Carmel-by-the-Sea City Council
January 4, 2022

Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis

DEBT ADMINISTRATION (LONG-TERM LIABILITIES)
During the year, Long-Term Liabilities from governmental activities increased by $1.4 million primarily due to increase in the net pension liability and the net OPEB liability as shown below and described in the financial highlights section.

The following table summarizes the City’s debt at the end of the year:

See Note 6 in the notes to financial statements section for additional information.

GENERAL FUND BUDGETARY HIGHLIGHTS
Changes from the City's General Fund original budget to the final budget are detailed in the Required Supplementary Information section along with a comparison to actual activity for the year ended. In Fiscal Year 20/21, the City originally estimated a decrease of $1.02 million in fund balance; however due to increased performance in revenues, transfers from other funds, and decreased annual spending, the City ended the year with an excess of expenditures over revenues of $3.86 million.

Revenues
The General Fund adopted and final revenue budgets were $15.5 and $16.2 million, with actual revenues recorded at $20.2 million. This $4 million difference primarily increased property tax values and transient occupancy tax collections.

Expenditures
The General Fund adopted expenditure budget was $18.45 million and the final budget was $19 million.

The actual expenditures totaled $18.3 million, which resulted in a net difference of $711,682. Most of the savings can be attributed to salary and benefit savings and overall reductions related to COVID-19.

Increase
2021 2020 (Decrease)
Sunset Center COP - $ 4,890,000 $ (4,890,000) $
Sunset Center LRB 3,895,000 - 3,895,000
Sunset Center LRB Premium 866,901 - 866,901
Countywide Radio Project 165,051 165,051 -
Pension Obligation Bonds 1,340,000 1,980,000 (640,000)
Compensated Absences 598,095 581,520 16,575
Net Pension Liability 24,342,598 21,666,416 2,676,182
Claims Liability 575,000 575,000 -
Net OPEB Liability 4,140,591 4,640,704 (500,113)
Total Long-Term Liabilities 35, $ 34,498,691 923,236 $ 1,424,545 $ Table 6 - Outstanding Long-Term Liabilities
Governmental Activities

Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis

ECONOMIC OUTLOOK
Summary
Consistent with prior years, the City’s primary revenue sources include property taxes, sales and use taxes, and transient occupancy taxes. The City anticipated a significant decline in revenue resulting from the coronavirus and associated travel restrictions in Fiscal Year 2020-2021. However, efforts by the State of California to collect taxes from online sales, strong consumer spending during the pandemic on certain goods and services and the passage of a 1.5% local sales tax by the Carmel electorate, effective on July 1, 2020, buffered some of the revenue loss. In addition, Carmel-by-the-Sea remained a popular travel destination during the pandemic positively affecting both sales and use taxes and transient occupancy taxes.

Assuming a phased recovery and incremental return to pre-pandemic tourism and related spending levels, projections for the City’s three major revenues total $19.6 million, or 78%, of the $25.3 million in estimated total citywide revenues for Fiscal Year 2021-2022. This represents an increase of $5.3 million in revenue when compared to the Fiscal Year 2020-2021 Adopted Budget, primary driven by strong performance in transient occupancy taxes. However, while the approaching fiscal year reflects increased revenue receipts, the economic outlook assumes the recovery of sales and use taxes to pre-pandemic levels over two years.

Similarly, projected growth in transient occupancy taxes spans three to five years before reaching receipts similar to Fiscal Year 2018-2019. In addition to the three primarily revenue sources, the infusion of federal recovery funds over the next two years, bolsters the economic outlook.

Anticipating improvements in citywide revenues, planned expenditures also increase in the upcoming fiscal year. After enacting workforce reductions in Fiscal Year 2020-2021 due to the projected loss of revenue, City staffing levels increase from 72.5 full-time equivalents (FTE) to 81 FTE in Fiscal Year 2021-2022.

As such, the cost of staffing increases from $9.6 million to $11.1 million due to a combination of factors such as negotiated salary and benefit adjustments, personnel advancement (annual merit or salary step adjustments), rising retirement and health insurance costs and additional staff. Personnel costs steadily increase, approaching $12.2 million by Fiscal Year 2023-2024, without any additional increase in FTE beyond the Fiscal Year 2021-2022 staffing levels.

However, even without an increase in staffing levels, the City faces rising personnel costs primarily attributed to pension-related expenses. In addition to its annual contributions toward retirement costs for existing employees, the City makes an annual required payment to the California Public Employees’ Retirement System (CalPERS) for the City’s unfunded actuarial liability (“UAL”). The UAL payment for the upcoming fiscal year approaches $1.9 million, an increase of approximately $235,000 over the prior year. Projections indicate an annual increase of a similar magnitude over the next three years. To help address its pension obligations, the City established a Section 115 Trust with an initial investment of $1 million into the trust and a desire to fund the trust upwards of $1 million on an annual basis.

The City’s ability to providing ongoing funding into the trust while maintaining an annual balanced budget is contingent on (1) revenues beginning to rebound from the pandemic and sustaining annual growth over the next several years and (2) controlling increases in citywide expenses, particularly regarding salary and benefits and capital outlay. Emerging reports regarding inflation also affect the ability to reduce costs for staffing, services and supplies.

Outlook for Major Revenues
Property Taxes
Located within one square mile, the City’s land capacity for new housing is limited, which curtails the

Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis availability of housing stock. This limited supply, coupled with a high demand for housing driven by the City’s desirability as a place to live and close proximity to the San Francisco metropolitan area, contributes to a healthy real estate market and thus the stability and strength of property tax revenues.

Unlike sales tax and transient occupancy tax, the Fiscal Year 2020-2021 budget assumed incremental growth in property tax and a resiliency to potential negative economic impacts associated with COVID-19.

In actuality, the performance of the real estate market improved during the pandemic. The Economic Outlook contained within the Governor’s Fiscal Year 2021-2022 Budget discusses the strong housing market despite the COVID-19 recession as well as the ability of high-income households to purchase homes. The State median home price averaged over $600,000 in March through May, set new record highs from June to September 2020 and reached a record high of $712,430 in September 2020. The California median home sales price through November 2020 reflected a 9.2% increase, on average, compared to the same period in 2019. This real estate phenomenon affects Carmel, which has a consistently strong property tax base. While Fiscal Year 2020-2021 property tax revenue outpaces projections, growth of this magnitude is not sustainable and annual growth of 3% is more realistic. Historically, the City’s annual increase in property taxes over the last ten years averages 5.1%. The financial forecast assumes 3% annual growth over the next several years.

Sales and Use Taxes
Many of the features that contribute to residential quality of life, such as a temperate climate, natural beauty, architecture and unique design standards and cultural, dining and shopping opportunities also attract visitors. The variety of restaurants and other dining options located within the City, as well as art galleries, jewelry and clothing retailers contributes to shopping opportunities for residents and visitors alike.

Restaurants and general consumer goods (retail) are the City’s leading drivers of sales and use tax revenue.

The pandemic negatively affected restaurants in particularly, especially at the beginning of the emergence of COVID-19, and this sector continued to face economic challenges in Fiscal Year 2020-2021 due to shelter-in-place restrictions and other COVID-19 protocols that affected seating capacity on already spatialconstrained dining establishments.

Consumer preferences and spending patterns have varied since the pandemic. From a timing perspective, the State’s implementation for the collection of taxes from out-of-state vendors and online sales coincided with the start of the pandemic and helped buffer the loss of sales tax revenues. Moreover, the pandemic shifted consumer spending from services to goods, which are more likely to be subject to taxes.

Projections statewide for the restaurant category anticipate growth of nearly 30% in 2021-2022, which includes recovery of lost revenue from the two prior fiscal years due to restaurant closures, limited hours of operations and reduced customers. After the initial recovery, growth tampers to 6% in 2022-2023.

General consumer goods also rebound and show resiliency in the second quarter of 2021 with growth at 9% in 2021-2022, followed by 2% in 2022-2023. The return to in-person shopping and spending driven by consumers returning to school and work, as well as the holiday season, bolster anticipated growth in this sector.

For Carmel, the number of visitors within the Village, the permitted sale of food “to go” and the City support for the use of the right-of-way for ”parklets” for outdoor dining are factors that potentially impact sales tax revenues. As the restaurant and retail sectors rebound from the pandemic, the extent of their recovery is contingent on factors such as consumer comfort level to dine and/or shop indoors, policies requiring vaccination and/or masks to enter dining and retail establishments, the continued allowance of “parklets” for outdoor dining, labor shortages, supply issues for obtaining various goods and inflation.

Fiscal Year 2021-2022 projects an increase of 38% and 29% respectively in the local sales tax (Measure C)

Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis and the City’s share of the statewide sales tax when compared to the Fiscal Year 2020-2021 Adopted Budget. However, a rebound to pre-pandemic sales tax receipts occurs in Fiscal Year 2022-2023.

Transient Occupancy Taxes
Various lodging options are available to visitors and these lodging establishments charge a 10% transient occupancy tax for stays of 30 days or less. Transient occupancy taxes (TOT) are challenging to predict as they are based upon personal choices regarding travel, be it the decision on whether to travel, where to travel, and how much to spend on travel, such as the amount to pay for a hotel room. In addition to facing competition from other popular US destinations that neighbor the Monterey Peninsula to the north and south, the City also competes with other international destinations. On the other hand, given is proximity to San Francisco and location on the California central coast between San Francisco and Los Angeles the City is accessible to many visitors, including guests from California, other states and other countries. Thus, the City’s TOT is sensitive to changes in consumer spending, economic conditions, and, to some extent, statewide, national and international policies.

However, based upon preliminary data, the projected loss of revenue attributed to tourism for Fiscal Year 2020-2021 is less than originally projected. While there is optimism about vaccine deployment and the lifting of travel restrictions, variants of the pandemic are also emerging, potentially affecting ongoing travel and leisure spending. Based upon industry-specific literature, which indicated recovery to pre-pandemic levels for domestic travel spending and international travel in 2024 and 2025 respectively, the City’s financial forecast assumes a phased approach to recovery. The Fiscal Year 2021-2022 budget target represents 78% of the Fiscal Year 2018-2019 actual, adjusted incrementally to 85%, 90% and 95% of 2018- 2019 levels over the following three fiscal years.

Outlook for Major Expenditures
Salaries and Benefits
After enacting workforce reductions in Fiscal Year 2020-2021 due to the projected loss of revenue, City staffing levels increase from 72.5 full-time equivalents (FTE) to 81 FTE in Fiscal Year 2021-2022.

Correspondingly, the cost of staffing increases from $9.6 million to $11.1 million due to a combination of factors such as negotiated salary and benefit adjustments, step increases, rising retirement and health care costs and additional staff. In comparison, the adopted budget for salaries and benefits in Fiscal Year 2019- 2020 totaled $11.5 million while funded 92 FTE, illustrating the upward pressure on staffing costs even without significantly increasing the number of positions. Personnel costs steadily increase, approaching $12.2 million by Fiscal Year 2023-2024, without any additional increase in FTE beyond the Fiscal Year 2021-2022 staffing levels.

Pension Costs
The City provides a defined pension plan through the California Public Employees’ Retirement System (CalPERS) for its full-time employees. As such, the City is responsible for contributing toward current employees’ retirement packages based upon a set amount determined by CalPERS based upon a percentage of salary (“employer contribution”). The employer contribution is included within the City’s overall budgeted salary and benefit costs. In addition, the City is obligated to make additional pension payments to CalPERS known as the unfunded actuarial liability (“UAL”). The UAL addresses any shortfall between funding CalPERS needs to pay for retirement benefits when people retire compared to the funding that CalPERS currently has on hand to pay for the estimated costs of these benefits. As calculated by CalPERS, the City’s UAL payment steadily increases from $1.4 million in Fiscal Year 2019-2020, to $1.6 million in Fiscal Year 2020-2021, to $1.9 million in Fiscal Year 2021-2022 and then to $2.1 million in Fiscal Year

Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis 2021-2022. A similar planned increase of approximately $200,000 in Fiscal Year 2022-2023 results in a new payment of $2.1 million, with annual cost increases of roughly the same magnitude spanning over the next several years. However, CalPERS plans to review its investment returns and potentially lower the discount rate, which affects the UAL amount.

To help address its pension obligations, the City established a Section 115 Trust with an initial investment of $1 million into the trust. Current City Council wishes to provide funding of $1 million annually into the trust. Based upon preliminary forecasts, overall citywide expenditures outpace revenues. In particular, increases in personnel and capital outlay minimize the amount of funding available to allocate to the trust.

However, the maturity of the pension obligation bond in 2023 provides for a potential funding source for the trust moving forward.

Other Operating Costs
In order to deliver services to the community, the City procures various types of goods and services. The category of services and supplies assumes 5% annual growth. However, in addition to overall sensitivity to inflation, certain expenses also increase beyond 5% such as fuel, (general liability, property and workers compensation) insurance premiums and utilities. The City contracts for specialized professional services and costs trend upward based upon credentials, certifications and qualifications of the individuals provided the service. Moreover, the City currently contracts with another governmental agency for fire prevention and response services, subject to increases based upon salary and benefits, including pension.

Capital Projects
After deferring capital projects in Fiscal Year 2020-2021 due to the projected loss of revenue, capital expenditures increase to $2.3 million in Fiscal Year 2021-2022. In future years, in accordance with the City’s financial policies, capital outlay expenses represent 3.5% of projected revenue, or approximately $1 million annually based upon current revenue assumptions. However, the City’s Five-Year Capital Improvement Plan totals $19.8 million and identifies needs of $2.5-4 million annually over the next four fiscal years. Similar to service and supplies, inflation and other market-based conditions drive the availability of contractors and costs to implement public works projects, subject to prevailing wage. In addition, deferring building and infrastructure maintenance drives long-term costs for repair and replacement.

Debt Service
On July 3, 2012, the City Council authorized the issuance of pension obligation bonds to refinance the City’s outstanding side fund obligations to CalPERS. The annual debt service is approximately $700,000 until the bond matures on June 1, 2023. On September 30, 2020, the City refinanced the 2010 Refunding Lease Revenue Bond related to improvements at the Sunset Center (the Sunset Theater Project). Payments for Fiscal Year 2021-2022 approach $163,000. Future payments approximate $500,000 annually until the bond matures on November 1, 2032.

REQUEST FOR FINANCIAL INFORMATION
This Annual Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. If you have any questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Carmel-by-the-Sea-by-the-Sea Finance Department, P O Box CC, Carmel-by-the-Sea, CA 93921, or visit the City’s web page at http://ci.carmel.ca.us/carmel.

Attachment 2

BASIC FINANCIAL STATEMENTS

Attachment 2
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Attachment 2
City of Carmel-By-The-Sea
Statement of Net Position
June 30, 2021
Governmental
ASSETS Activities
Current Assets:

Cash and investments $ 17,677,724
Receivables:

Accounts 2,509,808
Due from other governments 1,229,709
Total Current Assets 21,417,241
Noncurrent Assets:

Capital Assets:

Nondepreciable 5,152,170
Depreciable, net of accumulated depreciation 34,620,892 Total Capital Assets - Net 39,773,062
Total Assets $ 61,190,303

DEFERRED OUTFLOWS OF RESOURCES
OPEB Adjustments $ 331,678
Pension Adjustments 5,543,390
Total Deferred outlows of Resources $ 5,875,068

LIABILITIES
Current Liabilities:

Accounts payable $ 300,549
Payroll related liabilities 307,919
Deposits and other liabilities 443,992
Interest payable 30,000
Claims payable - current portion 57,500
Compensated absences - current portion 450,000
Long-term debt - due within one year 712,086
Total Current Liabilities 2,302,046
Noncurrent Liabilities:

Long-term debt - due in more than one year 5,554,866
Claims payable 517,500
Compensated absences 148,095
Net pension liability 24,342,598
Net OPEB liability 4,140,591
Total Noncurrent Liabilities 34,703,650
Total Liabilities $ 37,005,696

DEFERRED INFLOWS OF RESOURCES
OPEB Adjustments $ 742,308
Pension Adjustments 1,497,824
Total Deferred Inflows of Resources $ 2,240,132

NET POSITION
Net investment in capital assets 34,846,110 $
Restricted for:

Transportation 450,532
Public safety 55,866
Debt service 393,133
Library 1,470,720
Public parking 737,124
Measure D 1,635,906
Asset seizure 5,455
Total Restricted 4,748,736
Unrestricted (11,775,303)
Total Net Position $ 27,819,543
The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-By-The-Sea
Statement of Activities
For the Year Ended June 30, 2021
Operating
Charges for Grants and Governmental
Functions/Programs Expenses Services Contributions Total Activities Primary Government:

Governmental Activities:

General government 5,423,821 $ 165,541 $ 508,169 $ 673,710 $ (4,750,111) $ Community Planning and Building 1,280,518 1,142,277 - 1,142,277 (138,241) Public Safety 8,968,364 796,471 - 796,471 (8,171,893)
Public Works 4,162,030 156,838 - 156,838 (4,005,192)
Library 1,539,410 5,544 304,970 310,514 (1,228,896)
Community Activities 119,562 33,140 - 33,140 (86,422)
Economic Revitalization 819,202 111,093 - 111,093 (708,109) Interest and fiscal charges 387,525 - - - (387,525)
Total Governmental Activities $ 2,410,904 22,700,432 $ 813,139 $ 3,224,043 $ (19,476,389) General Revenues:

Taxes:

Property taxes 7,389,657
Sales and use taxes 7,028,041
Transient occupancy taxes 5,339,285
Franchise fees 756,358
Business license tax 524,220
Total taxes 21,037,561
Intergovernmental revenues not restricted to specific programs 704,337 Investment earnings 47,554
Other revenues 63,692
Total General Revenues 21,853,144
Change in Net Position 2,376,755
Net Position - Beginning of Year 25,442,788
Net Position - End of Year 27,819,543 $
The accompanying notes are an integral part of these financial statements.

Net (Expense)
Revenue and
Change in Net
Program Revenues Position

Attachment 2

MAJOR GOVERNMENTAL FUNDS
Fund Title Fund Description
General Fund This fund is used to account for all of the general operations and other financial transactions of the City, which are not accounted for by another fund.

Measure C Sales Tax This fund is used to account for the transaction and use tax increase to be used to maintain essential services, including fire, ambulance and police response times; fund capital needs, including streets, beach, parks, forest and trails; increase code compliance; maintain libraries, Sunset Center and other public facilities; address CalPERS pension liabilities and other debt; and provide other general City services.

Capital Projects This fund accounts for resources utilized, committed, assigned or restricted for capital projects.

Harrison Memorial Library This fund is used to account for activities associated with the Harrison Memorial Library.

Attachment 2
City of Carmel-By-The-Sea
Balance Sheet
Governmental Funds
June 30, 2021
Harrison
Measure C Capital Memorial Other Total
General Sales Tax Projects Library Governmental Governmental Fund Fund Fund Fund Funds Funds
ASSETS
Cash and investments 11,101,414 $ 436,205 $ 544,713 $ 1,473,080 $ 1,612,102 $ 15,167,514 $ Receivables:

Accounts 2,509,808 - - - - 2,509,808
Due from other governments - 1,199,701 - - 30,008 1,229,709 Total assets $ 1,635,906 13,611,222 $ 544,713 $ 1,473,080 $ 1,642,110 $ 18,907,031 $

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable 244,442 $ - $ 4,850 $ 2,360 $ - $ 251,652 $ Accrued liabilities 307,919 - - - - 307,919
Deposits 443,992 - - - - 443,992
Total liabilities - 996,353 4,850 2,360 - 1,003,563
Fund Balances:

Restricted:

Transportation - - - - 450,532 450,532
Public safety - - - - 55,866 55,866
Debt service - - - - 393,133 393,133
Library - - - 1,470,720 - 1,470,720
Asset seizure - - - - 5,455 5,455
Public parking - - - - 737,124 737,124
Measure C - 1,635,906 - - - 1,635,906
Committed:

Holstery tax - 248,820 - - - 248,820
Budget stabilization 2,173,138 - - - - 2,173,138
Assigned:

Operational reserves 1,025,194 - - - - 1,025,194
Capital projects - - 539,863 - - 539,863
Unassigned 9,167,717 - - - - 9,167,717
Total fund balances 1,635,906 12,614,869 539,863 1,470,720 1,642,110 17,903,468 Total liabilities and
fund balances $ 1,635,906 13,611,222 $ 544,713 $ 1,473,080 $ 1,642,110 $ 18,907,031 $ The accompanying notes are an integral part of these financial statements.

Major Funds

Attachment 2
City of Carmel-By-The-Sea
Reconciliation of the Government Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2021
Total Fund Balances - Total Governmental Funds $ 17,903,468 Amounts reported for governmental activities in the statement of net position were different because:

Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. The capital assets were adjusted as follows:

Capital assets 63,284,650
Less: accumulated depreciation (24,232,854)
Total Capital Assets 39,051,796
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (30,000) Internal service funds are used by management to charge the costs of stores, vehicle maintenance and various insurance costs to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 2,607,580
The differences from benefit plan assumptions and estimates versus actuals are not included in the plan's actuarial study until the next fiscal year and are reported as deferred inflows or deferred outflows of resources in the statement of net position. 3,634,935 Long-term obligations were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. The long-term liabilities were adjusted as follows:

Long-term debt (6,266,952)
Compensated absences (598,095)
Net pension obligation (24,342,598)
Net OPEB liability (4,140,591)
Total Long-Term Obligations (35,348,236)
Net Position of Governmental Activities $ 27,819,543
The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2021
Harrison
Measure C Capital Memorial Other Total
General Sales Tax Projects Library Governmental Governmental Fund Fund Fund Fund Funds Funds

REVENUES
Taxes:

Property taxes 7,389,657 $ - $ - $ - $ - $ 7,389,657 $
Sales and use taxes 3,020,937 4,007,104 - - - 7,028,041 Transient occupancy taxes 5,339,285 - - - - 5,339,285
Franchise fees 756,358 - - - - 756,358
Business license tax 524,220 - - - - 524,220
Intergovernmental revenues 693,873 - - - 518,633 1,212,506 License and permits 889,822 - - - - 889,822
Contributions - - - 304,972 - 304,972
Fines and forfeitures 48,947 - - - - 48,947
Charges for services 1,198,569 - - 5,544 - 1,204,113
Interest 26,791 - - 9,899 3,343 40,033
Rents and concessions 138,138 - - - - 138,138
Other revenues 171,326 - 22,249 - - 193,575
Total Revenues 4,007,104 20,197,923 22,249 320,415 521,976 25,069,667

EXPENDITURES
Current:

General government 5,083,467 - - - - 5,083,467
Community Planning and Building 1,172,337 - - - - 1,172,337 Public Safety 7,833,156 - - - - 7,833,156
Public Works 2,635,206 - - - - 2,635,206
Library 646,750 - - 270,944 - 917,694
Community Activities 82,366 - - - - 82,366
Economic Reviltalization 808,540 - - - - 808,540
Capital outlay 44,864 - 54,043 - - 98,907
Debt service
Principal - - - - 640,000 640,000
Interest and fiscal charges - - - - 406,525 406,525
Total Expenditures - 18,306,686 54,043 270,944 1,046,525 19,678,198 Excess (Deficiency) of
Revenues over Expenditures 1,891,237 4,007,104 (31,794) 49,471 (524,549) 5,391,469

OTHER FINANCING SOURCES (USES)
Bond issuances - - - - 4,761,901 4,761,901
Bond defeasance - - - - (4,890,000) (4,890,000)
Transfers in 1,965,485 - - - 1,244,515 3,210,000
Transfers out - (3,050,000) - - (160,000) (3,210,000)
Total Other Financing Sources (Uses) (3,050,000) 1,965,485 - - 956,416 (128,099) Net Change in Fund Balances 3,856,722 957,104 (31,794) 49,471 431,867 5,263,370 Fund Balances Beginning 8,758,147 678,802 571,657 1,421,249 1,210,243 12,640,098 Fund Balances Ending 12,614,869 $ 1,635,906 $ 539,863 $ 1,470,720 $ 1,642,110 $ 17,903,468 $ The accompanying notes are an integral part of these financial statements.

