CITY COUNCIL: Fiscal Year 2012-2013 Quarterly Performance Report

City of Carmel-by-the-Sea

Fiscal Year 2012-2013

Quarterly Performance Report

First Quarter Fiscal Year 2012-2013

July 1, 2012 – September 30, 2012

Presented to the City Council

November 6, 2012

Summary of Report

FIRST QUARTER
The first quarter of Fiscal Year 2012-2013 ended September 30, 2012. The budget remains tight overall with particular focus on ambulance operations. Significant progress on Key Projects, operations, and capital projects was achieved. Highlights for the first quarter include: Progress has been made on all Key Projects with substantial completion of half of them, department operations are effectively operating under the
revised structure approved as part of the Fiscal Year 2012-2013 Operating Plan, and substantial progress has occurred on all capital projects.

YEAR END
In addition this first quarter report demonstrates the unaudited year end financials on page 7. The Fiscal Year 2011-2012 year end figures show revenues exceeded expenditures by $344,000.

On the revenue side, of the big three revenues, property taxes exceeded budget expectations by $367,000 while transient occupancy taxes fell $33,000 short of budget and sales taxes fell $147,000 short of budget. Transient occupancy taxes ending the year essentially as planned is noteworthy given the La Playa Hotel, a primary historic generator of transient occupancy tax revenue, was closed for remodel for much of the year. Franchise fees continued a trend of steady decline whereas budgets both last year and this year anticipated a rebound; staff is examining ways to manage the revenues including conducting an audit. Revenues overall, not including transfers, ended the year $6,200.00 below budget targets.

On the expenditure side, most operating departments ended the year within budget appropriation. The functional area of Policy and Executive, which includes the departments of City Council, Legal, and the City Administrator Office ended the year within budget limits. Public Safety, which includes Police, Fire and Ambulance, also ended the year within spending limits. Public Services as a function exceeded budget by nearly $20,000. Library remained within appropriation limits. Administrative Services exceeded budget by $12,000 and Community Planning and Development exceeded budget by $15,000.

Status of Key Projects

Work with the City and regional partners to cooperate on assuring a viable long-term water supply.

Status: Peninsula cities jointly created the Monterey Peninsula Regional Water Authority to promote timely development of water projects, to cooperate with other agencies and California-American Water while not duplicating or replacing their missions, and to provide a means for representation in the governance of the Authority that is directly accountable to the residents and businesses receiving a water supply from the replacement and replenishment water projects at a reasonable cost to sufficiently meet the water needs of city and county general plans. The City provided start-up staffing to the Authority during the first part of 2012. California-American Water has proposed the Monterey Peninsula Water Supply Project currently under review by the California Public Utilities Commission. The project consists of a desalination plant, ground water replacement, and aquifer storage and retrieval.

Implement an organizational structure that strengthens the management/leadership of the City to achieve accountability, efficiency and strong customer focus.

Status: The City Council adopted the Fiscal Year 2012-2013 budget and operating plan that establishes an updated organizational structure. The City has implemented a Policy Planning and Management System to manage operations and processes within the organizational structure; this system utilizes a systems approach to manage activities in alignment with the City Council’s adopted objectives, key projects, and policy plans. The system is predicated on core standards of an engaged workforce that include 1) quality service, 2) accountability, 3) efficiency, and 4) customer orientation.

Complete a financial forecast identifying the longer-term trends of the City’s revenues, expenditures and liabilities. Evaluate paid parking, a sales tax rate increase, and a TOT rate increase as sources for additional revenue.

Status: A five-year financial forecast was presented to the City Council on March 20, 2012 and updated and included in the Fiscal Year 2012-2013 adopted budget and operating plan. As part of the budget adoption process, the City Council utilized the forecast data to examine revenue alternatives that would provide a sustainable level of service into the future. The City Council adopted a Service Level Sustainability Plan on June 12, 2012 that included three components: 1) an adopted balanced budget but one that utilizes reserves for ongoing operations, 2) establishment of a hospitality improvement district as a key component of the City’s economic development strategy to encourage overnight visitors, and 3) a November 2012 ballot initiative asking voters to consider approving a temporary sales tax increase to meet the City’s needs to
maintain infrastructure and quality of life.

