Rendering of New Fire Station #2. City of Denton, Texas

Transcription

1 Rendering of New Fire Station #2 City of Denton, Texas First Quarter Financial Report December 2015

2 About This Quarterly Financial 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 December 31, This report is presented in six 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. In addition, the progress on Key Action Steps are highlighted. 6. The G.O. Bond Program Report provides updates of each of the Bond Propositions from the 2012 and 2014 bond elections. 1

3 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

4 Section 1 City of Denton Quarterly Financial Report December 2015 Executive Dashboards 3

5 FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PROJECTION VARIANCE Beginning Fund Balance as of 09/30/15 $ $ RESOURCES: Ad Valorem Taxes % Sales Tax % Franchise Fees % Other Taxes % Service Fees % Fines and Fees % Licenses and Permits % Miscellaneous Revenue % Transfers In % Total Revenues % Total Resources City of Denton, Texas General Fund Executive Dashboard EXPENDITURES : Personal Service % Material and Supplies % Maintenance and Repairs % Insurance % Miscellaneous % Operations % Transfers Out % Fixed Assets % Total Expenditures % Net Income (Loss) Ending Fund Balance $ $ Key Trends At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. $40 $35 $30 $25 $20 $15 $10 $5 $ $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 Revenue & Expenses (in Millions) Oct 15 YTD Revenue Nov 15 YTD Expenses Dec 15 Sales Tax Monthly Average by Quarter 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 4 $ 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 Note: All figures presented are in millions of dollars.

6 DESCRIPTIO N City of Denton, Texas Electric Fund Executive Dashboard FY ANNUAL BUDGET 1 FY ANNUAL PRO JECTIO NS FY VARIANCE Beginning Working Capital and Reserves as of 9/30/15 $ $ 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) (8.05) (8.05) Ending Working Capital and Reserves $ $ $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $ Revenue & Expenses (in Millions) Oct 15 Nov 15 Dec 15 YTD Revenue YTD Expense Historical Quarterly GWH Sales Key Trends At this point in the fiscal year, revenues and expenses are projected to meet budgeted levels Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q16 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. Note: All figures presented are in millions of dollars. 5

7 FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET 1 PROJECTION VARIANCE Beginning Working Capital and Reserves as of 09/30/15 2 $ $ RESOURCES: Water Sales % Other Water Revenues % Transfers In % Impact Fee Revenue % Total Revenues % Total Resources EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfers Out % Total Expenditures % Net Income (Loss) (0.02) (0.02) Ending Working Capital and Reserves $ $ Key Trends City of Denton, Texas Water Fund Executive Dashboard At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $ 3,000 2,500 2,000 1,500 1, Revenue & Expenses (in Millions) Oct 15 Nov 15 Dec 15 YTD Revenue YTD Expenses Historical Quarterly Gallons Sold (in Millions) 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 2 The Beginning Working Capital balance excludes $4.6 million of Impact Fees Reserves and $1.0 million of Development Plan Line Reserves Q 11 3Q 11 1Q 12 3Q 12 1Q 13 Note: All figures presented are in millions of dollars. 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16

8 FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET 1 PROJECTION VARIANCE Beginning Working Capital and Reserves as of 09/30/15 2 $ 9.60 $ RESOURCES: Wastewater Fees % Other Wastewater Revenue % Drainage Fees % Transfer In % Impact Fee Revenue % Total Revenues % Total Resources EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) Ending Working Capital and Reserves $ 9.61 $ Key Trends City of Denton, Texas Wastewater Fund Executive Dashboard At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. $12 $10 $8 $6 $4 $2 $ 1,200 1, Q Historical Quarterly Gallons Billed (in Millions) 3Q 11 1Q 12 Revenue & Expenses (in Millions) Oct 15 Nov 15 Dec 15 3Q 12 YTD Revenue 1Q 13 3Q 13 YTD Expenses 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 2 The Beginning Working Capital balance excludes $3.0 million of Impact Fees Reserves, $1.0 million of Development Plan Line Reserves and $1.0 million for Drainage Reserves. 7 Note: All figures presented are in millions of dollars.

9 City of Denton, Texas Drainage Operations Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET PROJECTION VARIANCE REVENUES: $1.4 Residential Drainage Fees $ 1.64 $ % Nonresidential Drainage Fees % $1.2 General Fund Transfer % Total Revenues % $1.0 Revenue & Expenses (in Millions) EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) $ - $ - $0.8 $0.6 $0.4 $0.2 $ Oct 15 Nov 15 Dec 15 YTD Revenue YTD Expenses Key Trends At this point in the fiscal year, expenditures and revenues are projected to meet budgeted levels. Note: All figures presented are in millions of dollars. 8

10 FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PRO JECTIO NS VARIANCE Beginning Working Capital and Reserves as of 09/30/15 2 $ 4.91 $ 5.85 RESO URCES: Collection & Disposal % Recycling % Other Revenue % Total Revenues % Total Resources EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) - - Ending Working Capital and Reserves $ 4.91 $ 5.85 Key Trends City of Denton, Texas Solid Waste Fund Executive Dashboard At the end of the first quarter, revenues and expenditures are expected to meet budget projections. 7,200 6,600 6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1, ,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 Qtr 2 Residential Curbside Collection Tonnage 2014 Qtr Qtr Qtr 1 Refuse Tonnage 2014 Qtr Qtr Qtr Qtr Qtr Qtr 4 Recycling Tonnages 2015 Qtr Qtr Qtr Qtr 1 Commercial Refuse & Recycling (Front & Side Load) Cubic Yards Serviced per Week Commercial Refuse Commercial Recycling 2016 Qtr 1 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 2 The Beginning Working Capital Reserve excludes $6.93 million of Landfill Closure/Post Closure reserves. Note: All figures presented are in millions of dollars. 9

11 Key Trends City of Denton, Texas Airport Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PRO JECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/15 $ 3.75 $ 3.40 RESOURCES: Airport Ground Leases % FBO Commissions % Miscellaneous % Total Operating Revenues % EXPENDITURES: Personal Service % Operations, Services % Transfer Out % Total Operating Expenditures % Net Operating Income (Loss) (0.53) (0.53) NO N-O PERATING REVENUES: Investment Income % Gas Well Royalties % Total Non-Operating Revenues % NO N-O PERATING EXPENDITURES: Debt Service % Transfer Out - Capital % Total Non-Operating Expenditures % Net Non-Operating Income (Loss) (0.12) (0.12) Net Income (Loss) (0.65) (0.65) Ending Working Capital and Reserves $ 3.10 $ 2.75 At this point in the year all revenues and expenses are expected to meet the annual budget. $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 55,000 50,000 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) 2Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY budget process. Note: All financial amounts presented are in millions of dollars. 10

12 City of Denton, Texas Street Improvement Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PROJECTIO N VARIANCE Beginning Fund Balance as of 09/30/2015 $ 1.02 $ 1.39 RESO URCES: Franchise Fe es % Street Cuts % Inve stme nt Income % Transfers In % Total Revenues % Total Resources $2.4 $1.6 $0.8 Revenue & Expenses (in Millions) EXPENDITURES: Personal Service % Materials & Supplies % Maintenance & Repairs % Operations, Services % Transfer Out % Total Expe nditure s % Net Income (Loss) - - Ending Fund Balance $ 1.02 $ 1.39 Key Trends Lane miles of surface treatment declined 98% in the 1 st quarter as compared to last year due to heavy rainfall and departmental focus on reconstruction projects. 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 11 $ Oct-15 Nov-15 Dec-15 YTD Revenue YTD Expenses Tons of Asphalt Laid (in Thousands) Qtr1 FY14-15 FY15-16 Lane Miles Surface Treatment Qtr 1 FY FY Note: All figures presented are in millions of dollars.

