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6.1 B - Attachment No. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS folding/mailing machine for utility billings. The increase in improvements was related to the sewer system replacement and the recycled water distribution system. Long-Term Debt-Issues described in detail in Notes 6 and 7 to Financial Statements. Outstanding Debt(in Millions) Governmental Business-Type Activities Activities Total 2009 2008 2009 2008 2009 2008 Variance $ $ $ $ $ $ Revenue bonds 20.228 22.493 80.141 81.981 100.369 104.474 -3.929% General improvement bonds 0.000 0.170 0.000 0.170 -100.000% Taxincrementbonds 46.133 45.998 46.133 45.998 0.293% I,pans 0.169 0.212 1.876 1.903 2.045 2.115 -3.310% Accrued sickleave and vacation 9.693 8.451 0.955 0.905 10.648 9.356 13.809% - - - Total long term debt 76.223 77.324 82.972 84.789 159.195 162.113 -1.800% SPECIAL ASSE5SMENT 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, 2009, a total of$24.8 million in special assessment district debt was outstanding, issued by two 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. ECONOMIC OUTLOOK AND MAJOR INITIATIVES Redwood City is a 34 square mile community at an elevation of 25 feet which is located on the west shore of the San Francisco Bay peninsula midway between San Francisco (25 miles to the north) and San Jose (17 miles to the south). The number of San Mateo County residents employed remains well below the peak levels reached in 2001. As of June 30, 2001 there were an estimated 420,100 employed residents in San Mateo County while as of June 30, 2009 there were an estimated 348,200 employed residents. All quoted job numbers are from the State of California Employment Development Department and are not seasonally adjusted. According to information published by NAI BT Commercial Real Estate, the vacancy rate for commercial office space in San Mateo County was 19.4% as of June 30, 2009. This compares unfavorably to the vacancy rate of 12.6%as of June 30,2008. In FY 2008/09 sales t� revenues declined by $2.6 million, from $18.1 million in FY 2007/08 to $15.5 million. The single largest factor behind this decline was a $1.0 million drop in sales tax from the sales of new vehicles. The City also experienced a $600,000 decrease in sales t� from the general retail sector. Despite the current economic malaise, Costco, one of the City's largest sales t� generators, opened a reconstructed 160,000 square foot store with 12 gas pumps in October 2009. We believe that Costco's investment is reflective of the positive long-term economic fundamentals present in Redwood City and the surrounding area. Redwood City's sales t� revenue has also been significantly affected by local software development firms delivering more of their products electronically. Under California state law, sales and use tax applies to the purchase or consumption of tangible personal property. The State Board of Equalization, the regulatory authority 12