Waco, TX – The Aquilla Water Supply District is preparing for a significant overhaul of its nearly 40-year-old water system, launching a $50 million bond project aimed at upgrading its aging infrastructure. The district, which serves around 40,000 people in Hill County, is responding to both the wear and tear of its system and increasing demands driven by local growth and regulatory pressures from state and federal authorities.
Joe Cunningham, President of the Aquilla Water Supply Board, explained that the project is necessary due to a combination of aging infrastructure and a growing community. “We’ve got a 40-year plus system, and so we’re having to do some major upgrades,” Cunningham said. He acknowledged that while some of the system’s challenges are simply a result of time and equipment wear, others stem from expanding needs in the region and increasing expectations from government agencies.
Initially, the district had hoped the project would come in at a lower cost. However, due to inflation and delays in the planning process, the total cost has now ballooned to approximately $50 million. The bond project has been in the works for several years, and with the increased costs, the district has been forced to pass some of the financial burden on to its customers.
“We’re looking at approximately a $50 million project,” Cunningham noted. “It’s been such a long process, and all of a sudden, you’ve got to start it, and somebody’s got to pay those costs.”
The city of Hillsboro, the largest customer of the Aquilla Water Supply District, is facing the largest impact. Hillsboro accounts for about 60% of the district’s customers, and the city was informed in October 2024 that it would need to pay an additional $1 million for the fiscal year to help cover the bond project costs. This increase comes at a challenging time for Hillsboro, which had already raised its water rates significantly in June 2024 to cover the costs of maintaining its own infrastructure.
Hillsboro City Manager Megan Henderson expressed the city’s commitment to transparency with its residents. “We tried to be real transparent with the customers about what was needed and why we had to make that increase, and that the resulting rate structure was essentially to break even for us,” she explained.
However, the added $1 million cost from Aquilla Water Supply forced the city to raise its water rates once again. “Just as soon as we made this big increase that everybody was having to deal with, we learned that our costs were going to be going up another million dollars,” Henderson said. “The increase that we had just made didn’t cover that.”
In response, the city decided to raise its rates by 15% in December 2024, rather than the 25-30% that would have been necessary to fully cover the additional cost by the end of the fiscal year. This decision was made to balance the financial strain on residents, though it also meant postponing important infrastructure projects. “We’re going to have to push back some things,” Henderson said. “It puts us in an uncomfortable position of not being able to do some of what we need to do.”
Despite the financial challenges, Henderson acknowledged the importance of the Aquilla Water Supply District’s bond project in maintaining the quality of drinking water for the city’s residents. “We support our partners in doing what they need to do,” she said. “In this case, it hit us at a pretty inconvenient time in a pretty stout amount. We’re just doing what we can do to balance all of the different interests and what is both fair and also is going to leave our customers with reliable drinking water.”
The City of Hillsboro also faces its own aging infrastructure, with water system components as much as 80 years old. With customer water rates no longer able to cover the cost of necessary upgrades, the city is applying for grants through the Texas Water Development Board to help fund its infrastructure improvements.
Similarly, Aquilla Water Supply is seeking grants and low-interest loans to help fund the full $50 million bond project. Cunningham emphasized that these funding sources are essential to keeping overall costs down for customers. “We are applying for some of the lower interest loans that will keep our overall costs down on the payout on this,” he said.
The district plans to begin work on the bond project within the next year, with the goal of completing the upgrades within two to three years. While the increased costs are a burden for both the Aquilla Water Supply District and its customers, the project aims to ensure the long-term reliability of the water system in Hill County.