13 City of Denton, Texas Grants Dashboard FY FY GRANT ANNUAL FY DESCRIPTIO N AMO UNT PRO JECTION VARIANCE Budget Comm Development $ 2.75 $ % Public Safety % Parks & Recreation % Other % Total Budget % New Awards Comm Development % Public Safety % Total New Awards % Totals $ 5.48 $ % $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ FY Awards & Expenses (in Millions) COMM DEV PUBLIC SAFETY Awards FY Grants Awarded OTHER 6% PARKS & REC Expenses OTHER Key Trends The following grants have been received in FY : Community Development : ESG additional award $5,522, Amy Young Program $88,000. Fire Department: 2015 SHSP: $2,352. PARKS & REC 28% PUBLIC SAFETY 14% COMM DEV 52% Note: All figures presented are in millions of dollars. 12

14 Section 2 City of Denton Quarterly Financial Report December 2015 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 Projection (Unaudited) For the Period Ended December 31, 2015 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 $ 17,717,948 $ 15,191,348 $ 18,996,836 $ 39,977,232 $ 39,977,232 0% Delinquent - Ad Valorem 65,759 55,331 16, , ,482 0% Miscellaneous Penalties & Fees 71,703 66,225 40, , ,254 0% Ad Valorem Taxes 17,855,410 15,312,904 19,053,590 40,588,968 40,588,968 0% Sales Tax 7,986,901 7,737,651 8,385,311 30,925,867 30,925,867 0% Franchise - Gas Utilities , ,852 0% Franchise - Private Electric Utilities , ,124 0% Franchise - Cable 5, , ,520 0% Franchise - Telecom - 69,323 9, , ,436 0% Franchise - Denton Municipal Utilities 1,011, ,214 1,094,333 4,570,917 4,570,917 0% Franchise Fees 1,017, ,537 1,104,269 6,228,849 6,228,849 0% Other Taxes , ,528 0% Ambulance Service Fees 566, , ,064 3,168,000 3,168,000 0% Charges to Bond Funds 150, % Fire Department Fees 32,902 62,638 37, , ,557 0% Building Inspections Fees 110, , , , ,527 0% Park Department Fees 103, , ,567 1,612,826 1,612,826 0% Planning Department Fees 47, , , , ,969 0% Reprographics Fees 86, ,374 70, , ,130 0% Miscellaneous Service Fees 32,001 26,423 30, , ,693 0% Service Fees 1,129,906 1,078,415 1,265,521 6,867,702 6,867,702 0% Denton Municipal Fines 434, , ,609 2,118,112 2,118,112 0% Parking Fines 54,395 56,553 50, , ,208 0% Miscellaneous Fines and Fees 203, , ,272 1,098,227 1,098,227 0% Court Administrative and Service Fees 184, , ,186 1,022,380 1,022,380 0% Fines and Fees 877,015 1,039, ,857 4,464,927 4,464,927 0% Demolition Permits 3,820 2,422 1,710 9,690 9,690 0% Building Permits 538, , ,243 2,399,453 2,399,453 0% Certificate of Occupancy 12,255 21,840 12,635 87,360 87,360 0% Miscellaneous Licenses and Permits 16,745 22,146 10,213 88,539 88,539 0% Licenses and Permits 571, , ,801 2,585,042 2,585,042 0% Investment Income 33,481 49,135 45, , ,541 0% Miscellaneous Revenues 26, , ,243 1,342,208 1,342,208 0% Miscellaneous Resources 60, , ,775 1,538,749 1,538,749 0% ROI - Denton Municipal Utilities 1,524,863 1,714,753 1,726,839 7,229,529 7,229,529 0% Transfers 1,934,418 1,995,459 1,990,268 7,979,788 7,979,788 0% Transfers 3,459,281 3,710,212 3,717,107 15,209,317 15,209,317 0% Total General Fund Revenues $ 32,957,998 $ 30,367,159 $ 35,421,231 $ 108,749,949 $ 108,749,949 0% 14

16 City of Denton General Fund Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION NEIGHBORHOOD SERVICES Building Inspections $ 522,439 $ 726,920 $ 567,983 $ 2,905,378 $ 2,905,378 0% Community Improvement Services 290, , ,424 1,826,791 1,826,791 0% Libraries 1,415,451 1,445,687 1,406,635 5,778,146 5,778,146 0% Parks and Recreation 2,307,161 3,063,532 2,422,125 12,244,373 12,244,373 0% Planning 486, , ,606 2,830,301 2,830,301 0% Gas Well Review 66, ,028 54, , ,777 0% Social Services 87, , , , ,812 0% 5,175,281 6,632,429 5,385,955 26,508,578 26,508,578 0% PUBLIC SAFETY Animal Services 334, , ,013 1,405,491 1,405,491 0% Fire 5,154,744 6,490,147 5,487,265 25,701,080 25,701,080 0% Municipal Court 288, , ,495 1,462,866 1,462,866 0% Municipal Judge 80, ,788 77, , ,813 0% Police 5,855,411 7,038,811 5,924,093 28,098,208 28,098,208 0% 11,714,419 14,356,408 12,124,830 57,106,458 57,106,458 0% TRANSPORTATION Traffic Operations 335, , ,246 2,115,224 2,115,224 0% Transportation Operations 65, ,251 86, , ,633 0% Street Lighting 187, , , , ,000 0% 588, , ,029 3,330,857 3,330,857 0% ADMINISTRATIVE & COMMUNITY SERVICES Cable Television 68,223 80,782 67, , ,872 0% City Manager's Office 590, , ,042 2,890,453 2,890,453 0% Economic Development 374, , ,872 3,244,853 3,244,853 0% Facilities Management 804, , ,803 3,805,911 3,805,911 0% Finance 790, , ,429 2,858,615 2,858,615 0% Human Resources 308, , ,408 1,783,309 1,783,309 0% Internal Audit - 18,765 34,913 75,000 75,000 0% Legal Administration 544, , ,975 2,264,527 2,264,527 0% Public Communications Office 92, , , , ,558 0% Reprographics 115, ,275 94, , ,745 0% Non-Departmental 880, , ,690 3,284,629 3,284,629 0% 4,570,753 5,348,083 4,452,847 21,648,472 21,648,472 0% TOTAL EXPENDITURES $ 22,048,653 $ 27,170,292 $ 22,757,661 $ 108,594,365 $ 108,594,365 0% 15

