H.B. No. 4

	AN ACT
	relating to the administration of the Texas Water Development Board
	and the funding of water projects by the board and other entities;
	authorizing the issuance of revenue bonds.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	ARTICLE 1.  ADMINISTRATION OF THE TEXAS WATER DEVELOPMENT BOARD
	SECTION 1.01.  Sections 6.052(a) and (b), Water Code, are
	amended to read as follows:
	(a)  The board is composed of three [six] members who are
	appointed by the governor with the advice and consent of the senate.
	One member must have experience in the field of engineering, one
	member must have experience in the field of public or private
	finance, and one member must have experience in the field of law or
	business.
	(b)  The governor shall make the appointments in such a
	manner that the members reflect the diverse geographic regions and
	population groups of this state and do not have any conflicts [each
	member is from a different section of the state and has no conflict]
	of interest prohibited by state or federal law.
	SECTION 1.02.  Section 6.053, Water Code, is amended by
	adding Subsection (d) to read as follows:
	(d)  A person is not eligible for appointment to the board if
	the person served on the board on or before January 1, 2013.
	SECTION 1.03.  Section 6.054, Water Code, is amended by
	amending Subsection (c) and adding Subsection (d) to read as
	follows:
	(c)  If the executive administrator or a member has knowledge
	that a potential ground for removal exists, the executive
	administrator shall notify the chairman of the board of the
	potential ground. The chairman of the board shall then notify the
	governor and the attorney general that a potential ground for
	removal exists. If the potential ground for removal includes the
	chairman of the board, the executive administrator or another
	member of the board shall notify the member [next highest ranking
	officer] of the board with the most seniority, who shall then notify
	the governor and the attorney general that a potential ground for
	removal exists.
	(d)  The governor, with the advice and consent of the senate,
	may remove a board member from office as provided by Section 9,
	Article XV, Texas Constitution.
	SECTION 1.04.  Section 6.056, Water Code, is amended to read
	as follows:
	Sec. 6.056.  TERMS OF OFFICE. (a) The members of the board
	hold office for staggered terms of six years, with the term [terms]
	of one member [two members] expiring February 1 of each
	odd-numbered year [every two years]. Each member holds office
	until a [his] successor is appointed and has qualified.
	(b)  A person appointed to the board may not serve for more
	than two six-year terms.
	SECTION 1.05.  Section 6.059, Water Code, is amended to read
	as follows:
	Sec. 6.059.  CHAIRMAN OF THE BOARD [OFFICERS]. [(a)] The
	governor shall designate one member as chairman of the board to
	serve at the will of the governor.
	[(b)     The members of the board shall elect a vice-chairman
	every two years. The board shall fill a vacancy in the office of
	vice-chairman for the remainder of the unexpired term.]
	SECTION 1.06.  Sections 6.060(a) and (b), Water Code, are
	amended to read as follows:
	(a)  The board shall hold regular meetings and all hearings
	at times specified by a board order and entered in its minutes [meet
	at least once every other month on a day and at a place within the
	state selected by it, subject to recesses at the discretion of the
	board].  The [chairman or two] board [members] may hold special
	meetings at the times and places in this state that the board
	decides are appropriate for the performance of its duties. The
	chairman of the board or the board member acting for the chairman
	shall give the other members reasonable notice before holding a
	special meeting [call a special meeting at any time by giving notice
	to the other members].
	(b)  The chairman [or in his absence the vice-chairman] shall
	preside at all meetings of the board. The chairman may designate
	another board member to act for the chairman in the chairman's
	absence.
	SECTION 1.07.  Section 6.061, Water Code, is amended to read
	as follows:
	Sec. 6.061.  FULL-TIME SERVICE.  Each member of the board
	shall serve on a full-time basis. [COMPENSATION; EXPENSES.   A
	member is entitled to receive an amount as provided by the General
	Appropriations Act for each day he serves in the performance of his
	duties, together with travel and other necessary expenses.]
	SECTION 1.08.  Section 6.103, Water Code, is amended to read
	as follows:
	Sec. 6.103.  EXECUTIVE ADMINISTRATOR. The board shall
	appoint a person to be the executive administrator to serve at the
	will of the board.  A person is not eligible for appointment as the
	executive administrator if the person served in that capacity on
	January 1, 2013.
	SECTION 1.09.  (a)  Not later than September 1, 2013, the
	governor shall appoint the initial members of the Texas Water
	Development Board under Section 6.052, Water Code, as amended by
	this Act.  In appointing the initial members of the board, the
	governor shall appoint one person to a term expiring February 1,
	2015, one to a term expiring February 1, 2017, and one to a term
	expiring February 1, 2019.
	(b)  The terms of the current members of the board expire
	September 1, 2013.
	SECTION 1.10.  (a)  Not later than October 1, 2013, the Texas
	Water Development Board shall appoint the executive administrator
	of the board under Section 6.103, Water Code, as amended by this
	Act.
	(b)  The person currently serving as the executive
	administrator of the board ceases to serve in that capacity on the
	date a new executive administrator is appointed under Subsection
	(a) of this section.
	ARTICLE 2.  FUNDING OF WATER PROJECTS
	SECTION 2.01.  (a)  The legislature recognizes the
	importance of providing for this state's future water supply needs.
	The purpose of this article is to ensure that proper funding in the
	form of meaningful and adequate financial assistance is available
	to provide an adequate water supply for the future of this state.
	(b)  To accomplish that purpose, this article creates the
	state water implementation fund for Texas. The fund is intended to
	serve as a water infrastructure bank in order to enhance the
	financing capabilities of the Texas Water Development Board under
	constitutionally created programs and revenue bond programs. The
	fund provides a source of revenue or security for those programs and
	provides a cash flow mechanism under which money used in board
	programs flows back to the fund to provide protection for the fund's
	corpus. Money in the fund will be available immediately to provide
	support for low-interest loans, longer repayment terms for loans,
	incremental repurchase terms for projects in which the state owns
	an interest, and deferral of loan payments. Money in the fund may
	not be used to make grants.  In addition, this article creates the
	state water implementation revenue fund for Texas for use in
	managing revenue bonds issued by the board that are supported by the
	state water implementation fund for Texas.
	SECTION 2.02.  Chapter 15, Water Code, is amended by adding
	Subchapters G and H to read as follows:
	SUBCHAPTER G. STATE WATER IMPLEMENTATION FUND FOR TEXAS
	Sec. 15.431.  DEFINITIONS. In this subchapter:
	(1)  "Advisory committee" means the State Water
	Implementation Fund for Texas Advisory Committee.
	(2)  "Fund" means the state water implementation fund
	for Texas.
	(3)  "Historically underutilized business" has the
	meaning assigned by Section 2161.001, Government Code.
	(4)  "Trust company" means the Texas Treasury
	Safekeeping Trust Company.
	Sec. 15.432.  FUND. (a)  The state water implementation fund
	for Texas is a special fund in the state treasury outside the
	general revenue fund to be used by the board, without further
	legislative appropriation, for the purpose of implementing the
	state water plan as provided by this subchapter. The board may
	establish separate accounts in the fund. The fund and the fund's
	accounts are kept and held by the trust company for and in the name
	of the board. The board has legal title to money and investments in
	the fund until money is disbursed from the fund as provided by this
	subchapter and board rules.  It is the intent of the legislature
	that the fund will never be used:
	(1)  for a purpose other than the support of projects in
	the state water plan; or
	(2)  to certify that appropriations from the treasury
	are within the amount estimated to be available in a fund of the
	treasury affected by the appropriation.
