CITYOF CARMEL-BY-THE-SEA
CITY COUNCIL AGENDA
Mayor Dave Potter, Councilmembers Jeff Baron,
Alissandra Dramov, Karen Ferlito, and Bobby
Richards
Contact: 831.620.2000 www.ci.carmel.ca.us
All meetings are held in the City Council Chambers
East Side of Monte Verde Street
Between Ocean and 7th Avenues
CITY COUNCIL SPECIAL MEETING - WORKSHOP
Tuesday, May 21, 2024
Councilmember Ferlito will be attending this meeting remotely under California Gov.
Code 54953(b) at the following location: 220 Madison Avenue, 3-O, New York, NY, 10016.
The agenda will be posted at the location and will be open to the public.
HYBRID MEETING ATTENDANCE OPTIONS
Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public Appearances. Each person's comments shall be limited to 3 minutes, or as otherwise established by the Chair.
Matters not appearing on the agenda will not receive action at this meeting and may be referred to staff. Persons are not required to provide their names, and it is helpful for speakers to state their names so they may be identified in the minutes of the meeting.
https://ci-carmel-ca-us.zoom.us/j/81292482891 Webinar ID: 812 9248 2891 Passcode:
778926 Dial in: (253) 215-8782
HOW TO OFFER PUBLIC COMMENT
The public may give public comment at this meeting in person, or using the Zoom teleconference module, provided that there is access to Zoom during the meeting. Zoom comments will be taken after the in-person comments. The public can also email comments to [email protected]. Comments must be received at least 2 hours before the meeting in order to be provided to the legislative body. Comments received after that time and up to the beginning of the meeting will be made part of the record.
Tour Time - 3:45 PM
TOUR OF INSPECTION
Prior to calling the meeting to order, the Board/Commission will conduct an on-site tour of inspection of the properties listed on the agenda and the public is welcome to join. After the tour is complete, the Board/Commission will begin the meeting in the City Council Chambers no earlier than the time noted on the agenda.
A. Mission Trail Nature Preserve, Rio Road Entrance, across the street from 3100 Rio Road, Carmel
OPEN SESSION
4:30 PM
CALL TO ORDER AND ROLL CALL
ORDERS OF BUSINESS
Orders of Business are agenda items that require City Council, Board or Commission discussion, debate, direction to staff, and/or action.
1. Receive a presentation on the Fiscal Year 2024-2025 Budget, conduct a public workshop, and provide direction to staff
PUBLIC APPEARANCES - Limited to items on the agenda
Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public Appearances. Each person's comments shall be limited to 3 minutes, or as otherwise established by the Chair.
Persons are not required to provide their names, however, it is helpful for speakers to state their names so they may be identified in the minutes of the meeting. Under the Brown Act, public comment for matters on the agenda must relate to that agenda item and public comments for matters not on the agenda must relate to the subject matter jurisdiction of this legislative body. If a member of the public attending the meeting remotely violates the Brown Act by failing to comply with these requirements of the Brown Act, then that speaker will be muted.
ADJOURNMENT
This agenda was posted at City Hall, Monte Verde Street between OceanAvenue and 7thAvenue, Harrison Memorial Library, located on the NE corner of Ocean Avenue and Lincoln Street, the Carmel-by-the-Sea Post Office, 5th Avenue between Dolores Street and San Carlos Street, and the City's webpage http://www.ci.carmel.ca.us in accordance with applicable legal requirements.
SUPPLEMENTAL MATERIAL RECEIVED AFTER THE POSTING OF THEAGENDA Any supplemental writings or documents distributed to a majority of the City Council regarding any item on this agenda, received after the posting of the agenda will be available for public review at City Hall located on Monte Verde Street between Ocean and Seventh Avenues during regular business hours.
SPECIAL NOTICES TO PUBLIC
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk's Office at 831-620-2000 at least 48 hours prior to the meeting to ensure that reasonable arrangements can be made to provide accessibility to the meeting (28CFR 35.102-35.104 ADA Title II).
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Staff Report
May 21, 2024
ORDERS OF BUSINESS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Jane Hogan, Accountant
APPROVED BY: Chip Rerig, City Administrator
SUBJECT:
Receive a presentation on the Fiscal Year 2024-2025 Budget, conduct a public workshop, and provide direction to staff
RECOMMENDATION:
Receive a presentation on the Fiscal Year 2024-2025 Budget, conduct a public workshop, and provide direction to staff.
BACKGROUND/SUMMARY:
In accordance with Carmel Municipal Code Section 3.06.020, prior to the beginning of each fiscal year, the City Administrator shall prepare and submit to the City Council a proposed operating and capital budget for the forthcoming fiscal year (Attachment 1). The proposed budget, referred to as the Fiscal Year 2024-2025 (FY 24- 25) Recommended Budget of $43.9 million is submitted for Council’s consideration. The proposed expenditures totaling $43.9 million, include the General Fund operating budget ($28.2 million), debt service ($519,100), pension unfunded liability ($2.4 million), capital budget ($12.6 million), and workers compensation ($127,000).
The proposed revenues totaling $31.4 million include property taxes ($8.6 million), sales tax ($9.8 million), transient occupancy tax ($7.5 million), and other revenue ($5.5 million). The FY 24-25 Recommended Budget requires the use of $12.4 million in prior years’ savings ("fund balance") in order to balance, unless additional reductions are made.
Since the May 7, 2024 Council Meeting, the Recommended budget has been adjusted per direction of Council to add $6,000 to Community Promotions. Additionally, staff has adjusted Liability Insurance Premiums $31,000 higher based upon updated figures from PRISM received May 16, 2024.
The total fund balance is estimated to end the FY 23-24 at $37.3 million which includes all restricted, reserves and unassigned funds. City Council has the authority to tap into the unassigned fund balance ($15M).
As the economy remains unpredictable, the City remains cautious and anticipates a conservative increase in revenues for FY 24-25. Conversely, the City also expects its expenditures to grow in FY 24-25, primarily related to increased staffing, pension costs, general operating costs, and a robust Capital Improvement Plan. Highlights of the budget include:
Salary and benefit costs of approximately $16 million with minimal changes to FTE over prior FY (97.25 FTE total).
Pension costs of approximately $2.4 million for the City’s annual unfunded accrued liability (“UAL”) payment to CalPERS. Additionally, the City will restrict $1 million by transferring funds into the City’s established Section 115 Trust.
Services and supplies costs of approximately $12.4 million to fund contractual services, fuel and vehicle maintenance, supplies and materials, utilities, fire services, insurance premiums, Sunset Center, staff training, marketing and other operational costs. $12.6 million for capital projects and vehicle and equipment purchases in the following categories:
public safety ($3.4 million), streets/sidewalks ($4.0 million), facilities ($1.1 million), drainage ($1.7 million), green infrastructure ($275,000), environment ($1.1M), IT/Planning ($300,000), fleet ($150,000), libraries ($145,000) and CIP Contingency ($400,000). $519,100 for debt service payments and $127,000 for workers compensation claim administration, potential claims and costs associated with the implementation of preventive measures.
Staff provided a brief overview of the budget as part of the May 7, 2024 Council meeting. At the May 21, 2024 budget workshop, staff will present a detailed review of the budget as well as present responses to any questions that staff have received (Attachment 2) Staff will receive direction from Council on the budget and this direction will be incorporated into the FY 24-25 Recommended Budget, which will be considered for adoption by Council on June 4, 2024.
Capital Improvement Program
At the March 5, 2024 Council meeting, the Public Works Director presented the First Review of the FY 2024/25 Capital Improvement Program (CIP) which included:
15 capital improvements and 14 operating budget projects completed in FY 2023/24. 4 projects recommended to be cancelled or modified.
15 projects funded in (or prior to) FY 2023/24 that were recommended to be carried over, with remaining funds, into FY 2024/25.
6 (of the 15) carry-over paving, drainage, and facility renovation projects that require supplemental funding of $1.7M for construction.
6 potential new projects funded by the Vehicle and Equipment Fund. 13 potential new projects funded by the Capital Improvement Fund.
An introduction of the 5-year Capital Improvement Plan (FY 2024/25 through 2028/29). An updated 5- Year CIP is included in Attachment 4, and is also available for review on the City Website under the Public Works homepage.
At the Special Council meeting on March 26, 2024, the Public Works Director presented the Second Review of the CIP for FY 2024/25 which included:
Responses to questions received at the March 5th meeting (Attachment 3). 5 new or revised projects that changed since the March 5th meeting.
At that meeting, Council tentatively approved:
4 projects to cancel or modify.
Carry over of 15 projects funded in (or prior to) FY 2023/24 with remaining funds, into FY 2024/25.
Supplemental funding for 6 carry-over paving, drainage, and facility renovation projects for construction.
6 new vehicle and IT projects funded by the Vehicle and Equipment Fund.
Tentatively 12 of 13 new projects funded by the Capital Improvement Fund, although several projects require additional review and consideration.
Based on Council direction at the March 26th meeting, the CIP was included in the “Fiscal Year 2024-2025 Recommended Budget Book” (pages 52-68) and introduced at the May 7, 2024 Council meeting.
Questions regarding the CIP asked at the March 26th Special meeting and their responses, are provided in Attachment 3
While the draft CIP for FY 2024/25 is now substantially complete (Attachment 4), there are still concerns expressed from Council, the public, and staff, regarding the $12M+ cost for all projects listed, as well as the current CIP backlog, staff’s current workload, and the ability to execute approximately 34 projects while at the same time, trying to reduce the reliance on the City’s three project management consultants. As noted in the response to CIP Question 18,
“Without any new capital improvement projects assigned for FY 2024/25, the current backlog of work from the 15 Carry-Over Project funded in, or prior to, FY 2023/24 would take staff plus our three Project Management consultants approximately one more full year to complete. As reference, the City completed 14 projects in FY 23 and 15 projects in FY 24 with one in-house Project Manager plus three Project Management consultants.
Currently, the tentative list of 6 new Vehicle and Equipment Funded projects plus 13 new Capital Fund Projects, will add a full year of workload to the existing backlog. In addition, the Public Works Department, for example, is also involved in 11 Strategic Priority Projects (several of which are capital projects), in addition to ongoing streets and facilities maintenance, forestry and environmental programs, and service requests.
Staff does not recommend eliminating all 19 new projects since many are time-sensitive and should begin soon as possible. Hiring a second in-house Project Manager would be part of the solution in reducing the backlog and phasing out project management consultants. However, the scale and cost of the proposed new FY 24/25 CIP projects should be further reviewed. For example, at the March 26th meeting, Council directed staff to defer the construction phase of the Sunset Center Portico. At the May 21, 2024 Budget Workshop, staff will identify four additional, important, but non-urgent projects which Council may consider to defer.”
At the May 21, 2024 Budget Workshop, staff will recommend that Council consider not proceeding with the following four CIP projects in the next Fiscal Year for the following reasons:
1. Doolittle Bridge and Pathway Realignment– Environmental Permitting and Design, $175,000. Clearly a worthwhile project included as the fourth of eight improvements along the Mission Trail Nature Preserve stream, it is not time sensitive. Further, at the May 7th meeting, Council approved a construction contract in the amount of $433,818 for construction of MTNP 3 Stream/Drainage Improvement Projects.
Staff suggests that the Doolittle Bridge Project be deferred for one or more years.
2. Junipero Bypass Drainage Project – Design, $175,000. Although this may be the most critical, high priority project identified in the Storm Drain Master Plan Update, it is a large-scale project with a subsequent construction cost estimated at $1M. It must be done. However, the Drainage Repairs Project, which includes 3 high priority repairs from the SDMP, will be under construction next FY upon approval of a supplemental budget increase included in the CIP Budget. Deferring the Junipero Bypass design out one year would allow staff to focus on constructing the Drainage Repairs, and then begin the design the following year.
Staff suggests that the Junipero Bypass Drainage Project Design be deferred for one year.
3. Park Branch Library Windows and Dry Rot, $45,000. An alternative to implementing this project at one time, (which would be more cost-efficient in the long run), would be to make these repairs over the next two fiscal years using funding from the Facilities Maintenance Budget. For example, in FY 2024/25, the dry rot can be repaired, and the 18+ windows could be replaced over the subsequent fiscal year.
Staff suggests that the Park Branch Library Windows and Dry Rot Project be undertaken as facility maintenance budgeted projects over the next two years.
4. Ocean Avenue, Carpenter to Highway 1, $500,000, funded by Monterey County. Another worthwhile project would be to reconstruct the deteriorated pavement, and provide drainage and street improvements along Ocean Avenue; however, this is in the jurisdiction of Monterey County. While there would be no direct costs to the City if we enter into a full cost recovery Agreement with the County, this will be a significant impact on staff time. As noted in the CIP Project description, “Ocean Avenue, between the east City limits near Carpenter Street and Highway 1, is currently inundated with potholes and pavement distress. The pavement condition has deteriorated to the point that a minor paving resurfacing treatment would be insufficient, and the roadway may need to be reconstructed in some areas followed by an asphalt overlay. While located in the jurisdiction of Monterey County, Ocean Avenue is a primary arterial entryway from Highway 1 into the central downtown core of the City of Carmel.
Numerous calls have come in over the years requesting the City to repair these potholes, until the callers are notified that this is the responsibility of the County. Public Works has contacted the County’s Public Works Department numerous times to alert them to potholes. While the County is typically very responsive to the City’s requests, repairs can be delayed at times, particularly following storms.
This new CIP project for FY 24-25 would allow the City to launch this major street improvement project on behalf of, but at the full cost of, the County. The first step in this process would be to enter into a funding agreement, to be approved by the County Board of Supervisors and City Council, outlining the work to be performed by the City and its consultants and contractors, payment or reimbursement of all direct costs by the County, and a mechanism to allow the City to terminate the agreement at any time.
While these necessary roadway improvements would clearly benefit citizens of Carmel and the County alike, this project does pose risks. For example, the required Encroachment Permit from CalTrans could potentially trigger intersection improvements at Highway 1, such as modified turn movement and/or signalization updates. The roadway design must include drainage improvements, repairs and/or additions to sidewalks along both sides of the street, and accessibility ramps. Additional project implementation and construction issues that must be addressed include CEQA documentation, environmental permits, community outreach, and reconciliation of design and contracting standards between the County and City.
The City does not currently have the capacity to implement this project. Therefore, one of the City’s Project Management consultants would be needed for this project. Next, a third-party engineering/environmental firm must be retained for engineering design, permitting, and bid phase and construction engineering support. While the vast majority of the work would be performed by consultants and contractors, all at the expense of the County, the impact to City staff cannot be understated.
The County provided an initial cost estimate of $500,000 for the paving portion of the project.
Preliminarily, it appears that the full cost for project management, design, and construction, including drainage, sidewalks, ADA improvements, and traffic control, will be substantially higher.” Staff suggests that the Ocean Avenue, Carpenter to Highway 1 Project remain the responsibility with the County. The City could offer to support their project by such things as serving on consultant selection committees, attending progress meetings, supporting outreach efforts, assisting with checking plans and specifications, etc.
Additional Correspondence
On May 17, 2024, the City received a letter from Amy Herzog, Executive Director of Visit Carmel, which was intended to offer additional information related to the City of Carmel-by-the-Sea's contract with Visit Carmel.
This letter has been included at Attachment 5.
FISCAL IMPACT:
The FY 24-25 Recommended Budget totals $43.9 million. There is no fiscal impact associated with receiving a presentation on the FY 24-25 Recommended Budget. However, direction provided by Council will have an impact on the budget and planned expenditures for the upcoming fiscal year.
PRIOR CITY COUNCIL ACTION:
Council received presentations regarding the Capital Improvement Plan on March 5, 2024 and March 26, 2024.
Council received a presentation regarding the FY 24-25 Recommended Budget, inclusive of the Capital budget, on May 7, 2024.
Council direct staff to add $6,000 to the City Council's Community Promotions for two additional discretionary grants at the May 7, 2024 Council Meeting.
ATTACHMENTS:
Attachment 1) FY24-25 Recommended Budget Book
Attachment 2) Recommended Budget Questions and Answers
Attachment 3) CIP Questions and Answers
Attachment 4) Updated 5 Year Capital Improvement Plan
Attachment 5) Visit Carmel Letter
Fiscal Year 2024-2025
RECOMMENDED
BUDGET
CITY OF CARMEL-BY-THE-SEA
Attachment 1
2 CITY COUNCIL
DAVE POTTER,
MAYOR
BOBBY RICHARDS,
MAYOR PRO TEMPORE
JEFF BARON,
COUNCILMEMBER
KAREN FERLITO,
COUNCILMEMBER
ALISSANDRA DRAMOV,
COUNCILMEMBER
CHIP RERIG, CITY ADMINISTRATOR
CITY OF CARMEL-BY-THE-SEA
P.O. BOX CC
CARMEL-BY-THE-SEA, CA 93921
T: (831) 620-2000
www.ci.carmel.ca.us
Attachment 1
3 Table of Contents
INTRODUCTION ........................................................................................................................ 4 RECOMMENDED BUDGET MESSAGE .............................................................................. 5 REVENUE ............................................................................................................................... 9 EXPENDITURES .................................................................................................................. 13 FY 24-25 AUTHORIZED POSITIONS ................................................................................. 16 ORGANIZATIONAL CHART ............................................................................................... 18 OPERATING BUDGET ............................................................................................................ 19 CITY COUNCIL .................................................................................................................... 20 CITY ATTORNEY ................................................................................................................. 22 ADMINISTRATION .............................................................................................................. 23 CITYWIDE (NON-DEPARTMENTAL) ................................................................................ 28 ECONOMIC DEVELOPMENT ............................................................................................ 29 LIBRARY AND COMMUNITY ACTIVITIES ...................................................................... 31 COMMUNITY PLANNING AND BUILDING .................................................................... 35 PUBLIC WORKS ................................................................................................................... 39 PUBLIC SAFETY .................................................................................................................. 46 CAPITAL IMPROVEMENT PLAN (CIP) ................................................................................ 51 DEBT SERVICE ........................................................................................................................ 69 OTHER FUNDS ........................................................................................................................ 71 OTHER FUNDS OVERVIEW ............................................................................................... 72 PROJECTED FUND BALANCE .......................................................................................... 75 PROJECTED FUND BALANCE AS OF JUNE 30, 2024 ............................................... 76 PROJECTED FUND BALANCE AS OF JUNE 30, 2025 ............................................... 77 FINANCIAL POLICIES ............................................................................................................ 78 APPROPRIATIONS LIMIT ...................................................................................................... 91 APPENDIX A ............................................................................................................................. 95 RESOLUTION 2024-XXX ADOPTION OF FY 24-25 BUDGET ............................................ 96 FY 24-25 ADOPTED BUDGET (DETAIL) ............................................................................... 97 Attachment 1
4 INTRODUCTION
Attachment 1
5 RECOMMENDED BUDGET MESSAGE
Honorable Mayor Potter, City Councilmembers, and Residents of Carmel-by-the-Sea:
The Fiscal Year 2024-2025 (“FY 24-25”) recommended budget is submitted for your consideration and tentative adoption on June 4, 2023. This budget continues to be structurally balanced and maintain service levels from last fiscal year, all in an effort to continue to build organizational resiliency. The City has risen to a magnitude of challenges over the last year including another season of severe winter storms that absorbed a profound amount of our capacity, and several high interest community projects such as the General Plan Housing Element, and the Police Station Project. Throughout, the City’s dedicated staff, volunteer groups and the community at large worked together to serve and take the best actions under challenging circumstances. Please allow me to reinforce that we have a strong and dedicated workforce, and unparalleled leadership from the City Council combined with an impassioned and solutions-oriented citizenry.
The adopted Operating Budget serves as a policy document, financial plan, operations guide, and communications device. It is a living document that reflects the City Council’s strategic goals and objectives and provides a framework to meet future challenges such as rising operational costs and limited growth in revenues.
As we move forward and plan the Fiscal Year 24-25 operating budget for the upcoming year, it is important to take into consideration the various factors that impact our financial health at the global, national, State, and local levels.
At the global level, we continue to face economic uncertainty and instability due to high interest rates, changes in leisure travel patterns, market distress, and volatility in financial markets. Although far from our backyard, the two major wars currently being fought overseas factor into the overall economic picture. These variables have resulted in a decrease in revenue for many businesses and organizations, and we would be wise to anticipate and prepare for potential impacts on our own financial situation.
At the national level, we have continued to see declines in personal savings which fell from roughly 4.8% in June of 2023 to 3.2% at the time of this report. This trend could add to a greater sell-off of investments and potentially steep market declines. Going on fifteen years, the current economic cycle is likely the longest in US history, so there is also uncertainty around how long [soon] it will be before we see a major change, especially given all of the financial “levers” that have been pulled over the last year by the FED in efforts to affect the economy.
Attachment 1
6 At the state level, California faces its own set of challenges. The state has a large and diverse economy, but it also has a high cost of living and a significant homeless population.
The state’s budget is also impacted by various factors such as natural disasters, healthcare costs, and public education funding. Very recently, the Governor has signaled the need to make cuts to the State Budget, which could impact grant funding anticipated to be received by local governments like ours.
At the local level, Monterey County is no exception to these challenges. We must also consider factors such as our aging infrastructure, affordable housing shortage, and rising healthcare costs. Additionally, our County-wide tourism industry continues to recover from the pandemic, resulting in a decrease in revenue for our county. The City’s three major sources (Property Tax, Sales and Use Tax and Transient Occupancy Tax) of General Fund revenue continue to increase, but only slightly as the trend of “revenge spending” that was seen coming out of the pandemic continues to flatten. This trend has led to decreased occupancy in our hotels and a remaining uncertainty about travel patterns, impacting two of these three major revenue pillars. It is also worth noting that as Highway 1 through Big Sur seems to have some sort of annual disaster event, we will continue to see less visitor trade and traffic coming up along the coast from the L.A. area and bringing important visitor dollars to the peninsula.
As I said, the factors identified above may reflect a monetary tightening that could impact the City’s revenue pillars into the future. As such, we approached our budget planning with an understanding of these factors and their potential impacts on our financial health. This budget is a thoughtful representation working together internally and with the community to identify areas where we can maintain costs at status quo, and where there may be room to cautiously spend budgetary dollars to enhance services for the Village. Given trends though, it is likely the City will soon need to begin to explore the need for additional sources of revenue to maintain our financial stability, or adopt a position of significantly reducing costs in future fiscal years.
The recommended budget is not operationally balanced, meaning the total projected incoming revenue does not compensate for our projected expenditures. The recommended budget is, however, structurally balanced – balanced by strategically using unrestricted fund balance (revenue saved over past fiscal years) to address past and current direction of Council. That direction is to maintain core services and invest heavily in deferred infrastructure maintenance, natural resource management, community character and of course the Police Building Project. We are fortunate to have an available fund balance, accumulated through the prudent budgeting in past years, to close the gap in revenue that we are forecasting. In total, the funds needed to structurally balance the budget is approximately $12,500,000. Using this amount will virtually eliminate our current fund balance.
Attachment 1
7 STAFFING
After no increase in the previous Fiscal Year, I am proposing an increase in the number of City staff. This includes a restructuring of some existing positions to meet the changing operational needs of the City and to respond to the City Council and Community’s desires for additional services. At face value in the FY24-25 budget, it appears that only 1 FTE is being added to the entire workforce, but this number does not reflect the full story, which is the addition of approximately 6 new FTE staff members. In the Library, a total of 1.25 new Library Assistant FTEs are proposed, which will allow for additional weekend hours; In Community Planning and Building, 1 Principal Planner FTE is proposed, which will allow for implementation of the General Plan Housing Element; and in Public Works total of the following 4 new FTEs: 1 Maintenance Worker, which will increase capacity to complete deferred maintenance around the Village, 1 Project Manager, which will help with accomplishing more CIP projects without contractors, 1 Assistant City Forester, which will help with response time for development plan review and implementation of the forthcoming Urban Forest Management Plan, and 1 Tree Permit Technician, which will help with processing tree permits and inspection requests.
These new positions are offset in the total count of FTEs by a few things: 1) reallocation of some existing vacant positions which no longer support operational needs such as the Library Circulation Supervisor, and the Public Works Natural Resource Manager; 2) The removal of 4 Police Department positions still listed on the City roster which should have been removed after the major restructuring that took place in FY22-23.
CAPITAL IMPROVEMENT AND MAINTENANCE
On March 4, 2024 and, again on March 26, 2024, the City Council reviewed the FY 24-25 Capital Improvement Program. Comprised of 27 projects, the combined total CIP investment for carry-over plus new projects would be $12,579,000 – a figure that includes both internal and external funding. Capital projects included in the recommended budget consist of rehabilitation of City facilities, sidewalk and street improvements, enhanced public safety, Citywide ADA improvements, and protection and preservation of the natural environment. More generally speaking, the FY 24-25 budget recognizes the importance of investing in our “green” infrastructure (Mission Trails Nature Preserve, Carmel Beach and Coastline, etc.), and includes funding for continuation of the Police Building project, Library Master planning, and improvements at Sunset Center and other City facilities.
