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6.1 B - Attachment No. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS Parking fines were less than budget by $131,000 due to new legislation which directed more fine revenue to the State. Net decrease in fair value of investments was not anticipated, and therefore not budgeted as the City's general fund experienced a net $.9 million loss on investment with the San Mateo County Pool due to the Lehman Brothers bankruptcy. Charges for services were $.2 million less than budgeted primarily due to a decline in plan checking and planning services revenue related to decreased construction activity, offset by unanticipated increases in recreation program fees,and increased engineering services related to the Preserve in Redwood Shores. Expenditures, overall,were$3.6 million less than budgeted primarily due to an unspent appropriation of$.5 million for the City's General Plan which is encumbered as of June 30,2009, savings in law enforcement of$.4 million due to vacancies, $.3 million additional savings from the prepayment of retirement contribution to Ca1PERS, and citywide vacancies due to a temporary hiring freeze across departments. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets - At the end of FY 2008/09, the City had $371.6 million, net of depreciation, invested in a broad range capital assets used in governmental and business-type activities, as shown in the table below. Additional information on the City's capital assets can be found in Note 4 and Note 16 of this report. Capital Assets at Year-end(in Millions) Governmental Business-Type Activities Activities Total 2009 2008 2009 2008 2009 2008 Variance $ $ $ $ $ $ Lan d 34.105 29.3 04 3.4 48 3.44 8 3 7.55 3 32.7 52 14.6 5 9% Street� 101.113 99.439 101.113 99.439 1.683% Construction in progress 10.419 29.133 22.955 42.012 33.374 71.145 -53.090% Buildings 80.956 62.661 56.832 53.802 137.788 116.463 18.311% Equipment 20.175 19.666 1.445 1.390 21.620 21.056 2.679% Improvements 13.705 13.705 112.377 101.537 126.082 115.242 9.406% Harbor improvements 3.446 3.440 3.446 3.440 0.174% Parks,bridges, etc. 27.346 26.356 27.346 26.356 3.756% Traffic signals 2.661 2.452 2.661 2.452 8.524% Storm drains 9.612 8.370 9.612 8.370 14.839% Less accumulated depreciation 83.332 77.054 45.688 42.398 129.020 119.452 8A10% Total capital assets 216.760 214.032 154.815 163.231 371.575 377.263 -1.508% Governmental Activities The substantial (64%) decrease in Construction in Progress is driven by the completion of construction projects in connection with the Redwood Shores library which translated into increases in building, the completion of street improvements, and the completion of levee improvements, which were subsequently transferred to storm drains. Land increased due to the purchase of the Cemex property. Equipment increased primarily due to the completion of the Council Chamber audio visual system. Parks increased due to the replacement of artificial turf playfields at Hoover Park. Business-Type Activities The $19.1 million decrease in Construction in Progress resulted primarily from the write off of the Port construction in progress associated with pollution remediation to an extraordinary item. Buildings increased due to the increase in the Recycled Water Plant. Equipment increased primarily due to the purchase of a new 11