City of Denton nd Quarter Financial Report March Denton Municipal Electric s Engineering and Operations Building

Transcription

1 City of Denton nd Quarter Financial Report March 2013 Denton Municipal Electric s Engineering and Operations Building

2 About This Report This report has been prepared by the City of Denton s Finance Department. The Quarterly Financial Report is intended to provide our users (internal and external) with information regarding the City s financial position and economic activity. This report includes information for the quarter ending March 31, This report is presented in four sections. 1. The Executive Dashboard section contains a high level summary of the major operating funds using graphic illustrations and key economic indicators. Narrative disclosures are also included to highlight any significant changes or fluctuations. 2. The Financial Summary section reports the performance of the major operating funds of the City. In addition, the report provides an end of year projection and a comparison to the budget for major revenue sources and expenditure items. 3. The Revenue & Economic Analysis section provides additional analysis regarding key revenue sources and economic indicators. 4. The Quarterly Investment Report provides a summary of the City s investment portfolio, interest earnings and a brief market outlook. 5. The Performance Report provides Key Performance Indicators (KPIs) for each of the goals identified in the City s strategic plan. The Quarterly Financial Report is intended to provide our users with timely and relevant information. Please provide us with any comments or suggestions you may have. If you would like additional information, feel free to contact me. Chuck Springer Director of Finance 215 East McKinney Street Denton, TX

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4 Section 1 City of Denton Quarterly Financial Report March 2013 Executive Dashboards 3

5 City of Denton, Texas General Fund Executive Dashboard 4 FY FY ANNUAL ANNUAL FY $70 DESCRIPTIO N BUDGET PRO JECTIO N VARIANCE Beginning Fund Balance $60 as of 09/30/12 $ $ RESOURCES: $50 Ad Valorem Taxes % Sales Taxes % $40 Franchise Fees % Other Taxes % $30 Service Fees % Fines and Fees % Licenses and Permits % $20 Miscellaneous Revenue % Transfers In % $10 Total Revenues % Total Resources EXPENDITURES: Personal Service % Material and Supplies % Maintenance and Repairs % Insurance % Miscellaneous % Operations % Transfers Out % Fixed Assets % Total Expenditures % Net Income (Loss) (0.65) (0.26) Ending Fund Balance $ $ Key Trends Other Taxes are $0.08 million more than budget due to increases in Mixed Beverage Taxes. Miscellaneous Revenue is $0.08 million more than budget due mainly to increases in reimbursements of non grant related Federal and State aid. Personal Service is $0.45 million less than budget due to vacant position management. $ $2.4 $2.2 $2.0 $1.8 $1.6 $1.4 $1.2 $1.0 1Q 08 Oct 12 2Q 08 3Q 08 Revenue & Expenses (in Millions) 4Q 08 1Q 09 Nov 12 YTD Revenue Dec 12 YTD Expenses Jan 13 Feb 13 Sales Tax Monthly Average by Quarter 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Note: All figures presented are in millions of dollars. 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 Mar 13 1Q 13 2Q 13

6 5 DESCRIPTION City of Denton, Texas Electric Fund Executive Dashboard FY ANNUAL BUDGET FY ANNUAL PROJEC TIO N FY VARIANCE Beginning Working Capital and Reserves as of 9/30/12 $ $ % RESO URCES: Operating Revenues % Non-operating Revenues % Total Revenues % Total Resources EXPENDITURES: Purchased Power % Operation and Maintenance % Non-Operating Expenditures % Total Expenditures % Net Income (Loss) (16.25) (19.56) Ending Working Capital and Reserves $ $ Key Trends Electric operating revenues are projected to be $4.1 million, or 3%, lower than budgeted primarily due to actual ECA rates ($0.0340) being lower than budgeted ECA rates ($0.0370). GW WH $80 $70 $60 $50 $40 $30 $20 $10 $ Revenue & Expenses (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 YTD Revenue YTD Expense Historical Quarterly GWH Sales Non operatingrevenues operating are projected to be $0.09 million, or 19% lower than 0 budgeted due to lower than estimated investment earnings. 0 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 Operations and Maintenance cost are projected to be $0.9 million lower than budgeted primarily due to lower maintenance & repair expenses. Note: All figures presented are in millions of dollars.

7 6 City of Denton, Texas Water Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET PROJECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/12 1 $ $ RESOURCES: Water Sales % Other Water Revenues % Transfers In % Impact Fee Revenue % Tt Total lrevenues % Total Resources EXPENDITURES : Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfers Out % Total Expe nditure s % Net Income (Loss) (0.91) Ending n Working Capital and Reserves $ $ $25 $20 $15 $10 $5 $ Revenue & Expenses (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 YTD Revenue YTD Expenses Gallons Sold (in Millions) Key Trends Other Water Revenues are expected to be below budget due to less work performed for other City Departments. Personal Service expenditures are expected to be below budget due to position vacancies. Operations, Services are projected to be under budget due to lower than anticipated Purchased Power, Materials & Supplies and outside services costs. 1 The Beginning Working Capital balance excludes $3.3 million of Impact Fees Reserves and $1.0 million of Development Plan Line Reserves Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Residential Commercial Note: All figures presented are in millions of dollars.

8 7 City of Denton, Texas Wastewater Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET PRO JECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/12 1 $18 $ 8.87 $ 8.87 $16 RESO URCES: $14 Wastewater Fees % $12 Other Wastewater Revenue % $10 Drainage Fees % $8 Transfer In % $6 Impact Fee Revenue % $4 Total Revenues % $2 Total Resources $ EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) (0.47) (0.28) Ending Working Capital and Reserves $ 8.40 $ 8.59 Key Trends Other Wastewater revenue is below budget due to lower miscellaneous fees. Personal Service expenditures are expected to be below budget due to position vacancies. Operations, Services are projected to be under budget due to lower than anticipated Materials & Supplies and Maintenance & Repair costs. 1 The Beginning Working Capital balance excludes $2.06 million of Impact Fees Reserves, $1.0 million of Development Plan Line Reserves, and $1.0 million of Drainage Reserves Revenue & Expenses (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 YTD Revenue YTD Expenses Gallons Billed (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Residential Commercial Note: All figures presented are in millions of dollars.

9 8 City of Denton, Texas Drainage Operations Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET PROJECTIO N VARIANCE REVENUES: Residential Drainage Fees $ 1.54 $ % Nonresidential Drainage Fees % Wastewater Resources % General Fund Transfer % Total Revenues % EXPENDITURES: Personal Service % $1.0 Operations, Services % Capital Outlay % Debt Service % $0.5 Transfer Out % Total Expe nditure s % $ Net Income (Loss) $ - $ - $2.5 $2.0 $1.5 Revenue & Expenses (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 YTD Revenue YTD Expenses Key Trends Personal Services are projected to be lower than budget due to a vacant engineer position. Operations, Services are projected to be under budget due to lower than anticipated Materials & Supplies and Maintenance & Repair costs. Capital Outlay is projected to be higher than budget due to savings in other expenditures. Note: All figures presented are in millions of dollars.