17 City of Denton Electric Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 1 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 9/30/15 $ 55,704,256 $ 59,828,699 REVENUES: Operating Revenues $ 37,271,408 $ 37,587,708 $ 38,395, ,407, ,407,861 0% Non-operating Revenues 70,825 77,391 89, , ,000 0% Total Revenues 37,342,233 37,665,099 38,484, ,707, ,707,861 0% EXPENDITURES: Purchased Power 22,201,856 19,856,731 21,800,658 89,808,303 89,808,303 0% Operation and Maintenance 7,137,528 9,097,109 7,442,536 39,321,717 39,321,717 0% Return on Investment 1,049,088 1,132,695 1,201,300 5,085,712 5,085,712 0% Franchise Fee 1,496,267 1,616,335 1,713,537 7,265,302 7,265,302 0% Non-Operating Expenditures 14,059,282 15,522,751 15,200,131 34,272,853 34,272,853 0% Total Expenditures 45,944,021 47,225,621 47,358, ,753, ,753,887 0% Net Income (Loss) $ (8,601,788) $ (9,560,522) $ (8,873,367) (8,046,026) (8,046,026) Ending Working Capital and Reserves $ 47,658,230 $ 51,782,673 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 16

18 City of Denton Water Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/15 1 $ 16,960,052 $ 16,893,397 REVENUES: Water Sales Residential $ 3,744,501 $ 4,140,915 $ 4,179,675 17,455,940 17,455,940 0% Water Sales Commercial 3,821,299 4,019,035 4,403,433 16,607,584 16,607,584 0% Water for Resale 516, , ,507 1,273,688 1,273,688 0% Other Water 254, , , , ,151 0% Transfers In 1,539,997 1,575,787 1,546,887 6,303,147 6,303,147 0% Investment Income 16,949 23,500 21,643 94,000 94,000 0% Impact Fee Revenue 900,000 1,000,000 1,000,800 4,000,000 4,000,000 0% Total Revenues 10,793,458 11,310,459 11,609,911 46,661,510 46,661,510 0% EXPENDITURES: Personal Service 1,999,701 2,260,327 2,074,015 10,508,368 10,508,368 0% Purchased Power 355, , ,060 1,593,340 1,593,340 0% Purchase of Water 17, % Materials and Supplies 264, , ,507 1,758,560 1,758,560 0% Maintenance and Repairs 179, , ,740 1,440,938 1,440,938 0% Insurance 54,881 57,825 57, , ,299 0% Miscellaneous 45, , , , ,667 0% Operations, Services 582, , ,361 2,950,519 2,950,519 0% Capital Outlay 1,959,252 2,064,675 4,160,027 7,908,676 7,908,676 0% Return on Investment 275, , ,754 1,269,253 1,269,253 0% Franchise Fee 393, , ,364 1,789,442 1,789,442 0% Debt Service 9,632,325 8,839,002 8,839,002 13,441,102 13,441,102 0% Transfers Out 801, , ,589 3,383,659 3,383,659 0% Total Expenditures 16,561,842 16,762,982 18,015,623 46,681,823 46,681,823 0% Net Income (Loss) $ (5,768,384) $ (5,452,523) $ (6,405,712) (20,313) (20,313) Ending Working Capital and Reserves $ 16,939,739 $ 16,873,084 1 The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $4,587,529 and $1,000,000 of Development Plan Line Reserves. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 17

19 City of Denton Wastewater Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/15 1 $ 9,603,331 $ 11,063,297 REVENUES: Residential Fees $ 2,643,868 $ 2,741,998 $ 2,718,920 10,973,246 10,973,246 0% Commercial Fees 2,809,613 3,021,731 3,087,657 11,835,262 11,835,262 0% Effluent Irrigation Fees 26,410 17,090 27,720 74,063 74,063 0% Wholesale Fees 131, , , , ,597 0% Other Wastewater Fees 355, , ,023 1,556,366 1,556,366 0% Drainage Fees 1,157,925 1,135,351 1,129,830 4,445,722 4,445,722 0% Transfer In 161, , , , ,975 0% Interest Revenue 10,413 12,500 15,307 50,000 50,000 0% Impact Fee Reserves 450, , ,400 2,000,000 2,000,000 0% Total Revenues 7,746,743 8,133,000 8,205,408 32,354,231 32,354,231 0% EXPENDITURES: Personal Service 1,558,440 1,708,592 1,536,119 8,018,825 8,018,825 0% Purchased Power 225, , , , ,000 0% Materials and Supplies 101, , ,444 1,526,303 1,526,303 0% Maintenance and Repairs 249, , ,631 1,554,119 1,554,119 0% Insurance 62,615 61,895 61, , ,579 0% Miscellaneous 29,206 21,245 29,506 52,458 52,458 0% Operations, Services 513, , ,551 2,516,109 2,516,109 0% Capital Outlay 1,017,938 1,049,998 2,152,942 4,385,380 4,385,380 0% Return on Investment 200, , , , ,564 0% Franchise Fee 285, , ,406 1,249,377 1,249,377 0% Debt Service 4,470,119 4,765,323 4,765,323 7,649,736 7,649,736 0% Transfers Out 786, , ,943 3,384,735 3,384,735 0% Total Expenditures 9,501,360 10,458,954 11,045,708 32,340,185 32,340,185 0% Net Income (Loss) $ (1,754,617) $ (2,325,954) $ (2,840,300) 14,046 14,046 Ending Working Capital and Reserves $ 9,617,377 $ 11,077,343 1 The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $2,959,984, $1,000,000 of Development Plan Line Reserves, and $1,000,000 of Drainage Reserves. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 18

20 City of Denton Drainage Operations Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION REVENUES: Residential Drainage Fees $ 412,947 $ 405,317 $ 425,230 $ 1,636,150 $ 1,636,150 0% Nonresidential Drainage Fees 744, , ,600 2,809,572 2,809,572 0% Wastewater Resources 25, , % General Fund Transfer 128, , , , ,155 0% Total Revenues 1,311,183 1,391,199 1,254,969 4,985,877 4,985,877 0% EXPENDITURES: Personal Service 352, , ,027 1,800,514 1,800,514 0% Materials and Supplies 6,061 10,664 4,702 88,096 88,096 0% Maintenance and Repairs 18,613 28,990 15, , ,276 0% Insurance 6,093 6,020 6,020 24,078 24,078 0% Miscellaneous 2,097 3,744 1,828 16,000 16,000 0% Operations, Services 136, ,599 81, , ,960 0% Capital Outlay 77,080 47,567 59, , ,563 0% Debt Service 571, , , , ,138 0% Transfer Out 140, , , , ,252 0% Total Expenditures 1,311,183 1,391,199 1,254,969 4,985,877 4,985,877 0% Net Income (Loss) $ - $ - $ - $ - $ - 19

