Public investment is essential, but communities also need to keep up with development schedules
Texas appropriated $1.038 billion for the Water Supply and Infrastructure Grants Program, a significant one-time investment in water supply and infrastructure projects. At the same time, demand for the Texas Water Development Board’s (TWDB) existing drinking water and wastewater financing programs continues to far exceed available funding.
Funding is essential, but it cannot guarantee timely projects. In TWDB financing programs from 2020 to 2024, less than 16% of submitted drinking water projects and less than 15% of submitted clean water projects received commitments. That imbalance continues. For the 2026 program year, TWDB reported that its Drinking Water State Revolving Fund was oversubscribed by 10 times and its Clean Water State Revolving Fund by nine times.
For communities and developers, that mismatch makes it important to evaluate utility capacity before breaking ground and consider infrastructure options beyond waiting for a traditional expansion. Decentralized treatment, phased capacity, leasing, and wholesale delivery can provide additional ways to align treatment capacity with a project’s timeline and growth.
Texas Is Making a Major Water Infrastructure Investment
The $1 billion appropriation reflects both the urgency and scale of the water supply challenges Texas is facing. An investment of that magnitude can expand supplies, strengthen public systems, and help communities prepare for growth. Public programs also allow Texas to direct resources toward needs that individual communities might struggle to meet.
Statewide funding works within program requirements and funding cycles, while local capacity demand emerges on other timelines, like construction phases, population growth, or existing plant limitations.
Infrastructure Needs Still Outpace Available Funding
The challenge is not simply securing funding. Communities and developers also have to align financing with when capacity is actually needed. A project may need treatment capacity before the funding, design, construction, and commissioning of a larger regional expansion can occur.
A development might need to match spending to growth phases and reserve funds for when capacity is needed. A community might have the funding for water assets but not the organizational resources to staff, operate, maintain, and repair a modern system. Flexible treatment and delivery models can give decision-makers another path when the timing of public funding and planned infrastructure does not match a project’s capacity needs.
What Capacity Gaps Mean for Growing Communities
Regional expansion might eventually solve a community’s infrastructure problem, but development can stall until the project is commissioned.
Lago Vista, Texas, for instance, faces commitment delays after submitting a 2023 proposal to the TWDB for a $27 million expansion of its wastewater plant. TWDB ranked the project, but it did not place Lago Vista on the Initial Invited Projects List and therefore did not invite it to submit a full application.
As its system approached 80% capacity, the city resubmitted the project the following year with a revised estimate of $28.2 million. Lago Vista projected 3,200 additional sewer connections over 10 years but had limited borrowing capacity. Wastewater flows will exceed the plant’s permitted capacity by 2033, according to the city.
Options for Keeping Projects Moving
Decentralized treatment can support phased development by adding capacity closer to where it is needed. Prefabricated treatment systems can also be expanded in phases, allowing infrastructure investment to more closely follow actual demand rather than requiring full build-out capacity on day one.
Leasing can also provide quicker access to treatment assets without requiring an upfront purchase or permanent ownership commitment. Through the Lease Plant Program, AUC leases everything inside the fence during the lease term, with purchase options available. Leasing also aligns with phased growth, temporary bypass treatment, and emergency capacity needs.
Wholesale water and wastewater solutions offer partnerships when a utility, district, municipality, or other contracting entity is ready for a long-term, full-service arrangement. Under performance-based wholesale agreements, the private partner owns, operates, and maintains the treatment assets. The public partner pays for treatment service rather than owning, operating, and maintaining the infrastructure itself. Wholesale solutions can align capacity and costs with project growth, and the public partner is free to refocus resources on other responsibilities.
A Harris County master-planned community demonstrates how these approaches work together. The development needed 600,000 gallons per day of wastewater treatment capacity, and planned construction in four sections. Under a five-year lease, AUC installed the plant in four phases, commissioning each phase when its corresponding housing section came online.
Planning Beyond Available Funding
Funding should be part of the infrastructure plan, but it shouldn’t be the only plan. When existing capacity, public funding, and development schedules don’t line up, evaluating phased treatment, leasing, or wholesale delivery early can preserve options before infrastructure becomes the project’s bottleneck.
Contact AUC early for help evaluating treatment capacity, phasing, leasing, and wholesale options for your project.
