2025-05-13; City Council; 10; Economic and Financial Update for the Third Quarter of Fiscal Year 2024-25 and Midyear Budget Review

CA Review AZ

Meeting Date: May 13, 2025

To: Mayor and City Council

From: Geoff Patnoe, City Manager

Staff Contact: Zach Korach, Finance Director
[email protected], 442-339-2127
Matt Sanford, Economic Development Director
[email protected], 442-339-5987
Subject: Economic and Financial Update for the Third Quarter of Fiscal Year 2024- 25 and Midyear Budget Review
Districts: All

Recommended Actions
Receive a report on the economic and financial update for the third quarter of fiscal year 2024- 25 and provide direction as appropriate.

Executive Summary
The City Manager has committed to providing quarterly updates to the City Council on the city’s economic outlook and finances. The update reviews the city’s economic and fiscal health and serves as a measure of budgetary performance.

In this report, staff will provide information on national, state, regional and Carlsbad-specific economic data and the city’s most recent financial data.

This report also details recent economic trends and information on current impacts on our local economy. In line with regional trends, Carlsbad experienced increases in revenues in almost all categories when compared to the same quarter in the previous fiscal year, from October to December, and expenditures are in line with the prior year’s rate of spending.

Explanation & Analysis
Economic update
Carlsbad’s economy remains resilient and diversified, supported by five key industry clusters:
life sciences, technology, clean technology, sports and active lifestyle, and hospitality and tourism. These industries continue to provide some stability amid mixed national economic signals and evolving federal policy directions.

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Item #10 Page 1 of 29
Gross regional product
Carlsbad is the second largest economy in San Diego County. In 2024, Carlsbad’s estimated gross regional product was $16.8 billion, a $50 million decrease from the adjusted 2023 total of $16.85 billion, representing a 0.3% contraction. This modest decline reflects growth in hospitality, real estate and health care, offset by declines in manufacturing, professional and technical services and administrative services. Declining consumer demand may present additional challenges moving forward.

Labor market conditions
Carlsbad’s unemployment rate increased slightly, ending the quarter at 4.1%, up from 4% in December 2024. Job postings for the quarter totaled 6,043, an increase from the previous quarter but down slightly from the same period last year. Approximately 1,357 Carlsbad employers posted open positions.

At the national level, the unemployment rate remained steady at 4.2% in March. However, job openings declined to 7.2 million, down more than 900,000 year over year, suggesting a cooling in labor demand. Despite this, job growth continues in health care, social assistance and transportation, while layoffs remain low.

Commercial real estate trends
The commercial real estate market in Carlsbad remained relatively stable during Q3 FY 2024–

25. Industrial vacancies increased by 2.63%, office vacancies increased by 0.7%, and retail vacancies dropped by 2.08%. Staff have started to see renewed interest in office and industrial sites after a two-year cooling period – a positive sign. As some of that interest is realized, it should cause a rebound in those property types.

Housing market and cost of living
Carlsbad’s median home price rose to $1.54 million in March 2025, a 4.3% year-over-year increase. While the Federal Reserve enacted several rate cuts in late 2024, mortgage rates remained elevated due to ongoing inflation and tight housing inventory. Housing affordability continues to impact workforce attraction and retention, as some employees relocate to more affordable areas, resulting in longer commutes and increasing pressure on local employers.

Federal policy and macroeconomic considerations
Recent trade policy changes, including fluctuating tariff levels on imports from China, Canada, and Mexico, have affected input costs and supply chains across the U.S., with potential downstream impacts on Carlsbad’s manufacturing and clean tech sectors. Nationally, the gross domestic product contracted by 0.3% in Q1 2025, largely due to import surges ahead of the implementation of tariffs. In addition, proposed reductions to federal research grants and travel restrictions for federal agency staff could disproportionately impact Carlsbad’s life sciences and healthcare industries, which rely heavily on federal funding and collaboration.

Conclusion
We are in an uncertain economic environment with near-daily changes in outlook. However, Carlsbad’s economy remains strong and is in a competitive position to weather ongoing macroeconomic changes. Continued monitoring of federal policy impacts, labor force dynamics and cost-of-living pressures will be essential in adapting strategies that support local economic resilience.

May 13, 2025
Item #10 Page 2 of 29

Staff will continue to monitor economic conditions and provide quarterly updates to the City Council.

The complete economic scan for the third quarter of fiscal year 2024-25 is provided as Exhibit 1.

Economic indicators are tracked on a dashboard available at carlsbadca.gov/economy.

Financial update
The COVID-19 pandemic created immense uncertainty in the city’s revenues, most notably those from the sales tax and transient occupancy tax, the tax collected on hotel overnight stays.

The fiscal year 2021-22 adopted budget anticipated continued adverse impacts from the pandemic with moderate recovery. However, the city’s main revenue sources, specifically property, sales and transient occupancy tax revenues, reached historically high levels in fiscal years 2021-22 and 2022-23. This was mainly due to the staggered removal of pandemic restrictions, coupled with pent-up demand and inflationary increases.

When the city was developing the fiscal year 2022-23 adopted budget, unprecedented inflationary increases and its anticipated impacts on disposable income, personal savings, tourism and the housing market drove a need for conservative revenue estimating and budget tightening. As fiscal year 2022-23 ended, the primary revenue sources for the city’s General Fund continued to persevere through the high inflationary period, sustained by strong consumer demand.

Fiscal year 2023-24 experienced strong growth and revenue performance, specifically with property tax and sales tax. However, as the year progressed, indications of an economic slowdown became more evident. The total amount of taxable receipts began to decline when compared to previous periods, and transient occupancy tax revenues ended the year very similarly to the prior year.

Although the General Fund’s base revenues increased above original expectations in fiscal year 2023-24, it will be critical to monitor the city’s revenues and expenditures as the city continues through fiscal year 2024-25 and take necessary proactive steps to continue mitigating economic uncertainties.

The March 2025 Financial Status Report is provided as Exhibit 2.

Revenues
The city’s General Fund is its primary operating fund, used to account for all financial activities that aren't specifically designated for another fund, and primarily covers the costs of essential services such as police, firefighting, parks and recreation, general government operations and other basic city functions. The General Fund’s top three revenue sources – the property, sales and transient occupancy taxes – reached historic highs in fiscal year 2023-24.

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The current fiscal year’s adopted budget took a conservative approach at estimating these revenue sources, because revenue growth appears to be leveling off. However, total revenues are up $4.2 million or 3% over the prior year, despite the amount of uncertainty in the economy. The table below shows the differences in revenue when comparing the first nine months of fiscal year 2024-25 with the same period in the prior fiscal year.

Fiscal year 2024-25 year-to-date revenues as of March 2025 compared to fiscal year 2023-24 as of March 2024
Revenue category Change ($) Change (%)
Property tax $1,668,642 3%
Transient occupancy tax $1 ,291,903 5%
Charges for services $917,809 9%
Other taxes $327,145 4%
Intergovernmental $313,262 19%
Licenses and permits $271,293 12%
Sales tax $109,028 0.2%
Investments, property income $89,547 1%
Fines and forfeitures -$41,791 -13%
Other revenue sources -$128,764 -22%
Interdepartmental charges -$563,602 -12%
Total revenues $4,254,472 3%

Major revenue sources
Property tax
The majority of property tax revenue is collected in December and April each year. Increases of $1.7 million for the nine months of the fiscal year are due to a 4.99% increase in assessed property values when compared to last year. Revenue from aircraft taxes has also increased slightly due to an increase in aircraft assessed values combined with an increase in the number of aircraft housed at the county’s Palomar-McCellan Airport.

Sale s tax
Sales tax revenue is $109,000 higher in the first nine months of the fiscal year than in the same period in the previous fiscal year. To date, sales tax revenue represents receipts that were collected for the third and fourth quarter of calendar year 2024 as well as the first advance of the city’s sales tax revenue from the first calendar quarter of 2025.

The city experienced accelerated recovery in fiscal year 2021-22, after the impacts of the pandemic. Fiscal years 2022-23 and 2023-24 had historically high levels of sales tax revenue driven by inflation and sustained by consumer demand as well as the correction of a taxpayer error. The city is anticipating that growth in sales will continue leveling off and slow down in fiscal year 2024-25.

Sales occurring in the fourth calendar quarter of 2024, the most recent data available, show key year-over-year gains in new auto sales. The largest economic segments in the city are May 13, 2025
Item #10 Page 4 of 29

automobile dealers, consumer goods and restaurants. Together, they generate approximately 79% of the city’s sales tax revenue.

A significant portion of the year-over-year increase is attributed to the auto sales sector and a correction in methodology for how respective sales were being assigned and reported for a particular taxpayer. Without considering the error correction, on an economically adjusted basis, the city’s fourth quarter sales tax receipts were down about 3% compared to the third quarter in the previous year. This decline indicates declining consumer demand in response to sustained inflationary increases since 2021 as well as heightened economic uncertainty with the new administration. Staff will continue to monitor sales tax trends closely and keep the City Council informed of any significant changes.

Transient occupancy tax
Year-to-date transient occupancy tax figures represent taxes collected on overnight stays at lodging businesses through the month of February 2025. The revenue received in the first nine months of the fiscal year represents an increase of $1.3 million or 5% when compared to the same year-to-date period last year.

Occupancy rates over the last 12 months have been 72.0% on average, which is slightly higher when compared to the prior year of 70.5%. Average daily room rates in January, February and March of 2025 were 2% higher than the previous year on average.

Expenditures and encumbrances
The city’s total General Fund expenditures and encumbrances – those funds either spent or committed for specific expenses – through the month of March 2025 are $186.5 million, compared to $177.1 million at the same time last year. The remaining budget available through the fiscal year ending June 30, 2025, is $69.5 million, or 27%.

