The State Water Implementation Fund for Texas and the Texas Infrastructure Resiliency Fund Advisory Committees met on December 15 to review overall operation, function and structure of their respective funds. The SWIFT Advisory Committee met first, with the TIRF Advisory following immediately after. A video of the SWIFT hearing can be found here and a video of the TIRF hearing can be found here.
The HillCo report below is a summary of information intended to give you an overview and highlight of the various topics included in the responses. This report does not cover the entirety of each response, but aims to provide an overview of the testimony submitted.
State Water Implementation Fund for Texas Advisory Committee
Peter Lake, Texas Water Development Board
- Provides an overview of SWIFT program; original $2 billion investment in the program, balance is $1.61 billion due to the return share
- Intent of the program was to invest $27 billion in water projects from the 2012 Water Plan
- Have completed six rounds of funding to finance $9 billion in water projects
- Have taken out $772 million from the SWIFT fund to provide incentive capital
- Providers have received approximately $300 billion in savings due to the state’s low interest rate
- Have incentivized $9 billion worth of water projects across the state; have completed 33% of original $27 billion dollar target
- SWIFT is not only source of funding; other funding sources include the State Revolving Fund and Water Development Fund
- Actively manage to balance between draws and earning power of investments; have reduced interest rate subsidies, altered funding structures, and used other funding sources
- June TWDB resolution enacted reduced subsidy amounts expected to be available for entities applying for low interest loans in the 2021-2022 SWIFT cycle
- Currently taking applications through February 1 for the next round of SWIFT funds
- Sen. Perry – Multi-year options were a concern of mine, thought we were going to cap those to secure funds for other parts of the states, what is the status of this?
- Lake – Have put restrictions of multi-year, have locked in the interest rate available and have limited the length of multi-year commitments to five years
- Sen. Perry – Have a remaining $1.6 billion, is this on target to do more than we originally planned?
- Lake – Thrilled with what has been accomplished, but does not want to speculate
- Sen. Perry – Still have challenges getting rural Texas engaged in this fund, looking for a regional fund; still looking for ways TWDB/the state can reach out to rural communities
- Rep. Metcalf – What is the average allocation out of all that is funded?
- Lake – Ranges from $8,000 to $1.5 billion
- Rep. Walle – Looking for clarification on how both the TIRF and SWIFT are funded
- Lake – TIRF and SWIFT are two separate financing programs managed by the TWDB
- Rep. Walle – Wants to ensure how to maximize and distinguish these programs for all communities
- Lake – Will continue to reach out
- Sen. Perry – Drought currently effecting West of I-35, but this area lacks buying-power and coordination to successfully get into these programs
Ruchit Shah, Texas Treasury Safekeeping Trust Company
- Manages funds for the SWIFT; are exactly where we want to be for the asset allocation for this program and are trying to grow and preserve the capitol for the SWIFT
- Equity risk is a “touch light,” but it is a fully diversified portfolio; notes asset allocation has been stable for the past couple years
- Have earned $380 million of the capital back from the money invested; have earned an estimated $170 above previous benchmark
- Through October, are down 1.5% for the year, which is not bad considering the pandemic; performed strong in November and are worth an estimated $1.6 billion for the year
- Including November, fund is annualizing at 5.2% over the five-year period
- Sen. Hinojosa – During the pandemic, have had a higher-than-average performance of the stock market?
- Shah – Largely a timing issue, portfolio was down 6% while global markets were down 10-15%
- Shah – Markets have since bounced back; not trying to match the equity market
- Sen. Hinojosa – Asks about the differences between the equity market and global shares
- Shah – To date, equity market is doing well, but March was uncertain
- Sen. Hinojosa – Have had issues in the past where state investments were small in comparison to the return of investment, just wanted to clarify
- Sen. Kolkhorst – What is being earned on cash right now?
- Shah – Virtually zero, we would expect that
- Sen. Kolkhorst – Targeted rate is around 10%, are you sitting on that because the market is hot?
- Shah – Want to keep a little extra cash in case extra distributions are needed
Texas Infrastructure Resiliency Fund Advisory Committee
- Sen. Perry – SB 7 created multiple accounts for the TIRF; Flood Plan Mitigation Account, Hurricane Harvey Account, Flood Plan Implementation Account (no appropriations), Federal Matching (no appropriations)
Nim Kidd, Texas Department of Emergency Management
- Are partnered with the General Land office and TWDB
- 336 projects in progress; 87 county, 184 city, and 65 special districts projects; many of which are related to water drainage and have more than one funding source
- Sen. Perry – Is FEMA in the loop trying to match up for these funding sources?
- Kidd – Yes, Hazard Mitigation Funding is set, and Public Assistance prices have gone up and down
- Sen. Perry – Has it worked according to plan, or is a logistical nightmare?
- Kidd – Has been long overdue, appreciative of the collaboration between the Land Office and TWDB
- Sen. Perry – Had some local jurisdiction have not spent Hurricane Ike funding, are you aware of the status of these funds?
- Kidd – The General Land Office is in charge of this, will get them in contact
- Sen. Perry – Looking to get a list together of unspent funds
- Members express appreciation for TDEM and Nim Kidd’s service
- Rep. Walle – Layering between the different agencies, can we distinguish between what we do with SWIFT and TIRF?
- Kidd – Notes there are many worthwhile projects being worked on through collaboration
- Rep. Walle – Notes that natural disasters do not stop at the county line; wants to take a regional approach
- Kidd – Need to ensure multiple local governments and districts are working together; need to ensure upstream and downstream partners are working together
- Sen. Perry – SB 8 focuses on the regional approach Rep. Walle is talking about; will need a process to get an accounting of how many state/federal dollars are floating around
- Sen. Kolkhorst – Notes this fund, like the SWIFT, will keep giving; notes $4.2 billion in Community Development Block Funds will not be realized for some time
Peter Lake, Texas Water Development Board
- Flood risk management: mapping (SB 7), planning (SB 8), and mitigation (SB 7)
- $1.5 billion was appropriated for the TRIF fund by SB 500
- Flood mapping allows local leadership understand flood risk; creating more detailed BLE maps
- LiDAR acquisition is available across the state; some areas are soon to be updated
- Base level engineering plan; estimates entire state to be fully mapped by 2024
- InFRM flood decision support toolbox is a federal collaboration with the state to ensure local leaders can evaluate flood risk and potential damage costs for a specific location in real time
- Scheduled to be completed in January 2021
- org is available to the public to indicate anticipated future floods/high flows
- Overviews other flood science activities; flood mapping has been historically jump started
- 15 flood planning groups; reports are due January 2023 and will be presented to the legislature in September 2024; reports will be used to create a statewide plan
- Have appointed regional flood planning group member and sponsors; all 15 flood planning groups have met and many are about to have their second meeting
- Overviews the prioritization of mitigation projects; including effectiveness on mitigating funding and protecting property and set minimum standards for entities to
- Applications were received for mitigation projects in October; will determine allocations at the December 3 board meeting through early 2021
- Have created an informational website, Information Clearninghouse; have received federal funding to allow for the U.S. Core of Engineers to help with the flood coordination process
- Rep. Walle – How has this been working with local partners, like Harris County Flood Control?
- Lake – Coordination with locals, especially Harris County, are highly involved and participating
- Lake – Distinction between different funding buckets is important, but there is some overlap; SWIFT for creating new water supply and TIRF is for flood mitigation and planning
- Rep. Walle – How has it been working with A&M Galveston on mapping?
- Lake – Collaboration has been going according to plan
- Sen. Hinojosa – Always hear the private sector does things cheaper and faster, but they cannot gather/provide better information