Bonds in mix for $1 billion Austin wastewater treatment plant expansion

A $1 billion expansion project for an Austin, Texas, wastewater facility, which moved forward in the city council last week, will be funded in part with revenue bonds.

The financing plan calls for a combination of water and wastewater system revenue bonds, cash financing, and potential low-interest loans from the Texas Water Development Board and/or the Environmental Protection Agency's Water Infrastructure Finance and Innovation Act, according to a statement from Austin Water.

The city council on Thursday approved design and construction contracts for the project with work slated to begin next year on the Walnut Creek Wastewater Treatment Plant, which was built in 1977 and underwent expansions in 1987, 1990, and 2005. 

Austin Water

"The expansion is needed based on projected future flows of wastewater into the plant, in accordance with Texas Commission on Environmental Quality regulations and the requirements of Texas Administrative Code," according to a city council meeting document.

The project will allow the plant to treat and discharge 100 million gallons per day up from 75 million gallons currently. 

The water system serves a 538-square-mile area covering the entire 333-square-mile city and portions of Travis and Williamson counties.

The city's total water pumpage increased more than 26% from fiscal 2015 to fiscal 2023, reaching 54.85 million gallons, according to offering documents from a water revenue bond refunding sale earlier this year. Austin Water projects an increase to 57.96 million gallons by fiscal 2029.

The city's population increased more than 13% from 2014 to 2023, topping 995,000.

As part of the expansion, the plant's disinfection method will be converted from chlorine gas to ultraviolet light in order to reduce nutrients that contribute to algae growth in the Colorado River, where treated water is discharged. The project also includes construction of a wall to protect the plant from floodwaters.   

"With these investments, every part of the treatment process will be enhanced and upgraded, and we will be prepared to serve the growing needs of our city," Shay Ralls Roalson, Austin Water's director, said in a statement.

Austin had nearly $2.138 billion of water and wastewater system revenue bonds outstanding as of Sept. 30, according to the city's fiscal 2023 annual comprehensive financial report.

Earlier this year, the city sold nearly $454.2 million of refunding and improvement bonds that were rated Aa2 by Moody's Ratings, AA-minus by Fitch Ratings, and AA by S&P Global Ratings.