Code sections 65583, subdivision (c) and 65583.2, subdivision (c). Please be aware, if the City fails to adopt a compliant housing element within one year from the statutory deadline, the element cannot be found in substantial compliance until all necessary rezones are completed.
Several federal, state, and regional funding programs consider housing element compliance as an eligibility or ranking criteria. For example, the CalTrans Senate Bill (SB) 1 Sustainable Communities grant, the Affordable Housing and Sustainable Communities program, and HCD’s Permanent Local Housing Allocation consider housing element compliance and/or annual reporting requirements pursuant to Government Code section 65400. With a compliant housing element, the City will meet housing element requirements for these and other funding sources.
For your information, some general plan element updates are triggered by housing element adoption. HCD reminds the City to consider timing provisions and welcomes the opportunity to provide assistance. For information, please see the Technical Advisories issued by the Governor’s Office of Planning and Research at:
https://www.opr.ca.gov/planning/general-plan/guidelines.html.
HCD appreciates the cooperation and effort the City’s housing element team provided during the housing element update and review. We are committed to assisting the City in addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Pierce Abrahamson, of our staff, at [email protected].
Sincerely,
Paul McDougall
Senior Program Manager
Enclosure
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APPENDIX
CITY OF CARMEL
The following changes are necessary to bring the City’s housing element into compliance with Article 10.6 of the Government Code. Accompanying each recommended change, we cite the supporting section of the Government Code.
Housing element technical assistance information is available on HCD’s website at https://www.hcd.ca.gov/planning-and-community-development/hcd-memos. Among other resources, the housing element section contains HCD’s latest technical assistance tool, Building Blocks for Effective Housing Elements (Building Blocks), available at https://www.hcd.ca.gov/planning-and-community-development/housing-elements/buildingblocks and includes the Government Code addressing State Housing Element Law and other resources.
A. Housing Needs, Resources, and Constraints
1. Affirmatively further[ing] fair housing in accordance with Chapter 15 (commencing with Section 8899.50) of Division 1 of Title 2…shall include an assessment of fair housing in the jurisdiction (Gov. Code, § 65583, subd. (c)(10)(A)).
Fair Housing Enforcement and Outreach: While the element describes the City as having not been found in violation of fair housing laws, it should also describe how the City proactively complies with existing fair housing laws and regulations. For additional information, please see pages 28-30 on HCD’s Affirmatively Furthering Fair Housing (AFFH) Guidance Memo at https://www.hcd.ca.gov/communitydevelopment/affh/docs/AFFH_Document_Final_4-27-2021.pdf.
Integration and Segregation: The element reports some data on income at the regional (City compared to Region) and local level (areas within the City compared to each other) but should also analyze the data for patterns and trends over time, particularly at the regional level. An analysis should address trends over time, coincidences with other components of the assessment of fair housing and incorporate local data and knowledge and other relevant factors. Examples of local data and knowledge include service providers, nonprofit developers, local foundations and city officials. Other relevant factors include zoning and land use; state and federal investments including transportation; lack of applying for state and federal resources and demographics and market conditions.
Disparities in Access to Opportunity: While the element reports data on disparities in access to education, economic, and environmental opportunities, it should also address disparities in access to transportation opportunities, including accessibility and combined transportation and housing costs experienced by protected groups. Please refer to page 35 of the AFFH guidebook (link: https://www.hcd.ca.gov/communitydevelopment/affh/docs/AFFH_Document_Final_4-27-2021.pdf).
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Disproportionate Housing Needs (Substandard Housing Conditions): While the element included some data regarding housing conditions, it must also identify any concentrations of substandard housing units or concentrations of older units in need of rehabilitation at the local level.
Identified Sites and AFFH: While the element provides some analysis regarding how sites affirmatively further fair housing, it should quantify the number of units by income category and location such as the northern and southern portions of the City. Then, the element should evaluate the impacts of identified sites on existing patterns, including addressing any isolation of the regional housing need allocation (RHNA) by income group, lack of identified sites by income groups in any areas of the City and whether the identification of sites improves or exacerbates existing patterns of socio-economic characteristics.
Contributing Factors to Fair Housing Issues: Upon a complete analysis of AFFH, the element should re-assess and prioritize contributing factors to fair housing issues.
2. Analyze any special housing needs such as elderly; persons with disabilities, including a developmental disability; large families; farmworkers; families with female heads of households; and families and persons in need of emergency shelter. (Gov. Code, § 65583, subd. (a)(7).)
Special Needs Households: The element reports data and includes a generic discussion of housing challenges faced by special needs households. However, the element must analyze the housing needs of special needs households for each special need group including seniors, farmworkers, large households, persons with disabilities including developmental disabilities and persons experiencing homelessness. An analysis should address household characteristics, trends, local knowledge such as service providers, existing resources and strategies and the magnitude of the gap in addressing those housing needs.
In addition, for farmworkers, the analysis may utilize past farmworker housing studies and other studies generally applicable to their special housing needs. For example, the element could utilize a recent study conducted by the University of California at Merced that is available at
https://clc.ucmerced.edu/sites/clc.ucmerced.edu/files/page/documents/fwhs_report_2.2. 2383.pdf. Based on the outcomes of the analysis, the element should add or modify programs to address this special housing need in the region.
3. An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period to meet the locality’s housing need for a designated income level, and an analysis of the relationship of zoning and public facilities and services to these sites. (Gov. Code, § 65583, subd. (a)(3).)
Progress in Meeting the RHNA: Table C-2 (p. C-2) currently has a placeholder for “Units permitted between June 30, 2023 and December 31, 2023”. While jurisdictions in the AMBAG region may credit units permitted, entitled, approved, or built (pipeline) since June 30, 2023, the element must demonstrate the affordability and availability of pipeline units in the planning period. Affordability should be demonstrated based on anticipated or actual rents, sales prices, or other mechanisms ensuring affordability Attachment 7
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(e.g., deed restrictions). Availability or likelihood of pipeline units being built in the planning period should address status, remaining steps, and any known barriers to development in the planning period, including other relevant factors such as the likelihood of an application or entitlement discontinuing toward development.
Realistic Capacity: The element must calculate the realistic residential capacity on identified sites and, generally, account for land use controls, site improvements and typically built densities and affordability. However, the element may utilize minimum densities. The element appears to utilize minimum densities based on Program 3.1.G (Housing Priority Overlay Zoning). However, Program 3.1.G should be revised to clearly commit to establishing minimum densities and apply for all identified sites utilizing minimum densities. For example, several sites appear to utilize minimum densities but are not proposed with the overlay zone. Otherwise, the element provides a list of sites of approved projects from the 5th cycle planning period with relevant information such as total units built, density calculations, and affordability. However, the average density of completed developments is lower than 33 du/ac, and none of the projects included units affordable to lower- and moderate-income households. As a result, the element should either provide additional supporting information that accounts for land use controls and site improvements (e.g., heights, floor area ratio (FAR), lot coverages, parking, interior courtyard) or rescale assumptions to better align with recent trends.
In addition, given the City is utilizing an overlay and several sites appear with zoning that allow 100 percent nonresidential uses, the calculations of residential capacity should account for the likelihood that sites will utilize the overlay and include a residential component. For example, to demonstrate the likelihood of utilizing the overlay, the element could discuss interest from property owners or developers. To demonstrate the likelihood of a residential component, the element could examine all development in the relevant zones and how often a residential component occurs.
Suitability of Nonvacant Sites: The element identifies nonvacant sites to accommodate the RHNA and includes a site-by-site description. However, in many cases, the element only briefly mentions existing conditions such as what could be built, structure type and the improvement to land value tier. In addition, except for sites where owner interest in residential development in the planning period is expressed, the element should evaluate the extent existing uses impede additional development. For example, the evaluation should address (a) any existing leases or other contracts or conditions that would perpetuate the existing use or prevent redevelopment of the site for additional residential development; (b) existing regulatory framework, including incentives and potential barriers such as heights, FARs and interior courtyard requirements; (c) existing versus allowable floor area; (d) indicators of turnover such as vacancy, for sale or frequent changes in use; (3) the viability of the existing use and impacts of relocation or continuing the use and (4) any other relevant factors that may preclude or promote redevelopment.
In addition, for your information, the element relies on nonvacant sites to accommodate 50 percent or more of the housing needs for lower-income households, which triggers requirements to make findings based on substantial evidence that the existing use is not an impediment and will likely discontinue in the planning period. Absent findings (e.g., Attachment 7
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adoption resolution) based on substantial evidence, the existing uses will be presumed to impede additional residential development and will not be utilized toward demonstrating adequate sites to accommodate the RHNA.
City-Owned Sites: The element identifies City-Owned sites to accommodate the RHNA but also appears to indicate that redevelopment may not be likely. Specifically, the element mentions for Sites 1 (Sunrise Center North) and 2 (Sunrise Center South) that the City is only interested if the parking needs can be met and for Site 4 (City Public Works) the element discusses the City’s interest if housing is feasible. The element should address the status of each of the City-Owned sites, necessary steps for entitlement and issuing building permits and any known barriers to development in the planning period. For example, the element should discuss the potential for meeting the parking needs of Sites 1 and 2 and the feasibility of Site 4. Based on the outcomes of this analysis, the element should either remove the sites or add or modify programs (See Finding B2 below)
Alternative Adequate Sites: The element may utilize a variety of methods to identify adequate sites and utilizes two methods (Hospitality Employee Housing and Overnight Visitor Accommodation). While the element lists several properties that could utilize the incentive programs, it should also discuss the potential for utilizing the program, recent development trends, interest or other relevant factors supporting assumptions or rescale assumptions in the planning period. For example, the element may utilize a method similar to accessory dwelling units (ADU) based on past trends. Furthermore, the element should list potential receiving sites for the transfer of development rights and analyze their suitability for development or redevelopment in the planning period.
Finally, the element should include a program to evaluate the effectiveness of these programs, including progress aligned with assumptions in the inventory, and, if development is not occurring as assumed, take alternative action by a specified date to maintain adequate sites, including but not limited to additional incentives and rezoning additional sites with appropriate zoning.
Zoning for Lower-Income Households: The element must demonstrate adopted densities appropriate to accommodate housing for lower income households. For communities with densities that meet specific standards (at least 20 units per acre for Carmel), no analysis is required (Default Density). (Gov. Code, § 65583.2, subd. (c)(3).) Otherwise, an analysis must demonstrate appropriate densities based on factors such as market demand, financial feasibility, and development experience within identified zones. To address this requirement, the element should clearly identify which zones and allowable densities are being utilized to accommodate the lower-income RHNA. If utilizing existing zoning, the element should either meet the Default Density standard or demonstrate the appropriate densities based on the factors noted above. If utilizing planned zoning, (e.g., City-owned sites, Housing Priority Overlay, SB 10), the element must include a program(s) rezoning sites to meet all by-right requirements pursuant to Government Code section 65583.2, subdivisions (h) and (i). This rezoning should not be limited to senior housing (e.g., Site 10 – Carmel Foundation).
In addition, please be aware, that the recent California appellate decision in Martinez v.
City of Clovis found that while overlays can be used in a rezone, when the base zone allows residential development, both the base zone and the overlay zone must comply Attachment 7
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with the minimum density requirements of Government Code section 65583.2, subdivision (h). The City may need to adjust its rezoning strategy if the underlying zoning for sites that will be rezoned allows minimum densities less than 20 dwelling units per acre. Martinez v. City of Clovis (2023) 90 Cal.App.5th 193, 307 Cal.Rptr.3d 64.
Environmental Constraints: While the element discusses environmental constraints, it should also address any other conditions that could preclude development in the planning period. Examples of other conditions include shape, access, contamination, relocation, title conditions, historic preservation and easements.
Infrastructure: The element describes infrastructure limitations in the City. However, it must also demonstrate sufficient total dry utility capacity (existing and planned) to accommodate the City’s RHNA for the planning period. (Gov. Code, § 65583.2, subd. (b).)
In addition, while the element includes Programs 1.2.A (Water Distribution Prioritization for Affordable Housing) and 1.2.B (Address Infrastructure Constraints) to maintain and augment the existing water supply, the program should be revised to include discrete timelines for implementation throughout the planning period.
Electronic Sites Inventory: For your information, pursuant to Government Code section 65583.3, the City must submit an electronic sites inventory with its adopted housing element. The City must utilize standards, forms, and definitions adopted by HCD.
Please see HCD’s housing element webpage at https://www.hcd.ca.gov/communitydevelopment/housing-element/index.shtml#element for a copy of the form and instructions. The City can reach out to HCD at [email protected] for technical assistance.
Zoning for a Variety of Housing Types:
• Emergency Shelters: While the element provides general information on emergency shelters, it must also describe how it complies with the requirements of Assembly Bill 2339 (2022). Among other changes, this amendment to Government Code section 65583, subdivision (a)(4) expands the definition of “emergency shelters,” specifying the type of zoning designations that must be identified to allow emergency shelters as a permitted use without a conditional use or discretionary permit and demonstrate the appropriateness of sites to accommodate emergency shelters, including analyzing proximity to transportation and services. The element must add a program committing to compliance with these requirements within one year of adoption. • Employee Housing: The element indicates the City does not have agriculturally designated land and therefore is not required to identify any zones to provide farmworker housing. The Employee Housing Act (Health and Safety Code § 17000 et seq.), specifically, sections 17021.5 and 17021.6. Section 17021.5 requires employee housing for six or fewer employees to be treated as a singlefamily structure and permitted in the same manner as other dwellings of the same type in the same zone. Section 17021.6 requires employee housing consisting of no more than 12 units or 36 beds to be permitted in the same manner as other agricultural uses in the same zone.
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The element must either demonstrate consistency with these requirements or include programs to amend zoning as appropriate. For additional information and sample analysis, see the Building Blocks at https://www.hcd.ca.gov/planningand-community-development/housing-elements/building-blocks/farmworkers. • Permanent Supportive Housing: Supportive housing shall be a use by-right in zones where multifamily and mixed uses are permitted, including nonresidential zones permitting multifamily uses pursuant to Government Code section 65651.
The element must demonstrate compliance with this requirement and include programs as appropriate.
4. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in paragraph (1) of subdivision (c), and for persons with disabilities as identified in the analysis pursuant to paragraph (7), including land use controls, building codes and their enforcement, site improvements, fees and other exactions required of developers, and local processing and permit procedures... (Gov. Code, § 65583, subd. (a)(5).)
Land Use Controls: The element must identify and analyze all relevant land use controls impacts as potential constraints on a variety of housing types (e.g., multifamily rental housing). The analysis must also evaluate the cumulative impacts of land use controls on the cost and supply of housing, feasibility, and ability to achieve minimum. The analysis should specifically address heights, FARs, lot coverage and other standards such as interior courtyards and based on the outcomes of a complete analysis, the element should include programs to address or remove the identified constraints.
Fees and Exaction: While the element describes required fees for single-family and multifamily housing development, it must analyze their impact as potential constraints on housing supply and affordability. Specifically, the element must analyze the total per unit fee cost for multifamily housing units being higher than that of total fees for single family homes as a constraint and should include programs to reduce fees for multifamily housing. For additional information and a sample analysis, see the Building Blocks at https://www.hcd.ca.gov/planning-and-community-development/housingelements/building-blocks/fees-and-exactions.
Local Processing and Permit Procedures: The element describes some typical permitting tracks under the City’s processes, including design review and conditional use permits (CUP) but should also analyze the impacts on housing cost, timing and approval certainty. The analysis should specifically address approval findings for typical development that are consistent with zoning, Forest and Beach Commission hearing and story pole requirements. The element should include programs to address or remove the identified constraints.
In addition, while the element discusses compliance with the Permit Streamlining Act, it should also discuss intersections with the California Environmental Quality Act and timing requirements, including streamlining determinations and add or modify programs as appropriate.
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Constraints on Housing for Persons with Disabilities:
• Reasonable Accommodation: While the element lists the required findings to approve a reasonable accommodation request, it should analyze the finding that approving the accommodation “will not result in a significant and unavoidable negative impact on adjacent uses or structures.” The element must analyze how this is applied and include a program to remove subjectivity, as appropriate. In addition, the element should analyze any appeals processes, including the final decision-making body and parties who can request an appeal hearing of a reasonable accommodation request.
• Conditional Use Permit: While the element commits to removing use permits for certain types of housing, the element must also fully describe the CUP approval findings for potential constraints on the development of licensed residential care facilities of seven or more persons.
B. Housing Programs
1. Include a program which sets forth a schedule of actions during the planning period, each with a timeline for implementation, which may recognize that certain programs are ongoing, such that there will be beneficial impacts of the programs within the planning period, that the local government is undertaking or intends to undertake to implement the policies and achieve the goals and objectives of the Housing Element... (Gov. Code, § 65583, subd. (c).)
To achieve a beneficial impact during the planning period, programs should include, where appropriate, specific commitment toward housing outcomes and discrete timing (e.g., at least annually). Programs should be revised as follows:
• Program 3.1A (Mixed Use Affordable Housing): This Program commits to meeting with developers and soliciting input and feedback on the City’s design guidelines and approval process. However, the Program should commit to taking actions resulting from the feedback provided by the development community. For example, the Program could commit to revising the guidelines/approval process if any constraints are identified as part of the feedback received. This Program should also be modified to include a timeline or frequency for those actions. • Program 3.1F (Expedited Processing Procedures): This Program commits to developing a policy that will shorten processing times by 50 percent for affordable housing projects by offering expedited review procedures for residential projects that will clarify and refine permit processing procedures for affordable housing to shorten processing procedures. However, the Program doesn’t describe specific actions to substantiate the quantified objective. This Program should consist of specific commitments, including but not limited to, the removal of the story pole requirement and the Forest and Beach Commission hearing requirement for affordable projects that would allow the City to reasonably achieve a 50 percent reduction in processing times.
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• Program 3.3D (Single-Room Occupancy (SRO) Units): While the element now commits to codifying SROs as a housing type, it should provide an implementation timeframe for this action.
2. Identify actions that will be taken to make sites available during the planning period with appropriate zoning and development standards and with services and facilities to accommodate that portion of the city’s or county’s share of the regional housing need for each income level that could not be accommodated on sites identified in the inventory completed pursuant to paragraph (3) of subdivision (a) without rezoning, and to comply with the requirements of Government Code section 65584.09. Sites shall be identified as needed to facilitate and encourage the development of a variety of types of housing for all income levels, including multifamily rental housing, factory-built housing, mobilehomes, housing for agricultural employees, supportive housing, single-room occupancy units, emergency shelters, and transitional housing. (Gov. Code, § 65583, subd. (c)(1).)
As noted in Finding A3, the element does not include a complete site analysis; therefore, the adequacy of sites and zoning were not established. Based on the results of a complete sites inventory and analysis; the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types. In addition, the element should be revised as follows:
Shortfall of Sites to Accommodate the Lower-Income RHNA: As noted in Finding A3, if rezoning is necessary, including appropriate densities, to accommodate the lower-income RHNA, programs should specifically commit to acreage, allowable densities and anticipated units. In addition, the program should specifically commit to rezoning that meets all by-right requirements pursuant to Government Code section 65583.2, subdivisions (h) and (i). Examples of by-right requirements include permitting all multifamily (not limited to senior housing) developments without discretionary action in which at least 20 percent of the units are affordable to lower-income households, 16 units per site, minimum densities and residential only performance standards. Based on the information in the element, these by-right and other program requirements should at least apply to City-Owned sites, some Housing Priority Overlay sites and SB 10 sites and Site 10 (Carmel Foundation).
• Minimum Densities: As noted in Finding A3, the element appears to be utilizing minimum densities to calculate residential capacity on identified sites. If so, Program 3.1.G (Housing Priority Overlay Zone) should specifically commit to establish minimum densities. Currently, the Program appears to commit to minimum densities as part of a menu of incentives. Further, the Program or another program should commit to establishing minimum densities aligned with assumptions in the inventory for all relevant zones.
• City-Owned Sites: In addition to meeting various requirements described above, Program 1.1.B (Underutilized Sites) should commit to numerical objectives consistent with assumptions in the sites inventory and a specific commitment to a Attachment 7
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schedule of actions to facilitate development in the planning period, including alternative actions completed by a specified date (e.g., by 2028) if the sites will likely not develop in the planning period. Actions should include discrete timing for outreach with developers, issuing requests for proposals, incentives, assisting with funding and entitlement and issuing building permits.
3. Address and, where appropriate and legally possible, remove governmental and nongovernmental constraints to the maintenance, improvement, and development of housing, including housing for all income levels and housing for persons with disabilities. The program shall remove constraints to, and provide reasonable accommodations for housing designed for, intended for occupancy by, or with supportive services for, persons with disabilities. (Gov. Code, § 65583, subd. (c)(3).) As noted in Finding A4, the element requires a complete analysis of potential governmental constraints. Depending upon the results of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints.
4. Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, disability, and other characteristics... (Gov. Code, § 65583, subd. (c)(5).)
As noted in Finding A1, the element must be revised to add or modify goals and actions based on the outcomes of a complete analysis. Goals and actions must specifically respond to the analysis and to the identified and prioritized contributing factors to fair housing issues and must be significant and meaningful enough to overcome identified patterns and trends. Actions must have specific commitment, metrics, and milestones as appropriate and must address housing mobility enhancement, new housing choices and affordability in high-opportunity areas, place-based strategies for community preservation and revitalization, and displacement protection.
In addition, promoting housing mobility removes barriers to higher opportunity areas and strategically enhances access to housing choices and affordability to promote more inclusive neighborhoods, cities and regions. Among other factors, the City is wholly the highest resource community in contrast to the rest of the region. As a result, the element should include significant and robust actions with numerical targets (not limited to the RHNA) to promote housing mobility and increase housing choices and affordability throughout the City. Examples include promoting more housing choices and affordability in lower density areas, religious institutional sites and enhancing ADUs and junior accessory dwelling units (JADU) and home sharing strategies.
Attachment 7
Comment
Reference HCD Section HCD Comment HCD Examples Tracking Note for HCD A Housing Needs, Resources, and Constraints
A.1 AffirmaƟvely further[ing] fair housing in accordance with Chapter 15 (commencing withSecƟon 8899.50) of Division 1 of Title 2...shall include an assessment of fair housing inthe jurisdicƟon. (Gov. Code, § 65583, subd. (c)(10)(A).) A.1.1 Fair Housing Enforcement and Outreach: While the element describes the City as having not been found in violation of fair housing laws, it should also describe how the City proactively complies with existing fair housing laws and regulations.
For additional information, please see pages 28‐30 on HCD’s Affirmatively Furthering Fair Housing (AFFH) Guidance Memo at https://www.hcd.ca.gov/community‐ development/affh/docs/AFFH_Document_Final_4‐27‐2021.pdf.
Edits to address this comment were made in Appendix A.Appendix A, subsection A.7, heading "Compliance with State Fair Housing Law" has been updated to state how the City complies with the laws listed (P. A‐87 to A‐ 88).
A.1.2 Integration and Segregation: The element reports some data on income at the regional (City compared to Region) and local level (areas within the City compared to each other) but should also analyze the data for patterns and trends over time, particularly at the regional level. An analysis should address trends over time, coincidences with other components of the assessment of fair housing and incorporate local data and knowledge and other relevant factors.
Examples of local data and knowledge include service providers, nonprofit developers, local foundations and city officials. Other relevant factors include zoning and land use; state and federal investments including transportation; lack of applying for state and federal resources and demographics and market conditions.
Edits to address this comment were made in Appendix A. Revisions to integration and segregation related to income and racial characteristics are addressed on pages A‐14 to A‐33. Integration and segregation related to special needs groups is located on pages A‐45 to A‐60. Our analysis ties these trends at the regional and local levels to disparities in access to opportunity on pages A‐60 to A‐68.
A.1.3 Disparities in Access to Opportunity: While the element reports data on disparities in access to education, economic, and environmental opportunities, it should also address disparities in access to transportation opportunities, including accessibility and combined transportation and housing costs experienced by protected groups.
Please refer to page 35 of the AFFH guidebook (link: https://www.hcd.ca.gov/community‐ development/affh/docs/AFFH_Document_Final_4‐27‐2021.pdf).
Edits to address this comment have been made in Appendix A.Appendix A has been revised to provide further analysis on transit disparities (P. A‐ 67, and housing and transportation costs for special needs group (P. A‐41 to A‐56).
A.1.4 Disproportionate Housing Needs (Substandard Housing Conditions): While the element included some data regarding housing conditions, it must also identify any concentrations of substandard housing units or concentrations of older units in need of rehabilitation at the local level.
Edits to address this comment have been made in Appendix A.Appendix A has been revised to provide further analysis of substandard housing and/or concentrations of units in need of rehabilitation (P. A‐79 to A‐80).
A.1.5 Identified Sites and AFFH: While the element provides some analysis regarding how sites affirmatively further fair housing, it should quantify the number of units by income category and location such as the northern and southern portions of the City. Then, the element should evaluate the impacts of identified sites on existing patterns, including addressing any isolation of the regional housing need allocation (RHNA) by income group, lack of identified sites by income groups in any areas of the City and whether the identification of sites improves or exacerbates existing patterns of socio‐economic characteristics.
