TWDB’s Water Supply & Infrastructure Grants are a Special Opportunity

Texas Living Waters is submitting written comments to the Texas Water Development Board on its Water Supply and Infrastructure Grants Implementation Plan.

About a year ago, Governor Abbott took the stage in Austin for his State of the State address and called for a “Texas-sized investment” in water. He deemed water an emergency item for 89th Texas Legislature, highlighting the need to secure long-term supplies and fix aging, leaky pipes that lose billions of gallons each year across the state. The legislative session was just getting underway when the Governor made these comments, and lawmakers responded in a big way: in addition to passing the landmark bills that paved the way for Prop 4 and the dedication of tax revenue for water projects, they also approved a historically large investment through the Supplemental Appropriations Act for “water infrastructure and supply projects and grants.”

Water Funding Bills Passed by the 89th Texas Legislature:

If the phrase “water infrastructure and supply projects and grants” strikes you as promising but vague, you are not alone. Water-related appropriations are typically deposited into accounts tied to activities that are authorized and governed by the Texas Water Code, which provides TWDB with a backdrop of consistent definitions and other details that aid their operation of the state’s funding programs. HB 500 is nonspecific about the activities that it should or should not be used for, leaving TWDB with a relatively clean slate to develop a plan for spending the money.

The plan that TWDB  came up with is currently posted on the agency’s website for public comment, and it details several ways in which the funding opportunity created by HB 500 is different from the agency’s usual offerings. It also lays out their plan for ranking applications to select projects for funding, as well as the terms and limitations of the grants being offered.

  • 100% of the money will be available as grants, making WSIG unique compared to TWDB’s primarily loan-based financial assistance programs.
  • Water Supply Corporations are not eligible on their own, but may participate in interlocal organizations such as Public Utility Authorities that apply for and receive the funds on their behalf.
  • TWDB will not conduct environmental reviews for these projects. Under other TWDB programs, compliance with relevant environmental protection laws is part of the standard due diligence review. In this case, applicants will instead be asked to provide affidavits certifying their compliance.
  • Funds are proposed to be allocated based on population brackets, with caps per bracket and per project. These anticipated allocations come from an analysis of recent demand for the Drinking Water State Revolving Fund (DWSRF) program.
  • Projects will primarily be ranked according to the lowest service area income (for retail utilities) or the smallest population served (for wholesale utilities.)
  • Projects for medium-large service populations must be ready for construction. Projects serving smaller populations will receive extra points if they are ready for construction.
  • TWDB is proposing to designate $100m as matching funds for canal lining and conversion projects funded by the North American Development Bank (NADBank).
  • TWDB must spend the funds by August 2027. The agency would lose access to funds not spent during the biennium, unless they are appropriated again next session.
 Texas Living Waters’ Perspective, as Reflected in Our Comments

HB 500 provided for an investment in Texas Water unlike any we have seen before, and it’s unlikely that funding will be appropriated in this unique manner again. It’s incumbent on TWDB to think big about how to make the best use of this Texas-sized investment. After all, as the state agency responsible for not only water funding but also water planning, data, and science they are best positioned to ensure the funds are used in a manner that makes real progress in addressing the issues Governor Abbott identified in his address. A successful implementation of HB 500 will mean improved water quantity and quality for Texas communities. Since getting water right in our cities is also an effective way to protect the quantity and quality of water available for fish and wildlife habitat, a wide range of organizations – including conservation groups – have a keen interest in supporting good decisions at TWDB throughout this process.
 
In our written comments on the proposed implementation plan, we make several suggestions promoting a more flexible interpretation of HB 500 and thoughtful outreach to ensure its benefits are accessible to the communities that need it most. We encourage the TWDB to adopt a broad and inclusive definition of “infrastructure” that does not restrict applicants’ ability to propose creative solutions to water supply, and to make some additional efforts to ensure the greatest possible number of Texas utilities are aware of the opportunity – particularly those who are not already frequent TWDB customers.
 
The implementation plan reflects a somewhat narrow reading of HB 500 and strictly limits project eligibility to water supply and infrastructure projects. We recommend expanding eligibility to include “soft” infrastructure such as technical assistance and asset management, as well as the acquisition of land to protect water quality and wastewater or flood control projects that result in water supply benefits. Adopting project categories that are narrow could prevent this funding from being used to support holistic One Water initiatives and other innovative approaches.
 
TWDB’s decision to forego environmental reviews for these projects may help them meet  the ambitious timeline for spending the money, but it sets a concerning precedent. When seeking funds through TWDB’s standard financial assistance programs, applicants must document their compliance with relevant environmental protection statutes – we believe this due diligence makes sense for all public spending and not be eliminated for HB 500 projects. Our recommendations suggest that if reviews won’t be conducted, TWDB should award additional points to projects that were reviewed by other agencies or project categories that are generally understood to carry less risk of environmental harm.
 
The smallest proposed population bracket in TWDB’s proposal includes all utilities with service areas up to 10,000. Two years ago, their plan for spending the initial deposit to the Texas Water Fund included a bracket for populations under 1,000 to ensure the state’s smallest utilities with the most limited revenue streams would have access to the funds. We think this was a good idea, and we recommend re-introducing this category while generally shifting the available funds toward the smaller end of the population scale. Grants are powerful for small communities, and this may not be fully reflected in the allocations TWDB is proposing based on its analysis of the DWSRF loan program.
 
Although canal lining can achieve significant water conservation benefits, we suggest funds should also be clearly available for other types of projects that achieve similar conservation gains, regardless of whether they participate in NADBank’s funding program. We also recommend TWDB prioritize conversion projects over canal lining, since they address both seepage and evaporation by moving canals into pipelines underground.
 
How to Make Sure Your Community Doesn’t Miss Out
In addition to the public comment period for TWDB’s proposal, a webpage has been added to the agency’s website to provide applicants with information and updates about this opportunity. To apply, certain documentation is required, including a current financial audit, water loss audit, and water conservation plan. These items are standard requirements for most TWDB funding, but some applicants – especially those new to TWDB or public funding in general – may benefit from technical assistance to ensure they are ready in time for the July 2026 application deadline. This kind of help is available from organizations such as the Texas Water Infrastructure Coordinating Committee (TWICC), which lists technical assistance resources on its website.

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