Vehicle & Equipment Fund
The total vehicle acquisition costs for FY 24-25 are budgeted at $570,000 and the City's 10% replacement reserve target is approximately $500,000. Currently, the Vehicle & Equipment Fund balance is estimated at $1,060,000 for FY 23-24 and will be utilized for FY 24-25 acquisitions. The City will continue to maintain the Vehicle & Equipment replacement Attachment 1
8 reserve at 10% of the estimated replacement value of the City’s vehicles and equipment, adjusted annually based on CPI.
FISCAL YEAR 24/25 BUDGET AT A GLANCE
Many of you know the level of respect I have for the lessons one can learn by studying the past. And while much of my message may seem dour, history teaches us that economic cycles are intrinsic to local government. Consequently, as clear as I can be about the likelihood of an unavoidable down cycle in two of our three major revenue pillars, I am equally as confident about the inevitable upcycle to follow. The budget I am presenting is not intended to be irrepressibly contrarian; it is meant to be cautious and realistic. In the long term, I remain very bullish, and indeed optimistic about our future.
My profound thanks to my department heads, and especially our Finance Division team, for developing a budget that is realistic given the realities that we are facing. I look forward to Council’s leadership and guidance as we balance fiscal sustainability with the need to fund projects and services for our community.
Respectfully submitted,
Chip Rerig
City Administrator
Attachment 1
9 REVENUE
The FY 24-25 Recommended Budget includes $31.4 million in estimated new revenue. As illustrated in the chart below, statewide sales tax (Sales Tax) and local Measure C district tax (Measure C), contribute 31% and is the largest City revenue source. This reveals the importance and impact of the voter approved of Measure C in 2020. Property Tax reflects its customary stable growth accounting for 28% of the budgeted revenue. Hotel Tax (TOT) increases 2% over last fiscal year to 24% of budgeted revenue, followed by Other revenues and Charges for Services combined at 17%, a 2% decrease over prior FY 23-24.
Attachment 1
10 Property taxes are estimated at $8.6 million, reflecting a 2% projected growth over the previous year’s adopted budget. The City’s portion of the Sales Tax is $3.7 million and Measure C $6 million, which remains at 12% and 19% of revenue respectively. The significance of the March 2020 Carmel voter approval of Measure C, at a renewed rate of
1.5%, cannot be understated. Amid COVID-19, Measure C provided a financial lifeline allowing for the continuance of core City services and still plays significantly in funding both operational and capital needs. Sales Tax has also fared well. This FY 24-25 Recommended Budget projects a continuation of status quo in Measure C and Sales Tax trends as consumers remain cautious of inflation and overall price increases of goods and services.
Transient Occupancy Tax (“TOT”) is levied at 10% of the rent charged by a hostelry operator within the City. TOT has slowed over the FY 22-23 high. Recommended at $7.5 million, TOT accounts for 24% of revenues, a 2% increase over FY 23-24. Charges for Services are fees collected from a specific user of a service, such as plan review, building inspection and ambulance transports and account for $2.6 million, or 8% of the budget. The category of “Other” revenue includes General Fund revenues from business license tax, franchise fee and other intergovernmental revenue as well as restricted revenue for Community Oriented Policing Services (COPS), road maintenance and transportationrelated projects and federal and State grants for planning, parks, and radio communications.
The City’s three major sources of revenue include Property Tax, Sales and Use Tax, and Transient Occupancy Tax. As shown on the Table 1 above entitled “Estimated Performance and Recommended Budget for Major Revenue Sources”, property taxes had historically been a strong component to the City’s financial health. Each tax represents about 1/3 of the City’s total 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, Attachment 1
11 rebounding to approximately $7.7 million in FY 21-22 returning to pre-COVID levels, and exceeding $8.4 million in FY 22-23.
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 has been increasing on average by 6% over the past 9 years, reaching $8.14 million in fiscal year 2022-2023.
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. The City has budgeted Property Tax revenue at 2% over last fiscal year’s adopted budget, as done in prior years. This budget conservatively projects growth yet remains confident in the stability of Carmel’s property tax performance.
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 Bradley- Burns tax, as well as revenue from a local sales tax. 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, the City of Carmel-by-the- Sea 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 at $9.3 million, a -2.69% decrease.
The City remains conservative and vigilant to the current trends, as we are aware geopolitical tensions, inflation concerns, and interest rates drive consumer spending patterns. Consumer spending for certain goods and services remain high, particularly for online shopping and dining. General consumer goods spending slowed by the end of FY 22- 23, hitting outlets, galleries and gift shops the hardest. We project stagnant sales tax activity in FY 24-25 coming in at $3.7 million and $6.0 million in line with the current year’s estimates based on Statewide sales tax trends.
TRANSIENT OCCUPANCY TAX
The FY 24-25 Recommended Budget for TOT is $7.5 million, which assumes continued occupancy at the current fiscal year’s rate. In FY 23-24, daily occupancy rates have been lower while the daily room rate are higher over prior fiscal year. For the reasons noted Attachment 1
12 above under Sales and Use Taxes, as well as Highway 1 Big Sur closures, we remain guarded by consumer travel trends in our TOT revenue projections.
As the City looks forward to its future revenues that fund services, capital projects and other initiatives, stepping back and reviewing the City’s historic performance is of value.
The chart below depicts the performance of the City’s three major revenue sources over the last 10 years.
Attachment 1
13 EXPENDITURES
The FY 24-25 Recommended Budget totals $43.9 million, which consists of the following:
▪ Operating Budget, or General Fund, totals $30.7 million, or 71%, of the citywide budget
▪ Debt service totals $519,100, or 1% of the citywide budget ▪ Capital outlay, including Capital Improvement Projects ($12,009,000) and Vehicles and Equipment ($580,000), makes up 29% of the recommended budget The Operating Budget consists of the City’s departments and services. Debt is based upon required payments toward various bonds issued by the City or by other governmental agencies on behalf of the City. As shown in the chart below, FY 24-25 Expenditure by Type, the FY 24-25 Budget includes the Operating Budget and Debt Service. The Operating Budget is further categorized by types of expenditure including salaries and benefits, outside services, and other expenditures as explained below.
Attachment 1
14 The City’s largest expenditure is related to the cost of personnel. Salaries and benefits total $16 million and account for 36% of the citywide budget. Capital Outlay is the second largest type of expenditure at $12.6 million, or 29% of the budget. The third largest type of expenditure is Outside Services. This category includes various line-item accounts, such as advertising and noticing, contract services and community promotions. Contract services are used as an alternative to City staff directly providing the service due to cost savings or the specialized nature of the work being performed and include funding for expenses such as fire service provided by the City of Monterey ($3.3 million); support for the operations of the Sunset Center and other marketing activities ($1.2 million); legal services ($517,000); tree care and landscape maintenance ($1.5 million) and janitorial service ($280,000).
Other expenditures total $3.3 million and account for 8% of the citywide budget. This category includes various line-item accounts such as retiree healthcare and citywide operational expenses like property tax assessments and utilities. Also included here are the City’s general liability and property insurance premiums ($1.1 million) and expenses such as public works materials and supplies, telecommunications, fuel, training and conferences, vehicle maintenance, medical and safety supplies and printing and postage.
Pension expenses total $2.4 million, or 5%, of the budget and only include the annual required unfunded pension liability ($2.4 million). The City will also make its annual funding transfer to the City’s Section 115 trust ($1.0 million) for pension mitigation.
The citywide budget is rounded out with Debt Service ($519,100) accounting for 1% of the citywide budget.
Attachment 1
15 Another way to view operating expenditures is by function, as depicted in the FY 24-25 Expenditures by Function illustration. Capital Outlay makes up 29% of operating expenditures. The public safety functions of Ambulance, Fire and Police make up 24% of the budget. The Public Works Department is the next largest operating expenditure at 15% followed by Citywide at 9% of the budget, as it includes the City’s unfunded actuarial liability. In total, Administration, Council, Planning, Legal, Marketing, the Sunset Center, and Library and Community Activities represent the remaining 23% of the Operating Budget.
Attachment 1
16 FY 24-25 AUTHORIZED POSITIONS
Attachment 1
17 Attachment 1
18 ORGANIZATIONAL CHART
Carmel-by-the-Sea
Electorate
Council
City
Administrator
Library and
Community
Activities
Library
Admin
Circulation
Youth
Reference
Local History
Community
Activities
Community
Planning &
Building
Planning
Building Safety
Code
Compliance
Public Works
Admin
Project
Management
Environmental
Compliance
Facilities
Streets
Forest, Parks
and Beach
Public Safety
Ambulance
Fire
Police
Office of City
Administrator
City Clerk
Finance
Human
Resources
Information
Technology
City Attorney
Attachment 1
19 OPERATING BUDGET
GENERAL FUND - 101
(CITY DEPARTMENTS AND SERVICES)
Attachment 1
20 CITY COUNCIL
The City Council consists of the Mayor and four Councilmembers, elected at large by the citizens of Carmel-by-the-Sea on a non-partisan basis. The City Council is the policymaking legislative body of the City. The Council adopts the annual budget, enacts ordinances, and approves major contracts, acquisitions, and leases. With the advice and assistance of the City Administrator and City Attorney, the City Council reviews proposals to meet the community’s needs, initiates action for new policies, and allocates resources. 2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Develop Telecommunication Ordinance consistent with federal law ▪ Stormwater Ordinance Update
▪ Car Week Safety and Impacts
▪ Review barriers to construction of affordable housing (Housing Element Adoption) 2024-2025 PRIORITIES
▪ Continued oversight of the implementation of the strategic plan and updating of City priorities to include some of the following: plan for natural areas, reduce fire risk, review opportunities for enhanced fire/ambulance service; develop forest management plan and update tree ordinance; update zoning code & design guidelines; ADU ordinance; wireless ordinance; increase beautification effort; review barriers to affordable housing; explore street addresses, develop a facilities master plan; underground utilities rule 20A; explore reinstatement of design review board; explore opportunities for Flanders Mansion and Scout House. ▪ Continue to respond to any forthcoming State legislation that undermines local control, especially as it relates to local land-use decisions.
BUDGET SUMMARY AND SERVICE IMPACTS
▪ Community Promotions includes $30,000 for the Council discretionary grant program, $3,000 for United Way 211, $3,000 for the Monterey County Film Commission, and $86,600 for the cost of courier service for the mail delivery program for a total budget of $122,600.
Attachment 1
21 Attachment 1
22 CITY ATTORNEY
The City Council appoints the City Attorney. The City Attorney legally represents the City and provides legal advice and/or training to the City Council, City Administrator, boards, commissions, and departments; investigates and resolves claims against the City; defends the City in litigation and administrative actions; initiates and prosecutes litigation on behalf of the City; and drafts and reviews legal documents and agenda items.
BUDGET SUMMARY AND SERVICE IMPACTS
▪ The FY 24-54 contract services budget totals $442,000 and consists of $360,000 for general legal services and $75,000 for other specialized legal assistance from the City’s attorney office, including labor negotiations and personnel. The budget also includes $7,000 for the City’s attorney’s annual performance evaluation. There are no changes from FY 23-24 adopted budget.
▪ $75,000 is budgeted for supplementary specialized legal costs, such as wireless communications.
Attachment 1
23 ADMINISTRATION
The City Administrator is appointed by the City Council and is responsible for the enforcement of City laws and ordinances; ensuring that the orders of the City Council are executed; preparing the budget and monitoring City finances; and managing day-to-day operations. In addition to overseeing City departments, the Administrator also serves as the director of the centralized administrative functions pertaining to the City Clerk, Finance, Human Resources, and Information Technology.
2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Ensured the execution of Council policy direction, completion of capital projects, hiring of staff and continuity of daily citywide operations to deliver services in an efficient and effective manner
▪ Pursued collaborative relationships with USPS and the Postmaster and through staff research produced four next step options in exploring street addresses ▪ Awarded Certificate of Achievement for Excellence in Financial Reporting for the City’s Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2022
▪ Continued execution of the City’s multi-pronged financial strategy to address pension liability
▪ Updated the City’s Purchasing Policy
▪ Refreshed the City’s website
▪ Completed public engagement phase through public meetings and outreach for the Parking and Traffic Management Program
2024-2025 PRIORITIES
▪ Explore Opportunities for Flanders Mansion
▪ Explore Street Addresses
▪ Develop and Implement a Social Media Plan
▪ Explore Parking and Traffic Management
Program
▪ Review and update reserve and financial
policies
▪ Transient Occupancy Tax (TOT) increase:
Explore a ballot measure for 2024 election
▪ Carmel Area Wastewater District (CAWD)
Bridge to Everywhere Project
▪ Board and Commissioner Training
Attachment 1
24 BUDGET SUMMARY AND SERVICE IMPACTS
ADMINISTRATION
The Administration Divisional budget includes funding for the City Administrator’s performance evaluation within contract services, office supplies, copier fees, and the citywide postage meter.
Attachment 1
25 CITY CLERK
The City Clerk provides timely and accessible service in response to all inquiries and requests for public information and records, and is responsible for the administration of elections, public records requests processing, records management, and the legislative process. Records the City’s legislative history through approved minutes and maintaining City Ordinances and the Municipal Code; facilitates applications for appointments to boards and commissions and coordinates Statements of Economic Interest as well as campaign and other financial disclosure-related filings.
FINANCE
Finance provides financial analysis, management and reporting through the development of the annual budget, ongoing financial monitoring and reporting of revenues and expenditures. Routine financial duties including vendor payments, payroll, business license processing and the collection of the transient occupancy tax and the administration of passthrough funding to the hospitality and tourism improvement districts. Provides treasury services, invests revenue, and issues and manages debt.
Attachment 1
26 HUMAN RESOURCES
Human Resources recruits, develops, and retains a diverse, well-qualified workforce that reflects the high standards of the community, and leads the City departments in positive employee relations, talent management, succession planning, and employee engagement.
Services include employee orientation, recruitment, performance assessment, compensation and job classification assessments, safety and wellness programs; and organization development services efficiently to City departments. Staff is responsible for negotiating Memorandums of Understanding with the City’s three bargaining units, subject to Council direction and approval.
The HR divisional budget includes funding for implementing new employee supplemental benefits, managing an updated and expanded citywide Safety Program, and digitizing personnel records using LaserFiche. Funding for the staff appreciation events, such as the annual holiday party, is now separately reflected under Employee Appreciation.
Attachment 1
27 INFORMATION TECHNOLOGY
Information Technology (IT) provides innovative and secure technology solutions that support City departments in delivering quality services to the community. The purpose of IT is to provide a broad range of high-quality technology-related solutions to employees, departments, Council members, and the community; and to support and continuously improve essential technology infrastructure for enabling day-to-day operations of the City.
Attachment 1
28 CITYWIDE (NON-DEPARTMENTAL)
Citywide, or non-departmental costs, are expenses that are spread across the entire organization. These items include the unfunded pension liability, the City’s insurance premiums for general liability and property insurance, and the City’s share of costs toward retiree healthcare. Other operational expenses include utilities, property tax assessments and the administrative fee charged by Monterey County for property tax collection.
BUDGET SUMMARY AND SERVICE IMPACTS
▪ In addition to the employer contribution toward retirement for City employees, the City also is responsible for pension obligations for the unfunded actuarial liability (“UAL”). This amount increases by $432,584, or 22%, in FY 24-25 compared to the FY 23-24 originally Adopted Budget. The FY23-24 lump sum payment was paid in July 2023 for a savings of $65,000 and those savings were transferred to other budget line items during the fiscal year.
▪ The City will pay the annual lump sum UAL in July, which will result in approximately $75,000 of interest savings. Those savings would then be available for other line item expenses.
▪ On September 7, 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 Service (PARS). Since, City staff has deposited three $1 million annual contributions into the Trust, which are to be made over the next five years. The City will be contributing the fourth annual $1 million tranche into the Section 115 Trust in FY 24-25. As this is a transfer to restrict funds for pension obligations, it is not included in the FY 24-25 recommended budget. ▪ The City’s liability insurance premiums are budgeted to increase by $125,490, or 13%.
▪ The utility expenses for the Forest Theater are separated out for tracking purposes, as required by the lease.
Attachment 1
29 ECONOMIC DEVELOPMENT
Two of the City’s unique facilities include the performing arts venue known as the Sunset Community and Cultural Center and the Forest Theater, an outdoor amphitheater. These locations support musical performances, lectures and other cultural activities that enhance the quality of life for residents and promote the City and the Monterey Peninsula as an artistic and cultural destination.
In 2017, the City entered into a lease agreement with the Sunset Cultural Center, Inc. (SCC) for the management of these facilities and the terms of the lease require the City to make an annual grant to SCC to support operations. In 2021, Sunset Cultural Center, Inc.’s management of the Forest Theater ended. The annual grant for management of only Sunset Center remains in the budget.
In 2021, the City entered into a lease agreement with Pac Rep Theater for the management of the Forest Theater. This new lease does not require an operational grant payment.
Rather, the City pays for a portion of utilities and repairs, which are budgeted in the Citywide (Non-Departmental) and Public Works budgets, respectively.
The City funds the Monterey County Convention and Visitors Bureau (MCCVB) and Visit Carmel to manage visitors. Visit Carmel maintains the City’s official travel website (www.carmelcalfornia.com) and develops targeted and seasonal marketing campaigns to encourage visitors to stay overnight, dine, and shop within the Village.
In addition to supporting these organizations with General Fund revenues, the City also collects a tourism improvement district assessment from its lodging establishments on behalf of the County and remits these pass-thru funds to MCCVB on a bi-monthly basis.
The City also collects an assessment on lodging through the Carmel Hospitality Improvement District and remits these funds to Visit Carmel for the marketing of overnight stays within the Village during mid-week and the non-peak season. As of January 1, 2019, the City also began collecting an assessment from full-service restaurants on behalf of the Carmel Restaurant Improvement District (CRID) and remits these funds to Visit Carmel for marketing efforts to increase food and beverage sales within the City. An ordinance of the City Council renewed the CRID for a term of nine years and six months beginning January 1, 2024 and ending on June 30, 2033.
Another partner agency is the Carmel Chamber of Commerce, which operates the Visitor Center in town, publishes a comprehensive visitor guide, and assists businesses. The Chamber also supports small businesses and provides services to assist its members, including listing businesses on the Chamber website, providing educational programs, conducting outreach with businesses via weekly business walks with City elected officials and staff and marketing opportunities to “shop locally”.
Attachment 1
30 BUDGET SUMMARY AND SERVICE IMPACTS
Visit Carmel has been budgeted funding in the amount of $120,000 annually. Funding to MCCVB is $226,297 equates to 3% of the FY 24-25 transient occupancy tax revenue budget of $7,453,000.
Attachment 1
31 LIBRARY AND COMMUNITY ACTIVITIES
LIBRARY
The Library is an efficient medium for the free and equitable distribution and exchange of books, information, and ideas; and a recognized social center providing the community with a place to learn, interact and gather. The Library aspires to be a welcoming place, in-person and virtually, where
reading, learning and imagination thrive; a recognized
leader and respected voice in our community; and a model library in our industry.
A five-member Board of Trustees appointed by the City
Council governs the Library. The Harrison Memorial Library Board of Trustees, the Carmel Public Library Foundation, Harrison Memorial Library Friends of the Library, and the City work together in partnership to sustain the vital and historic tradition of providing free public library service of excellent quality for the residents and visitors of the City of Carmel and the Monterey Peninsula.
2023-2024 WORKLOAD INDICATORS / PERFORMANCE MEASURES
▪ 15,722 reference and information questions were answered. ▪ 2,088 library cards were issued.
▪ 85,223 library items were circulated.
▪ 5,006 people attended library programs.
▪ 120,194 visits were made to the library.
▪ 9,390 log-ins were made to library wi-fi.
▪ 84,485 digital items (e-books, audios, magazines, films, music) were accessed. ▪ 5 new oral history interviews were captured.
2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Worked with the Community Activities Department, Police Department, and Carmel CERT to launch the Carmel Prepares initiative to communicate with the community on a regular basis on regional agency preparedness efforts and to encourage citizens to be prepared for disasters and emergencies.
Attachment 1
32 ▪ With funds from the Harrison Memorial Library Board of Trustees purchased equipment to turn the Park Branch Library into a charging station for the community during power outages.
▪ Created a space in the Park Branch Library for ongoing Friends of the Library book sales.
▪ Began working with the Carmel-by-the-Sea Rotary to launch Dolly Parton Imagination Library countywide to provide free books to children ages 5 and under. 2024-2025 PRIORITIES
▪ Restore Saturday hours.
▪ Complete a new Library’s Strategic Plan.
▪ Continue to work on moving the Library Facilities Master Plan project forward.
BUDGET SUMMARY AND SERVICE IMPACTS
The City funds the personnel and building maintenance costs for operating the Main and Park Branch libraries. The sources of funding for library materials, programs and services are the Carmel Public Library Foundation, the Friends of the Library, and other donations.
Attachment 1
33 COMMUNITY ACTIVITIES
The Community Activities department and Commission encourage and support the interaction of neighbors, friends, families and visitors through the shared experience of special events, programs, and gatherings which bring the community together virtually and in-person safely on the City’s streets and in its parks and create opportunities to interact, celebrate, enrich people’s lives, and promote inclusiveness.
The Community Activities department facilitates the weekly Farmers’ Market, permitting special events, beach events, and filming, in addition to organizing the City’s annual special events (Memorial Day, 4th of July, Sandcastle Contest, Pumpkin Roll, Halloween Parade, Veteran’s Day, Homecrafters’ Marketplace, and Holiday Menorah and Tree-lighting).
2023-2024 WORKLOAD INDICATORS / PERFORMANCE MEASURES
▪ Planned and facilitated twelve City special events.
▪ An estimated 6,000 people attended City Special Events. ▪ Issued 46 event, beach, and film permits.
2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Worked with the Library, Police Department, and Carmel CERT to launch the Carmel Prepares initiative to communicate with the community on a regular basis on regional agency preparedness efforts and to encourage citizens to be prepared for disasters and emergencies, which will be a biannual event going forward. ▪ Collaborated with Public Works on a combined Community, Earth, and Arbor Day celebration, in addition to the annual Community Day event in the Fall.
Attachment 1
34 ▪ Continue to work with Car Week event organizers to build Car Week in Carmel back to something like it was pre-pandemic.
2024-2025 PRIORITIES
▪ Holding beloved annual special events and always looking for ways to make them safer and more fun.
▪ Building and sustaining community partnerships for current special events and future smaller events.
▪ Soliciting community input on new small
community-oriented events and initiatives
through surveys, Farmers’ Market outreach, and
work with community partners.
▪ Continuing to facilitate community gatherings and
special events, and ensure that processes are
streamlined and conducive to encouraging events
within the bounds of current city regulations.
▪ Continue to keep the Council informed on new initiatives and provide report outs on items like Car Week and the Farmers’ Market.
BUDGET SUMMARY AND SERVICE IMPACTS
Community Activities department expenses include costs for advertising, banners and signage, event and office supplies for City events, equipment replacements, Community Activities Commission initiatives, and the Farmers’ Market.
Attachment 1
35 COMMUNITY PLANNING AND BUILDING
The Community Planning and Building Department (CPB) includes the Planning, Building and Code Compliance Divisions and is responsible for preserving community character while fostering a vibrant community and a high quality of life for its residents, businesses and visitors.
PLANNING
The Planning division processes current development applications, maintains the General Plan, and ensures that capital programs, zoning and other activities of the City are consistent with the goals and policies of the Plan.
BUILDING SAFETY
The Building Safety division is responsible for plans examination and inspections of City and private development projects to ensure compliance with building codes.
CODE COMPLIANCE
The Code Compliance division ensures compliance with the City Municipal Code. This function includes public education and outreach on existing laws and resolving code violations.
Attachment 1
36 2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Began work on Phase 2 update of the City’s Historic Context Statement. ▪ Adopted and certified an update to the City’s General Plan Housing Element for the 6th Cycle of the Regional Housing Needs Allocation (RHNA). ▪ Adopted a full update to the City’s Wireless Ordinance, including robust public participation and complete redraft to all existing regulations. ▪ Implemented several measures in line with the CPB 2019 strategic plan’s customer service, technology, and streamlining goals including but not limited to: expanding the online payment system, simplifying CPB’s website portal, refreshing SOPs for the Building and Planning processes.