Excluding transfers out, contingencies and non-departmental charges, the percentage available on March 31, 2025, is 25.1%, slightly less than the 25.4% available on March 31, 2024.

Pension funding
The cost of CalPERS, the state pension system for government employees and pension funding, has been and will continue to be a challenge for participating agencies like the City of Carlsbad.

CalPERS administers the city’s defined benefit pension plan, and costs have been increasing in past years as CalPERS addresses a structural shortfall in the plan’s assets to cover unfunded actuarial liabilities, the shortfall when a pension plan's assets are less than the value of the promised benefits it owes to current and future retirees.

In support of CalPERS strategies for plan sustainability and as part of the city’s strategic, long- term approach to financial management, the city actively manages its unfunded pension costs.

Since fiscal year 2016-17, the City Council has approved additional discretionary payments of $56.4 million to decrease future costs related to the city’s unfunded actuarial liability and strive to achieve a funded status of 80% in accordance with City Council Policy No. 86.

CalPERS’ latest report (as of June 30, 2023) indicated the city had a combined pension funded status of 73.7%, reduced from the prior year’s status of 74.6%. This reduction was predominantly driven by CalPERS’ fiscal year 2022-23 investment gain of 5.8%, below its target of 6.8%. This performance will not impact the city’s required contributions until fiscal year 2025-26.

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Item #10 Page 5 of 29

The City Council approved the establishment of a public agencies post-employment benefits trust, known as a Section 115 Trust, on Sept. 12, 2023. This trust allows the city to stabilize pension cost volatility, maintain local control over the city’s assets and earn a potentially higher rate of return than if the assets were kept within the General Fund. The City Council approved an initial trust contribution of $10 million on Sept. 26, 2023.

As of March 31, 2025, the city’s Section 115 Trust had a balance of $18,882,700, including the initial $10 million contribution and second annual contribution of $7.5 million. Since the trust was established, the investments have earned $1.4 million, or 7.9%. Considering the assets held by CalPERS as well as the assets held in the city’s trust, the combined pension funded status as of March 2025 is 75.8%. Staff will continue to monitor the activities in the trust and report the city’s pension-funded status to the City Council quarterly.

Enterprise funds
The city’s water and wastewater enterprise funds
1 continue to operate in line with budgeted
expectations. Operations at the city’s municipal golf course, The Crossings at Carlsbad, have remained relatively consistent year over year.

Fiscal An alysis
There is no fiscal impact associated with the third quarter economic and financial update.

Next Steps
Staff will continue to develop tools to understand the economy, attract businesses and cultivate talent, and provide quarterly updates to the City Council on the economic outlook and the city’s finances.

Environmental Evaluation
The proposed action is not a “project” as defined by CEQA Section 21065 and CEQA Guidelines Section 15378(b)(5) and does not require environment review under CEQA Guidelines Section 15060(c)(3) and 15061(b)(3), because the proposed action to report on (short description: for example, “the implications associated with the passage of SB 123 and its effects on city facilities and operations”) is an organizational or administrative government activity that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. Any subsequent action or direction stemming from the proposed action may require preparation of an environmental document in accordance with CEQA or CEQA Guidelines.

Exhibits

1. Carlsbad Economic Scan - FY 2024-25 - Third Quarter

2. March 2025 Financial Status Report

1 Enterprise funds are government funds usually used to account for operations that are financed and operated in a manner similar to private business enterprises, with the services provided paid for primarily through user charges.

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1 GROSS REGIONAL PRODUCT
Carlsbad GRP (Source: Lightcast, 2025)
$16.8B
In 2024, Carlsbad had the second largest gross regional product in San Diego County at more than $16.8B, only trailing the City of San Diego. From 2023 to 2024, Carlsbad’s GRP contracted by $50 million representing a modest decline of .3%. Some industries saw growth, like hospitality and tourism, real estate, and health care, while others saw declines, like manufacturing, professional, scientific and technical services (commonly known as research and development), and office administrative services.

JOBS
Unemployment Rate (Source: California Employment Development Department, March 2025 Report) Unemployment rate in Carlsbad indicates the city remains at full employment, despite headwinds impacting different industries.

Carlsbad’s unemployment rate increased during the first two months of the quarter, but dipped in March to end the quarter at

4.1%,
still up slightly from 4% in December 2024. Unemployment in March was 4.2% for San Diego County and 5.3% for the State of California.
0 1
2 3
4 5
6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Carlsbad Unemployment Rate 2022 - 2025
2022 2023 2024 2025
0 1
2 3
4 5
6 7
Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Unemployment Rate Comparison
Last 12-Months
Carlsbad San Diego County California North County Avg w/o Carlsbad Innovation + Economic Development Department
Third Quarter, Fiscal Year 2024-25
The following scan provides an overview of key economic indicators for January, February, and March 2025 for the City of Carlsbad. This economic scan is updated quarterly to provide information that is relevant to the health of Carlsbad’s economy. For regularly updated information regarding the Carlsbad economy and economic development visit carlsbadca.gov/economy.

Gross Regional Product
Released May 13, 2025
Exhibit 1
May 13, 2025
Item #10 Page 7 of 29
Economic Scan
{city of
Carlsbad
2 Job Postings (Source: Lightcast, January - March 2025) 6,043
Job postings for the quarter totaled 6,043, an increase from the previous quarter but down slightly from the same period last year.

Approximately 1,357 Carlsbad employers posted open positions.

At the national level, the unemployment rate remained steady at 4.2% in March. However, job openings declined to 7.2 million, down more than 900,000 year-over-year, suggesting a cooling in labor demand. Despite this, job growth continues in health care, social assistance, and transportation, while layoffs remain low. The median posting duration is 21 days, a decrease from the 30-31 day duration that has been common over the past several years. This could be an indicator that workers are more readily available.

In-Demand Skills (Source: Lightcast, March 2025)
Job Postings This Quarter
Marketing, Project Management, and Audit skills are currently among the most in-demand skills for Carlsbad employers, showing rapid projected growth. However, a noticeable gap remains in the availability of these skills, as seen by the lower frequency in job postings compared to professional profiles.

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Item #10 Page 8 of 29
Top Specialized Skills
• Frequency in Job Postings
Skills
Marketing
Marketing (Profiles)
Project Managemenl
Project Management (Profiles)
Aud~ing
Auditing (Profiles)
Merchandising
Merchandising (Profiles)
Selling Techniques
Selling Techniques (Profiles)
Finance
Finance (Profiles)
Restaurant Operation
Restaurant Operation (Profiles)
Accounting
Accounting (Profiles)
Product Knowledge
Product Knowledge (Profiles)
Housekeeping
Housekeeping (Profiles)
1-,.....J
1-,.J
I
0%
Postings
Marketing 416
Project Management 386
Auditing 340
Merchandising 328
Selling Techniques 296
Finance 257
Restaurant Operation 248
Accounting 242
Product Knowledge 230
Housekeeping 222
J
I
l
%ofTotal Profiles Postings
8% 9,723
7% 6,923
6% 1,991
6% 1,686
5% 2,279
5% 2,781
5% 711
4% 2,867
4% 391
4% 112
• Frequency in Profiles
5% 10% 15%
%ofTotal Projected Skill Skill Growth Relative to
Profiles Growth Market
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11% +19.8% 1Cfilfilllii!H11li't
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0% +13.3% ..
3 CAPITAL
Interest Rates (Source: U.S. Department of the Treasury, March 2025) The Federal Reserve lowered interest rates cutting the benchmark interest rate three times in 2024, however, as economic output slowed in the last quarter and inflation increased, The Federal Reserve has signaled it is unlikely to make additional cuts in the foreseeable future. Interest rates dipped this quarter, but rebounded in March, ending the quarter higher than the previous quarter. In March, one-year rates were 4.17%. Ten-year rates were 4.58%. 30-year rates were 4.83%. As of March, inflation figures for the San Diego area jumped to 3.8% (4.1% less food and energy) over the past year. Nationally, annual inflation in March was 2.4% (also 2.4% less food and energy). Inflation is expected to rise as a result of trade policy.

March 2024
One-year interest rate

5.03%
10-year in
terest rate 4.20%
30-
year in
terest rate 4.34%
Mar
ch 2025
One-y
ear interest rate 4.17%
10-year in
terest rate 4.58%
30-
year in
terest rate 4.83%

COMMERCIAL REAL ESTATE
Market Vacancy Rates and Rent per Square Foot (Source: CoStar, March 2025) The commercial real estate market in Carlsbad remained
relatively stable during the quarter. Industrial vacancy increased by 2.63%, office vacancy increased by 0.7%, and retail vacancy dropped by 2.08%. Staff have started to see renewed interest in office and industrial sites after a two-year cooling period – a positive sign. As some of that interest is realized, it should cause a rebound in those property types.

Rental rates were relatively steady across industrial and office products. Retail rates dropped. Average market rents per square foot, per year for office rates in March were $39.70. Industrial rates in March were $22.48. Retail rates in March were $43.08.

7.8%
Industrial vacancy rate
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
Q1 Q2 Q3 Q4 Q1
2024 2025
Market Rent Per SF
Retail Office Industrial
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
Retail Office Industrial Retail Office Industrial
Carlsbad North County w/o Carlsbad
Market Rent Per SF
2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 Q1
May 13, 2025
Item #10 Page 9 of 29
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4 TOURISM
Occupancy averaged 68.7% in the third quarter, which is greater than the same quarter for 2024 (66.2%). These figures suggest that Carlsbad as a whole continues to perform well compared to similar markets. However, while overall occupancy was higher, this was due to increased group business. Individual and leisure travel were down compared to previous years. Changing international traveler sentiment and economic uncertainty, could have an impact on tourism in the coming year. 42 With 42 hotels in Carlsbad, tourism is a major industry in terms of employment and economic impact. It is also a major contributor to city revenue, through TOT and sales tax generation. Below are several indicators reflecting the health of the city’s tourism economy.

