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Water & Wastewater Commission Review and Recommendation Government That Works for All COA Strategic Direction: October 6, 2021 Commission Meeting Date: Council Meeting Date: Department: Financial Services October 14, 2021 Client: Kevin Critendon Agenda Item Recommend approval of an ordinance amending the Fiscal Year 2021-2022 Combined Utility Revenue Bond Redemption Fund (Ordinance No. 20210811-001) to increase the transfer in from the Water and Wastewater Reserve Fund by $20,000,000 and increase other operating requirement expenditures by $20,000,000 for the purpose of defeasing and redeeming certain outstanding bonds secured by the Reserve Fund. This item has no fiscal impact. Amount and Source of Funding October 6, 2021 — To be reviewed by the Water and Wastewater Commission. Purchasing Language: Prior Council Action: Boards and Commission Action: MBE/WBE: N/A N/A N/A Debt Service Reserve funds are utilized to provide additional security to bond holders. As bonds mature or are refinanced with obligations that do not require a Debt Service Reserve fund, the reserve funds on hand can be utilized for debt service. The funds on hand can be utilized by contributing the funds as part of the refinancing transaction or they can be utilized to defease outstanding obligations. To utilize the excess reserve funds, the Combined Utility Revenue Bond Redemption Fund’s requirements must be increased. There will be a $0 net impact as the reserve proceeds will serve as “Revenue” to offset the increased requirements. 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. The obligations payable from the escrow are no longer secured by or payable from the revenues initially pledged to their payment. OPERATING BUDGET FISCAL NOTE DATE OF COUNCIL CONSIDERATION: DEPARTMENT: FUND: 10/14/21 Austin Water Combined Utility Revenue Bond SUBJECT: Approve an ordinance amending the Fiscal Year 2021-2022 Combined Utility Revenue Bond Fund (Ordinance No. 20210811-001) to authorize the use of Parity Water/Wastewater Obligation funds held in the Reserve Fund of $20,000,000 for the purpose of defeasing and redeeming certain outstanding bonds secured by the Reserve Fund for a net impact of $0 to the ending balance. CURRENT YEAR IMPACT: Beginning Balance Revenue Interest Other Revenue Total Revenue Transfers In Austin Water Utility TRF WWW Reserve Fund Total Transfers In Total Available Funds Other Requirements Interest payment D/S funds Debt defeasance payment D/S funds Principal payment D/S funds TRF CRF to Debt Defeasance Total Other Requirements 2021-22 Proposed 88,144,323 This Action 2021-22 Amended 0 88,144,323 14,817 0 14,817 14,817 0 14,817 218,455,000 0 218,455,000 20,000,000 20,000,000 218,455,000 20,000,000 238,455,000 218,469,817 20,000,000 238,469,817 100,702,598 64,826,000 55,365,000 0 220,893,598 0 20,000,000 0 0 20,000,000 100,702,598 84,826,000 55,365,000 0 240,893,598 0 0 0 0 0 0 Total Requirements 220,893,598 20,000,000 240,893,598 Excess (Deficiency) of Total Available Ending Balance (2,423,781) 85,720,542 (2,423,781) 85,720,542 FIVE-YEAR ESTIMATED IMPACT: FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Total Available Funds Total Requirements Net Budget Impact 20,000,000 20,000,000 0 0 0 0 0 0 0 0 0 0 ANALYSIS / ADDITIONAL INFORMATION: This item will amend the Combined Utility revenue Bond Fund to increase Transfer In from WWW Reserve Fund by $20.0 million and increase Transfers Out by $20.0 million. Released debt service reserve funds will be utilized pay down obligations on future refunding and defeasance transactions.