	(b)  Money deposited to the credit of the fund may be used
	only as provided by this subchapter.
	(c)  The fund consists of:
	(1)  money transferred or deposited to the credit of
	the fund by law, including money from any source transferred or
	deposited to the credit of the fund at the board's discretion as
	authorized by law;
	(2)  the proceeds of any fee or tax imposed by this
	state that by statute is dedicated for deposit to the credit of the
	fund;
	(3)  any other revenue that the legislature by statute
	dedicates for deposit to the credit of the fund;
	(4)  investment earnings and interest earned on amounts
	credited to the fund; and
	(5)  money transferred to the fund under a bond
	enhancement agreement from another fund or account to which money
	from the fund was transferred under a bond enhancement agreement,
	as authorized by Section 15.435.
	Sec. 15.433.  MANAGEMENT AND INVESTMENT OF FUND. (a)  The
	trust company shall hold and invest the fund, and any accounts
	established in the fund, for and in the name of the board, taking
	into account the purposes for which money in the fund may be used.
	The fund may be invested with the state treasury pool.
	(b)  The overall objective for the investment of the fund is
	to maintain sufficient liquidity to meet the needs of the fund while
	striving to preserve the purchasing power of the fund.
	(c)  The trust company has any power necessary to accomplish
	the purposes of managing and investing the assets of the fund. In
	managing the assets of the fund, through procedures and subject to
	restrictions the trust company considers appropriate, the trust
	company may acquire, exchange, sell, supervise, manage, or retain
	any kind of investment that a prudent investor, exercising
	reasonable care, skill, and caution, would acquire or retain in
	light of the purposes, terms, distribution requirements, and other
	circumstances of the fund then prevailing, taking into
	consideration the investment of all the assets of the fund rather
	than a single investment.
	(d)  The trust company may charge fees to cover its costs
	incurred in managing and investing the fund. The fees must be
	consistent with the fees the trust company charges other state and
	local governmental entities for which it provides investment
	management services. The trust company may recover fees it charges
	under this subsection only from the earnings of the fund.
	(e)  The trust company annually shall provide a written
	report to the board and to the advisory committee with respect to
	the investment of the fund. The trust company shall contract with a
	certified public accountant to conduct an independent audit of the
	fund annually and shall present the results of each annual audit to
	the board and to the advisory committee. This subsection does not
	affect the state auditor's authority to conduct an audit of the fund
	under Chapter 321, Government Code.
	(f)  The trust company shall adopt a written investment
	policy that is appropriate for the fund.  The trust company shall
	present the investment policy to the investment advisory board
	established under Section 404.028, Government Code. The investment
	advisory board shall submit to the trust company recommendations
	regarding the policy.
	(g)  The board annually shall provide to the trust company a
	forecast of the cash flows into and out of the fund. The board shall
	provide updates to the forecasts as appropriate to ensure that the
	trust company is able to achieve the objective specified by
	Subsection (b).
	(h)  The trust company shall disburse money from the fund as
	directed by the board. The board shall direct disbursements from
	the fund on a semiannual schedule specified by the board and not
	more frequently than twice in any state fiscal year.
	(i)  An investment-related contract entered into under this
	section is not subject to Chapter 2260, Government Code.
	Sec. 15.434.  USE OF FUND; PAYMENTS TO AND FROM OTHER FUNDS
	OR ACCOUNTS. (a)  At the direction of the board, the trust company
	shall make disbursements from the fund to another fund or account
	pursuant to a bond enhancement agreement authorized by Section
	15.435 in the amounts the board determines are needed for debt
	service payments on or security provisions of the board's general
	obligation bonds or revenue bonds, after considering all other
	sources available for those purposes in the respective fund or
	account.
	(b)  Of the money disbursed from the fund during the
	five-year period between the adoption of a state water plan and the
	adoption of a new plan, the board shall undertake to apply not less
	than:
	(1)  10 percent to support projects described by
	Section 15.435 that are for:
	(A)  rural political subdivisions as defined by
	Section 15.992; or
	(B)  agricultural water conservation; and
	(2)  20 percent to support projects described by
	Section 15.435, including agricultural irrigation projects, that
	are designed for water conservation or reuse.
	Sec. 15.435.  BOND ENHANCEMENT AGREEMENTS. (a)  A bond
	enhancement agreement entered into under this section is an
	agreement for professional services. A bond enhancement agreement
	must contain terms that are consistent with Section 15.433(h), and
	the agreement, including the period covered by the agreement and
	all other terms and conditions of the agreement, must be approved by
	the board.  An obligation to disburse money from the fund, or from a
	special account established by the board, in accordance with a bond
	enhancement agreement is a special obligation of the board payable
	solely from designated income and receipts of the fund or of the
	account, as determined by the board. An obligation to disburse
	money from the fund, or from a special account established by the
	board, in accordance with a bond enhancement agreement does not
	constitute indebtedness of the state.
	(b)  To facilitate the use of the fund for the purposes of
	this subchapter, the board may direct the trust company to enter
	into bond enhancement agreements to provide a source of revenue or
	security for the payment of the principal of and interest on general
	obligation bonds, including bonds issued under Section 49-d-9 or
	49-d-11, Article III, Texas Constitution, or revenue bonds issued
	by the board to finance or refinance projects included in the state
	water plan if the proceeds of the sale of the bonds have been or will
	be deposited to the credit of:
	(1)  the state water implementation revenue fund for
	Texas;
	(2)  the water infrastructure fund;
	(3)  the rural water assistance fund;
	(4)  the Texas Water Development Fund II state
	participation account; or
	(5)  the agricultural water conservation fund.
	(c)  If the trust company enters into a bond enhancement
	agreement under Subsection (b), the board may direct the trust
	company to make disbursements from the fund to another fund or
	account for the support of bonds the proceeds of which are used to
	provide financial assistance in the form of:
	(1)  a loan bearing an interest rate of not less than 50
	percent of the then-current market rate of interest available to
	the board;
	(2)  a loan to finance a facility under repayment terms
	similar to the terms of debt customarily issued by the entity
	requesting assistance but not to exceed the lesser of:
	(A)  the expected useful life of the facility; or
	(B)  30 years;
	(3)  a deferral of loan repayment, including deferral
	of the repayment of:
	(A)  principal and interest; or
	(B)  accrued interest;
	(4)  incremental repurchase terms for an acquired
	facility, including terms for no initial repurchase payment
	followed by progressively increasing incremental levels of
	interest payment, repurchase of principal and interest, and
	ultimate repurchase of the entire state interest in the facility
	using simple interest calculations; or
	(5)  a combination of the methods of financing
	described by Subdivisions (1)-(4).
	(d)  The board may direct the trust company to enter into
	bond enhancement agreements with respect to bonds issued by the
	board before September 1, 2013, only if:
	(1)  those bonds otherwise satisfy the requirements of
	Subsections (b) and (c);
	(2)  the proceeds of those bonds were or are required to
	be used only for the implementation of water projects recommended
	through the state and regional water planning processes under
	Sections 16.051 and 16.053; and
	(3)  general revenue of the state was appropriated
	before September 1, 2013, for the payment of debt service on those
	bonds.
