SB1194

SB1194 creates the Central Texas Water Alliance, a regional authority for water and wastewater projects. Its initial sponsors are Bell County, Bell County Water Control and Improvement District No. 1, Clearwater Underground Water Conservation District and McLennan County. Its territory follows sponsor territory and applicable service areas, with later additions or removals allowed by law. The act creates authority to pursue projects; it does not itself build a pipeline, select a water source or guarantee new supply. Signed May 15, 2025, it took effect immediately. Final law, sections 11020.0101–11020.0105 and act section 5; Official history.

Joining and leaving: A local government or private entity may petition to join. The board must hold a noticed hearing, find benefit to the applicant and the alliance’s best interest, and issue an order bringing the new sponsor’s territory/service area and financial obligations into the alliance. A joining local government must also publish notice for two consecutive weeks, with the first publication at least 14 days before the order’s effective date. Leaving requires board approval and cannot impair outstanding obligations; conditions may include paying sponsor-specific debt, an allowed proportional debt share, property transfers and winding-up costs. A conditionally approved sponsor remains responsible until conditions and payments are satisfied. A former sponsor may still contract for services. Final law, sections 11020.0106–11020.0108.

Governance: Except for the initial board, the alliance has five to 18 sponsor-appointed directors. Seats are apportioned by contracted water-supply amounts, but every sponsor gets at least one. Directors must be at least 18 and either alliance-territory residents or sponsor employees. They serve staggered three-year terms, with a five-consecutive-term limit, and the appointing sponsor may remove its director with or without cause and fill vacancies. Each director ordinarily has one vote, but the board may establish graduated voting after each sponsor has appointed a director. The act allows dual service on a sponsor’s governing body and gives directors governmental immunity for their official actions. Final law, sections 11020.0201–11020.0209.

The initial appointments must be made 30 to 90 days after the act’s effective date. Initial directors draw lots for terms ending February 28 in 2027, 2028 and 2029; those are the dates specified by the act, not a claim about appointments actually made. A director whose appointing sponsor regulates an issue before the board must disclose that authority by affidavit and abstain from further participation. The statute bars that director from the related closed meeting and from voting, with an express voting exception when a majority of directors must file such affidavits. Final law, section 11020.0210 and act section 2.

Projects and contracts: The alliance can acquire, build, operate and finance water sources, reservoirs, wells, treatment/transmission facilities, wastewater-reuse and aquifer-storage/recovery projects, including facilities outside its boundaries. It can adopt conservation/drought plans, dispose of unneeded property and enter service and interlocal contracts. It also incorporates Water Code 65.201 powers, which include water supply, waste handling, local storm-water control, irrigation, necessary land-elevation changes and firefighting services. These are legal powers, not a list of projects already approved. Sponsors can convey utility-system assets to the alliance without a conveyance election and are exempt from the specified Government Code chapter 1502 conveyance/sale/acquisition provisions. Final law, sections 11020.0301–11020.0306; Additional incorporated powers; Utility-system definition.

Charges and land acquisition: The alliance must establish rates and fees for sponsors and customers, which may vary by customer class, project or service area. Contracting parties must collect and pledge enough charges to meet their obligations. The alliance itself may not impose a property tax, but a contracting party that already has property-tax authority may pledge that revenue to its contract. The alliance has eminent-domain authority for necessary property interests under Property Code chapter 21, but may not condemn land to acquire groundwater rights, water or water rights. The bill’s votes—27–3 in the Senate and 121–20 in the House—met the two-thirds condition, so the fallback clause eliminating eminent domain did not take effect. Final law, sections 11020.0305, 11020.0307–11020.0401 and act sections 4–5; Condemnation petition requirements; Compensation framework.

Financing: The alliance may receive gifts, grants and loans and issue revenue-backed bonds, notes and other obligations without a bond election. Repayment can be secured by charges, service/product sales, facility revenue, grants/gifts and contract proceeds; facilities may also secure debt. The act permits multiple debt series, differing repayment priorities, trust arrangements, public/private/negotiated sales and refinancing. For attorney-general review, professional revenue/growth projections and accumulated funds may demonstrate debt-service ability; forecast rate increases can be included when the authorizing resolution commits to necessary increases. The specified obligations, related transactions, interest and sale profits are exempt from Texas state and local taxation—not automatically from federal tax. Final law, sections 11020.0402 and 11020.0501–11020.0505; Incorporated debt-authorization framework; Refunding authority.