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City of San Leandro <br />Meeting Date: November 18, 2013 <br />Staff Report <br />Agenda Section:File Number:13-571 ACTION ITEMS <br />Agenda Number:10.C. <br />TO:City Council <br />FROM:Chris Zapata <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for 2012-13 Year-End General Fund Balance <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council designate the unbudgeted year -end General Fund <br />surplus of $3.2 million to the economic contingency reserve to mitigate the impact of <br />unforeseen events in the City. <br />BACKGROUND <br />The City Council reviewed the 2012-13 year-end report on October 21, 2013. Unaudited <br />results indicate a $3.2 million increase to the General Fund undesignated fund balance as <br />compared to the original estimate of a $1.0 million shortfall. Economic conditions indicate <br />recovery despite 8.9% statewide unemployment. Statewide median single family home price <br />is $441,000, an increase of 28% over the prior year. San Leandro’s fiscal conditions have <br />improved over original projections, the City’s unemployment rate is 7.4% and the median <br />home price is $400,000, a 32% increase over the prior year according to Trulia .com. Lower <br />mortgage rates have spurred investments in housing. Lower interest rates have also boosted <br />purchases of large ticket items, such as automobiles and home improvements, which boosted <br />sales tax by 11% in the City. Better than expected sales tax, property tax and other revenue <br />were the primary drivers in producing a positive budget balance. <br />Expenses grew at a slower pace than revenue in the prior year, which resulted in a surplus of <br />$3.2 million. <br />City Council Reserve Guideline <br />The City Council has identified an amount equivalent to 20 percent of the General Fund <br />expenditure budget for an economic contingency reserve. This reserve is intended to provide <br />a cushion against fluctuations in revenue and expenses. <br />Page 1 City of San Leandro Printed on 11/12/2013