21 City of Denton Solid Waste Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/15 1 $ 4,914,289 $ 5,854,345 REVENUES: Garbage Fees - Residential $ 2,450,146 $ 2,585,178 $ 2,599,241 10,636,545 10,636,545 0% Garbage Fees - Commercial 3,179,805 3,398,561 3,393,391 14,242,150 14,242,150 0% Landfill Fees 893,181 1,191,377 1,195,913 4,822,055 4,822,055 0% Recycling 195, , , , ,125 0% Construction - 28,029 30, , ,024 0% Site Operations 54,834 44,835 30, , ,200 0% Other Revenue 94,366 94,557 36, , ,931 0% Interest Revenue 2,143 1,125 3,593 4,500 4,500 0% Total Revenues 6,870,086 7,544,746 7,502,598 31,192,530 31,192,530 0% EXPENDITURES: Personal Service 2,031,016 2,527,048 2,022,289 10,292,605 10,292,605 0% Materials and Supplies 71,005 96, , , ,063 0% Maintenance and Repairs 67, , , , ,659 0% Insurance 39,295 48,601 48, , ,245 0% Miscellaneous 26,980 30,036 33,601 66,000 66,000 0% Operations, Services 1,287,669 1,844,894 1,132,029 6,565,216 6,565,216 0% Capital Outlay 138, ,101 1,106,500 1,157,500 1,157,500 0% Debt Service 3,755,088 3,966,861 3,966,861 7,407,499 7,407,499 0% Franchise Fee 333, , ,566 1,540,179 1,540,179 0% Landfill Closure 91,050 92,099 92, , ,100 0% Transfer Out 579, , ,401 2,549,549 2,549,549 0% Total Expenditures 8,422,389 10,151,224 9,637,934 31,190,615 31,190,615 0% Net Income (Loss) $ (1,552,303) $ (2,606,478) $ (2,135,336) 1,915 1,915 Ending Working Capital and Reserves $ 4,916,204 $ 5,856,260 1 The Beginning Working Capital Reserve excludes $6,927,921 of Landfill Closure/Post Closure reserves. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 20

22 City of Denton Airport Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 1 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/15 $ 3,751,302 $ 3,400,588 OPERATING REVENUES: Airport Ground Leases $ 110,752 $ 144,867 $ 119, , ,000 0% FBO Commissions 47,947 92,073 34, , ,000 0% Miscellaneous 9,244 13,761 10,815 55,000 55,000 0% Total Operating Revenues 167, , ,625 1,002,000 1,002,000 0% OPERATING EXPENDITURES: Personal Service 126, , , , ,675 0% Materials and Supplies 2,438 13, ,705 48,705 0% Maintenance and Repairs 32,565 17,808 24,508 77,113 77,113 0% Insurance 5,340 5,595 5,589 22,358 22,358 0% Miscellaneous ,500 1,500 0% Operations 65,191 56,821 34, , ,111 0% Transfers Out - Operating 107, , , , ,112 0% Franchise Fee 8,396 15,255 8,231 60,970 60,970 0% Total Operating Expenses 348, , ,349 1,527,544 1,527,544 0% Operating (Loss) (180,510) (131,486) (155,724) (525,544) (525,544) NON-OPERATING REVENUES: Investment Income 6,577 6,255 6,227 25,000 25,000 0% Gas Well Royalties ,935 86, , ,000 0% Total Non-Operating Revenues 7, ,190 92, , ,000 0% NON-OPERATING EXPENDITURES: Debt Service 230, , , , ,356 0% Transfers Out - Capital 297, , , , ,000 0% Total Non-Operating Expenses 527, , ,744 1,081,356 1,081,356 0% Non-Operating Income (Loss) (520,596) (142,674) (739,263) (125,356) (125,356) Net Income (Loss) $ (701,106) $ (274,160) $ (894,987) (650,900) (650,900) Ending Working Capital $ 3,100,402 $ 2,749,688 1 Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY budget process. 21

23 City of Denton Street Improvement Fund Schedule of Expenditures - Budget vs Actual(Unaudited) For the Period Ended December 31, 2015 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 1 PROJECTION PROJECTION Beginning Fund Balance as of 9/30/2015 $ 1,019,023 $ 1,388,223 RESOURCES: Franchise Fees $ 1,509,356 $ 2,493,306 $ 1,766,669 9,965,248 9,965,248 0% Street Cuts 68,867 87,570 24, , ,000 0% Investment Income 34 2,502 2,657 10,000 10,000 0% Transfers In 135, , , , ,175 0% Total Resources 1,713,844 2,781,081 2,014,374 11,115,423 11,115,423 0% EXPENDITURES: Personal Service 515, , ,132 2,794,903 2,794,903 0% Materials and Supplies 7,958 20,552 17,240 82,150 82,150 0% Maintenance and Repairs 494,900 1,458, ,988 7,010,447 7,027,947 0% Insurance 13,881 12,613 12,604 50,417 50,417 0% Miscellaneous 2,671 1,251 3,070 5,000 5,000 0% Operations, Services 320, , , , ,938 0% Transfer Out 610, , , , ,068-3% Total Expenditures 1,966,057 2,781,071 1,306,230 11,115,423 11,115,423 0% Net Income (Loss) $ (252,213) $ 10 $ 708, Ending Fund Balance $ 1,019,023 $ 1,388,223 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 22

24 City of Denton Grants Schedule of Expenses - Budget vs Projection (Unaudited) For the Period Ended December 31, 2015 GRANT DESCRIPTION EXPENDITURES AS OF CURRENT 9/30/ Y-T-D ANNUAL BUDGET ANNUAL PROJECTION BUDGET VS PROJECTION FY Budget US Dept of HUD - Community Development Block Grant(CDBG) $ 1,587,914 $ 136,443 $ 1,231,360 $ 650,000 53% US Dept of HUD - HOME Investment Partnership Program 1,510, , , ,000 65% Emergency Solutions Grant , , % Community Development 3,097, ,228 2,748,369 1,848,000 67% TxDot Comprehensive Grant - 19,384 86,070 86, % 2015 Byran Justice Assistance Grant (JAG) - 1,113 24,000 24, % 2014 DFWA UASI 11,772 37, , , % 2014-SHSP-LETPA ,000-0% 2015 UASI , , % Emergency Management Performance Grant - 11,706 46,825 46, % Auto Theft Grant ,793-0% 2015 Tobacco Grant - 2,100 12,000 12, % Public Safety 11,772 72, , ,395 57% Summer Food Grant , , % TxDot NW Trail Extension Grant - - 1,341,617 1,341, % Parks and Recreations - - 1,541,617 1,541, % Interlibrary Loan Program (ILL) ,064 13, % Farmers Market Grant 14,453 1,012 50,000 50, % TxDot US380 - I35 Traffic Lights Grant , , % Texas Emission Reduction Plan Rebate Grant , , % Texas Historical Commission ,370-0% Airport Maintenance (RAMP) Grant ,000 50, % Other 14,453 1, , ,942 97% Total FY Budget 3,124, ,443 5,381,486 4,147,954 77% New Awards Amy Young Barrier Removal Program ,000 88, % Emergency Solutions Grant additional award 29,505 1,279 5,222 5, % Community Development 29,505 1,279 93,222 93, % 2015 SHSP - - 2,352 2,352 Public Safety - - 2,352 2, % Total New Awards 29,505 1,279 95,574 95, % TOTALS $ 3,153,648 $ 329,722 $ 5,477,060 $ 4,243,528 77% 1 A portion of the grants presented cover multiple years. 2 The fund was spent in the 4th quarter, This grant was turned down by the Police Department. 23

