North Austin News

Austin Water has successfully closed a financial transaction that is projected to save the utility a staggering $62 million over the next three years. This strategic move, known as debt defeasance, will significantly reduce the amount paid towards debt service, resulting in substantial cost savings for both Austin Water and its customers.

According to Shay Ralls Roalson, Director of Austin Water, "Finding efficiencies and cost savings are critical components of Austin Water’s overall debt management strategy. Debt defeasance has been a tremendously successful strategy that has helped offset the cost of construction and upgrades to improve resilience across Austin’s water and wastewater infrastructure."

Austin Water has been widely recognized for its award-winning financial strategies, which effectively balance responsible debt management with investments in vital infrastructure. Since 2016, the utility has already saved customers a remarkable $556 million through effective debt management while simultaneously working towards the renovation of its aging water and wastewater system.

To achieve these savings, Austin Water utilizes Capital Recovery Fee dollars for annual debt defeasance transactions, which effectively reduce future debt service requirements. This approach has not only allowed Austin Water to manage debt costs but has also improved its overall financial performance. The impact of reducing debt service requirements is significant, with every dollar of debt service savings resulting in a reduction of annual revenue requirements by $1.75.

The implementation of debt defeasance transactions has yielded several notable outcomes for Austin Water. Firstly, it has enabled the utility to establish one of the most robust Customer Assistance Programs for low-income customers in the country, including multiple significant rate reductions. Additionally, Austin Water has been at the forefront of innovation by creating one of the first Multifamily Customer Assistance Programs nationwide. Furthermore, this financial strategy has facilitated the financing necessary to support infrastructure expansions in one of the fastest-growing cities in the United States.

Moreover, Austin Water has been able to maintain stable rates since 2018, providing reassurance to customers, particularly during the challenging times brought about by the ongoing pandemic and other emergency events. Temporary rate reductions have also been implemented to further support customers in times of need.

Austin Water's commitment to responsible debt management and its continued investment in critical infrastructure have cemented its reputation as a reliable provider of safe, high-quality, and affordable water services. With a service area encompassing over 1 million people across more than 548 square miles, Austin Water has consistently met the community's needs for over a century.

For those seeking more information about Austin Water's award-winning debt management strategy, visit their website at www.austinwater.org.