expenditures 1,150,320 509,404 (640,916) Net change in fund balance (737,820) 312,633 1,050,453 Donations Total revenues 1,446,500 1,444,551 (1,949) Total expenditures 1,105,585 519,116 (586,469) Net change in fund balance 340,915 925,435 584,520 Financing Districts Total revenues 3,331,500 2,571,924 (759,576) Total expenditures 3,840,329 3,028,804 (811,525) Net change in fund balance (508,829) (456,880) 51,949 Habitat and Agricultural Management Total revenues 54,000 51,993 (2,007) Total expenditures 270,348 203,530 (66,818) Net change in fund balance (216,348) (151,537) 64,811 Other Special Revenue Funds Total revenues 440,000 438,336 (1,664) Total expenditures 507,778 430,051 (77,727) Net change in fund balance (67,778) $ 8,285 $ 76,063 $ (continued) 148 Combining Schedule of Revenues and ExpendituresBudget and Actual (Budgetary Basis)Special Revenue Funds (continued)Year Ended June 30, 2019 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Police Grants and Asset Forfeiture Total revenues 884,000 $ 858,178 $ (25,822) $ Total expenditures 1,007,909 932,712 (75,197) Net change in fund balance (123,909) (74,534) 49,375 Section 8 Rental Assistance Total revenues 7,575,000 7,701,490 126,490 Total expenditures 8,305,230 7,487,365 (817,865) Net change in fund balance (730,230) 214,125 944,355 Totals Total revenues 15,577,500 15,966,382 388,882 Total expenditures 17,230,488 13,871,853 (3,358,635) Net change in fund balance (1,652,988) $ 2,094,529 $ 3,747,517 $ 149 Combining Schedule of Revenues and Expenditures Budget and Actual (Budgetary Basis) Capital Project Funds Year Ended June 30, 2019 Actual Amounts Variance (Budgetary Over Budget Basis)(Under) Parking-in-Lieu (Grants and Other Capital Project Funds) Total revenues 44,500 $ 44,004 $ (496) $ Total expenditures 93,205 93,105 (100) Net change in fund balance (48,705) $ (49,101) $ (396) $ 150 This p a g e is intentionally left blank. 151 Combining Statement of Net PositionInternal Service FundsJune 30, 2019 Fleet Self-Insured ASSETS Management Benefits Current assets: Cash and investments 19,207,775 $ 5,991,656 $ Receivables: Interest 94,748 30,148 Accounts, net of allowances 6,602 - Inventories 458,057 - Prepaid items - - Total current assets 19,767,182 6,021,804 Noncurrent assets: Capital assets: Machinery and equipment 24,897,028 - Construction in progress - - Intangible assets - - Less accumulated depreciation (13,901,245) - Total capital assets (net of accumulated depreciation 10,995,783 - Total assets 30,762,965 6,021,804 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - OPEB related items 7,741 - Deferred outflows of resources - pension related items 299,024 - Total deferred outflows of resources 306,765 - LIABILITIES Current liabilities: Accrued liabilities 628,229 4,101,538 Estimated claims payable - 20,000 Current portion of long-term debt - - Total current liabilities 628,229 4,121,538 Noncurrent liabilities: Deposits payable - - Net OPEB liability 18,447 - Net pension liability 1,220,276 - Capital lease payable - - Total noncurrent liabilities 1,238,723 - 1,866,952 4,121,538 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - OPEB related items 2,979 - Deferred inflows of resources - pension related items 74,932 - Total deferred inflows of resources 77,911 - NET POSITION Net investment in capital assets 10,995,783 - Unrestricted 18,129,084 1,900,266 29,124,867 $ 1,900,266 $ Total liabilities Total net position 152 Information Risk Workers’ Technology Management Compensation Total 7,167,089 $ 4,575,092 $ 12,161,248 $ 49,102,860 $ 33,637 22,946 60,960 242,439 - - - 6,602 - - - 458,057 - - 184,106 184,106 7,200,726 4,598,038 12,406,314 49,994,064 5,370,566 - - 30,267,594 101,076 - - 101,076 1,689,637 - - 1,689,637 (5,121,898) - - (19,023,143) 2,039,381 - - 13,035,164 9,240,107 4,598,038 12,406,314 63,029,228 23,934 1,491 639 33,805 1,166,366 88,212 50,039 1,603,641 1,190,300 89,703 50,678 1,637,446 982,824 50,584 7,034 5,770,209 - 2,897,988 10,197,793 13,115,781 211,114 - - 211,114 1,193,938 2,948,572 10,204,827 19,097,104 - 1,000 - 1,000 57,034 3,554 1,524 80,559 4,681,873 340,349 207,530 6,450,028 147,952 - - 147,952 4,886,859 344,903 209,054 6,679,539 6,080,797 3,293,475 10,413,881 25,776,643 9,212 574 246 13,011 476,090 11,063 22,485 584,570 485,302 11,637 22,731 597,581 1,680,315 - - 12,676,098 2,183,993 1,382,629 2,020,380 25,616,352 3,864,308 $ 1,382,629 $ 2,020,380 $ 38,292,450 $ 153 Combining Statement of Revenues, Expenses and Changes in Net PositionInternal Service FundsFor the Year Ended June 30, 2019 Fleet Self-Insured Management Benefits Operating revenues: Other charges for services 5,043,320 $ 373,181 $ Miscellaneous 64,551 - Total operating revenues 5,107,871 373,181 Operating expenses: Depreciation 1,822,995 - Fuel and supplies 1,403,148 - Claims and premiums expense - 382,553 Small equipment purchases 16,986 - General and administrative 1,296,843 - Total operating expenses 4,539,972 382,553 Operating income (loss)567,899 (9,372) Nonoperating revenues (expenses): Income from property and investments 708,908 - Interest expense - - Gain (loss) on sale of property 25,601 - Total nonoperating revenues (expenses)734,509 - Income (loss) before transfers and capital contributions 1,302,408 (9,372) Transfers in - - Capital contributions 350,693 - Change in net position 1,653,101 (9,372) Total net position at beginning of year 27,471,766 1,909,638 Total net position at end of year 29,124,867 $ 1,900,266 $ 154 Information Risk Workers’ Technology Management Compensation Totals 11,352,800 $ 2,091,149 $ 3,004,370 $ 21,864,820 $ 32,643 50,967 273,923 422,084 11,385,443 2,142,116 3,278,293 22,286,904 689,786 - - 2,512,781 - - - 1,403,148 - 1,759,733 5,269,988 7,412,274 1,769,349 - - 1,786,335 10,004,525 407,743 107,113 11,816,224 12,463,660 2,167,476 5,377,101 24,930,762 (1,078,217) (25,360) (2,098,808) (2,643,858) 271,211 153,651 451,433 1,585,203 (28,158) - - (28,158) - - - 25,601 243,053 153,651 451,433 1,582,646 (835,164) 128,291 (1,647,375) (1,061,212) - - 1,500,000 1,500,000 101,076 - - 451,769 (734,088) 128,291 (147,375) 890,557 4,598,396 1,254,338 2,167,755 37,401,893 3,864,308 $ 1,382,629 $ 2,020,380 $ 38,292,450 $ 155 Combining Statement of Cash FlowsInternal Service FundsFor the Year Ended June 30, 2019 Fleet Self-Insured Management Benefits Cash flows from operating activities: Receipts from customers and users 5,112,793 $ 343,033 $ Payments to suppliers (1,863,932) - Payments to employees (849,455) - Internal activity - payments to other funds (135,111) - Claims and premiums paid - (334,467) Net cash provided by (used in) operating activities 2,264,295 8,566 Cash flows from noncapital financing activities: Operating subsidies and transfers (to) from other funds - - Cash flows from capital and related financing activities: Purchase of capital assets (1,693,172) - Gross proceeds from the sale of capital assets 25,601 - Principal paid on capital debt - - Interest expense - - Net cash provided by (used in) capital and related financing activities (1,667,571) - Cash flows from investing activities: Interest on investments 692,896 - Net increase (decrease) in cash and cash equivalents 1,289,620 8,566 Cash and cash equivalents at beginning of year 17,918,155 5,983,090 Cash and cash equivalents at end of year 19,207,775 $ 5,991,656 $ 156 Information Risk Workers’ Technology Management Compensation Total 11,385,446 $ 2,142,116 $ 2,898,890 $ 21,882,278 $ (7,377,110) (129,902) (9,765) (9,380,709) (4,368,633) (271,433) (138,763) (5,628,284) (74,551) (22,610) (2,030) (234,302) - (1,242,144) (3,318,045) (4,894,656) (434,848) 476,027 (569,713) 1,744,327 - - 1,500,000 1,500,000 (199,741) - - (1,892,913) - - - 25,601 (198,810) - - (198,810) (28,158) - - (28,158) (426,709) - - (2,094,280) 271,014 148,070 438,059 1,550,039 (590,543) 624,097 1,368,346 2,700,086 7,757,632 3,950,995 10,792,902 46,402,774 7,167,089 $ 4,575,092 $ 12,161,248 $ 49,102,860 $ (continued) 157 Combining Statement of Cash FlowsInternal Service Funds (continued)For the Year Ended June 30, 2019 Fleet Self-Insured Management Benefits Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)567,899 $ (9,372) $ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 1,822,995 - Other non-operating revenues and expenses - (30,148) Change in assets and liabilities: (Increase) decrease in receivables 4,922 - (Increase) in inventories (61,635) - (Increase) in prepaid items - - (Increase) in deferred outflows - OPEB related items (1,529) - (Increase) in deferred outflows - pension related items 