Elizabeth Fazio, J.D., LL.M.
Director, House Natural Resources Committee
Chick Bend at Sunrise, Brazos River near Kyle,
Co...
Overview:
State Water Planning in Texas
• Senate Bill 1 in 1997
– Created “Bottom-up” Regional Planning Process
• Senate B...
Projected Population Growth, Water Demand, and
Water Shortages in Texas’ Major Metro Areas by 2030
3
October 7-8, 2013 Tex...
2012 State Water Plan
Water for Texas
BY THE NUMBERS
Learn why Texas needs to implement the 2012 State Water Plan.
16regio...
Projected Texas Population Growth
The population in Texas is expected to increase 82 percent between the years 2010 and 20...
Projected Texas Population Growth
in Texas Counties
6
October 7-8, 2013 Texas Water Law Conference
Projected Water Demand and
Existing Supplies
Demand 18,010,599 19,038,954 19,821,152 20,517,886 21,190,527 21,952,198
Supp...
Projected Need for Additional Water
in Times of Drought
If Texas does not implement new water supply projects or managemen...
Recommended Water Management
Strategies in 2060
9
October 7-8, 2013 Texas Water Law Conference
Recommended Water Management
Strategies in Acre-Feet Per Year
Municipal Conservation 137,847 264,885 353,620 436,632 538,9...
Total Capital Costs for
Future Water Supply
The majority of the $53 billion in costs are for water management strategies r...
Financing the 2012 State Water Plan
• Senate Joint Resolution 1
– Constitutionally creates the
State Water Implementation ...
Overview: Senate Joint Resolution 1
• Constitutional Dedication
• Inside State Treasury, Outside of the
General Revenue Fu...
Overview: House Bill 4
• Structure
– Develops a sophisticated financing mechanism which leverages $2B
one-time capitalizat...
House Bill 4: High-Level View of Structure
15
SWIRFT
October 7-8, 2013 Texas Water Law Conference
House Bill 4: Goals
#1 GOAL: Increase Water Supply Today and Into the Future
– Implement projects and develop water supply...
House Bill 4: Challenges
• Lots and Lots of Questions…
– Who gets the funding and what type of projects?
– How much do we ...
House Bill 4: Solutions
• Models
• Management
• Mandatory Prioritization of Projects
18
October 7-8, 2013 Texas Water Law ...
WIFC WIFD SPP Total
-2019 3.33 0.42 0.24 3.99
2020-2029 4.54 0.4 0.28 5.22
2030-2039 4.75 0.4 0.59 5.74
2040-2049 4.75 0.4...
House Bill 4: Overfunded Reserve Concepts
20
$2Billion
$27Billion +
October 7-8, 2013 Texas Water Law Conference
House Bill 4: Overfunded Reserve Concepts
21
$2Billion
$27Billion +
October 7-8, 2013 Texas Water Law Conference
• Sec. 15.435
– A bond enhancement agreement entered into under this section is an
agreement for professional services.
– ...
House Bill 4: Management
• TWDB
– Created in 1957, 6 part-time Members
– To-date, has sold $3.95B in bonds
– HB 4, Restruc...
House Bill 4: Mandatory
Prioritization of Projects
• Use of the Fund
– Sec. 15.434(b)
• Eligibility
– Sec. 15.435(g)(1)
• ...
Use of Funds
TARGETED GOAL: During the life of any 5-year
SWP:
• 10% of projects funded to support rural areas,
including ...
Eligibility
In order to be eligible to receive financial
assistance through SWIFT, an applicant must:
• submitted and impl...
Conservation/ Reuse: Prioritization
• TWDB must develop a system for the
prioritization of projects at the time of its
req...
Regional Prioritization
• Each regional water planning group shall
prioritize projects in its respective regional
water pl...
TWDB Prioritization
• TWDB prioritization:
– local contribution;
– financial capacity of the applicant to repay;
– ability...
House Bill 4: Minimal Construction
Contract Standards
Chapter 17, Texas Water Code changes:
• Replaces terms “sound engine...
House Bill 4: Maximized Lending Resources
Chapter 49, Texas Water Code change:
• Enables federally approved entities to is...
32
Significant economic losses and threat to
public health:
Total annual losses of $11.9 billion today
Loss of $115.7 bill...
“The constitutional amendment providing for the creation of the
State Water Implementation Fund for Texas and the
State Wa...
Chick Bend at Sunrise, Brazos River near Kyle,
Copyright © 2010 Photographs by Charles Kruvand, from
The Living Waters of ...
