Item 20 - GoPurple Affordable Housing Incentive — original pdf

Backup

Water & Wastewater Commission: May 21, 2025 Council: June 5, 2025 Item 20 ..Title Posting Language Recommend approval to approve a resolution authorizing amendments to Austin Water’s Fiscal Year 2024-2025 GoPurple pilot incentive program for alternative onsite water reuse systems and reclaimed water connections for new commercial, mixed use and multi-family developments in the total aggregate amount of $4,000,000, not to exceed $1,500,000 per project for affordable housing projects exempt from the GoPurple reuse requirements and not to exceed $500,000 per project for all other projects. Funding in the amount of $4,000,000 is available in the Fiscal Year 2024-2025 Operating Budget of Austin Water. ..De Lead Department Austin Water. Prior Council Action: November 29, 2018 – City Council approved the Water Forward Plan on a 10-0 vote. December 11, 2019 – City Council voted to approve the Land Development Code Revision directing Austin Water to establish a regulatory program and an incentive program for Onsite Water Reuse Systems on first reading, on a 7-4 vote. February 13, 2020 – City Council voted to approve the Land Development Code Revision directing Austin Water to establish a regulatory program and an incentive program for Onsite Water Reuse Systems on second reading, on a 7-4 vote. December 10, 2020 - City Council approved an ordinance establishing City Code Chapter 15-13 relating to treatment, monitoring and reporting regulations for Onsite Water Reuse Systems, on a 10-0 vote. April 22, 2021 – City Council voted to initially approve the Pilot Incentive Program for Onsite Water Reuse Systems for Fiscal Year 2021 for the installation of alternative Onsite Water Reuse Systems up to a total aggregate amount of $1,000,000 and not to exceed $500,000 for each project on a 10-1 vote. September 30, 2021 - City Council voted to reauthorize the Pilot Incentive Program for Onsite Water Reuse Systems for Fiscal Year 2022 for the installation of alternative Onsite Water Reuse Systems up to a total aggregate amount of $1,000,000 and not to exceed $500,000 for each project on a 10-1 vote. September 29, 2022 - City Council voted to reauthorize the Pilot Incentive Program for Onsite Water Reuse Systems for Fiscal Year 2023 for the installation of alternative Onsite Water Reuse Systems up to a total aggregate amount of $1,000,000 and not to exceed $500,000 for each project on a 10-1 vote. March 7, 2024 - City Council voted to reauthorize the Pilot Incentive Program for onsite water reuse systems and reclaimed water connections for Fiscal Year 2024 up to a total aggregate amount of $5,600,000 and not to exceed $500,000 for each project on a 11-0 vote. March 7, 2024 – City Council approved an ordinance amending City Code Chapter 25-9 (Water and Wastewater) relating to clarifying requirements for water conservation in the implementation of the Water Forward Plan, including distances for the Reclaimed Water Connection requirement, clarifying definitions, and modifying variances, including adding certain affordable housing exemptions for Reclaimed Water Connections and Onsite Water Reuse requirements. September 26, 2024 – City Council approved reauthorization of the Pilot Incentive Program for onsite water reuse systems and reclaimed water connections for Fiscal Year 2024-205 up to a total aggregate amount of $4,000,000 and not to exceed $500,000 for each project.  Water & Wastewater Commission: May 21, 2025 Council: June 5, 2025 Item 20 Council Committee, Boards and Commission Action: May 20, 2025 – To be reviewed by the Resource Management Commission. May 21, 2025 – To be reviewed by the Water and Wastewater Commission. Additional Backup Information: This action is to amend Austin Water's "GoPurple Program" authorized by Council on March 7, 2024 to accelerate the expansion of Austin’s centralized reclaimed water system and onsite water reuse for affordable housing. These strategies are essential in Water Forward, Austin’s 100-Year integrated water resources plan, to meet the long-term needs for a secure and sustainable future. The GoPurple Program ordinance approved by Council on March 7, 2024 provided an exemption from the water reuse code requirements for specific affordable housing projects. Additionally, it instructed the City Manager to investigate the possibility of establishing a program to fully subsidize the costs associated with reclaimed connections, dual-use plumbing, and onsite water reuse systems for these exempt projects. The goal was to implement this program by April 1, 2025. Exempt development projects provide the City with 50% on-site affordable housing units that are income-restricted at 60% of the median family income for rental units or 80% of the median family income for ownership units. Austin Water (AW) estimates these projects will require up to $1,500,000 per project to fully subsidize water reuse systems. The existing FY 2024-2025 GoPurple Pilot Incentive Program caps incentives at $500,000 for each project. The requested authorization amendment will allow AW to increase the program incentive cap to $1,500,000 for affordable housing projects that are exempt from the reuse requirements, while maintaining the $500,000 cap for other projects. The incentives will be paid out over multiple years if projects can meet program guidelines and deadlines for the design, construction, and operation of the onsite water reuse systems or connection to the City’s reclaimed water system. The purpose of this incentive program amendment is to help promote affordable development and gather additional information on the design, engineering, installation, operation, maintenance, cost, permitting and application of the regulatory guidance needed for the successful implementation of these onsite systems and reclaimed water system connections. AW staff will provide quarterly reports to the Water and Wastewater Commission and Resource Management Commission summarizing AW’s water conservation, rebate, and other incentive programs, including incentives for the installation of alternative water reuse systems for large new commercial, mixed use and multi-family development under this program. For all projects for which the incentive amount will exceed $72,000, the reports will also include measures installed, expected savings, potable water offsets, and other relevant data. M E M O R A N D U M TO: Mayor and Council Members THROUGH: Mike Rogers, Assistant City Manager FROM: Shay Ralls Roalson, P.E., Director, Austin Water DATE: February 13, 