Posting Language
Title
Approve a resolution authorizing the defeasance of certain outstanding Water and Wastewater System Revenue Bonds, including authorizing the execution of an escrow agreement, and related documents. Funding: $46,633,211 is available in the Fiscal Year Operating Budget of the Combined Utility Revenue Bond Redemption Fund. Related to Item #83.
Body
Lead Department
Austin Financial Services.
Fiscal Note
Funding is available in the Fiscal Year 2025-2026 Operating Budget of the Combined Utility Revenue Bond Redemption Fund.
For More Information:
Belinda Weaver, Treasurer, 512-974-7885.
Council Committee, Boards and Commission Action:
November 12, 2025 - Recommended by the Water and Wastewater Commission on a 9-0 vote with two absences.
Additional Backup Information:
A defeasance is a method of using available cash to pay off outstanding debt. The cash is placed in an escrow account with an escrow agent to make principal and interest payments on the required payment date for the bonds being defeased to the redemption date. Once the escrow is funded, the debt obligations payable from the escrow are no longer secured by or payable from the revenues initially pledged to their payment and the debt is legally and financially retired.
The proposed related defeasance item seeks authorization to defense, or 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, 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 source of funds for the defeasance is Impact Fee/Capital Recovery Fee (CRF), Austin Water operating funds that includes cash collected from the developers of Indian Hills and Whisper Valley pur...
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