Water Challenges and Future Solutions: What Comal County Land Investors Need to Know

Part 3 in our Land Banking in Comal County Series. This seven-part series aims to guide commercial real estate investors through the opportunities, strategies, and considerations for successful land banking along the Highway 281 corridor in Comal County. Our goal is to provide both newcomers and experienced investors with practical, local insights for building a strategic land investment portfolio in this high-growth region.

In our previous articles, we explored the fundamentals of land banking in Comal County and how to identify high-potential parcels along the Highway 281 corridor. Now we turn to perhaps the most critical factor affecting development in this region: water. Understanding water challenges and potential solutions is essential for any serious land banking strategy in the Texas Hill Country.

Note: For a comprehensive understanding of water issues in the region, we recommend reading our Special Report: Water Crisis in Comal County, Texas – History, Challenges, and Responses, which provides in-depth background information that complements this article.

The Current Water Landscape in Comal County

Water scarcity isn’t just a future concern in Comal County—it’s a present reality that shapes development patterns and influences property values throughout the region. Several factors contribute to the complex water situation:

Severe Drought Conditions

Comal County is currently experiencing unprecedented water scarcity due to severe drought conditions. By early 2025, Canyon Lake hit a record-low water level of 878.9 feet, dropping well below the previous record low set in 2009. These conditions have triggered Stage 4 water restrictions in many parts of the county, particularly areas served by The Texas Water Company (TWC), which has operated under Stage 4 drought rules for nearly three years straight.

Stage 4 restrictions effectively ban nearly all outdoor water use, reflecting the gravity of the situation. For land banking investors, these restrictions signal that water access has become a limiting factor for development that cannot be ignored.

Limited Groundwater Resources

The primary water source for much of Comal County is the Trinity Aquifer, with portions of the county also overlying the Edwards Aquifer. Both face increasing demands as population growth continues. The Trinity Aquifer in particular has seen declining water levels in recent years, leading to stricter regulation and growing concerns about long-term sustainability.

The Cow Creek formation of the Middle Trinity Aquifer, which supplies many wells in western Comal County, has experienced significant drawdown in some areas. This declining availability increases both costs and regulatory hurdles for new developments.

Population Growth Pressure

Comal County ranks among the fastest-growing counties in Texas and the nation, with tens of thousands of new residents in recent years. This explosive growth has significantly increased water demand even as supplies falter. The county adds approximately 10,000 new residents each year, and each household adds to the strain on water resources.

According to local water officials, the average person in San Antonio or New Braunfels uses about 130 gallons of water per day, with a substantial portion going to lawn irrigation. This level of consumption is unsustainable given current water supplies and drought conditions.

Infrastructure Limitations

Much of the Highway 281 corridor lacks municipal water and sewer service, particularly in areas north of Bulverde. Development in these areas typically relies on wells and septic systems, which face increasing regulatory scrutiny and operational challenges as density increases.

In areas served by water utilities like Canyon Lake Water Service Company (now Texas Water Company) or San Antonio Water System (SAWS), capacity constraints can limit new connections or require significant capital contributions for system expansions. In fact, these constraints have become so severe that in 2025, The Texas Water Company announced it would not provide water service to nine proposed subdivisions, affecting an estimated 4,182 planned residential lots. This unprecedented move effectively halted these developments, demonstrating how water scarcity is now directly impacting growth along the Highway 281 corridor.

How Water Challenges Impact Property Value

Understanding how water issues affect property values is essential for strategic land banking. Several patterns emerge consistently:

The Water Access Premium

Properties with secured water rights or existing utility service typically command significant premiums over comparable parcels without confirmed water access. This premium has grown as water constraints have become more widely recognized throughout the region.

For commercial development, the ability to access sufficient water for higher-intensity uses can be the difference between a viable project and an undevelopable parcel. Savvy land bankers recognize this reality and prioritize water security in their acquisition decisions.

The Development Moratorium Impact

The unprecedented moratorium on new water connections by Texas Water Company has created a clear division in the market. Properties that cannot obtain water service commitments are effectively unbuildable in the near term, which sharply reduces their value to developers.

This situation creates both challenges and opportunities for land banking investors. On one hand, land that was previously slated for imminent development may now be available at lower prices due to the inability to secure water service in the short term. On the other hand, such properties may require significantly longer holding periods until new water supplies come online or restrictions ease.

