How to choose the right water and wastewater delivery model for your project’s needs, budget, timeline, and long-term goals
A developer facing limited or unavailable municipal capacity during the first phase of a community’s development may have very different infrastructure needs five or ten years later. A municipality may have the long-term demand for a new plant but not the capital or staffing to take it on today. In both cases, the question is how to finance, own, operate, and expand that infrastructure over time.
Start With the Project, Not the Ownership Model
AUC Group offers several infrastructure delivery models that can be structured around the needs of developers, municipal utility districts (MUDs), municipalities, and other utility customers. Before deciding on a delivery model and who should own the infrastructure, developers and municipalities should evaluate their current and future utility needs and establish what challenges need to be overcome.
Lease | Wholesale / BOO | Traditional Ownership | |
|---|---|---|---|
| Who owns the plant? | AUC during lease | AUC | Customer |
| Who operates it? | Typically customer | AUC | Customer or contracted operator |
| Customer finances plant? | No | No | Yes |
| Can capacity grow with the project? | Yes | Can be structured for growth | Depends on system design |
| Path to customer ownership? | Lease-to-purchase available | BOOT or purchase options may be available | Customer owns from outset |
When Leasing Makes Sense
AUC’s Lease Plant Program, which offers short- and long-term options, allows developers and municipalities to add treatment infrastructure without purchasing the assets upfront. This can preserve capital for other development priorities while still putting needed capacity in place.
Leasing can also make sense when demand will change over time. A project may need temporary capacity until a permanent system comes online, or it may need a long-term system that can expand as development progresses. AUC’s Lease Plant Program allows customers to align infrastructure and lease payments more closely with phased growth rather than purchasing capacity for full buildout upfront.
When Wholesale Delivery Makes Sense
AUC’s wholesale water and wastewater treatment solutions may make sense when a developer or municipality needs reliable treatment capacity but doesn’t want to own, operate, and maintain the plant. With this model, AUC designs, finances, builds, owns, operates, and maintains the water or wastewater treatment plant, providing treatment as a service for a fixed monthly fee.
The primary distinction from leasing is operational responsibility. Under a typical AUC lease, the customer leases the treatment infrastructure and generally remains responsible for operating it. Under a build-own-operate (BOO) arrangement, AUC retains ownership and operational responsibility, while the customer pays for the water produced or wastewater treated under the agreement.
When Traditional Ownership Makes Sense
Some developers, MUDs, and municipalities prefer to own and control the infrastructure themselves. In such cases, AUC can design and build a permanent system that the customer owns rather than leasing the infrastructure or purchasing treatment through a long-term service agreement.
Traditional ownership may make sense when a customer has access to capital funding, clearly defined long-term capacity needs, and a long-term plan for operating and maintaining the system.
Infrastructure Can Change With the Development
Choosing a delivery model at the beginning of a project doesn’t necessarily lock the customer into that structure forever. AUC’s options can accommodate changes in capacity, financing, ownership, and operational needs as a development matures.
For example, AUC offers short- and long-term leases, as well as leases with an option to purchase. A customer can therefore lease the infrastructure initially and retain the option to purchase it later if ownership becomes a better fit as the project matures. AUC’s program also extends beyond leasing a standalone treatment unit. Depending on the project, the lease can encompass the treatment facility and supporting infrastructure within the treatment site, including lift stations, clarifiers, electrical systems, controls, foundations, and other components needed to put the plant into operation.
Similarly, AUC’s wholesale delivery models include build-own-operate (BOO) and build-own-operate-transfer (BOOT) options. Under a BOO agreement, customers can renew, renegotiate, or terminate the agreement when the contract ends, and they may also have the option to purchase the plant. With a BOOT agreement, ownership of the infrastructure transfers to the customer at the end of the contract term.
Questions AUC Asks Before Recommending an Approach
- How quickly is capacity needed? When capacity is needed quickly, leasing or wholesale delivery may remove financing or procurement barriers that could otherwise delay a project. AUC’s prefabricated and scalable treatment systems can further support accelerated deployment where appropriate.
- What does the development phasing look like? Will demand come online relatively quickly or increase over multiple phases? If the latter, delivery options that can accommodate phased infrastructure expansion can help align investment with current demand rather than having to size capacity for full buildout at the outset.
- How much capacity is needed now versus full buildout? A project with clearly defined long-term demand may approach infrastructure differently from a growing community that needs to add capacity in phases.
- What are the long-term ownership goals? Does the customer want to pay a fixed monthly fee for treatment as a service, or do they ultimately want to own the infrastructure? If ownership is preferred, do they want to own the infrastructure from the outset, or would a lease-to-purchase or build-own-operate-transfer agreement offer a better solution?
- Who will operate and maintain the infrastructure? Does the utility have the staff and resources to reliably operate the infrastructure, or would it prefer to take a more hands-off approach, outsourcing operations to a professional service provider?
- How much capital does the customer want tied up in treatment infrastructure? Leasing or wholesale delivery can reduce the amount of capital that must be committed to treatment infrastructure upfront, preserving it for other project priorities. Public funding can help finance infrastructure, but funding alone doesn’t always solve capacity or project timing constraints.
There is no one-size-fits-all approach to water and wastewater infrastructure. The choice of delivery model will be influenced by the answers to the questions above and can evolve with the project. AUC can help developers and municipalities evaluate these factors to identify the solution that best meets their current and long-term needs. Contact our team to discuss your project and explore the delivery model that makes the most sense for you.
