CHAPTER 20. TEXAS WATER RESOURCES FINANCE AUTHORITY

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WATER CODE

TITLE 2. WATER ADMINISTRATION

SUBTITLE C. WATER DEVELOPMENT

CHAPTER 20. TEXAS WATER RESOURCES FINANCE AUTHORITY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 20.001. LEGISLATIVE PURPOSE AND POLICY. (a) The

legislature declares that it is the policy of the state to:

(1) encourage and assist in the conservation and development of

the water resources of the state for all useful and lawful

purposes by the acquisition, improvement, extension, or

construction of water resource conservation and development

projects;

(2) encourage the optimum development of the feasible sites

available for the construction or enlargement of dams and

reservoirs for conservation of the public water of the state held

in trust for the use and benefit of the public through assistance

and participation in the acquisition and development of water

storage facilities and systems or works necessary for filtration,

treatment, and transportation of water from storage to points of

treatment, filtration, and distribution;

(3) aid in the protection of the quality of the water resources

of the state by encouraging and assisting in the financing of

water quality enhancement projects; and

(4) aid in flood control, drainage, subsidence control,

recharge, chloride control, agricultural soil and water

conservation, and desalinization by encouraging and assisting in

the financing of projects necessary to those purposes.

(b) The legislature finds that existing mechanisms for

implementing the policies stated in Subsection (a) of this

section may be enhanced by financing as provided in this

subchapter.

state to aid in the accomplishment of the purposes stated in

Subsection (a) of this section, it is necessary to create a water

resources finance authority for the purpose of increasing the

availability of financing by purchasing political subdivision

bonds, and the legislature declares that the creation of the

authority for this purpose is a public purpose and a use for

which public money may be borrowed, spent, advanced, loaned,

granted, or appropriated, and that this use serves a public

purpose in improving or otherwise benefitting the people of this

state. Also, the legislature determines and declares the

necessity of enacting this subchapter is in the public interest.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.002. DEFINITIONS AND CONSTRUCTION. In this subchapter:

(1) "Authority" means the Texas Water Resources Finance

Authority.

(2) "Authorized investments" means:

(A) direct obligations of or obligations the principal of and

interest on which are guaranteed by the United States;

(B) direct obligations of or participation certificates

guaranteed by the Federal Intermediate Credit Bank, Federal Land

Banks, Federal National Mortgage Association, Federal Home Loan

Banks, and Banks for Cooperatives;

interest on which are guaranteed by the State of Texas;

(D) bonds of cities, counties, and other political subdivisions

of this state, other than bonds issued by a political subdivision

to finance a project covered by this chapter;

(E) certificates of deposit of state and national banks that

satisfy the requirements of Section 2.015, Chapter 240, Acts of

the 69th Legislature, Regular Session, 1985 (Article 4393-1,

Vernon's Texas Civil Statutes), and the rules of the comptroller

and if the authority or a financial institution acting solely as

agent for the authority possesses the collateral securing those

deposits; and

(F) direct security repurchase agreements made only with state

or national banks domiciled in the state under which the

authority buys, holds in its possession or the possession of a

financial institution acting solely as agent for the authority

for a specified time, and then sells back any of the following

securities, obligations, or participation certificates:

(i) United States government securities;

(ii) direct obligations of or obligations the principal of and

interest on which are guaranteed by the United States; and

(iii) direct obligations of or participation certificates

guaranteed by the Federal Intermediate Credit Bank, Federal Land

Banks, Federal National Mortgage Association, Federal Home Loan

Banks, and Banks for Cooperatives.

(3) "Board" means the board of directors of the authority.

(4) "Bond" means any type of interest-bearing obligation,

including any bond, note, bond anticipation note, or other

evidence of indebtedness under this chapter.

(5) "Development board" means the Texas Water Development Board.

(6) "Director" means a member of the board.

(7) "Political subdivision" means a city, county, or other body

politic or corporate of the state, including any district or

authority created under Article III, Section 52, or Article XVI,

Section 59, of the Texas Constitution, a state agency, an entity

created by an interstate compact to which the state is a party,

and any nonprofit water supply corporation created and operating

under Chapter 67.

(8) "Political subdivision bonds" means bonds, notes, or other

securities that were issued by and any debt or other contractual

obligations that were incurred by a political subdivision for the

purpose of financing or refinancing projects for water resource

development and conservation, water quality enhancement, flood

control, drainage, subsidence control, recharge, chloride

control, agricultural soil and water conservation,

desalinization, or any combination of these purposes.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.21, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 18.63, eff.

Sept. 1, 1999.

SUBCHAPTER B. ADMINISTRATIVE PROVISIONS

Sec. 20.011. CREATION OF AUTHORITY. (a) The Texas Water

Resources Finance Authority is created as a governmental entity

and a body politic and corporate.

(b) The exercise of the powers and duties by the authority under

this chapter constitutes an essential public purpose of the state

in promoting the general welfare of the state and its citizens.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.012. BOARD OF DIRECTORS. (a) The authority is governed

by a board of directors composed of the six directors of the

development board.

(b) Each director serves on the board as an additional duty to

those required of a member of the development board.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.013. COMPENSATION; REIMBURSEMENT. The directors are not

entitled to receive compensation for their service on the board

but are entitled to be reimbursed for their expenses in

performing their powers and duties under this chapter.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.014. ORGANIZATION OF BOARD. (a) The board shall select

from its membership one person to serve as chairman and one

person to serve as vice-chairman.

(b) The person selected as chairman shall preside at meetings of

the board and perform other duties directed by the board, and the

vice-chairman shall preside at meetings of the board in the

absence of the chairman.

treasurer for the authority. The persons selected as secretary

and treasurer are not required to be directors and the positions

of secretary and treasurer may be held by one person. The board

also may appoint assistant secretaries.

(d) The secretary is the custodian of the minutes, books,

records, and seal of the board, and the secretary and the

treasurer shall perform duties as directed by the board.

(e) The chairman, vice-chairman, secretary, and treasurer shall

be selected by the board at the first meeting of the board

following January 31 of each odd-numbered year.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.015. BOARD MEETINGS. (a) The board shall hold regular

meetings at times provided by its rules and shall meet at least

once each calendar year.

(b) The board may hold special meetings at the call of the

chairman or on request of three or more directors.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.016. RULES AND RESOLUTIONS. The board may adopt rules

that are necessary to carry out this chapter and may take

official action by adoption of a resolution or order.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.017. LIABILITY. A director or officer of the authority

is not liable for any bonds issued or contracts executed by the

authority.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.018. GENERAL FISCAL AUTHORITY. The board may acquire,

hold, invest and reinvest in authorized investments, deposit,

use, and dispose of the authority's revenues, income, receipts,

funds, and money from every source and may select its depository

or depositories, inside or outside the state, subject only to

this chapter and any covenants with respect to the authority's

bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.019. PROPERTY TAX EXEMPT. (a) The property of the

authority, its income, and its operations are exempt from all

taxes and assessments imposed by the state and political

subdivisions on property acquired or used by the authority under

this chapter.

(b) If the authority is dissolved, all of its rights and

properties vest in the state.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.020. FISCAL YEAR; ANNUAL AUDIT. (a) The authority

shall operate on a fiscal year beginning September 1.

(b) The state auditor may audit the authority's books and

accounts, based on a risk assessment performed by the state

auditor and subject to the legislative audit committee's approval

of including the audit in the audit plan under Section 321.013,

Government Code. The cost of an audit shall be paid by the

authority.

with both houses of the legislature on or before January 1 of

each year, except if the audit is being made by the state auditor

and is not available by January 1, it shall be filed as soon as

it is available.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 2003, 78th Leg., ch. 785, Sec. 50, eff.

Sept. 1, 2003.

Sec. 20.021. AUTHORITY EXPENSES. (a) Expenses incurred by the

authority under this Act shall be paid solely from revenues or

funds provided or to be provided under this chapter.

(b) This chapter may not be construed to authorize the authority

to incur any indebtedness or liability on behalf of or payable by

the state.

any money appropriated by the state.

(d) The board shall use all available sources of revenue and

income to pay expenses of operation and maintenance of the

authority, to pay the premium, principal of and interest on

bonds, and to create and maintain any reserves or funds provided

by resolutions authorizing the issuance of bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.022. SUITS. The authority may sue and be sued in the

courts of this state in the name of the authority, and the courts

shall take judicial notice of the creation of the authority.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.023. SEAL. The board may adopt a seal for the

authority.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

SUBCHAPTER C. POWERS AND DUTIES

Sec. 20.041. GENERAL POWERS AND DUTIES. The authority may

exercise any authority necessary or appropriate to carry out the

purposes of this chapter.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.042. GIFTS, GRANTS, ETC. The board may request and

accept for the authority grants, allocations, subsidies,

guaranties, aid, contributions, services, labor, materials,

gifts, and donations.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.043. CONTRACTS. The board on behalf of the authority

may enter into contracts with any person to carry out this

chapter.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.044. PURCHASE OF INSURANCE. The board may purchase for

the authority and pay premiums on insurance of any type, in any

amounts, and from any insurers the board considers advisable.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.045. CONTRACTS WITH DEVELOPMENT BOARD. The authority

may enter into contracts with the development board and with

consultants as necessary to perform the functions provided by

this chapter.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

SUBCHAPTER D. POLITICAL SUBDIVISION BONDS

Sec. 20.071. PURCHASE OF POLITICAL SUBDIVISION BONDS. The board

may purchase political subdivision bonds including bonds that are

acquired or owned by the development board.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.072. ACQUISITION OF CERTAIN DEVELOPMENT BOARD BONDS. If