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Mechanics of hb 4 texas waterlawcle_10.07.2013

  1. 1. Elizabeth Fazio, J.D., LL.M. Director, House Natural Resources Committee Chick Bend at Sunrise, Brazos River near Kyle, Copyright © 2010 Photographs by Charles Kruvand, from The Living Waters of Texas, Texas A&M University Press MECHANICS OF HOUSE BILL 4: FINANCING THE TEXAS STATE WATER PLAN 83rd Texas Legislature
  2. 2. Overview: State Water Planning in Texas • Senate Bill 1 in 1997 – Created “Bottom-up” Regional Planning Process • Senate Bill 2 in 2001 – Created Water Infrastructure Fund • Senate Bill 3 in 2007 – Created Environmental Flow Process • House Bill 4 in 2013 – Created Mechanism for Financing State Water Plan 2 October 7-8, 2013 Texas Water Law Conference
  3. 3. Projected Population Growth, Water Demand, and Water Shortages in Texas’ Major Metro Areas by 2030 3 October 7-8, 2013 Texas Water Law Conference
  4. 4. 2012 State Water Plan Water for Texas BY THE NUMBERS Learn why Texas needs to implement the 2012 State Water Plan. 16regional water planning groups plan for Texans’ needs for water over the next 50 years 12interest groups are represented on each planning group: agriculture, industry, the public, the environment, municipalities, business, water districts, river authorities, water utilities, counties, power generation, and groundwater management areas 450 voting and non-voting members make up the planning groups 3,000water user groups are planned for, representing 6 water use categories— municipal, manufacturing, steam-electric power, irrigation, livestock, and mining 46 million people will live in Texas by 2060 8.3million acre-feet of water would be needed during a repeat of the drought of record in 2060 562water management strategies were recommended by the planning groups to meet the needs for water during a repeat of the drought of record 9.0million acre-feet of water would be supplied from recommended strategies $53.1billion in capital costs are required to implement the plan $231billion capital costs is needed for water supplies, water treatment and distribution, wastewater collection and treatment, and flood control by 2060 4 October 7-8, 2013 Texas Water Law Conference
  5. 5. Projected Texas Population Growth The population in Texas is expected to increase 82 percent between the years 2010 and 2060, growing from 25.4 million to 46.3 million people. 5 October 7-8, 2013 Texas Water Law Conference
  6. 6. Projected Texas Population Growth in Texas Counties 6 October 7-8, 2013 Texas Water Law Conference
  7. 7. Projected Water Demand and Existing Supplies Demand 18,010,599 19,038,954 19,821,152 20,517,886 21,190,527 21,952,198 Supplies 16,983,205 16,409,225 16,015,972 15,611,330 15,400,092 15,270,535 Water demand is projected to increase by only 22 percent over the planning horizon, from about 18 million acre‐feet per year in 2010 to about 22 million acre‐feet per year in 2060. Existing water supplies— the amount of water that can be produced with current permits, current contracts, and existing infrastructure during drought—are projected to decrease about 10 percent, from about 17.0 million acre‐feet in 2010 to about 15.3 million acre‐feet in 2060. 7 October 7-8, 2013 Texas Water Law Conference
  8. 8. Projected Need for Additional Water in Times of Drought If Texas does not implement new water supply projects or management strategies, then homes, businesses, and agricultural enterprises throughout the state are projected to need 8.3 million acre-feet of additional water supply by 2060. 8 October 7-8, 2013 Texas Water Law Conference
  9. 9. Recommended Water Management Strategies in 2060 9 October 7-8, 2013 Texas Water Law Conference
  10. 10. Recommended Water Management Strategies in Acre-Feet Per Year Municipal Conservation 137,847 264,885 353,620 436,632 538,997 647,361 Irrigation Conservation 624,151 1,125,494 1,351,175 1,415,814 1,463,846 1,505,465 Other Conservation 4,660 9,242 15,977 18,469 21,371 23,432 New Major Reservoir 19,672 432,291 918,391 948,355 1,230,573 1,499,671 Other Surface Water 742,447 1,510,997 1,815,624 2,031,532 2,700,690 3,050,049 Groundwater 254,057 443,614 599,151 668,690 738,484 800,795 Reuse 100,592 428,263 487,795 637,089 766,402 915,589 Groundwater Desalination 56,553 81,156 103,435 133,278 163,083 181,568 Conjunctive use 26,505 88,001 87,496 113,035 136,351 135,846 Aquifer Storage and Recovery 22,181 61,743 61,743 72,243 72,243 80,869 Weather Modification - 15,206 15,206 15,206 15,206 15,206 Drought Management 41,701 461 461 461 461 1,912 Brush Control 18,862 18,862 18,862 18,862 18,862 18,862 Seawater Desalination 125 125 143 6,049 40,021 125,514 Surface Water Desalination - 2,700 2,700 2,700 2,700 2,700 The regional water planning groups recommended 562 unique water supply projects designed to meet needs for additional water supplies for Texas during drought, resulting in a total, if implemented, of 9.0 million acre‐feet per year in additional water supplies by 2060. 10 October 7-8, 2013 Texas Water Law Conference