Hotel Occupancy (Source: Smith Travel Research, March 2025 Report) Carlsbad’s average daily room rate (ADR) for the quarter was a strong $204.37 a jump up from 2024 levels ($193.81). This upward trend highlights Carlsbad’s continued demand as a tourist destination, despite economic uncertainty.

Hotel Average Daily Room Rate (Source: Smith Travel Research, March 2025 Report) 0 50
100
150
200
250
300
350
2022 2023 2024 2025
Hotel Average Daily Rate Trend
0 10
20 30
40 50
60 70
80 90
100
2022 2023 2024 2025
Hotel Occupancy Trend
0 10
20 30
40 50
60 70
80 90
Hotel Occupancy Last 12 Months
San Diego County, CA City of Oceanside, CA
City of Newport Beach, CA City of Carlsbad
0 50
100
150
200
250
300
350
400
450
Average Daily Rate Last 12 Months
San Diego County, CA City of Oceanside, CA
City of Newport Beach, CA City of Carlsbad
Hotels in Carlsbad
May 13, 2025
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5 INCOME + HOUSING
Median Household Income (Source: 2023 ACS 5-Year Estimates, the latest year available) Median household income in Carlsbad continues to exceed county income levels. The median income for a household in Carlsbad in 2023 was $139,326, (adjusted for inflation), which was $5,200 higher than the previous year, and $36,000 more than the county median household income. Carlsbad has generally outpaced the region in terms of household income growth.

Median Home Price (Source: Zillow Home Value Index - March 2025) Carlsbad’s median home price rose to $1.54 million in March 2025, a 4.3% year-over-year increase. While the Federal Reserve enacted several rate cuts in late 2024, mortgage rates remained elevated due to ongoing inflation and tight housing inventory. Housing affordability continues to impact workforce attraction and retention, as some employees relocate to more affordable areas, resulting in longer commutes and increasing pressure on local employers. $600,000.00
$700,000.00
$800,000.00
$900,000.00
$1,000,000.00
$1,100,000.00
$1,200,000.00
$1,300,000.00
$1,400,000.00
$1,500,000.00
$1,600,000.00
2020 2021 2022 2023 2024 2025
Carlsbad Median Home Price
2019 2020 2021 2022 2023 _
City of Carlsbad
Median Household Income $123,409 $112,933 $124,669 $146,596 $138,326 _ County of San Diego
Median Household Income $70,588 $74,855 $79,324 $98,928 $102,285 _ City of Carlsbad
Per Capita Income $63,079 $57,607 $65,430 $66,944 $70,896 _ County of San Diego
Per Capita Income $40,389 $39,737 $44,377 $46,957 $49,891_ May 13, 2025
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6 BUSINESS ACTIVITY
Building Permits (Source: City of Carlsbad, March 2025) Between January and March, residential permits issued
(792) saw an uptick in residential building permits issued, up from 777 in the previous quarter.

Commercial permits issued (93) increased compared to
the previous quarter (77).
0 200
400
600
800
1000
1200
1400
1600
Commercial
Residential
Commercial
Residential
Commercial
Residential
Commercial
Residential
Commercial
Residential
2021 2022 2023 2024 2025
Building Permits Issued
Q1 Q2 Q3 Q4
Business Licenses (Source: City of Carlsbad, March 2025) There were a total of 2,796 business licenses issued last quarte r, including 1195 non-residential, 763 residential, and 838 outside-the- city
licenses. This is an overall jump of 480 total businesses over the same quarter of 2024. The total number of Carlsbad business licenses is 10,158.

The number of licenses issued does not reflect the number of businesses in Carlsbad
as a business may carry multiple licenses, short-term
vacation rentals are required to get a license, and businesses outside of Carlsbad that do business in the city or with the city are required to get a
license. It is estimated that there are approximately 6,881 businesses in Carlsbad, a net increase of 251 total businesses over the previous year.0
500
1000
1500
2000
2500
3000
Q1 Q2 Q3 Q4 Q1
2024 2025
Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
Carlsbad Businesses by City Council District
Business License Activity by District
District 1 District 2 District 3 District 4
New 23 22 4 3
Renewing 617 747 228 224
Total 640 769 232 227
May 13, 2025
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7 BUSINESS ACTIVITY Continued
Largest Employers (Source: City of Carlsbad, March 2025) The following is a list of the largest employers by City Council district based on information about total employment as submitted by a business during the business license process.

New Businesses in Carlsbad (Source: City of Carlsbad, March 2025) New business are defined as entities that have received a license for a location where they previously did not exist. This could also include existing businesses that have changed ownership or business license type. The information below includes new non-home-based businesses in the city according to business license filings.

District 1
• Pretty Please Fashion
• Carlsbad Village Yoga Co-Op
• Laguna Estates
• Carlsbad By the Sea
• Bayshore Carlsbad
District 2
• Viasat Inc
• Legoland California
• Thermo Fisher
• lonis Pharmaceuticals
• North Coast Medical
District 3
• Costco
• Aerotek
• Hilton Garden Inn
• The Neurology Center of SoCal
• Vons
District 4
• Omni La Costa
• La Costa Glen Carlsbad CCRC
• Glenbrook HC
• Ralphs Grocery Company
• Vons
Ocean Sky Beads and Gems
Mar Beauty Blends
The Nest Home Decor and Boutique
Sankalp the Taste of India
Coastal Rolfing LLC
Jeanie Vetter LCSW
The Boarding Home
Evolution Toyz
DW Acupuncture
The Batcave Collectables
ACME Collectibles
Sulab Toys
PC Parts Shop
Simon Hernandez
Top Star Treasures
Top Right Collectibles
Legacy Swim Academy LLC
Bloom Accounting Services LLC
Dreamwave Coffee
Untapp
Project Midnite
Chris McDuffie Counseling -
A Licenced Clinical Social Worker
Corporation
Peak Performance Bodywork and Rehab
Bolt Medical Inc
SD Botox
Back Nine
Pit Management Group Inc
Kendra Willhelm LLC
Brah Electric LLC
Vika Art Nails
Jules Bryant
Stephanie Azar
Constcorp Inc
Arete Commercial
Journeys
Disc Surgery Center at Carlsbad LLC
MMR Consulting USA Inc
The Creative Learning Studio
Emagine Med Spa LLC
Management Registry Inc
Comfort Zone Futons and Furniture Inc
Theee Hair Savage Luxury Hair Studio
OCD Anxiety Centers California LLC
Catalyst Windmill La Vida LLC
Broadway Salon Studios
Roadwarrior Audio LLC Los Tacos
REI Co-Op Mane Haven LLC North County Primary Care
District 1
District 4
District 3
District 2
May 13, 2025
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8 INDUSTRY CLUSTERS
Life Sciences (Source: City of Carlsbad and Lightcast - 2025) The Life Sciences industry cluster employs 6,415 workers across 115 firms and experienced a 17% increase in employment between 2019 and 2024. The cluster is 5.18 times more concentrated in Carlsbad than the national average and annual wages per worker average $170,820.

San Diego County and California have historically experienced parallel employment growth in the Life Sciences cluster.

Between 2010 and 2020, employment in Carlsbad surged by 75%, with a particularly strong 40% growth from 2016 to 2018.

While growth slowed between 2018 and 2020, the sector rebounded significantly, growing 17% between 2019 and 2024.

Technology (Source: City of Carlsbad and Lightcast - 2025) The Information and Communications Technologies (ICT) cluster employs 8,470 workers across 327 firms in Carlsbad and is

2.18 times more concentrated in Carlsbad than the national average. Annual wages per worker average $181,562, and the ICT industry cluster experienced a 5% increase in the number of jobs between 2019 and 2024.

Between 2010 and 2020, San Diego County and California experienced steady parallel growth in ICT, while Carlsbad saw an initial decline from 2012 to 2015. However, since 2015, employment in Carlsbad’s ICT sector has trended upward. From 2019 to 2024, employment in Carlsbad grew by 5%, compared to San Diego County which did not have any growth across the industry.

Cleantech (Source: City of Carlsbad and Lightcast - 2025) Between 2019 and 2024, the number of workers employed at Cleantech firms increased by 15%. Across the industry cluster, 36 Cleantech firms in Carlsbad employed more than 3,780 people. The average annual wage per worker is $200,304, and the Cleantech industry cluster in Carlsbad is 4.38 times more concentrated than the national average.

Carlsbad’s Cleantech industry initially declined between 2010 and 2012 before experiencing steady growth through 2020.

While employment growth peaked in California and San Diego County in 2013, Carlsbad has continued its upward trend.

Between 2019 and 2024, employment in Carlsbad’s Cleantech sector grew 15%, significantly outpacing the 3% growth in San Diego County.

Sports Innovation & Design (Source: City of Carlsbad and Lightcast - 2025) The Sports Innovation & Design industry cluster employs 1,754 workers across 113 firms and experienced a 28% increase in employment between 2019 and 2024. The cluster is 17.37 times more concentrated in Carlsbad than the national average and annual wages per worker average $134,176.

Previously, Carlsbad’s employment in the Sports Innovation & Design cluster had been on a steady decline since 2013.

San Diego County and California also saw declines starting in 2015, with sharp drops between 2019 and 2020 due to the COVID-19 pandemic. However, Carlsbad experienced a strong recovery, with employment increasing 28% between 2019 and 2024, significantly outpacing San Diego County’s 9% growth.

Hospitality & Tourism (Source: City of Carlsbad and Lightcast - 2025) Carlsbad’s Hospitality & Tourism cluster is about 1.42 times more concentrated in Carlsbad than the national average and employs 14,170 people across 674 businesses. Hospitality & Tourism experienced a sharp 15% decrease in employment between 2019 and 2024, driven by the effects of the COVID-19 pandemic between 2019 and 2020. Average annual wages per worker remain low relative to other key industry clusters, with workers earning $44,930 on average.

Carlsbad, San Diego County, and California saw severe employment declines in the Hospitality & Tourism sector between 2019 and 2020 as businesses such as theater companies, amusement parks, and arcades shut down due to the COVID-19 pandemic. While the sector has struggled to recover, Carlsbad experienced a 15% decline from 2019 to 2024, exceeding the 1% decline in San Diego County.

May 13, 2025
Item #10 Page 14 of 29
9 INDUSTRY IMPACT
Largest Industries (Source: Lightcast, March 2025)
Carlsbad’s economy significantly exceeds the national average for jobs in manufacturing, accommodation & food services, and professional, scientific & technical services. These sectors, which would include tech, life sciences, and other innovation industries are generally more resilient to recessions, also represent significant job growth in the economy.

GRP by Industry
Industry size by employment
May 13, 2025
Item #10 Page 15 of 29
Man ufa ctu ring
Professional , Scientific . and Technical Services
Wholesale Trade
Government
Finance and Insurance
Retail Trade
Accommodation and Food Services
Health Care and Social Assistance
Real Estate and Rental and leasing
Info rmation
Administrative and Support and Waste Management and
Remediation Services
Construction
Arts, Entertainment , and Recreation
Management of Companies and Enterprises
Other Services (excep t Pub lic Administration)
Transportation and Warehousing
Educational Services
Utilities
Agriculture , Forestry , Fishing and Hunting
Sales and Related
Office and Administrative Support
Food Preparation and Serving Related
Management
Business and Financial Operations
Pr-oduction
Transportation and Material Moving
Personal Care and Service
Educational I nstruction and Library
Computer and Mathematical
Building and Grounds Cleaning and Maintenance
Architecture and Engineering
Healthcare Practitioners and Technical
I nsta llation, Maintenance . and Repair
Healthca..-e Support
Arts , Design . Entertainment . Sports , and Media
Construction and Extraction
Protective Service
Ufe , Physical . and Social Science
Community and Social Service
legal
Military-only
F am1ing, Fishing , and Fo..-estry
_ ,
-. ,
0 $1 000B
-
I
I
I
2 .000
$2 .000B $3 .000B
I
,_
I
I
I
I
I
4 .000 6 .000 8 .000 10 .000
10 INNOVATION
Patents (Source: 2024 Carlsbad Patent Study)
The Carlsbad innovation economy is powered by the key industry clusters of Life Sciences, Information & Communications Technology, Sports Innovation & Design and Clean Technology. The figure below shows consistently strong patent activity over the past decade with an elevated level from 2017-2020. Patents are a key indicator of economic competitiveness and growth. In the case of Carlsbad it also demonstrates the diversity of the economy along with other economic drivers such as tourism.

Carlsbad Patents by Industry
0 200
400
600
800
1000
1200
1400
1600
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Carlsbad Patents by Year, 2013-2023
The highest number of patents
are issued in the broad
manufacturing category which
includes technology, electronics,
apparel, sporting goods, and
transportation. Complimenting
this are the patents issued in
the information category which
includes satellite, wireless, and
wired telecommunications.

Patents in these two categories
demonstrate a vibrant innovation
ecosystem.

Released May 13, 2025
The quarterly economic scan is developed by the City of Carlsbad Economic Development Department.

For more information, visit carlsbadca.gov/economy, or contact the team at [email protected]. 0 100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Patent Count per Year by Industry (2013-2023)
Administrative and Support and Waste Management and Remediation Services Agriculture, Forestry, Fishing and Hunting Arts, Entertainment, and Recreation Construction
Educational Services Health Care and Social Assistance
Information Manufacturing
Professional, Scientific, and Technical Services Real Estate and Rental and Leasing Retail Trade Transportation and Warehousing
May 13, 2025
Item #10 Page 16 of 29
+
+
+ +
Exhibit 2
Th
is report summarizes the City of Carlsbad’s General F und revenues and expenditures through March 31, 2025. It compares revenues an d expenditures for the first nine months of fiscal year 2024-25 and fiscal year 2023-24. In addition, the financial status of the Water , Wastewater and Golf Course Enterprise Funds are included. This report is for internal use only. The figures presented here are unaudited and have not been prepared in accordance with Generally Accepted Accounting Principles.

General Fund Revenues
Property Taxes ($58.0 million) – The majority of property tax revenue is collected in December and April each year. According to the County of San Diego Assessor’s Office, assessed values in Carlsbad have increased by 4.99% for fiscal year 2024-25. This is the 12th year in a row that Carlsbad’s assessed values have increased from year to year, and in line with assessed value increases with other cities in San Diego County for the year. The increase in this year’s assessed values is due to increases in the assessed values of residential, 4.8%, and industrial, 7.4%, properties in the city; the city saw a smaller increase, 1.5%, in commercial property values for the year. This is the 10th year in a row since the Great Recession ended that the city saw increases in assessed values in all three property components (residential, commercial and industrial). Although increases in residential assessed values were recorded for fiscal year 2024-25 and for-sale home prices are remaining steady, the county is experiencing historically low for-sale housing inventory as higher interest rates are decreasing home affordability.

The property taxes for the fi
rst nine months of the fiscal year have increased by 3% when compared to the prior fiscal year. The primary reasons for the increase are:
• Current taxes are up by $2,187,000 or 4.2% mainly due to increased assessed property values. The first installment of taxes was received by the city in December. • Supplemental taxes are down $536,000 or 40%, these taxes are driven by change in assessed value due to change in property ownership.
• Aircraft taxes are also up $17,000 or 1% due to an increase in aircraft assessed values.

Sales Taxes ( $44.9 million) – For the nine months of the fiscal year, sales tax revenues are $109,000, or 0.2%, higher than the same period in the previous fiscal year. Sales tax revenues to date for the current fiscal year represent the city’s sales tax revenues for the third and fourth calendar quarter of calendar year 2024 as well as the first advance for the first calendar quarter of 2025.

In
fiscal year 2021-22, the city experienced accelerated recovery after the impacts of the COVID-19 pandemic. Fiscal year 2022-23 saw historically high levels of sales tax revenues driven by inflation and sustained by consumer demand . Fiscal year 2023-24 revealed a leveling from sales growth and slowdown in consumer activity. This leveling off continues into the current fiscal year as revenue trends remain slightly lower than a year ago overall. Consumers are more likely to wait for greater improvement of household economic conditions before extending themselves again, inspiring the next sales tax growth cycle.

March 31, 2025
3%

0.2%
May 13, 2025
Item #10 Page 17 of 29
PRE.P ,AREO BY THE F l: NANCE 01 EPAR:TMENT
Financial Status Report
FOR
SALE
{city of
Ca,rlsbad

Quarterly Financial Report _______________________________________________________________ 2 The largest economic segments in the city are automobile dealers, general consumer goods, and restaurants.

Together, they generate approximately 79% of the city’s sales tax revenues. For sales occurring in the fourth calendar quarter of 2024 (the most recent data available), Carlsbad’s cash basis sales were down 3.2%, when compared to the fourth quarter of 2023. The city’s largest sector, auto dealers, showed higher new car sales, which is attributable to the correction of a taxpayer error . With this in mind, and on an economically adjusted basis, the city’s sales tax receipts were actually down approximately 5.5 % over the previous year and driven mainly by a decline in consumer demand, likely in response to the sustained inflationary period combined with future uncertainty with the new administration.

Transient Occupancy Tax ($26.6 million) – The city’s third highest General Fund revenue source on an annual basis is Transient Occupancy Tax (TOT or hotel tax), estimated at $ 34.8 million for the current fiscal year. A tax of 10% of the rent amount is collected on all occupancies less than 30 days (transient) in duration.

Year-to-date TOT figures represent taxes collected on hotel receipts through the month of February 2025. TOT collected for the first nine months of the fiscal year reflects an increase of $1.3 million or 5%, when compared to the previous year.

Currently, there are 5,059 hotel rooms in the city and 449 registered short-term vacation rentals. The average occupancy of hotel rooms over the most recent 12 months has been 7 2.0% which is slightly higher when compared to this time last year of 70.5%. Average daily room rates in January, February and March of 2025 were 2% higher than the previous year on average. While occupancy rates remain stable, it will be important to monitor the impact of average daily room rate fluctuations on occupancy rates moving forward.

Business License Tax ($ 5.0 million) – All entities doing business in the City of Carlsbad are required to have a valid business license. Business license revenue is estimated at $6.6 million for the current fiscal year. Business license revenues are up by $109,000, or 2.2%, from the previous fiscal year. The increase is due to a 5% increase in license renewal activity partially offset by a reduction i n penalty revenue from overdue business license renewals.

There are currently 10,043 active business licenses , 592 more than the prior year. The majority of taxed businesses (6,744 businesses) are located in Carlsbad, with 2,578 of these businesses home-based.

Interdepartmental Charges ($4.1 million) – Interdepartmental charges are down by $564,000 or 12% when compared with the same period last year. These charges are generated through engineering services charged to capital projects; reimbursed work from other funds; and miscellaneous interdepartmental expenses charged to funds outside the General Fund fo r services performed by departments within the General Fund. The decrease this year is the result of the budgeted decrease in the miscellaneous interdepartmental expense charged from the General Fund to other funds, which is based on the city’s most recent cost allocation plan.

