2019-037 First Quarter Financial ReportDate: March 8, 2019 Report No. 2019-037
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Quarterly Financial Report for the period ending December 31, 2018.
BACKGROUND:
Attached for your review is the Quarterly Financial Report for the period ending December 31,
2018. If you have any questions or need additional information, please let me know.
STAFF CONTACT:
Antonio Puente, Jr., Chief Financial Officer
(940) 349-7283
Antonio.Puente@cityofdenton.com
1
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, 2018.
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 section provides a summary
of the City’s investment portfolio, interest earnings and a brief
market outlook.
2
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.
Antonio Puente, Jr.
Chief Financial Officer
215 East McKinney Street
Denton, TX 76201
940-349-8260
3
Section 1
City of Denton
Quarterly Financial Report
December 2018
Executive Dashboards
4
Note: All figures presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Fund Balance as of 09/30/18 31.09$ 30.32$ RESOURCES: Ad Valorem Taxes 46.26 46.26 0% Sales Tax 41.43 41.43 0% Franchise Fees 4.36 4.36 0% Other Taxes 0.51 0.51 0% Service Fees 8.23 8.23 0% Fines and Fees 3.72 3.72 0% Licenses and Permits 3.86 3.86 0% Miscellaneous Revenue 2.17 2.17 0% Transfers In 17.16 17.16 0%Total Revenues 127.70 127.70 0%Total Resources 158.79 158.02 EXPENDITURES : Personal Service 87.17 87.17 0% Material and Supplies2.92 2.92 0% Maintenance and Repairs3.27 3.27 0% Insurance1.44 1.44 0% Miscellaneous1.15 1.15 0% Operations18.30 18.30 0% Transfers Out14.36 14.36 0% Fixed Assets0.57 0.57 0%Total Expenditures129.18 129.18 0%Net Income (Loss)(1.48) (1.48) Ending Fund Balance29.61$ 28.84$ City of Denton, Texas General Fund Executive Dashboard $‐ $5 $10 $15 $20 $25 $30 $35 $40 $45Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsAt this point in the fiscal year, revenues and expenditures are projected to meet budgeted levels. $‐ $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5Sales Tax Monthly Average by Quarter1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process.5
Note: All figures presented are in millions of dollars.City of Denton, Texas Electric Fund Executive DashboardDESCRIPTIONFY 2018-19 ANNUAL BUDGET1FY 2018-19 ANNUAL PRO JEC TIO NS FY 2018-19 VARIANCEBeginning Working Capital and Reserves as of 9/30/18 62.95$ 73.94$ RESOURCES: Rate Revenues 135.52 135.52 0% Transmission Revenue 40.06 40.06 0% Other Revenues 3.75 3.75 0% DEC Revenues 36.30 36.30 0%Total Revenues 215.63 215.63 0%Total Resources 278.58 289.57 EXPENDITURES: Purchased Power 67.19 67.19 0% DEC Fuel 14.97 14.97 0% Transmission of Power 12.50 12.50 0% Personnel Service 22.06 22.06 0% Operation and Maintenance 27.32 27.32 0% Debt Service 69.30 40.68 -41% Transfers Out 14.33 14.33 0% Capital Outlay 16.02 16.02 0%Total Expenditures 243.69 215.07 -12%Net Income (Loss) (28.06) 0.56 Ending Working Capital and Reserves 34.89$ 74.50$ $0$10$20$30$40$50$60Oct‐18 Nov‐18 Dec‐18Revenue & Expenses (in Millions)YTD RevenueYTD ExpenseKey TrendsAt this point in the fiscal year, revenues are projected to meet budgeted levels. Expenditures have been reduced by $28.6 Million to reflect no debt defeasance of the TMPA Scrubber debt in FY 2018‐19.01002003004005006001Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q192013 – 2018 Historical Quarterly GWH Sales1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process. 6
Note: All figures presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18223.98$ 25.95$ RESOURCES: Water Sales 37.50 37.50 0% Other Water Revenues 1.02 1.02 0% Transfers In 1.49 1.49 0% Impact Fee Revenue 5.70 5.70 0%Total Re ve n u e s 45.71 45.71 0%Total Resources 69.69 71.66 EXPENDITURES: Personal Service 8.86 8.86 0% Operations, Services 10.00 10.00 0% Capital Outlay 15.28 15.28 0% Debt Service 12.66 12.66 0% Transfers Out 3.39 3.39 0%Total Expenditures 50.19 50.19 0%Net Income (Loss) (4.48) (4.48) Ending Working Capital and Reserves 19.50$ 21.47$ 05001,0001,5002,0002,5001Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q192014‐2019 Historical Quarterly Gallons Sold (in Millions)City of Denton, Texas Water Fund Executive Dashboard $‐ $2 $4 $6 $8 $10 $12 $14 $16Oct‐18 Nov‐18 Dec‐18Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsAt this point in the fiscal year, expenditures and revenues are projected to meet budgeted levels.1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process.2The Beginning Working Capital balance excludes $10.88M of Impact Fee Reserves and $0.75 million for Development Plan Line Reserves.7
FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18219.19$ 18.67$ RESOURCES: Wastewater Fees 23.64 23.64 0% Other Wastewater Revenue 1.83 1.83 0% Drainage Fees 4.73 4.73 0% Transfer In 0.55 0.55 0% Impact Fee Revenue 2.00 2.00 0%Total Revenues 32.75 32.75 0%Total Resources 51.94 51.42 EXPENDITURES: Personal Service 8.61 8.61 0% Operations, Services 8.58 8.58 0% Capital Outlay 10.18 10.18 0% Debt Service 6.81 6.81 0% Transfer Out 3.29 3.29 0%Total Expenditures 37.47 37.47 0%Net Income (Loss) (4.72) (4.72) Ending Working Capital and Reserves 14.47$ 13.95$ Note: All figures presented are in millions of dollars.02004006008001,0001,2001,4001Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q192014‐2018 Historical Quarterly Gallons Billed (in Millions)City of Denton, Texas Wastewater Fund Executive Dashboard $‐ $2 $4 $6 $8 $10 $12 $14 $16Oct‐18 Nov‐18 Dec‐18Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsAt this point in the fiscal year, expenditures and revenues are projected to meet budgeted levels.1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process.2The Beginning Working Capital balance excludes $4.19 million of Impact Fee Reserves, $1.0 million for Drainage Reserves, and $0.54 million for Development Plan Line Reserves.8
FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET PROJECTION VARIANCEREVENUES: Residential Drainage Fees 1.82$ 1.82$ 0% Nonresidential Drainage Fees 2.91 2.91 0% Wastewater Resources 0.04 0.04 0% General Fund Transfer 0.32 0.32 0%Total Revenues 5.09 5.09 0%EXPENDITURES: Personal Service 1.97 1.97 0% Operations, Services 0.80 0.80 0% Capital Outlay 1.40 1.40 0% Debt Service 0.48 0.48 0% Transfer Out 0.44 0.44 0%Total Expe n di tu re s 5.09 5.09 0%Net Income (Loss) -$ -$ Note: All figures presented are in millions of dollars.City of Denton, Texas Drainage Operations Executive Dashboard $‐ $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8Oct‐18 Nov‐18 Dec‐18Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsAt this point in the fiscal year, expenditures and revenues are projected to meet budgeted levels.9
FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTIONBUDGET 1PROJECTIONS VARIANCEBeginning Working Capital and Reserves as of 09/30/1828.64$ 10.92$ RESOURCES: Collection & Disposal 26.29 26.29 0% Recycling 6.84 6.84 0% Other Revenue 1.39 1.39 0%Total Revenues 34.52 34.52 0%Total Resources 43.16 45.44 EXPENDITURES: Personal Service 11.21 11.21 0% Operations, Services 10.14 10.14 0% Capital Outlay 1.33 1.33 0% Debt Service 9.00 9.00 0% Transfer Out 3.19 3.19 0%Total Expenditures 34.87 34.87 0%Net Income (Loss)(0.35) (0.35) Ending Working Capital and Reserves8.29$ 10.57$ 01,0002,0003,0004,0005,0006,0007,0002017Qtr 22017Qtr 32017Qtr 42018Qtr 12018Qtr 22018Qtr 32018Qtr 42019Qtr 1Refuse TonnageRecycling TonnagesResidential Curbside Collection TonnageNote: All figures presented are in millions of dollars.City of Denton, Texas Solid Waste Fund Executive DashboardKey TrendsAt this point in the fiscal year, all revenues and expenses are expected to meet budget projections.05,00010,00015,00020,00025,00030,0002017Qtr 22017Qtr 32017Qtr 42018Qtr 12018Qtr 22018Qtr 32018Qtr 42019Qtr 1Commercial Refuse & Recycling (Front & Side Load)Cubic Yards Serviced per WeekCommercial RefuseCommercial Recycling1Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018‐19 budget process.2The Beginning Working Capital and Reserves excludes $9.90 million of Landfill Closure/Post Closure reserves.10
