Quarterly Financial Report Q3 2016 - City of Vancouver ...

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Quarterly Financial Report

Third Quarter 2016

Third Quarter 2016 Financial Report City of Vancouver 1

Third Quarter 2016 Financial Report (This report contains un-audited financial information as of November 14, 2016)

Table of Contents

Section Page

I. Executive Summary 3 II. Economic Report 4 III. Financial Results 12 IV. Outstanding Debt 26 V. Investments 26 VI. Interfund Loans 28

Attachments

A Expenditure Summary by Fund 29 B Revenue Summary by Fund 31 C Investment Portfolio Tables 34 D Outstanding Debt 37

- - - - - For additional information on the City’s financial performance please contact Natasha Ramras in the City’s Financial & Management Services Department at 360-487-8484.

I. Executive Summary

The national economy continued to grow in 2016, reaching an annualized pace of growth of 2.9% in the third quarter of 2016, according to the advance estimate published by the Bureau of Economic Analysis. Most recent data indicates that the increase was mostly due to increases in personal consumption expenditures, private inventory investment, federal government spending and exports. The national unemployment rate has been stable in 2016, hovering around 4.9% during the year and at the end of the third quarter.

City of Vancouver General Fund revenues in the third quarter of 2016 totaled $100 million, or 71 % of the forecast for the year. The total 2016 collections exceeded those in the third quarter of 2015 by approximately $2 million. Tax revenues, in particular, exceeded those received in the third quarter of 2015 by approximately $3.6 million, mostly due to the additional 1.5% in utility tax revenue approved in 2016 for Streets and stronger sales and property tax collections, partially offset by lower than forecasted revenues in taxes on natural gas, electricity and telephone taxes. Overall, the third quarter revenues remain on track. The City expects to receive approximately $3.5 million more through the end of the year than was originally anticipated. Expenditures in the General Fund by the end of the third quarter totaled $102 million, or 70% of the budget for the year. The third quarter expenditures exceeded those in 2015 by $4.4 million, mostly due to the timing of transfers to other funds. The departments in the General Fund spent 70% of their budget, or $50 million through the third quarter, approximately $1.8 million higher than the amounts spent during the comparable time period in 2015. Following is detailed information on the main revenue sources of the General Fund. Cumulatively, the seven major sources of revenue listed on the chart below represent more than 87% of the total forecasted revenues in the City’s General Fund. A separate section has been added to this report on revenues and expenditures associated with the City’s new Street Funding initiative.


Note: Utility tax revenue above includes the tax on Solid Waste, Charges for Services exclude the Business License revenue.

The General Fund operating cash balance was $41.6 million at the end of September 2016. II. Economic Report The US economy continued to improve over the last three quarters. The unemployment rate continues to decline, the housing sector is showing a consistent level of activity and higher prices than in the prior four years, but the annual rate of increase has cooled, and consumer confidence continues to be very strong. The following is specific information related to some of the major national economic indicators, beginning with Gross Domestic Product. The annual rate of growth of Gross Domestic Product in the third quarter of 2016 was estimated at 2.9%, according to an advance estimate released by the Bureau of Economic Analysis, up from the 0.8% growth rate in the first quarter of 2016 and 1.4% rate in the second quarter.1 The increase in GDP so far this year was due to increases in personal consumer spending, private inventory investment, federal government spending, upturn in federal government spending and exports.

The national seasonally adjusted unemployment rate has been fluctuating at the 4.9 % - 5.0% level. Nationally, employment gains occurred in several industries, led by leisure and hospitality, health care, financial, information and professional and business services. The numbers of unemployed workers have declined slightly since the beginning of 2016, at an estimated level of 7.8 million nation-wide2.

1http://www.bea.gov/newsreleases/national/gdp/gdphighlights.pdf, Bureau of Economic Analysis. 2 http://www.bls.gov/news.release/pdf/empsit.pdf


Data Source: www.bls.gov

• The September 2016 Federal Reserve press release from the Federal Open Market Committee confirmed that the labor market conditions continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Growth in household spending has been growing, but business fixed investment has been soft. Since the beginning of the year, the housing sector has improved further but business fixed investment has been soft. The Committee confirmed that inflation remains below the FOMC’s goal of 2%, partly reflecting earlier declines in energy prices and in prices of non-energy imports. The Committee’s assessment of the economic conditions was that these would continue to evolve in a manner that will warrant only gradual increases in the federal funds rate.3

• One of the major measures of consumer confidence is the Conference Board’s compiled Index of Consumer Confidence. The Index is based on consumer perceptions of current business and employment conditions, as well as consumer expectations for the following six months. The level of consumer confidence is associated with consumer anticipation of future developments in the economy, and is utilized as an indicator of the likely general direction of consumer spending in the coming months. The index reading has been fluctuating in 2016, improving to the level of 103.5 in September. Since then, the index dipped a little to a reading of 98.6, mostly due to dampening of the index of the present situation and consumer expectations.

3 http://www.federalreserve.gov/newsevents/press/monetary/20160921a1.pdf


• The second measure of consumer attitude, the University of Michigan Consumer Sentiment, paints a very similar picture. The October 2016 reading is below that from April of this year, mostly due to the expectations component that fell in October to one of the weakest readings of the last two years. Weakness in expectations indicates some doubts over the jobs outlook. The two indicators of consumer confidence represent a very similar picture.

• The US Conference Board tracks economic indicators in ten different areas to assess the health of the economy and to evaluate the direction of economic development in the near future. The cumulative product of the ten indicators is called the US Leading Economic Index (LEI). The US LEI has been on an increasing trend since early 2009. The index increased slightly from the reading of 123.7 at the end of June, to a reading of 124.4 in September.

“The U.S. LEI increased in September, reversing its August decline, which together with the pickup in the six-month growth rate suggests that the economy should continue


expanding at a moderate pace through early 2017… Housing permits, unemployment insurance claims, and the interest rate spread were the main components lifting the index in September.”, said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board.4 The graphic representation of the Conference Board Leading Economic Index for the U.S. since 1999 is shown in the following graph.

• At the national level, data on the housing sector indicates smaller fluctuations around the somewhat flat five-month average activity level. For the third quarter, starts nationally were mixed buy permits were up. Starts plunged by 9% in September, but the drop was tied entirely to the multi-family component, that tends to be very volatile. The single-family component was up sharply by 8.1%. Permits for both components were up with single-family 0.4% higher and with multi-family up 17%, in contrast to starts. The graph below shows national data.

4 The Conference Board, October 20, 2016, https://www.conference-board.org/pdf_free/press/US%20LEI%20-%20Press%20Release%20OCTOBER%2020%202016.pdf


https://www.conference-board.org/pdf_free/press/US%20LEI%20-%20Press%20Release%20OCTOBER%2020%202016.pdf

https://www.conference-board.org/pdf_free/press/US%20LEI%20-%20Press%20Release%20OCTOBER%2020%202016.pdf

• The national inflation rate as measured by the U.S. Consumer Price Index for All Urban Consumers (CPI-U) on a year-over-year basis came in at 1.5% in September, the highest rate since October 2014, as reported by the U.S. Department of Labor. Consumer prices rose a little, but the price of energy surged by 2.9% during September alone, delivering the largest impact on the change in the inflationary measure. The graph below shows annualized inflation rate changes in both CPI and Core CPI (less food and energy).

State Economy • The latest outlook from the Washington Economic and Revenue Forecast Council stated

that the Washington economy “…is expanding at a solid pace. In recent months Washington employment has grown faster than expected in the June forecast and historical estimates were revised higher. Washington exports continue to decline and manufacturing activity is struggling. Home prices are rising rapidly in the Seattle area but home construction has weakened in recent months.”


• State revenue collections are coming in higher than anticipated but most of the extra revenue came from large one-time payments of past-due taxes rather than taxes collected on current economic activity.5

Local Economy

• The number of residential permits is the local data equivalent for housing starts. In 2012 through 2013, the City saw a significant increase in the number of residential units permitted and their respective valuation. The 2014 data on single family residential houses permitted shows that only 189 were permitted during the year with a total valuation of $21.0 million. In 2015, the pace of permitting picked up -- a total of 366 residential permits were issued with a total valuation of $38.3 million. In the first half of 2016, a total of 244 single residential units were permitted, but then the numbers have dropped – only 30 residences were permitted in the third quarter, the lowest number permitted since fourth quarter of 2011. We will be monitoring this trend closely hoping the third quarter decline is an abnormality and not the signal of a change in the trend.

• Similarly to the national trends, the City has been seeing an increase in the number of

multi-family units permitted within the city limits. The number of new multi-family units permitted in 2013 was 657, roughly double that of 2011 and 2012. In 2014 and 2015, a total of 609 and 705 units were permitted, respectively. The first quarter of 2016 showed strong new multi-family construction activity, but there was a significant slowdown in the second and third quarters of 2016.