Edits to address this comment have been made in Appendix C, Section C.6. A full AFFH analysis of sites has been added to this appendix (P. C‐75 to C‐101).
A.1.6 Contributing Factors to Fair Housing Issues: Upon a complete analysis of AFFH, the element should re‐assess and prioritize contributing factors to fair housing issues.
Edits to address contributing factors have been made in Chapter 2 and Appendix A. Chapter 2 (P. 2‐3) and Appendix A (P. A‐90 to A‐93) were updated to include revised contributing factors.
A.2 Analyze any special housing needs such as elderly; persons with disabilities, including a developmental disability; large families; farmworkers; families with female heads of households; and families and persons in need of emergency shelte A.2.1 Special Needs Households : The element reports data and includes a generic discussion of housing challenges faced by special needs households. However, the element must analyze the housing needs of special needs households for each special need group including seniors, farmworkers, large households, persons with disabilities including developmental disabilities and persons experiencing homelessness. An analysis should address household characteristics, trends, local knowledge such as service providers, existing resources and strategies and the magnitude of the gap in addressing those housing needs.In addition, for farmworkers, the analysis may utilize past farmworker housing studies and other studies generally applicable to their special housing needs.
For example, the element could utilize a recent study conducted by the University of California at Merced that is available at https://clc.ucmerced.edu/sites/clc.ucmerced.edu/files/page/documents/fwhs_report_2.2. 2383.pdf. Based on the outcomes of the analysis, the element should add or modify programs to address this special housing need in the region.
Edits to address this comment were made in Appendix A.Appendix A has been revised to include further analysis of special needs households as guided by the HCD comment (P. A‐41 to A‐59).
A.3 An inventory of land suitable and available for residenƟal development, including vacantsites and sites having realisƟc and demonstrated potenƟal for redevelopment during theplanning period to meet the locality’s housing need for a de A.3.1 Progress in Meeting the RHNA: Table C‐2 (p. C‐2) currently has a placeholder for “Units permitted between June 30, 2023 and December 31, 2023 ”. While jurisdictions in the AMBAG region may credit units permitted, entitled, approved, or built (pipeline) since June 30, 2023, the element must demonstrate the affordability and availability of pipeline units in the planning period. Affordability should be demonstrated based on anticipated or actual rents, sales prices, or other mechanisms ensuring affordability (e.g., deed restrictions). Availability or likelihood of pipeline units being built in the planning period should address status, remaining steps, and any known barriers to development in the planning period, including other relevant factors such as the likelihood of an application or entitlement discontinuing toward development.
Edits to address this comment were made in Appendix C. Appendix C has been revised to update Table C‐2, to include updated numbers for units permitted between June 30, 2023 and December 31, 2023 based on pipeline projects (P. C‐2).
A.3.2 Realistic Capacity: The element must calculate the realistic residential capacity on identified sites and, generally, account for land use controls, site improvements and typically built densities and affordability. However, the element may utilize minimum densities. The element appears to utilize minimum densities based on Program 3.1.G (Housing Priority Overlay Zoning). However, Program 3.1.G should be revised to clearly commit to establishing minimum densities and apply for all identified sites utilizing minimum densities.In addition, given the City is utilizing an overlay and several sites appear with zoning that allow 100 percent nonresidential uses, the calculations of residential capacity should account for the likelihood that sites will utilize the overlay and include a residential component.
For example, several sites appear to utilize minimum densities but are not proposed with the overlay zone. Otherwise, the element provides a list of sites of approved projects from the 5th cycle planning period with relevant information such as total units built, density calculations, and affordability. However, the average density of completed developments is lower than 33 du/ac, and none of the projects included units affordable to lower‐ and moderate‐income households. As a result, the element should either provide additional supporting information that accounts for land use controls and site improvements (e.g., heights, floor area ratio (FAR), lot coverages, parking, interior courtyard) or rescale assumptions to better align with recent trends.For example, to demonstrate the likelihood of utilizing the overlay, the element could discuss interest from property owners or developers. To demonstrate the likelihood of a residential component, the element could examine all development in the relevant zones and how often a residential component occurs.
Edits to address this comment were made in Appendix C and Chapter 2.Apendix C has been revised to include a clear realistic capacity analysis for each individual site. This analysis includes accounting for adjustment factors such as land use controls, site improvements, typical densities, and affordability (P. C‐14; P. C‐20 to C‐71).City staff are no longer utilizing a Housing Priority Overlay Zone. Instead, the City has committed to establishing a minimum density of 33 du/ac for the base zoning of all Commercial Zoning Districts (SC, RC, and CC) and the Multi‐Family Residential (R‐4) Zoning District. Without establishing a minimum density, the Commercial Districts permit 0‐22 du/ac and the Multi‐Family Residential district permits a maximum of 33 du/ac unless enabling a maximum of 44 du/ac with affordable units (P. C‐8). Chapter 2 has been revised to update Program 3.1.G, which has been revised to eliminate the Housing Priority Overlay Zone, and instead establishes implementation procedures and monitoring for the establishment of a minimum density of 33 du/ac to the base zoning for Commercial Districts and the Multi‐Family Residential District (P. 2‐21). This intention is rooted in enabling the construction of more residential units, rather than enabling larger units at a lower yield. Appendix C has been further updated to include a list of pipeline projects that utilize a minimum density of 33 du/ac in the Commercial District (P. C‐16 to C‐17). As well as, a list of projects that developed during the 5th Cycle, utilizing similar densities in the Commercial District (P. C‐11 to C‐13). These projects include many second story residential additions No single story developments have A.3.3 Suitability of Nonvacant Sites: The element identifies nonvacant sites to accommodate the RHNA and includes a site‐by‐site description. However, in many cases, the element only briefly mentions existing conditions such as what could be built, structure type and the improvement to land value tier. In addition, except for sites where owner interest in residential development in the planning period is expressed, the element should evaluate the extent existing uses impede additional development.In addition, for your information, the element relies on nonvacant sites to accommodate 50 percent or more of the housing needs for lower‐income households, which triggers requirements to make findings based on substantial evidence that the existing use is not an impediment and will likely discontinue in the planning period. Absent findings (e.g., adoption resolution) based on substantial evidence, the existing uses will be presumed to impede additional residential development and will not be utilized toward demonstrating adequate sites to accommodate the RHNA.
For example, the evaluation should address (a) any existing leases or other contracts or conditions that would perpetuate the existing use or prevent redevelopment of the site for additional residential development; (b) existing regulatory framework, including incentives and potential barriers such as heights, FARs and interior courtyard requirements; (c) existing versus allowable floor area; (d) indicators of turnover such as vacancy, for sale or frequent changes in use; (3) the viability of the existing use and impacts of relocation or continuing the use and (4) any other relevant factors that may preclude or promote redevelopment.
Edits to address this comment have been made in Appendix C. Appendix C has been revised to include a section addressing nonvacant sites to accommodate 50 percent or more of the housing needs for lower‐income households (P. C‐10 to C‐14). Additionally, a section has been added to provide context for projects that were completed during the 5th cycle and recent development trends in the Commercial District (P. C‐11 to C‐13). The majority of the City's sites are located in the Commercial District, where underutilized sites are most likely to develop in the eight‐year planning cycle. The City's Municipal Code requires that all newly constructed second story floor area, including area in new buildings, remodeled buildings and replacement, rebuilt of reconstructed buildings, shall be occupied by residential dwellings only and shall not be used for any commercial use (CMC 17.14.050F). This requirement has not been an impediment to commercial development, and instead has resulted in the addition of several residential second story units. Many sites included in the Sites Inventory include property owner development intentions for second story residential additions.
A.3.4 City‐Owned Sites: The element identifies City‐Owned sites to accommodate the RHNA but also appears to indicate that redevelopment may not be likely. Specifically, the element mentions for Sites 1 (Sunrise Center North) and 2 (Sunrise Center South) that the City is only interested if the parking needs can be met and for Site 4 (City Public Works) the element discusses the City’s interest if housing is feasible. The element should address the status of each of the City‐Owned sites, necessary steps for entitlement and issuing building permits and any known barriers to development in the planning period.
For example, the element should discuss the potential for meeting the parking needs of Sites 1 and 2 and the feasibility of Site 4. Based on the outcomes of this analysis, the element should either remove the sites or add or modify programs (See Finding B2 below) Edits related to this comment were made in Appendix C and Chapter 2. Appendix C has been revised to clearly state the City's interest and development intentions for Sites #1 and #2 (Sunset Center North and South Parking Lots). This includes the City's intentions to develop housing over podium parking. Anticipated funding for the development of podium parking has also been clarified in the individual sites analyses. Chapter 2 has been revised to update Program 1.1.B to give clear committments in regard to the Surplus Land Act process (P. 2‐6).The analysis for Site #3 (Vista Lobos) has been updated to include more specific details regarding the City's intention for development, including the use of the City's Bonus Density to enable a higher density of 44 du/ac for affordable units.
A.3.5 Alternative Adequate Sites: The element may utilize a variety of methods to identify adequate sites and utilizes two methods (Hospitality Employee Housing and Overnight Visitor Accommodation). While the element lists several properties that could utilize the incentive programs, it should also discuss the potential for utilizing the program, recent development trends, interest or other relevant factors supporting assumptions or rescale assumptions in the planning period. Furthermore, the element should list potential receiving sites for the transfer of development rights and analyze their suitability for development or redevelopment in the planning period.Finally, the element should include a program to evaluate the effectiveness of these programs, including progress aligned with assumptions in the inventory, and, if development is not occurring as assumed, take alternative action by a specified date to maintain adequate sites, including but not limited to additional incentives and rezoning additional sites with appropriate zoning.
For example, the element may utilize a method similar to accessory dwelling units (ADU) based on past trends.
Edits to address this comment have been made in Appendix C and Chapter 2. Appendix C has been revised to clarify the City's intentions for the use of Overnight Visitor Accommodation sites to a) encourage lower income housing for employees by incentivizing the development of a single unit upon receiving building permits for remodel/repair of these sites; and b) to encourage the transfer of development rights for multi‐family rental residence at Overnight Visitor Accommodation sites that meet eligibility criteria (P. C‐72 to C‐74).Chapter 2 has been updated to revise Program 1.3.B and Program 1.3.D to include clear mid‐cycle objectives and actions should the program not receive interest (P. 2‐8 and P. 2‐10).
A.3.6 Zoning for Lower‐Income Households: The element must demonstrate adopted densities appropriate to accommodate housing for lower income households. For communities with densities that meet specific standards (at least 20 units per acre for Carmel), no analysis is required (Default Density). (Gov. Code, § 65583.2, subd. (c)(3).) Otherwise, an analysis must demonstrate appropriate densities based on factors such as market demand, financial feasibility, and development experience within identified zones. To address this requirement, the element should clearly identify which zones and allowable densities are being utilized to accommodate the lower‐income RHNA. If utilizing existing zoning, the element should either meet the Default Density standard or demonstrate the appropriate densities based on the factors noted above. If utilizing planned zoning, (e.g., City‐owned sites, Housing Priority Overlay, SB 10), the element must include a program(s) rezoning sites to meet all by‐right requirements pursuant to Government Code section 65583.2, subdivisions (h) and (i). This rezoning should not be limited to senior housing (e.g., Site 10 – Carmel Foundation).In addition, please be aware, that the recent California appellate decision in Martinez v. City of Clovis found that while overlays can be used in a rezone, when the base zone allows residential development, both the base zone and the overlay zone must comply with the minimum density requirements of Government Code section 65583.2, subdivision (h). The City may need to adjust its rezoning strategy if the underlying zoning for sites that will be rezoned allows minimum densities less than 20 dwelling units per acre. Martinez v. City of Clovis (2023) 90 Cal.App.5th 193, 307 Cal.Rptr.3d 64.
Edits to address this comment have been made in Appendix C and Chapter 2. Please note: Site number have changed since the prior draft.Appendix C has been revised to include a section clarifying which zones are intended to accommodate lower‐income housing, as well as their default densities (P. C‐8). Also included, is clarifying information regarding which strategies are being utilized to accommodate lower‐income housing including, Surplus Land Act, SB 10, and utlizing a newly established minimum density. No sites are intended to be rezoned, with the exception of Sites #5 (First Church of Christ Parking Lot), #6 (American Red Cross), and #10 (American Legion). These sites are intended to utilize SB 10. Full details are provided in Appendix C. Chapter 2 has also been revised to update Program 1.3.I, which establishes and monitors the regulatory process to enable SB 10 for these sites (P. 2‐12 to 2‐13). Chapter 2 has been revised to update Program 3.1.G, as previously noted (P. 2‐21).
A.3.7 Environmental Constraints: While the element discusses environmental constraints, it should also address any other conditions that could preclude development in the planning period.
Examples of other conditions include shape, access, contamination, relocation, title conditions, historic preservation and easements.
Edit to address this comment have been made in Appendix C.Appendix C has been revised to list environmental constraints as they apply for each invidual site (P. C‐21 to C‐71).
A.3.8 Infrastructure: The element describes infrastructure limitations in the City.
However, it must also demonstrate sufficient total dry utility capacity (existing and planned) to accommodate the City’s RHNA for the planning period. (Gov. Code, § 65583.2, subd. (b).)In addition, while the element includes Programs 1.2.A (Water Distribution Prioritization for Affordable Housing) and 1.2.B (Address Infrastructure Constraints) to maintain and augment the existing water supply, the program should be revised to include discrete timelines for implementation throughout the planning period.
Edits to address this comment have been made in Appendix B, Appendix C, and Chapter 2.Appendix B, section titled, "Water Supply," is also included in the housing element to describe the City's water supply status and efforts to provide sufficient water for new residential development. (P. B‐1 to B‐3)Appendix C has been revised to include a section addressing dry utility capacity for the Sites Inventory, as well as detailing infrastructure capacity for each individual site (P. C‐14). Chapter 2, Programs 1.2.A and 1.2.B, are also included to address priority water services for affordable developments and the City's commitment to improving infrastructure (P. 2‐6 and 2‐7).
A.3.9 Electronic Sites Inventory: For your information, pursuant to Government Code section 65583.3, the City must submit an electronic sites inventory with its adopted housing element. The City must utilize standards, forms, and definitions adopted by HCD. Please see HCD’s housing element webpage at https://www.hcd.ca.gov/community‐ development/housing‐element/index.shtml#element for a copy of the form and instructions. The City can reach out to HCD at [email protected] for technical assistance
A.3.10 Zoning for a Variety of Housing Types:
• Emergency Shelters: While the element provides general information on emergency shelters, it must also describe how it complies with the requirements of Assembly Bill 2339 (2022). Among other changes, this amendment to Government Code section 65583, subdivision (a)(4) expands the definition of “emergency shelters,” specifying the type of zoning designations that must be identified to allow emergency shelters as a permitted use without a conditional use or discretionary permit and demonstrate the appropriateness of sites to accommodate emergency shelters, including analyzing proximity to transportation and services. The element must add a program committing to compliance with these requirements within one year of adoption.• Employee Housing: The element indicates the City does not have agriculturally designated land and therefore is not required to identify any zones to provide farmworker housing. The Employee Housing Act (Health and Safety Code § 17000 et seq.), specifically, sections 17021.5 and 17021.6. Section 17021.5 requires employee housing for six or fewer employees to be treated as a single‐ family structure and permitted in the same manner as other dwellings of the same type in the same zone. Section 17021.6 requires employee housing consisting of no more than 12 units or 36 beds to be permitted in the same manner as other agricultural uses in the same zone. The element must either demonstrate consistency with these requirements or include programs to amend zoning as appropriate. For additional information and sample analysis, see the Building Blocks at https://www.hcd.ca.gov/planning‐ and‐community‐development/housing‐elements/building‐blocks/farmworkers.
Edits to address this comment have been made in Appendix A, Appendix B, and Chapter 2.Appendix A has been revised to address employee housing and farmworker housing (P. A‐56 and A‐57) and a new program (1.3.F) was added to Chapter 2 (P. 2‐11).Appendix B has been revised to address transitional/supportive housing requirements (P. B‐23 and B‐24). Additionally, Appendix B has been revised to address the suitability of emergency shelters in the City (P. B‐24 and B‐25), and references Program 1.3.J (P. 2‐13), which establishes an amendment to the Municipal Code to define emergency shelters and clarifies they are permitted by‐right in the CC, SC, and RC zones, which allow residential uses. Chapter 2 has been revised to include Program 1.3.F, which establishes an amendment to the Municipal Code to meet State requirements for employee housing (P. 2‐11 and 2‐12). Additionally, Program 3.3.A has been added, which establishes an amendment to the Municipal Code to meet State requireemnts for transitional/supportive housing (P. 2‐22). Program 1.3.J has been added to Chapter 2 to address emergency shelter requirements in compliance with AB 2339 Statutes of 2022 (P. 2‐13).
A.4 An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in paragraph (1) of subdivision (c), and for person A.4.1 Land Use Controls: The element must identify and analyze all relevant land use controls impacts as potential constraints on a variety of housing types (e.g., multifamily rental housing). The analysis must also evaluate the cumulative impacts of land use controls on the cost and supply of housing, feasibility, and ability to achieve minimum. The analysis should specifically address heights, FARs, lot coverage and other standards such as interior courtyards and based on the outcomes of a complete analysis, the element should include programs to address or remove the identified constraints.
Edits to addres this comment have been made in Appendix B. Appendix B has been updated to evaluate the cumulative impacts of land use controls on the cost of housing, feasibility, and ability to acheive minimum densities. The analysis addresses FAR, density, height, lot coverage, interior courtyards and intra‐block walkways (P. B‐11 to B‐19).
A.4.2 Fees and Exaction: While the element describes required fees for single‐ family and multifamily housing development, it must analyze their impact as potential constraints on housing supply and affordability. Specifically, the element must analyze the total per unit fee cost for multifamily housing units being higher than that of total fees for single family homes as a constraint and should include programs to reduce fees for multifamily housing.
For additional information and a sample analysis, see the Building Blocks at https://www.hcd.ca.gov/planning‐and‐community‐development/housing‐ elements/building‐blocks/fees‐and‐exactions.
Edits to address this comment have been made in Appendix B.Appendix B has been updated to include a clear analysis of the potential constraints that fees for single‐family and multi‐family developments may pose on housing supply and affordability. A per unit analysis was added for multifamily housing (P. B‐43 to B‐45).
A.4.3 Local Processing and Permit Procedures: The element describes some typical permitting tracks under the City’s processes, including design review and conditional use permits (CUP) but should also analyze the impacts on housing cost, timing and approval certainty. The analysis should specifically address approval findings for typical development that are consistent with zoning, Forest and Beach Commission hearing and story pole requirements. The element should include programs to address or remove the identified constraints.In addition, while the element discusses compliance with the Permit Streamlining Act, it should also discuss intersections with the California Environmental Quality Act and timing requirements, including streamlining determinations and add or modify programs as appropriate.
Edits to address this comment have been made in Appendix B.Appendix B has been updated to clearly state the approval findings for typical development that are consistent with zoning (Pages B‐34‐36); and the application process, approval findings, and hearings related to the Forest and Beach Commission (P. B‐35 to B‐37)Additionally, Appendix B has been updated to clarify the Local Coastal Program's required development process, which requires the use of story poles to determine the potential obstruction of signficant coastal views by proposed development (P. B‐53). Lastly, Appendix B has been updated to discuss intersections with CEQA and processing timing requirements (Page B‐48‐49) A.4.4 Constraints on Housing for Persons with Disabilities:
• Reasonable Accommodation: While the element lists the required findings to approve a reasonable accommodation request, it should analyze the finding that approving the accommodation “will not result in a significant and unavoidable negative impact on adjacent uses or structures.” The element must analyze how this is applied and include a program to remove subjectivity, as appropriate. In addition, the element should analyze any appeals processes, including the final decision‐making body and parties who can request an appeal hearing of a reasonable accommodation request.• Conditional Use Permit: While the element commits to removing use permits for certain types of housing, the element must also fully describe the CUP approval findings for potential constraints on the development of licensed residential care facilities of seven or more persons.
Edits to address this comment have been made in Appendix B and Chapter 2.Appendix B has been updated to include the reviewing authority and appeals process for requests for reasonable accommodation (P. B‐26 and B‐27). Appendix B has also been updated to describe the CUP findings process for Residential Care Facilities (P. B‐28 and B‐29). Chapter 2 has been revised to include Program 3.2.A to amend the City's Municipal Code language (P. 2‐22). Program 1.4.A has also been revised to propose the elimination of CUP for multi‐family housing and community care facilities (P. 2‐13 and 2‐14).
B Housing Programs
B.1 Include a program which
sets forth a schedule of actions during the planning period, each with a timeline for implementation, which may recognize that certain programs are ongoing, such that there will be
To achieve a beneficial impact during the planning period, programs should include, where appropriate, specific commitment toward housing outcomes and discrete timing (e.g., at least annually). Programs should be revised as follows:
Edits to address this comment have been made in Chapter 2. Chapter 2 has been updated with discrete timelines and quantified objectives. Table 2‐1, Quantified Objectives, has also been updated to reflect revised program objectives (P. 2‐3).
B.1.1 Program 3.1A (Mixed Use Affordable Housing): This Program commits to meeting with developers and soliciting input and feedback on the City’s design guidelines and approval process. However, the Program should commit to taking actions resulting from the feedback provided by the development community. For example, the Program could commit to revising the guidelines/approval process if any constraints are identified as part of the feedback received. This Program should also be modified to include a timeline or frequency for those actions.
Edits to address this comment have been made in Chapter 2.Chapter 2 has been revised to update Program 3.1.A (P. 2‐18 and 2‐19).
B.1.2 Program 3.1F (Expedited Processing Procedures): This Program commits to developing a policy that will shorten processing times by 50 percent for affordable housing projects by offering expedited review procedures for residential projects that will clarify and refine permit processing procedures for affordable housing to shorten processing procedures. However, the Program doesn’t describe specific actions to substantiate the quantified objective. This Program should consist of specific commitments, including but not limited to, the removal of the story pole requirement and the Forest and Beach Commission hearing requirement for affordable projects that would allow the City to reasonably achieve a 50 percent reduction in processing times.
Edits to address this comment were made in Appendix B and Chapter 2. Appendix B has been updated to clearly state Coastal Act requirements to provide a visual analysis for new developments within the coastal zone to determine if significant coastal views are at risk of obstruction (P. B‐53). Chapter 2 was updated to include specific actions to substantiate the quanitified objective for Program 3.1.F (P. 2‐21). Story pole requirements are not addressed in this program, as they are required through the Coastal Act.
B.1.3 Program 3.3.D (Single‐Room Occupancy (SRO) Units): While the element now commits to codifying SROs as a housing type, it should provide an implementation timeframe for this action.
Edits to address this comment were made in Chapter 2. Chapter 2 was updated to revise Program 3.3.D to provide a clear implementation timeframe for the codifying of SROs in the Municipal Code (P. 2‐24).
B.2 Identify actions that will
be taken to make sites available during the planning period with appropriate zoning and development standards and with services and facilities to accommodate that portion of the city’s or county’s share of the regional housing need for
As noted in Finding A3, the element does not include a complete site analysis; therefore, the adequacy of sites and zoning were not established. Based on the results of a complete sites inventory and analysis; the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types. In addition, the element should be revised as follows:
Edits to address this comment were made in Appendix C and Chapter 2. As previously noted, Appendix C has been updated to clarify the zoning districts and densities utilized to encourage a variety of housing types (P. C‐8 and C‐14). Chapter 2 includes several programs to amend the Municipal Code to accommodate the development of housing to meet the City's RHNA goals.
B.2.1 Shortfall of Sites to Accommodate the Lower‐Income RHNA: As noted in Finding A3, if rezoning is necessary, including appropriate densities, to accommodate the lower‐income RHNA, programs should specifically commit to acreage, allowable densities and anticipated units. In addition, the program should specifically commit to rezoning that meets all by‐right requirements pursuant to Government Code section 65583.2, subdivisions (h) and (i). Examples of by‐right requirements include permitting all multifamily (not limited to senior housing) developments without discretionary action in which at least 20 percent of the units are affordable to lower‐income households, 16 units per site, minimum densities and residential only performance standards. Based on the information in the element, these by‐right and other program requirements should at least apply to City‐Owned sites, some Housing Priority Overlay sites and SB 10 sites and Site 10 (Carmel Foundation).
Edits to address this comment were made in Appendix C and Chapter 2. As previously noted, no sites are intended to be rezoned, with the exception of three (3) sites intended to utilize SB 10 to maximize residential development potential. Please refer to row 19 in this spreadsheet for more details regarding SB 10 intentions for these sites. Details of revisions in Chapter 2 pertaining to the SB 10 sites are also included.
B.2.2 Minimum Densities: As noted in Finding A3, the element appears to be utilizing minimum densities to calculate residential capacity on identified sites. If so, Program 3.1.G (Housing Priority Overlay Zone) should specifically commit to establish minimum densities. Currently, the Program appears to commit to minimum densities as part of a menu of incentives. Further, the Program or another program should commit to establishing minimum densities aligned with assumptions in the inventory for all relevant zones.