Income from Investments and Property ($ 6.4 million) – For the first nine months of the fiscal year, income from investments and property is up $90,000 compared to the previous fiscal year . This increase is due to several factors including a 22.6% rise in yield from 2.45% as of March 2024 to 3.01% as of March 2025 along with a 0.5% increase in the average cash balance held in the General Fund as well as interest earned of $568,000 fiscal year to date on the city’s Section 115 Pension Trust. The City Council approved the establishment of a Section 115 Pension Trust in 2023 for purposes of mitigating CalPERS’ volatility, maintaining local control over city assets and preparing for potential future decreases in CalPERS’ discount rate. An initial contribution of $10 million was authorized by the City Council followed by a second annual contribution of $7.5 million in October 2024.

-12%

2.2%
5%
May 13, 2025
Item #10 Page 18 of 29

Quarterly Financial Report _______________________________________________________________ 3

Inflation which had been on a historic rise for much of 2022 and into 2023 which resulted in the Federal Reserve increasing benchmark rates all the way to a target range of 5.25% -5.5% as of July 2023, the highest it has been in more than 20 years.

The Federal Reserve began cutting interest rates in late 2024, first lowering the range to 4.75% -5.0% in September, followed by further reductions to 4.5% -4.75% in November and 4.25%-4.5% in December. Recent indicators suggest that economic activity has continued to expand at a solid pace, with the unemployment rate moving up but remaining low. Inflation has made further downward progress but remains somewhat elevated.

While many experts predict additio nal rate cuts in the months ahead, the Federal Reserve has indicated it will proceed with caution.

Recreation Fees ($ 2.3 million) – Recreation fees are generated through instructional classes, camps, youth and adult sports, special events, parent participation preschool, senior programs, and various aquatic programs.

Recreation revenues are down by $80,000 compared to last year at this time.

The decrease in revenue is due to the Alga Norte pool which was clos ed for renovations from November 2024 through early March 2025.

Development Related Revenues ($3.3 million) – Development related revenues, which include building permits, planning fees, building department fees, and engineering fees, reflect a 5% increase, or $164,000, for the first nine months of the fiscal year when compared to the same time last year.

Development related fees are paid by developers to cover a portion of the cost of reviewing and monitoring development activities, such as plan checks and inspections. Engineering plan check fees are one of the first fees paid during the initial stages of development.

Activity during the first nine months of fiscal year 2024-25 included permits associated with the new residential construction of 48 second dwelling units across the city, 93 condominiums (Coral Springs at Marja Acres and La Costa Town Square), 97 apartments (FPC Residential at Ponto and Romeria Pointe), 3 single family homes and various homeowner improvements. Commercial building permit activity included Grand Pacific Autograph Hotel (28,170 sq. ft.) Toyota of Carlsbad (26,665 sq. ft.) and additional footage for Palomar Airport Road car wash (3,111 sq. ft.). Industrial permit activity included three shell buildings (61,753 sq. ft.) in the Carlsbad Oaks North Industrial Park.

One source of development related revenue is building permits, which are $1.45 million for the current fiscal year compared to $1.40 million from the prior fiscal year, a 4% increase.

Franchise Tax ($2.7 million) – Franchise taxes are generated from public utility sources, such as San Diego Gas & Electric (SDG&E), trash collection franchises, and cable franchises conducting business within city limits. Franchise tax revenue is estimated to be at $8.9 million for the current fiscal year. Year -to- date franchise taxes are $ 58,000 higher, or 2.2%, when compared to the same period last year.

Cable television franchise revenues (Spectrum and AT&T) are down $ 93,000 representing a decrease in the number of subscription service subscribers (premium video, equipment rental, on -demand, and programming services) as more customers continue to move to streaming services. This was offset by an increase of $113,000 in trash collection revenue mostly from contracted rate adjustments with Republic Services, the city’s waste services provider.

SDG&E pays franchise taxes for the use of public land over which they transport gas and electric services. In addition, SDG&E pays an “in -lieu” franchise tax based on the value of gas and electricity transported through

-3%
5%

2.2%
May 13, 2025
Item #10 Page 19 of 29

Quarterly Financial Report _______________________________________________________________ 4 SDG&E lines but purchased from another source. The “in-lieu” tax was put in place to capture the franchise taxes on gas and electricity that is transported using public lands, but which would not otherwise be included in the calculations for franchise taxes. Approximately 4 8% of the city’s franchise taxes are anticipated to be received from SDG&E in April 2025.

Ambulance Fees ($5.4 million) – The city bills any individual who is transported in one of the city’s ambulances. Through March 2025, receipts from ambulance fees are up $ 344,000, or 7%, compared to last fiscal year. The increase in revenue for the first nine months of the fiscal year is mainly due to changes to the ambulance fee schedule that the City Council approved in June 202 4 based on an updated cost of service study (increases effective Sept 1, 202 4). Billable transports totaled 5,414 in the first nine months of fiscal year 2024-25 versus 5,826 at the same time in the prior fiscal year.

Other Revenue Sources ($466,000) – Other revenue sources have decreased by $129,000 when compared to the prior year and include revenues received by the city to offset the costs of special studies or projects for developers; reimbursements for damage done to city streets, rights -of-way, and other city - owned property; donations; and miscellaneous reimbursed expenses. The decrease to date is related to a decrease in general reimbursed expenses when compared to the prior year.

Other Licenses and Permits ($1.1 mi
llion) – Other licenses and permits consist
of fire protection services, right -of-way, lagoon, grading, hazardous uses, and other miscellaneous permit revenues. These permits usually increase/decrease along with increases/decreases in development activity. Other licenses and permit revenues can vary throughout the year. To date, the increase of $222,000 over the prior year is primarily a result of increased right of way ($60,000), coastal development and grading permits ($48,000) and fire inspection services ($47,000) when compared to the same period last year.

Fines and Forfeitures ($ 27
8,000) – Fines and forfeitures represent fees
collected for code violations, parking citations, overdue fines, and returned checks. The city recognizes revenues when the citizen pays the fine or forfeiture, as opposed to when the fine is imposed. The decrease to date of $ 42,000 is mostly due to a slight decrease in code violations when compared to the previous fiscal year.

Intergovernmental Revenues ($ 1.
9 million ) – Intergovernmental revenues
include homeowners property tax exemption revenue and miscellaneous receipts and grants received from the state or federal governments, as well as local school districts. The increase of $313,000 received this year includes FEMA COVID-19 reimbursement of $931,000 which was offset by a decrease of $604,000 in state reimbursements received including two planning related state grant awards in the prior year. These state grants were completed in the prior year and no additional receipts this fiscal year will be received.

26%
-22%
19%
-13%
May 13, 2025
Item #10 Page 20 of 29

Quarterly Financial Report _______________________________________________________________ 5

Transfer Taxes ($866,000 ) – When real property is sold, the County Assessor’s Office charges a transfer tax. The transfer tax rate in San Diego County is $0.0011 multiplied by the selling price of the property. The city receives 50% of the transfer tax charged for sales within the City of Carlsbad. Revenues have increased by $ 161,000 over the same period last year due to a n increase in property transfers.

Other Charges or Fees ( $1. 7 million ) – Other charges or fees are generated through the sale of city documents, such as staff reports, blueprints and copies; general fees collected for false alarms, easements and agreements, weed abatement and kiosk signs; and general services, such as fire mutual aid response, mall police services, emergency response services, reports, etc. These fees are up by $539,000, or 46% mainly due to a n increase in fire mutual aid response reimbursements when compared to the prior fiscal year.

A d
etailed schedule of General Fund revenues is provided below:

23%
46%
May 13, 2025
Item #10 Page 21 of 29
nl

Quarterly Financial Report _______________________________________________________________ 6

May 13, 2025
Item #10 Page 22 of 29

GENERAL FUND

REVENUE COMPARISON

REVENUE

REVENUE EXPECTED ACTUAL ACTUAL CHANGE FROM
BUDGETED THROUGH FY2024 FY2025 YTD2024 TO PERCENT
FOR FY 2024-25 03/ 31/ 25 AS OF 03/ 31/ 24 AS OF 03/ 31/ 25 YTD 2025 CHANGE TAXES
PROPERTY TAX $94,901,892 $57,401,225 $56,365,393 $58,034,035 $1,668,642 3% SALES TAX 59,382,534 45,989,394 44,806,426 44,915,454 109,028 0.2% TRANSIENT OCCUP!\NCY TAX 34,776,940 25,831,788 25,284,639 26,576,542 1,291,903 5% FRANCHISE TAX 8,883,315 2,921,726 2,653,170 2,710,831 57,661 2.2% BUSINESS LICENSE TAX 6,560,060 4,965,744 4,879,458 4,987,990 108, 532 2 .2% TRANSFER TAX 1,676,136 876,977 704,645 865,597 160,952 23% TOTAL TAXES 206,180,877 137,986,854 134,693,731 138,090,449 3,396,718 3%

INTERGOVERNMENTAL
VEHICLE LICENSE FEES 140,000 140,000 141,68 9 181, 367 39,678 28% HOM EOWNERS EXEMPTIONS 245,000 122,500 162,187 159,502 {2,685) -2% OTHER REIMBURSEMENT 613,764 532,140 1,311,843 1,588,112 276,269 21% TOTAL INTERGOVERNMENTAL 998,764 794 ,640 1,615,719 1,928,981 313,262 19%

LICENSES AND PERMITS
BUILDING PERMITS 2,400,000 1,818,3 98 1,395,822 1,445,38 7 49,565 4% OTHER LICENSES & PERMITS 973,500 701,720 864,159 1,085,887 221,728 26% TOTAL LICENSES & PERMITS 3,373,500 2,520,118 2,259,981 2,531,274 271,293 12%

CHARGES FOR SERVICES
PLANNIN G FEES 813,000 539,176 568,619 614,151 45,532 8% llU ILUIN(; Utl'AK I MtN I ~tt~ ~l4,UUU b~lS,l 4U :,i.:, ,:,~1 :>44, /lSl l~,D U b% ENGINEERING FEES 872,000 655,017 635,716 675,684 39,968 6% AMBULANCE FEES 7,650,000 5,893,552 5,055,891 5,399,991 344,100 7% RECREATION FEES 3,459,066 2,516,751 2,401,480 2,321,620 {79,860) -3% OTHER CHARGES OR FEES 1,690,500 1,179,213 1,165,272 1,704,091 538,819 46% TOTAL CHARGES FOR SERVICES 15,408,566 11,421,949 10,342,509 11,260,318 917,809 9% FINES AND FORFEITURES 351,700 270,458 319,629 277,838 {41,791) -13% I NCOME FROM I NVESTMENTS & PROPERTY 7,041,490 4,840,596 6,317,272 6,406,819 89,547 1% I NTERDEPARTMENTAL CHARGES 5,503,963 4,182,816 4,621,650 4,058,048 {563,602) -12% OTHER REVENUE SOURCES 392,804 420,762 595,108 466,344 {128,764) -22% TRANSFERS IN 33 0 0 0 0 0 %
TOTAL GENERAL FUND $239,251,696 $162,438 ,191 160 ,765,599 $165,020,071 $4,254,472 3% (1)
(1) Ca lculated Genera l Fund revenues are 2% above estimates as of M arch 3 1, 202 5.