5 Washington June Economic & Revenue Forecast, http://www.erfc.wa.gov/publications/documents/sep16pub.pdf


• Activity level in the commercial sector has remained strong. A total of 13 commercial projects were permitted in the third quarter with the total valuation of $40.6 million.

Data provided by the Community and Economic Development Department, City of Vancouver.

• The local Portland-Vancouver metro inflation rate is published twice a year by the Bureau of Labor Statistics. The metro inflation rate (CPI-U) for the 12 month period ending in June of 2016 was 1.7%.6 Energy prices fell 10.8%, largely the result of a decrease in the price of gasoline. The index for all items less food and energy rose 3.2% over the year. The inflation rate for the second half of 2016 will be published in February of 2017.

6 http://www.bls.gov/regions/west/news-release/consumerpriceindex_portland.htm


• According to the Bureau of Labor Statistics, the city’s estimated unemployment rate at the end of September was 6.3%, slightly higher than the 6.0% reading at the county and below that in Portland metro at 4.8%.

Data provided by the Bureau of Labor Statistics

• Home sales are cyclical. Typically, they increase in the second and third quarters of the year. Home prices continue to stabilize nationally and locally, according to the S&P’s Case-Shiller Home price Index. During the last twelve months, the prices of houses in the Portland-Vancouver metro area have been consistently higher than those in the prior year by approximately 11.8%, indicating that locally the market has continued to be on an upward swing. The index for the metro housing market has grown faster locally than it did in the largest 20 cities of the country or nationally, and the values locally have exceeded those reached during the last housing bubble.


• Housing prices in Clark County have been increasing since December of 2011. The median sale price in Vancouver is estimated at $288.5 thousand, 9.5% higher on a year-over-year basis, according to the RMLS7. In 2016, the inventory in months has been fluctuating between 2.7 months in February to 2.1 months in September. Housing prices in the local area have likely reached their peak and are anticipated to start showing signs of slowdown in the coming months.

• Zillow evaluates Vancouver real estate market as healthy, relative to other markets across the county. The Market Health index is based on up to 10 metrics including those capturing the past and projected evolution of home values, the prevalence of foreclosures, foreclosure re-sales, negative equity and delinquency among others. The Vancouver market is currently rated at 9.6 out of 10 possible.

7 Market Action, September 2016, http://www.clarkcountyexpert.com/reports/CCMarketAction.pdf

III. Financial Results General Fund REVENUES

City of Vancouver General Fund revenues in the third quarter of 2016 totaled $100 million, or 71 % of the forecast for the year. The 2016 total collections exceeded those in the third quarter of 2015 by approximately $3.6 million. Tax revenues, in particular, exceeded those received in the third quarter of 2015 by approximately $3.9 million, mostly due to the additional 1.5% in utility tax revenue approved in 2016 for Streets and slightly stronger sales and property tax collections, partially offset by lower than forecasted revenues in taxes on natural gas and telephone taxes. Overall, the third quarter revenues remain on track and the City is likely to receive approximately $3.5 million more in revenue than was originally anticipated. Following is detailed information on the main revenue sources of the General Fund. Cumulatively, the seven chief sources of revenue listed on the chart below represent more than 87% of the total forecasted revenues in the City’s General Fund.


Note: Utility tax revenue above includes the tax on Solid Waste, Charges for Services exclude the Business License revenue.

Property Tax • Property tax revenues are typically received during the second and fourth quarters of the

year. The amount of revenue is based on the assessed valuation and is estimated using the County Assessor’s data. Deviations from estimates in this revenue source are mostly related to the amount of new construction and delinquency rates.

• By Council action, there was a 0.251% property tax levy increase for 2016 taxes. The total City of Vancouver levy rate in 2016 is $2.66 per $1,000 of assessed value, which is applied to a total taxable value of approximately $16.8 billion.

• The City experienced a 23.5% combined reduction in assessed valuation between 2009

and 2012. The reduction in assessed valuation resulted in an increase of the City’s property tax levy rate, but did not have any impact on the revenues. The City’s assessed valuation between 2013 and 2016 in total increased 21.6%, almost the same assessed valuation as that experienced in 2008 and 2009. The increase in assessed valuation for 2016 was 6.41%.

• A total of $25.9 million in property taxes was collected through the third quarter of 2016.

This year’s collections are approximately $55 thousand above comparable 2015 collections, reflecting the revenue increase due to new construction and the levy increase.


Note: The dollar amounts have not been adjusted for inflation.

Sales Tax

• The sales tax rate of 8.4% in the incorporated area is distributed as follows: 6.5% to the State, 0.5% for the City’s “basic” sales tax, 0.3% for the City’s “optional” sales tax, 0.2% for the City restricted to funding Public Safety, the County’s additional optional 0.1% for Law and Justice, 0.1% for addressing the region’s methamphetamine drug addiction and related crime, and 0.7% for C-TRAN.

• A total of $26.9 million in sales tax revenue was received through in the third quarter of

2016, approximately $1.4 million more than revenue received in the first quarter of 2015. In 2013, the City’s collections finally caught up with those in the pre-recession time, year 2007, (without adjustment for inflation for the past six year period). The fastest growing categories of retail sales are auto sales, construction-related and general merchandise. Sales tax collections in 2015 exceeded forecast by almost $4 million, most of it due to non-sustainable sales trends in the auto industry. The sales tax revenues are anticipated to increase by 5% compared to 2015. Below is a graph representing an annual change in the sales tax revenues of the City of Vancouver – the pace of growth appears to be tapering off.


• Growth in taxable retail sales in the last several years was fueled by improving real estate

market, new construction and auto sales.

Taxes on Privately Owned Utilities • Vancouver collects a 6% utility tax on electrical, natural gas and telephone services

provided within the incorporated area by entities other than the City. The City also charges cable franchise fees.

• Utility tax on privately owned utilities generated $13.2 million through the third quarter of

2016, approximately $0.4 million below collections during the comparable period of 2015, mostly due to lower collections in the electric and telephone taxes.

• Natural gas tax revenues in the third quarter of 2016 totaled $1.8 million, slightly below

forecast. During the similar time period of 2015, $2.2 million in natural gas revenue was collected.


• Telephone tax revenues in the third quarter of 2016 totaled $3.1 million, approximately $130 thousand below the comparable 2015 collections. The telephone tax revenue has been on a declining trend over the last several years.

• A total of $6.7 million was collected in electrical tax revenue during the third quarter of

2016, in line with the comparable 2015 collections. The forecast for 2016 anticipates an approximate 5% increase over the actual 2015 revenues. The actuals are coming in slightly below the anticipated level.

• The revenue from cable franchise fees totaled $1.5 million through the third quarter of 2016, similar to the comparable collections in 2015. The trend in this revenue has been declining over the past years, resulting in a forecast reduction for the year of approximately $150 thousand compared to 2015 collections.

Water, Sewer, Storm Water and Solid Waste Taxes

• The City Utility tax on Water, Sewer and Storm Water utility during 2016 is set at 21.5%. • Prior to 2010, the City charged a solid waste franchise fee for garbage collection services

to fund operations of the Solid Waste fund with a portion of the fees, equivalent to approximately a 12% tax rate, deposited into the General Fund for general use. In 2010, the franchise fee portion, (related to the general use), was converted to a utility tax of 20%. There was an increase of 1.5% in the utility tax on city-owned utilities fully dedicated to funding city streets.


• Utility revenue on city-owned utilities has been slowly increasing due to increases in the customer base as well as the underlying rate increases. The underlying water utility rates were increased by 5.0% in 2013, 2014 and 2015. Storm water rates were increased by 5.0% in 2014 and 2015 and sewer rates increased by 2.5% in 2014 and 2015. The rates had to be increased by 1.9% going into 2016 to allow for generation of the additional utility tax.

• A total of $16.9 million was collected in taxes of City-owned utilities through the third quarter of 2016, approximately $2 million higher than was collected during the comparable period of 2015.

• In 2015, residential water revenues generated approximately 80% of the total water user revenues, while residential sewer fee revenues made up 66% of the total sewer user revenues. A similar breakdown is anticipated in 2016.

Grant & Entitlement Revenues • The City anticipates receiving $1.1million in grants in 2016. The largest grants are those for

equipment in Police, and Brownfield and Commute Trip Reduction grants in the Community and Economic Development department. Grants are frequently reimbursing the City for the expenditures incurred, so most of the revenue comes in the second through last quarters of the year.

• Through September, the City received $380 thousand in grant reimbursements, approximately 34% of the anticipated revenue for the year.


Charges for Goods and Services The largest program areas that generate fee revenue are the Development Review Services and Recreation programs. The forecast for the year anticipates $4.9 million to be received in these two categories. Land Use and Other Planning Permits

• During 2008 through 2010, the City experienced a significant decrease in both the number of single family residential permits issued and in their valuation. The collections over 2011 through 2013 remained relatively flat. Years 2014 and 2015 saw significant annual increases in land use fees. Similar trends appear to continue into 2016.