City of Denton, Texas Airport Fund Executive DashboardKey TrendsAt this point in the fiscal year all revenues and expenses are expected to be at budgeted levels.$0.0$1.0$2.0$3.0$4.0$5.02009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019GAS WELLREVENUE(in millions of dollars by fiscal year) 20,000 30,000 40,000 50,000 60,000AIRPORT OPERATIONS BY QUARTER(takeoff or landing by fiscal year)Note: All financial amounts presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18 2.67$ 2.93$ RESOURCES: Airport Ground Leases 0.77 0.77 0% FBO Commissions 0.21 0.21 0% Miscellaneous 0.11 0.11 0%Total Operating Revenues 1.09 1.09 0%EXPENDITURES: Personal Service 0.55 0.55 0% Operations, Services 0.42 0.42 0% Transfer Out 0.52 0.52 0%Total Operating Expenditures 1.49 1.49 0%Net Operating Income (Loss) (0.40) (0.40) NON-OPERATING REVENUES: Investment Income 0.02 0.02 0% Gas Well Royalties 0.43 0.43 0%Total Non-Operating Revenues 0.45 0.45 0%NON-OPERATING EXPENDITURES: Transfer Out - Capital 0.25 0.25 0%Total Non-Operating Expenditures 0.25 0.25 0%Net Non-Operating Income (Loss) 0.20 0.20 Net Income (Loss) (0.20) (0.20) Ending Working Capital and Reserves 2.47$ 2.73$ 1Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018‐19 budget process.11
FY 2018-19 FY 2018-19ANNUAL PRELIMINARY FY 2018-19DESCRIPTIONBUDGET 1ACTUALS VARIANCEBeginning Working Capital and Reserves as of 09/30/2018 1.16$ 1.62$ RESOURCES: Franchise Fees 13.52 13.52 0% Street Cuts 0.36 0.36 0% Investment Income0.01 0.01 0% Transfers In1.20 1.20 0%Total Revenues15.09 15.09 0%Total Resources16.25 16.71 EXPENDITURES: Personal Service3.64 3.64 0% Materials & Supplies0.09 0.09 0% Maintenance & Repairs9.20 9.20 0% Operations, Services0.78 0.78 0% Transfer Out1.36 1.36 0%Total Expe n di tu re s15.07 15.07 0%Net Income (Loss)0.02 0.02 Ending Fund Balance1.18$ 1.64$ 1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process.City of Denton, Texas Street Improvement Fund Executive DashboardKey TrendsRevenues and expenditures are projected to meet budgeted levels.No surface treatments were completed in the 1stquarter of the prior year due to cold weather.Note: All figures presented are in millions of dollars.012345Qtr1Tons of Asphalt Laid (in Thousands)FY17-18FY18-190204060Qtr 1Lane Miles Surface TreatmentFY 17-18FY 18-19 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0Oct-18Nov-18Dec-18Revenue & Expenses (in Millions)YTD RevenueYTD Expenses12
FY 2018-19 FY 2018-19GRANT ANNUAL FY 2018-19DESCRIPTION AMOUNT PROJECTION VARIANCE2018-19 Budget Comm Development13.64$ 1.25$ -66% Public Safety 1.02 1.02 0% Transportation172.92 31.56 -57% Other 0.28 0.28 0%Total Budget 77.86 34.11 -56%New Awards Public Safety 0.04 0.04 0%Total New Awards0.04 0.04 0%Totals 77.90$ 34.15$ -56%COMM DEV4.67%PUBLIC SAFETY1.36%TRANS93.60%OTHER0.37%FY 2018‐19 Grants Awarded $‐ $20.0 $40.0 $60.0 $80.0COMMDEVPUBLICSAFETYTRANSOTHERAwardsExpensesFY 2018‐19 Awards & Expenses (in Millions)City of Denton, Texas Grants DashboardNote: All figures presented are in millions of dollars.1This grant amount will be spent over several years and the fiscal year 2018-19 projections are estimated expenditures for one year. Remaining grant amounts will be spent in future fiscal year.Key TrendsThe following grants have been received in FY 2018-19: Federal Equitable Sharing: $1,000Chapter 59 Asset Forfeitures: $9,929Sexual Assault Examiners Reimbursement:$8,0352017 UASI: $20,65713
Section 2
City of Denton
Quarterly Financial Report
December 2018
This report is designed for internal use and does not include all the
funds and accounts included in the City of Denton’s operations. The
information provided is unaudited; for a complete audited report,
please refer to the City of Denton Comprehensive Annual Financial
Report, available through the City’s Finance Department, City
Secretary’s Office, or Denton Public Libraries.
FINANCIAL SUMMARY
14
City of Denton General FundSchedule of Revenues - Budget vs Projection (Unaudited)For the Period Ended Decmeber 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
REVENUE DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION
Current Year - Ad Valorem 21,575,628$ 20,502,485$ 20,244,896$ 45,674,373$ 45,674,373$ 0%
Delinquent - Ad Valorem 41,034 62,345 50,118 296,882 296,882 0%
Miscellaneous Penalties & Fees 50,553 47,413 33,249 288,727 288,727 0%
Ad Valorem Taxes 21,667,215 20,612,243 20,328,263 46,259,982 46,259,982 0%
Sales Tax 9,700,411 10,364,681 9,902,458 41,425,582 41,425,582 0%
Franchise - Gas Utilities 11,298 - 11,593 298,753 298,753 0%
Franchise - Private Electric Utilities - - - 105,949 105,949 0%
Franchise - Cable - - - 410,188 410,188 0%
Franchise - Telecom - - - 201,058 201,058 0%
Franchise - Denton Municipal Utilities 845,451 616,472 816,782 3,346,901 3,346,901 0%
Franchise Fees 856,749 616,472 828,375 4,362,849 4,362,849 0%
Other Taxes - - - 505,936 505,936 0%
Ambulance Service Fees 624,307 432,160 658,136 3,700,000 3,700,000 0%
Fire Department Fees 48,989 54,503 49,520 218,000 218,000 0%
Building Inspections Fees 126,084 133,798 125,414 589,172 589,172 0%
Park Department Fees 102,485 209,821 99,906 2,003,991 2,003,991 0%
Planning Department Fees 262,243 265,957 344,820 1,063,557 1,063,557 0%
Reprographics Fees 74,747 92,613 62,653 370,160 370,160 0%
Miscellaneous Service Fees 15,775 45,434 26,982 181,671 181,671 0%
Service Fees 1,254,630 1,234,286 1,367,431 8,229,879 8,229,879 0%
Denton Municipal Fines 329,521 370,504 321,799 1,482,000 1,482,000 0%
Parking Fines 65,170 65,000 73,935 260,000 260,000 0%
Miscellaneous Fines and Fees 199,753 190,342 189,754 901,000 901,000 0%
Court Administrative and Service Fees 231,570 240,000 217,620 1,080,000 1,080,000 0%
Fines and Fees 826,014 865,846 803,108 3,723,000 3,723,000 0%
Demolition Permits 2,090 1,625 1,045 6,500 6,500 0%
Building Permits 638,082 831,232 800,588 3,738,024 3,738,024 0%
Certificate of Occupancy 13,015 20,000 17,290 80,000 80,000 0%
Miscellaneous Licenses and Permits 3,210 9,752 3,012 39,000 39,000 0%
Licenses and Permits 656,397 862,609 821,935 3,863,524 3,863,524 0%
Investment Income 92,272 115,000 143,787 460,000 460,000 0%
Miscellaneous Revenues 73,753 149,612 163,553 1,710,198 1,710,198 0%
Miscellaneous Resources 166,025 264,612 307,340 2,170,198 2,170,198 0%
ROI - Denton Municipal Utilities 1,781,588 2,010,017 1,830,748 8,427,209 8,427,209 0%
Transfers 2,008,981 2,185,036 2,179,628 8,733,146 8,733,146 0%
Transfers 3,790,569 4,195,053 4,010,376 17,160,355 17,160,355 0%
Total General Fund Revenues 38,918,010$ 39,015,802$ 38,369,286$ 127,701,305$ 127,701,305$ 0%
15
City of Denton
General Fund
Schedule of Expenditures - Budget vs Projection (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION
NEIGHBORHOOD SERVICES
Building Inspections 677,286$ 763,831$ 724,582$ 3,052,886$ 3,052,886$ 0%
Community Improvement Services 316,381 390,743 321,128 1,561,728 1,561,728 0%
Libraries 1,609,959 1,492,099 1,635,787 5,963,678 5,963,678 0%
Parks and Recreation 2,810,636 2,677,706 2,011,378 10,702,253 10,702,253 0%
Planning 687,820 891,601 717,490 3,563,561 3,563,561 0%
Gas Well Review 61,025 103,990 42,997 415,606 415,606 0%
Social Services 123,488 168,367 115,046 672,928 672,928 0%
6,286,595 6,488,337 5,568,408 25,932,640 25,932,640 0%
PUBLIC SAFETY
Animal Services 393,984 411,779 410,391 1,633,265 1,633,265 0%
Fire 7,412,533 7,588,710 8,008,837 30,330,574 30,330,574 0%
Municipal Court 327,449 318,642 300,420 1,273,547 1,273,547 0%
Municipal Judge 100,114 112,125 117,983 448,161 448,161 0%
Police 7,899,347 8,931,526 8,641,884 35,697,544 35,697,544 0%
16,133,427 17,362,782 17,479,515 69,383,091 69,383,091 0%
TRANSPORTATION
Traffic Operations 325,273 523,554 439,501 2,092,526 2,092,526 0%
Transportation Operations 101,030 99,649 75,251 398,291 398,291 0%
Street Lighting 192,254 194,406 211,828 777,000 777,000 0%
618,557 817,609 726,580 3,267,817 3,267,817 0%
ADMINISTRATIVE & COMMUNITY SERVICES
Cable Television 76,138 84,709 82,487 338,597 338,597 0%
City Manager's Office 683,528 531,973 511,349 2,126,205 2,126,205 0%
Economic Development 333,147 1,488,990 317,638 5,951,194 5,951,194 0%
Facilities Management 889,407 1,347,823 1,107,109 5,386,980 5,386,980 0%
Finance 745,870 905,844 839,162 3,620,494 3,620,494 0%
Human Resources 475,940 457,235 493,037 1,827,469 1,827,469 0%
Internal Audit 54,810 137,335 74,970 548,905 548,905 0%
Legal Administration 504,011 676,426 534,041 2,703,529 2,703,529 0%
Public Communications Office 117,778 339,321 281,460 1,356,209 1,356,209 0%
Reprographics 88,114 91,439 48,102 365,458 365,458 0%
Non-Departmental 1,363,843 1,592,098 2,443,471 6,375,848 6,375,848 0%
5,332,586 7,653,193 6,732,826 30,600,888 30,600,888 0%
TOTAL EXPENDITURES 28,371,165$ 32,321,921$ 30,507,329$ 129,184,436$ 129,184,436$ 0%
16
City of Denton
Electric Fund
Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION
Beginning Working Capital
and Reserves as of 9/30/18 62,950,654$ 73,942,033$
REVENUES:
