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Legislation #: 090472 Introduction Date: 5/28/2009
Type: Ordinance Effective Date: 6/14/2009
Sponsor: COUNCILMEMBER HERMANN
Title: Directing the City Manager to develop a Fuel Price Risk Management Program for presentation to the Council and Board of Police Commissioners; and directing the Director of Finance to develop a fuel price management policy consistent with state law and industry best practices.

Legislation History
DateMinutesDescription
5/28/2009 Filed by the Clerk's office
5/28/2009 Referred to Finance and Audit Committee
6/3/2009 Advance and Do Pass as Second Committee Substitute, Consent
6/4/2009 Passed As Second Substitute

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SECOND COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 090472

 

Directing the City Manager to develop a Fuel Price Risk Management Program for presentation to the Council and Board of Police Commissioners; and directing the Director of Finance to develop a fuel price management policy consistent with state law and industry best practices.

 

WHEREAS, the City of Kansas City, Missouri, and the Kansas City, Missouri Police Department are significant consumers of fuel for their vehicles; and

 

WHEREAS, the costs associated with fuel use have shown significant volatility in recent years, and the volatility shows no signs of abating; and

 

WHEREAS, the City desires to better manage its fuel procurement process by moderating market price volatility in order to ensure budget stability and cost control; and

 

WHEREAS, the City has determined that a Fuel Price Risk Management Program could minimize fuel price fluctuations and their impact on the City; and

 

WHEREAS, fuel price management and a firm fixed pricing strategy are two fuel price risk management program strategies; and

 

WHEREAS, under the fuel price management strategy, the City is protected by having a counterparty pay it the price difference when the purchase price is greater than the benchmark price. Alternatively, if the purchase price is less than the benchmark price, the City would pay the difference to the counterparty; and

 

WHEREAS, under a firm fixed pricing strategy, the City would be able to purchase future deliveries of fuel at a price locked in today; and

 

WHEREAS, prior to entering into any agreements, the City shall have adopted a written policy governing such agreements; and

 

WHEREAS, such policy shall be prepared by integrating the recommended practices published by the Government Finance Officers Association or comparable nationally recognized professional organization and shall provide guidance with respect to the permitted purposes, authorization process, mitigation of risk factors, ongoing oversight responsibilities, market disclosure, financial strategy, and any other factors in connection with such agreements determined to be relevant by the City; and

 

WHEREAS, the City may enter into such agreements provided the payment, security, default, remedy, and other terms and conditions are within the adopted written policy; NOW, THEREFORE,


BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

Section 1. That the City Manager is authorized and directed to develop a Fuel Price Risk Management Program for the purpose of minimizing fuel price fluctuations and their impact on the City and Police Department, for presentation to the Council and the Board of Police Commissioners.

 

Section 2. That the City Manager is directed to present his proposed Fuel Price Risk Management Program to the Council and the Board of Police Commissioners for consideration within 30 days of the passage of this ordinance.

 

Section 3. That the Director of Finance is directed to develop a fuel price management policy consistent with state law and industry best practices.

 

______________________________________

 

Approved as to form and legality:

 

_______________________________
Heather A. Brown

Assistant City Attorney