• Through September of 2016, a total of $761 thousand in planning permit fee revenues was collected by the City, approximately $70 thousand below revenues received during the same time period of 2015. The activity remains elevated locally compared to the last few years.

Recreation Program Fees A total of $4.5 million in recreation fees is anticipated to be received in 2016,

representing a 9% increase over the actual revenues received in 2015. It appears that the activity in 2016 continues at the subdued level experienced over the last four years. Revenues will likely be short of forecast by approximately $0.3 million. Through the third quarter of the year a total of $3.4 million in recreation program fees was received, approximately 76% of the total forecast for the year and approximately $50 thousand more than was received last year during the same time period.

EXPENDITURES

• General Fund expenditures through the third quarter of 2016 totaled $102 million, or 70% of the budget for the year. The amount spent was approximately $4.5 million higher than the amount spent during the comparable period of 2015. The difference was mostly due to the timing of supporting transfers, largely the transfer to the Fire Fund.

• Departmental spending remains in line with that in 2015.

• Expenses vs. budget by category within the General Fund are shown in the chart below.


• Salaries and benefits expenditures in the General Fund totaled $33.7 million through the third quarter of 2016, or 72.2% of the budget for the year.

• General Fund expenditures in the supplies and services category were $7.8 million, or 53.5% of the budget.

• The intergovernmental category of expenditures includes payments by the City to other jurisdictions, based on inter-local agreements in place and internal transfers supporting other funds, including the Debt Fund, Fire Fund, and Street Fund. Expenditures in the Intergovernmental category reached $53 million through the third quarter, or 72% of the budget for the year.

• Internal expenditures were $7.5 million, $0.6 million below those in 2015. The reason for the lower expenditures is largely due to the fact that direct billing has not taken place between the General Fund and the Building Fund for the activity performed on behalf of the other fund. The difference is largely due to the timing of internal charges. The amounts will be trued up by the end of the year.

• Beginning in 2015, the cost of the internal services departments, (such as IT, HR, Finance and General Services), is proportionately reflected in the respective budgets of the direct service departments.

Cash Balance

• The General Fund operating cash balance was $41.6 million at the end of the third

quarter 2016. This is $2.8 million higher than the cash balance at the end of September 2015.

• In addition to the operating cash balance, the General Fund has an emergency reserve totaling $10.97 million at the end of September 2016, compared to $10.7 million in


September 2015. Council updated the financial policy related to the emergency reserve balance in 2012. The policy requires the emergency reserve balance to equal 7% of actual external revenues in the preceding fiscal year for the General, Street, and Fire Funds. These funds are intended to be used only for extraordinary events, such as natural disasters.

Fund Balance • The cash balance represents a snapshot on a particular date, while the fund balance

factors in revenues that are anticipated to be received by the end of the year and expenditures that are anticipated to happen through the end of the year.

• The total fund balance in the General Fund at the end of 2015 was $57 million, according to the City’s audited financial statements. A portion of the fund balance estimated at $0.3 million represents prepaid items and capital assets held for resale. The remaining balance is composed of the Restricted, Committed, Assigned and Unassigned balances. The Restricted balance of $0.1 million represents the grant revenue received in advance of expenditures in VPD. The Committed balance of $44.9 million represents reserves in accordance with the City Financial Policies: the City Emergency reserve of $10.7 million, Revenue Stabilization reserve of $3.6 million, reserve restricted for capital purposes of $0.9 million and the working capital of $29.7 million. The working capital is required to ensure sufficient cash flow in the fund. The balance pays for the ongoing operations of the General Fund when the incoming seasonal revenues are not sufficient to cover the expenses and eliminate the need for short-term borrowing. The Assigned reserve of an estimated $3.8 million represents funding of 50% of accrued compensated absences. The remaining portion of the balance of $7.9 million was undesignated at end of 2015.

Street Fund • Expenditures in the Street Fund through September were $12 million, or 68% of the budget,

approximately $1.6 million lower than comparable expenditures in 2015. • The revenues in the fund, (excluding a budgeted general fund transfer), totaled $6 million,

$0.4 million higher than comparable collections in 2015. This fund’s largest sources of revenue are state shared revenues from the motor vehicle fuel tax (MVFT), real estate excise tax (REET), and a transfer from the General Fund. The budgeted General Fund transfer to the Street fund is $11.8 million for 2016.

• Motor Vehicle Fuel Tax (MVFT) revenues almost reached $2.6 million through September of

2016, an amount similar to the comparable 2015 collections. This revenue source is a set tax per gallon that does not depend on the price of gasoline. The significant increase in gasoline prices nation-wide that were experienced over the past two years resulted in declining gasoline consumption in the state. The decline in consumption has been negatively impacting tax revenue collections state-wide and decreased the proportionate share of the tax received by the City.


Real Estate Excise Tax (REET)

• Real Estate Excise Tax (REET) of one-quarter of 1.0% of the selling price is imposed on each sale of real property in the corporate limits of the City. The tax is deposited into the Street Fund and is restricted to fund preservation of the City’s street system. The City also collects REET for Parks and Transportation capital.

• REET revenue was growing rapidly in years 2004-2006 fueled by the favorable real estate

market and increasing home prices. REET revenues declined significantly through 2010 since the housing bubble in 2005 and 2006. Since 2011, collections have been representing an upward trend. The real estate market is showing consistent signs of improvement.

• Through September of 2016, a total of $2.5 million was received in the REET revenue, $500

thousand higher than was received during the comparable time period of 2015. If the trend continues, the revenues will significantly exceed the forecast for the year. The graph below demonstrates fluctuations in REET collections over the past eleven years.


Street Funding Initiative • During 2015, an extensive, six-month long public process took place to determine what

would be the desired level of services in the city street and right-of-way maintenance program and what additional funding sources would be most appropriate to fund any desired enhancements in the service level.

• A special commission that reviewed the issue at hand was composed of individuals representing City Council, the community, businesses and neighborhoods.

• The recommendations prepared by the Commission on the desired service level and funding

were accepted and acted upon by City Council, resulting in new/increased revenues being directed to Streets to fund the desired operating and capital outcomes. The ultimate anticipated outcomes of this initiative are the improvement in the condition of City streets from the current “fair” to “good” over a period of twenty years, reconstruction of a major arterial every two years and improved maintenance of right-of-ways, among other things. Following is a link to the specific set of recommendations: http://www.cityofvancouver.us/sites/default/files/fileattachments/public_works/page/12554/streets_funding_commission_recommendation_final.pdf

• Year 2016 is anticipated to be the first year when the revenue is collected by City. The City

has pre-funded the activities related to right-of-way maintenance with City dollars so some of the results could be seen in 2016. A portion of the new revenue - vehicle license fees - will be coming into the Transportation Benefits District beginning July 1, 2016.

Below is the financial information related to the Operating Street Initiatives and the Capital Street Initiatives funds.

Revenues 2015 2016 2016 %

Actual Budget September Budget

Street Initiative Operating Fund 50,852 1,252,713 1,356,246 108% Street Funding Initiative - Capital Fund - 2,442,109 549,617 23%

Transportation Benefits District

- 721,060

Expenditures

Street Initiative- NEW Fund - 1,243,585 486,220 39% Capital Streets Initiative Fund (NEW) - 1,000,000 448,326 0

Consolidated Fire Fund

• The City has an Operating Fire Fund and Capital Fire Fund, largely funding vehicle replacements and set up. The Operating Fire Fund fully supports the Capital Fire Fund. The graph below represents the operating fund’s financial information.

• Operating Fire Fund revenues through the third quarter of 2016 were at $859 thousand, (exclusive of General Fund support, the Fire District 5 transfer and the transfer between Fire Operating and Capital), mostly representing permit and inspection fees. A pilot project is under way in the Fire Marshall’s office. Two new inspector positions were created in the 2015-2016 budget with an expectation of generating sufficient revenues to cover the costs


associated with these positions. In 2015, the two inspectors generated more than sufficient revenue to cover the costs.

• Total Fire Operating expenditures through the third quarter of 2016 were $27.4 million, approximately $1.5 million higher than those in the comparable time period of 2015, at 74% of the budget. Overtime expenditures are running very high in 2016.

Building Inspection Fund

• Building inspection fee revenues received through the third quarter of 2016 totaled $3.1 million, approximately $100 thousand higher than permit revenues generated during the comparable period of 2015.

• Building Fund expenditures through September of 2016 were at $3.9 million,

approximately $400 thousand higher than those in the comparable time period of 2015.

• The fund balance in the Building fund anticipates funding 18 months of permitting activity after the revenue is collected.


Parking Fund

• Fee and fine revenues through September of 2016 were $1.7 million, approximately $100

thousand above the comparable collections in 2015.

• The General Fund support of the Parking fund remained at the $1.25 million level in 2015 and is planned at the same level for 2016. The fund is anticipated to become fully self-supporting beginning in 2017.

