C APITAL PROJECT FUNDING UPDATE AARON BOVOS – CHIEF FINANCIAL OFFICER 1 SEPTEMBER 29, 2015

Agenda 2 BackgroundCorrective Actions Remaining Unbalanced Projects Repeal Ordinance Process Changes Going Forward

3 Capital Needs Identified Long-Range CIP Strategic Plan Funding Sources Identified Five-Year CIP Plan Annual Capital Budget CIP Project & Program Execution Capital Project Management Financial Reporting Updates Project Closeout Capital Asset

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Unbalanced Projects Lack of formal CIP Purchase Order Management Project & administration workload Overall process workflow; current system allowed for overcharging accounts Delegated authority for transfer of funds for Capital Improvement Projects 5

Inactive Projects Project Management priorities No aging reports (will have in PeopleSoft) Criteria for Determining Inactive Projects: All projects that had no activity in previous 6 months Narrowed down to which projects needed to be closed 6

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Corrective Actions 8 August 11, 2015 – Council was presented with an update on Capital Project Funding: ◦The report detailed the use of transfers from the Contract Street Maintenance Fund to the TPW Community Facility Agreement Fund to cover unbalanced projects ($1,656,341). ◦An additional $1,389,467 has been used to cover additional projects that have been identified as unbalanced providing for a total transferred amount of $3,045,808 (From Contract Street Maintenance to TPW Community Facility Agreement Fund).

Corrective Actions  Appropriation from the Contract Street Maintenance Fund were used in 3 different areas: ◦Active Projects – $2,155,068 covering 190 projects ◦Closed Projects – $605,054 covering projects ◦Unspecified - $285,686 will be used for any remaining unbalanced projects 9 Transfers from Contract Street Maintenance Fund CFA/Developer Projects

Carmax River Ranch Project  Developer Initiated and Driven Project  When a developer builds a facility on a City street it could require Water and Sewer connectivity and paving and drainage improvements to City property and therefore requires the following :  Initial Plan Review, Material Testing, and Inspection completed by City staff 10

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Carmax River Ranch Project TPW Developer Fund WaterSewerTotal Revenue$6,162 (Developer Contribution) $2,500 $11,162 Expenses$12,270$12,954$5,733$30,957 Deficit($6,108) Covered by transfer from Contract Street Maintenance) ($10,454) Covered by additional Water Funding) ($3,233) Covered by additional Sewer Funding) ($19,795) 12

Remaining Unbalanced/Inactive Projects (City-Wide) 13  As of September 15, 2015 there are 60 remaining unbalanced projects in 69 funding strings ◦Total - $4,058,094 ◦Based on current fund balances and existing savings from completed projects, there is no anticipation of additional funds needed to balance the remaining projects.  As of September 15, 2015 there are 77 inactive projects, 24 of which are partially closed.  The goal is to have all projects balanced and appropriate projects closed by the end of fiscal year  M&C G will replenish the $3,045,808 in the Contract Street Maintenance Fund using available unallocated Gas Well Revenue.

Use of Gas Well Revenue The City’s Financial Management Policy Statement (FMPS) Document allows for the use of Gas Well Revenue: The City’s Financial Management Policy Statement (FMPS) Document allows for the use of Gas Well Revenue: “Fifty percent of revenue from bonuses, royalties and fees from gas leases, pipelines or related activities will be allocated to the Capital Projects Reserve Fund.” ◦Chapter 1, section 4 – “All other Revenue” 14

Repeal Interdepartmental Transfers 15  M&C G recommends that City Council amend Chapter 2 “Administration,” Article I “In General,” of the Code of the City of Fort Worth to Repeal Section 2-11, “Interdepartmental Transfer of Funds for Capital Improvement Projects.”  The delegated authority to transfer funds is one of the sources of the imbalance among capital projects.  This amendment serves as an effort to implement better financial controls and improve transparency in the City’s fiscal process ◦The repeal of this provision will require all transfers of funds for capital improvement projects to be approved by City Council.

Current Fund Transfer Process Back to Department Fiscal Staff to submit a Unifier to Accounting ACM approval if over $25K Department Director Approval Submitted to Budget Analyst for approval Request for Transfer submitted to Department Fiscal Staff Need for Transfer Identified 16

Capital Improvement Plan 17 Project scope and budget identified in Capital Improvement Program Mayor and Council appropriate funds for each project Only Mayor & Council may amend: Capital project scope Project budget Appropriation Upon project closure & completion, remaining funds will be moved by Finance to a Capital Reserve Account

Pay As You Go Projects 18 Future CC FF&E $58,10059,10060,10061,10062,100300,500 Bucket Project Bucket Bucket Bucket Bucket Bucket Bucket

2014 Bond Program 19 Bucket – Moving funds within a bucket can be completed at the department level Project – Funds appropriated for a specific project require council approval to make transfers Project Project Project Project

Process Improvements OLD PROCESS System allowed payments in projects with negative balances System allowed payments in projects with negative balances Ability for staff to transfer funds for capital projects including excess funds for completed projects NEW PROCESS ERP prevents payments in projects with negative balances -sufficient funds need to be appropriated prior to payment ERP prevents payments in projects with negative balances -sufficient funds need to be appropriated prior to payment Mayor and Council authorize transfer of funds for capital projects and programs 20

Going Forward 21 System Controls  The new ERP system reporting tools will allow for easier access for monitoring aging reports to alert departments to begin the closeout process  Implementation of the new ERP system will enable the use of Commitment Control which will prevent payment of invoices for projects with insufficient budget

Going Forward 22 New Policies  Repeal Ordinance  Operating and Capital Budget Policy  CFA Fund

Going Forward 23 Capital Project Review  Continue to balance unbalanced projects  Identify projects that are balanced, but may be short to complete intended scope  Reconcile completed/in-process projects with debt documents  November 3 rd presentation