State Water Implementation Fund for Texas (SWIFT)*
Affordable, ongoing financial assistance for projects in the state water plan. Passed by the Legislature and approved by Texas voters through a constitutional amendment, the SWIFT program helps communities develop and optimize water supplies at cost-effective rates. The program provides low-interest loans, extended repayment terms, deferral of loan repayments, and incremental repurchase terms for projects with state ownership aspects.
Jump to application instructions.
1. Who can borrow?
Any political subdivision or nonprofit water supply corporation with a project included in the most recently adopted state water plan.
Political subdivisions include:
- River authorities
- Special law districts
- Water improvement districts
- Water control and improvement districts
- Irrigation districts
- Groundwater conservation districts
2. What types of projects are eligible for funding?
Eligible projects are recommended water management strategy projects with an associated nonzero capital cost in the most recently adopted state water plan at the time abridged applications are due to TWDB for consideration. Alternative water management strategy projects are not eligible unless the regional and state water plans are amended to include them as recommended projects prior to the time abridged applications are due to TWDB for consideration. Eligible projects include conservation and reuse, desalinating groundwater and seawater, building new pipelines, developing reservoirs and wells fields, purchasing water rights, as well as numerous other strategies. Only the project components specified in the plan are eligible for SWIFT financing. For example, if the project is listed in the plan as "construction of a well field," but does not list a pipeline for delivery of that water, the pipeline would not be eligible for the SWIFT program.
Recognizing the benefit of conservation and the needs of rural Texas, the legislation creating the program encourages SWIFT funding of projects for rural communities, agricultural water conservation, water conservation, and reuse projects.
3. What type of financing is available?
The SWIFT program offers a variety of loans and terms to accommodate the diversity of projects included in the state water plan. Grants are not available in the program. Funds can be used for planning, design, acquisition, and construction costs. In order to qualify for multi-year commitments, a borrower must close on a portion of the commitment in the first year.
The types of SWIFT assistance are listed below. Entities may use any or all of these different structures available to finance their projects.
Low-interest Obligations — Long-term, fixed-rate loans offered at below-market rate. Maturities range from 20 to 30 years. Interest rates are based on the TWDB's cost of funds, which reflects the program's AAA credit rating. This interest rate is further reduced by a subsidy established by the Board for each funding cycle.
The 2020 funding cycle subsidy percentages (which are the same as 2019) are listed below. Normally, the subsidy percentages for the new funding cycle are determined at the time of prioritization. However, with respect to the global pandemic and its impact of investment and bond markets, the Board did not take formal action at that time. After reviewing new funding requests, existing commitments, and evaluation of the long-term program capacity, the Board approved these percentages at the June 4, 2020 Board meeting.
- 20 Year Tax-Exempt: up to 35%
- 20 Year Taxable: up to 28%
- 21-25 Year Tax-Exempt: up to 25%
- 21-25 Year Taxable: up to 20%
- 26-30 Year Tax-Exempt: up to 20%
- 26-30 Year Taxable: up to 16%
At the same meeting, the Board approved Resolution 20-055 to establish parameters regarding future management of the SWIFT program. The Resolution allows the Board to proactively manage risk while maintaining subsidies and payment deferral options for program participants. In the Resolution, the Board stated its intent to reduce subsidies for Low-Interest Obligations for the 2021 funding cycle (as outlined below) and will remain in place indefinitely.
Low-Interest Obligations (effective for the 2021 funding cycle):
- 20 Year Tax-Exempt: up to 25%
- 20 Year Taxable: up to 20%
- 21-25 Year Tax-Exempt: up to 18%
- 21-25 Year Taxable: up to 14%
- 26-30 Year Tax-Exempt: up to 14%
- 26-30 Year Taxable: up to 10%
At this time no changes are anticipated to the Deferred Loan and Board Participation financing options. Pursuant to Board rules, the program terms and subsidies are established with each prioritization cycle.
Rural/Agriculture Low-Interest Obligations:
- 20 Year Tax-Exempt: up to 50%
- 20 Year Taxable: up to 40%
- 21-25 Year Tax-Exempt: up to 34%
- 21-25 Year Taxable: up to 27%
- 26-30 Year Tax-Exempt: up to 27%
- 26-30 Year Taxable: up to 22%
In order to qualify for the rural/agricultural low-interest obligations, entities must do one of the following:
- Propose a project that provides agricultural water conservation or irrigation benefits; or
- Serve a population of 10,000 or less, and fall entirely outside of urbanized areas as defined by the most recent available U.S. Census.