• Operating expenses through September of 2016 totaled $2 million, approximately $500

thousand higher than those in 2015, mostly due to the Government Parking District program that will extend pay stations into a currently unregulated part of downtown.

Utility Operations Operating transfers between the Water, Sewer and Storm Water funds are included in the accompanying report, Attachment A, per budget requirements. These transfers are generally eliminated when financial statements are prepared. Financial statements for utility funds are prepared on a quarterly basis. Please call (360) 487-8441to receive a copy of the detailed financial statements for the utility funds. Water

• Water sales revenues were $23.2 million through September of 2016, or 78% of the forecast. Collections were almost $0.7 million above the comparable 2015 collections, largely due to the impact of tax increases for Street Initiatives, effective in 2016.

• Expenditures in the Water fund through September of 2016 totaled $25.1 million, or 60% of the

budget.

Sewer


• Sewer charge revenues in the Sewer Fund were $30.7 million through September of 2016,

approximately $1 million above the comparable 2015 revenues. Sewer rates were increased by 9% in 2011, 6.5% in 2012, 2.5% in 2013 and 2014 and 2% in 2015. The only rate increase in 2016 was to generate the tax revenue of 1.5%, dedicated to street funding.

• Sewer expenditures through the third quarter of 2016 totaled $32.8 million, $5.7 mil above

the 2015 comparable expenditures. Storm Water

• A total of $10.2 million in storm water fee revenue was received through September of 2016, approximately $0.5 million higher than the 2015 comparable revenues. The Storm Water rates were increased by 5% in 2013, 2014 and 2015. In 2016, the rates were increased to generate the 1.5% utility tax dedicated to streets.

• Overall, the expenditures in the Storm Water fund through the third quarter were $8.8 million, or 64% of the budget, higher than those in 2015 by approximately $1 million.


IV. Outstanding Debt

• At the end of the third quarter of 2016, the City had about $91.6 million of general obligation (G.O.) debt outstanding and approximately $21.3 million of revenue bond debt outstanding. General obligation debt is backed by the full faith and credit of the City and by general taxes. Revenue bond debt is supported by a pledge of specific revenues. All of the City’s revenue bond debt is supported by the City’s water and sewer utilities. The weighted average interest rate for the City’s general obligation debt is 3.28% while the average interest rate for the City’s revenue bond debt is 4.02%.

A complete list of the City’s outstanding debt is included in Attachment C.

V. Investments

Market Conditions • Information received since the Federal Open Market Committee met in September indicates

that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid. Household spending has been rising moderately but business fixed investment has remained modest. Inflation has increased somewhat since earlier this year but is still below the Committee's two percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up but remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

• In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and two percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from two percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

• The overall yield curve increased during the third quarter of 2016. The yield on the three-

month Treasury has increased ending at 0.25% at the end of the third quarter. The six-month Treasury yield has increased to 0.427%. The yield on the two-year Treasury has increased to 0.77%. The thirty-year Treasury yield increased, ending the second quarter at 2.32% from 2.3%. Market risk of the City’s portfolio is low. The average maturity of the portfolio has been kept at less than one year. The investment maturities are expected to meet the cash flow needs of the city and it is unlikely that an investment would have to be liquidated before maturity to meet the city cash needs.

• The City complies with State statutory guidelines and the City’s investment policies that limit the types of securities purchased. These consist of U.S. Treasury securities, federally-backed


agency securities, and other relatively risk-free investments. The City does not leverage its portfolio nor does it invest in derivatives.

Investment Performance The average amount invested during the third quarter of 2016 was $312 million compared to $288.1 million on September 30, 2015. The portfolio had an average yield of 0.65% year to date, which is 5 basis points lower than the projected yield of 0.70% for 2016. The projected yield is based upon the blended yield between existing rates and expected market rates when new investments are purchased during the year. The year-to-date yield is 22 bps higher than the State Investment Pool, which had an average yield of 0.51%. The State Pool has a weighted average maturity of 33 days. The City’s investment portfolio weighted average maturity is approximately 11 months. Longer-term portfolio yields will outperform shorter-term portfolio yields in a falling interest rate environment. Interest revenue distributed through the third quarter of 2016 to all funds is approximately $1,513,801 compared to $952,149 during the same period of 2015. The City’s investment portfolio profile is detailed in Attachment D.


VI. Interfund Loans In 2003, Council passed an ordinance giving the City Treasurer the authority to make interfund loans to meet the short term liquidity and cash flow needs of the City’s various funds. The ordinance requires the City Treasurer to provide a quarterly report to City Council showing the amount of all interfund loans outstanding and the repayment plan for those loans. Through the third quarter of 2016, one fund had an interfund loan, although the balance was zero at the end of the quarter.


ATTACHMENT A 2015 2015 % 2016 2016 % of

Expenditures Actuals SeptemberYE

Actuals Budget September BudgetGENERAL FUNDCity Council 485,079 358,945 74.0% 645,121 342,355 53%City Manager's Office 2,435,737 1,811,899 74.4% 2,593,466 1,891,795 73%Legal Services 4,155,107 3,067,057 73.8% 4,964,020 3,242,627 65%Community Economic Development 5,429,961 4,023,718 74.1% 5,684,809 3,727,726 66%Parks Administration 801,613 635,474 79.3% 945,390 571,661 60%Parks, Trails, & Natural Resources 1,114,145 611,027 54.8% 1,171,459 707,309 60%Recreation Services 6,702,990 5,004,441 74.7% 7,064,469 5,296,375 75%Police 38,395,903 27,557,046 71.8% 41,244,270 29,334,948 71%Transportation 28,461 28,132 - 1,623 Grounds Maintenance 3,242,014 2,410,773 74.4% 3,551,703 2,564,467 72%Facilities Maintenance 3,556,871 2,665,316 74.9% 3,631,110 2,336,845 64%

Subtotal Non-Gen. Governmental 66,347,881 48,173,828 72.6% 71,495,817 50,017,731 70%General Governmental

Child Justice Center Support 336,720 252,540 75.0% 347,348 270,117 78%City Cable Programming 460,596 345,447 75.0% 425,644 319,230 75%Fire District #6 18,157 18,157 100.0% 17,640 21,392 121%Emergency Mgmt (CRESA) 143,244 107,433 75.0% 146,631 109,358 75%Air Pollution Control Authority 53,885 53,885 100.0% 56,166 54,692 97%Humane Society 255,631 164,011 64.2% 292,853 181,484 62%Animal Control 281,137 206,165 73.3% 248,056 183,967 74%Alcoholism Support 38,449 18,417 47.9% 30,168 22,847 76%Regional Transp Council 21,300 21,300 100.0% 21,300 21,300 100%Election Support 303,549 - 0.0% 350,000 3,000 1%AWC, Chamber of Commerce Membership 84,239 73,629 87.4% 87,318 75,699 87%Opportunity Reserve 133,248 138,113 103.7% 221,102 73,845 33%Miscellaneous 7,105,727 501,239 7.1% 2,256,043 931,140 41%Public Defender 1,216,412 879,675 72.3% 1,250,933 1,121,118 90%County Jail Costs 3,567,397 1,904,601 53.4% 3,769,360 752,165 20%County Corrections Costs 1,255,606 841,794 67.0% 1,319,539 951,572 72%County District Court Costs 935,985 474,133 50.7% 1,034,054 572,193 55%General Obligation Debt Payment 6,881,850 831,341 12.1% 6,027,302 749,339 12%General Govt Support 53,577,055 42,578,406 79.5% 8,261,169 2,534,570 31%Street Support (formerly in General Support - - 14,613,428 9,975,976 68%Fire Support (formerly in General Support) - - 30,886,091 30,886,091 100%LEOFF Pension Support (formerly in General - - 2,836,000 2,126,997 75%

Subtotal General Govermental 76,670,185 49,410,285 64.4% 74,498,145 51,938,091 70%Total General Fund 143,018,067 97,584,113 68.2% 145,993,962 101,955,821 70%

SPECIAL REVENUE FUNDSStreet 19,966,124 13,653,661 68.4% 17,760,898 12,029,775 68%Street Initiative- NEW Fund - - 1,243,585 486,220 39%Fire Operating Fund 35,602,460 25,788,399 72.4% 36,845,259 27,389,154 74%Fire Capital Fund 859,647 277,861 32.3% 2,130,544 756,466 36%AMR Compliance Fund (New) 416,594 284,698 68.3% 664,717 341,424 51%Drug Enforcement and Investigative Funds 187,098 52,333 28.0% 438,073 12,985 3%Community Development Block Grant 3,889,529 3,440,739 88.5% 2,815,806 1,898,636 67%Tourism 1,064,322 665,256 62.5% 2,825,224 773,004 27%Criminal Justice/LLEBG 127,246 (77) -0.1% 819,574 96,087 12%Real Estate Excise Tax - I 3,341,023 502,697 15.0% 3,599,695 507,713 14%Transportation Special Revenue 2,094,516 636,743 30.4% 2,557,201 648,860 25%Parks & Recreation Special Revenue 40,407 24,129 59.7% 18,605 17,704 95%Parks Construction - Residual REET 54,116 32,355 59.8% 22,191 17,527 79%Downtown Initiatives 397,616 81,214 20.4% 100,750 83,841 83%VNHR Properties 158,584 78,053 49.2% 660,901 150,643 23%Senior Messenger 244,420 189,454 77.5% 321,998 211,239 66%TIF Funds 1,516,745 757,582 49.9% 4,937,482 292,072 6%PIF Funds 881,954 559,722 63.5% 3,102,179 629,425 20%

