DANA POINT'S ECONOMIC CONDITION AND OUTLOOK
Dana Point is a city of approximately 6.7 square miles. Located on the southern coast of Orange County, California, the City has a population of approximately 37,000.
The City serves more than 2 million of visitors each year, many of whom are drawn by the small boat harbor, beaches, parks, golf courses and resorts in the City. The City currently has two five-star resort, one four-star resort, ten hotels and motels, and a 29 unit bed-and-breakfast inn. The City's coastal resources continue to draw visitors who, in turn, support the visitor-oriented commercial establishments within the City.

Transient occupancy taxes continue to be the City's largest single revenue source, representing 33.1% of General Fund revenues in fiscal 2002. In fiscal 2002, transient occupancy tax revenues were up by $1,028,368, or 16.2% to $7,348,708.  This represents a record amount since the City was incorporated. This represents an all-time record for this revenue source since the City incorporated and was due in large part to the opening of the St. Regis Monarch Beach Resort which opened in 2001.

Historically, sales tax revenues have tended to move along the same trend lines as transient occupancy taxes. This is because many of the City's businesses are heavily dependent upon visitor traffic for their sales. In fiscal 2002, the City registered an increase of $230,728, or 6.8%, in sales tax revenues, which represent the City's second largest General Fundd revenue source.  As with transient occcupancy taxes, this increase is attributable mainly to increased revenues from the St. Regis Monarch Beach Resort.  x revenues. Seven of the top 25 tax producing businesses were restaurants, five were gas stations and four were supermarkets. Dana Point remains relatively low (compared to other Orange County cities) in per capita sales tax generation. This is due in large part to the lack of substantial retail centers (shopping malls, auto dealerships, etc.) which would serve to bring residents from outside the City here to shop. As a result, Dana Point's largest sales tax generators continue to be the visitor serving businesses, such as restaurants and hotels. The lack of such common retail businesses as clothing, furniture and household appliances forces most Dana Point residents to make major purchases in neighboring cities.

Following an 82% drop in fiscal 1998, new home construction staged a substantial increase in 1999, surging by 300% to 44 units. In addition, there was 13,380 square feet of new commercial construction in fiscal 1999, compared to zero in 1998. The total valuation of the new construction in fiscal 1999 was $15,620,119, of which $14,448,219 was residential and $1,171,900 was commercial. Dana Point is considered to be essentially "built out", with limited undeveloped areas for new construction. The largest contiguous undeveloped parcels are located in the Headlands and Monarch Beach areas of the City. Most of the new construction in fiscal 1999 occurred in the Ritz Pointe development in the Monarch Beach area of the City. The Headlands area has not been developed, but may ultimately include a combination of open space, residential, visitorserving and commercial construction. After four years of an essentially flat housing market, citywide assessed property valuations were up substantially in fiscal 1999. They rose by $288 million, or 8.1%, to $3.863 billion. This marks the first year assessed valuation has surpassed the previous peak of $3.778 million set in 1993.

Fiscal Year 1998-99 saw a continuation of the trend started the previous year. Total valuation for the year was over $125,000,000 with significant construction activity in both residential and nonresidential. Not accounting for the Monarch Beach Hotel, a total of 19,369 square feet of new commercial construction was started or completed. New construction is a reflection of theover all strength of the County of Orange as well as the City. As existing office and commercial buildings have filled to 100% occupancy in the City and surrounding area, tenants are moving into the city and creating pressure for additional office and commercial space. While building activity in the City will slow in the next few years, the overall growth potential for the region will remain high.

On December 6, 1994 losses in the Orange County Investment Pool (managed by the Orange County Treasurer/Tax Collector) led to a bankruptcy filing by the County of Orange (the"County"). At the date of the bankruptcy, the City had $15,859,985 invested in the Orange County Investment Pool ("OCIP"), of which $12,828,853, or 80.9%, has subsequently been recovered. On June 11, 1996 the County emerged from bankruptcy. As of June 30, 1999, the City was still owed $3,031,132; however, recovery of this amount is dependent upon the outcome of litigation between the County and a number of third parties allegedly involved in the OCIP failure. During fiscal 1998 and 1999, the County reached out-of-court settlements with several of the defendants, which is expected to result in the City's recovery of a substantial portion of the remaining balance owed the City.

The City anticipates continued moderate growth in revenues during the next several years as additional hotel and commercial development is completed.