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6.C. - Page 17 of 196 FACTORS AFFECTING FINANCIAL CONDITION Pandemic and other National Challenges FY 2019-20 was the beginning of an extraordinary time in our nation. Our country, and the rest of the world, was confronted with a highly contagious coronavirus that causes Coronavirus Disease 2019 (COVID-19). The pandemic triggered a collapse of the global economy along with a public health care system crisis from which no state has been immune. On March 17, counties throughout the Bay Area issued the first in a series of shelter -in- place orders that essentially quarantined residents and closed businesses to in-person commerce and activity, including the City Hall of Redwood City. The economic impact of COVID-19 has resulted in business closures and job losses for 10.7 million Americans and an unemployment rate of 6.7 percent as of December 2020. The economic crisis has correlated to a decrease in revenue sources while community needs for essential services and new assistance have increased. For example, transient occupancy tax revenue plummeted, while the City stood up new programs to provide rental assistance, food distribution, COVID-19 testing and vaccination distribution. The full impact of the pandemic on the City's finances is not reflected in the FY 2019-20 CAFR as it only includes activity for the early phases of the pandemic through June 30, 2020. Subsequent challenges in 2020 included social unrest following the deaths of African Americans Breonna Taylor on March 13 in Louisville, and George Floyd on May 25 in Minneapolis, at the hands of their respective police departments. Resulting nationwide protests elevated the Black Lives Matter movement to a national reckoning with racial injustice across America. Concurrently, unprecedented partisanship fomented months -long anxiety surrounding a Presidential election with historic voter turnout despite the logistical challenges of the pandemic. Heated controversy over the election results ultimately culminated in an historic riot of insurrectionists at the nation's Capitol in the first week of 2021. In addition, the impacts of climate change on the environment and weather patterns brought an unprecedented number of wildfires in the summer and autumn of 2020 throughout the western United States, including California, more than doubling the millions of U.S. acres burned compared to the previous year. Redwood City's firefighters were deployed to multiple strike teams in San Mateo County and throughout the Bay Area, which was blanketed with air quality rated the worst in the world as the sun was blotted out by smoke for days at a time and emergency power shut -offs repeatedly restricted residential and commercial activity. The nation and, more specifically, Redwood City continue to navigate the lasting consequences of the pandemic and multiple concurrent crises of 2020; as a result, there remain financial, social, and environmental uncertainties that make an economic recovery difficult to predict. Local Economy The local economy exhibited signs of a healthy economy before it was thrust into a recession in March 2020, along with the rest of the nation and the world, due to the pandemic and associated government orders intended to slow the spread of COVID-19. The largest economic sectors affected were transportation, tourism and hospitality. By June 1, 2020, CalTrain reported a 97% drop in ridership; and Bay Area airports reported a 19% reduction in passenger departures for the full fiscal year 2019-2020. Redwood City Transit Occupancy Tax from hotel stays dropped by nearly 30% in fiscal year 2019-20 from the previous fiscal year (more details regarding this and other taxes are provided below). Given the health of the economy for the during the first half of fiscal year 2019-20, such annualized reductions indicate considerably greater drops in economic activity during the spring of 2020. Perhaps the most discouraging economic impact of the pandemic is unemployment. After falling to 1.6 percent in December 2019, Redwood City's unemployment rate abruptly leapt to a high of 8.9 percent in April 2020. Since that time, unemployment slowly decreased down to 4.3 percent in November 2020, but increased slightly to 5.1 percent in December 2020. 104