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26 Section 3 City of Denton Quarterly Financial Report December 2015 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 December 31, 2015 Gross Domestic Product (GDP) The U.S. economy grew at a +3.9% pace in the second quarter and slowed to a +2.0% rate of growth in the third. The initial measure of GDP growth for the fourth quarter of 2015 showed the U.S. economy had slowed even more to a +0.7% annual rate, slightly below the +0.8% median forecast, but not quite as bad as some had feared. The breakdown showed that exports fell while imports rose, consumption slowed and business spending was particularly weak. Inventories subtracted from growth for the second straight quarter suggesting fading business confidence. Final sales (which exclude inventories) rose by +1.2%. For all of 2015, GDP increased by a lackluster +1.8% (subject to revision), falling well short of the +3.0% optimistic economic growth analysts had predicted 12 months earlier. By contrast, GDP was +2.4% in 2014 and +2.2% in Nonfarm Payrolls The FOMC decision to raise rates in December was based largely on considerable improvement in labor conditions. This was evident throughout the quarter as nonfarm payrolls increased by +307k in October, +252k in October and +292k in December. The average monthly payroll gain for the previous three months was +174k. Unusually warm weather across the U.S. may have boosted hiring a bit at the expense of later months, but there was little dispute that the numbers supported Fed tightening. The unemployment rate held steady at a 7½-year low of 5.0%, while the broader U6 measure, which counts involuntary part-time workers and people who would like to work but haven t actively searched during the past 30 days, drifted upward from 9.8% to 9.9%. Over the past 5 years, the U.S. economy has now added over 12 million jobs. 27

29 Housing Existing home sales rose by +14.7% in December, the largest increase in the 17-year history of the series to a 5.46 million unit annual pace. This follows a -10.5% drop in November, which probably reflected delays associated with the implementation of a new, more cumbersome documentation process. The available supply of existing homes fell to just 3.4 months in December, an 11-year low. This is a positive in that new construction will ramp up in the coming months to rebuild the lean supply, but a detriment in the nearterm as potential homebuyers will have fewer purchase options. New home sales rose by +10.8% in December to an annual pace of +544,000, a 10-month high. The number of new homes sold and awaiting construction reached the highest level since July For all of 2015, overall homes sales reached their highest level since Retail Sales Americans are spending, but not in enough volume to drive the economy at its accustomed pace. Consumers saved an estimated $120 billion at the gasoline pump in 2015, but instead of spending the entire windfall chose to increase their savings rate to the highest level in four years. During the quarter, October retail sales were flat and November sales rose by +0.4%, but December fell by -0.1%. For the entire year, sales rose by just +2.1%, the slowest year of the current expansion cycle. A continued bright spot is auto sales. Purchases of cars and trucks were booming in the fall with a record three straight months above an 18 million unit annual pace. Although the record high average age of cars and trucks on the road (11½ years) has played a role in the increased sales, so have liberal credit and financing terms that some believe have fueled a bubble. 28

30 Texas Home Sales There was evidence of a slowdown in the fourth quarter as year-over-year sales in Texas were negative for the first time since the recession ended. The -1.4% decline was in sharp contrast to the +10% advance from a year ago. The average home price in Texas climbed +3.4% YOY to $256,600 while available supply moved toward record lows at a very lean 3.2 months. In Denton County during the fourth quarter, unit home sales rose +5.5% over the same period a year ago. The average sales price in December rose by +15.4% from 12 months earlier to $287,100, while the median sales price rose +12.9% to $239,100. A historical high was reached in August at an average price of $275,400. Total listings for Denton County are currently at 1,375 units or a lean 1.6 month supply. 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 Hilltop Securities. 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 Positive 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 15% decrease from the prior quarter at the national level and a 16.5% decrease at the state level. Staff has rated this outlook as Positive. Fuel Prices Sales Tax Texas Fuel Prices US Fuel Prices $4.00 $10 $3.50 $9 $3.00 $8 $7 $2.50 $6 Dollars $2.00 $5 Millions $1.50 $4 $1.00 $3 $2 $0.50 $1 $0.00 1Q '12 3Q '12 1Q '13 3Q '13 1Q '14 3Q '14 1Q '15 3Q '15 1Q '16 $0 Source: U.S. Department of Energy 30

32 Municipal Cost Index Outlook Positive 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 1st fiscal quarter of 2016 shows an decrease of 1% over the prior quarter and an decrease of 1.8% over the 1st fiscal quarter of Staff has rated this indicator as Positive Municipal Cost Index Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 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 1st Quarter of FY 2016 was both 5.6% more than budget and 5.7% more than prior year's actual. Staff has rated the outlook for this economic indicator as Positive. 1st Quarter FY Actual Y-T-D Occupancy Tax Revenue: $ 518,531 $ 518,531 FY Budget $ 490,781 $ 490,781 Over (Under) Budget $ 27,750 $ 27,750 FISCAL YEAR FORECAST Hotel Occupancy Tax Budget: $ 2,167,494 End of Year Projection: $ 2,167,494 Variance: $ - Hotel Occupancy Tax Collections $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr FY FY FY FY FY

