The assignment of a rating by Fitch does not constitute

June 5, 2017

Ms. M. Elizabth ReichChief Financial OfficerDallas1500 Marilla StreetDallas, TX 75201

Dear Ms. Reich:

Fitch Ratings has assigned one or more ratings and/or otherwise taken rating action(s), as detailed in theattached Notice of Rating Action.

In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers andunderwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonableinvestigation of the factual information relied upon by it in accordance with its ratings methodology, andobtains reasonable verification of that information from independent sources, to the extent such sourcesare available for a given security or in a given jurisdiction.

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JS/mb

(Doc ID: 203130)

Jeff Schaub

The assignment of a rating by Fitch does not constitute consent by Fitch to the use of its name as anexpert in connection with any registration statement or other filings under US, UK or any other relevantsecurities laws. Fitch does not consent to the inclusion of its ratings in any offering document in anyinstance in which US, UK or any other relevant securities laws requires such consent. Fitch does notconsent to the inclusion of any written letter communicating its rating action in any offering document.You understand that Fitch has not consented to, and will not consent to, being named as an "expert" inconnection with any registration statement or other filings under US, UK or any other relevant securitieslaws, including but not limited to Section 7 of the U.S. Securities Act of 1933. Fitch is not an "underwriter"or "seller" as those terms are defined under applicable securities laws or other regulatory guidance, rulesor recommendations, including without limitation Sections 11 and 12(a)(2) of the U.S. Securities Act of1933, nor has Fitch performed the roles or tasks associated with an "underwriter" or "seller" under thisengagement.

It is important that you promptly provide us with all information that may be material to the ratings sothat our ratings continue to be appropriate. Ratings may be raised, lowered, withdrawn, or placed onRating Watch due to changes in, additions to, accuracy of or the inadequacy of information or for anyother reason Fitch deems sufficient.

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In this letter, "Fitch" means Fitch Ratings, Inc. and any successor in interest.

We are pleased to have had the opportunity to be of service to you. If we can be of further assistance,please feel free to contact us at any time.

Enc: Notice of Rating Action

Managing Director, OperationsU.S. Public Finance /Global Infrastructure & Project Finance

Notice of Rating Action

Bond Description Rating Type Action Rating Watch Eff Date NotesOutlook/

01-Jun-2017RO:StaNew RatingLong Term AA+Dallas (TX) wtrwrks & swr sys rev rfdg bonds ser2017

RO: Rating Outlook, RW: Rating Watch; Pos: Positive, Neg: Negative, Sta: Stable, Evo: EvolvingKey:

(Doc ID: 203130) Page 1 of 1

ACTUAL BUDGET ACTUALFY 2015-16 FY 2016-17 FY 2016-17 DOLLARS PERCENT DOLLARS PERCENT

OCT $21,768,868 $22,643,318 $23,256,127 $1,487,259 6.8% $612,809 2.7%NOV 20,523,724 21,429,628 $22,167,177 $1,643,453 8.0% $737,549 3.4%DEC 30,137,311 31,084,441 $30,146,384 $9,073 0.03% ($938,057) -3.0%JAN 21,258,240 21,150,897 $21,809,865 $551,625 2.59% $658,968 3.1%FEB 20,418,444 21,012,953 $21,898,775 $1,480,331 7.25% $885,822 4.2%MAR 27,481,662 28,497,411 $28,359,166 $877,504 3.19% ($138,245) -0.5%APR 22,264,607 22,648,188 $22,205,794 ($58,813) -0.26% ($442,394) -2.0%MAY 22,311,362 22,520,061 (22,311,362) -100.0% (22,520,061) -100.0%JUN 26,609,193 28,089,202 (26,609,193) -100.0% (28,089,202) -100.0%JUL 21,920,611 22,607,650 (21,920,611) -100.0% (22,607,650) -100.0%AUG 22,670,093 22,676,831 (22,670,093) -100.0% (22,676,831) -100.0%SEP 26,553,757 27,827,924

TOTAL $283,917,872 $292,188,504 $169,843,288 $5,990,432 3.7% $1,376,452 0.8%

YTD VARIANCE FY 16-17 ACT. VS. FY 15-16 ACT.

