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ALAMEDA COUNTY REDEVELOPMENT AGENCY - SAN LEANDRO JOINT PROJECT AREA MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2008 Major Fund Financial Analysis As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with finance- relatedlegal requirements. Commercial Improvement Fund -Agency uses this fund as its chief operating fund to account for redevelopment expenditures from tax increments. At June 30, 2008, the fund balance was $11,751,137. San Leandro Housing Fund By law a redevelopment agency must set aside 20 percent of the gross tax increment revenue in a special revenue fund for low and moderate-income housing. At June 30, 2008, the fund balance was $5,635,270. Budget Verses Actual Comparison The primary differences between the budget and the actual revenues and expenditures for the year: Commercial Improvement Fund • Property tax increments revenue was $1,499,584 under budget. • Public improvement expenditure was $735,083 over budget. • Economic development expenditure was $263,500 under budget. • Redevelopment housing program expenditure was $2,749,361 under budget. • Administrative expenses were $283,343 under budget. San Leandro Housing Fund • Property tax increments revenue was $201,379 under budget. • Redevelopment housing program expenditure was $1,358,052 under budget. The Agency utilizes a projection of future tax increment receipts to develop the budget each fiscal year. The projections used for the development of the budget underestimated tax increment revenue by the amount noted and was most likely due to residential developments that occurred in San Leandro and Ashland. The Agency utilizes a projection of future tax increment receipts to develop the budget each fiscal year. The projections used for the development of the budget overestimated tax increment revenue by the amount noted and was due to a combination of over-optimistic expectations far tax increment revenue by staff and aslow-down in the housing market resulting in fewer and lower-value sales. As a result of the higher tax increment projections, the Pass-through budgets were overstated.