Farmers Branch reviews five scenarios to fund $78 million water, sewer capital plan

City of Farmers Branch officials and consultants presented a water and wastewater rate study on May 20 that showed the utility will need additional revenue or bond funding to pay for an approximately $78 million five‑year capital improvement program (CIP).

The study, presented by Ray Silveres, Director of Public Works, and consultants Richard Campbell and Andrea Campbell of NewGen Strategies & Solutions, laid out five scenarios ranging from all‑cash funding of the CIP to mixes of general obligation (GO) bonds and utility revenue bonds, and a high‑ambition scenario that doubles the CIP. The consultants said the city’s wholesale costs for water and wastewater (from Dallas Water Utilities and TRA) are the largest drivers of operating expenses.

Why it matters: the study shows the current rates and reserves will not support the planned capital projects and ongoing wholesale cost increases without either notable rate increases, voter‑approved bond funding or a combination of both. City staff and consultants recommended a follow‑up work session so council members can weigh policy choices (rate design, affordability measures, debt strategy) before adopting changes in the budget process.

The presentation framed the utility as an enterprise that must meet operating costs, set aside reserves and reinvest for renewal and growth. Andrea Campbell said the city’s model assumes a 90‑day operating reserve target of roughly $6 million and noted that without rate changes the system shows “insufficient financial performance” for 2025–2030 if the CIP is cash‑funded. The consultants emphasized that wholesale purchases (Dallas Water Utilities and TRA) represent roughly three‑quarters of the O&M cost and will materially affect future rates.

Consultants described five illustrative scenarios: (1) continue cash‑funding the $78 million CIP (no new bonds); (2) issue GO bonds (funded by property tax) combined with cash; (3) issue revenue bonds annually with partial cash funding; (4) alternate bond issuance and cash funding year‑to‑year; and (5) an aggressive option that doubles the CIP and cash‑funds it. Each scenario produces different annual rate increases and different monthly bill impacts for a residential customer using the study’s average consumption assumptions (7,500 gallons). For example, consultants showed the all‑cash scenario would require larger immediate increases (the presentation listed a $19.10 monthly increase for an average customer in the first rate year under that scenario), while a GO‑bond approach shifted much of the cost to property tax and showed lower monthly utility bill impacts in the near term.

The consultants also presented a regional bill comparison showing Farmers Branch’s combined water and wastewater charges are lower than many peers, but they cautioned that comparisons are not “apples‑to‑apples” because participating cities have different CIP and wholesale cost profiles. Richard Campbell told councilors the communication plan with residents will be important: “The value of water … that’ll buy you 1 and 3‑quarters cups of coffee from Starbucks or … a thousand gallons of water delivered right to your house,” an example the consultant used to illustrate the low per‑unit price relative to perceived household cost.

Council members asked for historical wholesale cost data and for copies of federal correspondence about lead/copper rules. Councilman Neal asked for a 10‑year percentage history of TRA and Dallas increases; Andrea Campbell and staff said the raw historical data exist and staff will provide percentage increases to council. Council members also raised affordability concerns for seniors and other vulnerable groups; the consultants noted rate design choices (e.g., how the first 2,000 gallons are treated) can target different policy goals.

Next steps: staff proposed scheduling a dedicated work session with the city manager, the finance director and council to discuss policy preferences (debt vs. cash, rate design and affordability options) and to build a funding strategy into the next budget. Councilmembers agreed to schedule further review.

Ending: The consultants left council with a clear tradeoff: under the existing structure the utility will under‑recover given the planned CIP and projected wholesale increases; council must choose a policy path that balances rate impacts, debt use and the city’s capital needs.