By Lewis of Orange, Geren                              H.B. No. 622
         77R11625 E                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to financing rural water projects.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Chapter 15, Water Code, is amended by adding
 1-5     Subchapter O to read as follows:
 1-6                 SUBCHAPTER O.  RURAL WATER ASSISTANCE FUND
 1-7           Sec. 15.901.  DEFINITIONS. In this subchapter:
 1-8                 (1)  Notwithstanding Section 15.001, "federal agency"
 1-9     means the United States Department of Agriculture or an agency or
1-10     entity acting through or on behalf of the United States Department
1-11     of Agriculture.
1-12                 (2)  Notwithstanding Section 15.001, "fund" means the
1-13     rural water assistance fund established under this subchapter.
1-14                 (3)  "State agency" means an agency or other entity of
1-15     the state, including the Department of Agriculture, the Texas
1-16     Department of Housing and Community Affairs, or an agency or
1-17     authority acting through or on behalf of the Department of
1-18     Agriculture or the Texas Department of Housing and Community
1-19     Affairs.
1-20           Sec. 15.902.  ELIGIBILITY FOR ASSISTANCE. The following
1-21     political subdivisions are eligible for assistance under this
1-22     subchapter:
1-23                 (1)  a nonprofit water supply or sewer service
1-24     corporation, district, or municipality that:
 2-1                       (A)  has a water or sewer service area that has a
 2-2     population of not more than 10,000; or
 2-3                       (B)  qualifies for financing from a federal
 2-4     agency; and
 2-5                 (2)  a county that does not contain an urban area with
 2-6     a population of more than 50,000.
 2-7           Sec. 15.903.  CREATION OF FUND. (a)  The rural water
 2-8     assistance fund is created in the state treasury.
 2-9           (b)  The fund consists of:
2-10                 (1)  money directly transferred to the fund;
2-11                 (2)  the repayment of principal and interest on loans
2-12     made from the fund not otherwise needed as a source of revenue
2-13     under Section 17.9611(b);
2-14                 (3)  money transferred to the fund by the board from
2-15     any available source; and
2-16                 (4)  interest earned on the investment of money in the
2-17     fund and depository interest allocable to the fund in the general
2-18     revenue fund.
2-19           (c)  Sections 403.095 and 404.071, Government Code, do not
2-20     apply to the fund.
2-21           Sec. 15.904.  USE OF FUND. The fund may be used only:
2-22                 (1)  to provide low-interest loans to eligible
2-23     political subdivisions for water or water-related projects,
2-24     including:
2-25                       (A)  the purchase of well fields;
2-26                       (B)  the purchase or lease of rights to produce
2-27     groundwater; and
 3-1                       (C)  the interim financing of construction
 3-2     projects;
 3-3                 (2)  to enable eligible political subdivisions to
 3-4     obtain water supplied from political subdivisions as defined by
 3-5     Section 15.001;
 3-6                 (3)  to finance the consolidation or regionalization of
 3-7     water or water-related projects of neighboring eligible political
 3-8     subdivisions;
 3-9                 (4)  to contract for an outreach and technical
3-10     assistance program to assist eligible political subdivisions in
3-11     obtaining assistance through the fund;
3-12                 (5)  to refinance loans at lower interest rates; or
3-13                 (6)  as a source of revenue for the payment of
3-14     principal and interest on water financial assistance bonds issued
3-15     by the board if the proceeds of the sale of those bonds will be
3-16     deposited in the rural water assistance fund.
3-17           Sec. 15.905.  JOINT APPLICATION. An eligible political
3-18     subdivision may enter into an agreement with a federal or state
3-19     agency to submit a joint application for financial assistance under
3-20     this subchapter.
3-21           Sec. 15.906.  RULES. The board shall adopt necessary rules to
3-22     administer this subchapter, including rules establishing procedures
3-23     for application for and award of loans, distribution of loans,
3-24     investment of funds, and administration of loans and the fund.
3-25           Sec. 15.907.  FINDINGS REGARDING APPLICANT'S WATER RIGHTS.
3-26     The board may not deliver funds to an applicant for financial
3-27     assistance until the executive administrator makes a written
 4-1     finding that an applicant proposing:
 4-2                 (1)  surface water development has the necessary water
 4-3     rights authorizing the applicant to appropriate and use the water
 4-4     that the project will provide; or
 4-5                 (2)  underground water development has the right to use
 4-6     water that the project will provide.
 4-7           Sec. 15.908.  CONSIDERATIONS IN REVIEWING APPLICATION. In
 4-8     reviewing an application from a political subdivision for financial
 4-9     assistance, the board shall consider:
4-10                 (1)  the needs of the area to be served by the project;
4-11                 (2)  the benefit of the project to the area;
4-12                 (3)  the relationship of the project to the overall
4-13     state water needs;
4-14                 (4)  the relationship of the project to the state water
4-15     plan; and
4-16                 (5)  the availability of revenue to the political
4-17     subdivision from all sources for the repayment of the cost,
4-18     including interest, of the water supply project.
4-19           Sec. 15.909.  APPROVAL OF APPLICATION. (a)  The board by
4-20     resolution may approve an application if, after considering the
4-21     factors listed in Section 15.908 and any other relevant factors,
4-22     the board finds:
4-23                 (1)  that the public interest is served by state
4-24     assistance to the project; and
4-25                 (2)  that the revenue or taxes pledged by the political
4-26     subdivision will be sufficient to meet all the obligations assumed
4-27     by the political subdivision during the succeeding period of not
 5-1     more than 50 years.
 5-2           (b)  Before the board approves an application or provides any
 5-3     financial assistance under an application, it shall require an
 5-4     applicant to adopt or implement a program of water conservation for
 5-5     the more efficient use of water in the manner provided by Section
 5-6     15.106.
 5-7           Sec. 15.910.  CONSTRUCTION CONTRACT REQUIREMENTS. Sections
 5-8     17.183-17.187 apply to the construction of projects funded under
 5-9     this subchapter.
5-10           SECTION 2.  Section 15.011(b), Water Code, is amended to read
5-11     as follows:
5-12           (b)  After notice and hearing and subject to any limitations
5-13     established by the General Appropriations Act, the board may
5-14     transfer money from the fund to the loan fund created under
5-15     Subchapter C of this chapter, the storage acquisition fund created
5-16     under Subchapter E of this chapter, the research and planning fund
5-17     created under Subchapter F of this chapter, the hydrographic survey
5-18     account created under Subchapter M of this chapter,  provided the
5-19     hydrographic survey account transfer does not exceed $425,000,
5-20     [and] the aquatic vegetation management fund created under
5-21     Subchapter N of this chapter, and the rural water assistance fund
5-22     created under Subchapter O of this chapter.
5-23           SECTION 3.  Section 15.012(c), Water Code, is amended to read
5-24     as follows:
5-25           (c)  Money appropriated to the fund by the legislature for a
5-26     specific purpose stated in Subchapter C, E, F, M, [or] N, or O of
5-27     this chapter shall be placed in the appropriate fund created by
 6-1     that subchapter.
 6-2           SECTION 4. Subchapter L, Chapter 17, Water Code, is amended
 6-3     by adding Section 17.9611 to read as follows:
 6-4           Sec. 17.9611.  TRANSFERS TO RURAL WATER ASSISTANCE FUND. (a)
 6-5     The board may direct the comptroller to transfer amounts from the
 6-6     financial assistance account to the rural water assistance fund
 6-7     created by Section 15.903 to provide financial assistance under
 6-8     this subchapter for the purposes provided by Section 15.904.
 6-9           (b)  The board shall use the rural water assistance fund as a
6-10     source of revenue to be deposited in accordance with this
6-11     subchapter for the payment of principal and interest on water
6-12     financial assistance bonds issued by the board, the proceeds of
6-13     which are deposited in the rural water assistance fund, and to make
6-14     payments under a bond enhancement agreement with respect to
6-15     principal or interest on the water financial assistance bonds.
6-16           SECTION 5. Subchapter H, Chapter 151, Tax Code, is amended by
6-17     adding Section 151.3095 to read as follows:
6-18           Sec. 151.3095.  PROJECTS FINANCED BY THE RURAL WATER
6-19     ASSISTANCE FUND. A taxable item sold, leased, or rented to or
6-20     stored, used, or consumed by a nonprofit water supply or sewer
6-21     service corporation for any project financed by the rural water
6-22     assistance fund created under Subchapter O, Chapter 15, Water Code,
6-23     is exempted from the taxes imposed by this chapter.
6-24           SECTION 6.  This Act takes effect September 1, 2001.