126,300 - Increase (decrease) in accrued liabilities 74,416 130,253 Increase (decrease) in estimated claims payable - (82,167) Increase (decrease) in net OPEB liability (61) - Increase (decrease) in net pension liability (276,256) - Increase (decrease) in deferred inflows - OPEB related items 139 - Increase (decrease) in deferred inflows - pension related items 7,105 - Net cash provided by (used in) operating activities 2,264,295 $ 8,566 $ Noncash capital financing activities: Capital assets contributed by other funds 350,693 $ -$ 158 Information Risk Workers’ Technology Management Compensation Total (1,078,217) $ (25,360) $ (2,098,808) $ (2,643,858) $ 689,786 - - 2,512,781 - - - (30,148) - - - 4,922 - - - (61,635) - - (184,106) (184,106) (4,730) (295) (126) (6,680) 527,603 55,469 21,209 730,581 413,643 (60,372) (9,029) 548,911 - 575,871 1,756,646 2,250,350 (187) (12) (4) (264) (1,059,921) (77,051) (46,982) (1,460,210) 430 27 11 607 76,745 7,750 (8,524) 83,076 (434,848) $ 476,027 $ (569,713) $ 1,744,327 $ 101,076 $ -$ -$ 451,769 $ 159 Combining Statement of Changes in Assets and LiabilitiesAgency FundsFor the Year Ended June 30, 2019 Contractors’ and Miscellaneous Deposits Balance Balance ASSETS July 1, 2018 Additions Deductions June 30, 2019 Current assets: Cash and investments 14,599,174 $ 58,203,828 $ 56,499,715 $ 16,303,287 $ Receivables: Interest 60,735 81,653 60,735 81,653 Taxes - 37 37 - Other 17,572 5,110 22,682 - Prepaid items 2,639 - 2,639 - Total current assets 14,680,120 $ 58,290,628 $ 56,585,808 $ 16,384,940 $ LIABILITIES Accrued liabilities 811,759 $ 59,413,818 $ 58,889,837 $ 1,335,740 $ Deposits held for others 13,868,361 5,632,361 4,451,522 15,049,200 Total liabilities 14,680,120 $ 65,046,179 $ 63,341,359 $ 16,384,940 $ Assessment Districts Balance Balance ASSETS July 1, 2018 Additions Deductions June 30, 2019 Current assets: Cash and investments 6,587,811 $ 6,425,740 $ 8,348,739 $ 4,664,812 $ Receivables: Interest 78,951 53,753 78,952 53,752 Taxes 4,030 4,464 4,030 4,464 Other 17,360 22,406 17,360 22,406 Total current assets 6,688,152 6,506,363 8,449,081 4,745,434 Restricted assets: Cash and investments 5,124,822 - 664,418 4,460,404 Total restricted assets 5,124,822 - 664,418 4,460,404 Total assets 11,812,974 $ 6,506,363 $ 9,113,499 $ 9,205,838 $ LIABILITIES Accrued liabilities 52,724 $ 51,961 $ 75,123 $ 29,562 $ Deposits held for others 11,760,250 5,908,700 8,492,674 9,176,276 Total liabilities 11,812,974 $ 5,960,661 $ 8,567,797 $ 9,205,838 $ (continued) 160 Combining Statement of Changes in Assets and LiabilitiesAgency Funds (continued)For the Year Ended June 30, 2019 Total Agency Funds Balance Balance ASSETS July 1, 2018 Additions Deductions June 30, 2019 Current assets: Cash and investments 21,186,985 $ 64,629,568 $ 64,848,454 $ 20,968,099 $ Receivables: Interest 139,686 135,406 139,687 135,405 Taxes 4,030 4,501 4,067 4,464 Other 34,932 27,516 40,042 22,406 Prepaid items 2,639 - 2,639 - Total current assets 21,368,272 64,796,991 65,034,889 21,130,374 Restricted assets: Cash and investments 5,124,822 - 664,418 4,460,404 Total current assets 5,124,822 - 664,418 4,460,404 Total assets 26,493,094 $ 64,796,991 $ 65,699,307 $ 25,590,778 $ LIABILITIES Accrued liabilities 864,483 $ 59,465,779 $ 58,964,960 $ 1,365,302 $ Deposits held for others 25,628,611 11,541,061 12,944,196 24,225,476 Total liabilities 26,493,094 $ 71,006,840 $ 71,909,156 $ 25,590,778 $ 161 Statement of Fiduciary Net PositionPrivate Purpose Trust FundJune 30, 2019 Redevelopment Obligation Retirement ASSETS Trust Fund Current assets: Cash and investments 1,289,292 $ Receivables: Interest 18,837 Total current assets 1,308,129 Noncurrent assets: Loans receivable 3,750,000 Total assets 5,058,129 LIABILITIES Current liabilities: Accrued liabilities 2,598 Accrued interest payable 79,718 Current portion of long-term debt 815,000 Total current liabilities 897,316 Noncurrent liabilities: Due to the City of Carlsbad 7,255,238 Tax allocation bonds payable 3,705,000 Total noncurrent liabilities 10,960,238 Total liabilities 11,857,554 NET POSITION Held in trust for redevelopment obligation retirement purposes (6,799,425) $ 162 Changes in Fiduciary Net PositionPrivate Purpose Trust FundFor the Year Ended June 30, 2019 Redevelopment Retirement Obligation ADDITIONS Trust Fund Contributions: Redevelopment Property Tax Trust Fund (RPTTF) revenues 3,637,680 $ Income from property and investments 87,708 Total additions 3,725,388 DEDUCTIONS General and administrative 625,813 Interest expense and fees 368,753 Total deductions 994,566 Change in net position 2,730,822 Total net position (deficit) at beginning of year (9,530,247) Total net position (deficit) at end of year (6,799,425) $ 163 This p a g e is intentionally left blank. 164 Statistical Section Statistical Section Statistical SectionStatistical Section 165 Statistical Section This section of the City of Carlsbad’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Table of Contents Page Financial Trends 166 These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. Revenue Capacity 176 These schedules contain information to help the reader assess the city’s water and wastewater revenue sources as well as the city’s most significant local revenue source, property taxes. Debt Capacity 184 These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt, and the city’s ability to issue additional debt in the future. Demographic and Economic Information 194 These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. Operating Information 198 These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. Net Position by Component Last Ten Fiscal Years (dollars in thousands) 2010 2011 2012 2013 Governmental activities Net investment in capital assets 767,719$ 774,269$ 780,727$ 782,500$ Restricted for: Capital assets 178,669 184,419 192,713 182,685 Lighting and landscaping districts 2,827 2,133 2,246 2,958 Affordable housing 36,187 40,005 38,434 37,390 Habitat and agricultural mitigation management 6,600 5,377 4,799 2,665 Other purposes 2,710 5,298 4,022 3,685 Unrestricted 279,737 284,825 308,470 (1)319,317 Total governmental activities net position 1,274,449$ 1,296,326$ 1,331,411$ 1,331,200$ Business-type activities Net investment in capital assets 317,238$ 314,691$ 311,392$ 307,000$ Restricted for: Capital assets 44,241 44,954 45,522 45,990 Unrestricted 34,556 38,278 47,530 55,758 Total business-type activities net position 396,035$ 397,923$ 404,444$ 408,748$ Total government Net investment in capital assets 1,084,957$ 1,088,960$ 1,092,119$ 1,089,500$ Restricted for: Capital assets 222,910 229,373 238,235 228,675 Lighting and landscaping districts 2,827 2,133 2,246 2,958 Affordable housing 36,187 40,005 38,434 37,390 Habitat and agricultural mitigation management 6,600 5,377 4,799 2,665 Other purposes 2,710 5,298 4,022 3,685 Unrestricted 314,293 323,103 356,000 375,075 Total net position 1,670,484$ 1,694,249$ 1,735,855$ 1,739,948$ Source: City of Carlsbad Comprehensive Annual Financial Reports (1) The significant increase in FY 2011-12 is due to the dissolution of the city's Redevelopment Agency which created a large extraordinary gain for the year. (2) Net position for the prior year was restated in FY 2014-15, to reflect the application of GASB 68. 166 2014 2015 2016 2017 2018 2019 784,210$ 783,298$ 788,035$ 788,078$ 793,090$ 786,965$ 175,468 178,228 176,279 183,245 182,811 194,434 4,703 5,263 5,921 6,527 7,307 8,025 39,317 39,544 40,390 40,528 41,500 43,588 1,713 1,708 1,758 1,805 1,640 1,524 3,774 3,059 2,948 2,818 2,800 4,329 328,602 223,522 245,078 249,816 262,023 289,000 1,337,787$ (2)1,234,622$ (2)1,260,409$ 1,272,817$ 1,291,171$ 1,327,865$ 305,681$ 307,122$ 317,927$ 344,836$ 349,548$ 346,628$ 46,632 47,315 45,950 40,098 39,522 38,540 66,083 69,922 73,285 85,153 88,576 97,509 418,396$ (2)424,359$ (2)437,162$ 470,087$ 477,646$ 482,677$ 1,089,891$ 1,090,420$ 1,105,962$ 1,132,914$ 1,142,638$ 1,133,593$ 222,100 225,543 222,229 223,343 222,333 232,974 4,703 5,263 5,921 6,527 7,307 8,025 39,317 39,544 40,390 40,528 41,500 43,588 1,713 1,708 1,758 1,805 1,640 1,524 3,774 3,059 2,948 2,818 2,800 4,329 394,685 293,444 318,363 334,969 350,599 386,509 1,756,183$ 1,658,981$ 1,697,571$ 1,742,904$ 1,768,817$ 1,810,542$ 167 Changes in Net Position Last Ten Fiscal Years (dollars in thousands) 2010 2011 2012 2013 Expenses Governmental activities General government 23,038$ (1)16,907$ 16,675$ 23,574$ (4) Public safety 44,371 45,011 45,576 48,468 Community services 37,675 42,179 43,087 47,900 (5) Public works 35,383 25,759 28,441 