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Dana Point City Council met on Tuesday, Feb. 18 and heard a presentation on the city’s long-term financial plan (LTFP).
The city’s first published LTFP was in the fiscal year 2016 and fiscal year 2017 budget. In 2018, the city council adopted new financial policies addressing its LTFP, and council directed that the LTFP be updated annually. The most recent update was prepared in spring 2019, prior to the adoption of the current budget.
Long-term financial planning includes projecting revenues and expenditures out at least five years and must incorporate implementation of strategic plan goals. Projections made by Assistant City Manager Mike Killebrew went an additional year, out to FY 2027.
The city is heavily dependent on the transient occupancy tax (TOT), as it makes up about 30% of the budget.
“TOT is always a risk. If there are delays in the new hotels, that will have an impact,” Killebrew said. “We will keep that in our planning and make sure we continually discuss where those hotel projects are in coming to fruition.”
The city anticipates partial revenue to come from the Wave Hotel in FY 2023, Headlands Hotel in FY 2024 and the new hotel in the Dana Point Harbor in FY 2025.
Killebrew added that short-term rentals contribute roughly $750,000 to the annual budget.
“I know there’s been a lot of discussion on (short-term rentals); there’s a council committee working on this,” Killebrew said. “I just want people to know what we’re dealing with.”
As far as future expenses, Killebrew anticipated growth in the Orange County Sheriff’s Department contract, as well as salaries and wage growth.
No vote was needed following the presentation, and council received and filed the agenda item. There will be a mid-year financial report provided on March 3, a formal draft update to the Long-Term Financial Plan on May 5 and updates to the FY 2021 budget on June 2.