Page 151 - Fort Worth City Budget 2019

General Fund

is required to track the lease assets, assess space needs and track revenues and expenditures for better planning
and utilization of space in city facilities and to analyze the cost/benefit of renting space in private facilities.

Mineral Management: The city has an estimated total of 18k mineral acres with 11k mineral acres under lease
with various gas companies. Leasing of the remaining 7k mineral acres of city properties for subsurface natural
gas drilling is dependent on a sustained and remarkable increase in the natural gas market prices. The variability
of the gas market (prices), well decline (production) and other market factors cause unforeseen fluctuations in
annual royalty revenues which may be higher or lower than estimated at the beginning of a budget year.
Assurance of an accurate royalty revenue stream requires consistent due diligence review of the city’s mineral
interest, market price and production for the 604 mineral leases in the city inventory. Lease assignments and
transfers between gas companies, lawsuits, and audits add a further complexity to assuring the accuracy of the
city’s royalty revenue stream and distribution of the revenue per Federal guidelines and the city’s financial
management policies. Improved technology, process review and sufficient staff resources will be required for
optimum management of this estimated $1 billion mineral asset.

Lake Worth Leases: The city is currently managing 97 residential and six commercial leases around Lake Worth.
Under the direction of the City Manager’s Office and City Council approval, the city has begun to sell all residential
leased lots to the current leaseholders. This year, Property Management has sold 11 residential lots resulting in
$420k in revenue with a reduction to the General Fund budget from annual rent for the coming FY2019. As sales
progress the rent revenue which offsets salaries and operating expenses in General Fund will continue to be
reduced, however, revenue from Ad Valorem taxes for these Lake Worth properties will be increased in the long
term.

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