  11. 11. Total Capital Costs for Future Water Supply The majority of the $53 billion in costs are for water management strategies recommended for municipal water user groups. 11 October 7-8, 2013 Texas Water Law Conference
  12. 12. Financing the 2012 State Water Plan • Senate Joint Resolution 1 – Constitutionally creates the State Water Implementation Fund for Texas (SWIFT) & State Water Implementation Revenue Fund for Texas (SWIRFT). Requires voter approval in November 5th, 2013 general election. • House Bill 1025 – Authorizes a one-time $2B transfer from the Rainy Day Fund to the SWIFT. • House Bill 4 – Provides for the structure, administration, and oversight of the funds. 12 October 7-8, 2013 Texas Water Law Conference
  13. 13. Overview: Senate Joint Resolution 1 • Constitutional Dedication • Inside State Treasury, Outside of the General Revenue Fund • Self-Supporting • Rainy Day Fund 13 October 7-8, 2013 Texas Water Law Conference
  14. 14. Overview: House Bill 4 • Structure – Develops a sophisticated financing mechanism which leverages $2B one-time capitalization with TWDB’s bonding authority: • Administration – Embraces conservation and reuse projects as part of overall strategy to meet future needs and recognizes the need to ensure rural areas are supported; and – Requires the regional and statewide prioritization of projects in the financing of the state water plan. • Oversight – Creates an advisory committee to provide recommendations on the adoption of rules for the structure and administration of the funds. 14 October 7-8, 2013 Texas Water Law Conference
  15. 15. House Bill 4: High-Level View of Structure 15 SWIRFT October 7-8, 2013 Texas Water Law Conference
  16. 16. House Bill 4: Goals #1 GOAL: Increase Water Supply Today and Into the Future – Implement projects and develop water supply • Leverage One-Time Capitalization with State’s Bonding Authority – State financial assistance requested = $27B over 50 years • Protect the Corpus – Increase investment capabilities – grow the fund. • Provide Incentives – Lower-interest rates; – Longer repayment terms; – Incremental repayment terms; and – Deferred repayments. 16 October 7-8, 2013 Texas Water Law Conference
  17. 17. House Bill 4: Challenges • Lots and Lots of Questions… – Who gets the funding and what type of projects? – How much do we need? – How do we know how much we need and when? – Who would manage and invest the corpus? – How would the corpus be invested? – How much/ what type of incentives should the state provide? – How is this similar to or different than the management of other state water funds? – What does the management of yield restrictions/ arbitrage issues look like? 17 October 7-8, 2013 Texas Water Law Conference
  18. 18. House Bill 4: Solutions • Models • Management • Mandatory Prioritization of Projects 18 October 7-8, 2013 Texas Water Law Conference
  19. 19. WIFC WIFD SPP Total -2019 3.33 0.42 0.24 3.99 2020-2029 4.54 0.4 0.28 5.22 2030-2039 4.75 0.4 0.59 5.74 2040-2049 4.75 0.4 0.58 5.73 2050-2059 5.22 0.44 0.64 6.3 22.59 2.06 2.33 26.98 CashFlowConcept House Bill 4: EXAMPLE Models WIFC WIFD SPP Total -2019 11.9 2 1.2 15.1 2020-2029 2.9 0.3 0.9 4.1 2030-2039 2.7 0.7 0.69 4.09 2040-2049 1.6 0.1 0.22 1.92 2050-2059 0.83 0.155 0.4 1.385 19.93 3.255 3.41 26.595 2012SWPFinancialAssistanceRequested($B) WIFC WIFD SPP Total -2019 5 0.62 0.36 5.98 2020-2029 6.81 0.6 0.42 7.83 2030-2039 3.52 0.3 0.43 4.25 2040-2049 3.52 0.3 0.43 4.25 2050-2059 3.87 0.33 0.47 4.67 22.72 2.15 2.11 26.98 ReserveFundConcept* 19 October 7-8, 2013 Texas Water Law Conference
  20. 20. House Bill 4: Overfunded Reserve Concepts 20 $2Billion $27Billion + October 7-8, 2013 Texas Water Law Conference
  21. 21. House Bill 4: Overfunded Reserve Concepts 21 $2Billion $27Billion + October 7-8, 2013 Texas Water Law Conference
  22. 22. • Sec. 15.435 – A bond enhancement agreement entered into under this section is an agreement for professional services. – This is NOT a credit enhancement agreement. – It IS the mechanism to support the “purpose” of SWIFT which is to provide support, including the ability to provide additional security. • Sec. 15.474 (SWIRFT) – Only place credit agreements mentioned. “Bond Enhancement Agreement” 22 October 7-8, 2013 Texas Water Law Conference
  23. 23. House Bill 4: Management • TWDB – Created in 1957, 6 part-time Members – To-date, has sold $3.95B in bonds – HB 4, Restructures to 3 full-time Members • Texas Treasury Safekeeping Trust Company – Created in 1986, current powers 2001 – Overseen by Texas Comptroller of Public Accounts – Invests, manages, and oversees $58B of state’s assets • Advisory Committee – 7 members: Comptroller, 3 Senate Members, and 3 House Members – Advise and provide comments on rulemaking for SWIFT/ SWIRFT program 23 October 7-8, 2013 Texas Water Law Conference