36,806 Interest and fiscal charges on long-term debt 547 453 298 4 Total governmental activities 141,014 130,309 134,077 156,752 Business-type activities Carlsbad Municipal Water District 33,923 34,978 35,985 41,626 Golf course 11,927 11,538 11,190 10,668 Wastewater 10,434 11,751 11,330 13,556 Solid waste 2,535 2,565 2,922 2,918 Total business-type activities 58,819 60,832 61,427 68,768 Total government 199,833$ 191,141$ 195,504$ 225,520$ Program Revenues Governmental activities Charges for services: General government 341$ 1,793$ 315$ 1,469$ Public safety 4,358 4,502 4,379 4,025 Community services 6,199 7,266 6,314 6,987 Public works 4,196 3,567 3,717 5,073 Operating grants and contributions 11,445 12,033 11,813 13,199 Capital grants and contributions 32,459 13,557 15,429 17,741 Total governmental activities 58,998 42,718 41,967 48,494 Business-type activities Charges for services: Carlsbad Municipal Water District 29,865 30,715 35,776 44,240 (6) Golf course 5,625 5,850 6,127 6,278 Wastewater 9,580 10,053 10,989 12,402 Solid waste 2,988 3,015 2,961 3,060 Operating grants and contributions 1,734 1,263 1,201 38 Capital grants and contributions 17,882 5,640 4,560 2,855 Total business-type activities 67,674 56,536 61,614 68,873 Total government 126,672$ 99,254$ 103,581$ 117,367$ Net (Expense)/Revenue: Governmental activities (82,016)$ (87,591)$ (92,110)$ (108,258)$ Business-type activities 8,855 (4,296) 187 105 Total government net expense (73,161)$ (91,887)$ (91,923)$ (108,153)$ 168 2014 2015 2016 2017 2018 2019 20,187$ 16,108$ 16,147$ 18,374$ 25,192$ (11)22,234$ 48,942 48,856 50,463 55,994 62,630 (11)67,968 45,341 48,630 51,191 54,212 51,897 57,978 30,314 36,273 37,464 34,317 36,875 36,897 1 - 1 3 2 4 144,785 149,867 155,266 162,900 176,596 185,081 43,547 40,897 39,458 45,219 51,658 51,638 11,032 10,538 10,545 10,211 10,560 11,035 12,488 12,629 12,613 12,626 13,495 15,238 2,856 2,973 2,997 3,272 3,089 3,840 69,923 67,037 65,613 71,328 78,802 81,751 214,708$ 216,904$ 220,879$ 234,228$ 255,398$ 266,832$ 289$ 1,382$ 296$ 327$ 816$ 1,679$ 3,950 4,220 3,980 4,647 4,805 4,784 8,732 10,534 10,711 12,154 11,588 10,755 3,720 4,014 4,152 3,952 3,768 4,574 11,919 12,242 11,912 12,630 13,054 17,307 16,129 19,105 12,042 (8)22,789 22,993 13,842 44,739 51,497 43,093 56,499 57,024 52,941 46,750 47,461 39,854 (9)44,817 50,095 46,431 6,635 6,709 6,988 7,119 7,973 7,979 12,896 12,875 12,963 13,467 13,885 14,099 3,320 3,245 3,206 3,302 3,427 3,440 90 59 5,646 2,471 1,611 1,260 3,198 5,879 2,011 13,322 5,484 4,864 72,889 76,228 70,668 84,498 82,475 78,073 117,628$ 127,725$ 113,761$ 140,997$ 139,499$ 131,014$ (100,046)$ (98,370)$ (112,173)$ (106,401)$ (119,572)$ (132,140)$ 2,966 9,191 5,055 13,170 3,673 (3,678) (97,080)$ (89,179)$ (107,118)$ (93,231)$ (115,899)$ (135,818)$ (continued) 169 Changes in Net Position (continued) Last Ten Fiscal Years (dollars in thousands) 2010 2011 2012 2013 General Revenues and Other Changes in Net Position Governmental activities Taxes: Property taxes 55,113$ 54,049$ 51,538$ 52,861$ Sales and use taxes 23,031 25,660 28,094 28,403 Transient occupancy taxes 11,490 11,569 12,872 14,702 Franchise taxes 4,906 4,650 4,852 5,118 Business license taxes 3,458 3,581 2,695 3,834 Real property transfer taxes 758 911 925 1,058 Vehicle license fees 309 483 53 (2)55 Income from property and investments 12,523 8,372 6,088 1,792 Other general revenues 391 328 419 426 Extraordinary gain/(loss)- - 20,477 (3)- Transfers (443) (135) (1,810) (656) Total governmental activities 111,536 109,468 126,203 107,593 Business type activities Property taxes 2,822 2,779 2,721 2,904 Income from property and investments 3,686 2,109 2,054 555 Other general revenues 153 3,599 106 85 Transfers 443 135 1,810 655 Total business-type activities 7,104 8,622 6,691 4,199 Total government 118,640$ 118,090$ 132,894$ 111,792$ Change in Net Position Governmental activities 29,520$ 21,877$ 34,093$ (665)$ Business-type activities 15,959 4,326 6,878 4,304 Total government 45,479$ 26,203$ 40,971$ 3,639$ Source: City of Carlsbad Comprehensive Annual Financial Reports (1) The large increase in general government expenses in FY 2009-10 is primarily a result of a refund of over $10 million in excess development fees paid by Rancho Santa Fe Road property owners. (2) The State of California ceased sending the city vehicle license fee revenues in FY 2011-12. (3) The extraordinary gain in FY 2011-12 resulted from the transfers of the assets and liabilities of the former Redevelopment Agency to Successor Agency trust funds. (4) The large increase in FY 2012-13 includes a repayment to SANDAG of $1.4 million in excess Transnet Funds on inactive/closed projects and a transfer of $4.5 million in surplus construction funds from the Poinsettia Lane Assessment District to be used in the refunding of Reassessment District No. 2012-1. (5) The large increase in FY 2012-13 includes a $3.8 million transfer of an affordable housing loan receivable to the Successor Housing Agency trust fund as required by the California Department of Finance. (6) The increase in FY 2012-13 was the result of a combination of a five percent increase in the number of water units sold coupled with an average eight percent increase in water rates charged to customers and a reimbursement from a lawsuit involving a landslide. (7) The extraordinary loss in FY 2013-14 resulted from the restatement of accrued interest on prior year advances made by the city to the Successor Housing Agency per California state mandate. (8) The decrease in FY 2015-16 was a result of one-time funds received from the federal government in the previous fiscal year for the 2014 Poinsettia Fire, as well as the receipt of retroactive mandated cost reimbursements. (9) The decrease in FY 2015-16 was a result of a decrease in water sales during the fiscal year from drought conservation measures. (10) The increase in FY 2015-16 is a result of higher cash balances that generate interest, an increase in investment earnings, and interest received from the California Department of Finance earned on unpaid mandated costs. (11) The increase in FY 2017-18 is mainly due to changes in the city's pension discount rate. 170 2014 2015 2016 2017 2018 2019 52,608$ 55,992$ 58,945$ 63,988$ 66,524$ 69,952$ 30,520 32,146 34,843 33,999 33,674 38,510 17,472 19,713 20,943 22,267 24,233 26,320 4,907 5,427 5,632 5,475 5,812 6,100 4,177 4,548 4,895 4,328 5,026 5,322 1,080 1,406 1,546 1,393 1,463 1,715 - - - - - - 6,917 4,564 11,910 (10)1,975 2,551 20,695 429 609 486 451 519 439 (10,289) (7)- - - - - (1,188) (1,264) (1,240) (15,067) (136) (219) 106,633 123,141 137,960 118,809 139,666 168,834 2,897 3,133 3,306 3,569 3,743 4,002 2,498 1,870 3,163 749 986 7,784 99 623 39 370 3 113 1,188 1,264 1,240 15,067 136 219 6,682 6,890 7,748 19,755 4,868 12,118 113,315$ 130,031$ 145,708$ 138,564$ 144,534$ 180,952$ 6,587$ 24,771$ 25,787$ 12,408$ 20,094$ 36,694$ 9,648 16,081 12,803 32,925 8,541 8,440 16,235$ 40,852$ 38,590$ 45,333$ 28,635$ 45,134$ 171 Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2010 2011 (2)2012 2013 General Fund Reserved 59,586$ -$ -$ -$ Unreserved 68,935 - - - Nonspendable - 53,943 54,228 57,719 Restricted - - - - Committed - 1,000 1,000 1,000 Assigned - 23,584 22,955 26,200 Unassigned - 57,533 61,384 69,578 Total General Fund 128,521$ 136,060$ 139,567$ 154,497$ All Other Governmental Funds Reserved 50,617$ -$ -$ -$ Unreserved, reported in: Special revenue funds 41,449 - - - Debt service funds (17,824) - - - Capital project funds 262,612 (1)- - - Nonspendable Special revenue funds - 433 440 435 Debt service funds - - - - Capital project funds - 250 - - Restricted Special revenue funds - 65,585 64,401 61,938 Debt service funds - - - - Capital project funds - 171,214 177,372 167,009 (4) Committed Special revenue funds - - - - Debt service funds - - - - Capital project funds - - - - Assigned Special revenue funds - - - - Debt service funds - - - - Capital project funds - 123,473 123,465 121,861 Unassigned Special revenue funds - - - - Debt service funds - (18,658) - (3)- Capital project funds - - - - Total all other governmental funds 336,854$ 342,297$ 365,678$ 351,243$ Source: City of Carlsbad Comprehensive Annual Financial Reports (1) The large decrease in FY 2009-10 in the unreserved fund balance in the capital project funds is primarily a result of a refund of over $10 million in excess development fees paid by Rancho Santa Fe Road property owners. (2) GASB 54, which requires changes in the reporting categories for fund balances, was implemented in