34 Sales and Use Tax Analysis Outlook Positive 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 1st quarter of FY 2016 compared to revenues from the prior year 1st quarter shows a 4.99% increase, and compared to the budget it is 6.61% above. Staff has rated this indicator as Positive. 1st Quarter FY Actual Y-T-D Revenue: Gross Sales Tax Municipal Operations $ 424,075 $ 424,075 General Retail & Others 8,137,254 8,137,254 Comptroller Fees (162,745) (162,745) Amount Retained (159,490) (159,490) Total Revenue $ 8,239,094 $8,239,094 Expenses: Economic Incentives Denton Crossing $ 135,647 $ 135,647 Unicorn Lake 17,758 17,758 Rayzor Ranch 316, ,073 Golden Triangle - - Total Expenses $ 469,478 $ 469,478 Net Total 7,769,616 7,769,616 FY Budget 7,287,778 7,287,778 Over(Under) Budget $ 481,838 $ 481,838 Sales Tax Budget: $ 30,925,867 Year End Projection: 30,925,867 Variance to Original Budget: $ - Economic Development Expenditure Budget: $ 2,002,842 Year End Projection: 2,002,842 Variance to Original Budget: $ - $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 Gross Sales Tax Collections (Millions) 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 2009 International Building Code (IBC) and applicable City ordinances. The IBC states, "that no building shall be used or occupied, and no change in the existing occupancy classification of a building or structure or portion thereof shall be made, until the building official has issued a certificate of occupancy.." 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 20% from the prior quarter and increased 18% from the 1 st quarter of Staff has rated the outlook for this revenue indicator as Cautious Certificates of Occupancy Q '11 2Q '11 3Q '11 4Q '11 1Q '12 2Q '12 3Q '12 4Q '12 1Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 Source: City of Denton's Planning and Development Department. 34

36 Residential Permits Outlook Cautious Description: Residential Permits are issued in compliance with the 2009 International Residential Code (IRC) 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 decreased 12.8% from the prior quarter and decreased 1.8% from the 1 st Quarter of Staff has rated the outlook for this revenue indicator as Cautious Residential Permits Q '11 2Q '11 3Q '11 4Q '11 1Q '12 2Q '12 3Q '12 4Q '12 1Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 Source: City of Denton's Planning and Development Department. 35

37 Texas Leading Indicators Index Outlook Cautious 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 a slow down in the state's rate of growth. The index remained level from the prior quarter and decreased 5.5% from the 1 st quarter of Staff has rated this indicator as Cautious Texas Leading Indicators Index Q '06 3Q '06 1Q '07 3Q '07 1Q '08 3Q '08 1Q '09 3Q '09 1Q '10 3Q '10 1Q '11 3Q '11 1Q '12 3Q '12 1Q '13 3Q '13 1Q '14 3Q '14 1Q '15 3Q '15 1Q '16 Source: Federal Reserve Bank of Dallas 36

38 Unemployment Rate Index Outlook Positive 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. The unemployment rate for the City of Denton is at 3.2% for the 1 st quarter. The unemployment rates for most of the other reported sectors were down from the prior quarter, except for Texas. As a result of the downward trend since the high of the 1st Quarter of 2010, staff has rated the outlook for this revenue indicator as Positive Unemployment Rate Index Q '10 3Q '10 1Q '11 3Q '11 1Q '12 3Q '12 1Q '13 3Q '13 1Q '14 3Q '14 1Q '15 3Q '15 1Q '16 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

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40 Section 4 City of Denton Quarterly Financial Report December 2015 INVESTMENT REPORT 39

41 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2015 Page 1 INVESTMENT POOL Policy Par Market Book Unrealized Max. Benchmark Portfolio: Value Value Value Gain/(Loss) 1 WAM WAM YTM Yield* Investment Pool $ 495,293,673 $ 495,831,271 $ 496,248,495 $ (417,224) % 0.32% *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. U.S. Treasuries 29,000,000 29,002,346 29,014,358 (12,012) % 5.85% % U.S. Federal Agencies 225,000, ,148, ,552,381 (403,811) % 45.45% % Municipal Bonds 37,470,000 37,875,944 37,880,337 (4,393) % 7.63% 15.00% Certificates of Deposit 131,000, ,000, ,000, % 26.40% 35.00% Commercial Paper 18,000,000 17,980,738 17,977,746 2, % 3.62% 5.00% Demand Deposits 54,823,673 54,823,673 54,823, % 11.05% - Total Portfolio $ 495,293,673 $ 495,831,271 $ 496,248,495 $ (417,224) % % - 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: 12/31/2015 9/30/2015 Difference 12/31/2014 Par Value $ 495,293,673 $ 503,987,672 $ (8,693,999) $ 462,308,315 Market Value $ 495,831,271 $ 505,837,398 $ (10,006,127) $ 463,762,207 Book Value $ 496,248,495 $ 505,326,347 $ (9,077,852) $ 463,683,002 Unrealized Gain(Loss) $ (417,224) $ 511,051 $ (928,275) $ 79,205 Weighted Average Maturity (11) 379 Yield to Maturity 0.72% 0.65% 0.07% 0.55% $ $ $ $ 1 Year Ago Difference 32,985,358 32,069,064 32,565,493 (496,429) (46) 0.17% Portfolio Composition: U.S. Treasuries 5.85% 4.36% 1.49% 4.77% U.S. Federal Agencies 45.45% 48.04% -2.59% 51.26% Municipal Bonds 7.63% 7.53% 0.10% 6.51% Certificates of Deposit 26.40% 25.13% 1.27% 25.02% Commercial Paper 3.62% 4.15% -0.53% 3.23% Demand Deposits 11.05% 10.79% 0.26% 9.21% 1.08% -5.81% 1.12% 1.38% 0.39% 1.84% Bank Collateral Review**: Institution Collateral Type Market Value Collected Balance Pledge Required Collateral Ratio Wells Fargo Demand Deposits BNY Mellon U.S. Agency MBS $ 82,252,981 $ 54,672,232 > 102% % Comerica Bank Certificates of Deposit Federal Reserve U.S. Agency MBS $ 53,751,161 $ 28,342,033 > 110% % LegacyTexas Bank Certificates of Deposit*** Fed Home Loan Bank Standby LOC $ 25,845,000 $ 25,127,087 > 100% % Independent Bank Certificates of Deposit Fed Home Loan Bank Standby LOC $ 24,000,000 $ 23,097,951 > 100% % **Does not include FDIC insurance ***Formerly, ViewPoint Bank Depository Ledger Balance Review: Institution Account Type Beginning Bal. Deposits Withdrawals Ending Bal. Wells Fargo Bank Checking $ 46,759,508 $ 68,067,823 $ (60,003,658) $ 54,823,673 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 Reviewer: Bryan Langley, CGFO Assistant City Manager & CFO 40

