Item 02 - Austin Water Budget Amendment — original pdf

Backup

Item 2 Water & Wastewater Commission: November 10, 2026 Council: November 19, 2026 Posting Language ..Title Recommend approval of an ordinance amending the Fiscal Year 2026-2027 Austin Water Operating Budget (Ordinance No. 20260812-007) to increase $9,200,000 Transfer In from Capital Improvement Plan and increase $9,200,000 transfers out to the Combined Utility Revenue Bond Redemption Fund for a net impact of $0 to the ending fund balance; and amending the Fiscal Year 2026-2027 Combined Utility Revenue Bond Redemption Fund (Ordinance No. 20260812-007) to increase $9,200,000 transfers in and increase $9,200,000 appropriations to defease and redeem outstanding Water and Wastewater System Revenue Refunding Bonds. Funding: $9,200,000 is available in the Capital and Operating Budget of Austin Water. Related to Item 3. 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. Prior Council Action: August 12, 2026 – Council approved an Ordinance No. 20260812-007 adopting the Austin Water Operating Budget for the Fiscal Year 2026-2027. 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 a 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, $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. Impact fee/CRF collections are restricted in use by Texas Local Government Code Chapter 395.012. 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. City of Austin Council Meeting Backup: November 19, 2026 OPERATING BUDGET FISCAL NOTE File ID: 26-3021 DATE OF COUNCIL CONSIDERATION: DEPARTMENT: FUND: 12/3/26 Austin Water Combined Utility Operating Fund SUBJECT: Approve an ordinance amending the Fiscal Year 2026-2027 Austin Water Operating Budget (Ordinance No. 20260812-007) to increase $9,200,000 Transfer In from Capital Improvement Plan and increase $9,200,000 transfers out to the Combined Utility Revenue Bond Redemption Fund for a net impact of $0 to the Operating Budget to defease and redeem outstanding Water and Wastewater System Revenue Refunding Bonds. Funding: Funding: $9,200,000 is available in the Capital and Operating Budget of Austin Water. Related to Item #_ CURRENT YEAR IMPACT: Beginning Balance Revenue Total Revenue Transfers In CIP Austin Water Utility AW CIP - CPM Support Services/Infrastructure Funds Austin Resource Recovery Fund Total Transfers In Total Available Funds Program Requirements Other Requirements Debt Service Transfers Out Trf CRF to Debt Defeasance Trf Operating to Debt Defeasance Trf WWW Reserve Fund to Debt Defeasance Trf to Reclaimed Water CIP Fund Other Trf Total Transfers Out Total Requirements 2026-27 Approved 288,052,888 This Action 2026-27 Amended 288,052,888 0 816,132,503 0 816,132,503 30,000,000 32,504,444 4,356,837 0 74,884 66,936,165 9,200,000 9,200,000 39,200,000 32,504,444 4,356,837 0 74,884 76,136,165 883,068,668 9,200,000 892,268,668 358,613,591 39,317,115 208,782,066 30,000,000 4,000,000 6,000,000 253,069,890 293,069,890 358,613,591 39,317,115 208,782,066 30,000,000 13,200,000 0 6,000,000 253,069,890 302,269,890 9,200,000 9,200,000 899,782,662 9,200,000 908,982,662 Excess (Deficiency) of Total Available Ending Balance (16,713,994) 271,338,894 FIVE-YEAR ESTIMATED IMPACT: FY 2027 FY 2028 FY 2029 FY 2030 Total Available Funds Total Requirements Net Budget Impact 9,200,000 9,200,000 0 0 0 0 0 0 0 0 0 0 0 0 (16,713,994) 271,338,894 FY 2031 0 0 0 ANALYSIS / ADDITIONAL INFORMATION: Capital Improvement Program (CIP) transfers in are from impact fee/capital recovery fee (CRF) collections that are restricted in use by Texas Local Government Code Chapter 395.012. 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 10-Year Update. The total transfers out from CRF to debt defeasance is $30,000,000, Operating to debt defeasance is $13,200,000 for a combined total of up to $43,200,000 will be used to defease debt, which will reduce Austin Water existing debt service requirements. This results in a net change of $0 to Austin Water's Operating Budget.