AgdaPkt 2017-12-18 Special Joint SA PFA

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City of Redwood City Management’s Discussion and Analysis For the fiscal year ended June 30, 2017 11 expenditures in the Capital Outlay Fund (for non-capitalized transportation project expenditures), the Special Gas Tax Street Improvement Fund, the Transportation Fund, and the Traffic Mitigation Fees Fund, offset by a decrease in the Transportation Grants Fund and Traffic Mitigation Fees Fund. Environmental support and protection decreased $1.6 million mostly due to an increase in the internal service funds’ operating income in FY 2016-17, of which a large portion of this income is offset against environmental support and protection expenses. Leisure, cultural, and information services increased $2.0 million due to increased costs to operate the Library, including the literary services and neighborhood libraries and outreach. Also included in this increase are increases in various Parks, Recreation, and Community Services Department categories, such as community services and special interest programming/marketing. Policy development and implementation increased $2.6 million due to increases in management/policy execution and the decrease in the reimbursement from other funds in FY 2016-17 as a result of not eliminating the $4.1 million of right-of-way rent received from the Water and Sewer Funds, which had been previously presented as an offset to policy development and implementation expenses. The increases in policy development and implementation expenses was partially offset by a decrease in legal services and less expenditures in the capital outlay fund related to non-capitalized policy development and implementation expenditures (projects). During FY 2016-17 there was an increase of $40 thousand in interest expense related to the outstanding 2013 Public Financing Authority Refunding Lease. BUSINESS-TYPE ACTIVITIES Business-type activities prior to transfers increased the City’s net position by $17.8 million in FY 2016-17. Key elements accounting for increases or decreases in revenues and expenses are as follows: Business-type revenues increased primarily due to the increase in utility rates and a large increase in parking in-lieu fees collected. There was a decrease in Sewer Fund revenues in FY 2016-17 due to a small increase in the value of our investment in the Silicon Valley Clean Water Authority (SVCWA) of $153 thousand during the FY 2016-17, compared to an increase of $10.8 million in FY 2015-16. A large part of this increase in the value of the investment in FY 2015-16 was due to our contribution of $10 million to partially supplant our portion of the bond issued by the Authority in FY 2015-16. Port revenues increased by $269 thousand mostly due to increased user fees. The water utility’s expenses were higher in FY 2016-17 due to an increase in the rates charged for water by the San Francisco Public Utilities Commission, an increase in employee costs, supplies and services, depreciation, and insurance costs and claims, offset by decreases in maintenance, utility costs, and contractual services. Sewer utility expenses increased by $3.1 million, not including the $10.8 million payment to SVCWA in FY 2015-16. The increase consists of an increase in payments to SVCWA for wastewater treatment, and debt service reimbursement for SVCWA debt issued for wastewater system capital improvements, as well as an increase in employee costs, maintenance, supplies and services, depreciation, and insurance costs and claims, offset by decreases in utility costs and non-capitalized project costs. The expenses of the parking fund essentially stayed the same, with a decrease of only $773 from the prior fiscal year. 6.1.E. - Page 34