▪ Certified an update to the City’s Timeshare Ordinance with the California Coastal Commission.
▪ Multiple community workshops and meetings for the Design Traditions 1.5 Project, following the release of a first draft update to the Commercial and Residential Guidelines.
▪ Conducted citywide code compliance effort to bring excess outdoor seating/guest amenities still remaining from the Covid-19 emergency proclamation into conformity or to gain the required permits.
▪ Conducted complete fee study on department wide permit fees, adjusted amounts, and implemented new fees.
▪ Completed first draft of ADU ordinance, held public workshop with Planning Commission, and worked with Coastal Commission and HCD staff to refine policy language.
▪ Purchased and rolled-out of two (2) electric bicycles for Planning, Building, and Code Compliance inspections.
2024-2025 PRIORITIES
▪ Continued implementation of the CPB 2019 strategic plan, with a focus on customer service, technology, and streamlining processes.
▪ Begin year one of eight to implement the General Plan Housing Element and utilize State grant funding through the Regional Early Action Planning (REAP) 2.0 program.
▪ Adopt the General plan Safety Element updates by December, 2024. ▪ Adopt Phase 2 (final phase) of the Historic Context Statement update. ▪ Adoption of: (1) updated Accessory Dwelling Unit Ordinance; (2) updated Beach Fire Ordinance.
▪ Formalize a Long Range Planning work plan to help with planning and tracking ordinance related tasks.
▪ Update the City’s Mills Act Policy and bring it to City Council for Consideration.
Attachment 1
37 ▪ Complete the scanning/digitizing of rolled building plans currently in storage at Vista Lobos.
▪ Adoption of updated Design Guidelines and Zoning Code through the Design Traditions 1.5 Project.
▪ Complete a successful recruitment to install a new Director of Community Planning and Building
▪ Engage staff to participate in more training opportunities to continue the professionalization and growth of the Community Planning and Building Department.
BUDGET SUMMARY AND SERVICE IMPACTS
Planning contract services ($136,010 total) includes items such as $82,500 for General Plan Housing Element implementation and Safety Element updates; $40,000 for scanning rolled plans stored at Vista Lobos, and $40,000 for the completion of Phase 2 update of the Historic Context Statement. The City will receive a total of $82,500 in various State grant awards to offset some of the contract services associated with the Housing Element and the Historic Context Statement Update.
The State has signaled that potential housing program budget cuts will be made to balance the overall State budget. Due to this, it is likely that the previously awarded REAP 2.0 Attachment 1
38 Grant from last fiscal year ($85,000), will be reduced by 50% to $42,500 in this coming fiscal year. This reduction has been reflected in the FY 2024/24 budget. The REAP 2.0 Grant funds are used for Housing Element implementation.
In an effort to continue professionalizing and growing the Board and Commission members along with the Community Planning and Building Department staff, the overall budget for training and education has been increased to include training for boards and commissions.
The Planning Department is seeking to add one new position, which would effectively be the Housing Element Implementation Planner. This position would be created at the Principal Planner level. With the 6th Cycle Housing Element now adopted, the task at hand is an 8-year implementation plan. This complex and detailed plan will require a full time effort, that will be undertaken and managed by this new position. The addition of this new Planning Position will also greatly reduce the need for utilizing costly contract support for the implementation of the Housing Element.
PLANNING
BUILDING SAFETY
CODE COMPLIANCE
Account Number Account Description FY23-24
Amended
Budget
FY23-24
Estimated
Actual
FY24-25
Recommended
101-115-20-42001 Contract Services $367,600 $367,600 $136,100 101-115-20-42009 Advertising and Legal Notice 500 500 500 101-115-20-42101 Office Supplies 6,400 6,400 6,400
101-115-20-42102 Publications & Subscriptions 1,425 1,425 1,425 101-115-20-42104 Safety Equipment and Supplies 800 200 2,700 101-115-20-42115 Other Supplies 2,900 2,900 1,750
101-115-20-42301 Training & Education 5,325 3,000 6,825 101-115-20-42302 Conferences & Meetings 4,000 1,000 4,000 101-115-20-42305 Mileage Reimbursement 0 0 0
101-115-20-42403 Printing 1,000 1,000 1,000
Services & Supplies Subtotal $393,050 $385,625 $164,500 Community Planning & Building: Planning
Attachment 1
39 PUBLIC WORKS
The mission of the Public Works Department is to plan, design, construct, operate, and maintain public infrastructure, streets, sidewalks, storm drains, building facilities, the urban forest, parks, and beach that contribute to the health, safety, and well-being of the Village. Public Works consists of an administrative unit and five operating divisions with responsibilities as follows:
ADMINISTRATION
Prepares Council agenda reports, monthly status reports, and annual 5-year Capital Improvement Plan, make presentations, serves as Executive Team liaison to the Forest and Beach Commission and on the TAMC TAC and Traffic Safety Committees, liaison to volunteer groups throughout the City, performs engineering services, and provides administrative support, budgeting, scheduling, and performance oversight of the operating divisions.
STREET MAINTENANCE
Supervises Public Works field personnel, prioritizes and allocates equipment, tools, and material resources, repairs streets, potholes, sidewalks, curbs, fencing, storm drainage system, berms, traffic signs, striping, and pavement markings, performs street sweeping, provides fleet maintenance services, reviews utility and encroachment permit applications, supports City events, and provides emergency response.
FACILITIES MAINTENANCE
Maintains and repairs 20 City-owned buildings and facilities with 137,000 square feet, including 8 historic buildings nearly 100 years old, supports facility renovation capital improvements, oversees janitorial contract, obtains quotes and manages building trade contractors, implements ADA projects, and performs annual fire safety apparatus, generators, and backflow inspections.
ENIVORNMENTAL COMPLIANCE
Enforces State storm water quality and waste reduction/recycling regulations, oversees the City’s waste hauler contract, implements Climate Action and Adaptation Plan projects, serves on ReGen Monterey and
Monterey Regional Stormwater Management Program TAC
committees, manages sensitive projects in the North Dunes and Mission Trail Nature Preserve (MTNP), evaluates energy reduction initiatives, and coordinates with partners on resiliency, environmental, and sustainability-focused projects.
Attachment 1
40 FORESTRY, PARKS AND BEACH
Performs tree management for 10,000+ City trees, including planting, pruning, and removal services, prepares reports and presentations for Forest & Beach Commission meetings, maintains eight City parks, Carmel Beach, open spaces, and landscaped islands, collaborates with volunteer
organizations, processes tree removal/pruning permits,
reviews private development applications, manages multiple on-call tree care and landscape maintenance service
contractors, and provides emergency response during storms.
PROJECT MANAGEMENT
Implements planning, engineering, design, public bidding, and construction- of capital improvement projects, including transportation, drainage, and facility renovation projects, performs condition assessments, manages consultants and contractors, coordinates with utilities and other City departments, prepares special conditions of approval for major encroachment permits, checks technical reports and plans, obtains permits, and prepares specifications, contract documents, and cost estimates. 2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Facilitated community volunteer organizations in obtaining permits for projects such as Leadership Carmel’s Forest Hill Park “Nature Play” project and Carmel Cares’ Scenic Road Barrier Rails
▪ Continued developing the Urban Forest Master Plan and completed technical studies
▪ Planted new trees following removal of dozens of
dead, diseased, and hazardous trees that were
removed via task orders by our on-call tree services
contractors
▪ Coordinated emergency response and clean up of tree
incidents from February 2024 storms
▪ Established 48 sites which receive ongoing
landscaping maintenance by our on-call landscaping
contractor
▪ Updated the City’s Stormwater Ordinances
▪ Issued two Emergency Coastal Development Permits
to repair six beach access stairways
Attachment 1
41 ▪ Completed Phase I of the Coastal Engineering Study, including the Shoreline Assessment and Beach Change Analysis, Erosion Exposure Modeling, Coastal Hazards, and Sea Level Rise Vulnerability Assessment
▪ Awarded a $500,000 Coastal Commission Local Coastal Program Grant to perform Phase 2
▪ Held the 2nd-Annual Earth Day/Arbor Day celebration
▪ Installed new split rail fencing at Forest Hill Park and the North Dunes Habitat Restoration area
▪ Implemented waste management compliance with organics and recycling regulations, and implemented a new waiver application process ▪ Installed new dual, ribbon style, trash and recycling cans throughout downtown and residential areas
▪ Supported the re-formed Climate Committee
▪ Remodeled the Police Dispatch Office
▪ At Sunset Center, installed new bollards, a recirculating fire pump system, and replaced the heater for Carpenter Hall
▪ Completed other Facility Renovation Projects: Fire
Station back patio resurfacing, Police evidence locker
installation, and Park Branch Library dumbwaiter
decommissioning
▪ Updated the “StreetSaver” Pavement Management
System database
▪ Used 30 tons of asphalt to fill potholes and street repairs and 70 gallons of traffic paint to update pavement markings
▪ As a Public Works team building project, rebuilt a foot bridge in MTNP and installed new roadway surfacing and new gate at the Preserve entrance at Eleventh Avenue ▪ Began using the all-electric Street Sweeper and received a $250,000 rebate from 3CE
▪ Auctioned 7 surplus vehicles for a total of $36,000
▪ Completed construction of the following Capital Improvement Projects:
▪ City Hall Retaining Wall Repair Project
▪ MTNP – Well Abandonment, and Removal of Tank and Pump House ▪ Completed construction of the FY 22 Paving Project, which included the City’s first application of micro-surfacing and establishment of the first official bike route along San Carlos Street
▪ Hazardous materials remediation and painting the exterior of Sunset Center and Harrison Memorial Libraries
▪ Electrical panel assessments at four sites: Public Works, City Hall, and Fire Station, and Ocean Avenue median
Attachment 1
42 ▪ Completed engineering, design, and environmental review of the following Capital Projects:
• MTNP – 3 Drainage Improvements for Stream Stability
• Four Drainage System repairs and bottlenecks
• FY 23 Concrete Street Repair Project
• FY 23-24 Street Resurfacing Project
• San Antonio Pathway Repairs (Second to Fourth Avenues) • Sunset Center Retaining Wall Repairs
• Electrical Panel Upgrade at Vista Lobos
• Police Building - completed building condition assessment and Police Department space needs
• Developed a conceptual design for Sunset Center Portico 2024-2025 PRIORITIES
▪ Adopt and implement the Urban Forest Master Plan, which will kick off a 3-year “catch up” plan with the goal of resolving the backlog of Stump Removals and Tree Removals for dead, dying, or diseased trees. The backlog is anticipated to be reduced by 1/3 by the end of FY 24-25. A “catch up” plan will also be implemented to plant trees equal to the number of trees which fell in recent years’ storms, all the while continuing to replant 1-for-1 for non-storm removals. All progress on these efforts will be reported monthly at Forest & Beach Commission meetings. ▪ Establish an Underground Utility District utilizing PG&E Rule 20A funds. ▪ Develop adaptation strategies and launch public outreach for Coastal Engineering Study, Phase 2
▪ Continue North Dunes Restoration Improvements and Reporting Implement updates to the Monterey Regional StormWater Management Program and Reporting ▪ Construct the FY 24 Street Resurfacing Project, including 4 bid additives from the FY 22 paving project and the San Antonio/Ocean Avenues intersection reconstruction from the FY 23 concrete streets project
▪ Construct four Drainage System repairs and bottleneck improvements ▪ Complete construction of the MTNP – 3 Drainage Improvements for Stream Stability
▪ Construct the Electrical Panel Upgrade and EV Chargers at Vista Lobos ▪ Implement beautification projects, notably the re-landscaping of the Ocean Avenue Medians
▪ Construct the City Hall Roof Replacement and Sunset Center Cottage Window Repairs
▪ Reconstruct the San Antonio Pathway
▪ Repair retaining walls at Sunset Center
▪ Remove and replace 167 trees and remove 200 stumps
Attachment 1
43 BUDGET SUMMARY AND SERVICE IMPACTS
ADMINISTRATION
The Administration Unit budget includes funding for Contract Services ($32,200), including uniforms and software contracts, training ($15,000), subscriptions ($5,000), and office supplies ($3,000). Line item increases reflect all field positions being filled.
Attachment 1
44 STREET MAINTENANCE
The Street Division budget includes funding for Materials and Supplies ($71,000) for black and pick mutt mitts ($30,000), asphalt, sidewalk pavers, and traffic paint, Equipment and Vehicle Maintenance ($10,000), Fuel ($30,000), and Contract Services ($46,200) including reconstruction of the San Antonio Pathway, between Second and Fourth Avenues damaged by January storms and subject to FEMA reimbursement.
FACILITIES MAINTENANCE
The budget for the Facilities Maintenance Division includes funding for Contract Services ($571,762) including janitorial ($280,412), alarm monitoring, and generator services, HVAC, plumbing, roofing, and electrical repairs, and Materials & Supplies ($94,350) for doors, hardware, lighting, filters, plumbing, and first aid supplies.
ENIVORNMENTAL COMPLIANCE
The Environmental Compliance Division budget includes funding for Contract Services ($292,800), including SB1383 implementation, recycling containers, and waste hauler oversight ($8,000), stormwater quality enforcement and watershed monitoring ($26,000).
Cleaning of storm drains, on-call environmental consultants, and climate change initiatives, and Permits and Licenses ($13,200) for stormwater and Air Resources District permits and MTNP invasive removals and North Dunes habitat monitoring services.
Attachment 1
45 FORESTRY, PARKS AND BEACH
The Forestry, Parks, and Beach Division budget includes funding for Contract Services ($1,426,200), including tree contractors for removals, pruning, stump grinding, MTNP tree work, beautification projects ($25,000), landscape maintenance contract ($179,200), and Materials and Supplies ($82,200) for trees, landscaping and irrigation supplies. Tree contract budget increased to reflect numerous dead/unsafe tree removals and the backlog of stumps, all part of a 3-year tree maintenance catch-up plan.
Attachment 1
46 PUBLIC SAFETY
The Director of Public Safety/Police Chief manages the Public Safety Department and three distinct functions:
POLICE DEPARTMENT
The Police Department is responsible for law enforcement and crime prevention within the City. The mission of the Department is to protect and serve, with the primary responsibility of ensuring the rights of citizens and visitors to live in peace and safety. It also oversees the management and operation of the Emergency Operations Center; the Volunteers in Policing Program that assists with daily clerical activities, errands, public outreach and special events and the City Community Emergency Response Team of volunteers ready to assist the community during an emergency situation.
FIRE DEPARTMENT
The Fire Department is primarily responsible for saving lives and protecting property through the prevention and control of fires. The Fire Department has operated under a contract with the City of Monterey since 2012. The Public Safety Department manages the contract with the City of Monterey and is responsible for oversight of needed equipment and supplies.
CARMEL FIRE AMBULANCE
Carmel Fire Ambulance provides advanced life support ambulance service to the residents of Carmel- by-the-Sea. Ambulance staffing includes paramedic-firefighters and emergency medical technician- firefighters to provide front line medical emergency response and allhazard response as a key component of the City’s public safety services. The City of Monterey also provides administrative oversight of this function through a contractual agreement managed by the Public Safety Department.
2023-2024 INITIATIVES AND ACCOMPLISHMENTS
▪ Vacancies were filled to include, (1) Police Chief/Director of Public Safety, (1) Police Officer, and (2) Dispatchers. Recruitments to fill the vacant Police Officer position continue.
▪ In the process of developing new contract language for Fire services with the City of Monterey.
▪ A new radio tower was purchased in conjunction with Monterey County and a grant through the Bay Area Urban Areas Security Initiative (UASI). The installation of the Attachment 1
47 tower is in its final stages and should allow the police department the ability to transition to the digital network used by all county law enforcement agencies. ▪ A new Ambulance and Fire Engine were ordered to replace aging vehicles. ▪ The police department is working to convert a majority of its fleet to fully electric vehicles. The department purchased two fully electric vehicles, one administrative vehicle and an electric pick-up, which will be used for patrol operations. ▪ Volunteer groups like (VIPS) volunteers in policing and (CERT) Community Emergency Response Team were utilized during essential situations such as storms and flooding.
▪ In January 2024, in Conjunction with City Departments, including Fire, Public Works, Library, Forestry, VIP’s, CERT, and County Agencies including, Monterey County Department of Emergency Management and CalFire, began a planned series of educational forums for the public called Carmel Prepares. The series will include bi-annual training for our village on how to prepare for emergencies in our village. ▪ The Volunteer in Policing (V.I.P.) program is composed of people who give freely of their time. They enjoy the satisfaction of providing worthwhile contributions to departmental personnel and the Community of Carmel. They are motivated by their interest in a higher quality of life for Carmel. The
VIP’s provide a variety of services for the village,
including acting as ambassadors for the village by
helping to direct and educate visitors. Our VIP’s
play an important role during emergencies,
including traffic control and operating and
maintaining our Temporary Assistance Center.
▪ Our Carmel CERT (Community Emergency Response Team) was also integral to our safety in the community and was activated multiple times during the storm emergencies to help with power outages, contacting residents, and assisting in life saving measures alongside police, fire, and ambulance services. Our CERT Team is made up of 30 dedicated volunteers who support our village as well as provide mutual aid to our neighboring communities. During emergencies or disasters, both selfreliance and the use of volunteers under professional direction will be necessary.
CERT provides community members with disaster related know how. They need to be self-sufficient and support others until further help can arrive. 2024-2025 PRIORITIES
▪ Continue recruitments to fill additional Police Officer positions and be fully staffed. ▪ Continue work towards the completion of the Police Department Remodel Project. ▪ Upgrade outdated computer equipment in police vehicles and parking scooters. ▪ Increase efforts in retention of police officers through positive leadership and training in preparation for promotional advancement and growth.
Attachment 1
48 ▪ Increase transparency and education of the use and placement of the Flock camera system.
BUDGET SUMMARY AND SERVICE IMPACTS
POLICE DEPARTMENT
▪ The FY 24-25 Budget decreases by $404,964 over the FY 23-24 Amended Budget. The Department will continue to focus on patrol and responding to public safety needs. ▪ The FY 24-25 Budget reflects an increase of $21,023 in services and supplies over FY 23-
24. The increase is primarily the result of upgrading aging equipment, and an increase in ammunition prices, providing CERT team uniforms and equipment, and training and supplies needed to fill vacant positions. Training expenses were increased to add Critical Incident Training, De-escalation and Racial Bias Training for all department members.
Contract services include expenses critical to operations including dispatch, jail booking and animal services provided by Monterey County; tasers, body and surveillance cameras and associated software and maintenance costs.
Attachment 1
49 FIRE DEPARTMENT
▪ The FY 24-25 Budget increases by $235,815 over the FY 23-24 Amended Budget.
Contract services include fire services provided to the Village by the City of Monterey ($3,253,597).
▪ The FY 24-25 Budget also includes funding for fuel ($19,000) and vehicle maintenance ($40,000) as Carmel is responsible for vehicle repair and replacement under the contract with Monterey.
Attachment 1
50 CARMEL FIRE AMBULANCE
▪ The FY 24-25 Budget decreases by $36,108 over the FY 23-24 Amended Budget.
Overtime reflects an anticipated decrease from FY 23-24 Estimated Actual due to being fully staffed. Contract services include station coverage by the City of Monterey as needed ($85,000), ambulance billing ($48,000), Monterey Fire management of Ambulance personnel ($27,222). Other major expenses include medical supplies ($48,150), fuel and vehicle maintenance ($21,000 and $37,000 respectively), safety equipment ($17,500) and required training to maintain credentials ($19,150).
Attachment 1
51 CAPITAL IMPROVEMENT PLAN (CIP)
Attachment 1
52 CAPITAL IMPROVEMENT PLAN
VEHICLE AND EQUIPMENT FUND
Table 1: FY 24-25 Recommended Vehicle and Equipment Acquisitions and Funding Source
Funding prioritizes public safety response capabilities, including enhanced communications and the purchase of new vehicles. A focus on environmentally friendly vehicles is evident in this year’s spending plan.
Ambulance
A contract to build the new ambulance and furnish equipment for $410,000 was executed last year. Delivery is anticipated in late 2025. Funding of $275,000 from the Vehicle and Equipment Fund and a $50,000 donation will be carried forward into FY 24-25 until the invoice is due. The estimated $85,000 balance for the ambulance will be programmed in FY 25-26.
Fire Engine
In October 2022, Council appropriated $880,000 and added the fire engine into the Fiscal Year (FY) 22-23 Capital Improvement Program (CIP). The Pierce Manufacturer Enforcer diesel fire engine has been ordered with delivery anticipated by late 2025. Although the purchase is complete, the project is being carried forward until delivery of the fire engine.
Public Works Dump Truck
In October 2022, Public Works’ 5-yard dump truck, a 1995 F700, broke down on Highway 1 with a seized transmission and had to be towed to the Vista Lobos parking lot where it still resides. Due to the age of the truck and the unavailability of a new transmission, despite an exhaustive search, staff recommended its replacement. In the interim, dump trucks have been rented periodically for certain tasks, but this approach is not sustainable.
Attachment 1
53 A dump truck is needed year-round by all divisions in the Public Works Department. The dump truck is often used for hauling materials such as debris, wood chips, tree-rounds, logs, sand, gravel, decomposed granite, and asphalt.
The estimated cost for a new 2024 or 2025 Ford F650 chassis (or similar) and a 5-yard dump bed is $150,000. Preliminary research has not yet resulted in a cost-effective electric vehicle alternative of the capacity we need, but additional research is warranted. With proper maintenance, a new truck should have a life expectancy of another 20+ years.
Police EV Patrol Vehicle
The Police EV Patrol Vehicle will replace a gas-powered 2017 Dodge Charger that has reached the end of its useful life. This vehicle continues to have mechanical issues, which require increasingly expensive repairs, and it is no longer reliable for emergency response.
The estimated cost of $90,000 includes the purchase of the vehicle and outfitting it for Police use. Electric Vehicle grants from 3CE will be pursued for all new electric vehicles.
While the amount of any grants is unknown at this time, staff estimates that up to $15,000 in rebates or incentives may be funded by 3CE. The existing gas-powered vehicle will ultimately be sold at a public auction.
Police Radios Lease (Years 4 of 6)
Twenty-two (22) radios were purchased in 2021 with a payment schedule of $30,000 per year for six years, with funding from the Vehicle and Equipment Fund.
Council Chambers AV Upgrade
In 2017, the Council Chambers' Audio Visual (A/V) system upgraded from standard to high definition. However, some of the equipment has reached the end of its useful life, and IT staff and vendors have determined that it needs to be replaced to be functional.
Upgrades are crucial to ensure smooth facilitation of hybrid meetings, accommodating both in-person and remote participation, especially via Zoom. Reliable audio and video systems are essential for seamless remote engagement and comprehensive meeting recordings.
Therefore, allocating resources for timely A/V infrastructure upgrades aligns with modern communication demands and demonstrates the City’s commitment to inclusive civic engagement. The estimated cost is $70,000.
Core Networks
The existing Arista switches that connect our computer server locations together were purchased in November 2016 and have reached the end of their useful life. The manufacturer no longer provides updates or support for these switches. The budget for new core networks is $50,000.
Network Firewalls
Purchased in April 2017, the existing network firewalls have reached the end of their useful life and must be replaced as soon as possible. The budget for new network firewalls is $180,000.
Attachment 1
54 CAPITAL PROJECTS FUND
Table2: FY 24-25 Recommended Capital Projects and Funding Source
STREETS
Paving Project : Conglomerate Paving Project FY 24-25
Annual Paving Project, FY 23-24: In April 2023, Council adopted a list of streets to be included in the FY 23-24 Annual Paving Project. The City’s annual Maintenance of Effort funding ($674,000 for FY 24-25) leverages external funds via TAMC from Attachment 1
55 Measure X, Gas Tax, SB 1 - the Road Maintenance and Rehabilitation Account (RMRHA), and the Regional Surface Transportation Program (RSTIP). This project includes design and construction of asphalt pavement overlays of five roadway segments, including Upper Ocean Avenue and Santa Lucia Avenue, between Dolores Street and Rio Road, removal of failed pavement sections and providing a slurry seal treatment on 21 road segments predominately in residential neighborhoods, and replacing broken sidewalks with permeable pavers along five road segments in the downtown area.
All of these improvements, which have a construction cost estimate of $1.68 million, will be included in the Conglomerate Paving Project for FY 2024-25; however, several of the most expensive roadways may be included in the construction bid documents as additive bids and awarded if sufficient funding is available upon receiving the bid proposals.
Annual Paving Project, FY 21-22: Construction of this Project is substantially complete. This project included paving overlays along Junipero Street, between Third and Fourth Avenues, at the Junipero-Camino del Monte intersection, and along Santa Fe Street between Fifth and Sixth and Avenues.
