DALLAS – Local water authorities will save more than $106 million in borrowing costs after the first $810 million bond issue for the State Water Implementation Fund for Texas, state officials said.
SWIFT leverages the Texas Water Development Board’s triple-A credit rating to provide a pool of loans for local utilities and regional water authorities that would have to pay higher rates using their own credit.
In an Oct. 7 pricing, SWIFT bonds maturing in 2050 drew yields of 3.85% on 4% coupons. Bonds maturing in October 2020 earned yields of 1.35% on 5% coupons.
TWDB Chairman Bech Bruun called the bond sale “extremely successful” with orders more than double the available debt.
“One of the most important measures is how much money SWIFT is saving the state,” Bruun said in a statement. “When utilities save money, they can pass those savings on to their rate payers."
The total amount of financial assistance for SWIFT projects in 2015 is approximately $900 million. The TWDB estimates the 20 project sponsors will save more than $106 million for the 30 projects it approved earlier this summer. The total savings may be higher for communities whose credit ratings are lower than the AAA rating for the SWIFT program.
The application period for the next round of SWIFT will open Dec. 1 and close Feb. 5.
SWIFT was established by the Texas Legislature and voters in 2013 to fund projects in the state water plan. Initial funding came from a one-time transfer of $2 billion from the state's Rainy Day Fund. The $2 billion will be leveraged with revenue bonds over the next 50 years to finance an estimated $27 billion in water supply projects.
The TWDB, created during the most severe drought in Texas history in the 1950s, is the state agency charged with managing water-related data, aiding regional planning and preparing the state water plan for the development of the state's water resources.
Approved projects include transmission pipelines, canal linings, capacity expansions, seawater desalination, leak detection systems, water meter replacements, and reservoirs.
One of the largest projects approved was a $953 million grant to the North Harris County Regional Water Authority in the Houston area for a water supply project. The board also agreed to support the $812 million West Harris County Regional Water Authority's supply project and the North Fort Bend Water Authority's $556 million project west of Houston.
Jimmie Schindewolf, general manager of the North Harris County Regional Water Authority, called the TWDB’s initial funding grants a “landmark decision.”
“Over the next decade and beyond, the NHCRWA will be developing historic water supply infrastructure projects, acting solely and in cooperation with the city of Houston and other regional water authorities,” Schindewolf said. “SWIFT funding plays a vital role in our ability to ensure a sustainable water supply for our community’s growing population – which is projected to exceed 780,000 in 2025.”
