SWIFT Funds Start Flowing
Last week, the Texas Water Development Board awarded $3.9 billion for water infrastructure projects as part of the inaugural round of loans from the State Water Implementation Fund (SWIFT). Twenty-one state entities will receive financial assistance for thirty-two
projects identified as recommended water strategies the 2012 State Water Plan. The approved projects include transmission pipelines, canal linings, capacity expansions, brackish and seawater desalination plants, leak detection systems, water meter replacements, and reservoirs (a full list can be found
here). The Board gave highest priority to projects that serve large populations with an urban-rural nexus, among other criteria. Please read our prior coverage of SWIFT
First Round Financial Assistance
SWIFT provides several types of loans and terms to accommodate different projects. Entities may use any or all of these structures to finance their projects. The Board offered three types of assistance in the first round of funding:
- Low-interest loans offered at below market rate with maturities ranging from 20 to 30 years. Interest rates are based on the Board’s cost of funds, which reflects its credit rating. For the first round of SWIFT, the subsidy amount is 35.5% for 20-year maturities. The subsidy for loans up to 25 years is 27%, and for
loans up to 30 years the subsidy is 22%.
- Deferred loans used to fund costs of planning and design, with maturities ranging from 20 to 30 years. Principal and interest is deferred up to eight years, or until the end of construction, whichever is sooner. Interest rates are based on the
Board’s costs of funds. For the first round, the subsidy amount is 15% for 20-year maturities. No subsidy is available for loans longer than 20 years.
- Board participation through temporary ownership interest in a facility. Under this option, the local sponsor will repurchase the Board’s interest under a repayment schedule that allows for the structured deferral of both principal and interest. Financing terms vary but are generally 34 years. Interest rates are
based on the Board’s costs of funds. No additional subsidy amount is available.
Funds can be used for planning, acquisition, design, and construction costs. A pre-design funding option is available for most projects; this method allows an entity to receive a loan commitment on the basis of preliminary engineering, environmental,
economic, and social information. Funds for completed detailed planning, including environmental studies, are provided at closing, while funds for design, preparation of final plans and specifications, and construction are held in escrow until needed. In addition, entities that have funding needs for
a project that may span several years may receive multi-year commitments. The Board currently anticipates that the loan closings will occur in November or December of this year.
Houston Area Projects
The Houston metropolitan area is the biggest beneficiary of the first round of SWIFT, receiving nearly $3 billion in assistance for projects serving Harris, Fort Bend, and Brazoria counties. All projects will receive low-interest, multi-commitment loans, with the
exception of a smaller project sponsored by the Brazosport Water Authority. The Luce Bayou Interbasin Transfer project will involve Board participation.
The City of Houston, in partnership with four regional water authorities, will receive more than $950 million to expand the Northeast Water Purification Plant, located about one and a half miles from Lake Houston. The plant’s total water treatment capacity will
increase from 80 million to 400 million gallons per day after the construction of a new plant adjacent to existing facilities, along with an intake, pumping, and conveyance system to withdraw water from Lake Houston and deliver it to the plant.
The Coastal Water Authority received $300 million to plan, design and construct the Luce Bayou Interbasin Transfer, which will deliver water from the Trinity River Basin to Lake Houston. Originally conceived in the 1930s, the project includes a pump
station, three miles of mains, and twenty-three miles of open canals to convey the water to Lake Houston. The City of Houston will treat the water at the Northeast Water Purification Plant, then deliver the treated water to more than 300 water districts in northern and western Harris County, northern Fort Bend County,
and Montgomery County. End users will primarily be residential and agricultural.
On a smaller scale, the Brazosport Water Authority received $28.3 million, to construct three brackish groundwater wells and a reverse osmosis water treatment plant. This project will help the Authority to provide water to its customers when supplies from the
Brazos River are low.
These projects seek to increase water supplies for one of the nation’s fastest-growing regions. The population of Harris County has swelled by 8.5 percent since 2010, bringing the total number of residents to 4.4 million. The projects may also reduce
subsidence caused by historic over-drafting from the Chicot, Evangeline, and Jasper Aquifers. The ground near Galveston Bay, for example, has dropped by as much as ten feet during the 20th Century, according to data from the Harris-Galveston Subsidence District, a local agency created by the Legislature
to regulate groundwater use. Harris and Galveston counties are under a mandate from the subsidence district to reduce groundwater withdrawals.
North Texas Projects
North Texas cities and water districts also received SWIFT funding last week. Among the approved projects is Lake Ralph Hall reservoir, which is expected to yield 30 million gallons of water per day for the Dallas Fort Worth Metropolitan Area. The project received
$44 million and is the first reservoir permitted by the State of Texas in 20 years. In addition, the North Texas Municipal Water District, which serves counties around Dallas, will receive $82.1 million for land acquisition and construction mitigation work on the Lower Bois d’Arc Creek Reservoir, which is
being built to address water supply shortages. The Dallas-Fort Worth region will also benefit from a new $440 million pipeline project sponsored by the Tarrant Regional Water District and Dallas Water Utilities. That pipeline is expected to provide an estimated additional 350 million gallons of water per
By law, twenty percent of SWIFT funds is required to be set aside for projects that promote water conservation and reuse. However, only three of the projects approved in the first round met these criteria. Two of the conservation projects are located in
the Dallas-Fort Worth area. The City of Forth Worth will receive $76 million to develop and implement an advanced meter infrastructure system, while the City of Bedford will receive $90 million to finance the replacement of 90 percent of the water piping in its water distribution system and the replacement of 15,000
water meters with automatic readers. These projects garnered praise from the Sierra Club’s Lone Star Chapter. The Texas Water Development Board says it expects to see more conservation projects in the 2017 State Water Plan.
Central, South, and West Texas Projects
Central Texas projects include $27.6 million to the Lone Star Regional Water Authority, $55 million to the Canyon Regional Water Authority, and $12.5 million to the Hays Caldwell Public Utility Agency, each for water supply projects that include new
pipelines and increased water plant capacity. The Guadalupe-Blanco River Authority was approved for $8 million to finance a seawater desalination project. In South Texas, a Hidalgo County irrigation district will receive $7 million to finance planning, design, and construction costs associated with
improvements to an agricultural irrigation system. And in West Texas, the El Paso Water Utilities Public Service Board was awarded $50 million to purchase 26,000 acres as part of a plan to pipe groundwater from Hudspeth County beginning in 2050.
Posted at 08/03/2015 5:23 PM