Edits to address this comment were made in Appendix C and Chapter 2. As previously stated, Appendix C has been revised to include a realistic capacity analysis for each individual site. Minimum densities were used for Commercial and Multi‐Family Residential zoned sites.Chapter 2 has been revised to update Program 3.1.G (P. 2‐21). The program has been revised to eliminate the Housing Priority Overlay Zone, and instead establishes implementation procedures and monitoring for the establishment of a minimum density of 33 du/ac for the base zoning for Commercial Districts and the Multi‐Family Residential District.
B.2.3 City‐Owned Sites: In addition to meeting various requirements described above, Program 1.1.B (City‐Owned Sites) should commit to numerical objectives consistent with assumptions in the sites inventory and a specific commitment to a schedule of actions to facilitate development in the planning period, including alternative actions completed by a specified date (e.g., by 2028) if the sites will likely not develop in the planning period. Actions should include discrete timing for outreach with developers, issuing requests for proposals, incentives, assisting with funding and entitlement and issuing building permits.
Edits to address this comment were made in Chapter 2.Chapter 2 has been revised to update Program 1.1.B, to include quantified objectives that are consistent with assumptions presented in the Sites Inventory and a specific committment to a schedule of actions to facilitate development in the planning period (P. 2‐4).Details for each City‐owned site have been included in Appendix C (P. C‐21 to C‐ 28) and reference Program 1.1.B.
B.3 Address and, where appropriate and legally possible, remove governmental and nongovernmental constraints to the maintenance, improvement, and development of housing, including housing for all income levels and housing for person B.3.1
As noted in Finding A4, the element requires a complete analysis of potential governmental constraints. Depending upon the results of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints.
Refer to finding A4, column E for revisions made to address this comment.
B.4 Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, d B.4.1 As noted in Finding A1, the element must be revised to add or modify goals and actions based on the outcomes of a complete analysis. Goals and actions must specifically respond to the analysis and to the identified and prioritized contributing factors to fair housing issues and must be significant and meaningful enough to overcome identified patterns and trends. Actions must have specific commitment, metrics, and milestones as appropriate and must address housing mobility enhancement, new housing choices and affordability in high‐opportunity areas, place‐based strategies for community preservation and revitalization, and displacement protection.In addition, promoting housing mobility removes barriers to higher opportunity areas and strategically enhances access to housing choices and affordability to promote more inclusive neighborhoods, cities and regions. Among other factors, the City is wholly the highest resource community in contrast to the rest of the region. As a result, the element should include significant and robust actions with numerical targets (not limited to the RHNA) to promote housing mobility and increase housing choices and affordability throughout the City.
Examples include promoting more housing choices and affordability in lower density areas, religious institutional sites and enhancing ADUs and junior accessory dwelling units (JADU) and home sharing strategies.
Edits to address this comment were made in Appendix A.A "Housing Mobility Enhancement" section was added to Appendix A (P. A‐67 to A‐ 68).
STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
DIVISION OF HOUSING POLICY DEVELOPMENT
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
(916) 263-2911 / FAX (916) 263-7453
www.hcd.ca.gov
March 20, 2024
Brandon Swanson, Planning Director
Community Planning and Building Department
City of Carmel
P.O Box CC
Carmel-by-the-Sea, CA 93921
Dear Brandon Swanson:
RE: City of Carmel’s 6th Cycle (2023-2031) Revised Draft Housing Element Thank you for submitting the City of Carmel’s (City) revised draft housing element that was received for review on January 24, 2024 along with revisions on March 8, 2024.
The review was facilitated by a conversation on February 7, 2024 with Marnie Waffle.
Pursuant to Government Code section 65585, the California Department of Housing and Community Development (HCD) is reporting the results of its review. In addition, HCD considered public comments from Victoria Beach, Richard Pepe, and Brian Wilke, pursuant to Government Code section 65585, subdivision (c).
The revised draft element addresses many statutory requirements; however, revisions will be necessary to substantially comply with State Housing Element Law (Gov. Code, § 65580 et seq). The revisions needed to comply with State Housing Element Law.
1. An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period to meet the locality’s housing need for a designated income level, and an analysis of the relationship of zoning and public facilities and services to these sites. (Gov. Code, § 65583, subd. (a)(3).) Identify actions that will be taken to make sites available during the planning period with appropriate zoning and development standards and with services… facilitate and encourage the development of a variety of types of housing…(Gov.
Code, § 65583, subd. (c)(1).)
Progress toward the Regional Housing Need Allocation (RHNA): The element now incorporates pipeline units, affordability metrics, and development barriers.
However, the revised element now has data inconsistencies across Tables C-2 through C-4. For example, Table C-3 states that ten Low Income (LI) ADUs are projected alongside seven pipeline units, while Table C-4 lists seven LI ADUs and zero LI units. Similar inconsistencies exist across all three tables. Revisions Attachment 9
Brandon Swanson, Planning Director
are necessary to correct these potential inconsistencies while ensuring that no units, including ADUs, are double-counted across site categories. Please note that depending on the data verification results, housing opportunities or sites for very low-income (VLI) households may need to be identified and evaluated to accommodate the VLI RHNA. Based on the outcomes of this analysis, the element should add or modify programs, as appropriate.
Electronic Sites Inventory: For your information, pursuant to Government Code section 65583.3, the City must submit an electronic sites inventory with its adopted housing element. The City must utilize standards, forms, and definitions adopted by HCD. Please see HCD’s housing element webpage at https://www.hcd.ca.gov/community-development/housingelement/index.shtml#element for a copy of the form and instructions. The City can reach out to HCD at [email protected] for technical assistance.
Zoning for a Variety of Housing Types (Employee Housing): The element indicates the City does not have agriculturally designated land and therefore, is not required to identify any zones to provide farmworker housing. However, the Employee Housing Act (Health and Safety Code § 17000 et seq.) is not limited to farmworkers. Specifically, Section 17021.5 requires employee housing for six or fewer employees to be treated as a single-family structure and permitted in the same manner as other dwellings of the same type in the same zone. The element must either demonstrate consistency with this requirement or include a program action to amend zoning, as appropriate.
2. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in paragraph (1) of subdivision (c), and for persons with disabilities as identified in the analysis pursuant to paragraph (7), including land use controls, building codes and their enforcement, site improvements, fees and other exactions required of developers, and local processing and permit procedures... (Gov. Code, § 65583, subd. (a)(5).) Address and, where appropriate and legally possible, remove governmental and nongovernmental constraints to the maintenance, improvement, and development of housing, including housing for all income levels and housing for persons with disabilities. The program shall remove constraints to, and provide reasonable accommodations for housing designed for, intended for occupancy by, or with supportive services for, persons with disabilities. (Gov. Code, § 65583, subd. (c)(3).)
Land Use Controls: The element has been revised to incorporate some analysis of land use control impacts as potential constraints on a variety of housing types.
However, the analysis must address the cumulative impacts of all relevant land use controls on the cost and supply of housing, feasibility, and ability to achieve minimum densities. Specifically, the analysis should still address open space and interior courtyard requirements for impacts on housing supply (number of units) Attachment 9
Brandon Swanson, Planning Director
and costs and the ability to achieve maximum densities. The element may use sample or recent projects to demonstrate cumulative impact of land use controls.
Lastly, the element should add or modify programs to address identified constraints.
Housing for Persons with Disabilities (Reasonable Accommodation): The element now describes the City’s reasonable accommodation procedure but should clarify whether the definition of aggrieved parties allows a third-party to request an appeal hearing and, if so, evaluate the impacts on housing for persons with disabilities and add or modify programs to address identified constraints. For example, a program could be added to allow only the applicant or potential beneficiary of the reasonable accommodation request to request an appeal hearing.
3. Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, disability, and other characteristics... (Gov. Code, § 65583, subd. (c)(5).) Housing mobility removes barriers to higher opportunity areas and strategically enhances access to housing choices and affordability to promote more inclusive neighborhoods, cities, and regions. Among other factors, the City is wholly the highest resource community in contrast to the rest of the region. As a result, the element should include significant and robust actions with numerical targets (not limited to the RHNA) to promote housing mobility and increase housing choices and affordability throughout the City. While the element has been revised to include Program 3.2B (and associated programs) that outline several actions and strategies to promote housing mobility, it should be modified to enhance housing mobility strategies. Program 3.2B includes a list of housing mobility actions the City will pursue such as encouraging missing middle zoning under the condition that the City produce 187 housing opportunities (the City’s lower-income RHNA) affordable to lower income households by 2027. However, actions to affirmatively further fair housing (AFFH) should not be limited by the RHNA. The City should commit to employing the outlined midcycle alternative actions as primary program actions to remove barriers to higher opportunities areas irrespective of RHNA progress.
The element will meet the statutory requirements of State Housing Element Law once it has been revised, adopted, submitted, and reviewed by HCD to comply with the above requirements pursuant to Government Code section 65585.
Public participation in the development, adoption, and implementation of the housing element is essential to effective housing planning. Throughout the housing element process, the City should continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly Attachment 9
Brandon Swanson, Planning Director
available and considering and incorporating comments where appropriate. Please be aware, any revisions to the element must be posted on the local government’s website and to email a link to all individuals and organizations that have previously requested notices relating to the local government’s housing element at least seven days before submitting to HCD.
For your information, pursuant to Assembly Bill 1398 (Chapter 358, Statutes of 2021), if a local government fails to adopt a compliant housing element within 120 days of the statutory deadline (December 15, 2023), then any rezoning to make prior identified sites available or accommodate the RHNA shall be completed no later than one year from the statutory deadline pursuant to Government Code sections 65583, subdivision (c) and 65583.2, subdivision (c). Please be aware, if the City fails to adopt a compliant housing element within one year from the statutory deadline, the element cannot be found in substantial compliance until all necessary rezones are completed.
Several federal, state, and regional funding programs consider housing element compliance as an eligibility or ranking criteria. For example, the CalTrans Senate Bill (SB) 1 Sustainable Communities grant, the Affordable Housing and Sustainable Communities program, and HCD’s Permanent Local Housing Allocation consider housing element compliance and/or annual reporting requirements pursuant to Government Code section 65400. With a compliant housing element, the City will meet housing element requirements for these and other funding sources.
For your information, some general plan element updates are triggered by housing element adoption. HCD reminds the City to consider timing provisions and welcomes the opportunity to provide assistance. For information, please see the Technical Advisories issued by the Governor’s Office of Planning and Research at:
https://www.opr.ca.gov/planning/general-plan/guidelines.html.
HCD appreciates the cooperation and effort the City’s housing element team provided during the housing element update and review. We are committed to assisting the City in addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Pierce Abrahamson, of our staff, at [email protected].
Sincerely,
Paul McDougall
Senior Program Manager
Attachment 9
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
DIVISION OF HOUSING POLICY DEVELOPMENT
2020 W El Camino Avenue, Suite 500
Sacramento. CA 95833
(916) 263-2911 / FAX (916) 263-7453
Brandon Swanson, Director
Community Planning and Building Department
City of Carmel-by{he-Sea
P.O. Box CC
Carmel, CA 93921
Dear Brandon Swanson:
RE: Carmel-by-the-Sea's 5th Cycle (2023-20311Revised Draft Housing Element Thank you for submitling the City of Carmel-bythe-Sea's (City) revised draft housing element update received for review on April 5,2024. Pursuant to Government Code section 65585, the California Department of Housing and Community Development (HCD) is reporting the results of its review.
The revised draft element meets the statutory requirements described in HCD's March 20, 2024 review. The housing element will substantially comply with State Housing Element Law (Gov. Code, $ 65580 et seq) when it is adopted, submitted to, and approved by HCD, in accordance with Government Code section 65585.
April 5,2024
For your information, if the housing element relies upon nonvacant siles to accommodate more than 50 percent of the regional housing needs allocation (RHNA) for lower-income households, the housing element must demonstrate that the existing use is not an impediment to additional residential development in the planning period (Gov. Code, S 65583.2, subd. (g)(2).). This can be demonstrated by providing substantial evidence that the existing use is likely to be discontinued during the planning period (Gov. Code, $ 65583.2, subd. (g)(2).). Absent findings (e.9., adoption resolution) based on substantial evidence, the existing uses will be presumed to impede additional residential development and will not be utilized toward demonstrating adequate sites to accommodate the RHNA. The City must make these findings as part of its adoption resolution. Please see HCD's Guidance memo (p.27) lor additional information:
httos://www.hcd.ca.qov/communitv-developmenUhousinq-elemenUhousinq-elementmemosidocs/sites inventorv memo fina 106102020. pdf .
Attachment 10
Brandon Swanson, Director
For your information, pursuant to Government Code section 65583.3, the City must submit an electronic sites inventory with its adopted housing element. The City must utilize standards, forms, and definitions adopted by HCD. Please see HCD's housing element webpage at https://www.hcd.ca.qov/olanninq-and-communitvdevelopme nUhousinq-elements for a copy of the form and instructions. The City can reach out to HCD at sitesinve [email protected] for technical assistance Public participation in the development, adoption, and implementation of the housing element is essential to effective housing planning- Throughout the housing element process, the City must continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly available while considering and incorporating comments where appropriate. Please be aware, any revisions to the element must be posted on the local government's website and to email a link to all indlviduals and organizations that have previously requested notices relating to the local government's housing element at least seven days before submitting to HCD.
Several federal, state, and regional funding programs consider housing element compliance as an eligibilig or ranking criteria. For example, the CalTrans Senate Bill (SB) 1 Sustainable Communities grant, the Affordable Housing and Sustainable Communities programs, and HCD's Permanent Local Housing Allocation consider housing element compliance and/or annual reporting requirements pursuant to Government Code section 65400. With a compliant housing element, the City will meet housing element requirements for these and other funding sources.
HCD appreciates the hard work and dedication the City's housing element team provided in the preparation of the City's housing element and looks foruard to receiving the City's adopted housing element. lf you have any questions or need additional technical assistance, please contact Jose Ayala, of our staff, at [email protected].
Sincerely,
For your information, some general plan element updates are triggered by housing element adoption. HCD reminds the City to consider timing provisions and welcomes the opportunity to provide assistance. For information, please see the Technical Advisories issued by the Governor's Office of Planning and Research at:
https://www.opr.ca.qov/plannino/oeneral-plan/quidelines.html.
Paul McDougall
Senior Program Manager
Attachment 10
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Staff Report
April 8, 2024
ORDERS OF BUSINESS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Jane Hogan, Accountant
APPROVED BY: Chip Rerig, City Administrator
SUBJECT:
Resolution 2024-024 receiving the Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2023
RECOMMENDATION:
Adopt Resolution 2024-024 receiving the Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2023
BACKGROUND/SUMMARY:
This item is on the Council's agenda to receive the Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2023 (Fiscal Year 2022-2023). The ACFR includes the City's audited basic financial statements and the independent auditor's report. It also includes a narrative on the City’s financial activities known as the Management Discussion and Analysis and a statistical section pertaining to financial trends, revenue capacity, debt capacity, demographic and economic information and operating information.
State law requires that the accounts and fiscal affairs of all municipal entities be examined annually by an independent certified public accountant. The City has retained an independent auditor, Chavan and Associates, LLP, to audit the City’s financial statements. The audit was performed in accordance with auditing standards generally accepted in the United States, including financial auditing standards issued by the Comptroller General of the United States, in order to determine if the City’s financial statements were misstated or misrepresented, either due to fraud or error. Chavan and Associates, LLP, has issued an unmodified opinion that the financial statements for the year ended June 30, 2023, are fairly presented in conformity with generally accepted accounting principles (GAAP).
As part of the audit process, Chavan and Associates, LLP, also test the City’s internal controls over financial reporting and compliance and reports on the outcome of these tests (“findings”) as part of the Communication Letter. There are different categories of findings, including a material weakness, meaning that a deficiency, or a combination of deficiencies, in internal controls exists and that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, detected or corrected on a timely basis. No material weaknesses or other findings were identified as part of the audit.
The Fiscal Year 2022-2023 ACFR was prepared using guidelines issued by the Government Finance Officers Association of the United States and Canada (GFOA) as part of its Certificate of Achievement for Excellence in Financial Reporting Program. The intent of this program is to encourage state and local governments to prepare reports that exceed the minimum requirements of generally accepted accounting principles in order to produce a readable and efficiently organized document intended to allow greater public transparency and full disclosure of the City’s financial health. The City received a Certificate of Achievement for its Fiscal Year 2020-2021 and 2021-2022 ACFRs and the Fiscal Year 2022-2023 ACFR will also be submitted to the GFOA for consideration of a new Certificate of Achievement.
FISCAL IMPACT:
There is no fiscal impact associated with receiving the ACFR. The cost for the audit for fiscal year 2023- 2024 is included within the adopted budget for a not to exceed amount of $32,000.
PRIOR CITY COUNCIL ACTION:
There is no prior action taken on this item.
ATTACHMENTS:
Attachment 1) Resolution 2024-024
Attachment 2) FY22-23 Annual Comprehensive Financial Report
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
RESOLUTION NO. 2024-024
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA
RECEIVING THE ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR) FOR THE FISCAL YEAR ENDING JUNE 30, 2023
WHEREAS, State law requires that all accounts and fiscal affairs of municipal entities be examined annually by an independent certified public accountant; and WHEREAS, the City retained the independent auditing firm of Chavan and Associates, LLP to audit the City’ s financial statements; and
WHEREAS, the audit was performed in accordance with auditing standards generally accepted in the United States, including financial auditing standards issued by the Comptroller General of the United States, in order to determine if the City’s financial statements were misstated or misrepresented, either due to fraud or error; and WHEREAS, Chavan and Associates, LLP has issued an unmodified opinion that the financial statements for the fiscal year ending June 30, 2023 (“Fiscal Year 2022-2023)” are fairly presented in conformity with generally accepted accounting principles; and WHEREAS, the audited financial statements are a component of the Annual Comprehensive Financial Report (ACFR); and
WHEREAS, the ACFR is a report that goes beyond minimum requirements of generally accepted accounting principles and was prepared using the guidelines developed by the Government Finance Officers Association (GFOA) for its Certificate of Achievement for Excellence in Financial Reporting program in order to produce a readable and efficiently organized document intended to allow greater public transparency and full disclosure of the City’s financial health.
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES HEREBY:
Receive the Annual Comprehensive Financial Report (ACFR) for the Fiscal Year Ending June 30, 2023.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BYTHE-SEA this 1st day of April, 2024, by the following vote:
AYES:
NOES:
ABSENT:
Attachment 1
Resolution No. 2024-024
ABSTAIN:
APPROVED: ATTEST:
_________________________ _________________________
Dave Potter Nova Romero
Mayor City Clerk
Attachment 1
Annual Comprehensive Financial Report
City of Carmel-by-the-Sea
California
Fiscal Year Ended June 30, 2023
Attachment 2
Page Intentionally Left Blank
Attachment 2
City of Carmel-by-the-Sea
California
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2023
Prepared by the Finance Department
Attachment 2
Page Intentionally Left Blank
Attachment 2
CITY OF CARMEL-BY-THE-SEA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2023
TABLE OF CONTENTS
INTRODUCTORY SECTION
Transmittal Letter ............................................................................................................... 1 Principal Officials..............................................................................................................10 Organizational Chart ..........................................................................................................11 GFOA Certificate ...............................................................................................................12
FINANCIAL SECTION
Independent Auditor’s Report.............................................................................................15 Management’s Discussion and Analysis (Required Supplementary Information) .................21 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position.........................................................................................39 Statement of Activities.............................................................................................40 Fund Financial Statements
Governmental Funds:
Balance Sheet .....................................................................................................42 Reconciliation of the Government Funds Balance Sheet
to the Government-Wide Financial Statement of Net Position.........................43 Statement of Revenues, Expenditures and Changes in Fund Balances ..................44 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ..................................................................................45 Proprietary Funds:
Statement of Net Position ...................................................................................46 Statement of Revenues, Expenses, and Changes in Fund Net Position..................47 Statement of Cash Flows.....................................................................................48 Notes to the Basic Financial Statements ........................................................................49
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP Basis):
General Fund ...........................................................................................................83 Measure C Sales Tax Fund .......................................................................................84 Harrison Memorial Library Fund..............................................................................85 Schedule of Pension Contributions .....................................................................................86 Schedule of Proportionate Share of Net Pension Liability ...................................................87 Schedule of Total OPEB Liability ......................................................................................88 Attachment 2
CITY OF CARMEL-BY-THE-SEA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2023
SUPPLEMENTARY INFORMATION
Combining Nonmajor Governmental Funds:
Combining Balance Sheet..............................................................................................92 Combining Statement of Revenues, Expenditures and Changes in Fund Balances...........94 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (GAAP Basis):
Gas Tax Fund ........................................................................................................96 Transportation Safety Fund ...................................................................................97 COPS Grant Fund..................................................................................................98 Parking In-Lieu Fun ..............................................................................................99 Asset Seizure Fun................................................................................................100 Debt Service Fund...............................................................................................101 Schedule of Revenues, Expenditures and Changes in Fund Balances – Capital Projects - Budget and Actual (GAAP Basis) ...............................................102 Combining Internal Service Funds:
Combining Statement of Net Position ..........................................................................104 Combining Statement of Revenues, Expenses and Changes in Fund Net Position .........105 Combining Statement of Cash Flows ...........................................................................106
STATISTICAL SECTION
Net Position by Component................................................................................................... 111 Changes in Net Position ........................................................................................................ 112 Fund Balances of Governmental Funds.................................................................................. 114 Changes in Fund Balances of Governmental Funds................................................................ 116 General Governmental Tax Revenues by Source .................................................................... 118 General Fund Tax Revenues by Source.................................................................................. 119 Net Assessed Value of Taxable Property ............................................................................... 120 Direct and Overlapping Property Tax Rates........................................................................... 121 Principal Property Tax Owners ............................................................................................. 122 Property Tax Levies and Collections..................................................................................... 123 Ratios of Outstanding Debt by Type...................................................................................... 124 Ratios of Net General Bonded Debt Outstanding ................................................................... 125 Computation of Direct and Overlapping Debt ........................................................................ 126 Legal Debt Margin Information............................................................................................. 127 Pledged Revenue Coverage ................................................................................................... 128 Demographic and Economic Statistics................................................................................... 129 Principal Employers.............................................................................................................. 130 Number of City Employees by Department............................................................................ 131 Operating Indicators by Function .......................................................................................... 132 Capital Asset Statistics by Function ...................................................................................... 133
OTHER INDEPENDENT AUDITOR REPORTS
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........................................................ 137 Attachment 2
TRANSMITTAL LETTER
Attachment 2
This page is intentionally blank
Attachment 2
CITY OF CARMEL-BY-THE-SEA
P.O. BOX CC
CARMEL-BY-THE-SEA, CA 93921
March 29, 2024
Honorable Mayor Dave Potter
Members of the Carmel-by-the-Sea City Council, and
Citizens of Carmel-by-the-Sea
SUBJECT: Annual Comprehensive Financial Report – June 30, 2023 The Annual Comprehensive Financial Report (ACFR) for the City of Carmel-by-the-Sea for the fiscal year ended June 30, 2023 is hereby submitted.
REPORT PURPOSE AND ORGANIZATION
In accordance with State law, which requires that the accounts and fiscal affairs of all municipal entities be examined annually by an independent certified public accountant, the City of Carmel-by-the-Sea retained an independent auditor, Chavan and Associates, LLP, to audit the City’s financial statements. Chavan and Associates, LLP, has issued an unmodified opinion that the financial statements for the year ended June 30, 2023, are fairly presented in conformity with generally accepted accounting principles (GAAP). This opinion, along with the basic financial statements, are submitted as the Annual Comprehensive Financial Report (ACFR) for the City for the fiscal year ended June 30, 2023. The information included in the financial section of this report fulfills the above requirement.
This report consists of City management’s representations regarding the finances of the City of Carmel-by-theSea. Management assumes full responsibility for the completeness, data accuracy, and fairness of the information presented, including all footnotes and disclosures. Management believes the data presented are accurate in all material respects and presented in a manner designed to fairly set forth the financial position and results of operations of the City.
To provide a reasonable basis for making these representations, City management has established a comprehensive framework of internal controls that is designed to both protect the City’s assets from loss, theft or misuse and to compile sufficiently reliable information for the preparation of the City’s financial statements in conformity with generally accepted accounting principles.
Because the cost of internal controls should not exceed their benefits, the City’s internal controls have been designed to provide reasonable, rather than absolute, assurance that the financial statements are free from material misstatements. The audit is intended to provide users with reasonable assurance that the information presented is free from material misstatements. As management, we assert, that to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
Generally accepted accounting principles require management to provide a narrative introduction, overview, and analysis that accompanies the basic financial statements in a format known as the Management’s Discussion and Analysis (MD&A). This letter of transmittal is intended to augment the MD&A and is meant to be read in conjunction with the MD&A. The MD&A can be found in the Financial Section of this document, immediately following the report of the independent auditor.
