Make informed decisions about water treatment funding for your warehouse, fulfillment center, or office building
To attract and retain tenants, commercial spaces must have a reliable supply of water, as well as access to wastewater treatment. When a commercial building is too large or too remote to rely on municipal systems, it has to rely on its own infrastructure, which can be costly, typically requiring substantial capital investment. Fortunately, there are flexible solutions to help fund water treatment in commercial settings. Let’s compare three options: leasing, owning, and build-own-operate (BOO).
Leasing a Water or Wastewater Treatment System
AUC’s water and wastewater treatment plants utilize advanced technologies to ensure clean and safe water for commercial operations.
Leasing is an attractive option for managing water quality without incurring the high up-front costs typically associated with purchasing and installing a water or wastewater treatment system. AUC Group’s Lease Plant Program offers several benefits that make it a viable strategy, including:
- Lower up-front costs. One of the primary advantages of leasing is the significantly reduced initial investment requirement. Commercial customers can acquire water treatment systems without a large up-front payment, preserving cash flow for other operational needs.
- Predictable monthly payments. Since lease agreements typically involve fixed monthly payments, it is easier for customers to budget and plan expenses. This predictability can be particularly beneficial for facilities with tight or fluctuating budgets.
- Access to the latest technology.Leasing enables businesses to remain at the forefront of water and wastewater treatment advancements. As new and improved systems are developed, leased facilities provide greater flexibility to adopt the latest technologies, unlike purchased equipment that might necessitate a costly and extensive overhaul.
Owning Your Water or Wastewater Treatment Plant
AUC’s commercial water and wastewater treatment plants are designed to be sustainable and energy-efficient.
The ownership model for funding water treatment systems involves the outright purchase of the equipment. While this approach comes with certain responsibilities, it offers distinct advantages:
- Full control over the asset. Owning a water or wastewater treatment system gives commercial customers full control over the equipment. This allows for complete customization to meet specific operational needs, including the choice of technology, system configuration, and integration with existing processes.
- Potentially lower long-term cost after payoff. Although the initial capital outlay is higher, owning the system can be more cost-effective than leasing over the long term. Once the equipment is paid off, the customer makes no further payments aside from costs associated with operations and maintenance, potentially making it a more economical choice over time.
- Potential for asset appreciation. The system becomes a tangible asset for the commercial business that can be included on the balance sheet. This can be beneficial for improving the company’s asset base and enhancing its financial standing.
Build-Own-Operate Agreements
With BOO agreements, commercial customers enjoy complete hands-off management as our experts oversee the entire water treatment process, from installation to daily operation.
The use of financing contracts such as build-own-operate (BOO) and build-own-operate-transfer (BOOT) is an approach in which a specialized water treatment company is responsible for building or installing, owning, and operating a treatment system on behalf of a commercial customer. In a BOOT contract, the infrastructure is transferred to the customer at the end of the term. These models work well for businesses looking to outsource the complexities of water treatment while focusing on their core business operations. Here are some of the benefits:
- No up-front capital investment. One of the primary advantages of BOO/BOOT contracts is that they require no up-front capital. AUC shoulders the financial burden of the system, and the customer pays for the service on a per-use or contractual basis.
- Complete hands-off management. Commercial customers benefit from having water treatment experts handle all aspects of the system, from installation to daily operations.
- Long-term efficiency and reliability. AUC’s capable team of water experts optimizes system performance and ensures regulatory compliance of the water or wastewater treatment system. This expertise can lead to higher efficiency and reliability than with in-house management.
Strategic Considerations for Financing Commercial Water and Wastewater Treatment
When choosing the right financial model for commercial water treatment systems, it’s important to ensure that it’s cost-effective and meets the operational needs of the facility. Two primary factors to consider are the availability of capital and the cost of accessing that capital.
It may be more cost-effective to opt for a lease or a BOO/BOOT agreement than to pay high interest rates on a long-term loan. It is also important for developers and businesses to evaluate long-term goals for a facility and assess their scalability needs. If they plan on expanding the facility, it might be better to choose a lease that allows for upgrades at the end of the lease term, or a BOO agreement that offers the flexibility to scale up at any time, rather than taking full ownership and having to inject more capital to accommodate changes in operations or water treatment needs.
Developers also must understand the regulatory compliance and maintenance requirements of managing a water or wastewater treatment system. Some financial models include guarantees or services that ensure that the system remains compliant with environmental regulations. With a BOO contract, AUC takes care of all operations and system maintenance, ensuring optimal efficiency, environmental compliance, and system longevity.
Selecting the right financial model requires balancing initial costs with long-term operational expenses and ensuring compliance with regulatory goals. By carefully considering these factors, businesses can choose the model that best aligns with their financial strategy and operational needs.
Contact AUC for expert advice and tailored water and wastewater treatment solutions.
