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Q3 2017TOWN OF NANTUCKET Quarterly Financial ReportQuarterly Financial Report Third Fiscal Quarter Ended March 31 2017March 31, 2017 Table of Contents Financial Highlights..........1 General Fund Revenues..........2 Results for most recent quarter..........3 Results for year-to-date period..........4 Gl Fd E 5General Fund Expenses..........5 Results for most recent quarter..........6 Results for year-to-date period..........7 Capital Investments..........8 Financing Activity..........9 Investment Report..........10 Outlook: Muni Watch 11Outlook: Muni Watch..........11 Financial Highlights The Town of Nantucket ended its third quarter of fiscal year 2017 in a favorable position. Economic activity on the  island remains strong with tourism real estate and building industries leading the way The growth period seen overisland remains strong with tourism, real estate and building industries leading the way. The growth period seen over  the last few years has translated into higher collections of local receipts, such as local rooms and meals taxes, and  has also resulted in increased demands for municipal services across the board.  The flagship project for FY2017 has been the construction of the new Nantucket Intermediate School (NIS), which is  expected to be completed by the end of this fiscal year. The new facility will help the Town accommodate the  steadily growing student population at Nantucket Public Schools. General Fund Revenues Third quarter General Fund (1)revenues were $24.5M, representing a $1.7M increase (+7%) over the third quarter  last year. Real estate and personal property taxes collected were the main drivers behind the quarter‐over‐quarter  increase. Fee & Rentals as well as a few other revenue categories were affected by timing differences in collections.  FY2017 year‐to‐date, the Town collected $67.5M, equivalent to a $1.8M increase (+3%) compared to the same  period last year. Year‐to‐date results show the Town has met or exceeded its annual budget goals for Excise Taxes,  Fees & Rentals, as well as Fines & Forfeits categories and is on its way to reaching all targets by the end of the fiscal  year In FY2016 the Town received a $836 305 refund for emergency repairs to the Town pier related to Stormyear.  In FY2016, the Town received a $836,305 refund for emergency repairs to the Town pier related to Storm  Juno. Excluding this one‐time revenue, the Town is ahead by $2.7M (+4%) for FY2017 as compared to the same nine  months last year. General Fund Expenses General Fund expenses ended the quarter at $17.5M, equivalent to a $1.2M increase (+7%) over the third quarter  of FY2016. School spending was behind nearly half the increase while Debt Service and Group Insurance, comprised  mostly of health insurance coverage for employees, made up another good portion. Project management and  maintenance initiatives have also had an expected impact on expenditures over the quarter. Year‐to‐date, General  Fund expenses totaled $60.6M, representing an increase of $2.7M (+5%) over the same nine months last year. The  rise in year‐over‐year expenses was due to higher health insurance and pension costs as well as continued financial  support to the operations of two enterprise funds: Our Island Home and Solid Waste.  Third Quarter General Fund Revenues Third Quarter General Fund Expenditures (2) 5‐Yr History (in millions of dollars) 5‐Yr History (in millions of dollars) $1 7M $1.8M $2 7M $1.6M $1.8M  $2.2M  $2.4M  $2.4M  $0.1M  $2.0M $2.3M $2.4M  $3.2M  $3.0M  $0.0M $0.3M $0.9M  $0.8M  $0.7M  $4.1M $5.1M $5.2M  $7.0M $7.3M  $0.9M  $1.2M $1.1M  $1.7M $ $2.3M  $1.6M $2.7M  Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 $17.2M $16.6M $17.0M $18.9M $20.8M  Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 (1) General Fund: general government, safety & protection, marine department, maintenance, human services, culture & recreation,  and contractual obligations.  (2) Excludes school spending which was $6.5M in Q3/FY17 (see next page). Salaries & Benefits Operational Expenses Debt Service Transfers & Other Real Estate & Property Taxes Local Receipts State Aid & Other 1 General Fund Revenues Where does the money come from? General Fund Revenues (1) For Fiscal Quarter Ended March 31, 2017 15% 2%6%Motor Vehicle Excise Tax Local Rooms Tax Local Meals & Other Excise 46% 3%7% 11% 10% Fees & Rentals License & Permits State Local Aid Fines & Forfeits Other Third Quarter Rooms Tax (in thousands of dollars) Third Quarter Motor Vehicle Excise Tax (in millions of dollars) $130K  $1 7M $1.7M $81K  $95K $104K  $1.1M  $1.3M $1.4M  $1.7M $1.7M  Third Quarter Meals Tax (in thousands of dollars) Third Quarter Building Permits (in thousands of dollars) (2)    $0K  Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 $ $67K  $79K $86K  $94K  $212K  $163K  $262K  $322K  $277K  (1) Excludes real estate and personal property tax revenue, which equals approx. 