Rendering of New Linda McNatt Animal Care & Adoption Center. City of Denton, Texas st Quarter Financial Report December 2014

Transcription

1 Dedicated to Quality Service We care Destination Denton Quality Service We care Destination Denton Dedicated to We care Destination Denton Dedicated to Quality Service W ation Denton Dedicated to Quality Service We care Des Dedicated to Quality Service We care Destination Denton Quality Service We care Destination Denton Dedicated to We care Destination Denton Dedicated to Quality Service W ation Denton Dedicated to Quality Service We care Des Rendering of New Linda McNatt Animal Care & Adoption Center City of Denton, Texas st Quarter Financial Report December 2014

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 December 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

3 2

4 Section 1 City of Denton Quarterly Financial Report December 2014 Executive Dashboards 3

5 City of Denton, Texas General Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET 1 PROJECTION VARIANCE Beginning Fund Balance $35 as of 09/30/14 $ $ RESOURCES: $30 $25 Franchise Fees % Other Taxes % $20 Service Fees % Fines and Fees % $15 Licenses and Permits % Miscellaneous Revenue % Transfers In % $10 Ad Valorem Taxes Sales Taxes % 3% Total Revenues % Total Resources $5 EXPENDITURES: $ Personal Service % Material and Supplies % Maintenance and Repairs % Insurance % Miscellaneous % Operations % Transfers Out % $3.0 Fixed Assets % Total Expenditures % $2.5 Net Income (Loss) (0.66) 0.24 Ending Fund Balance $ $ $2.0 Revenue & Expenses (in Millions) YTD Revenue YTD Expenses Oct 14 Nov 14 Dec 14 Sales Tax Monthly Average by Quarter Key Trends $1.5 The sales tax estimate has been increased due to strong first quarter results. $1.0 $0.5 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process. 4 $ 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 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 Note: All figures presented are in millions of dollars.

6 DESCRIPTIO N City of Denton, Texas Electric Fund Executive Dashboard FY FY ANNUAL ANNUAL BUDGET 1 PRO JECTIO NS FY VARIANCE Beginning Working Capital and Reserves as of 9/30/14 $ $ 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) (0.89) (0.89) Ending Working Capital and Reserves $ $ $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $ Revenue & Expenses (in Millions) Oct 14 Nov 14 Dec 14 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 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 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 City of Denton, Texas Water Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PRO JECTIO N VARIANCE $16 Beginning Working Capital $14 and Reserves as of 09/30/14 2 $ $ $12 RESO URCES: $10 Water Sales % $8 Other Water Revenues % $6 Transfers In % Impact Fee Revenue % $4 Total Revenues % $2 Total Resources EXPENDITURES : Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfers Out % Total Expenditures % Net Income (Loss) (0.44) (0.44) Ending Working Capital and Reserves $ $ Key Trends At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. $18 $ 3,000 2,500 2,000 1,500 1, Revenue & Expenses (in Millions) Oct 14 Nov 14 Dec 14 YTD Revenue YTD Expenses Historical QuarterlyGallonsSold (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 $3.7 million of Impact Fees Reserves and $1.0 million of Development Plan Line Reserves Q 09 3Q 09 1Q 10 3Q 10 1Q 11 Note: All figures presented are in millions of dollars. 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15

8 City of Denton, Texas Wastewater Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PRO JECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/14 2 $10 $ 8.91 $ 9.21 $9 RESO URCES: $8 Wastewater Fees % $7 Other Wastewater Revenue % $6 Drainage Fees % $5 Transfer In % $4 Impact Fee Revenue % $3 Total Revenues % $2 Total Resources EXPENDITURES: Personal Service % Operations, Services % Capital Outlay % Debt Service % Transfer Out % Total Expenditures % Net Income (Loss) (0.18) (0.18) Ending Working Capital and Reserves $ 8.73 $ 9.03 $1 $ 1,200 1, Revenue & Expenses (in Millions) Oct 14 Nov 14 Dec 14 YTD Revenue YTD Expenses Historical QuarterlyGallonsBilled (in Millions) Key Trends At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 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 $2.7 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: Residential Drainage Fees $ 1.59 $ % $1.6 Nonresidential Drainage age Fees % $1.4 Wastewater Resources % General Fund Transfer % $1.2 Total Revenues % $1.0 Revenue & Expenses (in Millions) EXPENDITURES: Personal Service % Operations, Services % $0.8 $0.6 Capital Outlay % $0.4 Debt Service % Transfer Out % $0.2 Total Expenditures % $ Net Income (Loss) $ - $ - Oct 14 Nov 14 Dec 14 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 City of Denton, Texas Solid Waste Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTIO N BUDGET 1 PRO JECTIO N VARIANCE Beginning Working Capital and Reserves as of 09/30/14 2 $ ,600 6,000 5,400 4,800 $ 4,200 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) (0.12) (0.12) Ending Working Capital and Reserves $ 3.65 $ 3.93 Key Trends At this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. 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 2 Residential Curbside Collection Tonnage 2013 Qtr Qtr Qtr 1 Refuse Tonnage 2014 Qtr Qtr Qtr 4 Recycling Tonnages 2015 Qtr 1 Commercial Refuse & Recycling (Front & Side Load) Cubic Yards Serviced per Week 2013 Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr 1 Commercial Refuse Commercial Recycling 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 $6.52 million of Landfill Closure/Post Closure reserves. Note: All figures presented are in millions of dollars. 9