Quarterly Financial Report _______________________________________________________________ 7 Expenditures

Total General Fund expenditures and encumbrances – those funds either spent or committed for specific expenses – through the month of March 2025 (the first nine months of the fiscal year) are $186.5 million, compared to $177.1 million at the same time last year. The remaining budget available through the fiscal year ending June 30, 2025, is $69.5 million, or 27%. If funds were spent in the same proportion as the previous year, the General Fund would have 25% or $52.7 million available. Excluding transfers out, contingencies, and non - departmental charges, the percentage available on March 31, 2025, is 25.1%, 0.3% less than the 25.4% available on March 31, 2024.

The fiscal year 2024-25 budget was developed with a focus on resiliency over the long -term during a time of continued economic uncertainty. The adopted budget prioritizes the goals in the City Council’s 5 -Year Strategic Plan, which was based on input from thousands of community members and approved in 2022.

The adopted budget eliminates the projected General Fund deficit from the five-year financial forecast that had been previously forecasted since 2019. A structural deficit describes a situation when projected ongoing spending is expected to increase at a faster rate than anticipated ongoing revenue. The city’s five-year financial forecast currently shows a balanced budget through 2031.

Healthy revenues, increased efficiencies, cost reductions and new budget policies and practices over the past several years have worked together to close the gap. However, economic uncertainty remains as the city transitions from focusing on building and development to maintaining what has been created. As such, the adopted budget for fiscal year 2024-25 continues to focus on finding new cost savings and reducing ongoing spending while continuing to grow city reserves, prioritizing capital project funding and maintaining high quality service levels.

The adopted General Fund budget for fiscal year 2024-25 increased by 10.0% or $21.5 million when compared to last fiscal year due to:
• Increased personnel costs (increase of $4.6 million or 3.6%):
o $1.3 million in salaries and wages due to negotiated salary increases offset by a reduction in total full- time equivalent positions of 9.7.
o $2.1 million in retirement benefits costs.
o $0.2 million in health insurance costs.
o $0.9 million increase in other personnel costs (Medicare, unemployment and disability benefits). • Increased maintenance and operations costs (increase of $0.7 million or 1.3%):
o Overall, total maintenance and operations costs were projected with small increase, Fiscal year 2021-22 and 2022-23 experienced inflationary increases ranging between 4.1% and 8.3% which drove the city’s need to contain costs and identify areas for reduction with minimal service level impacts. Although inflation has declined compared to previous periods, it was still ranging between 3.6% and 5.2% when the FY 2024- 25 budget was being developed. As a result, the fiscal year 2024 -25 budget adopted a minimal increase to maintenance and operations given the lingering inflation in the economy. • Increase in transfers to other city funds (increase of $15.6 million or 71.4%):
o Per Council Policy 91, Long Term General Fund Capital Funding Policy, the city annually budgets 6% of General Fund revenues as a transfer to the Infrastructure Replacement Fund, General Capital Construction Fund and t he Technology Investment Capital Fund to help fund major new construction, maintenance and replacement of city infrastructure and facilities and the city’s future technology needs.

For FY 2024-25 this amounted to $14.4 million, split evenly between these three capital project funds. o $13.8 million in additional transfers, compared with $7.4 million last year, was budgeted for the General Capital Construction Fund resulting from the estimated General Fund surplus. The General Capital Construction Fund is funded by the General Fund and includes many capital projects programmed in the May 13, 2025
Item #10 Page 23 of 29

Quarterly Financial Report _______________________________________________________________ 8 future. The level of funding necessary to fully fund these projects is an increasing concern. This one-time transfer amount will assist with funding the city’s general capital construction into the future.

CalPERS and pension funding has been and will continue to be a challenge for participating agencies. CalPERS administers the city’s defined benefit pension plan and costs have been increasing in past years as CalPERS addresses a structural shortfall in plan assets to cover unfunded liabilities. In support of CalPERS strategies for plan sustainability and as part of the city’s strategic, long -term approach to financial management, the city actively manages its unfunded pension liability. Since fiscal year 2016 -17, the City Council has approved additional discretionary payments of $56.4 million to decrease future costs of the city’s unfunded actuarial liability and strive to achieve a minimum pension -funded ratio of 80% funded, with a target funded ratio range of 80% to 85%, in accordance with City Council Policy Statement No. 86.

CalPERS latest actuarial valuation report (as of June 30, 2023), the city had a combined pension funded status of

73.7%, reduced from the prior year’s status of 74.6%. This reduction was predominantly driven by CalPERS’ fiscal year 2022-23 investment return of 5.8%, below their target of 6.8% and will be reflected in the city’s required contributions in fiscal year 2025-26.

The City Council approved the establishment of a Public Agencies Post -Employment Benefits Trust (Section 115 Trust) in September 2023. This trust allows the city to stabilize pension cost volatility, maintain local control over the city’s assets and earn a potentially higher rate of return than if the assets were kept within the General Fund.

The City Council approved an initial trust contribution of $10 million on September 26, 2023. As of March 31, 2025, the city’s Section 115 Trust had a balance of $ 18,882,700. Considering the assets held by CalPERS as well as the assets held in the city’s trust, the combined pension funded status as of March 2025 is 75.8%.

Identifying a potential structural deficit early has allowed the city to take a thoughtful approach to solutions, exploring new ways to reduce spending and increase revenue. While the projected future deficit has been pushed out beyond the 5 -year forecasted period, city staff will continue to monitor financial and economic trends and provide regular updates to the City Council throughout fiscal year 2024-25.

A detailed schedule of General Fund expenditure is provided on the next page.

May 13, 2025
Item #10 Page 24 of 29

Quarterly Financial Report _______________________________________________________________ 9

May 13, 2025
Item #10 Page 25 of 29

GENERAL FUND

EXPENDITURE STATUS BY DEPARTMENT
ADOPTED WORKING AS OF 03/ 31/25

BUDGET BUDGET
DEPARTM ENT DESCRIPTION FY 2024-25 FY 2024-25 (a)

POLICY AND LEADERSHIP GROU P
CITY ATTORN EY $2,179,705 $2,197,392
CITY CLERK 1,273 ,604 1,339,731
CITY COUNCIL 599,047 601 ,541
CITY MANAGER 2,105,683 2,254,019
CITY TREASURER 279,522 276,522
COMMUN ICATIONS & ENGAGEMEN T 2,010,091 2,130,999
TOTAL POLICY AND LEADERSHIP GROUP 8,447,652 8,800,204

ADMINISTRATIVE SERVICES
ADM INISTRATION 796,1% 781 ,181
FINANCE 5,631,964 5,943,723
HUMAN RESOURCES 5,136,218 5,503,157
ECONOM IC DEVELOPM ENT 891,866 1,186,669
TOTAL ADM INISTRATIVE SERVICES 12,456,244 13,414 ,730

PUBLIC SAFETY
POLICE 60,193,850 62,285,910
FIRE 41,793,630 43,955,332
TOTAL PUBLIC SAFETY 101,987,480 106,241,242

COMM UNITY SERVICES
COMMUN ITY SERVICES ADM INISTRATION 592,261 755,416
COMMUN ITY DEVELOPMENT 10,998,825 13,168,457
HOUSING & HOME LESS SERVICES 3,232 ,287 3,475,473
LIBRARY & CULTURAL ARTS 14,522,844 14,968,260
PARKS & R ECREATION 22,759,082 23,363,473
TOTAL COMMUNITY SERVICES 52,105,299 55,731 ,079

PUBLIC WORKS
PUBLIC WO RKS ADM INISTRATION 1,533,038 1,545,155
CONSTRUCT ION MANAGEMENT & INSPECTIONS 3,068,292 3,145,583 ENVIRONMEN TAL SUSTAINAB ILITY 1,210,630 1,760,379
FACILITIES 7,191,930 8,179,680
TRANSPORTATION 10,741,20 2 11,143,609
TOTAL PUBLIC WORKS 23,745,092 25,774,406

NON-DEPARTM ENTAL & CONTINGENCY
(d) OTHER NON-DEPARTMENTAL 1,679,000 2,690,363
VILLAGE TRENCH I NG 0 5,220,000
OPERATING TRANSFERS OUT 37,547,678 37,547,678
CONT INGENCY 500,000 492,334
TOTAL NON-DEPT & CONTINGENCY 39,726,678 45,950,375
TOTAL GENERAL FUND $238,468 ,445 $255 ,912,036
(a) Working budget incl udes t he adopted budget, open encumbrances from the end o f the pri or fiscal year, approved carry forwards of the pri or fiscal year and all other mid-year council approvals. (b) Actual expenditures on a budgetary basis inclu de encumbrances and exclude non-bu dgeted items. (c) Amount available would be 25% if funds were spent in t he same proportion as the previ ous year.