81% of total revenues collected in Q3/FY17. (2) Prior to FY2014, the Town of Nantucket collected Room Excise Tax semi‐annually instead of quarterly. (2)    $0K  Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 2 General Fund Revenues Results for most recent quarter Three Months Ended March 31, QTR/QTR FY2017 FY2017 Actuals FY2016 Actuals % Change $ Change Budget Real Estate Taxes 20,416,947$        18,562,691$        10% 1,854,256$        72,568,546$      Personal Property Taxes 384,814                333,207               15% 51,607                1,632,421         Excise Taxes Motor Vehicle Excise Tax 1,716,555            1,666,241           3% 50,315                2,150,000         Local Rooms Tax 130,318                104,055               25% 26,263                2,566,000         LlMlT 93 845 86 059 9%7786 900 000Local Meals Tax 93,845                  86,059                 9%7,786                   900,000             Other ‐ Includes Penalties & Interest 167,061                154,328               8% 12,733                640,470             Subtotal ‐ Excise Taxes 2,107,779            2,010,683           5% 97,096                6,256,470         Charges for Services 8,499                     7,021                    21% 1,478                   44,600               Fees & Rentals Planning Board Filing Fees 17,678                  13,225                 34% 4,454                   84,500               Plumbing & Wiring Inspection Fees 101,000                135,463               (25%) (34,463)               226,000             HDC Filing Fees 81,971                  48,357                 70% 33,614                202,500             Concession Rental Fees ‐                              2,000                    (100%) (2,000)                 ‐                           Marine Mooring Rentals & Docking Fees 25,157                  43,033                 (42%) (17,876)               180,300             Other 184,316                220,024               (16%) (35,708)               433,735             Subtotal ‐ Fees & Rentals 410,123                462,102               (11%) (51,979)               1,127,035         License & Permits Building Permits 277,431                321,602               (14%) (44,171)               1,010,000         Li Li 50 600 62 500 (19%)(11900)230 300Liquor Licenses 50,600                  62,500                 (19%)(11,900)               230,300             Other 39,075                  52,368                 (25%) (13,293)               216,750             Subtotal ‐ License & Permits 367,106                436,469               (16%) (69,363)               1,457,050         State Local Aid School Aid 511,179                745,236               (31%) (234,057)            2,980,944         Other 37,035                  56,627                 (35%) (19,592)               197,543             Subtotal ‐ State Local Aid 548,214                801,863               (32%) (253,649)            3,178,487         Fines & Forfeits Parking Fines 69,396                  23,531                 195% 45,865                230,000             Other 3,850                     3,275                    18% 575                      14,800               Subtotal ‐ Fines & Forfeits 73,246                  26,806                 173% 46,440                244,800             Investment Income 30,788                  32,481                 (5%) (1,692)                 110,500             Other Departmental Revenue Town Gas Sales 14,832 10,005 48%4,827 69,500Town Gas Sales 14,832                  10,005                 48%4,827                   69,500               Off Duty Police and Fire Personnel 7,975                     7,206                    11% 769                      60,000               Other 12,392                  181,889               (93%) (169,497)            53,290               Subtotal ‐ Other Dept'l Revenue 35,199                  199,100               (82%) (163,902)            182,790             Miscellaneous ‐                              ‐                             na ‐                           49,245               Transfer & Other Sources Debt Premium ‐                              ‐                             na ‐                           ‐                           Indirect Costs 154 825 na 154 825Indirect Costs 154,825                ‐                             na 154,825              ‐                           Special Revenue Fund Transfer ‐                              ‐                             na ‐                           ‐                           