Austin Water advances $1.7B wastewater capital plan, anticipates $1B EPA loan for Walnut Creek expansion

Austin Water advances $1.7B wastewater capital plan, anticipates $1B EPA loan for Walnut Creek expansionThe utility's capital spending forecast highlights major investments in wastewater capacity and aquifer storage, while officials evaluate the risks of public-private partnerships against traditional funding mechanisms.

Austin Water's FY26-30 capital spending plan allocates $1.7 billion to wastewater, $873 million to water, and $119 million to reclaimed water infrastructure.

The wastewater budget is heavily driven by the $630 million Walnut Creek expansion, which will increase future treatment capacity.

The utility expects to close a $1 billion EPA loan in the coming months to fund the Walnut Creek project.

On the water side, spending is prioritized for a major Aquifer Storage and Recovery (ASR) project aimed at long-term drought resiliency.

Austin Water is moving forward with an aggressive five-year capital improvement plan (CIP) for FY26-30, dominated by a $1.7 billion allocation for wastewater infrastructure. The spending is largely driven by the Walnut Creek expansion, a $630 million project intended to increase future wastewater treatment capacity to meet the city's growing needs. To finance the massive expansion, Austin Water expects to close on a $1 billion EPA loan in the next couple of months, according to Acting Assistant Director of Financial Services Tina Romero. The utility is currently relying on traditional financing and federal loans rather than alternative delivery models. While staff recently explored public-private partnerships (P3s), Romero noted that such models are currently more common among smaller rural utilities and that Austin Water must carefully weigh the risks before considering a P3 approach, relying instead on its ability to issue commercial paper and revenue bonds. Beyond wastewater, the utility's capital plan includes $873 million for water infrastructure. The largest water initiative is the full-scale Aquifer Storage and Recovery (ASR) project, which will store surplus water underground for recovery during drought conditions. Staff noted during a June 11 Budget Committee meeting that recent decisions to move the ASR project to Travis County will likely shift the funding forecast in the upcoming CIP update, as pilot testing informs the full-scale rollout. Reclaimed water projects also feature prominently, with $119 million programmed to complete the "core" infrastructure connecting the Walnut Creek and South Austin Regional wastewater treatment plants. The reclaimed system investments are being partially funded by the utility's "Go Purple" community benefit charge, which collects roughly $12 million annually to defease debt and supplement capital funding for reuse projects. On the operational side, Austin Water is forecasting a $16.5 million increase in debt service requirements for FY27 and is seeking 41 new full-time equivalent (FTE) positions at a cost of $5 million. Utility staff explained that the hiring push is designed to offset severe overtime levels that currently see some staff working 60 to 65 hours a week.