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.