Examine long-term trends of key revenue sources and recommend a range of possible action including a TOT Incentive Program.

Status: The City Council actively examined revenue trends in advance of its adoption of the Fiscal Year 2012-2013 budget and operating plan. The data is included in an updated and revised operating plan and budget document. Section A of the budget book includes the financial forecast and revenue assumptions, Section B includes business and revenue generating statistics. Section C includes summary schedules of revenue and expenditures. A key chart, included on page B-6 of the adopted budget book, shows the revenue trend of the City’s three primary revenues for a period from 1980-1981 through the forecast period of 2016-2017. The chart demonstrates the slower growth rate of sales tax revenue relative to property tax and transient occupancy tax revenues; this divergence was discussed by the City Council in its adoption of an increase in the sales tax rate as a component of the Service Level Sustainability Plan. A TOT Incentive Program requires additional research to devise a policy solution that will specifically target the projects that will best leverage the use of public funds for private capital improvements. The City Council continued its focus on the economic vitality of the Village’s inns with the creation of the hospitality improvement district.

Begin implementing CalPERS Committee recommendations.

Status: The Carmel CalPERS Pension Committee completed its report and submitted it to the City Council on September 27, 2011. The report includes four recommendations: 1) pay the side fund debt, 2) pass a non-binding resolution to terminate the CalPERS pension plans, 3) include side fund debts and estimated termination unfunded liabilities in the City financial reports, and 4) provide substantially lower defined benefits for new employees. Recommendation #1 is scheduled to be implemented in mid-November 2012. The City Council determined not to act on the specific steps in Recommendation #2 but did direct staff to proceed with the goal of that recommendation of obtaining an accurate actuarial valuation of the City’s pension
obligations. Recommendation #3 is being implemented with reporting included in the revised budget book document (see for example page C-8); the Governmental Accounting Standards Board came to a similar conclusion and is now requiring such reporting as the primary component of its GASB 68 statement. The City Council took a large step in implementing Recommendation #4 with its adoption and implementation of a second retirement tier in April 2012.

While maintaining core competencies, continue to explore options for outsourcing and/or shared services.

Status: This is an ongoing effort and a strategic aspect for the City to meet its future service level responsibilities given current and future fiscal constraint. The City Council, during 2012, entered into an agreement with the City of Monterey to provide ambulance operations management. The City Council, also in 2012, approved a vehicle maintenance agreement with the City of Monterey for fleet maintenance. Staff continues to explore sharing additional back room operations. Equipment sharing with neighboring cities and law enforcement sharing with the City of Pacific Grove is ongoing. Most recently the City Council approved additional funding for code compliance as part of its adoption of the Fiscal Year 2012-2013 budget; the code compliance staff brought onboard is an individual who splits code compliance activities between the City of Monterey and the City of Carmel-by-the-Sea.

Develop funding options for phase one renovation of the Forest Theater.

Status: City staff has applied for three grants for an initial renovation phase of the Forest Theater. The goal is to identify available funding that can be used as leverage for fundraising and funding for planning of a renovation project. The renovation project will need to be identified through a community process and its completion is dependent on funding. A Forest Theater Renovation project is identified in the March 20, 2012 Capital Improvement Plan but the project remains unfunded.

Work to ensure seamless service to residents continues during the fire and ambulance transitions.

Status: The fire and ambulance services the City provides are improved since January 1, 2012. Fire service staffing is being provided by contract with the City of Monterey. Ambulance staffing is being provided by the City of Carmel-by-the-Sea after the dissolution of the Carmel Regional Fire Ambulance Authority. The downtown fire station remains fully staffed with high quality equipment and vehicle apparatus. Fire and ambulance response times remain at low historic levels as demonstrated in the monthly reports provided to the City Council. Operation management is professional with coordination further strengthened and integrated into the City’s management structure and systems with the filling of the position of Public Safety Director.

Complete the design of the Santa Lucia Restroom and seek construction funding.

