Water Legislation to Lift Agency's Profile

The persistence of drought conditions across Texas brought extra attention on the once-obscure Texas Water Development Board this legislative session, as lawmakers approved a major overhaul of the agency's leadership. 

And with a major financing proposal before voters, the power of the state agency, which has just under 300 employees, is poised to grow. Stakeholders will be watching to see if the new board can become a major player in shaping what Texas needs in the coming decades — a comprehensive strategy to ensure adequate water supplies in a booming state. 

Starting Sept. 1, Gov. Rick Perry will replace the current board by appointing three full-time government employees, who will make $150,000 a year. The board would also have control over $2 billion in a revolving fund for water supply projects across the state, should voters approve creating such a fund in November.     

The agency, not even a tenth the size of the Texas Commission on Environmental Quality, has been the state’s water infrastructure bank since 1957, doling out money for various infrastructure projects. It has a current outstanding bond portfolio of $5.5 billion. 

“The impact this agency has on the state is tremendous,” said Melanie Callahan, the board’s executive administrator. “The responsibilities with which we’ve been entrusted are huge.”

Lawmakers have been critical of how the board has operated. Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate Natural Resources Committee and a proponent of the shakeup, called the current board “reactionary.”

“I want them to be proactive instead of reactive,” Fraser said, adding that he felt the board did not communicate enough with its own staff, legislators or regional planning groups.

Callahan and the current board members have declined to comment on the board overhaul until their terms expire.

But former board members say they're concerned that the new board would be less representative of the state. 

“I worry that the political pressure will go where the votes and population centers are rather than where it makes the most sense," said Jack Hunt, who served on the board from 1998 to 2010. He said rural and disadvantaged communities that need the loans the most often get left behind. 

Fraser hopes that the new board, rather than being “just a bank,” will “basically become salesmen,” traveling the state to help regions develop water plans and projects.  The new law requires that one member have a background in engineering, another in law or business, and another in public or private finance. 

His concerns reflect an increasing sense of urgency that the ever-growing state needs to develop a more comprehensive water strategy and that the board should play a bigger role in that effort. Critics of the current board say members simply loan out money for a “laundry list” of water projects, with no real direction or larger goal.

“You can see that the current trajectory isn’t working,” said Laura Huffman, director of the Nature Conservancy's Texas office. The new board members, Huffman said, should not "just look at projects as they’re coming in, but help do some shaping.”

That has not historically been the role of the board, which loans money for projects that include sewage treatment, desalination plants and water main replacement. Right now, the board ranks projects based on conservation efforts and when the additional water supply would be needed. 

The amendment up for a vote in November would require a more stringent prioritization method that would be developed by a separate committee, and could include measures like cost-effectiveness. Such a method will likely take at least one to two years to develop, at which time the new funds would become available. 

That would add a large burden on the shoulders of the TWDB and its board members, who vote on every loan, and the agency has so far resisted such a burden. 

Callahan said that for many years, the board had access to enough money to give loans to everyone that needed them, and prioritization wasn’t necessary. But that may change if the new $2 billion fund is approved, because the financing is likely to be attractive to many entities.

Should the voters approve the $2 billion in November, the board says it will have to spend $1.9 million more over the next two years to administer the funds, which includes hiring 12 full-time employees. Changing the board’s structure will cost an estimated $2.4 million, including the salaries and benefits of the new board members and their supporting staff. 

Andrew Sansom, executive director of the Meadows Center for Water and the Environment at Texas State University, said the new prioritization system would be a challenge.

“No matter what kind of restructuring takes place, it’s going to still be very, very difficult to say, when two projects have equal merits, how do I decide between San Marcos and Lockhart,” he said.

At the same time, a new ranking system, and a bigger role for the Texas Water Development Board members, could have a measurable and important effect on what water infrastructure projects actually get built in the coming decades.

“I think there’s stuff out there that we probably shouldn’t have built,” Sansom said, referring to reservoirs that have lost much of their initial supply due to evaporation. “Hopefully, those would get weeded out under the new structure.”

Nearly two dozen people have applied for appointments to the board since the law was passed. And privately, many legislators and observers have mentioned Carlos Rubinstein, a TCEQ commissioner, as a favorite for chairman.

Even if voters approve the $2 billion water financing proposal in November, there is still a lot of work for the board to do. The current “wish list” of water supply plans across the state would cost a total of $53 billion.

“$2 billion isn’t even going to scratch the surface of that,” Sansom said. “The biggest danger in the passage of this bill is for us to believe that if we go out and spend a couple billion dollars and build a bunch of things, that this problem will go away."