10 City of Denton, Texas Solid Waste Fund Executive Dashboard 9 FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET PRO JECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/12 1 $ $ ,600 6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1, RESO URCES: Collection & Disposal % Recycling % Other Revenue % Total Revenues % 0 Total Resources EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) 0.02 (0.18) Ending Working Capital and Reserves $ $ Key Trends Other Revenue is expected to be less than budget due to miscellaneous fees revenue being lower than budget. Personal Service expenditures are expected to be under budget due to vacancies. Operations, Services expense is lower than budget due to lower fuel prices. 32,500 30,000 27,500 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2, Qtr 3 Residential Curbside Collection Tonnage 2011 Qtr Qtr Qtr 2 Refuse Tonnage 2012 Qtr Qtr Qtr 1 Recycling Tonnages 2013 Qtr 2 Commercial Refuse & Recycling (Front & Side Load) Cubic Yards Serviced per Week 2011 Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr 2 Commercial Refuse Commercial Recycling 1 The Beginning Working Capital Reserve excludes $5.79 million of Landfill Closure/Post Closure reserves. Note: All figures presented are in millions of dollars.

11 City of Denton, Texas Airport Fund Executive Dashboard 10 FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET PROJECTION VARIANCE Beginning Working Capital and Reserves as of 09/30/12 $ 6.39 $ 6.39 RESOURCES: Airport Ground Leases % FBO Commissions % Other Resources % Total Operating Revenues % EXPENDITURES : Personal Service % Operations, Services % Transfer Out % Total Operating Expenditures % Net Operating Income (Loss) (0.31) (0.38) NON-OPERATING REVENUES: Investment Income % Gas Well Royalties % Total Non-Operating Revenues % NON-O PERATING EXPENDITURES: Debt Service % Transfer Out - Capital % Total Non-Operating Expenditures % Net Non-Operating Income (0.08) 0.02 Net Income (0.39) (0.36) Ending Working Capital and Re serves $ 6.00 $ 6.03 Key Trends Airport Ground Leases are projected $0.18 million less than budget due to delays in the hangar development plan. Personal Service expenses are projected $0.08 million less than budget due to position vacancies. Gas Well Royalties are projected $0.15 million less than budget due to production volume declines and decreases in the wellhead prices. Transfer Out Capital is projected $0.25 million less than budget due to fewer opportunities for investment projects than anticipated. $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - GAS WELL REVENUE (in millions of dollars by fiscal year) YTD AIRPORT OPERATIONS BY QUARTER (takeoff or landing) 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q - 13 Note: All financial amounts presented are in millions of dollars.

12 11 City of Denton, Texas Street Improvement Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET PROJECTIO N VARIANCE Beginning Fund Balance as of 9/30/2012 $ 0.99 $ 0.99 RESO URCES: Franchise Fees % Street Cuts % Inve stme nt Income % Transfers In % Total Revenues % Total Resources $ EXPENDITURES: Personal Service % Materials & Supplies % Maintenance & Repairs % OCI Related Maintenance % Operations, Services % Transfer Out % Total Expe nditure s % Net Income (Loss) Ending n Fund Balance $ $ $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ Revenue & Expenses (in Millions) Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 YTD Revenue YTD Expenses Tons of Asphalt Laid(in Thousands) Qtr 1 Qtr 2 Qtr 3 Qtr 4 FY FY $ Lane Miles Surface Treatment t 100 Key Trends Tons of asphalt laid increased 137% in the 2 nd quarter as compared to last 40 year. Lane miles of surface treatment increased 81% in the 2 nd 20 quarter as compared to last year. 0 Note: All figures presented are in millions of dollars Qtr 1 Qtr 2 Qtr 3 Qtr 4 FY FY Note: All figures presented are in millions of dollars.

13 City of Denton, Texas Grants Dashboard 12 FY FY GRANT ANNUAL FY DESCRIPTIO N AMO UNT PRO JECTIO N VARIANCE Budget Comm Development % Public Safety % Other % Total 2012 Budget % New Awards Public Safety % Other Total New Awards % $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ FY Awards & Expenses (in Millions) COMM DEV PUBLIC SAFETY Awards PARKS & REC Expenses OTHER FY Grants Awarded Totals $ 7.28 $ % OTHER 14% Key Trends The following grants have been received in FY : Police: STEP Comprehensive Grant $98,908, Tobacco Grant $9,000, JAG grants $50,982. Fire : 2011 UASI $2,000,, 2012 UASI $162,330. Solid Waste : TCEQ $400,000*, NCTCOG $200,000* and $66,015. PARKS & REC 2% PUBLIC SAFETY 34% COMM DEV 50% *These items have been awarded to the City of Denton but the contract has not been provided to or approved by Council. Note: All figures presented are in millions of dollars.

14 Section 2 City of Denton Quarterly Financial Report March 2013 This report is designed for internal use and does not include all the funds and accounts included in the City of Denton s operations. The information provided is unaudited; for a complete audited report, please refer to the City of Denton Comprehensive Annual Financial Report, available through the City s Finance Department, City Secretary s Office, or Denton Public Libraries. FINANCIAL SUMMARY 13

15 City of Denton General Fund Schedule of Revenues - Budget vs. Actual (Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS REVENUE DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Current Year - Ad Valorem $ 29,806,410 $ 30,632,009 $ 31,205,233 $ 31,579,391 $ 31,579, % Delinquent - Ad Valorem 148, , , , , % Miscellaneous Penalties & Fees 159, , , , , % Ad Valorem Taxes 30,113,807 30,997,623 31,537,395 32,285,809 32,202, % Sales Tax 12,933,211 13,497,715 12,957,764 26,466,107 26,466, % Franchise - Gas Utilities 287, , , , , % Franchise - Private Electric Utilities 60,449 24,499 46, , , % Franchise - Cable 361, , , , , % Franchise - Telecom 211, , , , , % Franchise - Denton Municipal Utilities 2,224,656 2,640,276 2,378,314 5,435,376 5,405, % Franchise - DISD Fiber ,751 14, % Franchise Fees 3,146,009 3,375,702 2,912,589 7,592,570 7,558, % Other Taxes 84,993 75,853 92, , , % Ambulance Service Fees 1,175, ,040 1,186,675 2,472,000 2,375, % Charges to Bond Funds 63,427-88, , , % Fire Department Fees 86, ,800 85, , , % Building Inspections Fees 189, , , , , % Park Department Fees 226, , ,843 1,645,059 1,512, % Planning Department Fees 597, , , ,615 1,005, % Miscellaneous Service Fees 41,257 50,968 45, , , % Service Fees 2,379,752 1,950,624 2,508,311 5,943,989 5,800, % Denton Municipal Fines 936, , ,204 1,899,940 1,959, % Parking Fines 152, , , , , % Miscellaneous Fines and Fees 488, , ,841 1,218,557 1,147, % Court Administrative and Service Fees 451, , ,827 1,188,096 1,070, % Fines and Fees 2,028,223 2,204,925 2,076,322 4,564,093 4,434, % Demolition Permits 3,705 4,682 3,420 9,364 9, % Building Permits 509, , ,159 1,143,277 1,278, % Certificate of Occupancy 36,195 33,800 31,000 67,600 67, % Miscellaneous Licenses and Permits 71,655 96,509 21, , , % Licenses and Permits 621, , ,274 1,413,195 1,463, % Investment Income 91, ,545 83, , , % Miscellaneous Revenues 278, , ,984 1,322,113 1,458, % Miscellaneous Resources 369, , ,070 1,547,113 1,633, % ROI - Denton Municipal Utilities 2,620,020 2,913,802 2,689,674 6,206,110 6,231, % Cost of Service Transfers - Indirect 2,313,575 2,791,440 2,791,343 5,582,686 5,582, % Transfers 79, , ,504 1,750,307 1,750, % Transfers 5,013,181 6,580,710 6,343,521 13,539,103 13,564, % Total General Fund Revenues $ 56,690,187 $ 59,763,175 $ 59,554,867 $ 93,655,392 $ 93,500, % 14