the board agrees to purchase political subdivision bonds from the

development board that have not been purchased by the development

board at the time of the agreement, the board may pay the

purchase price for those bonds in exchange for the agreement of

the development board to transfer those bonds to the board at the

time the development board acquires them.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.073. PRICE AND TERMS OF PURCHASE. The board shall

purchase political subdivision bonds at prices and under terms

the board determines to be reasonable.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.074. REVENUE BONDS. (a) The board may issue revenue

bonds in the name of the authority to finance the cost of

acquisition of political subdivision bonds and to pay the cost of

bond issuance.

(b) The board may provide for payment of the premium, principal

of, and interest on revenue bonds by pledging all or part of the

revenue derived from political subdivision bonds acquired or to

be acquired by the authority or from other sources of funds

available to the authority.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.075. CONTRACT FOR OBTAINING COMPLIANCE WITH POLITICAL

SUBDIVISION BONDS. The board shall enter into a contract with

the development board for the development board to perform the

functions required to ensure that the political subdivisions pay

the debt service on political subdivision bonds and observe the

conditions and requirements set forth in those bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.076. ENFORCEMENT OF POLITICAL SUBDIVISION BONDS. (a)

If there is a default in the payment of principal of or interest

on political subdivision bonds purchased by the authority or any

other default as defined in the proceedings or indentures

authorizing the issuance of the bonds, the attorney general shall

institute appropriate proceedings for mandamus or other legal

remedies to compel the political subdivision or its officers,

agents, and employees to cure the default by performing those

duties that they are legally obligated to perform.

(b) The proceedings shall be brought and venue shall be in a

district court of Travis County.

to which the board may be entitled.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

SUBCHAPTER E. BOND PROCEDURES

Sec. 20.101. ISSUANCE OF BONDS. For the issuance of bonds under

this chapter, the board may exercise the authority granted to the

governing body of an issuer with regard to issuance of

obligations under Chapter 1371, Government Code, to the extent

that it is not inconsistent with this chapter.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.416, eff.

Sept. 1, 2001.

Sec. 20.102. CONDITIONS FOR ISSUANCE OF BONDS. (a) Bonds may

be issued as various series and issues.

(b) Bonds issued by the authority may mature serially or

otherwise not later than 50 years after the date on which they

are issued.

accordance with the resolution or order authorizing the issuance

of the bonds but not to exceed the net effective interest rate

authorized by Chapter 1204, Government Code.

(d) Rates of interest on bonds may be fixed, variable, floating,

adjustable, or otherwise.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.417, eff.

Sept. 1, 2001.

Sec. 20.103. PERIODIC DETERMINATION OF INTEREST. A bond

resolution or order may provide for the periodic determination of

interest rates without the board being required to give specific

approval.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.104. PERSONS DESIGNATED TO ACT AS AGENTS OF BOARD. (a)

A bond resolution or order may delegate to one or more officers,

employees, or agents designated by the board authority to act on

behalf of the board during the time bonds are outstanding to fix

dates, prices, interest rates, and interest payment periods and

to perform other procedures specified in the resolution.

(b) The person designated by the board may adjust the interest

on bonds as necessary to permit the bonds to be sold or resold at

par in conjunction with secondary market transactions.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.105. SECURITY QUALIFICATIONS. The board may take any

action necessary to qualify the authority bonds for offer and

sale under the securities laws and regulations of the United

States, this state, and other states of the United States.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.106. INVESTMENT SECURITIES. The bonds and any interest

coupons are investment securities under Chapter 8, Business &

Commerce Code, and may be issued registrable as to principal or

as to both principal and interest or may be made redeemable

before maturity at the option of the authority or may contain a

mandatory redemption provision.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.107. FORM OF BONDS. (a) The authority's bonds may be

issued in the form, denominations, and manner and under the

terms, conditions, and details as provided by the board in the

resolution or order authorizing their issuance.

(b) The bonds shall be signed and executed as provided by the

board's resolution or order authorizing the issuance of the

bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.108. FUNDS. (a) In the resolution or order authorizing

issuance of bonds, the board may make additional covenants with

respect to the bonds and the pledged revenues and may provide for

the flow of funds and the establishment, maintenance, and

investment of funds.

(b) The funds established may include an interest and sinking

fund, a reserve fund, and other funds that will be kept and

maintained by or under the direction of the board.

state treasury but, at the direction of the board, may be kept

and held in escrow and in trust by the state treasury on behalf

of the authority and the owners of the bonds and used only as

provided by this chapter.

(d) Money in the funds shall be invested in authorized

investments as provided by any bond resolutions and orders of the

authority.