Rate Revenues 33,285,116$ 31,097,272$ 34,473,793$ 135,522,850 135,522,850 0%
Transmission Revenues 3,140,937 4,976,526 6,444,844 40,055,256 40,055,256 0%
Other Revenues 2,167,681 941,296 1,331,232 3,750,515 3,750,515 0%0%
DEC Revenues - 7,828,449 4,061,861 36,304,634 36,304,634 0%
Total Revenues 38,593,733 44,843,543 46,311,730 215,633,255 215,633,255 0%
EXPENDITURES:
Purchased Power 17,701,759 18,847,914 16,334,143 67,185,014 67,185,014 0%
DEC Fuel - 4,241,051 1,678,366 14,967,553 14,967,553 0%
Transmission of Power 728,374 1,317,886 1,267,236 12,500,000 12,500,000 0%
Personnel Services 4,290,392 5,519,476 4,558,341 22,058,231 22,058,231 0%
Materials and Supplies 114,027 151,303 83,178 1,010,795 1,010,795 0%
Maintenance and Repair 148,561 315,167 94,057 1,771,604 1,771,604 0%
Insurance 64,983 461,817 68,015 705,178 705,178 0%
Return on Investment Return on Investment1,233,960 1,372,613 1,334,912 6,204,970 6,204,970 0%
Franchise Fee Franchise Fee1,760,373 1,959,254 1,909,380 8,864,243 8,864,243 0%
Miscellaneous 237,356 399,526 122,289 814,132 814,132 0%
Operations 917,808 1,841,169 1,063,588 7,967,345 7,967,345 0%
Debt Service 15,690,179 17,129,878 17,129,878 69,303,309 40,683,309 -41%
Interfund Transfers 3,089,449 3,581,497 3,579,625 14,325,987 14,325,987 0%
Capital Outlay - - - 16,016,335 16,016,335 0%
Total Expenditures 45,977,221 57,138,551 49,223,048 243,694,696 215,074,696 -12%
Net Income (Loss)(7,383,488)$ (12,295,008)$ (2,911,318)$ (28,061,441) 558,559
Ending Working Capital and Reserves 34,889,213$ 74,500,592$
17
City of Denton
Water Fund
Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION
Beginning Working Capital
and Reserves as of 09/30/181 23,982,828$ 25,947,230$
REVENUES:
Water Sales Residential 4,503,572$ 4,621,410$ 3,675,360$ 19,496,211 19,496,211 0%
Water Sales Commercial 4,401,205 4,537,021 3,884,314 16,841,145 16,841,145 0%
Water for Resale 1,222,766 328,757 121,861 1,168,296 1,168,296 0%
Other Water 317,734 184,087 288,899 767,349 767,349 0%
Transfers In 1,486,820 371,941 372,513 1,487,762 1,487,762 0%
Investment Income 63,153 62,750 104,535 251,000 251,000 0%
Impact Fee Revenue 939,603 1,425,000 1,426,140 5,700,000 5,700,000 0%
Total Revenues 12,934,853 11,530,966 9,873,622 45,711,763 45,711,763 0% Use of Reserves - - - -
EXPENDITURES:
Personal Service 2,558,827 1,920,310 2,055,010 8,855,034 8,855,034 0%
Purchased Power 309,963 393,641 262,589 1,431,895 1,431,895 0%
Materials and Supplies 292,667 319,552 234,804 1,408,230 1,408,230 0%
Maintenance and Repairs 256,357 259,340 271,825 1,594,203 1,594,203 0%
Insurance 55,620 55,858 55,858 223,433 223,433 0%
Miscellaneous 80,676 111,852 103,803 411,219 411,219 0%
Operations, Services 420,502 448,809 521,382 1,693,620 1,693,620 0%
Capital Outlay 2,197,981 2,460,001 1,720,155 15,279,508 15,279,508 0%
Return on Investment 325,216 356,020 276,939 1,339,555 1,339,555 0%
Franchise Fee 464,594 504,703 395,628 1,898,986 1,898,986 0%
Debt Service 6,497,330 6,662,950 6,662,950 12,662,613 12,662,613 0%
Transfers Out 870,659 847,686 880,649 3,390,738 3,390,738 0%
Total Expenditures 14,330,782 14,340,722 13,442,062 50,192,034 50,192,034 0%
Net Income (Loss)(1,395,929)$ (2,809,756)$ (3,568,440)$ (4,480,271) (4,480,271)
Ending Working Capital
and Reserves 19,502,557$ 21,466,959$
1 The Beginning Working Capital balance excludes $10,884,298 of Impact Fee Reserves and $750,000 for Development Plan Line Reserves.
budget process.
2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19
18
City of Denton
Wastewater Fund
Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION
Beginning Working Capital
and Reserves as of 09/30/181 19,188,011$ 18,669,754$
REVENUES:
Residential Fees 2,902,097$ 2,661,062$ 2,974,289$ 10,657,173 10,657,173 0%
Commercial Fees 3,150,476 3,143,819 2,967,486 12,218,689 12,218,689 0%
Effluent Irrigation Fees 27,709 14,781 18,582 68,576 68,576 0%
Wholesale Fees 138,085 162,559 193,766 694,234 694,234 0%
Other Wastewater Fees 277,695 379,104 241,891 1,624,678 1,624,678 0%
Drainage Fees 1,160,122 1,184,202 1,196,332 4,727,006 4,727,006 0%
Transfer In 164,757 137,949 137,949 551,795 551,795 0%
Investment Income 51,740 52,000 76,199 208,000 208,000 0%
Impact Fee Reserves 500,400 500,000 500,400 2,000,000 2,000,000 0%
Total Revenues 8,373,081 8,235,476 8,306,894 32,750,151 32,750,151 0%
EXPENDITURES:
Personal Service 1,941,627 1,792,391 2,049,466 8,607,813 8,607,813 0%
Purchased Power 252,338 290,831 275,767 1,221,000 1,221,000 0%
Materials and Supplies 196,588 164,876 211,970 1,254,075 1,254,075 0%
Maintenance and Repairs 265,509 274,305 265,008 1,433,519 1,433,519 0%
Insurance 45,123 58,005 58,005 232,020 232,020 0%
Miscellaneous 35,671 48,371 58,196 80,218 80,218 0%
Operations, Services 420,115 656,990 572,774 2,212,776 2,212,776 0%
Capital Outlay 1,417,699 4,118,827 4,842,598 10,184,524 10,184,524 0%
Return on Investment 222,411 221,247 218,897 882,684 882,684 0%
Franchise Fee 317,730 316,068 312,709 1,260,978 1,260,978 0%
Debt Service 3,768,607 3,649,709 3,649,709 6,808,831 6,808,831 0%
Transfers Out 824,855 823,204 888,869 3,292,816 3,292,816 0%
Total Expenditures 9,708,273 12,414,824 13,403,968 37,471,254 37,471,254 0%
Net Income (Loss)(1,335,192)$ (4,179,348)$ (5,097,074)$ (4,721,103) (4,721,103)
Ending Working Capital
and Reserves 14,466,908$ 13,948,651$
1 The Beginning Working Capital balance excludes $4,189,562 of Impact Fee Reserves, $1,000,000 for Drainage Reserves,
and $535,000 for Development Plan Line Reserves.
2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated
in the FY 2018-19 budget process.
19
City of Denton
Drainage Operations
Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION
REVENUES:
Residential Drainage Fees 438,139$ 449,825$ 455,010$ 1,820,000$ 1,820,000$ 0%
Nonresidential Drainage Fees 721,983 734,285 741,323 2,907,006 2,907,006 0%
Wastewater Resources 10,950 10,950 - 43,800 43,800 0%
General Fund Transfer 106,007 79,199 79,199 316,795 316,795 0%
Total Revenues 1,277,079 1,274,259 1,275,532 5,087,601 5,087,601 0%
EXPENDITURES:
Personal Service 401,425 407,257 439,499 1,968,225 1,968,225 0%
Materials and Supplies 9,466 17,497 8,176 76,075 76,075 0%
Maintenance and Repairs 21,947 30,172 50,500 123,300 123,300 0%
Insurance 6,365 8,942 8,942 35,767 35,767 0%
Miscellaneous 5,887 6,639 1,720 17,200 17,200 0%
Operations, Services 109,987 92,786 111,558 546,870 546,870 0%
Capital Outlay 200,919 342,248 278,489 1,403,688 1,403,688 0%
Debt Service 370,485 258,957 258,957 477,433 477,433 0%
Transfer Out 150,598 109,761 117,691 439,043 439,043 0%
Total Expenditures 1,277,079 1,274,259 1,275,532 5,087,601 5,087,601 0%
Net Income (Loss)-$ -$ -$ -$ -$
20
City of Denton
Solid Waste Fund
Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION
Beginning Working Capital
and Reserves as of 09/30/181 8,639,290$ 10,918,907$
REVENUES:
Refuse Fees - Residential 1,563,232$ 1,401,979$ 1,395,608$ 5,788,754 5,788,754 0%
Refuse Fees - Commercial 3,507,897 3,450,965 3,604,996 14,533,461 14,533,461 0%
Residential Recycling 1,424,248 1,332,496 1,286,053 5,337,119 5,337,119 0%
Commercial Recycling 322,645 376,599 345,919 1,505,187 1,505,187 0%
Landfill Gate and Material Sales 1,423,234 1,471,139 1,520,362 5,967,459 5,967,459 0%
Recycled Material Sales 16,194 15,159 16,834 60,590 60,590 0%
Asset Sales and Interest Income 51,979 114,897 42,549 459,217 459,217 0%
Other Revenue 67,276 217,989 194,176 871,268 871,268 0%
Total Revenues 8,376,705 8,381,223 8,406,497 34,523,055 34,523,055 0%
EXPENDITURES:
Personal Service 2,715,698 2,804,211 2,692,434 11,207,879 11,207,879 0%
Materials and Supplies 61,685 107,530 57,827 429,792 429,792 0%
Maintenance and Repairs 66,705 137,486 37,986 549,506 549,506 0%
Insurance 58,408 68,292 67,376 272,954 272,954 0%
Miscellaneous 33,047 29,379 61,217 117,419 117,419 0%
Operations, Services 1,184,777 1,478,592 1,452,907 5,909,622 5,909,622 0%
Capital Outlay - 332,942 21,600 1,330,709 1,330,709 0%
Debt Service 5,108,893 4,870,776 4,870,389 8,996,579 8,996,579 0%
Franchise Fee 418,743 423,912 412,376 1,694,293 1,694,293 0%
Transfers for Landfill Closure 94,689 292,572 292,338 1,169,349 1,169,349 0%
Admin Transfers Out 736,497 799,033 924,076 3,193,559 3,193,559 0%
Total Expenditures 10,479,142 11,344,725 10,890,526 34,871,661 34,871,661 0%
Net Income (Loss)(2,102,437)$ (2,963,502)$ (2,484,029)$ (348,606) (348,606)
Ending Working Capital
and Reserves 8,290,684$ 10,570,301$
1 The Beginning Working Capital Reserve excludes $9,896,590 Landfill Closure/Post Closure Reserves.
2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process.