Deferred Obligations — Used to fund developmental costs (planning and design). Maturities range from 20 to 30 years. Principal and interest is deferred up to eight years from the delivery date, or until the end of construction, whichever is sooner. The deferred payment option is targeted at projects that have long development periods in which the applicant must spend considerable time and money before actual delivery of water and the accompanying revenue stream materializes.
Interest rates are based on the TWDB's cost of funds, which reflects the program's AAA credit rating. No additional interest rate subsidy is applied.
Board Participation — Long-term, structured, fixed-rate financing through a temporary TWDB ownership interest in a regional facility that is being "right-sized" to accommodate future demand. The TWDB's interest is in the excess capacity portion of the project and limited to 80% of total project costs. The local sponsor repurchases the TWDB's ownership interest under a repayment schedule that allows for the structured deferral of both principal and interest. Financing terms vary but are generally 34 years.
Interest rates are based on the TWDB's cost of funds, which reflects the program's AAA credit rating. No additional interest rate subsidy is applied.
Funding through the Board Participation option requires specific determinations be made by the Board, including that: the estimated cost of the facility exceeds current financing capabilities of the area; and the public interest will be served by the Board's participation in the project.
Multi-Year Commitments — Applicants may propose a multi-year closing schedule based on a single SWIFT program funding commitment. The multi-year commitment option provides entities additional flexibility to support project needs spanning up to 5 years, including the first year closing, and may be requested in combination with any of the financing structures listed above. Once committed, subsidies are locked in through the end of the following State Fiscal Year only.
Generally, a SWIFT loan will be amortized over 20 or 30 years with level debt service and follow the same guidelines as other TWDB financial assistance programs. Principal payments are required to start within 18 months of the delivery date, and capitalized interest and debt service reserve funding is available. Entities that require specific loan structuring are asked to submit their needs for evaluation.
4. How much funding is available?
A strategic planning tool was developed to analyze funding scenarios to achieve the legislative directive of financing $27 billion in state water plan projects over the next 50 years. This tool will be used in analyzing the capacity of the program for each funding cycle. The actual amounts and types of funds are expected to fluctuate between years to obtain this goal.
The Board determines the amount of capacity at the time of prioritization.
5. What are the conditions of financial assistance?
The TWDB anticipates selling bonds for each round of funding through the SWIFT program. Therefore, borrowers are required to execute Financing Agreements, similar to those used in other TWDB financial assistance programs. Due to the complexities and timing involved in the issuance of the TWDB bonds, borrowers will need to close their individual loans shortly after the TWDB's bond closing.
6. What is the prioritization process for SWIFT applications?
Project prioritization for recommended water management strategy projects with an associated nonzero capital cost in the most recently adopted state water plan at the time abridged applications are due to TWDB for consideration will occur at two levels: regional and state.
- At the regional level, the 16 regional water planning groups prioritize projects in their regional water plans every five-year cycle using uniform standards developed by a stakeholder committee. The final product is the list of the prioritizations of recommended water management strategy projects
At the state level, the TWDB will solicit SWIFT abridged applications for financial assistance up to twice a year. The abridged applications will then be prioritized following the prioritization system. The prioritization system is described in full detail in 31 TAC §363.1303 and criteria in §363.1304.
A summary of the prioritization criteria is listed below:
- The population served by the project when fully operational
- Whether the project serves a diverse urban and rural population
- Whether the project provides regionalization
- The percentage of water supply needs met by the project within the first decade
- Local contributions to the project
- Financial capacity of the applicant to repay
- Whether the project addresses an emergency need
- Whether the project is ready to proceed with implementation or construction
- Demonstration or projected effect of the project on water conservation, including preventing water loss
- The priority ranking assigned to the project by the applicable Regional Water Planning Group
If two or more projects receive the same priority ranking, priority will be given to the project with the highest water conservation score. If a tie still remains, priority will be given to the project with the highest emergency need score.
The Board then considers the prioritization, establishes the funds available by category, the structure of financing, and the terms of any subsidy.