11 City of Denton, Texas Airport Fund Executive Dashboard FY FY ANNUAL ANNUAL FY DESCRIPTION BUDGET 1 PROJECTION VARIANCE Beginning Working Capital and Reserves as of 09/30/14 $ 5.10 $ 5.23 RESOURCES: Airport Ground Leases % FBO Commissions % Miscellaneous % Total Operating Revenues % EXPENDITURES: Personal Service % Operations, Services % Transfer Out % TtlO Total Operating Expenditures % Net Operating Income (Loss) (0.30) (0.30) NON-OPERATING REVENUES: Investment Income % Gas Well Royalties % Total Non-Operating Revenues % NON-OPERATING OPERATING EXPENDITURES: Debt Service % Transfer Out - Capital % Total Non-Operating Expenditures % Net Non-Operating Income (2.11) (0.11) Net Income (2.41) (0.41) Ending Working Capital andreserves $ 2.69 $ 4.82 Key Trends $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 At this point in the fiscal year, revenues and expenses are projected to meet budgeted 10,000 levels except for a $2.0 million reduction in Transfer Out Capital due to a reduction of 5,000 property acquisition costs. - 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 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 09/30/2014 $ 0.87 $ 0.92 RESO URCES: Franchise Fe es % Street Cuts % Inve stme nt Income % Transfers In % Total Revenues % Total Resources $- EXPENDITURES: Personal Service % Materials & Supplies % Maintenance & Repairs % Operations, Services % Transfer Out % Total Expe nditure s % Net Income (Loss) - - Ending Fund Balance $ 0.87 $ 0.92 Key Trends Tons of asphalt laid increased 214% in the 1st quarter as compared to last year due to improved weather condition. $2.4 $2.0 $1.6 $1.2 $0.8 $ Revenue & Expenses (in Millions) Oct-14 Nov-14 Dec-14 YTD Expenses YTD Revenue Tons of Asphalt Laid (in Thousands) Qtr1 FY FY Lane Miles Surface Treatment 1 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY budget process Qtr 1 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 $ 2.90 $ % Public Safety % Parks & Recreation % Other % Tt Total lbudget % $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ FY Awards & Expenses (in Millions) New Awards Comm Development % Awards Expenses Parks & Recreation % FY Grants Awarded Other % Total New Awards % Totals $ 5.60 $ % COMM DEV PUBLIC SAFETY OTHER 6% PARKS & REC OTHER Key Trends The following grants have been received in FY : Community Development : ESG additional award $33,521, Amy Young Program $66,000. Parks: TxDot NW Trail Extension $1,341,617. Other: Farmers Market Promotion Program: $77,871, US380 I35 $102,211. PARKS & REC 27% PUBLIC SAFETY 13% COMM DEV 54% Note: All figures presented are in millions of dollars. 12

14 Section 2 City of Denton Quarterly Financial Report December 2014 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, 2014 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 $ 15,473,970 $ 14,191,529 $ 17,717,948 $ 37,346,130 $ 37,346,130 0% Delinquent - Ad Valorem 84,076 62,741 65, , ,769 0% Miscellaneous Penalties & Fees 39,571 61,015 71, , ,285 0% Ad Valorem Taxes 15,597,617 14,315,285 17,855,409 37,991,184 37,991,184 0% Sales Tax 6,698,850 7,042,110 7,986,901 28,145,925 29,052,164 3% Franchise - Gas Utilities , ,087 0% Franchise - Private Electric Utilities , ,615 0% Franchise - Cable - 67,796 5, , ,934 0% Franchise - Telecom , ,279 0% Franchise - Denton Municipal Utilities 1,211, ,222 1,011,463 4,560,934 4,560,934 0% Franchise Fees 1,211, ,018 1,017,404 6,228,849 6,228,849 0% Other Taxes , ,748 0% Ambulance Service Fees 593, , ,334 2,599,250 2,599,250 0% Charges to Bond Funds 176, , , ,500 0% Fire Department Fees 60,672 52,275 32, , ,103 0% Building Inspections Fees 97,851 96, , , ,707 0% Park Department Fees 96, , ,811 1,546,273 1,546,273 0% Planning Department Fees 260, ,671 47, , ,407 0% Reprographics Fees 91, ,049 86, , ,828 0% Miscellaneous Service Fees 19,637 28,567 32, , ,269 0% Service Fees 1,396, ,727 1,129,906 6,325,337 6,325,337 0% Denton Municipal Fines 410, , ,995 2,219,548 2,219,548 0% Parking Fines 60,735 53,813 54, , ,250 0% Miscellaneous Fines and Fees 229, , ,578 1,054,890 1,054,890 0% Court Administrative and Service Fees 207, , ,047 1,068,500 1,068,500 0% Fines and Fees 908,777 1,065, ,015 4,558,188 4,558,188 0% Demolition Permits 3,280 2,375 3,820 9,500 9,500 0% Building Permits 400, , ,896 2,127,694 2,127,694 0% Certificate of Occupancy 29,675 21,000 12,255 84,000 84,000 0% Miscellaneous Licenses and Permits 2,115 21,947 16,745 87,749 87,749 0% Licenses and Permits 435, , ,716 2,308,943 2,308,943 0% Investment Income 30,004 49,135 33, , ,541 0% Miscellaneous Revenues 74, ,138 26,884 1,289,831 1,289,831 0% Miscellaneous Resources 104, ,273 60,365 1,486,372 1,486,372 0% ROI - Denton Municipal Utilities 1,452,957 1,652,976 1,524,863 6,976,466 6,976,466 0% Transfers 1,955,146 1,938,313 1,934,418 7,751,083 7,751,083 0% Transfers 3,408,103 3,591,289 3,459,281 14,727,549 14,727,549 0% Total General Fund Revenues $ 29,761,413 $ 28,302,115 $ 32,957,998 $ 102,185,095 $ 103,091,334 1% 14

16 City of Denton General Fund Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2014 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION NEIGHBORHOOD SERVICES Building Inspections $ 455,546 $ 613,569 $ 522,439 $ 2,452,355 $ 2,452,355 0% Community Improvement Services 269, , ,590 1,605,801 1,605,801 0% Libraries 1,494,834 1,417,413 1,415,451 5,665,136 5,665,136 0% Parks and Recreation 2,284,019 2,949,573 2,307,161 11,788,704 11,788,704 0% Planning 438, , ,128 2,430,812 2,430,812 0% Gas Well Review 101, ,207 66, , ,504 0% Social Services 88, ,784 87, , ,770 0% 5,132,550 6,210,502 5,175,281 24,822,082 24,822,082 0% PUBLIC SAFETY Animal Services 232, , ,778 1,134,965 1,134,965 0% Fire 5,106,683 6,028,783 5,154,744 24,095,824 24,095,824 0% Municipal Court 290, , ,547 1,460,545 1,460,545 0% Municipal Judge 79, ,762 80, , ,716 0% Police 5,711,580 6,769,636 5,855,411 27,056,934 27,056,934 0% 11,420,832 13,558,583 11,714,419 54,190,984 54,190,984 0% TRANSPORTATION Traffic Operations 273, , ,159 2,238,105 2,238,105 0% Transportation Operations 87, ,166 65, , ,312 0% Street Lighting 167, , , , ,000 0% 529, , ,200 3,421,417 3,421,417 0% ADMINISTRATIVE & COMMUNITY SERVICES Cable Television 65,220 78,463 68, , ,607 0% City Manager's Office 587, , ,542 2,768,897 2,768,897 0% Economic Development 200, , ,089 3,038,854 3,038,854 0% Facilities Management 667, , ,494 3,712,457 3,712,457 0% Finance 721, , ,897 3,543,503 3,543,503 0% Human Resources 326, , ,776 1,565,523 1,565,523 0% Internal Audit ,765-75,000 75,000 0% Legal Administration 506, , ,407 2,194,662 2,194,662 0% Public Communications Office 84, ,363 92, , ,112 0% Reprographics 64, , , , ,828 0% Non-Departmental 913, , ,826 2,278,714 2,278,714 0% 4,139,574 5,107,118 4,570,753 20,412,157 20,412,157 0% TOTAL EXPENDITURES $ 21,222,190 $ 25,732,237 $ 22,048,653 $ 102,846,640 $ 102,846,640 0% 15

