Maintaining affordability through innovative debt management strategies for utility infrastructure
Austin Water secured a combined $50.9 million in funding through the Drinking Water State Revolving Fund, the Clean Water State Revolving Fund, and the State Water Implementation Fund for Texas. The newly acquired below-market interest rate loans from the Texas Water Development Board will allow the utility to make major investments in infrastructure improvements without impacting water and wastewater rates. This newest wave of funding locks in interest rates as low as 2.4% and saves the utility and customers millions in financing costs.
“These low interest loans are a key component of our affordability strategies that work to keep costs for water and wastewater infrastructure improvements down,” said Christina Romero, Austin Water Division Manager, Financial Services. “We’re saving customers upwards of $9 million in financing costs in this wave of funding alone.”
Austin Water has also completed a major debt refunding transaction that saves customers $36.9 million in financing costs. Along with a scheduled debt defeasance transaction by the end of the year that will save an additional $52.2 million, these innovative debt management strategies will bring the overall savings to customers of over $500 million since 2016. These debt management efforts have allowed Austin Water to maintain flat rates since 2018 despite increased infrastructure investments.
Strengthening Austin infrastructure at a fraction of the cost
More Reliable Reservoir Storage and Pumping Capacity
Funding from the Drinking Water State Revolving Fund will go towards upgrading the North Austin Reservoir with a new pump station. A portion of the funding will also go toward a state-of-the-art electrical equipment at the Ullrich Water Treatment Plant’s Low Service Pump Station, replacing equipment that was original to the plant construction. Both of these projects will improve water system reliability and resiliency and reduce maintenance costs. The $24.6 million, 30-year loan with an all-in interest rate of 2.44%, will save customers and the utility an estimated $5.8 million relative to traditional revenue bond financing in the municipal capital markets.
Enhanced Power Reliability at Wastewater Treatment Plants
Funding from the Clean Water State Revolving Fund will go towards improving pumping systems at Walnut Creek Wastewater Treatment Plant as well as rehabilitation of the plant’s sludge thickener system. The electrical substation at the South Austin Regional Wastewater Treatment Plant will also be replaced. These projects will improve the reliability and resiliency of Austin’s major wastewater treatment facilities. The $8.3 million, 30-year loan with an all-in interest rate of 2.55%, will save customers and the utility an estimated $2.1 million relative to traditional revenue bond financing in the municipal capital markets.
Real-time Data with Advanced Metering Infrastructure
Funding from the State Water Implementation Fund for Texas will go toward a complete modernization of Austin’s water meter infrastructure. A city-wide initiative, known as MyATXWater, is underway to replace analog water meters with advanced digital meters to give customers more control over their water usage and the ability to closely monitor for leaks within their private system. The advanced meter infrastructure will also provide Austin Water with more real-time analytics about system-wide performance. The $18 million, 20-year loan with an all-in interest rate of 3.3%, will save customers and the utility nearly $1.1 million dollars relative to traditional revenue bond financing in the municipal capital markets.