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On a positive note, we have many promising development proposals in the planning stage that will yield positive economic benefits - Staples Ranch and the expansion of the Stoneridge Mall to name just a couple. In addition, there are a number of residential proposals that, if approved, would yield revenues to the City. These and other developments should have a positive impact on operating revenues such as property tax, sales tax, and development fee revenues and capital project revenues such as utility connection and impact fees. The outcome of a number of fee studies will be of critical importance to establishing a balance between revenues and the cost of services, and within the next year a comprehensive array of utility rate and connection fee studies will be presented to City Council. It is the goal of these studies to determine both the long term maintenance and replacement needs of our water and wastewater infrastructure and recommend rate and fee adjustments accordingly. Another very important fee study that will be presented to City Council in roughly that same time frame will be an update to planning and development services fees at a level approaching full cost recovery. These studies will be presented in a thorough and thoughtful manner allowing for careful consideration by the City Council, the community, and all stakeholders. East Bay and Local Economy Most economists have predicted that 2008 will be a weak year for the regional economy and suggest a best case scenario for 2009 would be that economic growth would be sluggish or see a slight increase by the end of the calendar year. Because there is somewhat of a lag period between changes in the economy and the impact on City revenues, balancing revenues and expenditures in the next two-year cycle could be more challenging than we have experienced in recent years. As it pertains to the East Bay economy, the UCLA Anderson Forecast has identified that while job losses related to real estate were smaller than preliminary estimates, sectors such as high tech manufacturing, education, and health care were significantly weaker. A major question will be how soon the local and regional economy will recover and to what extent. Suffice to say, the housing slowdown and its potential effect on City revenues remains a concern, as do energy prices and the State budget. Energy Costs The City is making strides in a number of ways to manage energy costs and to be mindful of our corporate carbon footprint. We are currently developing a “Green Fleet” policy with respect to our motor vehicles and related equipment. This strategy will ensure that these purchases and expenditures are made in a manner consistent with improving local air quality and reducing greenhouse gas emissions. These actions including moving the fleet toward hybrids and alternative fuel vehicles should also provide some relief from the high cost of fuel that we may be experiencing well into the future. We have also recently conducted PG&E energy audits at a number of facilities including the Aquatics Center, Senior Center and the Operations Service Center. The recommendations included changes to existing fixtures and the use of photovoltaic solar panels in some cases, which will be implemented over time as budget resources allow. î