KBRA assigns a long-term rating of AA- to the City of Austin, TX Senior Lien Special Tax Revenue Bonds, Series 2026A (Convention Center Project) and A+ to the City's Junior Lien Special Tax Revenue Bonds, Series 2026B (Convention Center Project). The rating Outlook is Stable.

Key Credit Considerations

The ratings were assigned because of the following key credit considerations:

Credit Positives

• Rapidly growing Austin area economy provides strong basis for growth in pledged receipts.
• Structuring of debt service requirements to be accommodated within pledged City HOT receipts without reliance on unproven PFZ Increment receipts.

Credit Challenges

• Pledged City HOT receipts are vulnerable to recession, travel disruption, and changes in business and leisure demand, as demonstrated by the severe decline experienced during the pandemic.
• Junior Bond security provisions are weak relative to the historic volatility of pledged receipts.

Rating Sensitivities

For Upgrade

• Completion of the Convention Center on time and within budget followed by consistent growth in pledged receipts and widening debt service coverage.

For Downgrade

• Sharp decline in pledged receipts due to severe economic contraction or event-based reduction in travel.
• Significant construction delays, cost escalation, or additional borrowing beyond the current financing plan that materially increases leverage.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1015948

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