  24. 24. House Bill 4: Mandatory Prioritization of Projects • Use of the Fund – Sec. 15.434(b) • Eligibility – Sec. 15.435(g)(1) • Prioritization of Projects • Regional: Sec. 15.436 • TWDB: Sec. 15.437 Independence Creek Copyright © 2010 Photographs by Charles Kruvand, from The Living Waters of Texas, Texas A&M University Press 24 October 7-8, 2013 Texas Water Law Conference
  25. 25. Use of Funds TARGETED GOAL: During the life of any 5-year SWP: • 10% of projects funded to support rural areas, including agricultural water conservation, and • 20% of projects funded to support water conservation or reuse, including agricultural irrigation projects. 25 October 7-8, 2013 Texas Water Law Conference
  26. 26. Eligibility In order to be eligible to receive financial assistance through SWIFT, an applicant must: • submitted and implement a water conservation plan; and • complete a request for financing information, including a water infrastructure financing survey. *All projects must be included in the state water plan. 26 October 7-8, 2013 Texas Water Law Conference
  27. 27. Conservation/ Reuse: Prioritization • TWDB must develop a system for the prioritization of projects at the time of its request for financial assistance, including: – Demonstrated or projected effect of the project on water conservation: • Prevention of water loss; and • Filing of a water loss audit which demonstrates accountability for reducing water loss and increasing efficiency in the distribution of water. 27 October 7-8, 2013 Texas Water Law Conference
  28. 28. Regional Prioritization • Each regional water planning group shall prioritize projects in its respective regional water plan, considering at a minimum: – decade of need; – feasibility of the project; – viability of the project; – sustainability of the project; and – cost-effectiveness of the project. 28 October 7-8, 2013 Texas Water Law Conference
  29. 29. TWDB Prioritization • TWDB prioritization: – local contribution; – financial capacity of the applicant to repay; – ability of the board and the applicant to leverage local and federal funding; – emergency need for the project; – if applying for WIF programs, shovel ready; – demonstration of water conservation; and – priority given the project by the applicable RWPG. • High consideration: – serve a large population; – provide assistance to a diverse urban and rural population; – provide regionalization; or – meet a high percentage of the water supply needs of the water users to be served by the project. 29 October 7-8, 2013 Texas Water Law Conference
  30. 30. House Bill 4: Minimal Construction Contract Standards Chapter 17, Texas Water Code changes: • Replaces terms “sound engineering principles” with “approved plans and specifications”; – Sec. 17.183 – Sec. 17.187 (strikes “in consultation with…” language) • Adds “Buy American Provisions” – Sec. 17.183 *Effective September 1, 2013 30 October 7-8, 2013 Texas Water Law Conference
  31. 31. House Bill 4: Maximized Lending Resources Chapter 49, Texas Water Code change: • Enables federally approved entities to issue bonds and/or notes to certain districts (more rural), in conjunction with already exempted entities: o Farmers Home Administration; o United States Department of Agriculture; o TWDB; and o North American Development Bank. – Sec. 49.153(e) re: 3 year issuances – Sec. 49.181(a) re: commission approval *Effective September 1, 201331 October 7-8, 2013 Texas Water Law Conference
  32. 32. 32 Significant economic losses and threat to public health: Total annual losses of $11.9 billion today Loss of $115.7 billion by 2060 Loss of 1.1 million jobs 1.4 million Texans gone by 2060 Loss of local and state revenues Projected Economic Losses October 7-8, 2013 Texas Water Law Conference
  33. 33. “The constitutional amendment providing for the creation of the State Water Implementation Fund for Texas and the State Water Implementation Revenue Fund for Texas to assist in the financing of priority projects in the state water plan to ensure the availability of adequate water resources.” 33 Most Concepts in HB 4 Contingent On Water Proposition 6 on November 5, 2013 October 7-8, 2013 Texas Water Law Conference
  34. 34. Chick Bend at Sunrise, Brazos River near Kyle, Copyright © 2010 Photographs by Charles Kruvand, from The Living Waters of Texas, Texas A&M University Press Elizabeth A. Fazio, J.D., LL.M. Director, House Natural Resources Committee Texas House of Representatives P.O. Box 2910, E2.104 Austin, Texas 78768 Telephone: (512) 463-0802 elizabeth.fazio_hc@house.state.tx.us Questions?

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