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2008-07-15 CITY OF SOUTHLAKE TEXAS REGULAR CITY COUNCIL MEETING MINUTES: JULY 15, 2008 LOCATION: 1400 Main Street, Southlake, Texas Council Chambers in Town Hall CITY COUNCIL PRESENT: Mayor Andy Wambsganss, Deputy Mayor Pro Tern Virginia M. Muzyka, and Councilmembers Gregory Jones (arrived at 5:20 p.m.), Pamela Muller, John Terrell and Vernon Stansell. CITY COUNCIL ABSENT: Councilmember Laura K. Hill. STAFF PRESENT: City Manager Shana Yelverton, Assistant City Manager / Director of Public Safety Jim Blagg, Assistant to the City Manager Alison Orlowski, Community Relations Officer Pilar Schank, Manager of Information Systems Gary Gregg, Interim Director of Community Services Chris Tribble, Deputy Director of Community Services Kerry McGeath, Community Services Coordinator Crystal Shafer, Director of Economic Development Greg Last, Director of Finance Sharen Jackson, Director of Human Resources Kevin Hugman, Interim Chief of Fire Services Mike Starr, Interim Chief of Police Services Robert Finn, Lieutenant Ashleigh Douglas, Deputy Director of Planning and Development Services Dennis Killough, Planner II Clayton Comstock, Director of Public Works Robert H. Price, City Attorney E. Allen Taylor, and City Secretary Lori Payne. WORK SESSION: Agenda Item No. 1. Call to order. The work session was called to order by Mayor Wambsganss at 5:12 p.m. Agenda Item No. 2. Invocation. Chaplain of the Month, Mike Dotson, gave the invocation. Mayor Wambsganss led the pledge of allegiance. Agenda Item No. 3. Recognition of Southlake Sister Cities Youth Ambassadors. Councilmember Terrell introduced the students who are going to Japan for the Sister Cities program and thanked their City staff sponsor, Lieutenant Douglas. Agenda Item No. 4. Improving customer service through technology (update). Assistant to the City Manager Ortowski presented this item to Council. Chief Finn answered questions related to the CRIMES software and Assistant City Manager Blagg answered questions related to Performance Point. REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 1 of 8 Agenda Item No. 5. Discuss all items on tonight's meeting agenda. City Council reviewed the agenda items with city staff. Mayor Wambsganss closed the work session at 5:53 p.m. REGULAR SESSION: Agenda Item No. 1. Call to order. The regular session was called to order by Mayor Wambsganss at 5:53 p.m. Agenda Item No. 2A. Executive Session. Mayor Wambsganss announced City Council would be going into Executive Session pursuant to the Texas Government Code Section 551.072, deliberation regarding real property; and Section 551.087, deliberation regarding economic development negotiations. City Council adjourned for Executive Session at 5:53 p.m. Executive Session began at 6:20 p.m. Executive Session ended at 7:02 p.m. Agenda Item No. 2B. Reconvene. Mayor Wambsganss reconvened the regular meeting at 7:10 p.m. There was action taken as a result of the executive session but the motion was made in conjunction with item 9C. Agenda Item No. 3A. Mayor's Report. Mayor Wambsganss announced upcoming meetings and events. Agenda Item No. 3B. City Manager's Report. City Manager Yelverton addressed a recent newspaper article regarding the neighborhood sewer program and a possible incentive program encouraging neighbors to tie into the sewer. The article referenced a discussion held at the July 1, 2008 City Council meeting and City Manager Yelverton further clarified points within the article and the discussion at that meeting. Agenda Item No. 3C. Local Business Report - update on www.southlakebusiness.com. Director Last presented this item to Council. Agenda Item No. 3D. Financial Report. Director Jackson presented this item to Council. CONSENT AGENDA: Consent agenda items are considered to be routine by the City Council and are enacted with one motion. The Mayor read the items into the record. Agenda Item No. 4A. Approve the minutes from the July 1, 2008, regular City Council meeting. A presentation was not made on this item. The minutes were approved as presented. Agenda Item No. 4B. Resolution No. 08-026, Appoint a Mayor Pro Tem and a Deputy Mayor Pro Tem. Mayor Wambsganss announced that Council would appoint John Terrell as Mayor Pro Tem and Gregory Jones as Deputy Mayor Pro Tem. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows. REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 2 of 8 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, APPOINTING A MAYOR PRO TEM AND A DEPUTY MAYOR PRO TEM PURSUANT TO ARTICLE 2.07 OF THE HOME RULE CHARTER; AND PROVIDING AN EFFECTIVE DATE. Agenda Item No. 4C. Approve an interlocal purchasing agreement with the City of Grand Prairie, Texas. A presentation was not made on this item. Agenda Item No. 4D. Approve a contract with Red Moon, Inc. for the purchase, installation, and maintenance of security cameras in Town Square and archival system in the amount of $328,362. A presentation was not made on this item. Agenda Item No. 4E. Approve second amendment to the agreement with Maximus, Inc. for software implementation and data conversion services. A presentation was not made on this item. Agenda Item No. 4F. Approve an interlocal agreement with Tarrant County for the asphalt overlay of North White Chapel Boulevard from State Highway 114 to Dove Road. A presentation was not made on this item. Agenda Item No. 4G. Award of bid to Horizon Distributors for the purchase of the Maxicom Irrigation Management System in the amount of $63,409.05. A presentation was not made on this item. Agenda Item No. 4H. Resolution No. 08-028, Suspending the August 8, 2008, effective date of Oncor Electric Delivery Company requested rate change to permit the city time to study the request and to establish reasonable rates approving cooperation with Oncor Cities Steering Committee to hire legal and consulting services and to negotiate with the company and direct any necessary litigation and appeals; finding that the meeting at which this resolution is passed is open to the public as required by law; and requiring notice of this resolution to the company and legal counsel for the steering committee. A presentation was not made on this item. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: SUSPENDING THE AUGUST 8, 2008, EFFECTIVE DATE OF ONCOR ELECTRIC DELIVERY COMPANY REQUESTED RATE CHANGE TO PERMIT THE CITY TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE RATES; APPROVING COOPERATION WITH ONCOR CITIES STEERING COMMITTEE TO HIRE LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT ANY NECESSARY LITIGATION AND APPEALS; FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL FOR THE STEERING COMMITTEE. Agenda Item No. 41. Ordinance No. 480-562, 1St Reading (ZA07-148), Zoning Change and Site Plan for Onsom Medical Offices on property legally described as Tracts 4C1A REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 3 of 8 and 4C213, Les Ex, A.H. Chivers Survey, Abstract No. 299; and located at 630 East State Highway 114. Current Zoninq: AG Agricultural District. Requested Zoning: S-P-1 Detailed Site Plan District. SPIN Neighborhood #5. The applicant requested to table this item to the August 5, 2008, City Council meeting. Motion was made to approve consent agenda items 4A; 4B to appoint John Terrell as Mayor Pro Tern and Gregory Jones as Deputy Mayor Pro Tem; 4C; 4D; 4E; 4F; 4G; 4H; and to table 41 at the applicant's request to the August 5, 2008 City Council meeting. Motion: Terrell Second: Muzyka Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 REGULAR AGENDA: Mayor Wambsganss announced item 9C would be considered next. Agenda Item No. 9C. Award of bid to Robinson Landscape and Construction for the construction of Royal and Annie Smith Park and Liberty Park at Sheltonwood in the amount of $1,021,343 and reallocation of funds for this purpose. Director Tribble presented this item during the work session. Mayor Wambsganss introduced this item during the regular session. Motion was made to award bid to Robinson Landscape and Construction for the construction of Royal and Annie Smith Park and Liberty Park at Sheltonwood in the amount of $1,021,343 and reallocation of funds for this purpose and authorizing the Mayor to enter into a contract for the purchase of property for park purposes as discussed in executive session. Motion: Terrell Second: Muzyka Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 5. Public Forum. No one spoke. Agenda Item No. 6A. Ordinance No. 480-328A, 2nd Readinq (ZA08-043), Zoninq Change and Site Plan for Countryside Bible Church on property being legally described as Lot 2R, Block A, Ravenaux Village Addition and located at 250 Countryside Court. Current Zoning: S-P-1 Detailed Site Plan District with Community Service District uses. Requested Zoning: S-P-1 Detailed Site Plan District with Community Service District uses. SPIN Neighborhood #11. Deputy Director Killough presented this item to Council. Applicant F.C. LeVrier made a presentation and answered Council's questions. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as fol lows: REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 4 of 8 AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; GRANTING A ZONING CHANGE ON A CERTAIN TRACT OR TRACTS OF LAND WITHIN THE CITY OF SOUTHLAKE, TEXAS BEING LEGALLY DESCRIBED AS LOT 2R, BLOCK A, RAVENAUX VILLAGE, AN ADDITION TO THE CITY OF SOUTHLAKE, TARRANT COUNTY, TEXAS, ACCORDING TO THE PLAT RECORDED IN CABINET A, SLIDE 6215, PLAT RECORDS, TARRANT COUNTY, TEXAS, BEING APPROXIMATELY 13.738 ACRES, AND MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A" FROM "S-P-1" DETAILED SITE PLAN DISTRICT WITH "CS" COMMUNITY SERVICE DISTRICT USES TO "S-P-1" DETAILED SITE PLAN DISTRICT WITH "CS" COMMUNITY SERVICE DISTRICT USES AS DEPICTED ON THE APPROVED SITE PLAN ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT "B", SUBJECT TO THE SPECIFIC REQUIREMENTS CONTAINED IN THIS ORDINANCE; CORRECTING THE OFFICIAL ZONING MAP; PRESERVING ALL OTHER PORTIONS OF THE ZONING ORDINANCE; DETERMINING THAT THE PUBLIC INTEREST, MORALS AND GENERAL WELFARE DEMAND THE ZONING CHANGES AND AMENDMENTS HEREIN MADE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. Mayor Wambsganss opened the public hearing. John Larson, 335 Ravenaux, Southlake, Texas spoke in support of this item and discussed the inner bufferyard plantings and any possible extension of Countryside Court. Mayor Wambsganss closed the public hearing. Motion was made to approve Ordinance No. 480-328A, 2nd Reading (ZA08-043), Zoning Change and Site Plan for Countryside Bible Church subject to Council's motion on first reading; subject to the applicant's representations and presentation at this meeting, specifically noting the applicant's agreements to construct a concrete channel at the bottom of the detention area, to stain the concrete channel with an application that blends it aesthetically, and to plant the inner bufferyard at the location shown this evening with similar plantings as the north side, and subject to Site Plan Review Summary No. 2, dated June 13, 2008. Motion: Terrell Second: Muzyka Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 5 of 8 Agenda Item No. 6B. Ordinance No. 480-UUU, 2"d Reading, Amendments to the Comprehensive Zoning Ordinance No. 480, as amended, as it pertains to fencing and screening regulations. Deputy Director Killough presented this item to Council. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AMENDING ORDINANCE NO. 480, AS AMENDED, THE COMPREHENSIVE ZONING ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS; PERTAINNIG TO FENCING AND SCREENING REGULATIONS ON PROPERTIES WITHIN THE CITY OF SOUTHLAKE; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 480-UUU, 2nd Reading, Amendments to the Comprehensive Zoning Ordinance No. 480, as amended, as it pertains to fencing and screening regulations and subject to the recommendations of the Planning and Zoning Commission. Motion: Terrell Second: Muzyka Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 6C. Ordinance No. 480-VW, 2nd Reading, Amendments to the Comprehensive Zoning Ordinance No. 480, as amended, for miscellaneous amendments and corrections. Planner Comstock presented this item to Council and answered questions. Council discussed concerns related to the proposed percentage increase in lot coverage. Mayor Wambsganss opened the public hearing. Kosse Maykus, 608 Chapel Court, Southlake, Texas addressed concerns with the proposed 10% increase in lot coverage. After discussion, Council decided to table this item to allow time for further evaluation and discussion. Motion was made to table Ordinance No. 480-VW, 2"d Reading, Amendments to the Comprehensive Zoning Ordinance No. 480, as amended, for miscellaneous amendments and corrections to the next Council meeting and to continue the public hearing to that date. REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 6 of 8 Motion: Terrell Second: Muzyka Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 Councilmember Terrell stepped out of the room during the next item. Agenda Item No. 6D. Ordinance No. 483-N, 2nd Reading, An amendment to the Subdivision Ordinance No. 483, as amended, as it pertains to completeness determination procedures and clarification of the official filing date of an application for approval of a plat. Deputy Director Killough presented this item to Council. In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: AN ORDINANCE AMENDING ORDINANCE NO. 483, AS AMENDED, THE SUBDIVISION ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS, TO PROVIDE FOR COMPLETENESS DETERMINATION PROCEDURES; CLARIFYING THE OFFICIAL FILING DATE OF AN APPLICATION FOR APPROVAL OF A PLAT; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDINANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR A PENALTY FOR VIOLATIONS HEREOF; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; PROVIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. No one spoke during the public hearing. Motion was made to approve Ordinance No. 483-N, 2nd Reading, An amendment to the Subdivision Ordinance No. 483, as amended, as it pertains to completeness determination procedures and clarification of the official filing date of an application for approval of a plat. Motion: Stansell Second: Muller Ayes: Jones, Muller, Muzyka, Stansell, Wambsganss Nays: None Approved: 5-0 Councilmember Terrell returned to the meeting during the next item. Agenda Item No. 9A. Consider SP08-144, Variance to Sign Ordinance No. 704-C for a temporary sign for Carillon Office Development, located at the 200 block of East State Highway 114. Planner Comstock presented this item to Council. Applicant David Carr, 13155 Knoll Road, Dallas, Texas with Hines answered Council's questions. Council discussed the approval of this request for a two year time frame. REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 7 of 8 Motion was made to approve SP08-144, Variance to Sign Ordinance No. 704-C for a temporary sign for Carillon Office Development, located at the 200 block of East State Highway 114 for a period of two years. Motion: Jones Second: Terrell Ayes: Jones, Muzyka, Terrell, Stansell, Wambsganss Nays: Muller Approved: 5-1 Agenda Item No. 9B. Consider SP08-161, Variance to the Shady Oaks Office Park Conditional Sign Permit for Guaranty Bank, located at 600 West Southlake Boulevard, Suite 110. Deputy Director Killough presented this item to Council. Jim Hagle with Chandler Signs, 3201 Manor Way, Dallas, Texas and Matthew Hickey with Guaranty Bank, 610 West Southlake Boulevard, Southlake, Texas answered Council's questions. Council discussed this request and suggested potential changes to the proposed sign. Motion was made to table SP08-161, Variance to the Shady Oaks Office Park Conditional Sign Permit for Guaranty Bank, located at 600 West Southlake Boulevard, Suite 110. Motion: Terrell Second: Jones Ayes: Jones, Muller, Muzyka, Terrell, Stansell, Wambsganss Nays: None Approved: 6-0 Agenda Item No. 11. Meeting adjourned. Mayor Wambsganss adjourned the meeting at 8:59 p.m. *An audio recording of this meeting will be permanently retained in the City Secretary's Office. _7e5~~ "Andy Wambsganss Mayor ATTEST: a J 10 Lon Payne, TRM ° `A City Secretary REGULAR CITY COUNCIL MEETING MINUTES, JULY 15, 2008 Page 8 of 8 SOUTHLAKE Quarterly Rev'iew ■ Integrity For the period ended Innovation Accountability June 30 2008 Commitment to Excellence Teamwork Finance Department's Quarterly Review For the period ended June 30, 2008 City of Southlake July 2008 Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork To: Shana Yelverton, City Manager Jim Blagg, Assistance City Manager From: Sharen Jackson, Finance Director Re: Third Quarter FY 2008 Financial Report Date: Julyl5, 2008 The finance department is pleased to submit a financial report for the third quarter of FY 2008 period ended June 30, 2008. This report contains financial statements for the City's operating funds, status reports of the Capital Projects and a report of the City's Investment portfolio. GENERAL FUND REVENUES Property tax. In the General Fund, $14,593,384 of $14,677,181 or 99.4% of budgeted property tax has been collected. Since property tax bills are delinquent as of February 1, most tax collections are received in the first four months of the fiscal year. It is anticipated that collections will meet projections. Tarrant County has collected the City's taxes since 1982. Sales tax. Sales tax budgeted for Fiscal Year 2008 is $8,402,600. For FY 2008 third quarter (October through June) the City has collected $5,817,656 in sales tax. This is 20.4% or $956,422 above the projected amounts to date. The significant increase is due to budget collections are net Grand Avenue 380 agreement and actual collections include 100% of Grand Avenue collections sales tax. Franchise fees. Franchise fees include amounts received for use of public rights of way from utility companies. To date the City has received $1,978,029 of $2,471,971 budgeted. FY 2008 collections are comparable to prior year's collections. Tri-County pays their second semi-annual payment in July. Historically Oncor made an annual payment in September but recently Oncor began making quarterly payments. Fines/forfeitures. Revenues from Fines and Forfeitures are $622,670, which is 62.3% of the $1,000,000 budgeted. This revenue source depends on many variables, such as the number of citations issued, warrants issued and collected, plus the number of cases assigned to deferred adjudication. Citation volume is lower for third quarter FY 2008 compared to FY 2007 third quarter. Citation volume is expected to remain consistent, staff will continue to monitor revenues and make any necessary budget amendments this summer during the budget process. Charges for services. This category includes revenue from ambulance transport, recreation class fees, and amounts received from the Cities of Grapevine and Colleyville for participation in the Teen Court program. Revenue to date total $715,305, compared with $619,005 collected for the same period in the prior year. The majority of the increase in collections for FY 2008 is related to the increase in ambulance revenue for FY 2008. It is anticipated that revenue from Charges for Services will be within budgeted amounts. Permits/fees. Revenues from permits and fees are $1,264,213, or 77.3% of the budgeted amount of $1,635,250. This is less than $1,509,334 collected as of June 30, 2007. 115 residential permits have been issued to date compared to 144 issued in the prior fiscal year third quarter. The residential permits issued for FY 2008 are for homes with higher values on average approximately $66,595 higher in value. The largest reduction in permits/fee revenue is due to the reduction in commercial permits issued year to date. 7 and 19 commercial permits were issued as of the third quarter June 30, 2008 and June 30, 2007, respectively. Miscellaneous. This category includes amounts from tower leases, the 10% administrative fee retained from Municipal Court State taxes remitted quarterly to the Comptroller, and library fees/fines. The City has received $585,612 to date. Revenues from miscellaneous income will meet the $663,812 budgeted. Interest income. Interest earnings to date total $299,418. The total collected is on target with the $400,000 budgeted for the year. GENERAL FUND EXPENDITURES For the third quarter ended June 30, 2008 of the fiscal year, General Fund total expenditures are $19,093,626 or 64.4% of the $29,641,168 budget. A brief discussion of each department will follow, providing a summary explanation of major expenditures trends. General government department. Department expenditures for the City Secretary's Office, Human Resources, City Manager's Office and Support Services total $3,290,166, which is 58.5% of budget. Personnel, capital and utility expenditures are on target with budget. Therefore it is anticipated that expenditures in General Government will be within the amount budgeted. Finance department. For the Finance, Municipal Court, Teen Court Divisions, total expenditures to date are $1,198,570 or 64.9% of the $1,847,521 budgeted. Personnel, operations and capital expenditures are within budget. Public safety department. Total expenditures for Police Services, Fire Services, and Public Safety Support, are $7,733,828, which is 65.7% of the $11,764,469 budgeted. Currently, public safety expenditures are within budget and on target for the fiscal year. Public works department. Budgeted within this department are Streets/Drainage, and Public Works Administration. Expenditures to date are $2,036,928 or 72.5% of the $2,808,783 budgeted. Personnel, operations and capital expenditures are within budget. Planning and development department. Total expenditures for Planning and building inspections are $1,211,108 or 61.4% of the $1,973,527 budgeted for the year. Expenditures in the Department are within budgeted. Economic development department. The department has expended $208,958, or 58.2% of the $358,897 budgeted for the year. Expenditures in the Department are within budget. Community services department. Total expenditures for Community Services, Parks and Recreation, and Library Services are $3,414,068 or 64.9% of the $5,259,992 budgeted. Personnel expenditures are on target with budget. Expenditures in the Department are expected to be within budget projections. WATER AND SEWER ENTERPRISE FUND Revenues. As of June 30, 2008, the City has received $12,926,223 or 66.8% in revenues of the $19,351,913 estimated. This is more than the prior year collections of $11,182,227 received through June of last year. The increase in 2008 collections is due to the extremely rainy season we experienced in 2007. The majority of revenue is received in the summer months. Total revenues for the year will most likely be within budget or slightly higher. Expenses. The City has expended $11,672,387 or 60.0% of the $19,455,310 budgeted for personnel, operations, capital, and debt services. Of the total expenses, $2,767,874 has been paid to the City of Fort Worth for treated water. STORMWATER ENTERPRISE FUND Revenues. On October 17, 2006 City Council approved Ordinance No. 900 and 901 establishing the Storm water Drainage Utility System and establishing the fee respectively. As of June 30, 2008, the city has received $952,311 or 88.8% in revenue of the $1,072,197 estimated. Total revenues for the year will most likely be within budget or slightly higher. Expenses. The City has expended $356,772 or 42.1% of the $916,185 budgeted for personnel and operations. Of the total expenses, $248,071 was for drainage materials. DEBT SERVICE FUND Revenues. The City has received $6,481,680 in current and delinquent property taxes through June 30, 2008. This fund pays the property tax supported debt requirements for the city. The first semi-annual payments were paid February 2008 totaling $5,467,077. SOUTHLAKE PARKS DEVELOPMENT CORPORATION (SPDC) Operating Fund. As of June 30, 2008, $2,782,244 in the 1/2 cent sales tax has been collected. SPDC sales tax receipts are 8.10% above estimates, or $208,405. CRIME CONTROL AND PREVENTION DISTRICT (CCPD) Operating Fund. As of June 30, 2008, $2,654,655 in the 1/2 cent sales tax has been collected. Sales tax receipts are 3.62% above estimates, or $92,761. PARK DEDICATION FEE FUND Revenues. The City has collected $85,423 of the $60,000 budgeted for the year. This revenue source varies depending on the number of