HomeMy WebLinkAbout26-0101 - 2026-08-25 - Informal ReportFORT WORTH®
INFORMAL REPORT TO CITY COUNCIL MEMBERS
SUBJECT: FY26 INTEREST INCOME ALLOCATION - BRADY KIRK, FWLAB ASSISTANT
FINANCE DIRECTOR AND KATE PERRY, FINANCIAL MANAGEMENT SERVICES ASSISTANT
FINANCE DIRECTOR
DATE: 08/25/26 NUMBER: IR 26-0101
TO THE MAYOR AND MEMBERS OF THE CITY COUNCIL
The purpose of this Informal Report is to provide recommendations for the allocation of
unrestricted interest income to fund one-time initiatives during Fiscal Year (FY) 2026.
The City generates income by prudently investing idle cash from operations, "pay as you go"
(PayGo) capital funds, and bond funds in compliance with state law and City policy. The
existing practice is to allocate interest income earned from governmental funds to one-time
initiatives or contribute to unassigned fund balance as recommended by the City Manager.
The latest FY2026 interest income analysis has projected $22,157,262.00 of unrestricted and
unpledged surplus interest income. Staff recommends recognition of this income in the
General Fund in FY2026 so the money may be used for the initiatives detailed below:
Purpose
Transfer to Group Health Insurance Fund
Transfer to Risk Fund - Jefferson Lawsuit Settlement (partial
amount)
Transfer to Community Arts Building Project (former Center for
Transforming Lives Building)
Forgivable Loan to Evans -Rosedale Affordable Housing Project
Total to be Allocated
Amount
$16,600,000.00
2,057,262.00
2,000,000.00
1,500,000.00
$22,157,262.00
The Group Health Insurance and Risk Funds are facing high costs for claims and settlements,
and contributions to each fund will replenish fund balance and assist with liquidity and
adherence to reserve requirements in accordance with City policy.
The contribution to the Group Health Insurance Fund (Fund) will add to the Fund's working
capital for FY2026 as part of a comprehensive plan to bring the fund into reserve compliance
by FY2028, which includes benefit changes, additional departmental allocations and further
contributions of interest income during FY2027 and FY2028. The working capital for the Fund is
1 of 3
FORT WORTH®
currently projected to be $750,768 for FY2026, while the required working capital (25% of the
following year's budgeted expenditures) per City policy is $30,612,231. The contribution of
$16,600,000 will raise the working capital to $17,350,768, reducing the shortfall from the policy
target to $13,261,463 to be addressed during FY2027 and FY2028.
The proposed $11.25 million settlement for the family of Atatiana Jefferson will be funded by a
previously earmarked amount in the Risk Fund of $2.25 million, plus funds from projected
interest income in the current fiscal year and FY2027. $2.06 million from surplus interest income
in FY2026, and $6.94 million from surplus interest income during FY2027 will complete the
needed $11.25 million.
The Community Arts Building, located at 512 W. 4th Street requires system upgrades and
renovations once the Mayor's Task Force finalizes its work. The current funding available for the
project totals $9.0 million, which will primarily be utilized to update building systems like the
A/C and elevators. It is recommended that the $2 million from interest income be made
available to complete renovations of the space.
On June 10, 2025, the City Council approved an allocation of $2.5 million for the development
of multifamily housing in the historic Evans and Rosedale Urban Village as part of the Housing
and Urban Development (HUD) Pathways to Removing Obstacles to Housing (PRO Housing)
Grant Action Plan (M&C 25-0523). Because projects funded by the PRO Housing grant funds
are subject to federal Build America, Buy America Act (BABA) requirements, the project
developer, Royal Capital Group, LLC (RCG), has indicated that complying with BABA would
increase construction costs and create a funding gap ranging from $2.4 to $6 million. As an
alternative, staff is recommending withdrawing the $2.5 million PRO Housing grant allocation
for the Evans and Rosedale Urban Village and instead providing RCG with $1.5 million in City
interest earnings in the form of a forgivable loan. RCG has indicated that it believes it will be
able to identify project savings to cover the remaining $1 million of project costs. Once another
eligible housing project or initiative is identified for the PRO Housing grant, approval to amend
the PRO Housing Grant Action Plan will be requested from the City Council and HUD.
Staff will present a Mayor and Council Communication to allocate the interest income at
Council's meeting on September 15, 2026.
For questions regarding this information, please contact Brady Kirk, FWLab Assistant Finance
Director at (817) 392-8712 or Kate Perry, FMS Assistant Finance Director/Controller at (817) 392-
2234.
Jesus "Jay" Chapa
City Manager
2 of 3
FORT WORTH®
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS
3 of 3