HomeMy WebLinkAboutResolution 4076-03-2012A Resolution
NO. 4076 -03 -2012
DISSOLVING THE TRUST ADVISORY COUNCIL FOR THE FORT WORTH
PERMANENT FUND
WHEREAS, natural gas drilling, production and pipeline revenues derived from the Barnett Shale
are projected to produce significant and unique financial benefits for the City of Fort Worth (the "City ");
WHEREAS, gas well drilling, extraction and production activities in the Barnett Shale have and will
continue to result in economic benefits for the City and the region;
WHEREAS, revenues from the one time gas lease bonuses and royalty collection on City property
are significant but they are also a volatile and unpredictable source of revenue subject to the variability of
gas well production levels, commodity market prices, gas use levels and the pressures of ever increasing
costs of extraction;
WHEREAS, Barnett Shale gas production is a finite resource and as a result production revenue and
tax revenue from the extraction of natural gas from the Barnett Shale are predicted to diminish over time;
WHEREAS, the City Council, on behalf of current and future generations has expressed its
commitment, intent and desire to take full advantage of this unique opportunity to maximize the value of this
one time revenue windfall for the current and perpetual benefit of all Fort Worth citizens;
WHEREAS, on January 8, 2008, the City Council adopted amendments to the Gas Lease Revenues
Distribution Policy of the City of Fort Worth Financial Management Policy Statements, establishing a trust
fund, setting procedures for distribution and allocation of revenues derived from gas well bonus and royalty
lease revenues and ad valorem tax revenues in M &C G- 16013;
WHEREAS, the goal of the trust fund is to produce income from investments and be a long -term source
of revenue for the benefit of both present and future citizens of Fort Worth;
WHEREAS, as set forth in M &C G- 16013, the trust fund will be managed by a corporate trustee
appointed by the City Council (the "Trustee");
WHEREAS, on June 10, 2008, Resolution No. 3624 -06 -2008 established a nine
member Trust Advisory Council charged with considering and making recommendations
to the Trustee and the City Council on gas well revenue management strategies and
issues to ensure fiscal stability of the trust fund, monitoring the trust fund performance,
recommending annual disbursements to the City and recommend fund management
decisions; and
WHEREAS, the terms of all appointees expired on or before May 31, 2011.
ORT WOIiTT
A
Resolution No. 4076 -03 -2012
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS, THAT:
1. The Trust Advisory Council is hereby dissolved; and
2. The creation and management of a Gas Lease Revenue Trust Fund shall be
managed in accordance with the City's Financial Management Policy
Statements.
Adopted this 20th day of March, 2012.
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ORT WOI T
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 3/20/2012 - Resolution No. 4076 -03- 2012
DATE: Tuesday, March 20, 2012
LOG NAME: 13FY2012FMPS AMEND
REFERENCE NO.: G -17551
SUBJECT:
Authorize Amendment of the Financial Management Policy Statements to Dissolve the Trust Advisory
Council and Establish a Gas Lease Revenue Trust and Adopt Resolution (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached resolution dissolving the Trust Advisory Council; and
2. Authorize amendment of the Financial Management Policy Statements to establish a Gas Lease
Revenue Trust Fund with oversight from the City of Fort Worth Chief Financial Officer.
DISCUSSION:
The Financial Management Policy Statements (FMPS), initially adopted by the City Council on January
15, 1994 require an annual review by the City Council. The FMPS is periodically updated with revisions
and refinements as deemed necessary.
On December 13, 2011, the City Council approved the Fiscal Year 2012 FMPS. As part of the adoption,
the City Council requested a review of the section pertaining to the Trust provision of the Revenues from
Gas Leases and Pipeline Agreements section.
On February 7, 2012, Staff presented an overview of the Trust provision, which was accompanied by
recommendations for enhancement. City Council then directed staff to bring forward an amendment to the
FMPS that establishes a trust with oversight from the Chief Financial Officer. Adoption of the attached
Resolution will dissolve the Trust Advisory Council, which was created via Resolution 3624 -06 -2008 on
June 10, 2008.
Additionally, Staff recommends Section I, Revenues I, Trust, be amended as follows:
Trust
a. The City shall establish a Trust Fund that will be structured and governed in such a manner to
achieve maximum investment flexibility, maximum investment protection and professional investment
management. The Trust will be managed to ensure the long -term preservation and growth of the Trust
principal.
b. The Trust will be managed by a corporate trustee appointed by the City Council in accordance with
the City Charter and the State Local Government Code. A name m9ermber eititem Trust Advi5ary Gatineil,
Logname: 13FY2012FMPS AMEND Pagel of 3
evaltiate the effeetivemess of alleeatiom amd investrmemt deeisiOM5. The Trust Advisory Gotine"' will hold a
. The City's Chief Financial Officer (CFO) will be empowered to make
fund management decisions and recommendations that are consistent with an adopted investment policy
of the City Council. The CFO shall serve as the financial guardian of the Trust ensuring fiscal stability,
overseeing the Trustee that is appointed by the City Council monitoring fund performance and
recommending to the City Council the amount of funds available for disbursement annually in accordance
with Section f. The CFO shall be excluded from making specific expenditure decisions which will be made
by the City Council upon recommendation by the City Manager.
C. The Trust instrument may be substantively amended upon the approval of a super majority vote of
the City Council. Prior to such vote, the City Council shall
68 days at the thmfd ptiblie heafing. hold three public hearings. Any vote to substantively amend the Trust
instrument shall occur six or more months after the initial public
hearing.
d. To the extent not in conflict with any other common law or any other statutes applicable to the Trust
Fund, the Trustee shall retain all powers granted to Trustees by the Texas Trust Code and particularly is
to have the power to invest and reinvest the Trust estate in accordance with the goals and stipulations of
the governing Trust instrument.
e. The determined percentage of bonus and royalty revenue from various sources are to be held in a
consolidated account, which will be divided into different sub - accounts and such other sub - accounts that
may be approved by the City Council including, but not be limited to, the Aviation Endowment Gas Lease
Fund, the Park System Endowment Gas Lease Fund, the Nature Center Endowment Gas Lease Fund
and the Water and Sewer Endowment Gas Lease Fund.
f. The goal of the Trust Fund is to produce income from investments and be a long -term source of
revenue for the benefit of both present and future citizens of Fort Worth. The Trustee, in close cooperation
with the CFO, will recommend to the City Council distribution procedures for the different
funds of the Trust consistent with the goal to preserve, as well as increase, the principal of the Trust. The
amount of income available to be distributed each year from a particular fund of the Trust shall be
determined by the Trustee and the Trust Advisefy Gatineil CFO by July 1 st, of each year and shall be
based on a spending rule which allows for reasonable growth of the principal. In the event that investment
regulations prohibit the intended growth and expansion of the Trust, a provision for dissolution of the Trust
will be incorporated into the initial Trust instrument. Dissolution of the Trust will first require a
determination and recommendation of the Corporate Trustee and the Trtist Advisory Gatineil CFO.
FISCAL INFORMATION / CERTIFICATION:
The Financial Management Services Director certifies that this action will have no material effect on City
funds.
FUND CENTERS:
TO Fund /Account /Centers FROM Fund /Account /Centers
Logname: 13FY2012FMPS AMEND Page 2 of 3
CERTIFICATIONS:
Submitted for City Manager's Office by:
Originating Department Head:
Additional Information Contact:
Susan Alanis (8180)
Lena Ellis (8517)
Greg Jordan (8843)
Logname: 13FY2012FMPS AMEND Page 3 of 3