CITY COUNCIL: FY 2007/08 Quarterly Financial Report ended June 30, 2008

CITY OF CARMEL-BY-THE-SEA
FY 2007-08 QUARTERLY FINANCIAL REPORT
TWELVE MONTHS ENDED JUNE 30, 2008
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This report summarizes the 2007-08 fiscal year activities of the City’s General Fund and is not meant to be inclusive of all finance and accounting transactions. It is intended to provide the City Council and the public with an overview of the state of the City’s general fiscal condition. The financial figures included in this report are not audited.

Revenue Trends
The City’s total General Fund revenues for the twelve months ended June 30, 2008 totaled $13,873,666 as compared to the annual budget of $13,502,610. Below is a summary of the City’s revenues starting with the City’s “Big 3” revenue sources, which account for 76% of the total revenues budget.

City of Carmel-by-the-Sea
Financial Report as of 6/30/08

Transient Occupancy Tax (TOT)
TOT receipts for the fiscal year were up by about 4.5% as compared to the previous fiscal year and were higher than budget by $175,330. This is very good news as the City’s budget is heavily dependent on tourism revenues. Occupancy rates averaged 64.74% and average room rates were $182.95 for the fiscal year.

Property Tax
Property tax revenues totaled $3,867,213 for the fiscal year, which is about 3.8% higher than the previous year. The two categories that did not reach the budgeted amounts were Property Transfer Taxes and Unsecured Taxes. When combined, these two categories were about $17,000 lower than expected. Overall, all Property Taxes received were $67,213 higher than budget.

Sales Tax
Despite some indications earlier in the year that Sales Tax revenues may be lagging as compared to previous years, revenue for the fiscal year met and exceeded budget by $145,217. The total received of $2,362,217 is about 10% higher than what was received in FY 2006-07. This total will be adjusted up or down when the City receives the State Board of Equalization’s final reconciliation for the period, which is due in late September.

Business License Tax
Business license tax revenues ended the year with a $17,000 positive budget variance. The annual revenues were approximately 18% higher than the previous fiscal year, primarily due to the higher business license tax rate approved in November 2006.

Interest Income & Parking Lot Revenues
In this category, interest income came in very close to budget but parking lot revenues were lower than budget by about $27,000. This was primarily due to a decrease in Sunset Center north parking lot revenues, which were down approximately 4% as compared to the previous year.

Fees and Permits
Revenues from fees and permits did not reach the annual budget. The shortfall was about $16,000, primarily due to building and planning permits. Because of the lower building and planning fee activity in FY 2007-08, amounts for the FY 2008-09 budget were adjusted down accordingly during the budget process.

Franchise Fees
The $426,149 collected in franchise fees includes payments from American Water (Cal-Am), Comcast, Waste Management, and PG&E. The $29,801 budget shortfall is primarily due to lower than expected franchise fees from American Water. In FY 2006-07, American Water made an overpayment to the City and adjusted accordingly when remitting its franchise fees in FY 2007-08. This negative adjustment of approximately $56,000 was offset by favorable budget variances from the other franchisee payments.

Other Governmental Agencies
Revenues from Other Governmental Agencies in total came in very close to budget despite lower than expected State POST training reimbursements and a loss of State booking and processing fees. The main source of revenue in this category is State Motor Vehicle In Lieu fees, which came in about $15,000 higher than budget.

Traffic Safety
Traffic safety revenues ended the year with a strong positive budget variance of $78,527. The main factors contributing to this positive variance are a fully staffed traffic enforcement program and high collection rates maintained by the City’s contracted citation collector, Enforcement Technology.

Expenditures
The City’s total expenditures for the fiscal year totaled $12,625,856 as compared to the year-to-date budget of $12,669,624. Two categories with negative budget variances are the Regional Ambulance Subsidy and Utilities. The total spent of $500,494 for the Regional Ambulance Subsidy includes a prior yearend audit adjustment of $78,520. The latest estimate by CRFA of Carmel’s subsidy for FY 2007-08 is approximately $441,000. The final subsidy amount will be confirmed once the CRFA 2007-08 audit is completed.

