Austin Water secures $55 million for pipe replacement, reclaimed water expansion
(UI) — Austin Water has secured $55 million in low-interest state funding to advance a slate of water and wastewater infrastructure projects, including replacement of aging service lines and expansion of the city’s reclaimed water pipeline system.
The funding comes from the State Water Implementation Fund for Texas, with an initial $13 million in low-interest loans issued through the Texas Water Development Board. Interest rates on the loans are locked in as low as 2.895%, a move the utility says will reduce long-term construction costs.
“These low-interest loans are critical in keeping the overall cost of construction down,” said Christina Romero, Austin Water’s Acting Assistant Director of Financial Services. “This wave of funding alone will save upwards of $1.5 million in interest over the 20-year loan. These loans allow us to make major improvements and provide reliable service to customers at tremendous value.”
In addition to the state loans, Austin Water also completed a debt defeasance transaction that is expected to save $49.6 million by reducing future debt service obligations. The utility said similar transactions have saved more than $675 million since 2016.
A significant portion of the funding—$45 million—is earmarked for polybutylene service line replacement, a program aimed at reducing water loss caused by aging pipe materials installed between the late 1960s and mid-1980s. Polybutylene piping is known to become brittle over time and is prone to leaks. Of that total, $3 million closed in November 2025, with the remaining funds scheduled to close over the next three years. Austin Water estimates the financing structure will save $2.7 million over the life of the loans.
Another $10 million will support the Travis Heights Reclaimed Water Main, which will expand Austin’s purple pipe system and connect two existing reclaimed water service areas. The project is designed to improve system resilience while reducing reliance on potable water supplies, saving customers an estimated $1.1 million in financing costs.
Austin Water serves more than 1 million residents across the Austin metropolitan area, operating a system that spans more than 538 square miles. Utility officials said the financing strategy allows the city to move forward with underground infrastructure upgrades while limiting the cost burden on ratepayers.
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