AgdaPkt 2016-01-11 Closed and Joint SA PFA

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6.1.E. - Page 18 entity-wide balance sheet, and the balance sheet of the proprietary funds.The new balance sheet presentation of this existing obligation creates a deficit in the unrestricted portion of the City's total unrestricted equity (i.e. Unrestricted Net Position), and negatively impacts the equity of the proprietary funds. GASB 68 also changes the pension expense calculation from actual contributions made to a pension plan, to an expense based on actuarial calculations. FACTORS AFFECTING FINANCIAL CONDITION Local Economy The local economy is recovering from the "Great Recession" more robustly than the national economy with the unemployment rate in San Mateo County decreasing to 3.3% as of June 2015 from 4.2% as of June 2014, which is consistently lower than the State's unemployment rate of 6.2% and the national rate of 5.5%. The number of employed residents in the County increased from 388,300 in June 2014 to 426,600 in June 2015. The Redwood City commercial real estate market continues to exhibit signs of high demand with the citywide vacancy rate stable at 9.61% as of the second quarter 2015 compared to 9.24% as of the second quarter 2014. Vacancy rates as of June 2015 in Redwood City's downtown area are notably lower, with retail vacancy down to 2.5% from 7% last year. The office space vacancy rate has decreased to 3.2% as of June 2015 compared to 4.4% as of June 2014. Countywide commercial vacancy rates are at 11.3% as of second quarter of 2015, a fourteen year low. We believe these indicators paint a positive picture of the local economy and provide a solid underpinning for economic growth continuing into the near future. Balanced economic development remains a priority of the City Council. With the State mandated demise of its Redevelopment Agency, the City continues to move private development forward through thoughtful and innovative planning and efficient use of its capital improvement program. Furthermore, the City focuses on providing affordable housing opportunities, which will allow the City's workforce to continue to contribute to the local economy. Economic Development Initiatives The Downtown Precise Plan (DTPP) is one tool the City has used to foster economic growth and meet the unprecedented regional housing challenges. The first phase of development under the DTPP has included a number of housing developments. Since the 2011 adoption of the DTPP, planning entitlements have been issued for 1,608 net new residential units, all of which are either currently under building permit review or under construction and expected to be completed in 2017 or sooner. Since August 2014, applications for six downtown office developments have been submitted totaling more than 500,000 square feet.Three of the six office projects have received Planning entitlements. It appears that one additional office development will be able to be processed under the Downtown Precise Plan, with future development proposals requiring General Plan amendments. The process for the first office development application began two years ago. In August 2013 the City Council approved a Disposition and Development Agreement for the development of the City's Block 2 property, located along Middlefield Road. The City's sale of this property closed in October 2013 and construction of the Crossing 900 office building started shortly thereafter. Building A of the project, which was completed and occupied in November 2015, will bring approximately 1,000 new employees to support downtown retail businesses. Tenant improvements for Building B, which is also fully leased, is expected to begin around the end of 2015 and will bring approximately 400 new employees. In addition, 900 new public parking spaces will be available nights and weekends to support the evening and weekend live and movie theatre scenes. In October 2014, the City approved a Property Disposition Agreement with Greystar for the sale of City property for inclusion in a housing project. The property was acquired in 1997 to assist in the construction of the Jefferson Street undercrossing project. The remnant parcels were jointly owned with Samtrans, whose approval for the iii