DEBT SERVICE FUNDSG O Debt Service Fund 36,456,827 26,596,190 73.0% 20,452,671 10,981,379 54%


ATTACHMENT A 2015 2015 % 2016 2016 % of

Expenditures Actuals SeptemberYE

Actuals Budget September BudgetL I D Debt Fund 153,082 153,082 100.0% 107,400 67,878 63%

CAPITAL FUNDS2011 Bond Capital Fund - Waterfront 155,487 43,627 28.1% 4,315,835 108,712 3%Transportation Capital Fund 11,697,485 10,051,376 85.9% 26,655,077 3,575,554 13%Capital Streets Initiative Fund (NEW) - 1,000,000 448,326 45%Fire Acquisition Fund 2,325,869 2,103,057 90.4% 12,989,130 1,282,622 10%Capital Improvement Fund 4,048,825 1,415,384 35.0% 7,920,408 2,671,605 34%VNHR Property Capital 547,900 511,865 93.4% 8,754,542 2,466,437 28%2015 Bond Capital Fund - VNHR (New) 448,403 595,199 132.7% 4,649,016 - 0%Parks Construction Fund (Capital Projects on 2,580,737 1,254,351 48.6% 29,201,361 2,479,772 8%City Tree Reserve Fund 14,900 4,569 30.7% 39,201 22,415 57%Drainage Construction Fund 586,011 322,968 55.1% 2,192,648 461,073 21%Systems Development Reserves 2,549,589 - 0.0% 2,554,548 - 0%Water Construction Fund 10,807,140 7,642,966 70.7% 28,482,410 5,107,960 18%Utility Customer Assistance 23,013 17,588 76.4% 35,000 14,212 41%Water Revenue Bond Debt Service Fund 58,454 620,017 1060.7% 645,160 636,605 99%Sewer Revenue Bond Debt Service Fund 1,769,485 9,984,715 564.3% 10,769,068 10,221,820 95%Sewer System Development 2,550,478 - 0.0% 2,555,525 - 0%Sewer Construction Fund 759,811 496,339 65.3% 8,407,881 1,812,573 22%

ENTERPRISE FUNDSStorm Water 12,501,417 7,790,275 62.3% 13,626,409 8,774,219 64%Water 39,374,091 21,817,585 55.4% 41,970,823 25,051,072 60%Sewer 44,580,281 26,931,476 60.4% 44,642,295 32,769,790 73%Building Inspection 4,926,400 3,529,660 71.6% 5,518,541 3,894,687 71%Solid Waste 2,455,379 1,440,320 58.7% 3,030,709 1,638,046 54%Parking 2,082,286 1,441,006 69.2% 3,602,379 1,953,609 54%Tennis Center 1,093,253 828,178 75.8% 1,336,982 797,412 60%Airpark 432,959 317,471 73.3% 1,280,469 597,633 47%

INTERNAL SERVICE FUNDSFacilities Asset Mgmt & Replacement Reserve 1,939,670 1,500,185 77.3% 8,526,826 4,200,185 49%Equipment Services Operations Fund 4,774,153 3,576,609 74.9% 5,740,269 3,742,814 65%Equipment ER&R Capital 2,083,724 1,260,874 60.5% 3,522,448 1,463,427 42%Technology ER&R 659,372 524,196 79.5% 1,633,819 755,615 46%Risk Fund 5,498,356 2,393,786 43.5% 5,113,017 2,899,655 57%Internal Administrative Services Fund (New) Finance 4,855,685 3,550,634 73.1% 5,506,739 3,611,537 66% Information Technology 5,137,694 3,938,448 76.7% 7,159,844 4,565,598 64% Human Resources 1,716,057 1,295,063 75.5% 1,864,562 1,169,877 63% General Services 183,683 159,795 87.0% 347,412 132,884 38%Benefits Fund 11,170,964 8,859,863 79.3% 11,321,358 7,274,334 64%Self Insured Health Insurance (New) 5,162,871 3,720,604 72.1% 6,896,631 4,422,510 64%Print Shop & Mail Services 193,415 145,696 75.3% 213,220 138,760 65%

AGENCY FUNDSSWAT Team 181,626 144,273 79.4% 182,754 104,853 57%Police Pension 740,132 449,837 60.8% 974,012 732,814 75%Fire Pension 1,417,836 910,852 64.2% 1,782,023 1,098,692 62%Cable TV 1,125,216 763,202 67.8% 1,091,098 702,723 64%PEG 656,684 250,614 38.2% 704,161 240,234 34%Transportation Benefits District (NEW) - - Notes

2. Operating transfers between funds are included within this report.1. This report was prepared using the methodology prescribed under the basis of budgeting, depreciation, appreciation costs have be

3. In 2015, Finance, Information Technology, Human Resources and General Services moved from General Fund to an Intenral Administrativce Services Fund.


ATTACHMENT B ADJ-15 SEP-15 SEP-16 SEP-16Revenues 2015 2015 % of 2016 2016 % of

Actual September YE Actual Budget September BudgetGENERAL FUND Tax Revenue

Property Tax 44,230,563 25,344,572 57% 44,959,107 25,903,997 58%Sales Tax 35,035,394 25,441,874 73% 34,334,609 26,871,744 78%Electrical Tax 7,941,368 6,741,825 85% 8,304,928 6,729,921 81%Natural Gas 2,621,807 2,174,283 83% 2,728,642 1,837,596 67%Telephone 4,154,451 3,249,711 78% 4,412,693 3,114,813 71%Cable Franchise Fee 1,968,024 1,475,109 75% 1,789,230 1,523,841 85%Water/Sewer/Storm Water 16,248,095 12,042,274 74% 17,297,391 13,628,012 79%Solid Waste Utility Tax 3,877,313 2,887,381 74% 4,200,716 3,251,613 77%Gambling and Leasehold Taxes 672,174 384,287 57% 618,079 431,861 70%

Subtotal Tax Revenue 116,749,189 79,741,316 68% 118,645,395 83,293,398 70%Business Licenses 1,095,045 777,012 71% 913,138 881,660 97%Grants & Entitlements 1,374,629 959,681 70% 1,114,651 379,856 34%State Shared Revenues 3,569,646 2,716,743 76% 3,531,579 3,337,425 95%Parks Contract with Clark County 67,396 50,286 75% - 51,708 Charges for Services

Planning Permits 782,485 688,488 88% 436,905 761,324 174%Recreation Program Fees 4,136,526 3,350,987 81% 4,511,632 3,406,849 76%Interfund Service Charges 3,371,937 2,748,356 82% 2,749,007 2,459,030 89%Other Charges & Services 819,322 562,115 69% 689,613 635,051 92%

Subtotal Charges for Services 9,110,270 7,349,946 81% 8,387,157 7,262,255 87%District Court 1,618,593 1,215,256 75% 1,675,240 1,226,673 73%Miscellaneous 977,065 765,729 78% 832,061 731,781 88%Lease Revenue (short and long-term) 3,574,825 2,460,878 69% 3,363,599 2,764,757 82%Operating Transfers 625,064 49,332 8% 1,503,016 117,440 8%

Total General Fund 138,761,723 96,086,179 69% 139,965,836 100,046,953 71%SPECIAL REVENUE FUNDSStreet Fund

Real Estate Excise Tax 3,246,532 2,083,711 64% 2,229,795 2,531,673 114%Motor Vehicle Fuel Tax 3,506,747 2,585,797 74% 3,560,605 2,621,167 74%Permits and Misc. 1,413,478 861,486 61% 980,886 807,216 82%Operating Transfers 11,831,555 8,838,726 75% 11,808,428 8,906,429 75%

Total Street Fund 19,998,313 14,369,720 72% 18,579,714 14,866,485 Operating Street Initiative Fund (NEW) 1,252,713 1,356,246 108%

Operating Fire FundService Charges-Fire Dist. #5 8,091,492 4,045,746 50% 8,373,653 4,257,487 51%Grant Revenue 43,329 62,011 143% 1,290 1,290 n/aPermit/Other Fees and Misc 1,164,508 883,743 76% 1,045,913 859,374 82%Operating Transfers 25,923,859 25,886,091 100% 26,005,283 25,886,091 100%

Total Operating Fire Fund 35,223,189 30,877,591 88% 35,426,139 31,004,242 88% Fire Equipment Fund 1,445,335 878,483 61% 1,363,945 932,665 68%