17 City of Denton Electric Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2014 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 9/30/14 $ 54,758,487 $ 59,009,001 REVENUES: Operating Revenues $ 33,200,230 $ 37,151,570 $ 37,271, ,802, ,802,333 0% Non-operating Revenues 86,905 87,676 70, , ,000 0% Total Revenues 33,287,135 37,239,246 37,342, ,152, ,152,333 0% EXPENDITURES: Purchased Power 24,190,564 21,000,417 22,201,856 93,218,421 93,218,421 0% Operation and Maintenance 7,920,723 10,947,522 7,137,528 35,995,463 35,995,463 0% Return on Investment 1,000,518 1,105,861 1,049,088 4,884,489 4,884,489 0% Franchise Fee 1,426,822 1,577,852 1,496,267 6,977,841 6,977,841 0% Non-Operating Expenditures 1 12,982,353 14,245,374 14,059,282 25,968,616 25,968,616 0% Total Expenditures 47,520,980 48,877,026 45,944, ,044, ,044,830 0% Net Income (Loss) $ (14,233,845) $ (11,637,780) $ (8,601,788) (892,497) (892,497) Ending Working Capital and Reserves $ 53,865,990 $ 58,116,504 1 Adjusted timing of debt service transfers to meet required debt service payment in FY 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, 2014 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D 2 BUDGET 3 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/14 1 $ 18,666,699 $ 17,493,722 REVENUES: Water Sales Residential $ 3,476,591 $ 4,274,507 $ 3,744,501 18,029,014 18,029,014 0% Water Sales Commercial 3,794,775 4,245,023 3,821,299 15,915,885 15,915,885 0% Water for Resale 137, , ,043 1,070,592 1,070,592 0% Other Water 202, , , , ,037 0% Transfers In 1,286,093 1,540,184 1,539,997 6,160,732 6,160,732 0% Investment Income 19,122 23,000 16,949 92,000 92,000 0% Impact Fee Revenue 775, , ,000 3,600,000 3,600,000 0% Total Revenues 9,692,259 11,262,934 10,793,458 45,765,260 45,765,260 0% EXPENDITURES: Personal Service 1,924,608 2,209,540 1,999,701 9,940,056 9,940,056 0% Purchased Power 280, , ,541 1,517,918 1,517,918 0% Purchase of Water 16,333 20,055 17, , ,800 0% Materials and Supplies 259, , ,316 1,813,463 1,813,463 0% Maintenance and Repairs 158, , ,462 1,303,599 1,303,599 0% Insurance 54,300 54,882 54, , ,527 0% Miscellaneous 42, ,053 45, , ,332 0% Operations, Services 322, , ,086 3,130,434 3,130,434 0% Capital Outlay 1,097,613 1,317,502 1,959,252 7,643,141 7,643,141 0% Return on Investment 261, , ,675 1,256,938 1,256,938 0% Franchise Fee 373, , ,822 1,772,319 1,772,319 0% Debt Service 9,321,711 3,459,434 9,632,325 13,837,735 13,837,735 0% Transfers Out 802, , ,761 3,209,009 3,209,009 0% Total Expenditures 14,915,495 10,118,920 16,561,842 46,202,271 46,202,271 0% Net Income (Loss) $ (5,223,236) $ 1,144,014 $ (5,768,384) (437,011) (437,011) Ending Working Capital and Reserves $ 18,229,688 $ 17,056,711 1 The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $3,731,476 and $1,000,000 of Development Plan Line Reserves. 2 Adjusted timing of debt service transfers to meet required debt service payment in FY 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, 2014 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D 2 BUDGET 3 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/14 1 $ 8,908,860 $ 9,212,033 REVENUES: Residential Fees $ 2,640,512 $ 2,716,827 $ 2,643,868 10,657,561 10,657,561 0% Commercial Fees 2,609,940 2,801,841 2,809,613 10,997,342 10,997,342 0% Effluent Irrigation Fees 24,835 14,870 26,410 62,899 62,899 0% Wholesale Fees 129, , , , ,333 0% Other Wastewater Fees 257, , ,626 1,610,119 1,610,119 0% Drainage Fees 1,075,188 1,078,761 1,157,925 4,404,640 4,404,640 0% Transfer In 152, , , , ,506 0% Interest Revenue 10,083 9,750 10,413 39,000 39,000 0% Impact Fee Reserves 275, , ,000 1,800,000 1,800,000 0% Total Revenues 7,175,711 7,653,729 7,746,743 30,746,400 30,746,400 0% EXPENDITURES: Personal Service 1,481,498 1,349,744 1,558,440 7,860,235 7,860,235 0% Purchased Power 208, , , , ,000 0% Materials and Supplies 89, , ,956 1,089,071 1,089,071 0% Maintenance and Repairs 144, , ,137 1,447,694 1,447,694 0% Insurance 54,281 55,627 62, , ,460 0% Miscellaneous 28,577 33,569 29,206 55,670 55,670 0% Operations, Services 487, , ,780 2,548,149 2,548,149 0% Capital Outlay 989, ,922 1,017,938 4,642,256 4,642,256 0% Return on Investment 191, , , , ,039 0% Franchise Fee 272, , ,857 1,192,913 1,192,913 0% Debt Service 2 4,924,178 1,759,911 4,470,119 7,039,645 7,039,645 0% Transfers Out 743, , ,310 3,143,772 3,143,772 0% Total Expenditures 9,615,508 6,334,055 9,501,360 30,925,904 30,925,904 0% Net Income (Loss) $ (2,439,797) $ 1,319,674 $ (1,754,617) (179,504) (179,504) Ending Working Capital and Reserves $ 8,729,356 $ 9,032,529 1 The Beginning Working Capital and Reserves excludes Fund Balance from the Impact Fee Reserve Fund of $2,695,213, $1,000,000 of Development Plan Line Reserves, and $1,000,000 of Drainage Reserves. 2 Adjusted timing of debt service transfers to meet required debt service payment in FY 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, 2014 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION REVENUES: Residential Drainage Fees $ 397,766 $ 390,934 $ 412,947 $ 1,591,366 $ 1,591,366 0% Nonresidential Drainage Fees 677, , ,978 2,813,274 2,813,274 0% Wastewater Resources 208,802 25,000 25, , ,000 0% General Fund Transfer 120, , , , ,030 0% Total Revenues 1,404,757 1,231,979 1,311,183 5,017,670 5,017,670 0% EXPENDITURES: Personal Service 324, , ,988 1,762,374 1,762,374 0% Materials and Supplies 6,299 9,490 6,061 86,896 86,896 0% Maintenance and Repairs 10,984 26,783 18, , ,892 0% Insurance 6,058 6,093 6,093 24,373 24,373 0% Miscellaneous 2,008 6,543 2,097 16,950 16,950 0% Operations, Services 72, , , , ,086 0% Capital Outlay 93,899 52,300 77, , ,062 0% Debt Service 757, , ,023 1,059,849 1,059,849 0% Transfer Out 131, , , , ,188 0% Total Expenditures 1,404,757 1,231,664 1,311,183 5,017,670 5,017,670 0% Net Income (Loss) $ - $ 315 $ - $ - $ - 19

