Part 10.
TEXAS WATER DEVELOPMENT BOARD
Chapter 354.
MEMORANDA OF UNDERSTANDING
31 TAC §354.1
The Texas Water Development Board (the board) adopts amendments
to 31 TAC §354.1 concerning the Memoranda of Understanding without changes
to the proposed text as published in the October 31, 2003 issue of the
The board adopts amendment to §354.1, memorandum of understanding
between the board and the Texas Antiquities Committee, to update the name
of the Texas Antiquities Committee to the Texas Historical Commission and
to update several statutory provisions which have been re-codified. In addition,
the deadline for a board archeologist to send a survey report to the Texas
Historical Commission is extended from 30 days to 45 days of the date of completion
of the survey, in response to the complexity of sites that board archeologists
have surveyed in recent years.
There were no comments received on the proposed amendments.
The amendments are adopted under the authority of the Texas Water
Code, §6.101 which provide the Texas Water Development Board with the
authority to adopt rules necessary to carry out the powers and duties in the
Texas Water Code and other laws of the State and §6.104 which authorizes
the board to enter into memorandum of understanding with other state agencies.
The statutory provision affected by the amendments is Texas Water Code,
Chapter 6 and Texas Water Code, §16.342.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 21, 2004.
TRD-200402665
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: May 11, 2004
Proposal publication date: October 31, 2003
For further information, please call: (512) 475-2052
Subchapter K. SMALL COMMUNITY HARDSHIP PROGRAM
31 TAC §§363.1101 - 363.1107
The Texas Water Development Board (board) adopts amendments
to 31 TAC Chapter 363, concerning Financial Assistance Programs to create
a new subchapter, Subchapter K, relating to the Small Community Hardship Program,
and adopts new 31 TAC §§363.1101 - 363.1107 without changes to the
proposed text as published in the February 6, 2004 issue of the
Texas Register
(29 TexReg 1160) and will not be republished. New 31
TAC §§363.1101 - 363.1107 creates a new program by which the board
may provide political subdivisions with grants for projects that provide adequate
water and sewer service to economically distressed areas.
The board adopts new §363.1101, Scope and Purpose of Subchapter, to
identify the purpose of the new rules. This new section also identifies the
source of funds for the program because the use of payments from the Texas
Water Resources Finance Authority creates limitations in the use of these
funds.
The board adopts new §363.1102, Definitions of Terms, which provides
definitions applicable to this new subchapter. It first uses definitions in
Water Code Chapters 15, 16 and 17, unless expressly defined in this new section.
New §363.1102(1) defines adjusted median household income as household
income identified in the most recent U.S. Census multiplied by the current
Texas Consumer Price Index divided by the most recent decennial Texas Consumer
Price Index. Annual median household income directly relates to the economic
conditions of potential applicants and its ability to repay loans. The board
is using a household income as the economic factor to identify areas as economically
distressed and therefore eligible for assistance under this new subchapter
because it is common and easily identifiable by using the federal census data
and accurately reflects the current economics of the area. The board requires
that the median household income that is identified by the latest federal
census be adjusted using the current Consumer Price Index, so that the census
figures reflect present levels of income. This will more closely reflect the
applicant's current economic situation when comparing current rates to income
level. New §363.1102(2) defines applicant as a political subdivision
that requests financial assistance from the board so that the rule will easily
identify the requirements of the new subchapter as applicable only to those
entities that request funding. New §363.1102(3) and (4) defines the term
average yearly sewer and water bill, respectively, which are used in defining
disadvantaged community. The average yearly water bill is calculated by applying
the community's rate structure to the average number of gallons of water used
in-house per year by the average occupied household. Identification of the
rate on a per gallon basis accounts for the different usage rates between
water systems thereby creating a common measure when analyzing the percentage
of the water or combined water and sewer bill to the adjusted median household
income. The number identified as the average gallons used in an individual
residence for sewer and water in new §363.1102(3) and (4) is the estimated
state-wide average of domestic water that enters a household and returns via
the sewer system, based on data submitted by political subdivisions and compiled
by the Texas Commission on Environmental Quality (TCEQ). These new subsections
also includes taxes, surcharges or other fees as part of the annual bill by
including the average annual amount per household of the fee in calculating
the average yearly sewer or water bill if such fees are used to subsidize
the sewer or water service systems. New §363.1102(5) and (8) define combined
household cost factor and household cost factor, respectively. Household affordability
factors are used in new §363.1102(6) to define disadvantaged area because
these factors measure whether a project is affordable to the customers of
the system. The household affordability factors indicate the capacity of the
customers to support the cost of water and/or sewer service, including debt
service, through user charges. If the water or combined water and sewer bill
exceeds a certain percentage of the adjusted median household income, then
the project would not be affordable to the community without assistance from
this program. The percentage of the average water or combined water and sewer