21
City of Denton
Airport Fund
Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET1 PROJECTION PROJECTION
Beginning Working Capital
and Reserves as of 09/30/18 2,668,447$ 2,930,368$
OPERATING REVENUES:
Airport Ground Leases 167,014$ 189,516$ 182,477$ 767,526 767,526 0%
FBO Commissions 25,170 52,317 20,351 209,100 209,100 0%
Miscellaneous 11,197 30,882 10,999 113,364 113,364 0%
Total Operating Revenues 203,381 272,715 213,827 1,089,990 1,089,990 0%
OPERATING EXPENDITURES:
Personal Service 121,413 136,416 129,205 545,217 545,217 0%
Materials and Supplies 3,243 9,415 1,638 37,640 37,640 0%
Maintenance and Repairs 4,913 25,896 1,077 103,500 103,500 0%
Insurance 5,456 10,957 7,823 43,792 43,792 0%
Miscellaneous 156 24 - 100 100 0%
Operations 22,818 59,856 36,421 239,235 239,235 0%
Transfers Out - Operating 129,960 130,036 130,386 519,730 519,730 0%
Total Operating Expenses 287,959 372,600 306,550 1,489,214 1,489,214 0%
Operating (Loss)(84,578) (99,885) (92,723) (399,224) (399,224)
NON-OPERATING REVENUES:
Investment Income 13,747 5,571 22,957 22,263 22,263 0%
Gas Well Royalties 38,651 107,950 24,362 431,456 431,456 0%
Total Non-Operating Revenues 52,398 113,521 47,319 453,719 453,719 0%
NON-OPERATING EXPENDITURES:
Transfers Out - Capital - 62,550 - 250,000 250,000 0%
Total Non-Operating Expenses - 62,550 - 250,000 250,000 0%
Non-Operating Income (Loss)52,398 50,971 47,319 203,719 203,719
Net Income (Loss)(32,180)$ (48,914)$ (45,404)$ (195,505)(195,505)
Ending Working Capital 2,472,942$ 2,734,863$
1 Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018-19 budget process.
22
City of Denton
Street Improvement Fund
Schedule of Expenditures - Budget vs Projection (Unaudited)
For the Period Ended December 31, 2018
PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS
DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET1 PROJECTION PROJECTION
Beginning Fund Balance
as of 9/30/2018 1,158,668$ 1,623,427$
RESOURCES:
Franchise Fees 2,144,267$ 3,382,682$ 2,257,138$ 13,519,911 13,519,911 0%
Street Cuts 75,252 91,107 50,496 364,140 364,140 0%
Investment Income - 2,502 3,859 10,000 10,000 0%
Transfers In 258,645 299,340 258,645 1,196,404 1,196,404 0%
Total Resources 2,478,164 3,775,631 2,570,138 15,090,455 15,090,455 0%
EXPENDITURES:
Personal Service 860,521 911,038 817,062 3,641,249 3,641,249 0%
Materials and Supplies 24,210 21,805 11,267 87,150 87,150 0%
Maintenance and Repairs 1,427,229 2,381,269 1,132,404 9,195,194 9,195,194 0%
Insurance 12,923 18,198 18,182 72,727 72,727 0%
Miscellaneous 4,292 1,251 3,632 5,000 5,000 0%
Operations, Services 133,274 175,213 157,283 700,302 700,302 0%
Transfer Out 753,758 261,239 402,513 1,366,383 1,366,383 0%
Total Expenditures 3,216,207 3,770,013 2,542,343 15,068,005 15,068,005 0%
Net Income (Loss)(738,043)$ 5,618$ 27,795$ 22,450 22,450
Ending Fund Balance 1,181,118$ 1,645,877$
1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process.
23
City of Denton
Grants
Schedule of Expenditures - Budget vs Projection (Unaudited)
For the Period Ended December 31, 2018
GRANT DESCRIPTION
EXPENDITURES
AS OF 9/30/20182 CURRENT
Y-T-D
ANNUAL
BUDGET
ANNUAL
PROJECTION
BUDGET VS
PROJECTION
FY 2017-18 Budget
US Dept of HUD -
Community Development Block Grant(CDBG)3,511,216$ 223,814$ 2,146,395$ 700,000$ -67%
US Dept of HUD -
HOME Investment Partnership Program 3,320,362 58,886 1,279,659 500,000 -61%
Emergency Solutions Grant (ESG)506,879 43,581 210,994 46,000 -78%
Community Development1 7,338,457 326,281 3,637,048 1,246,000 -66%
TxDot STEP Comprehensive Grant - 14,401 88,537 88,537 0%
Domestic and Sexual Violence Initiative IACP
Grant 204,202 37,927 225,000 225,000 0%
2018 UASI - - 125,956 125,956 0%
Emergency Management Performance Grant - - 43,956 43,956 0%
Staffing for Adequate Fire & Emergency Response
(SAFER) Grant 225,381 124,434 419,971 419,971 0%
2018 SHSP SWAT Equipment Enhancement - - 24,000 24,000 0%
BG-Rifle-Resistant Body Armor Grant Program
(BAGP)- - 91,692 91,692 0%
Public Safety 429,583 176,762 1,019,112 1,019,112 0%
Airport Maintenance (RAMP) Grant - - 50,000 50,000 0%
TxDot-RTR-Mayhill Rd-IH35 E to US 380 28,569,138 2,485,798 21,115,515 13,500,000 -36%
TxDot-RTR-Bonnie Brae Rd-IH35 E to US 377 13,770,118 730,878 26,938,818 8,300,000 -69%
TxDot-IH35E at Loop 288/Lillian Miller Pkwy - - 53,865 53,865 0%
TxDot-RTR-McKinney (Formerly FM426) 1,336,448 29,267 17,598,079 7,300,000 -59%
TxDot-RTR-Hickory Creek FM2181-FM2499 79,163 47,327 2,396,190 600,000 -75%
TxDot-RTR-North Texas Boulevard Roundabout 15,393 8,298 1,986,592 380,000 -81%
TxDot-RTR-ITS COMM Trunk Line 438,382 155,885 1,277,294 1,176,170 -8%
Bicycle & Pedestrian Projects Grant - - 1,500,000 195,000 -87%
Transportation1 44,208,642 3,457,453 72,916,353 31,555,035 -57%
Interlibrary Loan Program (ILL) - - 25,000 25,000 0%
TIFMAS Training Tuition Grant - - 10,500 10,500 0%
Miscellaneous New Grants - - 250,000 250,000 0%
Other - - 285,500 285,500 0%
Total FY 2018-19 Budget 51,976,682 3,960,496 77,858,013 34,105,647 -56%
New Awards
Federal Equitable Sharing - 1,000 1,000 1,000 0%
Chapter 59 Asset Forfeitures - 9,929 9,929 9,929 0%
Sexual Assault Nurse Examiners (SANE)
Reimbursement - 8,035 8,035 8,035 0%
2017 UASI - 20,657 20,657 20,657 0%
Public Safety - 39,621 39,621 39,621 0%
Total New Awards - 39,621 39,621 39,621 0%
TOTALS 51,976,682$ 4,000,117$ 77,897,634$ 34,145,268$ -56%
1 This grant amount will be spent over several years and the fiscal year 2018-19 projections are just estimated expenditure in the one year.
Remaining grant amounts will be spent in future fiscal year.
2 A portion of the grants presented cover multiple years.
24
Section 3
City of Denton
Quarterly Financial Report
December 2018
REVENUE & ECONOMIC
ANALYSIS
25
National Economic Trends
Period Ending December 31, 2018
Gross Domestic Product (GDP)
The record 35 day government shutdown
meant a number of key economic data releases
were postponed; fourth quarter GDP falls into
that category. In fact, since many of the
components the Commerce Department uses
in its GDP calculation come from government
sources, it may be a while before a reliable
number is released. For now, it appears the
U.S. economy has continued to slow. Early
estimates show annualized GDP well below
+3.0% for the final quarter of 2018. This
follows tax cut-fueled second quarter growth
of +4.2%, and revised third quarter growth of
+3.4%. First quarter 2019 growth (although
just a guess at this point) is generally expected
to fall below -2.0% due to the ongoing trade
war and the government shutdown.
Nonfarm Payrolls
December nonfarm payrolls increased by
+312k, topping the +184k median Bloomberg
forecast, while prior month revisions boosted
November job gains up from +155k to +176k.
The unemployment rate climbed from a 49-
year low of 3.7% (where it had stood for three
months) to 3.9% as +419k reenergized
Americans reentered the workforce. It isn’t
unusual for unemployment to rise in a healthy
job market. The tight labor market managed
to generate a bit of wage pressure in
December as average hourly earnings rose
+3.2% year-over-year, the fastest pace since
2009. If hourly earnings (as the White House
economic advisors have predicted) reach 4%
in 2019, rate hikes could be back on the table.
While many segments of the economy are
showing signs of stress, the labor market, so
far is not.
26
Inflation
Falling energy prices drove overall inflation
sharply lower in the final two months of the
year. The consumer price index (CPI)
declined -0.1% in December, dragging the
year-over-year pace down from +2.2% to
+1.9% (it was +2.5% in October and as high
as +2.9% in July). December core CPI,
which excludes food and energy prices, rose
+0.2%, holding the annual pace steady at
+2.2%, a rate that has persisted for 4 of the
last 5 months. The Fed’s preferred inflation
measure, core PCE, remained below the
Fed’s +2.0% target in November with a
+1.877% reading. The most recent
Bloomberg economist survey indicated CPI
should continue to decline in Q1, which
should effectively sideline the Fed.
Retail Sales
The retail sales report for December was
also postponed due to the shutdown, and as
of this writing has not be released. It does
appear that holiday spending was brisk.
