Water infrastructure — dams, pipelines, reservoirs, desalination plants and more — can be tremendously expensive, and usually requires financing through some form of long-term borrowing.
The Texas Water Development Board (TWDB) offers a wide array of low-cost financing options for new infrastructure, or water management strategy projects (WMSPs), to help local and regional entities with all phases of their implementation, from planning and design to construction. Since 1957, TWDB has provided $27.6 billion in financial assistance for water projects.
In the wake of the devastating drought of 2011, the Texas Legislature sought additional tools for funding water projects. In 2013, Texas voters approved a constitutional amendment creating the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT) to finance projects approved by one or more of the state’s 16 regional water planning groups and included in the State Water Plan (SWP). At inception, the Legislature’s goal for the funds was to provide about $27 billion in loans for SWP projects over 50 years.
SWIFT offers financing support for low-interest loans provided by TWDB, with options such as extended repayment terms, repayment deferrals and incremental repurchase terms for projects with elements of state ownership. These loan structures are intended to provide an incentive to encourage water project sponsors (such as cities, counties and river authorities) to enter the state water planning process and address growing water needs.
SWIFT was initially funded with $2 billion from the state’s Economic Stabilization Fund. Its investments are managed by the Texas Treasury Safekeeping Trust Company, an entity of the Texas Comptroller of Public Accounts. As of Jan. 31, 2019, SWIFT had a balance of nearly $1.7 billion.
The SWIRFT, in turn, sells revenue bonds to generate the proceeds TWDB uses to provide SWIFT-subsidized loans to income-earning water projects. Revenue from projects supported by these loans is used to repay the bonds’ interest and principal.