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COSL Quarterly Review
CITY OF SOUTH Al<,,,E For the period ended March 31.,2015 SOUTHLAKE TEXAS Finance Department's Quarterly Rev i*ew For the period ended March 31, 2-015 City of Southlake April ?015 Integrity- 1 Innovation P Accountability ♦ Commitment to Excellence ♦ Teamwork To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Re: Second Quarter FY 2015 Financial Report Date: April 21, 2015 The finance department is pleased to submit a financial report for the second quarter of FY 2015 for the period ended March 31, 2015. This report contains financial statements for the City's operating funds and selected special revenue 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, $18,060,007 of $19,561,715 or 92.3% 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 2015 is $12,022,000. For FY 2015 second quarter (October through February) the City has collected $6,785,221 in sales tax. This is 51.4% or $2,398,266 above the projected amounts to date. The increase is due to a couple of reasons, 1) a large payment received with January collections as a result of an audit of prior collections covering the period from 2010 through 2013 and 2) the budget collections are net Grand Avenue 380 agreement and actual collections include 100% of Grand Avenue collections sales tax. Net the audit adjustment and the Grand Avenue 380 payments, sales tax collections are 9.9% above budget. City staff will continue to monitor the economic environment and make any necessary budget amendments during the budget process this summer. Franchise fees. Franchise fees include amounts received for use of public rights of way from utility companies. To date the City has received $1,183,070 of $2,736,404 budgeted. FY 2015 collections are comparable to prior year's collections. A large portion of the franchise fees are collected in the fourth quarter of the fiscal year. Tri- County pays their second semi-annual payment in July. Fines/Forfeitures. Revenues from Fines and Forfeitures are $575,892, which is 51.6% of the $1,115,000 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. As planned, citation volume is lower for second quarter FY 2015 compared to second quarter FY 2014. Citation volume is expected to remain consistent and revenues from fines are anticipated to meet budget. Charges for services. This category includes revenue from ambulance transport, recreation class fees, and amounts received from the Cities of Grapevine, Colleyville and Keller for participation in the Teen Court program. Revenues to date total $568,422, compared with $503,143 collected for the same period in the prior year. The majority of the revenue for this category is seasonal and collected during the summer months. It is anticipated that revenue from Charges for Services will be within budgeted amounts. Permits/fees. Revenues from permits and fees are $1,188,963 or 80.2% of the budgeted amount of $1,482,300. This is more than $1,143,402 collected as of March 31, 2014. 125 residential permits have been issued to date compared to 93 issued in the prior fiscal year's second quarter. The largest increase in permits/fees revenue is due to the increased number of residential permits issued during the second quarter FY 2015. 11 and 14 commercial permits were issued for the second quarter March 31, 2015 and March 31, 2014, 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 $462,930 to date. Revenues from miscellaneous income will meet the $815,000 budgeted. Interest income. Interest earnings to date total $29,695. It is anticipated that interest income will be within budgeted amounts, staff will continue to monitor revenues and make the necessary budget amendments during the budget process. GENERAL FUND EXPENDITURES For the second quarter ended March 31, 2015 of the fiscal year, General Fund total expenditures are $15,978,096 or 45.1% of the $35,429,210 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, Information Technology, Communications and Support Services total $2,428,260 which is 42.9% of budget. Personnel, contract services and utility expenditures are on target with budget. Therefore it is anticipated that expenditures in General Government will be within the amount budgeted. 2 Finance department. For the Finance, Municipal Court, Teen Court Divisions, total expenditures to date are $1,019,089 or 49.6% of the $2,053,498 budgeted. Personnel, operations and capital expenditures are within budget. Public safety department. Total expenditures for Police Services, Fire Services, and Public Safety Support, are $7,095,456, which is 48.3% of the $14,702,975 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, Facility Maintenance and Public Works Administration. Expenditures to date are $1,880,783 or 39.8% of the $4,721,912 budgeted. Personnel, operations and capital expenditures are within budget. Planning and development department. Total expenditures for Planning and Building Inspections are $888,296 or 44.0% of the $2,019,139 budgeted for the year. Expenditures in the Department are within budget. Economic development department. The department has expended $94,543, or 40.9% of the $230,965 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 $2,571,669 or 42.6% of the $6,040,344 budgeted. Personnel, operations and capital 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 March 31, 2015, the City has received $10,720,987 or 44.7% in revenues of the $23,966,900 estimated. This is more than $9,364,188 received through March of last year. The majority of the increase is due to the Fort Worth pass-thru water rate increase and 264 new water customers. Total revenues for the year will most likely be within budget. Expenses. The City has expended $11,860,069 or 51.5% of the $23,013,325 budgeted for personnel, operations, capital, and debt services. Of the total expenses, $2,842,092 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 March 31, 2015, the City has received $685,623 or 50.8% in revenue of the $1,348,950 estimated. 3 Expenses. The City has expended $316,396 or 51.1% of the $619,616 budgeted for personnel, operations and capital. $76,018 expended for drainage materials and capital equipment (mechanical street sweeper). DEBT SERVICE FUND Revenues. The City has received $13,812,096 in current and delinquent property taxes through March 31, 2015. This fund pays the property tax supported debt requirements for the City. The first semi-annual payments were paid February 2015 totaling $14,254,400. SOUTHLAKE PARKS DEVELOPMENT CORPORATION (SPDC) Operating Fund. As of March 31, 2015, $3,479,593 in the '/2 cent sales tax has been collected. SPDC sales tax receipts are 32.8% above estimates, or $859,882. The increase is due a large payment received with January collections as a result of an audit of prior collections covering the period from 2010 through 2013. Net the audit adjustment sales tax collections are 9.9% above budget. CRIME CONTROL AND PREVENTION DISTRICT (CCPD) Operating Fund. As of March 31, 2015, $3,448,806 in the '/2 cent sales tax has been collected. Sales tax receipts are 31.4% above estimates, or $824,139. The increase is due a large payment received with January collections as a result of an audit of prior collections covering the period from 2010 through 2013. Net the audit adjustment sales tax collections are 8.5% above budget. PARK DEDICATION FEE FUND Revenues. The City collected $121,981 park dedication funds as of March 31, 2015. 