	(e)  The board may direct the trust company to enter into
	bond enhancement agreements with respect to refunding bonds issued
	by the board to refund bonds issued by the board the proceeds of
	which have been or are to be used for projects included in the state
	water plan and which otherwise satisfied the requirements of
	Subsections (b) and (c).
	(f)  The board may not direct the trust company to enter into
	a bond enhancement agreement with respect to bonds issued by the
	board the proceeds of which have been or are to be used to make
	grants.
	(g)  The board may not direct the trust company to enter into
	a bond enhancement agreement with respect to bonds issued by the
	board the proceeds of which may be used to provide financial
	assistance to an applicant if at the time of the request the
	applicant has failed to:
	(1)  submit or implement a water conservation plan in
	accordance with Section 11.1271; or
	(2)  satisfactorily complete a request by the executive
	administrator or a regional water planning group for information
	relevant to the project for which the financial assistance is
	sought, including a water infrastructure financing survey under
	Section 16.053(q).
	(h)  The board may not direct the trust company to enter into
	a bond enhancement agreement with respect to bonds issued by the
	board the proceeds of which may be used to provide financial
	assistance to an applicant unless at the time of the request the
	applicant has acknowledged its legal obligation to comply with any
	applicable requirements of:
	(1)  federal law relating to contracting with
	disadvantaged business enterprises; and
	(2)  state law relating to contracting with
	historically underutilized businesses.
	(i)  The board may not approve a bond enhancement agreement
	with respect to bonds issued by the board unless the agreement
	contains a provision to the effect that if the trust company makes a
	disbursement under the bond enhancement agreement from the fund to
	the credit of another fund or account as provided by Section
	15.434(a), the board shall direct the comptroller to transfer an
	amount not to exceed that amount from the fund or account receiving
	the payment back to the fund if:
	(1)  money is available in the surplus balance in the
	fund or account for that purpose; and
	(2)  the money transferred back to the fund will not
	cause general obligation bonds that are payable from the fund or
	account receiving the payment to no longer be self-supporting for
	purposes of Section 49-j(b), Article III, Texas Constitution.
	(j)  For purposes of Subsection (i)(1), the surplus balance
	of a fund or account that receives a disbursement from the fund
	under a bond enhancement agreement is the amount of money on deposit
	in the fund or account, as determined by the board, that is
	attributable to the general obligation bonds or revenue bonds that
	are the subject of the bond enhancement agreement, including money
	received from the sale or other disposition of the board's rights to
	receive repayment of financial assistance, money received from the
	sale, transfer, or lease of an acquired facility, money received
	from the sale of water associated with an acquired facility, and
	related investment earnings, that exceeds the amount required to
	pay annual debt service on the bonds and any other amounts specified
	in the resolution or other proceedings authorizing the bonds and
	any related obligations.
	(k)  The board shall submit each bond enhancement agreement
	and the record relating to the agreement to the attorney general for
	examination as to the validity of the agreement. If the attorney
	general finds that the agreement has been made in accordance with
	the constitution and other laws of this state, the attorney general
	shall approve the agreement and the comptroller shall register the
	agreement.  If the agreement is not submitted at the same time that
	the bonds to which it relates are submitted, the agreement shall be
	treated as a public security solely for the purposes of Section
	1202.004, Government Code.
	(l)  After a bond enhancement agreement has been approved and
	registered as provided by Subsection (k), the agreement is valid
	and is incontestable for any cause.
	(m)  At the direction of the board, the trust company shall
	make disbursements from the fund, or from a special account
	established by the board, in accordance with a bond enhancement
	agreement in the amounts the board determines are needed for debt
	service payments on, or for security provisions of, general
	obligation bonds or revenue bonds issued by the board the proceeds
	of the sale of which have been deposited in another fund
	administered by the board, or in an account in that other fund, for
	use in accordance with this subchapter, after the board considers
	all other sources available for those purposes in that other fund or
	account. Money transferred under this subsection may be deposited
	into that other fund or into a special account established by the
	trust company or a corporate trustee that is a trust company or a
	bank that has the powers of a trust company, as determined by the
	board.
	Sec. 15.436.  PRIORITIZATION OF PROJECTS BY REGIONAL WATER
	PLANNING GROUPS. (a)  Each regional water planning group shall
	prioritize projects in its respective regional water plan for the
	purposes of Section 15.435. At a minimum, a regional water planning
	group must consider the following criteria in prioritizing each
	project:
	(1)  the decade in which the project will be needed;
	(2)  the feasibility of the project, including the
	availability of water rights for purposes of the project and the
	hydrological and scientific practicability of the project;
	(3)  the viability of the project, including whether
	the project is a comprehensive solution with a measurable outcome;
	(4)  the sustainability of the project, taking into
	consideration the life of the project; and
	(5)  the cost-effectiveness of the project, taking into
	consideration the expected unit cost of the water to be supplied by
	the project.
	(b)  In prioritizing projects, each regional water planning
	group shall include projects that meet long-term needs as well as
	projects that meet short-term needs.
	(c)  The board shall create a stakeholders committee
	composed of the presiding officer or a person designated by the
	presiding officer of each regional water planning group to
	establish uniform standards to be used by the regional water
	planning groups in prioritizing projects under this section.
	Uniform standards established under this subsection must be
	approved by the board. The board shall consult the stakeholders
	committee from time to time regarding regional prioritization of
	projects.
	(d)  Each regional water planning group shall submit to the
	board the prioritization developed by the group under this section
	together with the group's respective regional water plan developed
	and submitted under Section 16.053.
	Sec. 15.437.  PRIORITIZATION OF PROJECTS BY BOARD. (a)  The
	board shall prioritize projects included in the state water plan
	for the purpose of providing financial assistance under this
	subchapter.
	(b)  The board shall establish a point system for
	prioritizing projects for which financial assistance is sought from
	the board. The system must include a standard for the board to
	apply in determining whether a project qualifies for financial
	assistance at the time the application for financial assistance is
	filed with the board.
	(c)  The board shall give the highest consideration in
	awarding points to projects that will have a substantial effect,
	including projects that will:
	(1)  serve a large population;
	(2)  provide assistance to a diverse urban and rural
	population;
	(3)  provide regionalization; or
	(4)  meet a high percentage of the water supply needs of
	the water users to be served by the project.
	(d)  In addition to the criteria provided by Subsection (c),
	the board must also consider at least the following criteria in
	prioritizing projects:
	(1)  the local contribution to be made to finance the
	project, including the up-front capital to be provided by the
	applicant;
	(2)  the financial capacity of the applicant to repay
	the financial assistance provided;
	(3)  the ability of the board and the applicant to
	timely leverage state financing with local and federal funding;
	(4)  whether there is an emergency need for the
	project, taking into consideration whether:
	(A)  the applicant is included at the time of the
	application on the list maintained by the commission of local
	public water systems that have a water supply that will last less
	than 180 days without additional rainfall; and
	(B)  federal funding for which the project is
	eligible has been used or sought;
	(5)  if the applicant is applying for financial
	assistance for the project under Subchapter Q, whether the
	applicant is ready to proceed with the project at the time of the
	application, including whether:
	(A)  all preliminary planning and design work
	associated with the project has been completed;
	(B)  the applicant has acquired the water rights
	associated with the project;
	(C)  the applicant has secured funding for the
	project from other sources; and
	(D)  the applicant is able to begin implementing
	or constructing the project;
	(6)  the demonstrated or projected effect of the
	project on water conservation, including preventing the loss of
	water, taking into consideration, if applicable, whether the
	applicant has filed a water audit with the board under Section
	16.0121 that demonstrates that the applicant is accountable with
	regard to reducing water loss and increasing efficiency in the
	distribution of water; and
	(7)  the priority given the project by the applicable
	regional water planning group under Section 15.436.
	Sec. 15.438.  ADVISORY COMMITTEE. (a)  The State Water
	Implementation Fund for Texas Advisory Committee is composed of the
	following seven members:
	(1)  the comptroller, or a person designated by the
	comptroller;
	(2)  three members of the senate appointed by the
	lieutenant governor, including:
	(A)  a member of the committee of the senate
	having primary jurisdiction over matters relating to finance; and
	(B)  a member of the committee of the senate
	having primary jurisdiction over natural resources; and
	(3)  three members of the house of representatives
	appointed by the speaker of the house of representatives,
	including:
	(A)  a member of the committee of the house of
	representatives having primary jurisdiction over appropriations;
	and
	(B)  a member of the committee of the house of
	representatives having primary jurisdiction over natural
	resources.
	(b)  The following persons shall serve as staff support for
	the advisory committee:
	(1)  the deputy executive administrator of the board
	who is responsible for water science and conservation or a person
	who holds an equivalent position at the agency, or a person
	designated by that person;
	(2)  the deputy executive administrator of the board
	who is responsible for water resources planning and information or
	a person who holds an equivalent position at the agency, or a person
	designated by that person; and
	(3)  the chief financial officer of the board, or a
	person who holds an equivalent position at the agency.
	(c)  An appointed member of the advisory committee serves at
	the will of the person who appointed the member.
	(d)  The lieutenant governor shall appoint a co-presiding
	officer of the advisory committee from among the members appointed
	by the lieutenant governor, and the speaker of the house of
	representatives shall appoint a co-presiding officer of the
	committee from among the members appointed by the speaker.
	(e)  The advisory committee may hold public hearings, formal
	meetings, or work sessions. Either co-presiding officer of the
	advisory committee may call a public hearing, formal meeting, or
	work session of the advisory committee at any time. The advisory
	committee may not take formal action at a public hearing, formal
	meeting, or work session unless a quorum of the committee is
	present.
	(f)  Except as otherwise provided by this subsection, a
	member of the advisory committee is not entitled to receive
	compensation for service on the committee or reimbursement for
	expenses incurred in the performance of official duties as a member
	of the committee.  Service on the advisory committee by a member of
	the senate or house of representatives is considered legislative
	service for which the member is entitled to reimbursement and other
	benefits in the same manner and to the same extent as for other
	legislative service.
	(g)  The advisory committee shall submit comments and
	recommendations to the board regarding the use of money in the fund
	for use by the board in adopting rules under Section 15.439 and in
	adopting policies and procedures under Section 15.441. The
	submission must include:
	(1)  comments and recommendations on rulemaking
	related to the prioritization of projects in regional water plans
	and the state water plan in accordance with Sections 15.436 and
	15.437;
	(2)  comments and recommendations on rulemaking
	related to establishing standards for determining whether projects
	meet the criteria provided by Section 15.434(b);
	(3)  an evaluation of the available programs for
	providing financing for projects included in the state water plan
	and guidelines for implementing those programs, including
	guidelines for providing financing for projects included in the
	state water plan that are authorized under Subchapter Q or R of this
	chapter, Subchapter E or F, Chapter 16, or Subchapter J, Chapter 17;
	(4)  an evaluation of the lending practices of the
	board and guidelines for lending standards;
	(5)  an evaluation of the use of funds by the board to
	provide support for financial assistance for water projects,
	including support for the purposes described by Section 15.435(c);
	(6)  an evaluation of whether premium financing
	programs should be established within the funds described by
	Section 15.435 to serve the purposes of this subchapter, especially
	in connection with projects described by Section 15.434(b);
	(7)  an evaluation of methods for encouraging
	participation in the procurement process by companies domiciled in
	this state or that employ a significant number of residents of this
	state; and
	(8)  an evaluation of the overall operation, function,
	and structure of the fund.
	(h)  The advisory committee shall review the overall
	operation, function, and structure of the fund at least
	semiannually and may provide comments and recommendations to the
	board on any matter.
	(i)  The advisory committee may adopt rules, procedures, and
	policies as needed to administer this section and implement its
	responsibilities.
	(j)  Chapter 2110, Government Code, does not apply to the
	size, composition, or duration of the advisory committee.
	(k)  The advisory committee is subject to Chapter 325,
	Government Code (Texas Sunset Act). Unless continued in existence
	as provided by that chapter, the advisory committee is abolished
	and this section expires September 1, 2023.
	(l)  The advisory committee shall make recommendations to
	the board regarding information to be posted on the board's
	Internet website under Section 15.440(b).
	(m)  The advisory committee shall evaluate and may provide
	comments or recommendations on the feasibility of the state owning,
	constructing, and operating water supply projects, including
	reservoirs and major water supply conveyance infrastructure,
	through existing financial assistance programs under Subchapter E
	of this chapter, Subchapter E or F, Chapter 16, or other mechanisms.
	(n)  The executive administrator shall provide an annual
	report to the advisory committee on:
	(1)  the board's compliance with statewide annual goals
	relating to historically underutilized businesses; and
	(2)  the participation level of historically
	underutilized businesses in projects that receive funding related
	to a bond enhancement agreement under this subchapter.
	(o)  If the aggregate level of participation by historically
	underutilized businesses in projects that receive funding related
	to a bond enhancement agreement under this subchapter does not meet
	statewide annual goals adopted under Chapter 2161, Government Code,
	the advisory committee shall make recommendations to the board to
	improve the participation level.
	Sec. 15.439.  RULES. (a)  The board shall adopt rules
	providing for the use of money in the fund that are consistent with
	this subchapter, including rules:
	(1)  establishing standards for determining whether
	projects meet the criteria provided by Section 15.434(b); and
	(2)  specifying the manner for prioritizing projects
	for purposes of Section 15.437.
	(b)  The board shall give full consideration to the
	recommendations of the advisory committee before adopting rules
	under this subchapter.
	Sec. 15.440.  REPORTING AND TRANSPARENCY REQUIREMENTS. (a)
	Not later than December 1 of each even-numbered year, the board
	shall provide a report to the governor, lieutenant governor,
	speaker of the house of representatives, and members of the
	legislature regarding the use of the fund, including the use of the
	fund to support projects that are for rural political subdivisions
	or agricultural water conservation or that are designed for water
	conservation or reuse as required by Section 15.434(b).