Attachment 2
CITY OF CARMEL-BY-THE-SEA PROFILE
Located 120 miles south of San Francisco on the Monterey Peninsula, the City of Carmel-by-the-Sea is a coastal village with a population of 3,033 that is renowned for its natural beauty, including a white sand beach, urban forest of over 10,000 public trees comprised of Monterey pines, live oaks, and Monterey cypress and natural parklands all within a one-square-mile, built-out community. In addition to recreational opportunities afforded by such scenery, the City is also known for its architecture and dining and shopping opportunities, which may be found in the walkable downtown area. In addition to many City sponsored events like the City Halloween Parade, Sandcastle Contest and Pumpkin Roll, other special events also occur throughout the year and cultural activities abound, including at such venues as the Sunset Center performing arts center and the Forest Theater, an outdoor amphitheater.
The median age of the City’s residents is 64 years. Nearly 75% of the population age 25 or older have a bachelor’s degree. The City’s median household income is $100,365. The Carmel area offers outstanding educational opportunities through the Carmel Unified School District as well as institutions of higher learning on the Monterey Peninsula including the Monterey Peninsula College, the Middlebury Institute for International Studies, California State University Monterey Bay, and the Hopkins Marine Station operated by Stanford University.
Form of Government
The City of Carmel-by-the-Sea was incorporated on October 31, 1916. As a General Law City, Carmel-by-theSea operates under a Council-City Manager (City Administrator) style of government and derives its power from the California Constitution and laws enacted by the State legislature.
All legislative power is held by the publicly elected, five-member City Council that consists of the Mayor and four Councilmembers. The Mayor serves a two-year term while Council members serve a four-year term, with overlapping terms with municipal elections occurring in November of each even numbered year. City Council is the policy making legislative body of the City and it adopts the annual budget, enacts ordinances, and approves major contracts, acquisitions and leases. The Council appoints the City Administrator to serve as the City’s chief administrative officer.
The City Administrator is responsible for the enforcement of City laws and ordinances; ensuring that the orders of the City Council are executed; for supporting Council, which includes the preparation of agendas and the maintenance of records; and overseeing the City’s day-to-day operations. This includes oversight of the departments of Community Planning and Building, Library, Community Activities, Public Safety and Public Works. The City Administrator also directs the centralized administrative functions of the City Clerk, Finance, Human Resources and Information Technology.
City Services
The City provides a variety of services to the residents, businesses and visitors to the village of Carmel-by-theSea. Administration provides oversight of daily City functions and financial activity. Community Planning and Building provides building safety services, code compliance and planning functions while Community Activities and Library manage new and ongoing special events and provide library services at two branch locations. Public Safety services related to ambulance, law enforcement, and crime prevention are provided by the Ambulance and Police Department, respectively, while fire services are provided through a contract with the City of Monterey.
Public Works is responsible for facility and vehicle maintenance, development and management of capital projects; construction, improvement and repair of streets, sidewalks, pathways and storm drain systems and maintaining the Village forest, parks and shoreline areas.
Attachment 2
The ACFR includes all financial activities of the City. Financial data for all funds through which services are provided by the City have been included in this report using criteria adopted by the Governmental Accounting Standards Board (GASB), which is the authoritative body establishing U.S. Generally Accepted Accounting Principles (GAAP) for local governments.
Budgetary Policy and Control
The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balanced set of accounts. The minimum number of funds is maintained consistent with legal and managerial requirements. Annually appropriated budgets are legally adopted on a budgetary basis for the governmental fund types and are controlled on a fund and departmental level. These funds are used to account for most of the City’s general government activities. Governmental fund types use the flow of current financial resources, measurement focus, and the modified-accrual basis of accounting and budgeting. Expenditures are recognized as encumbrances when a commitment is made. Unencumbered appropriations lapse at year-end.
The goal of the City Administrator is to present a balanced budget to the City Council for review and adoption.
A balanced budget is a budget in which sources meet or exceed uses. Available funding sources shall be at least equal to recommended appropriations. As a general rule, the year-end undesignated General Fund balance should not be used to fund ongoing operations.
As set in the Carmel Municipal Code prior to the beginning of each fiscal year, the City Council shall adopt a budget for expenditures and anticipated revenues. On or before 15 February of each year, the City Administrator will present to the City Council a proposed budget schedule. The City Administrator prepares and submits to the City Council a proposed operating and capital budget for the forthcoming fiscal year. The City Council shall adopt the budget by 1 July.
The City Administrator shall have the right to approve the transfer of appropriations within a departmental budget; however, no additional positions shall be created without the authorization of the City Council. All transfers of appropriations between departments or in regards to capital items or projects shall be approved by the City Council. The City Administrator shall be charged with the responsibility of controlling the expenditures for all departments in accordance with the approved budget. A report on current year revenues, expenditures, and fund balances shall be maintained.
FACTORS AFFECTING FINANCIAL CONDITION
This brief narrative on the local economy, City financial policies and major initiatives outlined within the annual budget are intended to provide context to the MD&A and financial statements.
Local Economy
The City’s three major sources of General Fund revenue include Property Tax, Sales and Use Tax, and Transient Occupancy Tax. As shown on the chart on the next page entitled “City’s Major Revenues Historical Trend”, property taxes have historically been a strong component to the City’s financial health. Each tax represents about 1/3 of the City’s total General Fund revenues. Revenue generated from sales and use taxes have become increasingly important to the City, especially after the passage of a local 1% sales tax measure by Carmel voters in 2012 and the subsequent approval of a new 1.5% sales tax for 20 years in March 2020. Transient occupancy taxes (“TOT”) have also significantly contributed to the City’s revenues, eclipsing nearly $7 million in fiscal year 2018-2019, rebounding to approximately $7.7 million in fiscal year 2021-2022 returning to pre-COVID levels, and exceeding $8.4 million in fiscal year 2022-2023.
Attachment 2
The City’s three major revenue sources also illustrate the unique opportunities attributed to the City of Carmelby-the-Sea. Located within one square mile, the City is considered to be built-out, limiting the availability of new 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.
Many of the features that contribute to residential quality of life, such as a temperate climate, natural beauty, architecture, unique design standards and cultural, dining and shopping opportunities also attract visitors. The variety of restaurants and other dining options located within the City’s boundary as well as art galleries, jewelry and clothing retailers contribute to shopping opportunities for residents and visitors alike. Similarly, visitors have many lodging options to choose from when staying overnight within the City. The lodging establishments charge a 10% TOT for stays of 30 days or less, which is remitted to the City.
On November 6, 2012, the Carmel electorate approved a temporary 1% transaction and use tax (“sales tax”) for ten years to raise revenue for general purposes, known as Measure D. The City received its first tranche of Measure D in the spring of 2013, and, as shown in the chart below. The advent of Measure D increased the viability of sales tax as the City’s top major revenue sources, as shown in the chart “City’s Major Revenues Historical Trend” below. On March 3, 2020, the Carmel electorate voted and approved Measure C to increase the sales tax rate to 1.5%. The timing of Measure C helped minimize the effects of reduced sales tax revenue suffered during the pandemic, allowing the City to survive and recover to pre-pandemic levels by fiscal year 2020-2021. Sales tax revenue has been the largest source of revenue for the City over the last two fiscal years.
While fiscal year 2019-2020 was on track to meet revenue projections, the City’s economic forecast for two of its major revenue streams quickly began to change as news regarding the coronavirus (“COVID-19”) emerged.
Travel restrictions coupled with decreased consumer spending and demand, particularly in the areas of travel and leisure, resulted in the underperformance of sales tax and TOT in fiscal year 2020-2021. TOT returned to preCOVID levels in fiscal year 2021-2022, a tribute to Carmel’s claim as a unique travel destination. TOT reached a ten-year high of $8.5 million due to increased travel after masking and travel restrictions eased. In addition, property taxes reached a ten-year high of $8.2 million while sales and use tax had a decrease of revenue by 2.5% to $9.4 million over 2021-2022. The economy has changed over the past fiscal year, hitting the general consumer goods group the hardest. Of this group, galleries and gift shops saw the greatest collective decline in sales. $-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 City's Major Revenues Historical Trend
Property Sales TOT
Attachment 2
Property Taxes
The desirability of Carmel-by-the-Sea as a place to reside, coupled with its limited housing stock, contribute to a strong local real estate market. Property tax revenue totaled $4.8 million in fiscal year 2013-2014, increasing on average by 6% over the past 9 years, reaching $8.16 million in fiscal year 2022-2023. Local Property taxes grew during the pandemic at rates of 4.1% and 6.1% in fiscal year 2021-2022 and fiscal year 2022-2023, respectively.
The State median home price is expected to rise 6.2% to $860,300 in 2024, after dropping 1.5% to $810,000 in 2023 from $822,300 in 2022. In fiscal year 2022-2023, the total amount of revenue received from property taxes was $8.2 million, a 6% increase over fiscal year 2021-2022. The City has averaged a 7% growth in property taxes over the last three fiscal years, largely due to the increase in secured property taxes.
Sales and Use Taxes
The majority of the City’s sales and use taxes are attributed to businesses within the categories known as general consumer goods and restaurants. The City receives a portion (1%) of the statewide sales tax, known as BradleyBurns tax, as well as revenue from a local sales tax. The Carmel electorate approved a local 1% sales tax measure in November 2012. Sales tax has steadily increased each year since 2013, dropping slightly in 2016 and then rising each year thereafter to reach approximately $5.7 million in 2019. As explained in more detail within the Transient Occupancy Tax narrative below, the City faced a decline in the number of visitors due to COVID-19 for the last quarter of fiscal year 2019-2020, which also impacted sales tax. Sales tax in 2020 totaled approximately $4.8 million. On March 3, 2020, the Carmel electorate voted and approved Measure C to increase the sales tax rate to
1.5%. The timing of Measure C helped minimize the effects of reduced sales tax revenue suffered during the pandemic, allowing the City to survive and recover to pre-pandemic levels by fiscal year 2020-2021. In fiscal year 2021-2022, as vaccination efforts increased and the masking restrictions were lifted, the City of Carmel-by-theSea experienced a peak increase in sales and use tax revenue, a reflection of the revenge consumer spending and relief from consumer goods shortages and logistic headaches brought out during COVID-19. Fiscal year 2022- 2023 sales and use tax revenue finished slightly under the prior year’s high of $9.6 million.
Consumer spending for certain goods and services remained high, particularly for online shopping and dining.
General consumer goods spending slowed by the end of fiscal year 2022-2023, hitting outlets, galleries and gift shops the hardest. Sales tax in fiscal year 2022-2023 generated approximately $9.4 million, a -2.54% decrease the prior fiscal year. Increases in national ecommerce spending behaviors plus the expansion of more in-state fulfilment centers and retailers using existing locations to deliver goods tied to online orders are shifting taxes $-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Amount
Fiscal Year
Property Tax Trend
Attachment 2
away from county tax pools. The offsetting effect is that these dollars are being directed to local agency’s coffers where the goods reside and no longer split and divide amongst the pools.
Transient Occupancy Taxes
Transient occupancy taxes (“TOT”) contributed $5.1 million toward citywide revenues in fiscal year 2013-2014.
TOT grew, on average, by 9% over the next 3 fiscal years until reaching $6.1 million in fiscal year 2017-2018.
Revenues continued to rise and TOT totaled $6.8 million in fiscal year 2018- 2019 with expected strong performance on the horizon. However, with global news emerging in February 2020 regarding the coronavirus, local hotels experienced an immediate decline in occupancy due to international travel restrictions. Subsequently Monterey County issued a shelter in place (“SIP”) order on March 17, 2020 followed by a statewide SIP issued by Governor Newsom on March 19, 2020. Hotels faced a near absolute shut down with little to no guests in February and March 2020 and entered the early summer, which is one of the City’s busier periods for tourism, with decreased occupancy rates. As a result, TOT generated $5.1 million in fiscal year 2019-2020, or $1.7 million (25%), less than the fiscal year 2019-2020. As the pandemic continued for fiscal year 2020-2021, the City of Carmel-by-the-Sea began to see an increase in TOT revenue of 4.4% to $5.3 million as more travelers sought to escape to Carmel. Rebound in revenue came in fiscal year 2021-2022 when the TOT revenue grew to $7.8 million, a 46% growth over prior fiscal year, surpassing pre-pandemic revenues. Carmel has proved to maintain its allure as a travel destination. TOT revenues for the Fiscal year 2022-2023 are $8.5 million, a growth of 8.6% over last fiscal year.
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Amount
Fiscal Year
Sales & Use Tax Trends
Attachment 2
Relevant Financial Policies
Financial and Budget Policies
The City Council adopted Council Policy C94-01: Financial and Budget Policies to provide direction to help ensure sound fiscal planning and the management of fiscal integrity. The Policies pertain to the capital and operating budgets, fund balance, debt management and investments.
Highlights of policy guidelines include the following:
Capital
▪ Total capital expenditures were budgeted at $4.3 million at the beginning of the fiscal year. When omitting Streets projects of $1,005,000, capital expenses were budgeted at approximately $3.3 million, or 10% of total revenue. Actual capital expenditures totaled approximately $1.2 million. ▪ 10% of the unrestricted funds designated for capital project expenditures were not set aside for unanticipated expenditures. A capital reserve policy of 20% of estimated five-year CIP expenditures was maintained. The reserve amount is calculated at $3.4 million. ▪ The Five-Year Capital Improvement Program (CIP) was updated. The estimated cost to the City for its Five-Year Capital Improvement plan is $17.1 million. All fiscal year 2022-2023 funded projects are consistent with the City’s General Plan.
Operating
▪ The fiscal year 2022-2023 Adopted Budget did not include a revenue buffer of 5% of projected expenditures.
▪ The fiscal year 2022-2023 Adopted Budget projected a balanced budget. Ongoing expenses were not funded with one-time revenues. At fiscal year-end, governmental fund sources were greater than uses by $5.2 million.
Fund Balance
▪ General Fund and Hostelry Fund reserves were maintained at no less than 15% and 10%, respectively, of their annual projected revenue. The General Fund Balance of $22.3 million, significantly exceeds the statutory required reserve limit.
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Amount
Fiscal Year
TOT Tax Trends
Attachment 2
Major Initiatives
Continued Investment in Protecting Natural Resources and Critical Infrastructure The fiscal year 2022-2023 Adopted Budget allocated $5 million in funding for capital projects and vehicle and equipment purchases intended to rehabilitate City facilities; address sidewalks and street improvements; enhance public safety and protect and preserve the natural environment. The fiscal year 2022-2023 budget recognizes the importance of investing our “green” infrastructure by including $327,000 for projects pertaining to the Mission Trail Nature Preserve Stream Drainage project, the Coastal Engineering Report, North Dunes Restoration including split rail fencing and signage. Additional capital funding included the Police Station Renovation, Drainage Design, Deferred Facilities Maintenance at City Hall, Harrison Memorial Library, and Sunset Center, ongoing implementation of accessibility improvements at various City facilities, an electric sweeper, and two residential electric vehicles for Community Planning and Building. The City also amended the fiscal year 2022- 2023 budget by allocating an additional $880,000 for the purchase of a new fire engine.
Revenue Enhancement and Stability
On November 6, 2012, the Carmel electorate approved a temporary 1% transaction and use tax (“sales and use tax”’) known as Measure D. Measure D sunsets in 2023. Recognizing the importance of this revenue to the City’s financial health, the City Council began discussions regarding the renewal of Measure D well ahead of the sunset date. Council drafted a new sales tax initiative to replace the existing Measure D and increase the local sales tax by 0.50%. On March 3, 2020, Carmel voters approved Measure C, which authorizes a 1.5% tax for 20 years for general City purposes. The criticality of Measure C to both the City’s short and long-term fiscal sustainability immediately became apparent with the emergence of the coronavirus pandemic in the spring of 2020. As the new sales tax rate became effective on July 1, 2020, the additional 0.50% tax rate mitigated projected decreases in visitor-driven sales tax performance. In addition, online purchases are subject to local sales tax and this type of spending greatly increased during the pandemic.
Addressing Pension Liabilities
The California Public Employees’ Retirement System (“CalPERS”) is the largest pension fund in the country, managing investments for nearly 2 million members on behalf of the state, schools and other public agencies. The City is a participating member of CalPERS and has two primary CalPERS plans, one for miscellaneous members and one for safety members.
Annually, the City makes a payment to CalPERS that consists of (1) the annual cost for current employees (“normal cost”) and (2) the unfunded accrued liability (“UAL”). The UAL is the actuarial liability less the actuarial value of the assets. In other words, it is the difference between what CalPERS needs in order to pay for retirement benefits when people retire as compared to the amount that CalPERS currently has on hand to pay for the estimated costs of the retirement benefits. Similar to other public agencies, the City’s pension costs have risen.
The UAL for the City is $28.2 million, based on the valuation date of June 30, 2021, as measured through June 30, 2022.
The City has historically used a combination of strategies to help mitigate the costs associated with pension liability, such as the:
• Issuance of pension obligation bonds;
• Negotiation of employee contributions toward the employer’s cost of pensions; and • Prepaying the annual UAL payment in order to save interest.
In January 2019, Council endorsed the City’s participation in a Pension Rate Stabilization Program to pre-fund pension obligations and authorized staff to issue a request for proposals for a Section 115 Trust Administrator. A Section 115 Trust is a tax-exempt investment vehicle authorized by the Internal Revenue Services to prefund government expenses, such as retirement plan benefits. Funds placed within the trust can remain within the trust Attachment 2
until such time that the City chooses to draw on its assets to pay an annual benefit obligation (i.e. make either an annual and/or additional payment to CalPERS) or seek reimbursement for a pension-related expense. Other benefits associated with the establishment of a trust include (1) greater investment flexibility and risk diversification compared to the City’s general investment options and (2) City oversight of investment and control over the risk tolerance of its investment portfolio as compared to investments managed by CalPERS. On August 2, 2021, Council authorized the adoption of a Section 115 Trust known as the Public Agencies Post-Employment Benefits Trust administered by the Public Agency Retirement Services (PARS) and authorized the City’s participation within this program. Subsequently, on September 7, 2021, Council authorized City staff to make an initial deposit of $1 million into the Trust. $1 million annual deposits are to be made over the next five years in the Section 115 Trust. The City deposited the second annual $1 million tranche into the Section 115 Trust in fiscal year 2022-2023.
AWARDS
Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Carmel-by-the-Sea for its comprehensive annual financial report for the fiscal year ended June 30, 2022. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
ACKNOWLEDGEMENTS
As a result of the professionalism and dedication of the Finance Division staff, the City continues to make strides in updating and enhancing its financial policies, procedures and systems, and its financial reporting capabilities, as evidenced by the production of this annual comprehensive financial report. The preparation of this report also required the involvement of many City departments in gathering statistics, as well as the guidance and support of the City’s independent auditor, and we extend our appreciation to these individuals for the assistance provided.
The annual comprehensive financial report is a document that strives to achieve transparency and full disclosure in financial reporting. As such, the preparation of this document would not be possible without the support of the City Council. We wish to acknowledge the City Council’s leadership and commitment to organizational excellence, public transparency and sound fiscal management.
Chip Rerig Jane Hogan
City Administrator Accountant
Attachment 2
CITY OF CARMEL-BY-THE-SEA PRINCIPAL OFFICERS
Fiscal Year 2022-2023
City Council
Dave Potter, Mayor
Bobby Richards, Mayor Pro Tempore
Jeff Baron, Councilmember
Karen Ferlito, Councilmember
Alissandra Dramov, Councilmember
City Administrator
Chip Rerig
Attachment 2
CITY OF CARMEL-BY-THE-SEA ORGANIZATIONAL CHART
Attachment 2
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Carmel-by-the-Sea
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
Attachment 2
FINANCIAL SECTION
Attachment 2
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Attachment 2
Page | 12 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
To the Honorable Mayor and Members of the
City Council of the City of Carmel-By-The-Sea
Carmel-by-the-Sea, California
Report on the Financial Statements
Opinion
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Carmel-By-The-Sea (the “City"), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Carmel-By-The-Sea, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements City management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Attachment 2
Page | 12 15105 Concord Circle, Ste. 130, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and GAGAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because Attachment 2
Page | 13 15105 Concord Circle, Ste. 130, Morgan Hill, CA 95037 Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] • www.cnallp.com
the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements, schedules, and other information listed in the supplementary information section of the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2024 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
March 29, 2024
Morgan Hill, California
Attachment 2
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Attachment 2
MANAGEMENT’S DISCUSSION
AND ANALYSIS
Attachment 2
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Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis
INTRODUCTION
As management of the City of Carmel-By-The-Sea, we offer readers of the City’s financial statements this narrative overview and analysis of financial activities of the City of Carmel-By-The-Sea for the fiscal year that ended on June 30, 2023. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the other sections of the attached audited financial statements, required supplemental information and other supplemental information. The required components of the report are listed below.
Required Components of the Annual Financial Report
FISCAL YEAR 2022/23 FINANCIAL HIGHLIGHTS
Government-Wide Highlights
• The assets and deferred outflows of resources of the City of Carmel-by-the-Sea exceeded liabilities ad deferred inflows of resources at the close of the fiscal year by $43.58 million (net position). Of this amount, net position included $32.93 million classified as net investment in capital assets; $5.54 million as restricted; and $5.11 million as a deficit unrestricted net position (negative net position). The negative unrestricted net position is largely due to GASB 68 – Accounting and Financial Reporting for Pensions. This pronouncement requires local governments to record pension liabilities on the government-wide financial statements. The City’s pension liability in accordance with GASB 68 as of June 30, 2023 was $28.16 million vs. $15.96 million in the prior fiscal year. • The City of Carmel-by-the-Sea’s total net position increased by $11.41 million from last fiscal year mostly due to pension credits of $4.83 million, an in current assets of $7.42 million, and an increase in general revenues of $1.54 million.
Management’s
Discussion & Analysis
Government-Wide
Financial Statements
Fund
Financial Statements
Notes to the
Financial Statements
Basic
Financial Statements
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Fund Highlights
• At the close of Fiscal Year 22/23 the City of Carmel-by-the-Sea’s governmental funds reported combined fund balances of $31.61 million, an increase of $5.57 million in comparison with the prior year. Approximately 49% or $15.54 million was classified as unassigned fund balance and was available for spending at the government’s discretion, which is up from $10.02 million over the prior year.
• At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the general fund was $20.39 million, or 91% of total general fund expenditures, prior to transfers, versus $16.73 million and 64% in the prior year. • The City’s long-term liabilities increased by $11.45 million primarily as the result of increases to employee benefit liabilities totaling $12.2 million.
• The City’s net capital assets decreased by 1% or $378 thousand primarily as a result of depreciation during the year.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis are intended to serve as an introduction to the City of Carmel-by-the-Sea’s financial statements. The City of Carmel-by-the-Sea’s basic financial statements are comprised of (1) Government-wide Financial Statements (2) Fund Financial Statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City of Carmel-by-the-Sea’s finances, in a manner similar to a private-sector business. Government-wide financial statements are prepared on the accrual basis, which means they measure the flow of all economic resources of the City as a whole. Government-wide financial statements consist of the Statement of Net Position and the Statement of Activities.
The Statement of Net Position presents financial information on all of the City of Carmel-by-the-Sea’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Carmel-by-the-Sea is improving or deteriorating.
The Statement of Activities presents information showing how the City of Carmel-by-the-Sea’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. This is consistent with a full accrual concept, which may result in the reporting of revenues and expenses in the current fiscal year, with cash flows occurring in future fiscal periods (e.g. uncollected revenues and earned but not used vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Carmel-by-the-Sea that are principally support by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). An overview of the City’s functions associated with each classification is listed below.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Governmental Activities – All of the City's basic services are considered to be governmental activities. This includes general government, public safety, public works, library, and community planning and building.
These services are supported by general City revenues such as taxes, and by specific program revenues such as development and general government program fees. The City also operates three internal service funds, which are combined with the governmental funds and reported as governmental activities. See the table of contents for reference to the government-wide financial statements pages within this report.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Fund financial statements provide detailed information about each of the City's most significant funds, called major funds. Major funds are presented individually, with all nonmajor funds summarized and presented only in a single column. Subordinate schedules present the detail of these nonmajor funds. Major funds present the major activities of the City for the fiscal year and may change from year to year as a result of changes in the pattern of the City's activities. The City's funds are segregated into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds
Governmental funds are used to account for essentially the same function reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. This represents a modified accrual basis of accounting, with capital assets, long-lived assets, and long-term liabilities excluded from the financial statements. Such information may be useful in evaluating the City's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for the governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.
The City maintains eleven governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Measure C Sales Tax Fund, the Capital Projects Fund and the Harrison Memorial Library Fund. These funds are considered to be major funds. Data from the other governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.
The City of Carmel-by-the-Sea adopts an annual budget for its governmental funds. A budgetary comparison statements have been provided to demonstrate compliance with this budget. See the table of contents for where the basic governmental fund financial statements can be found this report.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Proprietary Funds
Internal service funds are an accounting mechanism used to accumulate and allocate costs internally among the City of Carmel-by-the-Sea’s various functions. The City uses internal service funds to account for the management of its retained risks associated with liability self-insurance, workers compensation and other post-employment benefits (OPEB). The City also uses an internal service fund, the Vehicle & Equipment Replacement Fund, to manage the costs of various equipment purchased, maintained and utilized to operate City services for various departments. Because these internal services predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the Government-Wide Financial Statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds are provided in the form of combining statements in the combining and individual fund statements and schedulessection of this report. See the table of contents for where the proprietary fund financial statements can be found this report.