Status: The restroom design has been a transparent and community involved process that continues to lead to design refinement. The latest iteration is scheduled to go to the Planning Commission in November 2012 and to the City Council in December.  The design, as a result of a public process, is smaller, appropriate for the site location, high quality, and in accordance with the needs of users, neighbors, and residents. Funding is being pursued for the construction phase of the project. The City has pursued two grants for the construction phase of the project and is outreaching to the community for donor support.

Explore water capture, filter and reuse of storm water runoff outflows.

Status: This is an ongoing focus of community and capital planning as the community faces water supply uncertainty and seeks to efficiently utilize local water supplies and available sources. In addition, State storm water run-off mandates encourage the City to manage flows. The completion of the water supply tank project at the Del Mar parking lot doubled the City's capacity of capturing and reusing spring water. The water is used for irrigation along the Scenic bluffs, tree watering throughout the village, sidewalk cleaning, street sweeping, and fire suppression and emergencies. The City is reducing and diverting storm water run-off from reaching the beach. The City installed bulkheads in many of the storm water outfalls. The dry weather flows are minimal enough that they will collect in the storm drain behind the bulkhead during dry weather months. The Ocean Avenue outfall has flows that exceed the ability to use a bulkhead so the City is laying a percolation pipe for approximately one hundred feet along the dunes (south of the Del Mar parking area) that will allow the water to filter into the sand. Next the City will be installing a few other very small percolation beds that will allow runoff to filter into the hill side along Scenic Drive.

Financial Summary
MAJOR FUND BUDGET SUMMARY 25% of the Fiscal Year
Actual Actual Revised Budget Actual Adopted Budget Adjusted Budget First Quarter % of adjusted Proposed Budget
Description FY 2009-10 FY 2010-11 FY 2011-12 FY 2011-12 FY 2012-13 FY 2012-13 FY 2012-13 Budget FY 2013-14
GENERAL FUND
Source of Funds
Taxes 10,190,355 10,368,322 10,780,000 10,982,324 11,361,000 11,361,000 1,129,168 9.94% 11,670,770
Franchise Fees 452,935 476,597 504,608 406,550 512,698 512,698 85,125 16.60% 522,952
Fees & Permits 448,356 390,738 425,000 450,600 430,500 430,500 132,585 30.80% 444,000
Fines & Forfeit 17,007 19,314 35,200 17,907 25,200 25,200 4,462 17.71% 25,960
Intergovernmental 386,658 450,778 382,800 368,948 71,700 71,700 43,342 60.45% 73,134
Other 643,343 810,446 765,259 660,342 428,266 428,266 121,217 28.30% 439,356