Varying Impacts by Development Type

Different commercial uses have dramatically different water requirements. Low-intensity uses like warehouse or self-storage facilities might remain viable with minimal water infrastructure, while restaurants, hotels, or medical facilities require substantial water resources.

This variation creates targeted opportunities for land bankers who understand both water constraints and market demand. Properties with marginal water access might still present excellent opportunities for specific commercial uses.

The Future Development Timeline

Water challenges often extend development timelines, particularly for higher-intensity uses. Properties that might otherwise be ready for immediate development may face years of additional holding before water solutions become available.

For patient capital with appropriate time horizons, these extended timelines can create acquisition opportunities. Properties with short-term water constraints but strong long-term potential often trade at discounts that more than compensate for the required holding period.

Emerging Water Solutions

While water challenges in Comal County are real, so are the emerging solutions. Land banking investors who understand these evolving approaches gain meaningful advantages:

Conservation-Oriented Development

Water-conscious development approaches are transforming how commercial properties operate in the Hill Country. These include:

• Rainwater harvesting systems that capture and store rainfall for irrigation and non-potable uses
• Gray water recycling that allows water to be reused multiple times within a development
• Low-impact development techniques that minimize runoff and maximize groundwater recharge
• Xeriscaping and native landscaping that dramatically reduce irrigation requirements

Commercial properties incorporating these approaches can reduce water consumption by 30-50% compared to conventional developments. This efficiency creates development potential even in areas with limited water resources.

Local regulations are increasingly supporting this shift. For example, the City of New Braunfels has been updating land development codes to discourage water-intensive landscaping in new developments, limiting turfgrass and encouraging drought-tolerant plants. This trend is likely to extend to county regulations if pending legislation grants Comal County more land-use authority.

Advanced Onsite Treatment Systems

Conventional septic systems limit development density and face increasing regulatory scrutiny. However, advanced onsite sewage facilities (AOSFs) provide significantly improved treatment capabilities, allowing for:

• Higher-density development
• Better environmental protection
• Potential water reuse applications
• Reduced regulatory concerns

These systems represent a middle ground between traditional septic systems and centralized sewer service, making development viable in areas waiting for municipal infrastructure expansion.

Alternative Water Sources

Beyond traditional groundwater and surface water supplies, developers increasingly leverage alternative sources:

• Rainwater collection at commercial scale
• Condensate recovery from air conditioning systems
• Strategic water rights acquisition and transfer
• Innovative gray water reuse systems

For commercial development, these alternatives often provide sufficient supply for landscape irrigation and certain building functions, reducing demand on primary water sources.

Public-Private Infrastructure Partnerships

As water infrastructure costs increase, new models are emerging to finance needed expansions:

• Developer-funded utility extensions with reimbursement agreements
• Public Improvement Districts that spread infrastructure costs across benefiting properties
• Tax Increment Reinvestment Zones that leverage future tax revenue to fund current infrastructure
• Municipal Utility Districts that allow developers to issue bonds for water infrastructure

These mechanisms create pathways to extend water infrastructure to previously underserved areas, potentially accelerating development timelines for strategic parcels.

Strategic Approaches for Land Banking Investors

Given this complex water landscape, how should land banking investors incorporate water considerations into their strategies? Several approaches have proven effective:

Tiered Property Evaluation

Sophisticated investors typically classify potential acquisitions into water-related tiers:

Tier 1: Secured Water Access

• Properties with existing utility service
• Parcels with proven, permitted wells with adequate capacity
• Sites with contractually secured water rights or commitments
• Properties served by utilities with the most secure water rights (such as those with access to multiple sources)

These properties typically command premium pricing but offer the shortest path to development.

Tier 2: Transitional Water Status

• Properties in areas with planned utility expansion
• Parcels with moderate groundwater potential requiring additional verification
• Sites where alternative water strategies could support targeted uses
• Properties in areas where new water supply infrastructure is scheduled to come online in the next 3-5 years

These opportunities often present the best balance of current value and future potential.

Tier 3: Long-Term Water Solution Required

• Properties in areas with significant documented water challenges
• Parcels requiring substantial infrastructure investment to secure water access
• Sites where water solutions depend on broader regional initiatives
• Properties in areas currently under development moratoria due to water limitations

These properties typically require the longest holding periods but may offer compelling value for truly patient capital with 10+ year horizons.