YTD VARIANCE FY 16-17 ACTUAL VS. BUDGET

SALES TAX as of April 2017

$0

$5

$10

$15

$20

$25

$30

$35

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

RE

VE

NU

E R

EC

EIV

ED

$ M

illio

ns

MONTHLY SALES TAX REVENUESFY 16-17 vs. FY 15-16 COMPARISON

FY 15-16 Actual FY 16-17 Budget FY 16-17 Actual

FY 2016-17 Financial Forecast Report

Information as of April 30, 2017

AsofApril30,2017(000s)

GENERALFUND

2

GENERALFUNDREVENUES

3


GENERALFUNDREVENUES

4

GENERALFUNDEXPENDITURES

5


GENERALFUNDEXPENDITURES

6


PROPRIETARYFUNDS

7


PROPRIETARYFUNDS

8


PROPRIETARYFUNDS

9


PROPRIETARYFUNDS

10


PROPRIETARYFUNDS

11


OTHERFUNDS

12


OTHERFUNDS

13


DEBTSERVICEFUND

14

1. TheGeneralFundbudgetwasamended/increasedbasedonCouncil’sapproveduseofcontingencyreservefunds:

Increasedby$500onFebruary22,2017byCR#17-0438foradditionallegalservicesnecessarytocontinuerepresentingfourDallasCityCouncilmemberswithregardtotheDallasPoliceandFirePensionSystem;

Increasedby$759onMarch22,2017byCR#17-0483foractuarialservicesrelatedtotheDallasPoliceandFirePensionSystem;and

Increasedby$330onMay24,2017foranincreaseinthejointelectionsagreementandelectionservicescontractbetweentheCityofDallas,DallasCountyandotherjurisdictions.

2. AdValoremtaxrevenuesareforecasttobe$1,681overbudgetbasedoncurrentyearpropertytaxreceiptstrendingaboveaverage.

3. Sales tax revenues are forecast to be $1,376 over budget based on current sales tax receipts.Salestaxreceiptshaveincreasedby4.2percentoverthemostrecent12months.

4. AtmosEnergyrevenuesareforecasttobe$1,454overbudgetduetoincreasedgasconsumptionbycustomers.

5. OtherFranchiserevenuesareforecasttobe$1,377belowbudgetduetosubscribersswitchingfromcabletosatelliteserviceswhichisreducingcablefranchisefees.

6. Interest earned revenues are forecast to be $1,911 above budget due to an increase in themarketinterestrate.

7. Intergovernmental revenuesareprojected tobe$618abovebudgetprimarilydue toa refundcheckreceivedfromtheDallasCountyElectionsDepartmentandaDallasFireRescuedeploymentreimbursementreceivedfromtheState.

8. Municipal Court revenues are forecast to be $1,626 below budget primarily as a result of adecreaseinthevolumeofcitationsbeingissued.

9. VehicleTowingandStorage inesareforecasttobe$494overbudgetduetoanincreaseintowsaswellasvehiclesstayingontheautopoundpropertylongerthananticipated.

10.Public Library revenues are projected to be $176 below budget due to implementation ofautomaticrenewalonmaterialsthathavebeencheckedoutatlibrarylocationsandanincreaseinthe usage of e-materials. Fines and late fees are not collected on e-materials as they areelectronicallyrecalledontheduedate.

(Dollarsin000s)

NOTES

15

11.EmergencyAmbulancerevenuesareprojectedtobe$8,241overbudgetduetoananticipatedincreaseinthereimbursementfromtheStatebasedontherecentcostreport.

12.Other Charges for Services is projected to be $4,907 below budget primarily due to thereduction of ire watch fees, contract delays for the Mobile Community Health Program and achange in the interlocal agreement with Parkland Health System for Biotel services wherebygovernment entities that would formerly reimburse the City for Biotel services now contractdirectlywithParkland.

13.City Auditor’s Of ice expenditures are forecast to be $163 below budget due vacancies andsalarysavings.

14.Human Resources Department expenditures are forecast to be $349 below budget due tovacanciesandsalarysavings.

15.Non-Departmental expenditures are forecast to be $4,312 below budget primarily due tosavingsinthemasterleaseprogram.

16.PoliceDepartmentexpendituresareforecasttobe$1,945belowbudgetprimarilyasaresultofsalary and pension savings offset by increased use of overtime and increased vacation/sicktermination payments. Pension savings were adjusted to re lect changes in state law effectiveSeptember1,2017.

17.Salary and Bene it Reserve funds were allocated to City Attorney’s Of ice ($87) and CityManager’sOf ice($342)tooffsetvacation/sickterminationpayments.

18.Sustainable Development and Construction is projected to be $3,749 below budget due tovacanciesandtechnologyenhancementsdeferredtoFY2017-18.

19.SanitationServicesrevenuesareprojectedtobe$7,750abovebudgetduetoanincreaseincashcustomers at the land ill. Expenses are projected to be $2,014 above budget due to increase inland illactivity.

(Dollarsin000s)

NOTES

16

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The assignment of a rating by Fitch does not constitute