Major Funds

Attachment 2
City of Carmel-By-The-Sea
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities
For the Year Ended June 30, 2021
Net Change in Fund Balances - Total Governmental Funds $ 5,263,370 Amounts reported for governmental activities in the Statement of Activities and Changes in net position were different because:

Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities and Changes in net position, the cost of those assets was allocated over their estimated useful lives as depreciation expense.

Capital outlay 133,875
Depreciation expense (1,854,789)
Gains and losses from the disposal of capital assets are recorded in the government-wide statement of activities as a special item, but only the proceeds from disposals are reported in the fund statements. (30,306)
Internal service funds are used by management to charge the costs of stores, vehicle maintenance, and various insurance costs to individual funds.

Net revenue (excess expenses) reported with governmental activities (295,847) Long-term compensated absences and claims payables were reported in the Government-Wide Statement of Activities, but they did not require the use of current financial resources and were not reported as expenditures in governmental funds.

Compensated absences (16,575)
In governmental funds, actual contributions to benefit plans are reported as expenditures in the year incurred. However, in the government-wide statement of activities, only the current year benefit expense as noted in the plans' valuation reports is reported as an expense, as adjusted for deferred inflows and outflows of resources. (1,369,229)
Repayment of long-term debt was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of net position. 768,099 Certain expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in the fund statements as follows:

Other postemployment benefits (240,843)
Interest expense on long-term debt was reported in the Government-Wide Statement of Activities and Changes in net position, but it did not require the use of current financial resources. Therefore, interest expense was not reported as expenditures in governmental funds. The following amount represented the net change in accrued interest from and accreted interest from prior year. 19,000
Change in Net Position of Governmental Activities $ 2,376,755 The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-By-The-Sea
Statement of Net Position
Proprietary Funds
June 30, 2021
Governmental
Activities -
Internal
Service Funds
ASSETS
Current assets:

Cash and investments 2,510,210 $
Total current assets 2,510,210
Noncurrent Assets:

Capital assets - net 721,266
Total assets $ 3,231,476

LIABILITIES
Current liabilities:

Accounts payable 48,897 $
Claims payable - current 57,500
Total current liabilities 106,397
Non-current liabilities:

Claims payable 517,500
Total liabilities $ 623,897

NET POSITION
Net Investment in capital assets 721,266 $
Unrestricted 1,886,313
Total net position $ 2,607,579
The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-By-The-Sea
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the Year Ended June 30, 2021
Governmental
Activities -
Internal
Service Funds

OPERATING REVENUES
Charges for services - $
Total operating revenues -

OPERATING EXPENSES
Claims 21,965
Depreciation 281,403
Total operating expenses 303,368
Operating income (loss) (303,368)

NONOPERATING REVENUES(EXPENSES)
Investment earnings 7,521
Total nonoperating revenues(expenses) 7,521
Income (loss) before operating transfers (295,847)
Transfers in -
Transfers out -
Total Other Financing Sources (Uses) -
Change in net position (295,847)
Total net position - beginning 2,903,426
Total net position - ending 2,607,579 $
The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-By-The-Sea
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2021
Governmental
Activities -
Internal
Service Funds
Cash flows from operating activities:

Receipts from interfund services provided 54,440 $
Payments for claims (21,965)
Payments for supplies and materials 48,501
Net cash provided (used) by operating activities 80,976 Cash flows from capital financing activities:

Purchases of property and equipment (139,124)
Net cash provided (used) by capital financing activities (139,124) Cash flows from investing activities:

Investment income received 7,521
Net cash provided (used) by investing activities 7,521
Net increase (decrease) in cash and cash equivalents (50,627) Cash and cash equivalents - beginning 2,560,837
Cash and cash equivalents - ending $ 2,510,210
Reconciliation of operating income to net cash provided (used) by operating activities:

Operating income (loss) $ (303,368)
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation 281,403
Change in operating assets and liabilities:

Due from other funds 54,440
Accounts payable 48,501
Net cash provided (used) by operating activities 80,976 $ The accompanying notes are an integral part of these financial statements.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Carmel-by-the-Sea, California, (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below.

A. Financial Reporting Entity
The City of Carmel-by-the-Sea, California was incorporated on October 31, 1916, under the laws and regulations of the State of California (State). The City operates under a City Council/Manager form of government and provides the following services: general government, community planning and building, public safety (fire, police and ambulance), public works, library, economic revitalization and other community activities.

The City operates as a self-governing local government unit within the State. It has limited authority to levy taxes and has the authority to determine user fees for the services that it provides. The City’s main funding sources include sales taxes, other intergovernmental revenue from state and federal sources, user fees, and federal and state financial assistance. All property taxes are paid to Monterey County (County) as part of the revenue neutrality payment obligation. The financial statements do not reflect the amounts received on behalf of the City and retained by the County.

The financial reporting entity consists of (a) the primary government, the City, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component unit’s board, and either (a) the City has the ability to impose its will on the organization, or (b) there is a potential for the organization to provide a financial benefit to or impose a financial burden on the City.

As required by US GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. These component units are reported on a blended basis. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. The financial statements of the individual component units, if applicable as indicated below, may be obtained by writing to the City of Carmel-by-the-Sea, Finance Department, Post Office Box CC, Carmel-by-the-Sea, CA 93921.

The City’s reporting entity includes the following blended component units:
 Carmel Public Improvement Authority
 Harrison Memorial Library
The above component units are included in the City’s basic financial statements using the blended method since the component unit’s governing body is substantively the same as the governing body of the City and there is a financial benefit and a burden relationship between the City and the component units. There are no component units of the City that meet the criteria for discrete presentation.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
The City applies all applicable GASB pronouncements for certain accounting and financial reporting guidance. In December of 2010, GASB issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.

GASB 62 incorporates pronouncements issued on or before November 30, 1989 into GASB authoritative literature. In June of 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. GASB 76 supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. GASB 76 also amends GASB 62 and AICPA Pronouncements paragraphs 64, 74, and 82. The GAAP hierarchy sets forth what constitutes GAAP for all state and local governmental entities. It establishes the order of priority of pronouncements and other sources of accounting and financial reporting guidance that a governmental entity should apply. The sources of authoritative GAAP are categorized in descending order of authority as follows:
a. Officially established accounting principles—Governmental Accounting Standards Board (GASB) Statements (Category A)
b. GASB Technical Bulletins; GASB Implementation Guides; and literature of the AICPA cleared by the GASB (Category B).

If the accounting treatment for a transaction or other event is not specified by a pronouncement in Category A, a governmental entity should consider whether the accounting treatment is specified by a source in Category B.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Government-Wide Financial Statements
The City's government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City. Fiduciary activities of the City are not included in these statements.

Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The City did not report any business-type activities for the year.

These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets, deferred outflows of resources, liabilities, deferred inflows of resources (including capital assets, as well as infrastructure assets, and long-term liabilities), are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those clearly identifiable with a specific function or segment. In conformity with the City’s indirect cost allocation plan, certain indirect costs are included in the program expense reported for individual functions and activities. Certain types of

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
transactions are reported as program revenues for the City in three categories:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Certain eliminations have been made as prescribed by GASB Statement No. 34 in-regards-to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated. Interfund services provided and used are not eliminated in the process of consolidation. The following interfund activities have been eliminated:
 Transfers in/Transfers out
 Internal Service Fund charges
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets, deferred outflows of resources, current liabilities, and deferred inflows of resources are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally up to 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales taxes, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures, licenses and permits and parking meter revenues are not susceptible to accrual because they are usually not measurable until received in cash. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

Unearned revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unearned revenue is removed from the combined balance sheet and revenue is recognized.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
The following funds are major funds:

General Fund
The General Fund is used to account for all of the general operations and other financial transactions of the City, which are not accounted for by another fund.

The Measure C Sales Tax Fund
The Measure C Sales Tax Fund used to account for the transaction and use tax increase to be used to maintain essential services, including fire, ambulance and police response times; fund capital needs, including streets, beach, parks, forest and trails; increase code compliance; maintain libraries, Sunset Center and other public facilities; address CalPERS pension liabilities and other debt; and provide other general City services.

Capital Projects Fund
This fund accounts for resources utilized, committed, assigned or restricted for capital projects.

Harrison Memorial Library Fund
This fund accounts for the contributions, revenues and resources used to operate the operate the Harrison Memorial Library.

Additionally, the City reports the following nonmajor fund types of governmental funds:

Special Revenue Funds
Special revenue funds account for and report the proceeds of specific revenue sources that are restricted, committed or assigned to specific purposes other than debt service or capital projects.

Debt Service Funds
Debt service funds account for the accumulation of resources for, and payment on, long-term obligation debt principal and interest.

Proprietary Funds
In the fund financial statements, proprietary funds are presented using the accrual basis of accounting.

Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the “economic resources measurement focus”. This means all assets, deferred outflows of resources, liabilities (whether current or noncurrent) and deferred inflows of resources associated with their activities are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal value. Non-operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the internal service funds financial statements.

The City’s internal service funds are proprietary funds. Internal service funds account for charges to City departments for services provided, on a cost reimbursement basis. The City has the following internal service funds:

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Worker's Compensation Fund
This fund accounts for workers compensation insurance provided to departments on a cost reimbursement basis.

OPEB Reserve Fund
This fund accounts for other postemployment benefits provided to departments on a cost reimbursement basis.

Vehicle & Equipment Replacement Fund
This fund is to set aside financial resources for future purchases of replacement equipment essential to the operations of the City.

C. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments.

Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and Investment Disclosures (Amendment of GASB Statement No. 3), certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas: Interest Rate Risk, Overall Credit Risk, Custodial Credit Risk, Concentrations of Credit Risk, and Foreign Currency Risk. Other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures.

The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to change in interest rates.

Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction.

In determining this amount, three valuation techniques are available:
 Market approach - This approach uses prices generated for identical or similar assets or liabilities.

The most common example is an investment in a public security traded in an active exchange such as the NYSE.
 Cost approach - This technique determines the amount required to replace the current asset. This approach may be ideal for valuing donations of capital assets or historical treasures.  Income approach - This approach converts future amounts (such as cash flows) into a current discounted amount.

Each of these valuation techniques requires inputs to calculate a fair value. Observable inputs have been maximized in fair value measures, and unobservable inputs have been minimized.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
D. Interfund Receivables and Payables
Items classified as interfund receivables/payables are referred to as “advances to/advances from other funds” or as “due to/from other funds”. Due to/from other funds include short-term lending/borrowing transactions between funds. This classification also includes the current portion of an advance to or from another fund. Advances to/advances from other funds represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and therefore, is not available for appropriation.

E. Receivables
In the fund financial statements, material receivables in governmental funds include revenue accruals such as property tax, sales tax, and intergovernmental subventions since they are usually both measurable and available. Non-exchange transactions collectible but not available, such as property tax, are deferred in the fund financial statements in accordance with the modified accrual basis, but not deferred in the government-wide financial statements in accordance with the accrual basis.

Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. The City’s experience is that all accounts receivable are collectible; therefore an allowance for doubtful accounts is unnecessary.

The County of Monterey is responsible for the collection and allocation of property taxes. Under California law, property taxes are assessed and collected by the County up to 1% of the full cash value of taxable property, plus other increases approved by the voters and distributed in accordance with statutory formulas. The City recognizes property taxes when the individual installments are due, provided they are collected within 60 days after year-end.

F. Capital Assets
The City's assets are capitalized at historical cost or estimated historical cost, if actual is unavailable, except for donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement that are reported at acquisition value rather than fair value. Policy has set the capitalization threshold for reporting at $5,000 for non-infrastructure capital assets and $25,000 for infrastructure capital assets.

Public domain (infrastructure) capital assets include roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems.

The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements.

Prior to July 1, 2003, governmental funds’ infrastructure assets were not capitalized, since then these assets have been valued at estimated historical cost.

Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. No

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
depreciation is recorded in the year of acquisition or in the year of disposition. In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements.

Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:

Buildings and improvements 20-50 Years
Improvements other than buildings 35 Years
Vehicles, machinery and equipment 5-20 Years
Infrastructure 20-50 Years
Technology/Hardware and Software 5-20 Years
G. Deferred Outflows/Deferred Inflows of Resources
Deferred outflows of resources are a consumption of net assets by the City that is applicable to a future reporting period; for example, prepaid items and deferred charges.

Deferred inflows of resources are an acquisition of net assets by the City that is applicable to a future reporting period; for example, unavailable revenue and advance collections.

H. Interest Payable
In the government-wide financial statements, interest payable of long-term debt is recognized as an incurred liability for governmental fund types. The City has not allocated the interest on long-term debt to departments.

In the fund financial statements, governmental fund types do not recognize the interest payable when the liability is incurred. Interest on long-term debt is recorded in the fund statements when payment is made.

I. Claims Payable
The City records a liability for claims, judgments, and litigation when it is probable that an asset has been impaired or a liability has been incurred prior to fiscal year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated.

J. Compensated Absences
Employees accrue vacation, sick, holiday, and compensatory time off benefits. City employees have vested interests in the amount of accrued time off, with the exception of sick time, and are paid on termination. Also, annually an employee may elect to be compensated for up to 40 hours of unused annual leave. However, this is contingent upon the employee using at least 40 hours during the previous year and, the employee having a minimum balance of 80 annual leave hours after the payment. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements and is currently payable. The City had no employee resignations or retirements for which compensated absences should be accrued in governmental funds at year-end. The general fund is typically used to liquidate compensated absences.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
K. Long-Term Liabilities
In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type activities.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Debt issuance costs are expensed in year incurred.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

L. Benefit Plans
Pension Expense
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (the Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS.

For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Other Postemployment Benefit (OPEB) Expense
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense information about the fiduciary net position of the City’s Retiree Benefits Plan (the OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the OPEB Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms.

M. Fund Balances
In accordance with Government Accounting Standards Board 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies governmental fund balances as follows:

Nonspendable
Nonspensable fund balance includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints.

Restricted
Restricted fund balance includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation.

Committed
Committed fund balance includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision-making authority and does not lapse at year-end. Committed fund balances are imposed by the City Council, the

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
City’s highest level of decision-making authority, for specific purposes pursuant to constraints imposed by formal action taken such as resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council action to commit fund balance needs to occur within the fiscal reporting periods; however the amount can be determined subsequently.

Assigned
Assigned fund balance includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund balances may be assigned by the City Council and the City Manager.

Unassigned
The Unassigned Fund Balance category represents fund balance which may be held for specific types of uses or stabilization purposes, but is not yet directed to be used for a specific purpose. The general fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The detail of amounts reported for each of the above defined fund balance categories is reported in the governmental funds balance sheet and in the combining nonmajor fund balance sheets.

Flow Assumption / Spending Order Policy
When expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to be spent first. When expenditures are incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to be spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council has directed otherwise.

N. Net Position
In the government-wide financial statements, net position is classified in the following categories:

Net Investment in Capital Assets
This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that are attributed to the acquisition, construction, or improvement of the assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also are included in the net investment in capital assets component of net position
Restricted Net Position
This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position
This amount is all net position that does not meet the definition of "net investment in capital assets" or "restricted net position."

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
The detail of amounts reported for each of the above defined net position categories is reported in the government-wide Statement of Net Position.

Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City's policy is to apply restricted net position first.

Interfund Transactions
Interfund services provided and used are accounted for as revenue, expenditures or expenses, as appropriate. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursed fund. All other interfund transactions, except for interfund services provided and used and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as transfers.

O. Property Taxes
County tax assessments include secured and unsecured property taxes and special assessments. "Unsecured" refers to taxes on personal property. These tax assessments are secured by liens on the property being taxed.

Secured property taxes are levied on or before the first day of July of each year. They become a lien on real property on January 1 proceeding the fiscal year for which taxes are levied. These taxes are paid in two equal installments; the first is due November 1 and is delinquent with penalties after December 10; the second is due February 1 and delinquent with penalties after April 10. Secured property taxes, which are delinquent and unpaid as of June 30, are declared to be tax defaulted and are subject to redemption penalties, cost, and interest when paid. If the delinquent taxes are not paid at the end of five years, the property is sold at public auction and the proceeds are used to pay the delinquent amounts due. Any excess is remitted, if claimed, to the taxpayer. Additional tax liens are created when there is a change in ownership of property or upon completion of new construction. Tax bills for these new tax liens are issued throughout the fiscal year and contain various payments and delinquent dates, but are generally due within one year. If the new tax liens are lower, the taxpayer receives a tax refund rather than a tax bill. Unsecured personal property taxes are not a lien against real property. These taxes are due on January 1 each year and are delinquent, if unpaid, on August 31.

The County apportions secured property tax revenue in accordance with the alternate methods of distribution, the “Teeter Plan”, as described by Section 4717 of the California Revenue and Taxation code. Therefore, the City receives 100 percent of the secured property tax levies to which it is entitled, whether or not collected. Unsecured delinquent taxes are considered fully collectible.

P. Budgetary Information
In accordance with applicable sections of the California Government Code and the Carmel-by-the-Sea Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, Special Revenue Funds, Capital Projects Funds and the Debt Service Fund.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Budgetary control is legally maintained at the fund level for these funds. Department heads submit budget requests to the City Administrator. The City Administrator prepares an estimate of revenues and prepares recommendations for the next year’s budget. The preliminary budget may or may not be amended by the City Council and is adopted by resolution by the City Council on or before June 30 in accordance with the municipal code.

The City Council may amend the budget by motion during the fiscal year. Only the Council can authorize transfers between funds and approve inter-fund loans. The City Administrator is authorized to transfer budgeted amounts within a fund without formal council action or approval. The City Administrator is authorized to increase expenditures in relation to revenues in funds receiving assigned revenues without approval by the City Council.

Expenditures may not legally exceed appropriations at the fund level, which is the legal level of control.

Supplemental appropriations, which increase appropriations, may be made during the fiscal year.

Appropriations, except open project appropriations, and unexpended grant appropriations, lapse at the end of each fiscal year.

Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be offset against a deficit in the following year. For the fiscal year ended June 30, 2021, based on calculations by City management, proceeds of taxes did not exceed appropriations.

Q. Encumbrances
Under encumbrance accounting, purchase orders, contract and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary integration in all funds. All appropriations, except open project appropriations, and unexpended grant appropriations and encumbrances, lapse at year end. Valid outstanding encumbrances (those for which performance under the executory contract is expected in the next year) are re-appropriated and become part of the subsequent year’s budget pursuant to state regulations.

R. Unearned Revenue
Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied.

Grants and entitlements received before eligibility requirements are met are recorded as deferred inflows from unearned revenue. In the governmental fund financial statements, receivables associated with nonexchange transactions that will not be collected within the availability period have been recorded as deferred inflows from unavailable revenue.

S. Use of Estimates
The preparation of basic financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
T. Implemented New Accounting Pronouncements
GASB Statement No. 84, “Fiduciary Activities.” Issued in January 2017, this statement establishes criteria for identifying fiduciary activities for accounting and financial reporting purposes and describes four fiduciary funds that should be reported, if applicable. The statement is effective beginning fiscal year 2021. Items previously reported as part of the agency fund classification of the Fiduciary Funds statements were reviewed to evaluate if they met the new custodial funds criteria. The City determined that the Refundable Deposits fund did not meet the definition of a custodial fund per GASB 84. As of June 30, 2021, this fund has been included with the General Fund. Since the Refundable Deposits fund only accounted for $340,994 in deposits held and related cash, there were no beginning fund balance restatements.

U. Upcoming New Accounting Pronouncements
The City is currently analyzing its accounting practices to determine the potential impact on the financial statements of the following recent GASB Statements:

GASB Statement No. 87, “Leases.” Issued in June 2017, this statement establishes standards of accounting and financial reporting for leases by lessees and lessors. It provides guidance on accounting treatment of lease assets, lease liability, short-term leases, certain regulated leases, measurement for leases other than short-term leases and contracts that transfer ownership, subleases, lease-leaseback transactions, intra-entity leases, and leases between related parties. The statement will be effective beginning fiscal year 2022.

GASB Statement No. 91, “Conduit Debt Obligations.” Issued in May 2019, this statement provides a single method of reporting conduit debt obligations by issuers and eliminates diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The statement will be effective beginning fiscal year 2023.

GASB Statement No. 92, “Omnibus 2020.” Issued in January 2020, this statement was issued for clarity and consistency by addressing practice issues identified from the implementation and application of certain GASB statements. The statement will be effective beginning fiscal year 2022.

GASB Statement No. 93, “Replacement of Interbank Offered Rates.” Issued in March 2020, this statement is to address accounting and financial reporting implications that result from the replacement of an interbank offered rate (IBOR) such as the London Interbank Offered Rate (LIBOR). As a result of global reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021. The statement will be effective beginning fiscal year 2022.

GASB Statement No. 94, “Public-Private and Public-Public Partnerships and Availability Payment Arrangements.” Issued in March 2020, this statement is to improve financial reporting by establishing the definitions of public-private and public-public partnership arrangements (PPPs) and available payment arrangement (APAs) and providing uniform guidance on accounting and financial reporting for transactions that meet those definitions. The statement will be effective beginning fiscal year 2023.

