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Farmers Branch residents could see their monthly water and sewer bills increase by as much as $96 per month under one scenario presented to the City Council on May 20, as the city grapples with a $78 million capital improvement plan over the next five years.
NewGen Strategies and Solutions, the consulting firm hired to conduct the city's water and wastewater rate study, presented five different funding scenarios to address what officials describe as an urgent need to upgrade aging infrastructure while maintaining financial stability.
"Your utility is a business," said Richard Campbell, principal and managing director at NewGen Strategies. "For a business to be successful, revenues must match or exceed expenses, you must plan for a rainy day, and you must reinvest in the business."
Under current rates with no increases, the city projects a revenue deficit of nearly $67 million by 2030. The study shows that without rate adjustments, Farmers Branch will be unable to fund necessary capital improvements while maintaining a required $6 million reserve fund equivalent to 90 days of operating expenses.
A significant driver of the financial pressure comes from wholesale water and wastewater costs. By 2030, water purchases from Dallas Water Utilities will represent nearly 79 percent of the city's water operation and maintenance expenses, while wastewater treatment through the Trinity River Authority will account for 78 percent of wastewater costs.
Ray Silva-Reyes, director of public works, explained that the city has maintained flat rates since 2019, absorbing increasing wholesale costs. "We've been flat at $21.99 starting 2019, and we've just been absorbing everything," Silva-Reyes said.
The consultants outlined five funding approaches, each with different impacts on residents:
Scenario 1 calls for cash-funding all projects with no bond issuance, resulting in water rate increases of 15 percent, 12 percent, and 20 percent in consecutive years, with wastewater increases of 27 percent, 20 percent, and 11.5 percent. This would increase the average residential bill by $19.10 monthly in 2026, growing to $21.22 by 2028.
Scenario 2 relies heavily on General Obligation bonds funded through property taxes, keeping utility rate increases minimal at 3-4 percent for water and 5-10 percent for wastewater. However, this approach requires voter approval and would shift costs to property tax bills.
Scenario 3 uses revenue bonds issued annually with 50 percent cash funding, resulting in more moderate increases with combined monthly bill impacts ranging from $8.03 to $9.63.
Scenario 4 alternates between revenue bond funding and cash funding every other year, creating variable rate increases but keeping most annual increases under 10 percent.
Scenario 5 doubles the capital improvement program to $156 million while cash-funding everything, resulting in dramatic rate increases including a 65 percent water rate increase and 150 percent wastewater increase in 2026, translating to a $96 monthly bill increase.
Currently, Farmers Branch residents pay $95.20 monthly for combined water and wastewater service for 7,500 gallons, ranking among the lower-cost providers in the region. The study compared rates with 18 other North Texas municipalities, with Dallas having the lowest combined rate at $79.28 and Southlake the highest at $140.92.
However, Andrea Campbell, a consultant at NewGen Strategies, cautioned that the comparison is not "apples to apples" since each city has different capital improvement needs and wholesale purchasing arrangements.
Mayor Terry Lynne expressed concerns about the potential impact on residents, particularly seniors and those on fixed incomes. "Some of these scenarios where we were talking more than $12 a month increase all the way up to $96 a month, that's probably not within the realm of possibilities," he said.
The mayor suggested scheduling a separate work session for deeper discussion of the options, noting that while rate increases appear inevitable, the council needs to determine what makes the most sense for Farmers Branch residents.
The city plans to continue discussions on the rate scenarios before making final decisions on how to fund the necessary infrastructure improvements while balancing resident affordability concerns.