Lower gasoline prices apparently provided
a boost to shoppers. MasterCard reported a
+5.1% year-over-year increase in holiday
sales while UPS experienced a +5% rise in
package shipments. Analysts have already
concluded that it was the best holiday
reason for retailers in six years, but the
outlook is less promising. The Conference
Board's Consumer Confidence Index
dropped to a five month-low of 128.1 in
December. The 8.3-point drop was the
largest single-month decline since July
2015 and was primarily caused by
crumbling confidence about the future.
27
Texas Home Sales
Texas home sales fell -17.1% in the
fourth quarter, and -2.8% on a year-
over-year basis as even the hottest of
housing markets cooled in response to
rising prices and higher mortgage
rates. The average Texas home price
in December was $286.8k, a +2.4%
increase over the previous year, but
below the record high of $298.2 set
three months earlier.
In Denton County, unit home sales fell
by -20.6% during in the fourth
quarter, and -11.8% over the same
period a year ago. The average home
price in December was $347.4k, a
surprising decline of -2.5% year-over-
year, and well below the record high
of $367.6 set in July. County home
listings in December totaled 3,195,
approximately +26% higher than a year ago. The available inventory (in months) was 2.6 months at
quarter end. Although this was higher than last year, it’s still quite lean from a historical perspective.
The paper was prepared by Hilltop Securities 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 Hilltop Securities 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.
28
Fuel Prices Outlook Cautious
Description: Quarterly fuel trends for the United States and Texas.
Analysis:Fuel prices are a major commodity source in the economy. Studies have shown a positive effect on
disposable income levels when fuel prices decrease.It is estimated that for every penny decrease in the price of
fuel,$1.3 billion is available to the consumer for disposable income. Therefore, the price of fuel is likely to be a key
predictor of sales tax collections. Fuel prices showed an 8.0%decrease from the prior quarter at the national level
and a 10.2% decrease at the state level. Staff has rated this outlook as Cautious.
Source: U.S. Department of Energy
$0
$2
$4
$6
$8
$10
$12
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
1Q '15 3Q '15 1Q '16 3Q '16 1Q '17 3Q '17 1Q '18 3Q '18 1Q '19 MillionsDollarsFuel Prices
Sales Tax Texas Fuel Prices US Fuel Prices
29
Municipal Cost Index Outlook Negative
Description:The Municipal Cost Index was developed to show the rate of inflation for the cost of goods purchased
frequently by local governments. The MCI draws on the monthly statistical data collected by the U.S. Departments
of Commerce and Labor as well as independently compiled data to project a composite cost picture for the
municipal budget officer or operating department manager. Costs of labor, materials and contract services are all
factored into the composite MCI. Major indicators of these items used for the MCI include the Consumer Price
Index, the Wholesale Price Index for Industrial Commodities (now known as the Producer Price Index) and the
construction cost indexes published by the U.S. Department of Commerce, respectively.
Analysis:The Municipal Cost Index (MCI) pulls a variety of prices for frequently purchased commodities for local
governments. The cost for labor, materials and contract services are factored for the MCI.An increase in MCI
means the overall price mix for these types of commodities will cost local governments more to do routine business.
The 1st Quarter of 2018-19 shows an increase of 0.2% over the prior quarter and an increase of 6.8% over the 1st
Quarter of 2017-18. Staff has rated this indicator as Negative.
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.
Source: American City and County Magazine
225.00
230.00
235.00
240.00
245.00
250.00
255.00
1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19
Municipal Cost Index
30
Hotel Occupancy Tax Analysis Outlook Positive
1st Quarter FY 2018-19
Actual Y-T-D
Occupancy Tax Revenue:688,176$ 688,176$
FY 2018-19 Budget 702,383$ 702,383$
Over (Under) Budget (14,207)$ (14,207)$
Hotel Occupancy Tax Budget:3,207,406$
3,207,406$
Variance:-$
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 2019 was 2.04%less than budget but 15.51%more than prior year's actual.
Staff has rated the outlook for this economic indicator as Positive.
FISCAL YEAR FORECAST
End of Year Projection:
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Hotel Occupancy Tax Collections
FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
31
Sales and Use Tax Analysis Outlook Cautious
1st Quarter FY 2018‐19
Actual Y‐T‐D
Revenue: Gross Sales Tax
Municipal Operations 426,030$ 426,030$
General Retail & Others 9,859,712 9,859,712
Comptroller Fees (193,578) (193,578)
Amount Retained (189,706) (189,706)
Total Revenue 9,902,458$ $9,902,458
Expenses: Economic Incentives
Denton Crossing1 149,253$ 149,253$
Unicorn Lake2 20,687 20,687
Rayzor Ranch3 518,662 518,662
Golden Triangle4 30,438 30,438
O'Reilly's5 402,264 402,264
Total Expenses 1,121,304$ 1,121,304$
Net Total 8,781,154 8,781,154
FY 2018‐19 Budget 9,571,379 9,571,379
Over(Under) Budget (790,225)$ (790,225)$
Sales Tax Budget:41,425,582$
Year End Projection:41,425,582
Variance to Original Budget:‐$
Economic Development Expenditure Budget:3,854,014$
Year End Projection:3,854,014
Variance to Original Budget:‐$
* Economic Incentive actuals are through November 2018 with budget amount for December.
1. Incentive is 33% of sales taxes. For the 1st quarter sales tax equaled $452,282.
2. Incentive is 33% of sales taxes. For the 1st quarter sales tax equaled $62,688.
3. Incentive is 50% of sales taxes. For the 1st quarter sales tax equaled $1,037,324
4. Incentive is 50% of sales taxes. For the 1st quarter sales tax equaled $60,876.
5. Incentive is 100% of sales taxes. For the 1st quarter sales tax equaled $402,264.
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 2019 compared to revenues
from the prior year 1st quarter shows a 2.08% increase, and compared to the budget it is 8.35% below. Staff has rated
this indicator as Cautious.
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Gross Sales Tax Collections (Millions)
FY 2014‐15 Actual FY 2015‐16 Actual FY 2016‐17 Actual FY 2017‐18 Actual FY 2018‐19 Actual
32
Certificates of Occupancy Outlook Cautious
Source: City of Denton's Development Services Department.
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 1.71%from the prior quarter and decreased 9.1%from the
1st Quarter of 2018. Staff has rated the outlook for this revenue indicator as Cautious.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
1Q
'14
2Q
'14
3Q
'14
4Q
'14
1Q
'15
2Q
'15
3Q
'15
4Q
'15
1Q
'16
2Q
'16
3Q
'16
4Q
'16
1Q
'17
2Q
'17
3Q
'17
4Q
'17
1Q
'18
2Q
'18
3Q
'18
4Q
'18
1Q
'19
Certificates of Occupancy
33
Residential Permits Outlook Cautious
Source: City of Denton's Development Services Department.
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 34.9%from the prior quarter and decreased 4.0%from the 1st
Quarter of 2018. Staff has rated the outlook for this revenue indicator as Cautious
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
1Q
'14
2Q
'14
3Q
'14
4Q
'14
1Q
'15
2Q
'15
3Q
'15
4Q
'15
1Q
'16
2Q
'16
3Q
'16
4Q
'16
1Q
'17
2Q
'17
3Q
'17
4Q
'17
1Q
'18
2Q
'18
3Q
'18
4Q
'18
1Q
'19
Residential Permits
34
Texas Leading Indicators Index Outlook Negative
Source: Federal Reserve Bank of Dallas
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 an increase in the state's rate of growth. The index decreased 1.12%from the prior quarter and
decreased 0.31% from the 1st Quarter of 2017-18. Staff has rated this indicator as Negative
100.0
105.0
110.0
115.0
120.0
125.0
130.0
135.0
140.0
4Q
'08
2Q
'09
4Q
'09
2Q
'10
4Q
'10
2Q
'11
4Q
'11
2Q
'12
4Q
'12
2Q
'13
4Q
'13
2Q
'14
4Q
'14
2Q
'15
4Q
'15
2Q
'16
4Q
'16
2Q
'17
4Q
'17
2Q
'18
4Q
'18
Texas Leading Indicators Index
35
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 2.83%for the 1st Quarter.
The unemployment rates for most of the other reported sectors were either down slightly or flat from the prior
quarter.As a result of the downward trend since the high of the 2nd Quarter of 2012,staff has rated the outlook for
this revenue indicator as Positive.
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.
Source: Federal Reserve Bank of Dallas, U.S. Bureau of Labor Statistics, and Texas Workforce Commission
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
1Q '13 3Q '13 1Q '14 3Q '14 1Q '15 3Q '15 1Q '16 3Q '16 1Q '17 3Q '17 1Q '18 3Q '18 1Q '19
Unemployment Rate Index
Dallas-Plano-Irving MD Denton Texas U6 Unemployment United States
36
Section 4
City of Denton
Quarterly Financial Report
December 2018
INVESTMENT REPORT
37
1st Fiscal Quarter 2019- December 31, 2018 Page 1
INVESTMENT POOL
Policy
Par Market Book Unrealized Max.Benchmark
Portfolio:Value Value Value Gain/(Loss)1 WAM WAM YTM Yield*
Investment Pool 627,577,468$ 624,491,587$ 626,046,406$ (1,554,819)$ 223 550 2.01%2.33%
*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 67,500,000 67,136,495 66,927,741 208,754 486 2.55%10.69%100.00%
U.S. Federal Agencies 272,956,000 270,938,188 272,619,818 (1,681,630) 311 1.67%43.55%100.00%
Municipal Bonds 5,000,000 4,948,950 5,000,000 (51,050) 245 1.18%0.80%15.00%
Certificates of Deposit 82,000,000 82,000,000 82,000,000 - 160 1.70%13.10%35.00%
Commercial Paper 66,000,000 65,346,486 65,377,379 (30,893) 120 2.76%10.44%15.00%
Local Government Investment Pools 132,202,864 132,202,864 132,202,864 - 1 2.30%21.12%50.00%
Demand Deposits 1,918,604 1,918,604 1,918,604 - 1 1.00%0.30%-
Total Portfolio 627,577,468$ 624,491,587$ 626,046,406$ (1,554,819)$ 223 2.01%100.00%-
Current 3 Months Ago 3 Month 1 Year Ago
Investment Pool Comparisons:12/31/2018 9/30/2018 Difference 12/31/2017
Par Value 627,577,468$ 610,092,457$ 17,485,011$ 664,555,916$
Market Value 624,491,587$ 606,716,884$ 17,774,703$ 661,960,386$
Book Value 626,046,406$ 609,567,636$ 16,478,770$ 664,403,888$
Unrealized Gain(Loss)(1,554,819)$ (2,850,752)$ 1,295,933$ (2,443,502)$
Weighted Average Maturity 223 206 17 329
Yield to Maturity 2.01%1.73%0.28%1.29%
Portfolio Composition:
U.S. Treasuries 10.69%4.42%6.27%8.13%
U.S. Federal Agencies 43.55%42.26%1.29%50.99%
Municipal Bonds 0.80%1.80%-1.01%3.43%
Certificates of Deposit 13.10%13.45%-0.35%20.47%
Commercial Paper 10.44%5.86%4.58%6.90%
Local Government Investment Pools 21.12%31.94%-10.83%5.93%
Insured Cash Sweep Savings Deposits 0.00%0.00%0.00%3.76%
Demand Deposits 0.30%0.27%0.03%0.39%
Bank Collateral Review**:Institution Collateral Type Market Value Collected Balance Collateral Ratio
Wells Fargo Demand Deposits BNY Mellon U.S. Agency MBS 36,427,029$ 1,918,604$ 1898.62%
LegacyTexas Bank Certificates of Deposit***Fed Home Loan Bank Standby LOC 26,390,000$ 25,641,141$ 102.92%
Independent Bank Certificates of Deposit Fed Home Loan Bank Standby LOC 19,679,101$ 15,327,253$ 128.39%
**Does not include FDIC insurance
***Formerly, ViewPoint Bank
Depository Ledger Balance Review:Institution Account Type Beginning Bal.Deposits Ending Bal.