16 City of Denton General Fund Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION NEIGHBORHOOD SERVICES Building Inspections $ 875,697 $ 1,001,655 $ 929,911 $ 2,001,360 $ 2,001, % Code Enforcement 503, , ,264 1,364,783 1,364, % Libraries 2,468,350 2,713,541 2,557,156 5,424,927 5,424, % Parks and Recreation 4,166,873 5,411,208 4,631,016 10,816,509 10,816, % Planning 973,352 1,169, ,774 2,353,174 2,353, % Development Review Engineering 123, , , , , % Gas Well Review 159, , , , , % Social Services 163, , , , , % 9,433,998 11,583,201 10,119,343 23,169,529 23,169, % PUBLIC SAFETY Animal Services 428, , ,477 1,049,446 1,049, % Fire 10,378,749 11,434,820 11,164,938 22,860,521 22,860, % Municipal Court 576, , ,095 1,346,089 1,346, % Municipal Judge 157, , , , , % Police 11,395,391 12,081,933 12,106,936 24,154,219 24,154, % 22,936,151 24,921,269 24,555,547 49,830,739 49,830, % TRANSPORTATION Traffic Operations 710,836 1,010, ,495 2,019,805 2,019, % Transportation Operations 174, , , , , % Street Lighting 331, , , , , % 1,216,343 1,579,631 1,320,094 3,139,287 3,139, % ADMINISTRATIVE & COMMUNITY SERVICES Cable Television 118, , , , , % City Manager's Office 1,067,226 1,297,733 1,233,004 2,586,457 2,586, % Economic Development 586,563 1,129, ,411 2,261,390 2,154, % Facilities Management 1,399,505 1,562,357 1,453,051 3,123,463 3,123, % Finance 1,666,547 1,714,985 1,602,726 3,422,873 3,422, % Human Resources 685, , ,020 1,535,392 1,535, % Internal Audit 10,684 75,481 68, , , % Legal Administration 865, , ,795 1,970,567 1,970, % Public Communications Office 180, , , , , % Non-Departmental 1 1,815,097 1,199,682 1,107,966 2,407,503 1,960, % 8,395,431 9,094,804 8,267,910 18,180,731 17,626, % TOTAL EXPENDITURES $ 41,981,923 $ 47,178,905 $ 44,262,894 $ 94,320,286 $ 93,766, % 1 Non-Departmental Annual Projection includes $400,000 of unbudgeted Personal Service savings that are not allocated to departments at this time. 15

17 City of Denton Electric Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/12 $ 92,326,941 $ 92,326,941 REVENUES: Operating Revenues $ 58,207,559 $ 63,670,432 $ 60,413, ,248, ,181,905-3% Non-operating Revenues 275, , , , ,000-19% Total Revenues 58,482,811 63,939,035 60,647, ,741, ,581,905-3% EXPENDITURES: Purchased Power 35,140,469 44,558,275 45,198, ,928, ,928,672 0% Operation and Maintenance 14,574,126 15,019,649 12,277,212 28,008,773 27,079,744-3% Return on Investment 1,852,650 1,865,587 1,860,092 4,303,400 4,337,203 1% Franchise Fee 2,646,642 2,546,893 2,657,274 6,147,714 6,196,004 1% Non-Operating Expenditures 8,819,170 9,807,239 9,611,597 19,598,966 19,598,966 0% Total Expenditures 63,033,057 73,797,643 71,604, ,987, ,140,589-1% Net Income (Loss) $ (4,550,246) $ (9,858,608) $ (10,957,166) (16,246,224) (19,558,684) Ending Working Capital and Reserves $ 76,080,717 $ 72,768,257 16

18 City of Denton Water Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/12 1 $ 15,995,854 $ 15,995,854 REVENUES: Water Sales Residential $ 5,859,775 $ 5,993,484 $ 6,544,407 16,277,324 16,311,188 0% Water Sales Commercial 6,116,283 6,281,853 6,623,601 14,869,171 14,821,257 0% Water for Resale 190, , , , ,147 38% Other Water 372, , , , ,002-7% Public Works Fees and Permits 275, , , , ,000 4% Public Works Cap Lbr/Subledger 55, ,033 57, , ,576-9% Engineering Fees & Permits 6,831 10,882 1,950 20,645 11,231-46% Engineering Capital Charges 926,951 1,161, ,112 2,204,345 1,969,860-11% Transfers In 2,098,134 2,283,114 2,283,114 4,566,227 4,374,463-4% Investment Income 187, ,500 40, ,000 61,000-74% Impact Fee Revenue 950,380 1,300,000 1,300,520 2,600,000 2,600,000 0% Total Revenues 17,039,120 17,991,902 19,117,570 42,964,597 42,539,724-1% EXPENDITURES: Personal Service 4,757,719 5,418,916 5,232,109 11,049,920 10,467,557-5% Purchased Power 525, , ,199 1,504,000 1,271,516-15% Purchase of Water 29,016 37,226 35,287 91,500 91,019-1% Materials and Supplies 575, , ,149 1,694,929 1,541,268-9% Maintenance and Repairs 400, , ,982 1,237,446 1,215,681-2% Insurance 98, , , , ,580 0% Miscellaneous 54,055 54,554 55,024 99,548 98,215-1% Operations, Services 1,012, , ,848 2,624,709 2,300,316-12% Capital Outlay 1,930,317 2,691, ,452 5,872,287 5,784,287-1% Return on Investment 434, , ,092 1,140,060 1,146,691 1% Franchise Fee 620, , ,989 1,618,168 1,627,744 1% Debt Service 6,186,252 6,605,897 6,604,939 13,211,794 13,209,294 0% Transfers Out 1,567,274 1,759,940 1,762,760 3,519,876 3,519,876 0% Total Expenditures 18,191,562 20,695,570 18,352,676 43,867,930 42,478,044-3% Net Income (Loss) $ (1,152,442) $ (2,703,668) $ 764,894 (903,333) 61,680 Ending Working Capital and Reserves $ 15,092,521 $ 16,057, The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $3,313,842 and $1,000,000 of Development Plan Line Reserves. 17