Use of Prior Funds 592,178 1,055,458 1,309,080 - 575,002 575,002 - 0.00% 260,408
12,730,832 13,571,653 14,201,947 12,886,671 13,404,366 13,404,366 1,515,899 11.31% 13,436,580
Uses of Funds
Policy & Executive 1,719,774 969,482 1,503,029 1,336,723 1,311,096 1,311,096 292,470 22.31% 1,815,593
Public Safety 4,871,400 4,850,572 5,049,354 4,975,670 6,011,113 6,011,113 1,308,089 21.76% 5,302,235
Public Services 2,069,581 2,113,969 2,501,338 2,525,179 2,635,655 2,635,655 492,603 18.69% 2,376,436
Library 935,990 969,482 952,115 882,223 988,775 988,775 263,668 26.67% 1,012,663
Administrative 1,022,518 891,592 975,821 987,529 1,151,869 1,151,869 545,123 47.33% 1,195,780
Planning & Bldg 537,414 571,994 560,472 585,414 613,779 613,779 158,903 25.89% 640,192
Non-Dept 861,757 1,158,964 1,078,934 681,289 154,879 154,879 151,224 97.64% 954,771
Debt Service 579,257 634,258 533,155 569,060 537,200 537,200 21,668 4.03% 540,200
Capital Outlay 76,000 1,056,000 125,876 - - 82,817 523,336
Other Uses 140,669 225,687 - - - - (0)
12,814,360 13,442,000 13,280,094 12,543,086 13,404,366 13,404,366 3,316,565 24.74% 14,361,205
GAS TAX FUND
Source of Funds
Taxes 66,620 64,117 70,500 115,530 72,450 72,450 11,986 16.54% 75,308
Interest 1,633 - 2,000 554 2,500 2,500 0.00% 2,500
68,253 64,117 72,500 116,084 74,950 74,950 11,986 15.99% 77,808
Uses of Funds
Salaries and Benefits 65,834 44,674 70,500 27,946 - - 7,116 -
Materials & Supplies 1,735 5,600 2,000 - - - -
Capital Outlay - - - - - - -
Transfer to General - - 150,500 80,000 74,950 74,950 4,870 6.50% 77,808
67,569 50,274 223,000 107,946 74,950 74,950 11,986 15.99% 77,808
CAPITAL PROJECTS FUND
Source of Funds
Grants - 247,978 430,000 465,632 48,028 10.31% 30,000
Intergovernmental - 291,000 370,000 370,000 4,844 1.31% -
Fees - 195,000 305,600 305,600 59,690 19.53% 342,200
Transfer in 220,932 295,200 80,000 - 82,817 523,336
Use of Prior Funds - 100,000 1,519,465 562,988 611,758 8,572 1.40% -
Interest
- 220,932 1,129,178 1,599,465 1,668,588 1,752,990 203,950 11.63% 895,536
Uses of Funds
Capital Outlay 1,085,637 1,126,538 1,599,465 1,668,588 1,752,990 203,950 11.63% 895,536
Designated for Future - - - -
- 1,085,637 1,126,538 1,599,465 1,668,588 1,752,990 203,950 11.63% 895,536
AMBULANCE FUND
Source of Funds
Call Income - - 350,000 28,212 370,000 370,000 71,970 19.45% 370,000
Transfer in - 112,000 323,888 433,179 433,179 109,032 25.17% 452,933
Debts Recovered - - 400 - - 2,500
- - 462,400 352,100 803,179 803,179 181,002 22.54% 825,433
Uses of Funds
Salaries and Benefits - 44,674 383,263 313,989 667,547 667,547 155,383 23.28% 688,454
Materials & Supplies - 5,600 79,137 38,111 135,632 135,632 25,619 18.89% 136,980
- 50,274 462,400 352,100 803,179 803,179 181,002 22.54% 825,433



