By: Perry, Flores S.B. No. 28

(In the Senate - Filed March 6, 2023; March 7, 2023, read first time and referred to Committee on Water, Agriculture & Rural Affairs; March 21, 2023, reported adversely, with favorable Committee Substitute by the following vote: Yeas 9, Nays 0; March 21, 2023, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 28 By: Perry

A BILL TO BE ENTITLED

AN ACT

relating to financial assistance provided and programs administered by the Texas Water Development Board.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 15, Water Code, is amended by adding Subchapter C-1 to read as follows:

SUBCHAPTER C-1. NEW WATER SUPPLY FOR TEXAS FUND

Sec. 15.151. DEFINITION. In this subchapter, "fund" means the new water supply for Texas fund.

Sec. 15.152. FUND. The new water supply for Texas fund is a special fund in the state treasury. The fund consists of:

(1) money appropriated to the board for a purpose of the fund;

(2) money the board transfers to the fund from an available source;

(3) depository interest allocable to the fund and other investment returns on money in the fund;

(4) money from gifts, grants, or donations to the fund; and

(5) any other fees or sources of revenue that the legislature may dedicate for deposit to the fund.

Sec. 15.153. USE OF FUND. (a) The board by rule shall undertake to finance projects through the fund that will lead to the acquisition or creation of seven million acre-feet per year of new water supplies by December 31, 2033.

(b) The fund may be used only to provide:

(1) financial assistance to political subdivisions to develop water supply projects that create new water sources for the state, including:

(A) the acquisition of water from other states;

(B) the development of infrastructure to transport water from other states;

(C) desalination projects, including marine and brackish water desalination; and

(D) produced water treatment projects, other than projects that are only for purposes of oil and gas exploration; or

(2) grants to institutions of higher education or qualified research entities, as determined by the board, to conduct research into new technology that may lead to the development of significant new water supply sources, as determined by the board based on the amount of water the technology may produce.

(c) The fund may be used to provide financial assistance for any purpose described by Subsection (b) under criteria developed by the board. A loan made under this subchapter may provide for repayment terms of up to 30 years, in the board's discretion.

(d) Financial assistance described by Subsection (c) for a purpose described by Subsection (b)(1):

(1) may be provided for a qualifying project under Chapter 2267, Government Code; and

(2) may not be provided for expenses associated with the maintenance or operation of a water supply project described by Subsection (b)(1).

(e) The board may not provide financial assistance from the fund if the balance of the fund is less than $50 million.

Sec. 15.154. FINANCIAL ASSISTANCE. (a) The board shall adopt rules necessary to administer this subchapter, including rules establishing procedures for the application for and award of loans, the distribution of loans, the investment of funds, and the administration of loans and the fund.

(b) When evaluating an application for financial assistance from a political subdivision, the board shall consider:

(1) the intended end users of the water supply, the needs of the area to be served by the project, the expected benefit of the project to the area, the relationship of the project to the water needs of this state overall, and the relationship of the project to the state water plan;

(2) the amount of water expected to be produced by the project; and

(3) the availability of revenue to the political subdivision or wholesale water provider from all sources for the ultimate repayment of the cost of the project, including all interest.

(c) The board by resolution may approve an application if, after considering the factors listed in Subsection (b) and other relevant factors, the board finds that:

(1) the public interest is served by state assistance for the project; and

(2) the revenue or taxes pledged by the political subdivision or wholesale water provider will be sufficient to meet all the obligations assumed by the political subdivision or wholesale water provider during the succeeding period of not more than 30 years.

(d) The repayment of principal or interest on a loan made under this subchapter must be deposited to the credit of the Texas water fund.

(e) An application from a political subdivision or wholesale water provider for financial assistance under this subchapter must comply with the requirements of Section 16.4021.

(f) Sections 17.183-17.187 apply to the construction of projects funded under this subchapter.

SECTION 2. Chapter 15, Water Code, is amended by adding Subchapter H-1 to read as follows:

SUBCHAPTER H-1. TEXAS WATER FUND

Sec. 15.501. DEFINITION. In this subchapter, "fund" means the Texas water fund.

Sec. 15.502. FUND. (a) The Texas water fund is a special fund in the state treasury outside the general revenue fund. The fund is administered by the board.

(b) The board may use the fund only to transfer money to:

(1) the water assistance fund established under Subchapter B;

(2) the new water supply for Texas fund established under Subchapter C-1;

(3) the state water implementation fund for Texas established under Subchapter G;

(4) the state water implementation revenue fund for Texas established under Subchapter H;

(5) a revolving fund established under Subchapter J;

(6) the rural water assistance fund established under Subchapter R;

(7) the Texas Water Development Fund established under Subchapter C, Chapter 17; and

(8) the Texas Water Development Fund II state participation account established under Section 17.957.

(c) The board has legal title to money and investments in the fund.

(d) The comptroller may not use the fund for certification under Section 49a, Article III, Texas Constitution.

(e) Money in the fund may be used only as provided by this subchapter.

(f) The fund consists of:

(1) money transferred or deposited to the credit of the fund by law, including money from any source transferred or deposited to the credit of the fund as authorized by law;

(2) any other revenue that the legislature by statute dedicates for deposit to the credit of the fund;

(3) investment earnings and interest earned on amounts credited to the fund;

(4) money from gifts, grants, or donations to the fund; and

(5) the redeposit of money transferred from the fund.