bill to annual median household income, which is defined in new §363.1102(1)
is a methodology used in other board programs and by other states in developing
affordability guidelines as well as the federal government in determining
affordability of projects. The 1.0% for water rates used in new §363.1102(6)(B)(i)
is the percentage used by the Environmental Protection Agency in its User
Manual for the Municipality's Ability to Pay Computer Model. The 2.0% for
water and sewer rates in new §363.1102(6)(B)(ii) was used because it
is recognized that the additional cost of sewer services impacts the ability
of customers to pay for a new project and is used by the board in other programs
as well as another state in developing its affordability guidelines. New §363.1102(5)
defines combined household cost factor as a combination of the average yearly
water bill with the average yearly sewer bill and divides the total by the
average median household income while new §363.1102(8) defines household
cost factor as the number that is derived by dividing the average yearly water
bill by the adjusted median household income. New §363.1102(6) uses three
criteria to define a disadvantaged community: permanent residential population;
adjusted median household income; and household affordability factors. Population
is used because the board believes that the smaller the service population
for a utility provider, the harder it is to obtain the capital necessary to
complete infrastructure projects. A population of less than 5,000 is used
because 93% of the 616 Texas communities identified as lacking adequate water
or sewer service have a population of 5,000 or less. The adjusted median household
income is a measure of the income levels of residents of the area. Similar
income criteria are used in the Drinking Water State Revolving Fund (DWSRF)
and the Economically Distressed Areas Program (EDAP), both of which are administered
by the board, so that its use fosters consistency between board programs.
The board is using an income threshold of 75% of the median state household
income because it is the measure already used by the board to establish eligibility
for the EDAP as required by Water Code §16.341(1). The household cost
factors are discussed in the preceding paragraph. Relying on the definition
of a disadvantaged area, economically distressed area is defined in new §363.1102(7)
as an area that not only lacks financial resources as identified in the definition
of disadvantaged area but also as an area with inadequate water or wastewater
service. In this manner, the board has defined an economically distressed
area consistent with the statutory intent to direct this grant assistance
to areas not meeting the statewide standard for service and that also lack
the financial resources to address that need. New §363.1102(9) and (10)
define inadequate water service and inadequate sewer services, respectively,
by relying on TCEQ regulations because these standards set statewide standards
for adequate sewer and water services. New §363.1102(11) defines political
subdivision as defined in Water Code §15.001 but excludes an interstate
compact commission since that would not be a viable potential service provider.
The board adopts new §363.1103(a) to state that the board may provide
grants to a political subdivision for projects that provide adequate water
or sewer service to areas that do not currently have adequate service. The
board is providing grants because there have been indications that some small
communities have difficulty accessing board loan programs due to the interest
costs associated with a loan. Further, due to federal tax law, it is advisable
to use the funds provided for this program by the Texas Water Resources Finance
Authority in this manner. The board adopts new §363.1103(b) to identify
eligible uses of the fund as the planning, designing, or construction of a
new water or sewer service system or improvements to an existing system in
an economically distressed area, the purchase of a inadequate system so that
it can be consolidated with another system that can provide adequate service,
reduction of the interest rates loans or reduction or elimination of outstanding
indebtedness to finance a project identified in new paragraphs (1), (2), or
(3) of this subsection, provided however that the loan is not from the board
or other state agency. The board may not use these funds for interest rate
reduction or refinancing of state indebtedness due to federal tax considerations.
The board adopts new §363.1103(c) to identify that the board may provide
assistance through a written agreement with the political subdivision.
The board adopts new §363.1104 to identify the information that must
be provided in an application for assistance under this new subchapter. The
elements identified in this new section are either required by Water Code §15.103
or are similar to the requirements for applications in other board programs
and have proven to be the essential elements for the board to consider prior
to providing assistance. New §363.1104(1) provides that an application
must include a resolution from the applicant's governing body requesting assistance,
stating the amount of the request, and designating a representative as the
point of contact for the application. New §363.1104(2) requires that
the designated representative provide an affidavit that states the decision
to request financial assistance was made in an open meeting, states the information
in the application is true and correct, warrants compliance with the application
representations, and states the applicant will comply with all applicable
federal and state laws. New §363.1104(3) requires copies of the consultant
services contracts be provided with the application. New §363.1104(4)
requires that the application provide the citation to the legal authority
of the applicant. New §363.1104(5) requires data from the federal census
or a survey of the residents to establish the eligibility of the area as disadvantaged.