	(b)  The board shall post the following information on the
	board's Internet website regarding the use of the fund and
	regularly update the information posted:
	(1)  the progress made in developing needed water
	supply statewide and for the benefit of each regional water
	planning area; and
	(2)  for each regional water planning area, a
	description of each project funded through bonds supported by a
	bond enhancement agreement entered into under Section 15.435,
	including:
	(A)  the expected date of completion of the
	project; and
	(B)  the current status of the project.
	Sec. 15.441.  POLICIES AND PROCEDURES TO MITIGATE OR
	MINIMIZE ADVERSE EFFECTS OF CERTAIN FEDERAL LAWS. The board shall
	adopt, and may amend from time to time at the board's discretion,
	policies and procedures for the purpose of mitigating or minimizing
	the adverse effects, if any, of federal laws and regulations
	relating to income taxes, arbitrage, rebates, and related matters
	that may restrict the board's ability to freely invest all or part
	of the fund or to receive and retain all the earnings from the fund.
	SUBCHAPTER H. STATE WATER IMPLEMENTATION REVENUE FUND FOR TEXAS
	Sec. 15.471.  DEFINITION. In this subchapter, "fund" means
	the state water implementation revenue fund for Texas.
	Sec. 15.472.  FUND. (a)  The state water implementation
	revenue fund for Texas is a special fund in the state treasury
	outside the general revenue fund to be used by the board, without
	further legislative appropriation, only for the purpose of
	providing financing for projects included in the state water plan
	that are authorized under Subchapter Q or R of this chapter,
	Subchapter E or F, Chapter 16, or Subchapter J, Chapter 17. The
	board may establish separate accounts in the fund. The board has
	legal title to money and investments in the fund until the money is
	disbursed as provided by this subchapter and board rules.  It is the
	intent of the legislature that the fund will never be used:
	(1)  for a purpose other than the support of projects in
	the state water plan; or
	(2)  to certify that appropriations from the treasury
	are within the amount estimated to be available in a fund of the
	treasury affected by the appropriation.
	(b)  Money deposited to the credit of the fund may be used
	only as provided by this subchapter.
	(c)  The fund consists of:
	(1)  money transferred or deposited to the credit of
	the fund by law, including money from any source transferred or
	deposited to the credit of the fund at the board's discretion as
	authorized by law;
	(2)  the proceeds of any fee or tax imposed by this
	state that by statute is dedicated for deposit to the credit of the
	fund;
	(3)  any other revenue that the legislature by statute
	dedicates for deposit to the credit of the fund;
	(4)  investment earnings and interest earned on amounts
	credited to the fund;
	(5)  the proceeds from the sale of bonds, including
	revenue bonds issued by the board under this subchapter, that are
	designated by the board for the purpose of providing money for the
	fund;
	(6)  repayments of loans made from the fund;
	(7)  money from the sale, transfer, or lease of a
	project acquired, constructed, reconstructed, developed, or
	enlarged with money from the fund; and
	(8)  money disbursed to the fund from the state water
	implementation fund for Texas as authorized by Section 15.434.
	Sec. 15.473.  MANAGEMENT AND INVESTMENT OF FUND. (a)  Money
	deposited to the credit of the fund shall be invested as determined
	by the board. The fund may be invested with the state treasury
	pool.
	(b)  The fund and any accounts established in the fund shall
	be kept and maintained by or at the direction of the board.
	(c)  At the direction of the board, the fund and any accounts
	established in the fund may be managed by the comptroller or a
	corporate trustee that is a trust company or a bank that has the
	powers of a trust company for and on behalf of the board and pending
	their use for the purposes provided by this subchapter may be
	invested as provided by an order, resolution, or rule of the board.
	(d)  The comptroller or corporate trustee shall manage the
	fund in strict accordance with this subchapter and the orders,
	resolutions, and rules of the board.
	Sec. 15.474.  USE OF FUND. (a)  Except as provided by
	Subsection (c), money in the fund may be used by the board only to
	provide financing or refinancing, under terms specified by the
	board, for projects included in the state water plan that are
	authorized under Subchapter Q or R of this chapter, Subchapter E or
	F, Chapter 16, or Subchapter J, Chapter 17, including water
	conservation or reuse projects designed to reduce the need for this
	state or political subdivisions of this state to develop additional
	water resources.
	(b)  Financing or refinancing of projects described by
	Subsection (a) may be provided by using money in the fund to make
	loans to eligible political subdivisions or to purchase bonds or
	other obligations of eligible political subdivisions bearing
	interest at a rate or rates determined by the board, including a
	rate or rates below prevailing market rates.
	(c)  The board may use money in the fund:
	(1)  as a source of revenue or security for:
	(A)  the payment of the principal of and interest
	on:
	(i)  revenue bonds issued by the board under
	this subchapter; or
	(ii)  other bonds issued by the board if the
	proceeds of the bonds will be deposited in the fund; or
	(B)  a bond enhancement agreement;
	(2)  to acquire loans or other assets from another fund
	or account administered by the board, including political
	subdivision bonds sold or disposed of under Section 15.978 or
	17.968; or
	(3)  to pay the necessary and reasonable expenses of
	paying agents, bond counsel, and financial advisory services and
	similar costs incurred by the board in administering the fund.
	(d)  The board, or comptroller or corporate trustee managing
	the fund at the direction of the board as provided by Section
	15.473(c), shall withdraw from the fund and forward to another
	person any amounts, as determined by the board, for timely payment
	of:
	(1)  the principal of and interest on bonds described
	by Subsection (c)(1)(A) of this section that mature or become due;
	and
	(2)  any cost related to bonds described by Subsection
	(c)(1)(A) of this section that become due, including payments under
	related credit agreements or bond enhancement agreements.
	Sec. 15.475.  ISSUANCE OF REVENUE BONDS. (a)  The board may
	issue revenue bonds for the purpose of providing money for the fund.
	(b)  The board may issue revenue bonds to refund revenue
	bonds or bonds and obligations issued or incurred in accordance
	with other provisions of law.
	(c)  Revenue bonds issued under this subchapter are special
	obligations of the board payable only from and secured by
	designated income and receipts of the fund, or of one or more
	accounts in the fund, including principal of and interest paid and
	to be paid on fund assets or income from accounts created within the
	fund by the board, as determined by the board.
	(d)  Revenue bonds issued under this subchapter do not
	constitute indebtedness of the state as prohibited by the
	constitution.
	(e)  The board may require fund participants to make charges,
	levy taxes, or otherwise provide for sufficient money to pay
	acquired obligations.
	(f)  Revenue bonds issued under this subchapter must be
	authorized by resolution of the board and must have the form and
	characteristics and bear the designations as the resolution
	provides.
	(g)  Revenue bonds issued under this subchapter may:
	(1)  bear interest at the rate or rates payable
	annually or otherwise;
	(2)  be dated;
	(3)  mature at the time or times, serially, as term
	revenue bonds, or otherwise in not more than 50 years from their
	dates;
	(4)  be callable before stated maturity on the terms
	and at the prices, be in the denominations, be in the form, either
	coupon or registered, carry registration privileges as to principal
	only or as to both principal and interest and as to successive
	exchange of coupon for registered bonds or one denomination for
	bonds of other denominations, and successive exchange of registered
	revenue bonds for coupon revenue bonds, be executed in the manner,
	and be payable at the place or places inside or outside the state,
	as provided by the resolution;
	(5)  be issued in temporary or permanent form;
	(6)  be issued in one or more installments and from time
	to time as required and sold at a price or prices and under terms
	determined by the board to be the most advantageous reasonably
	obtainable; and
	(7)  be issued on a parity with and be secured in the
	manner as other revenue bonds authorized to be issued by this
	subchapter or may be issued without parity and secured differently
	than other revenue bonds.
	(h)  Section 17.955 applies to revenue bonds issued under
	this subchapter in the same manner as that section applies to water
	financial assistance bonds.
	(i)  All proceedings relating to the issuance of revenue
	bonds issued under this subchapter shall be submitted to the
	attorney general for examination. If the attorney general finds
	that the revenue bonds have been authorized in accordance with law,
	the attorney general shall approve the revenue bonds, and the
	revenue bonds shall be registered by the comptroller. After the
	approval and registration, the revenue bonds are incontestable in
	any court or other forum for any reason and are valid and binding
	obligations in accordance with their terms for all purposes.
	(j)  The proceeds received from the sale of revenue bonds
	issued under this subchapter may be deposited or invested in any
	manner and in such investments as may be specified in the resolution
	or other proceedings authorizing those obligations. Money in the
	fund or accounts created by this subchapter or created in the
	resolution or other proceedings authorizing the revenue bonds may
	be invested in any manner and in any obligations as may be specified
	in the resolution or other proceedings.
	Sec. 15.476.  SUBCHAPTER CUMULATIVE OF OTHER LAWS. (a)  This
	subchapter is cumulative of other laws on the subject, and the board
	may use provisions of other applicable laws in the issuance of bonds
	and other obligations and the execution of bond enhancement
	agreements, but this subchapter is wholly sufficient authority for
	the issuance of bonds and other obligations, the execution of bond
	enhancement agreements, and the performance of all other acts and
	procedures authorized by this subchapter.
	(b)  In addition to other authority granted by this
	subchapter, the board may exercise the authority granted to the
	governing body of an issuer with regard to the issuance of
	obligations under Chapter 1371, Government Code.
	SECTION 2.03.  Section 15.973(b), Water Code, is amended to
	read as follows:
	(b)  The fund consists of:
	(1)  appropriations from the legislature;
	(2)  any other fees or sources of revenue that the
	legislature may dedicate for deposit to the fund;
	(3)  repayments of loans made from the fund;
	(4)  interest earned on money credited to the fund;
	(5)  depository interest allocable to the fund;
	(6)  money from gifts, grants, or donations to the
	fund;
	(7)  money from revenue bonds or other sources
	designated by the board; [and]
	(8)  proceeds from the sale of political subdivision
	bonds or obligations held in the fund and not otherwise pledged to
	the discharge, repayment, or redemption of revenue bonds or other
	bonds, the proceeds of which were placed in the fund; and
	(9)  money disbursed to the fund from the state water
	implementation fund for Texas as authorized by Section 15.434.
	SECTION 2.04.  Section 15.974, Water Code, is amended by
	adding Subsection (b) to read as follows:
	(b)  The board shall transfer back to the state water
	implementation fund for Texas any money disbursed to the fund as
	described by Section 15.973(b)(9) if the requirements of Section
	15.435 are satisfied.
	SECTION 2.05.  Section 15.978(c), Water Code, is amended to
	read as follows:
	(c)  Notwithstanding other provisions of this chapter, the
	board may sell to the Texas Water Resources Finance Authority or to
	the state water implementation revenue fund for Texas any political
	subdivision bonds purchased with money in the water infrastructure
	fund and may apply the proceeds of a sale in the manner provided by
	this section.
	SECTION 2.06.  Section 15.993, Water Code, is amended to
	read as follows:
	Sec. 15.993.  FUND.  The rural water assistance fund is a
	special fund in the state treasury.  The fund consists of:
	(1)  money directly appropriated to the board for a
	purpose of the fund;
	(2)  repayment of principal and interest from loans
	made from the fund not otherwise needed as a source of revenue
	pursuant to Section 17.9615(b);
	(3)  money transferred by the board from any sources
	available;
	(4)  interest earned on the investment of money in the
	fund and depository interest allocable to the fund;
	(5)  money transferred to the fund from the water
	assistance fund in accordance with Section 15.011(b), including
	proceeds from the sale of political subdivision bonds by the board
	to the Texas Water Resources Finance Authority that are deposited
	in the water assistance fund as provided by Section 17.0871;
	(6)  money from gifts, grants, or donations to the
	fund;
	(7)  money disbursed to the fund from the state water
	implementation fund for Texas as authorized by Section 15.434; and
	(8) [(7)]  any other fees or sources of revenue that
	the legislature may dedicate for deposit to the fund.
	SECTION 2.07.  Section 15.994, Water Code, is amended by
	adding Subsection (i) to read as follows:
	(i)  The board shall transfer back to the state water
	implementation fund for Texas any money disbursed to the fund as
	described by Section 15.993(7) if the requirements of Section
	15.435 are satisfied.
	SECTION 2.08.  Section 17.183, Water Code, is amended to
	read as follows:
	Sec. 17.183.  CONSTRUCTION CONTRACT REQUIREMENTS. (a)  The
	governing body of each political subdivision receiving financial
	assistance from the board shall require in all contracts for the
	construction of a project:
	(1)  that each bidder furnish a bid guarantee
	equivalent to five percent of the bid price;
	(2)  that each contractor awarded a construction
	contract furnish performance and payment bonds:
	(A)  the performance bond shall include without
	limitation guarantees that work done under the contract will be
	completed and performed according to approved plans and
	specifications and in accordance with sound construction
	principles and practices; and
	(B)  the performance and payment bonds shall be in
	a penal sum of not less than 100 percent of the contract price and
	remain in effect for one year beyond the date of approval by the
	engineer of the political subdivision; [and]
	(3)  that payment be made in partial payments as the
	work progresses;
	(4)  that each partial payment shall not exceed 95
	percent of the amount due at the time of the payment as shown by the
	engineer of the project, but, if the project is substantially
	complete, a partial release of the five percent retainage may be
	made by the political subdivision with approval of the executive
	administrator;
	(5)  that payment of the retainage remaining due upon
	completion of the contract shall be made only after:
	(A)  approval by the engineer for the political
	subdivision as required under the bond proceedings;
	(B)  approval by the governing body of the
	political subdivision by a resolution or other formal action; and
	(C)  certification by the executive administrator
	in accordance with the rules of the board that the work to be done
	under the contract has been completed and performed in a
	satisfactory manner and in accordance with approved plans and
	specifications [sound engineering principles and practices];
	(6)  that no valid approval may be granted unless the
	work done under the contract has been completed and performed in a
	satisfactory manner according to approved plans and
	specifications; [and]
	(7)  that, if a political subdivision receiving
	financial assistance under Subchapter K of this chapter, labor from
	inside the political subdivision be used to the extent possible;
	and
	(8)  that the contract include a requirement that iron
	and steel products and manufactured goods used in the project be
	produced in the United States, unless:
	(A)  such products or goods are not:
	(i)  available in sufficient quantities;
	(ii)  readily available; or
	(iii)  of a satisfactory quality; or
	(B)  the use of such products or goods will
	increase the total cost of the project by more than 20 percent.
