DALLAS -- Texas voters’ approval of a $2 billion state fund for water projects across the state is a positive credit factor for local utilities, Moody’s Investors Service said in a Friday report.

“The newly established fund offers local governments a more cost-effective way to upgrade and expand water systems than conventional bonded debt,” wrote analyst James Hobbs.

The State Water Implementation Fund for Texas (SWIFT) will divert $2 billion from the state’s $11.8 billion rainy day fund to finance local water projects.

The Texas Water Development Board, which acts as a bond bank for local water utilities and provides financial assistance for low-income areas, will administer the SWIFT program. Voters gave the program overwhelming support on Nov. 5. TWDB is rated triple-A by all three ratings agencies.

Moody’s maintains ratings for 107 municipal utility systems in Texas, which carry a median rating of Aa3, Hobbs said.

Under the 2012 State Water Plan, the estimated cost for projects recommended by regional water planning groups is $53 billion. That, however, represents only about a quarter of the estimated $231 billion needed, according to water experts.  Statewide, municipalities’ water needs are projected to grow by 972% between 2010 and 2060.

Texas officials believe the SWIFT’s $2 billion can be leveraged over time through loans and repayment to fund projects in excess of $25 billion.

Under the law passed by the 2013 Texas Legislature and the constitutional amendment approved by voters Nov. 5, a Regional Water Planning Group will develop a plan for prioritizing projects. The draft plan is expected to be submitted by June 2014. The TWDB must then approve the plan and establish rules for the use of funds and how they will be allocated. The board expects to adopt those rules near the end of 2014 but no later than March 1, 2015.

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