AMOUN T
COMM ITTED (b)
$1,682 ,030
873 ,160
423 ,453
1,762 ,952
176,653
1,611 ,445
6,529,694
502,070
4,529,429
4,043,047
809,923
9,884,469
45,690,892
34,208,737
79,899,629
597,211
10,327,067
2,347,095
10,781 ,044
17,405,513
41,457 ,931
1,155,247
2,277,223
1,027,464
6,306,009
8,729 ,786
19,495 ,729
1,024,164
0 28,160,766
0 29,184,930
$186,452 ,381
(d) Oth er non-departmen tal inclu des property tax administration fees, assessment district administration, citywi de litig ation expenses, and oth er items not attri buted t o a specific departme nt.

AVAILABLE

BALANCE
$515 ,362
466,571
178,087
491,067
99,869
519,554
2,270,510
279,111
1,414,294
1,460,111
376,746
3,530,262
16,595,018
9,746,595
26,341,613
158,205
2,841,390
1,128,378
4,187,216
5,957,960
14,273,148
389,908
868,360
732 ,915
1,873 ,671
2,4 13,823
6,278,677
1,666,199
5,220,000
9,386,912
492,334
16,765,445
$69,459 ,655
%
AVAILABLE (c)

23.5%

34.8%

29.6%

21.8 %

36.1%

24.4%

25.8%

35.7%

23.8%

26.5%

31.7%

26.3%

26.6%

22.2%

24.8%

20.9%

21. 6%

32.5%

28.0%

25.5%

25.6%

25.2%

27.6%

41.6%

22.9%

21.7 %

24.4%

61.9 %
100.0%

25.0%
100.0%

36.5%

27.1 %

Quarterly Financial Report _______________________________________________________________ 10 Council Contingency

The City Council has allocated $ 500,000 out of the General Fund budget for unanticipated emergencies or unforeseen program needs. Below is a listing of the City Council’s contingency:

Donations

Carlsbad Municipal Code 2.08.100 authorizes the city manager to accept donations on behalf of the city in an amount or of value of up to $5,000 per donation. These donations shall be used in accordance with the donor’s intent or added to the city’s contingency account. Below is a listing of all donations, that have been accepted by the city manager to date during fiscal year 2024-25:

Department Intention Qtr. 1 Qtr. 2 Jan. Feb Mar Qtr. 3 Total Parks & Recreation Leo Carrillo Ranch Cash Donations $1,761 $4,213 $689 $1,897 $16,575 $19,161 $25,135 Parks & Recreation Opportunity Grant Donations 1,767 1,216 519 873 1,579 2,971 5,953 Parks & Recreation Senior Center Cash Donations 59 0 20 802 0 822 881 Parks & Recreation Senior Meals Cash Donations 6,261 5,728 2,333 1,765 2,054 6,152 18,141 Parks & Recreation Senior Transportation Cash Donations 664 852 266 269 283 819 2,335 Parks & Recreation Special Events Cash Donations 1,000 0 0 0 1,000 1,000 2,000 Parks & Recreation Teen Program Cash Donations 1 452 0 452 2,355 2,807 3,260 Subtotal - Parks & Recreation $11,513 $12,461 $3,827 $6,058 $23,846 $33,731 $57,705 Library & Cultural Arts Gallery, TGIF and Arts Education support 0 0 0 150 0 150 150 Library & Cultural Arts Genealogy Program 0 0 0 1,015 0 1,015 1,015 Library & Cultural Arts Support Library Programs and Services $142 $1,205 $0 $12 $1,120 $1,132 $2,479 Subtotal - Library & Cultural Arts $142 $1,205 $0 $1,177 $1,120 $2,297 $3,644 Fire Food gifts for crews $515 $300 $0 $0 $1,075 $1,075 $1,890 Subtotal - Fire $515 $300 $0 $0 $1,075 $1,075 $1,890
Total Donations $12,170 $13,966 $3,827 $7,235 $26,041 $37,104 $63,239 Donations Fiscal Year 2024-25
May 13, 2025
Item #10 Page 26 of 29

EXPLANATIO N

ADOPTED BUDGET
USES:

CONTINGENCY ACCOUNT

USE OF FUNDS
Winnin g Teams Grant: Carlsbad High School Lancer Dancers (Resolut ion 2024-246)

TOTAL USES

AVAILABLE BALANCE
Note 1 - City Council Policy 51 gives aut horizat ion to the City Manager, or designee, to appro ve Winnin g Teams and Communi ty Spirit G rants up to $5,000 pe r grant.

AMOUN T
$500,000
(7,666)
(7,666)
$492 ,334

Quarterly Financial Report _______________________________________________________________ 11 Water Enterprise

Revenues
• Increase in water operating revenues due to increase in user rates effective January 2025 , combined with a 10% increase in water volume sales.
• Interest earnings increased due to a 2 2.6% increase in the yield of the Treasurer’s portfolio offset by a 13.6% decrease in the monthly average cash balance. • The increase in property taxes is primarily due to the annual increase in assesed property values.
• The increase in fines is from rate increase of late and door hanger fees. • The increase in other revenues is from higher revenue due to a loss recovery and reimbursed work from other departments.
• The decrease in miscellaneous service charges driven by private development requests.

Expenses
• The increase in staffing expenses due to increase in hazard pay and insurance in addition to annual required contribution to the city’s unfunded pension liability balance with CalPERS. • Lower interdepartmental expenses resulted from the annual update of the citywide cost allocation.
• Purchased water expenses have increased from the prior year due to a 11.37% rate increase in the variable cost of water purchased from the San Diego County Water Authority (SDCWA) combined with a 9.75% increase in the amount of water purchased. • Outside services increase from pump and asphalt repairs in current year. • Miscellanous expense increased from various parts and equipment purchases. • Captial outlay decrease due to higher costs in piror year for excavator purchase.

CHANGE FROM
BUDGET YTD* YTD* YTD 2022-23 TO PERCENT
FY 2024-25 3/31/2024 3/31/2025 YTD 2023-24 CHANGE
REVENUES:

WATER DELIVERY 45,000,000$ 30,039,349$ 32,926,549$ 2,887,200$ 9.6% INTEREST 660,456 555,324 605,769 50,445 9.1%
MI SC. SERVI CE CHARGES 413,600 294,889 266,889 (28,000) -9.5% PROPERTY TAXES 3,119,800 2,610,328 2,737,593 127,265 4.9% FINES, FORFEITURES & PENALTIES 378,500 296,737 347,761 51,024 17.2% OTHER REVENUES 513,000 344,090 366,329 22,239 6.5%
TOTAL OPERATING REVENUE 50,085,356 34,140,717 37,250,890 3,110,173 9.1% EXPENSES:

STAFFING 4,905,926 3,464,154 3,655,385 191,231 5.5%
INTERDEPARTMENTAL SERVICES 3,553,726 2,824,607 2,685,367 (139,240) -4.9% PURCHASED WATER 34,200,000 20,885,056 23,252,609 2,367,533 11.3% MWD/CWA FI XED CHARGES 7,710,000 5,206,689 5,858,193 651,504 12.5% OUTSIDE SERVICES/MAINTENANCE 2,943,455 598,367 661, 661 63, 294 10.6%
DEPRECIATION/REPLACEMENT 5,100,000 3,739,460 3,825,000 85,540 2.3% MISCELLANEOUS EXPENSES 1,068,191 525,470 705,252 179,782 34.2% CAPITAL OUTLAY 143,211 60,936 33,510 (27,426) -45.0%
TOTAL OPERATING EXPENSES 59,624,509 37,304,739 40,676,977 3,372,238 -9.0% OPERATING INCOME/(LOSS) (9,539,153)$ (3,164,022)$ (3,426,087)$ (262,065)$ 8.3% *Adjusted to reflect timing differences for water purchases and depreciation.

WATER OPERATIONS FUND
March 31, 2025

15%
11%
May 13, 2025
Item #10 Page 27 of 29

Quarterly Financial Report _______________________________________________________________ 12 Wastewater Enterprise

Revenues
• Charges for current services are higher than in the prior year due primarily to a 20% rate increase that went into effect in January 2024.
• Interest earnings increased due to a 2 2.6% increase in the yield of the Treasurer’s portfolio combined with a 5.6% decrease in the monthly average cash balance. • The decrease in other revenues is from higher plan check fee activity in prior year.

Expenses
• The increase in staffing expenses is due to negotiated salary adjustments in addition to annual required contribution to the city’s unfunded pension liability balance with CalPERS. • Encina operating costs increased from higher staffing and costs for chemicals, energy and insurance.
• Depreciation increased from replacement of infrastructure has reached end of useful life.

CHANGE FROM
BUDGET YTD* YTD* YTD 2022-23 TO PERCENT
FY 2024-25 3/31/2024 3/31/2025 YTD 2023-24 CHANGE
REVENUES:

CHARGES FOR CURRENT SERVICES 25,206,000 16,682,573 19,802,584 3,120,011 18.7% INTEREST 288,780 215,230 241,093 25,863 12.0%
OTHER REVENUES 395,700 355,650 294,344 (61,306) -17.2%
TOTAL OPERATING REVENUE 25,890,480 17,253,453 20,338,021 3,084,568 17.9% EXPENSES:

STAFFING 3,355,846 2,400,788 2,528,497 127,709 5.3%
INTERDEPARTMENTAL SERVICES 1,976,943 1,445,754 1,489,419 43,665 3.0% ENCINA PLANT SERVICES 6,124,537 4,802,145 5,334,192 532,047 11.1% OUTSIDE SERVICES/MAINTENANCE 1,768,726 314,523 371,686 57,163 18.2% DEPRECIATION/REPLACEMENT 8,000,000 3,962,481 6,000,000 2,037,519 51.4% MISCELLANEOUS EXPENSES 848,199 491,067 488,859 (2,208) -0.4% CAPITAL OUTLAY 26,087 572 2,287 1,715 299.8%
TOTAL OPERATING EXPENSES 22,100,338 13,417,330 16,214,940 2,797,610 20.9% OPERATING INCOME/LOSS 3,790,142 3,836,123 4,123,081 286,958 7.5% * Adjusted to reflect timing differences for Encina quarterly invoices and depreciation.