GASB Statement No. 96, “Subscription-Based Information Technology Arrangements.” Issued in May 2020, the statement provides guidance on the accounting and financial reporting for subscription based information technology arrangements (SBITAs) for governments by (1) defining a SBITA, (2) establishing that a SBITA results in a right-to-use subscription asset-an intangible asset-and a

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
corresponding subscription liability, (3) providing the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA, and (4) requiring note disclosures regarding a SBITA. The statement will be effective beginning fiscal year 2023.

GASB Statement No. 97, “Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32.” Issued in June 2020, the statement will result in more consistent financial reporting of defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans (e.g., certain Section 457 plans), while mitigating the costs associated with reporting those plans. The statement will be effective beginning fiscal year 2022.

NOTE 2 - CASH AND INVESTMENTS
As of June 30, 2021, cash and investments were reported in the financial statements as follows:

Pooled cash and investments 17,677,724 $
Total cash and investments $ 17,677,724
The following summarized cash and investments by type:

Cash on hand 1,545 $
Demand Deposits 10,434,606
Investments 7,241,573
Total cash and investments $ 17,677,724
The City follows the practice of pooling cash and investments of all funds except for funds required to be held by fiscal agents under provisions of bond indentures. Interest income earned on pooled cash and investments is allocated monthly to the various funds based on monthly cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

A. Cash Deposits
The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest, and places the City ahead of general creditors of the institution.

The market value of pledged securities must equal at least 110 percent of the City's cash deposits.

California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes that have a value of 150 percent of the City's total cash deposits. The City has waived the collateral requirements for cash deposits which are fully insured to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The bank balances before reconciling items totaled $10,865,629 at June 30, 2021 and were different from carrying amounts due to deposits in transit and outstanding checks. The amount uninsured was $10,615,629 which was collateralized by securities held by pledging financial institutions.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
B. Fair Value Measurements
GASB 72 established a hierarchy of inputs to the valuation techniques above. This hierarchy has three levels:
 Level 1 inputs are quoted prices in active markets for identical assets or liabilities.  Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other than quoted prices that are not observable
 Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal.

C. Investment Policies
City Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of bond indentures of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment in
One Issuer
United States (U.S.) Treasury Issues 5 years None None
U.S. Government Agency Securities 5 years 50% 50%
California State and Local Bonds, Notes, & Warrants None None None Bankers Acceptance 180 days 40% 30%
Commercial Paper 270 days 15% 10%
Medium Term Corporate Notes 5 years 30% 30%
Negotiable Certificates of Deposit 5 years 30% 30%
Repurchase Agreements 92 days None None
Passbook Savings/Money Market None 20% 10%
Local Agency Investment Fund (LAIF) N/A None None
Federal Instrumentalities None None None
Authorized Investment Type

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Authorized Investments - Debt Agreements
Investments held by bond fiscal agents (trustees) are governed by the provisions of the underlying indenture agreements rather than the general provisions of the City’s investment policy or California Government Code. The indenture agreements identify the following permitted investments:

Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment in
One Issuer
United States (U.S.) Treasury Issues None None None
U.S. Government Agency Securities None None None
Banker's Acceptance 360 days None None
Commercial Paper 270 days None None
Money Market Funds None None None
Investment Agreements None None None
Local Agency Bonds None None None
Medium Term Notes None None None
Negotiable Certificate of Deposits None None None
Local Agency Investment Fund (LAIF) N/A None None
Authorized Investment Type
D. External Investment Pool
The City's investments with LAIF at June 30, 2021, include a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments include the following:

Structured Notes
These are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities
The bulk of asset-backed securities are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as CMO's) or credit card receivables.

LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The approved investments policy is listed on the LAIF website, located at http://www.treasurer.ca.gov/pmia-laif/.

D. Risk Disclosures
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the term of an investment’s maturity, the greater the sensitivity to changes in market interest rates. It is the City’s practice to manage its exposure to interest rate risk is by

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
purchasing a combination of shorter and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for City’s operations.

Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of an investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization, Standards and Poor. As of June 30, 2021, the City’s investments were in compliance with the ratings required by the City’s investment policy, indenture agreements and Government Code.

Concentrations of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2021, the City had no investments in any one issuer (other than external investment pools which are exempt) that represented 5% or more of the total City investments.

Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments.

With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF).

As of June 30, 2021, the City’s investments had the following maturities and ratings:
12 Months or
Less 13 to 24 Months
25 to 36
Months Total Rating
Fair Value
Input Levels
LAIF (state pool) 5,347,352 $ - $ - $ 5,347,352 $ not rated n/a Money market funds 877,916 - - 877,916 AAA 1
Bonds - 257,159 - 257,159 AAA 1
Certificate of deposits 498,991 - 260,155 759,146 not rated 1 Total Investments 6,724,259 $ 257,159 $ 260,155 $ 7,241,573 $ Investment Type

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
NOTE 3 - ACCOUNTS RECEIVABLE
The following summarizes accounts receivable as of June 30, 2021:

Ambulance 450,201 $
Holstery Tax 1,251,785
Measure C 1,199,701
Sales and Use Tax 547,633
Accruals 290,197
Total Accounts Receivable 3,739,517 $
NOTE 4 - INTERFUND TRANSACTIONS
A. Inter-fund Receivables and Payables
Amounts due to or due from other funds reflect inter-fund balances for services rendered or short-term loans expected to be repaid in the next fiscal year. Advances to or from other funds are long-term loans between funds that are to be repaid in their entirety over several years. There were no interfund balances as of June 30, 2021.

Transfers In/Out
With Council approval, resources may be transferred from one fund to another. Transfers may be made to pay for capital projects or capital outlays, lease or debt service payments, operating expenses, and to finance various programs accounted for in other funds in accordance with budgetary authorizations. The following summarizes transfers between funds during the fiscal year ended June 30, 2021:

Fund Transfer in Transfer out
General Fund 1,965,485 $ - $
Measure C Sales Tax Fund - 3,050,000
Nonmajor Funds 1,244,515 160,000
Total Transfers 3,210,000 $ 3,210,000 $

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
NOTE 5 - CAPITAL ASSETS
Capital assets for governmental activities consisted of the following as of June 30, 2021:
` Balance Transfers/ Balance
Governmental Activities July 01, 2020 Additions Deletions June 30, 2021 Non-depreciable:

Land 5,101,641 $ - $ - $ 5,101,641 $
Construction in Progress 260,965 54,042 (264,478) 50,529 Total Non-Depreciable 5,362,606 54,042 (264,478) 5,152,170 Depreciable:

Buildings and improvements 26,215,531 208,800 - 26,424,331 Infrastructure 26,917,801 201,835 - 27,119,636
Vehicles 2,891,605 57,420 (30,306) 2,918,719
Technology/Hardware and Software 621,959 - - 621,959
Machinery and equipment 2,886,049 15,380 - 2,901,429
Total Depreciable 59,532,945 483,435 (30,306) 59,986,074 Less Accumulated Depreciation for:

Buildings and improvements (10,694,702) (640,384) - (11,335,086) Infrastructure (6,944,409) (1,225,451) - (8,169,860)
Vehicles (2,718,706) (67,584) 30,306 (2,755,984)
Technology/Hardware and Software (377,224) (124,392) - (501,616) Machinery and equipment (2,493,949) (108,687) - (2,602,636) Total Accumulated Depreciation (23,228,990) (2,166,498) 30,306 (25,365,182) Total Depreciable Capital Assets - Net 36,303,955 (1,683,063) - 34,620,892 Total Governmental Capital Assets 41,666,561 $ (1,629,021) $ (264,478) $ 39,773,062 $ Internal Service Funds (Inlcuded with Governmental Activities) Buildings and improvements 145,355 $ 139,123 $ - 284,478 $ Technology/Hardware and Software 607,507 - - 607,507
Vehicle, Machinery and Equipment 961,609 - - 961,609
Accumulated Depreciation (850,925) (281,403) - (1,132,328) Total Internal Service Funds - Net 863,546 $ (142,280) $ - $ 721,266 $ Depreciation expense was allocated to the following governmental activities:

General Government 120,094 $
Community Planning and Building 1,257
Public Safety 161,347
Public Works 1,312,290
Library 543,479
Community Activities 28,031
Total depreciation expense 2,166,498 $

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
NOTE 6 - NONCURRENT LIABILITIES
The City's noncurrent liabilities consisted of the following as of June 30, 2021:

Due
Beginning Ending Within One
Noncurrent Liabilities Balance Additions Deletions Balance Year Sunset Center COP 4,890,000 $ - $ 4,890,000 $ - $ - $
Sunset Center LRB - 3,895,000 - 3,895,000 -
Sunset Center LRB Premium - 866,901 - 866,901 28,897
Countywide Radio Project (Direct) 165,051 - - 165,051 23,189 Pension Obligation Bonds 1,980,000 - 640,000 1,340,000 660,000 Compensated Absences 581,520 466,972 450,397 598,095 450,000 Net Pension Liability 21,666,416 19,967,868 17,291,686 24,342,598 - Claims Liability 575,000 - - 575,000 57,500
Net OPEB Liability 4,640,704 711,027 1,211,140 4,140,591 - Total Noncurrent Liabilities 34,498,691 $ 25,907,768 $ 24,483,223 $ 35,923,236 $ 1,219,586 $ Certificates of Participation - Sunset Center COP
In 2010, the Carmel Public Improvement Authority, a component unit of the City, refunded previously issued Certificates of Participation in the amount of $7,485,000, bearing an average interest rate of 4.73%, secured by general revenues of the City, and matures in October 2031. The original proceeds were used to remodel the Sunset Cultural Center property. The City issued 2020 Refunding Lease Revenue bonds to refund the COP during the fiscal year.
2020 Refunding Lease Revenue Bonds - Sunset Center
On September 23, 2020, the City issued $3,895,000 in 2020 Refunding Lease Revenue Bonds at a $866,901 premium with interest at 4%. The issuance costs were $183,992. The bonds were issued to refund the Sunset Center COPs. The net savings on the defeasance totaled $1,042,418 in future debt service payments. The annual debt service requirements were as follows Fiscal Year Ending June 30: Principal Interest Total
2022 - $ 160,128 $ 160,128 $
2023 - 155,800 155,800
2024 355,000 155,800 510,800
2025 375,000 141,600 516,600
2026 380,000 126,600 506,600
2027-2031 2,200,000 387,800 2,587,800
2031-2035 585,000 27,600 612,600
Total 3,895,000 $ 1,155,328 $ 5,050,328 $

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Countywide Radio Project
In 2009, the City entered into a participation agreement with Monterey County to provide funding related to the "Next Generation Radio Project," a Federal Communications Commission mandated alteration of public safety and local government radio systems. Estimated payments will change should individual local jurisdictions elect out of the project. The annual debt service requirements were as follows:

Fiscal Year Ending June 30: Principal Interest Total
2022 22,308 $ 7,356 $ 29,664 $
2023 23,189 6,475 29,664
2024 24,105 5,559 29,664
2025 25,057 4,607 29,664
2026 26,047 3,617 29,664
2027-2028 44,345 4,107 48,452
Total 165,051 $ 31,721 $ 196,772 $
Pension Obligation Bond
On November 29, 2012, the City issued $6,280,000 in 2012 Taxable Pension Obligation Bonds, the purpose of which was to fund certain PERS side fund obligations. The bonds bear an interest rate of

0.55% to 3.1% and mature on June 1, 2023. The annual debt service requirements were as follows:

Fiscal Year Ending June 30: Principal Interest Total
2022 660,000 $ 40,428 $ 700,428 $
2023 680,000 21,080 701,080
Total 1,340,000 $ 61,508 $ 1,401,508 $
Compensated Absences
The City records employee absences, such as vacation, illness, and holidays, for which it is expected that employees will be paid as compensated absences.

Net Pension Liability
In accordance with GASB Statement No. 68, the City has recorded its net pension liability of CalPERS benefits for retirees. Pension benefits and associated liabilities are paid from the General Fund. See Note 8 for further discussion on the net pension liability.

Claims Liability
The City has recorded a liability for potential claims in excess of amounts covered by the insurance pool.

See Note 7 for further discussion on the City’s risk management activities.

Net OPEB Liability
A net OPEB obligation is the cumulative differences between annual OPEB cost and an employer’s contributions to a plan. OPEB liabilities are paid from the General Fund. See Note 9 for further discussion on OPEB.

NOTE 7 - RISK MANAGEMENT
The City of Carmel-by-the-Sea (City) is a member of CSAC-EIA (California State Association of Counties Excess Insurance Authority) which is a shared risk pool. CSAC-EIA covers claims for City for both Workers Compensation and General Liability. The City’s Liability SIR is pre-funded through

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
CSAC-EIA for 8 quarters of payments made on behalf of City. Currently, the SIR fund for the City with CSAC-EIA is maintained at $8,183. If the pre-funded SIR balance drops below this amount, the City is billed by CSAC-EIA to replenish the fund to the $8,183 level. The City does not make claim payments, they are all issued by the city's third-party administrator from a CSA-EIA account.

The City has two layers of Liability coverage through CSAC-EIA and under the first layer, the Primary General Liability layer, there is an SIR (Self Insured Retention) of $10,000 per claim. Thereafter, the next layer of coverage kicks in (General Liability 1 program) which carries an SIR of $100,000 which is satisfied by exhausting the coverage limit of $100,000 under the Primary Liability program. The maximum limit of coverage under the primary General Liability 1 program is $25 million. The City retains the risk of loss above $25 million.

For Workers Compensation, the City is a member of both the CSAC-EI Primary Workers Compensation program and then, the CSAC-EIA Excess Workers Compensation program. The Primary Workers compensation program provides dollar 1 coverage to the City for Workers Compensation claims. In other words, City has no deductible or SIR. This layer of Workers Compensation coverage carries a maximum limit o $125,000 per occurrence. Thereafter, CSAC EIA's excess coverage steps in and the SIR (Self Insured Retention) is $125,000 which again, is satisfied by exhausting the limits of coverage under the Primary Workers Compensation program. The upper limit of coverage under the Excess Workers Compensation program is "statutory". What this means is that regardless of the total cost of the claim, it is covered under the CSAC-EIA Excess Workers Compensation program. There is absolutely no monetary exposure to the City under these two Workers Compensation programs except for the premium costs to purchase this coverage. The City has had no settlements which exceeded insurance coverage in the last three fiscal years and no significant changes or reductions in insurance coverage during the current year.

The following summarizes the change in the estimated liability over the last two fiscal years:

Year Ended Year Ended
June 30, 2021 June 30, 2020
Beginning of year 575,000 $ 575,000 $
Increase (decrease) in current year claims 3,218 1,566
Changes in estimates 21,965 92,303
Claims paid (25,183) (93,869)
Ending balance 575,000 575,000
Current portion (57,500) (57,500)
Non-current portion 517,500 $ 517,500 $
NOTE 8 - RETIREMENT PLANS
General Information about the Pension Plans
Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous and Safety Employee Pension Plans (the Plans); cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS).

Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions,

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
assumptions and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. The cost-of-living adjustments for the Plans are applied as specified by the Public Employees’ Retirement Law. The Plans’ provisions and benefits in effect at June 30, 2021, are summarized as follows:

Tier 1 Tier 2 PEPRA
Hire date < 4/15/2012 >= 4/15/2012 >= 1/1/2013
Benefit formula 2% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 Years 5 Years 5 Years
Benefit payments Monthly for Life Monthly for Life Monthly for Life Retirement age 55 60 62
Monthly benefits as a % of eligible compensation 2.0% to 2.5% 2.00% 2.00% Required employee contribution rates 7.000% 7.000% 6.750% Required employer contribution rates 11.031% 8.794% 7.732% Contractual employee contribution rates 10.000% 10.000% 9.750% Contractual employer contribution rates 8.031% 5.794% 4.732% Miscellaneous
Tier 1 Tier 2 PEPRA
Hire date < 4/15/2012 >= 4/15/2012 >= 1/1/2013
Benefit formula 3% @ 50 2% @ 50 2.7% @ 57
Benefit vesting schedule 5 Years 5 Years 5 Years
Benefit payments Monthly for Life Monthly for Life Monthly for Life Retirement age 50 50 57
Monthly benefits as a % of eligible compensation 2.00% 2.00% 2.00% Required employee contribution rates 9.000% 9.000% 13.000% Required employer contribution rates 23.674% 18.152% 13.044% Contractual employee contribution rates 12.000% 12.000% 16.000% Contractual employer contribution rates 20.674% 15.152% 10.044% Safety
Employees Covered
At June 30, 2021, the following employees were covered by the benefit terms for the Plans:

Miscellaneous Safety
Active 55 19
Transferred 24 22
Separated 31 15
Retired 104 59
Total 115 214

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rates are the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2021, the following contributions were made:

Employer
Contributions
Miscellaneous 1, $ 048,291
Safety 1,135,314
Total Employer Contributions $ 2,183,606
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2021, the City reported net pension liabilities for its proportionate shares of the net pension liability as follows:

Miscellaneous
Safety
Total
Proportionate Share of
Net Pension
Liability/(Asset)
$ 11,969,788
12,372,810
$ 24,342,598
The City’s net pension liability for the Plans is measured as the proportionate share of the net pension liability. The net pension liability of the Plans are measured as of June 30, 2020, and the total pension liability for the Plans used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined.

The City’s proportionate share of the net pension liability for the Plans as of June 30, 2020 and 2020 was as follows:

Miscellaneous Safety Combined Plans
Proportion - June 30, 2020 0.27533% 0.17046% 0.21144%
Proportion - June 30, 2021 0.28377% 0.18571% 0.22373%
Change - Increase/(Decrease) 0.00844% 0.01526% 0.01229% For the year ended June 30, 2021, the City recognized pension expense of $3,552,834.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions - $ 85,373 $
Differences between Expected and Actual Experience 616,839 - Differences between Projected and Actual Investment Earnings 355,582 - Differences between Employer's Contributions and
Proportionate Share of Contributions 821,393 -
Change in Employer's Proportion 393,174 -
Pension Contributions Made Subsequent to Measurement Date 1,048,291 - Total $ 906,766 2,413,885 $
Miscellaneous
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions - $ 41,214 $
Differences between Expected and Actual Experience 959,449 - Differences between Projected and Actual Investment Earnings 268,913 - Differences between Employer's Contributions and
Proportionate Share of Contributions 549,843 -
Change in Employer's Proportion 765,828 -
Pension Contributions Made Subsequent to Measurement Date 1,135,314 - Total $ 591,057 3,129,505 $
Safety
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions - $ 126,587 $
Differences between Expected and Actual Experience 1,576,287 - Differences between Projected and Actual Investment Earnings 624,495 - Differences between Employer's Contributions and
Proportionate Share of Contributions 1,371,235 -
Change in Employer's Proportion 1,159,002 -
Pension Contributions Made Subsequent to Measurement Date 2,183,606 - Total $ 1,497,822 5,543,390 $
Misc and Safety
The City reported $2,183,606 as deferred outflows of resources related to contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2022.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Miscellaneous Safety Total
$ 328,186 (105,624) $ 222,562 $
532,760 189,654 722,414
407,447 204,251 611,698
134,741 170,547 305,288
- - -
- - -
$ 1,403,134 458,828 $ 1,861,962 $
Deferred Outflows/(Inflows) of
Resources
Fiscal Year
Ending June 30:

Total
2023
2024
2025
Thereafter
2026
2022
Actuarial Assumptions
The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age
Normal Cost
Method
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase (1)
Investment Rate of Return 7.15% (2)
Mortality (3)
(1) Varies by entry age and service
(2) Net of pension plan investment expenses, including inflation (3) Derived using CalPERS' membership data for all funds Discount Rate
The discount rate used to measure the total pension liability was 7.15%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the Plan, CalPERS stress tested employer rate plans within the Plan that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested employer rate plans run out of assets. Therefore, the current 7.15% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The stress test results are presented in a detailed report, GASB Statements 67 and 68 Crossover Testing Report for Measurement Date June 30, 2018 based on June 30, 2017 Valuations, that can be obtained from the CalPERS website.

According to Paragraph 30 of GASB 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. For the CalPERS Plan, the 7.00% investment return

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.15%. Using this lower discount rate has resulted in a slightly higher total pension liability and net pension liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it to be a material difference.

In determining the long-term expected rate of return, CalPERS took into account both short- term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the Plan’s asset classes, expected compound (geometric) returns were calculated over the short-term (first 11 years) and the long-term (60 years) using a building-block approach. Using the expected nominal returns for both short-term and longterm, the present value of benefits was calculated for the Plan. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

Assumed
Asset Real Return Real Return
Asset Class (a) Allocation Years 1 - 10 (b) Years 11+ (c) Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(a) In the System's CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. (b) An expected inflation of 2.0% used for this period. (c) An expected inflation of 2.92% used for this period.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for the Plans, calculated using the discount rate for the Plans, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1- percentage point higher than the current rate:

Miscellaneous Safety Combined
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability 17,921,227 $ 17,751,639 $ 35,672,866 $ Current 7.15% 7.15% 7.15%
Net Pension Liability 11,969,788 $ 12,372,810 $ 24,342,598 $ 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability 7,052,301 $ 7,958,972 $ 15,011,273 $ Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

NOTE 9 - OTHER POSTEMPLOYMENT BENEFITS PLAN
Plan Description and Benefits
The City of Carmel-by-the-Sea Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare plan administered by the City. The Plan provides access to lifetime healthcare benefits to eligible retirees and their dependents. The City provides retiree medical benefits through the California Public Employees’ Retirement System healthcare program (PEMHCA). For eligible retirees, the City contributes not less than 5% of the active contribution times years in PEMHCA (max $100/month increase). For purposes of its contract with PEMHCA, the City uses a statutory schedule to determine its monthly contribution on behalf of each active employee. The statutory amount is $133.00 for 2018 and will be indexed by the Medical CPI each year thereafter.

The City offers the same medical plans to its retirees and surviving spouses as to its active employees, with the exception that once a retiree becomes eligible for Medicare, he or she must join a Medicare HMO or a Medicare Supplement plan, with Medicare becoming the primary payer. Employees become eligible to retire and receive City-paid healthcare benefits upon attainment of age 50 and 5 years of service (age 52 for Miscellaneous PEPRA employees). The City contribution towards retiree health benefits is determined under the "equal contribution method" under PEMHCA, whereby the contribution is 100% of the City's statutory minimum contribution for active employees ($133/month for 2018 and scheduled to be indexed by medical inflation for years after 2018). No stand-alone financial are issued for this plan as it is not a trusted plan.

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Employees Covered by Benefit Terms
At June 30, 2021, the benefit terms covered the following employees:

Active employees 63
Inactive employees 41
Total employees 104
Contributions
The City makes contributions based on a pay-as-you go basis as approved by the authority of the City’s Board. Total benefit payments included in the measurement period were $152,834. The actuarially determined contribution for the measurement period was $605,749. The City’s contributions and benefit payments were 2.27% of payroll during the measurement period June 30, 2021. Employees are not required to contribute to the plan. There have been no assets accumulated in a trust to provide for the benefits of this plan.

Actuarial Assumptions
The following summarized the actuarial assumptions for the OPEB plan included in this fiscal year:

Valuation Date:

Measurement Date:

Actuarial Cost Method:

Amortization Period:

Actuarial Assumptions:

Discount Rate
Inflation
Payroll Increases
Trend Rate
Municipal Bond Rate
Mortality

4.00%
Entry-Age Normal Cost Method
June 30, 2021
June 30, 2021
20 years

2.50%

2.75%

2.20%

2.16%
2017 CalPERS Mortality for Safety Employees
2017 CalPERS Retiree Mortality for All Employees
2017 CalPERS Mortality for Miscellaneous and
Schools Employees
Discount Rate
The discount rate was based on the Bond Buyer 20-bond General Obligation Index.

Total OPEB Liability
The City's total OPEB liability was measured as of June 30, 2021 (measurement date) and was determined by an actuarial valuation as of June 30,2021 (valuation date) for the fiscal year ended June 30, 2021 (reporting date).

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
Changes in the Total OPEB Liability
The following summarizes the changes in the Total OPEB liability during the year:

Fiscal Year Ended June 30, 2021
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
(Asset)
Balance at June 30, 2020 $ - 4,640,703 $ 4,640,703 $
Service cost 348,597 - 348,597
Interest in Total OPEB Liability 105,930 - 105,930
Actual and exp experience (823,299) - (823,299)
Changes in assumptions 21,493 - 21,493
Benefit payments (152,834) - (152,834)
Net changes - (500,113) (500,113)
Balance at June 30, 2021 $ - 4,140,590 $ 4,140,590 $
Covered Employee Payroll 6,734,318 $
Total OPEB Liability as a % of Covered Employee Payroll 61.48% Service Cost as a % of Covered Employee Payroll 5.18%
Net OPEB Liability as a % of Covered Employee Payroll 61.48% The City’s plan is nonfunded, meaning there have not been assets placed into an irrevocable trust, therefore the plan fiduciary net position is zero.

Deferred Inflows and Outflows of Resources
At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between actual and expected experience 43,141 $ 709,063 $ Change in assumptions 288,537 33,245
Totals $ 742,308 331,678 $
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30,
2022 (60,849) $
2023 (41,506)
2024 (60,463)
2025 (70,318)
2026 (70,318)
Thereafter (107,176)
Total $ (410,630)

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
OPEB Expense
The following summarizes the OPEB expense by source during the year ended June 30, 2021:

Service cost 348,597 $
Interest in TOL 105,930
Difference between actual and expected experience (108,945) Change in assumptions 48,096
OPEB Expense $ 393,678
The following summarizes changes in the net OPEB liability as reconciled to OPEB expense during the year ended June 30, 2021:
$ 4,140,590
(4,640,703)
(500,113)
Changes in deferred outflows 60,706
Changes in deferred inflows 680,252
Employer contributions and implicit subsidy 152,833
OPEB Expense $ 393,678
Total OPEB liability ending
Total OPEB liability begining
Change in total OPEB liability
Sensitivity to Changes in the Discount Rate
The net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher, is as follows:
1% Decrease 2.20% 1% Increase
Total OPEB Liability 4,739,417 $ 4,140,590 $ 3,651,151 $ Municipal Bond Rate
Sensitivity to Changes in the Healthcare Cost Trend Rates The net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than current healthcare cost trend rates, is as follows:
1% Decrease 4.00% 1% Increase
Total OPEB Liability 3,542,804 $ 4,140,590 $ 4,898,613 $ Trend Rate

Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2021
NOTE 10 - COMMITMENTS AND CONTINGENCIES
A. Lawsuits
The City may be involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that any cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

B. Federal and State Grant Programs
The City participates in Federal, State and County grant programs. These programs are audited by the City's independent accountants, if required, in accordance with the provisions of the Federal Single Audit Act Amendments of 1996 and applicable State requirements. For Federal programs, the City did not reach the level of qualifying expenditures during the current fiscal year that would require a single audit.

Expenditures which may be disallowed, if any, by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

NOTE 11 - SUBSEQUENT EVENTS
Beginning in March 2020, the United States economy began suffering adverse effects from the COVID 19 Virus Crisis ("CV19 Crisis"). Since the inception of the pandemic, the City had experienced significant declines in revenue, especially sales and transient occupancy taxes. However, in fiscal year 2020-21, the City reported in increase in total revenues, had sufficient reserves, and had prudently balanced budget. Therefore, management believes the City will be able to maintain a consistent level of operations for at least one year from the date of the issuance of this report.

Attachment 2
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Attachment 2

REQUIRED SUPPLEMENTARY

INFORMATION

Attachment 2
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Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (GAAP Basis)
General Fund
For the Year Ended June 30, 2021
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Taxes:

Property taxes 6,848,991 $ 7,081,488 $ 7,389,657 $ 308,169 $ Sales and use taxes 1,896,796 2,163,454 3,020,937 857,483 Transient occupancy taxes 2,488,198 2,488,198 5,339,285 2,851,087 Franchise fees 654,088 654,088 756,358 102,270
Business license tax 505,750 505,750 524,220 18,470
Intergovernmental revenues 706,961 787,241 693,873 (93,368) License and permits 1,010,027 1,010,027 889,822 (120,205) Fines and forfeitures 64,180 64,180 48,947 (15,233)
Charges for services 1,089,360 1,089,360 1,198,569 109,209 Interest 75,000 75,000 26,791 (48,209)
Rents and concessions 89,269 89,269 138,138 48,869
Other revenues 32,163 155,116 171,326 16,210
Total Revenues 16,163,171 15,460,783 20,197,923 4,034,752

EXPENDITURES
Current:

General government 5,070,986 5,245,636 5,083,467 162,169 Community Planning and Building 1,224,098 1,224,099 1,172,337 51,762 Public Safety 8,077,474 8,273,490 7,833,156 440,334
Public Works 2,482,660 2,639,035 2,635,206 3,829
Library 676,254 676,254 646,750 29,504
Community Activities 90,490 90,490 82,366 8,124
Economic Reviltalization 824,500 824,500 808,540 15,960 Capital outlay - 44,864 44,864 -
Total Expenditures 19,018,368 18,446,462 18,306,686 711,682 Excess (Deficiency) of Revenues over Expenditures (2,985,679) (2,855,197) 1,891,237 4,746,434

OTHER FINANCING SOURCES (USES)
Transfers in 1,965,485 1,965,485 1,965,485 -
Transfers out - - - -
Total Other Financing Sources (Uses) 1,965,485 1,965,485 1,965,485 - Net Change in Fund Balance (1,020,194) (889,712) 3,856,722 4,746,434 Fund Balance Beginning 8,758,147 8,758,147 8,758,147 -
Fund Balance Ending 7,737,953 $ 7,868,435 $ 12,614,869 $ 4,746,434 $

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (GAAP Basis)
Measure C Sales Tax Fund
For the Year Ended June 30, 2021
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Taxes:

Sales and use taxes 3,050,000 $ 3,050,000 $ 4,007,104 $ 957,104 $

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out (3,050,000) (3,050,000) (3,050,000) -
Total Other Financing Sources (Uses) (3,050,000) (3,050,000) (3,050,000) - Net Change in Fund Balance - - 957,104 957,104
Fund Balance Beginning 678,802 678,802 678,802 -
Fund Balance Ending $ 678,802 678,802 $ 1,635,906 $ 957,104 $

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (GAAP Basis)
Harrison Memorial Library Fund
For the Year Ended June 30, 2021
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Contributions 304,715 $ 304,715 $ 304,972 $ 257 $
Charges for services 2,000 2,000 5,544 3,544
Interest 8,000 8,000 9,899 1,899
Total Revenues 314,715 314,715 320,415 5,700

EXPENDITURES
Current:

Library 314,715 314,715 270,944 43,771
Total Expenditures 314,715 314,715 270,944 43,771
Excess (Deficiency) of Revenues over Expenditures - - 49,471 49,471

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out - - - -
Total Other Financing Sources (Uses) - - - -
Net Change in Fund Balance - - 49,471 49,471
Fund Balance Beginning 1,421,249 1,421,249 1,421,249 -
Fund Balance Ending 1,421,249 $ 1,421,249 $ 1,470,720 $ 49,471 $

Attachment 2
City of Carmel-by-the-Sea
Schedule of Pension Contributions
June 30, 2021
Miscellaneous and Safety Plan
Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021
Contractually Required Contributions 725,205 $ 1,124,776 $ 1,279,565 $ 1,317,381 $ 1,566,319 $ 1,864,910 $ 2,183,606 $ Contributions in Relation to Contractually
Required Contributions 725,205 1,124,776 1,279,565 1,317,381 1,566,319 1,864,910 2,183,606 Contribution Deficiency (Excess) $ - - $ - $ - $ - $ - $ - $ Covered Payroll 4,894,966 $ 5,193,071 $ 5,725,559 $ 5,897,326 $ 6,074,246 $ 6,591,573 $ 6,772,841 $ Contributions as a % of Covered Payro 14.82% 21.66% 22.35% 22.34% 25.79% 28.29% 32.24% Notes to Schedule:

Valuation Date: June 30, 2019
Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing

3.8 Years Remaining Amortization Period
Inflation Assumed at 2.5%
Investment Rate of Returns set at 7.15%

Fiscal year 2015 was the first year of implementation, therefore only seven years are shown.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016 and then decreased from 7.65% to 7.15% in fiscal year 2018.

The CalPERS mortality assumptions was adjusted in fiscal year 2019.

CalPERS mortality table based on CalPERS' experience and include 15 years of projected ongoing mortality improvement using 90 percent of Scale MP 2016 published by the Society of Actuaries.

Attachment 2
City of Carmel-by-the-Sea
Schedule of Proportionate Share of Net Pension Liability June 30, 2021
Miscellaneous and Safety Plan
Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021
Proportion of Net Pension
Liability (Safety and Misc) 0.18745% 0.19035% 0.19840% 0.20075% 0.20672% 0.21144% 0.22373% Proportionate Share of
Net Pension Liability 11, $ 13,065,617 664,146 $ 17,167,636 $ 19,908,483 $ 19,920,568 $ 21,666,416 $ 24,342,598 $ Covered Payroll 4,748,117 $ 4,894,966 $ 5,193,071 $ 5,725,559 $ 5,897,326 $ 6,074,246 $ 6,591,573 $ Proportionate Share of NPL
as a % of Covered Payroll 245.66% 266.92% 330.59% 347.71% 337.79% 356.69% 369.30% Plan's Fiduciary Net Position
as a % of the TPL 80.11% 77.73% 74.70% 73.44% 74.18% 72.78% 71.13% Fiscal year 2015 was the first year of implementation, therefore only seven years are shown.

The CalPERS discount rate was increased from 7.5% to 7.65% in fiscal year 2016 and then decreased from 7.65% to 7.15% in fiscal year 2018.

The CalPERS mortality assumptions was adjusted in fiscal year 2019.

Attachment 2
City of Carmel-by-the-Sea
Retiree Health Care Plan
Schedule of Total OPEB Liability
June 30, 2021
Fiscal Year Ended 2018 2019 2020 2021
Total OPEB liability
Service cost 199,013 $ 193,586 $ 295,059 $ 348,597 $
Interest 134,202 146,765 143,565 105,930
Differences between expected and actual experience (2,625) (2,524) 59,118 (823,299) Changes of assumptions (137,699) 192,779 256,216 21,493 Benefit payments (145,196) (159,107) (135,193) (152,834) Net change in Total OPEB Liability 47,695 371,499 618,765 (500,113) Total OPEB Liability - beginning 3,602,744 3,650,439 4,021,938 4,640,703 Total OPEB Liability - ending 3,650,439 $ 4,021,938 $ 4,640,703 $ 4,140,590 $ Plan fiduciary net position
Net change in plan fiduciary net position - $ - $ - $ - $ Plan fiduciary net position - beginning - - - -
Plan fiduciary net position - ending - $ - $ - $ - $
Net OPEB liability (asset) 3,650,439 $ 4,021,938 4,640,703 4,140,590 Plan fiduciary net position as a percentage of the
total OPEB liability 0.00% 0.00% 0.00% 0.00%
Covered Employee Payroll $ 6,207,949 6,021,711 $ 6,378,668 $ 6,554,081 $ Net OPEB liability as a percentage of covered employee payroll 60.62% 64.79% 72.75% 63.18% Total OPEB liability as a percentage of covered employee payroll 60.62% 64.79% 72.75% 63.18% Other Notes
No assets have been accumulated in a trust for the City's OPEB plan.

GASB 75 requires a schedule of contributions for the last ten fiscal years, or for as many years as are available if less than ten years are available. GASB 75 was adopted as of June 30, 2018.

The discount rate decreased from 3.5% to 2.2%, the inflation rate increased from 2.25% to 2.75%, the payroll rate decreased from 3% to 2.75%, and the trend rate changed from 8% to 4% from 2019 to 2020.

Actuarially determined contribution rates are calculated as of June 30, two years prior to the end of the fiscal year in which contributions are reported.

The discount rate decreased from 2.2% to 2.16% from 2020 to 2021.

Attachment 2

SUPPLEMENTARY INFORMATION

Attachment 2
This page is intentionally blank

Attachment 2

COMBINING NONMAJOR GOVERNMENTAL FUNDS
Fund Title Fund Description
Gast Tax This fund is used to account for revenues collected in accordance with the Streets and Highway Code.

Transportation Safety This fund accounts for the expenditures related to resources provided for transportation safety as required by Measure X.

COPS Grant This fund accounts for the expenditures related to the COP's grant for public safety.

Parking in Lieu This fund is used to account for activities associate with parking in-lieu fees.

Asset Seizure This fund accounts for the expenditures related to asset seizures.

Debt Service This fund is used to account for activities related to the repayment of the Certificate of Participation, Pension Obligation Bond, and capital lease obligations.

Attachment 2
City of Carmel-By-The-Sea
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2021

Gas Transportation COPS Parking
Tax Safety Grant In-Lieu
Fund Fund Fund Fund
ASSETS
Cash and investments 199,482 $ 237,709 $ 39,199 $ 737,124 $ Receivables:

Due from other governments 13,341 - 16,667 -
Total assets $ 237,709 212,823 $ 55,866 $ 737,124 $

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable - $ - $ - $ - $
Total liabilities - - - -
Fund Balances:

Restricted:

Transportation 212,823 237,709 - -
Public safety - - 55,866 -
Debt service - - - -
Asset seizure - - - -
Public parking - - - 737,124
Total fund balances 237,709 212,823 55,866 737,124
Total liabilities and fund balances $ 237,709 212,823 $ 55,866 $ 737,124 $ Cont'd
Special Revenue Funds

Attachment 2
City of Carmel-By-The-Sea
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2021
ASSETS
Cash and investments
Receivables:

Due from other governments
Total assets

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable
Total liabilities
Fund Balances:

Restricted:

Transportation
Public safety
Debt service
Asset seizure
Public parking
Total fund balances
Total liabilities and fund balances
Special Revenue
Funds Debt Service
Total
Asset Debt Nonmajor
Seizure Service Governmental
Fund Fund Funds
$ 393,133 5,455 $ 1,612,102 $
- - 30,008
$ 393,133 5,455 $ 1,642,110 $
$ - - $ - $
- - -
- - 450,532
- - 55,866
393,133 393,133 -
5,455 - 5,455
- - 737,124
393,133 5,455 1,642,110
$ 393,133 5,455 $ 1,642,110 $
Concluded

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

Gas Transportation COPS Parking
Tax Safety Grant In-Lieu
Fund Fund Fund Fund

REVENUES
Intergovernmental revenues 161,065 $ 200,841 $ 156,727 $ - $ Interest 333 416 168 2,357
Total Revenues 201,257 161,398 156,895 2,357

EXPENDITURES
Debt service
Principal - - - -
Interest and fiscal charges - - - -
Total Expenditures - - - -
Excess (Deficiency) of Revenues over Expenditures 161,398 201,257 156,895 2,357

OTHER FINANCING SOURCES (USES)
Bond issuances - - - -
Bond defeasance - - - -
Transfers in - - - -
Transfers out - - (160,000) -
Total Other Financing Sources (Uses) - - (160,000) -
Net Change in Fund Balances 161,398 201,257 (3,105) 2,357 Fund Balances Beginning 51,425 36,452 58,971 734,767
Fund Balances Ending 212,823 $ 237,709 $ 55,866 $ 737,124 $ Cont'd
Special Revenue Funds

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Bond issuances
Bond defeasance
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Debt Service
Total
Asset Debt Nonmajor
Seizure Service Governmental
Fund Fund Funds
$ - - $ 518,633 $
51 18 3,343
51 18 521,976

640,000 - 640,000
406,525 - 406,525
1,046,525 - 1,046,525
(1,046,474) 18 (524,549)
4,761,901 4,761,901 -
(4,890,000) - (4,890,000)
1,244,515 - 1,244,515
- - (160,000)
1,116,416 - 956,416
69,942 18 431,867
323,191 5,437 1,210,243
$ 393,133 5,455 $ 1,642,110 $
Concluded
Special Revenue
Funds

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Intergovernmental revenues 146,214 $ 146,214 $ 161,065 $ 14,851 $ Contributions - - - -
Charges for services - - - -
Interest - - 333 333
Total Revenues 146,214 146,214 161,398 15,184

EXPENDITURES
Debt service
Principal - - - -
Interest and fiscal charges - - - -
Total Expenditures - - - -
Excess (Deficiency) of Revenues over Expenditures 146,214 146,214 161,398 15,184

OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out - - - -
Total Other Financing Sources (Uses) - - - -
Net Change in Fund Balances 146,214 146,214 161,398 15,184 Fund Balances Beginning 51,425 51,425 51,425 -
Fund Balances Ending 197,639 $ 197,639 $ 212,823 $ 15,184 $ Cont'd
Gas Tax Fund
Budgeted Amounts

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Contributions
Charges for services
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ 183,000 183,000 $ 200,841 $ 17,841 $
- - - -
- - - -
- - 416 416
183,000 183,000 201,257 18,257

- - - -
- - - -
- - - -
183,000 183,000 201,257 18,257
- - - -
- - - -
- - - -
183,000 183,000 201,257 18,257
36,452 36,452 36,452 -
$ 219,452 219,452 $ 237,709 $ 18,257 $
Cont'd
Transportation Safety Fund
Budgeted Amounts

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Contributions
Charges for services
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ 160,000 160,000 $ 156,727 $ (3,273) $
- - - -
- - - -
- - 168 168
160,000 160,000 156,895 (3,105)

- - - -
- - - -
- - - -
160,000 160,000 156,895 (3,105)
- - - -
(160,000) (160,000) (160,000) -
(160,000) (160,000) (160,000) -
- - (3,105) (3,105)
58,971 58,971 58,971 -
$ 58,971 58,971 $ 55,866 $ (3,105) $
Cont'd
COPS Grant Fund
Budgeted Amounts

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Contributions
Charges for services
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - - $ - $ - $
- - - -
- - - -
- - 2,357 2,357
- - 2,357 2,357

- - - -
- - - -
- - - -
- - 2,357 2,357
- - - -
- - - -
- - - -
- - 2,357 2,357
734,767 734,767 734,767 -
$ 734,767 734,767 $ 737,124 $ 2,357 $
Cont'd
Parking In-Lieu Fund
Budgeted Amounts

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Contributions
Charges for services
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - - $ - $ - $
- - - -
- - - -
- - 18 18
- - 18 18

- - - -
- - - -
- - - -
- - 18 18
- - - -
- - - -
- - - -
- - 18 18
5,437 5,437 5,437 -
$ 5,437 5,437 $ 5,455 $ 18 $
Cont'd
Asset Seizure Fund
Budgeted Amounts

Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and
Changes in Fund Balances
Budget and Actual (GAAP Basis)
Nonmajor Governmental Funds
For the Year Ended June 30, 2021

REVENUES
Intergovernmental revenues
Contributions
Charges for services
Interest
Total Revenues

EXPENDITURES
Debt service
Principal
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of Revenues over Expenditures

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Fund Balances Ending
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
$ - - $ - $ - $
- - - -
- - - -
- - 51 51
- - 51 51

5,530,000 1,003,770 640,000 4,890,000
425,467 240,745 406,525 18,942
5,955,467 1,244,515 1,046,525 4,908,942
(5,955,467) (1,244,515) (1,046,474) 4,908,993
1,244,515 1,244,515 1,244,515 -
- - - -
1,244,515 1,244,515 1,244,515 -
(4,710,952) - 198,041 4,908,993
323,191 323,191 323,191 -
$ (4,387,761) 323,191 $ 521,232 $ 4,908,993 $
Concluded
Debt Service Fund
Budgeted Amounts

Attachment 2
Page Intentionally Left Blank

Attachment 2

INTERNAL SERVICE FUNDS
Fund Title Fund Description
Worker's Compensation This fund accounts for workers compensation insurance provided to departments on a cost reimbursement basis.

OPEB Reserve Fund This fund accounts for other postemployment benefits provided to departments on a cost reimbursement basis.

Vehicle & Equipment Replacement This fund is to set aside financial resources for future purchases of replacement equipment essential to the operations of the City.

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Net Position
Internal Service Funds
June 30, 2021
Total
Vehicle Governmental
Workers OPEB & Equipment Activities -
Compensation Reserve Replacement Internal
Fund Fund Fund Service Funds
ASSETS
Current assets:

Cash and investments 554,656 $ 1,845,329 $ 110,225 $ 2,510,210 $ Total current assets 554,656 1,845,329 110,225 2,510,210 Noncurrent assets:

Capital assets - net - - 721,266 721,266
Total assets $ 1,845,329 554,656 $ 831,491 $ 3,231,476 $

LIABILITIES
Current liabilities:

Accounts payable - $ - $ 48,897 $ 48,897 $
Claims payable - current 57,500 - - 57,500
Total current liabilities 57,500 - 48,897 106,397
Noncurrent liabilities:

Claims payable 517,500 - - 517,500
Total liabilities $ - 575,000 $ 48,897 $ 623,897 $

NET POSITION
Net investment in capital assets - $ - $ 721,266 $ 721,266 $ Unrestricted (20,344) 1,845,329 61,328 1,886,313
Total net position $ 1,845,329 (20,344) $ 782,594 $ 2,607,579 $

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds
For the Year Ended June 30, 2021
Total
Vehicle Governmental
Workers OPEB & Equipment Activities -
Compensation Reserve Replacement Internal
Fund Fund Fund Service Funds

OPERATING REVENUES
Charges for services - $ - $ - $ - $
Other - - - -
Total operating revenues - - - -

OPERATING EXPENSES
Claims 21,965 - - 21,965
Supplies and materials - - - -
Depreciation - - 281,403 281,403
Total operating expenses - 21,965 281,403 303,368
Operating income (loss) (21,965) - (281,403) (303,368)

NONOPERATING REVENUES(EXPENSES)
Investment income 1,621 5,900 - 7,521
Total nonoperating revenues(expenses) 5,900 1,621 - 7,521 Income (loss) before operating transfers (20,344) 5,900 (281,403) (295,847) Transfers in - - - -
Transfers out - - - -
Total Other Financing Sources (Uses) - - - -
Change in net position (20,344) 5,900 (281,403) (295,847) Total net position - beginning - 1,839,429 1,063,997 2,903,426 Total net position - ending (20,344) $ 1,845,329 $ 782,594 $ 2,607,579 $

Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2021
Total
Vehicle Governmental
Workers OPEB & Equipment Activities -
Compensation Reserve Replacement Internal
Fund Fund Fund Service Funds
Cash flows from operating activities:

Receipts from interfund services provided 54,440 $ - $ - $ 54,440 $ Payments for claims (21,965) - - (21,965)
Payments for supplies and materials - - 48,501 48,501
Net cash provided (used) by operating activities 32,475 - 48,501 80,976 Cash flows from capital financing activities:

Purchases of property and equipment - - (139,124) (139,124) Net cash provided (used) by noncapital financing activities - - (139,124) (139,124) Cash flows from investing activities:

Investment income received 1,621 5,900 - 7,521
Net cash provided (used) by investing activities 1,621 5,900 - 7,521 Net increase (decrease) in cash and cash equivalents 34,096 5,900 (90,623) (50,627) Cash and cash equivalents - beginning 520,560 1,839,429 200,848 2,560,837 Cash and cash equivalents - ending 554,656 $ 1,845,329 $ 110,225 $ 2,510,210 $ Reconciliation of operating income to net cash provided (used) by operating activities:

Operating income (loss) (21,965) $ - $ (281,403) $ (303,368) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation - - 281,403 281,403
Change in operating assets and liabilities:

Due from other funds 54,440 - - 54,440
Accounts payable - - 48,501 48,501
Net cash provided (used) by operating activities 32,475 $ - $ 48,501 $ 80,976 $

Attachment 2

STATISTICAL SECTION

Attachment 2
Page Intentionally Left Blank

Attachment 2
Financial Trends
Revenue Capacity
Debt Capacity
Demographic and Economic Information
Operating Information
Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.

These tables offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place.

These tables contain service and infrastructure data to help the reader understand how the information in the city's financial report relates to the services the city provides and the activities it performs.

These tables present information to help the reader assess the affordability of the city's current levels of outstanding debt and the city's ability to issue additional debt in the future.

STATISTICAL SECTION
(Unaudited)
These tables contain trend information to help the reader understand how the city's financial performance and well-being have changed over time.

This part of the City of Carmel-by-the-Sea's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health.

These tables contain information to help the reader assess the city's most significant local revenue source, the property tax.

Attachment 2
Page Intentionally Left Blank

Attachment 2
City of Carmel-by-the-Sea TABLE 1
Net Position By ComponentLast Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Governmental activities:

Net investment in capital assets 31,374,354 $ 29,605,438 $ 25,522,348 $ 32,547,268 $ 36,006,046 $ 36,931,575 $ 35,216,550 $ 37,132,103 $ 36,611,510 $ 34,846,110 $ Restricted 555,524 566,992 2,616,731 3,862,473 3,584,687 5,027,082 2,628,238 2,817,741 3,310,294 4,748,736 Unrestricted 7,408,523 2,205,463 6,266,725 (12,992,711) (12,666,545) (14,167,354) (12,141,385) (12,645,571) (14,479,015) (11,775,303) Total governmental activities net position 39,338,401 $ 32,377,893 $ 34,405,804 $ 23,417,030 $ 26,924,188 $ 27,791,303 $ 25,703,403 $ 27,304,273 $ 25,442,789 $ 27,819,543 $ Notes:1) In 2012 net position increased mostly due to capital additions and investments in capital assets2) In 2015, net position decreased mostly due to the implementation of GASB 68 for pension benefit liabilities and related amounts.Source: City of Carmel-by-the-Sea Finance Department $Ͳ
$5
$10$15$20$25$30$35$40$45
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Millions
Total Net Position

City of Carmel-by-the-Sea TABLE 2
Changes in Net Position
Last Ten Fiscal Years
2012 2013 2014 2015 2016
Expenses
Governmental activities:

General government 2,904,382 $ 9,481,135 $ 4,067,934 $ 3,724,546 $ 5,162,323 $ Community planning and building - - - - -
Public safety 4,193,157 4,694,672 4,299,954 6,685,310 6,445,695 Public works 1,790,684 1,896,305 2,227,067 2,003,332 1,454,895 Library - - - - -
Community activities - - - - -
Economic revitalization 361,458 304,587 363,342 326,956 306,505 Building maintenance 2,718,581 3,763,094 2,924,447 1,832,618 1,542,170 Forest, parks and beach 1,578,381 472,123 484,119 581,319 558,592 Culture and recreation 1,314,073 2,405,481 2,453,842 2,605,877 2,082,591 Interest and fiscal charges on long-term debt 194,153 376,787 346,674 365,043 336,551 Depreciation (Unallocated) - - - - 1,528,260
Total governmental activities expenses 15,556,384 22,892,669 17,167,379 18,125,001 19,417,582 Program Revenues
Governmental activities:

Charges for services:

General government 4,735 19,821 15,644 66,190 34,040
Community planning and building - - - - -
Public safety 167,723 39,878 184,338 918,644 684,612
Public works 412,605 433,928 467,392 525,310 534,224
Library - - - - -
Community activities - - - - -
Economic revitalization - - - - -
Forest, parks and beach - - 165,406 - -
Culture and recreation 36,030 80,909 91,804 18,953 20,326 Operating grants and contributions 871,230 1,474,331 1,282,214 1,444,296 668,239 Capital grants and contributions - - - 331,719 327,029
Total governmental activities program revenues 1,364,478 2,176,712 2,206,798 3,305,112 2,268,470 Net (expense)/revenue:

Governmental activities (14,191,906) (20,715,957) (14,960,581) (14,819,889) (17,149,112) General Revenues and Other Changes in Net Assets
Governmental activities:

Taxes
Property taxes 4,571,481 4,652,176 4,881,534 5,127,974 5,598,743 Sales and use taxes 1,743,748 2,760,414 5,115,880 5,280,418 4,897,325 Transient occupancy taxes 4,179,900 4,615,598 5,185,880 5,593,689 5,890,538 Franchise taxes 491,674 981,831 994,468 430,430 587,514 Business license tax 532,019 577,364 549,190 606,128 626,625 Intergovernmental - - - 382,145 413,334
Unrestricted grants and contributions - - - - -
Unrestricted investment earnings 55,995 69,735 76,880 163,648 160,172 Gain (loss) on sale of assets - - - - -
Special item - infrastructure capitalization 13,760,000 - - - - Miscellaneous or other revenues 276,751 98,331 184,660 249,537 1,963,750 Total governmental activities 25,611,568 13,755,449 16,988,492 17,833,969 20,138,001 Change in Net Position $ (6,960,508) 11,419,662 $ 2,027,911 $ 3,014,080 $ 2,988,889 $ Cont'd
Source: City of Carmel-by-the-Sea Finance Department
Note: In 2012 and 2018, the City changed the
classification of its program expenses and revenues
based on operations at the time.

Attachment 2
City of Carmel-by-the-Sea
Changes in Net Position
Last Ten Fiscal Years
Expenses
Governmental activities:

General government
Community planning and building
Public safety
Public works
Library
Community activities
Economic revitalization
Building maintenance
Forest, parks and beach
Culture and recreation
Interest and fiscal charges on long-term debt
Depreciation (Unallocated)
Total governmental activities expenses
Program Revenues
Governmental activities:

Charges for services:

General government
Community planning and building
Public safety
Public works
Library
Community activities
Economic revitalization
Forest, parks and beach
Culture and recreation
Operating grants and contributions
Capital grants and contributions
Total governmental activities program revenues
Net (expense)/revenue:

Governmental activities
General Revenues and Other Changes in Net Assets
Governmental activities:

Taxes
Property taxes
Sales and use taxes
Transient occupancy taxes
Franchise taxes
Business license tax
Intergovernmental
Unrestricted grants and contributions
Unrestricted investment earnings
Gain (loss) on sale of assets
Special item - infrastructure capitalization
Miscellaneous or other revenues
Total governmental activities
Change in Net Position
Source: City of Carmel-by-the-Sea Finance Department
Note: In 2012 and 2018, the City changed the
classification of its program expenses and revenues
based on operations at the time.

TABLE 2
2017 2018 2019 2020 2021
$ 4,896,809 4,981,304 $ 5,906,304 $ 5,356,174 $ 5,423,821 $ 1,206,295 1,146,860 1,191,826 1,214,005 1,280,518
7,771,104 7,281,137 8,390,616 9,166,804 8,968,364
2,950,423 2,605,036 4,162,376 4,410,995 4,162,030
1,303,989 1,144,883 1,894,410 2,011,886 1,539,410
153,224 446,445 283,512 256,698 119,562
1,125,261 1,110,857 1,144,022 1,081,813 819,202
- - - - -
- - - - -
- - - - -
319,974 322,181 283,606 268,721 387,525
1,786,021 1,747,960 - - -
21,513,100 20,786,663 23,256,672 23,767,096 22,700,432
318,414 38,795 256,645 211,067 165,541
1,167,308 - 1,454,523 1,112,512 1,142,277
692,187 373,716 790,428 808,559 796,471
58,931 751,844 44,636 42,395 156,838
14,794 - 10,097 11,793 5,544
79,067 - 146,443 85,060 33,140
97,142 - 102,366 91,528 111,093
- - - - -
- 31,817 - - -
681,240 675,765 865,370 695,186 813,139
- 166,726 - - -
3,109,083 2,038,663 3,670,508 3,058,100 3,224,043
(18,404,017) (18,748,000) (19,586,164) (20,708,996) (19,476,389) 6,192,126 5,825,889 6,524,331 6,690,948 7,389,657
5,486,449 5,373,800 5,732,885 4,766,762 7,028,041
6,329,074 6,112,347 6,882,015 5,115,271 5,339,285
637,136 672,554 636,397 632,833 756,358
544,392 649,525 594,941 592,466 524,220
462,989 436,073 - 672,399 704,337
92,155 - 637,124 - -
101,743 182,366 205,791 207,153 47,554
(2,439,255) - (160,794) - -
- - - - -
212,820 362,561 12,928 169,680 63,692
17,619,629 19,615,115 21,065,618 18,847,512 21,853,144
$ (784,388) 867,115 $ 1,479,454 $ (1,861,484) $ 2,376,755 $ Concluded

Attachment 2
City of Carmel-by-the-Sea TABLE 3
Fund Balances of Governmental FundsLast Ten Fiscal Years 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Fund
Nonspendable - $ - $ 73,038 $ - $ - $ - $ - $ - $ - $ - $ Committed 4,258,441 2,898,615 2,888,306 4,561,070 2,166,165 2,173,138 2,806,045 2,808,138 2,684,665 2,421,958Assigned - - - 1,747,589 3,308,636 2,448,461 1,922,008 1,926,008 1,025,194 1,025,194Unassigned 3,001,120 5,253,298 4,172,077 1,541,150 1,738,067 4,693,897 3,278,341 4,515,984 5,048,288 9,167,717Total Fund Balance 7,259,561 8,151,913 7,133,421 7,849,809 7,212,868 9,315,496 8,006,394 9,250,130 8,758,147 12,614,869 Other Governmental Funds
Nonspendable 46,747 $ 46,747 $ 46,747 $ - $ - $ - $ - $ - $ - $ - $ Restricted 555,524 566,992 2,543,658 3,903,533 3,624,383 5,065,310 2,628,238 2,817,741 3,310,294 4,748,736Committed - - - 1,783,310 - - - - - -Assigned 1,506,992 1,793,249 1,477,680 90,158 1,146,832 1,627,098 362,034 571,657 539,863 Unassigned - (479,166) - (684,400) (706,427) (1,264,197) (483) - - - Total Fund Balance 2,109,263 2,406,988 3,588,919 5,092,601 4,064,788 3,801,113 4,254,853 3,179,775 3,881,951 5,288,599 Total Fund Balance $ 10,558,901 9,368,824 $ 10,722,340 $ 12,942,410 $ 11,277,656 $ 13,116,609 $ 12,261,247 $ 12,429,905 $ 12,640,098 $ 17,903,468 $ Note: The City implemented GASB 54 in 2011 and prior fund balances were not restated or reclassified.Source: City of Carmel-by-the-Sea Finance Department

Page Intentionally Left Blank

Attachment 2
City of Carmel-by-the-Sea TABLE 4
Last Ten Fiscal Years
2012 2013 2014 2015 2016
Revenues
Taxes 11,497,256 $ 12,505,034 $ 12,727,944 $ 17,420,784 $ 18,014,079 $ Intergovernmental revenues 635,386 609,304 3,864,416 874,152 294,952 License and permits 612,356 1,195,092 1,114,927 720,257 788,578 Contributions 329,160 354,785 313,895 686,025 314,600
Fines and forfeitures 127,354 133,168 138,713 119,152 111,930 Charges for services 597,302 738,366 508,563 905,526 712,321 Interest - - - - -
Use of money and property 284,674 231,975 314,248 163,648 163,875 Other revenues 93,944 109,392 193,336 249,537 389,136
Total revenues 14,124,733 15,929,815 19,176,042 21,139,081 20,789,471 Expenditures
General government 3,122,302 3,029,816 4,305,440 3,593,094 5,045,332 Community Planning and Building - - - - -
Public Safety 3,363,428 4,026,884 4,245,184 6,398,876 6,264,950 Public Works 1,166,299 1,341,604 1,609,402 1,284,030 1,301,160 Library - - - - -
Community Activities - - - - -
Economic Revitalization 361,458 304,587 363,342 315,780 306,505 Building maintenance 2,633,987 2,263,763 2,798,314 1,637,602 1,525,038 Forest, parks and beach 1,122,795 466,021 468,247 544,902 547,211 Culture and recreation 1,298,938 1,918,196 1,963,003 1,999,728 2,054,872 Capital Outlay 1,599,462 651,785 1,993,305 2,396,667 4,439,279 Debt Service
Principal 315,570 410,434 927,774 1,046,128 898,379
Interest and fiscal charges 257,771 328,994 357,840 360,610 337,915 Total expenditures 15,242,010 14,742,084 19,031,851 19,577,417 22,720,641 Excess of revenues
over (under) expenditures 1,187,731 (1,117,277) 144,191 1,561,664 (1,931,170) Other financing sources (uses)
Asset dispositions - 2,346 19,248 - -
Long-term debt issued - 6,280,000 - - -
Retirement of PERS side fund - (6,280,000) - - -
Defeasance of debt - - - - -
Interagency transfers in (out) - - - - -
Transfers in 7,749,165 6,301,989 9,724,198 4,927,935 6,483,069 Transfers out (7,749,165) (6,301,989) (9,724,198) (4,927,935) (6,483,069) Total other financing sources (uses) - 2,346 19,248 - - Net change in fund balances (1,117,277) $ 1,190,077 $ 163,439 $ 1,561,664 $ (1,931,170) $ Total Expenditures 15,242,010 $ 14,742,084 $ 19,031,851 $ 19,577,417 $ 22,720,641 $ Capitalized Portion of Capital Outlay 1,066,867 651,397 1,993,170 2,396,667 4,311,179 Total Non-Capitalized Expenditures 14,175,143 $ 14,090,687 $ 17,038,681 $ 17,180,750 $ 18,409,462 $ Debt Service: Principal & Interest 573,341 $ 739,428 $ 1,285,614 $ 1,406,738 $ 1,236,294 $ Debt service as a percentage of noncapital
expenditures 4.0% 5.2% 7.5% 8.2% 6.7%
Source: City of Carmel-by-the-Sea Finance Department Cont'd Changes in Fund Balances of Governmental Funds
Note: In 2012 and 2018, the City changed the classification of its program expenditures and revenues based on operations at the time.

Attachment 2
City of Carmel-by-the-Sea
Last Ten Fiscal Years
Revenues
Taxes
Intergovernmental revenues
License and permits
Contributions
Fines and forfeitures
Charges for services
Interest
Use of money and property
Other revenues
Total revenues
Expenditures
General government
Community Planning and Building
Public Safety
Public Works
Library
Community Activities
Economic Revitalization
Building maintenance
Forest, parks and beach
Culture and recreation
Capital Outlay
Debt Service
Principal
Interest and fiscal charges
Total expenditures
Excess of revenues
over (under) expenditures
Other financing sources (uses)
Asset dispositions
Long-term debt issued
Retirement of PERS side fund
Defeasance of debt
Interagency transfers in (out)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Total Expenditures
Capitalized Portion of Capital Outlay
Total Non-Capitalized Expenditures
Debt Service: Principal & Interest
Debt service as a percentage of noncapital
expenditures
Source: City of Carmel-by-the-Sea Finance Department
Changes in Fund Balances of Governmental Funds
Note: In 2012 and 2018, the City changed the classification of its program expenditures and revenues based on operations at the time.

TABLE 4
2017 2018 2019 2020 2021
$ 19,652,166 19,041,911 $ 20,370,569 $ 21,037,561 $ 21,037,561 $ 454,997 365,304 1,088,044 1,126,260 1,212,506
1,087,953 850,547 1,192,242 928,752 889,822
318,398 323,495 314,450 241,324 304,972
91,813 87,154 121,470 72,152 48,947
1,070,999 440,439 1,261,169 1,193,992 1,204,113
58,055 - 167,544 178,244 40,033
100,899 182,367 185,156 130,792 138,138
211,153 1,979,561 158,029 206,908 193,575
23,046,433 23,270,778 24,858,673 25,115,985 25,069,667
4,696,923 5,681,103 5,517,516 5,008,054 5,083,467
1,128,977 - 1,116,689 1,094,736 1,172,337
7,024,092 7,033,862 7,617,310 7,774,916 7,833,156
2,769,129 2,554,752 2,902,461 2,847,091 2,635,206
1,217,687 - 1,258,390 1,344,340 917,694
141,378 - 179,426 209,554 82,366
1,095,636 351,425 1,103,993 1,076,542 808,540
1,138,983 - - - -
- 108,764 - - -
- 1,448,129 - - -
1,833,014 1,877,053 3,778,271 869,596 98,907

934,860 914,105 950,770 971,460 640,000
302,202 323,649 286,606 272,721 406,525
21,143,898 21,431,825 24,711,432 21,469,010 19,678,198
1,902,535 1,838,953 147,241 3,646,975 5,391,469
- - - - -
- - - - 4,761,901
- - - - -
- - - - (4,890,000)
31,000 - - - -
13,924,490 3,405,710 4,581,594 3,188,456 3,210,000
(16,713,387) (3,405,710) (4,681,594) (3,385,956) (3,210,000) (2,757,897) - (100,000) (197,500) (128,099)
$ (855,362) 1,838,953 $ 47,241 $ 3,449,475 $ 5,263,370 $ $ 21,143,898 21,431,825 $ 24,711,432 $ 21,469,010 $ 19,678,198 $ 1,900,132 1,870,844 3,533,858 918,075 133,875
$ 19,243,766 19,560,981 $ 21,177,574 $ 20,550,935 $ 19,544,323 $ $ 1,237,062 1,237,754 $ 1,237,376 $ 1,244,181 $ 1,046,525 $

6.3% 6.4% 5.8% 6.1% 5.4%
Concluded

Attachment 2
City of Carmel-by-the-Sea TABLE 5
General Governmental Tax Revenues by Source
Last Ten Fiscal Years
Sales Transient Business
Property and Use Franchise Occupancy License Other Tax Total $ 1,743,748 4,571,481 $ 981,831 $ 4,179,900 $ 577,364 $ - $ 12,054,324 $ $ 2,760,414 4,652,176 $ 994,468 $ 4,615,598 $ 549,190 $ - $ 13,571,846 $ $ 5,115,880 4,881,534 $ 430,430 $ 5,185,880 $ 606,128 $ 382,145 $ 16,601,997 $ $ 5,280,418 5,127,974 $ 587,514 $ 5,593,689 $ 626,625 $ 413,334 $ 17,629,554 $ $ 4,897,325 5,598,743 $ 672,554 $ 5,890,538 $ 649,525 $ $ 436,073 $ 18,144,758 $ 5,373,800 5,825,889 $ 637,136 $ 6,112,347 $ 544,392 $ 462,989 $ 18,956,553 $ $ 5,486,449 6,192,126 $ 637,136 $ 6,329,074 $ 544,392 $ 462,989 $ 19,652,166 $ $ 5,732,885 6,524,331 $ 636,397 $ 6,882,015 $ 594,941 $ - $ 20,370,569 $ $ 4,766,762 6,690,948 $ 632,833 $ 5,115,271 $ 592,466 $ - $ 17,798,280 $ $ 7,028,041 7,389,657 $ 756,358 $ 5,339,285 $ 524,220 $ $ 21,037,561 - $ Source: City of Carmel-by-the-Sea Finance Department
Fiscal Year
Ended
June 30
2013
2015
2014
2016
2017
2012
2018
2019
2020
2021
$-
$5
$10
$15
$20
$25
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Millions
Year
General Governmental Tax Revenue by Year

Attachment 2
City of Carmel-by-the-Sea TABLE 6
General Fund Revenues by Source
Last Ten Fiscal Years
Fiscal Year
Ended June 30 Taxes
InterGovernmentalLicenses and
Permits Contributions
Fines and
Forfeitures
Charges for
Services
Interest, Rents
and
Concessions
Other
Revenues Total
2012 11,497,256 $ 419,326 $ 430,250 $ 26,830 $ 27,385 $ 60,228 $ 226,616 $ 93,944 $ 12,781,835 $ 2013 12,505,034 $ 378,410 $ 1,011,292 $ 3,884 $ 16,647 $ 88,200 $ 283,233 $ 109,392 $ 14,396,092 $ 2014 12,727,944 $ 481,310 $ 997,334 $ - $ 30,489 $ 106,065 $ 313,076 $ 193,336 $ 14,849,554 $ 2015 14,702,528 $ - $ 504,419 $ - $ 9,246 $ 256,097 $ 161,620 $ 249,537 $ 15,883,447 $ 2016 15,124,699 $ 74,014 $ 553,602 $ - $ 7,245 $ 57,818 $ 159,632 $ 389,136 $ 16,366,146 $ 2017 16,296,757 $ 136,367 $ 762,257 $ - $ 8,422 $ 66,957 $ 170,631 $ 1,979,561 $ 19,420,952 $ 2018 16,753,721 $ 42,846 $ 1,087,953 $ - $ 91,813 $ 1,056,205 $ 123,382 $ 211,133 $ 19,367,053 $ 2019 17,290,655 $ 583,573 $ 1,192,242 $ - $ 121,470 $ 1,251,072 $ 309,418 $ 132,776 $ 20,881,206 $ 2020 17,798,280 $ 610,960 $ 928,752 $ - $ 72,152 $ 1,177,695 $ 273,176 $ 165,131 $ 21,026,146 $ 2021 17,030,457 $ 693,873 $ 889,822 $ - $ 48,947 $ 1,198,569 $ 164,929 $ 171,329 $ 20,197,926 $ Source: City of Carmel-by-the-Sea Finance Department
$-
$5
$10
$15
$20
$25
Millions
Total General Fund Revenues

Attachment 2
City of Carmel-by-the-Sea TABLE 7
Net Assessed Value of Taxable Property
Last Ten Fiscal Years
Total Total
Assessed Direct Tax
Secured Unsecured Value Rate

$ 30,254,516 2,908,891,597 $ 2,939,146,113 $ 1.00%
$ 28,759,821 3,001,630,584 $ 3,030,390,405 $ 1.00%
$ 27,307,767 3,153,416,179 $ 3,180,723,946 $ 1.00%
$ 26,813,656 3,309,856,089 $ 3,336,669,745 $ 1.00%
$ 26,719,717 3,569,065,524 $ 3,595,785,241 $ 1.00%
$ 26,280,598 3,766,258,441 $ 3,792,539,039 $ 1.00%
$ 25,708,168 3,999,182,757 $ 4,024,890,925 $ 1.00%
$ 26,668,954 4,220,683,852 $ 4,247,352,806 $ 1.00%
$ 28,251,679 4,446,041,301 $ 4,474,292,980 $ 1.00%
$ 31,785,264 4,686,463,940 $ 4,718,249,204 $ 1.00%

Notes:

Total Direct Tax Rate is from Table 8. Rates are based on a $100 of taxable value.