(e) Legal title to money in any fund is in the authority unless

or until paid from the fund as provided by this chapter or the

resolutions or orders authorizing the authority's bonds.

(f) The comptroller, as custodian of any of the funds, shall

administer the funds solely and strictly as provided by this

chapter and the resolutions or orders authorizing the bonds, and

the state may not take any other action relating to any of those

funds except those specified in this chapter and the resolutions

and orders authorizing the bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 20.08, eff.

Sept. 1, 1997.

Sec. 20.109. RESOLUTIONS, ORDERS, ETC. (a) The resolutions or

orders authorizing the bonds may prohibit the further issuance of

bonds or other obligations payable from the pledged revenue or

may reserve the right to issue additional bonds to be secured by

a pledge of and payable from the revenue on a parity with or

subordinate to the lien and pledge in support of the bonds being

issued.

(b) The orders or resolutions of the board issuing bonds may

include other provisions and covenants that the board determines

necessary.

authority's bonds, the board may prescribe systems, methods,

routines, and procedures under which the authority will function.

(d) The board may adopt and have executed any other proceedings

or instruments necessary and convenient in the issuance of bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.110. APPROVAL OF ATTORNEY GENERAL. The bonds issued

under this chapter are subject to review and approval by the

attorney general in the same manner and with the same effect as

provided by Chapter 1371, Government Code.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.418, eff.

Sept. 1, 2001.

Sec. 20.111. BOND REVIEW BOARD. (a) Bonds may not be issued

under this section unless the issuance has been reviewed and

approved by the bond review board. The bond review board is

composed of:

(1) the governor;

(2) the lieutenant governor;

(3) the speaker of the house of representatives; and

(4) the comptroller of public accounts.

(b) The governor is chairman of the review board. The bond

review board may adopt rules governing application for review,

the review process, and reporting requirements. A member of the

bond review board may not be held liable for damages resulting

from the performance of the members' functions under this

section.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 20.09, eff.

Sept. 1, 1997.

Sec. 20.112. REFUNDING BONDS. (a) The board may issue

refunding bonds to refund all or part of its outstanding bonds

issued under this chapter, including matured but unpaid interest.

(b) The board may refund bonds in the manner provided by general

law for revenue bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.113. ELIGIBLE SECURITY. The bonds are eligible to

secure deposits of public funds of the state and cities,

counties, school districts, and other political subdivisions of

the state. The bonds are lawful and sufficient security for

deposits to the extent of their face value.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.114. LEGAL INVESTMENTS. The bonds are legal and

authorized investments for:

(1) banks;

(2) savings banks;

(3) trust companies;

(4) savings and loan associations;

(5) insurance companies;

(6) fiduciaries;

(7) trustees;

(8) guardians; and

(9) sinking funds of cities, counties, school districts, and

other political subdivisions of the state and other public funds

of the state and its agencies, including the permanent school

fund.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.115. TAX EXEMPT. Since the authority is performing an

essential governmental function in the exercise of the powers

conferred on it by this chapter, the bonds issued under this Act,

and the interest and income from the bonds, including any profit

made on the sale of bonds, and all fees, charges, gifts, grants,

revenues, receipts, and other money received or pledged to pay or

secure the payment of bonds are free from taxation and

assessments of every kind by this state and any city, county,

district, authority, or other political subdivision of this

state.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.116. PLEDGE OF STATE FAITH AND CREDIT; COVENANT WITH

OWNERS OF BONDS. (a) The authority's bonds are obligations

solely of the authority and are payable solely from funds of the

authority, and this chapter and the authority's bonds are not and

do not create or constitute a pledge, giving, or lending of the

faith or credit or taxing authority of the state.

(b) Each bond of the authority must include a statement that the

state is not obligated to pay the premium, principal of, or

interest on the authority's bonds and that the faith or credit

and the taxing authority of the state is not pledged, given, or

loaned to those payments.

issued in accordance with this chapter that the state will not

limit or alter the rights vested in the authority to fulfill the

terms of any agreements made with the owners of the bonds or in

any way impair the rights and remedies of those owners until the

bonds, together with any premium and interest, interest on any

unpaid premium or installments of interest, and all costs and

expenses in connection with any action or proceeding by or on

behalf of those owners, are fully met and discharged. The

authority may include this pledge and agreement of the state in

any agreement with the owners of bonds.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

Sec. 20.117. ENFORCEMENT BY MANDAMUS. A writ of mandamus and

all other legal and equitable remedies are available to any party

at interest to require the authority and any other party to carry

out agreements and to perform functions and duties under this

chapter, the Texas Constitution, or the authority's bond

resolutions and orders.

Added by Acts 1987, 70th Leg., ch. 728, Sec. 1, eff. June 20,

1987.

State Codes and Statutes

State Codes and Statutes

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