21 City of Denton Solid Waste Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2014 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET 3 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/14 1 $ 3,767,241 $ 4,053,725 REVENUES: Garbage Fees - Residential $ 2,277,669 $ 2,406,694 $ 2,450,146 9,940,753 9,940,753 0% Garbage Fees - Commercial 2,701,089 3,088,841 3,179,805 12,945,252 12,945,252 0% Landfill Fees 717, , ,181 3,470,988 3,470,988 0% Recycling 192, , , , ,220 0% Construction - 30, , ,000 0% Site Operations 38,755 42,285 54, , ,000 0% Other Revenue 51,631 38,781 94, , ,000 0% Interest Revenue 1,455 1,377 2,143 5,500 5,500 0% Total Revenues 5,980,424 6,671,481 6,870,086 27,680,713 27,680,713 0% EXPENDITURES: Personal Service 1,975,897 2,300,806 2,031,016 9,377,529 9,377,529 0% Materials and Supplies 92,613 91,334 71, , ,941 0% Maintenance and Repairs 102, ,400 67, , ,033 0% Insurance 49,714 39,327 39, , ,178 0% Miscellaneous 26,867 31,362 26,980 73,800 73,800 0% Operations, Services 1,369,154 1,642,359 1,287,669 5,829,024 5,829,024 0% Capital Outlay 230, , , , ,087 0% Debt Service 2 3,237,901 3,755,088 3,755,088 6,897,359 6,897,359 0% Franchise Fee 283, , ,983 1,374,396 1,374,396 0% Landfill Closure 84,292 91,122 91, , ,200 0% Transfer Out 546, , ,829 2,610,045 2,610,045 0% Total Expenditures 7,998,891 9,189,814 8,422,389 27,802,592 27,802,592 0% Net Income (Loss) $ (2,018,467) $ (2,518,333) $ (1,552,303) (121,879) (121,879) Ending Working Capital and Reserves $ 3,645,362 $ 3,931,846 1 The Beginning Working Capital and Reserves excludes Fund Balance from the Landfill Closure/Post Closure Reserve Fund of $6,521, Adjusted timing of debt service transfers to meet required debt service payment in FY 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, 2014 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 09/30/14 $ 5,095,195 $ 5,234,484 OPERATING REVENUES: Airport Ground Leases $ 104,471 $ 197,043 $ 110, , ,546 0% FBO Commissions 45,411 98,042 47, , ,853 0% Miscellaneous 9,491 10,008 9,244 40,000 40,000 0% Total Operating Revenues 159, , ,943 1,219,399 1,219,399 0% OPERATING EXPENDITURES: Personal Service 125, , , , ,974 0% Materials and Supplies 3,867 11,688 2,438 46,725 46,725 0% Maintenance and Repairs 14,848 19,764 32,565 78,997 78,997 0% Insurance 5,331 5,345 5,340 21,359 21,359 0% Miscellaneous ,500 1,500 0% Operations 23,464 94,382 65, , ,848 0% Transfers Out - Operating 116, , , , ,148 0% Franchise Fee 7,969 15,255 8,396 60,970 60,970 0% Total Operating Expenses 297, , ,453 1,520,521 1,520,521 0% Operating (Loss) (138,413) (103,705) (180,510) (301,122) (301,122) NON-OPERATING REVENUES: Investment Income 6,488 10,008 6,577 40,000 40,000 0% Gas Well Royalties - 225, , ,000 0% Total Non-Operating Revenues 6, ,188 7, , ,000 0% NON-OPERATING EXPENDITURES: Debt Service 173, , , , ,356 0% Transfers Out - Capital 423, , ,032 2,565, ,500-78% Total Non-Operating Expenses 597, , ,914 3,046,856 1,046,856-66% Non-Operating Income (Loss) (590,593) (649,204) (520,596) (2,106,856) (106,856) Net Income (Loss) $ (729,006) $ (752,909) $ (701,106) (2,407,978) (407,978) Ending Working Capital $ 2,687,217 $ 4,826,506 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 Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2014 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 9/30/2014 $ 870,687 $ 916,613 REVENUES: Franchise Fees $ 1,146,424 $ 2,321,766 $ 1,509,356 9,279,639 9,279,639 0% Street Cuts 49,378 87,570 68, , ,000 0% Investment Income 1,008 2, ,000 10,000 0% Transfers In 94, , , , ,387 0% Total Revenues 1,291,788 2,547,294 1,713,844 10,181,026 10,181,026 0% EXPENDITURES: Personal Service 497, , ,845 2,495,611 2,495,611 0% Materials and Supplies 5,557 20,552 7,958 82,150 82,150 0% Maintenance and Repairs 198,886 1,484, ,900 6,037,989 6,037,989 0% Insurance 6,436 15,331 13,881 61,280 61,280 0% Miscellaneous 2,718 1,251 2,671 5,000 5,000 0% Operations, Services 144, , , , ,986 0% Transfer Out 729, , , , ,010 0% Total Expenditures 1,584,944 2,547,289 1,966,057 10,181,026 10,181,026 0% Net Income (Loss) $ (293,156) $ 5 $ (252,213) - - Ending Fund Balance $ 870,687 $ 916,613 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 Expenditures - Budget vs Projection (Unaudited) For the Period Ended December 31, 2014 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) $ 3,106,152 $ 121,852 $ 1,172,677 $ 850,000 72% US Dept of HUD - HOME Investment Partnership Program 1,410,605 22,240 1,137, ,000 57% Emergency Solutions Grant , , % Community Development 4,517, ,092 2,902,080 2,091,880 72% TxDot Comprehensive Grant - 14,493 95,830 95, % 2010 Congressional Grant 782, , ,391 0% 2013 Byran Justice Assistance Grant (JAG) 19, ,243 0% 2014 Byran Justice Assistance Grant (JAG) ,357 24, % 2013 UASI 1,860-42,000 42, % 2013 UASI-LETPA ,000 36, % 2013-SHSP-LETPA - - 9,500 9, % 2014 UASI , , % 2014-UASI-LETPA ,000 55, % Emergency Management Performance Grant - 14,256 71,280 57,024 80% Auto Theft Grant 12,993 38, , , % Tobacco Grant - 1,350 7,500 7,350 98% Public Safety 816, , , , % Summer Food Grant 180, , % Parks and Recreation , , % CNG Fuel Station Grant , , % Texas Historical Commission Grant ,775 37, % Airport Maintenance (RAMP) Grant ,000 50, % Other , , % Total FY Budget 5,333, ,516 3,975,555 3,424,583 86% New Awards Amy Young Barrier Removal Program ,000 66, % Emergency Solutions Grant additional award ,521 33, % Community Development ,521 99, % TxDot NW Trail Extension Grant - - 1,341,617 1,341, % Parks and Recreation - - 1,341,617 1,341, % Farmers' Market Promotion Program ,871 49,269 63% TxDot US380 - I35 Traffic Lights Grant - 102, , % Other , ,480 84% Total New Awards - - 1,621,220 1,592,618 98% TOTALS $ 5,333,888 $ 484,516 $ 5,596,775 $ 5,017,201 90% 1 A portion of the grants presented cover multiple years. 23

