Item 6 — original pdf

Backup

Item 6 # 22-2935 Water & Wastewater Commission: September 14, 2022 Council: September 29, 2022 Posting Language Recommend approval of an ordinance amending the Fiscal Year 2022-2023 Combined Utility Revenue Bond Redemption Fund (Ordinance No. 20220817-004) to increase the transfer in from the Water and Wastewater Reserve Fund by $18,000,000 and increase other bond debt service requirement expenditures by $18,000,000 for the purpose of defeasing and redeeming certain outstanding bonds secured by the Reserve Fund. Lead Department Austin Water Client Department Austin Water Assistant Director of Financial Services, Joseph Gonzales Fiscal Note A fiscal note is attached. Prior Council Action August 17, 2022 – Council approved the Fiscal Year 2022-2023 Combined Utility Revenue Bond Redemption Fund Council Committee, Boards and Commission Action N/A Additional Backup Information Debt Service Reserve funds are restricted funds that are set-aside to provide additional security to Austin Water’s revenue bond holders. Because most of Austin Water’s Debt Service Reserve funds were funded with proceeds from prior bond issuances, such funds are only permitted to be used towards debt service and are not available for any other purpose. As outstanding revenue bonds mature or are refinanced with new revenue bonds that do not require a Debt Service Reserve fund, the restricted Debt Service Reserve funds will be utilized by contributing the funds as part of a revenue bond refinancing transaction or will be utilized to defease (prepay) outstanding revenue bonds. 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. The prepayment of debt with Debt Service Reserve funds will reduce future interest costs to ratepayers. The use of Debt Service Reserve funds is in part contingent upon the issuance of refunding bonds being authorized by City Council under a separate ordinance. 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 either the optional redemption date or maturity date of the defeased bonds. The obligations payable from the escrow are no longer secured by or payable from the revenues initially pledged to their payment. Strategic Outcome(s) Government that Works for All OPERATING BUDGET FISCAL NOTE DATE OF COUNCIL CONSIDERATION: DEPARTMENT: FUND: 9/29/22 Austin Water Combined Utility Revenue Bond  SUBJECT: Approve an ordinance amending the Fiscal Year 2022‐2023 Combined Utility Revenue Bond Fund (Ordinance No. 20220817‐004) to authorize the use of Parity Water/Wastewater Obligation funds held in the Reserve Fund of $18,000,000 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 2022‐23 Proposed 81,385,150   This   Action  2022‐23 Amended 0  81,385,150  92,306 1,541,362 1,633,668 92,306 1,541,362 1,633,668 215,496,382 0 215,496,382 18,000,000 18,000,000 215,496,382 18,000,000 233,496,382 217,130,050 18,000,000 235,130,050 96,660,296 47,000,000 82,905,000 0 226,565,296 0 18,000,000 0 0 18,000,000 96,660,296 65,000,000 82,905,000 0 244,565,296 0 0 0 0 0 0 Total Requirements 226,565,296 18,000,000 244,565,296 Excess (Deficiency) of Total Available  Ending Balance (9,435,246) 71,949,904 (9,435,246) 71,949,904 FIVE‐YEAR ESTIMATED IMPACT: FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total Available Funds Total Requirements Net Budget Impact 18,000,000 18,000,000 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 $18.0 million and increase Transfers Out by $18.0 million. Released debt service reserve funds will be utilized pay down obligations on future refunding and defeasance transactions.