19 City of Denton Wastewater Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/12 1 $ 8,873,918 $ 8,873,918 REVENUES: Residential Fees $ 4,288,017 $ 4,706,457 $ 4,676,366 9,311,742 9,197,995-1% Commercial Fees 4,377,989 5,162,487 4,802,957 10,588,220 10,306,081-3% Effluent Irrigation Fees 44,068 41,729 46, ,640 61,468-51% Wholesale Fees 234, , , , ,379-5% Other Wastewater Fees 561, , ,360 1,240,890 1,289,000 4% Drainage Fees 2,113,186 2,125,164 2,149,970 4,275,310 4,291,037 0% Transfer In 114, , , , ,141 0% Interest Revenue 77,232 96,000 22, ,000 48,600-75% Impact Fee Reserves 500, , ,220 1,100,000 1,100,000 0% Total Revenues 12,311,860 13,699,139 13,372,343 27,776,462 27,210,701-2% EXPENDITURES: Personal Service 2,885,889 3,338,611 3,207,961 6,910,361 6,696,597-3% Purchased Power 375, , , , ,000-4% Materials and Supplies 289, , , , ,155-20% Maintenance and Repairs 493, , ,058 1,280,847 1,071,638-16% Insurance 51,127 67,917 67, , ,833 0% Miscellaneous 31,786 29,116 29,259 42,881 32,245-25% Operations, Services 992,393 1,165, ,364 2,318,797 2,100,282-9% Capital Outlay 1,624,510 2,476,352 1,807,124 4,429,213 4,602,685 4% Return on Investment 322, , , , ,317-2% Franchise Fee 460, , ,128 1,089,501 1,067,596-2% Debt Service 3,338,912 3,376,830 3,376,015 6,753,660 6,751,660 0% Transfer Out 1,097,992 1,398,770 1,380,816 2,797,536 2,766,458-1% Total Expenditures 11,962,498 14,212,679 12,653,568 28,252,407 27,492,466-3% Net Income (Loss) $ 349,362 $ (513,540) $ 718,775 (475,945) (281,765) Ending Working Capital and Reserves $ 8,397,973 $ 8,592, The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $2,065,059, $1,000,000 of Development Plan Line Reserves, and $1,000,000 of Drainage Reserves. 18

20 City of Denton Drainage Operations Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION REVENUES: Residential Drainage Fees $ 773,755 $ 765,508 $ 786,457 $ 1,536,889 $ 1,533,157 0% Nonresidential Drainage Fees 1,339,431 1,365,820 1,363,513 2,738,421 2,757,880 1% Wastewater Resources 14,942 32,908 32,908 65,815 65,815 0% General Fund Transfer 54, , , , ,962 0% Total Revenues 2,182,764 2,299,217 2,317,859 4,611,087 4,626,814 0% EXPENDITURES: Personal Service 596, , ,710 1,617,600 1,481,741-8% Materials and Supplies 15,578 24,967 33,516 94,046 81,325-14% Maintenance and Repairs 22,848 84,921 26, , ,716-18% Insurance 8,954 9,946 9,945 19,891 19,891 0% Miscellaneous 1,991 2,750 2,019 2,750 2,544-7% Operations, Services 202, , , , ,515-2% Capital Outlay 362, , , , ,344 32% Debt Service 618, , , , ,431 0% Transfer Out 151, , , , ,307-2% Total Expenditures 1,981,377 2,267,750 2,317,859 4,611,087 4,626,814 0% Net Income (Loss) $ 201,387 $ 31,467 $ - $ - $ - 19

21 City of Denton Solid Waste Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/12 1 $ 3,274,723 $ 3,274,723 REVENUES: Garbage Fees - Residential $ 3,444,156 $ 3,838,056 $ 3,831,703 7,799,493 7,745,900-1% Garbage Fees - Commercial 4,853,323 5,247,687 5,081,518 10,775,505 10,335,793-4% Landfill Fees 1,245,839 1,427,211 1,346,683 3,054,842 3,300,923 8% Recycling 1,535,824 1,418,694 1,475,124 2,836,249 2,832,050 0% Other Revenue 87, ,886 98, , ,103-64% Interest Revenue 3,416 2,001 3,326 4,000 4,101 3% Total Revenues 11,169,828 12,272,535 11,836,419 25,147,589 24,465,870-3% EXPENDITURES: Personal Service 3,473,008 4,172,683 3,959,053 8,395,223 8,187,227-2% Materials and Supplies 110, , , , ,262-2% Maintenance and Repairs 78, , , , ,435-2% Insurance 73,329 84,515 84, , ,776-2% Miscellaneous 29,782 35,090 27,045 60,322 58,827-2% Operations, Services 3,189,285 3,412,839 2,680,608 6,231,762 6,077,367-2% Capital Outlay 230, ,074 17, , ,296-2% Debt Service 2,264,932 2,691,602 2,689,541 5,379,555 5,378,055 0% Franchise Fee 544, , ,753 1,241,561 1,210,801-2% Landfill Closure 188, , , , ,950 0% Transfer Out 1,024,079 1,090,208 1,095,183 2,179,535 2,129,535-2% Total Expenditures 11,207,470 12,875,085 11,527,130 25,124,689 24,647,531-2% Net Income (Loss) $ (37,642) $ (602,550) $ 309,289 22,900 (181,661) Ending Working Capital and Reserves $ 3,297,623 $ 3,093, The Beginning Working Capital and Reserves excludes Fund Balance from the Landfill Closure/Post Closure Reserve Fund of $5,794,

22 City of Denton Airport Fund Schedule of Expenses- Budget vs Actual (Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/12 $ 6,388,839 $ 6,388,839 OPERATING REVENUES: Airport Ground Leases $ 170,665 $ 281,012 $ 191, , ,622-32% FBO Commissions 142, , , , ,230 2% Miscellaneous 17,664 20,008 19,320 40,000 40,000 0% Total Operating Revenues 330, , , , ,852-18% OPERATING EXPENSES: Personal Service 180, , , , ,180-18% Materials and Supplies 2,903 23,369 5,246 46,725 46,725 0% Maintenance and Repairs 24,463 39,213 16,296 78,697 70,120-11% Insurance 8,937 9,285 9,282 18,563 18,563 0% Miscellaneous ,500 1,300-13% Operations 93, ,535 53, , ,000-3% Transfers Out - Operating 108, , , , ,653 0% Franchise Fee/Return on Investment 27,137 18,042 16,010 36,071 36,071 0% Total Operating Expenses 447, , ,398 1,265,777 1,161,612-8% Operating (Loss) (117,397) (156,788) (169,202) (313,975) (382,760) NON-OPERATING REVENUES: Investment Income 21,468 12,505 15,758 25,000 25,000 0% Gas Well Royalties 610, , ,866 1,125, ,000-13% Recovery of Prior Year Expenses 8, Total Non-Operating Revenues 640, , ,624 1,150,000 1,000,000-13% NON-OPERATING EXPENSES: Debt Service 109, , , , ,848 0% Transfers Out - Capital 440, , ,300 1,000, ,000-25% Total Non-Operating Expenses 549, , ,624 1,227, ,848-20% Non-Operating Income (Loss) 90,550 (38,839) (335,000) (77,148) 23,152 Net Income (Loss) $ (26,847) $ (195,627) $ (504,202) (391,123) (359,608) Ending Working Capital $ 5,997,716 $ 6,029,231 21

23 City of Denton Street Improvement Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended March 31, 2013 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Fund Balance as of 9/30/2012 $ 991,942 $ 991,942 RESOURCES: Franchise Fees $ 2,062,615 $ 2,966,361 $ 2,521,346 6,562,039 6,562,039 0% Street Cuts 148, , , , ,000 7% Investment Income 2,492 5,002 2,537 10,000 10,000 0% Transfers In 1,000, , , , ,251 0% Total Resources 3,213,806 3,264,848 2,844,789 7,158,774 7,182,290 0% EXPENDITURES: Personal Service 930,686 1,071, ,779 2,141,141 2,137,740 0% Materials and Supplies 14,095 33,862 31,569 67,706 62,625-8% Maintenance and Repairs 11,403 28,728 41,287 57,433 57,433 0% OCI Related Street Maintenance 1,004,238 2,100,020 1,718,191 4,161,972 4,210,248 1% Insurance 18,582 23,886 23,876 47,751 47,751 0% Miscellaneous 3,209 3,000 3,084 6,000 5,500-8% Operations, Services 282, , , , ,972-7% Transfer Out 40,928 40,770 40,752 81,505 81,505 0% Total Expenditures 2,305,194 3,580,819 3,099,486 7,158,774 7,158,774 0% Net Income (Loss) $ 908,612 $ (315,971) $ (254,697) - 23,516 Ending Fund Balance $ 991,942 $ 1,015,458 22

