AgdaPkt 2017-01-09 Closed and Joint

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6.1.D. - Page 17 at Woodside Road. Though the proposed developments have not been approved, there is strong market interest in housing construction in Redwood City. Construction of new housing units will help meet the City's and region's long-term housing challenges. In addition to the new housing projects outside of the downtown, the Planning Commission issued final approvals for architectural designs for the Stanford in Redwood City project. This was the final step in moving forward with the proposed development that was approved as part of the Stanford in Redwood City Precise Plan and Development Agreement approved by the City Council in September 2013. Phase I of the project will include the construction of 570,000 square feet of office space, a 1,057 space parking structure, a fitness center, childcare facility and a 2.4 acre publicly -accessible open space. As part of the development, Stanford is providing over $15 million in community benefits for such things as education, sustainability, public transportation studies, affordable housing and more. Long -Term Financial Planning Maintaining a sustainable budget and prudently planning for the City's current and long-term needs is a top priority for Redwood City. The City continues to focus strategically on appropriate funding strategies for annual operations, a robust capital improvement program and future liabilities. Each year, the City prepares a five-year forecast to project revenue and expenditure trends. These forecasts are an integral part of the annual budget process as the City seeks to establish and implement its priorities in a fiscally sustainable manner. The City reviews major cost drivers to anticipate and control expenses to the full extent possible and makes fiscal decisions within the framework of the forecast. The City also monitors its revenue sources to identify and plan for trends. A summary of major revenue sources and other significant financial planning items is below. Sales Tax Sales tax is an important source of general fund revenue as it accounts for almost 20% of total general fund revenues. Sales tax revenue has increased 2% on a year over year basis in FY 2015-16 but, when compared to FY 2015-16 budget, generated approximately 1% less revenue than expected. Given the cyclical nature of the local economy, the loss of retail sales tax generators such as Office City and Lyngso and the stabilizing of the rate of new vehicles sales, it is anticipated that sales tax revenue will remain flat or possibly even decline in the near future. Consistent, steady growth in the general retail category, due in part to large retailers and online sales growth in the building materials segment, and growth in the restaurant segment continue to more than offset the decreasing revenue associated with a growing number of businesses engaged in selling and delivering software digitally to their customers. Transactions of this kind are not subject to sales tax under State Board of Equalization Regulations. Regarding retail sales, it is important to note that there is a growing risk of erosion in sales tax revenue due to the increase in online retail sales. The growing trend toward online retail sales and the risk that this poses to local sales tax revenue is a regional issue, not unique to Redwood City. Property Taxes Property tax accounts for 40% of City revenue and is a key indicator of the City's economic outlook. Projections for secured taxes in Redwood City in FY 2016-17 call for an 5.5% increase over FY 2015-16 actuals with indications that growth in assessed value will continue in FY 2016-17 due to strong real estate sales, property improvements, and development. Utilities Users Taxes This City collects a voter -approved Utilities User Tax (UUT) on gas, electricity, cable and telecommunications services. UUT revenue increased 3.2% in 2015-16 compared to 2014-15, driven by an increase in P.G.&E utility rates and usage, although other sources of UUT revenues such as wireless and cable continue to decline. Following the passage of Assembly Bill 1717 in 2014, the City entered into an agreement with the State Board of iv