BILL ANALYSIS


                                                         S.B. 768
                                                     By: Montford
                                                          Finance
                                                          3-16-95
                                     Committee Report (Unamended)
BACKGROUND

The State Water Pollution Control Revolving Fund (SRF) provides
financial assistance to political subdivisions at below market
rates of interest for the construction of sewage treatment
facilities.  SRF operation costs are recovered from the cash flows
created by loan repayments.  Current federal law restricts the
total amount of operating expenses that may be paid from the SRF;
as a result, the SRF program will reach its expense limit during
the next biennium.  State law currently does not permit the
assessment and collection of charges to SRF borrowers.

PURPOSE

As proposed, S.B. 768 authorizes the Texas Water Development Board
to recover administrative costs of the state water pollution
control revolving fund and additional state revolving funds from
borrowers on loans by means of a one-time loan orientation charge
and an annual loan servicing charge.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Texas Water Development Board under SECTION 1 (Section
15.609, Chapter 15J, Water Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 15J, Water Code, by adding Section
15.609, as follows:

     Sec. 15.609.  RECOVERY OF ADMINISTRATIVE COSTS.  (a)
     Authorizes the Texas Water Development Board (board) to charge
     a recipient of financial assistance from a state revolving
     fund an origination fee and an annual fee.  Requires the
     board, by rule, to set the fees at amounts necessary to
     recover the costs incurred in administering a revolving fund
     that are not paid from that fund.
     
     (b) Authorizes the board to establish one or more operating
       funds to finance the administration of the revolving fund. 
       Requires an operating fund to be held outside the state
       treasury and separate from the fund to which it relates. 
       Requires the board to deposit the collected fees to the
       credit of the appropriate operating fund.  Requires the
       board to use money deposited in the credit of an operating
       fund to pay the board's costs of administering the revolving
       fund to which the operating fund relates.
       
       (c) Prohibits the board from transferring money in the
       revolving fund to an operating fund, but authorizes the
       board to transfer money in an operating fund to the
       revolving fund to which the operating fund relates.
       
       (d) Requires money in an operating fund to be invested in
       authorized investments as provided by board order,
       resolution, or rule.
       
       (e) Authorizes the board to agree with the holder of a bond,
       the proceeds of which will be deposited in the revolving
       fund, that the board will use money in an operating fund
       only as provided by this section.
       
       SECTION 2.   Emergency clause.
           Effective date: upon passage.