Page 367 - FortWorthFY22AdoptedBudget

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 and the
Assistant City Managers are 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 Financial Management Services. This policy shall be administered on behalf
of the City Manager and the Assistant City Managers by the Chief Financial Officer / Director
of Finance.

II. Purpose:

The Water and Sewer Fund is an Enterprise Fund, with the Water and Sewer System operating
similar to a business in the private sector. However, as a tax-exempt governmental unit, the
Fund does not pay franchise fees or property taxes that would be required of a private utility.
The purpose of this policy is to outline the assessment of charges and fees to the Water and
Sewer Fund by the General Fund in order to provide revenue for general government services
comparable to what would be received from a private utility. In addition, this policy is also
intended to address contributions from the Fund in support of the City’s Public Art Program.

III. In General:

Payments from funds within the Water and Sewer System must comply with the Master
Ordinance (Ordinance 10968), which establishes the revenue financing program that provides
for issuance of System revenue bonds to finance capital improvements. The rate covenant in
the Master Ordinance obligates the City to establish and collect rates “necessary to produce
Gross Revenues and other Pledged Revenues sufficient (1) to pay all current Operating
Expenses, (2) to produce Net Revenues for each Fiscal Year at least equal to the Annual Debt
Service Requirements during such Fiscal Year of the then Outstanding Parity Obligations, and
(3) to pay all other financial obligations of the System reasonably anticipated to be paid from
Gross Revenues.” To fully implement this policy, in designing rates the Water and Sewer
System shall also take into account payments under this policy to the extent allowed by
applicable law and current contracts.

Under the Master Ordinance, payments such as those outlined in this policy can only be made
from Excess Pledged Revenues, which, generally speaking, consist of System revenues that
remain available after all Operating Costs have been paid and all debt-related obligations have
been met. The following paragraph describes in more detail the process for determining Excess
Pledged Revenues under the Master Ordinance.

In accordance with the Master Ordinance, Gross Revenues of the Water and Sewer System are
reduced by Operating Costs to determine Net Revenues, which, together with any other monies
pledged to the payment of Parity Obligations, constitute Pledged Revenues. The City also has
the right to pledge the Pledged Revenues in payment of, and as security for, debt obligations

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