Capital Projects and Equipment Acquisition
The Capital Outlays and Capital Improvement revised budget for FY 2007-08 was
$1,297,326 based on the list of projects below. The total spent for the year was
$1,021,334. Several of the projects with significant positive budget variances have continued on in the new fiscal year, such as the General Plan, Historic Context Statement, Fire Department Generator, Forest Study Implementation, Del Mar & N. Dunes Master Plan, Sunset Center Theater Sound System, and Mission Trails Pedestrian Footbridge Grant Project.

The Mission Street repaving project shows a negative budget variance of $75,936. However, the City received a TAMC grant of nearly $72,000 towards this project, which reduced the negative budget variance to about $4,000.

Summary of Financial Results-Twelve Months Ended June 30, 2008
The results for FY 2007-08 show a net surplus of $226,476 as compared to an expected deficit of $(464,340). The actual results are unaudited and therefore may change after the annual audit process is complete.

It is important to note that the results below do not include two transfers out of the General Fund that were approved by the City Council in January 2008 (Resolution 2008-8). With this resolution, the City Council approved using the FY 2006-07 General Fund surplus to payoff existing lease obligations and purchase Public Safety equipment. In addition, the Council approved transferring $772,443 from the General Fund to the Capital Project Reserve and $677,278 to a new Debt Reduction Reserve to make future debt payments on the Sunset Center Bond debt.

Status of Grant-funded Projects
Carmel-by-the-Sea
As of August 31, 2008
Projects in progress
Description and Status
Funding Source and Budget Amount
Project Period

Sunset Center Landscaping, Phase II
1. Landscaping at San Carlos Avenue entrance – completed.
2. Landscaping, new patio on Carpenter Hall Terrace – completed.
3. Landscaping and stairway repair on Hamilton Brown Terrace – completed except for additional landscaping if funds remain.

2002 Bond Act, Per Capita fund: $220,000
Roberti-Z’berg-Harris fund: $ 11,048
City match: $ 0
July 2003 to June 2011

Sunset Center Landscaping, Phase I
Planting of large trees and other landscaping – completed.
2000 Bond Act, Per Capita fund: $ 42,000
Roberti-Z’berg-Harris fund: $ 13,481
City match: $ 10,497
July 2001 to June 2009

Fourth Avenue Riparian Habitat and Pathway
Phase I (tree removal) completed. Final design plans and construction drawings are
completed. Contract for construction is in progress.
Riparian and Riverine Habitat Grant, CA Parks and Recreation Dept: $373,000
City match: $415,000
July 2002 to June 2010

Mission Trails Pedestrian Footbridge
New pedestrian footbridge at Mission Trails Nature Preserve – in engineering and
design phase
Monterey Peninsula Regional Park District $10,000
City match: 5,000
Dec 2007 to June 2009

Community Events
Supplemental Support
To support community events such as the 4th of July Celebration, Great Sandcastle
Contest, City’s Birthday Party and Parade, and Holiday Tree Lighting.
AT&T Youth Fund: $ 5,000
City match: $ 0
July 2008 to June 2009

Proposals submitted
Description and Status
Funding Source and Budget Amount
Project Period
Emergency Operations Center Grant Program
Install new diesel emergency generator for EOC, Youth Center, and Public Works;
purchase new radios and computers.
Pending.
Department of Homeland Security: $150,750
City match: $ 50,250
January 2009 to August 2009

Proposals not approved
Description Funding Source
Urban Drought Assistance Grant
New 20,000 underground water storage tank at foot of Ocean Avenue.
State Water Resources Control
Board: $91,265
City match: $22,816

Proposals in progress
Description and Status
Funding Source and Budget Amount
Project period
ASBS Grant program
Diversion system to be designed and constructed to prevent storm water/urban runoff into Carmel Bay.
State Water Resources Control
Board, Prop 84: $2,500,000
City match: $ 125,000
June 2009 to June 2013