24 City of Denton Grants Schedule of Grants For the Period Ended March 31, 2013 GRANT DESCRIPTION EXPENDITURES AS OF CURRENT 9/30/ Y-T-D ANNUAL BUDGET ANNUAL PROJECTION BUDGET VS PROJECTION 2013 Budget US Dept of HUD - Community Development Block Grant(CDBG) $ 3,800,480 $ 404,562 $ 1,825,602 $ 1,072, % US Dept of HUD - HOME Investment Partnership Program 2,242, ,255 1,366, , % Emergency Solutions Grant , , , % Community Development 6,043, ,078 3,663,822 2,194, % Public Safety Training Facility Grant , % 2009 Congressional Setaside Grant , % 2010 Congressional Setaside Grant - - 1,000, % 2011 UASI - LETPA , , % Emergency Management Performance Grant 2-37,864 68,844 75, % Public Safety - 37,864 2,172, , % Downtown Transit Center 3,085, % TCEQ CWA 319 Grant 147,689 57, , , % Tx Historical Commission 6,500 3,000 21,934 21, % Airport Maintenance (RAMP) Grant ,000 50, % Summer Food Grant , , % Other 3,239,884 60, , , % Total 2012 Budget 9,282, ,078 6,296,010 2,982, % New Awards 2012 UASI State Homeland Security Grant , % 2012 UASI-LETPA State Homeland Security Grant , % Tobacco Enforcement Program Grant - 1,200 9,000 9, % TxDot Comprehensive Grant - 31,829 98,908 98, % 2011 Byrne Assistance Grant (JAG) - 25,869 28,516 28, % 2012 Byrne Assistance Grant (JAG) - 15,625 22,466 22, % 2011 UASI State Homeland Security Program - - 2,000 2, % Public Safety - 74, , , % ARRA Diesel Emission Reduction 698, , % Clean Transportation Triangle (CTT) , % Alternative Fuel & Advanced Technology Grant , % ,015 66, % Other 698, ,015 92, % Total New Awards 698,613 74, , , % TOTALS $ 9,981,587 $ 1,019,601 $ 7,285,245 $ 3,236, % 1 A portion of the grants presented cover multiple years. 2 The Emergency Management Performance Grant was increased by 10% from $68,844 to $75,

25 24

26 Section 3 City of Denton Quarterly Financial Report March 2013 REVENUE & ECONOMIC ANALYSIS 25

27 Revenue & Economic Analysis Summary The data included in this section provides information on local, state and national trends impacting the City s financial position. The following notes are provided to facilitate this section s readability. 1. Positive Outlook Represents favorable conditions for the local economy. Color code Green. 2. Cautious Outlook Represents changing conditions that require close monitoring. Color code Yellow. 3. Negative Outlook Represents unfavorable conditions for the local economy. Color code Red. The data included in this section have been obtained from a variety of sources. Sales tax and construction related data have been obtained from internal city departments. Economic data for the State have been obtained from the Federal Reserve Bank of Dallas and may be subject to availability. National economic data were compiled with assistance from the City s investment advisor, First Southwest Asset Management. 26

28 National Economic Trends Period ending March 31, 2013 Gross Domestic Product (GDP) In each of the previous two years, the U.S. economy enjoyed a solid first quarter, before retreating in the second. Last year, volatility was blamed on unseasonably warm weather during the winter months, which allowed shoppers to get out early and spend money that they normally would have spent later in the spring. For the most part, weather conditions in 2013 have been similar, raising concerns that the economic pattern of the last two years may repeat itself. Forced federal budget cuts have added to this concern. It s too early to tell for sure, but it appears first quarter annualized GDP growth was somewhere between 2.5% and 3.0%, not too far from the 3.2% average over the past 65 years. Unfortunately, this is probably borrowed growth that will have to be returned in subsequent quarters. Going forward, only moderate growth is expected. Nonfarm Payrolls. From November through February, payroll gains averaged more than 200k per month, while unemployment fell to 7.7%, the lowest in more than four years. Unfortunately, only 88k jobs were created in March, the smallest gain in nine months. The unemployment rate, by contrast, actually showed improvement. However, the drop in the unemployment to a four-year low of 7.6% was misleading, as the actual household survey numbers used in the calculation showed a loss of 206k jobs. The rate itself fell as a result of the labor force shrinking by another 496k workers, the biggest drop since December The participation rate declined by 2/10 ths of a percentage point and now stands at 63.3%, the lowest level since May If the participation rate had simply remained the same, the unemployment rate would have risen to 7.9%. 27

29 Housing The housing market continues to recover, and in fact, seems to be gaining momentum. Freddie Mac s 30-yr mortgage index crept up to 3.57% in March from a record low of 3.35% in December, but home sales were resilient. Existing home sales rose by 0.8% in February to an annualized rate of 4.98 million, the strongest sales pace in more than three years, while new home sales reached a fiveyear high. The supply of existing homes in January was 4.3 months, the leanest in eight years. The median price for an existing home was up 11.6% year-over-year in February to $173,600, while the median price for a new home was a much pricier $246,800. December housing starts reached a 5½-year high of 982k, before retreating to lower levels in January and February. Retail Sales March retail sales turned out to be quite a bit weaker than expected, and the two previous months were revised lower, suggesting that first quarter growth may not be as solid as most had figured. The 0.4% decline in March, was the worst showing since last June, and was well below the median forecast, which had indicated no change. Revisions dragged January sales into negative territory from the previously reported 0.2% gain to a 0.1% decline, and February sales down a tenth from +1.1% to +1.0%. Vehicle sales have picked up in recent months with sales of cars and light trucks averaging 15.3 million annualized units over the last 3 months, very near last November s recovery high of 15.5 million annualized units. Oddly enough, in the midst of all this spending, consumer confidence unexpectedly dropped by 8.3 points in March to

30 Texas Homes Sales The Texas housing recovery continues and has gained momentum in recent months. As of February 2013, Texas sales were up 13.5% yearover-year. During this same period, average home values climbed 7.4% to $202,200, while the month s supply fell from 6 to 4.3 months. In Denton County, the story was even more impressive. On a year-over-year basis, through February, sales were up 24%. The average price rose slightly from $196,800 a year ago, to $197,500 in February. Total listings are now quite lean at 1,519 units or 2.3 months supply, down from 2,265 and 4.4 months a year ago. For all of 2012, sales were up 27%, and the average home price rose by 5.8% to $209,700. Sales volume typically climbs in the spring. Low inventory levels suggest an increase in future construction. The paper was prepared by FirstSouthwest Asset Management, is intended for educational and informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of FirstSouthwest Asset Management as of the date of the report and may differ from the views of other divisions/departments of First Southwest Company. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. 29