Sec. 15.503. MANAGEMENT AND INVESTMENT OF FUND. (a) Money in the fund shall be invested as determined by the board. The fund may be invested with the state treasury pool.

(b) The fund and any accounts established in the fund shall be kept and maintained by or at the direction of the board.

(c) The money in the fund may be managed by the comptroller or a corporate trustee that is a trust company or a bank that has the powers of a trust company for and on behalf of the board and pending the money's use for the purposes provided by this subchapter may be invested as provided by an order, resolution, or rule of the board.

(d) If directed by the board to manage the fund under Subsection (c), the comptroller or corporate trustee shall manage the fund in strict accordance with this subchapter and the orders, resolutions, and rules of the board. The board, comptroller, or corporate trustee has any power necessary to accomplish the purposes of managing and investing the assets of the fund. In managing the assets of the fund, through procedures and subject to restrictions the board, comptroller, or corporate trustee considers appropriate, the board, comptroller, or corporate trustee may acquire, exchange, sell, supervise, manage, or retain any kind of investment that a prudent investor, exercising reasonable care, skill, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the fund then prevailing, taking into consideration the investment of all the assets of the fund rather than a single investment.

Sec. 15.504. USE OF FUND. (a) Subject to legislative appropriation, the board may make transfers from the fund to a fund or account described by Section 15.502(b) for an authorized purpose of the receiving fund or account.

(b) The board may not transfer money to a fund or account described by Section 15.502(b) until the application for the project for which the money is to be used has been approved.

(c) The board shall ensure that a portion of the money transferred from the fund is used for:

(1) water infrastructure projects to prevent or repair water main failure, prioritized by risk or need, for:

(A) rural political subdivisions, as defined by Section 15.992; and

(B) municipalities with a population of less than 150,000;

(2) projects for which all required state or federal permitting has been completed;

(3) the statewide water conservation public awareness program established under Section 16.401; and

(4) water conservation strategies for new residential construction.

(d) Money transferred from the fund for the purposes described by Subsection (c) may be transferred to funds or accounts described by Section 15.502(b) to be used to provide low interest loans, zero interest loans, negative interest loans, loan forgiveness, or grants for any purpose described by Subsection (c) under criteria developed by the board.

(e) Money deposited to the credit of the fund as provided by Section 15.154(d) may be used only for the purposes described by Section 15.153(b).

Sec. 15.505. ADVISORY COMMITTEE. The State Water Implementation Fund for Texas Advisory Committee established under Section 15.438:

(1) shall submit comments and recommendations to the board regarding the use of money in the fund for use by the board in adopting rules under Section 15.506;

(2) shall review the overall operation, function, and structure of the fund at least annually and may provide comments and recommendations to the board on any matter; and

(3) may adopt rules, procedures, and policies as needed to administer this section and implement its responsibilities.

Sec. 15.506. RULES. (a) The board may adopt rules providing for the use of money in the fund that are consistent with this subchapter.

(b) Rules adopted under this section must require each recipient of financial assistance administered through the fund to submit to the board a water conservation plan consistent with the requirements of Section 16.4021.

SECTION 3. Section 15.994(c), Water Code, is amended to read as follows:

(c) The board may use money in the fund to contract for outreach, financial, planning, and technical assistance to assist rural political subdivisions [in obtaining and using financing from any source] for a purpose described by this section, including in obtaining and using financing from funds and accounts administered by the board.

SECTION 4. Section 16.0121, Water Code, is amended by adding Subsections (k) and (l) to read as follows:

(k) The board by rule shall establish a program to provide technical assistance to retail public utilities in conducting water audits required under Subsections (b) and (b-1) and in applying for financial assistance from the board to mitigate the utility system's water loss. The board may provide for the implementation of the program established under this subsection by contracting or partnering with other entities. Rules adopted under this section must provide for the prioritization of technical assistance to retail public utilities based on:

(1) water loss audits submitted to the board;

(2) the population served by the utility; and

(3) the integrity of the utility's system.

(l) The board shall post on the board's Internet website information that:

(1) summarizes the information compiled under Subsection (f);

(2) summarizes the measures taken by retail public utilities to reduce water loss; and

(3) identifies the retail public utilities participating in the program established under Subsection (k) and details the use of financial assistance provided under that subsection.

SECTION 5. Section 16.4021(b), Water Code, is amended to read as follows:

(b) This section applies to an application for financial assistance under:

(1) Subchapters C, C-1, D, E, G, H, J, O, Q, and R, Chapter 15;

(2) Subchapters E and F of this chapter; and

(3) Subchapters D, F, I, K, and L, Chapter 17.

SECTION 6. Not later than January 1, 2024, the Texas Water Development Board shall adopt rules as required by Section 16.0121(k), Water Code, as added by this Act.

SECTION 7. (a) Except as otherwise provided by this Act, this Act takes effect September 1, 2023.

(b) Section 2 of this Act takes effect January 1, 2024, but only if the constitutional amendment proposed by the 88th Legislature, Regular Session, 2023, creating the Texas water fund to assist in financing water projects in this state is approved by the voters. If that constitutional amendment is not approved by the voters, Section 2 of this Act has no effect.

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