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City braces for growth slowdown: Report: Housing prices to stabilize as Redwood City officials consider new revenue streams
May 15, 2017, 05:00 AM By Anna Schuessler Daily Journal

Redwood City officials will broaden their perspectives on the city’s future to its role in the region and position in the face of an uncertain national economic climate following a sobering report on the city’s economic indicators presented to the City Council Monday.

Economist Jon Haveman predicted the city may experience the slowing employment growth already documented in the state and region, which could have a delayed effect on sales and property taxes, the city’s two largest sources of revenue in the city’s 2015-16 fiscal year. Though Haveman noted the city’s home prices are high by regional standards, he said a decline in the last year may bring relief to Redwood City residents, who he said have experienced a tightening housing market as the city’s population grew faster in the last five years than San Mateo County’s population.

Councilwoman Alicia Aguirre, also a member of the council’s finance and audit subcommittee, said the information Haveman presented was eye-opening, highlighting the range of trends city officials must weigh as they make decisions about Redwood City’s future. As chair of the City/County Association of Governments and commissioner with the Metropolitan Transportation Commission, Aguirre said Haveman’s report inspired her to think about how regional projects she and other leaders are working on can address challenges the city is facing.

“As I was listening to that, I was listening with all the hats that I wear,” she said.

From affordable housing to the city’s commute patterns and infrastructure needs, Haveman’s report marked the city’s position on many issues Aguirre said she encounters in the regional bodies upon which she serves. She said she was encouraged by Haveman’s analysis of the city’s housing stock, which showed permits for the construction of new residential buildings had grown faster between 2014 and 2015 than nearby areas, while permits dropped in San Mateo County and the Bay Area as a whole during that time.

“I’m happy to see that housing is adequate for the growth that is expected of us,” she said. “Because rents are coming down, I’m hoping we’ll be able to keep more people here.”

But she said Haveman’s less rosy perspective on indicators such as the city’s employment growth rate, which he said would follow the Bay Area’s suit in falling to 3 percent from 4 percent, puts the city’s budget decisions in the context of regional, state and national policies. Well aware city economies based solely on one industry or service have struggled with cooling economic conditions, Aguirre said she is excited about the variety of developments planned for the city, such as Stanford University’s new Redwood City office campus, and to explore expanding revenue opportunities within city fixtures such as the Port of Redwood City.

For Vice Mayor Ian Bain, Haveman’s less than optimistic perspective was the most realistic forecast he had seen recently, and validated the council’s conservative approach to managing money.

Also on the council’s finance and audit subcommittee, Bain found especially troubling the city’s income inequality trends, which Haveman found to closely mirror national trends indicative of increasing income inequality. Haveman’s report showed the bottom 20 percent of households in the city receive less than 5 percent of the city’s total income, while the top 20 percent of households receive more than 50 percent of all income.

“If consumers don’t have money to spend, the economy suffers,” Bain said in an email. “That’s why minimum wage is important.”

Though Haveman’s report acknowledged California’s new minimum wage of $10.50 for companies with more than 26 employees, which went into effect Jan. 1, could mitigate the area’s rising cost of living for low-income residents, he did not see an appetite for such a policy from the presidential administration. Haveman was similarly concerned about the president’s open dislike for other measures that could stimulate spending, such as an increase in entitlements or health insurance coverage.

“[The president’s] promises on all these issues all have the ability to impact the economy negatively,” said Haveman.

He said the uncertainty caused by the mix of federal, state and local policies may make for a more volatile stock market, which could, in turn, discourage consumer spending.

“When people get scared, they don’t spend money,” he said. “There’s lots of uncertainty coming. The Northern California economy could well continue to slow. I will be somewhat surprised if we don’t have really slow growth.”

Bain acknowledged that even some of the more encouraging indicators Haveman detailed could signal slowing growth in some of the city’s revenue streams, such as property taxes. For Councilman Jeff Gee, watching the impact larger economic trends might have on Redwood City and its regional agencies would be key to protecting current revenue streams and creating new ones to support the city’s expenditures. As a board member of the San Mateo County Transit District and Caltrain, Gee said he has seen similarly sobering sales tax revenue numbers as those agencies are working slowing tax revenue growth into their budgets.

“They’re seeing the slowdown in the economy and they’re not betting as much as they were betting two years ago,” he said.

For Mayor John Seybert, Haveman’s report highlighted how connected Redwood City’s economy is to the region’s, and reaffirmed his belief that the city should continue to search for policies, no matter how big or small, that will protect and expand the city’s resources.

“I think it’s a regional issue,” he said. “Redwood City can’t even stimulate its own economy, let alone the region as a whole.”

Seybert said Haveman’s report was well-timed, providing much-needed context as the city looks to approve next year’s budget as well as a five-year capital improvement program in June.

anna@smdailyjournal.com

(650) 344-5200 ext. 102

 

 

Tags: city, haveman, redwood, which, report, haveman,


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