AMR Compliance Fund (New) 680,972 567,370 83% 680,000 568,769 84%Other Special Revenue Funds Street Initiative Operating Fund 50,852 - 0% 1,252,713 1,356,246 108%

Drug Enforcement 348,898 148,901 43% 335,000 213,907 64%Community Development Block Grant 3,818,039 3,355,771 88% 2,203,342 1,901,077 86%Tourism 2,129,442 1,433,593 67% 1,528,866 1,639,369 107%Criminal Justice/LLEBG 238,686 176,499 74% 301,490 186,363 62%Real Estate Excise Tax - I 3,124,470 1,965,042 63% 2,915,007 2,417,873 83%Parks & Recreation Special Revenue Fund 36,656 18,736 51% 18,605 5,226 28%Downtown Initiatives 177,035 129,610 73% 162,344 134,505 83%VNHR Properties 240,457 148,369 62% 563,053 215,786 38%Senior Messenger 290,206 222,100 77% 250,000 220,750 88%TIF Funds 588,500 501,155 85% 581,692 516,943 89%PIF Funds 1,820,394 1,281,751 70% 655,000 1,105,282 169%



Actual September YE Actual Budget September BudgetMiscellaneous Special Revenue Funds 716,670 338,360 47% 262,000 900,483 344%

DEBT SERVICE FUNDSG O Debt Service Fund 36,456,827 26,604,381 73% 20,302,666 10,984,156 54%L I D Fund 121,768 10,975 9% 4,000 770 19%CAPITAL FUNDS2011 Bond Capital Fund - Waterfront 19,013 15,252 80% - 21,899 n/aTransportation Capital Fund 10,786,104 6,352,237 59% 24,741,314 2,455,762 10%Capital Streets Initiative Fund (NEW) 2,442,109 549,617 23%Capital Improvement Fund 2,698,435 384,144 14% 5,789,441 484,349 8%Fire Acquisition Fund - 2,432,414 12,326,500 11,146,485 90%VNHR Property Capital 2,957,571 507,988 17% 6,781,056 785,934 12%Parks Construction Fund (Capital Projects o 13,457,520 695,556 5% 17,930,734 1,861,048 10%City Tree Reserve Fund 37,952 20,351 54% 81,348 86,874 107%Drainage Construction Fund 911,766 299,505 33% 2,282,157 90,151 4%Water/Sewer Capital Reserves 12,485 10,001 80% 10,000 14,953 150%Systems Development Reserves 3,321,361 2,507,129 75% 1,506,000 3,032,634 201%Water Construction Fund 15,343,983 459,355 3% 13,180,000 208,665 2%SCIP Fund 732,951 562,042 77% 615,000 461,177 75%Utility Customer Assistance 13,436 7,014 52% 41,000 5,917 14%Water Revenue Bond Debt Service Fund 646,305 532,555 82% 645,158 536,483 83%Sewer Revenue Bond Debt Service Fund 10,813,597 8,849,969 82% 10,784,067 8,887,576 82%Debt Service Reserves 7,633 6,115 80% 6,000 9,143 152%Sewer Utility Fund 46,840,575 31,647,947 68% 44,642,888 32,048,477 72%Sewer System Development 3,376,952 2,447,980 72% 2,053,000 3,126,203 152%Sewer Construction Fund 5,725,049 194,509 3% 3,370,000 21,865 1%ENTERPRISE FUNDSStorm Water

Storm Drainage Fees 12,373,597 9,042,557 73% 12,920,548 9,655,144 75%Private Capital Contributions 974,406 340,696 35% 150,000 271,218 181%Miscellaneous 373,501 269,136 72% 100,000 268,697 269%

Total Storm Water Fund 13,721,505 9,652,389 70% 13,170,548 10,195,059 77%Water

Residential Water Sales 23,338,172 17,965,095 77% 23,940,772 18,616,867 78%Commercial Water Sales 5,136,383 3,786,178 74% 4,987,379 3,830,503 77%Governmental Water Sales 985,320 806,350 82% 919,397 777,554 85%

Subtotal Water Sales 29,459,874 22,557,622 77% 29,847,548 23,224,925 78%Private Capital Contributions 6,338,529 1,984,560 31% 2,500,000 1,315,080 53%Interfund Transfers 2,681,098 4,760 0% 2,904,354 34,062 1%Indirect Cost Plan Revenue 1,570,615 1,202,749 77% 1,465,300 1,176,631 80%Miscellaneous 1,923,196 1,614,623 84% 1,301,308 1,371,407 105%

Total Water Fund 41,973,312 27,364,315 65% 38,018,510 27,122,106 71%Sewer

Residential Sewer Charges 26,033,424 19,511,694 75% 26,413,188 20,258,631 77%Commercial, Industrial Sewer Charges 12,145,094 9,029,520 74% 12,454,344 9,447,556 76%Governmental Sewer Charges 1,220,077 927,103 76% 1,412,056 963,453 68%

Subtotal Sewer Charges 39,398,594 29,468,317 75% 40,279,588 30,669,639 76%Private Capital Contributions 2,909,577 1,801,167 62% 600,000 950,982 158%Interfund Transfers 3,981,178 - 0% 2,820,000 - 0%Miscellaneous 551,225 378,463 69% 943,300 427,856 45%

Total Sewer Fund 46,840,575 31,647,947 68% 44,642,888 32,048,477 72%Building Inspection

Permits 3,747,752 2,895,315 77% 3,480,455 2,983,380 86%Miscellaneous 157,101 121,798 78% 153,421 130,896 85%Interfund Services 692,966 604,374 87% 639,402 248,881 39%

Total Building Fund 4,597,819 3,621,488 79% 4,273,278 3,363,156 210%



Actual September YE Actual Budget September BudgetSolid Waste

Solid Waste Utility Tax 1,096,068 822,051 75% 1,705,200 849,000 50%Service Charges-Recycling 618,174 334,455 54% 913,500 331,992 36%Miscellaneous 112,014 39,854 36% 30,450 29,919 98%

Total Solid Waste Fund 1,826,256 1,196,360 66% 2,649,150 1,210,912 184%Parking

Parking Fines 382,537 389,795 102% 578,000 405,693 70%Parking Meters & Lots 1,587,946 1,184,633 75% 1,707,560 1,291,359 76%Miscellaneous 38,423 25,813 67% (9,500) 8,373 n/aOperating Transfers 1,246,145 605 0% 1,245,540 - 0%

Total Parking Fund 3,255,051 1,600,846 49% 3,521,600 1,705,424 48%Tennis Center

Membership Fees 799,355 614,097 77% 910,306 626,766 69%Instruction and Miscellaneous 24,669 19,146 78% 132,535 15,610 12%Operating Transfers 391,598 171,170 44% 278,194 278,193 100%

Total Tennis Center Fund 1,215,622 804,413 66% 1,321,035 920,569 70%Other Enterprise Funds

Pearson Airfield 693,637 520,313 75% 749,346 525,829 70%Utility Customer Assistance 13,436 7,014 52% 41,000 5,917 14%

INTERNAL SERVICE FUNDSFacilities Asset Mgmt & Replacement Reser 1,838,531 1,380,794 75% 1,820,000 1,390,693 76%Equipment Services Operations Fund 5,090,883 3,774,779 74% 5,092,223 3,602,776 71%Equipment Services Capital Fund 3,137,085 2,378,705 76% 3,061,744 2,694,927 88%Computer Repair & Replacement 2,898,327 1,926,064 66% 3,103,980 2,259,373 73%Self-Insured Worker's Comp & Liability Fund 3,817,442 2,910,049 76% 3,567,982 2,704,467 76%Internal Administrative Services Fund 14,042,429 12,878,704 92% 14,227,672 8,539,517 60%Benefits Fund 9,913,855 7,227,245 73% 11,507,985 7,374,192 64%Self-Insured Health Insurance Fund 9,181,215 6,965,945 76% 5,860,865 5,368,077 92%Mail Services Fund 253,035 187,235 74% 254,511 171,905 68%AGENCY FUNDSSWAT Team 183,090 139,856 76% 209,898 127,952 61%Police Pension 1,087,546 816,905 75% 1,082,468 817,340 76%Fire Pension 1,962,342 1,523,411 78% 1,981,000 1,543,948 78%Cable TV 1,157,137 729,447 63% 1,029,923 620,245 60%PEG 742,603 557,348 75% 750,000 561,869 75%Notes1. This report was prepared using the methodology prescribed under the basis of budgeting.2. Operating transfers between funds are included within this report.