31 Fuel Prices Outlook Cautious Description: Quarterly fuel trends for the United States and Texas. Analysis: Fuel prices are a major commodity source in the economy. Studies have shown a positive effect on disposable income levels when fuel prices decrease. It is estimated that for every penny decrease in the price of fuel, $1.3 billion is available to the consumer for disposable income. Therefore, the price of fuel is likely to be a key predictor of sales tax collections. Fuel prices showed a 2% increase from the prior quarter at the national level and a 5% increase at the state level. Sales tax returns have shown a slight decrease in growth. There was a 1% decrease in receipts over the prior quarter. Because of the instability in this commodity, staff has rated this outlook as Cautious. Fuel Prices Sales Tax Texas Fuel Prices US Fuel Prices $4.00 $7 $3.50 $6 $3.00 $5 Dollars $2.50 $2.00 $1.50 $4 $3 Millions $1.00 $2 $0.50 $1 $0.00 2Q '09 4Q '09 2Q '10 4Q '10 2Q '11 4Q '11 2Q '12 4Q '12 2Q '13 $0 Source: U.S. Department of Energy 30

32 Municipal Cost Index Outlook Negative Description: The Municipal Cost Index was developed to show the rate of inflation for the cost of goods purchased frequently by local governments. The MCI draws on the monthly statistical data collected by the U.S. Departments of Commerce and Labor as well as independently compiled data to project a composite cost picture for the municipal budget officer or operating department manager. Costs of labor, materials and contract services are all factored into the composite MCI. Major indicators of these items used for the MCI include the Consumer Price Index, the Wholesale Price Index for Industrial Commodities (now known as the Producer Price Index) and the construction cost indexes published by the U.S. Department of Commerce, respectively. Analysis: The Municipal Cost Index (MCI) pulls a variety of prices for frequently purchased commodities for local governments. The cost for labor, materials and contract services are factored for the MCI. An increase in MCI means the overall price mix for these types of commodities will cost local governments more to do routine business. The 2nd fiscal quarter of 2013 shows an increase of 1.6% over the prior quarter and an increase of 3.2% over the 2nd fiscal quarter of Staff has rated this indicator as Negative Municipal Cost Index Q '11 3Q '11 4Q '11 1Q '12 2Q '12 3Q '12 4Q '12 1Q '13 2Q '13 Source: American City and County Magazine Note: The Municipal Cost Index is designed to show the effects of inflation on the cost of providing municipal services. State and local government officials rely on American City & County's Municipal Cost Index to stay on top of price trends, help control price increases for commodities, make informed government contract decisions and intelligent budget planning. Since 1978, readers have loyally referred to the Municipal Cost Index to determine the cost of inflation and, hence, the rising cost of doing business as a local government. 31

33 Hotel Occupancy Tax Analysis Outlook Positive Description: Tax imposed on a person who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for the use of a room that is in a hotel. A hotel includes: any building in which the public may obtain sleeping accomodations; motels; a tourist home, house or court; lodginghouse; inn; roominghouse; or bed and breakfast. The tax rate levied by the City is 7% of the price paid for a room. The State also levies a tax equal to 6%. Analysis: While the use of this revenue source is restricted by state law, it is an essential revenue source for various tourist related activities within the community and an important indicator of local economic activity. Hotel Occupancy tax revenue through the 2nd Quarter of 2013 was 40% higher compared to budget and 36% higher than the prior year's actual. Staff projects higher than anticipated revenues with approximately half of the increase attributable to $166,365 in delinquent taxes from one lodging establishment. As a result, staff has rated the outlook for this economic indicator as Positive. 2nd Quarter FY Actual Y-T-D Occupancy Tax Revenue: $ 475,327 $ 969,366 FY Budget $ 343,481 $ 690,851 Over(Under) Budget $ 131,846 $ 278,515 FISCAL YEAR FORECAST Hotel Occupancy Tax Budget: $ 1,508,740 End of Year Projection: $ 1,855,129 Variance: $ 346,389 $500,000 Hotel Occupancy Tax Collections $400,000 $300,000 $200,000 $100,000 $0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr FY FY FY FY

34 Sales and Use Tax Analysis Outlook Cautious Description: Tax imposed on all retail sales, leases and rentals of most goods, as well as taxable services. The total tax rate levied within the City is 8.25% (State, 6.25%; City, 1.5%; DCTA, 0.5%). Analysis: As the second largest revenue source to the City's General Fund, sales and use taxes are essential to the delivery of services to the community. Sales tax revenues through the 2nd quarter of FY 2013 compared to revenues through the 2nd quarter of FY2012 shows a 0.19% increase, and compared to the budget shows a 2.0% decrease. Staff has rated this indicator as Cautious. 2nd Quarter FY Actual Y-T-D Revenue: Gross Sales Tax Municipal Operations $ 343,637 $ 689,189 General Retail & Others 6,315,758 12,764,295 Comptroller Fees (123,795) (250,362) Amount Retained (121,321) (245,358) Total Revenue $ 6,414,279 $ 12,957,764 Expenses: Economic Incentives Denton Crossing $ 124,585 $ 278,592 Unicorn Lake 13,857 28,310 Rayzor Ranch 172, ,989 Total Expenses $ 311,381 $ 675,891 Net Total 6,102,898 12,281,873 FY Budget 6,254,188 12,589,419 Over(Under) Budget $ (151,290) $ (307,546) Sales Tax Budget: $ 26,466,107 Year End Projection: 26,466,107 Variance to Original Budget: $ - Economic Development Expenditure Budget: $ 1,372,855 Year End Projection: 1,264,260 Variance to Original Budget: $ (108,595) $7.0 Gross Sales Tax Collections (Millions) $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr FY Actual FY Actual FY Actual FY Actual 33

35 Certificates of Occupancy Outlook Cautious Description: Certificates of Occupancy (CO) are permits issued in compliance with the 2003 International Building Code (IBC) and applicable City ordinances. The IBC states, "that no building shall be occupied or used, and no change in existing occupancy classification of a building shall be made until a certificate of occupancy is issued." Certificates of Occupancy ensure that applicable building, fire and consumer health codes are met. Analysis: Certificates of Occupancy are an economic indicator that provides a framework for the overall condition of the local economy. Certificates of Occupancy decreased 35% from the prior quarter and 43% from the 2nd quarter of Staff has rated the outlook for this revenue indicator as Cautious Certificates of Occupancy Q '08 3Q '08 4Q '08 1Q '09 2Q '09 3Q '09 4Q '09 1Q '10 2Q '10 3Q '10 4Q '10 1Q '11 2Q '11 3Q '11 4Q '11 1Q '12 2Q '12 3Q '12 4Q '12 1Q '13 2Q '13 Source: City of Denton's Planning and Development Department. 34

36 Residential Permits Outlook Positive Description: Residential Permits are issued in compliance with the 2003 International Building Code (IBC) and applicable City ordinances. The data presented in this analysis only include new permits issued and not remodels/alterations. Analysis: Residential Permits are an economic indicator that provides a framework for the overall condition of the local economy. In particular, residential permits have a direct correlation with building inspection fees and appraised values. Residential permits increased 54% from the prior quarter and 42% from the 2nd Quarter of Staff has rated the outlook for this revenue indicator as Positive Residential Permits Q '08 3Q '08 4Q '08 1Q '09 2Q '09 3Q '09 4Q '09 1Q '10 2Q '10 3Q '10 4Q '10 1Q '11 2Q '11 3Q '11 4Q '11 1Q '12 2Q '12 3Q '12 4Q '12 1Q '13 2Q '13 Source: City of Denton's Planning and Development Department. 35