Also, the City’s first application of a micro-surfacing pavement treatment was completed along Junipero Street, between
Fourth and Ocean Avenues, and along San Carlos Street,
between Eighth and Thirteenth Avenues. Four large
downtown sidewalk repairs were also completed. No budget remains from this project.
Due to higher than anticipated construction bids received for this Annual Paving Project for FY 21-22, four additive bid items were not awarded for the construction contract. The bid items were for paving overlays along San Antonio Avenue, between Fourth and Ocean Avenues, San Antonio, between Ocean and Eighth Avenues, Monte Verde Street, between Fourth and Ocean Avenues, and along Torres Street, from Third to Fifth Avenues. All four of these bid additives, which have a construction cost estimate of $835,000, will be merged into the Conglomerate Paving Project FY 24-25.
Concrete Street Repairs, FY 22-23: The design of this project is complete and “shovel ready” for construction; however, this construction cost estimate is nearly $3 million.
Therefore, the majority of this project will be shelved until future capital funding becomes available. The project includes repairs and resurfacing of concrete intersections at Ocean-San Antonio, San Carlos-Fifth, San Carlos- Sixth, and ADA Attachment 1
56 ramps and bulb out improvements at the Junipero-Seventh intersection. Also, structural repairs and resurfacing are included along Ocean Avenue, between Monte Verde and San Antonio, as well as the three intermittent side streets, up to the sidewalks, on both sides of Ocean Avenue. In addition, the project includes repairs and resurfacing of San Carlos Street between Fifth and Sixth Avenues.
The project balance of $792,000 is being reallocated into the Conglomerate Paving Project for FY 24-25. Only one portion of this project will be included in the Conglomerate Paving Project – Reconstruction of the San Antonio-Ocean Avenue intersection – which has a cost estimate of $293,000.
San Antonio Pathway Reconstruction
The San Antonio Avenue Pathway, located on the west side between Second and Fourth Avenues, was damaged by winter storms in early 2023. FEMA funding was promptly applied for reconstruction costs, but this effort was not successful.
Funded out of the Public Works/Streets and Forestry operating budgets for FY 23-24, a structural engineering firm designed the repairs to restore the pathway. The design process revealed that the original construction was deficient in that while the original buried concrete piers were fine, the wooden lagging supporting the pathway did not accommodate proper drainage, and the connection of the wooden posts supporting the grape stake fencing were not properly connected to the piers. Consequently, stormwater traveled along the west edge of the fencing, rotting the lagging and the bottom of the posts, and resulted in the fence falling down.
The repair involves excavating around 44 concrete piers, constructing concrete pier caps to support new column posts, replacing the wood lagging, installing a drainage facility, restoring the Pathway, and installing grape stake fence to appear as the original fence. The FY 24-25 budget of $550,000 will cover the cost of construction and construction management.
Sunset Center Retaining Wall Repairs
Sunset Center initially requested this project. In FY 23-24, $40,000 was allocated to the project to prepare structural engineering evaluations and repair plans for deteriorated walls surrounding Sunset Center. The design was completed for five retaining walls. In the north lot, a 100-foot long, Carmel stone wall along Eighth Avenue is leaning, and there are significant cracks in the wall along Mission Street. In the south parking lot off of Tenth Avenue, there is a rotted wooden wall on top of a granite retaining wall. These and other walls require various structural repairs, restoration treatments, and replacement of fencing and railings. The FY 24-25 budget for construction and project management oversight is $550,000.
Attachment 1
57 Lincoln/Fourth Trestle Bridge
Originally built in the 1930s, the Lincoln Street/Fourth Avenue wooden trestle bridge was last formally inspected in 1998 when the footbridge was modified to provide parking for two homes adjacent to the bridge. Since then, Public Works crews have made numerous repairs to damaged boards, posts, and railings. Currently, there are some rotten deck boards, loose posts, and noticeable settling of concrete pier blocks on the east side of the bridge.
This project consists of hiring a structural engineering firm to assess the condition of the bridge, identify needed repairs and their urgency, and prepare cost estimates. The budget is $40,000. Depending on the condition findings, the design plans, CEQA review, and construction of the repairs would be programmed in subsequent fiscal year CIP budgets.
Ocean Avenue, Carpenter Street to Highway 1 – Monterey County Project Ocean Avenue, between the east City limits near Carpenter Street and Highway 1, is currently inundated with potholes and pavement distress. The pavement condition has deteriorated to the point that a minor paving resurfacing treatment would be insufficient, and the roadway may need to be reconstructed in some areas followed by an asphalt overlay. While located in the jurisdiction of Monterey County, Ocean Avenue is a primary arterial entryway from Highway 1 into the central downtown core of the City of Carmel.
Numerous calls have come in over the years requesting the City to repair these potholes, until the callers are notified that this is the responsibility of the County. Public Works has contacted the County’s Public Works Department numerous times to alert them to potholes.
While the County is typically very responsive to the City’s requests, repairs can be delayed at times, particularly following storms.
This new CIP project for FY 24-25 would allow the City to launch this major street improvement project on behalf of, but at the full cost of, the County. The first step in this process would be to enter into a funding agreement, to be approved by the County Board of Supervisors and City Council, outlining the work to be performed by the City and its consultants and contractors, payment or reimbursement of all direct costs by the County, and a mechanism to allow the City to terminate the agreement at any time.
While these necessary roadway improvements would clearly benefit citizens of Carmel and the County alike, this project does pose risks. For example, the required Encroachment Permit from CalTrans could potentially trigger intersection improvements at Highway 1, such as modified turn movement and/or signalization updates. The roadway design must include drainage improvements, repairs and/or additions to sidewalks along both sides of the street, and accessibility ramps. Additional project implementation and construction issues that must be addressed include CEQA documentation, environmental permits, community outreach, and reconciliation of design and contracting standards between the County and City.
Attachment 1
58 The City does not currently have the capacity to implement this project. Therefore, one of the City’s Project Management consultants would be needed for this project. Next, a thirdparty engineering/environmental firm must be retained for engineering design, permitting, and bid phase and construction engineering support. While the vast majority of the work would be performed by consultants and contractors, all at the expense of the County, the impact to City staff cannot be understated.
The County provided an initial cost estimate of $500,000 for the paving portion of the project. Preliminarily, it appears that the full cost for project management, design, and construction, including drainage, sidewalks, ADA improvements, and traffic control, will be substantially higher.
DRAINAGE
Mission Trail Nature Preserve 3 Stream/Drainage Projects This carry-over project consists of the first three of eight stream restoration and drainage improvements recommended in the 2019 MTNP Stream Stability Study. Acquisition of environmental permits from the U.S. Army Corps of Engineers, California Department of Fish and Wildlife Service, and Water Quality Control Board delayed the project for one year. The remaining funding of approximately $60,000 will be carried over into FY 24-25 for construction.
Construction includes three projects: 1) Drainage improvements along the Doolittle Trail, 2) swale reconstruction on the Willow Trail: and 3) an elevated boardwalk on the Willow Trail. A construction contract was awarded in May 2024 in the amount of $394,380.
Funding is available from a $178,000 California State Parks Per Capita Grant, the remaining balance of $163,169 from the FY 23-24 CIP Contingency Fund account, and $67,599 from FY 24-25 CIP funds. Construction is scheduled to be completed by late 2024.
Drainage System Repairs
The 2023 City-wide Drainage Master Plan Update identified numerous spot repairs needed for our existing underground storm drainpipes, as well as reconfigurations to eliminate significant "bottlenecks" in the drainage system. The Master Plan divided these repairs into 6 high priority repairs valued at $3.7M, 9 medium priority improvements at $7.7M, and 8 low priority projects at $3.3M. This Project, and subsequent projects programmed in the 5- year CIP, are intended to address these high priority issues.
In July 2023, Neill Engineers was issued a $159,100 Amendment to their Professional Services Agreement to design four of these high priority drainage system repairs at: 1) Eleventh Avenue (Carmelo to San Antonio Streets), 2) along Lincoln Street, from First to Second Avenues, and along Second Avenue, from Lincoln to Monte Verde Streets, 3) along Santa Fe Street from Eighth Avenue south to the MTNP outfall, and 4) a new headwall at Acacia Way/Flanders Way. The design plans are substantially complete, as are the required Attachment 1
59 CEQA documents for two locations, and the acquisition of one small drainage easement is in progress.
The remaining FY 23-24 funding of approximately $414,000 will be carried over into FY 24-
25. However, the revised construction cost for all four drainage projects is $1.052M, and supplemental funding of $638,000 is required to complete this project.
Junipero Bypass Drainage Project - Design
As noted in the project description above for Drainage System Repairs, the 2023 Storm Drain Master Plan Update divided identified drainage concerns into high, medium, and low priorities. Modeling results indicated significant hydraulic inadequacies in the storm drain in the vicinity of Junipero and Mission Streets between Seventh and Ninth Avenues.
Currently, stormwater from the north and eastern portions of the City’s watershed is channeled along Junipero between Fifth and Seventh Avenues. However, the pipeline then is inefficiently routed west to Mission Street, south to Ninth Avenue, and east back to Junipero Street. This jog is referred to as the Bypass.
The objective of this high priority project is to install a continuous, 36-inch drainage pipeline along Junipero, between Seventh and Ninth Avenues, to eliminate the bypass bottleneck. The upstream pipeline along Junipero, between Fifth and Seventh Avenues, is a medium priority project requiring a 30-inch parallel pipeline; however, it is most costeffective and efficient to combine these two adjacent segments for design.
This new FY 24-25 project allocates $175,000 for design of both pipeline segments. The cost of construction would be on the magnitude of $2.5M. Consequently, construction may need to be split to accommodate future funding availability.
FACILITIES
Police Building Project This is a carry-over project
advancing approximately $2.6M into the FY 23-24 CIP
Budget. In 2023, Council formed an Ad Hoc Committee
and awarded a $300,000 Professional Services Agreement
to an architectural firm. In FY 23-24, the architectural team and their engineering consultants prepared a
Condition Assessment Report of the Police Building which is available on the City’s website. The architect also
developed a Police space programming needs assessment
to accommodate modern police operations and standards.
In January 2024, the results of these tasks were
introduced to Council. Preliminary discussion was
introduced to consider advancing the project only into the schematic design phase to obtain more information to
Attachment 1
60 consider the possibility of significantly renovating the Police/Public Works building at the existing site, completely reconstructing the building at the existing site, or constructing a new Police Building at a different site and subsequently renovating and repurposing the existing building. Prior to consideration for advancing the program into schematic design, Council held a series of public meetings to solicit public input, and tours were conducted of the Carmel station and a new police station in Salinas.
Throughout this major project, a number of urgent safety repairs were completed in the Police Building, including electrical panels, steel doors, security systems, lighting, evidence lockers, dispatch room renovation, and others. These repairs are also funded by this CIP project.
The FY 23-24 project balance of approximately $2.6M will be carried over into FY 24-25 to cover remaining costs for schematic design, cost estimating, and potentially commencing design development of a selected alternative. Funding should also be earmarked to continue with a consultant project management firm, as well as to continue to make necessary safety repairs in the building. Additional public outreach will also continue.
ADA Upgrade, Year 7
This project would continue the City’s annual program of modifying public facilities, as identified in the City’s 2018 Americans with Disabilities Act Transition Plan, to improve access to the disabled. Last year, the City increased its annual allocation from $15,000 to $20,000 to continue to demonstrate good faith efforts to implement these improvements and to reflect higher costs due to inflation.
As has been the case in the past, the project will be managed, and improvements will be installed, by the Facilities Maintenance Division supplemented by vendors as needed.
Tentative projects will include installing ADA-compliant railings, drinking fountains, restroom facilities, and signage.
Norton Court Garage Security Access System
The Norton Court parking garage access control system provides security for the underground parking garage. The outdated system no longer has the ability to program new access cards and is in disrepair. The new system will have the ability to be programmed by staff, rather than only by the vendor, and includes replacing two card readers at the pedestrian access points into the garage. The cost estimate is $15,000.
Sunset Center – North Lot Electrical Panel
In July 2023, Council awarded a Professional Services Agreement to an electrical engineering consultant for three projects, including this project for a fee of $18,240. Based on the 60% design plans and consultations with PG&E and Sunset Center, this project will allow the City to install additional EV charging stations to cover the entire west wall of the parking lot.
Attachment 1
61 A two-pronged approach is being pursued. First, the existing, undersized electric panel along the Eighth Avenue ramp will be relocated down into the parking lot and rebuilt. This relocated panel will contain a new commercial service meter for the parking lot lights and a separate meter for the existing and future EV chargers. A new PG&E transformer, which will be installed by PG&E at no cost to the City, will provide power to all of the EV charging stations at discounted energy rates.
This project was initially funded at $100,000 in the FY 23-24 CIP, and remaining funds will be rolled over into the FY 24-25 CIP. It is anticipated that 3CE will provide a rebate or other incentives for EV charging stations, but for an amount currently unknown.
Vista Lobos 3 EV Charging Stations and Building Electrical Panel This is a follow-on project to the $75,000 Electrical Panel Assessments at Four Buildings Project which was funded and completed in FY 23-24.
In July 2023, Council awarded a Professional Services Agreement to an electrical engineering consultant for three projects, including this project, for a fee of $24,110. The design is currently 90% complete. This “new” $400,000 project for FY 24-25 will cover the cost for construction of a new electrical system to allow for the expansion of three more EV charging stations along the south wall of the Vista Lobos parking lot, tying into a new transformer to be set by PG&E at no cost to the City. Funding will also cover the cost to reconstruct and upsize the electrical service at a new electrical panel located on the south wall of the Vista Lobos building.
One of the three new EV stations will be high capacity to charge the City’s electric street sweeper. The other stations will be available to the public. Rebates from 3CE are anticipated to partially cover the cost of the EV charging stations. Staff anticipates up to $60,000 from 3CE,, but the actual amount is unknown at this time.
Facility Renovation Projects
Two carry-over facility renovation projects remain in the Capital Improvement Plan: The City Hall Roof Replacement Project and the Sunset Center Cottage Window Repairs Project.
▪ City Hall Roof Replacement: The City Hall roof was last replaced in 1984 and is 16 years past its warranty. Several roof leaks have been repaired by contractors and staff over the past few years as the roof progressively deteriorates. Contract documents for this project were extracted from a larger, bundled facilities renovation project which resulted in very high bids which were subsequently rejected by Council. This “shovel ready” project is anticipated to be constructed by Fall 2024.
The cost estimate has increased to $350,000, and supplemental funding is being programmed to cover the construction shortfall in FY 24-25.
Attachment 1
62 ▪ Sunset Center Cottage Window Repairs: The Cottage Window Repairs will be advertised for bids following the City Hall Roof Replacement. Contract documents for this project have also been extracted from the larger facility renovation projects.
Unlike the original bidding documents in which all work had to be done at the jobsite, this time, the contractor will have the option of physically removing affected windows, performing hazardous materials remediation, wood framing repairs, and painting at their own shop, and replacing them at the site. The cost estimate has increased to $200,000, and supplemental funding is being programmed to cover the construction shortfall in FY 24-25.
FOREST, PARKS AND BEACH
MTNP Doolittle Footbridge and Path Realignment
The Friends of Mission Trail Nature Preserve have expressed an interest in donating labor and materials to ultimately construct a new footbridge in the Redwood Grove at the northern end of Doolittle Trail in the MTNP. This footbridge was previously referred to as the Laiolo Bridge.
The proposed footbridge would provide safer creek crossings for pedestrians who currently cross over an often-wet concrete ford. This project was also included in the 2019 MTNP Stream Stability Report as the fourth of eight recommended projects along the MTNP creek bed.
The FY 24-25 budget for this new project is $175,000. These funds would be used for structural and civil engineering designs for construction of a new bridge, removal of a portion of the concrete ford in the creek, and minor realignment and regrading along the Doolittle Trail. However, a portion of the ford must remain within the easement used by the Carmel Area Wastewater District. Environmental permitting for the project may include approvals and permits from the US Army Corps of Engineers, California Department of Fish and Wildlife Service, Coastal Commission, and/or the Regional Water Quality Control Board. Construction funding would be programmed in a subsequent CIP budget.
Scenic Pathway Hardscape Renovations
In FY 23-24, the City appropriated $100,000, and City
support group Carmel Cares committed to matching
these funds, to continue to improve the Scenic Pathway.
City expenses to date from this fund in FY 23-24 has
been minimal and includes additional lumber and
hardware for barrier rail and pathway widening
improvements. Remaining funds will be carried over into FY 24-25.
Attachment 1
63 Proposed additional improvements along the Pathway include: signage, irrigation repairs, pathway trim edging, decomposed granite repairs, barrier rail extensions, and other hardscape amenities. Also, Council requested the project team to develop a holistic game plan to cover the complete renovation of the Pathway; however, certain contracting methods may trigger State public works contracting regulations, and these issues are currently under review.
ENVIRONMENTAL
Coastal Engineering Study, Phase II
This Study was identified in the City Council-adopted Climate Adaptation Plan as a critical document for sea level rise resilience planning to ensure the City has the tools necessary to make decisions related to the long-term maintenance of coastal resources. All five primary tasks in Phase I are complete, including the Shoreline Infrastructure Condition Evaluation, Shoreline and Beach Exposure Modeling, Coastal Hazard and Sea Level Rise Vulnerability Assessment, and Policy Review. Key findings were presented to the Forest and Beach Commission, Climate Committee, and City Council in 2023 and 2024.
Phase II is a carry-over project that is now underway, and will focus on hazards policy review and revisions, public outreach and engagement, socio-economic analysis, adaptation strategies, pathway development, and development of the City’s Local Coastal Program Amendment. This project is fully funded under a recently-executed, $500,000 Local Coastal Program Grant Agreement by the California Coastal Commission.
Shoreline Infrastructure Repairs
The first phase of the Coastal Engineering Study included a Shoreline Infrastructure Condition Assessment. The Assessment concluded that 2-4 existing seawalls need repairs, with the highest priority repair being the
Fourth Avenue Outfall. Eleven coastal
access stairs were assessed with 9 stairs
needing repairs, and two stairs are
currently closed due to structural damage
resulting from winter storms. In addition,
of the 6 rock revetments, 4 are high priority
in need of repair; one in its entirety and
others in some portions. The total cost for
engineering design, environmental permits,
and construction for all of these repairs will
likely exceed $2 million over the next few
years, as outlined in the 5-Year CIP.
Attachment 1
64 This Shoreline Infrastructure Repair Project will initiate the engineering and design of the highest priority repairs, as well as to repair the damaged beach access stairs with similar materials as a maintenance project. This approach is expected to streamline the regulatory approval process. This initial project will also allow the City to better estimate costs and phasing to complete future shoreline infrastructure repairs. A Request for Proposal has been prepared to retain a consultant with expertise in environmental permitting, coastal and structural engineering, and cost estimating.
Project funding for FY 23-24 was initially set at $250,000. An additional $100,000 previously budgeted for the Coastal Engineering Study, Phase 2 was reallocated to the Shoreline Infrastructure Project, and a FEMA grant of approximately $50,000 was received for beach stair repairs. All funds will be carried over into FY 24-25.
Shoreline Wall- Fourth Avenue Outfall
The Fourth Avenue Outfall is located on Carmel Beach west of the North Dunes Habitat Restoration site and north of Ocean Avenue. This seawall was identified as the highest priority seawall repair in the 2023 Carmel Beach Coastal Infrastructure Condition Assessment Report, prepared as part of the Coastal Engineering Study, Phase I. The seawall foundation is partially undermined, there are a number of significant structural cracks, and reinforcing steel bars have been exposed by spalling concrete and are corroded.
The seawall is at the end of its service life and poses a potential risk to beach users, particularly during a major storm or a seismic event. The Report recommended complete reconstruction of the seawall including the drainage box culvert outfall.
This is a new FY 24-25 project with an initial budget of $250,000 for engineering design and environmental permitting. For efficiency and cost-effectiveness, the design and environmental review are proposed to be completed in conjunction with the Shoreline Infrastructure Repairs Project described above. Construction of the project is currently estimated at $900,000 and is included in the 5-Year CIP for FY 25-26.
PG&E Rule 20A Undergrounding
In 1967, in response to local government interest in enhancing the aesthetics of their communities, the California Public Utilities Commission (CPUC) established electric tariff Rule 20 which includes various programs for undergrounding existing overhead utility lines. Rule 20A is the primary program for municipalities to underground utilities in urban areas that meet certain criteria. Since Rule 20A funding is primarily from ratepayer electric bills, proposed undergrounding projects must provide a benefit to the public at large.
Currently, the City is inactive in the program but has a work credit balance of $667,639. As the Rule 20A program phases out from aesthetic-based projects to wildfire risk-based programs, a portion of the City’s credits have already been reallocated to shovel ready projects in other cities. In order to freeze the remaining credits, the City would need to formally establish an Underground Utility District(s) by December 31, 2024.
Attachment 1
65 Two potential undergrounding projects/districts have been proposed by staff and considered by the City Council as follows:
▪ North side of Ocean Avenue, from San Antonio Avenue
extending 800 feet west to the end of the Del Mar Parking Lot. ▪ In the Mission Trails Nature Preserve and along the west side of the Willow Trail extending 1,100 feet south from the entrance gate at Eleventh Avenue.
Both districts would ultimately result in the removal of up to 10 power poles and associated overhead electric, telephone, and cable tv lines. Both districts also would require 7-8 property owners to convert their homes from overhead to underground services at the time the utility lines are undergrounded. Upon Council’s adoption of a Resolution selecting a District(s), a formal application is submitted to PG&E to commence the design, utility coordination, and easements, environmental permits, and funding agreement processes. Currently, PG&E estimates a 10-year lead time until actual construction would begin.
This has long been a carry-over project as funds have accumulated over many years. The project is listed in the FY 24-25 CIP since adoption of the Underground Utility District for Rule 20A in this fiscal year would upgrade the City’s program from inactive to active status – the first key milestone for this long range project.
LIBRARIES
Library Master Plan – Phases II-IV
This project complements the Library’s Strategic Plan objective to develop facility plans for the Harrison Memorial and Park Branch library buildings. In January 2023, Council awarded a $55,000 Professional Services Agreement to Jayson Architecture to prepare the Master Plan. The Master Plan was completed in mid-2023 and presented to the Library Board of Trustees and City Council in early 2024.
The Harrison Memorial Library is 96 years old, and the Park Branch Library was last significantly remodeled 35 years ago. Phases II-IV will encompass community outreach, conceptual designs, and construction documents for the renovation of the first building – tentatively the Harrison Memorial Library. Renovations to the facilities are intended to ensure that both library facilities are able to continue to serve the community well into the future. A Request for Proposals is being prepared to retain an architect to design the proposed renovations. The Carmel Public Library Foundation will be embarking on a significant fundraising campaign to support proposed renovations to both library buildings.
In FY 23-24, $100,000 was allocated for this Project and will be carried over into the FY 24- 25 CIP.
Attachment 1
66 Park Branch Library – Windows and Dry Rot Treatment
Throughout the Park Branch Library, there are a number of windows which are well over 30 years old that need to be replaced. These windows have become unsealed or have cracks, and the loss of integrity in the seals contributes to heat loss in the building during the colder months. This detracts from the City’s efforts to be as carbon neutral as possible with regards to energy usage.
In addition, the front of the building (south facing) is showing significant signs of dry rot around the windows, including peeling paint and framing detaching from the building.
Repair costs will be approximately $45,000.
CIP PLANNING
CIP Contingency Fund
In FY 23-24, a $500,000 Contingency Fund was established. This account was used during the fiscal year as follows: $262,779 to award the construction contract for the FY 21/22 Paving Project, $163,169 to award the contract for the MTNP 3 Stream/Drainage Project, $42,378 to award the contract for the MTNP Tank and Pump House Removal and Well Decommissioning Project, $17,860 for the Urban Forest Master Plan to cover unanticipated funding shortfalls from the CalFire Grant, and final payment of $13,814 for the electric Street Sweeper following the 3CE rebate. This was the first year for this contingency fund account and has proven to be successful to complete the above-named projects.
Similarly, for FY 24-25, $400,000 will be budgeted to cover any shortfalls to award construction contracts or to close out projects. Any balance should be carried over into FY 25-26.
Attachment 1
67 KEY PROJECTS AND FUNDING NEEDS FOR THE SUBSEQUENT FOUR (4) FISCAL YEARS OF THE 5-YEAR CAPITAL IMPROVEMENT PLAN (CIP) The 5-year CIP has been updated and is available on the City’s website. Although only the first Fiscal Year 24-25 would be funded as part of the City Budget, the remaining four years serve as a planning tool to identify in advance anticipated future projects.
