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6.A. - Page 17 of 191 FACTORS AFFECTING FINANCIAL CONDITION Local Economy The local economy continues to exhibit signs of a healthy economy. Local economists are not forecasting an economic downturn during the next fiscal year; however, it is likely that a downturn will occur at some point within the next five years. As of June 2019, the unemployment rate in San Mateo County was 2.2 percent, which is slightly higher than the May 2019 level of 1.7 percent (lowest level in almost 20 years). The City of Redwood City's unemployment rate as of June 2019 was 2.0 percent, which is considered full employment. Both San Mateo County and Redwood City unemployment rates are consistently lower than the State's unemployment rate of 4.2 percent and the national rate of 3.7 percent. The number of employed residents in the County increased by 2.0 percent from 438,700 in June 2018 to 447,300 in June 2019. The Redwood City office market citywide vacancy rate is 7.1 percent, reflecting higher vacancy in the Redwood Shores area. Retail space vacancy in the downtown area remains at 3.7 percent, but the construction of two new mixed-use projects will add new retail space to the inventory. 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. 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 close proximity to a Caltrain station, easy freeway access, and central location to San Francisco and San Jose has made downtown a desirable location for new businesses to locate. Redwood City has become one of the fastest growing locations for startup businesses to locate, and with the addition of new office developments, new employment opportunities are available for local residents. To further the downtown transformation, the recently adopted Retail Action Plan will focus the City's efforts on developing a diverse range of retail businesses that sell local goods for purchase by visitors, residents and workers, which would generate additional sales tax revenue. Phase I of the Stanford Redwood City project was completed in March 2019, consisting 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 will provide over $15 million in community benefits for such things as education, sustainability, public transportation studies, affordable housing and more over the course of two phases. Additionally, 740,000 square feet of new office space has been approved and will start construction soon. In addition to the new office developments, Redwood City is also seeing a growth in housing. New housing units in and around the Downtown are helping to address regional housing needs and provide housing for the City's growing employment base. Over one million square feet of housing has been approved and is currently under construction. Long -Term Financial Planning The City Council has a history of taking intentional, proactive, and strategic steps to ensure the long-term fiscal sustainability of the City, including adopting a structurally balanced annual budget, funding long-term needs, and maintaining a 15 percent General Fund reserve level. W