developments during a fiscal year, and the park dedication fee credits given, if any, for open space and amenities. The park land dedication revenue will be amended during the budget process this summer to better reflect actual collections for FY 2008. TAX INCREMENT FINANCIAN DISTRICT (TIF) Revenues. To date TIF received $3,020,210 in revenues for the fiscal year. Historically, the TIF revenues are not collected until the third and fourth quarter of the fiscal year. STRATEGIC INITIATIVE FUND Expenditures. As of June 30, 2008 the expenditures were $1,518,139 majority related to software conversions and fire ladder truck final payment. HOTEL OCCUPANCY FUND Revenues. The City has collected $577,585 or 104.3% in revenue of the $553,594 budgeted for the year. The Hotel Occupancy Tax is authorized under the Texas Tax Code, Chapter 351. The City of Southlake adopted Ordinance No. 769 in February 2000, levying a 7% tax on room receipts. The Hilton Hotel in Town Square opened in June 2007. The revenue will be amended during the budget process this summer to better reflect actual collections for FY 2008. Expenditures. As of June 30, 2008 the expenditures were $169,808 majority related to historical and transportation programs. GENERAL FUND Statement of Revenues, Expenditures and Changes in Fund Balance for the period ended June 30, 2008 with comparative actual amounts for the period ended June 30, 2007 (fiscal month 9-75.00%) Percent Year to Date 2008 Collected/ Year to Date REVENUES 6/30/08 Budget Expended 6/30/07 Ad Valorem Taxes $14,593,384 $14,677,181 99.4% $12,767,038 Sales Tax 5,817,656 8,402,600 69.2% 5,875,369 Franchise Fees 1,978,029 2,471,971 80.0% 1,501,207 Fines 622,670 1,000,000 62.3% 698,474 Charges for Services 715,305 903,570 79.2% 619,005 Permits/Fees 1,264,213 1,635,250 77.3% 1,509,334 Miscellaneous 585,612 663,812 88.2% 463,173 Interest Income 299,418 400.000 74.9% 207,954 Total Revenues $25,876,287 $30,154,384 85.8% $23,641,554 EXPENDITURES City Secretary $233,332 $387,746 60.20Y6$215,727 Human Resources 289,741 437,795 66.2% 257,810 City Manager 390,297 635,322 61.4% 353,864 Support Services 2.376.796 4.167.116 57.0% 2.386.351 General Government Total 3,290,166 5,627,979 58.5% 3,213,752 Finance 704,560 1,166,054 60.4% 722,471 Municipal Court 410,061 554,519 73.9% 387,317 Municipal Court-Teen Court 83.949 126,948 66.1% 79,752 Finance Total 1,198,570 1,847.521 64.9% 1,189,540 Fire 3,114,823 4,253,159 73.2% 2,562,338 Police 3,649,441 5,924,683 61.6% 4,239,604 Public Safety Support 969.564 1,586,627 61.1% 836.970 Public Safety Total 7,733,828' 11,764,469 65.7% 7,638,912 Streets/Drainage 1,295,344 1,612,078 80.4% 1,035,493 Public Works Administration 741.584 1.196.705 62.0% 627.544 Public Works Total 2,036,928 2,808,783 72.5% 1,663,037 Building Inspections 599,363 973,508 61.6% 492,578 Planning 611.745 1,000,019 61.2% 588.572 Planning Total 1,211,108 1,973,527 61.4% 1,081,150 Economic Development 208.958 358,897 58.2% 213.979 Economic Development Total 208,958 358,897 58.2% 213,979 Community Services 261,332 513,079 50.9% 390,356 Parks and Recreation 2,754,255 4,168,088 66.1% 2,242,204 Library Services 398.481 578,825 68.8% 363.047 Community Services Total 3,414,068 5,259,992 64.9% 2,995,607 Total Expenditures $19,093,626 $29,641,168 64.4% $17,995,977 Excess (deficiency) of Revenue over Expenditures $6,782,661 $513,216 $5,645,577 OTHER FINANCING SOURCES AND (USES) Proceeds from lease/CO (net) $0 $0 $0 Transfer 1n-Other Funds 0 408,195 0 Transfer To-Other Funds 0 (1.085,000) Total Other Sources/(Uses) $0 ($676,805) $0 Excess (deficiency) of Revenues/other sources over Exp. $6.782.661 ($163.589) $5.645,577 FUND BALANCE OCT 1 $7,768,639 Change in reserved fund balance $0 ENDING FUND BALANCE $7,605.050 fund balance percentage 25.66% WATER AND SEWER ENTERPRISE FUND Comparative Statement of Revenues and Expenses for the period ended June 30, 2008 and June 30, 2007 (fiscal month 9-75.00%) AMENDED Percen Year to Date 2008 Collected/ Year to Date REVENUES 6/30/08 Budeet Ex ended 6/30/07 Water Sales-residential $6,737,974 $10,500,000 64.2% $5,379,981 Water Sales-commercial 1,630,938 3,100,000 52.6% 1,723,632 Sewer Sales 3,255,410 3,900,000 83.5% 2,868,809 Sanitation Sales 788,944 1,156,163 68.2% 729,873 Other utility charges 234,457 289,750 80.9% 204,378 Miscellaneous 93,515 106,000 88.2% 126,874 Interest Income 184,985 300,000 61.7% 148.680 Total Revenues $12,926,223 $19,351,913 66.8% $11,182,227 EXPENSES Water $4,697,160 $10,655,015 44.1% $4,715,096 Utility Billing 553,627 419,847 131.9% 198,469 Sewer 1,632,163 2,184,385 74.7% 965,569 Sanitation 402,648 837,834 48.1% 493,893 Debt Service 4.386.789 5.358.229 81.9% 4.370.520 Total Expenses $11,672,387 $19,455,310 60.0% $10,743,547 Excess (deficiency) of Revenue over Expenses $1,253,836 $103.397 $438.680 OTHER FINANCING SOURCES AND (USES) Transfer In-Other Funds $0 $0 Developer Contributions $0 $50,000 $0 Transfer Out-Other Funds 0 (388,038) 0 Total Other Sources/(Uses) $0 ($338,038) $0 Excess (deficiency) of Revenues and other sources over Expenses $1,253,836 ($441,435) $438,680 CITY OF SOUTHLAKE 1% SALES TAX REPORT 2008 Collected Budget Balance Budget to Date Balance Percent $ 8,202,600 $6,436,135 ($1,766,465) -21.54% FISCAL FISCAL FISCAL YEAR % Inc YEAR % Inc YEAR % Inc MONTH 2006 -Dec 2007 -Dec 2008 -Dec October 933,496 126.2% 674,934 -27.7% 686,499 17% November 520,781 10.8% 619,509 19.0% 802,417 29.5% December 823,106 144% 1,106,026 344% 1,174,260 6.2% January 499,821 147% 559,469 11.9% 760,276 359% February 477,019 16.2% 611,242 281% 619,828 14% March 733,397 147% 804,752 97% 856,010 6.4% April 619,820 26.0% 664,768 73% 749,508 12.7% May 632,954 29.2% 744,258 176% 787,336 58% June 899,050 43.1% 828,321 -79% 0 -1000% July 509,767 13.2% 715,342 40.3% 0 -100.0% August 642,637 237% 672,614 47% 0 -1000% September 773, 386 26.2% 810,258 4.8% 0 -100.0% TOTAL $8,065,233 $8,811,494 $6,436,135 Three Year Revenue Comparison by Month 1,200, 000::. ~'~~~''L t;~t $srxa :k. ::.G, , H .E,~,:c `~..'y"°•~S caRq~;',`•:,:'. 5"t~.,nt. ~s r J '+w;a7'. ice., y-'`';':7t 4°' .,*i ;T",.` ` . ,ca '.4..:• a ..y' 1,000,000:` 'f ~v„A dt. 800,000 #®Yf 'w6f4 600,000 400,000 200,000 It M 0 OA 6 OA Oo Oo Oo o4i O~ O~ 00 00 Oo C° p~G )ate 0 mac PQ~ ~a~ )moo ~o~ Poo ~eQ ■ FISCAL YEAR 2006 Co FISCAL YEAR 2007 ■ FISCAL YEAR 2008 Actual Budget Actual Estimated (budget-est.) % Month 2007 2008 2008 2008 Difference Change October(*) $ 674,934 $ 628,294 $686,499 $ 686,499 $ 58,205 9.26% November(*) $ 619,509 $ 576,699 $802,417 $ 802,417 $ 225,717 3914% December(*) $ 1,106,026 $ 1,029,597 $1,174,260 $ 1,174,260 $ 144,663 1405% January(*) $ 559,469 $ 520,809 $760,276 $ 760,276 $ 239,467 4598% February(*) $ 611,242 $ 569,004 $619,828 $ 619,828 $ 50,825 893% March(*) $ 804,752 $ 749,142 $856,010 $ 856,010 $ 106,868 14.27% April $ 664,768 $ 618,831 $749,508 $ 749,508 $ 130,677 2112% May $ 744,258 $ 692,828 $787,336 $ 787,336 $ 94,507 1364% June $ 828,321 $ 771,082 $0 $ 771,082 $ - 0.00% July $ 715,342 $ 665,911 $0 $ 665,911 $ - 000% August(*) $ 672,614 $ 626,135 $0 $ 626,135 $ - 0.00% September(*) $ 810,258 $ 754,267 $00 $ 754,267 $ - 0.00% TOTAL $ 8,811,494 $ 8,202,600 $ 6,436,135 $ 9,253,530 $ 1,050,930 * Beginning April 2006 includes Grand Avenue sales tax collections per 380 agreement 80% of collections will be distributed to Cooper & Stebbins SOUTHLAKE CRIME CONTROL AND PREVENTION DISTRICT 112% SALES TAX REPORT 2008 Collected Budget Balance Budget to Date Balance Percent $ 4,467,750 $3,042,871 (1,424,879) -31.89% Fiscal Year Percent Fiscal Year Percent Fiscal Year Percent 2006 Increase/ 2007 Increase/ 2008 Increase/ MONTH, Actual (Decrease) Actual (Decrease) Actual (Decrease) October $461,119 12083% $304,276 -3401% $334,143 9.82% November 258,824 991% 308,020 1901% 376,231 22.14% December 371,963 1052% 523,323 4069% 536,434 2.51% January 246,180 11.18% 290,761 1811% 362,682 2474% February 235,970 1460% 301,199 2764% 299,335 -062% March 336,357 13.96% 382,088 1360% 382,776 0.18% April 303,289 22.98% 311,411 2.68% 363,054 16.58% May 314,379 2794% 359,218 14.26% 388,216 807% June 422,323 5052% 389,658 -7.73% - -100.00% July 255,215 15.79% 348,010 36.36% - -10000% August 311,137 2307% 329,686 5.96% - -100.00% September 340,310 23.27% 374,527 10.05% - 10000% TOTAL -s3,857,066 $4,222,177 $3,042,871 Three Year Revenue Comparison by Month $600,000+~. ,;V. 500,000 :{Y,,Ha:. $400,000 ~Rytyn:. ;ws W: $300,000 $200,000 dr: r.. $100,000 A $o o~' (Zp o~ N Fiscal Year 2006 Actual ■ Fiscal Year 2007 Actual 0 Fiscal Year 2008 Actual Actual Budget Actual Estimated (budget-est.) % 2007 2008 2008 2008 Difference Change October $ 304,276 $ 321,974 $ 334,143 $ 334,143 $ 12,169 378% November $ 308,020 $ 325,935 $ 376,231 $ 376,231 $ 50,296 1543% December $ 523,323 $ 553,761 $ 536,434 $ 536,434 $ (17,327) -3.13% January $ 290,761 $ 307,672 $ 362,682 $ 362,682 $ 55,010 17.88% February $ 301,199 $ 318,718 $ 299,335 $ 299,335 $ (19,383) -608% March $ 382,088 $ 404,311 $ 382,776 $ 382,776 $ (21,535) -533% April $ 311,411 $ 329,524 $ 363,054 $ 363,054 $ 33,530 10.18% May $ 359,218 $ 380,111 $ 388,216 $ 388,216 $ 8,105 2.13% June $ 389,658 $ 412,322 $ - $ 412,322 $ - 000% July $ 348,010 $ 368,251 $ - $ 368,251 $ - 000% August $ 329,686 $ 348,861 $ - $ 348,861 $ - 000% September $ 374,527 $ 396,311 $ - $ 396,311 $ - 000% TOTAL $ 4,222,177 $ 4,467,750 $ 3,042,871 $ 4,568,616 $ 100,866 SOUTHLAKE PARKS DEVELOPMENT CORPORATION 1/2% SALES TAX REPORT 2008 Collected Budget Balance Budget to Date Balance Percent $ 4,499.250 $3,170,036 ($1,329,214) -29.54% FISCAL FISCAL FISCAL YEAR % Inc YEAR % Inc YEAR % Inc MONTH 2006 -Dec 2007 -Dec 2008 -Dec October $459,781 126.2% $332,430 -277% $338,127 17% November 256,504 108% 305,131 190% 395,220 295% December 405,410 144% 544,759 344% 578,367 6.2% January 246,505 149% 275,560 118% 374,464 35.9% February 234,949 16.2% 301,059 28.1% 305,289 14% March 361,225 147% 396,371 97% 421,617 64% April 305,284 260% 327,423 73% 369,161 12.7% May 311,753 29.2% 366,575 176% 387,792 58% June 442,816 431% 407,979 -79% - -1000% July 251,080 13.2% 352,333 40.3% - -1000% August 316,523 237% 331,288 47% - -1000% September 380,921 26.2% 399,082 48% - -1000% TOTAL $3,972,753 $4,339,989 $3,170,036 Three Year Revenue Comparison by Month $600,000 $500,000 .'l'tt .:f ;.;,,ar-.,:µ..};: $400,000s:a:. r P_.r Srk; .gz-` wrk;x.. I jpr r , $300,000;; $200,000 PIZ. $100,000 $0 O~ O~ 01 00 O`b 00 00 Qg 00 00 Q§~ O~ O°~ peg' )a° Few ~mc PQ~ ~a~ P~0 SeQ ■ FISCAL YEAR 2006 0 FISCAL YEAR 2007 ■ FISCAL YEAR 2008 Actual Budget Actual Estimated (budget-est.) % 2007 2008 2008 2008 Difference Change October $ 332,430 $ 344,629 $338,127 $ 338,127 $ (6,502) -189% November $ 305,131 $ 316,328 $395,220 $ 395,220 $ 78,892 2494% December $ 544,759 $ 564,750 $578,367 $ 578,367 $ 13,617 2.41% January $ 275,560 $ 285,672 $374,464 $ 374,464 $ 88,793 3108% February $ 301,059 $ 312,107 $305,289 $ 305,289 $ (6,818) -2.18% March $ 396,371 $ 410,916 $421,617 $ 421,617 $ 10,701 2.60% April $ 327,423 $ 339,438 $369,161 $ 369,161' $ 29,723 8.76% May $ 366,575 $ 380,027 $387,792 $ 387,792 $ 7,765 2.04% June $ 407,979 $ 422,950 $0 $ 422,950 $ - 000% July $ 352,333 $ 365,262 $0 $ 365,262 $ - 000% August $ 331,288 $ 343,445 $0 $ 343,445 $ - 000% September $ 399,082 $ 413,727 $0 $ 413,727 $ - 000% TOTALS $ 4,339,989 $ 4,499,250 $ 3,170,036 $ 4,715,420 $ 216,170 Investment Portfolio Summary For the Quarter Ended June 30, 2008 Prepared By First Southwest Asset Management City of Southlake Quarterly Investment Report Investment Officers' Certification For the Quarter Ended June 30, 2008 This report is prepared for the city of Southlake (the "City") in accordance with Chapter 2256 of the Public Funds Investment Act ("PFIA"). Section 2256.023(a) of the PFIA states that "Not less than quarterly, the investment officer shall prepare and submit to the governing body of the entity a written report of the investment transactions for all funds covered by this chapter for the preceding reporting period." This report is signed by the City's investment officers and includes the disclosures required in the PHA. Market prices were obtained from independent pricing sources, including Interactive Data Corporation and Bloomberg L.P. The investment portfolio