The 5-year CIP is a “snapshot” in time of anticipated needs for future infrastructure revitalization funding in the outer years. As a dynamic planning document, the CIP for Years 2-5 is subject to change as updated information becomes available. A multi-year plan also accommodates scheduling larger projects into multiple years to allow more projects to be underway concurrently, and to allocate construction funding only when those funds are needed.
Note that the needs for infrastructure renewal and facility repairs far exceed the anticipated revenue over the subsequent four years as well.
The following are key projects, by asset category and preliminary budget estimates, for Years 2-5 only:
Drainage: Includes highest priority drainage repairs and upsizing for 20-year storm events as identified in the 2023 Storm Drain Master Plan Update, bottleneck reconfigurations, and CDS reconstruction = $3.33M.
Streets: Annual paving MOE and TAMC match funding for Years 2 and 3 are earmarked for the FY 23 Concrete Street Repair Projects. For Years 4 and 5, traditional paving overlays, micro-surfacing treatments, slurry seals, sidewalk repairs, parking lot resurfacing, and a bicycle master plan are proposed = $4.1M City plus $1.7M external funds via TAMC.
Facilities: As a placeholder, a total allocation of $22M is included to cover final design and construction of a Police Building Project (whether a new station or renovation of the existing building) plus launching the design of the Public Works building renovations. This major project will obviously require a dedicated funding source once a project concept is approved, and these “plug in” numbers need to be adjusted as more information and scheduling becomes available.
Additional facility renovation projects include relocation and renovation of the Scout House wherein the sale of the existing parcel may offset the costs for renovation, critical repairs and Building Code corrections to City Hall and the Fire Station, the Sunset Center Portico, repairs to park restrooms, and facility condition assessments, painting, and railing repairs = $25.9M.
Attachment 1
68 Forestry Parks, and Beach: Design and construction of the remaining 5 MTNP stream stability projects should continue during this time. Funding for construction of the MTNP Doolittle Bridge was proposed in Year 2, for a total of = $1.50M.
Fleet and Equipment: Replace aging Police, Fire, and Public Works vehicles with Electric Vehicles whenever possible. Replace broken and outdated heavy equipment, including Street’s asphalt patch truck, Forestry’s bucket truck and water truck, Police’s speed radar trailer and animal control vehicle, and other vehicles and equipment nearing the end of their useful lives. Complete funding for the Police radios lease and the ambulance purchase = $1.48M plus $0.12M 3CE rebates.
Environmental and Climate Change: Shoreline
infrastructure repairs, notably reconstruction of the Fourth Avenue outfall/wall, as well as for repairs to structurallydamaged beach access stairs and revetments, and climate action projects and energy upgrade initiatives = $3.85M IT: Equipment replacements, security upgrades, Police records management system, and GIS applications expansion =
$0.58M.
Library: It is difficult to estimate costs for the library as major renovations proposed under the Library Master Plan are largely subject to donor funding. As a placeholder, for Years 2- 5, the 5-Year CIP plan assumes the design and construction of the first major renovation project with a cost to the City of $800,000, supplemented by significant private donations, = $0.8M plus donations of millions of dollars. These “plug in” numbers need to be adjusted as more information and scheduling becomes available.
Years 2 - 5 Needs Summary
The total estimated investment of City funds identified for Years 2-5 is $42M. This amount exceeds anticipated CIP fund revenues over those four years plus any ending fund balance that may be available in those future years. However, without proper investment, the City's infrastructure will further decline into worsening conditions with more costly deferred repairs. Therefore, additional revenue sources should be considered.
Attachment 1
69 DEBT SERVICE
FUND 401
Attachment 1
70 DEBT SERVICE – FUND 401
Debt Service includes payments for the 2020 Refunding Lease Revenue Bonds. These payments total $519,100 as shown in Table 1, FY 24-25 Debt Service, below. 2020 Refunding Lease Revenue Bonds
On September 10, 2010, City Council approved issuance and sale of certificates to finance improvements and the Sunset Center (the Sunset Theater Project), including the refinancing of the City’s lease payment obligation related to the preliminary financing of the Sunset Center (the 2010 Refunding Lease Revenue Bond). The COP of approximately $7.6 million included a maturity date of November 1, 2031. On September 3, 2020, the Public Improvement Authority and City Council determined that a refunding of the 2010 Bond was in the City’s best interest to take advantage of historically low interest rates and to achieve cash flow savings in light of the economic impact of the pandemic on the City’s revenues. The 2020 Refunding Lease Revenue Bond of approximately $3.9 million matures on November 1, 2032. The City made its first principal payment in FY 23-24 after two years of interest only payments.
Funding Sources
General Fund revenue is the source of funding for debt service obligations. The General Fund (Fund 101) will transfer $519,100 to Debt Service (Fund 401) in FY 24-25.
Attachment 1
71 OTHER FUNDS
Attachment 1
72 OTHER FUNDS OVERVIEW
The City uses a fund accounting structure, which is an accounting structure to record and track resources that are limited in use by law or governing agency. The major governmental funds are the General Fund, Measure D and Capital Projects. The first set of funds listed below are discretionary, meaning there are no legal or policy-related restrictions on their use and can be used at the discretion of Council for services and projects.
General Fund (Fund 101)
Most of the City’s revenues and the expenditure budgets for City services and daily governmental operations are housed within the General Fund (Fund 101) and this is where the majority of the City’s financial activity occurs. The major revenue sources associated with the General Fund include property tax, the City’s share of the statewide sales and use tax, charges for services, franchise fees, business tax, and intergovernmental revenue.
These revenues are considered to be general in nature. Throughout this budget document, the General Fund is also referred to as the Operating Budget and City policy recommends a 15% Reserve.
Hostelry Fund (102)
This fund is used to account for the transient occupancy tax and is intended to fund the portion of the municipal budget covering community and cultural and recreation activities including, but not limited to Sunset Center and the Forest Theater, parks, public facilities and municipal structures, and parking lots; acquisition and improvement of parks, recreation land and other municipal purposes as determined from time to time by the City Council; provided, that all such uses shall be in accordance with the General Plan of the City and General Fund for usual and current expenses. City financial policy recommends a reserve of 10% of revenues.
Measure C Sales Tax (Fund 206)
Carmel voters approved a temporary (10 year) 1% increase in the transactions and use tax in 2012 known as Measure D. On March 3, 2020, voters approved Measure C, which increases the tax to 1.5% for 20 years. Measure C may be used for debt service, capital projects and general City services.
RESTRICTED FUNDS
The next set of funds are restricted as there are requirements prescribed by the local, state or federal governmental agencies regarding how these funds may be used.
Attachment 1
73 Gas Tax (Fund 201)
This fund is used to account for revenues collected in accordance with California Streets and Highway Code.
Transportation Safety (Fund 202)
Measure X, a 30-year 3/8 of one-percent transactions and use tax, was passed by the voters in November 2016 to fund transportation safety and mobility projects in Monterey County.
This fund accounts for the expenditures for eligible transportation safety projects.
COPS Grant
This fund accounts for the expenditures for the Department of Justice Community Oriented Policing Services (COPS) grant for public safety. This fund transfers into the General Fund for the Police Department budget.
Parking in Lieu (Fund 204)
This fund is used to account for activities associated with parking in-lieu fees as prescribed by Carmel Municipal Code Section 17.38.040.
Asset Seizure (Fund 205)
This fund accounts for expenditures related to asset seizures.
CAPITAL PROJECTS FUND
Capital Projects (Fund 301)
This fund accounts for resources utilized, committed, assigned or restricted for capital projects.
DEBT SERVICE FUND
Debt Service (Fund 401)
This fund accounts for activities related to the repayment of the Certificate of Participation, Pension Obligation Bond and capital lease obligations.
INTERNAL SERVICE FUNDS
Workers Compensation (Fund 501)
This fund accounts for workers’ compensation insurance provided to departments on a cost reimbursement basis.
Attachment 1
74 Other Post-Employment Benefits (OPEB) Liability Reserve Fund This fund accounts for other post-employment benefits.
Vehicle and Equipment Replacement Fund
This fund is to set aside financial resources for future purchases of replacement equipment essential to the operations of the City.
AGENCY FUNDS
Refundable Deposits
This fund accounts for monies received that are unearned and required to be returned by the City.
Attachment 1
75 PROJECTED FUND BALANCE
Attachment 1
76 PROJECTED FUND BALANCE AS OF JUNE 30, 2024
Attachment 1
77 PROJECTED FUND BALANCE AS OF JUNE 30, 2025
Attachment 1
78 FINANCIAL POLICIES
Attachment 1
79 BUDGET POLICIES AND PROCEDURES
The budget process for the City of Carmel‐by‐the‐Sea involves the citizens, City Council, and staff. Each person plays a critical role in the development of the budget for the upcoming year. The annual budget and operating plan balances the public service demands of the community with the fiscal resources of the City. It is intended to achieve the goals and objectives established by the City Council.
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 use.
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 February 15th 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 July 1st.
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.
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 (General Fund, Special Revenue Fund, Debt Service Fund, and Capital Projects Fund) 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.
Attachment 1
80 FINANCIAL POLICIES AND PROCEDURES
The City of Carmel‐by‐the‐Sea has strong financial policies that provide City Council direction to allow staff to provide sound fiscal planning and continued management of fiscal integrity. The financial policies are divided into five categories: Capital Budget Policies, Operating Management, Fund Balance Policy, Debt Policies, and Investment Policies. The City has financial policies that are adopted by the City Council with review every two years during the budget development process. The financial policies help ensure that the City maintains a healthy financial foundation into the future. The goal of these policies is to promote:
An extended financial planning horizon to increase awareness of future potential challenges and opportunities
Setting aside reserves for contingencies, replacement of capital equipment, and other similar needs
Maintaining the effective buying power of fees and charges and increasing cost recovery where directed to do so
Accountability for meeting standards for financial management and efficiency in providing services
Planning for the capital needs of the City
Maintaining manageable levels of debt while furthering quality bond ratings Communication to residents and customers on how the community goals are being addressed
CAPITAL BUDGET POLICY
The City develops an annual five‐year plan for capital improvements; it includes project design, development, implementation, and operating and maintenance costs. Each project in the Capital Improvement Plan (CIP) shows the estimated capital and on‐going maintenance costs, known and potential funding sources and a design/development schedule. As used in the CIP, projects include land acquisition, buildings and facilities construction; these projects do not have a cost threshold. A capital outlay (fixed asset) purchase is any single item or piece of equipment that costs more than $10,000 and has an expected useful life exceeding one year. The development of the Capital Improvement Plan is coordinated with the development of the operating budget. The CIP is a planning document; the City Council appropriates funding for capital projects in the annual operating budget. Costs for professional services needed to implement the CIP are to be included in the appropriate year’s operating budget.
Annual operating budgets should provide adequate funds for maintenance of the City’s buildings and maintenance and replacement of the City’s capital equipment. The City will make all capital improvements in accordance with an adopted and funded capital Attachment 1
81 improvement program. Prior to ratification of the capital budget for the forthcoming year by the City Council, the Planning Commission shall review the capital improvement plan and shall advise the City Council as to its recommendations regarding the proposed capital projects in accordance with the Government Code.
Capital expenditures shall be effectively planned and controlled.
Guidelines:
1. The level of capital improvement expenditures, excluding road maintenance program expenditures and lease payments, is established at three and one‐half percent (3.5%) of total revenues.
2. Funding for the road maintenance program should improve the pavement condition index.
3. The City shall maintain a Five‐Year Capital Improvement Program (CIP), which shall be updated at least annually as part of the budget review process.
4. The City shall annually establish a phasing calendar for capital improvement expenditures.
5. At least ten percent (10%) of the unrestricted funds designated for capital project expenditures shall be set aside for unanticipated expenditures.
6. The City shall conduct periodic reviews of property and facilities to determine the appropriate use and disposition of said property and facilities.
7. The City shall consider the ongoing impact of operations and maintenance expenses before undertaking any capital improvement expenditure.
8. The City shall maintain a capital reserve policy as described in the Reserve Policy.
9. Public participation in the Capital Improvement Program is a priority concern for the City.
10. All projects included in the Capital Improvement Plan shall be consistent with the City’s General Plan.
11. Capital projects that are not encumbered or completed during the fiscal year are required to be rebudgeted to the next fiscal year and subsequently approved by the City Council. All rebudgeted capital projects should be so noted in the proposed budget
OPERATING MANAGEMENT POLICY
Operating revenues shall exceed operating expenditures.
Guidelines:
1. The annual operating budget shall contain a current surplus (or “revenue buffer”) of at least five percent (5%) of projected expenditures.
Attachment 1
82 2. A balanced budget is a budget in which total funding sources meet or exceed uses.
3. An appropriated City Discretionary Account of at least one‐half of one percent (0.5%) of total projected General Fund expenditures shall be maintained.
4. Ongoing expenses shall not be funded with one‐time revenues.
5. The City shall establish internal service funds for the repair, operation, and replacement of rolling stock and data processing equipment.
6. The level of capital outlay expenditures is established at three percent (3%) of total revenues.
7. The City shall annually establish a phasing calendar for capital outlay expenditures.
8. The City shall develop a five‐year forecast of operating revenue and expenditures.
9. The City shall establish salary adjustments in conjunction with the budget process.
10. The City shall review the relationship between fees/charges and the cost of providing services at least every three years.
11. The City’s fees and charges for services shall be adjusted annually, based upon the San Francisco‐Oakland Consumer Price Index.
12. The City will seek to comply with suggested criteria of the Government Finance Officer’s Association in producing a budget document that meets the Distinguished Budget Presentation criteria.
FUND BALANCE POLICY
The Fund Balance Policy is designed to develop standards for setting reserve levels for various, significant City funds. Adequate fund balance and reserve levels are a necessary component of the City’s overall financial management strategy and a key factor in external agencies’ measurement of the City’s financial strength. The City shall maintain reserves at a prudent level, and shall use reserves appropriately with a focus on contributing to the reserves in good times and drawing on the reserves in times of difficult budget periods to maintain a consistent level of service and quality operations. Use of reserves are to supplement the annual budget.
Guidelines:
1. General Fund and Hostelry Fund reserves shall be maintained at no less than ten percent (10%) of their annual projected revenues.
2. The City shall maintain prudent reserves for identified liabilities.
Attachment 1
83 3. A Vehicle Replacement reserve will be maintained sufficient to replace vehicles and heavy equipment at the end of their useful lives, with the target being 10% of the total City fleet replacement value.
4. Technology equipment replacement reserves will be maintained sufficient to repair covered equipment and for replacement at the end of its useful life.
5. The City will maintain a long‐term budget stability reserve consisting of any unassigned General Fund balance. When available, the year‐end General Fund operating surplus will be dedicated to the long‐term budget stability reserve.
6. A general capital reserve fund will be maintained with a targeted balance of 20% of the estimated total five‐year capital improvement plan project expenditure.
Net proceeds from the sale of City owned property will be dedicated to the general capital reserve. Funds in the general capital reserve will be allocated through the budget process for capital projects.
7. Reserves shall be used only for established purposes.
8. Depleted reserves shall be restored as soon as possible.
9. A minimum level for each of the reserve funds shall be established (see chart below).
10. The City shall maintain reserves required by law, ordinance and/or bond covenants.
DEBT POLICY
The City considers the use of debt financing for one‐time capital improvements that benefit the residents of Carmel‐by‐the‐Sea when the term of the financing is no longer than the project life, and when specific resources are found to be sufficient to provide for the debt.
Use of long‐term debt is limited to capital projects or special projects or obligations that cannot be financed from current revenues. The City has traditionally kept annual debt service payments to less than 5% of the budget.
Use of Long‐Term Debt Policy
The City recognizes that it may need to enter into long‐term financial obligations to meet the demands of providing a high quality level of government services to our community.
The following long‐term debt policy sets the considerations for issuing debt and provides guidance in the timing and structuring of long‐term debt commitments by the City.
General Practices:
1. The City will strive to maintain good relations with credit rating agencies, investors of the City’s long‐term financial obligations and those in the financial community that participate in the City’s financings and demonstrate City officials are following a prescribed financial plan. The City also will strive to maintain and, if possible, improve its current AA+ bond rating in order to Attachment 1
84 minimize borrowing costs and preserve access to credit. The City will follow a policy of full disclosure by communicating with bond rating agencies to inform them of the City's financial condition.
2. Bond issue proposals are to be accompanied by an analysis defining how the new issue, combined with current debt, impacts the City’s debt capacity and conformance with City debt policies. Such analysis shall include identification of the funding source, an assessment of the ability to repay the obligation, the impact on the current budget, commitments to future budgets, maintenance and operational impact of the facility or asset and the impact on the City’s credit rating, if any.
3. City Council must review such analysis, including existing debt level, ability to pay debt service, impact on City services, and make a finding that use of debt is appropriate.
4. Debt service costs (COP, Lease Purchase Agreements and other contractual debt that are backed by General Fund Operating Revenues) are not to exceed 25% of the City’s General Fund operating revenues.
5. The City recognizes that it is of the utmost importance that elected and appointed City officials, and all others associated with the issuance of City debt, not only avoid the reality of a conflict of interest, but the appearance thereof as well. City officials must conduct themselves in a fashion consistent with the best interests of the City and taxpayers.
6. Bonds will be sold on a competitive basis unless it is in the best interest of the City to conduct a negotiated sale. Competitive sales will be the preferred method.
Negotiated sales may occur when selling bonds for a defeasance of existing debt, for current or advanced refunding of debt, or for other appropriate reasons.
The City will consider the issuance of long‐term obligations under the following conditions:
1. The City will use debt financing for one‐time capital improvement projects and specific nonrecurring equipment purchases or refunding of existing liabilities, and only under the following circumstances:
a. When the project is included in the City’s adopted five‐year capital improvement program (CIP) and is in conformance with the City’s adopted General Plan.
b. When the project is not included in the City’s adopted five‐year capital improvement program (CIP), but the project is an emerging critical need whose timing was not anticipated in the five‐year capital improvement program, or it is a project mandated by State or Federal requirements. c. When the project’s useful life, or the projected service life of the equipment, will be equal to or exceed the term of the financing.
Attachment 1
85 d. When there are designated General Fund revenues sufficient to service the debt, whether from project revenues, other specified and/or reserved resources, or infrastructure cost‐sharing revenues.
e. Debt financing (other than tax and revenue anticipation notes) is not considered appropriate for any recurring purpose such as current operating and maintenance expenditures.
2. The City will follow all State and Federal regulations and requirements related to bonds and debt financing instruments regarding bond provisions, issuance, taxation and disclosure.
3. Costs incurred by the City, such as bond counsel and financial advisor fees, printing, underwriter’s discount, and project design and construction costs, will be charged to the bond issue to the extent allowable by law.
4. The City will monitor compliance with bond covenants and adhere to federal arbitrage and disclosure regulations.
5. The City shall continually review outstanding obligations for opportunities to achieve debt service savings through refunding and shall pursue refinancing when economically feasible and advantageous.
Debt Limit
The City will keep outstanding debt within the limits prescribed by State of California statutes and at levels consistent with credit objectives. California Government Code provides that “a city may incur indebtedness for any municipal improvement requiring an expenditure greater than the amount allowed for it by the annual tax levy” (43602). A “city shall not incur an indebtedness for public improvements which exceeds in the aggregate 15 percent of the assessed value of all real and personal property of the city. Within the meaning of this section "indebtedness" means bonded indebtedness of the city payable from the proceeds of taxes levied upon taxable property in the city” (43605). The limit is relative to the principal amount of bonds sold and delivered (43606). The City of Carmel‐by‐the‐Sea, Policy No C94‐01 establishes “the City’s debt shall not exceed predetermined levels.” The guideline in that policy is that “the City’s debt service level shall not exceed eight and one‐ fourth percent (8.25%) of total expenditures.
INVESTMENT POLICY
The City will maintain adequate cash availability and yield on invested idle funds while insuring that invested moneys are protected. Municipal moneys not required for immediate expenditure will be invested. The Carmel Municipal Code requires the City Administrator to prepare investment policies and guidelines for adoption by the City Council. The adopted investment policy follows.
Policy
Attachment 1
86 In accordance with the Municipal Code of the City of Carmel‐by‐the‐Sea and under authority granted by the City Council, the City Treasurer is responsible for investing the unexpended cash in the City Treasury.
The investment of the City of Carmel‐by‐the‐Sea funds is directed to the goals of safety, liquidity and yield, in that order. The authority governing investments for municipal government is set forth in the California Government Code, Sections 53601 through 53659.
The primary objective of the investment policy of the City of Carmel‐by‐the‐Sea is SAFETY OF PRINCIPAL. Investments shall be placed in those securities as outlined by type and maturity sector in this document. Effective cash flow management and resulting cash investment practices are recognized as essential to good fiscal management and control.
The City’s portfolio shall be designed and managed in a manner responsive to the public trust and consistent with state and local law. Portfolio management requires continual analysis, and as a result the balance between the various investments and maturities may change in order to give the City of Carmel‐by‐the‐Sea the optimum combination of necessary liquidity and optimal yield based on cash flow projections.
Scope
The investment policy applies to all financial assets of the City of Carmel‐by‐the‐Sea as accounted for in the Annual Financial Report. Policy statements outlined in this document focus on the City of Carmel‐by‐the‐Sea’s pooled funds, but will also apply to all funds under the City Treasurer’s control unless specifically exempted by statute or ordinance.
Prudence
The standard to be used by investment officials shall be that of a “prudent person” and shall be applied in the context of managing all aspects of the overall portfolio. Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, direction and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.
It is the City’s full intent, at the time of purchase, to hold all investments until maturity to insure the return of all invested principal dollars.
Safety
Safety of principal is the foremost objective of the City. Each investment transaction shall seek to ensure that capital losses are avoided, whether from securities default, broker‐ dealer default, or from erosion of the market value.
Liquidity
Attachment 1
87 Historical cash flow trends are compared to current cash flow requirements on an ongoing basis in an effort to ensure that the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all reasonably anticipated operating requirements.
Yield
The investment portfolio should be designed to attain a market average rate of return through budgetary and economic cycles, consistent with the risk limitations, prudent investment principles and cash flow characteristics identified within the financial statements.
Performance Evaluation
Investment performance is continually monitored and evaluated by the City Treasurer.
Investment performance statistics and activity reports are generated on a monthly basis for presentation to the City Administrator and City Council.
Delegation of Authority
For short‐term investments, the Administrative Services Director has authority to make transfers to and from the City’s Local Agency Investment Funds (LAIF) account in order to maximize interest earned and meet cash flow requirements. The transfers are made to and from the City’s general checking account to the LAIF account, with a minimum balance maintained in the general checking account to meet daily cash requirements.
The City Treasurer is responsible for investment of all unexpended City funds as per California Government Code section 41000 et seq. The City Treasurer makes long‐term investments after review and approval by the Administrative Services Director and the City Administrator.
Ethics and Conflict of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that conflicts with the proper execution of the investment program, or impairs their ability to make impartial investment decisions. Additionally, the City Treasurer and the members of the investment committee are required to annually file applicable financial disclosures as required by the Fair Political Practices Commission (FPPC).
Safekeeping of Securities
To protect against fraud, embezzlement, or losses caused by a collapse of an individual securities dealer, all securities owned by the City shall be held in safekeeping by a third party bank trust department, acting as an agent of the City under the terms of a custody agreement or PSA agreement (repurchase agreement collateral). The third party bank trust department must have safe keeping as a professional business line with expertise in this Attachment 1
88 particular service area. All trades executed by a dealer will settle Delivery vs. Payment (DVP) through the City's safekeeping agent. Securities held in custody for the City shall be independently audited on an annual basis to verify investment holdings. All exceptions to this safekeeping policy must be approved by the City Treasurer in written form and included in quarterly reporting to the City Council.
Internal Control
Separation of functions between the City Treasurer's Office and the Administrative Services Department would be an ideal situation. Time and necessity, however, dictate a different approach. Due to the lack of personnel dedicated to the investment function alone, a proper balance must be maintained between Treasury activities and Administrative Services Department functions. The City Treasurer will make the appropriate arrangements to buy and sell securities that are deemed permissible by the Laws of the State of California as time permits. The Administrative Services Director and/or City Administrator will have the power as granted under the section titled Delegation of Authority in the absence of the City Treasurer. The City Administrator will have the authority to enter into agreements on securities so long as written policies set by the City Treasurer and State Legislature are followed.
The investment portfolio and all related transactions are reviewed and balanced to appropriate general ledger accounts by the Administrative Services Director on a monthly basis. An independent analysis by an external auditor shall be conducted annually to review internal control, account activity, and compliance with government policies and procedures.
