HomeMy WebLinkAbout(0015) 13_sectionivcapitalexpenditure_Spending_Modified.PDFFORT WORTH.
Capital Expenditures and Improvements Policy
I. Authority
The Fort Worth City Council is responsible for legislation, policy formulation, and
overall direction setting of the government. This includes the approval of financial
policies which establish and direct the operations of the City of Fort Worth. The City
Manager is responsible for carrying out the policy directives of the City Council and
managing the day-to-day operations of the executive departments, including the
Department of Finance. This policy shall be administered on behalf of the City Manager
by the Chief Financial Officer / Director of Finance.
II. Purpose:
This policy is intended to establish guidelines for the management of certain City
capital expenditures, to review and monitor the state of the City's -capital assets, setting
priorities for the addition, replacement, and renovation of such assets based on needs,
funding alternatives, and availability of resources.
III. Scope:
This policy shall apply to all funds under the budgetary and fiscal control of the City
Manager and the Mayor and City Council.
IV. Glossary
See definitions related to this policy provided in the appendix.
V. Policy:
A. Capital Improvements Planning
The City shall annually review the needs for capital improvements and
equipment, the current status of the City's infrastructure, replacement and
renovation needs, and potential new projects. All projects, ongoing and
proposed, shall be prioritized based on an analysis of current needs and resource
availability. For every capital project, all operation, maintenance, and
replacement costs shall be fully costed.
B. Replacement of Capital Assets on a Regular Schedule
The City shall annually prepare a schedule for the replacement of its non -
infrastructure capital assets. Within the resources available each fiscal year, the
City shall replace these assets according to the aforementioned schedule.
FORT WORTH.
Capital Expenditures and Improvements Policy
C. Capital Expenditure Financing
The City recognizes that there are three basic methods of financing its capital
requirements. It can budget the funds from current revenues (pay -go funding);
it can take the funds from unassigned fund balance, assigned fund balance, or
Net Position as allowed by the Unassigned/Assigned Fund Balance or Net
Position Policy Statements; or it can borrow money through the issuance of
debt. Debt financing includes general obligation bonds, revenue bonds,
certificates of obligation, lease/purchase agreements, certificates of
participation, commercial paper, tax notes, and other obligations permitted to
be issued or incurred under Texas law. Guidelines for assuming debt are set
forth in the Debt Policy Statements.
D. Lake Worth Expenditures
Proceeds from the sale of Lake Worth leases shall be escrowed and designated
for water and wastewater improvements within the area of the City of Fort
Worth surrounding and adjoining Lake Worth.
E. Surplus Bond Funds (M&C G-14441, July 27, 2004)
A "Restricted Residual Account" shall be established to record and manage
surplus project funds. Surplus project funds may become available after the
completion of a specific, voter- approved bond project or may result when a
bond project is modified or eliminated without being simultaneously replaced
by another eligible project.
Funds in the Restricted Residual Account may be used for projects consistent
with the voted purpose of the bonds to:
• Finance cost overruns on bond projects within the same bond
proposition;
• Reduce outstanding debt at the end of the bond program; and
• Fund newly identified projects within the voted purposes of an
approved bond proposition only after all voter -approved projects
/categories within the same proposition are substantially complete. A
project would be considered substantially complete when design has
been fully completed, construction is substantially underway, and staff
has prepared cost projections that include ample contingencies to
complete the project in the event unforeseen costs should arise.
FORT WORTH.
Capital Expenditures and Improvements Policy
Spending Priority of Capital Project Funding Sources (excluding grants)
Many capital projects that are administered by the City of Fort Worth
have multiple funding sources, which can include internal and external
sources. Spend funding in the following order: (e.g., Priority One, then
Priority Two, then Priority Three, and lastly Priority The p,,,. ose
of this section of the policy is to provide guidelines with respeet to whiel,
funding sourees should e eeTenaccd in w-hieh or -den Sever -a! scenarios
apply based upon whether -the prejeet has bond funding. The questions
below are intended to provide assistanee in seleeting w-hieh priority
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Prioritv One: Proceeds from anv tvne of debt issuance. including tax
notes, bonds, loans, etc. Use proceeds from oldest to newest (i.e., 2002
GO Bond proceeds before 2014 Bond proceeds, or 2014 before 2018
proceeds). Per IRS regulations, 85% of all Bond proceeds must be spent
within three years. Failure to spend Bond proceeds timely could result in
the bonds sold being deemed taxable.
Priority Two: Source of funds that include projects where a source
external to the City is funding a portion or all of the project in the order
listed below:
1. Intergovernmental Agreements (Once verified as Non -Grant)
2. Contribution from an outside source (e.g., cash donation)
3. Developer contributions
Prioritv Three: Internally committed funding sources. Internal
commitments exist due to an action taken by the Mayor and Council
(M&C), such as the adoption of the Financial Management Policy
Statements which designate the use of specific revenues for specific
purposes, e.g., DFW Airport Sharing Revenue to the Culture and
Tourism activitv. Gas Well Lease income for snecifrc numoses. or
Transfers -In.
FORT WORTH.
Capital Expenditures and Improvements Policy
Priority Four: Other funding sources appropriated by Budget that do not
fall into the three above categories. These funds should always be spent
last due to the ability to re-programy remaining funds when a project
is completed to other identified needs within the City.
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FORT WORTH.
Capital Expenditures and Improvements Policy
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FORT WORTH.
Capital Expenditures and Improvements Policy
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G. Spending Priority of Grant Related Capital Projects
The Mendinil Driority identified in Section F for non -grant capital
projects should generally be followed for grant funded projects, as long
as the priorities and methodologies are consistent with the grant
requirements. Where the grant requirements differ from the above
identified Citypriorities, the grant priorities should prevail.
Priority Model B identified above should generally be followed for- gr-an
tttlYcied pFojeets, as long as the p ioritiewq andmethodologies are eonsis ent
with the grantr-e"ir-emenis-ATne�e Fe-ements diffef: 4ofnrthe
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