	(b)  Plans and specifications submitted to the board in
	connection with an application for financial assistance must
	include a seal by a licensed engineer affirming that the plans and
	specifications are consistent with and conform to current industry
	design and construction standards.
	(c)  For the purposes of Subsections (a)(8) and (d):
	(1)  "Component" means any article, material, or
	supply, whether a manufactured good or raw material, that is
	directly incorporated into a manufactured good.
	(2)  "Manufactured good" means an item produced as the
	result of a manufacturing process.
	(3)  "Manufacturing process" means the application of a
	process to alter the form or function of materials or elements of a
	product in a manner that adds value and transforms the materials or
	elements so that a new end product is produced that is functionally
	different from the product that would result from simple assembly
	of the materials or elements.
	(4)  "Produced in the United States" means:
	(A)  in the case of iron and steel products,
	products for which all manufacturing processes, from initial
	melting through application of coatings, take place in the United
	States, except metallurgical processes that involve the refinement
	of steel additives; and
	(B)  in the case of a manufactured good, a good for
	which:
	(i)  all of the manufacturing process that
	produced the manufactured good takes place in the United States;
	and
	(ii)  more than 60 percent of the components
	of the manufactured good, by cost, originate in the United States.
	(d)  For the purposes of Subsection (c)(4)(B)(ii), if a
	component originates in the United States, the entire cost of that
	component contributes to the determination of the percentage of the
	components of the manufactured good that originate in the United
	States.
	(e)  This section shall be applied in a manner consistent
	with this state's obligations under any international agreement.
	SECTION 2.09.  Section 17.185(a), Water Code, is amended to
	read as follows:
	(a)  The board may inspect the construction of a project at
	any time to assure that[:
	[(1)]  the contractor is substantially complying with
	the approved engineering plans and specifications of the project[;
	and
	[(2)     the contractor is constructing the project in
	accordance with sound engineering principles].
	SECTION 2.10.  Section 17.187, Water Code, is amended to
	read as follows:
	Sec. 17.187.  CERTIFICATE OF APPROVAL. The executive
	administrator may consider the following as grounds for refusal to
	give a certificate of approval for any construction contract:
	(1)  failure to construct the project according to
	approved plans and specifications; or
	(2)  [failure to construct the works in accordance with
	sound engineering principles; or
	[(3)]  failure to comply with any term of the contract.
	SECTION 2.11.  Section 17.276(c), Water Code, is amended to
	read as follows:
	(c)  The board has the sole responsibility and authority for
	selecting the political subdivisions to whom financial assistance
	may be provided for treatment works and the amount of any such
	assistance. [In consultation with and pursuant to agreement with
	the political subdivision, except as provided by Subsection (d) of
	this section, the board shall determine the location, time, design,
	scope, and all other aspects of the construction of a sewerage
	system for which financial assistance is provided.]
	SECTION 2.12.  Section 17.775(c), Water Code, is amended to
	read as follows:
	(c)  The board has the sole responsibility and authority for
	selecting the political subdivisions to whom financial assistance
	may be provided and [,] the amount of any such assistance[, and in
	consultation with and pursuant to agreement with the political
	subdivision, the board shall determine the location, time, design,
	scope, and all other aspects of the construction to be performed].
	SECTION 2.13.  Section 17.853(c), Water Code, is amended to
	read as follows:
	(c)  The board may use the fund only:
	(1)  to provide state matching funds for federal funds
	provided to the state water pollution control revolving fund or to
	any additional state revolving fund created under Subchapter J,
	Chapter 15;
	(2)  to provide financial assistance from the proceeds
	of taxable bond issues to water supply corporations organized under
	Chapter 67, and other participants;
	(3)  to provide financial assistance to participants
	for the construction of water supply projects and treatment works;
	(4)  to provide financial assistance for an interim
	construction period to participants for projects for which the
	board will provide long-term financing through the water
	development fund;
	(5)  to provide financial assistance for water supply
	and sewer service projects in economically distressed areas as
	provided by Subchapter K, Chapter 17, to the extent the board can
	make that assistance without adversely affecting the current or
	future integrity of the fund or of any other financial assistance
	program of the board; [and]
	(6)  to provide funds to the water infrastructure fund
	created under Section 15.973; and
	(7)  to provide funds to the state water implementation
	revenue fund for Texas.
	SECTION 2.14.  Section 17.895, Water Code, is amended to
	read as follows:
	Sec. 17.895.  SOURCES OF ASSETS. The fund is composed of:
	(1)  money and assets, including bond proceeds,
	attributable to the bonds;
	(2)  investment income earned on money on deposit in
	the fund and depository interest earned on money on deposit in the
	state treasury;
	(3)  money appropriated by the legislature;
	(4)  repayments of principal and interest on loans made
	under this subchapter;
	(5)  administrative fees charged by the board under the
	bond program;
	(6) money disbursed to the fund from the state water
	implementation fund for Texas as authorized by Section 15.434; and
	(7) [(6)]  any other funds, regardless of their source,
	that the board directs be deposited to the credit of the fund.
	SECTION 2.15.  Section 17.899, Water Code, is amended by
	adding Subsection (c) to read as follows:
	(c)  The board shall transfer back to the state water
	implementation fund for Texas any money disbursed to the fund as
	described by Section 17.895(6) if the requirements of Section
	15.435 are satisfied.
	SECTION 2.16.  Section 17.957, Water Code, is amended by
	amending Subsection (b) and adding Subsection (d) to read as
	follows:
	(b)  The state participation account is composed of:
	(1)  money and assets attributable to water financial
	assistance bonds designated by the board as issued for projects
	described in Section 16.131;
	(2)  money from the sale, transfer, or lease of a
	project described in Subdivision (1) that was acquired,
	constructed, reconstructed, developed, or enlarged with money from
	the state participation account;
	(3)  payments received under a bond enhancement
	agreement with respect to water financial assistance bonds
	designated by the board as issued for projects described in Section
	16.131;
	(4)  investment income earned on money on deposit in
	the state participation account;
	(5)  money disbursed to the fund from the state water
	implementation fund for Texas as authorized by Section 15.434; and
	(6) [(5)]  any other funds, regardless of their source,
	that the board directs be deposited to the credit of the state
	participation account.
	(d)  The board shall transfer back to the state water
	implementation fund for Texas any money disbursed to the fund as
	described by Subsection (b)(5) of this section if the requirements
	of Section 15.435 are satisfied.
	SECTION 2.17.  Subchapter L, Chapter 17, Water Code, is
	amended by adding Section 17.9617 to read as follows:
	Sec. 17.9617.  TRANSFERS TO STATE WATER IMPLEMENTATION
	REVENUE FUND FOR TEXAS. (a) The board may direct the comptroller to
	transfer money or other assets from an account in the fund,
	including from the financial assistance account or from the state
	participation account, to the state water implementation revenue
	fund for Texas to provide financial assistance under this
	subchapter and Subchapter H, Chapter 15.
	(b)  A transfer of money or other assets from an account in
	the fund may not cause general obligation bonds that are payable
	from the fund or from an account in the fund to no longer be
	self-supporting for purposes of Section 49-j(b), Article III, Texas
	Constitution, as determined by the board.