Enterprise Fund Transfer ‐                              ‐                             na ‐                           ‐                           Other ‐                              ‐                             na ‐                           ‐                           Subtotal ‐ Transfer & Other Sources 154,825                ‐                             na 154,825              ‐                           Total General Fund Revenue 24,537,540$         22,872,422$          7% 1,665,118$        86,851,944$       3 General Fund Revenues Results for year-to-date period Nine Months Ended March 31,YTD/YTD FY2017,/FY2017 FY2017 Actuals FY2016 Actuals % Change $ Change Budget Real Estate Taxes 53,882,070$        51,218,558$        5% 2,663,512$        72,568,546$      Personal Property Taxes 1,092,823             1,068,148            2% 24,675                1,632,421         Excise Taxes Motor Vehicle Excise Tax 2,238,668             2,100,209            7% 138,459              2,150,000         Local Rooms Tax 3,391,879             3,315,484            2% 76,396                2,566,000         Local Meals Tax 985,997                 927,322                6% 58,675                900,000             Other ‐ Includes Penalties & Interest 451,643                 507,310                (11%) (55,667)               640,470             Subtotal ‐ Excise Taxes 7,068,187             6,850,324            3% 217,863              6,256,470         Charges for Services 30,822                   29,798                  3% 1,025                   44,600               Fees & Rentals Planning Board Filing Fees 83,935                   62,268                  35% 21,667                84,500               Plumbing & Wiring Inspection Fees 262,408                 282,339                (7%)(19,931)               226,000            g g p ,,()(, ), HDC Filing Fees 212,719                 140,471                51% 72,248                202,500             Concession Rental Fees 129,923                 206,075                (37%) (76,153)                ‐                           Marine Mooring Rentals & Docking Fees 155,862                 262,627                (41%) (106,765)            180,300             Other 323,916                 420,762                (23%) (96,846)               433,735             Subtotal ‐ Fees & Rentals 1,168,763             1,374,542            (15%) (205,780)            1,127,035         License & Permits Building Permits 891,361                 887,764                0% 3,597                   1,010,000         ()()Liquor Licenses 111,400                 141,550                (21%)(30,150)               230,300             Other 124,821                 159,663                (22%) (34,841)               216,750             Subtotal ‐ License & Permits 1,127,582             1,188,977            (5%) (61,395)               1,457,050         State Local Aid School Aid 2,044,716             1,987,296            3% 57,420                2,980,944         Other 148,936                 153,802                (3%) (4,867)                 197,543             Subtotal ‐ State Local Aid 2,193,652             2,141,098            2% 52,554                3,178,487         Fines & Forfeits Parking Fines 239,677                 199,477                195% 45,865                230,000             Other 14,125                   11,675                  18% 575                      14,800               Subtotal ‐ Fines & Forfeits 253,802                 211,152                20% 42,649                244,800             Investment Income 65,142                   110,845                (41%) (45,703)               110,500             Other Departmental Revenue Town Gas Sales 31 841 43 507 (27%)(11 667)69 500Town Gas Sales 31,841                   43,507                  (27%)(11,667)               69,500               Off Duty Police and Fire Personnel 34,780                   20,514                  70% 14,266                60,000               Other 41,564                   1,052,792            (96%) (1,011,228)         53,290               Subtotal ‐ Other Dept'l Revenue 108,184                 1,116,813            (90%) (1,008,628)         182,790             Miscellaneous ‐                              11,388                  na ‐                           49,245               Transfer & Other Sources Debt Premium ‐                              35,307                  (100%) (35,307)               ‐                           Idi tCt 464 475 464 475Indirect Costs 464,475                 ‐                             na 464,475              ‐                           Special Revenue Fund Transfer ‐                              ‐                             na ‐                           ‐                           Enterprise Fund Transfer ‐                              266,150                (100%) (266,150)             ‐                           Other ‐                               ‐                             na ‐                            ‐                           Subtotal ‐ Transfer & Other Sources 464,475                 301,457                54% 163,018               ‐                           Total General Fund Revenue 67,455,502$         65,623,101$           3% 1,832,401$        86,851,944$       4 General Fund Expenses Where does the money go? General Fund ExpensesGeneral Fund Expenses For Fiscal Quarter Ended March 31, 2017 37% 10% 6%2% Education Group & General Insurance Safety &Protection37% 19% 13% 11% Safety & Protection General Gov't Debt Service Maintenance Third Quarter Operational Expenses (1) (in millions of dollars) Third Quarter Salary Expenses (2) (in millions of dollars) All Others $0.9M  $1.2M $1.1M  $1.7M $1.8M  $2.9M $3.0M $3.1M  $4.1M $4.2M  Third Quarter Health & Other Group Insurance (in millions of dollars) Third Quarter Debt Service (P&I) (in millions of dollars) Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 $1.6M  $1.9M $2.1M  $2.9M $3.1M  $2.3M  $1.6M  $2.7M  $1.6M  $1.8M  (1) Excludes Debt Service, Transfers and State Assessments, which are subject to timing differences (2)Excludes Health Insurance & Other Group Insurance, Pension Costs and Contractual Obligations. Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 Q3/FY13 Q3/FY14 Q3/FY15 Q3/FY16 Q3/FY17 5 General Fund Expenses Results for most recent quarter Three Months Ended March 31, QTR/QTR FY2017 FY2017 FY2016 % Change $ Change Budget (1) General Government Finance Committee 9,629$                   2,042$                   372% 7,587$                18,680$                  Finance & Operations 540,403                 479,899                13% 60,503               2,370,839             Human Resources 65,080                   58,124                  12% 6,956                 272,139                 Information Systems / GIS 182,793                 292,908                (38%) (110,115)           955,059                 Legal / Town Counsel 114,917                 97,662                  18% 17,255               468,602                 Moderator ‐                               ‐                             na ‐                          1,680                     Planning & Land Use Services 468,357                 438,674                7% 29,683               1,829,459             Town Administration 346,019                 266,857                30% 79,162               1,604,876             Natural Resources 148,498                 157,913                (6%) (9,415)               654,052                 Town Clerk 87,345                   88,429                  (1%) (1,084)               343,360                 Subtotal 1,963,042$            1,882,510$           4%80,532$             8,518,746$            Safety & Protection Emergency Management ‐$                            1,163$                   (100%)(1,163)               7,075                    mergency Management $,63$( 00%)(,63)7,075 Fire Department 665,617                 665,714                (0%) (97)                     2,992,011             Police & Animal Control 1,597,188              1,419,169            13% 178,019            6,070,403             Street Lighting 23,833                   29,309                  (19%) (5,476)               165,000                 Subtotal 2,286,637$            2,115,354$           8%171,283$           9,234,489$            Marine & Coastal Resources Marine Department 54,381$                 56,876$                 (4%) (2,495)               820,581                 Subtotal 54,381$                 56,876$                 (4%)(2,495)$              820,581$               Maintenance Gas / Town Vehicles 70,624$                 47,973$                 47% 22,651               446,033                 Mosquito Control ‐                              ‐                             na ‐                          105,063                 Public Buildings 226,600                 184,475                23% 42,125               1,198,038             Public Works 600,153                 563,539                6% 36,615               2,958,805             Snow & Ice Removal 211,971                 183,171                16% 28,800               151,590                 Subtotal 1,109,348$            979,158$              13%130,191$           4,859,528$            Human ServicesHuman Services Human Services 75,333$                 70,728$                 7% 4,605                 436,967                 Subtotal 75,333$                 70,728$                 7%4,605$                