FY 2010-11. (3) AB1x26 and AB 1484 were implemented in FY 2011-12. The former Redevelopment Agency debt service funds were transferred to trust funds. (4) The large decreases in the restricted fund balance in the capital projects fund is a result of increased expenditures during FY 2012-13 and 2013-14 for the construction of Alga Norte Community Park. (5) Beginning in FY 2015-16, the Gas Tax fund balance was reclassified from a Special Revenue fund to a Capital Project fund. 172 2014 2015 2016 2017 2018 2019 -$ -$ -$ -$ -$ -$ - - - - - - 56,707 56,381 55,324 53,751 51,628 49,608 - - - - - - 1,000 1,000 1,000 1,000 1,000 1,000 27,838 40,865 42,692 38,439 43,855 33,367 75,615 80,274 94,404 78,191 82,570 101,701 161,160$ 178,520$ 193,420$ 171,381$ 179,053$ 185,676$ -$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - 430 3 4 1 1 1 - - - - - - - - - - - - 66,833 66,300 51,013 (5)51,677 53,246 57,465 - - - - - - 157,712 (4)161,499 176,280 (5)183,245 182,812 194,434 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 131,627 136,237 131,939 146,994 151,306 162,139 - - - - - - - - - - - - - - - - - - 356,602$ 364,039$ 359,236$ 381,917$ 387,365$ 414,039$ 173 Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (dollars in thousands) 2010 2011 2012 2013 Revenues: Taxes 100,249$ 103,660$ 105,595$ 109,447$ Intergovernmental 12,108 12,847 9,603 11,513 Licenses and permits 1,484 1,590 1,852 2,016 Charges for services 10,215 9,938 10,092 10,261 Fines and forfeitures 1,199 1,051 892 861 Income from property and investments 12,719 9,278 6,253 2,362 Contributions from property owners 4,580 5,473 9,927 12,029 Donations 203 310 206 411 Miscellaneous 1,263 2,521 697 1,969 Total revenues 144,020 146,668 145,117 150,869 Expenditures: Current: General government 22,778 16,937 16,992 23,072 Less: Interdepartmental charges (3,991) (3,015) (3,750) (3,858) Public safety 44,686 44,157 44,915 46,162 Community services 34,765 39,540 40,402 40,899 Public works 23,851 13,078 11,773 11,299 Capital outlay 19,727 20,985 17,367 28,602 Debt service: Principal retirement 490 515 851 316 Interest and fiscal charges 1,016 935 308 6 Total expenditures 143,322 133,132 128,858 146,498 Excess (deficiency) of revenues over (under) expenditures 698 13,536 16,259 4,371 Other financing sources (uses): Proceeds from the sale of property - - - - Issuance of debt - 581 - - Transfers in 21,837 9,802 19,887 8,087 Transfers out (22,578) (10,937) (23,097) (14,792) Extraordinary gain (loss)- - 12,847 (2) - Total other financing sources (uses)(741) (554) 9,637 (6,705) Net change in fund balances (43)$ 12,982$ 25,896$ (2,334)$ Debt service as percentage of noncapital expenditures (1)1.18%1.26%0.99%0.24% Source: City of Carlsbad Comprehensive Annual Financial Reports (1) Noncapital expenditures are total expenditures less capital outlay (to the extent capitalized for the Government-wideStatement of Net Position) and expenditures for capitalized assets included within the functional expenditure categories. (2) With the dissolution of Redevelopment Agencies state-wide, the former Redevelopment Agency debt service funds were transferred to trust funds in FY 2011-12. (3) Increase in taxes in FY 2014-15 due to growth in property and TOT taxes. (4) Includes a transfer out to the Golf Course Fund in the amount of $14.8 million for the defeasance of the golf course construction bonds during FY 2016-17. (5) Increase in investment income for FY 2018-19 is due to an increase in the average yield on the investment portfolio for the year as well as an increase due to the fair value adjustment done on investments at fiscal year end (per GASB 31). (6) Increase in public safety expenditures in FY 2018-19 is due to a voluntary $14.2M additional payment to CalPERS to reduce the city's unfunded pension liability in the safety plan. 174 2014 2015 2016 2017 2018 2019 114,996$ 123,411$ (3) 129,617$ 134,165$ 141,118$ 154,673$ 10,602 10,359 11,290 11,963 11,608 14,647 2,184 2,369 2,467 3,034 2,999 2,668 11,278 13,181 12,913 14,309 14,145 13,221 876 837 854 740 679 581 7,604 6,442 9,970 3,845 4,622 23,275 (5) 9,042 10,688 8,009 13,330 12,898 10,301 210 440 417 349 332 1,385 1,219 2,550 1,503 1,467 1,991 3,316 158,011 170,277 177,040 183,202 190,392 224,067 21,471 17,903 17,221 27,925 26,625 24,033 (3,566) (3,807) (3,471) (3,345) (3,160) (4,581) 47,333 48,915 52,015 57,329 58,568 77,550 (6) 41,505 44,501 46,298 48,930 49,039 52,951 15,442 16,350 17,465 17,349 17,220 18,380 18,702 20,050 34,669 17,603 26,885 20,703 159 - - - 10 10 5 5 6 5 7 5 141,051 143,917 164,203 165,796 175,194 189,051 16,960 26,360 12,837 17,406 15,198 35,016 - - - - - - - - - - - - 11,477 14,857 9,970 20,849 11,513 11,881 (16,415) (16,420) (12,710) (37,613) (4)(13,590) (13,600) - - - - - - (4,938) (1,563) (2,740) (16,764) (2,077) (1,719) 12,022$ 24,797$ 10,097$ 642$ 13,121$ 33,297$ 0.13%0.00%0.00%0.00%0.01%0.01% 175 General Governmental Tax Revenues by Source Last Ten Fiscal Years (dollars in thousands) Fiscal Year Property Tax * Sales and Use Taxes Transient Occupancy Taxes Franchise Taxes Business License Taxes Real Property Transfer Taxes Gas Tax Total Tax Revenue 2010 55,113$ 22,819$ 11,490$ 4,906$ 3,458$ 758$ 1,704$ 100,248$ 2011 54,049 26,386 11,569 4,650 3,581 911 2,514 103,660 2012 51,538 (1)28,733 (2)12,872 (2)4,852 3,669 925 3,006 (3)105,595 2013 52,888 29,301 14,702 (4)5,118 3,834 1,058 2,546 109,447 2014 52,607 31,464 17,472 (4)4,907 4,178 1,080 3,288 114,996 2015 55,992 (5)33,202 19,713 (6)5,427 4,548 1,406 3,123 123,411 2016 58,946 35,232 20,943 5,632 4,895 1,545 2,424 129,617 2017 63,988 (5)34,543 22,267 (7)5,475 4,328 1,393 2,171 134,165 2018 66,523 34,972 24,234 (8)5,812 5,026 (9)1,463 3,088 (10)141,118 2019 69,952 40,795 (11)26,320 6,100 5,322 1,715 4,469 154,673 Change 2010-2019 27%79%129%24%54%126%162%54% (1) Primarily the result of commercial and industrial property reassessments and lower amounts received from delinquent taxes. Beginning February 1, 2012, tax increment revenue from the former Redevelopment Agency is recorded in the Successor Agency Trust Fund. (2) Reflects improvement in the economy. (3) The large increases are due to state Section 2103 allocations which became effective in FY 2011 to allocate funds from a motor vehicle fuel excise tax that replaced previous city and county allocations from the Proposition 42 sales tax on gasoline. (4) The increase in TOT in FY 2013 and FY 2014 is due to the opening of two new hotels and higher occupancy and room rates citywide. (5) Reflects improvement in the housing market and new construction. (6) The increase in TOT in FY 2015 is due to the openings of several new hotels and higher occupancy and room rates throughout the city. (7) The increase in TOT in FY 2017 is due to higher room rates throughout most of the city's hotels and an increase in available rooms. (8) The increase in TOT in FY 2018 is due to higher room rates throughout most of the city's hotels and an opening of a new hotel. (9) The increase in Business License Taxes in FY 2018 is due to a significant number of delinquent payments being collected. (10) The increase in Gas Taxes in FY 2018 is due to new ongoing allocations received from the state's Road Maintenance and Rehabilitation Account. (11) The increase in Sales and Use Taxes in FY 2019 is due to overall growth and the ending of the state's sales and use tax "triple flip" in FY 2018. * Includes Vehicle License Fees (VLF) in lieu, property tax increment, low/moderate housing, set aside taxes and CFD No. 1 special taxes. Source: City of Carlsbad Comprehensive Annual Financial Reports $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total General Governmental Tax Revenues -Last Ten Fiscal Years (in thousands) Property Tax Sales and Use Taxes TOT Other Fiscal Year 176 Water and Wastewater Rates Last Ten Fiscal Years Wastewater Fiscal Year Base Price Per Unit (1) Monthly Base Rate 2010 $16.78 $2.29 $20.93 2011 18.00 2.70 23.03 2012 19.80 2.97 24.53 2013 21.38 3.20 25.02 2014 20.07 3.19 25.52 2015 21.08 3.35 26.03 2016 22.19 3.53 27.81 2017 24.11 3.84 27.81 2018 24.72 3.94 27.81 2019 24.72 3.94 27.81 Source: City of Carlsbad Note: Rates shown are for a 5/8" meter, which is the standard household meter size. (1) One unit of water equals 748 gallons. The base price shown is for tier 1, which applies to the first 12 units of usage per month at a single family residence. Water Monthly Delivery Charge 177 Assessed Value of Taxable Property Last Ten Fiscal Years (dollars in millions) Fiscal Year Residential Property Commercial Property