AgdaPkt 2017-12-18 Special Joint SA PFA

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iii FACTORS AFFECTING FINANCIAL CONDITION Local Economy The local economy is strong. As of June 30, 2017, the unemployment rate in San Mateo County dropped from 3.3% to 2.9%, and Redwood City’s unemployment rate was 2.7%. Both San Mateo County and Redwood City unemployment rates are consistently lower than the State’s unemployment rate of 4.9% and the national rate of 4.5%. The number of employed residents in the County increased slightly from 430,900 in June 2016 to 435,300 in June 2017. The Redwood City commercial real estate market continues to exhibit signs of high demand with the citywide vacancy rate stable at 3.8% as of the second quarter 2017. Vacancy rates as of June 2017 in Redwood City’s downtown area are stable due to new construction of retail space, with retail vacancy up slightly to 3.4% from 2.5% last year. The office space vacancy rate in downtown has dropped to 1.5% as of June 2017 compared to 4.4% as of June 2016. We believe these indicators paint a positive picture of the local economy and provide a solid underpinning for steady economic growth continuing into the near future. Recognizing that local and regional growth have exacerbated long-term mobility and affordable housing challenges, the City Council has taken numerous steps to address these issues over the past several years. Over the past fiscal year, application of the housing impact fee (adopted in 2016) allowed for funds to be granted to non-profits, allowing for a 55-unit and a 7-unit apartment building to be purchased, and deed restricted for affordable housing for at least 55 years. In addition, 105 additional deed-restricted affordable units were approved downtown, and another 117 are under construction. Additional affordable housing units are currently under review outside the downtown area. The City Council has also directed staff to complete a citywide transportation study and will undertake several related planning projects, including the El Camino Real Corridor Plan and the Downtown Transit Center and Broadway Streetcar/Urban Circulator Study. Economic Development Initiatives With the adoption of the Downtown Precise Plan in 2011, Downtown Redwood City has become a vibrant district where Redwood City residents enjoy working, living, and playing. The opening of the Crossing 900 Building, and four other office buildings under construction totaling 500,000 new square feet, has made downtown a desirable location for new businesses to locate. The close proximity to a Caltrain station, easy freeway access, and central location to San Francisco and San Jose make Redwood City one of the fastest growing locations for startup businesses to locate. In addition to the new office developments, Redwood City is also seeing a growth in housing. New housing units in the Downtown, along with several new projects located in close proximity, are helping to not only meet a much-needed regional housing need, but also provide housing for the City’s growing employment base. Phase I of the Stanford Redwood City project is under construction and consists of 570,000 square feet of office space, a 1,057 space parking structure, a fitness center, a 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. The City expects greater revenues from development related fees, as the Council adopted an updated fee schedule that goes into effect in FY 2017-18. 6.1.E. - Page 14