Department Summary
Note: This section reports on variances of actual expenditures compared to budget. The summaries differentiate timing variances from true variances. A timing variance is when an expenditure is anticipated in the adopted annual budget but does not occur at the anticipated time or on an even quarterly basis (for example a one-time expenditure that occurs in the first quarter). A true variance is an expenditure that is not anticipated in the adopted budget.

REVENUE
Revenue estimates are as anticipated through the first quarter. Although franchise fees remain an area of watch, at this point there is no indication overall revenue will be short of adopted projections. The adopted revenue budget does not anticipate revenue from Measure D nor from State intergovernmental revenue that is potentially subject to known State budget reductions.

CITY COUNCIL

The City Council budget is nearly 60% expended primarily as a result of timing. Annual citywide dues are paid early in the fiscal year resulting in much of the department’s expenditures being front loaded in the fiscal year. The dues for the Monterey Peninsula Regional Water Authority were approved by the City Council at an amount higher than budgeted; as a result of this true variance, a mid-year budget adjustment for the City’s
dues and memberships is likely.

Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Attend and participate in
City Council meetings 36 32 7 30 30
Set City goals and
objectives Yes Yes n/a Yes Yes
Number of ordinances
adopted 3 5 3 5 5
Number of resolutions
adopted 74 80 25 70 70
LEGAL
The expenditures for Legal are below budget limits as of the end of the first quarter.
Some of the positive variance is a result of timing due to the billing process. Legal
expenditures for Fiscal Year 2011-2012 were $448,240 against a budget of $454,333.
Department Summary
16
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Resolve 66% of litigation
cases without any
payment to plaintiff 43% 70% 100% 70% 70%
Provide advice on an
estimated number of
agenda items per year 204 225 18 230 230
Respond to 85% of legal
requests by negotiated
target date 85% 90% 92% 90% 90%
CITY ADMINISTRATOR OFFICE
The City Administrator Office budget is 21% expended at the quarter point of the fiscal
year. The Office also provides operational oversight of the Marketing and Economic
Development component and Community Services. The Marketing and Economic
Development budget is only 8% expended as of the end of the first quarter as most
regional marketing efforts occur during the second and third quarters. 13% of the
Community Services budget is expended at the quarter point of the fiscal year with the
savings primarily in part-time assistance due to a vacancy. The operational oversight
and coordination of Marketing and Economic Development and Community Services has
enabled the City to better cooperate efforts with partner agencies. For example, the
City began holding quarter economic development and marketing staff meetings with
organizations that also focus on marketing and economic development for the City of
Carmel-by-the-Sea. These meetings enable staff from the various organizations to share
ideas and strategies to assure there is not overlap of efforts and to work cooperatively.
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Conduct quarterly
operational review
meetings 18 28 6 28 28
Complete Department
manager performance
reviews before due date 7 8 n/a 6 6
47/48 50/50 15/15 50/50 50/50
98% 100% 100% 100% 100%
% of error free City Council
agendas 64% 80% 33% 100% 100%
% Public Records Act
requests processed within
10 days
17
ADMINISTRATIVE SERVICES
The Administrative Services budget shows expenditures at 47% at the 25% point of the
fiscal year. The primary contributor to this variance is the annual payment of the City's
insurance premiums. Taking this timing variance into account, the Administrative
Services Department budget is at 27.6% of expenditures at the end of the first quarter.
During the first quarter the Department completed acquisition of a replacement copier
in City Hall, installed workshop microphones in the Council Chambers, provided
necessary analysis for the proposed pension obligation bond issuance, and published
the adopted budget book.
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
% employee performance
reviews completed on time 38% 95% 39% 95% 95%
# of worker comp claims 11 8 2 5 5
IT expenditures per
workstation $ 7,163 $ 7,628 8,848 $ 7,909 $ 8,136
# of Budget Revisions 26 10 2 10 10
COMMUNITY PLANNING AND BUILDING
The Community Planning and Building Department is realizing revenue growth slightly
above budgeted levels due to a continuing increase in development projects and
remodels. As of the end of the first quarter the Department had one vacancy, the
temporary code compliance position. The early part of the second quarter saw the
hiring of the temporary code compliance contractor and the resignation of the
Community Planning and Building Services Manager. A recruitment process for this
position is under way.
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Review all design review
applications for
completeness within 2 weeks 85% 90% 83% 95% 95%
Provide building permit plan
check corrections w/in 3 wks 90% 95% 98% 98% 98%
Avg. 2 days from first code
complaint to investigation 75% 85% 90% 90% 95%
Complete 100% of
inspections within three
business days of request 90% 95% 100% 98% 98%
18
PUBLIC SERVICES
Public Services made progress on a number of projects during the first quarter. The
annual street paving project was awarded in September and work will be completed in
October. Winter storm preparation will begin in October. The bridge replacement
project at Mission Trail Nature Preserve began. The tree pruning contract was awarded