Industrial Property Exemptions and Other Taxable Property (1) Net Assessed Valuation Change From Prior Year Estimated Property Tax Revenue (2) Total Direct Tax Rate (3) 2010 $17,086 $3,340 $2,192 $617 $23,235 -1.20%$45 0.1927% 2011 16,946 3,355 2,111 601 23,013 -0.96%44 0.1927% 2012 17,306 3,133 1,983 560 22,982 -0.13%44 0.1927% 2013 17,222 3,237 1,884 614 22,957 -0.11%44 0.1927% 2014 17,774 3,298 1,871 580 23,523 2.47%45 0.1927% 2015 19,450 3,603 1,847 589 25,489 8.36%49 0.1927% 2016 20,431 3,973 1,909 612 26,925 5.63%52 0.1927% 2017 21,472 4,238 2,092 622 28,424 5.57%55 0.1927% 2018 22,707 4,355 2,378 555 29,995 5.53%58 0.1927% 2019 24,077 4,528 2,541 490 31,636 5.47%61 0.1927% (1) Other property includes farm, rural, institutional, recreational, state secured property, unsecured property, personal property and fixtures. (2) Estimated property tax revenues do not include special assessments, redevelopment tax increment or community facilities district revenues. Source: County of San Diego, California Auditor and Controller Notes: Information about estimated actual value of property is not available; the assessed value is based on the most recent sales value and includes secured property only. (3) The total direct tax rate is the city's proportionate share of Proposition 13 property taxes collected within the tax rate area. $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Taxable Assessed Property Value Last Ten Fiscal Years (in millions) Residential Property Commercial Property Industrial Property Fiscal Year 178 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $100 of assessed value) Fiscal Year City of Carlsbad Total Direct Rate (5) Carlsbad Unified School District San Diego County Educational Revenue Augmentation Fund Mira Costa Community College Tri City Hospital District All Other Rates Total Prop 13 Rate (2) Voter Approved Debt (3) Total Tax Rate (4) 2010 0.01927%0.3412%0.1576%0.1497%0.0937%0.0198%0.0453%1.0000%0.0408%1.0408% 2011 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0432 1.0432 2012 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0748 1.0748 2013 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0768 1.0768 2014 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0743 1.0743 2015 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0710 1.0710 2016 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0681 1.0681 2017 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0563 1.0563 2018 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0791 1.0791 2019 0.1927 0.3412 0.1576 0.1497 0.0937 0.0198 0.0453 1.0000 0.0758 1.0758 (1) The tax rate history above is for Tax Rate Area 09000, which has the highest total assessed value of the all the tax rate areas in the city. Tax Rate Area 09000 was chosen as the most representative for the city. (2) In 1978, California voters passed Proposition 13 which limited property taxes to a total maximum rate of 1.00% based on the assessed value of each property being taxed. This 1.00% is shared by all taxing agencies within a tax rate area. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2 percent). With few exceptions, property is only reassessed at the time that it is sold to a new owner. At that point, the purchase price of the property becomes the new assessed value. (3) The majority of voter approved debt is related to various school district and hospital bonds. (4) The Total Tax Rate is the 1.00% Proposition 13 rate plus the Voter Approved Debt rate. (5) The city has no general obligation bonds; therefore the Basic Tax Rate is the same as the Total Direct Tax Rate. Allocation of 1% Ad Valorem Property Taxes Overlapping Rates for Tax Rate Area 09000 (1) Source: County of San Diego Auditor and Controller's Office 179 Direct and Overlapping Property Tax Rates (continued) Last Ten Fiscal Years (rate per $100 of assessed value) Total Tax Rates (2) County Tax Rate Areas (3) Carlsbad Unified Schools Oceanside Unified Schools San Marcos Unified Schools Vista Unified Schools Encinitas Union Schools Mira Costa Comm. College Palomar Comm. College Palomar Health District MWD / SDCWA Total Voter Approved Rates (1) 1.0545 1 - - - - 0.0416%0.0129%- - - 0.0545% 1.0580 44 - - - - 0.0416 0.0129 - - 0.0035 0.0580 1.0660 3 - - - - 0.0416 - 0.0209 - 0.0035 0.0660 1.0723 3 0.0593 - - - - 0.0129 - - - 0.0723 1.0758 57 0.0593 - - - - 0.0129 - - 0.0035 0.0758 1.0760 5 - - - 0.0516 - - 0.0209 - 0.0035 0.0760 1.0829 2 - - 0.0665 - - 0.0129 - - 0.0035 0.0829 1.0837 3 0.0593 - - - - - 0.0209 - 0.0035 0.0837 1.0909 29 - - 0.0665 - - - 0.0209 - 0.0035 0.0909 1.0968 1 0.0593 - - - - 0.0129 - 0.0210 0.0035 0.0968 1.1039 1 - - 0.0665 - - 0.0129 - 0.0210 0.0035 0.1039 1.1119 11 - - 0.0665 - - - 0.0209 0.0210 0.0035 0.1119 1.1124 1 - 0.0960 - - - 0.0129 - - 0.0035 0.1124 (1) The majority of voter approved debt is related to various school district and hospital bonds. (2) The Total Tax Rate is the 1.00% Proposition 13 rate plus the Voter Approved Debt rate. (3) Tax rate areas are determined by the County of San Diego. There are currently thirteen tax rates distributed among the 161 tax rate areas in the city. The table above shows the number of tax rate areas affected by each of the rates. Fiscal Year 2018-19 Voter Approved Debt Tax Rates for all Rate Areas Source: County of San Diego Auditor and Controller's Office 180 Principal Property Taxpayers Current Year and Nine Years Ago Taxpayer Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Taxable Assessed Value Rank Percentage of Total City Net Assessed Value Poseidon Water Desalination Plant 544,402,445$ 1 1.72%$ -- La Costa Glen Retirement Community 260,922,718 2 0.82%230,280,630 1 0.99% La Costa Resort & Spa 237,065,147 3 0.75%204,343,913 3 0.88% Legoland California, LLC 226,235,083 4 0.72%126,054,123 4 0.54% The Forum Shopping Center 198,561,381 5 0.63%84,274,577 9 0.36% The Shoppes at Carlsbad 173,289,771 6 0.55%-- La Costa Town Center, LLC 143,481,791 7 0.45%-- Carlsbad Premium Outlets 126,982,812 8 0.40%114,030,700 6 0.49% Pacific View Apartments 124,725,402 9 0.39%121,238,334 5 0.52% The Reserve at Carlsbad Apartments 115,900,559 10 0.37%82,580,928 10 0.36% Park Hyatt Aviara Resort --216,600,922 2 0.93% Callaway Golf Company --99,591,497 7 0.43% Grand Pacific Palisades Resort --95,986,981 8 0.41% Total 2,151,567,109$ 6.80%1,374,982,605$ 5.92% Net assessed valuation 31,635,528,433$ 23,234,947,883$ Source: County of San Diego Offices of the Auditor and Controller and County Assessor 2019 2010 181 Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Total Tax Levy for Fiscal Year (1)Amount (2) Percentage of Levy Collections in Subsequent Years Amount Percentage of Levy 2010 $58,433,851 $55,030,915 94.18%$1,356,961 $56,387,876 96.50% 2011 56,792,002 53,953,149 95.00%884,139 54,837,288 96.56% 2012 53,682,809 52,778,359 98.32%746,650 53,525,009 99.71% 2013 54,469,819 53,677,921 98.55%571,980 54,249,901 99.60% 2014 55,883,499 55,042,944 98.50%517,082 55,560,026 99.42% 2015 60,266,230 59,509,285 98.74%530,047 60,039,332 99.62% 2016 63,363,527 62,595,504 98.79%459,299 63,054,803 99.51% 2017 67,116,590 66,233,111 98.68%511,597 66,744,708 99.45% 2018 70,221,876 69,383,391 98.81%415,935 69,799,326 99.40% 2019 74,560,530 72,869,105 97.73%N/A 72,869,105 97.73% (1) Includes real property transfer taxes, homeowner exemptions and Proposition 172 public safety sales taxes. (2) Total collections include secured, unsecured, homeowners' exception and supplementary amounts distributed by the county. Collections within the Fiscal Year of the Levy Total Collections to Date Source: County of San Diego Office of the Auditor and Controller $0 $20 $40 $60 $80 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Property Tax Levies & Collections Last Ten Fiscal Years (in millions) Total Tax Levy for Fiscal Year (1)Total Collections to Date Fiscal Year 182 This p a g e is intentionally left blank. 