HomeMy WebLinkAboutIR 9477
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9477
March 20, 2012
To the Mayor and Members of the City Council
Page 1 of 1
SUBJECT: USING GAS LEASE REVENUE TO SERVICE DEBT
The purpose of this Informal Report is to provide an update on the potential use of gas lease
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revenue to support debt service. On February 7, staff briefed Council on the provisions for the
ancial Management Policy
Statements. During that presentation, a question on whether gas lease revenue associated with
bonuses, royalties and the interest thereon could be used to service debt. The intent of this
communication is to address that question.
In discussing this matter with bond counsel, it was stated that while gas
lease revenue may not be legally pledged for the payment of debt obligations, such revenue can
be contributed to the interest and sinking fund established to pay such obligations thereby
reducing the ad valorem tax revenue needed to pay debt service.
Given the depleting nature of these resources and the volatility associated with gas prices, usin
gas lease revenues to make debt payments has some risk. Therefore, staff recommends
continuing to use these resources to cash fund capital projects.This allows for a more efficient
the use of ad valorem taxes to support
debt service.
If you have any questions, please contact Lena H. Ellis at 817-392-8517 or Greg Jordan at (817)
392-8843.
Tom Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS