Posting Language
Title
Approve an ordinance amending the Fiscal Year 2026-2027 Austin Water Operating Budget (Ordinance No. 20260812-007) to increase transfers in from the Capital Improvement Plan by $9,200,000 and increase transfers out to the Combined Utility Revenue Bond Redemption Fund by $9,200,000; and amending the Fiscal Year 2026-2027 Combined Utility Revenue Bond Redemption Fund (Ordinance No. 20260812-007) to increase transfers in and appropriations by $9,200,000 to defease and redeem outstanding Water and Wastewater System Revenue Refunding Bonds. Funding: $9,200,000 is available in the Capital and Operating Budgets of Austin Water. Related to Item #10.
De
Lead Department
Austin Water.
Fiscal Note
Funding in the amount of $9,200,000 is available in the Fiscal Year 2026-2027 Capital and Operating Budget of Austin Water. Reduction of these ending balances will maintain Austin Water’s compliance with relevant City financial policies. Fiscal notes are attached. Related to Item #26-3022.
Prior Council Action:
August 12, 2026 - Council approved Ordinance No. 20260812-007 adopting the Austin Water Operating Budget for Fiscal Year 2026-2027.
For More Information:
Vicky Addie, Austin Water Program Coordinator, vicky.addie@austintexas.gov; 512-972-0332.
Council Committee, Boards and Commission Action:
November 10, 2026 - To be reviewed by the Water and Wastewater Commission.
Additional Backup Information:
This budget amendment is related to a defeasance item on this same Council agenda that will authorize Austin Water to pay off certain maturities of the City’s outstanding Water and Wastewater System Revenue Bonds. A defeasance is a method of using available cash to pay off outstanding debt. The cash is placed in an escrow account held by a trustee to make principal and interest payments on the required payment date for the bonds being defeased until redemption or maturity. Once the defeasance is funded, the obligations payable from the escrow are no longer secured by or payable from the revenues initially pledged to their payment.
The proposed related defeasance item seeks authorization to pay off certain maturities of the City’s outstanding Water and Wastewater System Revenue Bonds. This process allows Austin Water to remove the debt from its books, which reduces debt levels, reduces interest expense, and improves debt service coverage by lowering the burden of debt service payments in the short-term. Also, this proposed defeasance action is in direct relation to achieving Water and Wastewater System rate stability over the next few years.
The total source of funds for the defeasance of $43,200,000 will be provided from a combination of $30,000,000 in Impact Fee/Capital Recovery Fee (CRF) collections and $13,200,000 in Austin Water Operating Funds. The final defeasance transaction and savings amount are dependent upon market conditions and the final bonds selected for defeasance.
Use of Impact fee/CRF collections is restricted by Texas Local Government Code Section 395.012 (Items Payable by Fee). Allowable uses include paying costs of constructing capital or facility improvements and pledging for payment of debt service issued to finance capital or facility improvements identified in the Impact Fee Capital Improvements Plan 5-Year Update.
This budget amendment will transfer the funds into the correct account to make those funds available for this defeasance.
For this transaction, PFM Financial Advisors LLC will serve as Municipal Advisor, McCall, Parkhurst & Horton LLP will serve as bond counsel, and The Arbitrage Group will serve as Verification Agent.