The URL can be used to link to this page

Home My WebLink AboutIR 9950 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9950 To the Mayor and Members of the City Council October 25, 2016 r� Page 2 of 4 �i {i7 Y *a SUBJECT: FINANCIAL MANAGEMENT POLICY STATEMENTS - REVISED GAS rrn RELATED REVENUE POLICY Non-substantive Changes to the Policy Include: 1. Revision of format to mirror recently adopted reserve policy appendices; 2. Updated language regarding the gas trust/endowment (the Fort Worth Permanent Fund) to reflect the language of the executed trust instrument, as amended (M&C G-18538); 3. Updated language regarding Lake Worth and Nature Center Funds to provide enhanced clarity without making substantive changes; and 4. Reorganization and editing of allocation lists to offer a more logical progression and enhanced internal cross-references. Financial Actions Required to Implement Revised Policy: The M&C will also recommend that the City Council approve actions to implement the revised policy. Specifically the M&C will recommend (1) reallocation of existing, unencumbered park bonus receipts from specific parks for which they were received to the park system as a whole; (2) delegation of authority to staff to effect transfers, make accounting entries, and take all other actions necessary to close the Utility Street Reconstruction Capital Improvement Projects Fund and the Golf Debt Service Fund; and (3) transfer of any balance remaining in those funds at their closing to a corresponding capital project fund The rationale for the recommended policy changes and their implementation follows. Park Bonus Under the current policy, all bonus revenue from gas leases associated with park land is designated for use for capital improvements at the park from which the bonus is generated. The M&C proposes a revised policy that changes the allocation of bonus revenue prospectively so that future revenue can be used within the overall park system and resources can be accumulated to complete larger scale projects. In addition, the M&C proposes implementing the policy change retrospectively by reallocating existing unencumbered park bonus revenues to the entire park system. Both the policy change and its application to the remaining unencumbered balance are in response to changes that have occurred in the market for natural gas and the City's related revenues over the last several years. Since the inception of the City's gas lease program in 2004, a total of$16,718,079 in park bonus revenue has been received. Of that amount only $108,000 has been received since the beginning of Fiscal Year 2014, with no bonus revenue receipts accruing in FY2016. Because bonus revenues are negligible, staff is recommending that they be allocated to the entire park system where they can be aggregated to make a significant impact on the Park and Recreation Capital Improvement Plan. Staff is also recommending the policy change be applied to reallocate existing unencumbered park bonus receipts. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9950 To the Mayor and Members of the City Council October 25, 2016 r� Page 3 of 4 �i {i7 Y *a SUBJECT: FINANCIAL MANAGEMENT POLICY STATEMENTS - REVISED GAS rrn RELATED REVENUE POLICY Only $419,100 in bonus receipts remains unencumbered, corresponding to a total of 39 parks. In light of the minimal amount that is available for each of the "host" parks, staff recommends the dollars be pooled to pay for larger capital improvements that have a greater impact and benefit to the citizens. Utility Street Reconstruction Fund Under the current policy, one fourth of gas-related fee revenue generated by the Water and Sewer System is allocated to the Utility Street Reconstruction Capital Improvement Projects Fund. That Fund was created and used to provide a dedicated funding source for pavement related expenses for water projects. With the implementation of comprehensive Capital Improvement Plans, those expenses are now factored into the Water Department's overall capital plan, and a separate, dedicated funding source is no longer needed. Staff recommends the money previously allocated to the Utility Street Reconstruction Capital Improvement Projects Fund be programmed to the Water and Sewer Gas Lease Capital Projects Fund. As revised, the allocation of Water and Sewer's gas-related revenues would be: 1. Seventy-five percent (75%) to the Water and Sewer Gas Lease Capital Projects fund; and 2. Twenty-five percent (25%) to the Water and Sewer System Endowment Gas Lease Fund. Staff also recommends that any remaining balance in the Utility Street Fund at the time of closing be transferred to the Department's gas capital projects fund, which is consistent with the revised policy. Golf Debt Fund Under the present policy, a portion of gas-related revenues generated by the City's golf courses is allocated to a Golf Gas Lease Debt Service Fund. When Golf was an Enterprise Fund (Proprietary) that allocation was consistent with accounting rules, as the program was expected to operate like a private business and fully cover its own debt and operating costs. However, in Fiscal Year 2015, the City Council acknowledged that profound changes in market conditions meant that the golf program could no longer be self-sustaining, and the Golf Fund was transitioned to a Special Revenue Fund (Governmental) via M&C G-18515. As a governmental fund, Golfs remaining debt was moved into and is being paid from the City's General Debt Service Fund, which derives its revenue from property taxes. Therefore, a separate Golf Gas Lease Debt Service Fund is no longer needed. As a result, the revised policy that is being recommended allocates one-hundred percent (100%) of the gas-related revenue from the City's golf courses to the Golf Gas Lease Capital Projects Fund. The M&C also recommends that any balance at the closing of Golf's debt service fund (currently projected to be ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9950 To the Mayor and Members of the City Council October 25, 2016 r� Page 4 of 4 �i {i7 Y *a SUBJECT: FINANCIAL MANAGEMENT POLICY STATEMENTS - REVISED GAS rrn RELATED REVENUE POLICY approximately $536,787) be transferred to the program's gas capital project fund, which is consistent with the revised policy. If you have any questions, please call Aaron Bovos, Chief Financial Officer, at 817-392-8517 David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS