Headline-making water supply woes in Corpus Christi come as Texas contemplates a massive price tag for water projects as costs escalate and a state program turns down financing requests for the first time.
Texas needs $174 billion
"If strategies are not implemented over the next 50 years, approximately one out of four Texans in 2080 would have less than half the municipal water supplies they will require during a drought of record," the plan said, adding a severe drought "could cause an estimated $91 billion in economic damages in 2030, and those potential damages are projected to increase to $177 billion per year by 2080."
The draft plan, the most expensive in Texas history at more than double the previous 2022 plan's $80 million price tag, contains 3,036 water supply projects,
"I think it invites questions on how does this state prioritize which of these projects are important for the state of Texas and the respective regions in the long run," said Jeremy Mazur, the group's infrastructure and natural resources policy director.
It may be time for the state legislature to revisit what constitutes orderly water infrastructure development, he added.
"Is it every entity saying, 'Hey, I want this, and let's put it in,' or should the legislature provide more strategic guidance?" Mazur said.
Water project financing requests have exceeded the capacity of a key state program.
The Texas Water Development Board said it received 23 applications totaling $4.2 billion for water infrastructure projects "aimed at addressing needs during a recurrence of drought-of-record conditions," but only had sufficient capacity in its Statewide Water Implementation Fund for Texas or SWIFT program for the top 10 projects. That left 13 requests for about $2.2 billion without access to the program's lower-cost loans via triple-A-rated TWDB bond issues.
"While other state and federal funds that the TWDB administers for water, wastewater, and flood infrastructure have surpassed program capacity previously, this is the first year where the current year's requests and prior years' loan closings exceed the capacity of the SWIFT program," a statement from the water board said.
It added that the size of this year's annual State Water Implementation Revenue Fund for Texas or SWIRFT revenue bond sale "is subject to new commitment approvals by the TWDB Board, followed by participants' own governmental approvals, and the return of signed financing agreements — all of which is expected to take place by the beginning of September."
TWDB's $1.83 billion
Drought-stricken Corpus Christi secured TWDB's commitment for a $757 million loan, of which $232 million of revenue bonds have been sold, specifically for a controversial Inner Harbor seawater desalination project that remains uncertain.
The city council last week postponed until September consideration of a $78.6 million contract for 60% of the project's design and construction of a demonstration plant during a marathon meeting where concerns were raised about potential marine life harm.
The City Council
Indecisiveness by the city's elected officials raised the ire of the Texas Governor's Office.
"The moment for leadership arrived, but the council met it with a whimper and a complaint," Gov. Greg Abbott's chief of staff, Robert Black, said in a statement. "For the second time in six months, the council could have taken meaningful steps to meet the long-term water needs of their citizens. Instead, they chose to bicker, blame, and hide behind excuses and 'studies' rather than take action."
He noted that in addition to the TWDB financing, the state has fully permitted the desalination project.
The Inner Harbor plant is among long-term projects involving seawater desalination
For the near term, Corpus Christi has $1 billion of projects aimed at producing 76 million gallons of water daily underway to stave off a Level 1 water emergency, indicating the water system is 180 days from supply not meeting demand.
Last week's city council meeting did
With
The city, which is scheduled to sell $115 million of general obligation bonds next week, was hit starting last fall with rating downgrades and negative outlooks, particularly for its combined utility system. The latest action was taken this month by Fitch Ratings, which
Corpus Christi's situation "can certainly happen in other parts of Texas, especially those areas where they're really dependent on surface water," Mazur said.
He pointed out that the legislature has poured billions of dollars into water infrastructure through appropriations and ballot measures.
Texas voters agreed in recent years to tap some of the state's surplus money to help finance new water sources. A 2023 constitutional amendment created the Texas Water Fund, administered by the TWDB, with at least 25% of the money allocated to a New Water Supply for Texas Fund to finance projects leading to 7 million acre feet of additional water supply by the end of 2033.
In November, voters approved a constitutional amendment that could raise $1 billion annually over 20 years for water supply projects. Starting in fiscal 2027, the first $1 billion in state sales tax revenue once annual revenue from the tax exceeds $46.5 billion will go into the Texas Water Fund.
The measure's enabling law expands the scope of the New Water Supply Fund by making water and wastewater reuse projects, out-of-state water rights acquisition, reservoirs meeting specific requirements, and water transportation projects eligible for financial assistance.
Reliable water infrastructure is part of the so-called Texas economic miracle's structural foundation, which also includes a qualified workforce and an independent electric grid, according to Mazur.
"There's a bunch of several blinking lights, some of them starting in the Corpus Christi region, pointing towards the need for continued state policy attention on the water and electricity fronts," he said.