183 Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands except per capita) Fiscal Year Bonds / Special Debt (1) Certificates of Participation Capital Leases Loans Payable 2010 10,250$ $ -$ -$ - 2011 9,735 - - 581 2012 - - - 475 2013 - - - 159 2014 - - - - 2015 - - - - 2016 (5)- - 970 - 2017 - - 784 - 2018 - - 588 - 2019 - - 378 - Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. (1) The 1993 Carlsbad Housing & Redevelopment Commission Tax Allocation Bonds were transferred to a trust fund due to the dissolution of the Redevelopment Agency in FY 2011-12. (2) During FY 2006-07, Carlsbad Municipal Golf Course Revenue Bonds were issued for $18.5 million. (3) The State Water Resources Control Board issued low interest loans for the Carlsbad Water Recycling Facility in 2005, 2006 and 2014. Varying amounts of principal and interest are due annually. Payments are funded from recycled water user fees. (4) Percentage of personal income is calculated using per capita personal income beginning in 2011, in prior years the percentage is calculated using household median income. (5) The Bond/Special Debt is net of amortized premiums and the Loan Payable is net of unamortized discounts. (6) The Carlsbad Municipal Golf Course Revenue Bonds were defeased during FY 2016-17. Governmental Activities Sources: MuniServices, LLC, California Department of Finance, and US Census Data $557 $ 525 $ 402 $ 373 $ 339 $ 313 $ 307 $ 147 $ 136 $ 149 $0 $200 $400 $600 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fiscal Year Outstanding Debt per Capita Last Ten Fiscal Years (in dollars) 184 Bonds / Special Debt (2) Installment Purchase Agreements Loan Payable (4) Capital Leases Total Percentage of Personal Income (3)Per Capita 17,975$ 4,105$ 25,715$ 502$ 58,547$ 0.79%557.30$ 17,670 3,365 24,290 256 55,897 1.38%524.58 17,345 2,585 22,830 14 43,249 1.00%401.67 17,237 1,697 21,335 - 40,428 0.92%373.48 16,645 905 19,837 - 37,387 0.77%339.36 16,260 - 18,429 - 34,689 0.71%313.49 16,058 - 17,670 - 34,698 0.60%307.25 - (6)- 15,901 - 16,685 0.28%146.71 - - 14,944 - 15,532 0.24%135.51 - - 16,827 - 17,205 0.25%149.30 Business-Type Activities 185 City of CarlsbadSchedule of Direct and Overlapping Bonded Debt Current Fiscal Year Fiscal Year 2018-19 Assessed Valuation:$33,056,672,643 Redevelopment Incremental Valuation:1,421,144,210 Adjusted Assessed Valuation:$31,635,528,433 Total Debt City’s Share of Overlapping Tax and Assessment Debt:06/30/19 Debt 6/30/19 Metropolitan Water District 48,050,000$ 1.139%547,290$ Mira Costa Community College District 85,850,000 27.650%23,737,525 Palomar Community College District 618,718,625 2.708%16,754,900 Carlsbad Unified School District 240,948,680 98.132%236,447,759 Carlsbad Unified School District Community Facilities District No 1 1,430,000 100.000%1,430,000 Oceanside Unified School District 222,457,302 0.004%8,898 Vista Unified School District 141,249,882 0.623%879,987 Encinitas Union School District 47,547,433 30.705%14,599,439 San Marcos Unified School District 274,121,554 18.129%49,695,497 San Marcos Unified School District School Facility Improvement District 1,380,653 19.644%271,215 San Marcos Unified School District CFD No. 4 15,800,000 32.779%5,179,082 San Marcos Unified School District CFD No. 5 14,440,000 100.000%14,440,000 San Dieguito Union High School District 333,920,000 9.055%30,236,456 San Dieguito Union HS District CFD No. 94-2 25,725,000 98.343%25,298,737 San Dieguito Union HS District CFD No. 95-2 6,050,000 9.338%564,949 Palomar Health District 431,124,259 1.670%7,199,775 Olivenhain Municipal Water District, Assess. Dist. No. 96-1 9,765,000 22.262%2,173,884 City of Carlsbad CFD No. 3, I.A. No. 1 & No. 2 19,715,000 100.000%19,715,000 City of Carlsbad 1915 Act Bonds 32,380,000 100.000%32,380,000 Total Overlapping Tax and Assessment Debt 2,570,673,388$ 481,560,393$ Source: MuniServices, LLC and County of San Diego Office of the Auditor and Controller (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. Percent Applicable (1) 186 City of CarlsbadSchedule of Direct and Overlapping Bonded Debt (continued) Current Fiscal Year Total Debt City’s Share of Overlapping General Fund Obligation Debt:06/30/19 Debt 6/30/19 San Diego County General Fund Obligations 255,365,000$ 6.316%16,128,853$ San Diego County Pension Obligation Bonds 508,765,000 6.316%32,133,597 San Diego County Superintendent of Schools General Fund Obligations 10,085,000 6.316%636,969 Mira Costa Community College District Certificates of Participation 150,000 27.650%41,475 Palomar Community College District General Fund Obligations 2,140,000 2.708%57,951 Carlsbad Unified School District General Fund Obligations 42,315,000 98.132%41,524,556 San Marcos Unified School District General Fund Obligations 73,382,458 18.129%13,303,506 Vista Unified School District Certificates of Participation 1,895,000 0.623%11,806 San Dieguito Union High School District General Fund Obligations 12,730,000 9.055%1,152,702 Total Overlapping General Fund Obligation Debt 906,827,458$ 104,991,415$ Overlapping Tax Increment Debt (Successor Agency):4,520,000 100.000%4,520,000 (2) Total Overlapping Debt:3,482,020,846$ 591,071,808$ City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations -$ 0.000%-$ Total City of Carlsbad Direct Debt -$ -$ Combined Total Debt 3,482,020,846$ 591,071,808$ (3) Source: MuniServices, LLC and County of San Diego Office of the Auditor and Controller (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Created by the dissolution of the Redevelopment Agency in FY 2011-12. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to FY 2018-19 Assessed Valuation: Total Overlapping Tax and Assessment Debt 1.46% Ratios to FY 2018-19 Adjusted Assessed Valuation: Governmental Activities Direct Debt 0.00% Combined Total Debt 1.87% Percent Applicable (1) 187 City of CarlsbadDirect and Overlapping Debt Last Ten Fiscal Years (rate per $1,000 of assessed value) 2010 2011 2012 2013 Overlapping Tax and Assessment Debt: Metropolitan Water District 0.147$ 0.129$ 0.110$ 0.080$ Mira Costa Community College District - - - - Palomar Community College District 0.207 0.447 0.448 0.375 Carlsbad Unified School District 5.401 8.660 8.527 8.312 Carlsbad Unified School District CFD No. 1 0.230 0.192 0.149 0.103 Oceanside Unified School District 0.001 0.001 0.001 0.001 Vista Unified School District 0.043 0.039 0.038 0.031 Encinitas Union School District 0.205 0.357 0.338 0.454 San Marcos Unified School District - - 3.103 1.711 San Marcos Unified School District Facility Improvement District 0.227 0.202 0.176 0.076 San Marcos Unified School District CFD No. 4 0.245 0.241 0.236 0.230 San Marcos Unified School District CFD No. 5 1.000 0.979 0.950 0.918 San Dieguito Union High School District - - - 0.621 San Dieguito Union HS District CFD No. 94-1 0.004 0.004 0.004 0.004 San Dieguito Union HS District CFD No. 94-2 1.105 1.093 1.106 1.082 San Dieguito Union HS District CFD No. 95-2 0.022 0.022 0.022 0.022 San Dieguito Union HS District combined CFD 0.218 0.215 - - Palomar Health District 0.383 0.444 0.434 0.353 Olivenhain Municipal Water District, Assess. Dist. No. 96-1 0.151 0.147 0.142 0.138 City of Carlsbad CFD No. 3, I.A. No. 1 & No. 2 1.244 1.080 1.063 1.045 City of Carlsbad 1915 Act Bonds 2.685 2.640 2.569 2.107 Total Overlapping Tax and Assessment Debt 13.518$ 16.892$ 19.416$ 17.663$ Overlapping General Fund Obligation Debt: San Diego County General Fund Obligations 1.201$ 1.133$ 1.155$ 1.070$ San Diego County Pension Obligation Bonds 2.470 2.410 2.300 2.017 San Diego City Superintendent of Schools General Fund Obligations 0.061 0.059 0.055 0.047 Mira Costa Community College District Certificates of Participation 0.043 0.036 0.032 0.028 Palomar Community College District General Fund Obligations 0.010 0.009 0.008 0.006 Carlsbad Unified School District General Fund Obligations 2.132 2.089 2.028 1.967 San Marcos Unified School District General Fund Obligations 0.834 0.831 0.837 0.458 Vista Unified School District Certificates of Participation - - - 0.001 Encinitas Union School District Certificates of Participation 0.004 - - - San Dieguito Union High School District General Fund Obligations 0.048 0.049 0.059 0.051 Other Unified School District Certificates of Participation 0.002 0.002 0.002 - Total Overlapping General Fund Obligation Debt 6.805$ 6.618$ 6.476$ 5.645$ Overlapping Tax Increment Debt (Successor Agency):-$ -$ -$ 0.376$ Total Overlapping Debt:20.323 23.510 25.892 23.684 City of Carlsbad Direct Debt: City of Carlsbad Governmental Activities Obligations - 0.025 0.021 0.007 Total City of Carlsbad Direct Debt -$ 0.025$ 0.021$ 0.007$ Combined Total Debt 20.323$ 23.535$ 25.913$ 23.691$ Source: MuniServices, LLC and California Municipal Statistics, Inc. 188 2014 2015 2016 2017 2018 2019 0.062$ 0.049$ 0.039$ 0.030$ 0.023$ 0.017$ - - - - 0.918 0.750 0.361 0.562 0.520 0.619 0.571 0.530 7.921 7.073 6.370 5.816 5.298 7.474 0.052 - - - 0.051 0.045 - - - - - - 0.028 0.025 0.022 0.024 0.018 0.028 0.426 0.385 0.515 0.551 0.506 0.461 2.248 2.087 1.922 1.797 1.706 1.571 0.057 0.035 0.027 0.020 0.014 0.009 0.292 0.254 0.232 0.199 0.181 0.164 0.864 0.690 0.626 0.566 0.509 0.456 0.607 0.967 0.906 1.031 1.032 0.956 0.004 