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found immediately following the fund financial statements.
OTHER INFORMATION
In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City of Carmel-by-the-Sea’s budgetary information for the General Fund and Major Special Revenue Funds, and the City’s funding progress for its employee pension and OPEB benefit obligations. The page numbers for the required supplementary information can be found in the table of contents.
The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information. The page numbers for the combining and individual fund statements and schedules can be found in the table of contents.
An un-audited statistical section provides historical and current data on financial trends, revenue and debt capacity, demographic and economic information, and operating information. The table contents list the page numbers for where this information can be found.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Over time, net position may serve as an indicator of a government’s financial position. In the case of the City of Carmel-by-the-Sea, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $43.58 million at the close of the Fiscal Year. This represents an increase of $11.41 million over the prior year.
The following table summarizes the City’s ending net position:
A significant portion, $32.93 million, of the City's net position reflects its investment in capital assets, (e.g., land, buildings, general government infrastructure, equipment, etc.), less accumulated depreciation and any outstanding debt that was used to acquire or construct those assets. Capital assets represent infrastructure which provide services to citizens and are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate the liabilities.
An additional $5.54 million of the City of Carmel-by-the-Sea’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of $5.11 million is classified as unrestricted. This negative unrestricted balance is largely due to GASB 68 – Accounting and Financial Reporting for Pensions. The City participates in the CalPERS Miscellaneous and Safety pension plans.
GASB 68 impacted local governments by requiring them to report a proportional share of their pension plan’s net pension liabilities on financial statements. As of June 30, 2023, the City’s proportionate share of the CalPERS pension liability was $28.16 million. See note 8 for detailed information related to the Plans, along with the required supplementary information section of this report.
Increase
2023 2022 (Decrease)
Assets
Current and other assets $ 38,077,120 $ 30,659,871 $ 7,417,249 Capital assets 38,065,618 38,443,660 (378,042)
Total Assets $ 76,142,738 $ 69,103,531 $ 7,039,207
Deferred Outflows of Resources $ 12,288,018 $ 5,571,642 $ 6,716,376 Liabilities
Current and other liabilities $ 2,510,426 $ 1,866,210 $ 644,216 Noncurrent liabilities 37,795,680 26,341,876 11,453,804 Total Liabilities $ 40,306,106 $ 28,208,086 $ 12,098,020 Deferred Inflows of Resources $ 4,546,761 $ 14,303,710 $ (9,756,949) Net Position
Net investment in capital assets $ 32,930,884 $ 33,545,605 $ (614,721) Restricted 5,536,383 6,773,624 (1,237,241)
Unrestricted 5,110,622 (8,155,852) 13,266,474
Total Net Position $ 43,577,889 $ 32,163,377 $ 11,414,512 Governmental Activities
Table 1 - Net Position
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis At the end of the current fiscal year, the City of Carmel-by-the-Sea is able to report a positive balance for the government as a whole. The reasons for the overall financial changes are discussed in the following sections for governmental activities.
Governmental Activities
As shown in the Statement of Changes in Net Position schedule below, the change in net position for governmental activities increased by $7.07 million. This increase is largely due to an increase of $1.04 million in taxes which is a direct result of increased property values and a pension credit of $4.83. Total revenues from governmental activities increased by $1.54 million from the prior year. The net change in expenses from the prior year was a decrease of $5.77 million.
With total revenues for the fiscal year at $32.45 million and total expenses at $21.04 million, the change in net position for current activity was $11.41 million. An analysis of the changes in revenues and expenses is as follows:
Increase
Functions/Programs 2023 2022 (Decrease)
Program Revenues
Charges for services $ 2,699,548 $ 2,941,755 $ (242,207) Operating grants and contributions 958,933 960,670 (1,737) Total Program Revenues 3,658,481 3,902,425 (243,944)
General Revenues
Taxes 27,588,978 26,544,389 1,044,589
Intergovernmental 771,258 734,550 36,708
Investment earnings 155,181 (126,009) 281,190
Other revenues 278,650 98,571 180,079
Total General Revenues 28,794,067 27,251,501 1,542,566
Expenses
General government 6,290,757 6,494,737 (203,980)
Community Planning and Building 1,618,884 1,789,916 (171,032) Public Safety 5,427,362 10,511,669 (5,084,307)
Public Works 4,572,764 4,961,215 (388,451)
Library 1,677,297 1,644,498 32,799
Community Activities 201,277 205,869 (4,592)
Economic Reviltalization 1,101,644 1,034,150 67,494
Interest on fiscal charges 148,051 168,038 (19,987)
Total Expenses 21,038,036 26,810,092 (5,772,056)
Increase / (Decrease) in Net Position 11,414,512 4,343,834 7,070,678 Net Position, Beginning of Year 32,163,377 27,819,543 4,343,834 Net Position, End of Year $ 43,577,889 $ 32,163,377 $ 11,414,512 Governmental Activities
Table 2 - Statement of Changes in Net Position
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Governmental Revenues
The following chart summarizes the changes in revenues by category during the fiscal year:
Significant changes in governmental revenues consisted of the following:
• Property tax increased by $469,544, or approximately 6%, over the prior year due to a strong real estate market bolstered by the coronavirus pandemic, the ability of high-income households to purchase homes and the desirability of Carmel-by-the-Sea as a place to reside, coupled with its limited housing stock.
• Travel and tourism remained strong during the pandemic even with ongoing travel restrictions. Sales and use taxes decreased by $243,355 from the prior year due to a less than expected consumer spending for online purchases and other types of goods and services, and lagging restaurant and dining sales.
Transient occupancy taxes increased by $668,099 over the prior year primarily due to an increase in the average daily room rates charged by lodging operators.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Governmental Expenses
The following chart summarizes the changes in expenses by category during the fiscal year:
Significant changes in governmental expenses include decreases to General Government, Community Planning and Building, Public Safety, and Public Works expenses of $204,980, $171,032, $5.08 million, and $388,451, respectively. The large decrease in public safety was mostly due to a $3.39 million pension credit and depreciation expense of $338,308.
FINANCIAL ANALYSIS OF THE CITY’S GOVERNMENTAL FUNDS
As noted earlier, the City of Carmel-by-the-Sea uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements.
In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City itself, or a group or individual that has been delegated authority to assign resources for particular purposes by the City of Carmel-by-the-Sea’s Council.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis The following is a summary of the changes in fund balance of the major and other (nonmajor) governmental funds:
The fund balance of the City’s General Fund increased by $4.73 million mostly due to transfers in from the Measure C Sales Tax fund and increased sales and transient hotel tax. The fund balance in the Measure C Sales Tax Fund decreased by $1.49 million mostly because of transfers to the General Fund and Capital Projects Fund. The fund balance in the Capital Projects fund increased by $2.08 million mostly from transfers made by the Measure C Sales Tax Fund to pay for future capital projects. The fund balance in the Library Fund decreased by $98,470 mostly as revenues decrease by $31,698 and expenses increased by $145,154 as compared to the prior year.
Combined Funds – Components of Fund Balance
As of June 30, 2023, the City of Carmel-by-the-Sea’s reported combined fund balances of $31.61 million, which represents a $5.57 million increase over the prior year. Approximately 49%, or $15.54 million, was classified as unassigned fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance was either committed, restricted, or assigned. The committed balance of $666,700 represents funds that are set-aside for specific purposes via resolution of the City Council. The restricted balance of $7.52 million reflects fund that are legally required to remain intact, $26,469 was classified as nonspendable for prepaid items, while the remainder of $7.86 million represents funds that were assigned to a particular purpose by the City Council or management given legal authority by the Council.
General Fund – Components of Fund Balance
The general fund is the chief operating fund of the City of Carmel-by-the-Sea. At the end of the current fiscal year, the unassigned fund balance of the general fund was $15.54 million, and the total fund balance increased to $22.4 million. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. The total general fund expenditures prior to transfers were $23.77 million. Unassigned fund balance represents approximately 65% of the total general fund expenditures, while total fund balance represents approximately 94% of total general fund expenditures.
Harrison
Measure C Capital Memorial Other
General Sales Tax Projects Library Governmental
Fund Fund Fund Fund Funds Total
Total Revenues $ 25,490,159 $ 5,868,695 -$ 345,243 $ $ 590,645 $ 32,294,742 Total Expenditures 23,771,725 1,199,077 - 443,713 874,942 26,289,457 Revenues Over (Under) Expenditures 1,718,434 5,868,695 (1,199,077) (98,470) (284,297) 6,005,285 Transfers in 3,644,009 3,585,897 - - 791,737 8,021,643
Transfers out (633,330) (7,356,906) (306,567) - (158,000) (8,454,803) Net change in fund balances 4,729,113 (1,488,211) 2,080,253 (98,470) 349,440 5,572,125 Beginning of year 17,669,288 3,399,710 1,596,719 1,549,102 1,824,812 26,039,631 End of year $ 22,398,401 $ 1,911,499 $ 3,676,972 $ 1,450,632 $ 2,174,252 $ 31,611,756 Major Funds
Table 3 - Summary of Changes in Fund Balance - Governmental Funds Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis The following charts provide an annual comparison of the fund balance components included in the general fund and the other governmental funds.
The assigned fund balance in other governmental funds was from the Capital Projects Fund which had $3.68 million in fund balance assigned for capital projects.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis FINANCIAL ANALYSIS OF CITY’S INTERNAL SERVICE FUNDS
The following is a summary of the changes in fund balance of the City’s internal service funds:
CAPITAL ASSETS
The City of Carmel-by-the-Sea’s investment in capital assets includes land, buildings, systems, improvements, machinery, equipment, facilities, roads, and other similar assets and infrastructure. The following table summarizes the City’s capital assets at the end of the year:
The City reported depreciation expense of $2.14 million for fiscal year 2022-23 as compared to $2.13 million for fiscal year 2021-22.
See Note 5 in the notes to financial statements section for additional information.
Vehicle
Workers OPEB & Equipment
Compensation Reserve Replacement
Fund Fund Fund Total
Total Revenues $ 98,435 $ 824,813 - $ $ 923,248
Total Expenditures 55,505 225,248 - 280,753
Revenues Over (Under) Expenditures 42,930 599,565 - 642,495 Nonoperating Revenue (Expense) 4,392 10,962 8,706 24,060 Transfers in 148,160 285,000 - 433,160
Transfers out - - - -
Net change in fund balances 195,482 10,962 893,271 1,099,715 Beginning of year 64,234 1,757,748 1,580,581 3,402,563
End of year $ 259,716 $ 1,768,710 $ 2,473,852 $ 4,502,278 Table 4 - Summary of Changes in Net Position - Internal Service Funds Increase
2023 2022 (Decrease)
Land $ 5,101,641 $ 5,101,641 -$
Construction in Progress 1,009,751 51,358 958,393
Buildings and improvements 14,370,979 14,895,659 (524,680) Infrastructure 16,653,881 17,820,081 (1,166,200)
Vehicles 205,651 227,043 (21,392)
Technology/Hardware and Software 124,702 96,010 28,692
Subscription based assets 250,580 250,580 -
Machinery and equipment 348,433 251,868 96,565
Total Capital Assets, Net $ 38,065,618 $ 38,443,660 $ (378,042) Table 5 - Capital Assets at Year End - Net
Governmental Activities
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 $11.45 million primarily due an increase in the net pension 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 22/23, the City originally estimated an increase of $6.64 million in fund balance; however the City ended the year with a surplus of revenues over expenditures of $4.73 million due to changes in transfers in for the Measure C Sales Tax Fund.
Revenues
The General Fund adopted and final revenue budgets were $23.36 and $23.99 million, with actual revenues recorded at $25.49 million. This $1.5 million difference was primarily from increased transient occupancy tax collections.
Expenditures
The General Fund adopted expenditure budget was $26.4 million and the final budget was $27.87 million.
The actual expenditures totaled $23.77 million, which resulted in a net difference of $1.47 million. Most of the savings can be attributed to salary and benefit savings.
Increase
2023 2022 (Decrease)
Sunset Center LRB $ 3,895,000 $ 3,895,000 -
Sunset Center LRB Premium 809,107 838,004 (28,897)
Countywide Radio Project 15,033 165,051 (150,018)
Pension Obligation Bonds - 680,000 (680,000)
Financed Purchases 156,440 - 156,440
Subscription Liabilities 259,154 - 259,154
Compensated Absences 898,688 586,299 312,389
Net Pension Liability 28,163,296 15,965,385 12,197,911
Claims Liability 575,000 575,000 -
Total OPEB Liability 3,023,962 3,637,137 (613,175)
Total Long-Term Liabilities $ 37,795,680 $ 26,341,876 $ 11,453,804 Table 6 - Outstanding Long-Term Liabilities
Governmental Activities
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis
ECONOMIC OUTLOOK
Summary
The City’s primary revenue sources include property taxes, sales and use taxes, and transient occupancy taxes. The desirability of Carmel-by-the-Sea as a place to reside and visit drives the overall increase to the City’s revenue in fiscal year 2022-2023. Property tax revenue continues to steadily grow year over year as limited stock drives home prices higher. After experiencing a slight decline in fiscal year 2019-2020, sales taxes and transient occupancy taxes are currently outperforming budget expectations. Moreover, consumer spending is shifting from consumer goods back to services, causing a slight reduction in sales and use taxes revenue for the City over last fiscal year. Restaurants and general consumer goods (retail) are the City’s leading drivers of sales and use tax revenue.
The City has recovered and surpassed pre-pandemic tourism and related spending levels. Projections for the City’s three major revenues total $24.9 million, or 81%, of the $30.9 million in estimated total citywide revenues for fiscal year 2023-2024. The three major revenues increase over $1 million when compared to the fiscal year 2022-2023 Adopted Budget, primarily driven by strong performance in transient occupancy taxes as well as sales and use taxes. While the approaching fiscal year reflects increased revenue receipts, the economic outlook assumes the leveling off of sales and use taxes to anticipate only a conservative 3% growth over prior year revenues as consumers shift from goods to services. Similarly, the City is cautionary in projecting growth in transient occupancy taxes (TOT). TOT daily occupancy rates are trending 4% lower than this time last fiscal year while the average daily room rate is trending 3% higher over the same period.
Planned expenditures also increase in the upcoming fiscal year. City staffing levels remained at 96.23 fulltime equivalents (FTE) in fiscal year 2022-2023. The cost of staffing increases from $13.5 million to $15 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 $16 million by fiscal year 2024-2025, without any additional increase in FTE beyond the fiscal year 2023-2024 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 is approximately $2 million. To help address its pension obligations, the City established a Section 115 Trust with an initial investment of $1 million in fiscal year 2021-2022 and an additional $1 million contribution in fiscal year 2022-2023.
The City’s ability to provide ongoing funding into the trust while maintaining an annual balanced budget is contingent on (1) revenues sustaining annual growth over the next several years and (2) controlling increases in Citywide expenses, particularly regarding salary and benefits and capital outlay. Inflation also affects 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 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.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis Unlike sales tax and transient occupancy tax, the fiscal year 2022-2023 budget assumed incremental growth in property tax and continued resiliency. The State median home price averaged over $810,000 in 2023, setting a 1.5% decrease from prior year. The California median home sales price for 2024 is expected to rise 6.2% to $860,300. Carmel has a consistently strong property tax base. While fiscal year 2022-2023 property tax revenue outpaces projections, annual growth of 3% is conservatively 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.
Projections statewide for the restaurant category anticipate growth of 2.9% in 2023-2024 and 3.7% in fiscal year 2024-2025, as ever-increasing prices are pushing strong gains. General consumer goods are expected to slow with growth at -.9% in 2023-2024, followed by an increase of 1.4% in 2024-2025. Recent trends show inflation has cooled in fiscal year 2023-2024, while financing costs are expected to begin a gradual decent in the second half of 2024.
Fiscal year 2023-2024 projects an increase of 15% and 4% respectively in the local sales tax (Measure C) and the City’s share of the statewide sales tax when compared to the fiscal year 2022-2023 Adopted Budget.
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 its 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.
TOT revenues recovered to pre-pandemic levels for travel spending in fiscal year 2022-2023.The City of Carmel-by-the-Sea continues to be a world travel destination and remains cautious as occupancy is trending 4% lower the first half of fiscal year 2023-2024. As the average daily room rate is on average 3% higher, receipts are 4% higher than this time last fiscal year. The City’s financial forecast assumes a conservative growth of 2% for fiscal year 2023-2024.
Outlook for Major Expenditures
Salaries and Benefits
The City’s largest expenditure is related to the cost of personnel. City staffing levels remained at 96.23 fulltime equivalents (FTE) in fiscal year 2023-2024. Correspondingly, the cost of staffing increases from $13.5 million to $15.1 million due to a combination of factors such as negotiated salary and benefit adjustments, Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis step increases, rising retirement and health care costs and additional staff. Personnel costs steadily increase, approaching $16 million by fiscal year 2024-2025, without any additional increase in FTE beyond fiscal year 2023-2024 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. The City’s UAL is estimated at $28.2 million based on the valuation date of June 30, 2021 with a measurement date of June 30, 2022.
As calculated by CalPERS, the City’s UAL annual contribution payment decreased from $2.1 million in fiscal year 2022-2023, to $2 million in fiscal year 2023-2024, and increases to $2.4 million in fiscal year 2024-2025. The City anticipates annual contribution costs will continue to rise over the next several years even if staffing levels remain unchanged.
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 and contributed its second tranche in fiscal year 2022-2023. When considering to fund the Section 115 Trust, the City considers 2025 personnel and capital outlay costs, as these minimize the amount of funding available to allocate to the trust. The City is on track to contribute another $1 million to the Section 115 Trust in fiscal year 2023-2024.
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 13% annual growth in fiscal year 2023-2024, as the City adjusts for goods and services overall sensitivity to inflation. The City is optimistic that federal interest rates will ease in 2024 and inflation will slow. The City contracts for specialized professional services and costs trend upward based upon credentials, certifications and qualifications of the individuals providing 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. Overall costs across all sectors are significantly higher over prior fiscal years.
Capital Projects
After deferring capital projects, coupled with higher construction and material costs, the City capital expenditures budgeted increased to $10.9 million in fiscal year 2023-2024. In future years, in accordance with the City’s financial policies, capital outlay expenses should represent 3.5% of projected revenue, or approximately $1.1 million annually based upon current revenue assumptions. However, the City’s FiveYear Capital Improvement Plan totals $52.9 million and identifies needs of $10 million annually over the next five 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.
Attachment 2
City of Carmel-by-the-Sea Management’s Discussion and Analysis 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 final debt service payment was made when the bond matured 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). Annual future debt service payment is $513,000 for fiscal year 2023-2024 through bond maturity 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, 2023
Governmental
ASSETS Activities
Current Assets:
Cash and investments 33,397,425 $
Receivables:
Accounts 2,504,159
Due from other governments 1,234,375
Other assets 941,161
Total Current Assets 38,077,120
Noncurrent Assets:
Capital Assets:
Nondepreciable 6,111,392
Depreciable, net of accumulated depreciation 31,954,226 Total Capital Assets - Net 38,065,618
Total Assets $ 76,142,738
DEFERRED OUTFLOWS OF RESOURCES
OPEB Adjustments $ 343,033
Pension Adjustments 11,944,985
Total Deferred outlows of Resources $ 12,288,018
LIABILITIES
Current Liabilities:
Accounts payable 1,184,932 $
Payroll related liabilities 792,510
Deposits and other liabilities 506,984
Interest payable 26,000
Claims payable - current portion 57,500
Compensated absences - current portion 206,000
Long-term debt - due within one year 480,181
Total Current Liabilities 3,254,107
Noncurrent Liabilities:
Long-term debt - due in more than one year 4,654,553
Claims payable 517,500
Compensated absences 692,688
Net pension liability 28,163,296
Total OPEB liability 3,023,962
Total Noncurrent Liabilities 37,051,999
Total Liabilities $ 40,306,106
DEFERRED INFLOWS OF RESOURCES
OPEB Adjustments 1,859,119 $
Pension Adjustments 2,687,642
Total Deferred Inflows of Resources $ 4,546,761
NET POSITION
Net investment in capital assets 32,930,884 $
Restricted for:
Transportation 1,392,572
Public safety 10,817
Debt service 26,805
Library 1,450,632
Public parking 738,592
Measure D 1,911,499
Asset seizure 5,466
Total Restricted 5,536,383
Unrestricted 5,110,622
Total Net Position $ 43,577,889
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, 2023
Operating
Charges for Grants and Governmental
Functions/Programs Expenses Services Contributions Total Activities Primary Government:
Governmental Activities:
General government 6,290,757 $ 177,654 $ 642,833 $ 820,487 $ (5,470,270) $ Community Planning and Building 1,618,884 1,268,455 - 1,268,455 (350,429) Public Safety 5,427,362 973,358 - 973,358 (4,454,004)
Public Works 4,572,764 73,206 - 73,206 (4,499,558)
Library 1,677,297 8,485 316,100 324,585 (1,352,712)
Community Activities 201,277 56,919 - 56,919 (144,358)
Economic Revitalization 1,101,644 141,471 - 141,471 (960,173) Interest and fiscal charges 148,051 - - - (148,051)
Total Governmental Activities $ 21,038,036 $ 2,699,548 $ 958,933 $ 3,658,481 (17,379,555) General Revenues:
Taxes:
Property taxes 8,164,266
Sales and use taxes 9,353,372
Transient occupancy taxes 8,455,742
Franchise taxes 880,958
Business license tax 734,640
Total taxes 27,588,978
Intergovernmental revenues not restricted to specific programs 771,258 Investment earnings 155,181
Other revenues 278,650
Total General Revenues 28,794,067
Change in Net Position 11,414,512
Net Position - Beginning of Year 32,163,377
Net Position - End of Year $ 43,577,889
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, 2023
Harrison
Measure C Capital Memorial Other Total
General Sales Tax Projects Library Governmental Governmental Fund Fund Fund Fund Funds Funds
ASSETS
Cash and investments 22,021,794 $ 780,423$ 3,978,295$ 1,474,144$ $ 2,084,270 $ 30,338,926 Receivables:
Accounts 2,494,971 - - - - 2,494,971
Due from other governments 1,131,076 - - - 103,299 1,234,375 Due from other funds 13,317 - - - - 13,317
Other assets 26,469 - - - - 26,469
Total assets $ 24,556,551 1,911,499$ 3,978,295$ 1,474,144$ $ 2,187,569 $ 34,108,058
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 858,656 -$ 301,323$ 23,512$ -$ 1,183,491 $ Accrued liabilities 792,510 - - - - 792,510
Deposits 506,984 - - - - 506,984
Due to other funds - - - - 13,317 13,317
Total liabilities 2,158,150 - 301,323 23,512 13,317 2,496,302 Fund Balances:
Nonspendable
Prepaid items 26,469 - - - - 26,469
Restricted:
Transportation - - - - 1,392,572 1,392,572
Public safety - - - - 10,817 10,817
Debt service - - - - 26,805 26,805
Library - - - 1,450,632 - 1,450,632
Asset seizure - - - - 5,466 5,466
Public parking - - - - 738,592 738,592
Pensions 1,983,781 - - - - 1,983,781
Measure C 1,911,499 - - - - 1,911,499
Committed:
Holstery tax - 666,700 - - - 666,700
Assigned:
Operational reserves - 4,180,736 - - - 4,180,736
Capital projects - - 3,676,972 - - 3,676,972
Unassigned - 15,540,715 - - - 15,540,715
Total fund balances 22,398,401 1,911,499 3,676,972 1,450,632 2,174,252 31,611,756 Total liabilities and
fund balances $ 24,556,551 1,911,499$ 3,978,295$ 1,474,144$ $ 2,187,569 $ 34,108,058 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, 2023
Total Fund Balances - Total Governmental Funds $ 31,611,756 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 64,851,723
Less: accumulated depreciation (28,038,885)
Total Capital Assets 36,812,838
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. (26,000) 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. 4,502,279
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. 7,741,256 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 (4,978,294)
Compensated absences (898,688)
Net pension obligation (28,163,296)
Total OPEB liability (3,023,962)
Total Long-Term Obligations (37,064,240)
Net Position of Governmental Activities $ 43,577,889
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, 2023
Harrison
Measure C Capital Memorial Other Total
General Sales Tax Projects Library Governmental Governmental Fund Fund Fund Fund Funds Funds
REVENUES
Taxes:
Property taxes 8,164,266 $ -$ -$ -$ -$ 8,164,266 $
Sales and use taxes 3,484,677 5,868,695 - - - 9,353,372 Transient occupancy taxes 8,455,742 - - - - 8,455,742
Franchise taxes 880,958 - - - - 880,958
Business license tax 734,640 - - - - 734,640
Intergovernmental revenues 832,011 - - - 582,080 1,414,091 License and permits 957,429 - - - - 957,429
Contributions - - - 316,100 - 316,100
Fines and forfeitures 108,144 - - - - 108,144
Charges for services 1,411,796 - - 8,485 - 1,420,281
Interest 110,604 - - 20,658 8,565 139,827
Rents and concessions 148,896 - - - - 148,896
Other revenues 200,996 - - - - 200,996
Total Revenues 5,868,695 25,490,159 - 345,243 590,645 32,294,742
EXPENDITURES
Current:
General government 6,806,933 - - - - 6,806,933
Community Planning and Building 1,939,088 - - - - 1,939,088 Public Safety 8,866,616 - - - - 8,866,616
Public Works 3,880,769 - - - - 3,880,769
Library - 913,183 - 443,713 - 1,356,896
Community Activities - 216,366 - - - 216,366
Economic Reviltalization 1,130,510 - - - - 1,130,510
Capital outlay - - 1,199,077 - - 1,199,077
Debt service
Principal 18,260 - - - 696,753 715,013
Interest and fiscal charges - - - - 178,189 178,189
Total Expenditures - 1,199,077 23,771,725 443,713 874,942 26,289,457 Excess (Deficiency) of
Revenues over Expenditures 1,718,434 5,868,695 (1,199,077) (98,470) (284,297) 6,005,285
OTHER FINANCING SOURCES (USES)
Transfers in 3,644,009 - 3,585,897 - 791,737 8,021,643
Transfers out (7,356,906) (633,330) (306,567) - (158,000) (8,454,803) Total Other Financing Sources (Uses) 3,010,679 (7,356,906) 3,279,330 - 633,737 (433,160) Net Change in Fund Balances 4,729,113 (1,488,211) 2,080,253 (98,470) 349,440 5,572,125 Fund Balances Beginning 17,669,288 3,399,710 1,596,719 1,549,102 1,824,812 26,039,631 Fund Balances Ending $ 22,398,401 $ 1,911,499 $ 3,676,972 $ 1,450,632 $ 2,174,252 $ 31,611,756 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, 2023
Net Change in Fund Balances - Total Governmental Funds $ 5,572,125 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 1,199,076
Depreciation expense (1,911,502)
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 1,099,715 Certain revenues were not recorded or recorded as unearned revenue in the governmental funds because they did not meet the revenue recognition criteria of availability. However, they were included as revenue in the Government-Wide Statement of Activities under the full accrual basis. 133,265 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 (312,389)
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. 4,826,100
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. 715,013 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 62,489
Amortization of prepaid pension obligation 28,897
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. 1,723
Change in Net Position of Governmental Activities $ 11,414,512 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, 2023
Governmental
Activities -
Internal
Service Funds
ASSETS
Current assets:
Cash and investments $ 3,058,499
Accounts receivable 9,188
Other assets 914,692
Total current assets 3,982,379
Noncurrent Assets:
Capital assets - net 1,252,780
Total assets $ 5,235,159
LIABILITIES
Current liabilities:
Accounts payable $ 1,441
Financed purchases - current 30,000
Claims payable - current 57,500
Total current liabilities 88,941
Non-current liabilities:
Financed purchases 126,440
Claims payable 517,500
Total non-current liabilities 643,940
Total liabilities $ 732,881
NET POSITION
Net Investment in capital assets $ 1,096,340
Unrestricted 3,405,938
Total net position $ 4,502,278
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, 2023
Governmental
Activities -
Internal
Service Funds
OPERATING REVENUES
Charges for services 98,435 $
Other 824,813
Total operating revenues 923,248
OPERATING EXPENSES
Claims 55,505
Depreciation 225,248
Total operating expenses 280,753
Operating income (loss) 642,495
NONOPERATING REVENUES(EXPENSES)
Gain (loss) on disposal of capital assets 9,188
Interest expense (482)
Investment earnings 15,354
Total nonoperating revenues(expenses) 24,060
Income (loss) before operating transfers 666,555
Transfers in 433,160
Transfers out -
Total Other Financing Sources (Uses) 433,160
Change in net position 1,099,715
Total net position - beginning 3,402,563
Total net position - ending 4,502,278 $
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, 2023
Governmental
Activities -
Internal
Service Funds
Cash flows from operating activities:
Receipts from interfund services provided 923,248 $
Payments for claims (54,064)
Net cash provided (used) by operating activities 869,184 Cash flows from noncapital financing activities:
Interfund transactions 433,160
Net cash provided (used) by noncapital financing activities 433,160 Cash flows from capital financing activities:
Purchases of property and equipment (1,178,718)
Net cash provided (used) by capital financing activities (1,178,718) Cash flows from investing activities:
Investment income received 15,354
Net cash provided (used) by investing activities 15,354 Net increase (decrease) in cash and cash equivalents 138,980 Cash and cash equivalents - beginning 2,763,561
Cash and cash equivalents - ending $ 2,902,541
Reconciliation of operating income to net cash provided (used) by operating activities:
Operating income (loss) 642,495 $
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 225,248
Change in operating assets and liabilities:
Other assets -
Accounts payable 1,441
Net cash provided (used) by operating activities $ 869,184 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, 2023
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, 2023
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, 2023
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, 2023
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, 2023
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, 2023
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, 2023
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.
