Fort Worth covering capital project shortfalls with gas well revenues

The City Council agreed Tuesday to spend slightly more than $3 million of unallocated gas well revenues to cover funding shortfalls in some capital projects discovered in accounting audits over the past several months.

The projects are mostly related to the city’s community facility agreement fund. That fund ended up with a $3 million shortfall because the city’s costs were greater than what the developers paid into it based on their agreements with the city.

Instead, city personnel moved the money from the contract street maintenance fund — which is used to pay for street maintenance and repairs performed by third-party contractors — to cover the shortfall. The gas well revenue money will make that fund whole again, said Aaron Bovos, the city’s chief financial officer.

“The bottom line still is that we are losing $3 million out of our gas fund revenue that could have been used somewhere else,” Councilman Zim Zimmerman said.

The council unanimously approved the move.

The shortfall was discovered during the transition to the second phase of enterprise resource planning, new business management software that completely changes the way the city handles its financial systems, including how it pays for services and accepts cash. The system goes live Thursday, the start of the city’s fiscal 2016 budget.

But while the new software greatly improves accounting efforts and efficiencies and provides real-time data, the move pointed to shortcomings in the city’s financial oversight. The new software will not allow the city to overspend an appropriation.

“We’re working on a plan to address some of the things we’ve identified that need some attention,” Bovos said. “Great work has gone into where we are today.”

Since February, the city has discovered 936 unbalanced projects, or those that had some part of their funding in a negative position, and 550 inactive projects. As of Sept. 15, the lists had been winnowed to 60 unbalanced projects and 77 inactive projects.

Bovos said a $4 million shortfall still exists from those projects, but savings from other projects will cover the costs.

Mayor Betsy Price said: “None of this is particularly pretty. For whatever reason, we have not been in good shape on this. The good news is, we are moving forward in the right direction. It’s critical we continue to push forward. It’s not where we’ve been, it’s where we’re going to be so Fort Worth capital projects continue to be delivered.”

In a related matter, the council also unanimously amended a portion of the city code that allowed money transfers between departments for capital improvement projects. The move closes a loophole by ending that practice. Now, remaining project monies will be placed in a reserve account to be spent by the mayor and council on projects.

“I am very, very pleased to see this take place in terms of procedure, policy, council engagement and council authorization,” Councilwoman Gyna Bivens said.

In other business, Councilman Sal Espino was unanimously re-elected mayor pro tem for a second year. The mayor pro tem steps in when the mayor is absent.

Espino thanked his colleagues and said it is an honor to serve as mayor pro tem.

“We all work together as a team,” he said.

This story was originally published September 29, 2015 at 8:20 PM with the headline "Fort Worth covering capital project shortfalls with gas well revenues."