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. TAX INCREMENT FINANCIAL DISTRICT (TIF) Revenues. To date TIF has not received any revenues for the fiscal year. Historically, the TIF revenues are not collected until the third quarter of the fiscal year. 4 STRATEGIC INITIATIVE FUND Expenditures. As of March 31, 2015, the expenditures were $787,862 for community enhancement (Town Square enhancements) and capital acquisition (fire engine). HOTEL OCCUPANCY FUND Revenues. The City has collected $381,395 or 41.2% in revenue of the $926,565 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. Expenditures. As of March 31, 2015, the expenditures were $279,240 for personnel, advertising and marketing and promotion. 61 GENERALFUND Comparative Statement of Revenues, Expenditures and Changes in Fund Balance for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) REVENUES Ad Valorem Taxes Sales Tax Franchise Fees Fines Charges for Services Permits/Fees Miscellaneous Interest Income Total Revenues EXPENDITURES City Secretary Human Resources City Manager Information Technology Communications Support Services General Government Total Finance Municipal Court Municipal Court -Teen Court Finance Total Fire Police Public Safety Support Public Safety Total Streets/Drainage Facility Maintenance Public Works Administration Public Works Total Building Inspections Planning Planning and Dev Total Economic Development Economic Development Total Community Services Parks and Recreation Library Services Community Services Total Total Expenditures Excess (deficiency) of Revenue over Expenditures OTHER FINANCING SOURCES AND (USES) Proceeds from lease/CO (net) Transfer In -Other Funds Transfer To -Other Funds Total Other Sources/(Uses) Excess (deficiency) of Revenues/other sources over Exp. FUND BALANCE OCT 1 Change in reserved fund balance ENDING FUND BALANCE fund balance percentage Year to Date 3/31/15 $18,060,007 6,785,221 1,183,070 575,892 568,422 1,188,963 462,930 29,695 $28,854,200 $201, 073 253,122 371,994 975,419 92,245 534,407 2,428,260 695,771 266,511 56.807 1,019,089 3,698,925 2,796,823 599,708 7,096,466 689,991 637,155 553,637 188, 0,783 469,919 418,377 888,296 94,543, 94,643 531,856 1,736,505 303,308 2,671,669 $15,978,096 2015 Budget $19,561,715 12,022,000 2,736,404 1,115, 000 1,252,150 1,482,300 815,000 70,000 $39,054,569 $491, 369 616,307 825,144 2,142,154 162,743 1,422,660 6,660,377 1,231,600 673,877 148,021 2,053,498 7,629,218 5,860,540 1,213,217 14,702,975 1,682,704 1,751, 706 1,287,502 4,721,912 1,052,964 966,175 2,019,139 230,965 230,965 1,157,814 4,269,231 613,299 6.040,344 $35,429,210 $12,876,104 $3,625,359 $0 $0 1,585,529 1,585,529 (4,990,000) (4,990,000) ($3,404,471) ($3,404,471) $9,471,633 $220,888 $8,895,959 $0 9 1$ . 16 847 25.73% Year to Date 3/31 /14 $17,976,434 5,032,820 1,115,040 685,508 503,143 1,143,402 436,357 12.983 $26,905,687 $168,232 235,869 370,823 811,453 0 743,544 2,329,921 619,157 245,803 55,910 920,870 3,643,093 2,796,412 608,915 7,048,420 764,347 569,381 438,668 1,772,396 424,788 389,908 814,696 67,924 67,924 378,029 1,806,285 341,316 2,525,630 $15,479,867 $11,425,830 $0 1,481,115 (3,220,000� ($1,738,885) $9,686,945 % Increase/ -Decrease Prior Year 0.5% 34.8% 6.1% -16.0% 13.0% 4.0% 6.1% 128.7% 7.2% 19.5% 7.3% 0.3% 20.2% 922449900.0% -87.6% -77.1 % 292.2% 183.1 % 376.7% -93.8% -72.0% 32.3% 359.3% -91.5% $28.3% 21.2% 45.2% -68.8% 342.8% 20.5% -48.6% 1207.8% 39.2% -75.0% -70.6% 408.8% -88.0% -83.4% REVENUES Water Sales -residential Water Sales -commercial Sewer Sales Sanitation Sales Other utility charges Miscellaneous Interest Income Total Revenues EXPENSES Water Utility Billing Sewer Sanitation Debt Service Total Expenses Excess (deficiency) of Revenue over Expenses OTHER FINANCING SOURCES AND USES Transfer In -Other Funds Developer Contributions Transfer Out -Other Funds Total Other Sources/(Uses) Excess (deficiency) of Revenues and other sources over Expenses WATER AND SEWER ENTERPRISE FUND Comparative Statement of Revenues and Expenses for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) Year to Date 3/31/15 $5,420,869 1,704, 917 2,425,758 776,017 282,203 106,236 5.987 $10,720,987 $4, 058,477 186,205 1,090,906 586,628 5,937 853 $11,860,069 ($1,139, 082) $0 $0 96( 0,676) ($960,676) ($2,099,758) 2015 Budget $13,100,000 3,500,000 5,050,000 1,715,000 416,900 160,000 25,000 $23,966,900 $11,624,912 503,768 2,731,590 1, 320, 000 6,833,055 $23,013,325 953 575 $50,000 96( 0,6751 ($910,676) $42,899 Year to Date 3/31/14 $4,468,899 1,374,409 2,424,466 774,830 205,798 107.974 7,812 $9,364,188 $3,323,951 178,667 1,304,325 502,207 5,836,777 $11,145,927 ($1.781,739) $0 $0 93( 5,555) ($935,555) ($2,717,294) % Increase/ -Decrease Prior Year 21.3% 24.0% 0.1 % 0.0% 37.1 % -1.6% -23.4% 14.5% 22.1 % 4.2% -16.4% 16.8% 1.7% 6.4% REVENUES Interest Income Total Revenues EXPENDITURES Infrastructure Maintenance Community Enhancement Technology Infrastructure Capital Acquisition Total Expenditures Excess (deficiency) of Revenue over Expenses OTHER FINANCING SOURCES AND (USES Transfer In -Other Funds Transfer Out -Other Funds Total Other Sources/(Uses) Excess (deficiency) of Revenues and other sources over Expenses FUND BALANCE OCT 1 ENDING FUND BALANCE STRATEGIC INITIATIVE FUND Comparative Statement of Revenues and Expenditures for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) Percent % Increase/ Year to Date 2015 Collected/ Year to Date -Decrease 3/31/15 Budget Expended 3/31/14 Prior Year 432 $8,000 5.4% $5,171 -91.6% $432 $8,000 5.4%1 $6,171 -91.6% $0 $0 98,148 518,000 0 0 689,714 700,000 $787,862 $1,218,000 787 430 ($1,210,000) $4,400,000 $4,400,000 (7,420,000) (7,420,0001 ($3,020,000) ($3,020,000) ,($3.807,430) ($4,230.000) $7,816,274 3 586 274 0.0% 18.9% 0.0% 98.5% 64.7% $0 69,147 40,210 167.275 $276,632 271 461 $2,200,000 (4,100,0001 ($1,900,000) 2 171 461 -100.0% 41.9% -100.0% 312.3% 184.8% SOUTHLAKE PARKS DEVELOPMENT CORPORATION Comparative Statement of Revenues and Expenditures for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) Percent Year to Date 2015 Collected/ Year to Date REVENUES 3/31/15 Budget Expended 3/31/14 Sales Tax $3,479,593 $6,592.000 52.8% $2,611,698 Rental Income 64,093 153,816 41.7% 76,912 Interest Income 2,620 7,500 34.9% 6 210 Total Revenues $3,546,306 $6,753,316 52.5% $2,694,820 EXPENDITURES Personnel $48,756 $106,658 45.7% $46,318 Operations 46,100 682,600 6.8% 133,441 Capital 74,769 190,000 39.4% 62,789 Total Expenditures $169,625 $979,258 17.3% $242,548 Excess (deficiency)'of Revenue over Expenses $3,376,681 $5,774,058 $2,452,272 OTHER FINANCING SOURCES AND (USES) Transfer In -Other Funds $0 $0 $0 Transfer Out -Other Funds (4,154,422) 4 154 422 (5,918,311) Total Other Sources/(Uses) ($4,154,422) ($4,154,422) ($5,918,311) Excess (deficiency) of Revenues and other sources over Expenses 777 741 1 619 636 ($3.466.039) FUND BALANCE OCT 1 $7,351,962 ENDING FUND BALANCE 8,971,598 % Increase/ -Decrease Prior Year 33.2% -16.7% -57.8% 31.6% 5.3% -65.5% 19.1% -30.1 % REVENUES Sales Tax Interest Income Total Revenues EXPENDITURES Personnel Operations Capital Total Expenditures Excess (deficiency) of Revenue over Expenses OTHER FINANCING SOURCES AND (USES) Transfer In -Other Funds Transfer Out -Other Funds Total Other Sources/(Uses) Excess (deficiency) of Revenues and other sources over Expenses FUND BALANCE OCT 1 CRIME CONTROL AND PREVENTION DISTRICT Comparative Statement of Revenues and Expenditures for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) Year to Date 3/31 /15 $3,448,806 1.327 $3,450,133 $271,379 22,948 15,550 $309,877 3 140 256 $0 (4,281,600) ($4,281,600) 1 141 344 2015 Budget $6.592,000 500 $6,592,500 $594,986 111,054 18,000 $724,040 5 868 460 $0 (4,281,600) ($4,281,600) $1, 586, 860 $4, 724, 335 ENDING FUND BALANCE 