37 Texas Leading Indicators Index Outlook Positive Description: The Texas Leading Indicators Index is a single weighted summary statistic that sheds light on the future of the state's economy. The index is designed to signal movements and changes in the state's rate of growth. The index includes the following leading indicators: Texas Value of the Dollar, U.S. Leading Index, Real Oil Prices, Well Permits, Initial Claims for Unemployment Insurance, Texas Stock Index, Help-Wanted Advertising, and Average Weekly Hours Worked in Manufacturing. Analysis: Texas Leading Indicators provide a framework for the overall condition of the local economy. Data for this quarter shows continued increases in the state's rate of growth. The index increased by 1.04% from the prior quarter and increased 2.02% from the 2nd quarter of Staff has rated this indicator as Positive Texas Leading Indicators Index Q '03 4Q '03 2Q '04 4Q '04 2Q '05 4Q '05 2Q '06 4Q '06 2Q '07 4Q '07 2Q '08 4Q '08 2Q '09 4Q '09 2Q '10 4Q '10 2Q '11 4Q '11 2Q '12 4Q '12 2Q '13 Source: Federal Reserve Bank of Dallas 36

38 Unemployment Rate Index Outlook Cautious Description: Unemployment is defined as the number or proportion of people looking for work at the prevailing wage who are unable to find employment. Analysis: Unemployment is an economic indicator that provides a framework for the overall condition of the national, state and local economies. Data for this quarter reflects an increase in the unemployment rate from the prior quarter for all reported sectors. The unemployment rate for the City of Denton rose 5.1% compared to the prior quarter's rate of 4.9%. The unemployment rate for the other reported sectors were also higher than the prior quarter. Staff has rated the outlook for this revenue indicator as Cautious Unemployment Rate Index Q '07 4Q '07 2Q '08 4Q '08 2Q '09 4Q '09 2Q '10 4Q '10 2Q '11 4Q '11 2Q '12 4Q '12 2Q '13 Dallas-Plano-Irving MD Denton Texas U6 Unemployment United States Source: Federal Reserve Bank of Dallas, U.S. Bureau of Labor Statistics, and Texas Workforce Commission Note: U6 unemployment includes marginally attached workers who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part-time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. 37

39 38

40 Section 4 City of Denton Quarterly Financial Report March 2013 INVESTMENT REPORT 39

41 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 2nd Fiscal Quarter March 31, 2013 Page 1 INVESTMENT POOL Policy Par Market Book Unrealized Max. Benchmark Portfolio: Value Value Value Gain/(Loss) 1 WAM Wam YTM Yield* Investment Pool $ 420,334,259 $ 422,931,520 $ 422,510,776 $ 420, % 0.18% *Twelve month moving average of a one year U.S. T-bill yield % of Total Par Market Book Unrealized Portfolio Policy Securities By Investment Type: Value Value Value Gain/(Loss) 1 WAM YTM (Book Value) Max. Federal Agency Issues 233,000, ,601, ,176, , % 55.66% % Municipal Bonds 3,000,000 2,995,530 3,000,000 (4,470) % 0.71% 15.00% Certificates of Deposit 141,000, ,000, ,000, % 33.37% 35.00% Demand Deposits 43,334,259 43,334,259 43,334, % 10.26% - Total Portfolio $ 420,334,259 $ 422,931,520 $ 422,510,776 $ 420, % % - 1 Unrealized gain/(loss) is the difference between the market and book value and does not represent an actual gain or loss. Gains and losses are realized only when a security is sold prior to maturity. Since it is the City's practice to hold investments until they mature, the temporary gains and losses are unlikely to be realized. Current 3 Months Ago 3 Month 1 Year Ago Investment Pool Comparisons: 3/31/ /31/2012 Difference 3/31/2012 Par Value $ 420,334,259 $ 437,341,754 $ (17,007,495) $ 425,522,639 $ Market Value $ 422,931,520 $ 440,238,791 $ (17,307,271) $ 427,694,995 $ Book Value $ 422,510,776 $ 439,758,624 $ (17,247,848) $ 427,397,428 $ Unrealized Gain(Loss) $ 420,744 $ 480,167 $ (59,423) $ 297,567 $ Weighted Average Maturity Yield to Maturity 0.50% 0.52% -0.02% 0.58% 1 Year Ago Difference (5,188,380) (4,763,475) (4,886,652) 123, % Portfolio Composition: Federal Agency Issues 55.66% 52.40% 3.26% 53.42% Municipal Bonds 0.71% 0.91% -0.20% 0.24% Certificates of Deposit 33.37% 32.52% 0.85% 32.29% Commercial Paper 0.00% 4.77% -4.77% 4.67% Demand Deposits 10.26% 9.40% 0.86% 9.38% 2.24% 0.47% 1.08% -4.67% 0.88% Bank Collateral Review**: Institution Collateral Type Market Value Collected Balance Pledge Required Collateral Ratio Wells Fargo Demand Deposits BNY Mellon FNMA POOL $ 59,866,096 $ 43,181,468 > 102% % Comerica Collateralized CDs Federal Reserve FHLMC POOL $ 60,747,353 $ 49,427,878 > 110% % BBVA Compass Collateralized CDs Fed Home Loan Bk FHLB LOC $ 17,250,000 $ 16,120,053 > 102% % ViewPoint Bank Collateralized CDs Fed Home Loan Bk FHLMC&FNMA PL $ 16,082,281 $ 14,054,862 > 102% % **Does not include $250,000 FDIC insurance Depository Ledger Balance Review: Institution Account Type Beginning Bal. Deposits Withdrawals Ending Bal. Wells Fargo Bank Checking $ 44,197,203 $ 33,785,335 $ (34,648,279) $ 43,334,259 Compliance Statement & Review: The Quarterly Investment Report is in full compliance with the objectives, restrictions, and strategies as set forth in the City of Denton's Investment Policy and the Public Funds Investment Act (Texas Government Code, Chapter ). Reviewer: Antonio Puente, Jr., CGFO Assistant Director of Finance Preparer: Caroline Finley Treasury Administrator Reviewer: Chuck Springer, CGFO Director of Finance 40