Hybrid Water Strategies

Rather than relying on a single water source or approach, successful developments increasingly implement hybrid strategies:

• Using potable water only where required by code or function
• Implementing dual plumbing systems that separate potable and non-potable uses
• Combining multiple alternative sources to reduce conventional water demand
• Phasing development to align with infrastructure expansion timelines

Land banking investors who understand these hybrid approaches can identify properties with hidden potential that might be overlooked by less sophisticated buyers.

Water Due Diligence Essentials

Thorough water-related due diligence is non-negotiable for land banking in Comal County. Essential elements include:

• Hydrogeological assessment of groundwater potential
• Evaluation of existing and planned utility infrastructure
• Review of regulatory constraints and opportunities
• Analysis of water demand for various potential uses
• Assessment of alternative water strategy viability

The Blue Collar Commercial Group works with specialized consultants who can provide this critical evaluation before acquisition commitments.

Looking Ahead: Water Trends Shaping Future Opportunity

Several emerging trends will shape water-related opportunities in the coming decade:

Infrastructure Investments and New Supplies

In the near term (by mid-2020s), Texas Water Company’s additional groundwater supply (approximately 6,000 acre-feet) is slated to come online, which should significantly improve the water situation for western Comal County. TWC acquired these additional groundwater rights in southern Comal County in 2023, increasing its water supply capacity by roughly 40%.

This new supply is expected to come online by 2026 once the necessary wells, pipelines, and treatment facilities are completed. If this timeline holds and if the region receives average rainfall, we could see TWC cautiously lift its moratorium on new service connections, perhaps allowing some of the stalled developments to proceed in a few years.

Beyond that, regional planners are eyeing other projects for the 2030 and 2040 horizons. These might include expanding existing well fields, building pipelines to transfer water from areas with surplus, and possible aquifer storage and recovery projects. The Texas Legislature has created a new Texas Water Fund and is considering additional funding mechanisms that could support these initiatives.

Policy Changes Affecting Development

The Texas Legislature is considering several bills that could significantly impact water management and development in Comal County. House Bill 2265, if passed, would allow Comal County (with voter approval) to implement limited zoning and land-use regulations in areas around Canyon Lake and the Guadalupe River.

This would give the county more authority to guide development in water-sensitive areas and potentially prevent high-density subdivisions in the most water-stressed regions. Other proposed legislation would prohibit homeowner associations from requiring water-intensive landscaping and increase oversight of Municipal Utility Districts (MUDs), which developers often use to finance and manage utilities for large subdivisions.

For land banking investors, these potential policy changes signal that future development will face increased scrutiny regarding water use. Properties that can demonstrate sustainable water solutions will have a competitive advantage in securing approvals and financing.

Conservation as the New Normal

Water conservation is becoming a permanent feature of development in Comal County, not just a temporary response to drought. There is growing recognition that historical water use patterns—particularly for lawn irrigation, which accounts for over 50% of residential water use in some areas—are unsustainable.

Future developments will increasingly feature water-efficient designs: drought-tolerant landscaping, high-efficiency fixtures, rainwater collection systems, and possibly community-scale water reuse. Properties that incorporate these features from the outset may command premium prices as buyers become more water-conscious.

For commercial developments, water efficiency is becoming a key component of environmental sustainability initiatives. Projects that can demonstrate low water footprints may qualify for green building certifications and attract tenants who prioritize sustainability.

Conclusion: Water as an Investment Filter

Water challenges in Comal County need not deter strategic land banking—instead, they serve as a valuable filter that helps identify the most promising opportunities. Properties with secured water access or viable pathways to water solutions often represent the most compelling investments in growing corridors like Highway 281.

The current situation, where development has been temporarily halted in some areas due to water limitations, actually creates potential opportunities for patient land banking investors. Properties that might otherwise have been quickly developed may now be available at more reasonable prices, with the understanding that development timelines will be longer but still viable as infrastructure catches up with growth.

By understanding both current constraints and emerging solutions, investors can identify parcels positioned to benefit from the inevitable evolution of water infrastructure and technology. The most successful land bankers will incorporate water due diligence into their acquisition strategy, potentially giving them significant advantages in this increasingly water-conscious market.

In our next article, we’ll explore the infrastructure timeline along the Highway 281 corridor, helping investors develop realistic holding period expectations and optimize their acquisition and disposition strategies.

This article is part of our comprehensive Land Banking in Comal County series. For personalized guidance on navigating water challenges in your land banking strategy, contact The Blue Collar Commercial Group today.