WASTEWATER OPERATIONS FUND
March 31, 2025
18%
21%
May 13, 2025
Item #10 Page 28 of 29

Quarterly Financial Report _______________________________________________________________ 13

Golf Course Enterprise

Revenues
• Primary operating revenues at the golf course have remained relatively consistent year over year. Slight increase in demand combined with increase in rates. • Pro shop and food and beverage revenues decreased which was offset by increases in practice center and other revenues from interest earnings.

Expenses
• Course and grounds increase driven mostly by higher water use and rate. • Cost of sales decrease corre lated to sales in pro shop and focus on lower margins in food and beverage.
• Depreciation has increased from new assets placed in service for improvements and equipment. • Miscellaneous expenses slightly increased in utilities costs. • Capital outlay remains steady, reflecting ongoing equipment replacements and repair expenditures.

CHANGE FROM
BUDGET YTD YTD YTD 2023-24 TO PERCENT
FY 2024-25 3/31/2024 3/31/2025 YTD 2024-25 CHANGE
REVENUES:

GOLF COURSE 5,588,000 4,024,589 4,193,739 169,150 4.2%
FOOD & BEVERAGE 4,633,000 3,506,753 3,441,098 (65,655) -1.9% PRO SHOP 451,000 329,568 271,459 (58,109) -17.6%
PRACTI CE CENTER 462,000 382,227 389,873 7,646 2.0%
OTHER REVENUES 209,000 171,130 298,805 127,675 74.6%
TOTAL OPERATING REVENUE 11,343,000 8,414,267 8,594,974 180,707 2.1% EXPENSES:

GENERAL & ADMINISTRATIVE 6,507,000 4,426,241 4,445,087 18,846 0.4% COURSE & GROUNDS 1,264,000 855,021 938,582 83,561 9.8%
FOOD & BEVERAGE 384,000 271,265 283,769 12,504 4.6%
PRO SHOP 101,000 54,486 33,670 (20,816) -38.2%
COST OF SALES 1,308,000 966,239 848,483 (117,756) -12.2% DEPRECIATION/REPLACEMENT 1,000,000 562,500 750,000 187,500 33.3% MISCELLANEOUS EXPENSES 387,266 137,748 164,064 26,316 19.1% CAPITAL OUTLAY 1,115,000 714,196 715,140 944 0.1%
TOTAL OPERATING EXPENSES 12,066,266 7,987,696 8,178,795 191,099 2.4% OPERATING INCOME/LOSS (723,266) 426,572 416,179 (10,392) -2.4%

GOLF COURSE FUND
March 31, 2025

2.1%

2.4%
May 13, 2025
Item #10 Page 29 of 29
Matt Sanford, Economic Development Director
Zach Korach, Finance Director
May 13, 2025
Economic and Financial
Update: Q3 FY 2024-25
{ City of
Carlsbad
TODAY’S PRESENTATION
• Today’s report will cover Fiscal Year 2024-25, Third Quarter o January through March 2025
• Economic update
• Financial update
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
2 { City of
Carlsbad

ECONOMIC TRENDS
• External factors continue to affect the economy
o Domestic spending and grants
o Tariffs and trade policy
o Potential rebound of inflation and cost of capital
o Disinvestment in clean technologies
o International tourist sentiment
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
4 {city of
Carlsbad
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
5 INFLATION
Consumer Price Index for All Urban Consumers for San Diego-Carlsbad MSA Percent change

91.0 8.0

1.0 6.0

5.0 4.0

3.0 2.0

1.0 0.0
-
---·All ite ms
All ite ms less food and e nergry
-- ' '
Mar May Jul Sep N o,v Jan Mar May Jul Sep N o,v Jan Mar May Jul Sep N o,v Jan Mar 20 22 20 2:3 20 24 20 25
Source: U.S. Bureau of Labor Statistics . {city of
Carlsbad
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
7 0
1 2
3 4
5 6
7 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Unemployment Rate Comparison
Last 12-Months
Carlsbad San Diego County California North County Avg w/o Carlsbad T r
~ ...... ----------- -----------------==--=--=--=---- ---=~ --=---=-=-==-==~~::::::::::::::::::==;;;;::::::=~ T T
- : =
r T T r
{city of
Carlsbad

CARLSBAD JOBS
• January through March saw 6,043 unique job
postings
• Jobs were posted by 1,419 different Carlsbad
employers
• Average salary for posted jobs was $53,504
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
8 ITEM 10: ECONOMIC AND FINANCIAL UPDATE
9 $1.54m
$600,000.00
$700,000.00
$800,000.00
$900,000.00
$1,000,000.00
$1,100,000.00
$1,200,000.00
$1,300,000.00
$1,400,000.00
$1,500,000.00
$1,600,000.00
2020 2021 2022 2023 2024 2025
Carlsbad Median Home Price
{city of
Carlsbad

DEVELOPMENT & BUSINESS ACTIVITY
• There are an estimated 6,881 current businesses in Carlsbad • License activity remained consistently strong
10 0
500
1000
1500
2000
2500
3000
Q1 Q2 Q3 Q4 Q1
2024 2025
Business Licenses Issued by Quarter
Non-Residential Residential Outside City Total
---------------------------
- - -
{city of
Carlsbad
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
11 14.4%

7.8%

4.7%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2022 2023 2024 2025
Carlsbad Commercial Vacancy Rates
Carlsbad Retail Carlsbad Office Carlsbad Industrial
{city of
Carlsbad
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
12 TOURISM
0 20
40 60
80 100
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
2022 2023 2024 2025
Hotel Occupancy Trend
0 50
100
150
200
250
300
350
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
2022 2023 2024 2025
Hotel Average Daily Rate Trend
{city of
Carlsbad

KEY TAKEAWAYS
• External factors continue to create a chaotic
operating environment for businesses
• Business leaders are anxious about the future
• As a silver lining, Carlsbad’s economy is diverse and resilient.
• The city continues to be a sought-after destination
for businesses and workers with an uptick in
interest, over the last quarter.

ITEM 10: ECONOMIC AND FINANCIAL UPDATE
13 GENERAL FUND REVENUES
fiscal year to date through third quarter
14 $70,000,000
■ FY 2023-24 Actual
$60,000,000
■ FY 2024-25 Expected
$50,000,000 ■ FY 2024-25 Actual
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
_I I I_I ■ ■-- - •-
Property tax Sales tax Transient Other taxes Income from Development Other revenues occupancy tax inv. and prop. related revenue

GENERAL FUND REVENUES
Revenue category
Actual
FY 2023-24
Actual
FY 2024-25
$
difference
%
difference
Property tax $56.4 $58.0 $1.6 3%
Sales tax 44.8 44.9 0.1 0%
Transient occupancy tax 25.3 26.6 1.3 5%
Other taxes 8.2 8.6 0.4 5%
Income from inv. and property 6.3 6.4 0.1 2%
Development related revenue 3.1 3.3 0.2 6%
Other revenues 16.6 17.2 0.6 4%
Total $160.7 $165.0 $4.3 3%
fiscal year to date through third quarter (in millions) 15 [-----====-----' ]

GENERAL FUND BUDGET
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
• Adopted budget of $238.5 million
• Working budget of $255.9 million
• Available budget remaining of $69.5 million, or 27%
• Includes actual expenditures through March 2025
• Includes open purchase order commitments
16 {city of
Carlsbad

GENERAL FUND EXPENDITURES & ENCUMBRANCES
fiscal year to date through third quarter
17 $140,000,000
■ FY 2024-25 Budget
$120,000,000 ■ Q3 FY 2023-24 Actual
■ Q3 FY 2024-25 Actual
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$-
Personnel Maintenance & operations Transfers out Other

GENERAL FUND EXPENDITURES
fiscal year to date through third quarter (in millions) Category
FY 2024-25
Appropriation
As of Qtr. 3
FY 2024-25
% of Budget
Spent to Date
OPEN POs
at 03/31/25
Personnel $135.2 $100.0 74% $0.0
Maintenance & operations 74.3 44.4 60% 11.4
Transfers out 37.5 28.2 75% 0.0
Capital outlay 3.2 0.9 28% 1.5
Village Trenching 5.2 0.0 0% 0.0
Contingency 0.5 0.0 0% 0.0
Total $255.9 $173.5 68% $12.9
18 WATER AND WASTEWATER
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
Compared to prior year through Quarter 3:
• Water revenues are up 9% and expenses
are up 9%
• Wastewater revenues are up 18% and
expenses are up 21%

19 { city of
Carlsbad

GOLF COURSE
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
Compared to prior year through Quarter 3:
• Golf Course revenues are up 2% and
expenses are up 2%
20 {city of
Carlsbad

NEXT STEPS
• Monitor revenues and expenditures
• Publish economic and financial status reports:
carlsbadca.gov/doingbusiness
carlsbadca.gov/departments/finance/financial-reports
• Present fiscal year 2025-26 preliminary budget to City Council on May 20, 2025
ITEM 10: ECONOMIC AND FINANCIAL UPDATE
21 { City of
Carlsbad

Carlsbad City CouncilMay 13, 2025

Carlsbad City Council
May 13, 2025