City of VancouverInvestment Activity

Third Quarter of 2016(Dollars in thousands)

As of Percent of As of Percent of6/30/2016 Portfolio 9/30/2016 Portfolio

State Investment Pool 68,950 22.2% 76,340 24.5%Clark County Investment Pool 253 0.1% 831 0.3%U.S. Agencies 210,994 67.9% 209,013 67.0%Corporate Bonds (Pension Fund) 1,022 0.3% 1,042 0.3%Municipal Bonds 13,443 4.3% 8,587 2.8%Municipal Bonds Zero Coupon 1,987 0.6% 1,991 0.6%Federal Agency Discount Bond 4,982 1.6% 4,991 1.6%Zero Coupon 9,193 3.0% 9,199 2.9%

Total by Investment Type 310,824$ 100.0% 311,994$ 100.0%

As of Percent of As of Percent of6/30/2016 Portfolio Cumulative 9/30/2016 Portfolio Cumulative

Overnight 74,523 24.0% 24.0% 80,597 25.8% 25.8%One Month 500 0.2% 24.1% 10,000 3.2% 29.0%Two to Six Months 77,097 24.8% 48.9% 61,631 19.8% 48.8%Six Months to One Year 62,427 20.1% 69.0% 52,949 17.0% 65.8%One to Five Years 96,277 31.0% 100.0% 106,817 34.2% 100.0%

Total by Length of Maturity 310,824$ 100.0% 311,994$ 100.0%

12 Months 11 Months


Investment ActivityThird Quarter 2016

Issuer Type of InvestmentTransaction

DateMaturity

Date Purchase or

Deposit Redemption or

Withdrawal

Effective Interest

Rate

JulyClark County Treasurer* Local Government Investment Pool 177.81 155,662.63 0.73%FFCB Federal Agency Coupon Securities 7/15/2016 2,000,000.00 0.51%FFCB Federal Agency Coupon Securities 7/8/2016 5,000,000.00 1.08%FHLB Federal Agency Coupon Securities 7/8/2016 5,000,000.00 1.04%FHLB Federal Agency Coupon Securities 7/13/2016 5,000,000.00 1.13%FHLMC Federal Agency Coupon Securities 7/27/2016 5,000,000.00 1.00%General Electric Corp Corporate Bond 7/12/2016 500,000.00 1.50%General Electric Corp Corporate Bond 7/22/2016 500,000.00 5.25%State of Washington Municipal Bond 7/1/2016 5,320,000.00 0.65%Washington State Treasurer* Local Government Investment Pool 17,242,851.68 19,000,000.00 0.52%

32,743,029.49 31,975,662.63

AugustClark County Treasurer* Local Government Investment Pool - 60,369.35 0.73%FFCB Federal Agency Coupon Securities 8/10/2016 5,000,000.00 1.40%FFCB Federal Agency Coupon Securities 8/24/2016 5,000,000.00 1.32%FHLB Federal Agency Coupon Securities 8/17/2016 5,000,000.00 0.42%FHLB Federal Agency Coupon Securities 8/17/2016 5,000,000.00 0.42%FNMA Federal Agency Coupon Securities 8/25/2016 5,000,000.00 1.00%Washington State Treasurer* Local Government Investment Pool 18,796,799.76 13,000,000.00 0.52%

28,796,799.76 28,060,369.35

SeptemberClark County Treasurer* Local Government Investment Pool 1,000,032.16 206,258.58 0.73%Douglas County WA Public UtilitiesMunicipal Bonds 9/26/2016 500,000.00 1.45%FFCB Federal Agency Coupon Securities 9/13/2016 5,000,000.00 0.69%FFCB Federal Agency Coupon Securities 9/16/2016 5,000,000.00 0.45%FHLB Federal Agency Coupon Securities 9/28/2016 5,000,000.00 0.50%FHLB Federal Agency Coupon Securities 9/9/2016 5,000,000.00 1.13%FHLMC Federal Agency Coupon Securities 9/8/2016 5,000,000.00 1.00%FHLMC Federal Agency Coupon Securities 9/16/2016 5,000,000.00 0.88%FNMA Federal Agency Coupon Securities 9/27/2016 5,000,000.00 1.25%Washington State Treasurer* Local Government Investment Pool 27,351,003.64 24,000,000.00 0.52%