42 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2015 Page 2 INVESTMENT POOL Current 3 Months Ago 3 Month 1 Year Ago 1 Year 12/31/2015 9/30/2015 Difference 12/31/2014 Difference Par Value - U.S. Treasuries $ 29,000,000 $ 22,000,000 $ 7,000,000 $ 22,000,000 $ 7,000,000 Par Value - U.S. Federal Agencies 225,000, ,000,000 (17,000,000) 237,000,000 (12,000,000) Par Value - Municipal Bonds 37,470,000 37,470,000-29,585,000 7,885,000 Certificates of Deposit 131,000, ,000,000 4,000, ,000,000 15,000,000 Par Value - Commercial Paper 18,000,000 21,000,000 (3,000,000) 15,000,000 3,000,000 Demand Deposits 54,823,673 54,517, ,001 42,723,315 12,100,358 Total Par Value $ 495,293,673 $ 503,987,672 $ (8,693,999) $ 462,308,315 $ 32,985,358 Market Value - U.S. Treasuries $ 29,002,346 $ 22,097,838 $ 6,904,508 $ 22,111,952 $ 6,890,394 Market Value - U.S. Federal Agencies 225,148, ,135,237 (17,986,667) 237,719,456 (12,570,886) Market Value - Municipal Bonds 37,875,944 38,121,872 (245,928) 30,213,129 7,662,815 Certificates of Deposit 131,000, ,000,000 4,000, ,000,000 15,000,000 Market Value - Commercial Paper 17,980,738 20,964,779 (2,984,041) 14,994,355 2,986,383 Demand Deposits 54,823,673 54,517, ,001 42,723,315 12,100,358 Total Market Value $ 495,831,271 $ 505,837,398 $ (10,006,127) $ 463,762,207 $ 32,069,064 Book Value - U.S. Treasuries $ 29,014,358 $ 22,052,492 $ 6,961,866 $ 22,099,286 $ 6,915,072 Book Value - U.S. Federal Agencies 225,552, ,733,724 (17,181,343) 237,671,238 (12,118,857) Book Value - Municipal Bonds 37,880,337 38,070,745 (190,408) 30,197,348 7,682,989 Certificates of Deposit 131,000, ,000,000 4,000, ,000,000 15,000,000 Book Value - Commercial Paper 17,977,746 20,951,714 (2,973,968) 14,991,815 2,985,931 Demand Deposits 54,823,673 54,517, ,001 42,723,315 12,100,358 Total Book Value $ 496,248,495 $ 505,326,347 $ (9,077,852) $ 463,683,002 $ 32,565,493 Accrued Interest $ 1,991,821 $ 1,698,498 $ 293,323 $ 1,649,497 $ 342,324 Cash Value - $ 497,823,092 $ 507,535,896 $ (9,712,804) $ 465,411,704 $ 32,411,388 (Total Market Value + Accrued Interest) Unrealized Gain/(Loss) $ (417,224) $ 511,051 $ (928,275) $ 79,205 $ (496,429) Change in Fair Value since 9/30/15 - $ (1,275,615) $ (1,170,576) $ (105,039) $ (549,319) $ (726,296) (GASB 31) Strategy Statement: The 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 meet these obligations and to minimize potential liquidation losses, the dollar-weighted stated average 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 of 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 1st Fiscal Quarter December 31, 2015 Page 3 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Security Type: 12/31/2015 9/30/ /31/2014 U.S. Treasuries - Coupon $ 29,014,358 $ 22,052,492 $ 22,099,286 U.S. Federal Agencies - Coupon 222,552, ,733, ,681,990 U.S. Federal Agencies - Callable 3,000,000 9,999,827 4,989,248 Municipal Bonds - Coupon 37,880,337 38,070,745 30,197,348 Certificates of Deposit - CDARS 55,000,000 61,000,000 53,000,000 Certificates of Deposit - Collateralized 28,000,000 28,000,000 63,000,000 Certificates of Deposit - SLOC 48,000,000 38,000,000 - Commercial Paper - Discount 17,977,746 20,951,714 14,991,815 Demand Deposits 54,823,673 54,517,672 42,723,315 Total Book Value $ 496,248,495 $ 505,326,347 $ 463,683,002 Current 12/ U.S. Federal Agencies - Coupon 44.85% U.S. Federal Agencies - Callable 0.61% Municipal Bonds - Coupon 7.63% U.S. Treasuries - Coupon 5.85% Demand Deposits 11.05% Commercial Paper - Discount 3.62% Certificates of Deposit - CDARS Certificates of Deposit - Collateralized 5.64% Certificates of Deposit - SLOC 9.67% Objective: The portfolio is restricted to U.S. Treasuries and agency securities (maturing in less than five years); state and locally issued Texas municipal bonds rated AA or better (maturing in less than three years); insured, collateralized, or standby letter of credit backed 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: 12/31/2015 9/30/ /31/2014 U.S. Treasuries - Coupon 5.85% 4.36% 4.77% U.S. Federal Agencies - Coupon 44.85% 46.06% 50.18% U.S. Federal Agencies - Callable 0.61% 1.98% 1.08% Municipal Bonds - Coupon 7.63% 7.53% 6.51% Certificates of Deposit - CDARS 11.08% 12.07% 11.43% Certificates of Deposit - Collateralized 5.64% 5.54% 13.59% Certificates of Deposit - SLOC 9.67% 7.52% 0.00% Commercial Paper - Discount 3.62% 4.15% 3.23% Demand Deposits 11.05% 10.79% 9.21% Total % % % 42

44 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2015 Page 4 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Issuer: 12/31/2015 9/30/ /31/2014 CDARS CDs $ 55,000,000 $ 61,000,000 $ 53,000,000 COMERICA BANK CDs 28,000,000 28,000,000 53,000,000 LEGACYTEXAS BANK CDs* 25,000,000 25,000,000 10,000,000 INDEPENDENT BANK CDs 23,000,000 13,000,000 - U.S. TREASURY 29,014,358 22,052,492 22,099,286 FFCB 10,007,319 20,007,766 16,987,804 FHLB 83,014,280 96,028,380 66,061,617 FHLMC 62,450,826 62,518,223 77,140,376 FNMA 70,079,956 64,179,355 77,481,441 TEXAS A&M PERM UNIV FUND REV BDS 5,029,380 5,034,277 - WILLIAMSON COUNTY, TX GEN OBG BDS 1,668,785 1,681,880 - GARLAND, TX GENERAL OBG BONDS 3,037,836 3,064,092 3,142,859 TEXAS STATE GENERAL OBG BONDS - - 3,000,000 MCKINNEY, TX GENERAL OBG BONDS 1,238,846 1,247,915 - TEXAS SCHOOL DIST GEN OBG BONDS** 26,905,490 27,042,581 24,054,488 JP MORGAN SECURITIES LLC 17,977,746 20,951,714 4,994,563 TOYOTA MOTOR CREDIT CORP - - 9,997,253 WELLS FARGO DEMAND DEPOSITS 54,823,673 54,517,672 42,723,315 Total Book Value $ 496,248,495 $ 505,326,347 $ 463,683,002 WF DEMAND DEPOSITS, 11.05% JP MORGAN SECURITIES LLC, 3.62% TEXAS SCHOOL DIST GEN OBG BONDS, 5.42% MCKINNEY, TX GENERAL OBG BONDS, 0.25% GARLAND, TX GEN OBG BONDS, 0.61% WILLIAMSON COUNTY, TX GEN OBG BDS, 0.34% TEXAS A&M PERM UNIV FUND REV BDS, 1.01% Current 12/31/2015 CDARS CDs, 11.08% COMERICA BANK CDs, 5.64% LEGACYTEXAS BANK CDs, 5.04% INDEPENDENT BANK CDs, 4.63% FNMA, 14.12% U.S. TREASURY, 5.85% FFCB, 2.02% FHLMC, 12.59% FHLB, 16.73% 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 (including standby letters of credit), 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: 12/31/2015 9/30/ /31/2014 CDARS CDs 11.08% 12.07% 11.43% COMERICA BANK CDs 5.64% 5.54% 11.43% LEGACYTEXAS BANK CDs* 5.04% 4.95% 2.16% INDEPENDENT BANK CDs 4.63% 2.57% 0.00% U.S. TREASURY 5.85% 4.36% 4.76% FFCB 2.02% 3.96% 3.66% FHLB 16.73% 19.00% 14.25% FHLMC 12.59% 12.37% 16.63% FNMA 14.12% 12.70% 16.71% TEXAS A&M PERM UNIV FUND REV BDS 1.01% 1.00% 0.00% WILLIAMSON COUNTY, TX GEN OBG BDS 0.34% 0.33% 0.00% GARLAND, TX GENERAL OBG BONDS 0.61% 0.61% 0.68% TEXAS STATE GENERAL OBG BONDS 0.00% 0.00% 0.65% MCKINNEY, TX GENERAL OBG BONDS 0.25% 0.25% 0.00% TEXAS SCHOOL DIST GEN OBG BONDS** 5.42% 5.35% 5.19% JP MORGAN SECURITIES LLC 3.62% 4.15% 1.08% TOYOTA MOTOR CREDIT CORP 0.00% 0.00% 2.16% WELLS FARGO DEMAND DEPOSITS 11.05% 10.79% 9.21% Total % % % *Formerly, ViewPoint Bank **Individual issuers are listed on the attached Portfolio Details Report 43