25 24

26 Section 3 City of Denton Quarterly Financial Report December 2014 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, 2014 Gross Domestic Product (GDP) GDP, the most common gauge of economic growth, averaged +3.2% from 1947 to 2013, although the -5.1% contraction rate during the Great Recession was the worst in seven decades. During the recovery, GDP has struggled despite unprecedented government stimulus. While the U.S. economy enjoyed its best performance in four years, the path was wildly uneven. First quarter GDP unexpectedly contracted by -2.1% due to unseasonably cold weather, but rebound growth in the second (+4.6%) and third (+5.0%) quarters represented the strongest back-to-back increases since The initial reading of annualized fourth quarter 2014 GDP was +2.6%, bringing year-over-year economic growth to +2.4%, an increase over the 2013 gain of +2.2%. Nonfarm Payrolls There were +252k new jobs added to company payrolls in December. With an increase of 2.95 million, it was the best year for job creation since The December unemployment rate fell to 5.6%, the lowest level since June 2008 although the underlying reason wasn t a huge increase in new jobs, but rather another big decline in the number of Americans seeking work. If the Fed were to only look at job creation and unemployment, a good case could be made to boost short rates immediately, BUT the Fed has focused its attentions on wages, and apparently the true job market isn t yet tight enough that employers are forced to increase pay. Average hourly earnings actually fell by 0.2% in December, pulling down the yearover-year increase from 1.9% to 1.7%. 27

29 Housing 30-year mortgage rates have fallen back below 4% for the first time again since May 2013, and home price appreciation has slowed but home sales are slow to respond. Existing home purchases unexpectedly dropped -6.1% in November before climbing +2.4% in December to a 5.04 million unit annual pace. New home sales jumped 11.6% in December to a 481k annual pace, the highest since June 2008, but still well below the bubble peak of 1.4 million. Home prices continue to rise, but more modestly as the S&P Case Shiller home price index, which was appreciating by a substantial +13.2% a year ago, is now rising at just a +4.7% annual pace. Conditions are ripe for growth as excess inventories are lean, labor conditions are favorable, and household wealth is vastly improved but buyers are reluctant. Retail Sales Gasoline prices, which have fallen by an average of $1.50 per gallon since June, were expected to boost consumer spending, but surprisingly this hasn t yet been reflected in the sales data. December retail sales actually fell by -0.9%, the biggest monthly drop since January 2014 when sub-freezing weather trapped Americans indoors. A downward revision lowered November retail sales from a previously reported +0.7% to +0.4%. U.S. auto sales continue to show strength as Americans gradually replace the oldest group of cars and light trucks in history. Although the December sales pace fell back below the 17 million annual unit mark, 2014 sales were the best since In a sign that overall spending could increase later this year, consumer confidence rose to an 11-year high of 98.2 in December. 28

30 Texas Home Sales The state housing market continues to show extremely strong growth despite declining oil revenues. During the month of December 2014, Texas unit home sales were up 12.2% over the previous December, while dollar volume was up a huge 19.9% from 12 months ago. During this same YOY period, the average home price in Texas climbed 6.5% to $247,900 while available supply fell from 3.3 months to an all-time low of 3.1. In Denton County, on a year-over-year basis through December, unit home sales rose 2.9%. The average sales price in December increased by 11% from 12 months earlier to $249,900, boosting dollar volume by more than 27%. Total listings for Denton County are currently at 1,193 units or an extremely lean record low 1.5 month supply, down from 1,331 units and 1.7 months a year earlier. 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 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 17.2% decrease from the prior quarter at the national level and a 18.8% decrease at the state level. Sales tax returns increased 8% from the prior quarter. Staff has rated this outlook as Positive. Fuel Prices Sales Tax Texas Fuel Prices US Fuel Prices $4.00 $9 $3.50 $8 Dollars $3.00 $2.50 $2.00 $1.50 $1.00 $7 $6 $5 $4 $3 $2 Millions $0.50 $1 $0.00 1Q '11 3Q '11 1Q '12 3Q '12 1Q '13 3Q '13 1Q '14 3Q '14 1Q '15 $0 Source: U.S. Department of Energy 30

