Third Cycle of SWIFT Financing Commits $1 Billion to State Water Plan Projects

Written by  Director Peter Lake, TWDB Board Member

IT’S NO SECRET THAT TEXAS COMMUNITIES AND water providers face significant water needs over the next 50 years. As the state continues to grow its population and economy, it must continue to develop its ability to provide water—without new water infrastructure, the state could face a shortfall of over 8 million acre-feet of water per year in 2070. Fortunately, the 2017 State Water Plan identifies approximately 2,500 specific projects utilizing over 5,500 water management strategies to meet those water needs. If all of these projects are implemented by 2070, they will provide approximately 8.5 million acre-feet per year in additional water supplies to ensure that Texas can keep functioning even in the most devastating of droughts.

Water infrastructure projects, like the communities that will benefit from them, come in all shapes and sizes and are located throughout the state. Individual project costs vary widely, but in total the estimated capital cost to design, construct and implement the approximately 2,500 water management strategy projects in the 2017 State Water Plan is $63 billion. Notably, water providers anticipate needing state financial assistance with $36.2 billion of that $63 billion.

Making the leap from planning water supply projects to implementing them can be a difficult step for communities because of the challenges in finding affordable funding sources. The State Water Implementation Fund for Texas (SWIFT) program,* administered by the Texas Water Development Board (TWDB), is addressing that challenge by lowering the cost of financing for projects in the State Water Plan. This incentivizes communities to participate in the state water planning process and helps convert those plans into projects.

Established by the Texas Legislature and voters in 2013, SWIFT is a dedicated funding source for state water plan projects. It was created through a one-time transfer of $2 billion from the state’s Rainy Day Fund, which will be leveraged with revenue bonds over the next 50 years to finance approximately $27 billion in water supply projects.

In its first three years, the TWDB has committed to provide financial assistance to $5.6 billion worth of projects through the SWIFT program, including more than $450 million for conservation and reuse projects and more than $28 million for agricultural and rural projects. This total reflects the $1,052,915,000 in commitments made in July 2017 that will fund 10 projects— all recommended in the 2017 State Water Plan—that include water line replacements, well fields, seawater desalination planning, capacity expansions and reservoir planning.

Water Plan

This year’s SWIFT funding cycle follows the 2016 SWIFT commitments of $759,255,000 in financial assistance for 15 state water plan projects, and the inaugural cycle of SWIFT in 2015, which committed financial assistance for $3.8 billion for 30 projects across the state.

Much like in earlier rounds of funding, in 2017 several SWIFT project sponsors requested multiyear financial commitments, which reduce interest costs and allow greater flexibility in planning for and completing projects. Multiyear financing options have been very successful in enabling the TWDB to accommodate the annual capital needs for larger projects while still managing demand for program funds.

As in previous years, the 2017 SWIFT projects ranged in size and scope. The City of Azle received financial assistance for $1,350,000 to finance the planning, design and construction costs associated with replacing approximately 10,500 feet of deteriorated pipeline that caused high amounts of water loss. North Texas Municipal Water District received a commitment of $677,120,000 in financial assistance for reservoir pre-construction costs and planning and construction costs of water treatment plant facilities.

In addition, Springtown received financial assistance of $1,390,000 for new wells. The City of Corpus Christi received $2,750,000 in deferred financing to continue the planning phase of a seawater desalination project. Seawater desalination is a recommended water management strategy in the 2016 Region N. Regional Water Plan and is anticipated to meet manufacturing and steam-electric needs in Nueces and San Patricio counties starting in the 2030 decade.

The City of Justin received financial assistance through a $12 million multi-year loan commitment that will be used to finance the design and construction costs associated with replacing approximately 38,000 linear feet of pipeline. The improvements will allow the city to conserve water and operate a more efficient water system.

Shovels
Luce Bayou: The TWDB has committed approximately $3.3
billion in financial assistance through the SWIFT program
for the Houston area Luce Bayou Interbasin Transfer
project and the associated Northeast Water Purification
Plant. A groundbreaking ceremony for the project was held
in February 2017.

Brushy Creek Regional Utility Authority received a $16,995,000 financial assistance commitment to expand its water treatment plant capacity.

A regional project sponsored by the Hays Caldwell Public Utility Agency received financial assistance through a multi-year loan totaling $213,410,000. The financial assistance will allow the agency to complete the second phase of a regional water supply project initially funded through the SWIFT program in 2015. The phase entails developing a Carrizo Aquifer wellfield with an initial capacity of 5,500 acre-feet per year and an ultimate capacity of 35,690 acre-feet per year.

Three Houston-area water providers received commitments for financial assistance for $127,900,000 in additional costs associated with a large, regional water supply project already underway in the area, which brings the total SWIFT financing committed to Houston-area projects to $3.3 billion.

The TWDB anticipates issuing approximately $1.2 billion in bonds this fall for projects in the SWIFT program. Assuming all 2015, 2016 and 2017 projects move forward as planned, SWIFT program participants—Texas towns, cities and other local and regional water providers—will achieve a total savings of roughly $350 million.

Each of the three SWIFT funding cycles has demonstrated that project sponsors are proactively moving their state water plan projects forward. The abridged application process for the 2018 cycle of SWIFT funding will open late this year. All of us here at the TWDB are working hard to ensure that water providers and project sponsors will continue seeking financial assistance through SWIFT as we all work toward our common goal of developing reliable and sustainable water supplies for all Texans.

To learn more about the SWIFT program and the projects that have received financial assistance commitments, visit the TWDB’s website, www.twdb.texas.gov.

Author: Director Peter Lake, TWDB Board Member

Peter Lake



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