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  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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