Council directed staff to include $5.5 million DUD transfer in FY26 budget; rate study to follow

City staff told the council that the Drainage Utility District (DUD) faces a growing funding gap to meet required maintenance and an expanding list of drainage and erosion projects, and recommended a $5.5 million advance from the general fund and an updated rate study.

Public works staff provided background: Coppell’s stormwater fee was adopted in February 2007 and initially generated about $250,000 annually. A 2019 rate study redesigned the fee and the phased increase was fully implemented by 2023; the fee now generates approximately $2.6 million per year, staff said. Since the 2019 study, additional projects and new federal permit requirements have arisen, including an expansion of street-sweeping obligations from selected areas to sweeping “every single street in town,” which staff said increased operating costs.

Project needs and costs: staff presented project lists that totaled roughly $18–20 million for the next five years, and about $30 million over ten years when added to additional erosion-related projects. The Arborbrook Channel drainage project is in design with a current construction estimate of $1.6 million (previously estimated at $500,000), staff said.

Staff recommendation and council direction: Kim and public-works staff said current DUD revenues and reserves would produce a deficit beginning in 2026 and grow to an estimated $6.9 million by 2034 unless action is taken. To enable critical projects while staff conducts a new rate study, staff recommended a $5.5 million advance from the general fund; the rate study would recommend repayment terms and whether to issue bonds or pursue other funding. Councilmembers discussed options and, during the work session, directed staff to build the $5.5 million transfer (staff used the term “advance” to describe the mechanism) into the FY26 budget for formal consideration and to schedule the rate study.

Why it matters: staff said the permit-driven maintenance obligations and rising erosion-related capital needs have outpaced the current fee structure and reserves. Council members debated whether to treat the funding as a transfer (no required repayment) or as a loan (repayable to the general fund); a majority favored a transfer to allow projects to proceed and to preserve flexibility.

Ending: Staff will include the $5.5 million transfer in the FY26 budget materials and will return with a rate-study timeline and a recommended repayment or financing plan once the consultant’s analysis is complete.