436,967$               Culture & Recreation Atheneum 175,541$              346,720$              (49%) (171,178)           702,165                 Town Clock 141                         103                        36% 38                       4,777                     Visitor Services 117,635                 99,757                  18% 17,878               472,440                 Subtotal 293,317$              446,580$              (34%)(153,263)$         1,179,382$            Other Expenditures Debt Service Principal 1,341,800$            1,091,800$           23% 250,000            5,566,241             Debt Service Interest 486,360                 469,928                3% 16,432               1,513,824             Group Insurance 3,107,561              2,908,936            7% 198,625            12,052,110           General Insurance 206,685                 197,817                4% 8,868                 1,860,263             Retirement Assessment ‐                              ‐                             na ‐                          3,921,257             Cherry Sheet Assessments 68,026                   99,146                  (31%) (31,120)             427,300                 Contractual Obligations ‐                               ‐                             na ‐                          386,611                 (1) Budget includes prior year encumbrances, enterprise fund transfers and trust fund transfers. (2) Includes annual transfer to Community School. g , Intergovernmental ‐                               ‐                             na ‐                          8,000,985             Education (2) 6,492,156              5,992,471            8% 499,685            27,348,866           Subtotal 11,702,589$         10,760,099$        9%942,490$           61,077,457$         Total General Fund Expenses 17,484,647$         16,311,304$           7% 1,173,343$       86,127,148$          6 General Fund Expenses Results for year-to-date period Nine Months Ended March 31, YTD/YTD FY2017 FY2017 FY2016 % Change $ Change Budget (1) General Government Finance Committee 15,710$                  8,175$                  92% 7,535$                18,680$                  Finance & Operations 1,392,438              1,467,416           (5%) (74,978)             2,370,839             Human Resources 167,616                  152,215               10% 15,400               272,139                 Information Systems / GIS 650,396                  578,697               12% 71,699               955,059                 Legal / Town Counsel 282,634                  255,447               11% 27,187               468,602                 Moderator 178                          ‐                            na 178                     1,680                     Planning & Land Use Services 1,247,567              1,149,315           9% 98,251               1,829,459             Town Administration 1,028,473              782,686               31% 245,786            1,604,876             Natural Resources 395,590                  384,255               3% 11,334               654,052                 Town Clerk 260,868                  217,333               20% 43,534               343,360                 Subtotal 5,441,468$            4,995,540$          9%445,927$           8,518,746$            Safety & Protection Emergency Management 1,367                       1,859                   (26%)(491)                   7,075                    mergency Management ,367 ,859 (6%)(49 )7,075 Fire Department 1,946,600              1,947,945           (0%) (1,344)               2,992,011             Police & Animal Control 4,079,645              4,066,146           0% 13,499               6,070,403             Street Lighting 59,131                    70,575                 (16%) (11,444)             165,000                 Subtotal 6,086,744$            6,086,525$          0%219$                   9,234,489$            Marine & Coastal Resources Marine Department 551,478                  545,430               1% 6,048                 820,581                 Subtotal 551,478$                545,430$             1%6,048$                820,581$               Maintenance Gas / Town Vehicles 170,518                  150,778               13% 19,740               446,033                 Mosquito Control 65,386                    73,764                 (11%) (8,378)               105,063                 Public Buildings 561,084                  535,820               5% 25,264               1,198,038             Public Works 1,870,688              1,928,516           (3%) (57,828)             2,958,805             Snow & Ice Removal 245,147                  231,363               6% 13,784               151,590                 Subtotal 2,912,822$            