complied with the PFIA and the City's approved Investment Policy and Strategy throughout the period. All investment transactions made in the portfolio during this period were made on behalf of the City and were made in full compliance with the PFIA and the City's approved Investment Policy. Ur ~ First Southwest Asset Management Page 2 of 12 City of Southlake FIXED INCOME DISTRIBUTION June 30, 2008 Summary Information Tot:ds Weighted Averages Par Value 122,805,617.28 Average YTM 3 011 Markel Value 122,889,171.28 Average Maturity (yrs) 04 Adjusted Cost 122,825,317 46 Average Coupon 2.902 Net Gain/Loss 63,853.82 Average Duration 04 Annual Income 3,556,704.56 Number of Issues 22 Distribution by Maturity % Bond Average Average Average Maturity Number N1kt Value Holdings Y T M Coupon Duration 0 - 3 Months 6 77,362,001 78 63 0 2.771 2 640% 0 029 3 - 6 Months 3 8,025,522.50 6.5 4.202 3.564% 0.307 6- 9 Months 2 7,045,407.25 5 7 2.757 1.823% 0 702 9 - 12 Months 5 12,965,785 25 106 2.558 2.580% 0 870 1- 2 Years 3 9,562,031.25 7 8 3.385 3 803% 1 152 2- 3 Years 3 7,928,423.25 6 5 4 732 5189% 2.213 Page 3 of 12 . First Southwest Asset Management City of Southlake Portfolio Composition June 30, 2008 Portfolio Composition by Security Type Portfolio Composition by Issuer ❑ Commercial ■ FNMA ■ Agency Paper ®TexPool 8.3% 0 Securities 7,2% 30.5 44.1% ❑ FHLMC 10.5% ❑TexStar ■ FHLB 18.2% 20.4% ®Pools & Money ■ Commercial Markets Paper ❑PEFC O 48.7% 7.2% 4.9 Portfolio Composition by Maturity (Percentage) Portfolio Composition by Maturity (Amount) ❑3-6 Months $90 6.5% $80 ■ 6-9 Months $70 5.7% $60 11110-3 Months V/ 63.0% o $50 $40 ■9-12 Months $30 10.6% $20 ❑ 1-2 Years $10 7.8% $ 0-3 Months 3-6 Months 6-9 Months 9-12 1- 2 2- 3 Over 3 BE 2-3 Years Months Years Years Years 6.5% First Southwest Asset Management rage 4 or 12 City of Southlake Benchmark Comparison June 30, 2008 6000% 5.000% 4.000% -0-Southlake Portfolio Month-End Wtd Avg Yld 3.000% -~-TexPool Monthly Average -a 3-Mo CMT (3-Month Moving Avg) 2.000% 11 6-Mo CMT (6-Month Moving Avg) -rt-1-Yr CMT (12-Month Moving Avg) ~a 1000% ti ti ti ti ti r` ti e0 OD OD e0 e0 e0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 c -0 > c of c > v c c`o o ca Notes: I ) Benchmark data for TexPool is the monthly average yield. 2.) CMT stands for Constant Maturity Treasury This data is published in Federal Reserve Statistical Release 11 15 and represents an average of all actively traded Treasury securities having that time remaining until maturity This is a standard industry benchmark for Treasury securities. 3 ) The CMT benchmarks are moving averages. The 3-month CMT is the daily average for the previous 3 months, the G-month CMT is the daily average for the previous G months, and the I-year CMT is the daily average for the previous 12-months first Southwest Asset Management Page 5 of 12 City of soua:cake DETAIL OF SECURITY HOLDINGS .4s of June 30, 2008 Security Security Settlement Maturity Next Call Purchase Purchase Markel Market Accrued Days to Days to Yield to Vield to Description CUSIP Coupon Date Date Date Par Value Price Cost Book Value Price Value Interest Maturity Next Call Maturity Next Call General Operating TexSTAR lexslar 2.247 19,944,046.34 100.000 19,944,046.34 19,944,046.34 100.000 19,944,046.34 0 00 1 2.247 TcxFool lexpool 2.263 36,649,58516 100.000 36,649,585.16 36,649,58516 100.000 36,649,58516 0.00 1 2.263 PEFCO 74265109 5.870 06-04-07 07-31-08 6,000,000.00 100.653 6,039,180.00 6,002,781.44 100.250 6,015,000.00 147,728.33 31 5.259 FHLMC 3128X417F3 4.500 11-28-07 08-04-08 2,500,000.00 100.168 2,504,200.00 2,500,571 20 100.172 2,504,305 00 45,937 50 35 4.240 American Express Gedit CP 02581RHLO 0.000 02-22-08 08-20-08 4,000,000.00 98.590 3,943,600.00 3,984,333.33 99.647 3,985,892.00 0.00 51 2.900 FHLB 3133XCX40 4.500 05-03-07 09-08-08 5,000,000 00 99.279 4,963,930.00 4,994,993 47 100.344 5,017,187.50 70,625 00 70 5.056 GE Capital Scrtaccs CP 36959RKA2 0.000 04-16-08 10-10-08 2,000,000.00 98.751 1,975,023.33 1,985,747 78 99.260 1,985,210.00 0.00 102 2.608 FHLB 3133XBJPI 4.570 09-18-07 10-17-08 3,000,000.00 99.854 2,995,620.00 2,998,798.28 100.562 3,016,875.00 28,181.67 109 4707 FNMA 31398AAF9 4.900 09-13-07 11-03-08 3,000,000.00 100.223 3,006,690.00 3,002,007.21 100.781 3,023,437.50 23,683.33 126 4.691 FNMA 31359MUQ4 3125 06-10-08 03-16-09 4,102,000.00 100.451 4,120,500.02 4,I19,10T55 100187 4,109,691.25 37,388.02 259 2.524 GE Capital Corp Cl' 36959HQP5 0.000 06-26-08 03-23-09 3,000,000.00 97 765 2,932,950.00 2,934,191.67 97.857 2,935,716.00 0.00 266 3.090 FHLMC 3128X7JW5 2.265 05-29-08 04-14-09 3,000,000.00 99 704 2,991,120 00 2,992,035 75 99.555 2,986,641.00 14,533 75 288 2.608 FIILMC 3134A4UQ5 3.375 04-16-08 04-15-09 1,500,000.00 101.065 1,515,975 00 1,512,639.56 100.406 1,506,093 75 10,687.50 289 2.289 FHLB 3133XRD98 2.375 05-27-08 05-27-09 3,000,000.00 99.870 2,996,100.00 2,996,473.97 99.562 2,986,875.00 6,729 17 331 2.507 FIILMC 3128X7TV6 2.625 05-19-08 06-12-09 11-16-08 4,000,000.00 100 000 4,000,000.00 4,000,000.00 99.725 3,988,988.00 13,125.00 347 139 2.626 2.624 FHLB 3133XREUO 2.700 05-30-08 06-30-09 1,500,000.00 99.988 1,499,820.00 1,499,834.53 99.812 1,497,187.50 3,487.50 365 2.711 17HLB 3133XFYK6 5.375 05-29-08 07-17-09 1,500,000.00 102.935 1,544,025.00 1,540,516.26 102.531 1,537,968.75 36,72917 382 2.724 FI ILB 3133XPFF6 3.050 01-30-08 07-30-09 07-30-08 5,000,000 00 100.000 5,000,000.00 5,000,000.00 100 031 5,001,562.50 63,965 28 395 30 3.050 3.050 FHLB 3133XNSD2 4.250 12-18-07 12-18-09 12-I8-03 3,000,000.00 100.000 3,000,000 00 3,000,000.00 100.750 3,022,500.00 4,604 17 536 171 4.250 4.250 FNMA 31398AI-IX3 5 020 10-15-07 10-15-10 10-15-08 3,000,000.00 100.000 3,000,000 00 3,000,000.00 100.562 3,016,875 00 31,793.33 837 107 5 020 5.020 FHLB 3133XIAKEI 5.320 02-15-08 11-10-10 11-10-08 3,000,000.00 101.856 3,055,680.00 3,027,322.53 100.812 3,024,375.00 22,61000 863 133 4.588 2.749 11-ILMC 3128X4N56 5.250 05-12-08 02-24-11 02-24-09 1,864,000.00 101970 1,900,72080 1,894,345.66 101.243 1,887,17125 34,522.83 969 239 4.486 1686 2.918 119,559,631.50 100.020 119,578,765.65 119,579,331.68 100.073 119,643,185 50 596,331.55 159 3.032 Parks Development Corporation TexSTAR texstar 2.247 2,452,856.80 100.000 2,452,856.80 2,452,856.80 100.000 2,452,856.80 0.00 1 2.247 Texl'ool texpool 2.263 793,128 98 100.000 793,128.98 793,128 98 100.000 793,128 98 0 00 1 2.263 2,251 3,245,985 78 100.000 3,245,985.78 3,245,985 78 100.000 3,245,985 78 0.00 1 2.251 GRAND TOTAL 2.901 122,805,617.28 100.019 122,824,751.43 122,825,317.46 100.071 122,889,171.28 596,331.55 155 3.011 Page 6 of 12 First Southwest Asset Management City of Southlake CHANGE IN VALUE From 03-31-08 To 06-30-08 Security Maturity 03-31-08 03-31-08 Additions Withdrawals Interest Accrued 06-30-08 06-30-08 Description CUSIP Coupon Date Book Value Market Value Purchases Sales Received Interest Rook Value Market Value General Operating TexPool texpool 2.263 16,573,581.80 16,573,581.80 20,076,003.36 0.00 199,366 88 0.00 36,649,585 16 36,649,585 16 TcxSTAR texs(ar 2 247 22,819,410.54 22,819,410.54 82,517.51 -2,957,881.71 124,635.80 0.00 19,944,046.34 19,944,046.34 GE Capital Corp CP 369591-ID38 0.000 04-03-08 2,999,140.83 2,999,424.00 0.00 -3,000,000 00 0.00 0.00 0.00 0.00 Morgan Sta iley CP 61745AE54 0.000 05-05-08 1,990,952.22 1,994,458.00 0.00 -2,000,000.00 0.00 0.00 0.00 0 00 GE CAPITAL CORP CP 369591-IFS 1 0.000 06-26-08 2,966,245 00 2,982,309.00 0.00 -3,000,000.00 0.00 0 00 0.00 0 00 PEFCO 742651CJ9 5.870 07-31-08 6,011,21178 6,067,500.00 0.00 0.00 0.00 147,728.33 6,002,78144 6,015,000.00 FHLMC 3128X4FF3 4.500 08-04-08 2,502,100.00 2,517,560.00 0.00 0.00 0.00 45,937.50 2,500,571.20 2,504,305 00 American Express Credit CP 02581RUIL0 0.000 08-20-08 3,955,820.00 3,958,664.00 0.00 0.00 0.00 0.00 3,984,333.33 3,985,892.00 FIILB 3133XCX40 4.500 09-08-08 4,988,370.87 5,045,312.50 0.00 0.00 0.00 70,625.00 4,994,993 47 5,017,187.50 GE Capital Scrvices CP 36959RKA2 0 000 10-10-08 0.00 0 00 1,975,023.33 0.00 0.00 0 00 1,985,747 78 1,985,210.00 FHLB 3133XBJPI 4.570 10-17-08 2,997,790.53 3,036,562.50 0.00 0.00 68,550.00 28,181.67 2,998,798.28 3,016,875.00 FNMA 31398AAF9 4.900 11-03-08 3,003,466.57 3,045,000.00 0 00 0.00 73,500.00 23,683.33 3,002,007.21 3,023,437 50 FI ILB 3133XNAM I 4 400 11-21-08 3,000,000.00 3,008,437.50 0.00 -3,066,000 00 0.00 0.00 0.00 0.00 FI-ILB 3133XN1-1115 4.400 11-28-08 2,000,000.00 2,006.875 00 0.00 -2,043,511 11 0.00 0.00 0.00 0.00 FNMA 3136F3VD5 3.210 11-28-08 2,971,093.44 3,004,687.50 0.00 -3,048,150.00 0.00 0.00 0.00 0.00 FHLB 3133XNKN8 4.300 12-10-08 3,500,000.00 3,513,125.00 0.00 -3,575,250.00 0.00 0.00 0.00 000 17NMA 31359MUQ4 3.125 03-16-09 0.00 0.00 4,150,410.44 0.00 0.00 37,388.02 4,119,107.55 4,109,691.25 GE Capital Curl) CP 36959HQP5 0.000 03-23-09 0.00 0 00 2,932,950.00 0.00 0.00 0.00 2,934,191.67 2,935,710.00 FIILMC 3128X7JW5 2.265 04-14-09 0.00 0.00 2,999,613 75 0.00 0.00 14,533 75 2,992,035 75 2,986,641.00 FIILMC 3134A4UQ5 3.375 04-15-09 0.00 0.00 1,516,115.63 0 00 0.00 10,687.50 1,512,639.56 1,506,093 75 FHLB 3133XRD98 2.375 05-27-09 0.00 0.00 2,996,100.00 0.00 0.00 6,72917 2,996,473.97 2,986,875.00 FIILMC 3128X7TV6 2.625 06-12-09 0.00 0.00 4,000,875.00 0.00 000 13,125.00 4,000,000.00 3,988,988.00 FHLB 3133XREU0 2.700 06-30-09 0.00 0.00 1,499,820.00 0.00 0.00 3,487.50 1,499,834.53 1,497,187.50 F1ILB 3133XFYK6 5.375 07-17-09 0.00 0.00 1,573,587.50 0.00 0 00 30,729 17 1,540,516.26 1,537,968.75 FHLB 3133XPFF6 3.050 07-30-09 5,000,000 00 5,014,062.50 0.00 0.00 0.00 63,965.28 5,000,000.00 5,001,562.50 FIILMC 3128XGUV6 4.500 12-17-09 2,000,000.00 2,009,896.00 0 00 -2,045,000 00 0.00 0.00 0.00 0.00 FHLB 3133XNSD2 4.250 12-18-09 3,000,000.00 3,045,000.00 0.00 0.00 03,75000 4,604.17 3,000,000.00 3,022,500.00 FFCB 31331X71-0 4.800 10-15-10 2,000,000.00 2,001,875.00 0.00 -2,048,000.00 000 0.00 0.00 0.00 FNMA 31398A1IX3 5.020 10-15-10 3,000,000.00 3,039,375.00 0.00 0 00 75 700.00 31,793.33 3,000,000 00 3,016,875.00 FHLB 3133X1-IKEI 5.320 11-10-10 3,046,158.51 3,052,500.00 0.00 0.00 79,800.00 22,61000 3,027,322.53 3,024,375.00 FIILMC 3128X4N56 5.250 02-24-11 0.00 0 00 1,921,923 80 0 00 0.00 34,522.83 1,894,345 66 1,887,173.25 100,325,342.11 100,735,615.84 45,724 940 32 -26,783,792.82 684,902 68 596,331.55 119,579,331.68 119,643,185.50 Parks Development Corporation TexPool texpool 2.203 788,539.38 788,539.38 4,589.60 0.00 4,58960 0.00 793,128.98 793,128 98 TcxSTAR lexstar 2.247 2,438,838.98 2,438,838.98 14,017.82 0.00 14,017.82 0 00 2,452,856 80 2,452,856 80 3,227,378.36 3,227,378.36 18,607 42 0.00 18,607 42 0.00 3,245,985 78 3,245,985 78 GRAND TOTAL 103,552,710.47 103,961,994.20 45,743,547.74 -16,783,791.82 703,510.10 596,331.55 122,815,317.46 121,889,171.18 Page 7 of 12 First Southwest Asset Management City of Southlake General Operating INVESTMENT TRANSACTIONS From 04-01-08 7o 06-30-03 Settle Mature Call Unit Date Security CUSH, Coupon Dale Dale Quantity Price Amount PURCHASES 04-16-08 FI-ILMC 3134A4UQ5 3.375 04-15-09 1,500,000 101 065 1,515,975 00 Accrued Interest 140 63 04-16-08 GL Capital Services CP 369591UKA2 0 000 10-10-08 2,000,000 98 751 1,975,023.33 05-12-08 FI-ILMC 3128X4N56 5.250 02-24-11 02-24-09 1,864,000 101.970 1,900,720 80 Accrued Interest 21,203 00 05-19-08 PHLMC 3128X7TV6 2 625 06-12-09 11-16-08 4,000,000 100 000 4,000,000 00 Accrued Interest 875 00 05-27-08 FFILB 3133XRD98 2.375 05-27-09 3,000,000 99.870 2,996,100 00 05-29-08 1711LB 3133XFYK6 5.375 07-17-09 1,500,000 102.935 1,544,025 00 Accrued Interest 29,562.50 05-29-08 PHLMC 3128X7JW5 2.265 04-14-09 3,000,000 99 704 2,991,120 00 Accrued Interest 8,49375 05-30-08 F1ILB 3133XREU0 2.700 06-30-09 1,500,000 99.988 1,499,820 00 06-10-08 FNMA 31359MUQ4 3 125 03-16-09 4,102,000 100 451 4,120,500 02 Accrued Interest 29,910 42 06-26-08 GE Capital Corp CP 369591-1QP5 0 000 03-23-09 3,000,000 97 765 2,932,950 00 25,566,419 45 CALLS 04-15-08 FFCB 31331X7L0 4 800 10-15-10 04-15-08 2,000,000 100 000 2,000,000 00 Accrued Interest 48,000.00 05-21-08 FI-ILB 3133XNAMI 4 400 11-21-08 05-21-08 3,000,000 100 000 3,000,000 00 Accrued Interest 66,000 00 05-28-08 FHLB 3133XN11115 4 400 11-28-08 05-28-08 2,000,000 100 000 2,000,000 00 Accrued Interest 43,511 11 05-28-08 FNMA 3136F3VD5 3.210 11-28-08 05-28-08 3,000,000 100 