in September and work is anticipated to begin in November. The Public Services budget
is 19% expended at the end of the first quarter. The positive variance is a result of
salary savings due to a vacancy in Facilities Maintenance and a timing variance in Forest,
Parks, and Beach due to tree maintenance work occurring later in the fiscal year.
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Custodial expenditure per
square foot $ 0.90 $ 0.94 $ 1.08 $ 0.94 $ 0.95
City trees receiving
preventative maint. out of
total inventory of 9681 350 500 150 500 500
% of lane miles assessed
at satisfactory or better 53% 52% 52% 51% 51%
Street sweeping
expenditure per capita $ 36.65 $ 37.45 $ 35.64 $ 38.00 $ 38.50
PUBLIC SAFETY
While there were a number of incidents and calls for public safety service during first
quarter, there were no multi casualty events. The City hired a Public Safety Director and
a police sergeant, the fire function remains strong and fully staffed, and the ambulance
services have continued the healthy transition to being a city provided service.
Ambulance is maintaining an unfunded vacancy and the service area responsibility
remains in flux thereby potentially impacting closest unit response standards and
revenue estimates. The ambulance subsidy is impacting the General Fund nondepartmental
budget as a result of the required transfer to the Ambulance Fund to
meet operational costs. The Public Safety budget is slightly below budget due primarily
to a timing variance for fire services.
19
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
Total Fire expen per capita
(excludes ambulance) $ 515.81 $ 495.72 $ 409.76 $ 500.80 $ 508.03
% of total fire calls w/ a
response time of < 5 min. from
dispatch to arrival 90% 95% 98% 95% 95%
% full cardiac arrest patients
with a pulse upon delivery 100% 100% 100% 100%
% of UCR Pt 1 crimes cleared 10% 25% 33% 25% 30%
Maintain a 85% completion in
the Carmel Diversion Program 87% 90% 87% 90% 90%
LIBRARY
Updates to the Department’s five-year Strategic Workplan are under way. User surveys
are being solicited. The library continues to evolve services to meet user demand. The
library is now able to track WiFi users and has included that data as a new performance
indicator below. In addition, the library has undertaken a project to circulate eReaders.
The Library Department is fully staffed. The budget expenditures were nearly 27% at
the end of the first quarter.
Performance FY 11-12 FY 12-13 Q1 12-13 FY 13-14 FY 14-15
# of library visits 91,000 94,000 26,328 95,000 96,000
Total Circulation 140,000 145,000 38,509 150,000 150,000
Users of public internet
computers per year 15,000 15,000 3,796 15,000 15,000
WiFi Users 533
Registered borrowers 12,600 10,600 8,754 11,000 11,500
General Fund contribution
per registered borrower $ 73.27 $ 93.30 $ 120.17 $ 91.03 $ 87.07
20
CAPITAL PROJECTS
Vehicle acquisition: The Fiscal Year 2012-2013 budget includes $386,077 for vehicle
lease payments ($301,077) and purchases ($85,000). The new patrol vehicle has been
delivered and equipment is now being installed. The new Public Works vehicle has been
delivered. The parking enforcement vehicle (budgeted last fiscal year) is pending
delivery.
ASBS Dry Weather Diversion: This storm drain runoff project has the goal of eliminating
dry weather flows to the beach. Engineering is designing improvements and work is
anticipated to occur in Spring 2013.
Alerting System: This is a grant funded project and grant applications have been
submitted and are under review.
Rio Park Improvements: During the first quarter the City Council held a community
workshop on Rio Park. Additional ongoing funding will need to be identified. The
immediate task coming out of the workshop was to secure a pedestrian pathway from
Rio Road to the intersection of Lasuen Road and Dolores Street.
Interface for patrol audio/video equipment: The project is complete. Auto downloading
of audio and video data is proving more efficient with an improved chain of evidence
control.
Mobile data terminal software and installation: This project is being applied to the new
police patrol vehicle; equipment is being installed in the new police patrol vehicle.
Testing of the effectiveness of the equipment will be completed prior to full vehicle fleet
installation.
Self contained breathing apparatus: This is a grant funded project and grant
applications have been submitted and are under review. This is a multijurisdictional
grant request which typically makes the grant more attractive for award.
Del Mar Master plan: The design has been approved by the City Council and the grant
awarded. The construction bid was awarded for the boardwalk and San Antonio
pathway. The project is anticipated to be under way during the second quarter of this
fiscal year.

Forest Theater Renovation: The City has submitted two grant applications and is searching for additional foundation opportunities for the Forest Theater renovation.
Funding would enable a planning process to occur to identify a renovation project and phasing.

Street and Road projects: The annual street and road construction project is under way following the City Council approval in September 2012. There have been no adjustments to the projects from those included in the Capital Improvement Plan and approved by the City Council. The project experienced slight weather delay but is anticipated to be complete in the second quarter of this fiscal year.

Sunset Center roof repairs: A leak detection contractor is obtained and available for immediate response. There was insufficient saturation during the first quarter to identify leak location; identifying necessary repairs requires active leaking and/or saturation. Scheduling of the diagnostic work will occur as weather permits.