2,920,240$          (0%)(7,418)$              4,859,528$            Human ServicesHuman Services Human Services 202,157                  200,194               1% 1,963                 436,967                 Subtotal 202,157$                200,194$             1%1,963$                436,967$               Culture & Recreation Atheneum 526,624                  693,439               (24%) (166,815)           702,165                 Town Clock 1,625                       317                       412% 1,307                 4,777                     Visitor Services 328,145                  328,495               (0%) (350)                   472,440                 Subtotal 856,394$                1,022,251$          (16%)(165,858)$         1,179,382$            Other Expenditures Debt Service Principal 5,641,916              5,273,997           7% 367,919            5,566,241             Debt Service Interest 1,405,515              1,286,789           9% 118,727            1,513,824             Group Insurance 7,925,583              7,186,058           10% 739,525            12,052,110           General Insurance 1,290,188              1,223,733           5% 66,455               1,860,263             Retirement Assessment 3,922,150              3,567,128           10% 355,022            3,921,257             Cherry Sheet Assessments 271,483                  48,080                 465% 223,403            427,300                 Contractual Obligations ‐                                 ‐                            na ‐                          386,611                 (1)Budget includes prior year encumbrances, transfers to enterprise funds and transfers to trust funds. (2) Includes annual transfer to Community School. g , Intergovernmental 7,692,785              7,105,000           8% 587,785            8,000,985             Education (2) 16,416,016             16,421,349         (0%) (5,333)               27,348,866           Subtotal 44,565,636$           42,112,134$       6%2,453,502$       61,077,457$         Total General Fund Expenses 60,616,698$           57,882,314$          5% 2,734,384$       86,127,148$          7 Capital Investments Maintaining and improving the infrastructure FY2017 Top 10 Capital Projects Year‐To‐Date Expenditures 1. New Intermediate School Construction $27,665,961 2. Boulevarde / Lovers Ln Reconstruction $1,716,051 3. Easy Street Bulkhead Reconstruction $1,099,539 4. Brant Point Propagation Facility Construction $819,165 5. Other Road Repairs (Island‐Wide)$552,532 6. Other School Improvements $170,841 7. Other Pier Repairs $51,600 8. Other Building Improvements $29,647 9. Public Works Garage Design & Renovation $19,775 10. Parking Improvements (2 FG, 4 FG)$10,533 New intermediate school is expected to be complete by the end of the fiscal year Total $32,135,644 Reconstruction of the Easy Street bulk head has been completed 8 Financing Activity How much do we owe? The General Fund’s total outstanding debt was $106.0M as of the end of the third fiscal quarter This total includes $79.9M in principal and $26.1M in interest obligations related to the principal  Approximately 57% of General Fund debt is scheduled to be amortized over the next 10 years Principal and interest payments due in FY2017: $6.9M Principal and interest payments due through the end of FY2021 (approx. 5 years): $33.7M The Town monitors borrowings and other performance measures against Financial Policies adopted in  FY2017 to ensure continued stability and prudence The Town’s Credit Rating External credit ratings have a direct influence on the Town’s ability to: Minimize borrowing costs Successfully borrow funds to complete the improvement and construction of long‐term assets and  the Town’s infrastructure In October 2016, Moody’s affirmed the Town’s rating of Aa2 During the same period, Standard & Poor’s initiated coverage on the Town of Nantucket’s general obligation  debt in a report establishing a AA rating Both ratings represent the second highest rating on the agencies’ municipal credit rating scale The Town is expecting a visit from Moody’s in May 2017 as it prepares to raise long‐term debt to pay for  projects such as the new intermediate school, airport projects, and other capital projects currently underway Type of Bond Issued Moody’s Rating Standard & Poor’s Rating General Obligation Aa2 AA 9 Outlook The Muni Watch Periods based on fiscal calendar (1)Trend (2) Local Receipts Last Qtr Qtr/Qtr LTM Yr/Yr 3 Mo LTM DetailsLocal Receipts Last Qtr Qtr/Qtr LTM Yr/Yr 3‐Mo LTM Details Building Permits $277,431 (14%) $1.2M 8% Rooms Tax $130,318 25% $3.5M 3% Meals Tax $93,845 9% $1.1M 7%‐ Yellow if trend is between +5% and ‐10% Motor Excise Tax $1,746,555 5% $2.7M 2%‐ Red if trend is below ‐10% Local Indicators