City of Vancouver Investment Portfolio Including Call Dates

9/30/2016Purchase Maturity Par Market Book Percent Cumulative Interest Effective

Issuer Date Date Value Value Value of Portfolio Percent Rate Yield CallableClark County LGIP 831,197.64 831,197.64 831,197.64 0.3% 0.27% 0.679 0.670Washington State LGIP 76,340,539.84 76,340,539.84 76,340,539.84 24.5% 24.47% 0.485 0.479City of Seattle 06/04/2013 10/01/2016 3,425,000.00 3,432,535.00 3,425,000.00 1.1% 1.10% 3.000 0.541 Quarterly Callable. 10/27/2016.Federal Home Loan Bank 06/08/2015 10/17/2016 5,000,000.00 5,000,700.00 4,999,959.10 1.6% 1.60% 0.500 0.511 Non callable.Federal Farm Credit Bank 05/19/2015 10/19/2016 5,000,000.00 5,000,450.00 5,000,000.00 1.6% 1.60% 0.480 0.473 BulletFederal Home Loan Mortgage Co. 10/22/2012 11/01/2016 5,000,000.00 5,001,900.00 5,000,000.00 1.6% 1.60% 0.625 0.616 Quarterly Call. 11/17/2015.Port of Seattle WA 08/15/2014 11/01/2016 250,000.00 250,515.00 250,187.78 0.1% 0.08% 1.762 0.838 Continuous Call.Federal Home Loan Bank 11/13/2014 11/07/2016 5,000,000.00 5,001,300.00 4,999,900.73 1.6% 1.60% 0.60 0.612 Call 1x 01/28/2016.Federal Farm Credit Bank 11/20/2014 11/14/2016 5,000,000.00 5,001,550.00 4,999,870.52 1.6% 1.60% 0.600 0.613 Non Callable.Federal Nat'l Mtg. Assoc. 05/02/2013 11/15/2016 4,250,000.00 4,245,155.00 4,247,334.63 1.4% 1.36% 0.000 0.515 6/8/16 Quarterly Callable.Federal Farm Credit Bank 03/23/2015 11/23/2016 5,000,000.00 5,002,550.00 5,000,000.00 1.6% 1.60% 0.625 0.617 Non Callable.Federal Home Loan Bank 12/10/2015 11/23/2016 5,000,000.00 5,002,850.00 4,998,885.71 1.6% 1.60% 0.625 0.769 1x Call 03/28/2016.King County School District 06/23/2015 12/01/2016 2,530,000.00 2,540,018.80 2,535,866.86 0.8% 0.81% 2.000 0.909 05/25/2016 Quarterly Callable.Snohomish County School Distri 04/10/2015 12/01/2016 350,000.00 351,260.00 350,811.22 0.1% 0.11% 2.000 0.592 11/23/2016 Quarterly Callable.Whatcom County School District 07/23/2015 12/01/2016 250,000.00 250,890.00 250,563.11 0.1% 0.08% 2.000 0.631 Coninuous Call.Federal Home Loan Bank 05/07/2014 12/09/2016 4,000,000.00 4,013,200.00 4,006,761.77 1.3% 1.28% 1.625 0.710 Non callable.Federal Home Loan Bank 06/30/2015 12/16/2016 5,000,000.00 5,000,650.00 5,000,000.00 1.6% 1.60% 0.550 0.542 BulletFederal Home Loan Bank 01/15/2016 12/29/2016 5,000,000.00 4,994,400.00 4,991,347.22 1.6% 1.60% 0.700 0.713 5/24/2016. Quarterly Callable. Federal Home Loan Mortgage Co. 04/14/2015 01/27/2017 5,000,000.00 5,000,150.00 4,999,819.60 1.6% 1.60% 0.500 0.504 Non callable.Federal Farm Credit Bank 03/08/2013 02/22/2017 5,000,000.00 5,002,300.00 5,000,000.00 1.6% 1.60% 0.660 0.651 BulletFederal Home Loan Bank 03/04/2015 02/24/2017 5,000,000.00 5,004,400.00 4,999,798.59 1.6% 1.60% 0.700 0.700 Non callable.Federal Farm Credit Bank 08/24/2015 04/24/2017 5,000,000.00 5,005,850.00 5,000,000.00 1.6% 1.60% 0.750 0.740 BulletFederal Home Loan Bank 04/26/2016 04/26/2017 5,000,000.00 5,001,550.00 4,999,629.86 1.6% 1.60% 0.625 0.629 BulletFederal Home Loan Bank 04/28/2016 04/28/2017 5,000,000.00 4,999,900.00 5,000,000.00 1.6% 1.60% 0.650 0.641 BulletFederal Home Loan Mortgage Co. 12/21/2015 05/26/2017 5,000,000.00 5,006,100.00 5,000,000.00 1.6% 1.60% 0.750 0.986 1x Call 10/20/2015. Continuous aFederal Home Loan Mortgage Co. 12/22/2015 05/26/2017 5,000,000.00 5,006,100.00 5,000,000.00 1.6% 1.60% 0.750 0.987 BulletFederal Home Loan Bank 12/31/2015 05/30/2017 5,000,000.00 5,000,450.00 4,989,338.73 1.6% 1.60% 0.625 0.936 Quarterly Call. 11/13/2015.Chelan County Public Utility D 05/22/2015 06/01/2017 2,000,000.00 1,989,120.00 1,990,778.46 0.6% 0.64% 0.000 0.700 Quarterly Call. 12/28/2015.Federal Nat'l Mtg. Assoc. 03/01/2016 06/01/2017 5,000,000.00 4,975,900.00 4,951,550.00 1.6% 1.59% 0.763 0.770 5/25/2016 Quarterly Callable.Wachovia Corp 07/16/2015 06/15/2017 500,000.00 517,580.00 515,818.78 0.2% 0.17% 5.750 1.562 BulletFederal Farm Credit Bank 09/03/2015 07/03/2017 5,000,000.00 4,996,450.00 5,000,000.00 1.6% 1.60% 0.680 0.671 BulletFederal Home Loan Mortgage Co. 02/25/2016 08/25/2017 5,000,000.00 5,002,550.00 5,000,000.00 1.6% 1.60% 0.800 0.789 BulletDouglas County WA Public Utili 09/26/2016 09/01/2017 500,000.00 502,733.58 502,733.58 0.2% 0.16% 1.450 0.838 5/21/2016 Quarterly Callable.Federal Home Loan Mortgage Co. 09/28/2015 09/28/2017 5,000,000.00 4,998,700.00 5,000,000.00 1.6% 1.60% 0.800 0.789 BulletFederal Home Loan Mortgage Co. 10/27/2015 10/27/2017 5,000,000.00 4,996,500.00 5,000,000.00 1.6% 1.60% 0.750 0.718 Quarterly Call 7/28/2016.Federal Home Loan Mortgage Co. 10/30/2015 10/27/2017 5,000,000.00 4,994,000.00 5,000,000.00 1.6% 1.60% 0.720 0.710 Non callable.Federal Home Loan Mortgage Co. 10/29/2015 10/27/2017 5,000,000.00 4,996,500.00 4,999,327.99 1.6% 1.60% 0.750 0.752 Bullet.Federal Home Loan Mortgage Co. 11/24/2015 11/24/2017 5,000,000.00 5,000,800.00 5,000,000.00 1.6% 1.60% 0.900 0.888 Bullet.Federal Home Loan Mortgage Co. 02/24/2016 11/24/2017 5,000,000.00 4,995,250.00 5,000,000.00 1.6% 1.60% 0.950 0.918 BulletCity of Richland, WA 08/04/2015 12/01/2017 995,000.00 1,023,735.60 1,019,180.28 0.3% 0.33% 3.000 0.878 Continuous Call.Whatcom County School District 07/23/2015 12/01/2017 250,000.00 253,990.00 253,019.99 0.1% 0.08% 2.000 0.937 12/28/2016 Quarterly Callable.General Electric Capital Corp 07/22/2016 12/06/2017 500,000.00 526,040.00 526,188.26 0.2% 0.17% 5.250 0.770 1x Call 11/25/2015.Federal Home Loan Mortgage Co. 02/26/2016 02/26/2018 5,000,000.00 5,002,200.00 5,000,000.00 1.6% 1.60% 1.050 1.036 BulletFederal Home Loan Bank 04/27/2016 04/27/2018 5,000,000.00 5,000,550.00 5,000,000.00 1.6% 1.60% 1.030 1.016 BulletFederal Nat'l Mtg. Assoc. 05/05/2016 05/21/2018 5,000,000.00 5,000,250.00 5,000,000.00 1.6% 1.60% 1.030 1.016 Bullet.Federal Home Loan Mortgage Co. 07/27/2016 07/27/2018 5,000,000.00 4,990,600.00 5,000,000.00 1.6% 1.60% 1.000 0.986 5/25/2016 Quarterly Callable.Federal Home Loan Bank 09/09/2016 09/14/2018 5,000,000.00 5,022,011.17 5,022,011.17 1.6% 1.61% 1.125 0.885 BulletFederal Home Loan Mortgage Co. 09/16/2016 10/12/2018 5,000,000.00 4,997,893.23 4,997,893.23 1.6% 1.60% 0.875 0.884 BulletFederal Farm Credit Bank 04/08/2016 10/15/2018 5,000,000.00 4,989,500.00 5,000,000.00 1.6% 1.60% 1.100 1.085 BulletFederal Nat'l Mtg. Assoc. 05/24/2016 05/23/2019 5,000,000.00 5,000,000.00 5,000,000.00 1.6% 1.60% 1.350 1.332 BulletFederal Farm Credit Bank 06/27/2016 06/27/2019 5,000,000.00 4,994,250.00 5,000,000.00 1.6% 1.60% 1.120 1.105 Non callable.Federal Nat'l Mtg. Assoc. 06/28/2016 06/28/2019 5,000,000.00 4,999,900.00 5,000,000.00 1.6% 1.60% 1.200 1.184 Bullet.Federal Farm Credit Bank 07/08/2016 07/05/2019 5,000,000.00 4,988,400.00 5,000,000.00 1.6% 1.60% 1.080 1.065 Quarterly Call 07/28/2015Federal Farm Credit Bank 05/19/2016 08/19/2019 5,000,000.00 4,971,000.00 5,000,000.00 1.6% 1.60% 1.250 1.233 Non callable.Federal Nat'l Mtg. Assoc. 09/27/2016 09/27/2019 5,000,000.00 5,000,000.00 5,000,000.00 1.6% 1.60% 1.250 1.233 Non callable.Federal Home Loan Bank 07/13/2016 10/11/2019 5,000,000.00 4,975,600.00 4,999,431.82 1.6% 1.60% 1.125 1.141 Non callable.Federal Farm Credit Bank 08/24/2016 08/24/2020 5,000,000.00 4,988,000.00 5,000,000.00 1.6% 1.60% 1.320 1.302 BulletFederal Farm Credit Bank 08/10/2016 11/10/2020 5,000,000.00 4,992,200.00 5,000,000.00 1.6% 1.60% 1.400 1.381 CALL DATE 04/17/[email protected]

11 Months 311,994,746.47


City of VancouverOutstanding Debt - General Obligation BondsThird Quarter 2016

True FinalIssue Original Issue Amount Interest MaturityDate Purpose Amount Outstanding Cost (TIC) Date

Oct-02 To partially refund 1993, 1996, 1997, 1999, & 2000 LTGO issues, and issue $1.6 million for the Oracle HR/Payroll Management System Implementation

39,365,000 8,120,000 4.08% 12/1/2018

Jul-05 To construct & equip the East Precinct Police facility, and to partially refund the 98A and 98B LTGO bonds.

18,090,000 5,140,000 4.07% 12/1/2026

Oct-06 To fund multiple transportation projects and to fund the Marshall Community Center remodel

14,785,000 730,000 4.25% 12/1/2025

Jun-08 To fund West Police Precinct, Fire Station 810 and Police Evidence

14,570,000 1,185,000 4.51% 12/1/2027

Jun-09 To fund multiple Transportation Projects

12,970,000 1,790,000 4.03% 12/1/2028

Dec-10 To fund the new City Hall and partially refund the 2001 LTGO bond issue

13,410,000 9,205,000 4.50% 12/1/2035

Jun-11 To fund Transportation Projects for the Waterfront Access Project

10,515,000 9,325,000 3.93% 12/1/2035

Jan-12 To partially refund the 2003 LTGO bond issue for the Firstenburg Community Center

15,945,000 14,640,000 3.26% 12/1/2029

Dec-12 To partially refund the 2002 LTGO & Refunding bond issue for VancouverCenter, West Coast Bank, and Street Improvements

9,515,000 9,375,000 2.36% 12/1/2025

Jun-15 To fund the West Barracks rennovations (Vancouver Heritage Bonds)

1,296,500 1,296,500 4.33% 12/1/2028


Jun-15 To fund the West Barracks rennovations and to partially refund the 2005 LTGO, 2006 LTGO, and the 2008 LTGO issued for the East Police Precinct, West Police Precinct, Evidence Building, Fire Station 810, Transportation Projects, and the Marshall CC remodel.

23,100,000 23,005,000 2.72% 12/1/2034

Jun-16To Partially refund 2009 LTGO issued for Transportation Projects. 7,810,000$ 7,810,000$ 1.89% 12/1/2028

Total Outstanding General Obligation Bonds 91,621,500$


City of VancouverOutstanding Debt - Revenue BondsThird Quarter 2016

True FinalIssue Original Issue Amount Interest MaturityDate Purpose Amount Outstanding Cost (TIC) Date

Feb-04 Partially refund the 1999 Water/Sewer Revenue Bonds

26,250,000 11,980,000 3.998% 6/1/2020

Apr-05 Partially refund the 1997 Water/Sewer Revenue Bonds

42,520,000 9,320,000 4.037% 6/1/2018

21,300,000$


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