32 Municipal Cost Index Outlook Cautious 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 2015 shows an decrease of.34% over the prior quarter and an increase of 1.5% over the 1st fiscal quarter of Staff has rated this indicator as Cautious Municipal Cost Index Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 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 2015 was 22% more than budget and 11% more than the 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: $ 490,133 $ 490,133 FY Budget $ 400,881 $ 400,881 Over(Under) Budget $ 89,252 $ 89,252 FISCAL YEAR FORECAST Hotel Occupancy Tax Budget: $ 1,809,406 End of Year Projection: $ 2,039,613 Variance: $ 230,207 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 2015 compared to revenues from the prior year 1st quarter shows a 19.23% increase, and compared to the budget it is 16.07% above. Staff has rated this indicator as Positive. 1st Quarter FY Actual Y-T-D Revenue: Gross Sales Tax Municipal Operations $ 423,333 $ 423,333 General Retail & Others 7,869,518 7,869,518 Comptroller Fees (154,520) (154,520) Amount Retained (151,430) (151,430) Total Revenue $ 7,986,901 $7,986,901 Expenses: Economic Incentives Denton Crossing $ 134,892 $ 134,892 Unicorn Lake 17,823 17,823 Rayzor Ranch 310, ,330 Golden Triangle - - Total Expenses $ 463,045 $ 463,045 Net Total 7,523,856 7,523,856 FY Budget 6,482,152 6,482,152 Over(Under) Budget $ 1,041,704 $ 1,041,704 Sales Tax Budget: $ 28,145,925 Year End Projection: 29,052,164 Variance to Original Budget: $ 906,239 Economic Development Expenditure Budget: $ 1,820,872 Year End Projection: 1,820,872 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 Positive 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 increased 84% from the prior quarter and increased 102% from the 1st quarter of Staff has rated the outlook for this revenue indicator as Positive Certificates of Occupancy Q '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 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 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 2.3% from the prior quarter and increased 7% from the 1 st Quarter of Staff has rated the outlook for this revenue indicator as Cautious Residential Permits Q '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 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 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 a slow down in the state's rate of growth. The index decreased by 1.7% from the prior quarter and increased 2.0% from the 1st quarter of Staff has rated this indicator as Positive Texas Leading Indicators Index Q '05 3Q '05 1Q '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 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 declined to 3.4% from a rate of 4.4% the prior quarter. The unemployment rates for the other reported sectors were down from the prior quarter. 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 '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 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 December 2014 INVESTMENT REPORT 39

