CITY COUNCIL: FY 2008/09 Quarterly Financial Report Ended September 30, 2008

CITY OF CARMEL-BY-THE-SEA
FY 2008-09 QUARTERLY FINANCIAL REPORT
THREE MONTHS ENDED SEPTEMBER 30, 2008
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This report summarizes the first quarter of the 2008-09 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 quarter ended September 30, 2008 totaled $2,529,706 as compared to the quarterly budget of $2,628,514. Below is a summary of the City’s revenues starting with the City’s “Big 3” revenue sources, which account for approximately 80% of the total revenues budget. Overall, revenues were below budget by nearly $99,000.


Transient Occupancy Tax (TOT)
TOT receipts included in this report were for July and August 2008. Due to the change from a quarterly to bimonthly collection period made in January 2008, there is no previous year bimonthly period for which to compare the receipts for July and August. However, based on past quarterly collection periods, July and August TOT should represent roughly 23% of the annual budget. By using this percentage, the actual TOT is lower than expected by about $40,000. Occupancy rates for the July-August period averaged 88.38% and average room rates were $197.38.

Property Tax
Property tax revenues in the first quarter included only Property “Transfer Taxes”. Transfer taxes are assessed at a rate of $1.10/$1,000 when properties are sold. The amount of Property Transfer Taxes received is below budget by $15,236 and is about 21% lower than the previous year’s first quarter. The lower amount appears to be a reflection of the housing market downturn. The first large regular property tax payment from Monterey County is due to the City in December

Sales Tax
Sales tax revenues of $400,926 are below budget by about $23,000. As compared to the previous year, the revenues are down about 8%. With the slow economy, this revenue source will be tracked closely and adjusted down at mid-year, if necessary.

Business License Tax
Business license tax revenues of $538,230 are down by about 1% as compared to budget. However, the total is approximately 3.7% higher than the previous year.

Interest Income & Parking Lot Revenues
In this category, the unfavorable budget variance of $21,687 is primarily due to lower interest income on the City’s investments in LAIF. In the first quarter, LAIF investments earned an average of 2.78%. This rate compares to a rate of 5.25% in the first quarter of FY 2007-08.

Fees and Permits
Revenues from fees and permits totaled $140,923, which is close to $6,000 over budget. This category is budgeted at 12% lower than the previous year due to less building permit activity.

Franchise Fees
The $80,150 in franchise fees include garbage and cable fees and is about 5% higher than the previous year’s first quarter. Other franchise fees (from American Water (Cal-Am) and PG&E) are received on an annual basis and not quarterly.

Other Governmental Agencies
Revenues from Other Governmental Agencies include State Motor Vehicle In-Lieu fees. The unfavorable variance is due to timing of State POST reimbursements for Public
Safety training.

Traffic Safety
Traffic safety revenues of $75,227 were close to 9% above the previous year but lower than expected by almost $7,500. Traffic safety revenues fluctuate based on the number of visitors so this revenue source may be affected if Carmel’s tourism is affected by the economy.

Expenditures
The City’s total expenditures for the first quarter totaled $3,585,331 as compared to the year-to-date budget of $3,878,879. Two categories with the largest favorable budget variances are Salaries and Wages and the Regional Ambulance Subsidy.

For Salaries and Wages, there were new positions in the budget not yet filled by
September 30, 2008. For the Regional Ambulance Subsidy, no payments were made during the first quarter to CRFA, so the variance is merely a timing issue. The first subsidy payment was made in October.

Capital Projects and Equipment Acquisition
The FY 2008-09 Capital Budget totals $1,446,302, representing 10% of the City’s budgeted expenditures. Below is a recap of the amounts spent in the first quarter with many projects just starting for the fiscal year. It is expected that capital budget expenditures will continue throughout the fiscal year as projects are completed.


Summary of Financial Results-Quarter Ended September 30, 2008
The results for the first quarter of FY 2008-09 show a deficit of $(1,181,086) as compared to an expected deficit of $(1,661,585). Deficits are projected for the first quarter due to timing of transient occupancy taxes and property taxes. Although revenues came in nearly $99,000 lower than budget, the revenue losses were offset by both operating and capital improvement expenditures with favorable budget variances. At mid-year, the City Council will have the opportunity to review updated financial reports and make decisions about budget adjustments where necessary.


City of Carmel-by-the-Sea
Financial Reports
For Quarter Ended September 30, 2008 (Unaudited)

City of Carmel-by-the-Sea
1st Qtr FY 2008-09 “Big 3”
Revenues
2008-09 2008-09
Budget Actual Variance
TOT $ 995,860 $ 955,728 $(40,132)
PROP TAX 49,316 34,080 (15,236)
SALES TAX 423,989 400,926 (23,063)

City of Carmel-by-the-Sea
1st Qtr FY 2008-09 Capital Expenditures
Highlights
2008-09 2008-09
Annual Budget Actual
General Plan $ 60,000 $27,917
Police Dept Cameras 32,400 27,640
Police Dept Motorcycles 24,500 22,722
Street & Road Projects 470,600 16,115

Status of Grant-funded Projects Carmel-by-the-Sea
1st Quarter, FY08-09: June through September
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 – stairway and nearby landscaping and irrigation completed. Additional landscaping and lighting on terrace will be completed with remaining funds.
2002 Bond Act, Per Capita fund: $220,000
Roberti-Z’berg-Harris fund: $ 11,048
City match: $ 0
July 2003 to June 2011

Fourth Avenue Riparian Habitat and Pathway
Phase I (tree removal) completed. Final design plans and construction drawings are
complete. Construction contract has been awarded and work is expected to begin soon.
Riparian and Riverine Habitat Grant, CA Parks and Recreation Dept: $373,000
City match: $415,000
July 2002 to June 2010

Proposals submitted
Description and Status Funding Source and Budget Amount
Project Period

ASBS Grant program
Diversion system to be designed and constructed to reduce storm water/urban runoff into Carmel Bay. Concept proposal approved; full proposal was submitted September 10th.
State Water Resources Control Board, Prop 84: $2,500,000
City match: $ 125,000
June 2009 to June 2013

Proposals not approved
Description Funding Source
Emergency Operations Center Grant Program
Install new diesel emergency generator for EOC, Youth Center, and Public Works; purchase new radios and computers.
Department of Homeland Security: $150,750
City match: $ 50,250

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
None.