Exempt values are not included in Total.

Source: County of Monterey Assessors Office
2012
Fiscal Year
Ended
June 30
2019
2020
With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation, property is assessed according to a base year rather than on a percentage of market value. Accordingly, a reliable estimate of actual value of taxable property within the City is not possible. 2013
2014
2015
2016
2017
2018
2021
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Billions
Total Assessed Value

Attachment 2
City of Carmel-by-the-Sea TABLE 8
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(Rate per $100 of Taxable Value)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Direct Rates: (1) 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Overlapping Rates: (2)
Carmel Unified 0.014 0.014 0.014 0.014 0.014 0.014 0.014 0.016 0.015 0.010 Monterey Peninsula Community College 0.022 0.022 0.022 0.022 0.022 0.022 0.022 0.021 0.021 0.027 Total Direct and Overlapping Rate 1.036 1.036 1.036 1.036 1.036 1.036 1.036 1.037 1.036 1.037 City Share of 1% Levy per Prop. 13 (3) 0.903 0.827 0.913 0.904 0.918 0.925 0.929 0.919 0.906 0.918 Notes:
1 2
3 Source: County of Monterey Assessors Office
Source: County of Monterey CAFR
The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property tax rate to a base of $1.00 per $100.00. The $1.00 rate is levied by the County and apportioned to local agencies according to a formula prescribed by the California legislature.

Overlapping rates are those of entities that apply to property owners within the City of Pacific Grove. Not all overlapping rates apply to all property owners (e.g., the rates for school districts apply only to the proportion of the city's property owners whose property is located within the geographic boundaries of the school district).

This is the percentage of $1 countywide tax levy

Attachment 2
City of Carmel-by-the-Sea TABLE 9
Principal Property Tax Owners
Current Year and Nine Years Ago
Percentage Percentage
of Total of Total
Assessed Assessed Assessed Assessed
Tax Owner Valuation Rank Valuation Valuation Rank Valuation OWRF CARMEL LLC 60,224,916 $ 1 1.28% na na
PAUL ANDREW M 30,284,601 2 0.64% na na
HINES JEFFREY C 18,906,545 3 0.40% na na
LA PLAYA CARMEL HOTEL LLC 18,089,171 4 0.38% na na
HINES JEFFREY C 16,890,958 5 0.36% na na
ESPERANZA CARMEL COMMERCIAL LLC 14,525,404 6 0.31% na na DEBRUCE PAUL TR 14,156,630 7 0.30% na na
CVI INVESTORS LLC 13,372,666 8 0.28% na na
MOORE FAMILY TR 12,967,752 9 0.27% na na
GUNNER RICHARD V & MARGARET S GUNNER TRS 12,926,156 10 0.27% na na Totals 212,344,799 $ 4.50% - $ na
Total assessed value 4,718,249,204 $ - $
Source: County of Monterey Assessors Office
na= not available
2021 2012

Attachment 2
City of Carmel-by-the-Sea Table 8
Property Tax Levies and Collections
Last Ten Fiscal Years
Percent Supplemental Delinquent
Total Tax Current Tax of Levy Tax Tax Total
Levy Collections 1 Collected Collections Collections Collections

$ 4,480,045 4,652,176 $ 96.3% $ 140,827 59,551 $ $ 4,680,423 $ 4,827,837 4,881,534 $ 98.9% $ 98,220 72,123 $ $ 4,998,180 $ 5,004,903 5,127,974 $ 97.6% $ 94,859 98,094 $ $ 5,197,856 $ 5,469,972 5,598,743 $ 97.7% $ 79,701 104,109 $ $ 5,653,782 $ 5,674,416 5,825,889 $ 97.4% $ 77,571 122,069 $ $ 5,874,056 $ 6,354,698 6,524,331 $ 97.4% $ 90,035 119,343 $ $ 6,564,076 $ 6,374,271 6,524,331 $ 97.7% $ 80,213 131,185 $ $ 6,585,669 $ 6,374,271 6,524,331 $ 97.7% $ 80,213 131,185 $ $ 6,585,669 $ 6,242,449 6,890,120 $ 90.6% $ 64,523 107,412 $ $ 6,414,384 $ 6,712,274 7,311,845 $ 91.8% $ 85,217 144,856 $ $ 6,942,348 Source: County of Monterey Auditor-Controller's Office
City of Carmel-by-the-Sea Finance Department
2021
Fiscal
Year
Ended
June 30
2015
2012
2013
2014
2017
2018
2019
2020
2016
$-
$1
$2
$3
$4
$5
$6
$7
$8
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Millions
Total Tax Collections

Attachment 2
City of Carmel-by-the-Sea Table 11
Ratios of Outstanding Debt By Type
Last Ten Fiscal Years
Pension Lease NGEN Fire Total Median Percentage Debt
Obligation Revenue Public Safety Capital Outstanding Household of Household per Bonds Bonds Joint Agree Lease Debt Income Income Population Capita $ 7,295,000 6,280,000 $ 336,050 $ 344,131 $ 14,255,181 $ $ 72,582 0.51% 3,807 3,744 $ 7,010,000 6,165,000 $ 320,375 $ 349,372 $ 13,844,747 $ $ 71,719 0.52% 3,840 3,605 $ 6,725,000 3,585,000 $ 303,366 $ 137,387 $ 10,750,753 $ $ 62,460 0.58% 3,867 2,780 $ 6,435,000 5,005,000 $ 264,625 $ - $ 11,704,625 $ $ 74,758 0.64% 3,886 3,012 $ 6,140,000 4,420,000 $ 246,246 $ - $ 10,806,246 $ $ 81,607 0.76% 3,903 2,769 $ 5,840,000 3,825,000 $ 227,141 $ - $ 9,892,141 $ $ 87,532 0.88% 3,897 2,538 $ 5,530,000 3,220,000 $ 207,281 $ - $ 8,957,281 $ $ 87,532 0.98% 3,897 2,299 $ 5,215,000 2,605,000 $ 186,511 $ - $ 8,006,511 $ $ 87,532 1.09% 3,987 2,008 $ 4,890,000 1,980,000 $ 157,741 $ - $ 7,027,741 $ $ 98,638 1.40% 3,949 1,780 $ 3,895,000 1,340,000 $ 165,051 $ - $ 5,400,051 $ $ 98,188 1.82% 4,023 1,342

Source: City of Carmel-by-the-Sea Finance Department
Demographics from Table 16
2015
2016
2017
2018
2019
2020
2013
2014
Governmental Activities
2021
Fiscal Year
June 30
Ending
2012

Attachment 2
City of Carmel-by-the-Sea TABLE 12
Ratios of Net General Bonded Debt Outstanding
Last Ten Fiscal Years
Fiscal Less: Amount
Year General Lease Available Net Percentage Debt
Ended Obligation Revenue in Debt Obligation of Assessed Per Assessed June 30 Bonds Bonds Service Fund Total Value Capita Value Population 2012 - $ 7,295,000 $ 400,007 $ 6,894,993 $ 0.23% 1,811 $ $ 3,807 2,939,146,113 2013 6,165,000 $ 7,010,000 $ 400,007 $ 12,774,993 $ 0.42% 3,327 $ $ 3,840 3,030,390,405 2014 5,585,000 $ 6,725,000 $ 400,014 $ 11,909,986 $ 0.37% 3,080 $ $ 3,867 3,180,723,946 2015 5,005,000 $ 6,435,000 $ 400,015 $ 11,039,985 $ 0.33% 2,841 $ $ 3,886 3,336,669,745 2016 4,420,000 $ 6,140,000 $ 400,381 $ 10,159,619 $ 0.28% 2,603 $ $ 3,903 3,595,785,241 2017 3,825,000 $ 5,840,000 $ 400,582 $ 9,264,418 $ 0.24% 2,377 $ $ 3,897 3,792,539,039 2018 3,220,000 $ 5,530,000 $ 405,742 $ 8,344,258 $ 0.21% 2,141 $ $ 3,897 4,024,890,925 2019 2,605,000 $ 5,215,000 $ 402,335 $ 7,417,665 $ 0.17% 1,860 $ $ 3,987 4,247,352,806 2020 1,980,000 $ 4,890,000 $ 400,381 $ 6,469,619 $ 0.14% 1,638 $ $ 3,949 4,474,292,980 2021 1,340,000 $ 3,895,000 $ 393,132 $ $ 0.10% 1,204 4,841,868 $ $ 4,023 4,718,249,204 Source: California Department of Finance
City of Carmel-by-the-Sea Finance Department
$Ͳ
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Bonded Debt Outstanding

Attachment 2
City of Carmel-by-the-Sea TABLE 13
Computation of Direct and Overlapping Debt
2020-2021 Assessed Value 4,718,249,204 $
Total Percentage Amount
Debt Applicable Applicable
Outstanding to City (1) to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:

Monterey Peninsula Community College District 109,868,522 $ 11.570% 12,711,915 $ Carmel Unified School District 19,418,445 23.935% 4,647,805 Total Direct and Overlapping Tax and Assessment Debt 129,286,967 $ 17,359,720 $ DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Monterey County General Fund Obligations 138,253,793 6.371% 8,808,149 Monterey County Judgment Obligations 5,006,000 6.371% 318,932 Monterey County Water Resources Agency Gen Fund Debt 20,370,000 6.371% 1,297,773 City of Carmel-by-the-Sea General Fund Obligations 3,895,000 100.000% 3,895,000 City of Carmel-by-the-Sea Pension Obligation Bonds 1,340,000 100.000% 1,340,000 Total Gross Direct and Overlapping General Fund Debt 15,659,854 Less: Monterey County supported obligations 219,776
TOTAL NET DIRECT AND OVERALAPPING GENERAL FUND DEBT 15,440,078 $ TOTAL DIRECT DEBT $ 5,235,000
TOTAL GROSS OVERLAPPING DEBT $ 27,784,574
TOTAL NET OVERLAPPING DEBT $ 27,564,798
GROSS COMBINED TOTAL DEBT 2 $ 33,019,574
NET COMBINED TOTAL DEBT $ 32,799,798
Notes:
(1)
(2)
Ratios to 2020-21 Assessed Valuation:

Direct Debt
Total Direct and Overlapping Tax and Assessment Debt 0.37% Total Direct Debt ($8,750,000) 0.11%
Gross Combined Total Debt 0.70%
Net Combined Total Debt 0.70%
Source: MuniServices, LLC
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded capital lease obligations.

June 30, 2020
The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the City divided by the district's total taxable assessed value.

Attachment 2
City of Carmel-by-the-Sea TABLE 14
Legal Debt Margin InformationLast Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Debt limit 110,217,979 $ 113,639,640 $ 119,277,148 $ 125,125,115 $ 134,841,947 $ 142,220,214 $ 150,933,410 $ 159,275,730 $ 167,785,987 176,934,345 Total net debt applicable to limit - - - - - - - - - -
Legal debt margin 110,217,979 $ 113,639,640 $ 119,277,148 $ 125,125,115 $ 134,841,947 $ 142,220,214 $ 150,933,410 $ 159,275,730 $ 167,785,987 $ 176,934,345 $ Total net debt applicable to the limit
as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Notes: Legal Debt Margin Calculation For Fiscal Year 2019-20:

Total assessed value 4,718,249,204 $
Debt limit (3.75% of total assessed value) 176,934,345Debt applicable to limit:

General obligation bonds -Less: Amount available in debt service fund Source: City of Carmel by the Sea Finance Department for repayment of bonds - Total net debt applicable to limit -Legal debt margin 176,934,345 $ California Government Code, Section 43605, sets the debt limit at 15% of the total assessed valuation of all real personal property within the city, when assessed values were at 25% of full market value. This has changed to 100% of full market value, with the rate adjusting to 1/4 of 15%.

City of Carmel-by-the-Sea TABLE 15
Pledged-Revenue CoverageLast Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Sunset Center Certificates of Participation
General City Revenues 13,216,046 $ 15,932,161 $ 19,195,290 $ 21,139,081 $ 22,406,471 $ $ 23,167,967 21,653,778 $ 24,061,114 $ 21,424,311 $ 26,120,715 $ Less: operating expenses (14,648,160) (21,259,578) (15,512,429) (16,332,293) (17,552,771) (19,407,105) (18,716,522) (20,069,662) (20,883,375) (18,148,230)Net available revenue (1,432,114) (5,327,417) 3,682,861 4,806,788 4,853,700 2,937,256 3,760,862 3,991,452 540,936 7,972,485Debt service:

Principal 280,000 285,000 285,000 290,000 295,000 310,000 300,000 315,000 325,000 - Interest 231,163 225,463 219,763 213,963 208,063 198,188 202,063 190,375 173,320 106,957 Total 511,163 510,463 504,763 503,963 502,063 503,063 508,188 505,375 498,320 106,957 Coverage (2.80) (10.44) 7.30 9.54 9.65 5.85 7.40 7.90 1.09 74.54 Pension Obligation Bonds
General City Revenues NA 15,932,161 $ 19,195,290 $ 21,139,081 $ 22,406,471 $ $ 23,167,967 21,653,778 $ 24,061,114 $ 21,424,311 $ 26,120,715 $ Less: operating expenses (21,259,578) (15,512,429) (16,332,293) -17,552,771 (18,716,522) (20,069,662) (19,407,105) (18,148,230) (20,883,375) Net available revenue (5,327,417) 3,682,861 4,806,788 4,853,700 2,937,256 3,991,452 3,760,862 540,936 7,972,485Debt service:

Principal NA 115,000 580,000 580,000 585,000 605,000 595,000 615,000 625,000 640,000 Interest 57,848 122,593 118,243 112,443 96,206 105,131 85,120 71,892 57,666 Total 172,848 702,593 698,243 697,443 700,131 701,206 700,120 696,892 697,666 Coverage (30.82) 5.24 6.88 6.96 4.20 4.91 5.70 0.78 11.43 Combined coverage (4.20) (7.80) 3.05 4.00 4.04 2.44 2.85 3.31 3.31 9.91 Source: City of Carmel-by-the-Sea Finance DepartmentDetails regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation.

City of Carmel-by-the-Sea TABLE 16
Demographic and Economic Statistics
Last Ten Fiscal Years
Median Per Capita % of Population % of Population
Unemployment Household Family Median 25+ with High 25+ with Population1 Rate2
Income Income3Age School Diploma Bachelor's Degree
3,807 2.20% $ 72,582 $ 48,062 56.3 96.90% 58.50%
3,840 1.90% $ 71,719 $ 46,391 53.9 96.60% 60.80%
3,867 1.60% $ 62,460 $ 45,928 55.1 95.70% 57.60%
3,886 1.40% $ 74,758 $ 49,425 54.3 97.30% 58.60%
3,903 1.30% $ 81,607 $ 51,778 53.1 97.30% 63.70%
3,897 1.20% $ 87,532 $ 57,307 55.8 96.90% 64.70%
3,897 1.10% $ 87,532 $ 57,307 55.8 96.90% 64.70%
3,987 1.10% $ 87,532 $ 57,307 55.8 96.90% 64.80%
3,949 0.70% $ 81,607 $ 51,778 61.3 97.30% 63.70%
4,023 0.10% $ 98,188 $ 53,961 59.6 82.72% 55.03%
Notes:

A For calendar year ending during the fiscal year.

B Total Personal Income is presented in thousands.

Source: 1
California Department of Finance
2 California Employment Development Department
3 U.S. Department of Commerce, Bureau of Economic Analysis 2021
2020
2014
2015
2016
2017
2018
2019
2013
Fiscal Year
Ended
June 30
2012
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%
Per Capita Personal Income
Unemployment Rate
Per Capita Personal Income and Unemployment Rate
Unemployment Rate2 Per Capita Family Income3

Attachment 2
City of Carmel-by-the-Sea TABLE 17
Principal Employers
Current Year and Nine Years Ago (1)
Percentage Percentage
Number of of Total Number of of Total
Employees Rank Employment Employees Rank Employment
Employer: .

Carmel Realty 100 1 6.25% na na na
City of Carmel-by-the- Sea 80 2 5.00% na na na
Cypress Inn/Terry's Lounge 73 3 4.56% na na na
La Playa Hotel 68 4 4.25% na na na
Casanova 60 5 3.75% na na na
Dametra 50 6 3.13% na na na
Catinetta Luca 41 7 2.56% na na na
Auberge 40 8 2.50% na na na
Forge in the Forest 36 9 2.25% na na na
Bruno's Market 33 10 2.06% na na na
Totals 481 36.31%
Total employment 1,400
Notes: This is the second year that the City is including a statistical section. Due to the small size of the City, employee counts for prior years were not available through a database or third party. Prior year information will be included as the City reports this information in forthcoming years.

Source: City of Carmel-by-the-Sea Finance Department
2021 2012
Fiscal Year Ended June 30

Attachment 2
City of Carmel-by-the-Sea TABLE 18
Number of City Employees by Department
Last Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Departments:

General Government 9.77 10.78 10.72 18.20 17.60 18.60 16.20 15.70 15.66 15.00 Public Safety 31.71 27.02 28.02 28.80 30.70 30.70 31.70 32.00 32.00 25.00 Public Works 14.35 13.15 13.90 14.00 18.00 21.00 21.00 21.00 21.00 15.00 Community Activities 1.08 1.18 1.43 1.70 1.70 1.50 1.40 1.50 1.50 0.50 Library 11.29 10.40 11.65 11.60 12.40 12.40 12.80 14.00 13.98 5.50 Community Plng. and Bldg. 6.00 9.68 10.02 6.97 7.00 7.00 9.00 9.00 9.00 7.00 Totals 74.20 72.21 75.74 81.27 87.40 91.20 92.10 93.20 93.14 68.00 Source: City of Carmel-by-the-Sea Finance Department
0 10
20 30
40 50
60 70
80 90
100
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Fiscal Year
Total Number of City Employees

Attachment 2
City of Carmel-by-the-Sea TABLE 19
Operating Indicators By Function
Last Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function:

Police
Calls for service 13,232 10,889 10,023 14,360 14,813 13,701 12,674 13,252 11,385 8,778 Fire
Calls for service 742 648 759 925 851 856 843 1,006 803 754 Inspections 321 645 725 636 822 346 504 112 184 107
Public Works
Potholes patched 52 18 25 20 25
Tree permits Issued 90 166 177 216
Calls for service 250 300 500 750 433
Road asphalt used 34 48 28 32
Trees planted 32 60 82 82 59 57
Library
Circulation of library materials 150,280 155,630 140,848 153,227 114,137 106,976 99,802 104,456 104,456 84,810 Reference questions 32,512 33,176 24,318 37,010 20,233 19,252 16,276 15,789 15,789 13,579 Community Activities
Special Event permits na na 45 39 30 81 75 42 35 5
Community Development
Building Permits 306 286 340 500 422 416 590 580 677 446 Architectural Approvals 234 305 273 466 524 468 452 440 280 402 Administration
Business Licenses (All businesses) 1132 1208 1280 1350 1472 1615 1836 2187 2276 1,984 Public Records Requests (Calendar Yr) na 83 143 147 127 160 184 187 199 248 Source: City of Carmel-by-the-Sea Departments

Attachment 2
City of Carmel-by-the-Sea TABLE 20
Capital Asset Statistics By Function
Last Ten Fiscal Years
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function:

General Government
Number of buildings 1 1 1 1 1 1 1 11 1
Public Safety
Police
Stations 1 1 1 1 1 1 1 1 1 1
Parking meters 3 3 11 1 1 1 1 1 1 1
Fire stations 1 1 1 1 1 1 1 1 1 1
Public Works
Miles of paved streets 27 27 27 27 27 27 27 27 27 27
Parking lots 3 3 3 3 3 3 3 3 3 3
Fleet Vehicles (City-wide) 43 43 43 43 43 43 43 45 41 42 Recreation
Parks 10 10 10 10 10 10 10 10 10 10
Playgrounds 1 1 1 1 1 1 1 1 1 1
Tennis courts 2 2 2 2 2 2 2 2 2 2
Library
Library facilities 2 2 2 2 2 2 2 22 2
Source: City of Carmel-by-the-Sea Departments

Attachment 2
Page Intentionally Left Blank

Attachment 2

OTHER INDEPENDENT
AUDITOR’S REPORTS

Attachment 2
15105 Concord Circle, Ste. 130, Morgan Hill, CA 95037
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the
City Council of the City of Carmel-By-The-Sea
Carmel-by-the-Sea, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the City of Carmel-By-The-Sea (the “City”) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 17, 2021.

Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not

Attachment 2
15105 Concord Circle, Ste. 130, Morgan Hill, CA 95037
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
express such an opinion. The results of our tests disclosed no instances of noncompliance o r other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

December 17, 2021
Morgan Hill, California

Attachment 2

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report
January 4, 2022

ORDERS OF BUSINESS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Brandon Swanson, Community Planning & Building Director APPROVED BY: Chip Rerig, City Administrator
SUBJECT:

Consideration of extending the mandatory removal date for temporary parklets beyond January 20th, 2022
RECOMMENDATION:

Provide direction regarding an extension of the mandatory removal date for temporary parklets past January 20th, 2022.

BACKGROUND/SUMMARY:

Executive summary:

The Council is being asked to consider whether to approve a further extension of the mandatory removal date (currently January 20th) for all temporary restaurant parklets, and whether previously removed parklets should be allowed to be reconstructed. This extension can be considered under the City’s active Proclamation of the Existence of a Local Emergency.

Discussion:

On November 2nd, 2021, the City Council considered whether to extend the mandatory removal date of November 12th for all temporary restaurant parklets and outdoor seating for wine tasting shops. Council also considered the imposition of a monthly rental fee for the use of individual parking spaces. Ultimately, the Council acted to extend the mandatory removal date for restaurant parklets by a little over 68-days to January 20th, 2022, and require an $842 per month parking space rental fee for any restaurant choosing to keep their parklet during that period (pro-rated for the additional 8-days in January). This decision also included direction to staff that outdoor seating for wine tasting shops could continue until such a time that the Proclamation of the Existence of a Local Emergency was rescinded. Wine tasting shops, and any restaurant who had previously removed their parklet were not allowed to rebuild at the time.

At the time of the November 2nd City Council meeting, there were 26 restaurant parklets remaining in the Village. Since then one (1) restaurant has opted to remove their parklet, so there are 25 remaining, all of which have paid their rental fee to the City on time.

As part of the direction received to extend the mandatory removal date, staff was asked to bring this item back to the regular meeting on January 4th so that the Council could consider whether or not to approve another extension. With this in mind, staff is seeking the following direction from Council:

Should the mandatory restaurant parklet removal date of January 20th, 2022 be extended? If yes:

How long should the extension be?
If restaurants with previously approved parklets have since removed them, should they be allowed to apply and re-construct those parklets in the right-of-way? In addition to whether or not to extend the removal date for parklets, Council could also provide direction to staff on the timing of bringing recommendations from the Outdoor Seating Ad hoc Committee to the Planning Commission. Currently, staff is slated to bring this item to the Planning Commission in the early months of 2022.

FISCAL IMPACT:

Encroachment Permits and Design Review permits associated with outdoor seating were originally issued as “no-fee” permits. Costs associated with staff time to manage and enforce the outdoor seating program have been covered by the General Fund to date. “Rental fees” collected for the period of November through January totaled $87,544, which goes directly into the General Fund, and can be utilized for costs supported by that account, including additional code compliance efforts (staff overtime or contract support) to ensure any impacts associated with outdoor dining and wine tasting are minimized to the greatest extent feasible. Several efforts associated with downtown beautification during the months of November and December have been funded by these fees.

PRIOR CITY COUNCIL ACTION:

ATTACHMENTS:

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report
January 4, 2022

ORDERS OF BUSINESS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Brandon Swanson, Community Planning & Building Director APPROVED BY: Chip Rerig, City Administrator
SUBJECT:

Receive a status report on the various City Council Strategic Initiative projects assigned at the Council’s October 12th, 2021 public workshop.

RECOMMENDATION:

Receive a status report on the various City Council Strategic Initiative projects assigned at the Council’s October 12th, 2021 public workshop.

BACKGROUND/SUMMARY:

EXECUTIVE SUMMARY:

Over the past few months, staff has been working with City Council to develop and implement a list of priority projects related to the Council’s Strategic Initiatives. This report is intended to provide a brief synopsis Council direction to date, an update on recruitment efforts to build back capacity, and a status of the priority projects assigned by Council.

RECENT BACKGROUND:

On October 12th, 2021, the City Council held a public workshop at Sunset Center to discuss roughly 60 different projects associated with the Council’s adopted Strategic Initiatives. Recognizing that staffing resources are finite, the purpose of this meeting was to provide direction for prioritizing efforts to complete these projects. Staff presented Council with recommended priority levels for each project (1 through 4), and evaluation criteria related to the Strategic Initiatives to help facilitate the dialogue. Following a hearty and productive discussion, the Council reduced the list of priority projects to a total of 30. This was done in part by removing fifteen (15) Capital Improvement Program (CIP) items, and a handful of other projects from the list that Council felt were “day-to-day tasks” like contracts and RFPs. Council did elevate a small handful of projects which had initially been recommended as priority levels three or four, to be a top priority and remain on the list.

Although the list was reduced from 60 to 30 items, Council wisely recognized that many of these day-to-day items still require staffing resources. With that in mind, the City Administrator and Department Heads were asked to return to Council at a public meeting with a request to add additional positions. These new positions would allow for day-to-day activities to stay on track, while enabling the City to make meaningful progress on the selected priority projects. At the December 6th City Council Special Meeting, staff presented a plan to increase the number of positions across the enterprise by approximately twelve (12) full time equivalents (FTEs). This increase represented a mix of reinstating positions lost due to Covid related layoffs, and supplemental positions that were not previously in the organizational chart. These supplemental positions included qualified analyst support to help with completion of the Strategic Initiative projects.

Ultimately, Council approved the twelve (12) positions presented in December for immediate recruitment and hiring. Those recruitments have been prioritized, and are currently underway. The City’s HR department has brought on a contract staff member to assist with completing recruitments as quickly as possible.

It should be noted that since the December hearing, staff has identified the need for one (1) additional analyst position to support the Administrative Office in City Hall, for a total of thirteen (13) new positions.

This additional request is expected to be presented to City Council for consideration in February, 2022.

STRATEGIC INITIATIVE PROJECT TRACKER:

To aid in managing the Council’s 30 priority projects, staff created a workbook called the “Council Priorities Tracker” (Attachment 1), which includes information about project completeness and month-by-month updates/forecasting. This worksheet is a tool for department heads to plan and manage priority projects, and for the City Administrator to inform Councilmembers during weekly updates. It will also be presented on a periodic basis to the full City Council. Also, included for reference, is a worksheet that shows all of the approximately 60 original projects that were discussed with Council in October (Attachment 2).

As noted on the tracker, the majority of these projects are underway (approx. 70%), at various levels of completeness. Several of the projects which have not yet been started are planned to get underway after some of the recently approved analyst positions are filled. This can be noted in the tracker under the monthly status/forecast columns, and is generally targeted to take place in the Spring of 2022. These not yet started projects include things like:

Street addresses
Redevelopment of Sunset Center North Lot
Exploring opportunities for Flanders Mansion and Scout House Developing and implementing a social media plan
Also notable on the tracker, are a handful of strategic initiative projects which have recently been completed, even with reduced staffing levels:

Address pension liability
Restructure Peninsula Messenger Service
Adopt organics/recycling ordinance
Adopt revised sign ordinance (95% complete – pending Coastal Commission) Although not on the tracker, it is also worth recognition that the City’s Special Event Policy was recently updated and adopted by City Council.

NEXT STEPS:

As recruitments proceed, and resources are bolstered, progress will continue to be made on the City Council’s Strategic Initiative projects. Unless Council would like a more regular update, staff will plan to return in April, 2022 with a status report on the 30 projects included in the Council Priorities Tracker worksheet.

FISCAL IMPACT:

PRIOR CITY COUNCIL ACTION:

ATTACHMENTS:

Attachment 1 - Council Priorities Tracker
Attachment 2 - Original Projects From October Council Retreat Item # Description of Project Current Status Percentage Complete Responsible Department 2021 Status January Status February Status/Forecast March Status/Forecast April Status/Forecast May Status/Forecast June Status/Forecast July Status/Forecast 1 Develop a multi-pronged financial strategy to address pension liability Complete 100% Finance Task complete 2 Explore Paid Parking Program In Progress 20% CPB/PD
Staff research complete with various consultants;T2 selected to implement PD citiation management system Working with T2 to develop draft program to share with community for feedback T2 completes draft program/plan based on City Council feedback Community engagement / education meetings
3 Restructure Peninsula Messenger Service for at-home letter delivery Complete 100% Finance Task complete 4 Update Purchasing Ordinance In Progress 10% Finance
Current ordinance reviewed and sections for revisions identifed.Research on comparable cities completed.

Staff works with City Attorney to draft ordinance
Ordinance 1st Reading at City Council
5 Develop a plan to ensure that the
City’s natural areas, as well as private
property, are properly
maintained to reduce fire risk
Not Started 10% Fire/ PW
Part of of contract discussions with Monterey Fire
draft and negotiate adding provision to contract w/ Monterey Fire draft and negotiate adding provision to contract w/ Monterey Fire Contract to City Council for inclusion of additional services from Monterey Fire 6 Review opportunities for enhanced fire/ambulance service In Progress 25% PD City Council provided direction to pursue further contract negotiations draft and negotiate adding provision to contract w/ Monterey Fire draft and negotiate adding provision to contract w/ Monterey Fire Contract to City Council for inclusion of additional services from Monterey Fire 7 Review and Update Sign Ordinance In Progress 95% CPB / City Attorney City Council approved ordinance. Needs to go to Coastal Commission Local Coastal Program (LCP) amenemdment to Coastal Commission 8 Prepare Climate Action/Adaptation Plan In Progress 70% PW Vulnerability Report complete. Action and Adaptation Plan strategies and projects identified. GHG Emissions Forecast in progress.

Continue fine-tuning Action and Adaptation Strategies and Projects Lists. Review GHG Forecast report Complete Action and Adaptation Strategies and Projects Lists Prepare written report summarizing the project.

Complete written report.
9 Review and Update Tree Ordinance In Progress 20% PW
Draft received from City Attorney with significant editing. Needs detailed review and editing by staff.

Coordinate with City Attorney's office to make edits to fit needs of Forestry Division and F&B Commission expectations Take draft Ordinance to F&B, PC and Coastal Commission
Take draft Ordinance to F&B, PC and Coastal Commission
10 Update Zoning Code and Design
Guidelines (Residential &
Commercial)
In Progress 15% CPB
Working with Winter & Assoc. on proposal for contract support.

Work with Winter & Assoc. on project scope and overall approach for amendments Community outreach and engagement Community outreach and engagement Report to Planning Commission 11 Develop Accessory Dwelling Unit (ADU) Ordinance Not Started 0% CPB City Attorney and staff to draft ordinance Community outreach and engagement Planning Commission hearing City Council 1st reading of ordinance 12 Develop Organics/Recycling Ordinance Complete 100% PW Ordinance adopted. Council approved Franchise Agreement Amendment, rates, and assignment. MOU with Waste Management District approved.

Education/Outreach -- Develop game plan Education/Outreach - Finalize game plan, Begin outreach
Education/Outreach - ongoing by new Admin Tech hire
Education/Outreach - ongoing Education/Outreach - ongoing 13 Develop Telecommunication Ordinance consistent with federal law In Progress 40% CPB Ordinance drafted by City Attorney Staff works with City Attorney to refinde draft ordinance Community outreach and engagement Community outreach and engagement Report to Planning Commission Planning Commission hearing City Council 1st reading of ordinance 14 Filling vacant positions (12) In Progress 0% City Admin.

Ten (10) positions filled to date;Contract HR support brought on to help with processing Recruitments/Interview ongoing Recruitments/Interview ongoing Recruitments/Interview ongoing Recruitments/Interview ongoing Recruitments/Interview ongoing Recruitments/Interview ongoing 15 Forest Theater Facilities Manager In Progress 70% PW/Comm Act.

RFP issued. Proposals Reviewed. Deal points negotiated with PAC REP Theater Drafting Lease Agreement with City Attorney's office. Receive any comments back from PAC REP.

Complete Lease Agreement. Lease Agreement to Council for approval by March 16 Pandemic recovery (reopening, reporting, etc.) In Progress 50% City Admin. Explored larger venues (Sunset Center, Women's Club) - determined not viable Workign with local volunteer groups to set up plan to support in-person meeting in City Hall In-person meetings begin. Volunteers to check vaccination, masks, etc. 17 Stormwater Ordinance update In Progress 5% PW Hired on-call environmental consultant with expertise in Stormwater regulations Begin work with Dudek Consultants to develop ordinance Draft Ordinance. Amend Agreement with Dudek to complete project. Draft Ordinance Present to PC and Coastal Commission Prepare for Council adoption 18 Volunteer Groups oversight In Progress 10% PW
Limited oversight of Carmel Cares in progress. Proper level of oversight and collaboration on hold until spring. Anticipated assignment for new Anaylst hire.

Target Analyst on board
19 Review/reformulate approach to reserves/update financial policies Not Started 0% Finance Will incorporate into budget preparations Will incorporate into budget preparations Will incorporate into budget preparations Will incorporate into budget preparations Present to Counil as part of FY 2022/2023 budget Present to Counil as part of FY 2022/2023 budget 20 Develop Forest Management Plan In Progress 5% PW
Council approved submittal of application for a $171k CalFire grant;Work on plan pending receipt of grant award, anticipated for March Begin draft of RFP for FMP Complete draft RFP for FMP Announcement of Cal Fire Grant. If successful, issue RFP. If unsuccesful, seek additional funds with CIP 2022/23 Program 21 Explore opportunities for permanent outdoor dining In Progress 50% CPB Ad hoc Committee provided recommendation to be forwarded to PC Present Ad Hoc Committee recommendation to PC 22 Increase Beautification Efforts In Progress 25% PW
Funds from parklet rent utilized; First "beautufucation week" successfully completed; Ocean Ave. medians landscaping planned Install new irrigation system, plantings and hardscape prototype in Ocean Median between Lincoln and Monte Verde Target second "beautification week." F&B Review of prototype 23 Review barriers to construction of
affordable housing In Progress 15% CPB
Met with housing/planning managers from peninsula cities to discuss regional approach;Working with city of PG to partner on consultant support for feasibility study Finalize scope of work and contract for feasibility study feasibility study contract to City Council
24 Explore street addresses Not Started 0% CPB/PW On hold until spring. Anticipated assignment for new Anaylst hire. Target Analyst on board 25 Develop a Facilities Maintenance Plan In Progress 45% PW Portions of Plan prepared piece-meal. Need to compile comprehensively. This will become an ongoing working document once completed. On hold until spring. Anticipated assignment for new Analyst and/or Project Manager hire.

Target Analyst on board
Original Level 1 & 2 Priorities Level 3 & 4 Priorities Elevated by Council FY2021-22 Carmel-by-the-Sea City Council
Strategic Priority Tracker

Attachment 1
26 Underground Utilities Rule 20A Not Started 0% PW
Notified by PG&E that approx. $900k allocation for City project may be re-assigned in 2023+ without an identified project and establishment of an Underground Utilities District. On hold until spring. Anticipated assignment for new Project Manager hire.

Target Analyst on board
27 Explore reinstatement of Design Review Board Not Started 0% CPB Study Sesssion with City Council 28 Explore redevelopment of the north lot at Sunset Center Not Started 0% CPB On hold until hire of Associate Planner (Long Range Planning) Anticipate Associate Planner starts February or March - To begin work on this project ASAP Anticipate Associate Planner starts February or March - To begin work on this project ASAP 29 Explore opportunities for Flanders Mansion & Scout House Not Started 0% Assist. City Admin. On hold until spring. Anticipated assignment for new Administration Anaylst hire. Target Analyst on board 30 Develop and implement Social Media Plan Not Started 0% Clerk On hold until hire of City Clerk; Position being re-posted at higher salary range Anticipate Clerk starts March or April - To begin work on this project ASAP Anticipate Associate Planner starts March or April - To begin work on this project ASAP

Attachment 1
Item
#
Staff
Recommended
Priority Level
Baron
Priority
Level
Ferlito
Priority
Level
Potter
Priority
Level
Richards
Priority
Level
Theis
Priority
Level
Average Council
Recommended
Priority Level
Description of Goal Current Status Level of Effort to Complete Responsible Department Project Type 1 1 - Develop a multi-pronged financial strategy to address pension liability 80% complete Medium Finance Strategic Initiative 2 1 - Explore Paid Parking Program On-Going Medium CPB/PD Strategic Initiative3 1 - Restructure Peninsula Messenger Service for at-home letter delivery 80% High Finance Strategic Initiative4 1 - Update Purchasing Ordinance No Progress High Finance Strategic Initiative5 1 - Develop a plan to ensure that the City’s natural areas, as well as private property, are properly maintained to reduce fire risk Budgeted Medium/Low Fire/ PW Strategic Initiative6 1 - Review and Update Sign Ordinance Nearly Complete Medium CPB / City Attorney Strategic Initiative7 1 - Prepare Climate Action/Adaptation Plan In Progress High PW Strategic Initiative8 1 - Review and Update Tree Ordinance In Progress High PW Strategic Initiative9 1 - Update Zoning Code and Design Guidelines (Residential & Commercial) In Progress High CPB Strategic Initiative 10 1 - Develop Accessory Dwelling Unit (ADU) Ordinance No Progress Medium CPB Strategic Initiative11 1 - Develop Organics/Recycling Ordinance In Progress Medium PW Strategic Initiative12 1 - Develop Telecommunication Ordinance consistent with federal law In Progress Medium CPB Strategic Initiative13 1 - Review opportunities for enhanced fire/ambulance service In Progress High PD Strategic Initiative14 1 - ADA upgrades On-going Low PW CIP15 1 - Annual paving projects with sidewalk repairs Design Complete High PW CIP16 1 - Mission Trail Nature Preserve stream stability projects #1-3 Env. Review High PW CIP17 1 - Park Branch Library generator In Progress Low PW CIP18 1 - Police station radio antenna County, Grant Medium PD/PW CIP19 1 - Filling vacant positions (12) In Progress High City Admin. Misc.20 1 - Forest Theater facilities manager In Progress Medium PW/Comm Act. Strategic Initiative21 1 - Janitorial RFP contract No Progress Medium PW Misc.22 1 - On-call tree and landscaping bids/contracts No Progress High PW CIP23 1 - Pandemic recovery (reopening, reporting, etc.) In Progress Low City Admin. Misc.24 1 - Stormwater ordinance update 25% Complete Medium PW Strategic Initiative25 1 - Volunteer groups oversight Ongoing High PW Misc.26 2 - Review/reformulate approach to reserves/update financial policies No Progress Medium Finance Strategic Initiative27 2 - Develop Forest Management Plan Budgeted Medium PW Strategic Initiative28 2 - Explore opportunities for permanent outdoor dining In Progress Medium CPB Strategic Initiative29 2 - Increase beautification efforts Budgeted High PW Strategic Initiative30 2 - Review barriers to construction of affordable housing In Progress Medium CPB Strategic Initiative31 2 - Explore street addresses No Progress High CPB/PW Strategic Initiative32 2 - Develop a facilities maintenance plan On-Going High PW Strategic Initiative33 2 - Continue participation in destination marketing through Visit Carmel On-Going Medium City Admin. Strategic Initiative34 2 - Drainange system repairs Budgeted Medium PW CIP35 2 - Decommission well and tank at Mission Trail Nature Preserve Budgeted High PW CIP36 2 - Scenic pathway barriers (Ocean Median Fencing?) Budget + Donations Medium PW CIP37 2 - Sunset Center windows/hazardous materials testing Budgeted High PW CIP38 2 - Scenic Road sewer line replacement E Permit Cond. Medium PW CIP39 2 - Underground utilities Rule 20A No Progress Medium PW Misc.40 3 - Review budget related community engagement strategy On-Going High Admin. Strategic Initiative41 3 - Explore reinstatement of Design Review Board No Progress High CPB Strategic Initiative42 3 - Consider creation of Downtown Master Plan No Progress High CPB/PW Strategic Initiative43 3 - Explore redevelopment of the north lot at Sunset Center No Progress High CPB Strategic Initiative44 3 - Conduct a ‘State of the Village’ presentation for the Community. Complete/Ongoing Low City Admin. Strategic Initiative45 3 - Develop and conduct a community engagement survey to help, in part, inform the community about future budgets. The survey will include an inquiry on ways to improve community engagement On-going Low Assist. City Admin. Strategic Initiative46 3 - Explore opportunities for Flanders Mansion & Scout House On-going High Assist. City Admin. Strategic Initiative Contract Item - Does Not Qualify as Strategic Priority
FY2021-22 Carmel-by-the-Sea City Council Strategic Priorities (Presented at 10/12/21 Council Retreat) Stategic Priority Items to Retain Strategic Priority Items to Remove CIP - Does Not Qualify as Strategic Priority

Attachment 2
47 3 - Work with the Carmel Chamber of Commerce to develop a Carmel Commercial Property Owners’ Association In progress Medium City Admin. Strategic Initiative 48 3 - Underground power lines in partnership with PG&E No Progress High PW/CPB Strategic Initiative49 3 - Beach sand/sea wall survey Budgeted Medium PW CIP50 3 - Coastal Conservancy Grant for North Dunes boardwalk/stairs Grant application Low PW CIP51 3 - Libraries master plan Budgeted Medium Library/PW CIP52 4 - Develop a plan to assess the City’s natural assets to potentially influence future Capital Improvement Plans Complete/Ongoing High PW Strategic Initiative 53 4 - Develop and implement Social Media Plan No Progress High Clerk Strategic Initiative 54 4 - Create a plan to increasingly bring the Community together and ensure City Council attendance at local events On-going Medium Comm. Act. Strategic Initiative 55 4 - Develop a process and plan for encouraged/preferred commercial uses by reviewing the Commercial Zoning Code and working with the business community In progress Medium CPB Strategic Initiative 56 4 - Develop a report on the feasibility of creating an economic opportunity function No Progress High City Admin. Strategic Initiative 57 4 - Energy Watch facilities assessment No Progress Low PW Strategic Initiative 58 4 - Sixth Ave./Devendorf Park Plaza (outreach) No Progress Low Library/PW CIP

Attachment 2

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report
January 4, 2022

PUBLIC HEARINGS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Evan Kort, Associate Planner
APPROVED BY: Chip Rerig, City Administrator
SUBJECT:

Consideration of an Appeal (APP 21-415) by Robert Carver on behalf of Dolores & 7 th
, LLC, of the Planning Commission decision to include Condition of Approval #27 restricting modifications to the front of the existing building as part of the approval of a Design Review and Use Permit application (DR 21-114 and UP 21-226 - The Conservatory), for a remodel and change of use for an historic structure, known as the China Arts Center located at Dolores Street, 2 northwest of 7th Avenue in the Central Commercial (CC) Zoning District and Downtown Conservation District (CD) Overlay; APN: 010-147-006
RECOMMENDATION:

Staff recommends the City Council adopt a resolution (Attachment 1) denying the appeal by Robert Carver (APP 21-415) and uphold the Planning Commission’s decision to approve Design Review Application DR 21-114 and Use Permit UP 21-226 as adopted in Planning Commission Resolution 2021-60-PC (refer to Attachment 7).

