Austin Water closed a financial transaction that will save the utility $62 million over the next three years. Known as debt defeasance, this strategy saves Austin Water and its customers money by reducing the amount paid towards debt service.
“Finding efficiencies and cost savings are critical components of Austin Water’s overall debt management strategy,” said Shay Ralls Roalson, Director of Austin Water. “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’s award-winning financial strategies successfully balance two essential priorities: responsibly managing debt and continuing to invest in critical infrastructure to provide water and wastewater service reliability and stability for the 10th largest city in the county. The utility has saved customers $556 million since 2016 through effective debt management while making great strides to renovate an aging water and wastewater system.
Austin Water uses Capital Recovery Fee dollars for annual debt defeasance transactions to reduce future debt service requirements. These defeasances have allowed Austin Water to manage debt costs and improve financial performance. Reducing debt service requirements has a multiplier effect on revenue requirements: every dollar of debt service savings reduces annual revenue requirements by $1.75. Debt defeasance transactions have resulted in:
- One the of most robust Customer Assistance Programs for low-income customers in the country, including multiple significant rate reductions.
- Creation of one of the first Multifamily Customer Assistance Programs in the nation.
- Financing to support infrastructure expansions for one of the fastest growing cities in the United States.
- Stable rates since 2018 and temporary rate reductions to aid customers during the pandemic and other emergency events.
For more information about Austin Water’s award winning debt management strategy visit www.austinwater.org.
About Austin WaterAustin Water provides safe, reliable, high quality, sustainable and affordable water services that have met the community’s needs for over 100 years. Austin Water services over 1 million people in the Austin metropolitan area across more than 548 square miles.