Reporting
The City Treasurer shall review and render monthly reports to the City Administrator and the City Council, which shall include the face amount of the cash investment, the classification of the investment, the name of the institution or entity, the rate of interest, the maturity date, and the current value and accrued interest to date due for all securities.
Qualified Broker/Dealers
The City shall transact business only with banks and broker/dealers that are properly licensed and in good standing. The Administrative Services Director and the City Treasurer shall investigate dealers who wish to do business with the City to determine if they are adequately capitalized and if they market securities appropriate to the City’s needs.
The City Treasurer shall annually send a copy of the current investment policy to all broker/dealers approved to do business with the City. Confirmation of receipt of the City’s policy by the broker/dealer shall be considered evidence that the broker/dealer understands the City’s investment policies and intends to sell the City only appropriate investments authorized by this investment policy.
Attachment 1
89 Collateral Requirements
Collateral is required for investments in certificates of deposit. In order to reduce market risk, the collateral level will be at least 110% of market value of principal and accrued interest.
In order to conform with the provisions of the Federal Bankruptcy Code that provide for liquidation of securities held as collateral, the only securities acceptable as collateral shall be certificates of deposit, commercial paper, eligible banker’s acceptances, medium term notes or securities that are the direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency of the United States.
Authorized Investments
Investment of City funds is governed by the California Government Code Sections 53600 et seq. Within the context of the limitations, the following investments are authorized as further limited herein:
1) United States Treasury Bills, Bonds, and Notes or those for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio that can be invested in this category, although a five‐year maturity limitation is applicable but current market conditions and interest rate projections may call for shorter terms.
2) Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, may be used up to the maximum permitted by the California State Law. LAIF is a demand account so no maturity limitation is required.
Investments detailed in items 3) are further restricted to percentage of the cost value of the portfolio in any one‐issuer name to a maximum percentage of 15%. The total value invested in any one issuer shall not exceed 5% of the issuer’s net worth. Again, a five‐year maximum maturity is applicable unless further restricted by current policy. Market conditions should be evaluated as an important consideration and may indicate a shorter maturity. 3) Negotiable certificates of deposit issued by nationally or state chartered bank or state or federal savings institutions. Negotiable certificates of deposit shall be rated in a category of “A” or its equivalent or better by two Nationally Recognized Statistical Rating Organizations. Purchases of negotiable certificates of deposit may not exceed 30% of the total portfolio.
A maturity limitation of up to five years is applicable after considered evaluation of the financial markets.
Ineligible investments are those that are not described herein, including, but not limited to, common stocks and long term (over five years maturity) notes, bonds, and time deposits, Attachment 1
90 unless specifically allowed both by state law and City Council approval. It is noted that special circumstances may arise where these methods of investment may become necessary.
When this becomes necessary, the City Council will be asked to take the appropriate action to ratify the means of investment necessary, provided that it is allowable by California Code.
Legislative Changes
Any State of California legislative actions that further restrict allowable maturities, investment type, or percentage allocations will supersede any of the material presented herein. In this case, the applicable law will become part and parcel of this investment policy.
Interest Earnings
All moneys earned and collected from investments authorized in this policy shall be allocated monthly to the General Fund and various special funds of the City that legally require interest proration or when City Council action dictates such proration. This distribution will be based on the cash balance in the fund as a percentage of the entire pooled portfolio.
Policy Review
The City of Carmel‐by‐the‐Sea’s investment policy shall be approved by resolution of the City Council. This investment policy shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity and yield, and its relevance to current law and financial and economic trends. Any amendments to the policy, other than State and Federal laws that automatically supersede the relevant sections shall be forwarded to the City Council for approval by resolution.
Attachment 1
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions
and Responses
May 21, 2024
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
The following questions represent those received at the May 7th, 2024 City Council Meeting from Councilmembers and the general public. Also included, are questions received since May 7th via email, phone, or other means of communication. This list of questions and answers will continue to be expanded through the May 21st, 2024 budget workshop, up to the budget adoption hearing on June 4th, 2024. The questions are answered in the order that they were received during this timeframe.
1. Question/Comment: Every one of our boxes has a telephone and communications. It seems when it is all added up it gets pretty expensive. Is there a way to streamline the telephone and communications category? Response: The short answer is, yes, if the Council is comfortable assuming more risk to the City’s IT infrastructure. Our communications budget has grown in the past to add resiliency and redundancy to our network infrastructure, which has made the system more guarded against threats. On average, hackers are ransoming between 5%-10% of a City’s general fund to restore data and confidential information from hacked city sites.
2. Question/Comment: We have a lot of money in the bank. It seems like banks should be happy to have us as customers and they shouldn’t be charging us fees.
I’d like to look into that.
Response: The bank fees that are included in the Recommended Budget are specific to the credit card processing fees charged at the City’s Administration counter. Administration must collect the 2.5% directly from the customer when the credit card is processed. The credit card fees represented as “bank fees” in the budget are offset by the 2.5% processing fee revenue charged at the Administration counter. In other words, this bank fee is effectively a pass-through expense that is offset directly by revenue.
3. Question/Comment: I’d like to look into City credit cards to make sure we are getting points or money back, whatever it takes to take advantage of those banking opportunities.
Response: The City currently receives a rebate on its credit card purchases.
The City is enrolled in the State’s CAL-Card program, which is at no cost to the City (no fees). The CAL-Card program pays out quarterly rebates at
1.35%, that on average is $500 per quarter, which is recognized as revenue in the budget.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
4. Question/Comment: The recruiting fees: I know we need to have recruiters but is there a possibility we could get that cost lower? Response: The recruitment fee for the FY 24-25 budget includes the assumption that the City will be utilizing a secondary executive recruitment firm to help search for a new Public Works Director. These types of recruitments are typically in the $25K range, and drive up the overall recruitment costs. If Council desired, the budget for recruitment could be reduced marginally by utilizing our regular contract support less from Traffic Patterns (recruitment company). This would result in fewer recruitments being undertaken to bring on general employees such as planners, maintenance workers, librarians, forestry staff.
5. Question/Comment: I would consider raising the rate we spend on advertising and legal notice. There has been an outcry for more communication through the newspapers and different things and maybe we could bump that number up so we can take up a continuous ad in the papers or whatever it takes to make sure the citizens of the community know what is happening.
Response: The City Council, Boards, and Commissions utilize the legal section of The Pine Cone for all required public and legal notices, and routinely publish notices of special meetings/workshops that are not legally required to be noticed in the newspaper. Staff will continue to do so for added transparency and public engagement. The Pine Cone does not enter into agreements with cities to reduce legal notice costs, however, they have maintained the same prices for 9-10 years without any increases, and they offer a slight discount for multi-week notices. The City could utilize other regional newspapers to print duplicates of the notices that are going out now, but that may not reach residents. Staff will look at expanding communication tools that may be underutilized at the time such as the Friday Letter, the city’s email listserv for various topics, the City website and others.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
6. Question/Comment: Under completed projects, it lists Engineering Design and Environmental Review for the San Antonio Pathway. Under Priorities FY24-25, it says we can construct the pathway. When is that actually going to happen?
Response: We are currently at 90% design for this project. Assuming the CIP budget for the San Antonio Pathway is approved, we anticipate going out to bid for the work by July. So, the project could be under construction as early as this Fall.
7. Question/Comment: Do we have any projections, out several decades, of what our pension costs with this level of staffing will be? I ask that we somehow make a projection to see where we are out in the future.
Response: Based on the current data available through CalPERS, the City can project its UAL through FY29-30. The projections assume staffing at
80.0 FTE and 6.8% return on investment for FY23-24 forward. The projected UAL employer contributions are estimated to grow on average 8% fiscal year over fiscal year. To note, FY23-24 staffing is currently 81.0 FTE. If the projections hold, it is anticipated that the contributions in FY 29/30 will be approximately $3.2M. See Exhibit A for a chart that outlines the City’s UAL contributions from FY20-21 and projecting FY25-26 through FY29-30.
8. Question/Comment: Recommended Budget Book, Pages 5-6, Chip talked about the Revenue and sources and the possible need to adopt a position of significantly reducing costs in future fiscal years. And yet the proposed budget, you’re burning through the $12M surplus. To make the budget balance, you are going to eat all of that up. I don’t think that is prudent. Coming down the pipe you have two big projects on board with the Police Station and Public Works that you are proposing and some of the $12M surplus could be designated towards those things. Without the surplus, you will need to do bond measures to generate funds to do those expenditures.
Response: As of June 30, 2023, the City has an Unassigned Fund Balance of $15.5M. The Unassigned Fund Balance is funds that are neither Restricted, Reserved, Committed, nor Assigned. The FY 24-25 Recommended Budget has proposed tapping into the Unassigned Fund Balance to the tune of $12.4M in order to support the $12.6M in budgeted capital expenditures.
There is no plan to tap into any of the Reserve or Restricted Funds.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
9. Question/Comment: It always frustrates me to look at CalPERS and hear about the unfunded liabilities and I don’t know what to make of it; where that all fits; how much of it is current employees, retired people, previous employees, and so forth. I think this is a big question and needs better definition.
Response: As part of the City’s Annual Comprehensive Financial Report (ACFR), the City provides a valuation of its California Public Employees’ Retirement System (CalPERS) unfunded accrued liability (UAL), measured as of the prior year. You can find the FY22-23 ACFR as well as prior years’ reporting on the City’s website. https://ci.carmel.ca.us/budget 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. As such, the City’s UAL can vary each year based on staffing levels and the pension’s investment performance.
As shown here, the City’s most recent UAL evaluation was measured on June 30, 2022, and was estimated at $28.2 million:
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
10.Question/Comment: With respect to raising new revenue sources, I’ve heard talk about the TOT and bumping that up. We are currently at 10%. Pebble Beach and Monterey are at 12%. If we went to 12%, that would be a 20% bump which would generate $1.5M without putting us out of line with them. If you end up going that direction, it makes sense and is reasonable.
Response: At the May 7, 2024 City Council Meeting, Council voted not to pursue an increase to the City’s 10% transient occupancy tax rate at this time.
11.Question/Comment: TOT comes from the Hotels, and like Restaurant operations, not everybody pays their bills. So, within that TOT collection, are all hotels current, and if they aren’t, what steps do you take to get them current:
penalties, file lawsuits, etc.?
Response: Chapter 3.32, Transient Occupancy Tax, of the City’s Municipal Code lays out the timing of TOT collections, as well as the penalties and interest imposed on delinquent payments. See link below. https://www.codepublishing.com/CA/CarmelbytheSea/#!/html/Carmel03/Carm el0332.html
In short, TOT filings are due on or before the last day of the month following the close of the bi-monthly reporting period. Any operator who fails to pay timely is required to pay a 10% penalty of the amount of the tax, in addition to the amount of tax. If another 30 days pass without payment, a second penalty of 10% of the amount of the tax in addition to the amount of the tax and 10% penalty first imposed. Interest is also imposed from the date on which the remittance first became delinquent until paid.
Additional details for steps taken for Failure to Collect and Report Tax or Fraud can be found in the link above. At this time the City audits three hotels annually to ensure accurate TOT payments.
At this time, all hostelry operators are current on their TOT remittance.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
12.Question/Comment: What is the City Attorney line item of $7K for annual performance evaluation, I don’t quite understand that so I would like some clarification on that.
Response: The City Council conducts a thorough performance evaluation of the City Attorney on an annual basis. This effort is led by an outside consultant rather than the City’s HR department to ensure the neutrality of the process.
13.Question/Comment: A $43M budget to me is not safe nor prudent. Virtually spending the whole $12M reserve is not fiscally smart. We must, like any household, live within our means. Distasteful as it is, we must run a tight ship.
Freeze wages and bonuses, other than contractually obligated increases. Take a hard look at the organizational chart and find places where you can eliminate department heads and combine job responsibilities. There are too many chiefs.
Response: The $12.4M use of Unassigned Fund Balance needed to fund the recommended capital projects does not impact the City’s reserve balances. In preparing the “Projected Fund Balances”, the City captures the reserve balances in the Estimated Fund Balance June 2025 columns. The City Fund Balance policy states “a general capital reserve fund will be maintained with a targeted balance of 20% of the estimated total five-year capital improvement plan project expenditure”. Based upon B. Harary’s 5-year Capital Improvement Plan, the City’s costs are estimated to be $47.2M, making the 20% target reserve balance $9.45M. This is the same amount represented on the Projected Fund Balance ending June 30, 2025 chart in the Fund 301 Capital Projects line item. The City anticipates ending FY24-25 with $9.48M in Capital Project Reserves.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
14.Question/Comment: Two major issues in this budget that we should all be concerned about: Salaries and Consultant Fees. We need to trim some of this budget back. We need to be looking much more carefully at what we are spending. It’s totally unconscionable that in two years we have wiped out our reserve funds. I don’t think that’s fiscally responsible in this community in these times. You want five new employees, have you shown in the budget how that will extrapolate over the years. We seem to be adding an awful lot in terms of salaries over the past few years and we can always hire new people. But I think its about time we tighten our belt a little bit.
Response: The $12.4M use of Unassigned Fund Balance needed to fund the recommended capital projects does not impact the City’s Reserve Balances.
15.Question/Comment: Nobody has answered how we plan on raising the money for the two major projects we are looking at. And I think it is about time to discuss that in an open public meeting and invite the residents to attend that meeting.
Response: None of the upcoming major projects (e.g.: Police Building Project) are far enough along to understand their total fiscal impact/need, as they are still early in the concept phase. As these projects become more refined, there will be public meetings that include a discussion about funding mechanisms.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
16.Question/Comment: We have tried to do an awful lot in one year in this town.
We have way too many projects going and not enough public input and too much money wasted on consultants. I think we need to take a hard look at projects that we decide we are going to try to deal with. If we made a list of them, I think the people in the Community would be even more shocked than they are now. We simply do not have the capacity to do all the big wishlists that the Council seems to think is necessary for this little Community. So these comments I offer to you at a time when I think that we have huge projects facing us, some of the biggest projects we have had in the Community’s history, I think we need to start looking at how much we are spending.
Response: The City puts forth annually an updated 5-year Capital Improvement Plan, that lists all of the capital improvement projects (CIP) planned and their estimated cost to the City. The most recent iteration was presented at the March 5, 2024 City Council Meeting. Citizens are encouraged to review the current list of proposed FY 24-25 CIP projects in the Recommended Budget Book, as well as the 5-year Capital Improvement Plan.
Both the Recommended Budget Book and the 5-year Capital Improvement Plan are available electronically on the City’s website:
https://ci.carmel.ca.us/budget
17.Question/Comment: I would really appreciate it if the Council can look at and get creative and find ways to save money here and there and be more efficient rather than finding a way to feed the monster.
Response: The recommended budget put forward by staff was compiled through numerous working sessions with department heads to refine costs.
One of the purposes of the May 21st budget workshop is for Council to consider ways to potentially further refine these costs to ensure the best balance between providing services to the residents and saving money for the future.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
18. Question/Comment: 1% debt sounds very nice until you consider the millions and millions of dollars of deferred maintenance the City has, and to me that is our debt. We have not kept up with the maintenance. We still don’t have programs that keep up the maintenance and I am very concerned about that. I am hoping we can take a real hard look at how to save money rather than where we can get more money.
Response: Generally speaking, Carmel’s infrastructure, like that of most cities in California, has been deteriorating at a greater rate than funding and resources have been available to perform best practices of preventative maintenance and to make ongoing repairs. This reality could lead to undesirable practices of making repairs based on comments and concerns.
Over the past decade, the City has compiled numerous condition assessments to scientifically gauge the true needs, most with cost estimates and priority recommendations. Many of these assessments can be found on the Public Works Webpage: https://ci.carmel.ca.us/public-works, with many more available to the public by request.
(Also refer to CIP Questions #1 for facility maintenance needs, and #3 for pavement condition trends.)
These documents then serve as primary, objective sources of information in which to identify the highest priority repairs for funding during development of the annual Capital Improvement Plans.
Other soft infrastructure, particularly beach and landscape maintenance, is measured by “Levels of Service.” In Carmel, the citizens expect, and deserve, superior levels of service in the Village’s landscaping care. However, with a total of 138 acres consisting of 10 parks, Carmel Beach, greenbelts, medians, and other open space, plus 10,000+ City-owned trees, the sheer volume of work required to maintain superior levels of services for all areas at all times far exceeds the capacity of the City’s staff resources and funding available for contracted services. Thus, efforts by the City support groups and volunteers play a big role in improving the overall level of service in this community.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
19.Question/Comment: Please provide clarification about the number of full-time employees. Even though we are adding positions, we are effectively only adding one to the overall budget. Is that correct?
Response: Yes. That is correct. The total change over prior fiscal year budgeted positions is 1.02 FTE (full-time equivalent). We had in the FY23-24 position control list, and effectively in our budget, two Police positions that should have been removed from the budget after the last Police MOU negotiation cycle. The Recommended Budget corrects this error and helps offset the additional positions added in the FY24-25 Recommended Budget.
The approach for adding new positions also includes reclassifying some existing positions to better serve the community and the overall service vision of City Council.
The following chart shows the proposed changes to FTEs in the FY 24-25 budget:
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
20.Question/Comment: Are we still in the position where of making up the two years from COVID we did no capital projects?
Response: Yes, we are still in catch-up mode.
21.Question/Comment: We have savings in a Section 115 Trust, and we have been putting money into it for quite some time. To me, that’s savings and it's money the City can use. It doesn’t show up on these Projected Fund Balances charts in the Recommended Budget Book. At this point we have some number of millions of dollars Council has squirreled away for the future. And perhaps we can find a way so when we look at the Projected Fund Balances chart, and gain an understanding how this fund is doing financially.
Response: At Council’s direction, the City has been making $1M annual contributions to a Section 115 Trust since FY 21-22. A Section 115 Trust is a tax-exempt investment vehicle authorized by the Internal Revenue Service to prefund government expenses, such as retirement plan benefits. Funds placed within the trust can remain within the trust until such a 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.
As of April 30, 2024, the City has contributed three annual contributions over each of the past three fiscal years, with a balance of $3,022,198. Staff will highlight these funds in the budget book.
22.Question/Comment: We speak to the UAL a lot, hanging over the City’s head.
There is a big budget item in here to pay off this year’s UAL portion. That is an important number to me when I think about how well the City is doing. I didn’t see anything in the budget book relating to that. My preference is that there is a place in the budget book for some discussion of that and include the complicated line graphs from the State in the discussion.
Response: The City’s annual UAL payment is briefly discussed within the Operating Budget section under Citywide (Non-Departmental), on page 28 of the Recommended Budget Book. A more analytical look at the City’s UAL is taken in the City’s Annual Comprehensive Financial Report. Please refer to Question 9 Response above for more information.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
23.Question/Comment: It would be helpful to have some projections. Is it doable to have projected fund balances out into the future? To the point that we are dipping into our fund balances, it might be helpful to see what the projected fund balances a year are out, so we can understand if the path we are on is sustainable. It would be a tool the Council could use.
Response: Based on projections, it appears that fund balance will no longer be able to balance the budget as early as FY 2027-28 (See chart for details - Exhibit B). This conclusion, represented in Exhibit B, is based on the following FY25-26 through FY28-29 Projections and Assumptions:
Revenues:
● Property Tax: Assumes 3.537% annual growth.
● Bradley Burns and Measure C are projected based on 3-year average growth, which are 0.496% and 0.988%, respectively.
● TOT assumes a 1% annual growth.
● Charges for Services assume 1.971% growth, which is the average annual growth over the past three years.
● Other revenue growth is estimated at 2%.
Expenditures:
● General Fund Operating: Salaries and Benefits based on static staffing level (FY 23-24 FTE) with 4% annual growth from actual.
● PERS based upon CalPERS June 30, 2023 Actuarial Valuation reports assumes 6.8% investment return with no other changes to FY22-23 staffing. ● Pension Mitigation: Reflects direction provided by Council on 3/2/21 to set aside funding for pension mitigation options for five years. ● Services and supplies assume 2.6% annual inflationary growth. ● Debt: Based on debt schedules.
● Capital: Costs are taken directly from the 5-Year Capital Improvement Plan at full value. This is the most conservative approach, as the historic trend has been for the actual CIP expenditures in a Fiscal Year to be significantly less than forecasted.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
24.Question/Comment: Maybe a discussion in the budget book “What is Fund Balance” will help people know the difference between Reserves and Fund Balance and how that works?
Response: Staff will add a discussion/explanation about the difference between Fund Balance and Reserves in the Budget Book before it returns for adoption in June.
At a basic level, Fund Balance is money in a Fiscal Year that was budgeted for something, and didn’t get spent. That money goes into “Fund Balance” which then can be used in the next fiscal year. Fund Balance is much more liquid, like the money that we all keep in a savings account. On the other hand, Reserve Funds are monies that are intentionally set aside each year and placed into a fund that is meant to be a long term strategic reserve or a sort of fiscal “safety net” for the City. These reserve funds have only ever been tapped into one time to balance the City’s budget, and that was during the Covid-19 Pandemic.
At a more detailed level. staff have provided a detailed breakdown of the City’s Fund Balance, which is split between Unassigned, Reserved, and Restricted (See chart for details - Exhibit C). The City starts by calculating its Reserve balances, as laid out in the far left column of the worksheet. After determining the City’s reserve balances, the City then carves out Restricted balances from this larger number, or balances that can only be used for very specific purposes. For example, the Restricted balance within the General Fund (Fund 101) represents the Section 115 PARS balance, which can only be used to fund pension obligations. The remaining fund balance, after removing the Reserved and Restricted balances, is the Unassigned fund balance. This is the amount that is referred to as “Fund Balance” which can be used for the next Fiscal Year. As of June 2024, we estimate an Unassigned fund balance of $15M. If we were to adopt the FY 24-25 Recommended Budget, which includes utilizing $12.5M of Fund Balance to offset CIP projects, we would then estimate ending FY 24-25 with $2.5M in Unassigned Fund Balance.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
25.Question/Comment: Last year, someone in the Public requested that in addition to the list of employees from each department, that we have their salaries listed. There was some discussion of not doing so because of their privacy. I really think that would be helpful. That information is available if anyone wants to search it on the internet. So I think that would be helpful to have that listed and I would like to request that be one of the items listed when we have our workshop.
Response: True, every City employee’s salary is public information, and available on the internet. Historically, this is not information that has been included as part of the Budget Book. If the majority of Council gives direction at the May 21st workshop to include this information in the final draft of the Budget Book.
26.Question/Comment: We need to reduce spending significantly. One way to do that would be to implement a budget-wide 10% reduction.
Response: This is a policy decision that the City Council could consider at the May 21st workshop, and provide direction to staff on whether or not to incorporate into the final draft budget considered at the June hearing for adoption.
27.Question/Comment: Are we allowed to include surcharges as part of our fees? I thought the law changed and no longer allows surcharges.
Response: The City Attorney is still reviewing this question. We anticipate having an answer prior to the May 21st budget workshop. However, as a general rule, City fees must be based on the City’s costs to provide a service.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
28.Question/Comment: I’d like to understand more details on the recommended shift from contractors v hiring FTEs. I believe this decision and recommendation is wise, I’d just like to see more than was covered on May 7th.
Response: For the past two fiscal years, the City retained three (3) project management firms to advance the following projects:
● 4 Leaf, ($198k total): Includes Police Building Project, FY 22 Paving Project specifications, and technical support for resilience and electrical panel assessment projects.
● Ausonio, Inc., ($250k total): Includes City Hall retaining wall repair, Sunset Center and Harrison Memorial Library exterior painting projects, City Hall roof replacement, Cottage Windows repairs, 4 facility condition assessments, design concepts for Sunset Center’s portico, design of Sunset Center retaining walls repairs and San Antonio pathway structural repairs, and Park Branch Library dumbwaiter decommissioning.
● Wallace Group, ($350k total): Includes Mission Trail Nature Preserve tank/pump house/well removal design, oversight of FY 23 Concrete Streets Project and the Storm Drain Master Plan Update, planning for wayfinding signs, planning for shoreline infrastructure repairs, and engineering and design of the FY 24 Paving Project.
This $800k investment over the past two years allowed the City to advance 20 capital improvement projects.
The fully-burdened cost (salary plus benefits) for a City Project Manager is roughly $196,000. A Project Manager can support an average of eight to ten projects at a time. Thus, hiring a second City Project Manager on staff would ultimately reduce outside consultant fees, but continuing to retain project management consultants is still a prudent strategy until the current backlog of projects can be reduced. In addition, consultants will still be required for their technical expertise.