	(c)  The board shall use the state water implementation
	revenue fund for Texas, or an account in that fund, as a source of
	revenue to be deposited in accordance with this subchapter for the
	payment of principal and interest on water financial assistance
	bonds issued by the board, the proceeds of which are to be deposited
	into the state water implementation revenue fund for Texas, or the
	account in that fund, and to be used to make payments under a bond
	enhancement agreement with respect to principal or interest on the
	water financial assistance bonds.
	SECTION 2.18.  Section 17.968, Water Code, is amended by
	amending Subsection (a) and adding Subsection (a-1) to read as
	follows:
	(a)  The board may sell or dispose of political subdivision
	bonds or other assets purchased with money in the fund to any
	person, including the Texas Water Resources Finance Authority, or
	to another fund administered by the board, including the state
	water implementation revenue fund for Texas, and the board, in such
	manner as it shall determine, may apply the proceeds of the sale of
	political subdivision bonds or other assets held by the board to:
	(1)  pay debt service on water financial assistance
	bonds issued under this subchapter; or
	(2)  provide financial assistance to political
	subdivisions for any one or more of the purposes authorized by
	Section 49-d-8, Article III, Texas Constitution.
	(a-1)  A sale or disposition of political subdivision bonds
	or other assets may not cause general obligation bonds that are
	payable from the fund or from an account in the fund to no longer be
	self-supporting for purposes of Section 49-j(b), Article III, Texas
	Constitution, as determined by the board.
	SECTION 2.19.  Section 49.153(e), Water Code, is amended to
	read as follows:
	(e)  Subsection (c) does not apply to:
	(1)  a note issued to and approved by [the]:
	(A)  the Farmers Home Administration;
	(B)  the United States Department of Agriculture;
	(C)  the Texas Water Development Board; [or]
	(D)  the North American Development Bank; or
	(E)  a federally chartered instrumentality of the
	United States authorized under 12 U.S.C. Section 2128(f) to provide
	financing for water and waste disposal facilities, provided that
	the district that executes the note is located wholly in a county
	that:
	(i)  does not contain a municipality that
	has a population of more than 750,000; and
	(ii)  is not adjacent to a county described
	by Subparagraph (i); or
	(2)  a district described by Section 49.181(h).
	SECTION 2.20.  Section 49.181(a), Water Code, is amended to
	read as follows:
	(a)  A district may not issue bonds unless the commission
	determines that the project to be financed by the bonds is feasible
	and issues an order approving the issuance of the bonds.  This
	section does not apply to:
	(1)  refunding bonds if the commission issued an order
	approving the issuance of the bonds or notes that originally
	financed the project;
	(2)  refunding bonds that are issued by a district
	under an agreement between the district and a municipality allowing
	the issuance of the district's bonds to refund bonds issued by the
	municipality to pay the cost of financing facilities;
	(3)  bonds issued to and approved by:
	(A)  the Farmers Home Administration;
	(B)  [,] the United States Department of
	Agriculture;
	(C)  [,] the North American Development Bank;
	(D)  [, or] the Texas Water Development Board; or
	(E)  a federally chartered instrumentality of the
	United States authorized under 12 U.S.C. Section 2128(f) to finance
	such a project, provided that the district that issues the bonds is
	located wholly in a county that:
	(i)  does not contain a municipality that
	has a population of more than 750,000; and
	(ii)  is not adjacent to a county described
	by Subparagraph (i);
	(4)  refunding bonds issued to refund bonds described
	by Subdivision (3); or
	(5)  bonds issued by a public utility agency created
	under Chapter 572, Local Government Code, any of the public
	entities participating in which are districts if at least one of
	those districts is a district described by Subsection (h)(1)(E).
	SECTION 2.21.  As soon as practicable after the effective
	date of this Act, the lieutenant governor and the speaker of the
	house of representatives shall appoint the initial appointive
	members of the State Water Implementation Fund for Texas Advisory
	Committee as provided by Section 15.438, Water Code, as added by
	this Act.
	SECTION 2.22.  (a)  Not later than September 1, 2014, the
	State Water Implementation Fund for Texas Advisory Committee shall
	submit recommendations to the Texas Water Development Board on the
	rules to be adopted by the board under Sections 15.439(a)(1) and
	(2), Water Code, as added by this Act.
	(b)  Not later than the later of the 90th day after the date
	the Texas Water Development Board receives the recommendations
	described by Subsection (a) of this section or March 1, 2015, the
	board shall adopt rules under Section 15.439, Water Code, as added
	by this Act.
	SECTION 2.23.  As soon as practicable after the effective
	date of this Act, the Texas Water Development Board shall create a
	stakeholders committee under Section 15.436(c), Water Code, as
	added by this Act.
	SECTION 2.24.  Not later than December 1, 2013, the
	stakeholders committee created by the Texas Water Development Board
	under Section 15.436(c), Water Code, as added by this Act, shall
	submit the standards established by the committee under that
	subsection to the board.
	SECTION 2.25.  (a) Each regional water planning group shall
	prepare a draft prioritization of the projects included in the
	regional water plan most recently adopted by the group in
	accordance with Section 15.436, Water Code, as added by this Act,
	and submit the draft prioritization of the projects to the Texas
	Water Development Board not later than June 1, 2014. The board
	shall provide comments to each regional water planning group on the
	draft prioritization submitted by the group. Each regional water
	planning group shall submit a final prioritization of the projects
	to the board not later than September 1, 2014.
	(b)  Section 15.436(d), Water Code, as added by this Act,
	applies to a regional water plan beginning with the plan that is
	required to be submitted to the Texas Water Development Board by
	January 5, 2016.
	SECTION 2.26.  The Texas Water Development Board shall post
	the information described by Section 15.440(b), Water Code, as
	added by this Act, on the board's Internet website not later than
	March 1, 2014.
	SECTION 2.27.  Sections 2.01-2.07, 2.13-2.18, and 2.21-2.26
	of this article take effect on the date on which the constitutional
	amendment proposed by the 83rd Legislature, Regular Session, 2013,
	adding Sections 49-d-12 and 49-d-13, Article III, Texas
	Constitution, creating the state water implementation fund for
	Texas and the state water implementation revenue fund for Texas
	takes effect. If that amendment is not approved by the voters,
	those sections of this article have no effect.
	ARTICLE 3. EFFECTIVE DATE
	SECTION 3.01.  Except as otherwise provided by this Act,
	this Act takes effect September 1, 2013.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 4 was passed by the House on March 27,
	2013, by the following vote:  Yeas 146, Nays 2, 1 present, not
	voting; that the House refused to concur in Senate amendments to
	H.B. No. 4 on May 3, 2013, and requested the appointment of a
	conference committee to consider the differences between the two
	houses; and that the House adopted the conference committee report
	on H.B. No. 4 on May 20, 2013, by the following vote:  Yeas 141,
	Nays 4, 2 present, not voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 4 was passed by the Senate, with
	amendments, on April 29, 2013, by the following vote:  Yeas 30,
	Nays 1; at the request of the House, the Senate appointed a
	conference committee to consider the differences between the two
	houses; and that the Senate adopted the conference committee report
	on H.B. No. 4 on May 20, 2013, by the following vote:  Yeas 30, Nays
	1.
	______________________________
	Secretary of the Senate
	APPROVED: __________________
	Date
	__________________
	Governor