New §363.1104(6), (7) and (8) requires an engineering feasibility report
that includes that the water or sewer service for the area is inadequate,
a preliminary environmental information, and a water conservation plan, respectively,
all of which comply with referenced rules of the board applicable to other
board programs. New §363.1104(9) provides that if an applicant is receiving
or providing water or sewer service to another entity then a copy of the service
agreement must be provided with the application.
The board adopts new §363.1105 to identify the considerations and
findings that the board must make prior to approving an application as required
by Water Code §15.105. New §363.1105(a) provides that prior to application
approval, the board shall consider the needs of and benefits to the project
area in relation to other areas in the state, revenue available to the applicant
for project costs, overall statewide needs, the applicant's ability to pay
for the project without this assistance; and the county's efforts to control
the construction of subdivisions that lack basic utility services. New §363.1105(b)
provides that after considering these factors, the board can approve the application
if it finds that the public interest requires state participation in the project
and the revenue or taxes pledged by the political subdivision will be sufficient
to meet all the obligations assumed by the political subdivision. These considerations
and findings are required by statute. New §363.1105(c) acknowledges that
the resolution approving the application may include any condition that the
board deems appropriate including a requirement that the applicant adopt a
water conservation plan in compliance with board rules and state statute.
The board adopts new §363.1106 to identify the amount of the grant
assistance that will be provided. New §363.1106(a)(1) provides that when
the adjusted median household income for the project area is between 75% and
60% of the median state household income, the grant will be 50% of the amount
of the financial assistance requested in the application. New §363.1106(a)(2)
provides that when the adjusted median household is less than or equal to
60% but greater than 50% of the median state household income, the grant will
be 75% of the amount of the financial assistance requested in the application.
New §363.1106(a)(3) provides that when the adjusted median household
income is less than or equal to 50% of the median state household income,
the grant will be for 90% of the amount of the financial assistance requested
in the application. The graduated scale of grant assistance is intended to
create a means to direct the largest grants to the communities most in need
based on an analysis of the residents' ability to pay. New §363.1106(b)
provides that the amount of the financial assistance requested in the application
that is not provided as a grant shall be provided by a loan from another board
program. By this new subsection, the board requires that a grant recipient
under this new subchapter also receive a board loan. In this manner, the board
is assured that the community is contributing to the long-term success of
the project. This new subsection also provides the board the means to monitor
the ongoing viability of the utility and insure the best use of these limited
funds. New §363.1106(c) provides that the maximum amount of grant funds
made available to a single applicant is $1 million. The board adopts this
subsection in order to insure that multiple communities may access these limited
funds. New §363.1106(d) provides that if the applicant will be providing
the remaining portion of the project costs from sources other than board programs,
then the availability of the additional funds must be established prior to
the release of funds provided under this new subchapter.
The board adopts new §363.1107 to provide that the release of funds,
the construction phase, and the post-construction responsibilities for projects
funded under this new subchapter will be governed by the provisions of Division
4, Division 5, Division 6 of Subchapter A of this chapter. In this manner,
the board will manage the expenditure of these funds in the same manner as
other board programs.
There were four written comments in support and 0 comments in opposition
to the rules.
Comments on the proposed new sections were received from Mr. Mark Lowry,
P.E. from Turner Collie & Braden Inc. First, Mr. Lowery comments that
the Board should consider including the use funds for planning and design
in a manner than conditions release of the design funds upon the submission
of a viable plan. Second, Mr. Lowery concurs with the proposed use of area
surveys in the event that U. S. Census Bureau information is inadequate. Finally,
Mr. Lowery requests that the Board consider increasing the amount of grant
funds available for an individual project from one million dollars to four
million dollars.
BOARD RESPONSE: In response to the first comment, the rule explicitly includes
planning costs as an eligible expense. Proposed §363.1103(b)(1) states
that the board may provide assistance to "plan, design, and construct" new
water or sewer systems. Proposed §363.1103(b)(2) states that the Board
may provide assistance to "plan, design, and construct" improvements to existing
water or sewer systems. The rules provide the Board the discretion to condition
the release of the design funds as proposed by the comment, but does not mandate
that the Board always release funds in this manner. In response to the last
comment, the Board stated in the preamble to the proposed rule that the purpose
of limiting the amount of funds available for any one project is to insure
that multiple communities will benefit from the limited funds currently available
for this program.
Comments on the proposed new sections were received from Mr. John Blunt,
P.E. from Harris County, Public Infrastructure Department. Substantially identical
comments were received from Mr. Robert Stokes, Director, from a new non-profit
Organization called "Texas Safe and Affordable Water and Wastewater, Inc."
The first comment is a request that the rule be amended to allow a community
to receive pre-design funding for planning. The second comment is a request
that the one million dollar limitation be raised to four million dollars since
in some cases the communities are relatively large and need significant funding
above one million dollars.
BOARD RESPONSE: In response to the first comment, the rule explicitly includes
planning costs as an eligible expense as noted above and may release the design
funds separately. In response to the last comment, the Board stated in the
preamble to the proposed rule that the purpose of limiting the amount of funds
available for any one project is to insure that multiple communities will
benefit from the limited funds currently available for this program.
Comments on the proposed new sections were received from Ms. Tracy D. Hester
and Ms. Rebecca J. Rentz, from the law firm of Bracewell & Patterson,
L.L.P. The first comment is support for the decision to base funding on need
and not on geographic area. The second comment is that grant program should
allow funding in excess of one million dollars.
BOARD RESPONSE: The response to the second comment would be the same as
in the immediately preceding response.
Statutory authority: Water Code, §§6.101, 15.001(11),
15.011, and 15.103.
Cross reference to statute: Water Code, Chapter 15, Subchapter C.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 21, 2004.
TRD-200402666
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: May 11, 2004
Proposal publication date: February 6, 2004
For further information, please call: (512) 475-2052
The Texas Water Development Board (the board) adopts amendments to
31 TAC Chapter 370, §370.26 and §370.41, concerning the Colonia
Plumbing Loan Program without changes to the proposed text as published in
the March 5, 2004 issue of the
Texas Register
(29
TexReg 2259) and will not be republished. The amendments include an explicit
requirement that the applicants to the program enforce the model subdivision
rules and the change references to the Texas Commission on Environmental Quality.
The amendments are adopted for clarification as a result of the four-year
rule review requirement of Texas Government Code §2001.039.
The board adopts amendment to §370.26(a) that currently requires applicants
to the program to have adopted the model subdivision rules promulgated by
the board pursuant to Water Code §16.343. The board amends this provision
to include the phrase "and is enforcing" after "adopted" in order to insure
that applicants are informed that the requirement to adopt the model subdivision
rules includes the requirement to enforce the model subdivision rules.
The board also adopts amendments to §370.26(b) and §370.41(11)
to refer to the Texas Commission on Environmental Quality rather than the
Texas Natural Resource Conservation Commission because it has changed its
name.
No comments were received on the proposed amendments.
Subchapter B. POLICY DECLARATIONS
31 TAC §370.26
The amendments are adopted under the authority of the Texas
Water Code, §6.101 which provides the Texas Water Development Board with
the authority to adopt rules necessary to carry out the powers and duties
in the Water Code and other laws of the State, and the Texas Water Code, §15.737,
which authorizes the board to adopt rules for the Colonia Plumbing Loan Program.
The statutory provisions affected by the amendments are Texas Water Code, §15.731,
et seq.
Cross-reference to statute: Water Code, Chapter 15, Subchapter L.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 21, 2004.
TRD-200402662
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: May 11, 2004
Proposal publication date: March 5, 2004
For further information, please call: (512) 475-3073
31 TAC §370.41
The amendments are adopted under the authority of the Texas
Water Code, §6.101 which provides the Texas Water Development Board with
the authority to adopt rules necessary to carry out the powers and duties
in the Water Code and other laws of the State, and the Texas Water Code, §15.737,
which authorizes the board to adopt rules for the Colonia Plumbing Loan Program.
The statutory provisions affected by the amendments are Texas Water Code, §15.731,
et seq.
Cross-reference to statute: Water Code, Chapter 15, Subchapter L.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on April 21, 2004.
TRD-200402663
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: May 11, 2004
Proposal publication date: March 5, 2004
For further information, please call: (512) 475-3073
Subchapter A. INTRODUCTORY PROVISIONS
Chapter 363.
FINANCIAL ASSISTANCE PROGRAMS
Chapter 370.
COLONIA PLUMBING LOAN PROGRAM
Subchapter C. APPLICATIONS TO THE BOARD
Chapter 384.
RURAL WATER ASSISTANCE FUND