Wells Fargo Bank Checking 1,802,926$ 96,949,526$ 1,918,604$
Compliance Statement & Review:
Chief Financial Officer Treasury Manager
96,833,847$
Preparer: Kevin Ann Mullen, CPA
Withdrawals
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 2256.023).
Reviewer: Antonio Puente, Jr., CGFO
-7.46%
-7.37%
-0.09%
Pledge Required
3.54%
> 102%
> 102%
> 100%
15.18%
-3.76%
KEVIN ANN MULLEN, CPAANTONIO PUENTE, JR., CGFO
(106)
0.71%
-2.64%
(37,468,799)$
(38,357,482)$
888,683$
2.57%
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
1 Year Ago
Difference
(36,978,448)$
1Unrealized 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.
38
1st Fiscal Quarter 2019- December 31, 2018 Page 2
INVESTMENT POOL
Current 3 Months Ago 3 Month 1 Year Ago 1 Year
12/31/2018 9/30/2018 Difference 12/31/2017 Difference
Par Value - U.S. Treasuries 67,500,000$ 27,000,000$ 40,500,000$ 54,000,000$ 13,500,000$
Par Value - U.S. Federal Agencies 272,956,000 257,756,000 15,200,000 338,756,000 (65,800,000)
Par Value - Municipal Bonds 5,000,000 11,000,000 (6,000,000) 22,800,000 (17,800,000)
Certificates of Deposit 82,000,000 82,000,000 - 136,000,000 (54,000,000)
Par Value - Commercial Paper 66,000,000 36,000,000 30,000,000 46,000,000 20,000,000
Local Government Investment Pools 132,202,864 194,701,747 (62,498,883) 39,424,172 92,778,692
Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000)
Demand Deposits 1,918,604 1,634,710 283,894 2,575,744 (657,140)
Total Par Value 627,577,468$ 610,092,457$ 17,485,011$ 664,555,916$ (36,978,448)$
Market Value - U.S. Treasuries 67,136,495$ 26,893,742$ 40,242,753$ 53,875,122$ 13,261,373$
Market Value - U.S. Federal Agencies 270,938,188 254,844,355 16,093,833 336,610,728 (65,672,540)
Market Value - Municipal Bonds 4,948,950 10,930,770 (5,981,820) 22,686,733 (17,737,783)
Certificates of Deposit 82,000,000 82,000,000 - 136,000,000 (54,000,000)
Market Value - Commercial Paper 65,346,486 35,711,560 29,634,926 45,787,887 19,558,599
Local Government Investment Pools 132,202,864 194,701,747 (62,498,883) 39,424,172 92,778,692
Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000)
Demand Deposits 1,918,604 1,634,710 283,894 2,575,744 (657,140)
Total Market Value 624,491,587$ 606,716,884$ 17,774,703$ 661,960,386$ (37,468,799)$
Book Value - U.S. Treasuries 66,927,741$ 26,947,477$ 39,980,264$ 53,988,660$ 12,939,081$
Book Value - U.S. Federal Agencies 272,619,818 257,563,816 15,056,002 338,795,485 (66,175,667)
Book Value - Municipal Bonds 5,000,000 11,000,000 (6,000,000) 22,813,784 (17,813,784)
Certificates of Deposit 82,000,000 82,000,000 - 136,000,000 (54,000,000)
Book Value - Commercial Paper 65,377,379 35,719,886 29,657,493 45,806,043 19,571,336
Local Government Investment Pools 132,202,864 194,701,747 (62,498,883) 39,424,172 92,778,692
Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000)
Demand Deposits 1,918,604 1,634,710 283,894 2,575,744 (657,140)
Total Book Value 626,046,406$ 609,567,636$ 16,478,771$ 664,403,888$ (38,357,482)$
Accrued Interest 3,374,014$ 2,671,966$ 702,048$ 3,724,093$ (350,078)$
Cash Value -627,865,601$ 609,388,850$ 18,476,751$ 665,684,479$ (37,818,877)$
(Total Market Value + Accrued Interest)
Unrealized Gain/(Loss)(1,554,819)$ (2,850,752)$ 1,295,933$ (2,443,502)$ 888,683$
Change in Fair Value since 9/30/18 -(1,516,332)$ (1,356,603)$ (159,729)$ (1,385,383)$ (130,949)$
(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 income,
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.
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
39
1st Fiscal Quarter 2019- December 31, 2018 Page 3
INVESTMENT POOL
Current 3 Months Ago 1 Year Ago
Summary By Security Type:12/31/2018 9/30/2018 12/31/2017
U.S. Treasuries - Coupon 66,927,741$ 26,947,477$ 53,988,660$
U.S. Federal Agencies - Amort 6,107,691 - -
U.S. Federal Agencies - Coupon 245,756,279 236,808,052 308,038,429
U.S. Federal Agencies - Callable 20,755,849 20,755,765 30,757,056
Municipal Bonds - Coupon 5,000,000 11,000,000 22,813,784
Certificates of Deposit - CDARS 42,000,000 42,000,000 54,000,000
Certificates of Deposit - SLOC 40,000,000 40,000,000 82,000,000
Commercial Paper - Discount 65,377,379 35,719,886 45,806,043
Local Government Investment Pools 132,202,864 194,701,747 39,424,172
Insured Cash Sweep Savings Deposits - - 25,000,000
Demand Deposits 1,918,604 1,634,710 2,575,744
Total Book Value 626,046,406$ 609,567,636$ 664,403,888$
Objective:
Current 3 Months Ago 1 Year Ago
Summary By Security Type:12/31/2018 9/30/2018 12/31/2017
U.S. Treasuries - Coupon 10.69%4.42%8.13%
U.S. Federal Agencies - Amort 0.97%0.00%0.00%
U.S. Federal Agencies - Coupon 39.26%38.85%46.36%
U.S. Federal Agencies - Callable 3.32%3.41%4.63%
Municipal Bonds - Coupon 0.80%1.80%3.43%
Certificates of Deposit - CDARS 6.71%6.89%8.13%
Certificates of Deposit - SLOC 6.39%6.56%12.34%
Commercial Paper - Discount 10.44%5.86%6.90%
Local Government Investment Pools 21.12%31.94%5.93%
Insured Cash Sweep Savings Deposits --3.76%
Demand Deposits 0.30%0.27%0.39%
Total 100.00%100.00%100.00%
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
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 government money market mutual funds (weighted average maturity of less than
60 days).
U.S. Treasuries -
Coupon
10.69%
U.S. Federal Agencies -Coupon
39.26%U.S. Federal Agencies -Callable
3.32%
Municipal Bonds -Coupon
0.80%
CD -SLOC
6.39%
CD -CDARS
6.71%
Commercial Paper -
Discount
10.44%
Local Government Investment Pools
21.12%
Demand Deposits
0.30%
U.S. Federal Agencies -
Amort
0.97%
Current
12/31/2018
40
1st Fiscal Quarter 2019- December 31, 2018 Page 4
INVESTMENT POOL
Current 3 Months Ago 1 Year Ago
Summary By Issuer:12/31/2018 9/30/2018 12/31/2017
CDARS CDs 42,000,000$ 42,000,000$ 54,000,000$
LEGACYTEXAS BANK CDs*25,000,000 25,000,000 62,000,000
INDEPENDENT BANK CDs 15,000,000 15,000,000 20,000,000
U.S. TREASURY 49,382,057 26,947,477 53,988,660
FFCB 67,645,911 57,996,001 79,025,848
FHLB 113,959,085 105,978,215 130,105,703
FHLMC 30,870,083 25,932,308 47,914,577
FNMA 77,690,423 67,657,291 81,749,357
DALLAS, TX WTR & SWR REV BDS 4,000,000 10,000,000 10,000,000
TEXAS A&M UNIV REV BDS 1,000,000 1,000,000 4,500,000
LUBBOCK, TX GO REFUNDING BDS - - 3,300,517
UNIVERSITY OF HOUSTON, TX REV BDS - - 5,013,267
JP MORGAN SECURITIES LLC 15,830,273 10,923,670 25,911,014
TOYOTA MOTOR CREDIT CORP 29,853,322 19,820,178 14,919,698
ING (U.S.) FUNDING LLC - - 4,975,331
NATIXIS NY BRANCH 14,746,283 4,976,038 -
RBC 4,947,500 - -
TEXSTAR 107,100,000 194,701,747 39,424,172
TEXPOOL 25,102,864 - -
INSURED CASH SWEEP - - 25,000,000
WELLS FARGO DEMAND DEPOSITS 1,918,604 1,634,710 2,575,744
Total Book Value 626,046,406$ 609,567,636$ 664,403,888$
Objective:
Current 3 Months Ago 1 Year Ago
Summary By Issuer:12/31/2018 9/30/2018 12/31/2017
CDARS CDs 6.71%6.89%8.13%
LEGACYTEXAS BANK CDs*3.99%4.10%9.33%
INDEPENDENT BANK CDs 2.40%2.46%3.01%
U.S. TREASURY 7.89%4.42%8.13%
FFCB 10.80%9.51%11.89%
FHLB 18.20%17.39%19.58%
FHLMC 4.93%4.25%7.21%
FNMA 12.41%11.10%12.30%
DALLAS, TX WTR & SWR REV BDS 0.64%1.64%1.51%
TEXAS A&M UNIV REV BDS 0.16%0.16%0.68%
LUBBOCK, TX GO REFUNDING BDS --0.50%
UNIVERSITY OF HOUSTON, TX REV BDS --0.75%
JP MORGAN SECURITIES LLC 2.53%1.79%3.90%
TOYOTA MOTOR CREDIT CORP 4.77%3.25%2.25%
ING (U.S.) FUNDING LLC --0.75%
NATIXIS NY BRANCH 2.36%0.82%-
RBC 0.79%--
INSURED CASH SWEEP --3.76%
TEXSTAR 17.11%31.94%5.93%
TEXPOOL 4.01%--
WELLS FARGO DEMAND DEPOSITS 0.30%0.27%0.39%
Total 100.00%100.00%100.00%
*Formerly, ViewPoint Bank
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
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 and 15% savings deposit restrictions. Some
investment types may be further limited.
