AgdaPkt 2014-01-13 Interview, Closed and Regular

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7.1.G. - Page 17 Sales Taxes Sales tax is an important source of general fund revenue as it accounts for about 21% of total general fund revenues. Sales tax has increased 8% and 13% on a year over year basis in FY 2011/12 and FY 2012/13 respectively. Most of this increase was attributable to increased sales from new and used vehicle dealers. The City continues to rely heavily on sales tax generated by businesses engaged in selling software. A threat to this revenue stream is the progressive migration of businesses delivering software to their customers electronically (via Internet download or over dedicated phone lines) which then, under regulations adopted by the State of California Board of Equalization, provides that such products are no longer subject to sales tax. Property Taxes Property tax projections for FY 2013/14 call for a 7.5% increase in secured taxes over FY 2012/13 with indications that growth will continue to increase in FY 2014/15. Based on recent job growth it appears that the housing market is strengthening and that assessed values will be increasing over the next several years. 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 and $4.2 million annually in FY 2011/12 and in FY 2012/13 respectively, depends upon the State's complicated school financing formula and the State legislature not redirecting these revenues elsewhere. Recent changes in school financing could result in this revenue decreasing in FY 2013/14 and future years. 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 reduce 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 August 2013 the City Council approved the Disposition and Development Agreement with the development team of Hunter Storm and its financial partner Kilroy Realty. This Agreement enabled the sale of the City's Block 2 property, located along Middlefield Road, with escrow closing in October 2013, and the beginning of construction of a 300,000 square foot, two tower office building. The City additionally benefits from this project iii