M&C Review


COUNCIL ACTION:  Approved on 5/15/2012 - Ordinance Nos. 20216-05-2012 and 20217-05-2012

DATE: 5/15/2012 REFERENCE NO.: **G-17591 LOG NAME: 13ALLIANCEAIRPORTAUTHORITY GAS LEASE REVENUE
CODE: G TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT:   Authorize Transfer in the Amount of $281,902.00 in Gas Lease Revenues from the Capital Projects Reserve Fund and in the Amount of $281,902.00 from the General Endowment Gas Lease Fund to AllianceAirport Authority, Inc. and Adopt Appropriation Ordinances (ALL COUNCIL DISTRICTS)

RECOMMENDATION:

It is recommended that the City Council:

1.  Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the Capital Projects Reserve Fund in the amount of $281,902.00 and in the General Endowment Gas Lease Fund in the amount of $281,902.00;

2.  Authorize the transfer in the amount of $281,902.00 from the Capital Projects Reserve Fund and in the amount of $281,902.00 from the General Endowment Gas Lease Fund to AllianceAirport Authority, Inc.; and

3.  Adopt the attached supplemental appropriation ordinance increasing estimated receipts and appropriations in the amount of $563,804.00 in the AllianceAirport Authority Gas Revenue Fund from available funds.

 
DISCUSSION:

On February 8, 2011, the board of directors of AllianceAirport Authority, Inc., (the Authority) approved Resolution AAA-2011-01, which authorized the execution of a mineral lease with Quicksilver Resources, Inc., for approximately 112 mineral acres in the vicinity of 2000 Eagle Parkway, near Fort Worth Alliance Airport. This site comprises the American Airlines maintenance facility.

Under the Authority's Articles of Incorporation, the board has the right to pay any net earnings of the Authority to the City if the board determines that sufficient provision has been made for the full payment of all obligations of the Authority.  Total mineral revenues received to date are $563,804.00. One half of these revenues were deposited into the City's Capital Projects Reserve Fund and the other half was deposited into the City's General Endowment Gas Lease Fund.  It was initially determined that the revenues should be deposited into the City's gas lease revenue funds and expended in accordance with the City's Financial Management Policy Statements (FMPS).  However, a recent review by the Law Department concluded that the funds belong to the Authority.

Therefore, and in accordance with the Authority's Articles of Incorporation, formal action by the board of directors is required before any Authority revenues can be deposited into City accounts. As a result, it is necessary that all revenues received from the Authority's mineral lease be transferred from the City's Capital Projects Reserve Fund and the General Endowment Gas Lease Fund to the Authority so that the board of directors can review and take action, as it deems necessary.  Because of the bankruptcy filings of American Airlines, Inc., and AMR Corporation, it is anticipated that the Authority's board of directors will retain at least some of these revenues until those bankruptcy proceedings are resolved in order to ensure that sufficient funds are available to pay the Authority's bankruptcy counsel and, if required, to protect the Authority's interest in the American Airlines maintenance facility. After the board of directors takes action to budget sufficient funds for the Authority's perceived obligations, the board will have the right to authorize payment back to the City of any remaining Authority's revenues.

The City's FMPS specify that gas related revenues derived from property held by development corporations are to be deposited to separate accounts to support the lawful activities of such corporations per the policies and oversight of their respective governing boards.  Accordingly, because the recommended transfer is corrective, a suspension of the FMPS is not required in order to take this action.

 
FISCAL INFORMATION/CERTIFICATION:

The Financial Management Services Director certifies that upon approval of the above recommendations and adoption of the attached appropriation ordinances, funds will be available in the current budgets, as appropriated, of the General Endowment Gas Lease Fund and the Capital Projects Reserve Fund.

 
TO Fund/Account/Centers
1) GC10  446100  006060001000   $281,902.00
1) GC10  538070  006060001000   $281,902.00
1) T127  446100  006127099901   $281,902.00
1) T127  538070  006127099901   $281,902.00
2&3) R148  472010  0171000   $281,902.00
2&3) R147  472010  0171000   $281,902.00
3) R148  538110  0171000   $563,804.00
 
FROM Fund/Account/Centers
2) GC10  538070  006060001000   $281,902.00
2) T127  538070  006127099901   $281,902.00

Submitted for City Manager's Office by:
Susan Alanis (8180)
Originating Department Head:
Lena Ellis (8517)
Additional Information Contact:
Greg Jordan (8843)

 
 
ATTACHMENTS
  13ALLIANCEAIRPORTAUTHORITY GAS LEASE REVENUE AO12.doc
  13ALLIANCEAIRPORTAUTHORITY GAS LEASE REVENUE SAO12.doc