The second City Project Manager position is included in the Recommended Budget for FY 2024/25.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
29.Question/Comment: There is at least the Police Station, Beach Reinforcements, undergrounding desires, Library updates/upgrades (I know I’ve left another one off this list and there are maybe others?) that are potential considerations for large and needed expenditures. Some dollars come from room rate income or are delayed and others need special funding considerations.
Is there going to be an opportunity to talk this big picture through? Response: None of the upcoming major projects are far enough along to understand their total fiscal impact/need, as they are still early in the concept phase. As these projects become more refined, there will be public meetings that include a discussion about funding mechanisms.
30.Question/Comment: How much of the $12,579,000 in capital projects is carry over?
Response: The term “carry over” refers to funding allocated from capital projects in prior fiscal years that are not yet expended. With Council’s approval of the carry-over projects, these funds are then forwarded for the same projects in the new fiscal year. The estimated total carry-over amount into FY 2024/25 is $6.81M of City Funds plus $2.43M of external funds.
For information only, in terms of new funding (not carry over funding) for the new FY 2024/25, the total amount of supplemental funding for construction of six “shovel ready” projects ($1,667,000), plus six proposed new Vehicle and Equipment Fund projects ($545,000), and 13 proposed Capital Improvement Fund projects ($3,030,000) which equals $5,242,000 of City funds plus $515,000 of external funds.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
31.Question/Comment: Are the additional FTE's in Public Works enough to complete the deferred maintenance this next fiscal year? How are they to be used, and are they project catch up folks or sustaining team members? Response: Only one of the proposed FTE employees recommended for Public Works would be focused on capital improvement projects. This would allow the City to reduce the current dependency of using project management consultants at higher costs. It would help us to catch up on projects, but over time, not over just one year.
The three other proposed FTE employees to be added to Public Works would be allocated to Forestry: an Assistant City Forester (this position was defunded at the time of the Pandemic), a FTE Permit Technician, and one FTE Forestry Maintenance Worker who would help reduce the current backload of removing 400 dead/potentially dangerous trees and nearly 900 stumps.
32.Question/Comment: Is the cost of courier service for the mail delivery program ($86,600) growing? If so, what accounts for this (increased unit cost, volume, or both)?
Response: Peninsula Messenger, LLC charges per individual residence that they deliver to. As of April 2024, there are 82 City residences that receive U.S. mail service from Peninsula Messenger, LLC at a monthly rate of $88 each. Annualized, this cost is $86,600, which is the budgeted amount for FY24-25.
An increase in Peninsula Messenger, LLC’s per residence cost accounts for the rise in total cost for courier services. The average number of users has fallen each year since FY21-22, dropping from 100 to 90 in FY22-23, and now down to 82 in FY23-24. However, since FY21-22 the per residence cost has more than doubled from $41 to $88.
33.Question/Comment: Please provide the expense trend for courier service for the mail delivery program over the last three years.
Response: Please see Exhibit D for Courier Costs Trend Analysis.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
34.Question/Comment: What types of resources or programs do we have for managing our Worker’s Compensation expenses?
Response: We have a robust injury/illness prevention program in place that includes regularly scheduled injury prevention training for our public works employees and an internal communication system for reporting safety hazards. Our Police Department has in-house certified trainers that conduct injury prevention training for our officers. We also have a Wellness program that promotes health and wellness through gym membership reimbursement.
35.Question/Comment: What types of resources or programs do we have to support staff retention?
Response: On the whole, our employee salaries and benefits continue to be in the mid to top of the range when compared to those of surrounding and comparable agencies, helping us to be competitive. A longevity incentive program was implemented 2 years ago for those over 10 years of continuous service with the City. We have two annual employee appreciation events that include employee recognition awards. In addition to these appreciation events, there are also a handful of seasonal employee events such as gingerbread house making, and pumpkin carving contests. Each department’s operating budget includes money for professional training, which is highly encouraged by each department head. This focus on professional development and enrichment also helps with retention. The City strives to maintain a safe, supportive, and welcoming work environment and it’s that reputation that attracted our most recent recruitments.
36.Question/Comment: What accounts for the increase in recruitment services? Response: The recent vacancy of our Community Planning and Building Director created the need for professional recruitment services that comes at a relatively steep price per recruitment. The City is not immune to the challenges of attraction and retention of highly qualified employees of recent years.
Attachment 2
City of Carmel-by-the-Sea
FY24-25 Recommended Budget Questions and Responses
37.Question/Comment: What accounts for the increase in auditing services? Response: The City has increased the frequency in sales tax, transaction tax, and TOT tax audits to ensure that the correct amounts are being collected. The funds recovered through this extra effort help offset any costs.
Additionally, the City anticipates higher financial statement auditing costs, as the current contract expires on 6/30/2024, and will likely see rates increase.
38.Question/Comment: What projects/programs are candidates for extraordinary funding and what are the options for funding? These items to us include:
affordable housing, undergrounding, police station, library, beach erosion, roads, drainage….And what are the options for funding: a bond, state or Fed $'s, donations, operational $'s, grants public/private? And how do they work, what timelines are needed? A summary of this to educate the citizens is needed.
Response: All of the projects mentioned in the question are potential projects that could require additional funding outside what our normal revenue streams can cover. As these and other projects become more refined, the City will have a better understanding of exactly how much additional funding is needed. At that point, there will absolutely be a conversation with Council and the community about the different funding mechanisms.
Exhibits:
Exhibit A - Projected UAL Employer Contributions
Exhibit B - Five Year Financial Forecast with Fund Balance Exhibit C - Projected Fund Balance 2023-2025
Exhibit D - Courier Cost Trend Analysis
Attachment 2
Exhibit A
Attachment 2
*Projected contributions assume that all actuarial assumptions will be realized and and that no further changes to the assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment returnbeginning with FY 22-23 is assumed to be 6.8% per year, net of investment and administrative expenses. Future contributionrequirements may differ significantly from those shown above. The actual long-term cost of the plan will depend on the actualbenefits and expenses paid and the actual investment experience of the fund. 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 Contributions 1,598,574 1,833,526 2,082,464 2,007,732 2,375,351 2,555,900 2,733,700 2,881,400 3,174,200 3,239,200 8% Avg.
Growth
-
500,000
1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 Projected UAL Employer Contributions*
Exhibit A
Exhibit B
Attachment 2
FY 21-22
Adopted
Budget
FY 21-22
Actual
FY 22-23
Adopted
Budget
FY 22-23
Actual
FY 23-24
Adopted
Budget
FY 23-24
Estimated
FY 24-25
Recommended
Budget
FY 25-26
Projection
FY 26-27
Projection
FY 27-28
Projection
FY 28-29
Projection
Property 8,041,368 7,681,714 8,299,100 8,152,163 8,479,296 8,496,757 8,648,882 8,954,793 9,271,524 9,599,458 9,938,991Sales- Bradley Burns 2,966,109 3,611,423 3,190,300 3,469,442 3,665,207 3,665,207 3,738,511 3,757,054 3,775,689 3,794,416 3,813,237Sales- Local 4,706,660 5,970,464 5,721,000 5,868,695 5,926,532 6,147,450 6,045,063 6,104,788 6,165,104 6,226,015 6,287,528Transient Occupancy Tax (TOT ) 6,568,562 7,787,643 6,667,000 8,455,742 6,801,007 7,531,004 7,543,234 7,618,666 7,694,853 7,771,802 7,849,520Charges for Services 2,129,702 2,485,797 2,169,500 2,500,112 2,535,516 2,632,809 2,550,029 2,600,290 2,651,542 2,703,804 2,757,096Other Revenues 4,034,829 3,308,607 4,284,600 4,445,838 3,519,944 4,128,390 2,905,530 2,963,641 3,022,913 3,083,372 3,145,039Revenue Total 28,447,230 30,845,650 30,331,500 32,891,990 30,927,502 32,601,618 31,431,249 31,999,232 32,581,625 33,178,866 33,791,409Salaries/Benefits 11,254,976 10,211,452 13,488,692 11,729,271 15,075,509 12,191,275 16,016,392 13,186,083 13,713,526 14,262,067 14,832,550CalPERS Unfunded Accrued Liability Payment 1,833,526 1,772,536 2,082,464 2,013,193 3,007,732 1,942,767 2,375,351 2,555,900 2,733,700 2,881,400 3,174,200Pension Mitigation Total 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000Services/Supplies 8,900,889 8,952,087 9,800,223 10,249,694 11,249,342 10,584,957 12,239,201 12,557,420 12,883,913 13,218,895 13,562,586 General Fund Operating Total 21,989,391 20,936,075 25,371,379 23,992,158 29,332,583 24,718,999 30,630,944 28,299,403 29,331,140 30,362,362 31,569,336Worker Compensation 116,158 47,724 148,160 55,505 76,600 33,643 127,000 45,624 45,624 45,624 45,624Pension Bond 702,918 702,414 703,580 700,616 0 0 0 0 0 0 0 Sunset Center Bond 162,628 156,798 158,300 157,573 513,300 512,835 519,100 509,600 519,400 517,960 517,960NGEN Radio 17,110 0 16,423 16,753 14,744 15,033 0 0 0 0 0Debt Total 882,656 859,211 878,303 874,942 528,044 527,868 519,100 509,600 519,400 517,960 517,960Capital Outlay Total 4,439,580 149,873 5,972,327 1,199,076 10,916,100 2,720,673 12,579,000 9,205,000 16,675,000 16,165,000 5,280,000Expenses Total 27,427,785 21,992,884 32,370,169 26,121,681 40,853,327 28,001,183 43,856,044 38,059,627 46,571,164 47,090,946 37,412,920Surplus/(Deficit) 1,019,445 8,852,766 (2,038,669) 6,770,310 (9,925,825) 4,600,435 (12,424,795) (6,060,395) (13,989,539) (13,912,080) (3,621,511) Fund Balance 32,655,324 37,255,759 24,830,964 18,770,569 4,781,030 (9,131,050) (12,752,561) Deficit = use of fund balance
Five Year Financial Forecast FY24-25
Revenues
Fiscal Years
Revenues: Property Tax: Assumes 3.537% annual growth. Bradley Burns and Measure C are projected based on 3-year average growth, which are 0.496% and 0.988%, respectively. TOT assumes conservative 1% growth. Charges for Services assume 1.971% growth, which is the average annual growth over the past three years. Other revenue growth is estimated at 2%.
Surplus = adds to fund balance
FY 25-26 to FY 28-29 Projections and AssumptionsExpenditures: General Fund Operating: Salaries and Benefits based on static staffing level (FY 23-24 FTE) with 4% annual growth from actual. PERS based upon CalPERS June 30, 2023 Actuarial Valuation reports assumes 6.8% investment return with no other changes to FY22-23 staffing. Pension Mitigation: Reflects direction provided by Council on 3/2/21 to set aside funding for pension mitigation options for five years. Services and supplies assume 2.6% annual inflationary growth. Debt: Based on debt schedules. Capital: Costs are from the 5-Year Capital Improvement Plan.
ExpendituresDebt Service
Exhibit B
Exhibit C
Attachment 2
Projected Fund Balance June 30, 2024
FY 23-24
Estimated Fund Budgeted Revenue Estimated Fund
Fund Description Balance June 2023 & Expenditures Balance June 2024 Fund Unassigned Reserved Restricted Reserve Calcuations 101 General Fund 7,538,207 (860,352) 6,677,855 101 6,677,855 29,322,870 101 General Fund Reserve 6,994,965 470,137 7,465,102 101 4,398,431 3,066,670 4,398,431 101 General Fund Total 14,533,172 (390,215) 14,142,957 101 102 Hostelry 7,211,326 (2,492,241) 4,719,085 102 4,719,085 6,801,007 102 Hostelry Reserve 656,856 23,245 680,101 102 680,101 680,101 102 Hostelry Total 7,868,182 (2,468,996) 5,399,185 102
201 Gas Tax 536,346 0 536,346 201 536,346
202 Transportation Safety 856,226 (70,978) 785,248 202 785,248 203 COPS 10,817 (10,817) 0 203 0
204 Parking in Lieu 738,592 0 738,592 204 738,592
205 Asset Seizure 5,466 0 5,466 205 5,466
206 Local Measure Sales Tax 1,911,499 2,368 1,913,867 206 1,913,867 47,292,000301 Capital Projects 3,676,973 6,916,968 10,593,941 301 1,135,541 9,458,400 9,458,400 401 Debt Service 26,805 176 26,981 401 26,981
501 Worker's Comp 259,716 25,576 285,292 501 285,292502 OPEB Reserve 1,768,710 0 1,768,710 502 1,768,710 5,102,298 503 Veh & Eq Replacement 462,820 596,354 1,059,174 503 548,944 510,230 510,230 Total Fund Balance 32,655,324 4,600,435 37,255,759 14,995,292 15,047,161 7,213,305 Projected Fund Balance June 30, 2025
FY 24-25
Estimated Fund Budgeted Revenue Estimated Fund
Fund Description Balance June 2024 & Expenditures Balance June 2025 Fund Unassigned Reserved Restricted Reserve Calcuations 101 General Fund 6,677,855 (5,996,208) 681,647 101 681,647 30,624,944 101 General Fund Reserve 7,465,102 1,195,311 8,660,413 101 4,593,742 4,066,670 4,593,742 101 General Fund Total 14,142,957 (4,769,897) 9,373,060 101 681,647 4,593,742 4,066,670 102 Hostelry 4,719,085 (3,913,064) 806,021 102 806,021 7,543,234 102 Hostelry Reserve 680,101 74,222 754,323 102 754,323 754,323 102 Hostelry Total 5,399,186 (3,838,842) 1,560,344 102 806,021 754,323 201 Gas Tax 536,346 (404,983) 131,363 201 131,363202 Transportation Safety 785,248 (623,595) 161,653 202 161,653203 COPS 0 0 0 203204 Parking in Lieu 738,592 0 738,592 204 738,592 205 Asset Seizure 5,466 0 5,466 205 5,466
206 Local Measure Sales Tax 1,913,867 (954,937) 958,930 206 958,930 47,292,000 301 Capital Projects 10,593,941 (1,135,541) 9,458,400 301 9,458,400 9,458,400401 Debt Service 26,981 0 26,981 401 26,981 501 Worker's Comp 285,292 (127,000) 158,292 501 158,292502 OPEB Reserve 1,768,710 0 1,768,710 502 1,768,710 5,102,298 503 Veh & Eq Replacement 1,059,174 (570,000) 489,174 503 489,174 510,230 Total Fund Balance 37,255,759 (12,455,795) 24,799,964 2,446,598 15,295,639 7,057,727
PROJECTED FUND BALANCE
37,255,75924,799,964
15% Budgeted Expenditures 10% Hostelry Budgeted Revenue Reserve estimated at 20% 5-year Total Replacement based on CPI YOY 15% Budgeted Expenditures 10% Hostelry Budgeted Revenue Reserve estimated at 20% 5-year Total Replacement based on CPI YOY Exhibit C
Exhibit D
Attachment 2
0 20
40 60
80 100
120
140
160
180
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
FY 21/22 FY 22/23 FY 23/24
Number of Users and Unit Cost
Monthly Charges
Courier Costs Trend Anaylsis
Total Users Cost
Exhibit D
Attachment 2
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital
Improvement Plan (CIP) Questions and
Responses
May 21, 2024
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
The following CIP questions represent those received from both Councilmembers and the general public. This list of questions and answers will continue to be expanded through the May 21st, 2024 budget workshop, up to the budget adoption hearing on June 4th, 2024. The questions are answered in the order that they were received during this timeframe.
Section I) - From March 5, 2024 Council Meeting - 1st Review of the CIP
1. What buildings does the City own, and what are the estimated deferred maintenance costs for each?
Response:
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
2. What is the estimated total carry-over amount and the new FY 2024/25 proposed amounts? What is the forecast for funding next year?
Response: The estimated total carry-over amount into FY 2024/25 is $6.81M of City Funds plus $2.43M of external funds (now including PG&E Rule 20A). The total amount of the supplemental funding for six “shovel ready” projects ($1,667,000), plus six proposed new Vehicle and Equipment Fund projects ($545,000), and the 13 proposed Capital Improvement Fund projects ($3,030,000) would be $5,242,000 of City funds plus $515,000 of external funds.
While the forecasted funds for FY 2024/25 are not yet available, Council is requested to review and defer projects that may not be urgent or which exceed available funding.
3. Our roads are badly cracked. Can we add more funding to improve the streets? Response: According to our “StreetSaver” Pavement Management Program, the City’s overall Pavement Condition Index (PCI) has been slowly deteriorating over the past five years as indicated in the chart below. In 2019, the PCI of 78 was the highest of any agency in Monterey County. Since then, a three-year gap in paving projects caused by the Pandemic has reduced the PCI down to 71, as was anticipated.
With the proposed $2.8M street improvement project for FY 2024/25 and ongoing annual investments (local plus external funding) of $1.1M, our pavement condition is expected to be maintained in the 70s, at least for the next five years. Increasing investment for streets must be weighed against other significant infrastructure needs such as for priority drainage projects, shoreline infrastructure, and City building repairs.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
4. Why are we spending so much for consultants?
Response: The City relies on consultants to provide professional services for two primary reasons. First, City staff does not possess the wide range of technical expertise needed for many projects, such as in the following service areas: Architecture, coastal engineering, electrical engineering, geotechnical engineering, hazardous materials testing, landscape architecture, mechanical engineering, structural engineering, surveying, and traffic engineering.
The other primary reason is that while staff does have the needed technical expertise, the quantity of projects requires the City to supplement staff, such as for the following service areas: Arboricultural services, Building Code plan checking, civil engineering, construction management, environmental services, historic preservation, planning services, and project management.
Per state law, consultants are hired on the basis of demonstrated competency, qualifications, and experience, not on lowest price. Also refer to Question 11 below.
5. Can the proposed landscaping on the Ocean Avenue median island include an irrigation connection to facilitate watering plants and flowers around the WWI Memorial Arch?
Response: Yes, that infrastructure was recently installed.
6. Why wasn’t the PG&E Rule 20A Undergrounding funds included in the CIP? Response: The Rule 20A Undergrounding Project was included in the current FY 2023/24 budget and shown in the 5-year CIP spreadsheet. However, on March 5th, this should have been included as a carryover project with external funding. This has been corrected.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
7. Does the City have a plan to ultimately replace the new ambulance and fire engine? Response: Yes. Public Works and Public Safety maintain a list of all vehicles and equipment in the City’s fleet. This list is updated each year as part of the CIP programming process, and projects 15 years out. The incoming ambulance and fire engine are not yet in the City’s fleet; however, once they arrive, they will be added.
Our current Fire/Ambulance services operate with two fire engines and two ambulances.
One vehicle for each serves as a back-up for the primary. When we replace a fire engine or ambulance, we are essentially replacing the back-up. The new vehicle becomes the primary, and the old one moves to the back-up role.
8. Carmel Cares suggests fundraising to donate a bobcat or tractor to Public Works to help sand movement on Carmel Beach.
Response: The City would greatly appreciate such a donation. Currently Public Works has to rent this equipment.
9. Can the City increase the transfer tax to provide additional revenue? Response: No. Under California law, only a charter city may enact or increase a real property transfer tax that is a general tax. Therefore, the real property transfer tax would have to be approved by a majority of the voters.
10. What is the cost estimate to fix the roadway along Ocean Avenue in the County’s jurisdiction, between Carpenter Street and Highway 1?
Response: Monterey County Public Works officials have informed a local resident that the cost estimate to repair Ocean Avenue in the County’s jurisdiction would be $500,000.
City staff believes that this cost estimate is overly optimistic and may not include the full cost considering traffic detours, drainage, sidewalks, required ADA ramps, CalTrans permitting, etc.
With Council’s direction, Staff could begin to discuss the possibility of entering into an Interagency Agreement with Monterey County such that the City would oversee a program management consultant who would in turn oversee the development of design plans, CEQA documentation, bidding, and construction of the proposed project, all at the expense of the County.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
11. What are our costs for consultant project management services? What is the cost if we were to add a second project manager position in-house? Response: For the past two fiscal years, the City retained three project management firms for the total fees to advance the following projects:
● 4 Leaf, $198k: Includes Police Building Project, FY 22 Paving Project specifications, and technical support for resilience and electrical panel assessment projects. ● Ausonio, Inc., $250k: Includes City Hall retaining wall repair, Sunset Center and Harrison Memorial Library exterior painting projects, City Hall roof replacement, Cottage Windows repairs, 4 facility condition assessments, design concepts for Sunset Center’s portico, design of Sunset Center retaining walls repairs and San Antonio pathway structural repairs, and Park Branch Library dumbwaiter decommissioning. ● Wallace Group, $350k: Includes Mission Trail Nature Preserve tank/pump house/well removal design, oversight of FY 23 Concrete Streets Project and the Storm Drain Master Plan Update, planning for wayfinding signs, planning for shoreline infrastructure repairs, and engineering and design of the FY 24 Paving Project.
This $800k investment over the past two years allowed the City to advance 20 capital improvement projects.
The fully-burdened cost (salary plus benefits) for a City Project Manager is roughly $196,000. A Project Manager can support an average of eight to ten projects at a time.
Thus, hiring a second Project Manager on staff would ultimately reduce outside consultant fees, but continuing to retain project management consultants is still a prudent strategy until the current backlog of projects can be reduced. In addition, consultants will still be required for their technical expertise as described in Question 4 above.
12. The failed fencing along the San Antonio pathway, between Second and Fourth Avenues, was originally a joint project with Pebble Beach. Pebble Beach appears to have a similar problem with the fencing north of the Pebble Beach gate. Does Pebble Beach have a plan for repairs and would they be willing to participate in funding? Response: The Pebble Beach Community Services District advised staff to reach out to representatives of the Pebble Beach Company. While the fence inside Pebble Beach appears to be similar to the fence along San Antonio Avenue, it is not yet clear if the same, or alternative foundation design, was used there. More information is forthcoming.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
13. What is the total cost to implement all of the priority drainage repairs identified in the 2023 Storm Drain Master Plan (SDMP) Update?
Response: The 23 priority projects identified in the SDMP Update are estimated to cost $14.7M. Three of the six highest priority repairs will be “shovel ready” for construction pending supplemental funding of $638,000 proposed in FY 2024/25. The design of one additional high priority project, the Junipero Bypass, is a proposed new project valued at $175,000 for FY 2024/25.
The draft 5-year CIP includes an additional $2.8M in Years 2-5 towards completion of these top six projects. The nine medium priority projects included in the SDMP Update, valued at $7.7M, would take another 7 to 10 years to complete at current funding levels.
14. Council requests a presentation about the status of the Library Master Plan.
Response: The Library Master Plan was presented to the Harrison Memorial Library (HML) Board of Trustees on March 20, 2024 and was presented to Council at their April 2, 2024 meeting.
15. Can we dissect the San Antonio/Ocean Avenue intersection improvements included in the FY23 Concrete Streets project into the proposed, modified paving project to be constructed in FY 2024/25?
Response: Yes. This is one of the proposed project changes described in Section B of the March 26, 2024 Staff Report.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
Section II) - From March 26, 2024 Special Council Meeting - 2nd Review of the CIP
16. Explain what the Trestle Foot Bridge is on Lincoln & Fourth Avenue.
Response: There is a 90-year old wooden pedestrian bridge along the Lincoln Street alignment extending north from Fourth Avenue and ending at the end of Lincoln Street, south of Third Avenue. While Public Works routinely makes minor repairs to handrails, posts, and other elements, the overall structure is showing its age and may become unstable. The proposed project will allow for a structural engineer to assess the integrity of the bridge and determine the extent of repairs that are needed to ensure safety.
17. Sunset Center Portico – how did this project come about? Response: Sunset Center requested this project last year. There used to be an open trellis-type of portico structure in front of the entry doors on the west side of the main building, just south of the snack stand. The old trellis rotted out and was removed approximately 7-8 years ago. A couple of rotted out columns still remain. This project would ultimately replace the portico with a new structure.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
18. Concerned about City Staff workload. Hypothetically, what if we put a pause on the City’s backlog – what impacts would occur?
Response: Without any new capital improvement projects assigned for FY 2024/25, the current backlog of work from the 15 Carry-Over Project funded in, or prior to, FY 2023/24 would take staff plus our three Project Management consultants approximately one more full year to complete. As reference, the City completed 14 projects in FY 23 and 15 projects in FY 24 with one in-house Project Manager plus three Project Management consultants.
Currently, the tentative list of 6 new Vehicle and Equipment Funded projects plus 13 new Capital Fund Projects, will add a full year of workload to the existing backlog. In addition, the Public Works Department, for example, is also involved in 11 Strategic Priority Projects (several of which are capital projects), in addition to ongoing streets and facilities maintenance, forestry and environmental programs, and service requests.