BACKGROUND/SUMMARY:

EXECUTIVE SUMMARY
On November 10, 2021, Planning Commission adopted a resolution approving a Design Review Application and Conditional Use Permit for the renovation and reuse of the historic China Arts Buildings into a music recording studio. The Commission was generally supportive of the project, except for the addition of a sound-proofing glass entryway on the Dolores side of the building, similar to the entry at Sunset Center. As part of their motion for approval of the project, the Commission included Special Condition of Approval #27 which required the sound-proofing to be moved indoors, and prohibited modifications to the building on Dolores Street. Subsequent to this decision, an appeal was filed by the project architect, Robert Carver, objecting to the inclusion of the Special Condition.

BACKGROUND/ PROJECT DESCRIPTION
The project site is located on Dolores Street, 2 northwest of 7th Avenue on a 4,000 square foot lot. The applicant is proposing a seismic retrofit and complete interior remodel of an historic building, known as the “China Arts Center”, into a private multi-story, music recording studio. The project includes the addition of a new elevator and stairway enclosure on the roof, a new skylight, new windows and doors, and a new glass “sound lock” entry on Dolores Street. The “sound lock” component of the project is effectively an enclosure of the front vestibule with glass, similar to the entry of Sunset Center, to prevent sound from escaping out into the public.

The China Art Center is a multi-story commercial building constructed in the Mission Revival style.

Designed by San Francisco architect H.H. Winner and built by Hugh Comstock. The subject property is listed as a Carmel-by-the-Sea historic resource under the Historic Context Statement’s theme of Architectural Development in Carmel and is significant under California Criterion 3, in the area of architecture as an example of the Mission Revival Style. The character defining features of the building appear primarily on the front elevation and include:
• Gabled roof massing, with wide overhangs containing carved wood brackets; • Clay-barrel tile roofing material;
• Quatrefoil window with deep recess in the gable end;
• Grand entrance beneath cement plaster Moorish arch with carved corner pilasters; • Paired window openings flanking the entrance, containing steel industrial sash; • Carmel stone base course; cement plaster wall cladding; • Entrance vestibule accessed via carved wood gates and containing carved niches and cement plaster details;
• Mission Revival-style, wood entry gates with wrought iron hinges; • Paired wood entrance doors beneath a pedimented, Moorish entrance with carved spiral pilasters; • Arched window openings with steel industrial sash on the north elevation.

In addition to being a historic resource, the China Arts Center is located in the Downtown Conservation District (CD) Overlay. As outlined in CMC 17.20.280, projects within the Downtown CD Overlay affecting any historic resource shall require approval by the Historic Resources Board (HRB) consistent with CMC

17.32, Historic Preservation. Effectively, the HRB must find that the project as proposed is consistent with the Secretary of Interior’s standards and does not destroy or diminish the historic resource.

On August 16, 2021, the Historic Resources Board (HRB) considered the project and adopted Resolution 2021-07-HRB issuing a Determination of Consistency with the Secretary of the Interior’s Standards subject to the adoption of the recommended Conditions of Approval (refer to Attachment 6). The staff report and associated attachments from the August 16
th hearing has been included as Attachment 3. Attachment 3 provides an analysis and findings for the proposed modifications being consistent with the Secretary of the Interior’s Standards for Rehabilitation as well as findings for the project’s consistency within the Downtown Conservation District.

On October 13, 2021, the project was presented to the Planning Commission with a recommendation of approval by staff. Following deliberation, the project was continued with direction to the applicant to “explore providing a design that will have the sound lock on the interior of the building instead of the exterior of the vestibule”. The Commission was supportive of the proposed use as a music recording studio and did not provide additional direction regarding the other exterior modifications beyond exploring the relocation of the sound lock entry. The staff report and associated attachments from the October 13 th hearing have been
included as Attachment 4. Attachment 4 provides an analysis of the proposed land use as a music recording studio as well as an analysis of the proposed changes and modifications.

On November 10, 2021, the project returned the Planning Commission for consideration. In response to the Planning Commission’s October 13
th direction, the applicant did not provide revised drawings showing the sound lock in an alternative location. However, the applicant did submit information to support their position that the location of the sound lock on the exterior of the building is more efficient for sound attenuation than if located in the interior. The applicant also provided information to show that moving the sound lock to the interior would negatively impact the functionality of the recording studio. The Staff Report and associated attachments from the November 10
th hearing have been included as Attachment 5.

Attachment 5 provides a discussion on the supplemental materials provided by the Applicant and considered at the November 10
th hearing.

At the November 10
th hearing staff presented a resolution for approval that would allow for the glass sound lock to be located on the exterior of the vestibule, as proposed by the applicant. The Commission considered the location of the glass sound lock and whether its proposed location was appropriate on the exterior of the building or if it should be relocated to the interior of the building. Following deliberation, a motion was made to adopt the resolution as prepared by staff, however, that motion failed on a 2-2 vote (1 commissioner absent). A second motion was made to adopt a resolution approving the Use Permit and Design ReviewApplications, but with the addition of Special Condition of Approval # 27 that stated:

The proposed glass sound attenuating vestibule shall be relocated to the interior of the building with no modifications made to the primary building elevation on Dolores Street. The existing wood gates shall remain, however, may be minimally repositioned to meet exiting (egress) requirements as required by the Building and Fire Codes.

The second motion passed 3-1. Effectively, the adopted resolution approved the Conditional Use Permit and Design Review Application, but required the plans to be revised so the sound lock would be located within the interior of the structure.

On November 11
th
, the Robert Carver, on behalf of the property owner, filed a timely appeal objecting to the inclusion of Special Condition of Approval #27.

STAFF ANALYSIS
Although staff prepared a Resolution of approval for the Planning Commission’s consideration, it is the City staff’s long-standing practice to support the junior body’s recommendation to the City Council on appeal.

Planning Commission Findings
As part of the Planning Commission’s discussion about the merits of the project, they found that with the sound lock on the exterior of the building, certain required findings for Design Review approval could not be made. This deliberation led to the inclusion of Special Condition of Approval #27. The findings which the Commission determined could not be made with the sound lock on the exterior of the building are:

From Commercial Design Guidelines:

These guidelines establish a series of design statements intended to conserve the historical village character and pedestrian orientation of Carmel's central commercial district. The emphasis of this document is architectural, with special attention to building facades.

The pedestrian wall should not be without relief; it should be punctuated by occasional offsets produced by entries, window projections, small planters, and entrances to courtyards and intra-block walkways.

Large sheets of glass, unbroken by divisions, can appear too urban or modem and should be avoided.

Conserve or create recessed entries. Should two business entries be close to one another in the same building, a single recess may be designed to accommodate both.

Entrances to stores are typically recessed from the façade by creating a small alcove. This establishes a more definitive sense of entry and affords an alternative view of merchandise in display windows.

In addition to the findings made addressing the Commercial Design Guidelines, the following findings were made regarding the proposed project.

Dolores Street maintains the highest concentration of Historic Resources in the Downtown Conservation District within a one-block area.

Additions to historic structures are required to be differentiated, however, new materials and architectural styles to be more compatible with the historic structure.

The historic character of the property will be retained and preserved. Distinctive materials, features, spaces, and spatial relationships that characterize the property will be preserved. This (the vestibule) is not being preserved.

Grounds for Appeal
As stated in the appeal documents (Attachment 2) the grounds for appeal are stated as: “One Commissioner (who appeared to be supportive of the project at the first hearing) was absent. The City’s Historian, the HRB, 2 of the 4 Commissioners present and the Staff all supported the design as submitted. The interior sound lock will not work for all the reasons outlined at the hearing.” Review Process
The following section will step through the review process for this project, which included first determining if the project would impact a historical resource, and then whether the design and change of use were consistent with the City’s regulations.

Step 1 – Determination of Consistency
In accordance with CMC 17.32.140, Determination of Consistency with the Secretary’s Standards:

Consistency determinations for major alterations shall require an evaluation by a qualified professional and review and approval by the Historic Resources Board. Qualified professionals retained by the City to evaluate proposed alterations to historic resources shall be at the applicant’s expense. The Department shall determine whether the proposed project constitutes a minor or major alteration.

As part of the initial review of the application, staff determined the project qualified as a major alteration and therefore contracted with Seth Bergstein, of PAST Consultants, a qualified professional retained as one of the city’s historic consultants, to prepare a Phase II Evaluation of the proposed changes to the historic building. The Phase II Evaluation found the proposed modifications consistent with the Secretary of the Interior’s Standards for Rehabilitation provided the recommendations in the report were carried out (refer to Attachment 3).

Step 2 – Historic Resources Board Review
For projects located within the Downtown Conservation District, in accordance with CMC 17.20.280, Procedures and Criteria for Review, Projects affecting any historic resource shall require approval by the Historic Resources Board consistent with Chapter 17.32 CMC. In its review, the Board shall apply the Secretary of Interior’s Standards and shall adopt the following findings:

1. The historic character of the property will be retained and preserved. Distinctive materials, features, spaces, and spatial relationships that characterize the property will be preserved.

2. Distinctive materials, features, finishes, and construction techniques or examples of craftsmanship that characterize the property will be preserved.

3. The new work shall be subtly differentiated from the old and will be compatible with the historic materials, features, size, scale, and proportion and massing to protect the integrity of the property and its environment.

4. The proposed development is consistent with the established design context of the conservation district and will not adversely affect any historic resources on the project site or on adjacent sites.

Furthermore, CMC 17.32.160 states, If a proposed major alteration is found by the qualified professional to be consistent with the Secretary’s Standards (previously described in Step 1, above), the project shall be presumed to be consistent for purposes of making a preliminary determination regarding any required environmental documentation and staff shall forward the application and evaluation to the Board for action. If the Board concurs with the evaluation, the Board shall issue a determination of consistency and adopt any appropriate conditions of approval. Any finding of compliance by the Board shall be supported by substantial evidence.

On a 3-2 vote, the HRB found the proposed modifications to be consistent with the Secretary’s Standards, adopted the findings listed above, and issued a Determination of Consistency (refer to Attachment 6). As part of the action, the HRB adopted the recommendations outlined in the Phase II report as recommended Conditions of Approval for the project. The Determination of Consistency issued by the HRB was subject to the 10-business day appeal period. No appeals were filed regarding the Board’s determination.

Step 3 – Planning Commission Review
In accordance with CMC 17.20.280, Following action by the Historic Resources Board, the project shall then be scheduled for final review by the Planning Commission consistent with Chapter 17.58 CMC, Design Review. The Planning Commission, as the decision making body for this project, has authority to consider both the Use Permit and the Design Review application. Before approving an application for design review in any district, the Commission must find that the final design plans:

1. Conform to the applicable policies of the General Plan and the Local Coastal Program;

2. Comply with all applicable provisions of this code; and

3. Are consistent with applicable adopted design review guidelines (CMC 17.58.060).

Further, in accordance with CMC 17.14.220.A, Special Design Topics –Façade Remodels, when plans for remodels are reviewed for approval, the reviewing body must find the following to be true:

1. The proposed modification contributes to, restores or achieves consistency of architectural character and scale when considering the building or courtyard as a whole.

2. The proposed modification does not incorporate materials, patterns or other design elements that would:

1. Call attention to the building.

2. Create a form of advertising or sign through architectural treatment.

3. Would render the storefront unusable by a different business occupant without further remodeling.

4. Create a standardized identification with a particular business use.

Staff prepared and presented a Resolution for approval at the November 10 th Planning Commission
hearing that found the findings listed above to be true (refer to Attachment 4). After deliberation, the Commission ultimately found that the aforementioned required findings could only be made if the glass sound lock was relocated from the exterior vestibule to the interior of the building. As such, the project (both the Conditional Use Permit and Design Review) was approved on the condition that the sound lock be relocated to the interior of the building.

Consideration
This hearing is de novo, meaning that the entire decision of the Planning Commission is open for consideration by the City Council. However, it should be noted that the scope of the appeal is limited to the Planning Commission’s inclusion of Condition of Approval #27 to move the sound lock indoors, and any other components of the overall design and proposed new use that were considered by the Commission.

Since the Historic Resources Board’s determination of consistency was not appealed, the scope if this appeal does not include whether an exterior glass sound lock is consistent with the Secretary of the Interior’s Standards or consistent with the adopted findings by the HRB. As the Historic Resources Board is the decision making authority for the Determination of Consistency, the proposed project would remain consistent with the Secretary of Interiors Standards whether the appeal is granted or denied.

The Council should consider whether the inclusion of the glass sound lock, as proposed by the applicant, is consistent with the associated Design Review findings (listed under “Step 3”, above). If the Council finds that the glass sound lock is consistent with the established Design Review Findings, they may choose to grant the appeal. If the Council agrees with the Planning Commission’s decision that the location of the glass sound lock located within the vestibule would not meet the associated Design Review Findings, the Council should deny the appeal.

Council Options/Alternatives:

1. Deny Appeal – Adopt Resolution 2022-01 denying the appeal by Robert Carver (APP 21-415) and uphold the Planning Commission’s decision to approve Design Review Application DR 21-114 and Use Permit UP 21-226 as adopted in Planning Commission Resolution 2021-60-PC.

2. Grant Appeal - Adopt Resolution 2022-01 granting the appeal by Robert Carver. Staff would prepare a revised resolution for adoption by the City Council based on the Planning Commission’s Resolution, Resolution 2021-60-PC (refer to Attachment 7) and remove Condition of Approval #27.

3. Deny/Grant Appeal with Modification – As a de novo hearing, the City Council may either grant or deny the appeal with additional direction regarding other aspects of the project. Should the Council wish to address other aspects of the project related to design or use outside of the appeal, the Council should provide direction to staff to prepare a Resolution, as appropriate.

Public Correspondence: At the time of writing this report, staff has received one additional correspondence. The correspondence was received following the filing of the appeal and, in summary, voices support for granting the appeal.

Multiple correspondences were received ahead of the November Planning Commission meeting including two petitions: one in favor of the inclusion of the sound lock and one against its inclusion. Additional correspondences received voice support for the proposed project.

All correspondences received, including those previously provided to the Planning Commission, have been included as Attachment #8.

Environmental Review: Staff recommends the project be found categorically exempt from the California Environmental Quality Act (CEQA), State CEQA guidelines, and local environmental regulations, pursuant to Section 15303 (Class 3) – New Construction or Conversion of Small Structures. Class 3 exemptions include the conversion of existing small structures from one use to another where only minor modifications are made in the exterior of the structure. The project consists of a seismic retrofit and remodel an historic building previously used as a museum/art gallery into a private multi-story, music recording studio. The project also includes a complete interior remodel with the addition of a new elevator and stairway enclosure on the roof, a new skylight, and new windows and doors. The proposed project does not present any unusual circumstances that would result in a potentially significant environmental impact and no exceptions to the exemption exist pursuant to section 15300.2 of the CEQA Guidelines.

FISCAL IMPACT:

None for this action.

PRIOR CITY COUNCIL ACTION:

None.

ATTACHMENTS:

Attachment 1 - Resolution 2022-005
Attachment 2 – Appeal Documents
Attachment 3 - August 16, 2021 Historic Resources Board Staff Report (project plans excluded) Attachment 4 – October 13, 2021 Planning Commission Staff Report (project plans excluded) Attachment 5 – November 10, 2021 Planning Commission Staff Report (project plans excluded) Attachment 6 – Historic Resources Board Adopted Resolution Reso. 2021-07-HRB Attachment 7 – Planning Commission Adopted Resolution: Reso. 2021-60-PC Attachment 8 – Public Correspondence
Attachment 9 – Project Plans

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
RESOLUTION NO. 2022-005

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DENYING THE APPEAL BY ROBERT CARVER (APP 21-415) AND UPHOLDING THE PLANNING COMMISSION’S DECISION TO APPROVE DESIGN REVIEW APPLICATION DR 21-114 AND USE PERMIT UP 21-226 AS ADOPTED IN PLANNING COMMISSION RESOLUTION 2021-60-PC; APN: 010-147-006 WHEREAS, Robert Carver (“Applicant”) on behalf of property owner, Dolores & 7th, LLC, submitted an application requesting approval of a Design Review application “DR 21-114” and Use Permit application “UP 21-226” described herein (“Application”); and WHEREAS, the project is located on Dolores 2 Northwest 7th Avenue (Block: 75, Lot: 19) in the Central Commercial (CC) Zoning District and Downtown Conservation District (CD) Overlay; and
WHEREAS, the Applicant is requesting approval of a Design Review Application and a Conditional Use Permit for a seismic retrofit and remodel of the building into a multi-story, private music recording studio, which includes the addition of a glass “sound lock” entry to the exterior of the building; and
WHEREAS, on August 16, 2021, the Historic Resources Board held a public hearing to receive public testimony regarding the Application, including without limitation, the information provided to the Planning Commission by City staff and public testimony on the Design Review application and adopted Resolution 2021-007-HRB issuing a Determination of Consistency with the Secretary of the Interior’s Standards; and
WHEREAS, on October 13, 2021, the Planning Commission held a public hearing to receive public testimony regarding the Application, including without limitation, the information provided to the Planning Commission by City staff and public testimony on the Design Review Application and Use Permit application; and
WHEREAS, on October 13, 2021, the Planning Commission continued the application with direction the applicant to explore relocating the sound lock to the interior of the existing structure; and
WHEREAS, on November 10, 2021, the Planning Commission held a public hearing to receive public testimony regarding the Application, including without limitation, the information provided to the Planning Commission by City staff and public testimony on the Design Review Application and Use Permit application; and
WHEREAS, on November 10, 2021, the Planning Commission adopted Resolution 2021- 60-PC, approving the Application contingent upon the addition of Special Condition of Approval #27 that states, The proposed glass sound attenuating vestibule shall be relocated to the interior Attachment 1
Resolution No. 2022-005

of the building with no modifications made to the primary building elevation on Dolores Street.

The existing wood gates shall remain, however, may be minimally repositioned to meet exiting (egress) requirements as required by the Building and Fire Codes; and WHEREAS, on November 11, 2021, a timely appeal of the approval of the Application was filed with the City Clerk by Robert Carver objecting specifically to the inclusion of Special Condition of Approval #27; and
WHEREAS, the appeal (APP 21-415), filed by Robert Carver, stated the grounds for the appeal are, in part, “One Commissioner (who appeared to be supportive of the project at the first hearing) was absent. The City’s Historian, the HRB, 2 of the 4 Commissioners present and the Staff all supported the design as submitted. The interior sound lock will not work for all the reasons outlined at the hearing”; and
WHEREAS, on January 4, 2022, the City Council held a de novo hearing to consider the appeal and Application; and
WHEREAS, on January 4, 2022, the City Council held a duly noticed public hearing to receive public testimony regarding the appeal and Use Permit, including without limitation, information provided to the City Council by City staff and through public testimony on the conceptual design of the project; and
WHEREAS, this Resolution and its findings are made based upon evidence presented to the Commission at the hearing date including, without limitation, the staff report and attachments submitted by the Community Planning and Building Department; and WHEREAS, a Coastal Development Permit is not required pursuant to CMC 17.52.100.C, Developments Excluded from Coastal Permit Requirements –Other Improvements; and WHEREAS, the California Environmental Quality Act (California Public Resources Code §21000, et seq., “CEQA”), together with State Guidelines (14 California Code Regulations §15000, et seq., the “CEQA Guidelines”) and City Environmental Regulations (CMC 17.60) require that certain projects be reviewed for environmental impacts and that environmental documents be prepared; and
WHEREAS, pursuant to CEQA regulations, the Application is categorically exempt under Section 15303 (Class 3), New Construction or Conversion of Small Structures and no exceptions to the exemption exist pursuant to section 15300.2 of the CEQA Guidelines; and WHEREAS, notice of the public hearing was published on December 24, 2021, in compliance with State law (California Government Code 65091), as well as hand-delivery of the public notice by the Applicant to each property owner within a 100-foot radius of the project site indicating the date and time of the public hearing; and Attachment 1
Resolution No. 2022-005

WHEREAS, the City Council did hear and consider all said reports, attachments, recommendations and testimony herein above set forth and used their independent judgement to evaluate the project; and
WHEREAS, the facts set forth in the recitals are true and correct and are incorporated herein by reference.

NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Carmel-by-the-Sea does hereby DENY the appeal by Robert Carver (APP 21-415) and uphold the November 10, 2021 Planning Commission’s decision to approve Design Review application “DR 21-114” and Use Permit application “UP 21-226” with the inclusion of Special Condition of Approval #27 for the establishment of a music recording studio located on Dolores 2 Northwest 7 th Avenue in the
Central Commercial (CC) Zoning District, APN: 010-147-006, as found in Planning Commission Resolution: Resolution 2021-60-PC adopted on November 10, 2021.

Findings for Denial of Appeal
No.

1. With the sound lock on the exterior of the building, certain required findings for Design Review approval could not be made. This deliberation led to the inclusion of Special Condition of Approval #27. The findings which the Commission determined could not be made with the sound lock on the exterior of the building are:
 Inconsistencies with Commercial Design Guidelines
Cited Commercial Design Guidelines:
o These guidelines establish a series of design statements intended to conserve the historical village character and pedestrian orientation of Carmel's central commercial district. The emphasis of this document is architectural, with special attention to building facades.
 The pedestrian wall should not be without relief; it should be punctuated by occasional offsets produced by entries, window projections, small planters, and entrances to courtyards and intrablock walkways.  Large sheets of glass, unbroken by divisions, can appear too urban or modem and should be avoided.
 Conserve or create recessed entries. Should two business entries be close to one another in the same building, a single recess may be designed to accommodate both.
 Entrances to stores are typically recessed from the façade by creating a small alcove. This establishes a more definitive sense of entry and affords an alternative view of merchandise in display windows.

In addition to the findings made addressing the Commercial Design Guidelines, the following findings were made regarding the proposed project.

Attachment 1
Resolution No. 2022-005

 Dolores Street maintains the highest concentration of Historic Resources in the Downtown Conservation District within a one-block area.  Additions to historic structures are required to be differentiated, however, new materials and architectural styles to be more compatible with the historic structure.  The historic character of the property will be retained and preserved. Distinctive materials, features, spaces, and spatial relationships that characterize the property will be preserved. This (the vestibule) is not being preserved.

PASSED, APPROVED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BYTHE-SEA this 4 th day of January, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED: ATTEST:
_________________________ _________________________
Dave Potter Ashlee Wright
Mayor Acting City Clerk
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