Austin Water advances 280-million-gallon wastewater mining project as commissioners scrutinize reuse opt-out fees

Austin Water advances 280-million-gallon wastewater mining project as commissioners scrutinize reuse opt-out feesTwo years into Austin's mandatory commercial reuse program, the utility is preparing to approve a campus-wide wastewater mining project, while officials debate whether current developer fee-in-lieu payments are high enough to incentivize onsite infrastructure.

Austin Water expects to finalize an agreement by late 2026 for a wastewater mining project that will treat collection system flows to offset 280 million gallons of potable demand annually.

Since the March 2024 adoption of the 'Go Purple' program, five commercial projects have opted to pay a fee-in-lieu rather than build onsite reuse systems, generating $682,720.

Commissioners questioned if the fee is too nominal to deter developers, though staff noted the collected funds cover nearly 10% of the reclaimed system's $7 million annual debt service.

The utility is updating its centralized reclaimed water long-range plan, aiming for a Fall 2027 completion, to build system resiliency for growing indoor commercial demands.

Austin Water is advancing its decentralized and centralized reclaimed water networks following the March 2024 implementation of its 'Go Purple' program, which mandates new commercial developments either connect to the municipal reclaimed system or install onsite reuse infrastructure. During an August 19 meeting of the Water and Wastewater Commission, utility staff outlined the progress of the mandate, highlighting a major upcoming wastewater mining project that is currently at 90% design. Expected to be approved for construction by the end of 2026, the campus-wide project will extract wastewater directly from the city's collection system, treat it at a privately owned reclamation plant, and offset an estimated 280 million gallons of potable water demand annually. While the mandatory reuse ordinance is driving new onsite infrastructure, commissioners scrutinized the utility's fee-in-lieu structure, questioning whether it is too inexpensive to force developer compliance. Between April 2024 and March 2026, the utility approved 14 onsite water reuse systems for construction. However, five eligible projects opted to pay a fee-in-lieu—generating a total of $682,720—rather than build onsite treatment systems. The fee is calculated based on a project's water demand and the equivalent cost of installing 500 feet of purple pipe. Commissioners characterized the $682,720 total across five projects as nominal compared to the engineering and construction costs developers face, warning it could disincentivize onsite reuse. Utility staff defended the structure, noting that developers who pay the fee are still required by code to dual-plumb their buildings to be 'reclaimed ready.' Furthermore, Deputy Director Joseph Gonzalez emphasized that the collected fees are significant for the utility's capital planning. The $682,720 represents nearly 10% of the $7 million annual debt service for Austin Water's centralized reclaimed system. 'We use that funding primarily in two ways: either to directly support specific projects... or to defease debt to lower debt service so that we can create capacity to take on more projects,' Gonzalez said. Austin Water's centralized reclaimed system currently spans approximately 70 miles and delivered 1.8 billion gallons in 2025. To manage growing demand and a shift toward indoor commercial uses like toilet flushing and cooling, the utility initiated an update to its centralized reclaimed water long-range plan in May 2026. Slated for completion in Fall 2027, the plan will focus on system-scale looping and infrastructure to provide operational resiliency akin to the potable water network. To support the operation of the new private onsite systems, Austin Water is partnering with Capital Area Workforce Solutions and Austin Community College to launch a training and certification program for onsite reuse operators, with courses expected to begin in late 2026. Separately, the commission unanimously approved $6.7 million in consent agenda items, including a $2.27 million construction contract with Arguijo Corporation to relocate a 36-inch water line across the Colorado River, and a $2.92 million chemical contract for sodium bisulfite.