HomeMy WebLinkAboutIR 9262 INFORMAL REPORT TO CITY COUNCIL MEMBERS No.
To the Mayor and Members of the City Council June 22, 2010
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SUBJECT: RETIREMENT OF DEBT FOR THE MUNICIPAL GOLF FUND
The purpose of this Informal Report is to outline for the City Council a proposed financial
management strategy, which will enable the Municipal Golf Fund to pay-off all existing bond funds
ahead of schedule. On the June 22, 2010 agenda there is an M&C authorizing the necessary
transfer of funds to enable the elimination of all debt service in the Golf Fund. In order to fund the
pay-off, a one-time waiver of the City's Financial Management Policy is necessary.
The Golf Enterprise Fund currently has a debt service balance of$2,050,000.00 as of May 2010.
This debt is a result of revenue bonds sold in the late 1990's and designated for improvements at
both Pecan Valley and Meadowbrook Golf Courses.
The City of Fort Worth Financial Management Policy Statements (Sect. I Revenues Subsection
1.4.e., Bonus and Royalty Revenue Management; Municipal Golf Fund) stipulates that all
revenues generated through lease bonus or royalties on golf course properties shall be divided
equally between payment of Debt Service/Fund Balance and Golf Course Capital Improvements.
The anticipated balance in the Golf Capital Project Fund [including all prior allocations less
appropriated expenses], after receipt of the Meadowbrook Golf Course gas lease bonus, is
estimated at $3,017,514. In order to fully fund the debt retirement a transfer from the Golf Capital
Project Fund (gas well revenues) to the Golf Debt Service Fund in the amount of$665,338 is
necessary. Currently, there is $1,379,281.00 designated for debt service and $1,638,233 for
future capital improvements. Once the debt is retired, there will be an estimated $967,514 in the
Capital Improvement Fund.
The use of gas well revenue to retire the outstanding golf debt will eliminate the principal and
interest payment in the Golf Fund's annual operating budget, thus reducing the operating budget
approximately $300,000 per year. The early retirement of the debt will also save an estimated
$500,000 in interest payments over the final ten years of the loan.
The Golf Advisory Committee endorsed this request on May 12, 2010, and the Parks and
Community Services Advisory Board also endorsed this recommendation on May 26, 2010.
Dal . Fissele
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS