HBA-BSM C.S.H.B. 622 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 622
By: Lewis, Ron
Natural Resources
4/9/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, more than 4,500 community water systems deliver drinking water
to the citizens of Texas.  The great majority of these serve rural
populations of 10,000 or fewer.  Districts and cities currently secure
financing by issuing tax-exempt bonds or securing loans through the Texas
Water Development Board (board).  However, these funding resources do not
adequately address the demand or special needs of rural utility providers
with small rural populations.  In addition, nonprofit rural water
corporations do not qualify for the lower cost of financing by the sale of
tax exempt bonds.  Also, these small water systems may not have the
manpower or technical resources that are available to larger entities.  The
Sunset Advisory Commission report on the board notes that the smaller rural
water systems, including small cities and districts, cannot take advantage
of financial assistance easily, and that these areas need technical
assistance and outreach to take advantage of the funding. 

C.S.H.B. 622 establishes the rural water assistance fund.

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly granted to the Texas Water Development Board in
Section 1 (Section 15.906, Water Code) of this bill. 

ANALYSIS

C.S.H.B. 622 amends the Water Code to create the rural water assistance
fund (fund) and sets forth provisions regarding the composition of the
fund. The bill requires the Texas Water Development Board (board) to adopt
the necessary rules to administer the fund, including rules establishing
procedures for application for and award of loans, distribution of loans,
investment of funds, and the administration of loans. 

The fund may be used:

 _ to provide low interest loans to any nonprofit water supply or sewer
service corporation, district or municipality with a service of 10,000 or
less in population or which otherwise qualifies for financing from a
federal agency, or any county in which no urban area exceeds 50,000 in
population; 

 _to enable such eligible political subdivisions to obtain water from other
political subdivisions; 

 _ to finance the consolidation or regionalization of water or
water-related projects of neighboring eligible political subdivisions; 

 _to contract for an outreach and technical assistance program;

 _to refinance loans at lower interest rates; or
 
 _as a source of revenue for the payment of principal and interest on
certain water financial assistance bonds.   

The bill prohibits the board from delivering funds unless a proposed
applicant for surface water, or underground water development has the
necessary water rights to use the water that the project will provide.  The
bill requires the board to make certain considerations when reviewing an
application and sets forth provisions regarding the approval of an
application.  The bill also requires the board to require an applicant to
adopt or implement a program of water conservation.   

The bill authorizes the board  to transfer amounts from the water
assistance fund to the fund and to direct the comptroller to transfer
amounts from the financial assistance account to the fund. 

C.S.H.B. 622 amends the Tax Code to provide a tax exemption for projects
financed by the fund. 

EFFECTIVE DATE

September 1, 2001.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 622 differs from the original bill by including provisions to
ensure a project has the necessary surface or groundwater rights to make
the project viable.  The substitute also specifies factors which the board
must consider when considering applications for the fund.  The substitute
also clarifies the definition of rural eligible political subdivisions for
the fund.  C.S.H.B. 622 also differs from the original bill to authorize
the board to direct the comptroller to transfer funds to the rural water
assistance fund (fund).  The substitute also provides for a tax exemption
for projects financed by the rural water assistance fund.