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6.1.F. - Page 18 In FY 2011/12 the City continues to experience a decline in sales tax derived from business-to-business transactions with revenues from this sector dropping almost 10%from the prior year. Property Taxes Property tax projections for FY 2012/13 call for a 2.8% increase in secured taxes over FY 2011/12 with indications that growth will continue to increase modestly in FY 2013/14. The downturn in the housing market has affected the San Francisco Peninsula, although not as severely as some areas of the State. Based on property transfer tax revenues and supplemental secured taxes it appears that the housing market is stabilizing and that assessed values will be increasing modestly in the near term. Educational Revenue Augmentation Fund Refunds In FY 1992/93 and FY 1993/94, the State shifted property taxes from cities, counties, and special districts to school districts to supplant funding that the State was providing to school districts. The funds shifted from cities, the county, and special districts are placed into the Educational Revenue Augmentation Fund (ERAF) by the county controller. The controller then disburses these funds to school districts based upon the formula prescribed by State law. Any funds remaining in ERAF (after the distribution to the school districts) are returned to the cities, county, and special districts in proportion to the amount they contributed to ERAF. The continued receipt of these funds, which amounted to $3.5 million annually in FY 2010/11 and in FY 2011/12, depends upon the State's complicated school financing formula and the State legislature not redirecting these revenues elsewhere. Long-Term Financial Planning Economic development remains a priority of the City Council. With the demise of its Redevelopment Agency, the City continues to move private development forward through innovative planning, efficient use of its capital improvement program, and by enabling development of City-owned property. Zoning changes to encourage mixed use residential/commercial and high density housing reduces the time-to- market for these desirable projects. Additionally, through these zoning designations the City creates Priority Development Areas (PDAs), which focus on improving the linkage between jobs, housing, and transit. Most significantly, grant funding from the Metropolitan Transportation Commission is overwhelmingly provided to cities with PDAs. Redwood City has three such Areas, providing the City access to valuable transportation funds for pedestrian and vehicular improvements in and around the Downtown. Essential to the development community is surety of process and predictability of time-to-market. Since the adoption of the Downtown Precise Plan in 2010, the City has improved its project review efforts by combining Engineering, Planning, Building, and Public Works into a unified Community Development Department. Efficiencies in plan review and permitting enable the City to process development permits for large projects in the Downtown in just over three months from submittal to approval. In May 2012 the City Council selected the Hunter Storm team to develop the City-owned Block 2 site Downtown. Hunter Storm, with Kilroy Realty Corporation, proposes to build approximately 300,000 square feet of Class A office space on this site adjacent to the Redwood City Caltrain Station. The City is relocating a box culvert from the site so office construction can begin Spring 2013. Simultaneously, the City is discussing with Lowe Enterprises the potential for development of 100 units of housing on another City-owned site also adjacent to the Caltrain Station. In and around the downtown, in large part spurred by the Downtown Precise Plan, housing of various scale and size is in the construction pipeline. In 2012 projects at 640 Veterans Boulevard, 2580 EI Camino Real, and 201 Marshall Streetjoined 333 Main Street as projects under construction. These projects contribute 653 units of new housing stock. Anticipated to break ground in early 2013, projects at 145 Monroe Street and 490 Winslow Street will contribute another 371 housing units within the downtown. iv