Infrastructure—Weathering a Boom‐and‐Bust Development Cycle

Abstract

Making wise investments is the goal of every investor. This is certainly true for public utilities as they invest in infrastructure to fulfill their mission of providing safe, reliable, cost‐efficient service to their customers. Starting from a capacity deficit condition, the city of Austin, Texas, faced a boom‐and‐bust development cycle in the 1980s that made sizing and timing decisions for new water and wastewater facilities extremely difficult. In this case‐study paper, infrastructure investment decisions are examined for a decade in which Austin experienced a 30% increase in demand, followed by five years of almost no growth. The paper first addresses basic demand‐versus‐capacity relationships, then gives a perspective of the investment climate by describing the unusual rates of development activity. The making of investment decisions is addressed in terms of the effects on decision making of service policies, rate impacts, environmental considerations, and political considerations, including revenue bond voting and the formation of municipal utility districts. Austin's experience calls attention to the importance of certain basic infrastructure planning guidelines, and these are presented as lessons learned.