For Local Receipts categories: ‐ Green if trend is 5% or above Real Estate ‐ Sales ($M) $182M (9%) $994M 11% Real Estate ‐ Transactions 99 (13%) 511 0% SSA Freight Revenue ($M) $5.4M 8% $27M 4% SSA Nantucket Passengers 132,833 9% 660,544 2% GA Airport Landings 601 8% 13,917 11% between 0% and ‐3%, Red if trend is < 3% Airport: Private aircraft activity. SSA categories: ‐ Green if trend ≥ 0%, Yellow if Green if trend ≥ 5%, Yellow if 0% to 5%, Red if < 0% Real Estate categories: ‐ Green if trend ≥ 0%, Yellow if between 0% and ‐10%, Red if trend is < 10% Nat'l Leading Indicators Current 3‐Mo 12‐Mo 3‐Mo LTM LIBOR T‐Bill Yield Spread 0.39% 0.52% 0.36% Sr Loan Officer Survey 1.4% 1.5% (7%) S&P 500 Performance 2,363 2,239 2,059 WeeklyInitial Claims 247 250 257 000 265 000 ‐ Difference between 3mth LIBOR & 3 mth treasury bill  (< 0.5% signals stability). ‐ Fed Reserve: % of loan officers seeing loan standards  tightening for med/large firms (< 10% is positive). ‐ S&P 500 index as proxy of performance of risky  equity assets. Level > 1950 is positive. ‐ 4‐wk average of unemployment insurance initial  Quarterly Building Permits (in thousands of dollars) Quarterly Real Estate Sales (in millions of dollars) Quarterly Real Estate Sales 4 QTR Moving AverageQuarterly Building Permits 4 QTR Moving Average Weekly Initial Claims 247,250 257,000 265,000 claims, < 300,000 is positive.$175M$211M$274M$343M$163M$156M$251M$289M$200M$209M$317M$287M$182M$163K$297K$272K$238K$262K$242K$310K$257K$322K$332K$274K$340K$277KQuarterly Motor Excise Tax (in millions of dollars) Quarterly Meals Tax (in thousands of dollars) Quarterly Rooms Tax (in millions of dollars) $1.34M $1.38M $1.66M $1.75M $1.30M $1.56M $1.56M $1.65M $1.55M $1.71M $382K $383K $424K $418K$432K $460K $0.57M $0.29M $0.14M $0.70M $0.27M $0.17M $0.57M $0.39M $0.14M $0.08M $0.08M $0.09M $0.08M$0.10M $0.11M $0.13M $67K $75K $79K $64K $86K $71K $94K (1) Local receipt and local indicator data comparisons are based on the Town’s fiscal year (ex: Q1 = 7/1‐9/30).(2)LTM refers to “last twelve months”. 10 Investment Report How safe is our money? The following is a report prepared by the Town’s investment manager, Morgan Stanley: Trust Funds Account balance: $9,109,348 Asset Allocation: 10% Equity, 89% Fixed Income, 1% Cash Feb 2017 – made initial 10% allocation to Equities. While maintaining a liquid, conservative allocation, we believe  having a small equity exposure will help overall returns while providing dividend income and a hedge against risinghaving a small equity exposure will help overall returns, while providing dividend income and a hedge against rising  interest rates. Equities are comprised of the 21 companies on the MA Legal List of Investments. Fixed income investments are comprised of investment grade Corporate bonds, US Gov’t Agency bonds, and CDs. The annual projected income on the portfolio is $262,026 (approximately 2.9% yield) OPEB Fund Account balance: $1,383,516 Asset Allocation: 51% Equity, 48% Fixed Income, 1% Cash Feb 2017 –Given the long‐term nature of OPEB funds and the favorable equity environment, we increased the  equity allocation from 40% to 50%. Fixed Income investments are comprised of investment grade corporates and CDs. Fiscal Year to date return (7/1/2016 ‐3/31/17) of the OPEB fund was 3.15%, and 4.39% since inception (5/6/2014) Equity Portfolio Overview Nantucket’s equity portfolio is comprised of the 21 stocks listed on the Massachusetts List of Legal InvestmentsNantucket s equity portfolio is comprised of the 21 stocks listed on the Massachusetts List of Legal Investments. The Legal List portfolio of stocks returned 8.4% over the 1st quarter, versus a return of 6.1% for the S&P 500. Overall equity markets have performed well YTD, following improving US and global economic data, positive  corporate earnings, and market enthusiasm surrounding various political agenda items. Fixed Income Market As of 3/31, the 10 Year Treasury rate was 2.40%, down slightly from the year‐end rate of 2.45%. During Q1 however, bond prices remained volatile and the 10‐Year ranged from 2.31% to 2.62%. The Federal Reserve raised interest rates in January, again by 0.25%, to a target range of .50% to 0.75% Bond investors continue to debate the extent and pace of Federal interest rate hikes in 2017. Strategy Outlook We expect the equity markets will continue to move higher throughout 2017, driven by improving economic data  and positive corporate earnings. Throughout the year, we expect periods of higher volatility due to US political uncertainty, equity valuation  concern and broader geopolitical risksconcern, and broader geopolitical risks. We anticipate the Federal Reserve will continue to slowly raise interest rates, possibly two additional times in 2017. 11