Texas Invests in Water Infrastructure, But More Is Needed
Plant leases and BOO contracts from AUC can help close the gap
Texas has recently invested significantly in infrastructure to address water issues that are increasingly straining the state’s resources, including droughts, floods, urban growth, and water loss from aging pipes The new centerpiece $1 billion Texas Water Fund and other measures herald important progress, but the state’s actual need is much greater than the current investment can handle.
How can Texas fill this investment gap? Two options — plant leasing and contracts such as build-own-operate (BOO) — have quietly grown as a way of addressing the scale of the challenges.
Texas Water Fund
After the passage and signing of the state’s Senate Bill 28 in 2023, the newly created Texas Water Fund started the process of directing $1 billion toward the mitigation of water losses in the state. Every year, Texas water losses due to leaky pipes alone amount to 185 billion gallons (700 million cubic meters), enough water to fill Lake Buchanan. That amount of money will fix a great deal of pipe, but pipeline construction is not cheap. Typically, pipelining requires so much capital that it surpasses all other initial costs associated with water infrastructure.
Bipartisan Infrastructure Law
As part of the 2021 Federal Bipartisan Infrastructure Law (BIL), which contains the largest water investment in American history, $358,980,000 in federal funding is also on the way to Texas to upgrade drinking water, wastewater, and stormwater infrastructure.
Smaller communities have often fallen by the wayside during infrastructure planning, but funds from the BIL prioritize areas that have long been underfunded. The Coastal Bend and Galveston Bay National Estuary Programs, for instance, each received $1,819,600 for projects to assist disadvantaged communities by restoring the estuaries upon which they depend.
While the Texas Water Fund’s $1 billion move to address the problem represents important forward motion, the actual water investment needed in the state is orders of magnitude higher. In testimony before the Texas House Natural Resources Committee, Texas 2036, a nonpartisan public policy think tank, estimated the true need at a whopping $154 billion. According to the think tank, a breakdown of the investment gap includes:
- $59 billion to develop new water supplies
- $73.7 billion for repairs to failing water systems
- $21.1 billion for repairs to wastewater systems
Some even think the estimate is too low. State Sen. Charles Perry, who leads on water policy, said fixing water infrastructure and increasing the state’s water supply would more realistically cost $500 billion.
Challenges to Filling a $500 Billion Water Investment Gap
The traditional method of infrastructure delivery has become so familiar in the water sector that many decision-makers in Texas and beyond undertake design-tender projects almost reflexively. The familiarity of tradition, however, comes at a cost.
Water infrastructure projects present a huge financial risk. While offering unprecedented quality and efficiency, today’s advanced water treatment technologies require a new level of training for operators. Staffing a system adequately as the water workforce shrinks also offers challenges, and keeping up with complex, evolving, and demanding regulatory standards from the Texas Commission on Environmental Quality (TCEQ) can stretch resources to the breaking point.
Growing water scarcity and population growth exacerbate these challenges.
How can we remove obstacles and simplify the process, not just at the start but throughout decades of operations and maintenance?
Houston-based AUC Group is addressing such customer needs by adapting plant leasing and build-own-operate (BOO) contracts that relieve initial problems with access to capital.
Financing Water and Wastewater Treatment Projects
AUC’s Lease Plant Program offers a flexible solution for water and wastewater treatment needs. With various financing and equipment options, customers can tailor the program to their specific requirements.
The Lease Plant Program offers several key benefits, including flexibility, scalability, cost-effectiveness, comprehensiveness, and purchase options. Customers can choose from short- and long-term leases, or even lease-to-purchase plans, to match their project timelines. The modular design of the plants allows for easy expansion or contraction, ensuring that customers only pay for the capacity they need. Leasing can also free up capital for other projects, as well as reduce upfront costs.
With BOO and BOOT agreements, AUC secures financing, leaving developers and HOAs with little to worry about other than paying a set water services bill or lease payment. AUC takes care of the rest. This decentralized approach not only brings reliable service over the long haul but also independence from external utilities. AUC delivers scaled-to-fit plants that allow builders to build where and when they want.
Keeping water and wastewater services in the hands of experts offers several other benefits. AUC, with decades of experience in the Texas market, knows how to shepherd a project through the TCEQ approval process for unprecedented delivery speeds.
Signorelli leased a comprehensive water and wastewater treatment system from AUC Group, including site work, to streamline a complex development project.
For instance, when real estate developer The Signorelli Company needed both wastewater treatment and drinking water treatment for the well water supply at a development, it leased equipment from AUC. AUC went to work, conducting extensive site work, including ground preparation, power infrastructure, drainage, landscaping, and fencing. The arrangement brought a complex, full-water-cycle solution project under one roof instead of involving independent subcontractors. It expedited delivery and brought long-term cohesion and efficiency to the project’s future. Signorelli was able to forget about water and concentrate its attention elsewhere.
During the recent real estate boom, AUC has seen development after development suffer costly delays as they wait for regional or municipal systems to extend water and wastewater services to their sites. AUC is, however, able to enter areas with no existing infrastructure and commission plants, giving developments a dedicated, staffed water utility.
While Texas will benefit from the new investment in water infrastructure, AUC is here to fill in the investment gaps with products suited for developments, commercial interests, industry, and the small communities targeted by the Bipartisan Infrastructure Law. Whether your project has been funded or has fallen through the cracks, AUC Group is here to help. Contact AUC to tell us about your project.
