Finance director outlines multi‑year water rate plan and $12.8 million water CIP transfer in Farmers Branch budget update

Jay Patel, the city’s finance director, told the Farmers Branch City Council at a May 5 study session that staff plans to increase the capital contribution to the water/wastewater capital improvement program from $9,000,000 to $12,800,000 next fiscal year and to use a staged rate plan to pay for it without issuing new debt.

Patel outlined a multi‑year rate schedule he said is already partially in motion: a 15% increase was implemented this past year; staff has programmed a 12% increase for the upcoming year, another 12% the following year, and two subsequent 5% increases. “Only 27% of a resident’s tax bill comes into our coffers,” Patel said while explaining the broader tax‑and‑service context for the rate and CIP decisions.

The presentation described how the larger water/wastewater transfer, coupled with the rate plan, would let the city cash‑fund needed projects called out in the capital improvement plan and reduce the need to issue bonds. Patel said the exact annual transfer amounts will be tied to the detailed CIP schedule the water/wastewater team presented and that staff will avoid “making up” numbers outside that plan.

Patel also reviewed other proposed allocations: roughly $150,000 toward conceptual design for a community garden, about $1.8 million for pedestrian improvements based on an ongoing traffic study, $500,000 for facility infrastructure maintenance, and $150,000 for IT maintenance.

On revenue risks, Patel flagged several factors staff is monitoring: a recent change to the state’s business personal property exemption (from $5,000 to $125,000), an uptick in appraisal‑district protests and related settlement costs, month‑to‑month sales‑tax volatility, and a legislative proposal to change sales‑tax sourcing from point‑of‑sale to point‑of‑destination. “We estimate around $5,000,000 in potential sales‑tax losses” under a destination sourcing change, Patel said, and he stressed that the city’s revenue stabilization fund and transfer rules were designed to hedge those risks.

Patel described existing contract/grant commitments the budget accounts for, including annual allocations such as $50,000 to Firehouse Theatre, $200,000 to MetroCrest services, $50,000 to Woven Health Clinic and $75,000 to the minor home repair program. Staff said about $1,000,000 is being held as match/reserve for prioritized grant opportunities and that roughly $4,000,000 in grant applications had been filed in the previous four months.

Council members pressed staff for resident‑facing materials and more fiscal detail. Requests included a simple graphic or one‑page trifold showing what the average homeowner’s tax and water bills look like now and under the proposed rate path, itemized event costs and a historical spending summary for the minor home repair program. Patel said a town hall is planned for August and that staff will prepare a budget‑in‑brief and other outreach materials timed with the proposed budget release.

Councilwoman Villafranca, among others, cautioned that another 12% rate increase “seems like a lot in these times,” noting recent inflationary pressures and asking staff to consider timing and alternatives. Patel and another staff member explained how the sewer cap and other pro‑forma elements affect the rate calculations and said they can bring details back for council consideration.

Next steps: staff will refine the CIP‑linked transfer amounts, prepare the requested resident outreach materials (including the trifold/budget‑in‑brief), provide historical program spending for the minor home repair fund and return with updates during the upcoming budget workshops and the planned August town hall.