"It hasn't stopped developments from being able to tie in," Deputy City Administrator Shawn Cox told Community Impact in August. "It's just we're not going to tie in a large subdivision to it because it can't handle that."
The "it" in that quote is the South Regional Wastewater Reclamation Facility, the city's main treatment plant. The same report said the plant had been near capacity for several months and could not take most new large connections. That matters to anyone touring model homes along US 290 this fall. In a Dripping Springs subdivision, who handles sewer service depends on each project's agreement with the city. For a growing share of new lots, that arrangement is interim by design and is meant to change after people have moved in.
The court cleared the permit. Treatment capacity is a separate thing.
The Texas Supreme Court upheld the Texas Commission on Environmental Quality's grant of the city's discharge permit on April 11, 2025. The city applied in 2015 and TCEQ granted the permit in 2019. The Save Our Springs Alliance then sued over the possibility of discharge into Onion Creek, and the case ran for years. The permit allows up to about 822,500 gallons per day. Utilities Director Gray Lahrman told Community Impact the city plans to discharge only in an emergency and will store treated water it can't use for irrigation.
A permit only gives the city legal permission. It doesn't add any treatment capacity. The plant still runs at roughly 162,500 gallons per day, and the expansion that would bring it to 822,500 hasn't started construction. The expected finish date for phase one has also moved back each time it was reported:
| When it was reported | Expected phase-one completion |
|---|---|
| April 2025, days after the ruling | September 2027 |
| February 2026, after the council selected three firms for the project | Summer 2028 |
| August 2026, latest timeline | 2029 |
The August 2026 timeline is the most specific yet. The Texas Water Development Board approved $53 million in additional funding in July. The city plans to issue a notice to proceed to the winning bidder by December 2026 and start construction in 2027. Lahrman expects phase one to take two and a half to three years, and the city will design phase two while phase one is being built. These dates are still forecasts. Even so, a home closing this winter will probably sit in a subdivision that runs on an interim wastewater arrangement for several years.
Demand on the system keeps growing during the wait. Since 2015, the number of wastewater customers the city serves has grown by about 600%.
Caliterra and Ranch at Caliterra share a name, not a sewer provider
The clearest example of how this works is in the city's own paperwork. It's the Third Amended Wastewater Service and Impact Fee Agreement between Dripping Springs and Hays County Development District No. 1, the district behind Caliterra.
The original Caliterra subdivision gets wastewater service from the city under the city's land application permit. Caliterra is entitled to 674 living unit equivalents, or LUEs, of that capacity. It earned them because the owner built an effluent holding pond and surface irrigation area within the subdivision, sized for 1,063 LUEs, which the city uses for disposal. Put simply, the community got its capacity by building part of the system the city needed.
Ranch at Caliterra works differently. The district holds its own TCEQ permit, No. WQ0016604001, and the agreement is direct about who serves those homes:
"The District, not the City, will be the wastewater provider to Ranch at Caliterra during this interim period and will handle all billing and collection for operations under the Ranch at Caliterra Permit."
The agreement also spells out what happens later. Once the city can provide service, the district stops operating under its permit. The collection lines are cleaned, retested, and re-videoed before the city accepts them, and then the city owns the lines while the district or owner removes the interim plant. The district hands its billing records to the city. A household in Ranch at Caliterra could therefore deal with two sewer providers in the same house, and the timing of the switch depends on the city plant schedule in the table above.
The agreement lets the district run under the interim permit but doesn't require it, so the current setup for a specific lot is something to confirm directly. Construction at Ranch at Caliterra was underway as of the city's January 2026 State of the City presentation.
What the workarounds look like in city records
Ranch at Caliterra isn't a special case. In August, Community Impact reported that developments using alternative wastewater solutions will add more than 3,800 lots or units to the Dripping Springs area. A city subdivision status report shows what some of those solutions are:
- Double L Ranch is listed with a "Reclaimed Water Production Facility and Pump and Haul," shown as awaiting resubmittal in one status list and under review in another.
- Village Grove has a proposed wastewater treatment plant application listed as awaiting resubmittal.
- New Growth, a proposed 240-home mixed-use project, is waiting to move forward until the South Regional plant has more capacity.
- Pump-and-haul, where waste goes into a storage tank that is emptied and trucked away for treatment, is rare. The city has approved only three such plans in recent years.
The January 2026 State of the City listed construction underway at both Double L and Village Grove. So these subdivisions are building homes while their wastewater plans still go through city review.
These workarounds also cost money. After the 2025 ruling, Mayor Bill Foulds told Community Impact that many businesses and home developments had to build their own temporary treatment plants, which pushed up housing costs. He also said subdivisions lost plant life when land was cleared for effluent irrigation. In that account, the cost of an interim plant ends up in the price of the house.
The monthly bill moved too
Homes on city service are seeing their own change. In May 2026, the city council approved its first wastewater rate increase since 2022, and the new rates first appeared on September bills.
| Residential wastewater rate | Before | Starting with September 2026 bills |
|---|---|---|
| Base fee | $28.88 | $43.32 |
| Usage, per 1,000 gallons | $4.05 | $5.67 |
| Average monthly bill at 6,578 gallons | $55.52 | $80.62 |
Lahrman told Community Impact that growth in the customer base and rising operating demands were the main reasons. The city is also increasing its general fund contribution to wastewater from $980,000 to $2.5 million through 2030 to help keep customer fees down. These are the city's rates. Under the Caliterra agreement, homes served by a district under an interim permit are billed by the district, not the city. A buyer comparing two subdivisions in the same ZIP code could be comparing two different rate schedules.
Questions that surface the arrangement before closing
None of this appears on a listing sheet. These are the questions that get the answers in writing:
- Who provides wastewater service to this specific lot today: the City of Dripping Springs, a development district, or another operator?
- Is that service running under a permanent permit or an interim one, and what event triggers the switch to the city?
- If there's a switch, who pays to decommission the interim plant and transfer the lines, and does the agreement say?
- Who sends the sewer bill now, and at what rate?
- Is the subdivision's own wastewater application still under city review, and does the current status report list it as approved, under review, or awaiting resubmittal?
- Does the project hold reserved capacity, like Caliterra's 674 LUEs, or is it waiting on the South Regional expansion?
The development agreements and subdivision status reports that answer several of these questions are public city records, posted as attachments to council meeting agendas.
FAQ
Is Dripping Springs under a development moratorium?
No current moratorium came up in this research. The city's temporary moratorium tied to wastewater availability ran from 2021 to 2022 and was lifted while the permit case was still in court. City officials warned at the time that applicants would still face challenges.
Will the city discharge treated wastewater into Onion Creek?
City officials have said only in an emergency. In April 2025, Foulds called discharge a last resort for a "catastrophic" situation in which all storage is full. The city's special counsel said any discharge would have to be justified to TCEQ.
Nick Easley's background is homebuilding. When Easley Group looks at a new build in Dripping Springs, the wastewater agreement gets read before the floor plan. If you're comparing Double L, Caliterra, or another subdivision going up along 290, let's connect and look up who serves your lot before you sign.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.