6311 195 Year to Date 3131/14 $2,594,647 263 $2,594,910 $227,449 56,785 0 $284,234 2 310 676 $0 (5,245 275) ($5,245,275) ($2,934,599) % Increase/ -Decrease Prior Year 32.9% 404.6% 33.0%s 19.3% -59.6% 155499900.0% 9.0% HOTEL OCCUPANCY TAX Comparative Statement of Revenues and Expenditures for the period ended March 31, 2015 and March 31, 2014 (fiscal month 6-50.00%) Percent Year to Date 2015 Collected/ REVENUES 3/31115 Budget Expended Taxes $380,574 $926.065 41.1% Interest Income 821 500 164.2% Total Revenues $381,395 $926,565 41.2% EXPENDITURES Personnel $85,856 $196,508 43.7% Operations $193,384 557,954 34.7% Capital 0 0 0.0% Total Expenditures $279,240 $764,462 37.0% Excess (deficiency) of Revenue over Expenses $102,156 $172,103 OTHER FINANCING SOURCES AND USES Transfer In -Other Funds $0 $0 Transfer Out -Other Funds 37( 6,048) 37( 6,048) Total Other Sources/(Uses) ($376,048) ($376,048) Excess (deficiency) of Revenues and other sources over Expenses 273 893 203 945 FUND BALANCE OCT 1 $1,267,113 ENDING FUND BALANCE 1 $1,063,168 % Increase/ Year to Date -Decrease 3/31/14 Prior Year $385,003 -1.2% 295 178.3% $385,298 -1.0% $38,260 124.4% $173,377 11.5% 0 0.0% $211,637 31.9% 173 661 $0 (167,423) ($167,423) 6 238 CITY OF SOUTHLAKE 1% SALES TAX REPORT 2016 Collected Budget Balance Budget to Date Balance Percent $ 11,742,000 $7,064,627 ($4,677,373)-39.83% FISCAL FISCAL FISCAL YEAR % Inc YEAR % Inc YEAR % Inc MONTH 2O13 -Dec 2014 -Dec 2015 -Dec October 848,376 23.6% 983,585 15.9% 1,130,622 14.95% November 837,828 4.4% 995,373 18.8% 1,161,450 16,68% December 1,293,838 10.2% 1,519,672 17.5% 1,616,389 6.36% January 837,172 10.1% 931,846 11.3% 1,022,281 9.70% February (A) 816,932 31.8% 872,062 6.7% 2,133, 885 144.69% March 976,128 14.0% 1,229,474 26.0% -100.00% April 925,224 23.4% 1,136,025 22.8% -100,00% May 992,062 26.0% 1,069,795 7.8% -100.00% June 1,127,745 23.0% 1,269,400 12.6% -100.00% July 934,070 24.4% 1,136,338 21.7% -100.00% August 917,449 39.6% 1,039,189 13.3% -100,00% September 991 136 14.8% 1,160,059 17.0% -100.00% $11,497,962 $13,342,819 $7,064,627 TOTALI r. Three Year Revenue Comparison by Month 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 �o Om a NO FISCAL YEAR 2013 0 FISCAL YEAR 2014 . FISCAL YEAR 2015 Actual 2014 Budget 2015 Actual 2015 Estimated 2015 (budget•est.) Difference % Chan e October(*) $983,585 $865,579 $1,130,622 $ 1,130,622 $ 265,043 30.62% November(*) $995,373 $875,952 $1,161,450 $ 1,161,450 $ 285,498 32.59% December(*) $1,519,672 $1,337,348 $1,616,389 $ 1,616,389 $ 279,041 20,87% January(*) $931,846 $820,047 $1,022,281 $ 1,022,281 $ 202,234 24.66% February(*) $872,062 $767,435 $2,133,885 $ 2,133,885 $ 1,366,450 178.05% March(*) $1,229,474 $1,081,967 $0 $ 1,081,967 $ - 0.00% April {*) $1,136,025 $999,729 $0 $ 999,729 $ 0,00% May(*) $1,069,795 $941,445 $0 $ 941,445 $ - 0.00% June{*) $1,269,400 $1,117,102 $0 $ 1,117,102 $ 0,00% July $1,136,338 $1,000,005 $0 $ 1,000,005 $ 0.00% August(*) $1, 039,189 $914, 511 $0 $ 914,511 $ - 0.00% September(*) $1,160,059 $1,020,880 LO0 $ 1,020,880 $ - 0.00% 1 $ 14,140,266 $ 2,398,266 TOTALI $ 13,342,819 1 $ 11,742,000 1 $ 7,064,627 *Beginning April 2006 includes Grand Avenue sales tax collections per 380 agreement 80% of collections will be distributed to Cooper & Stebbins " Monthly collection includes an audit payment adjustment for previous periods (2010-2013) SOUTHLAKE PARKS DEVELOPMENT CORPORATION 112% SALES TAX REPORT 2015 Collected Budget Balance Budget to bate Balance Percent $ 6,592,000 $3,479,593 ($3,112,407) -47.21% MONTH FISCAL, YEAR 2O13 % Inc -Dec FISCAL YEAR 2014 % Inc -Dec FISCAL YEAR 2016 % Inc -Dec October $417,857 23.6% $484,463 15.9% $556,874 14.95% November $412,661 4.4% $490,258 18.8% $572,058 16.68% December $637,264 10.2% $748,495 17.5% $796,132 6.36% January $412,338 10.1 % $458,969 11.3% $503,511 9.70% February (1) $402,370 31.8% $429,523 6.7% $1,051,018 144.69% March $480,779 14.0% $605,562 26.0% $0 -100.00% April $455,708 23.4% $559,535 22.8% $0 -100.00% May $488,628 26.0% $526,914 7.8% $0 -100.00% June $555,457 23.0% $625,227 12.6% $0 -100.00% July $460,065 24.4% $559,689 21.7% $0 -100.00% August $451,878 39.6% $511,839 13.3% $0 -100.00% September 48$ 8,172 14.8% $571,373 17.0% L0 -100.00% TOTAL $ 5,663,175 $6,571,836 $3,479,593 $1,200,000 $1,000, 000 $800,000 $600,000 $400,000 $200, 000 $0 Three Year Revenue Comparison by Month �J\A I ®FISCAL YEAR 2013 oFISCAL YEAR 2014 ;, FISCAL YEAR 2015 Actual Budget Actual Estimated (budget-est.) % 2014 2015 2015 2015 Difference Change MONTH October $484,453 $ 485,939 $556,874 $ 556,874 $ 70,935 14.60% November $490,258 $ 491,762 $572,058 $ 572,058 $ 80,296 16.33% December $748,495 $ 750,792 $796,132 $ 796,132 $ 45,340 6.04% January $458,969 $ 460,377 $503,511 $ 503,511 $ 43,134 9.37% February $429,523 $ 430,841 $1,051,018 $ 1,051,018 $ 620.177 143.95% March $605,562 $ 607,420 $0 $ 607,420 $ - 0,00% April $559,535 $ 561,252 $0 $ 561,252 $ - 0.00% May $526,914 $ 628,531 $0 $ 528,531 $ - 0.00% June $625,227 $ 627,145 $0 $ 627,145 $ - 0.00% July $559,689 $ 561,406 $0 $ 561,406 $ - 0.00% August $511,839 $ 513,410 $0 $ 513,410 $ 0.00% September $571,373 $ 573,125 §0 $ 573,125 $ 0,00% $ 6,592,000 $ 7,451,882 $ 859,882 TOTAL $ 6,571,836 $ 3,479,593 Monthly collection includes an audit payment adjustmentfor previous periods (2010-2013) SOUTHLAKE CRIME CONTROL AND PREVENTION DISTRICT 112% SALES TAX REPORT 2015 Collected Budget Balance Budget to Date Balance Percent $ 6,592,000 $3,448,806 (3,143,194)-47.68% Fiscal Year Percent Fiscal Year Percent Fiscal Year Percent 2013 Increase/ 2014 Increase/ 2015 Increase! MONTH Actual (Decrease) Actual (Decrease) Actual (Decrease) October $413,388 23.72% $478,241 15,69% $550,793 15.17% November 410,740 9.17% 487,762 18.75% 571,043 17.07% December 624,361 16.39% 726.669 16.39% 780,822 7.45% January 415,721 14.62% 472,458 13.66% 499,824 5.79% February ("} 399,585 33.49% 429,517 7.49% 1,046,324 143.60% March 459,901 20.15% 576,306 25.31% -100.00% April 454,612 25.22% 556,230 22.35% -100.00% May 489,002 25.96% 525,327 7.43% -100.00% June 537.558 27.55% 662,081 23.16% -100.00% July 451,139 24.51 % 554,922 23.00% -100,00% August 445,542 39.74% 502,019 12.68% -100.00% September 469,916 18.73% 545,071 15.99% -100.00% $6,516,603 $3,448,806 TOTALI $5,571,465 1 Three Year Revenue Comparison by Month $1,200,000 $1,000,000 $800,000 $600, 000 i $400, 000 $200, 000 I $0 10' �o0t �Jm� m ee6`, a va J P ®Fiscal Year 2013 Actual ®Fiscal Year 2014 Actual Fiscal Year 2015 Actual Actual Budget Actual Estimated (budget-est.) % MONTH 2O14 2015 2015 2015 Difference Change October $ 478,241 $ 483,774 $ 550,793 $ 550,793 $ 67,019 13.85% November $ 487,762 $ 493,405 $ 571,043 $ 571,043 $ 77,638 15.74% December $ 726,669 $ 735,077 $ 780,822 $ 780.822 $ 45,745 6,22% January $ 472,458 $ 477,924 $ 499,824 $ 499,824 $ 21,900 4.58% February $ 429,617 $ 434,487 $ 1,046,324 $ 1,046,324 $ 611,837 140.82% March $ 576,306 $ 582,974 $ - $ 582,974 $ - 0.00% April $ 556,230 $ 562,666 $ - $ 562,666 $ - 0,00% May $ 625,327 $ 531,405 $ - $ 531,405 $ - 0.00% June $ 662,081 $ 669,741 $ - $ 669,741 $ - 0,00% July $ 554,922 $ 561,342 $ - $ 561,342 $ - 0,00% August $ 502,019 $ 507,827 $ - $ 507,827 $ - 0.00% September $ 545,071 $ 551,378 $ - $ 551,378 $ - 0.00% $ 6,516,603 1 $ 6,592,000 1 $ 3,448,806 $ 824,139 TOTAL 1 $ 7,416,139 " Monthly collection includes an audit payment adjustment for previous periods (2010-2013) 1E Fc,O E 3 O %6.. t: a a� E a� — L m Lo — w a� l� Y E Y d R W dsL N N d CL N UN a LL C G R 2 C- t4 W 0� w z IA Q O �w U. d a r N Q } a)b b `m c s o m U E a'�o y E L y o n a�'i o c ` R 70 o 0 3 n o ti 'x o CD w y o C N N O C Q (+6 E L L 0 E C N y F- s a> o n -c ma a o -a `a U a> E cL a> N � C> N � C N O T c Q o E m `m °> >• Q R w a> a 45 cL C o m aF> o o o b c m L n 9 N vo oQ oa `" o `� c N C G1 A = -, N � � n V CU C CD } _ V Q f4 -6 O 5 ca 'p M C U C LL 7 r` N L 's O a 0+ y y m o u> o f i a c o E r o(D 6 y c o y y m a c E c � o- R v iC o 12 Q o a o N m o } oT 'y � E c N •y = -a a C N d j 4 .a R 2 O -7 f O a> o o oo N 0 b a m q y n C t O ca �p ca m p E m a> zm N (6 fv in U •cf3 �` • c c y N O rn m -o o W y �> `o 0 m c� E U m a> u a> 3 o¢ U y 9 s Vi ' o py a1 v G O m y SLR.