42 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 2nd Fiscal Quarter March 31, 2013 Page 2 INVESTMENT POOL Current 3 Months Ago 3 Month 1 Year Ago 1 Year 3/31/ /31/2012 Difference 3/31/2012 Difference Par Value - Federal Agency Issues $ 233,000,000 $ 228,000,000 $ 5,000,000 $ 226,435,000 $ 6,565,000 Par Value - Municipal Bonds 3,000,000 4,000,000 (1,000,000) 1,000,000 2,000,000 Certificates of Deposit 141,000, ,000,000 (2,000,000) 138,000,000 3,000,000 Par Value - Commercial Paper - 21,000,000 (21,000,000) 20,000,000 (20,000,000) Demand Deposits 43,334,259 41,341,754 1,992,505 40,087,639 3,246,620 Total Par Value $ 420,334,259 $ 437,341,754 $ (17,007,495) $ 425,522,639 $ (5,188,380) Market Value - Federal Agency Issues $ 235,601,731 $ 230,919,567 $ 4,682,164 $ 228,600,206 $ 7,001,525 Market Value - Municipal Bonds 2,995,530 3,994,270 (998,740) 1,014,650 1,980,880 Certificates of Deposit 141,000, ,000,000 (2,000,000) 138,000,000 3,000,000 Market Value - Commercial Paper - 20,983,200 (20,983,200) 19,992,500 (19,992,500) Demand Deposits 43,334,259 41,341,754 1,992,505 40,087,639 3,246,620 Total Market Value $ 422,931,520 $ 440,238,791 $ (17,307,271) $ 427,694,995 $ (4,763,475) Book Value - Federal Agency Issues $ 235,176,517 $ 230,435,295 $ 4,741,222 $ 228,324,657 $ 6,851,860 Book Value - Municipal Bonds 3,000,000 4,001,146 (1,001,146) 1,008,176 1,991,824 Certificates of Deposit 141,000, ,000,000 (2,000,000) 138,000,000 3,000,000 Book Value - Commercial Paper - 20,980,429 (20,980,429) 19,976,956 (19,976,956) Demand Deposits 43,334,259 41,341,754 1,992,505 40,087,639 3,246,620 Total Book Value $ 422,510,776 $ 439,758,624 $ (17,247,848) $ 427,397,428 $ (4,886,652) Accrued Interest $ 1,434,931 $ 1,619,860 $ (184,929) $ 1,409,650 $ 25,281 Cash Value - $ 424,366,451 $ 441,858,651 $ (17,492,200) $ 429,104,645 $ (4,738,194) (Total Market Value + Accrued Interest) Unrealized Gain/(Loss) $ 420,744 $ 480,167 $ (59,423) $ 297,567 $ 123,177 Change in Fair Value since 9/30/12 - $ (987,191) $ (516,212) $ (470,979) $ (1,340,756) $ 353,565 (GASB 31) Strategy Statement: The City's Investment Pool is an aggregation of the majority of City funds which may include tax receipts, enterprise fund revenues, fine and fee revenues, reserve funds for outstanding utility system revenue bonds, as well as some, but not necessarily all bond proceeds, grants, gifts and endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. In order to ensure the ability of the City to meet obligations and to minimize potential liquidation losses, the dollar-weighted average stated maturity of the Investment Pool shall not exceed 1.5 years or 550 days. The objectives of this portfolio are to: (1) ensure safety of principal by investing in only high quality securities for which a strong secondary market exists; (2) ensure that anticipated cash flow needs are matched with adequate investment liquidity; (3) limit market and credit risk through diversification; and (4) attain the best feasible yield commensurate with the objectives and restrictions set forth in the Investment Policy by actively managing the portfolio to meet or exceed the twelve month moving average yield on a one year U.S. Treasury bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. 41

43 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 2nd Fiscal Quarter March 31, 2013 Page 3 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Security Type: 3/31/ /31/2012 3/31/2012 U.S. Federal Agencies - Coupon $ 215,179,415 $ 207,434,256 $ 192,882,388 U.S. Federal Agencies - Callable 19,997,102 23,001,039 28,442,269 U.S. Federal Agencies - Step Up - - 7,000,000 Municipal Bonds - Coupon 3,000,000 4,001,146 1,008,176 Certificates of Deposit - CDARS 62,000,000 62,000,000 38,000,000 Certificates of Deposit - Collateralized 79,000,000 81,000, ,000,000 Commercial Paper - Discount - 20,980,429 19,976,956 Demand Deposits 43,334,259 41,341,754 40,087,639 Total Book Value $ 422,510,776 $ 439,758,624 $ 427,397,428 Federal Agencies - Coupon 50.93% Current 3/31/2013 Federal Agencies - Callable 4.73% Municipal - Coupon 0.71% Certificates of Deposit - CDARS 14.67% Demand Deposits 10.26% Certificates of Deposit - Collateralized 18.70% Objective: The portfolio is restricted to U.S. Treasuries and agency securities (maturing in less than five years), state and locally issued bonds of Texas rated AA or better (maturing in less than three years), insured or collateralized certificates of deposit (maturing in less than three years), collateralized repurchase agreements (maturing in less than thirty days), commercial paper rated A-1/P-1 or better (maturing in less than 270 days), and local government pools & SEC registered money market mutual funds (weighted average maturity of less than 60 days). Current 3 Months Ago 1 Year Ago Summary By Security Type: 3/31/ /31/2012 3/31/2012 U.S. Federal Agencies - Coupon 50.93% 47.17% 45.13% U.S. Federal Agencies - Callable 4.73% 5.23% 6.65% U.S. Federal Agencies - Step Up 0.00% 0.00% 1.64% Municipal Bonds - Coupon 0.71% 0.91% 0.24% Certificates of Deposit - CDARS 14.67% 14.10% 8.89% Certificates of Deposit - Collateralized 18.70% 18.42% 23.40% Commercial Paper - Discount 0.00% 4.77% 4.67% Demand Deposits 10.26% 9.40% 9.38% Total % % % 42

44 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 2nd Fiscal Quarter March 31, 2013 Page 4 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Issuer: 3/31/ /31/2012 3/31/2012 CDARS CDs $ 62,000,000 $ 62,000,000 $ 38,000,000 COMERICA BANK CDs 49,000,000 49,000,000 39,000,000 BBVA COMPASS BANK CDs 16,000,000 16,000,000 35,000,000 VIEWPOINT BANK CDs 14,000,000 16,000,000 26,000,000 FFCB 34,344,755 19,343,584 29,329,683 FHLB 30,435,968 13,317,837 44,576,920 FHLMC 72,853,536 93,041,796 84,854,398 FNMA 97,542, ,732,078 69,563,656 GRAND PRAIRIE, TX GENERAL OBG - 1,001,146 1,008,176 TEXAS STATE GENERAL OBLIGATION 3,000,000 3,000,000 - TOYOTA MOTOR CREDIT CP - 20,980,429 19,976,956 WELLS FARGO DEMAND DEPOSITS 43,334,259 41,341,754 40,087,639 Total Book Value $ 422,510,776 $ 439,758,624 $ 427,397,428 Current 3/31/2013 BBVA COMPASS BANK CDs, 3.79% COMERICA BANK CDs, 11.60% VIEWPOINT BANK CDs, 3.31% FFCB, 8.13% FHLB, 7.20% CDARS CDs, 14.67% FHLMC, 17.24% WELLS FARGO DEMAND DEPOSITS, 10.26% TEXAS STATE GENERAL OBLIGATION, 0.71% FNMA, 23.09% Objective: It is the policy of the City to diversify its investment portfolio by restricting investments in a single issuer/institution to no more than 35 percent of the portfolio's total book value and to those offering repurchase agreements, collateralized CDs, and local or state of Texas municipal securities to no greater than 15 percent. The purpose of this requirement is to limit market and credit risk. Commercial paper issuers are further restricted by a 5 percent total portfolio limitation. There are no issuer limitations on U.S. Treasuries or FDIC insured products except as they pertain to the overall 35% certificates of deposit restriction. Current 3 Months Ago 1 Year Ago Summary By Issuer: 3/31/ /31/2012 3/31/2012 CDARS CDs 14.67% 14.10% 8.89% COMERICA BANK CDs 11.60% 11.14% 9.12% BBVA COMPASS BANK CDs 3.79% 3.64% 8.19% VIEWPOINT BANK CDs 3.31% 3.64% 6.08% FFCB 8.13% 4.40% 6.86% FHLB 7.20% 3.03% 10.43% FHLMC 17.24% 21.16% 19.86% FNMA 23.09% 23.81% 16.28% GRAND PRAIRIE, TX GENERAL OBG 0.00% 0.23% 0.24% TEXAS STATE GENERAL OBLIGATION 0.71% 0.68% 0.00% TOYOTA MOTOR CREDIT CP 0.00% 4.77% 4.67% WELLS FARGO DEMAND DEPOSITS 10.26% 9.40% 9.38% Total % % % 43