000 3,000,000 00 Accrued Interest 48,150 00 06-10-08 FIILB 3133XNKN8 4.300 12-10-08 06-10-08 3,500,000 100000 3,500,00000 Accrued Interest 75,250 00 06-17-08 FIILMC 3128X6UV6 4.500 12-17-09 06-17-08 2,000,000 100000 2,000,00000 Accrued Interest 45,000 00 15,825,911 11 MATURITIES 04-03-08 GE Capital Corp CP 369591ID38 0 000 04-03-08 3,000,000 100 000 3,000,000 00 05-05-08 Morgan Stanley CP 61745AE54 0 000 05-05-08 2,000,000 100 000 2,000,000 00 06-26-08 GE CAPITAL CORP CP 36959FIFS 1 0 000 06-26-08 3,000,000 100 000 3,000,000 00 8,000,000 00 Page 8 of 12 First Southwest Asset Management City of Soutblake EARNED INCOME Front 03-31-08 To 06-30-08 Beginning Ending Adjusted Accrued Purchased Sold Interest Earned Accrued Amortization/ Earned Interest Interest liderest Received Interest Interest Accretion Income General Operating TcxSTAIZ (tcxstar) 0 00 0 00 0 00 124,635 80 124,635 30 0 00 0 00 124,635 80 TcxPool (lexpool) 0.00 0 00 0 00 199,366.88 199,366.88 0 00 0 00 199,366.88 GE Capital Corp CP 0 000% Due 04-03-08 (36959hd38) 0 00 0 00 0 00 0 00 0 00 0 00 859 17 859 17 Morgan Stanley CP 0 000% Due 05-05-08 (61745ac54) 0 00 0 00 0 00 0 00 0 00 0 00 9,04778 9,04778 GE CAPITAL CORI' CP 0 000% Due 06-26-08 (369591ifs 1) 0 00 0.00 0 00 0 00 0.00 0 00 33,755 00 33,755 00 PEFCO 5 870% Due 07-31-08 (742651 cj9) 59,678.33 0 00 0 00 0 00 88,050 00 147,728.33 -8,430.34 79,619 66 FI-ILMC 4.500% Due 08-04-08 (3128x4ff3) 17,812.50 0 00 0 00 0 00 28,125 00 45,93T50 -1,528.80 26,596.20 American Express Credit CP 0 000% Duc 08-20-08 (02581 rhl0) 0.00 0 00 0 00 0 00 0 00 0 00 28,513.33 28,513.33 FFILB 4 500% Due 09-08-08 (3133xcx40) 14,375 00 0 00 0 00 0 00 56,250 00 70,625 00 6,622.59 62,872.59 GL' Capital Services CP 0 000% Due 10-10-08 (369591ka2) 0 00 0 00 0 00 0 00 0 00 0 00 10,724 45 10,724 45 FIILB 4.570% Due 10- 17-08 (3133xbjp 1) 62,45667 000 000 68,55000 34,27500 28,18167 1,00775 35,282.75 FNMA 4.900% Due 1 1-03-08 (31398aa1'9) 60,43333 0 00 0.00 73,500.00 36,750 00 23,683.33 -1,459.36 35,290 64 FI ILB 4 400% Due 11-21-08 (3133xnam1) 47,666.67 0.00 66,000.00 0 00 18,333.33 0 00 0 00 18,333.33 FI-ILB 4 400% Due 11-28-08 (3133xnlih5) 29,577 78 0.00 43,511 11 0 00 13,933.33 0 00 0 00 13,933.33 17NMA 3.210% Due 11-28-08 (313613vd5) 32,902.50 0 00 48,150.00 0 00 15,247.50 0 00 28,906.56 44,154.06 FIILB 4.300% Due 12-10-08 (3133xnkn8) 46,404 17 0 00 75,250 00 0 00 28,845 83 0.00 0 00 28,845 83 FNMA 3 125% Due 03-16-09 (31359niug4) 0 00 29,910 42 0 00 0 00 7,47760 37,388.02 -1,392.47 6,085 13 GE Capital Corp CP 0 000% Due 03-23-09 (36959hgp5) 0 00 0.00 0 00 0 00 0 00 0 00 1,241 67 1,241.67 FHLMC 2 265% Due 04-14-09 (3128x7jw5) 0.00 3,493 75 0 00 0 00 6,040.00 14,533 75 915 75 6,95575 I'l-ILMC 3.375% Due 04-15-09 (3134a4ug5) 0 00 140 63 0 00 0 00 10,546.87 10,687.50 -3,33544 7,21 1 43 FHLB 2.375% Due 05-27-09 (3133xrd98) 0.00 0.00 0 00 0 00 6,729 17 6,729 17 373.97 7,103 14 FI-ILMC 2.625% Due 06-12-09(31280M) 0 00 875.00 0.00 0 00 12,250.00 13,125 00 0.00 12,250 00 FIILB 2.700"/ Due 06-30-09 (3133xreu0) 0 00 0 00 0.00 0 00 3,487.50 3,487.50 14.53 3,502.03 FI-ILB 5.375% Due 07-17-09 (3133xfyk6) 0 00 29,562 50 0.00 0 00 7,166.67 36,729 17 -3,508.74 3,657.93 FI ILB 3 050"/,, Due 07-30-09 (3133xpff6) 25,840.28 0 00 0 00 0 00 38,125 00 63,965.28 0 00 38,125.00 FIILMC 4.500% Due 12-17-09 (3123x6uv6) 26,000 00 0 00 45,000 00 0 00 19,000 00 0 00 0 00 19,000 00 FHLB 4.250% Due 12-13-09 (3133xnsd2) 36,479 17 0 00 0 00 63,750 00 31,875 00 4,604 17 0 00 31,875 00 ITCB 4 800% Due 10-15-10 (31331 x710) 44,266.67 0 00 48,000 00 0.00 3,733.33 0 00 0 00 3,733.33 FNMA 5 020% Due 10-15-10 (31398a1ix3) 69,443.33 0 00 0 00 75,300 00 37,650.00 31,793.33 0.00 37,650 00 FFILB 5.320% Due I I-10-10 (3133xlike I 1 62,510 00 0.00 0 00 79,800 00 39,900 00 22,610 00 -18,83599 21,064 01 FIILMC 5.250% Duc 02-24-I I (3128x4n56) 0 00 21,203 00 0 00 0 00 13,319 83 34,522.83 -6,375 14 6,94469 635,846.40 90,185.30 325,911 11 684,902.68 881,11364 596,331.55 77,11627 958,229.91 Parks Development Corporation 'rexSTAR (tcxstar) 0 00 0 00 0 00 14,017 82 14,017 82 0 00 0 00 14,017 82 TexPool (texpool) 0 00 0 00 0 00 4,58960 4,58960 0 00 0 00 4,58960 0 00 0.00 0.00 18,607 42 18,607 42 0 00 0 00 13,607 42 GRAND TOTAL 635,846.40 90 185,30 325,911.11 703 510.10 899,721.06 596,331.55 77,116.27 976,837.33 ti First Southwest Asset Management Page 9 of 12 City of Southlake AMORTIZATION AND ACCRETION From 03-31-08 To 06-30-08 Purchase Information Amortization/Accretion Information Purchase Date Total Adjusted Quantity Date Price Total Cost To Date To Dale Balance Cost General Operating GB Capital Corp CP 0 000% Due 04-03-08 (36959hd38) 0 00 7/10/2007 0 000 0 00 859 17 115,128,33 0 00 Morgan Stanley CP 0 000% Due 05-05-08 (61745ac54) 0 00 10/24/2007 0 000 0 00 9,04778 51,625.56 0 00 GE CAPITAL CORP CP 0 000% Due 06-26-08 (36959hfs 1) 0 00 10/2/2007 0 000 0 00 33,755 00 105,190 00 0 00 PEFCO 5 870% Due 07-31-08 (742651 cj9) 6,000,000 00 6/4/2007 100 653 6,039,180 00 -8,430.34 -36,398.56 -2,78144 6,002,781 44 FHLMC 4.500% Due 08-04-08 (3128x4f0) 2,500,000 00 11/28/2007 100 168 2,504,200.00 -1,528.80 -3,62880 -571.20 2,500,571.20 American Express Credit CP 0 000% Due 08-20-08 (02581rh10) 4,000,000 00 2/22/2008 98.590 3,943,600.00 28,513.33 40,733.33 15,666 67 3,984,333 33 FHLB 4.500% Due 09-08-08 (3133xcx40) 5,000,000 00 5/3/2007 99.279 4,963,930 00 6,622.59 31,063 47 5,006.53 4,994,993 47 GE Capital Services CP 0 000% Due 10-10-08 (36959rka2) 2,000,000 00 4/16/2008 98.751 1,975,023.33 10,724 45 10,724 45 14,252.22 1,985,747 78 FHLB 4 570% Due 10-17-08 (3133xbjp1) 3,000,000.00 9/18/2007 99 854 2,995,620 00 1,00775 3,17828 1,201 72 2,998,798.28 FNMA 4.900% Due 11-03-08 (31398aal9) 3,000,000 00 9/13/2007 100 223 3,006,690 00 -1,45936 -4,68279 -2,007.21 3,002,007.21 FHLB 4 400% Due 1 121-08 (3133xnam 1) 0 00 11/21/2007 0 000 0.00 0 00 0 00 0 00 FI ILB 4.400% Due l 1-28-08 (3133;mhh5) 0 00 11/30/2007 0 000 0 00 0 00 0 00 0.00 FNMA 3.210% Due 11-28-08 (3136f3vd5) 0.00 10/2/2007 0 000 0.00 28,906.56 50,820 00 0 00 F ILB 4.300% Due 12-10-08 (3133xnkn8) 0 00 12/10/2007 0 000 0 00 0.00 0 00 0 00 FNMA 3 125% Due 03-16-09 (31359mug4) 4,102,000 00 6/10/2008 100 451 4,120,500 02 -1,392.47 -1,392.47 -17,107.55 4,119,107 55 GE Capital Corp CP 0 000% Due 03-23-09 (36959hgp5) 3,000,000.00 6/26/2008 97 765 2,932,950 00 1,241 67 1,241 67 65,808.33 2,934,191 67 FHLMC 2 265% Due 04-14-09 (3128x7.jw5) 3,000,000 00 5/29/2008 99 704 2,991,120.00 915 75 915 75 7,964.25 2,992,035 75 FHLMC 3.375% Due 04-15-09 (3134a4ug5) 1,500,000.00 4/16/2008 101 065 1,515,975 00 -3,33544 -3,33544 -12,639.56 1,512,639 56 FIILB 2.375% Due 05--27-09 (3133xrd98) 3,000,000 00 5/27/2008 99 870 2,996,100.00 373.97 373.97 3,52603 2,996,473.97 FHLMC 2.625% Due 06-12-09 (3128x71v6) 4,000,000 00 5/19/2008 100 000 4,000,000 00 0 00 0 00 0 00 4,000,000 00 FI ILB 2.700% Due 06-30-09 (3133xreu0) 1,500,000.00 5/30/2008 99.988 1,499,820.00 14.53 14.53 165 47 1,499,834.53 FI-ILB 5.375% Due 07-17-09 (3133xi'yk6) 1,500,000.00 5/29/2008 102.935 1,544,025.00 -3,508.74 -3,50874 -40,516.26 1,540,516.26 FHLB 3 050% Due 07-30-09 (3133xpfF6) 5,000,000 00 1/30/2008 100 000 5,000,000.00 0 00 0 00 0 00 5,000,000 00 FI ILMC 4.500% Due 12-17-09 (3128x6uv6) 0 00 12/17/2007 0 000 0 00 0 00 0 00 0 00 FI ILB 4.250% Due 12-18-09 (3133xnsd2) 3,000,000 00 12/18/2007 100.000 3,000,000 00 0 00 0 00 0 00 3,000,000 00 FFCB 4 800% Due 10-15-10 (31331x710) 0 00 10/24/2007 0 000 0 00 0 00 0 00 0 00 FNMA 5 020% Due 10-15-10 (31398ahx3) 3,000,000 00 10/15/2007 100 000 3,000,000 00 0 00 0 00 0 00 3,000,000 00 FI-ILB 5.320% Due 11-10-10 (3133xhkel) 3,000,000 00 2/15/2008 101 356 3,055,680 00 -18,83599 -28.35747 -27,322.53 3,027,322 53 FHLMC 5.250% Due 02-24-11 (3128x4056) 1,864,000.00 5/12/2008 101 970 1,900,72080 -6,37514 -6,37514 -30,34566 1,894,34566 GRAND TOTAL 62,985,134.15 77,116.27 323,329.93 -19,700.19 62,985,700.19 First Southwest Asset Management Page 10 of 12 City of Soutltlake PROJECTED FIXED INCOME CASH FLOWS BeginningJidy 1, 2008 SECURITY DESCRIPTION JUL AUG SEP OCr NOV DEC JAN FEB MAR APR MAY JUN TOTAL AGENCY COUPON SECURITIES PEFCO 5.870% Due 07-31-08 (742651c19) 6,176,100.00 6,176,100.00 Fi1LMC 4.500%Due08-04-08(3123x4ff3) 2.556,250.00 2,556,250.00 FIILB 4 500% Due 09-08-08 (3133xcx40) 5,112,500 00 5,112,500.00 1,11 LB 4.570% Due 10-17-08(3133xbjp1) 3,068,55000 3,068,55000 FNMA 4 900% Due 11-03-08 (31398aaf9) 3,073,500.00 3,073,500 00 FNMA 3 125% Due 03-16-09 (31359nurg4) 64,093 75 4.166,093 75 4,230,187 50 FIiLMC 2.265% Due 0444-09(3128x7jw5) 33,975.00 3,033,97500 3,067,95000 FIfLMC 3.375% Due 04-15-09(3134a4ug5) 25,312.50 1,525,312.50 1,550,62500 FI ILB 2.375% Due 05-27-09 (3133xrd98) 35,625.00 3,035,625.00 3,071,250 00 Fl-ILMC 2.625% Due 06-12-09 (3128x7tv6) 52,500.00 52,500 00 4,007,563.33 4,1 12,583 33 11-1LB 2.700% Duc 06-30-09 (3133xicu0) 1,543,875.00 1,543,875 00 FFCB 3 125°.. Due 07-01-09 (31331yz37) 46,875.00 46,875 00 FHLB 5 375% Due 07-17-09 (3133xfyk6) 40,312.50 40,312.50 80,625 00 F14LB 3.050% Due 07-30-09 (3133xpff6) 76,250.00 76,250 00 152,500.00 FHLB 4.250% Due 12-18-09(3133xusd2) 63,750.00 63,750.00 127,500.00 17NMA 5.020% Due 10-15-10 (31398alix3) 75,300.00 75,300.00 150,600.00 FllLB 5.320% Due II-10-10(3133xhke1) 79,800.00 79,800.00 159,600.00 171-ILMC 5.250% Due 02-24-11 (3128x4u56) 48,930.00 48,930 00 97,860 00 Total 6,292,662.50 2,605,180.00 5,176,593 75 3,203,137.50 3,241,425.00 63,750.00 163,437.50 48,930.00 4,166,093 75 4,634,587.50 3,167,925 00 5,615,208.33 38,378,930.83 COMMERCIAL PAPER American Express Credit CP 0 000% Due 08-20-08 4,000,000.00 4,000,000.00 (02581rb10) GE Capital Services CP 0.000% Due 10-10-08 2,000,000.00 2,000,001) 00 (369591ka2) Page First Southwest Asset Management I I of 12 City of Southfake PROJECTED FIXED INCOME CASH FLOWS Beginning Juh, 1, 2008 SECURITY DESCRIPTION JUL AUG SEP OCT NOV DEC JAN FEII MAR APR MAY JUN TOTAL GE Capital Corp CP 0.000% Doc 03-23-09 3,000,000.00 3,000.000 00 (36959hgp5) Total 4,000,000.00 2,000,000.00 3,000,000.00 9,000,000.00 Grand Total 6,292,662.50 6,605,180.00 5,176,593.75 5,203,137.50 3,241,425.00 63,750.00 163,437.50 48,930.00 7,166,093.75 4,634,587.50 3,167,925.00 5,615,208.33 47,378,930.83 Page 12 of 12 First Southwest Asset Management CITY OF SOUTHLAK.,-E FINANCE DEPARTMENT CITY OF SOUTHLAKE CAPITAL IMPROVEMENTS PROGRAM QUARTERLY STATUS REPORT June 30, 2008 The Capital Improvements Plan (CIP) establishes a five (5) year funding schedule for the purchase, construction or replacement of physical assets of the City. Capital improvements typically have a useful life of over ten (10) years and a value greater than $10,000. Most CIP projects typically involve major infrastructure development and improvement. CIP projects are primarily funded through General Obligation (GO) bonds and Revenue Certificates of Obligation. The City of Southlake's CIP Quarterly Status Report has been designed as a resource tool to be utilized by City staff, citizens of Southlake, and the community at large. The objective of this report is to provide timely and accurate information in a user friendly format regarding construction and other improvement projects in the City of Southlake. Projects within the City's CIP are categorized as follows: Street and Drainage Improvements, Traffic Management Projects, Water System Improvements, Sewer System Improvements, Crime Control Projects, Strategic Initiative Projects and Southlake Parks Development Corp. Improvement Projects. 1400 Main Street Suite 440 • Southlake, TX 76092 (817) 748-8042 • www.ci.southlake.tx.us TABLE OF CONTENTS Page Streets and Drainage Improvements Traffic Management Projects Water System Improvements Sewer System Improvements Crime Control Projects ..........................................................................11 Strategic Initiative Projects .....................................................................12 Southlake Parks Development Corp Improvements ....................................14 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Street & Drainage Improvement Projects Report Date: June 30, 2008 Title: Location: Project Description: FM 1938 Right-of-Way East side of Randol Mill from On December 31, 2001, the TCC approved a Minute FM 1709 north to the city limits Order giving the extension of FM 1938 (FM 1709 to SH 114) along the Randol Mill ROW Priority II funding status and Farm to Market designation. This means the FM 1938 extension project will likely be funded. Tarrant County will be acquiring 120' of ROW for the project. An additional 16'-20' will need to be acquired by the City of Southlake to provide a buffer, landscaping, a trail, and a 24" water line. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 580,000 $ 173,243 $ 406,757 Funding Source(s): Status: G O Bonds, G.O Bond Interest Waiting on TXDOT and FEDs to complete environmental studies. Tarrant County, through an interlocal agreement with the City, is in the process of obtaining right-of-way on the City's behalf Completion Date: Title: Location: Project Description: N. White Chapel Ultimate N. White Chapel from Emerald This project is for the design of the ultimate roadway Roadway to State Hwy 114 section (4 lane divided) as depicted by the Thoroughfare Plan. This project also includes necessary drainage improvements. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 7,095,000 $ 202,869 $ 6,892,131 Funding Source(s): Status: G O. Bonds, G.O Bond Interest, Roadway Impact funds Design and engineering are in progress. Completion Date: Summer 2009 Paae 1 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Street & Drainage Improvement Projects Report Date: June 30, 2008 Title: Location: Proiect Description: 2006 Street rehabilitation & Various locations throughout Design and rehabilitation or reconstruction of streets as reconstruction as required by the City recommended by the Pavement Management System. the Pavement Management Project includes pavement rehab, HMAC overlays and System concrete street section replacements. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,769,275 $ 1,571,956 $ 197,319 Funding Source(s): Status: G.O. Bonds, G.0 Bond Interest, residual funds Project is complete Completion Date: Summer 2008 Title: Location: Project Description: Sidewalks throughout the city Various locations Construction of sidewalks in areas where staff has received requests for the installation of sidewalks, primarily around schools and areas where sidewalks would improve pedestrian safety. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 924,070 $ 303,983 $ 620,087 Funding Source(s): Status: G.0 Bonds, Strategic Initiative Fund transfer In progress Completion Date: When funds are depleted Title: Location: Project Description: Roadway and drainage Shumaker Lane Construct paving and drainage on Shumaker Lane. This improvements street is a gravel street with storm water run-off that floods property to the west in Hunter's Ridge subdivision. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 409,218 $ 18,875 $ 390,343 Funding Source(s): Status: Strategic Initiative Fund transfer Construction contract has been awarded Completion Date: Fall 2008 Page 2 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Street & Drainage Improvement Projects Report Date: June 30, 2008 Title: Location: Project Description: Roundabout construction White Chapel at Continental Reconstruct the intersection to improve traffic flow and drainage. The design will include a traffic analysis to determine the optimal intersection. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 750,000 $ 97,415 $ 652,585 Funding Source(s): Status: Strategic initiative fund transfer, Roadway Impact fund Engineering is currently underway Completion Date: Spring 2009 Title: Location: Proiect Description: Roundabout construction Dove at N. White Chapel Reconstruct the intersection to improve traffic flow and drainage. The design will include a traffic analysis to determine the optimal intersection. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 800,000 $ 73,276 $ 726,724 Funding Source(s): Status: Strategic Initiative Fund transfer, Roadway Impact fund Engineering is currently underway Completion Date: Spring 2009 Title: Location: Project Description: Roundabout construction Dove at N. Carroll Reconstruct the Dove St. and N. Carroll Ave intersection to improve traffic flow and drainage. The design will include a traffic analysis to determine the optimal intersection. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 750,000 $ 73,276 $ 676,724 Funding Source(s): Status: Strategic initiative fund transfer, Roadway Impact fund Engineering is currently underway Completion Date: Spring 2009 Page 3 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Street & Drainage Improvement Projects Report Date: June 30, 2008 Title: Location: Project Description: Trail improvements East Dove Road from White Chapel Trail system implementation in key, high-use areas to to Estes Park entrance to Carroll compliment existing trails, make critical connections, or Middle School. construction as part of other capital projects. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 347,000 $ 17,344 $ 329,656 Funding Source(s): Status: G.O Bonds, Strategic Initiative Fund transfer Design is complete and project will be bid this summer Completion Date: Winter 2008 Title: Location: Proiect Description: N. Kimball Avenue N. Kimball Ave from SH 114 to Reconstruct ultimate section (4 lanes divided) of N. Kimball Dove Rd. Ave from SH 114 to Dove Rd. Ultimate section would add traffic lanes to encourage re-development of the Mesco site and alleviate traffic congestion. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,100,000 $ 204,965 $ 895,035 Funding Source(s): Status: Roadway Impact fees, G.O Bonds Design and engineering currently underway Completion Date: FY 2010-11 Page 4 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Traffic Management Projects Report Date: June 30, 2008 Title: Location: Proiect Description: Agreement with TXDOT for Jellico Court East and West Construction of intersection improvements with construction of deceleration Brock Dr, Meadowlark Ln., deceleration lanes along FM 1709 from Jellico Circle lanes at various locations Southridge Lakes Pkwy & West to Bank Street. along FM 1709 Waterford Dr., Ginger Ct., Stone Lakes PI., Timber Lake PI., Lake Crest Dr , Bicentennial Park, Diamond Blvd./Byron Nelson Pkwy., Foxborough Ln., Miron Dr, Westwood Dr., Commerce St., Bank St. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 500,000 $ 5,976 $ 494,025 Funding Source(s): Status: G.O. Bonds, G.O Bond Interest Working to obtain TXDOT approval of the design. Completion Date: Title: Location: Project Description: Design of right turn deceleration Various locations on Southlake Professional services agreement with TranSystems lanes Blvd. Corporation. Services will include design, right-of-way surveying with digital aerial photogrammertry, preparation of construction plans and specifications, and preparation of construction documents. The project will also address drainage and culvert issues that are necessary to accommodate the widening. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 343,123 $ 232,283 $ 110,840 Funding Source(s): Status: G.O. Bonds, G.O Bond Interest Close to completion Completion Date: Fall 2008 Page 5 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Water System Improvement Projects Report Date: June 30, 2008 Title: Location: Project Description: 12" waterline Along E. Continental Blvd. from Replace existing 8" water main with approximately 1,200 Byron Nelson Pkwy. to LF of 12" water main. Tie in existing 8" at Wyndsor Champion's Way Creek, tie in existing 8" at Sarah Park Trail, and tie in existing 6" at W Perry & E. Perry Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 276,650 $ 25,170 $ 251,480 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Contract has been awarded (issued in 2006) Completion Date: Fall 2008 Title: Location: Proiect Description: Florence 1.5 MG elevated Brewer Dr just south of Construction of a 1.5 million gallon water tower to replace water tank Florence Rd. the existing 0.5 million gallon tank on Florence Dr. The capacity of the existing tank is inadequate and has to be refilled many times per day, resulting in cost of pumping, electricity and shortage of supply to the customers. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 2,860,000 $ 2,362,490 $ 497,510 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Construction 90% complete. Completion Date: Summer 2008 Title: Location: Project Description: Repaint two elevated water tanks Bicentennial Park and at E. Dove Repainting of the interior and exterior of two elevated water Ave. and N. White Chapel Blvd. tanks. The repainting is in line with the expected life of the coatings applied during their original construction, Dove in 1986 and Bicentennial in 1988. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 793,600 $ 710,061 $ - Paqe 6 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Water System Improvement Projects Report Date: June 30, 2008 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Complete Completion Date: Complete Title: Location: Project Description: Repaint ground storage tanks Pearson East and West The Pearson East tank needs the interior of the tank painted. A routine inspection revealed that the interior was failing and needed repair. The exterior of the Pearson West tank has faded and needs to be repainted with a protective top coat to improve its aesthetics. Project includes plans, project administration, QA and testing. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 622,566 $ 622,566 $ - Funding Source(s): Status: Tax & Revenue Certificates of Obligation Complete Completion Date: Complete Title: Location: Project Description: 30" water supply line to TW King TW King Pump Station #2 Construct approximately 32,000 linear feet of 24" water Pump Station #2 transmission line in order to fully utilize pump station #2 and the ground storage tanks. Currently, this pump station is not connected to the Fort Worth supply line. It has to be back fed from pump station #1 This process is inefficient and reduces the City's ability to pump water throughout the system. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 5,476,000 $ 146,651 $ 5,329,349 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Project is currently in preliminary design and engineering. Completion Date: FY 2009/10 Panp 7 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Water System Improvement Projects Report Date: June 30, 2008 Title: Location: Project Description: 12" water line along Randol Mill from Randol Mill Bend This project involves replacing 8300 linear feet of existing 6" Randol Mill to FM 1709 water line along this portion of Randol Mill. The design was completed during FY 01-02 from FM 1709 to Florence. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 430,000 $ 95,000 $ 335,000 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Completion Date: Fall 2009 Title: Location: Project Description: 12" water line along Highland from Shady Oaks This project involves upgrading 5500 LF of 6" pipe with 12" Highland to SH114 water main. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 500,000 $ 22,240 $ 477,760 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Engineering and design are in progress Completion Date: Spring 2009 Title: Location: Project Description: 20" water line Across E. Southlake Blvd. at Improve water line at indicated location N. Carroll Ave. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 264,890 $ 158,413 $ 106,478 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Project 77% complete Completion Date: Summer 2008 Pane R CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Sewer System Improvement Projects Report Date: June 30, 2008 Title: Location: Proiect Description: Neighborhood sanitary sewer Quail Creek Estates, Woodland Install 8" sanitary sewer lines to convert neighborhoods installation, convert from septic Heights, and Shumaker Lane from septic to sewer 7,000 LF in Quail Creek and Woodland Heights, 930 LF on Shumaker Lane from Hunter's Creek to Sunshine Ln. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 2,254,735 $ 568,391 $ 1,686,344 Fundinq Source(s): Status: Tax & Revenue Certificates of Obligation Project is under construction, 26% complete (issued in 2006) Completion Date: Fall 2008 Title: Location: Proiect Description: N-1 sewer analysis and meter N-1 sewer line from Southlake and Sewer system capacity and structural integrity evaluation station improvements for TRA Westlake border to north of and miscellaneous meter station improvements necessary improvements Kirkwood Blvd. to satisfy TRA requirements for turnover of ownership and maintenance of the N-1 line north of the Southlake city limit. Completion of the turnover will shift Westlake billing responsibility to TRA. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 200,000 $ 37,191 $ 162,809 Funding Source(s): Status: Residual funds from other projects Professional services contract has been awarded to RJN Group, Inc. for the evaluation of the condition and capacity of the N-1 sewer line. Completion Date: Contract with RJN is complete Title: Location: Project Description: 8" sewer line Heatherwood Estates This project involves providing sanitary sewer service to the Royal Oaks Estates indicated neighborhoods which are experiencing problems Twin Creek Estates with septic systems; also to improve groundwater quality within the city Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,000,000 $ 35,785 $ 964,215 Paqe 9 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Sewer System Improvement Projects Report Date: June 30, 2008 Funding Source(s): Status: Tax & Revenue Certificates of Obligation Engineering and design in progress (issued in 2008) Completion Date: Summer 2009 Page 10 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Crime Control Fund Projects Report Date: June 30, 2008 Title: Location: Proiect Description: DPS East facility Central DPS facility to be located Design and construction of a centrally located DSP facility at 667 N. Carroll Ave. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 14,180,250 $ 3,988,080 $ 10,192,170 Fundina Source(s): Status: Crime Control sales tax Contract for design services has been awarded to RPGA Design Group. Contract for construction management services has been awarded to Lee Lewis Construction. Completion Date: Fall 2009 Title: Location: Proiect Description: Town Square video surveillance Town Square To strategically place fixed and moveable video cameras at Town Square and Grand Ave. Cameras will be monitored and recorded. Will help provide a sense of safety and security in Town Square, as well as provide a valuable tool in the prevention and investigation of crime. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 650,000 $ 292,868 $ 357,132 Funding Source(s): Status: Crime Control sales tax 31 cameras are installed at the East and West parking garages, Hilton Hotel, Harkins Theatre and Town Hall. Completion Date: Fall 2008 Paae 11 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Strategic Initiative Fund Projects Report Date: June 30, 2008 Title: Location: Proiect Description: Urban design study completion, NA Initiatives to enhance the quality of life or aesthetics for implementation and branding Southlake. Funding is to complete the Urban Design Study and related branding project, as well as initial implementation of the Urban Design Study recommendations. Projects may include medians, street trees, textures, portals, sidewalk treatments, traffic calming, sculptures, and placement of underground utilities. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 400,000 $ 182,726 $ 217,274 Funding Source(s): Status: Strategic Initiative Fund Study is complete and brand has been implemented. Remaining funds will be used to get projects started. Completion Date: Spring 2009 Title: Location: Project Description: Purchase and implementation of City wide Implementation of Phase II of the IT Alignment Study This Finance, Utility Billing and Human includes the purchase of Finance, Utility Billing and Human Resource Management software Resource Management foundational software; the purchase of hardware for the software applications; data conversion associated with the software applications. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,240,952 $ 1,199,312 $ 41,640 Funding Source(s): Status: Strategic Initiative Fund All applications have gone live. Completion Date: Fall 2008 Page 12 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Strategic Initiative Fund Projects Report Date: June 30, 2008 Title: Location: Project Description: Purchase and implementation of City wide Implementation of Phase II of the IT Alignment Study. This Public Operations software. includes selection assistance for the Public Operations Software, as well as the purchase of the software applications and implementation management; also includes the purchase of CRIMES software and hardware for RMS/CAD operations. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,185,260 $ 542,714 $ 642,546 Fundina Source(s): Status: Strategic Initiative Fund Software has been installed; in the process of set up as well as staff training on various parts of the software. Completion Date: Summer 2009 Page 13 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Southlake Parks Development Corp. Improvement Projects Report Date: June 30, 2008 Title: Location: Proiect Description: Nature Center Improvements Tucker property adjacent to Design, engineering and construction of a permanent Bob Jones Park Nature Center using the Tucker ranch house. Includes basic interior remodeling and upgrades, ADA accessible entries, crushed granite drive, parking and site amenities. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 972,000 $ 961,946 $ Funding Source(s): Status: Sales Tax Revenue Bonds Project is complete Completion Date: Spring 2008 Title: Location: Project Description: Royal & Annie Smith Park 3001 Johnson Rd. Design, engineering and construction of an asphalt drive developments and parking area off Johnson Road , 24' pavilion, irrigation, amenities such as benches, etc. farm implement display, fine grading, landscaping, trail additions and playground. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 367,000 $ 32,443 $ 334,557 Funding Source(s): Status: Sales Tax Revenue Bonds Design is complete and project has been bid Completion Date: Fall 2008 Title: Location: Project Description: Liberty Park at Sheltonwood Dove at Ridgecrest Design, engineering and construction of crushed granite drive and parking, 2 - 24' pavilions, irrigation, amenities, landscape improvements, utility upgrades, basic remodeling of existing pavilion, trails (2,300 I.f playground, sand volleyball and horshoes. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 606,000 $ 56,168 $ 549,832 Page 14 CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Southlake Parks Development Corp. Improvement Projects Report Date: June 30, 2008 Funding Source(s): Status: Sales Tax Revenue Bonds Design is complete and project has been bid Completion Date: Fall 2008 Title: Location: Proiect Description: Bob Jones Park development for Bob Jones Park Design, engineering and construction for parking lot parking lot improvements and loop improvements south of the existing softball fields and road improvements to the gravel loop road parking lot. Additional parking will alleviate current parking shortages. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 371,650 $ 363,559 $ - Funding Source(s): Status: Sales Tax Revenue Bonds Project is complete Completion Date: Summer 2008 Title: Location: Proiect Description: Land acquisition for multi-use Various Purchase of approximately 40-acres for lighted sports facility complex. A new Community Park would be ideal to house a large number of the fields and minimize the alternative of decentralizing lighted facilities. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 2,554,000 $ 1,087,918 $ 1,466,082 Funding Source(s): Status: Sales Tax Revenue Bonds Expenditures to date have been for Miles property at Bob Jones Park. Completion Date: When funds are depleted D... 1r CITY OF SOUTHLAKE, TEXAS FY 2007-08 CAPITAL IMPROVEMENTS PLAN Southlake Parks Development Corp. Improvement Projects Report Date: June 30, 2008 Title: Location: Proiect Description: Texas Parks and Wildlife trail Walnut Grove trail system Improvements to the Walnut Grove trail system. restoration grant, matching fund Bob Jones Trailhead - 4 covered picnic tables and corral participation fencing. Walnut Grove Trailhead - 2 covered picnic tables. Erosion control and improvements to trail surfaces and natural water crossings. Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 44,950 $ 4,303 $ 40,647 Funding Source(s): Status: Sales Tax Revenue Bonds, On hold Matching Funds from Southlake Mounted Patrol Completion Date: Fa112008/Spring 2009, weather permitting Title: Location: Proiect Description: Bicentennial Park design and Bicentennial Park Phase I improvements as part of the Bicentennial Park development schematic design include. Shady Oak entrance/road/round-a-bout; west baseball four-plex and parking; drainage improvements with pond enhancements; FM 1709 entrance improvements; Evan's house modifications; Tennis Courts (from Phase 111) Total Estimated Cost: LTD Actual Cost: Cost to Complete: $ 1,200,000 $ 713,000 $ 487,000 Funding Source(s): Status: SPDC Operating Fund Design is 95% complete, construction documents are 70% complete Completion Date: Spring 2009 Panes 16 * a> . First Southwest Asset Management • Quarter i The overriding theme of the second quarter was inflation, particularly During the quarter, Fed officials convinced the markets that their a rapid rise in crude oil prices that shattered previous inflation- most pressing concern was inflation and as a result, short yields adjusted highs. Since the beginning of 2008, oil is up 46%. On a moved significantly higher. Some investors projected Fed rate hikes year-over-year basis, the increase is a stunning 114%. By the end of as soon as the August FOMC meeting and the bond market priced-in June, the ongoing weakness of the dollar combined with increasing 75 bps of tightening before year end. The two-year Treasury-note global demand had driven prices above $140 per barrel. Ongoing yield opened the quarter at 1.59% and reached an intraday high of talk of an impending Israeli attack on Iranian nuclear facilities only 3.10% in mid-June even after what was likely a final 25 by rate cut in compounded the problem. The record oil prices pushed gasoline to April. But as the quarter drew to a close, economic releases proved all-time highs, which quickly gobbled up discretionary income, the especially bad, stocks plunged, bonds rallied in a classic flight-to- essential ingredientto economic growth. quality and difficult choices for the Fed got even tougher. But so far, high oil prices haven't been able to reduce demand in a significant way, because there isn't a ready substitute. Although • there has been an encouraging reduction in the total number of miles Americans are driving in recent months, drivers are Fed officials all talked tough on inflation during the quarter. This consuming nearly as much gas as they did three years ago when abrupt change in focus put an end to market anticipated rate cuts, it cost half as much. As energy prices rise, so do production and and shifted expectations to aggressive rate hikes. Some of the shipping costs. In late May, Dow Chemical announced that huge comments left little room for any interpretation other than that the increases in commodity prices would force the company to pass Fed would take its inflation fighting role seriously. In late April, the along some of its higher production costs to consumers. Dow's Wall Street Journal suggested in a front-page story that the Fed projected 20% increase would be their biggest price jump in more might soon pause in its easing campaign. On April 30th, the FOMC than 100 years. Bloomberg reported that General Mills, Monsanto cut rates once more to 2.0%, but by the end of May, Fed officials and Hershey could soon follow. Overall food prices are also rising at had a more pressing concern. Dallas Fed President Richard Fisher, an alarming rate, up 5% year-over-year, the fastest rise since 1990. a voting member of the FOMC, said in late May that "if inflation And this inflationary pressure is on a global scale. In early June, developments and more importantly, inflation expectations continue CNN reported that European Central Bank President, Jean-Claude