Financial policies are essential to the fiscal health of Austin Water and help provide financial stability and continuity. 

Austin Water has performed a review of its financial policies and recommends updates to Debt Service Coverage, Capital Projects Equity Contributions, Operating Cash Reserves, and Drinking Water Protection Zone beginning in Fiscal Year 2022.

The recommended updates to these financial policies aligns with internal goals that have been in place for several years. Austin Water has internal goals for Debt Service Coverage of 1.75x, Capital Projects Equity Contributions of 35% to 50%, and 180 Days of Operating Cash Reserves.

 

Public Input Stakeholder Meeting

A review of Austin Water's financial policies FY 2022 update was presented at a Public Input Stakeholder Webinar hosted on Zoom on February 9.  

 

Feedback Feedback Opportunities

Your feedback is requested, email us your comments or questions about the recommended financial policies to AW-FinancePublicInput@austintexas.gov.  

Comments and Recommendations from Residential Rate Advocate
Comments, Questions and Answers from Austin Water customers

 

More Information

In 2016, Austin Water launched a Cost of Service Study that included discussions on Austin Water’s Financial Policies. Upon completion of the study in 2018 and recommendations made to Austin City Council, Austin Water agreed to create a process that provides for stakeholder input before making future changes to its financial policies. 

 

Proposed Financial Policies

 
The financial policy updates proposed below will be included in the annual budget process, with a presentation to the City of Austin’s Audit and Finance Committee in May 2021 and Austin City Council in August 2021.
 
Approved Policy (FY21) Proposed Policy(FY22) Comments
Debt service coverage of at least 1.50x shall be targeted.

Debt service coverage of at least 1.75x shall be targeted.

NOTE: May 26, 2021 - The initial proposed policy for Debt Service Coverage was 1.85x. This proposed policy was amended after consideration of customer and stakeholder comment. The latest figure is listed above.

Consistent with Austin Water's current financial goals set within 2018 Cost of Service Rate Study and needed to strengthen bond ratings. Austin Energy policy is 2.0, Aviation policy is 1.25x.

Capital projects should be financed through a combination of cash, referred to as pay-as-you-go financing (equity contributions from current revenues), and debt. An equity contribution ratio of at least 20% is desirable. Capital projects should be financed through a combination of cash, referred to as pay-as-you-go financing (equity contributions from current revenues), and debt. An equity contribution ratio of at least 35% to 50% is desirable.

Consistent with Austin Water's current financial goals set within 2018 Cost of Service Rate Study and needed to strengthen bond ratings. Austin Energy policy is 35% to 60%.

Austin Water shall maintain operating cash reserves equivalent to a minimum of 60 days of budgeted operations and maintenance expense.

Austin Water shall maintain operating cash reserves equivalent to a minimum of 180 days of budgeted operations and maintenance expense.

NOTE: May 26, 2021 - The initial proposed policy Days of Operating Cash Reserves was 245 days. This proposed policy was amended after consideration of customer and stakeholder comment. The latest figure is listed above.

Consistent with Austin Water's current financial goals set within 2018 Cost of Service Rate Study and needed to strengthen bond ratings. Austin Energy is 150 days, Convention Center is 180 days.

Capital improvement projects for new water and wastewater treatment plants, capital expansions, and growth-related projects that are located in the Drinking Water Protection Zone (DWPZ) will be identified and submitted, as part of the annual budget process, to the following Boards and Commissions: Water and Wastewater Commission, Resource Management Commission, Environmental Board, Planning Commission, and the Zoning and Platting Commission.

These Boards and Commission will review growth-related DWPZ capital projects spending plans, obtain Board and Commission and citizen input, review consistent with Imagine Austin Comprehensive Plan, review effect on growth within the DWPZ, and make recommendations on project approval for inclusion in Austin Water's five-year capital spending plan.

A public hearing will be held during the City's annual budget review process to provide citizens an additional opportunity to comment on growth related projects located within the DWPZ.

Capital improvement projects for new water and wastewater treatment plants, capital expansions, and growth-related projects that are located in the Drinking Water Protection Zone (DWPZ) will be identified and submitted, as part of the annual budget process, to the Water and Wastewater Commission.

The Water and Wastewater Commission will review growth-related DWPZ capital projects spending plans, obtain Commission and citizen input, review consistency with Imagine Austin Comprehensive Plan, review effect on growth within the DWPZ, and make recommendations on project approval for inclusion in Austin Water's five-year capital spending plan.
 

Projects included in the DWPZ have been limited to only a very few in the past.  Review by all five of the Commissions has been extremely limited and generally are approved upon consent.  The DWPZ public hearing at Council during budget process has consistently had no speakers.  Getting on five Commission agendas during the budget process is challenging and generally has resulted in no input. In addition, these DWPZ projects are included in the 5-Year CIP Plan as part of the annual budget process, which includes a public hearing that offers opportunities for public comment.

 

A helpful list of terms and frequently asked questions have been compiled to help customers as they review the supporting documents and proposed updates.

Contact Us

Email us your comments or questions about the recommended financial policies to AW-FinancePublicInput@austintexas.gov.  

Question and Answer Summary 

A summary of stakeholder input will be compiled and posted on a monthly basis below. 

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