• ti .07' T c> O m tB -a n cc a tR_.> rn X �' c aa) 3 o m U t R R c 0' Eo C o y Y o v> U CDC m C' a;,V >( o - - �O � 0 n0 .Q 'D s R Qy U3a ° LL Eo m E LL> w `�-' rn m LL' cq Qv cD aj o- y E ui c, E R L Q C TS C .L.. 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ROW acquisition is complete for Phase 2. Phase 2 construction is currently underway. Current funding $525,000 Expenditures to date 33,250 Available balance $491,750 8-inch Water Line connector from Lake Dr/Burnoy Ln to Palo Duro/Lonesome Dove This project involves connecting an 8-inch water line at Lake Dr. and Burney Ln. to the existing 6-inch waterline at Palo Duro and Lonesome Dove by installing 1600 feet of 8-inch PVC. The new line will provide increased water pressure and flow, and will establish a loop for fire protection to the Dove Estates Subdivision. This section of water line is located on the Southlake 2030 Master Water Plan. Design for this project is complete and construction is currently underway. Current funding $350,000 Expenditures to date _ 14,026 Available balance $335,975 Brumlow Avenue Improvements The Brumlow Ave improvement project will widen approximately 1400 linear feet of Brumlow by expanding the existing road to five lanes undivided in order to accommodate the TxDOT construction of dual left turns for SH 26 to north bound Brumlow. The design is at 100%. Negotiations are complete with property owners for easements. City and franchise utility relocations are complete. A future project, currently unfunded, will widen the remainder of Brumlow Avenue extending north to the existing roundabout at Continental Blvd. Construction anticipated to begin Summer 2015. Current funding $745,000 Expenditures to date 176,314 Available balance $568,686 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page I of 9 CITY O SOUTHLAKE TEXAS Citywide Pavement Rehabilitation (PMA) The PMA is an on -going program which consists of the major repair and/or rehabilitation of local streets throughout the City of Southiake to improve pavement condition and rideability after the completion of neighborhood utility projects. One- third of the City's streets are surveyed annually with the Pavement Management Application (PMA) software designed by Stantec, which generates a pavement quality report. The PMA scores each street on the surface condition of the road (SDI), the riding quality of pavement (RCI), and the structural adequacy of the pavement (SAI). These scores are then averaged to calculate the Pavement Quality Index (PQI) for the roadway. The overall PQI for the City is the average of all the road's PQls. The Department has established a minimum overall PQI of 7.8 out of a possible 10.0. The current score is 8.3. FY 2015 results are currently being analyzed. Current funding $3,743,923 Expenditures to date 3,335,841 Available balance $ 408,082 FM1938 The FM1938 project involves paving, utility, and drainage improvements along the existing Randol Mill Road from FM1709 to SH114 to four lanes divided. Construction of FM1938 will be in two phases. Construction of Phase I from the bend in Randol Mill Road to SH114 through Westlake is complete. Phase II from the intersection of FM1709 and Randol Mill Road/Davis Blvd. to the bend in Randol Mill in Southlake is nearing 100% design. The Public Hearing on the entire project was held November 6, 2008 at the Cross Timbers Community Church in Keller, TX. Phase II right of way and easement acquisition by Tarrant County is complete. Relocation of city water and sewer, as well as franchise utilities (gas, electric, cable, telephone, etc.) is currently underway. TOOT construction began March 2015 and is anticipated to be completed by 2018. Construction will begin with the widening of the intersection of FM 1938 at FM1709 (Southlake Blvd). Roadway Roadway Impact Current funding $4,366,449 $660,000 Expenditures to date 3,443,235 632,307 Available balance $ 923,214 $ 27,693 Project Total Available Balance: $960,907 • FM1938 Waterline and Sewer Relocation Project for Phase II The FM 1938 Phase Il widening project required that City water and sanitary sewer, along with franchise utilities, be relocated outside of the proposed drive lanes of FM 1938 — between the intersection of FM 1709 and the Randol Mill bend. The project consisted of relocating approximately 10,000 linear feet of water line and Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 2 of 9 CITY OF SOUTHLAKE TEXAS + FM1938 Waterline and Sewer Relocation Project for Phase II continued approximately 5,400 linear feet of sanitary sewer relocation or extension. This project is complete. Current funding $2,558,127 Expenditures to date 1,965,285 Available balance $ 692,842 FM1938 Drainage Relief for Phase II This project will benefit those areas and drainage structures that are in need of rehabilitation in order to alleviate reported flooding and potential flooding due to undersized culverts or inadequate drainage. These improvements are included in the FM 1938 construction plans. Construction as part of the FM 1938 roadway project is now under way. Current funding $225,000 Expenditures to date Available balance $225,000 Illuminated Street Name Signs and Batte Backups along Southlake Boulevard This project includes the installation of backlit intersection signage at up to 14 major intersections along Southlake Blvd. similar to the existing signage at Kimball Avenue and SH114. This project includes the intersections of FM1709 at SH114, Commerce St., Central Ave., Nolen Dr., Kimball Ave., Village Center Dr., Carroll Ave., Byron Nelson Parkway, White Chapel Blvd., Shady Oaks Dr., Waterford Dr., Peytonville Ave., Randol Mill Rd., and Pearson Ln. This project will improve safety for the driving public by improving the visibility of major intersection signage at night. This project is complete. Current funding $609,779 Expenditures to date 513,757 Available balance $ 96,022 Love Hennt Ct. Drainage Improvements This project will implement drainage improvements along Love Henry Ct. north of Southlake Blvd. and Bicentennial Park, and east of Shady Oaks Dr. The improvements to the current drainage system will include upsizing of the pipe and additional grading to prevent possible flooding on Love Henry Ct. during heavy rainfall conditions. Engineering design is in progress. Construction is anticipated to begin Fall 2015. Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 3 of 9 CATY OF SOUTHLAKE TEXAS • Love Wenry Ct. Drainage Improvements, continued Current funding $340,000 Expenditures to date 40,180 Available balance $299,820 North Carroll Avenue at Federal Way This project will construct a traffic signal at the intersection of Federal Way at North Carroll Avenue. This is part of a larger intersection improvement project which includes a right turn lane from Federal Way to northbound Carroll Avenue as well as an 8-foot sidewalk along Federal Way. Construction of right turn lane and illuminated street sign is complete. Current funding $332,750 Expenditures to date 293,522 Available balance $ 39,228 • Nolen Drive Connecter This project will complete the roadway connection of Nolen Dr. between Exchange Blvd. and Industrial Blvd. in Grapevine. This project is a joint project between the City of Southlake and the City of Grapevine. Design and ROW acquisition is currently underway. Current funding $150,000 Expenditures to date _ 8,142 Available balance $141,858 North Kimball Avenue Street Widening from SH114 to Dove Road This project involves paving, utility, and drainage improvements for the widening of North Kimball Ave. from SH114 to Dove Rd. to its ultimate four lane divided pavement section with center landscaped medians and six-foot sidewalks on both sides of the street. Phase I for SH 114 to Kirkwood Blvd is complete. Phase II is the continuation along N. Kimball Ave. from Kirkwood Blvd. up to Dove Rd. Construction is substantially complete with punch line list items remaining. Roadway Roadway Impact utility Current funding $9,406,606 $1,260,000 $1,163,546 (Expenditures to date 8,990,906 1,034,262 594,794 Available balance $ 415,700 $ 226,738 $ 568,752 Project Total Available Balance: $1,210,190 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 4 of 9 CITY Y OF SOUTHLAKE TEXAS N. White Chapel from Emerald to SH114 This project involves paving, utility, and drainage improvements for the widening of N. White Chapel Blvd. from Emerald Blvd. to SH114 to its ultimate pavement section of four lanes divided. This project has been divided into two phases. Phase I extends from Emerald Blvd. to Highland St. and is currently at 95% design. Phase II is the continuation of the widening from Highland St. to SH114 including a dual -lane roundabout at the N. White Chapel Blvd/Highland St. intersection, and the design is currently 95% complete. Right of way acquisition is currently underway. Utility relocations will begin once all right of way is acquired. Roadway Roadway Impact Utility Current funding $9,991,000 $1,414,000 $1,445,000 Expenditures to date 961,142 706,513 81,824 Available balance $9,029,858 $ 707,487 $1,363,176 Project Total Available Balance: $11,100,521 • Pressure Compensating Valves This project will include the installation of pressure regulating valves (PR1/) between the City's high pressure and low pressure water systems. This will improve fire flow capacities in the event of an emergency during peak water use periods. This project will also require the construction of vaults, and the installation of electronic telemetry to monitor and activate the valves via the City's current remote system. Construction is anticipated to be completed Summer 2015. Current funding $862,245 Expenditures to date 711,179 Available balance $151,066 Sanitary Sewer System Rehabilitation Program This project was the result of a three year Sanitary Sewer Evaluation Study conducted by RJN from FY2008 to FY2010. The final report from the SSES recommended the rehabilitation of 358 sewer manholes including replacing manhole ringsllids, corbel, invert, clean -out, and point repairs, as well as street and pavement repairs resulting from activities associated with conducting the manhole repairs. These repairs were recommended in order to prevent inflow and infiltration of storm water and ground water which should lower the City's treatment costs to Trinity River Authority. The project is in its last year. Current funding $600,000 Expenditures to date _329,013 Available balance $270,987 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 5 of 9 CI-fY OF SOUTHLAIZE TEXAS Shady Oaks Roadway and Utility Improvements Project This project will implement utility improvements along Shady Oaks beginning at the north property line of Durham Elementary School to the intersection of Fox Glen. These improvements will include an 8" sanitary sewer line and a 12" water line from just south of Highland Street to Fox Glen along Shady Oaks Drive. Construction is anticipated to begin Summer 2015. Design for this project is complete. Utility Sewer Impact Current funding $1,450,000 $300,000 Expenditures to date 39,000 39,000 Available balance $1,411,000 $261,000 Project Total Available Balance: $1,672,000 South Carroll Avenue at Zena Rucker Road Traffic Signal The recent additions of the Park Village retail development and the Winding Creek Addition residential development have accelerated the need for construction of a signal at the intersection of South Carroll Avenue and Zena Rucker Road. In October 2012 as part of Southlake 2030, Kimley-Horn, Inc. completed the South CarrollAvenue Improvements Study which provided recommendations to the City for improving mobility along South Carroll Avenue between Southlake Boulevard (FM 1709) and Breeze Way. The study included the extension of Zena Rucker Road from the west to the intersection of South Carroll Avenue between the commercial and residential site. The addition of the signal will reduce delays and improve ingress and egress to the commercial developments. The signal is currently under design. Roadway Roadway Impact Current funding $200,000 $ 188,000 Expenditures to date 0 0 Available balance $200,000 $ 188,000 Project Total Available Balance: $388,000 South Kimball Avenue at East Continental Boulevard Traffic Signal The recent addition of the Stadium Southwest commercial development has prompted the need for a traffic signal at the intersection of South Kimball Avenue and bast Continental Boulevard. The addition of the signal will reduce the potential for traffic conflicts at this intersection. Construction of the signal will begin in the Spring of 2015. Current funding $200,000 Expenditures to date 0 Available balance $200,000 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 6 of 9 CITY OF SOUTHLAKE TEXAS • South White Chapel at Big -Bear Creek Scour Mitigation This project will address the immediate problem of scour (erosion) around columns supporting the main bridge deck. Engineering design is complete. This is a joint project with Colleyville. This project is complete. Current funding $150,000 Expenditures to date 89,786 Available balance $ 60,214 Street Rehabilitation Partnership Pro, This is an annual project which involves the rehabilitation of arterial streets within Southlake in partnership with Tarrant County. The City of Southlake funds the costs of materials, and Tarrant County provides labor and equipment. The FY 2014 project presented to Tarrant County will focus on Ridgecrest. The limits of this project are from East Dove Road to Southlake Park Drive for a total of 3900 linear feet. The FY 2015 Project will focus on resurfacing S. White Chapel from the roundabout on Continental Blvd. to the bridge at Bear Creek. Construction anticipated to begin Summer 2015. Current funding $1,235,000 Expenditures to date 994,613 Available balance $ 240,387 • Torian Lane Sanitary Sewer Lift Station This project consists of the design and construction of a sanitary sewer lift station at Torian Ln. to serve the Royal Oaks and Twin Creek Neighborhoods as well as future development along Torian Ln. The project is under design. Current funding $600,000 Expenditures to date 0 Available balance $600,000 Town Square _En_hancements Project This project is for improvements to streets, sidewalks, drainage and landscaping to attract visitors and shoppers. In FY 2012 the sidewalks around Town Hall were reconstructed and drainage corrections were made at the ramp leading to the first floor on the southwest corner of the building. Milling and overlay of Central from FM 1709 to Main Street and Prospect from N. Carroll to State and the Rustin Park gazebo renovation were completed in FY 2013. Each fiscal year also includes landscaping and irrigation improvements. FY 2015 funds the construction of State from Federal Way to SH 114 to provide a connection from Town Square to SH 114. Current funding $948,540 Expenditures to date 735,709 Available balance $212,831 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 7 of 9 CITY OF SOUTHLAKE TEXAS Zena Rucker Culvert This project calls for culvert improvements for the crossing of Zena Rucker Road. The construction of a culvert is intended to facilitate the future extension of Zena Rucker Road. The engineering drainage study is complete. Current funding $200,000 Expenditures to date 24,948 Available balance $176,062 Bicentennial Park Improvements Phase it The Bicentennial Park Improvement Project is a multi -phase project set to transform the existing park into a beautiful, safe and functional signature park for Southlake. Phase II of this project includes a new playground, Miracle League baseball field, 60190 baseball field, new concessionlrestroom facility, enhancement to the original baseball 4-plex, park boulevard connection to White Chapel Blvd., new Park Maintenance Facility, parking, trails, enhanced landscape and irrigation improvements, including an additional new water well. The project has been bid and construction began in January 2014. The project is approximately 80% complete and the anticipated completion date is Summer 2015. Current funding $ 14,256,363 Expenditures to date 10,088,271 Available balance $ 4,168,092 Community Recreation Center The Community Recreation Center project was recommended by the Southlake 2030 Parks, Recreation & Open Space 1 Community Facilities Master Plan, and approved by the City Council as a priority project for FY 2014. An architectural 1 engineering design services agreement was awarded in August 2013 and is complete. The design is separated into Phase I & II. The groundbreaking for Phase was held in September 2014 and has an estimated completion date of late 2015. With appropriate approval and funding, the construction of Phase II is anticipated to begin in August 2015, with an estimated completion date of November 2016. Current funding $ 17,120,000 Expenditures to date 5,103,596 Available balance $ 12,016,404 DPS West reconfiguration Following the construction of the new DPS North facility, the current DPS West configuration will need to be updated. The update is to reconfigure the building to increase the size and number of communityltraining rooms to be used by the Community Initiatives sections for community outreach and training, expand the Fire Day Room and replace the overhead doors. A needs assessment has been completed. Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 8 of 9 CITY OF SOUTHLAKE TEXAS • DPS West reconfiguration, continued Current funding $ 1,000,000 Expenditures to date 41,485 Available balance $ 958,515 Innovation 0 Integrity 0 Accountability 0 Commitment to Excellence 0 Teamwork Page 9 of 9 "In theory, higher interest rates should result in an even slower economy, an even stronger dollar and even lower inflation." The year began with an abundance of confidence fueled by the strongest labor market in 15 years, a healthy and lean housing market, fresh stock market highs and gasoline below $2 per gallon across much of the nation. The outlook was bright... but it gradually dimmed as the quarter went along. Frigid weather was a significant negative factor in the Northeast with Boston suffering a record 94 inches of snowfall in a 30- day period spanning virtually all of February, while a major port slowdown on the West Coast resulted in a sharp drop in both imported and exported goods during the first two months of the year. Although the initial first quarter GDP report isn't scheduled for release until late April and won't be final until late June, it appears as though economic growth in the first three months of 2015 fell well short of earlier forecasts. if this is indeed the case, it certainly won't be the first time during this 68-month recovery cycle that momentum stalled in the first quarter. There were rare negative GDP readings in the first quarter of 2011 and 2014, but growth quickly resumed in both cases. The port dispute has since resolved and most of the snow has melted, but there are still major obstacles in the growth path for 2015. The two dominant issues in the final quarter of 2014 carried forward into the first quarter of 2015 - the dollar got even stronger and oil prices fell even further. The U.S. dollar index, which tracks the dollar against a basket of six global currencies, increased by almost 9% in the first quarter, the strongest showing in 6'/2 years. Over the past three quarters, the dollar has gained more than 2 3 % versus its rival currencies. This sounds better than it actually is. A strong currency makes exported goods more expensive in foreign markets, while making imports cheaper. To compete against cheaper imports, domestic producers are forced to cut prices, thereby reducing profits. A lower profit margin discourages business expansion. Bloomberg Business Week reported in late March that crude oil inventories were growing at the fastest pace on record as drilling companies chose to warehouse oil in hopes of selling at higher prices later on. Crude inventories have been increasing by 1 million barrels per day, and by quarter end had reached an all-time high of 470 million barrels, easily the most in 80 years of recorded history. Although oil prices are less than half of what they were nine months ago, daily production has actually increased by about 12% since last year to 9.3 million barrels. prices would likely be lower if it weren't possible to physically store crude, so the rapidly diminishing storage capacity will be an increasing concern in the coming months. On the flip side, the number of drilling rigs has decreased by 400/6 during the quarter, so production and demand should eventually move toward equilibrium. Like most issues in this market, the question is in the timing. Obviously, the energy companies, energy -producing states and oil -rich countries are experiencing pain, but the consumer was supposed to benefit from sharply lower gasoline prices. The average nationwide pump price fell to $2.13 per gallon in January, a staggering $1.65 below the most recent peak nine months ago. Analysts estimate that the consumer has saved approximately $100 billion at the gas pump since June, but so far they've chosen to save rather than spend the windfall. This has been reflected in surprisingly slow retail sales growth during the winter months. With both Europe and Japan in the midst of massive quantitative easing campaigns, global bond yields continue to sink lower and lower, dragging U.S. government bond yields along for the ride. The irony is that three months after the Fed ended new asset purchases under QE3, 10-year Treasury -note yields had actually dropped half a percentage point, closing at an 18-month low of 1.64% at the end of January before drifting back to 1.92% to end the quarter. By comparison, 10-year government yields were 0.18% in Germany, 0.36% in Japan, and 0.48% in France. Even government bonds in several of the troubled European countries once referred to as "PIIGS" are shockingly low with the 10-year yielding 1,60% in Portugal, 1.30% in Italy, 0.77% in Ireland and 1.23% in Spain. The Fed may be able to manipulate short rates to some degree, but global market forces are driving the long end, and will likely continue doing so as long as foreign Central Banks are gobbling up available supply. EMPLOYMENT eo 7.0 &0 5.0 4.0 3.0 2,0 1.0 00 UnrmpSoymeu6 liate (Leh Hand Scslel Change In Non -Farm Payralfs (Right Hand Scale) R n D 3 D 0 0 c o m � c � ti..