to worsen, I would expect a change of course in monetary policy Trichet, said that the ECB was in a state of "heightened (inflation) to occur sooner rather than later, even in the face of an anemic awareness" and suggested that a rate increase could come as early economy" and added that he "...didn't know a single person on as July. Trichet's comment hammered an already reeling U.S. dollar the FOMC that wasn't concerned about inflation." Minneapolis that Bernanke had tried to jawbone higher only days earlier. Fed President, Gary Stern, also a voting member, echoed Fisher's concerns claiming that inflation was "too high" and that the Fed Although record energy costs are clearly inflationary, they also would need to consider the timing and magnitude of any reversal in make sustainable economic recovery difficult. Consumers are interest rate reductions. A couple of weeks later, Bernanke said that supposed to spend their way out of recessions. The government's "...the latest round of increases in energy prices has added to the $140 billion dollar stimulus plan was intended to give them the means upside risk to inflation and inflation expectations." That same day, to do exactly that. However, rising gasoline prices have completely Philly Fed President Charles Plosser told CNBC that the Fed would nullified any lasting advantage thatthe checks would have provided. "need to act preemptively" to stem inflation and that it was "...clear Not only that, but unemployment is on the rise, the stock market is that rates would have to rise". It's hard to imagine a scenario in falling like a stone and consumer confidence is getting clobbered. which the Fed would resume its easing campaign. The next move The nation's economic problem was highlighted by the Central Bank should be up. of Canada in April when it cut its' key interest rate by a larger-than- expected 50 bps and reasoned that it was "now projecting a deeper Summary of FOMC Monetary Policy Actions and more protracted slowdown in the U.S. economy." So, the Fed's in a box. Its' dual objectives both need major attention. The FOMC 11 April 30th - Fed cuts funds target by 25 bps to 2.00% needs to simultaneously cut rates to stimulate anemic growth and 2) June 25th - Fed leaves monetary policy unchanged. raise rates to squelch inflation and prop up the dollar. H . 200- 11 DO _ 150 ~ o00 1DO an 9DO E 5: € eoD 50 .Y 700 D x _ a Z 60D - Existing Home Sales 5, -5O New Home Sales SOG 4 :1' -100 m D D o Z o T g 4D0 O c 0 c 0 ° o o o m ¢ in °m m m m V V m g „b m Non-Farm Payroll New and Existing Home Sales Total Change in Thousands Annualized by Month • liPAIMIM . • Both new and existing home sales have risen slightlyfrom recentlows. C It's possible that housing may have reached a bottom, but if this proves to be the case, it'll likely be quite some time before any significant The Conference Board's measure of consumer confidence plunged bounce occurs. There is simply too much inventory and not enough from 57.2 to 50.4 in June, the lowest point since February 1992, while financially-able, confident and credit-worthy buyers. The record home the future expectations index reached an all-time record low for the sales of recent years were fueled by historically low mortgage rates, series. The University of Michigan sentiment index fell for the fifth lax lending standards, questionably innovative loan practices and straight month in May to 56.4, the lowest since the 1980 recession. brisk economic growth. All of these are now gone. Surprisingly, both confidence surveys were taken in the midst of a period in which most Americans had already received or were Mortgage delinquencies have hit an all-time high and the total number expected to find rebate checks in their mailboxes. Still, there was of foreclosed homes has now topped the million mark. The home plenty for consumers to fret over. Skyrocketing gasoline prices are vacancy rate rose to an all-time high of 2.9% and home values keep on a constant reminder of dwindling savings accounts. Supposedly, falling.The April S&P Case-Shiller home-price index dropped by 15.3% every penny of pump price increasetakes $1.3 billion out of consumer over the past year and has declined in each of the past 16 months. pockets. With the average pump price up $1.14 since last year, a Thirty-year mortgage rates rose to an eight-month high of 6.57% in whopping $140 billion in spending power has virtually evaporated. As June - ironically this is a higher average lending rate than before the bad as that sounds, consumer woes weren't restricted to petroleum. Fed starting cutting rates in September. Since bloated inventories Tumbling home prices, rising unemployment and a stock market snuff out new construction, housing starts recently fell to their lowest poised on the brink of an official bear market absolutely gouged level in more than 17 years, while single family building permits have household net worth in the second quarter. In fact, Merrill Lynch plunged 41%from last year. estimated that$1.2 trillion in stock market and home equity value was wiped out during the quarter, while food and energy cost increases Easier credit might spark sales and help move the massive inventory, are sapping discretionary spending at an annual loss rate of $300 but cautious lenders just aren't cooperating. The Fed's Senior Loan billion. So, there was little apparent incentive to spend those rebate Officer Survey for April revealed that credit conditions were tightened checks. But despite a national savings rate below one percent, spend further during the quarter, even after 225 basis points of easing in they did, as retail sales doubled forecasts and rose by a full 1.0% in 2008. Surprisingly, 60% of lenders indicated they had tightened their May. One of the more telling things was what shoppers spent those standards on prime mortgages during the prior quarter. Housing could checks on. Auto sales tumbled to a 15-year low in May, but bicycle well be an anchor on economic growth for years to come. sales were up 5% over the previous year. Leisure travel was down big, but television sales sky-rocketed. This money-saving trend has spawned the word "staycation", used to describe the practice of E ME 11411MN • using vacation time to simply relax at home. The labor market weakened during the quarter and offered little hope ' • of near-term improvement. Non-farm payrolls were negative for the sixth consecutive month,falling by a larger-than-expected 62k in June, while significant downward revisions to prior months pushed payroll Late spring floods in the Midwest dealt a cruel blow to corn prices, losses to 438k for the first half of 2008. By contrast, nearly 1.1 million which closed the first half of 2008 up 66% from the beginning of the jobs were created in 2007. The May unemployment rate jumped from year. Overall food prices jumped 0.9% in May-the largest one-month 5.0% to 5.5%, the biggest single month increase in more than 22 years. increase since January 1990. In the past 12 months, the overall price Predictably, much of the reported job loss and rise in unemployment is of food has jumped by 5%, also the biggest increase since 1990. There concentrated in the feeble construction and manufacturing sectors. is little reason to expect a retreat in food prices in the near future. S • • Likewise,the price of factory raw materials are on the rise. The prices paid index of the June ISM survey rose to 91.5, the highest since July Predicting what the Fed will do (and when) is a huge challenge 1.979. Energy price increases are apparentto anyone who drives bythe as the U.S. economy stumbles while global inflation rises. Fed Exxon station, but related price increases are less evident. According officials have made no secret of their concern over mounting to Business Week, major U.S. airlines will spend $60 billion on fuelthis price pressures, but threatening to increase the funds target year, a 400% increase from 2000. Because of this, the major carriers doesn't equate to actually pulling the trigger. The housing are projected to lose an average of $60 per roundtrip passenger and sector, highly sensitive to interest rates, is still in the midst are expected to lose a combined $7.2 billion this year. The airlines of what many would consider a severe recession. The DOW have responded with fare increases and newfees, along with reduced is fast approaching an official bear market of nearly a 20% route options and fewer and fewer perks. decline and 2,800 point drop from the October 2007 highs. Consumer expectations are at their lowest point since the Overall CPI and PPI continue to rise, but core inflation rates, which University of Michigan's survey was created more than 50 exclude food and energy prices are reasonably well behaved. Core years ago. Vehicle sales have just fallen to 15-year lows as CPI is up 2.3% through May, a bit lowerthan in 2007. A large part of the light truck buyers have disappeared right along with $3 per reason hastodowiththedrop inhousing costs.TheFedhastraditionally gallon gasoline. Business payrolls have been negative for the focused on the core rate of inflation. This habit has allowed them to past six months. The unemployment rate is nearing a four-year cut rates aggressively in 2008 in the face of rising commodity prices, high. The ISM manufacturing survey has indicated contraction but now many are questioning whether achieving well-behaved core for much of 2008 and the non-manufacturing index slipped inflation should be the Fed's objective, as persistent headline inflation into contraction territory in June. If one considers the notion would have a tendency to bleed through to the core over time. The that the Fed keeps inflation in check by raising interest rates Fed seems to have picked up on this notion and has been rattling its to slow the economy, then tightening monetary policy at this inflation fighting saber. point is hard to fathom. S • The other side of the argument is that inflation expectations are a bigger problem than inflation itself. The Fed can try to control these expectations by talking a tough game and then After a first quarter in which the DOW tumbled 7.6% with a record fall following through with moderate tightening. A case could be of over 1,000 points, second quarter damage nearly equaled the first made that by raising rates, the Fed might be able to ratchet as the DOW dropped by another 7.44% or 913 points. A severe late down inflation premiums on the long end of the curve and June plunge was led by General Motors, whose stock hit a 53-year indirectly lower fixed-term mortgage rates, the opposite of low after Fitch cut its rating to B-, six categories below investment what they've managed to achieve through 325 bps of easing. grade. At one point, all 30 companies in the DOW were in the red for Another benefit to tightening the funds rate would be its the quarter. The S&P fared better, and oddly enough the NASDAQ positive effect on the dollar. A strengthening dollar should registered a slight gain. help rein in oil prices, which should lower gasoline prices and boost consumer discretionary income. Since consumer spending fuels GDP growth, the extra dollars could help spur economic growth. DOW 500 NASDACI S&P 3/31/08 12,263 1,323 2,2279 Both arguments probably make some sense, which is why 6/30/08 11,350 1,281 2,293 there seems to be disagreement among the experts. Merrill, % Change for Q2-2008 -7.44% -3.2% -.06% UBS, Lehman, Deutsche Bank, First Tennessee and Moody's are among those firms still calling for rate cuts after a brief Fed pause. JP Morgan is the only Primary Dealer firm calling ' for a rate hike this year, although a number of lesser known nterestlRates firms had forecast tightening as well. The most likely direction for interest rates is higher, but the fragile economy will most likely postpone any rate hikes until sometime in 2009. In the Funds • meantime, the high degree of uncertainty should create Last 3/31/08 2.25% 1.32% 1.49% 1.59% 2.44% 3.41% significant market volatility and continued headaches for policy makers. High ' 2.01% 2.42% 3.04% 3.76% 4.27% Low 1.08% 1.39% 1.59% 2.44% 3.41% Scott McIntyre, CFA End 6/30/08 2.00% 1.74% 12.16%12.62% 3.33% 3.97% Senior Portfolio Manager July 8, 2008