0.003 0.003 0.003 0.003 - 1.032 0.928 0.855 0.983 0.908 0.800 0.023 0.021 0.019 0.017 0.016 0.018 - - - - - - 0.336 0.308 0.285 0.258 0.244 0.228 0.139 0.031 0.102 0.091 0.079 0.069 1.000 0.903 0.836 0.750 0.684 0.623 2.018 1.727 1.564 1.379 1.240 1.024 17.470$ 16.048$ 14.843$ 14.134$ 14.001$ 15.223$ 0.983$ 0.857$ 0.709$ 0.648$ 0.572$ 0.510$ 1.865 1.664 1.497 1.347 1.168 1.016 0.042 0.036 0.031 0.025 0.023 0.020 0.023 0.018 0.014 0.119 0.005 0.001 0.006 0.005 0.004 0.003 0.002 0.002 2.086 1.846 1.692 1.598 1.447 1.313 0.441 0.407 0.376 0.378 0.459 0.421 0.001 0.001 0.001 0.001 - - - - - - - - 0.049 0.047 0.044 0.041 0.039 0.036 - - - - - - 5.496$ 4.881$ 4.368$ 4.160$ 3.715$ 3.319$ 0.341$ 0.290$ 0.250$ 0.212$ 0.177$ 0.143$ 23.307 21.219 19.461 18.506 17.893 18.685 - - - - - -$ -$ -$ -$ -$ -$ 23.307$ 21.219$ 19.461$ 18.506$ 17.893$ 18.685$ 189 Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands) 2010 2011 2012 2013 Net assessed valuation 23,234,948$ 23,012,997$ 22,982,172$ 22,956,650$ Debt limit (25% x 15%)871,311 862,987 861,831 860,874 Less amount of debt applicable to limit: Bonded debt 28,225 27,405 17,345 (1)17,005 Loan payable - 581 475 159 Obligations under capital leases 502 256 14 - Total net debt applicable to limit 28,727 28,242 17,834 17,164 Legal debt margin 842,584$ 834,745$ 843,997$ 843,710$ Total net debt applicable to the limit as a percentage of debt limit 3.30%3.27%2.07%1.99% Source: City of Carlsbad Comprehensive Annual Financial Reports Note: Under state finance law, the city's outstanding general obligation debt should not exceed 15 percent (as adjusted by 25 percent per the law) of total assessed property value. By law, the general obligation debt subject to the limitation (1) The 1993 Carlsbad Housing & Redevelopment Commission Tax Allocation Bonds were transferred to a trust fund due to (2) The golf course bonds were defeased during FY 2016-17. may be offset by amounts set aside for repaying general obligation bonds. the dissolution of the Redevelopment Agency in FY 2011-12. 3.30%3.27% 2.07%1.99%1.89%1.70%1.67% 0.07%0.05%0.03%0% 1% 2% 3% 4% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Percent of Debt Applicable to the Legal Debt Limit Last Ten Fiscal Years Fiscal Year 190 2014 2015 2016 2017 2018 2019 23,522,746$ 25,489,468$ 26,924,891$ 28,423,782$ 29,994,964$ 31,635,528$ 882,103 955,855 1,009,683 1,065,892 1,124,811 1,186,332 16,645 16,260 15,855 - (2)- - - - - - - - - - 970 785 588 378 16,645 16,260 16,825 785 588 378 865,458$ 939,595$ 992,858$ 1,065,107$ 1,124,223$ 1,185,954$ 1.89%1.70%1.67%0.07%0.05%0.03% 191 Pledged-Revenue Coverage Last Ten Fiscal Years 2010 2011 2012 2013 Wastewater Revenue Bonds Gross revenues (1), (5)10,837,232$ 11,564,398$ 12,391,225$ 12,599,601$ Less expenses (2), (5)6,197,845 6,060,142 6,645,436 7,094,310 Net available revenue 4,639,387$ 5,504,256$ 5,745,789$ 5,505,291$ Debt service Principal (5)705,000$ 740,000$ 780,000$ 820,000$ Interest (5)228,006 191,419 152,468 111,469 Total debt service 933,006$ 931,419$ 932,468$ 931,469$ Coverage 4.97 5.91 6.16 5.91 Recycled Water Loans Gross revenues (3)6,635,220$ 5,942,531$ 7,002,009$ 8,160,109$ Less expenses (4)3,300,263 3,629,787 4,133,530 4,019,176 Net available revenue 3,334,957$ 2,312,744$ 2,868,479$ 4,140,933$ Debt service Principal 1,252,343$ 1,282,018$ 1,312,398$ 1,343,498$ Interest 624,140 594,463 564,084 532,983 Total debt service 1,876,483$ 1,876,481$ 1,876,482$ 1,876,481$ Coverage 1.78 1.23 1.53 2.21 Golf Course Revenue Bonds Gross revenues (1), (6)7,080,711$ 7,582,458$ 7,863,951$ 6,777,292$ Less expenses (2), (6)6,426,412 6,356,592 6,177,438 5,954,896 Net available revenue 654,299$ 1,225,866$ 1,686,513$ 822,396$ Debt service Principal (6)290,000$ 305,000$ 325,000$ 340,000$ Interest (6)810,250 798,350 785,750 771,600 Total debt service 1,100,250$ 1,103,350$ 1,110,750$ 1,111,600$ Coverage 0.59 1.11 1.52 0.74 Source: City of Carlsbad Comprehensive Annual Financial Reports (1) Includes operating and non-operating revenues and transfers in from the General Fund. (2) Includes operating and non-operating expenses, excluding interest expense and depreciation. (3) Includes recycled water operating and non-operating revenues and fees. (4) Includes recycled water operating and non-operating expenses, excluding interest expense and depreciation. (5) Debt service on the wastewater revenue bonds was completed during FY 2015-16. (6) The golf course bonds were defeased during FY 2016-17. 192 2014 2015 2016 2017 2018 2019 13,699,286$ 13,723,835$ 13,723,835$ -$ -$ -$ 6,989,194 7,249,798 7,249,798 - - - 6,710,092$ 6,474,037$ 6,474,037$ -$ -$ -$ 860,000$ 905,000$ 905,000$ -$ -$ -$ 68,419 23,191 - - - - 928,419$ 928,191$ 905,000$ -$ -$ -$ 7.23 6.97 7.15 n/a n/a n/a 9,392,061$ 9,210,258$ 8,216,362$ 8,371,467$ 9,869,958$ 8,198,882$ 3,640,786 3,826,699 4,679,706 4,863,054 5,559,509 5,996,366 5,751,275$ 5,383,559$ 3,536,656$ 3,508,413$ 4,310,449$ 2,202,516$ 1,375,337$ 1,407,932$ 1,441,301$ 1,475,461$ 1,510,433$ 1,546,234$ 501,144 468,550 435,182 401,021 366,049 330,248 1,876,481$ 1,876,482$ 1,876,483$ 1,876,482$ 1,876,482$ 1,876,482$ 3.06 2.87 1.88 1.87 2.30 1.17 7,747,116$ 8,428,375$ 8,196,853$ -$ -$ -$ 6,125,159 6,302,019 6,273,320 - - - 1,621,957$ 2,126,356$ 1,923,533$ -$ -$ -$ 360,000$ 385,000$ 405,000$ -$ -$ -$ 755,850 739,088 721,313 - - - 1,115,850$ 1,124,088$ 1,126,313$ -$ -$ -$ 1.45 1.89 1.71 n/a n/a n/a 193 Demographic and Economic Statistics Last Ten Fiscal Years Year Total Population % of S.D. County Population % Change from Previous Year % High School Graduate % Bachelor's Degree or Higher Median Age 2010 105,055 3.30%1.59%n/a n/a 38.7 2011 106,555 3.42%1.43%96.2%51.6%39.4 2012 107,674 3.43%1.05%95.3%50.6%40.3 2013 108,246 3.44%0.53%88.5%35.4%39.3 2014 110,169 3.45%1.78%95.6%51.3%40.3 2015 110,653 3.43%0.44%96.0%51.9%41.1 2016 112,930 3.43%2.06%95.6%54.8%42.1 2017 113,725 3.43%0.70%95.8%54.2%41.9 2018 114,622 3.43%0.79%95.7%55.0%42.3 2019 115,241 3.44%0.54%95.7%58.1%42.6 Sources: MuniServices, LLC Population projections are from the California Department of Finance (2) Per Capita Personal Income is reported starting in FY 2010-11; prior amounts are Median Household Income, adjusted for inflation. Educational Attainment Household and demographic characteristics estimates are from the United States Census Data Sets Tables. Unemployment rate estimates are from the California Employment Development Department, Bureau of Labor Statistics. (1) Personal income is the estimated total aggregate income for the total population. 194 Average Household Size Personal Income (1) (millions) Per Capita Personal Income (2) City Unemployment Rate 2.53 n/a 70,581$ 6.50% 2.53 4,048$ 37,985$ (2)6.80% 2.58 4,304$ 39,975$ 6.30% 2.63 4,403$ 40,672$ 5.90% 2.53 4,862$ 44,134$ 6.30% 2.30 4,907$ 44,345$ 4.30% 2.68 5,741$ 50,838$ 5.20% 2.58 6,060$ 53,285$ 4.20% 2.60 6,496$ 56,675$ 3.00% 2.60 6,889$ 59,780$ 2.60% 195 Principal Employers Current Year and Nine Years Ago Employer Industry Employees Rank % of Total City Employment Employees Rank % of Total City Employment Legoland California Hospitality/Tourism 2,300 1 3.26%1,022 5 1.88% ViaSat Information Technology 2,153 2 3.05%1,940 3 3.57% Life Technologies Life Sciences 1,982 3 2.81%3,988 1 7.34% Omni La Costa Resort & Spa Hospitality/Tourism 1,300 4 1.84%838 7 1.54% Carlsbad Unified School District Education 1,032 5 1.46%983 6 1.81% Gemological Institute of America Research/Education 856 6 1.21%- -- City of Carlsbad Government 746 7 1.06%713 9 1.31% Nortek Security Control Information Technology 637 8 0.90%- -- Optum UnitedHealth Groug Life Sciences 571 9 0.81%- -- HM Electronics Information Technology 571 9 0.81%- -- Taylor Made Golf Company Action Sports 570 10 0.81%2,075 2 3.82% Callaway Golf Company Action Sports - --1,637 4 3.01% Park Hyatt Aviara Resort Hospitality/Tourism - --823 8 1.51% Nordson Asymtek Manufacturing - --671 10 1.23% Subtotal Employees 12,718 18.01%14,690 27.03% Total Employees (estimate)70,614 54,347 Source: Carlsbad Business License Data 2019 2010 196 This p a g e is intentionally left blank. 