45 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2015 Page 5 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Maturity Time Frame: 12/31/2015 9/30/ /31/ Months $ 125,033,673 $ 104,517,672 $ 102,723, Months 44,000,000 60,210,000 37,000, Months 77,000,000 90,000,000 73,375, Months 220,260, ,260, ,210, Months & Over 29,000,000 28,000,000 66,000,000 Total Par Value $ 495,293,673 $ 503,987,672 $ 462,308,315 $550,000,000 $500,000,000 $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 Current 3 Months Ago 1 Year Ago Months Months Months 24 Months & Over Objective: The risk of market price volatility is minimized through maturity diversification. Investment maturities are staggered to provide cash flow based on the anticipated needs of the City. Liquidity is achieved by matching investment maturities with forecasted cash disbursements and by investing in securities with active secondary markets. Short-term local government investment pools and money market mutual funds help to provide daily liquidity and may be utilized as a competitive alternative to fixed income investments. Current 3 Months Ago 1 Year Ago Maturity Time Frame: 12/31/2015 9/30/ /31/ Months 25.24% 20.74% 22.22% Months 8.88% 11.95% 8.00% Months 15.55% 17.86% 15.87% Months 44.47% 43.90% 39.63% 24 Months & Over 5.86% 5.55% 14.28% Total % % % 44

46 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2015 Page 6 ECONOMIC SUMMARY Interest Rate History Source: U.S. Federal Reserve Statistical Release (H.15) Fiscal Year Fiscal Year Fiscal Year Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Market Sector: Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective) 0.18% 0.14% 0.09% 0.08% 0.07% 0.13% 0.16% 0.14% 0.16% 0.14% 0.09% 0.08% 3-Month U.S. T-Bill 0.14% 0.10% 0.04% 0.01% 0.01% 0.08% 0.09% 0.11% 0.07% 0.09% 0.05% 0.02% 2-Year U.S. T-Note 0.62% 0.70% 0.41% 0.21% 0.26% 0.34% 0.29% 0.26% 0.26% 0.26% 0.33% 0.40% Portfolio Benchmark* 0.32% 0.30% 0.25% 0.22% 0.18% 0.15% 0.15% 0.16% 0.18% 0.18% 0.16% 0.15% Portfolio Yield 0.65% 0.66% 0.66% 0.62% 0.59% 0.58% 0.56% 0.55% 0.52% 0.50% 0.48% 0.49% Fiscal Year Fiscal Year Fiscal Year Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Market Sector: Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective) 0.09% 0.08% 0.10% 0.09% 0.12% 0.11% 0.13% 0.14% 0.24% 3-Month U.S. T-Bill 0.07% 0.05% 0.04% 0.02% 0.03% 0.03% 0.02% 0.02% 0.23% 2-Year U.S. T-Note 0.34% 0.40% 0.45% 0.57% 0.64% 0.64% 0.69% 0.71% 0.98% Portfolio Benchmark* 0.13% 0.13% 0.12% 0.12% 0.12% 0.15% 0.18% 0.24% 0.32% Portfolio Yield 0.50% 0.49% 0.49% 0.51% 0.55% 0.57% 0.57% 0.65% 0.72% *Twelve month moving average of a one year U.S. T-bill yield 1.50% FY FY FY FY FY FY % 0.50% 0.00% Dec- 10 Mar- 11 Jun- 11 Sep- 11 Dec- 11 Mar- 12 Jun- 12 Sep- 12 Dec- 12 Mar- 13 Jun- 13 Sep- 13 Dec- 13 Mar- 14 Jun- 14 Sep- 14 Dec- 14 Mar- 15 Jun- 15 Sep- 15 Dec- 15 Mar- 16 Jun- 16 Sep- 16 Fed Funds 3-Month T-Bill 2-Year T-Note Portfolio Yield Portfolio Benchmark* Fiscal Year: $ $ $ $ $ $ Oct - Dec Oct - Mar Oct - Jun Oct - Sep 849, ,194 Fiscal Year to Date Earnings 3 Months 6 Months 9 Months 12 Months 613, , , ,111 $ 1,228,059 $ 1,874,847 $ 2,695,211 $ $ $ 1,121,491 1,177,337 1,239,869 $ $ $ 1,680,154 1,703,496 1,862,207 $ 1,056,309 $ 1,631,563 $ $ $ $ 2,298,785 2,276,341 2,511,585 2,216,300 QUARTERLY COMMENTARY December 31, 2015 Source: First Southwest Asset Management Economic Summary & TexStar Monthly Newsletter The fourth calendar quarter was marked by the raising of the fed funds rate by the Federal Open Markets Committee (FOMC) by 0.25%, diverging world monetary policies, volatile commodity and currency markets led by a continued drop in crude oil prices, as well as festering global growth concerns as Chinese economic data disappointed and their currency continued to drop in value. The FOMC decision to finally begin tightening rates in December was based largely on considerable improvement in labor conditions. Future rate increases do not appear to be on a preset path and will be determined by upcoming economic data. According to the Bloomberg economist survey dated December 18, 2015, the inflation adjusted median growth forecast for fourth quarter GDP is 2.2%, followed by 2.4%, 2.6% and 2.5% for the next three quarters. 45

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