Intangible right-to-use assets are amortized over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised, then the lease asset is amortized over the useful life of the underlying asset. Intangible right-to-use subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying asset.
Depreciation and amortization 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 Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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.
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. Subscription Based Information Technology Arrangements (SBITAs) The City recognizes subscription liabilities with an initial, individual value of $10,000 or more annually and $50,000 or more over the subscription contract. The City uses its estimated incremental borrowing rate to measure subscription liabilities unless it can readily determine the interest rate in the arrangement.
The City’s estimated incremental borrowing rate is based on its most recent public debt issuance.
M. 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 total 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.
N. 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:
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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 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.
O. 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 Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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."
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.
P. 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.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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.
Q. 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.
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, 2023, based on calculations by City management, proceeds of taxes did not exceed appropriations.
R. 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.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
S. 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.
T. 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.
U. Implemented New Accounting Pronouncements
GASB Statement No. 96, Subscription-based Information Technology Arrangements During the fiscal year, the City implemented GASB Statement No. 96, Subscription-based Information Technology Arrangements. GASB Statement No. 96 is an accounting pronouncement issued by the Governmental Accounting Standards Board (GASB) that provides guidance on how the costs and investments for subscription-based information technology arrangements (SBITAs) are accounted for and disclosed by governmental entities. This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. As a result, the City recorded intangible right of use subscription assets of $277,414 million and corresponding subscription liabilities of $277,414. The details of the related assets and liabilities can be found in Note 6.
V. 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. 100, Accounting Changes and Error Corrections—an amendment of GASB Statement No. 62
This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. This Statement also prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections in previously issued financial statements.
The requirements of this Statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
GASB Statement No. 101, Compensated Absences
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has performed the services required to earn the leave. Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment policies related to compensated absences and historical information about the use or payment of compensated absences. However, leave that is more likely than not to be settled through conversion to defined benefit postemployment benefits should not be included in a liability for compensated absences.
This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled should be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities.
With respect to financial statements prepared using the current financial resources measurement focus, this Statement requires that expenditures be recognized for the amount that normally would be liquidated with expendable available financial resources. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter.
NOTE 2 - CASH AND INVESTMENTS
As of June 30, 2023, cash and investments were reported in the financial statements as follows:
Cash and investments $ 33,397,425
Total cash and investments $ 33,397,425
The following summarized cash and investments by type:
Cash on hand $ 1,545
Demand Deposits 21,456,939
Investments 9,955,160
Restricted cash with fiscal agent 1,983,781
Total cash and investments $ 33,397,425
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.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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 $21,805,069 at June 30, 2023 and were different from carrying amounts due to deposits in transit and outstanding checks. The amount uninsured was $21,555,069 which was collateralized by securities held by pledging financial institutions.
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, 2023
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, 2023, 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, 2023
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, 2023, 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, 2023, 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, 2023, the City’s investments had the following maturities and ratings:
12 Months or
Less
13 to 24
Months
25 to 36
Months
37 to 48
Months
49 to 60
Months Total Rating
Input
Levels
LAIF (state pool) $ 5,336,853 $ - $ - $ - $ - $ 5,336,853 not rated n/a Money market funds 1,231,761 - - - - 1,231,761 AAA 1
Bonds 1,986,969 - - - - 1,986,969 AAA 1
Certificate of deposits 231,040 233,990 243,212 449,751 241,584 1,399,577 not rated 1 Total Investments $ 8,786,623 $ 233,990 $ 243,212 $ 449,751 $ 241,584 $ 9,955,160 Investment Type
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
NOTE 3 - ACCOUNTS RECEIVABLE
The following summarizes accounts receivable as of June 30, 2023:
$ 450,201
1,276,942
1,131,076
114,261
667,897
Ambulance
Holstery Tax
Measure C
Garbage Franchise Tax
Sales and Use Tax
Other Accruals 98,157
Total Accounts Receivable $ 3,738,534
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. As of June 30, 2023, the General Fund was owed $13,317 from COPS Grant Fund.
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, 2023:
Fund Transfer in Transfer out
General Fund 3,644,009 633,330
Measure C Sales Tax Fund - 7,356,906
Capital Projects Fund 3,585,897 306,567
Internal Service Funds 433,160 -
Nonmajor Funds 791,737 158,000
Total Transfers $ 8,454,803 $ 8,454,803
Funds were transferred from the Measure C Sales Tax Fund to the general fund for operating activities as identified in Measure C and to the Capital Projects Fund for capital improvements.
Internal service funds transfers were cost reimbursements not considered to be charges.
Transfers to and from nonmajor funds were for debt service and operations.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
NOTE 5 - CAPITAL ASSETS
Capital assets for governmental activities consisted of the following as of June 30, 2023:
` Balance Transfers/ Balance
Governmental Activities July 01, 2022 Additions Deletions June 30, 2023 Non-depreciable:
Land $ 5,101,641 $ - $ - $ 5,101,641
Construction in Progress 51,358 958,393 - 1,009,751
Total Non-Depreciable 5,152,999 958,393 - 6,111,392
Depreciable/Amortizable:
Buildings and improvements 26,886,573 140,573 - 27,027,146 Infrastructure 27,225,850 63,913 - 27,289,763
Vehicles 3,043,693 56,902 (60,655) 3,039,940
Technology/Hardware and Software 687,282 76,552 - 763,834 Subscription based assets - 277,414 - 277,414
Machinery and equipment 2,940,305 184,961 - 3,125,266
Total Depreciable/Amortizable 60,783,703 800,315 (60,655) 61,523,363 Less Accumulated Dep/Amort for:
Buildings and improvements (11,990,914) (665,253) - (12,656,167) Infrastructure (9,405,769) (1,230,113) - (10,635,882)
Vehicles (2,816,650) (78,294) 60,655 (2,834,289)
Technology/Hardware and Software (591,272) (47,860) - (639,132) Subscription based assets - (26,834) - (26,834)
Machinery and equipment (2,688,437) (88,396) - (2,776,833) Total Accumulated Dep/Amort (27,493,042) (2,136,750) 60,655 (29,569,137) Total Depreciable Capital Assets - Net 33,290,661 (1,336,435) - 31,954,226 Total Governmental Capital Assets $ 38,443,660 $ (378,042) $ - $ 38,065,618 Internal Service Funds (Inlcuded with Governmental Activities) Buildings and improvements $ 714,511 $ 40,355 - $ 754,866 Technology/Hardware and Software 660,844 - - 660,844
Vehicle, Machinery and Equipment 1,125,459 241,863 - 1,367,322 Accumulated Depreciation (1,305,004) (225,248) - (1,530,252) Total Internal Service Funds - Net $ 1,195,810 $ 56,970 $ - $ 1,252,780 Depreciation expense was allocated to the following governmental activities:
General Government $ 44,597
Community Planning and Building 6,947
Public Safety 181,197
Public Works 1,317,993
Library 549,005
Community Activities 37,011
Total depreciation expense $ 2,136,750
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
NOTE 6 - NONCURRENT LIABILITIES
The City's noncurrent liabilities consisted of the following as of June 30, 2023:
Due
Beginning Ending Within One
Noncurrent Liabilities Balance Additions Deletions Balance Year Sunset Center LRB $ 3,895,000 $ - $ - $ 3,895,000 $ 355,000 Sunset Center LRB Premium 838,004 - 28,897 809,107 28,897 Countywide Radio Project (Direct) 165,051 - 150,018 15,033 15,033 Pension Obligation Bonds 680,000 - 680,000 - -
Financed Purchases - 184,962 28,522 156,440 30,000
Subscription Liabilities - 277,414 18,260 259,154 51,251 Compensated Absences 586,299 482,217 169,828 898,688 206,000 Net Pension Liability 15,965,385 17,280,265 5,082,354 28,163,296 - Claims Liability 575,000 70,167 70,167 575,000 57,500
Total OPEB Liability 3,637,137 1,287,946 1,901,121 3,023,962 - Total Noncurrent Liabilities $ 26,341,876 $ 19,582,971 $ 8,129,167 $ 37,795,680 $ 743,681 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 and the aggregate difference in debt service between the refunding debt and the refunded debt was $1,042,418. The net savings on the defeasance totaled $128,099.
The annual debt service requirements were as follows:
Fiscal Year Ending June 30: Principal Interest Total
2024 355,000 155,800 $ 510,800
2025 375,000 141,600 516,600
2026 380,000 126,600 506,600
2027 405,000 111,400 516,400
2028 425,000 95,200 520,200
2029-2033 1,955,000 208,800 2,163,800
Total $ 3,895,000 $ 839,400 $ 4,734,400
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. During the fiscal year, the $133,265 of the liability was forgiven.
The annual debt service requirements were as follows:
Fiscal Year Ending June 30: Principal Interest Total
2024 $ 15,033 $ 1,519 $ 16,552
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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 bond matured during the year.
Financed Purchases
The City entered into a finance purchase agreement to buy Motorola radios for $203,021, including interest, at 3.13%, and principal. The payments commenced on July 1, 2022 and end on July 1, 2028. The annual debt service requirements were as follows:
Fiscal Year Ending June 30: Principal Interest Total
2024 $ 24,106 $ 4,897 $ 29,003
2025 24,861 4,142 29,003
2026 25,639 3,364 29,003
2027 26,442 2,561 29,003
2028 27,269 1,734 29,003
2029-2033 28,123 880 29,003
Total $ 156,440 $ 17,578 $ 174,018
Subscription Based Information Technology Agreements
During the year, the City implemented GASB 96, Subscription Based Information Technology Arrangements (SBITAs). The following summarizes the City’s terms and conditions for its SBITAs as of June 30, 2023:
Terms Spring Brook AXON BWP
Start 7/1/2022 1/1/2023
End 7/1/2027 6/30/2032
Annual Rate 2.52% 3.54%
Principal Paid $ 18,260 $ -
Interest Paid $ - $ -
Lease Amortization $ 17,881 $ 17,909
The following summarizes the City’s right of use assets and subscription liabilities:
Subscription Right of Use Assets Spring Brook AXON BWP Total Beginning $ - $ - $ -
Additions 107,281 170,133 277,414
Deletions - - -
Ending 107,281 170,133 277,414
Accumulated Amortization (17,880) (8,954) (26,834)
Subscription ROA, Net $ 89,401 $ 161,179 $ 250,580
Subscription Liabilities Spring Brook AXON BWP Total
Beginning $ - $ - $ -
Additions 107,281 170,133 277,414
Principal Paid (18,260) - (18,260)
Ending 89,021 170,133 259,154
Due Within One Year 16,930 16,786 33,716
Due in More Than One Year $ 72,091 $ 153,347 $ 225,438
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
The annual subscription payments as follows:
For the Year
Ending June 30, Principal Interest Total
2024 $ 51,251 $ 7,521 $ 58,772
2025 32,344 6,628 38,972
2026 33,312 5,660 38,972
2027 34,311 4,662 38,972
2028 35,340 3,633 38,972
2029-2033 72,596 6,603 79,199
Total Debt Service $ 259,154 $ 34,707 $ 293,862
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.
Total OPEB Liability
The total OPEB liability 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 PRISM (Public Risk Innovation, Solutions, and Management) which is a shared risk pool. PRISM covers claims for the City for both Workers Compensation and General Liability. The City’s Liability SIR is pre-funded through PRISM for 8 quarters of payments made on behalf of City. Currently, the SIR fund for the City with PRISM is maintained at $8,183. If the pre-funded SIR balance drops below this amount, the City is billed by PRISM 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 PRISM account.
The City has three layers of Liability coverage through PRISM 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 third layer is $25 million limit in the PRISM Optional Excess Liability program. The City’s total Liability insurance limit is $50 million.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
For Workers Compensation, the City is a member of both the PRISM Primary Workers Compensation program and then, the PRISM 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 of $125,000 per occurrence. Thereafter, PRISM'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 PRISM 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 workers compensation claims liability over the last two fiscal years:
Year Ended Year Ended
June 30, 2023 June 30, 2022
Beginning of year $ 575,000 $ 575,000
Increase (decrease) in current year claims 70,167 34,226 Changes in estimates (14,662) (33,628)
Claims paid (55,505) (598)
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 Employee Pension Plan (the Plan) which is a cost-sharing multiple employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). The plan includes different tiers for each class of employee under Miscellaneous and Safety provisions. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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, 2023, 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 compensation2.0% to 2.5% 2.00% 2.00% Required employee contribution rates 7.00% 7.00% 6.75%
Required employer contribution rates 10.87% 8.63% 7.47% Contractual employee contribution rates 10.00% 10.00% 9.75% Contractual employer contribution rates 7.87% 5.63% 4.47% 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 9.00% 9.00% 13.00% Required employer contribution rates 23.75% 18.17% 12.78% Contractual employee contribution rates 12.00% 12.00% 16.00% Contractual employer contribution rates 20.75% 15.17% 9.78% Miscellaneous
Safety
Employees Covered
At June 30, 2023, the following employees were covered by the benefit terms for the Plans:
Miscellaneous Safety Total
Active 55 18 73
Transferred 25 20 45
Separated 36 14 50
Retired 118 58 176
Total 234 110 344
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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, 2023, the following contributions were made:
Employer
Contributions
Miscellaneous $ 2,282,970
Safety 383,308
Total Employer Contributions $ 2,666,278
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2023, 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)
$ 14,060,259
14,103,037
$ 28,163,296
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, 2022, 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, 2021 rolled forward to June 30, 2022 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, 2022 and 2022 was as follows:
Miscellaneous Safety Combined Plans
Proportion - June 30, 2022 0.39543% 0.24098% 0.29520%
Proportion - June 30, 2023 0.30048% 0.20524% 0.24382%
Change - Increase/(Decrease) -0.09494% -0.03574% -0.05138% For the year ended June 30, 2023, the City recognized pension credit of $2,159,823.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
At June 30, 2023, 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 $ 1,440,767 $ -
Differences between Expected and Actual Experience 282,358 189,111 Differences between Projected and Actual Investment Earnings 2,575,466 - Differences between Employer's Contributions and
Proportionate Share of Contributions 184,598 326,536
Change in Employer's Proportion 66,300 589,526
Pension Contributions Made Subsequent to Measurement Date 2,282,970 - Total $ 6,832,459 $ 1,105,174
Miscellaneous
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 1,422,013 $ -
Differences between Expected and Actual Experience 583,673 153,148 Differences between Projected and Actual Investment Earnings 2,227,067 - Differences between Employer's Contributions and
Proportionate Share of Contributions - 1,418,750
Change in Employer's Proportion 496,465 10,571
Pension Contributions Made Subsequent to Measurement Date 383,308 - Total $ 5,112,526 $ 1,582,469
Safety
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of Assumptions $ 2,862,780 $ -
Differences between Expected and Actual Experience 866,031 342,259 Differences between Projected and Actual Investment Earnings 4,802,533 - Differences between Employer's Contributions and
Proportionate Share of Contributions 184,598 1,745,287
Change in Employer's Proportion 562,765 600,097
Pension Contributions Made Subsequent to Measurement Date 2,666,278 - Total $ 11,944,985 $ 2,687,643
Plan Total
The City reported $2,666,278 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, 20234
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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
$ 737,291 $ 896,771 $ 1,634,062
701,828 579,232 1,281,059
429,954 312,208 742,161
1,575,243 1,358,539 2,933,782
- - -
- - -
$ 3,444,316 $ 3,146,750 $ 6,591,064
Deferred Outflows/(Inflows) of
Fiscal Year Ending Resources
June 30:
Total
2025
2026
2027
Thereafter
2028
2024
Actuarial Assumptions
The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age
Normal Cost
Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase (1)
Investment Rate of Return 6.8% (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 6.9%. 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 6.9% 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, 2021 based on June 30, 2020 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 6.9% investment return Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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 6.9%. 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 Long-Term
Asset Expected Real
Asset Class (a) Allocation Return (1)(2)
Global Equity Cap Weighted 30.00% 4.54%
Global Equity NonCap Weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1) An expected inflation of 2.3% used for this period. (2) Figures are based on the 2021-22 Asset Liability Study.
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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 Total
1% Decrease 5.90% 5.90% 6.90%
Net Pension Liability $ 20,586,937 $ 19,834,018 $ 40,420,955 Current 6.90% 6.90% 7.90%
Net Pension Liability $ 14,060,259 $ 14,103,037 $ 28,163,296 1% Increase 7.90% 7.90% 0.00%
Net Pension Liability $ 8,690,423 $ 9,419,254 $ 18,109,677 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 was $133.00 for 2018 and is 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. 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, 2023
Employees Covered by Benefit Terms
At June 30, 2023, the benefit terms covered the following employees:
Active employees 72
Inactive employees 47
Total employees 119
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 $135,560. The actuarially determined contribution for the measurement period was $219,759. The City’s contributions and benefit payments were 2% of covered payroll during the measurement period June 30, 2023. 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, 2023
June 30, 2023
20 years
2.40%
2.80%
3.54%
3.86%
2021 CalPERS Mortality for Safety Employees
2021 CalPERS Retiree Mortality for All Employees
2021 CalPERS Mortality for Miscellaneous and
Schools Employees
Increased from 3.54%
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, 2023 (measurement date) and was determined by an actuarial valuation as of June 30, 2023 (valuation date) for the fiscal year ended June 30, 2023 (reporting date).
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
Changes in the Total OPEB Liability
The following summarizes the changes in the Total OPEB liability during the year:
Fiscal Year Ended June 30, 2022
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
(Asset)
Balance at June 30, 2021 $ 3,637,137 $ - $ 3,637,137
Service cost 197,644 - 197,644
Interest in Total OPEB Liability 133,373 - 133,373
Actual and exp experience 205,046 - 205,046
Changes in assumptions (1,013,678) - (1,013,678)
Benefit payments (135,560) - (135,560)
Net changes (613,175) - (613,175)
Balance at June 30, 2022 $ 3,023,962 $ - $ 3,023,962
Covered Employee Payroll $ 7,614,614
Total OPEB Liability as a % of Covered Employee Payroll 39.71% Service Cost as a % of Covered Employee Payroll 2.60%
Net OPEB Liability as a % of Covered Employee Payroll 39.71% 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, 2023, 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 $ 202,916 $ 475,555 Change in assumptions 140,117 1,383,564
Totals $ 343,033 $ 1,859,119
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,
2024 $ (276,903)
2025 (286,758)
2026 (286,758)
2027 (312,324)
2028 (227,733)
Thereafter (125,610)
Total $ (1,516,086)
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
OPEB Expense
The following summarizes the OPEB expense by source during the year ended June 30, 2023:
Service cost $ 197,644
Interest in TOL 133,373
Difference between actual and expected experience (79,291) Change in assumptions (178,654)
OPEB Expense $ 73,072
The following summarizes changes in the net OPEB liability as reconciled to OPEB expense during the year ended June 30, 2023:
$ 3,023,962
(3,637,137)
(613,175)
Changes in deferred outflows (93,558)
Changes in deferred inflows 644,245
Employer contributions and implicit subsidy 135,560
OPEB Expense $ 73,072
Total OPEB liability ending
Total OPEB liability begining
Change in total OPEB liability
Sensitivity to Changes in the Discount Rate
The total OPEB liability of the City, as well as what the City's total 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 3.86% 1% Increase
Total OPEB Liability $ 3,431,942 $ 3,023,962 $ 2,688,579 Municipal Bond Rate
Sensitivity to Changes in the Healthcare Cost Trend Rates The total OPEB liability of the City, as well as what the City's total 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 $ 2,660,783 $ 3,023,962 $ 3,473,239 Trend Rate
Attachment 2
City of Carmel-by-the-Sea
Notes to the Basic Financial Statements
June 30, 2023
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.
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, 2023
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes:
Property taxes $ 8,326,600 $ 8,326,600 $ 8,164,266 $ (162,334) Sales and use taxes 3,204,100 3,204,100 3,484,677 280,577 Transient occupancy taxes 6,667,000 7,000,000 8,455,742 1,455,742 Franchise fees 808,600 808,600 880,958 72,358
Business license tax 540,800 540,800 734,640 193,840
Intergovernmental revenues 1,387,800 1,538,195 832,011 (706,184) License and permits 959,700 959,700 957,429 (2,271)
Fines and forfeitures 57,100 57,100 108,144 51,044
Charges for services 1,166,400 1,166,400 1,411,796 245,396 Interest 27,500 27,500 110,604 83,104
Rents and concessions 142,000 142,000 148,896 6,896
Other revenues 73,100 223,416 200,996 (22,420)
Total Revenues 23,360,700 23,994,411 25,490,159 1,495,748
EXPENDITURES
Current:
General government 8,133,669 7,927,603 6,806,933 1,326,736 Community Planning and Building 2,208,029 2,188,030 1,939,088 268,941 Public Safety 9,552,916 10,213,370 8,866,616 1,346,754
Public Works 4,232,324 4,789,312 3,880,769 908,543
Library 1,127,591 1,129,621 913,183 216,438
Community Activities 238,271 238,271 216,366 21,905
Economic Reviltalization 1,130,510 1,130,510 1,130,510 - Capital outlay - 28,791 - 28,791
Debt service
Principal - - 18,260 (18,260)
Total Expenditures 27,871,573 26,397,245 23,771,725 4,099,848 Excess (Deficiency) of Revenues over Expenditures (3,036,545) (3,877,162) 1,718,434 5,595,596
OTHER FINANCING SOURCES (USES)
Transfers in 10,311,009 3,644,009 3,644,009 -
Transfers out (1,513,330) (633,330) (633,330) 880,000
Total Other Financing Sources (Uses) 2,130,679 9,677,679 3,010,679 880,000 Net Change in Fund Balance 6,641,134 (1,746,483) 4,729,113 6,475,596 Fund Balance Beginning 17,669,288 17,669,288 17,669,288 - Fund Balance Ending $ 24,310,422 $ 15,922,805 $ 22,398,401 $ 6,475,596 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, 2023
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Sales and use taxes 5,721,000 $ 5,721,000 $ 5,868,695 $ 147,695 $
OTHER FINANCING SOURCES (USES)
Transfers out (7,356,906) (7,356,906) (7,356,906) -
Net Change in Fund Balance (1,635,906) (1,635,906) (1,488,211) 147,695 Fund Balance Beginning 3,399,710 3,399,710 3,399,710 -
Fund Balance Ending $ 1,763,804 1,763,804 $ 1,911,499 $ 147,695 $ 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, 2023
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Contributions $ 400,500 400,500 $ 316,100 $ (84,400) $
Charges for services 24,900 24,900 8,485 (16,415)
Interest 2,000 2,000 20,658 18,658
Total Revenues 427,400 427,400 345,243 (82,157)
EXPENDITURES
Current:
Library 438,525 438,525 443,713 (5,188)
Total Expenditures 438,525 438,525 443,713 (5,188)
Excess (Deficiency) of Revenues over Expenditures (11,125) (11,125) (98,470) (87,345)
OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out - - - -
Total Other Financing Sources (Uses) - - - -
Net Change in Fund Balance (11,125) (11,125) (98,470) (87,345) Fund Balance Beginning 1,549,102 1,549,102 1,549,102 -
Fund Balance Ending $ 1,537,977 $ 1,537,977 $ 1,450,632 $ (87,345) Attachment 2
City of Carmel-by-the-Sea
Schedule of Pension Contributions
June 30, 2023
Miscellaneous and Safety Plan
Plan Measurement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021 2022 2023 Contractually Required Contributions $ 725,205 $ 1,124,776 $ 1,279,565 $ 1,317,381 $ 1,566,319 $ 1,864,910 $ 2,183,606 $ 2,378,458 $ 2,666,278 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 2,378,458 2,666,278 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 $ 6,244,060 $ 7,251,994 Contributions as a % of Covered Payroll 14.82% 21.66% 22.35% 22.34% 25.79% 28.29% 32.24% 38.09% 36.77% Notes to Schedule:
Valuation Date: June 30, 2021
Assumptions Used: Entry Age Method used for Actuarial Cost Method Level Percentage of Payroll and Direct Rate Smoothing
Remaining Amortization Period no more than 29 years
Inflation Assumed at 2.30%
Investment Rate of Returns set at 6.9%
Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.
The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.9% in FY2023.
The CalPERS mortality assumptions was adjusted in fiscal year 2023.
The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing morality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.
Attachment 2
City of Carmel-by-the-Sea
Schedule of Proportionate Share of Net Pension Liability June 30, 2023
Miscellaneous and Safety Plan
Plan Measurement Date 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021 2022 2023 Proportion of Net Pension
Liability (Safety and Misc) 0.18745% 0.19035% 0.19840% 0.20075% 0.20672% 0.21144% 0.22373% 0.29520% 0.24382% Proportion of Net Pension
Liability (Misc Plan Only) 0.47195% 0.47624% 0.49419% 0.50503% 0.52858% 0.54105% 0.28377% 0.39543% 0.30048% Proportionate Share of
Net Pension Liability $ 11,664,146 $ 13,065,617 $ 17,167,636 $ 19,908,483 $ 19,920,568 $ 21,666,416 $ 24,342,598 $ 15,965,385 $ 28,163,296 Covered Payroll $ 4,748,117 $ 6,261,394 $ 5,693,737 $ 5,365,096 $ 5,446,378 $ 5,919,593 $ 6,340,399 $ 6,335,440 $ 6,134,639 Proportionate Share of NPL
as a % of Covered Payroll 245.66% 208.67% 301.52% 371.07% 365.76% 366.01% 383.93% 252.00% 459.09% Plan's Fiduciary Net Position
as a % of the TPL 80.11% 77.73% 74.70% 73.44% 74.18% 72.78% 71.13% 81.45% 68.49% Fiscal year 2015 was the first year of implementation, therefore only nine years are shown.
The CalPERS discount rate was increased from 7.50% to 7.65% in FY2016, to 7.15% in FY2018, and then decreased to 6.80% in FY2023.
The CalPERS mortality assumptions was adjusted in fiscal year 2023.
Attachment 2
City of Carmel-by-the-Sea
Retiree Health Care Plan
Schedule of Total OPEB Liability
June 30, 2023
Fiscal Year Ended 2018 2019 2020 2021 2022 2023
Total OPEB liability
Service cost $ 199,013 $ 193,586 $ 295,059 $ 348,597 $ 261,219 $ 197,644 Interest 134,202 146,765 143,565 105,930 90,758 133,373 Differences between expected and actual experience (2,625) (2,524) 59,118 (823,299) - 205,046 Changes of assumptions (137,699) 192,779 256,216 21,493 (716,539) (1,013,678) Benefit payments (145,196) (159,107) (135,193) (152,834) (138,891) (135,560) Net change in Total OPEB Liability 47,695 371,499 618,765 (500,113) (503,453) (613,175) Total OPEB Liability - beginning 3,602,744 3,650,439 4,021,938 4,640,703 4,140,590 3,637,137 Total OPEB Liability - ending $ 3,650,439 $ 4,021,938 $ 4,640,703 $ 4,140,590 $ 3,637,137 $ 3,023,962 Plan fiduciary net position
Net change in plan fiduciary net position $ - $ - $ - $ - $ - $ - Plan fiduciary net position - beginning - - - - - -
Plan fiduciary net position - ending $ - $ - $ - $ - $ - $ - Net/total OPEB liability (asset) $ 3,650,439 4,021,938 4,640,703 4,140,590 3,637,137 3,023,962 Plan fiduciary net position as a percentage of the
total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered Employee Payroll $ 6,021,711 $ 6,207,949 $ 6,378,668 $ 6,544,081 $ 6,734,318 $ 7,410,817 NOL as a percentage of covered employee payroll 60.62% 64.79% 72.75% 63.27% 54.01% 40.80% TOL as a percentage of covered employee payroll 60.62% 64.79% 72.75% 63.27% 54.01% 40.80% 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 increased from 2.2% to 3.86%, 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 2023.
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.
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, 2023
Gas Transportation COPS Parking
Tax Safety Grant In-Lieu
Fund Fund Fund Fund
ASSETS
Cash and investments 516,876$ $ 789,064 $ 7,467 $ 738,592 Receivables:
Due from other governments 19,470 67,162 16,667 -
Total assets 536,346$ $ 856,226 $ 24,134 $ 738,592
LIABILITIES AND FUND BALANCES
Liabilities:
Due to other funds -$ $ - $ 13,317 $ -
Total liabilities - - 13,317 -
Fund Balances:
Restricted:
Transportation 536,345 856,227 - -
Public safety - - 10,817 -
Debt service - - - -
Asset seizure - - - -
Public parking - - - 738,592
Total fund balances 536,346 856,226 10,817 738,592
Total liabilities and fund balances 536,346$ $ 856,226 $ 24,134 $ 738,592 Cont'd
Special Revenue Funds
Attachment 2
City of Carmel-By-The-Sea
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
ASSETS
Cash and investments
Receivables:
Due from other governments
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Due to other funds
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
$ 5,466 $ 26,805 $ 2,084,270
- - 103,299
$ 5,466 $ 26,805 $ 2,187,569
$ - $ - $ 13,317
- - 13,317
- - 1,392,572
- - 10,817
- 26,805 26,805
5,466 - 5,466
- - 738,592
5,466 26,805 2,174,252
$ 5,466 $ 26,805 $ 2,187,569
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, 2023
Gas Transportation COPS Parking
Tax Safety Grant In-Lieu
Fund Fund Fund Fund
REVENUES
Intergovernmental revenues $ 157,804 $ 259,005 $ 165,271 -$ Interest 296 3,462 196 4,577
Total Revenues 158,100 262,467 165,467 4,577
EXPENDITURES
Debt service
Principal - - - -
Interest and fiscal charges - - - -
Total Expenditures - - - -
Excess (Deficiency) of Revenues over Expenditures 158,100 262,467 165,467 4,577
OTHER FINANCING SOURCES (USES)
Transfers in 306,567 - - -
Transfers out - - (158,000) -
Total Other Financing Sources (Uses) 306,567 - (158,000) - Net Change in Fund Balances 464,667 262,467 7,467 4,577 Fund Balances Beginning 71,679 593,759 3,350 734,015
Fund Balances Ending $ 536,346 $ 856,226 $ 10,817 $ 738,592 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, 2023
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)
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
$ - - $ 582,080 $
34 - 8,565
34 - 590,645
- 696,753 696,753
- 178,189 178,189
- 874,942 874,942
34 (874,942) (284,297)
- 485,170 791,737
- - (158,000)
- 485,170 633,737
34 (389,772) 349,440
5,432 416,577 1,824,812
$ 5,466 $ 26,805 $ 2,174,252
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, 2023
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental revenues $ 209,200 $ 209,200 $ 157,804 $ (51,396) Contributions - - - -
Charges for services - - - -
Interest - - 296 296
Total Revenues 209,200 209,200 158,100 (51,100)
EXPENDITURES
Debt service
Principal - - - -
Interest and fiscal charges - - - -
Total Expenditures - - - -
Excess (Deficiency) of Revenues over Expenditures 209,200 209,200 158,100 (51,100)
OTHER FINANCING SOURCES (USES)
Transfers in - - 306,567 306,567
Transfers out (209,200) (209,200) - 209,200
Total Other Financing Sources (Uses) (209,200) (209,200) 306,567 515,767 Net Change in Fund Balances - - 464,667 464,667
Fund Balances Beginning 71,679 71,679 71,679 -
Fund Balances Ending 71,679 $ 71,679 $ 536,346 $ 464,667 $ Cont'd
Budgeted Amounts
Gas Tax Fund
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, 2023
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)
$ 202,100 202,100 $ 259,005 $ 56,905 $
- - - -
- - - -
- - 3,462 3,462
202,100 202,100 262,467 60,367
- - - -
- - - -
- - - -
202,100 202,100 262,467 60,367
- - - -
(202,100) (202,100) - 202,100
(202,100) (202,100) - 202,100
- - 262,467 262,467
593,759 593,759 593,759 -
$ 593,759 $ 593,759 $ 856,226 $ 262,467
Cont'd
Budgeted Amounts
Transportation Safety Fund
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, 2023
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)
158,000$ 158,000$ $ 165,271 $ 7,271
- - - -
- - - -
- - 196 196
158,000 158,000 165,467 7,467
- - - -
- - - -
- - - -
158,000 158,000 165,467 7,467
- - - -
(158,000) (158,000) (158,000) -
(158,000) (158,000) (158,000) -
- - 7,467 7,467
3,350 3,350 3,350 -
3,350$ 3,350$ $ 10,817 $ 7,467
Cont'd
Budgeted Amounts
COPS Grant Fund
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, 2023
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)
-$ -$ -$ -$
- - - -
- - - -
- - 4,577 4,577
- - 4,577 4,577
- - - -
- - - -
- - - -
- - 4,577 4,577
- - - -
- - - -
- - - -
- - 4,577 4,577
734,015 734,015 734,015 -
$ 734,015 734,015$ $ 738,592 $ 4,577
Cont'd
Budgeted Amounts
Parking In-Lieu Fund
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, 2023
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)
-$ -$ -$ -$
- - - -
- - - -
- - 34 34
- - 34 34
- - - -
- - - -
- - - -
- - 34 34
- - - -
- - - -
- - - -
- - 34 34
5,432 5,432 5,432 -
5,432$ 5,432$ $ 5,466 $ 34
Cont'd
Budgeted Amounts
Asset Seizure Fund
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, 2023
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)
-$ -$ -$ -$ - - - - - - - - - - - - - - - -
696,423 696,423 696,753 (330)
181,880 181,880 178,189 3,691
878,303 878,303 874,942 3,361
(878,303) (878,303) (874,942) 3,361
485,170 485,170 485,170 - - - - -
485,170 485,170 485,170 -
(393,133) (393,133) (389,772) 3,361
416,577 416,577 416,577 -
$ 23,444 $ 23,444 $ 26,805 $ 3,361
Concluded
Budgeted Amounts
Debt Service Fund
Attachment 2
City of Carmel-By-The-Sea
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (GAAP Basis)
Capital Projects Fund
For the Year Ended June 30, 2023
Variance with
Budgeted Amounts Final Budget
Actual Positive
Original Final Amounts (Negative)
REVENUES
Intergovernmental revenues 285,500 $ 285,500 $ - $ (285,500) $ Total Revenues 285,500 285,500 - (285,500)
EXPENDITURES
Capital outlay 4,344,000 3,922,678 1,199,077 2,723,601
Total Expenditures 3,922,678 4,344,000 1,199,077 2,723,601 Excess (Deficiency) of Revenues over Expenditures (4,058,500) (3,637,178) (1,199,077) 2,438,101
OTHER FINANCING SOURCES (USES)
Transfers in 3,997,197 3,997,197 3,585,897 (411,300)
Transfers out - - (306,567) (306,567)
Total Other Financing Sources (Uses) 3,997,197 3,997,197 3,279,330 (717,867) Net Change in Fund Balance (61,303) 360,019 2,080,253 1,720,234 Fund Balance Beginning 1,596,719 1,596,719 1,596,719 -
Fund Balance Ending $ 1,535,416 $ 1,956,738 $ 3,676,972 $ 1,720,234 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, 2023
Total
Vehicle Governmental
Workers OPEB & Equipment Activities -
Compensation Reserve Replacement Internal
Fund Fund Fund Service Funds
ASSETS
Current assets:
Cash and investments $ 836,157 $ 1,768,710 $ 453,632 $ 3,058,499 Accounts receivable - - 9,188 9,188
Other assets - - 914,692 914,692
Total current assets 836,157 1,768,710 1,377,512 3,982,379 Noncurrent assets:
Capital assets - net - - 1,252,780 1,252,780
Total assets $ 836,157 $ 1,768,710 $ 2,630,292 $ 5,235,159
LIABILITIES
Current liabilities:
Accounts payable $ 1,441 -$ $ - $ 1,441
Financed purchases - current - - 30,000 30,000
Claims payable - current - 57,500 - 57,500
Total current liabilities 58,941 - 30,000 88,941
Noncurrent liabilities:
Financed purchases - - 126,440 126,440
Claims payable 517,500 - 517,500 -
Total noncurrent liabilities 517,500 - 126,440 643,940
Total liabilities $ 576,441 -$ $ 156,440 $ 732,881
NET POSITION
Net investment in capital assets -$ -$ 1,096,340 $ $ 1,096,340 Unrestricted 259,716 1,768,710 1,377,512 3,405,938
Total net position $ 259,716 $ 1,768,710 $ 2,473,852 $ 4,502,278 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, 2023
Total
Vehicle Governmental
Workers OPEB & Equipment Activities -
Compensation Reserve Replacement Internal
Fund Fund Fund Service Funds
OPERATING REVENUES
Charges for services 98,435 $ - $ - $ 98,435 $
Other - - 824,813 824,813
Total operating revenues 98,435 - 824,813 923,248
OPERATING EXPENSES
Claims 55,505 - - 55,505
Depreciation - - 225,248 225,248
Total operating expenses 55,505 - 225,248 280,753
Operating income (loss) 42,930 - 599,565 642,495
NONOPERATING REVENUES(EXPENSES)
Gain (loss) on disposal of capital assets - - 9,188 9,188 Interest expense - - (482) (482)
Investment income 4,392 10,962 - 15,354
Total nonoperating revenues(expenses) 4,392 10,962 8,706 24,060 Income (loss) before operating transfers 47,322 10,962 608,271 666,555 Transfers in 148,160 - 285,000 433,160
Transfers out - - - -
Total Other Financing Sources (Uses) 148,160 - 285,000 433,160 Change in net position 195,482 10,962 893,271 1,099,715 Total net position - beginning 64,234 1,757,748 1,580,581 3,402,563 Total net position - ending $ 259,716 $ 1,768,710 $ 2,473,852 $ 4,502,278 Attachment 2
City of Carmel-By-The-Sea
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2023
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 98,435 $ - $ 824,813 $ 923,248 $ Payments for claims (54,064) - - (54,064)
Net cash provided (used) by operating activities 44,371 - 824,813 869,184 Cash flows from noncapital financing activities:
Interfund transactions 148,160 - 285,000 433,160
Net cash provided (used) by noncapital financing activities 148,160 - 285,000 433,160 Cash flows from capital financing activities:
Proceeds from debt - - 184,962 184,962
Principal payments on debt - - (28,522) (28,522)
Interest payments on debt - - (482) (482)
Purchases of property and equipment - - (1,178,718) (1,178,718) Net cash provided (used) by noncapital financing activities - - (1,022,760) (1,022,760) Cash flows from investing activities:
Investment income received 4,392 10,962 - 15,354
Net cash provided (used) by investing activities 4,392 10,962 - 15,354 Net increase (decrease) in cash and cash equivalents 196,923 10,962 87,053 294,938 Cash and cash equivalents - beginning 639,234 1,757,748 366,579 2,763,561 Cash and cash equivalents - ending 836,157 $ 1,768,710 $ 453,632 $ 3,058,499 $ Reconciliation of operating income to net cash provided (used) by operating activities:
Operating income (loss) 42,930 $ - $ 599,565 $ 642,495 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation - - 225,248 225,248
Change in operating assets and liabilities:
Accounts payable 1,441 - - 1,441
Net cash provided (used) by operating activities $ 44,371 $ - $ 824,813 $ 869,184 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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Governmental activities:
Net investment in capital assets 25,522,348 $ 32,547,268 $ 36,006,046 $ 36,931,575 $ 35,216,550 $ 37,132,103 $ 36,611,510 $ 34,846,110 $ 33,545,605 $ 32,930,884 $ Restricted 2,616,731 3,862,473 3,584,687 5,027,082 2,628,238 2,817,741 3,310,294 4,748,736 6,773,624 5,536,383 Unrestricted 6,266,725 (12,992,711) (12,666,545) (14,167,354) (12,141,385) (12,645,571) (14,479,015) (11,775,303) (8,155,852) 5,110,622 Total governmental activities net position 34,405,804 $ 23,417,030 $ 26,924,188 $ 27,791,303 $ 25,703,403 $ 27,304,273 $ 25,442,789 $ 27,819,543 $ 32,163,377 $ 43,577,889 $ Notes:1) 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 $-
$5
$10 $15 $20 $25 $30 $35 $40 $45 $50
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Millions
Total Net Position
City of Carmel-by-the-Sea TABLE 2
Changes in Net Position
Last Ten Fiscal Years
2014 2015 2016 2017 2018
Expenses
Governmental activities:
General government $ 3,724,546 4,067,934 $ 5,162,323 $ 4,981,304 $ 4,896,809 $ Community planning and building - - - 1,146,860 1,206,295 Public safety 4,299,954 6,685,310 6,445,695 7,281,137 7,771,104 Public works 2,227,067 2,003,332 1,454,895 2,605,036 2,950,423 Library - - - 1,144,883 1,303,989
Community activities - - - 446,445 153,224
Economic revitalization 363,342 326,956 306,505 1,110,857 1,125,261 Building maintenance 2,924,447 1,832,618 1,542,170 - -
Forest, parks and beach 484,119 581,319 558,592 - -
Culture and recreation 2,453,842 2,605,877 2,082,591 - - Interest and fiscal charges on long-term debt 346,674 365,043 336,551 322,181 319,974 Depreciation (Unallocated) - - 1,528,260 1,747,960 1,786,021 Total governmental activities expenses 17,167,379 18,125,001 19,417,582 20,786,663 21,513,100 Program Revenues
Governmental activities:
Charges for services:
General government 15,644 66,190 34,040 38,795 318,414
Community planning and building - - - - 1,167,308
Public safety 184,338 918,644 684,612 373,716 692,187
Public works 467,392 525,310 534,224 751,844 58,931
Library - - - - 14,794
Community activities - - - - 79,067
Economic revitalization - - - - 97,142
Forest, parks and beach 165,406 - - - -
Culture and recreation 91,804 18,953 20,326 31,817 -
Operating grants and contributions 1,282,214 1,444,296 668,239 675,765 681,240 Capital grants and contributions - 331,719 327,029 166,726 - Total governmental activities program revenues 2,206,798 3,305,112 2,268,470 2,038,663 3,109,083 Net (expense)/revenue:
Governmental activities (14,960,581) (14,819,889) (17,149,112) (18,748,000) (18,404,017) General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes
Property taxes 4,881,534 5,127,974 5,598,743 5,825,889 6,192,126 Sales and use taxes 5,115,880 5,280,418 4,897,325 5,373,800 5,486,449 Transient occupancy taxes 5,185,880 5,593,689 5,890,538 6,112,347 6,329,074 Franchise taxes 994,468 430,430 587,514 672,554 637,136 Business license tax 549,190 606,128 626,625 649,525 544,392 Unrestricted grants and contributions - 382,145 413,334 436,073 462,989 Unrestricted investment earnings 76,880 163,648 160,172 182,366 101,743 Gain (loss) on sale of assets - - - - (2,439,255)
Miscellaneous or other revenues 184,660 249,537 1,963,750 362,561 212,820 Total governmental activities 17,833,969 16,988,492 20,138,001 19,615,115 17,527,474 Change in Net Position $ 3,014,080 2,027,911 $ 2,988,889 $ 867,115 $ (876,543) $ 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
Unrestricted grants and contributions
Unrestricted investment earnings
Gain (loss) on sale of assets
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
2019 2020 2021 2022 2023
$ 5,356,174 5,906,304 $ 5,423,821 $ 6,494,737 $ 6,290,757 $ 1,191,826 1,214,005 1,280,518 1,789,916 1,618,884
8,390,616 9,166,804 8,968,364 10,511,669 5,427,362
4,162,376 4,410,995 4,162,030 4,961,215 4,572,764
1,894,410 2,011,886 1,539,410 1,644,498 1,677,297
283,512 256,698 119,562 205,869 201,277
1,144,022 1,081,813 819,202 1,034,150 1,101,644
- - - - -
- - - - -
- - - - -
283,606 268,721 387,525 168,038 148,051
- - - - -
23,767,096 23,256,672 22,700,432 26,810,092 21,038,036
256,645 211,067 165,541 478,709 177,654
1,454,523 1,112,512 1,142,277 1,332,086 1,268,455
790,428 808,559 796,471 911,902 973,358
44,636 42,395 156,838 53,251 73,206
10,097 11,793 5,544 2,239 8,485
146,443 85,060 33,140 43,922 56,919
102,366 91,528 111,093 119,646 141,471
- - - - -
- - - - -
865,370 695,186 813,139 960,670 958,933
- - - - -
3,058,100 3,670,508 3,224,043 3,902,425 3,658,481
(20,708,996) (19,586,164) (19,476,389) (22,907,667) (17,379,555) 6,524,331 6,690,948 7,389,657 7,694,722 8,164,266
5,732,885 4,766,762 7,028,041 9,596,727 9,353,372
6,882,015 5,115,271 5,339,285 7,787,643 8,455,742
636,397 632,833 756,358 851,738 880,958
594,941 592,466 524,220 613,559 734,640
- 672,399 704,337 734,550 771,258
205,791 207,153 47,554 (126,009) 155,181
- (160,794) - - -
12,928 169,680 63,691 98,571 278,650
18,847,512 20,428,494 21,853,143 27,251,501 28,794,067
$ (1,861,484) 842,330 $ 2,376,754 $ 4,343,834 $ 11,414,512 $ Concluded
Attachment 2
City of Carmel-by-the-Sea TABLE 3
Fund Balances of Governmental FundsLast Ten Fiscal Years 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General Fund
Restricted - $ - $ - $ - $ - $ - $ - $ - $ 942,628 $ 1,983,781 $ Nonspendable 73,038 - - - - - - - - 26,469
Committed 2,888,306 4,561,070 2,166,165 2,173,138 2,806,045 2,808,138 2,684,665 2,421,958 4,410,254 666,700 Assigned - 1,747,589 3,308,636 2,448,461 1,922,008 1,926,008 1,025,194 1,025,194 2,298,939 4,180,736 Unassigned 4,172,077 1,541,150 1,738,067 4,693,897 3,278,341 4,515,984 5,048,288 9,167,717 10,017,467 15,540,715 Total Fund Balance 7,133,421 7,849,809 7,212,868 9,315,496 8,006,394 9,250,130 8,758,147 12,614,869 17,669,288 22,398,401 Other Governmental Funds
Nonspendable 46,747 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Restricted 2,543,658 3,903,533 3,624,383 5,065,310 2,628,238 2,817,741 3,310,294 4,748,736 6,773,624 5,536,383 Committed - 1,783,310 - - - - - - - -
Assigned 1,477,680 90,158 1,146,832 1,627,098 362,034 571,657 539,863 1,596,719 3,676,972 Unassigned (479,166) (684,400) (706,427) (1,264,197) (483) - - - - - Total Fund Balance 3,588,919 5,092,601 4,064,788 3,801,113 4,254,853 3,179,775 3,881,951 5,288,599 8,370,343 9,213,355 Total Fund Balance $ 12,942,410 10,722,340 $ 11,277,656 $ 13,116,609 $ 12,261,247 $ 12,429,905 $ 12,640,098 $ 17,903,468 $ 26,039,631 $ 31,611,756 $ 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
2014 2015 2016 2017 2018
Revenues
Taxes $ 12,727,944 $ 17,420,784 $ 18,014,079 $ 19,041,911 $ 19,652,166 Intergovernmental revenues 3,864,416 874,152 294,952 365,304 454,997 License and permits 1,114,927 720,257 788,578 850,547 1,087,953 Contributions 313,895 686,025 314,600 323,495 318,398
Fines and forfeitures 138,713 119,152 111,930 87,154 91,813 Charges for services 508,563 905,526 712,321 440,439 1,070,999 Interest - - - - 58,055
Rents and concessions 163,648 314,248 163,875 182,367 100,899 Other revenues 193,336 249,537 389,136 1,979,561 211,153 Total revenues 15,929,815 19,176,042 21,139,081 20,789,471 23,270,778 Expenditures
General government 4,305,440 3,593,094 5,045,332 5,681,103 4,696,923 Community Planning and Building - - - - 1,128,977
Public Safety 4,245,184 6,398,876 6,264,950 7,033,862 7,024,092 Public Works 1,609,402 1,284,030 1,301,160 2,554,752 2,769,129 Library - - - - 1,217,687
Community Activities - - - - 141,378
Economic Revitalization 363,342 315,780 306,505 351,425 1,095,636 Building maintenance 2,798,314 1,637,602 1,525,038 1,138,983 - Forest, parks and beach 468,247 544,902 547,211 108,764 - Culture and recreation 1,963,003 1,999,728 2,054,872 1,448,129 - Capital Outlay 1,993,305 2,396,667 4,439,279 1,877,053 1,833,014 Debt Service
Principal 927,774 1,046,128 898,379 914,105 934,860
Interest and fiscal charges 357,840 360,610 337,915 323,649 302,202 Total expenditures 19,031,851 19,577,417 22,720,641 21,431,825 21,143,898 Excess of revenues
over (under) expenditures 144,191 1,561,664 (1,931,170) 1,838,953 1,902,535 Other financing sources (uses)
Asset dispositions 19,248 - - - -
Long-term debt issued - - - - -
Retirement of PERS side fund - - - - -
Payments to refunded bonds escrow agent - - - - -
Interagency transfers in (out) - - - - 31,000
Transfers in 9,724,198 4,927,935 6,483,069 3,405,710 13,924,490 Transfers out (9,724,198) (4,927,935) (6,483,069) (3,405,710) (16,713,387) Total other financing sources (uses) 19,248 - - - (2,757,897) Net change in fund balances $ 163,439 $ 1,561,664 $ (1,931,170) $ 1,838,953 $ (855,362) Total Expenditures $ 19,031,851 $ 19,577,417 $ 22,720,641 $ 21,431,825 $ 21,143,898 Capitalized Portion of Capital Outlay 1,993,170 2,396,667 4,311,179 1,870,844 1,900,132 Total Non-Capitalized Expenditures $ 14,090,687 $ 17,038,681 $ 17,180,750 $ 18,409,462 $ 19,560,981 Debt Service: Principal & Interest $ 1,285,614 $ 1,406,738 $ 1,236,294 $ 1,237,754 $ 1,237,062 Debt service as a percentage of noncapital
expenditures 9.1% 8.3% 7.2% 6.7% 6.3%
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
Rents and concessions
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
Payments to refunded bonds escrow agent
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
2019 2020 2021 2022 2023
$ 17,798,280 20,370,569 $ 21,037,561 $ 26,544,389 $ 27,588,978 $ 1,126,260 1,088,044 1,212,506 1,323,845 1,414,091
928,752 1,192,242 889,822 1,276,260 957,429
241,324 314,450 304,972 371,377 316,100
72,152 121,470 48,947 55,506 108,144
1,193,992 1,261,169 1,204,113 1,448,681 1,420,281
178,244 167,544 40,033 (115,882) 139,827
130,792 185,156 138,138 132,551 148,896
206,908 158,029 193,575 127,327 200,996
24,858,673 23,046,433 25,069,667 31,164,054 32,294,742
5,008,054 5,517,516 5,083,467 5,990,601 6,806,933
1,094,736 1,116,689 1,172,337 1,550,702 1,939,088
7,774,916 7,617,310 7,833,156 8,236,353 8,866,616
2,847,091 2,902,461 2,635,206 3,184,957 3,880,769
1,344,340 1,258,390 917,694 929,258 1,356,896
209,554 179,426 82,366 136,788 216,366
1,076,542 1,103,993 808,540 1,033,307 1,130,510
- - - - -
- - - - -
- - - - -
3,778,271 869,596 98,907 149,872 1,199,077
950,770 971,460 640,000 660,000 715,013
286,606 272,721 406,525 199,212 178,189
24,711,432 21,469,010 19,678,198 22,071,050 26,289,457
147,241 3,389,663 5,391,469 9,093,004 6,005,285
- - - - -
- - 4,761,901 - -
- - - - -
- - (4,890,000) - -
- - - - -
4,581,594 3,188,456 3,210,000 5,217,994 8,021,643
(4,681,594) (3,385,956) (3,210,000) (6,174,835) (8,454,803) (100,000) (197,500) (128,099) (956,841) (433,160)
$ 47,241 $ 3,192,163 $ 5,263,370 $ 8,136,163 $ 5,572,125 $ 24,711,432 $ 21,469,010 $ 19,678,198 $ 22,071,050 $ 26,289,457 3,533,858 918,075 133,875 151,238 1,199,077
$ 19,243,766 $ 21,177,574 $ 19,544,323 $ 21,919,812 $ 25,090,380 $ 1,237,376 $ 1,244,181 $ 1,046,525 $ 859,212 $ 893,202
6.4% 5.9% 5.4% 3.9% 3.6%
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 $ 4,881,534 $ 5,115,880 $ 994,468 $ 5,185,880 $ 549,190 $ - $ 16,726,952 $ 5,127,974 $ 5,280,418 $ 430,430 $ 5,280,418 $ 606,128 $ 382,145 $ 17,107,513 $ 5,598,743 $ 4,897,325 $ 587,514 $ 5,890,538 $ 626,625 $ 413,334 $ 18,014,079 $ 5,825,889 $ 5,373,800 $ 672,554 $ 6,112,347 $ 649,525 $ 436,073 $ 19,070,188 $ 6,192,126 $ 5,486,449 $ 637,136 $ 6,329,074 $ 544,392 $ 462,989 $ 19,652,166 $ 6,524,331 $ 5,732,885 $ 636,397 $ 6,882,015 $ 594,941 $ - $ 20,370,569 $ 6,690,948 $ 4,766,762 $ 632,833 $ 5,115,271 $ 592,466 $ - $ 17,798,280 $ 7,389,657 $ 7,028,041 $ 756,358 $ 5,339,285 $ 524,220 $ - $ 21,037,561 $ 7,694,722 $ 9,596,727 $ 851,738 $ 7,787,643 $ 613,559 $ - $ 26,544,389 $ 8,164,266 $ 9,353,372 $ 880,958 $ 8,455,742 $ 734,640 $ - $ 27,588,978 Source: City of Carmel-by-the-Sea Finance Department
Fiscal Year
Ended
June 30
2015
2017
2016
2018
2019
2014
2020
2021
2022
2023
$-
$5
$10
$15
$20
$25
$30
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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
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 $ 2022 20,573,925 $ 678,437 $ 1,276,260 $ $ - $ 55,506 $ 1,446,442 $ 18,014 $ 127,327 $ 24,175,911 2023 $ 21,720,283 $ 832,011 $ 957,429 $ - $ 108,144 $ 1,411,796 $ 259,500 $ 200,990 $ 25,490,153 Source: City of Carmel-by-the-Sea Finance Department
$-
$5
$10
$15
$20
$25
$30
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
$ 3,153,416,179 $ 27,307,767 $ 3,180,723,946 1.00%
$ 3,309,856,089 $ 26,813,656 $ 3,336,669,745 1.00%
$ 3,569,065,524 $ 26,719,717 $ 3,595,785,241 1.00%
$ 3,766,258,441 $ 26,280,598 $ 3,792,539,039 1.00%
$ 3,999,182,757 $ 25,708,168 $ 4,024,890,925 1.00%
$ 4,220,683,852 $ 26,668,954 $ 4,247,352,806 1.00%
$ 4,446,041,301 $ 28,251,679 $ 4,474,292,980 1.00%
$ 4,686,463,940 $ 31,785,264 $ 4,718,249,204 1.00%
$ 4,933,554,941 $ 31,058,835 $ 4,964,613,776 1.00%
$ 5,322,503,952 $ 33,821,025 $ 5,356,324,977 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
2022
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. 2015
2016
2017
2018
2019
2020
2023
2014
Fiscal Year
Ended
June 30
2021
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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 0.016 0.015 0.010 0.015 0.007 Monterey Peninsula Community College 0.022 0.022 0.022 0.022 0.022 0.021 0.021 0.027 0.032 0.030 Total Direct and Overlapping Rate 1.036 1.036 1.036 1.036 1.036 1.037 1.036 1.037 1.047 1.037 City Share of 1% Levy per Prop. 13 (3) 0.913 0.904 0.918 0.925 0.929 0.919 0.906 0.918 0.929 0.929 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 $ 61,429,413 1 1.15% Unavailable na
ESPERANZA CARMEL COMMERCIAL LLC $ 58,174,496 2 1.09% Unavailable na HINES JEFFREY C $ 39,250,952 3 0.73% Unavailable na
PAUL ANDREW M $ 30,890,293 4 0.58% Unavailable na
GUNNER RICHARD V & MARGARET S GUNNER TRS $ 22,557,958 5 0.42% Unavailable na LA PLAYA CARMEL HOTEL LLC $ 18,405,598 6 0.34% Unavailable na ESPERANZA CARMEL LLC $ 23,070,043 7 0.43% Unavailable na HOSEIT MANAGEMENT LLC ET AL $ 14,672,226 8 0.27% Unavailable na PORTER ALAN R $ 14,812,705 9 0.28% Unavailable na
LEVETT FAMILY PROPERTIES LLC $ 13,546,469 10 0.25% Unavailable na Totals $ 296,810,153 5.54% na na
Total assessed value $ 5,356,324,977 na
Source: County of Monterey Assessors Office
na= not available
2023 2014
Attachment 2
City of Carmel-by-the-Sea Table 10
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
$ 4,769,259 4,881,534 $ 97.7% $ 73,000 95,355 $ $ 4,937,614 $ 4,994,647 5,127,974 $ 97.4% $ 74,547 117,309 $ $ 5,186,503 $ 5,453,176 5,598,743 $ 97.4% $ 80,397 106,567 $ $ 5,640,140 $ 5,691,894 5,825,889 $ 97.7% $ 76,128 124,505 $ $ 5,892,528 $ 6,049,707 6,192,126 $ 97.7% $ 80,213 131,185 $ $ 6,261,105 $ 6,242,449 6,524,331 $ 95.7% $ 64,523 107,412 $ $ 6,414,384 $ 7,219,695 6,690,948 $ 107.9% $ 71,261 118,629 $ $ 7,409,584 $ 6,712,274 7,389,657 $ 90.8% $ 85,217 144,856 $ $ 6,942,347 $ 7,612,601 7,694,722 $ 98.9% $ 83,468 174,951 $ $ 7,871,020 $ 7,603,636 8,164,266 $ 93.1% $ 53,537 198,307 $ $ 7,855,480 Source: County of Monterey Auditor-Controller's Office
City of Carmel-by-the-Sea Finance Department
2023
Fiscal
Year
Ended
June 30
2017
2014
2015
2016
2019
2020
2021
2022
2018
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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 Financed Capital Outstanding Household of Household per Bonds Bonds Joint Agree Purchases SBITAs Loan Debt Income Income Population Capita $ 3,585,000 $ 6,725,000 $ 303,366 -$ -$ 137,387$ $ 10,750,753 $ 62,460 0.58% 3,867 2,780 $ 5,005,000 $ 6,435,000 $ 264,625 -$ -$ -$ $ 11,704,625 $ 74,758 0.64% 3,886 3,012 $ 4,420,000 $ 6,140,000 $ 246,246 -$ -$ -$ $ 10,806,246 $ 81,607 0.76% 3,903 2,769 $ 3,825,000 $ 5,840,000 $ 227,141 -$ -$ -$ $ 9,892,141 $ 87,532 0.88% 3,897 2,538 $ 3,220,000 $ 5,530,000 $ 207,281 -$ -$ -$ $ 8,957,281 $ 87,532 0.98% 3,897 2,299 $ 2,605,000 $ 5,215,000 $ 186,511 -$ -$ -$ $ 8,006,511 $ 87,532 1.09% 3,987 2,008 $ 1,980,000 $ 4,890,000 $ 157,741 -$ -$ -$ $ 7,027,741 $ 98,638 1.40% 3,949 1,780 $ 1,340,000 $ 4,761,901 $ 165,051 -$ -$ -$ $ 6,266,952 $ 98,188 1.82% 4,023 1,558 $ 680,000 $ 4,733,004 $ 165,051 -$ -$ -$ $ 5,578,055 $ 101,696 1.82% 3,041 1,834 -$ 4,704,107 $ $ 15,033 $ 156,440 $ - 159,154 $ $ 5,034,734 $ 100,365 1.82% 3,033 1,660
Source: City of Carmel-by-the-Sea Finance Department
Demographics from Table 16
2015
2016
Governmental Activities
2023
Fiscal Year
June 30
Ending
2014
2017
2018
2019
2020
2021
2022
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 2013 5,585,000 $ 6,725,000 $ 400,014 $ 11,909,986 $ 0.37% 3,080 $ $ 3,867 3,180,723,946 2014 5,005,000 $ 6,435,000 $ 400,015 $ 11,039,985 $ 0.33% 2,841 $ $ 3,886 3,336,669,745 2015 4,420,000 $ 6,140,000 $ 400,381 $ 10,159,619 $ 0.28% 2,603 $ $ 3,903 3,595,785,241 2016 3,825,000 $ 5,840,000 $ 400,582 $ 9,264,418 $ 0.24% 2,377 $ $ 3,897 3,792,539,039 2017 3,220,000 $ 5,530,000 $ 405,742 $ 8,344,258 $ 0.21% 2,141 $ $ 3,897 4,024,890,925 2018 2,605,000 $ 5,215,000 $ 402,335 $ 7,417,665 $ 0.17% 1,860 $ $ 3,987 4,247,352,806 2019 $ 4,890,000 1,980,000 $ 400,381 $ 6,469,619 $ 0.14% 1,638 $ $ 3,949 4,474,292,980 2020 $ 4,761,901 1,340,000 $ 393,132 $ 5,708,769 $ 0.12% 1,419 $ $ 4,023 4,718,249,204 2021 $ 4,733,004 680,000 $ 416,577 $ 4,996,427 $ 0.10% 1,643 $ $ 3,041 4,964,613,776 2022 $ - $ 4,704,107 $ 26,805 $ 4,677,302 0.09% 1,542 $ $ 5,356,324,977 3,033 Source: California Department of Finance
City of Carmel-by-the-Sea Finance Department
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General Bonded Debt Outstanding
Attachment 2
City of Carmel-by-the-Sea TABLE 13
Computation of Direct and Overlapping Debt
2022-2023 Assessed Value $ 5,356,324,977
Total Percentage Amount
Debt Applicable Applicable
Outstanding to City (1) to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Monterey Peninsula Community College District $ 118,657,396 11.620% 13,787,989 $ Carmel Unified School District 15,683,445 24.013% 3,766,066
Total Direct and Overlapping Tax and Assessment Debt $ 134,340,841 $ 17,554,055 DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Monterey County General Fund Obligations 119,773,645 6.436% 7,708,632 Monterey County Judgment Obligations 4,534,000 6.436% 291,808 Monterey County Water Resources Agency Gen Fund Debt 18,755,000 6.436% 1,207,072 City of Carmel-by-the-Sea General Fund Obligations 5,134,734 100.000% 5,134,734 City of Carmel-by-the-Sea Pension Obligation Bonds 100.000% - - Total Gross Direct and Overlapping General Fund Debt 14,342,246 TOTAL NET DIRECT AND OVERALAPPING GENERAL FUND DEBT $ 14,342,246 TOTAL DIRECT DEBT $ 5,134,734
TOTAL GROSS OVERLAPPING DEBT $ 26,761,567
TOTAL NET OVERLAPPING DEBT $ 26,761,567
GROSS COMBINED TOTAL DEBT 2 $ 31,896,301
NET COMBINED TOTAL DEBT $ 31,896,301
Notes:
(1)
(2)
Ratios to 2021-22 Assessed Valuation:
Direct Debt
Total Direct and Overlapping Tax and Assessment Debt 0.33% Total Direct Debt 0.10%
Gross Combined Total Debt 0.60%
Net Combined Total Debt 0.60%
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, 2022
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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Debt limit $ 119,277,148 $ 125,125,115 $ 134,841,947 $ 142,220,214 $ 150,933,410 $ 159,275,730 $ 167,785,987 $ 176,934,345 $ 186,173,017 200,862,187 Total net debt applicable to limit - - - - - - - - - -
Legal debt margin $ 119,277,148 $ 125,125,115 $ 134,841,947 $ 142,220,214 $ 150,933,410 $ 159,275,730 $ 167,785,987 $ 176,934,345 $ 186,173,017 $ 200,862,187 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:
Total assessed value $ 5,356,324,977Debt limit (3.75% of total assessed value) 200,862,187 Debt 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 $ 200,862,187 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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Sunset Center Certificates of Participation
General City Revenues $ 19,195,290 $ 21,139,081 $ 22,406,471 $ 21,653,778 $ 23,167,967 $ 24,061,114 $ 21,424,311 $ 26,120,715 $ 27,251,501 $ 28,794,067 Less: operating expenses (15,512,429) (16,332,293) (17,552,771) (18,716,522) (19,407,105) (20,069,662) (20,883,375) (18,148,230) (22,576,272) (20,889,985) Net available revenue 3,682,861 4,806,788 4,853,700 2,937,256 3,760,862 3,991,452 540,936 7,972,485 4,675,229 7,904,082 Debt service:
Principal 285,000 290,000 295,000 300,000 310,000 315,000 325,000 - - - Interest 219,763 213,963 208,063 202,063 198,188 190,375 173,320 106,957 155,798 155,800 Total 504,763 503,963 503,063 502,063 508,188 505,375 498,320 106,957 155,798 155,800 Coverage 7.30 9.54 9.65 5.85 7.40 7.90 1.09 74.54 30.01 50.73 Pension Obligation Bonds
General City Revenues $ 19,195,290 $ 21,139,081 $ 22,406,471 $ 21,653,778 $ 23,167,967 $ 24,061,114 $ 21,424,311 $ 26,120,715 $ 27,251,501 $ 28,794,067 Less: operating expenses (15,512,429) (16,332,293) -17,552,771 (18,716,522) (20,069,662) (19,407,105) (18,148,230) (20,883,375) (22,576,272) (20,889,985) Net available revenue 3,682,861 4,806,788 4,853,700 2,937,256 3,760,862 3,991,452 540,936 7,972,485 4,675,229 7,904,082 Debt service:
Principal 580,000 580,000 585,000 595,000 605,000 615,000 625,000 640,000 660,000 680,000 Interest 122,593 118,243 112,443 105,131 96,206 85,120 71,892 57,666 40,414 21,080 Total 702,593 698,243 697,443 700,131 701,206 700,120 696,892 697,666 700,414 701,080 Coverage 5.24 6.88 6.96 4.20 5.36 4.91 0.78 11.43 6.67 11.27 Combined coverage 3.05 4.00 4.04 2.44 3.11 2.85 3.31 3.31 5.46 9.22 1 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 Income3 Age School Diploma Bachelor's Degree 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 1.10% $ 98,188 $ 53,961 59.6 82.72% 55.03%
3,041 1.10% $ 101,696 $ 55,889 65.0 95.80% 74.70%
3,033 1.10% $ 100,365 $ 76,590 63.6 95.80% 74.70%
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 2015
Fiscal Year
Ended
June 30
2014
2023
2022
2016
2017
2018
2019
2020
2021
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
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: .
La Bicyclette 109 1 6.65% Unavailable 1 n/a
Casanova 90 2 5.49% Unavailable 2 n/a
Cypress Inn 81 3 4.94% Unavailable 3 n/a
City of Carmel 80 4 4.88% Unavailable 4 n/a
Vesuvio 76 5 4.63% Unavailable 5 n/a
La Playa Hotel 73 6 4.45% Unavailable 6 n/a
Little Napoli 68 7 4.15% Unavailable 7 n/a
Il Fornaio 66 8 4.02% Unavailable 8 n/a
Grasings 57 9 3.48% Unavailable 9 n/a
Dametra 50 10 3.05% Unavailable 10 n/a
Alvarado Street Brewery & Bistr 50 10 3.05%
Totals 691 48.78% - -
Total employment 1,640 na
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
2023 2014
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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Departments:
General Government 10.72 18.20 17.60 18.60 16.20 15.70 15.66 15.00 15.00 15.00 Public Safety 28.80 30.70 30.70 31.70 32.00 32.00 25.00 24.00 28.02 24.00 Public Works 14.00 18.00 21.00 21.00 21.00 21.00 15.00 18.00 13.90 20.00 Community Activities 1.70 1.70 1.50 1.40 1.50 1.50 0.50 1.00 1.43 0.50 Library 11.60 12.40 12.40 12.80 14.00 13.98 11.65 5.50 11.00 10.50 Community Plng. and Bldg. 10.02 7.00 7.00 9.00 9.00 9.00 7.00 6.97 11.00 10.00 Totals 81.27 87.40 91.20 92.10 93.20 93.14 68.00 80.00 75.74 80.00 Source: City of Carmel-by-the-Sea Finance Department
0 10
20 30
40 50
60 70
80 90
100
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Function:
Police
Calls for service 10,023 14,813 14,360 13,701 12,674 13,252 11,385 8,778 8,959 9,709 Fire
Calls for service 759 851 925 856 843 1,006 803 754 794 951 Inspections 725 822 636 346 504 112 184 107 88 135
Public Works
Potholes patched 18 52 25 20 25 50 35
Tree permits Issued 166 90 177 216 183 305
Calls for service 300 250 500 750 433 1,455 6,935
Road asphalt used 48 34 28 32 44 28
Trees planted 60 32 82 82 59 57 139 254
Library
Circulation of library materials 153,227 140,848 114,137 106,976 99,802 104,456 104,456 84,810 55,414 127,777 Reference questions 37,010 24,318 20,233 19,252 16,276 15,789 15,789 13,579 14,199 9,062 Community Activities
Special Event permits 39 45 30 81 75 42 35 5 31 55
Community Development
Building Permits 340 500 422 416 580 590 677 446 411 458 Architectural Approvals 273 466 524 468 440 452 402 280 171 163 Administration
Business Licenses (All businesses) 1280 1350 1472 1615 1836 2187 2276 1,984 1,884 1,834 Public Records Requests (Calendar Yr) 143 147 127 160 184 187 199 248 101 215 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
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Function:
General Government
Number of buildings 1 1 1 1 1 11 1 1 1
Public Safety
Police
Stations 1 1 1 1 1 1 1 1 1 1
Parking meters 11 1 1 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 45 41 42 44 44 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 22 2 2 2
Source: City of Carmel-by-the-Sea Departments
Attachment 2
Page Intentionally Left Blank
Attachment 2
OTHER INDEPENDENT
AUDITOR’S REPORTS
Attachment 2
Page Intentionally Left Blank
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, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 29, 2024.
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) as a basis for designing 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 and significant deficiencies may exist that were not 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 statements. 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 or 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.
March 29, 2024
Morgan Hill, California
Attachment 2