41 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2014 Page 1 INVESTMENT POOL Policy Par Market Book Unrealized Max. Benchmark Portfolio: Value Value Value Gain/(Loss) 1 WAM Wam YTM Yield* Investment Pool $ 462,308,315 $ 463,762,207 $ 463,683,002 $ 79, % 0.12% *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 22,000,000 22,111,952 22,099,286 12, % 4.77% % U.S. Federal Agencies 237,000, ,719, ,671,238 48, % 51.26% % Municipal Bonds 29,585,000 30,213,129 30,197,348 15, % 6.51% 15.00% Certificates of Deposit 116,000, ,000, ,000, % 25.02% 35.00% Commercial Paper 15,000,000 14,994,355 14,991,815 2, % 3.23% 5.00% Demand Deposits 42,723,315 42,723,315 42,723, % 9.21% - Total Portfolio $ 462,308,315 $ 463,762,207 $ 463,683,002 $ 79, % % - 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: 12/31/2014 9/30/2014 Difference 12/31/2013 Par Value $ 462,308,315 $ 474,376,251 $ (12,067,936) $ 438,890,680 Market Value $ 463,762,207 $ 476,339,747 $ (12,577,540) $ 442,019,975 Book Value $ 463,683,002 $ 476,136,081 $ (12,453,079) $ 441,790,765 Unrealized Gain(Loss) $ 79,205 $ 203,666 $ (124,461) $ 229,210 Weighted Average Maturity (24) 449 Yield to Maturity 0.55% 0.51% 0.04% 0.50% $ $ $ $ 1 Year Ago Difference 23,417,635 21,742,232 21,892,237 (150,005) (70) 0.05% Portfolio Composition: U.S. Treasuries 4.77% 4.64% 0.13% 2.29% U.S. Federal Agencies 51.26% 49.34% 1.92% 53.10% Municipal Bonds 6.51% 6.37% 0.14% 6.96% Certificates of Deposit 25.02% 24.36% 0.66% 26.26% Commercial Paper 3.23% 4.20% -0.97% 0.00% Demand Deposits 9.21% 11.09% -1.88% 11.39% 2.48% -1.84% -0.45% -1.24% 3.23% -2.18% Bank Collateral Review**: Institution Collateral Type Market Value Collected Balance Pledge Required Collateral Ratio Wells Fargo Demand Deposits BNY Mellon U.S. Agency MBS $ 66,673,306 $ 42,546,307 > 102% % Comerica Collateralized CDs Federal Reserve U.S. Agency MBS $ 67,168,123 $ 53,363,913 > 110% % ViewPoint Bank Collateralized CDs Fed Home Loan Bk U.S. Agency MBS $ 11,653,114 $ 10,131,624 > 102% % **Does not include FDIC insurance Depository Ledger Balance Review: Institution Account Type Beginning Bal. Deposits Withdrawals Ending Bal. Wells Fargo Bank Checking $ 49,515,252 $ 63,306,271 $ (70,098,208) $ 42,723,315 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 1st Fiscal Quarter December 31, 2014 Page 2 INVESTMENT POOL Current 3 Months Ago 3 Month 1 Year Ago 1 Year 12/31/2014 9/30/2014 Difference 12/31/2013 Difference Par Value - U.S. Treasuries $ 22,000,000 $ 22,000,000 $ - $ 10,000,000 $ 12,000,000 Par Value - U.S. Federal Agencies 237,000, ,000,000 3,000, ,000,000 4,000,000 Par Value - Municipal Bonds 29,585,000 29,585,000-29,585,000 - Certificates of Deposit 116,000, ,000, ,000,000 - Par Value - Commercial Paper 15,000,000 20,000,000 (5,000,000) - 15,000,000 Demand Deposits 42,723,315 52,791,251 (10,067,936) 50,305,680 (7,582,365) Total Par Value $ 462,308,315 $ 474,376,251 $ (12,067,936) $ 438,890,680 $ 23,417,635 Market Value - U.S. Treasuries $ 22,111,952 $ 22,117,852 $ (5,900) $ 10,109,370 $ 12,002,582 Market Value - U.S. Federal Agencies 237,719, ,057,523 2,661, ,864,482 2,854,974 Market Value - Municipal Bonds 30,213,129 30,380,867 (167,738) 30,740,443 (527,314) Certificates of Deposit 116,000, ,000, ,000,000 - Market Value - Commercial Paper 14,994,355 19,992,254 (4,997,899) - 14,994,355 Demand Deposits 42,723,315 52,791,251 (10,067,936) 50,305,680 (7,582,365) Total Market Value $ 463,762,207 $ 476,339,747 $ (12,577,540) $ 442,019,975 $ 21,742,232 Book Value - U.S. Treasuries $ 22,099,286 $ 22,115,056 $ (15,770) $ 10,124,502 $ 11,974,784 Book Value - U.S. Federal Agencies 237,671, ,902,406 2,768, ,590,642 3,080,596 Book Value - Municipal Bonds 30,197,348 30,340,496 (143,148) 30,769,941 (572,593) Certificates of Deposit 116,000, ,000, ,000,000 - Book Value - Commercial Paper 14,991,815 19,986,872 (4,995,057) - 14,991,815 Demand Deposits 42,723,315 52,791,251 (10,067,936) 50,305,680 (7,582,365) Total Book Value $ 463,683,002 $ 476,136,081 $ (12,453,079) $ 441,790,765 $ 21,892,237 Accrued Interest $ 1,649,497 $ 1,396,000 $ 253,497 $ 1,855,837 $ (206,340) Cash Value - $ 465,411,704 $ 477,735,747 $ (12,324,043) $ 443,875,812 $ 21,535,892 (Total Market Value + Accrued Interest) Unrealized Gain/(Loss) $ 79,205 $ 203,666 $ (124,461) $ 229,210 $ (150,005) Change in Fair Value since 9/30/14 - $ (549,319) $ (1,805,166) $ 1,255,847 $ (384,041) $ (165,278) (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, 2014 Page 3 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Security Type: 12/31/2014 9/30/ /31/2013 U.S. Treasuries - Coupon $ 22,099,286 $ 22,115,056 $ 10,124,502 U.S. Federal Agencies - Coupon 232,681, ,917, ,598,323 U.S. Federal Agencies - Callable 4,989,248 12,984,440 25,992,319 Municipal Bonds - Coupon 30,197,348 30,340,496 30,769,941 Certificates of Deposit - CDARS 53,000,000 49,000,000 59,000,000 Certificates of Deposit - Collateralized 63,000,000 67,000,000 57,000,000 Commercial Paper - Discount 14,991,815 19,986,872 - Demand Deposits 42,723,315 52,791,251 50,305,680 Total Book Value $ 463,683,002 $ 476,136,081 $ 441,790,765 U.S. Federal Agencies - Coupon 50.18% Current 12/31/2014 U.S. Federal Agencies - Callable 1.08% Municipal Bonds - Coupon 6.51% U.S. Treasuries - Coupon 4.77% Demand Deposits 9.21% Commercial Paper - Discount 3.23% Certificates of Deposit - Collateralized 13.59% Certificates of Deposit - CDARS 11.43% 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: 12/31/2014 9/30/ /31/2013 U.S. Treasuries - Coupon 4.77% 4.64% 2.29% U.S. Federal Agencies - Coupon 50.18% 46.61% 47.22% U.S. Federal Agencies - Callable 1.08% 2.73% 5.88% Municipal Bonds - Coupon 6.51% 6.37% 6.96% Certificates of Deposit - CDARS 11.43% 10.29% 13.36% Certificates of Deposit - Collateralized 13.59% 14.07% 12.90% Commercial Paper - Discount 3.23% 4.20% 0.00% Demand Deposits 9.21% 11.09% 11.39% Total % % % 42

44 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2014 Page 4 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Issuer: 12/31/2014 9/30/ /31/2013 CDARS CDs $ 53,000,000 $ 49,000,000 $ 59,000,000 COMERICA BANK CDs 53,000,000 57,000,000 47,000,000 VIEWPOINT BANK CDs 10,000,000 10,000,000 10,000,000 U.S. TREASURY 22,099,286 22,115,056 10,124,502 FFCB 16,987,804 17,999,635 29,997,944 FHLB 66,061,617 66,111,221 49,269,498 FHLMC 77,140,376 73,202,644 60,459,786 FNMA 77,481,441 77,588,907 94,863,415 GARLAND, TX GENERAL OBG BONDS 3,142,859 3,169,114 3,247,882 TEXAS STATE GENERAL OBG BONDS 3,000,000 3,000,000 3,000,000 TEXAS SCHOOL DIST GEN OBG BONDS* 24,054,488 24,171,381 24,522,058 JP MORGAN SECURITIES LLC 4,994,563 3,998,130 - TOYOTA MOTOR CREDIT CORP 9,997,253 15,988,742 - WELLS FARGO DEMAND DEPOSITS 42,723,315 52,791,251 50,305,680 Total Book Value $ 463,683,002 $ 476,136,081 $ 441,790,765 WF DEMAND DEPOSITS, 9.21% TOYOTA MOTOR CREDIT CORP, 2.16% JP MORGAN SECURITIES LLC, 1.08% TEXAS SCHOOL DIST GEN OBG BONDS, 5.18% TEXAS STATE GEN OBG BONDS, 0.65% GARLAND, TX GEN OBG BONDS, 0.68% Current 12/31/2014 CDARS CDs, 11.43% COMERICA BANK CDs, 11.43% VIEWPOINT BANK CDs, 2.16% FNMA, 16.71% U.S. TREASURY, 4.77% FFCB, 3.65% FHLB, 14.25% FHLMC, 16.64% 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 (insured and collateralized) restriction. Current 3 Months Ago 1 Year Ago Summary By Issuer: 12/31/2014 9/30/ /31/2013 CDARS CDs 11.43% 10.29% 13.35% COMERICA BANK CDs 11.43% 11.97% 10.64% VIEWPOINT BANK CDs 2.16% 2.10% 2.26% U.S. TREASURY 4.77% 4.64% 2.29% FFCB 3.65% 3.78% 6.79% FHLB 14.25% 13.88% 11.15% FHLMC 16.64% 15.37% 13.69% FNMA 16.71% 16.30% 21.47% GARLAND, TX GENERAL OBG BONDS 0.68% 0.67% 0.74% TEXAS STATE GENERAL OBG BONDS 0.65% 0.63% 0.68% TEXAS SCHOOL DIST GEN OBG BONDS* 5.18% 5.08% 5.55% JP MORGAN SECURITIES LLC 1.08% 0.84% 0.00% TOYOTA MOTOR CREDIT CORP 2.16% 3.36% 0.00% WELLS FARGO DEMAND DEPOSITS 9.21% 11.09% 11.39% Total % % % *Individual issuers are listed on the attached Portfolio Details Report 43

