AgdaPkt 2018-12-17 Joint Special

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6.G. - Page 45 of 187 City of Redwood City Management's Discussion and Analysis For the fiscal year ended June 30, 2018 Long -Term Debt Additional information can be found in Notes 6 and 7 of this report. Outstanding Debt (in Millions) SPECIAL ASSESSMENT DISTRICT DEBT Special assessment districts in different parts of the City have also issued debt to finance infrastructure and facilities construction in their respective districts. At June 30, 2018, a total of $12.4 million in special assessment district debt was outstanding, issued by three special assessment districts. This debt is secured only by special assessments on the real property in the district issuing the debt, and is not the City's responsibility, although the City does act as these Districts' agent in the collection and remittance of assessments. PRIVATE PURPOSE TRUST FUND DEBT On February 1, 2012, the Redevelopment Agency of the City of Redwood City was dissolved pursuant to California State law, and as of that date, the long-term debt associated with the former Redevelopment Agency was transferred to a private purpose trust fund for the Successor Agency. At June 30, 2018, the Successor Agency had tax allocation bonds outstanding in the amount of $52.6 million, including principal and interest. ECONOMIC OUTLOOK AND NEXT FISCAL YEAR'S BUDGET Redwood City, like many cities, relies heavily upon property taxes and sales taxes to finance general governmental activities. In FY 2017-18, these two revenue streams accounted for approximately 41% and 16% of general fund revenues respectively. In FY 2017-18, the City continued to experience significant gains in property tax revenue, with an increase of 11.0% in the general fund. The increase in property tax revenue is attributed to the turnover of real estate properties and booming housing market. General fund sales tax revenue decreased by 0.8%, continuing a trend from the prior fiscal year. The decrease in sales tax revenue reflects a change in consumer spending habits, where online purchasing is growing and consumers are spending more on non-taxable "experiences" rather than material goods. Notably, lower sales tax revenue in the general fund is due to statewide sales tax return processing delays by the California Department of Tax and Fee Administration (CDTFA). For the City to recognize revenue in FY 2017-18, the revenue is required to be received within 60 days of year-end (June 30th). As a result, any 18 224 Governmental Business -Type Activities Activities Total 2018 2017 2018 2017 2018 2017 Variance Revenue bonds 63.886 66.890 63.886 66.890 -4.49% Refunding lease 0.348 1.035 0.348 1.035 -66.38% Accrued sick leave and vacation 12.020 11.556 0.961 0.915 12.981 12.471 4.09% Total long term debt 12.368 12.591 64.847 67.805 77.215 80.396 -3.96% SPECIAL ASSESSMENT DISTRICT DEBT Special assessment districts in different parts of the City have also issued debt to finance infrastructure and facilities construction in their respective districts. At June 30, 2018, a total of $12.4 million in special assessment district debt was outstanding, issued by three special assessment districts. This debt is secured only by special assessments on the real property in the district issuing the debt, and is not the City's responsibility, although the City does act as these Districts' agent in the collection and remittance of assessments. PRIVATE PURPOSE TRUST FUND DEBT On February 1, 2012, the Redevelopment Agency of the City of Redwood City was dissolved pursuant to California State law, and as of that date, the long-term debt associated with the former Redevelopment Agency was transferred to a private purpose trust fund for the Successor Agency. At June 30, 2018, the Successor Agency had tax allocation bonds outstanding in the amount of $52.6 million, including principal and interest. ECONOMIC OUTLOOK AND NEXT FISCAL YEAR'S BUDGET Redwood City, like many cities, relies heavily upon property taxes and sales taxes to finance general governmental activities. In FY 2017-18, these two revenue streams accounted for approximately 41% and 16% of general fund revenues respectively. In FY 2017-18, the City continued to experience significant gains in property tax revenue, with an increase of 11.0% in the general fund. The increase in property tax revenue is attributed to the turnover of real estate properties and booming housing market. General fund sales tax revenue decreased by 0.8%, continuing a trend from the prior fiscal year. The decrease in sales tax revenue reflects a change in consumer spending habits, where online purchasing is growing and consumers are spending more on non-taxable "experiences" rather than material goods. Notably, lower sales tax revenue in the general fund is due to statewide sales tax return processing delays by the California Department of Tax and Fee Administration (CDTFA). For the City to recognize revenue in FY 2017-18, the revenue is required to be received within 60 days of year-end (June 30th). As a result, any 18 224