CDARS CDs, 6.71%
LEGACYTEXAS BANK CDs, 3.99%
INDEPENDENT BANK CDs, 2.40%
U.S. TREASURY, 7.89%
FFCB, 10.81%
FHLB, 18.20%
FHLMC, 4.93%
FNMA, 12.41%
TEXAS A&M UNIV REV BDS, 0.16%
DALLAS, TX WTR & SWR REV BDS, 0.64%
JP MORGAN SECURITIES LLC, 2.53%
TOYOTA MOTOR CREDIT , 4.77%
NATIXIS NY BRANCH, 2.36%
RBC , 0.79%
TEXSTAR, 17.11%
TEXPOOL, 4.01%WF DEMAND DEPOSITS, 0.31%
Current
12/31/2018
41
1st Fiscal Quarter 2019- December 31, 2018 Page 5
INVESTMENT POOL
Current 3 Months Ago 1 Year Ago
Maturity Time Frame:12/31/2018 9/30/2018 12/31/2017
00-03 Months 250,121,468$ 235,336,457$ 182,299,916$
03-06 Months 76,000,000 116,000,000 100,500,000
06-12 Months 109,200,000 96,000,000 87,000,000
12-24 Months 184,756,000 162,756,000 200,000,000
24 Months & Over 7,500,000 - 94,756,000
Total Par Value 627,577,468$ 610,092,457$ 664,555,916$
Objective:
Current 3 Months Ago 1 Year Ago
Maturity Time Frame:12/31/2018 9/30/2018 12/31/2017
00-03 Months 39.85%38.57%27.43%
03-06 Months 12.11%19.01%15.12%
06-12 Months 17.40%15.74%13.09%
12-24 Months 29.44%26.68%30.10%
24 Months & Over 1.20%0.00%14.26%
Total 100.00%100.00%100.00%
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
The risk of market price volatility is minimized through maturity diversification. Investment maturities are staggered to provide cash flows 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 government money market mutual funds help to
provide daily liquidity and may be utilized as a competitive alternative to other fixed income investments.
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
$450,000,000
$500,000,000
$550,000,000
$600,000,000
$650,000,000
$700,000,000
Current 3 Months Ago 1 Year Ago
00-06 Months 06-12 Months 12-24 Months 24 Months & Over
42
1st Fiscal Quarter 2019- December 31, 2018 Page 6
ECONOMIC SUMMARY
Interest Rate History
Source: U.S. Federal Reserve Statistical
Release (H.15)
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Market Sector:Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg
Fed Funds (effective)0.09%0.08%0.10%0.09%0.12%0.11%0.13%0.14%0.24%0.36%0.38%0.40%
3-Month U.S. T-Bill 0.07%0.05%0.04%0.02%0.03%0.03%0.02%0.02%0.23%0.30%0.27%0.29%
2-Year U.S. T-Note 0.34%0.40%0.45%0.57%0.64%0.64%0.69%0.71%0.98%0.88%0.73%0.77%
Portfolio Benchmark*0.13%0.13%0.12%0.12%0.12%0.15%0.18%0.24%0.32%0.41%0.49%0.54%
Portfolio Yield 0.50%0.49%0.49%0.51%0.55%0.57%0.57%0.65%0.72%0.79%0.81%0.90%
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Market Sector:Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg
Fed Funds (effective)0.54%0.79%1.04%1.15%1.30%1.67%1.90%2.15%2.40%
3-Month U.S. T-Bill 0.51%0.75%1.00%1.05%1.32%1.71%1.92%2.20%2.36%
2-Year U.S. T-Note 1.20%1.31%1.34%1.38%1.84%2.27%2.53%2.57%2.49%
Portfolio Benchmark*0.61%0.69%0.83%1.00%1.20%1.46%1.75%2.05%2.33%
Portfolio Yield 0.95%1.07%1.16%1.25%1.29%1.42%1.58%1.73%2.01%
*Twelve month moving average of a
one year U.S. T-bill yield
Fiscal Year:
2018-2019
2017-2018
2016-2017
2015-2016
2014-2015
QUARTERLY COMMENTARY
December 31, 2018
Source: First Southwest Asset Management
Economic Summary
CITY OF DENTON : QUARTERLY INVESTMENT REPORT
Fiscal Year 2013-2014 Fiscal Year 2014-2015 Fiscal Year 2015-2016
Fiscal Year to Date Earnings
3 Months 6 Months 9 Months 12 Months
849,369$
613,877$ 1,228,059$
The portfolio is in compliance with the City's Investment Policy. The weighted average yield on new purchases was 2.86%, well
above the 2.46% on the maturing position and the 2.29% average LGIP rate. The portfolio’s weighted average yield continues to
trend higher, rising another 5 basis points, from 1.96% to 2.01%. The increase in the portfolio’s yield lagged the 8 basis point
increase in the benchmark 12-month Treasury-bill index, widening the portfolio’s deficit to the benchmark from 29 to 32 basis
points. The benchmark yield should begin to slow, allowing the gap between the benchmark and the portfolio to narrow in the
months ahead. The Fed raised the rate 25 basis points during December, bringing the total increase of 2018 to 100 basis points. A
global economic slowdown, the trade war with China, and the government shutdown are all contributing to the negative shift in
sentiment.
Staff will continue to monitor the investment portfolio and ensure compliance with the City's Investment Policy and the Public
Funds Investment Act.
Fiscal Year 2017-2018
2,138,420$ 8,955,045$
1,874,846$
4,734,315$ 6,999,226$
3,961,973$
1,175,753$ 2,763,135$
4,317,890$ 6,515,166$
2,743,857$ 1,771,206$
2,695,211$
-$ -$ -$ 2,952,850$
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Fiscal Year 2016-2017 Fiscal Year 2018-2019
0.00%
1.00%
2.00%
3.00%
Dec-
13
Mar-
14
Jun-
14
Sep-
14
Dec-
14
Mar-
15
Jun-
15
Sep-
15
Dec-
15
Mar-
16
Jun-
16
Sep-
16
Dec-
16
Mar-
17
Jun-
17
Sep-
17
Dec-
17
Mar-
18
Jun-
18
Sep-
18
Dec-
18
Mar-
19
Jun-
19
Sep-
19
Fed Funds 3-Month T-Bill 2-Year T-Note Portfolio Yield Portfolio Benchmark*
FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19
43
Days to
Maturity
Page 1
Par Value Book Value Maturity
Date
Stated
RateMarket Value
December 31, 2018
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
City of Denton
YTM
365CUSIPInvestment #Purchase
Date
Treasury Securities - Coupon
1,049FFCB40067,500,000.00 7,543,009.69 11/15/20213.05012/12/2018 7,598,460.00 2.8403133EJT74
668FNMA400110,000,000.00 10,002,674.20 10/30/20202.87511/30/2018 10,054,860.00 2.8593135G0U84
45U.S. TREASURY3948 10,000,000.00 9,993,827.75 02/15/20190.75006/07/2017 9,980,600.00 1.258912828P53
73U.S. TREASURY3978 5,000,000.00 4,987,841.50 03/15/20191.00004/23/2018 4,985,975.00 2.233912828P95
470U.S. TREASURY3990 5,000,000.00 4,917,803.90 04/15/20201.50010/18/2018 4,933,400.00 2.814912828X21
546U.S. TREASURY3991 5,000,000.00 4,929,077.98 06/30/20201.87510/18/2018 4,950,390.00 2.852912828VJ6
531U.S. TREASURY3994 5,000,000.00 4,906,782.58 06/15/20201.50010/31/2018 4,927,340.00 2.821912828XU9
561U.S. TREASURY3995 10,000,000.00 9,800,909.16 07/15/20201.50010/31/2018 9,843,360.00 2.8369128282J8
410U.S. TREASURY3999 10,000,000.00 9,845,814.49 02/15/20201.37511/16/2018 9,862,110.00 2.782912828W22
66,927,741.25 2.55067,136,495.0067,500,000.0064,228,750.90Subtotal and Average 486
Federal Agency Disc. - Amortizing
217FFCB39886,200,000.00 6,107,690.61 08/06/20192.47010/11/2018 6,107,000.00 2.579313312KB5
6,107,690.61 2.5796,107,000.006,200,000.006,101,309.78Subtotal and Average 217
Federal Agency Issues - Coupon
43FFCB393125,000,000.00 24,999,022.92 02/13/20191.20002/13/2017 24,969,200.00 1.2343133EG6Z3
269FFCB39328,000,000.00 8,001,157.85 09/27/20191.55002/16/2017 7,936,496.00 1.5303133EG2D6
149FFCB39375,000,000.00 5,008,069.32 05/30/20191.75002/22/2017 4,984,275.00 1.3523133EDPK2
461FFCB39596,000,000.00 6,004,554.69 04/06/20201.60007/25/2017 5,928,492.00 1.5383133EHEZ2
493FFCB39765,000,000.00 4,982,557.12 05/08/20202.15003/23/2018 4,974,600.00 2.4163133EJCA5
318FHLB39337,000,000.00 6,990,221.23 11/15/20191.37502/16/2017 6,924,218.00 1.5393130AA3R7