2025 SUBJECT: Update on GoPurple Program Incentives for Exempt Affordable Housing Projects, Ordinance No. 20240307-037 The purpose of this memorandum is to provide the feasibility analysis of a program to fully subsidize the cost of reclaimed connections, dual use plumbing, and onsite water reuse systems for exempt affordable housing projects per Ordinance No. 20240307-037 as well as related recommendations for City Council consideration to implement a program by April 1, 2025. Based on the analysis, Austin Water is proposing changes to the GoPurple Program Incentives to help benefit exempt affordable housing projects. Background Austin City Council approved key elements of the GoPurple Program on March 7, 2024, to accelerate the expansion of Austin’s centralized reclaimed water system and onsite water reuse. These strategies are essential in Water Forward, Austin’s 100-Year integrated water resources plan, to meet the long-term needs for a secure and sustainable future, including:  Adoption of code requirements for new large commercial, multi-family, and mixed-use developments to install Onsite Water Reuse Systems (OWRS) or connect to the City's reclaimed water system to use for non-drinking water purposes such as irrigation, flushing toilets, and cooling towers.  Approval of new incentives to share costs with developments that install onsite water reuse or reclaimed water systems.  Creation of a new Community Benefit Charge to support reuse strategies in the Water Forward Plan. Ordinance No. 20240307-037 provided an exemption from the water reuse code requirements for specific affordable housing projects. Additionally, it instructed the City Manager to investigate the possibility of establishing a program to fully subsidize the costs associated with reclaimed connections, dual-use plumbing, and onsite water reuse systems for these exempt projects to implement the program by April 1, 2025. Page 1 of 3 Austin Water Analysis and Recommendations The GoPurple Program, adopted in March of 2024, includes incentives covering up to $500,000 per project for implementing an onsite water reuse system or a reclaimed water connection. The Affordability Impact Statement that was completed for the Program identified additional construction costs of approximately $200,000 to $1,500,000 per project. While the existing GoPurple Program cap of $500,000 per project is able to cover the cost of implementing an onsite water reuse system or a reclaimed water connection for certain building types, an additional $1,000,000 would be needed per project to fully subsidize the cost of reclaimed connections, dual use plumbing, and onsite water reuse systems for all types of exempt affordable housing projects. A new Community Benefit Charge was created in 2024 to support reuse strategies in the Water Forward Plan, which Austin Water estimates will generate $10,000,000 in revenue annually. Additionally, Austin Water has implemented a voluntary monthly fee of $6.00, known as Purple Choice, which customers can choose to opt into this fiscal year to support the GoPurple Program. These funding sources will enable an increase in GoPurple Program incentives from $500,000 per project to $1,500,000 for a limited number of exempt affordable housing projects. Approximately half of the GoPurple Program funding will also be used to expand the City’s purple pipe network so that more projects can utilize reclaimed water. Implementation of an incentive program for exempt affordable housing projects will require City Council to amend the existing GoPurple Pilot Incentive Program resolution to increase the per project cap to $1,500,000 to cover additional plumbing costs. To this end, Austin Water will bring forward for City Council’s consideration an amended GoPurple Pilot Incentive Program resolution authorizing Austin Water to increase the per project cap and create an additional plumbing rebate for exempt affordable housing projects on the June 5, 2025 City Council Agenda. Proposed Changes to GoPurple Program Incentives Incentive Eligible Costs Onsite Water Reuse System Incentive (Existing Incentive) Reclaimed Main Extension Cost Share (Existing Incentive) Dual Plumbing Rebate (Proposed Incentive) Covers the design and installation costs of a collection and treatment system and dual plumbing Covers the design and installation cost of public reclaimed water mains Covers the design and installation cost of dual plumbing in buildings for reclaimed water service Proposed Changes to Per Project Funding Increase the per project cap from $500,000 to $1,500,000 for exempt affordable housing projects Maintain the current per project cap of $500,000 Only exempt affordable housing projects would be eligible for up to $1,000,000 per project This rebate would be available to development that is exempt from the Reclaimed Water Connection Requirements in City Code Section 25-9-412, per paragraph (E), and the Onsite Water Reuse System Page 2 of 3 Requirement in City Code Section 25-9-414, per paragraph (B)(2). Exempt development projects provide the City with 50% on-site affordable housing units that are income-restricted at 60% of the median family income for rental units or 80% of the median family income for ownership units. Providing the additional incentives will benefit the City by achieving both affordable housing and alternative water supply goals, and residents of these developments will benefit from reduced utility bills that non-exempt development projects receive when they install water reuse systems. Austin Water staff currently estimate that as many as six affordable housing projects per year might be eligible to benefit from this program which would require approximately $1.2M to $9M in funding to fully subsidize water reuse systems depending on the building types and proximity to the purple pipe network. The current City budget includes a reservation of $4,000,000 per fiscal year for GoPurple Program incentives. Austin Water will assess the need to increase this annual reservation to support additional affordable housing projects in future fiscal year budgets depending on affordable housing participation, reclaimed water main capital projects, and available GoPurple Program funds. Should you have any questions, please contact Shay Ralls Roalson, Director, Austin Water at 512-972- 0108 or shay.roalson@austintexas.gov. cc: T.C. Broadnax, City Manager CMO Executive Team Deborah Thomas, Interim City Attorney Myrna Rios, City Clerk Corrie Stokes, City Auditor Judge Sherry Statman, Presiding Judge Mary Jane Grubb, Municipal Court Clerk Page 3 of 3