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<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
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<br />SPECIAL AsSESSMENT DISTRICT DEBT
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<br />Special assessment districts in different parts of the City have also issued debt to finance infrastructure and facilities
<br />construction in their respective districts.
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<br />At June 30, 2005, a total of $35.7 million in special assessment district debt was outstanding, issued by three
<br />special assessment districts. This debt is secured only by special assessments on the real property in the district
<br />issuing the debt, and is not the City's responsibility, although the City does act as these Districts' agent in the
<br />collection and remittance of assessments.
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<br />ECONOMIC OUTI..OOK AND MAJOR INrrIA TlVES
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<br />Redwood City is located on the west shore of the San Francisco Bay peninsula midway between San Francisco, 25
<br />miles to the north, and San Jose, 17 miles to the south.
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<br />The number of jobs in San Mateo County remains well below the levels reached before the 2001 recession. As of
<br />June 30, 2001 there were an estimated 420,100 jobs in San Mateo County while as of June 30, 2005 there were an
<br />estimated 350,100 jobs. This latter amount is slightly below the estimated number of jobs (352,500) as of June 30,
<br />2004, which gives us hope that we are nearing the end of the job shedding phase and that we will begin to see jobs
<br />added in the near future. All quoted job numbers are from the State of California Employment Development
<br />Department and are not seasonally adjusted.
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<br />The economic recession that the nation entered into in the spring of 2001 has been experienced locally as well.
<br />Given the San Francisco Bay Area's reliance upon technology and related industries, this slowdown has had a
<br />marked impact on several of the City's revenues that are sensitive to the level of business activity occurring in the
<br />surrounding area. While revenues have shown recent improvement, several key revenues, such as sales tax and
<br />transient occupancy taxes remain below the levels they were at in FY 2000/01. In year-to-year comparisons from
<br />FY 2003/04 to FY 2004/05, sales tax revenues have increased 5.10% from $15.7 million to $16.5 million, transient
<br />occupancy taxes have increased 21.2% from $1.84 million to $2.23 million (resulting, in part, from a voter-
<br />approved transient occupancy tax rate increase from 8% to 10% in December 2003) while development-related
<br />revenues have declined 8.3% from $1.92 million in FY 2003/04 to $1.76 million in FY 2004/05.
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<br />Redwood City's sales tax revenue has been significantly affected by local software development firms delivering
<br />more of their products electronically. Under California state law, sales and use tax applies to the purchase or
<br />consumption of tangible personal property. The State Board of Equalization, the regulatory authority that oversees
<br />the state's sales and use tax laws, has adopted a regulation that exempts electronically delivered canned software
<br />from the sales and use taxes. Software that is delivered via a tangible medium (CD or tape) is, however, subject to
<br />sales and use taxes.
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<br />According to information published by NAI BT Commercial Real Estate, the vacancy rate for commercial office
<br />space in San Mateo County was 28% as of September 30, 2005. By comparison, in 1999 the vacancy rate for
<br />commercial office space was 1.2%. Redwood City currently had over 2.7 million square feet of vacant office space
<br />out of a total inventory of 9.9 million square feet as of September 30. City staff is confident that Redwood City
<br />will prosper in the coming years as the technology industry regains its strength.
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<br />Although technology companies (such as Informatica, Broadvision, Electronic Arts, and Oracle) are a substantial
<br />component of the City's economy, other sectors provide important economic support and have enabled the City to
<br />withstand the downturn in the technology sector. In addition to the technology sector, we have manufacturing
<br />(Tyco Electronics), biotechnology (Maxygen, Abbot Vascular Devices, and Genelabs), auto dealers (both domestic
<br />and import), building materials, two hospitals (Kaiser and Sequoia), a University of California extension campus, a
<br />community college (Cañada), a high school (Sequoia), and a variety of retailers (Costco, K-Mart, Mervyns, and
<br />Target). The Port of Redwood City is the only deep-water port on the San Francisco Bay south of San Francisco,
<br />serving the entire region as a key entry point for many types of materials contributing to the local economy.
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