346FHLB39345,000,000.00 5,036,284.96 12/13/20192.37502/16/2017 4,987,375.00 1.5903130A0JR2
413FHLB393920,000,000.00 19,999,155.28 02/18/20201.65003/08/2017 19,792,280.00 1.6543130AAXU7
413FHLB394515,000,000.00 14,995,173.91 02/18/20201.40004/26/2017 14,802,825.00 1.4293130ABAA4
413FHLB395115,000,000.00 15,000,000.00 02/18/20201.50006/29/2017 14,818,980.00 1.5003130ABM29
437FHLB39588,000,000.00 8,032,518.48 03/13/20201.87507/25/2017 7,931,568.00 1.528313378J77
311FHLB39735,000,000.00 4,974,074.49 11/08/20191.45001/25/2018 4,949,760.00 2.0723130AC2Q6
66FHLB39755,000,000.00 4,993,950.58 03/08/20191.50003/23/2018 4,991,215.00 2.1603133782M2
406FHLB397910,000,000.00 9,959,419.75 02/11/20202.12504/23/2018 9,953,160.00 2.5003130ADN32
346FHLB39844,000,000.00 3,999,529.98 12/13/20192.37505/30/2018 3,991,272.00 2.3873130AEDY3
513FHLB39855,000,000.00 5,009,073.75 05/28/20202.62505/30/2018 5,007,215.00 2.4923130AECJ7
437FHLB39895,000,000.00 4,959,580.20 03/13/20202.12510/18/2018 4,975,065.00 2.8163130A12B3
619FHLB400410,000,000.00 10,010,102.52 09/11/20202.87512/07/2018 10,052,900.00 2.812313370US5
104FHLMC39355,000,000.00 4,997,403.36 04/15/20191.12502/22/2017 4,981,360.00 1.3083137EADZ9
58FHLMC39385,000,000.00 5,000,000.00 02/28/20191.37502/28/2017 4,992,225.00 1.3753134GA6H2
Portfolio CITY
APRun Date: 02/20/2019 - 15:40 PM (PRF_PM2) 7.3.0
Report Ver. 7.3.6.1
44
Days to
Maturity
Page 2
Par Value Book Value Maturity
Date
Stated
RateMarket Value
December 31, 2018
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
City of Denton
YTM
365CUSIPInvestment #Purchase
Date
Federal Agency Issues - Coupon
486FHLMC39605,000,000.00 4,989,180.72 05/01/20201.37507/25/2017 4,922,785.00 1.5413137EADR7
381FHLMC39875,000,000.00 4,933,499.12 01/17/20201.50010/11/2018 4,943,915.00 2.8043137EAEE5
206FNMA39035,000,000.00 5,000,000.00 07/26/20191.00007/26/2016 4,954,780.00 1.0003136G3XJ9
56FNMA390410,000,000.00 10,003,714.96 02/26/20191.00007/07/2016 9,977,720.00 0.7543135G0J53
57FNMA39093,000,000.00 3,003,242.01 02/27/20191.70008/30/2016 2,996,400.00 0.9953136FTS67
56FNMA391010,000,000.00 10,000,374.44 02/26/20191.00008/30/2016 9,977,720.00 0.9753135G0J53
213FNMA393010,000,000.00 9,972,763.53 08/02/20190.87502/08/2017 9,899,010.00 1.3493135G0N33
423FNMA39365,000,000.00 5,000,000.00 02/28/20201.70002/28/2017 4,952,510.00 1.7003136G4MA8
423FNMA39425,000,000.00 4,994,693.09 02/28/20201.50003/29/2017 4,943,090.00 1.5943135G0T29
239FNMA39505,000,000.00 4,985,971.03 08/28/20191.00006/14/2017 4,946,720.00 1.4343135G0P49
296FNMA397110,000,000.00 9,920,989.78 10/24/20191.00001/08/2018 9,867,450.00 1.9933135G0R39
245,756,279.07 1.654244,326,581.00246,000,000.00243,808,180.25Subtotal and Average 299
Federal Agency Issues - Callable
163FFCB38955,000,000.00 4,999,848.74 06/13/20191.18006/22/2016 4,969,695.00 1.1873133EGEF8
545FHLMC39536,000,000.00 6,000,000.00 06/29/20201.62506/29/2017 5,917,932.00 1.6253134GBVD1
605FHLMC39654,950,000.00 4,950,000.00 08/28/20201.62508/29/2017 4,873,443.30 1.6253134GBD82
587FNMA39644,806,000.00 4,806,000.00 08/10/20201.70008/29/2017 4,743,536.42 1.6823136G4NZ2
20,755,848.74 1.53320,504,606.7220,756,000.0020,755,835.64Subtotal and Average 477
Municipal Bonds - Coupon
273DALLAS, TX WTR & SWR REV BDS3899 4,000,000.00 4,000,000.00 10/01/20191.21707/07/2016 3,955,680.00 1.21723542JBE4
134TX A & M UNIV REV BD3902 1,000,000.00 1,000,000.00 05/15/20191.00907/20/2016 993,270.00 1.00988213AFU4
5,000,000.00 1.1764,948,950.005,000,000.005,000,000.00Subtotal and Average 245
CDs - CDARS
37CD - CDARS3929 7,000,000.00 7,000,000.00 02/07/20191.67702/09/2017 7,000,000.00 1.677SYS3929
72CD - CDARS3940 10,000,000.00 10,000,000.00 03/14/20191.62603/16/2017 10,000,000.00 1.626SYS3940
198CD - CDARS3955 10,000,000.00 10,000,000.00 07/18/20191.69807/20/2017 10,000,000.00 1.698SYS3955
219CD - CDARS3961 10,000,000.00 10,000,000.00 08/08/20191.69808/10/2017 10,000,000.00 1.698SYS3961
254CD - CDARS3966 5,000,000.00 5,000,000.00 09/12/20191.52309/14/2017 5,000,000.00 1.523SYS3966
42,000,000.00 1.65742,000,000.0042,000,000.0042,000,000.00Subtotal and Average 153
CDs - SLOC
100CD - INDEPENDENT BANK3944 10,000,000.00 10,000,000.00 04/11/20191.62304/13/2017 10,000,000.00 1.623SYS3944
Portfolio CITY
APRun Date: 02/20/2019 - 15:40 PM (PRF_PM2) 7.3.0
45
Days to
Maturity
Page 3
Par Value Book Value Maturity
Date
Stated
RateMarket Value
December 31, 2018
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
City of Denton
YTM
365CUSIPInvestment #Purchase
Date
CDs - SLOC
401CD - INDEPENDENT BANK3974 5,000,000.00 5,000,000.00 02/06/20202.29502/08/2018 5,000,000.00 2.295SYS3974
128CD - LEGACYTEXAS BANK3946 10,000,000.00 10,000,000.00 05/09/20191.67705/11/2017 10,000,000.00 1.677SYS3946
163CD - LEGACYTEXAS BANK3949 15,000,000.00 15,000,000.00 06/13/20191.67606/15/2017 15,000,000.00 1.676SYS3949
40,000,000.00 1.74040,000,000.0040,000,000.0040,000,000.00Subtotal and Average 168
Commercial Paper Disc. - Amortizing
52JP MORGAN SECURITIES LLC3983 6,000,000.00 5,978,506.67 02/22/20192.48005/30/2018 5,976,528.00 2.59746640QPN5
206JP MORGAN SECURITIES LLC3997 5,000,000.00 4,914,166.66 07/26/20193.00010/31/2018 4,901,725.00 3.13446640QUS8
156JP MORGAN SECURITIES LLC4005 5,000,000.00 4,937,600.00 06/06/20192.88012/10/2018 4,936,785.00 2.96246640QT68
234NATIXIS NY BRANCH4002 10,000,000.00 9,808,250.00 08/23/20192.95011/30/2018 9,802,860.00 3.08663873KVP9
156NATIXIS NY BRANCH4003 5,000,000.00 4,938,033.34 06/06/20192.86012/07/2018 4,938,033.34 2.94263873KT64
135RBC40005,000,000.00 4,947,500.00 05/16/20192.80011/16/2018 4,945,995.00 2.87978009BSG8
44TOYOTA MOTOR CREDIT3986 20,000,000.00 19,941,822.22 02/14/20192.38009/11/2018 19,937,120.00 2.43889233HPE8
118TOYOTA MOTOR CREDIT3998 10,000,000.00 9,911,500.00 04/29/201911/01/2018 9,907,440.00 2.77589233HRV8
65,377,378.89 2.76465,346,486.3466,000,000.0064,532,063.97Subtotal and Average 120
Local Govt Investment Pools
1LOCAL GOVT INV POOL - TEXPOOL3996 25,054,193.98 25,054,193.98 2.53010/26/2018 25,054,193.98 2.530SYS3996
1LOCAL GOVT INV POOL - TEXSTAR3641 107,100,000.00 107,100,000.00 2.308107,100,000.00 2.308SYS3641
132,154,193.98 2.350132,154,193.98132,154,193.98124,783,226.24Subtotal and Average 1
Demand Deposits
1DEMAND DEPOSITS - WELLS FARGO3706 1,918,604.05 1,918,604.05 1.0001,918,604.05 1.000SYS3706
1,918,604.05 1.0001,918,604.051,918,604.052,536,607.13Subtotal and Average 1
2.017613,745,973.90 627,528,798.03 223624,442,917.09 625,997,736.59Total and Average
Portfolio CITY
APRun Date: 02/20/2019 - 15:40 PM (PRF_PM2) 7.3.0
46
Days to
Maturity
Page 4
Par Value Book Value Stated
RateMarket Value
December 31, 2018
Portfolio Details - Cash
Average
BalanceIssuer
Portfolio Management
City of Denton
YTM
365CUSIPInvestment #Purchase
Date
0.00
2.017613,745,973.90 627,528,798.03 223
0Average Balance
624,442,917.09 625,997,736.59Total Cash and Investments
Portfolio CITY
APRun Date: 02/20/2019 - 15:40 PM (PRF_PM2) 7.3.0
47