197 Authorized Full and 3/4 Time City Government Employees by Program Area Last Ten Fiscal Years Program Area 2010 2011 2012 2013 Policy and Leadership Group City Attorney 7.00 7.00 7.00 7.00 City Clerk and Records Management 8.00 8.00 6.25 6.00 City Council 1.00 1.00 1.00 1.00 City Manager 8.00 8.00 7.00 7.00 City Treasurer 0.75 0.75 0.75 0.75 Communications 3.75 2.75 2.75 2.75 Administrative Services Finance and Risk Management 31.00 30.50 30.50 30.50 Human Resources and Workers' Comp 10.00 9.00 9.00 9.00 Information Technology 19.00 22.50 (1)22.50 22.50 Public Safety Police 162.00 162.00 162.00 161.00 Fire 88.75 88.75 87.75 87.75 Community Services Community and Economic Development 50.00 54.00 (1)50.00 47.00 Housing and Neighborhood Services 10.00 11.00 (1)13.00 10.00 Library and Arts 53.00 52.25 51.25 51.25 Parks and Recreation 72.10 71.95 70.95 68.40 Public Works Environmental Management - - - - General Services, Engineering, Environmental 133.00 - (1)- - General Services - 41.60 (1)39.60 40.55 Public Works Administration - - - - Transportation - 58.40 (1)54.40 54.40 Utilities 55.40 69.55 (1)68.55 67.65 Full and 3/4 Time Authorized Employees 712.75 699.00 684.25 674.50 Net Increase/(decrease) over prior year 6.50 (13.75) (14.75) (9.75) Source: City of Carlsbad Operating Budget Notes: A full-time employee is scheduled to work 2,080 hours per year (including vacation and sick-leave). (1) During FY 2010-11, the Community Services, Public Works and Information Technology divisions were reorganized. (2) During FY 2014-15, the Policy and Leadership and Community Services divisions were reorganized. (3) During FY 2015-16 and FY 2016-17, the Public Works division restructured divisions. (4) During FY 2018-19, Police IT was consolidated with city IT, resulting in the transfer of 5.0 FTEs. A 3/4 time employee is scheduled to work 1,560 hours per year (including vacation and sick-leave). 198 2014 2015 2016 2017 2018 2019 7.00 7.00 7.00 6.00 7.00 7.00 5.00 5.00 5.00 5.00 6.00 6.00 1.00 1.00 1.00 1.00 1.00 1.00 7.00 7.00 7.00 8.00 8.00 9.00 0.75 0.75 0.75 0.75 0.75 0.75 2.75 4.75 (2)5.00 5.00 5.00 5.00 31.50 31.50 32.50 33.00 32.00 32.00 9.00 11.00 11.00 11.00 11.00 11.00 22.50 22.50 19.50 20.00 27.00 32.00 (4) 161.00 162.00 168.00 168.00 168.00 169.00 (4) 88.00 89.00 89.00 90.00 90.00 90.00 44.00 44.00 44.00 44.00 44.00 46.00 10.00 12.00 13.00 13.00 13.00 12.00 51.25 50.25 (2)50.50 50.50 50.50 50.50 67.60 61.60 (2)58.15 57.15 57.00 55.00 - - 8.50 9.50 9.70 9.60 - - - - - 40.60 39.90 28.10 (3)51.30 (3)52.00 53.00 - - 8.05 (3)9.85 (3)12.30 7.65 53.40 55.90 57.35 (3)33.00 (3)32.00 35.00 65.40 64.60 60.85 (3)60.20 59.00 61.75 667.75 669.75 674.25 676.25 685.25 693.25 (6.75) 2.00 4.50 2.00 9.00 8.00 199 Operating Indicators by Function/ProgramLast Ten Fiscal Years 2010 2011 2012 2013 General Government Number of applications processed (full and part-time)5,260 2,416 1,998 10,904 (8) Number of external new hires (full and part-time)27 31 16 151 (8) Number of internal promotions / transfers (full-time only)34 5 6 6 Business licenses processed 9,173 9,539 9,303 9,422 Number of outgoing payments processed 40,310 41,344 39,075 38,441 Public Safety Police Calls for service 94,678 97,414 93,248 90,122 Average priority one response (minutes)6.0 5.5 5.9 5.8 Cases 8,826 8,188 7,963 8,314 Fire Emergency responses 9,503 9,084 9,106 10,755 Response time: arrivals on scene within goal standard 74%71%72%71% Community Development Affordable housing units completed 6 5 - 59 Financial assistance to affordable housing projects 3,750,000$ 525,000$ 780,000$ 7,408,000$ Building permits issued n/a 2,600 1,400 1,500 Building inspections conducted 15,500 19,500 19,000 24,000 Final inspections (residential dwelling units)300 260 271 440 Final inspections (commercial square feet)n/a n/a n/a n/a Code Enforcement Actions 3,400 4,320 3,827 4,943 Community Services Library - total material circulation 1,365,127 1,362,700 1,358,839 1,348,333 Library - patron visits 749,514 858,788 858,422 821,045 Cultural Arts - number of events 54 44 50 50 Arts - attendance of events 80,000 80,000 75,000 80,000 Recreation - youth sports participants 1,200 1,200 1,200 1,200 Recreation - adult sports participants 5,400 5,400 5,450 5,200 Recreation - enrichment class enrollees 13,075 13,300 12,650 12,200 Recreation - special events participants 12,000 9,000 10,000 13,000 Recreation - aquatics classes conducted 368 470 557 575 Trees trimmed 1,816 2,221 1,863 1,936 Public Works Streets Road miles resurfaced- overlay or slurry seal 15.3 3.8 25.2 24.3 Carlsbad Municipal Water District Average consumption (millions of gallons per day)15.3 (1)14.1 (1)14.4 15.4 Annual water deliveries (acre feet)17,142 (1)15,786 (1)16,104 17,248 Water connections 27,910 27,978 28,379 28,947 Wastewater Sewage pumped (millions of gallons per day)7.10 7.57 6.92 6.65 Annual flow (millions of gallons)2,590 2,762 2,524 2,426 Wastewater connections 22,335 22,342 22,631 22,955 Source: City of Carlsbad (1) Water deliveries and consumption decreased significantly in FY 2008-09 through 2010-11 as a result of conservation efforts. (2) Increases in the number of participants is the result of the opening of the Alga Norte Community Park in FY 2013-14. (3) Increases in the number of enrichment class and special events participants are the results of overall higher attendance and including recategorized classes previously not classified or included as enrichment classes or special events in prior years. (4) The decrease in patron visits is due to the temporary closures of library facilities for remodeling during FY 2015-16. (5) The decrease is due to the time involved with the implementation of a new licensing system during FY 2016-17. (6) Reporting of information is not available for FY 20167-17 due to the implementation of a new permitting system. (7) Beginning in FY 2016-17, 2,500 acre feet of contracted desalinated water is included in the water purchase totals. (8) Beginning in FY 2012-13, part-time applicants were added to the number of applicants and new hires. 200 2014 2015 2016 2017 2018 2019 9,527 8,551 8,037 9,544 9,455 8,495 284 299 260 292 311 345 47 41 31 58 44 66 10,327 10,735 11,449 8,142 (5)11,267 9,546 39,310 40,663 41,398 41,304 41,869 43,520 87,976 91,314 92,061 84,858 90,760 99,562 5.8 6.5 6.1 5.9 5.8 5.7 8,296 8,349 9,253 8,884 8,643 8,705 9,925 9,830 11,455 12,515 12,039 12,378 63%63%64%64%61%65% - - - - - - -$ 2,646,000$ -$ 1,280,000$ -$ -$ 1,400 1,600 3,000 4,500 4,392 4,133 19,000 21,000 23,000 27,000 22,671 27,222 190 200 200 600 289 545 45,000 60,000 60,000 95,000 155,292 1,829,394 4,794 5,389 10,994 n/a (6)9,538 10,950 1,369,369 1,293,282 1,103,090 1,243,228 1,169,247 1,185,390 791,533 804,003 609,679 (4)720,205 685,188 668,973 62 80 88 79 82 96 75,000 87,000 85,000 79,067 65,817 61,531 2,292 (2)1,000 1,000 968 1,003 1,260 5,600 6,150 5,600 4,500 4,800 4,800 10,350 19,030 (3)19,632 17,402 12,996 17,900 13,600 17,841 (3)19,474 12,150 11,645 9,600 1,018 (2)1,224 684 733 778 830 1,920 2,018 1,965 1,971 1,954 4,340 14.8 18.1 20.0 23.8 25.8 8.3 15.9 14.6 12.1 13.1 14.3 13.0 17,801 16,368 13,578 14,616 (7) 16,032 14,563 29,045 29,190 29,190 29,782 30,054 30,131 6.53 5.90 6.17 5.82 6.32 6.03 2,384 2,152 2,252 2,125 2,306 2,200 23,282 23,431 23,431 23,747 23,863 23,959 201 Capital Asset Statistics Last Ten Fiscal Years 2010 2011 2012 2013 Community Services Number of parks and community fields 31 31 31 31 Acres of developed parks and community fields 183 183 183 183 Acres of open space and community fields 790 790 790 755 Miles of open space trails 47 47 47 47 Number of pools 1 1 1 1 Number of community centers 4 4 4 4 Number of libraries 3 3 3 3 Number of Materials in Library Collections 642,118 645,414 645,414 625,893 Public Safety Fire Protection Number of stations 6 6 6 6 Number of fire trucks 11 11 12 12 Number of ambulances 5 5 5 6 Number of other fire vehicles 14 14 15 15 Police Protection Number of patrol and other vehicles 91 90 90 88 Number of motorcycles 15 11 11 13 Public Works Carlsbad Municipal Water District Miles of lines and mains 447 518 (1)527 534 Wastewater Miles of sewers 282 284 288 288 Streets Miles of streets 340 340 340 343 Number of street lights 7,113 7,126 7,142 7,179 Number of traffic signals 172 172 172 174 Source: City of Carlsbad (1) During FY 2010-11, the figure for miles of lines and mains was adjusted to include recycled lines and mains. (2) During FY 2018-19, the number of vehicles was updated to include both active and reserve vehicles. 202 2014 2015 2016 2017 2018 2019 33 33 33 33 33 33 281 319 319 319 319 319 728 728 728 728 728 787 47 47 47 47 47 52 3 3 3 3 3 3 4 4 4 4 5 5 3 3 3 3 3 3 581,865 574,775 563,581 491,956 477,149 473,154 6 6 6 6 6 6 (2) 13 12 12 12 13 14 (2) 8 7 6 5 5 5 (2) 16 15 18 20 20 25 (2) 114 114 106 106 96 119 (2) 13 14 15 12 13 13 (2) 534 534 559 559 559 559 288 288 288 288 288 288 346 347 348 350 350 350 7,236 7,262 7,265 7,334 7,337 7,388 174 177 177 177 178 179 203 This p a g e is intentionally left blank. 204