Invitations to submit full financial assistance applications are extended to those projects within the limits of available funding. Full applications are due within 30 days after the Board meeting at which the applicant's project received priority for funding. Full applications include information needed to complete the standard environmental, engineering, financial, and legal reviews by the TWDB staff. Once the technical review process has been completed, the project is presented to the Board for funding consideration.
7. What if an entity's project is not included in the regional water plans or the state water plan?
An entity has the option to request an amendment to the regional water plan to include its project, which is the first step for a potential amendment to the state water plan. A regional water plan may be amended to add strategies, projects, or capital costs that are reviewed and approved by the Regional Water Planning Group. The state water plan may be amended to reflect additions made to the regional plans. If an entity's recommended water management strategy project is amended to add a capital cost, the state water plan must be amended to reflect this change prior to Board commitment on associated SWIFT funding. The Amendment Process Flowchart outlines the amendment process for both the regional and state water plans. Please contact your Regional Team for more information.
8. Where can I get more information?
In order to provide you with a single point of contact at the TWDB, our project implementation staff is organized into six regional project implementation teams. Each team is led by a manager that serves as the primary point of contact for both our existing and future customers. For assistance with the application or any questions related to your project, please look up contact information for your Regional Team.
How to Apply
The SWIFT Abridged Application collects the information necessary for TWDB staff to review and rank projects based on the prioritization system described in 31 TAC §363.1303 and criteria listed in 31 TAC §363.1304. Entities that rank within funding availability will be invited to submit full applications for financial assistance.
Two options are available for submitting an abridged application:
- Online Loan Application System (select "Start New PIF" and choose SWIFT under "Program Type")
- View the full Online Loan Application System instructions
- Submittal is provided as an option once all fields are complete. The Abridged Application must be submitted before midnight on the due date.
- Abridged Application (Word document)
- View the full Abridged Application instructions
Email the completed Abridged Application and applicable attachments to SWIFT@twdb.texas.gov. Or send two (2) hard copy Abridged Applications and applicable attachments to the address below. Applications must be received by TWDB no later than midnight on the due date.
Texas Water Development Board
ATTN: SWIFT Abridged Application
P.O. Box 13231
Austin, Texas 78711-3231
Entities that receive multi-year funding commitments will be required each year to verify that year's requested amount. To verify the annual request amount associated with a prior multi-year commitment, contact TWDB staff at SWIFT@twdb.texas.gov for further instructions.
Please feel free to contact Kimberly Rhodes at (512) 463-7277 or send an email to SWIFT@twdb.texas.gov for assistance if you encounter any problems while completing the abridged application.
- Eligible projects must be recommended water management strategy projects with an associated nonzero capital cost in the most recently adopted state water plan. For your convenience, a list of recommended water management strategy projects is available.
- An Infrastructure Financing Report (IFR) Survey response must be on file relating to the project. For your convenience, a list of IFR respondents is available. If your project is listed with no response, please submit an IFR Survey along with your Abridged Application.
- A water conservation and drought contingency plan is required for financial assistance greater than $500,000 as mandated by the Texas Administrative Code Title 31 §363, Subchapter A.
- Executed Financing Agreement
- Private Placement Memorandum
- Master Agreement for Board Participation funding
- Historically Underutilized Business reporting
- Reservoir funding must be segmented or phased; permitting is required prior to a construction commitment
- Board Participation is limited to funding of excess capacity portion and up to 80% of total project costs
- Board Participation requires specific determinations (31 TAC §363.1308(c)) and an executed master agreement
- State level environmental review
- Review of legislative requirements regarding water loss threshold limits
- December 2, 2019 - Abridged application period begins
- February 3, 2020 - Abridged applications due
- Spring 2020
- Board considers prioritization of abridged applications
- Board identifies amount of funds available by category; establishes the structure of financing, and the subsidy terms
- Invitations extended to submit full financial applications
- May 11, 2020 - Full applications due from invited entities
- Summer 2020
- Board considers and approves applications
- Board authorizes TWDB bond sale
- Fall 2020
- TWDB bond sale
- Fall/Winter 2020
- TWDB bond closing
- Borrower obligation closings
* The SWIFT program includes two funds, the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). Bonds for the program are issued through the SWIRFT.
Turns Planning into Projects