45 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2014 Page 5 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Maturity Time Frame: 12/31/2014 9/30/ /31/ Months $ 102,723,315 $ 88,791,251 $ 92,305, Months 37,000,000 57,000,000 20,000, Months 73,375,000 63,375,000 55,000, Months 183,210, ,210, ,375, Months & Over 66,000,000 82,000, ,210,000 Total Par Value $ 462,308,315 $ 474,376,251 $ 438,890,680 $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: 12/31/2014 9/30/ /31/ Months 22.22% 18.72% 21.03% Months 8.00% 12.01% 4.56% Months 15.87% 13.36% 12.53% Months 39.63% 38.62% 35.63% 24 Months & Over 14.28% 17.29% 26.25% Total % % % 44

46 CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1st Fiscal Quarter December 31, 2014 Page 6 ECONOMIC SUMMARY Interest Rate History Source: U.S. Federal Reserve Statistical Release (H.15) Fiscal Year Fiscal Year Fiscal Year Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Market Sector: Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective) 0.12% 0.16% 0.18% 0.18% 0.18% 0.14% 0.09% 0.08% 0.07% 0.13% 0.16% 0.14% 3-Month U.S. T-Bill 0.05% 0.15% 0.12% 0.16% 0.14% 0.10% 0.04% 0.01% 0.01% 0.08% 0.09% 0.11% 2-Year U.S. T-Note 0.87% 0.96% 0.72% 0.43% 0.62% 0.70% 0.41% 0.21% 0.26% 0.34% 0.29% 0.26% Portfolio Benchmark* 0.47% 0.42% 0.39% 0.34% 0.32% 0.30% 0.25% 0.22% 0.18% 0.15% 0.15% 0.16% Portfolio Yield 1.43% 1.22% 1.06% 0.62% 0.65% 0.66% 0.66% 0.62% 0.59% 0.58% 0.56% 0.55% Fiscal Year Fiscal Year Fiscal Year Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Market Sector: Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective) 0.16% 0.14% 0.09% 0.08% 0.09% 0.08% 0.10% 0.09% 0.12% 3-Month U.S. T-Bill 0.07% 0.09% 0.05% 0.02% 0.07% 0.05% 0.04% 0.02% 0.03% 2-Year U.S. T-Note 0.26% 0.26% 0.33% 0.40% 0.34% 0.40% 0.45% 0.57% 0.64% Portfolio Benchmark* 0.18% 0.18% 0.16% 0.15% 0.13% 0.13% 0.12% 0.12% 0.12% Portfolio Yield 0.52% 0.50% 0.48% 0.49% 0.50% 0.49% 0.49% 0.51% 0.55% *Twelve month moving average of a one year U.S. T-bill yield 3.00% FY FY FY FY FY FY % 2.00% 1.50% 1.00% 0.50% 0.00% Dec- 09 Mar- 10 Jun- 10 Sep- Dec- Mar- Jun Sep- Dec- Mar- Jun Sep- Dec- Mar- Jun Sep- Dec- Mar- Jun Sep- Dec- Mar- Jun- Sep Fed Funds 3-Month T-Bill 2-Year T-Note Portfolio Yield Portfolio Benchmark* Fiscal Year: $ $ $ $ $ $ Fiscal Year to Date Earnings Oct - Dec Oct - Mar Oct - Jun Oct - Sep 3 Months 6 Months 9 Months 12 Months 613, ,824 $ 1,121,491 $ 1,680,154 $ 2,298, ,749 $ 1,177,337 $ 1,703,496 $ 2,276, ,193 $ 1,239,869 $ 1,862,207 $ 2,511, ,111 $ 1,056,309 $ 1,631,563 $ 2,216,300 1,058,175 $ 1,920,154 $ 2,655,725 $ 3,248,091 QUARTERLY COMMENTARY December 31, 2014 Source: First Southwest Asset Management The U.S. economy ended the year on an upbeat note as employers created the most new jobs in three years in November and the final Economic Summary & TexStar Monthly reading of the third calendar quarter GDP was revised sharply higher to 5%, the fastest pace of growth since The Dow and S&P 500 Newsletter stock market indices both reached record highs as well. The Federal Open Market Committee (FOMC) ended its asset purchase program in October, thus, wrapping up the last of their quantitative easing (QE) campaign while China, Japan, and Europe are either in the midst of theirs or moving in that direction. Energy prices plummeted during the quarter reacting to surplus production and tepid demand. While the price decline aided consumer spending and bolstered confidence readings in the U.S., energy-related areas clearly felt the negative impact. The Federal Reserve continued to signal a willingness to raise short term rates around mid-2015, although at a more moderate pace and amount than previously anticipated. According to the Bloomberg economist survey dated January 14, 2015, the preliminary median forecast for annualized real GDP growth for the fourth calendar quarter was 2.9%, followed by 2.8%, 2.9% and 2.9% for the next three quarters. 45

47 46

48 47

49 48

50 49