Staff does not recommend eliminating all 19 new projects since many are time-sensitive and should begin soon as possible. Hiring a second in-house Project Manager would be part of the solution in reducing the backlog and phasing out project management consultants. However, the scale and cost of the proposed new FY 24/25 CIP projects should be further reviewed. For example, at the March 26th meeting, Council directed staff to defer the construction phase of the Sunset Center Portico.
At the May 21, 2024 Budget Workshop, staff will identify four (4) additional, important, but non-urgent projects which Council may consider to defer.
19. What is the potential cost of not doing a project?
Response: All infrastructure, such as pavement, sidewalks, drainage pipes, buildings, etc., decays over time. It is significantly less expensive to perform preventative maintenance and make repairs as soon as the infrastructure begins to slip into accelerated deterioration before the infrastructure completely fails and has to be completely replaced at much higher cost.
If funding is delayed for making needed repairs to deteriorating infrastructure, typically, the repair will be more costly in the long run. Further, the infrastructure may fail and be unusable for public use.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
20. How long are the construction bids actually good for? Response: Per the City’s standard construction contract documents, bids are valid for 90 days from the date of the bid opening.
21. Under the 13 Potential Projects, are the Lincoln & Fourth Avenue trestle footbridge repairs taken out of the operating budget?
Response: The proposed project will be included in the CIP Budget, rather than in the operating budget, with an allocation of $40,000 for the structural evaluation.
22. Ocean Avenue should be representative of a First Class community. Ocean Avenue is in really bad shape, and the City should fix it as it is the entrance to our City and many people travel on it daily. Can we work with the County, Caltrans, or private groups to be reimbursed for payment?
Response: This project has been included in the proposed CIP for FY 2024/25. The Project description is included in the draft Recommended Budget book.
23. Carmel Cares requests $100K for additional work on Scenic Pathway Project such as for barriers, erosion control, and landscaping.
Response: There is an FY 2023/24 carry-over project, entitled “Scenic Pathway Hardscape Renovations,” with an initial allocation of $100,000 from the City plus matching funds from Carmel Cares. Only a small portion of the City funds have been expended to date on materials. Plans for the next phase of improvements were approved at the May meeting of the Forest and Beach Commission.
Although construction of these improvements is anticipated to begin this summer, staff recommends that no additional funding be allocated to this project at this time. Once the allocated funds are depleted, additional funding could be requested at the FY 2024/25 Mid-Year Budget or with next year’s Capital Improvement Program.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
24. How do we measure a Consultant’s work?
Response: The City enters into a professional services agreement with every consultant. These agreements establish the scope of services, fees, and schedules that the consultants are required to perform and the standards that they must follow. City staff reviews the consultant’s reports, plans, specifications, or other documents that are to be submitted to the City per the agreement. If the consultant services are substandard or late, the City may require the consultant to redo the work product at no additional cost to the City or require them to provide a schedule to catch up on the required timeline if possible.
Some of the City’s consultant agreements include an on-call, as-needed task which allows for the City to quickly assign smaller, add-on tasks if funding is available.
Consultants who provide high quality, timely, and cost-effective services are more likely to be assigned these add-on tasks than consultants who do not provide best services.
25. How long will the San Antonio Walkway Project take? Can we get the project done faster?
Response: Currently, the design is 90% complete and in building permit readiness review. Subject to construction funding in FY 24/25, the project will be advertised for construction bids in early July, and a contract could be awarded in September.
Construction will take approximately 3 months to complete from issuance of the Notice to Proceed; thus, construction could be substantially complete by the end of 2024. This is a high priority project.
26. We need to put political pressure on Pebble Beach Company to fix the San Antonio Walkway/Structures.
Response: Mayor Potter and City Administrator Rerig have taken this responsibility on.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
27. What is the progress on undergrounding the Power Poles along San Antonio? Can we do the undergrounding project and the pathway project as a joint project? Response: City staff has been working with Carmel Cares and their consultant on planning for the undergrounding of overhead utility lines along the San Antonio Pathway, between Second and Fourth Avenues. To prevent any conflicts between the privatelyfunded undergrounding project and the City-funded Pathway Reconstruction Project, the undergrounding alignment has been shifted to be under the San Antonio roadway rather than along the Pathway. Staff recommends that these remain two separate projects because the reconstruction project involves concrete, steel, and wood structural work in 44 pits along the Pathway, and the other involves horizontal trenching and relocating electrical, cable TV, and telephone cables underground below the street, repaving, and removing the power poles. There is one proposed utility transformer that needs to be installed on the Pathway, but it will be set back so as not to conflict with the reconstructed pathway and fence.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
28. Should we continue with concrete streets knowing the expensive cost to repair them? Are concrete streets noisier? Should we keep concrete streets only along Ocean Avenue?
Response: It is extremely expensive to remove existing concrete streets and replace them with asphalt streets. While concrete streets are considerably more durable than asphalt, their use should be limited to highways, bridges, and major arterial streets with high truck counts, not along Village roads. Concrete streets are also more expensive to construct, repair, and to install utility lines under them.
The design work is complete on the FY 2022/23 Concrete Streets Repair Project, which included Ocean Avenue, from San Antonio to Monte Verde Street, along San Carlos Street, from Fifth to Sixth Avenues, three adjacent intersections, and improvements at the Junipero and Seventh Avenue intersection. The consultant evaluated several options for repairs, and the least expensive alternative will be to cut out squares with heavily cracked or damaged concrete, replace the squares with new concrete, grind down the concrete edges, place a geotextile fabric placed over the concrete, and pave an asphalt overlay on top. This approach is far less expensive than completely removing the concrete streets and reconstructing them as asphalt pavement streets.
Only $792,000 remains available for this $2.5M project; consequently, the funding is being reallocated to the Conglomerate Paving Project for FY 25 to allow the City to pave 25+ asphalt streets, rather than a few concrete streets. Future year budgets will need to be captured for the eventual repairs of the concrete streets.
Concrete streets are typically a little nosier with rubber tire vehicles as compared to asphalt pavement.
29. Ocean Ave and San Antonio intersection is concrete – should we continue with concrete?
Response: The existing intersection of Ocean and San Antonio Avenues is mostly asphalt, and various portions of the intersection were repaired multiple times. The intersection is significantly deteriorated and deformed. The Conglomerate Paving Project for FY 25 will completely reconstruct this intersection with a new asphalt pavement section.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
30. What is the cost of fixing all the Storm Drain Plan projects with inflation? What is the risk of delaying the Storm Drain Master Plan projects? Response: As noted in Question 13 above, the 23 priority projects identified in the SDMP Update are estimated to cost $14.7M. Three of the six highest priority repairs will be “shovel ready” for construction pending supplemental funding of $638,000 proposed in FY 2024/25. The design of one additional high priority project, the Junipero Bypass, is a proposed new project valued at $175,000 for FY 2024/25.
The draft 5-year CIP includes an additional $2.8M in Years 2-5 towards completion of these top six projects. The nine medium priority projects included in the SDMP Update, valued at $7.7M, would take another 7 to 10 years to complete at current funding levels.
The impacts of future inflation are unknown; however, it is reasonable to assume that construction costs will only increase over time. All six of the high priority projects in the SDMP Update are necessary to prevent potential flooding onto private properties, collapsed drain pipes, and to eliminate a significant bottleneck in the main drainage line along Junipero. Once all six high priority projects are completed, say by 2030, then the City should reassess the urgency of proceeding with the moderate and lower priority projects listed in the SDMP Update.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
31. Who bid on the City Hall roof and Cottage Windows project? What is so complicated about fixing the windows at the Cottage or the City Hall roof? Why is it so expensive?
Response: At the September 12, 2023 meeting, Council adopted Resolution 2023- 082, rejecting both bids received for four facility renovation projects that were bundled into one construction package. The bids, which were nearly twice the project team’s cost estimate, for these two projects are listed below:
Pro-Ex Construction Commercial Solutions Group
City Hall Roof Replacement $365,970 $631,171
Sunset Center Cottage
Window Repairs
213,345 145,393
Total Bid (with Sunset Center
and HML Painting projects)
$1,274,017 $1,321,250
The accompanying staff report to that Resolution noted a number of factors that likely led to unreasonable price escalations in the bids, as follows:
● The project was bid in the summer. Contractors in our region are already very busy and may not be aggressively seeking more jobs.
● There is a construction labor shortage in California. Contractors are paying increasingly higher wages to retain crews.
● Material prices continue to escalate due to inflation and supply chain issues. ● While there were many subcontractors at the pre-bid meeting, a majority were painters.
Only three general contractors attended the pre-bid, and two submitted bids. ● The City Hall roof bid was based on upgraded, cedar shingles with bid alternates to compare with less-costly composition shingles. However, the bidders still did not provide reasonable cost reductions for the composition roof, and, in fact, one bidder actually increased their bid using the less costly roofing materials. ● During the pre-bid meeting, several contractors expressed concerns that all of the buildings were historic and would be occupied during the work. ● Bid documents included hazardous materials testing and reporting duties. Therefore, the contractors had to hire a qualified consultant for this work and included markups.
Attachment 3
City of Carmel-by-the-Sea
FY 2024/25 Proposed Capital Improvement Plan (CIP)
Questions and Responses
32. When will we spend the money in the budget for the Sunset Center projects? Response: The Sunset Center Retaining Walls Repair Project is scheduled to be constructed by late 2024/early 2025. The Sunset Center North Lot Electrical Panel Replacement Project schedule largely depends on the schedule for transformer installation by PG&E (at no cost to the City); however, tentatively, construction is anticipated in FY 2025/26. The Sunset Center Portico design concepts have been completed; but construction funding has been deferred to FY 2025/26 in the 5-Year CIP exhibit.
33. Do people leave their cars at the EV charging station at Vista Lobos all day? Response: The existing EV charging station is used very frequently on a daily basis.
After their car is fully charged, the patron gets charged a fee of $10 per hour for leaving the charger on, with a maximum fee of $50. It is staff’s opinion that this has become a less frequent problem once patrons realize this.
34. Can we go on a field trip to the MTNP Laiolo Bridge and Pathway Realignment Project in May and decide on this project after the field trip? Response: There will be a Tour of Inspection of the proposed Doolittle (formerly Laiolo) Bridge and Pathway Realignment Project prior to the May 21, 2024 Council Budget Workshop at 3:45pm.
Attachment 3
EXTERNAL FUNDING 5/13/24 For May 21, 2024 Council Meeting Category Last Fiscal Year FY 23/24 Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 Year 4 Year 4 Year 5 Year 5 FY 2023/24 Budget Status FY 2024/25 Estimate FY 2025/26 Estimate FY 2026/27 Estimate FY 2027/28 Estimate FY 2028/29 Estimate Contingency CIP Contingency 500 Done CIP Contingency 400 CIP Contingency 250 CIP Contingency 250 CIP Contingency 250 CIP Contingency 250 $1,900 $ 500 $ 400 $ 250 $ 250 $ 250 $ 250
Drainage System Repairs (4) Carry Over 580 Drainage Repairs 4 - Suppl. $ 638 Junipero Bypass Construct Ph 1 750 Junipero Bypass Construct, Ph 2 1,000 Drainage Repairs - Design 250 Drainage Repairs Construct 800 Drainage Junipero Bypass Pipe - Design 175 4th Ave CDS - Design 4th Ave CDS - Construction 450 75 $4,718 $ 580 $ 813 $ 750 $ 1,075 $ 700 $ 800
FY 22 Paving Overlay/Micro Surf 543 Done FY25 Conglomerate Paving (FY24) 692 FY26 Allocate to Concrete Streets 700 FY27Allocate to Concrete Streets 710 FY28 Paving, Bike, S/W 720 FY29 Paving, Bike, S/W 730 Streets TAMC: SB1, X, HUTA, RSTP 335 Done TAMC: SB1, X, RSTIP, HUTA 408 TAMC: SB1, X, RSTIP, HUTA 410 TAMC: SB1, X, RSTIP, HUTA 420 TAMC: SB1, X, RSTIP, HUTA 430 TAMC: SB1, X, RSTIP, HUTA 440 SC - Retaining Walls - Design 40 Done San Antonio/Ocean Intersection 293 Resurface Parking Lots Bicycle Master Plan 70 300 Resurface Parking Lots 300 FY 23 Concrete Street Repairs Carry Over 564 FY 22 - 4 Bid Additives 835 Pavement Survey Update 30 TAMC: SB1, X, RSTIP, HUTA Carry Over 441 FY 23 Concrete Streets ($ to FY22, 24) - FY24 Paving Overlay, Slurry, S/W 657 Carry Over SC Retaining Walls - Construction 550 Lincoln.4th trestle bridge - Const 500 TAMC: SB1, X, RSTIP, HUTA 439 Carry Over San Antonio Pathway - Reconstruction 550 Lincoln/4th Trestle Bridge - Evaluate 40
Ocean Ave, Carpenter-Hwy 1 (County) 500
$12,647 $ 3,019 $ 3,868 $ 1,910 $ 1,230 $ 1,450 $ 1,170 ADA Updates - Year 6 Done 20 ADA Updates - Year 7 20 ADA Updates - Year 8 ADA Updates - Year 9 20 ADA Updates - Y 20 ear 10 20 ADA Updates - Year 11 25 Facilities City Hall Retaining Wall Repair 170 Done Scout House Relocate-PM, Env, Des 250 Scout House Relocation 350 Scout House Renovation 500 Elect Panels (CH, FS, VL, Ocean) 75 Done Vista Lobos: EV Chargers & E Panel 4 Facility Assessment (Flanders, RRs) 85 Sel 00 l Scout House Property TBD Sunset Center Ext Painting Done 3CE EV Chargers & Electrical 60 250 Fire Station Painting Flanders Structural Shoring 250 100 Sunset Center - 8 Bollards 20 Done Norton Garage - Secure Access 15 Design Repairs - CH, FS per FCA 150 CH FCA: Fire, Doors, Lighting 400 FS FCA: Roof, Windows, Alarm 500 SC - Carpenter Hall Heater 45 Done Fire Backflows to Code (3 bldgs) 150 Park Restroom Repairs 150 Sunset Center Railings 225 Sunset Center- Portico Concepts 40 Done Sunset Ctr Painting, Ph 2 250 Police Building Project 3,239 Carry Over Police Building Project - Design 1,000 Police Building - Construction 10,000 Police Building Construction 10,000 PW Building Reno - Design 1,000 Resilience Infr. Pilot Design 85 Merge w/PD Police Building, Fed Appropriation TBDCity Hall Roof Replacement Carry Over City Hall Roof - Supplemental $ 160 167 Sunset Ctr Cottage Windows Carry Over Sunset Ctr Cottage Windows-Supp 100 l $ 100 Sunset Center Portico Design, Const 475 Sunset Center - N Lot Electrical 100 Carry Over
$30,986 $ 4,304 $ 762 $ 2,480 $ 11,170 $ 11,245 $ 1,025 MTNP Tank & Well Demo 121 Done MTNP Doolittle Bridge - Env, Design 17 MTNP Doolittle Bridge Construct 125 5 Forestry, Urban Forest Master Plan 75 Done
Parks & Beach Urban Forest MP CalFire Grant Done 150
N Dunes Split Rail + Signage Fence Done 25 MTNP Stream Projects 5-6 Design 125 MTNP - Stream 5-6 Construct 500 MTNP-Stream 7-8-Design 150 MTNP-Stream 7-8-Construct 600 MTNP - Stream 3 Drainage Carry Over MTNP - 3 Drainage Supplement 85 al $ 68 MTNP - Stream 3 Drainage Grant 178 Carry Over -
Scenic Pathway Hardscape 100 Carry Over -
Scenic Pathway Hardscape (CC) 100 Carry Over
$2,577 $ 834 $ 243 $ 250 $ 500 $ 150 $ 600
Radios Lease, Year 3 30 Done Radios Lease, Year 4 30 Radios Lease, Year 5 30 Radios Lease, Year 6 (Last) 30 Fleet & 2 Forestry & 2 PD Vehicles Done 220 PW Dump Truck (1995) 150 Forestry Bucket Truck (1995) 225 Facilities Truck EV (2007) 85 Streets Pickup EV (2005) 75 Streets Pickup EV (2012) 75 Equipment EV Vehicles - 3CE Grants 25 TBD Police EV Patrol (2017) 75 Fire Vehicle EV (2010) 75 Fire Inspector Vehcile EV (2012) 75 Forestry Water Truck (1994) 120 PD Detective Veh EV (2017) 75 (Vehicle & Ambulance & Equipment/AED Carry Over EV Vehicles - 3CE Grants 15 Ambu 275 lance - Balance of $410k 85 PD Admin Vehicle EV (2013) 75 Streets Patch Truck (1999) 100 PD Patrol Vehicle EV (2020) 75 Equipment Fund) Ambulance (Donation) Carry Over 50 Ambulance Heart Monitor 35 PD Animal Control Veh (2009) 75 PD Patrol Vehicle EV (2019) 75 Fire Engine (Prepaid $880k) 0 Carry Over PD Motorcycle EV (2008) 30 PD Radar Trailer (2009) 25 PD Parking Vehicle EV (2014) 45 EV Vehicles - 3CE Grants 20 EV Vehicles - 3CE Grants 30 EV Vehicles - 3CE Grants 30 EV Vehicles - 3CE Grants 35 $2,470 $ 600 $ 270 - $ $ 500 - $ $ 395 $ 445 $ 260
Coastal Engineering Study, Ph I Done 133 Climate Action Plan Projects 50 Climate Action Plan Projects 50 Climate Action Plan Projects 50 Climate Action Plan Projects 50 Environmental Coastal Engineering Study, Ph 2 500 Carry Over Energy Upgrades 50 Energy Upgrades 50 Energy Upgrades 50 Energy Upgrades 50 & Climate Change Rule 20A Undergr. Utility Dist. 667 Carry Over Shoreline Inf Repairs, Stairs 350 Carry Over 4th Ave. Outfall Wall - Env, Design 250 Reconst. 4th Outfall - Const 900 Shoreline Inf Repairs, FEMA $ 50 Carry Over Shoreline Inf Repairs (3rd) - Const 750 Shoreline Inf Repairs - Const 4 750 Shoreline Inf Repairs - Const 5 750 Shoreline Inf Repairs (4th) - Design 150 Shoreline Inf Repairs - Design 5 150 $5,800 $ 1,700 $ 250 - $ $ 1,900 - $ $ 1,000 $ 850 $ 100 HML Generator - Cancel Core Networks 50 IT Network Refresh 60 IT Equipment 75 IT Equipment 80 IT Equipment 85 IT IT Servers 50 Done Network Firewalls 180 Wireless Access Point 50 GIS Upgrades 30 (Vehicle & Council Chambers AV Upgrade 60 PD Records Management 200 Equipment Fund)
$920 $ 50 $ 290 - $ $ 310 - $ $ 105 $ 80 $ 85
HML Carpet Cancel PBL - Windows, Dry Rot 45 -
Library HML Exterior + Part Interior Paint Done 140 MP Project #1 - Construction 200 MP Project #2 - Design 200 MP Project #2 - Construction 200 MP Project #2 - Construction 200 Library Master Plan - Phases 2-4 100 Carry Over MP Project #1 - Donations - TBD 800 MP Project #2 - Donations TBD 800 MP Project #2 - Donations 800 MP Project #2 - Donations 800 $4,285 $ 240 $ 45 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Grand Totals $66,303 $11,827 $6,941 $9,350 $16,725 $16,170 $5,290 City Funding $57,593 $9,115 $5,958 $8,120 $15,475 $14,910 $4,015 City of Carmel-by-the-Sea
5-Year Capital Improvement Plan
Excluding Operating Budget Projects
Attachment 4
May 17, 2024
RE: CITY CONTRACT WITH VISIT CARMEL FOR DESTINATION MARKETING SERVICES Dear Mayor Potter, Council Members Ferlito, Baron, Richards and Dramov, and Administrator Rerig, As we approach the Budget Workshop on May 21, 2024, I wanted to offer additional insights into the City of Carmel’s contract with Visit Carmel.
As a reminder, prior to 2018, the City engaged an external marketing agency to serve its marketing needs – mostly branding, communications and other visitor-marketing related projects. However, with the establishment of Visit Carmel, a non-profit destination marketing organization, significant synergies and cost efficiencies emerged. Consequently, the City transitioned to contracting with Visit Carmel for its marketing needs. Our current agreement, signed in June 2021 for a three-year term, is set to expire next month. We are seeking a 5-year renewal, with the annual investment subject to Council approval as part of the City's budget review process.
The Carmel Hospitality Improvement District (CHID) and the Carmel Restaurant Improvement District (CRID) mandate that marketing programs funded by these assessments prioritize hotels and restaurants.
Consequently, our efforts focus on driving overnight stays during off-peak periods and enhancing marketing initiatives for restaurants. Fortunately, these programs indirectly benefit the City through increased transient occupancy tax (TOT) and sales tax revenue.
The City's annual payment of $120,000 to Visit Carmel serves as both an investment in our largest economic driver, tourism, and a contract for marketing services. It ensures the City has a voice on our Board by maintaining a Board seat. And it enables Visit Carmel to support not only the City but also other visitor-serving businesses (retail, art galleries) and cultural assets (Sunset Center, Pac Rep, Outdoor Forest Theater, and special events).
For example, these include projects such as:
• Destination Website CarmelCalifornia.com – Branding, design, maintenance of listings of all visitor-serving businesses and calendar of events/performances. • Official City Guide and Maps – Design, production, distribution and fulfillment of printed City guide/brochure and display maps placed throughout the Village. • Visitor Center Support – Visit Carmel is now providing financial support to Carmel Chamber to continue and possibly expand its visitor management services via its Visitor Center. • Destination Stewardship Initiative – Campaign development, in-marketing banners and signs, paid digital and print ad support, coordination with local groups. • Retail Stakeholder Support – Monthly communications with all visitor-serving stakeholders; Create marketing content, public relations and social media support for shopping/retail in general, with then additional projects for:
o Art Galleries - Marketing support for Meet the Makers, Carmel Art Festival, the Carmel Art Walk, and Carmel art galleries and artists, among other initiatives, to support the local artist community/art gallery owner.
o Wine Tasting Rooms - Creation, implementation and marketing support for Carmel Wine Walk which supports the retail wine tasting rooms (and walkable nature of the experience indirectly benefits all retail)
• Performing Arts – Work in partnership to promote performances and events at Sunset Cultural Center, as well as Pac Rep/Outdoor Forest Theater productions.
Attachment 5
• PR and Social media – Visit Carmel handles (and contracts with an agency) to target media outlets for coverage, responds to media inquiries, implements social media campaigns on behalf of the entire destination (including retail, art, events, etc). • Crisis Communications – Visit Carmel coordinates with City of Carmel staff, See Monterey and other local agencies as needed to provide timely and essential information when there is an issue (road slides, weather, flooding, fire, beach damage, etc) that affects our visitor-serving businesses and our visitors. This includes maintaining Travel Alerts to communicating directly with hotel stakeholders so that they can advise their incoming guests to posting on social media for locals and visitors.
To be clear, the $120,000 is assigned to cover actual hard costs (printing, paid advertising, outside contractors) for projects that can be classified as “City Marketing” expenses. Those funds do not go toward paying for overall destination marketing or restaurant marketing programs. Neither do they fund professional time (mine, Jeff’s, graphic design/creative work), public relations, social media, or any administrative costs. For example:
Planned FY 24-25 Hard Cost Expenditures for “City-oriented” Marketing Projects Destination Website Digital Media $ 83,100
Website Hosting and Tech Support $ 9,200
Chamber Visitor Center Support $ 30,000
Carmel City Guide and Map Brochure Printing and Distribution $ 24,063 Destination Stewardship Digital ads and programs $ 26,750 Meet the Makers event (Supports Art Galleries and Wine Tasting Rooms) $ 20,554 Carmel Wine Walk Marketing and Brochure Printing $ 22,462 Carmel Art Walk Brochure Printing (not including design and distribution) $ 2,502 Carmel Car Week Brochure Printing (not including design and distribution) $ 1,428 Carmel Art Festival Ad $ 550
$220,609
Visit Carmel recently launched a new A Storybook Kind of Place campaign highlighting the artistic heritage of our Village and it is featured on our destination website. I encourage you to explore it.
Additionally, for a detailed overview of Visit Carmel’s mission and projects, I recommend reviewing our Annual Report and Marketing Plan.
Your participation and support are invaluable to our programs. City representation at the board level guides our overall marketing direction, as well as the complex set of sub-programs under the Visit Carmel umbrella.
I hope this provides clarity regarding the City's budget allocation. Please don't hesitate to reach out with any questions.
Sincerely,
Amy Herzog
Executive Director
Visit Carmel
831.238.1849
Attachment 5