� Unsmploymenl Rale s Change in Nonfarm Payrolls ElvlP,_ovrviEN r Change i11 Noi)-Farm Payrolls 450 400 350 300 250 zoo 150 100 50 If this employment summary had actually been written at the end of March, the storyline would be strong payroll gains and a vastly improved labor picture. But since it was written on April 3rd, the March employment data was available and it altered the story. In each of the previous 12 months, nonfarm payrolls had grown by 200,000 or more, the longest such stretch in nearly 20 years. During that same period, the unemployment rate dropped from 6.7% to 5.5%, a full percentage point below what was once the Fed's threshold for raising rates. If the Fed decided to tighten policy in June, their decision would have been based in large part on the vastly improved labor market. Then on Good Friday, the Bureau of Labor Statistics reported that U.S. companies had added just 126,000 new jobs in March, almost half the Bloomberg median forecast of +245,000. Downward revisions to January and February subtracted 69,000 jobs from earlier tallies. After factoring in revisions, the first quarter average payroll gain suddenly stood at +197,000 per month, well below the +324,000 average over the final three months of 2014. The unemployment rate, calculated from a separate household survey, held steady at 5.5%, but the underlying numbers were also surprisingly weak with household employment rising just +34,000. If the labor force hadn't shed another 96,000 workers in March, the unemployment rate might have drifted a bit higher. Within the less important employment data, the average workweek declined from 34.6 to 34.5 hours, while the factory workweek shrank from 41.0 to 40.9. Neither of these signal a compelling need for additional workers. Hourly earnings, which have been stagnant for years, rose by a fairly healthy +0.3% in March, but this was the only component of the March report that remotely suggested strength. Clearly, one month doesn't establish a trend, but given how out of sync the labor numbers had been with business investment, industrial production and consumer spending, a lesser hiring pace seems to make sense. CONSUMER SPENDING Retail sales unexpectedly fell by-0.6°!o during the month of February after falling -0.8% and -0.9% in the previous two months. What makes these declines so surprising is that lower gas prices were expected to significantly boost consumer spending. Apparently, consumers opted to save rather than spend as the personal savings rate jumped from 4.4% in November to a 2-year high of 5.8% in February. Analysts blamed weather for the bad report, although after three consecutive declines, the excuse is getting a bit worn. Admittedly, weather conditions were abysmal across much of the nation. In addition to Boston's well -documented snow days, Chicago and Cleveland both suffered their coldest Februaries in history. But, in the midst of (what was at the time) the heathiest labor market in over a decade, tumbling consumer spending is a real head -scratcher. One possible explanation is that the jobs being created during the recovery are primarily low -paying positions, while many of the recent layoffs in the energy sector are of the higher paying variety. Although a recent rebound in auto sales suggests that shoppers may have regained their footing, nothing can derail a consumer -driven economy like frugal spending. HOUSING Home sales have generally flattened out since reaching a post -recession peals in the summer of 2013. Initially, the slowing sales pace appeared to be a result of higher lending rates, but the recent decline in mortgage rates has yet to reignite the market. Existing home sales increased by +1.2% to an annualized sales rate of 4.88 million in February. Sales were slightly better than forecast, but it was the second 1,500 1,300 0 t 90G d n 700 � 5na 300 too Existing Home Sales New Homa Sales m gl oo G C 4 NEW AND EXISTING HOME SALES Ari�ivalaed by Month 7.5 7.0 G.5 z 5.0 4.53 3.5 y month in row under a 5 million unit pace and well off the recovery high point of 5.31 million. First-time home buyers represented 19% of all existing home purchases in February. This was up from 18% in late 2014, but well below the historical average of 40%. In theory, seasoned homeowners seeking to move -up need first-time buyers to buy their homes. The supply of available existing homes for sale remained at a lean 4.6 months, which probably kept upward pressure on the average price which rose by +7.6% year -over -year to $202,600, New home sales didn't seem to be impacted as much by weather, jumping +7.8% in February to an annualized sales rate of 539k units, the highest in seven years. New home sales data is notoriously volatile, so revisions or giveback in later months is likely. The unexpectedly brisk sales pushed the available supply of new homes down from 5.1 to 4.7 months, while the median price increased by +2.6% on a year -over -year basis to $275,500. The outlook for housing is relatively bright. The National Association of Realtors pending home sales index jumped to a 20-month high in February, despite freezing weather throughout much of the nation, The Mortgage Bankers Association (MBA) 30-year fixed rate loan index ended the quarter at 3.89%, down from 4.80% at the beginning of 2014 and within 4110`b' of the record low established in 2012. Credit conditions have gradually loosened and impediments to home ownership are being removed. Fannie and Freddie, for better or for worse, have reduced their down -payment requirements, while the Federal Housing Administration lowered its required mortgage insurance premiums. As rent costs continue to rise, the relative attractiveness of a home purchase increases. According to the Census Bureau, the vacancy rate for rental homes in the U.S. has fallen from above 11% in 2009 to below 7% at the beginning of 2015, the lowest percentage in 21 years. THE FED The primary interest in the March FOMC meeting was whether or not Fed officials would drop their pledge to remain "patient" in beginning the normalization of monetarypolicy. Fed Chair JanetYellen had long maintained that as long as the "patient" wording remained, it would be at least two meetings before the Fed began raising rates. The Fed did indeed remove the "patient" wording, making it at least possible that the Fed announces an increase in the overnight funds rate in June. However, the new statement pretty much negated that possibility, and in fact suggests it could be much longer if the job market doesn t improve and inflation remains low. The new language reads: `:,.The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range." The FOMC's Summary of Economic Projections (aka the "dot plot") added to the dovish tone as the Fed's three-year forecast for the overnight funds rate indicated a later start, a more leisurely pace and a lower ending point. Specifically, the median forecast for the overnight rate target in December 2015 was revised downward from 1.125% to 0.625%, while the Committee's median projection for the end of 2016 was lowered from 2.50% to 1.875%, and from 3.625% to 3.125% in 2017, Take this with a grain of salt. The Fed should always have confidence that its monetary policy stance will eventually result in rate normalization. After the market -friendly March FOMC statement, a number of Fed officials have weighed in with their own opinions, Apparently, there is a fair amount of dissention among Fed members about the timing of the first rate hike, although 15 of 17 committee members still expect