Page 16 - City of Kennedale Adopted Budget FY22

MANAGER’S MESSAGE

has been quite successful overall, various challenges relating to meter equipment and customer data
migration did elongate the timeline. Work continues to outfit all accounts with an AMR (automated meter
reading) transmitter that communicates with the AWU system.

Phase I of the system improvements necessary for the City to begin purchasing water from Arlington are
now complete, which equates to about 20% of Kennedale’s utility customers (in the Southeast portion of
the City) receiving AWU drinking water and the ability for Arlington to supply 100% of necessary water

during an emergency. Several significant capital improvements must be completed before Phase II of the
water purchase portion of the contract can be completed. The largest of these projects are the
rehabilitation or replacement of one ground storage tank and the elevated storage tower. AWU is
currently doing preliminary planning and design work for these necessary capital improvements, which
are expected to cost almost $2 million. One important note is that only the first two years of this contract
included a dedicated $150,000 for infrastructure repair and improvement. That is no longer a part of the
contract, and each necessary repair or upgrade will be invoiced individually going forward. As there is not
a Public Works Director at this time, the Finance Department has used historical revenue and expenditure
amounts to project that the Water and Sewer Fund FY21-22 ending balance is expected to be $3.6
million, which represents 84.3% of annual planned expenditures. It is however, expected for this fund
balance to decrease when outstanding invoices related to the City of Arlington Interlocal agreement are
received and processed.

S T R E E T I M P R O V E M E N T F U N D
The Street Fund budget includes an increased franchise fee transfer from the Water Fund to the Street
fund to 9.0%. This transfer percentage was increased from 7.0% last year to address additional street
maintenance that will likely be required as a result of more aggressive water and sewer line renewals that
have been long neglected. As there is not a Public Works Director at this time, the Finance Department
has used historical revenue and expenditure amounts to project that the Street FY21-22 ending balance is
expected to experience a fund balance draw down of $239,930.

E D C , T I F , A N D C A P I T A L R E P L A C E M E N T F U N D S
The Economic Development (EDC) Fund and the TIRZ (or TIF) are, again, expected to incur limited
spending next year, as we continue enhancing fund balances for future cash funding of capital projects.
The EDC Fund balance has increased during the current fiscal year from a budgeted $887,145 to
$1,006,022, which is largely due to high occupancy levels of EDC-owned buildings in TownCenter as
well as limited spending. Hughes Commercial is currently in negotiations to transfer ownership of their
interest in TownCenter. This item is expected to be heard by the EDC Board and the Council in the next
two months and may alter EDC income based on the final terms of the associated ground lease. Of note,
the Council recently voted against extension of the ground lease agreement with Red’s Roadhouse –
opting instead to require that the owner of the building purchase the land, the proceeds of which will

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