tightening to begin at some point this year. INFLATION Inflation continues to be well contained as the strong dollar and drop in oil prices exert deflationary forces. The Producer Price Index (PPI) fell -0.5% in February and -0.6% year -aver -year. Excluding food and energy, core PPI was also down -0.5% for the month and up just +1.0% year - over -year. The Consumer Price Index (CPI) for February actually firmed up a bit with a +0.2% increase in overall CPI, exactly meeting the median forecast, while the year - over -year change was 0.00%. Core CPI also rose +0.2%, nudging the year -over -year pace of core consumer inflation up from +1.6% to +1.79/b. Although consumer prices did move higher in February, there is little to indicate an upward trend at this point. In fact, energy prices, which rose in February, appeared to establish fresh lows in mid - March. The Fed has long contended that the lack of price pressure is transitory. This will likely be the case, but given the strong dollar and a clear lack of inflation on the global front, it may be a long wait before Fed rate decisions are driven by inflation expectations. The Fed's preferred inflation measure, the PCE Index, has now fallen below the FOMC's supposed 2% target for 33 straight months. EQUITY MARKETS 12/31/14 4,736 3/31/15 717�,8232,059 4,901 Change for Q1-2015 3.8% The Wall Street Journal reported that stock indexes in at least 17 countries including the U.S., the U.K., Germany and India reached new highs during the quarter. The S&P 500 gained 0.4%, the ninth straight positive quarter, but the DOW lost 0.3% as its gains disappeared on the last day of the quarter amid fears that a strengthening dollar would continue eating away at the profits of multinational companies. Despite the lackluster performance for the quarter, both the DOW and the S&P reached new highs in early March before backing off later in the quarter, while the NASDAQ fell just 20 points short of its all—time dot-com influenced record. Common sense might suggest U.S. companies were enjoying healthy profits, but corporate profits actually fell by 1.6% in the fourth quarter and 8.3% for all of 2014, the largest annual drop since 2008, Instead, there are a number of unusual, less - predictive factors pushing prices higher. These include the Fed's continued accommodative policy stance, the allure of the 20%+ annualized growth rate in the S&P 500 since the March 2009 trough, as well as a recent increase in foreign demand for U.S. stocks - In 2013, foreign investors were net sellers of U.S. stocks, but in 2014, they increased total holdings by $121.7 billion. The paper was prepared by First Southwest Asset Management (FSAM} and is intended for educational and informational purposes unlyanddoes nutcunstitute legal or investment advice, nor is it an offer or a sulicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained frum sources thatare believed to be reliable; however, it is not guaranteed tube correct, complete, urcurrent, and is nut intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances.The statementswithin constitute theviews of FSAM as ofthe date ofthe repurtand maydiffer from the views ufotherdivisions/departments of FirstSouthwest Company. In addition, theviews aresubjectto change without notice. This paper represents historical information only and Is not an indication offuture performance C 2015 First Southwest Asset Management. LLe. All rights reserved. TRS0415011 ECONOMIC AND INTEREST RATE OUTLOOK With GDP yet to reach +2.5% in any single year during the stimulus -fueled recovery cycle, we may be experiencing the "new normal." The U.S. economy grew by +2.3% in 2012, +2.2% in 2013 and +2.4% in 2014, all well below the +3.2% historical average over the last 60 years. The GDP forecast for 2015 had been closer to 3%, but with first quarter growth underperforming yet again, the economy is forced to play catch-up. When the Fed does eventually tighten monetary policy (presumably later this year) it's hard to imagine growth accelerating. The second quarter begins in relatively good shape. Recent history suggests a warm weather snapback following the harsh winter. Housing inventory is lean, so new construction is likely in the touring months. Consumer confidence is high, gasoline prices are still low and savings have recently increased, so the outlook for consumer spending is positive. Although payroll growth may have cooled a bit, there are plenty of indicators, including a 15-year high in job postings, and a 15-year low in new claims for unemployment benefits that suggest continued job creation. U.S. bond yields fell for the fifth straight quarter, the longest such period in over a decade as demand for government bonds by both domestic and global investors overwhelm limited supply. For better or for worse, this downward pressure on U.S. bonds is likely to continue as long as the European Central Bank is making massive asset purchases. Given the choice between a German 10-year bond at 0.20% and a 10-year Treasury -note at 1.90% (in arguably a more secure market), the choice is pretty easy. The notion that intermediate -to -long maturity Treasury yields could conceivably move lower is just basic supply/ demand economics. Thus, monetary policy has become a bifurcated issue. The ECB is indirectly controlling the intermediate -to -long end while the Fed attempts to manipulate the short end. The March employment report probably extinguished the possibility of an initial rate hike in June, and in fact the bond market seems to indicate that September is a more likely period for liftoff. Of course, this assumes that the problems the economy is facing now will be fixed in five or six months, and dismisses any possibility that things could worsen between now and then. Although Fed officials may be growing increasingly uncomfortable with 6+ years of a near -zero overnight rate target, the recent cooling of the economy, a strengthening dollar and falling inflation have created a no -win situation. In theory, higher interest rates should result in an even slower econorny, an even stronger dollar and even lower inflation. With this in mind, a considerable difference of public opinion has emerged amongst Fed members. Following the March FOMC meeting, Chicago Fed President Charles Evans told a London audience that the Committee needs to be "quite confident" that inflation is headed back to the 2% target before raising interest rates, suggesting tightening might be delayed until sometime in the first half of 2016, while St. Louis Fed President James Bullard warned that the current 5.5% unemployment rate doesn't support a zero interest rate policy and that the Fed needs to raise rates "as soon as possible:' Recently appointed Cleveland Fed President Loretta Mester reminded market participants that a June rate hike is still on the table and seconded comments by Vice Chairman Stanley Fischer that tightening (once it starts) is unlikely to follow the usual straight path upward. And a final thought here is that just because the Fed decides to lift the overnight rate target doesn't mean interest rates will necessarily obey. The demand for short, safe, Mixed-incoine securities is already enormous, and the new SEC money market reform measures requiring the vastly unpopular floating NAV for riskier "Prime" funds which take effect next year, will likely compound the situation further, When (what is expected to be) hundreds of billions in "Prime" funds transition to Government money market funds, the competition for short maturity bonds could be intense. Scott McIntyre, CIA Senior Portfolio Manager April 9, 2015