How to Access $2 Billion in Senate Bill 7 Funding for Texas Water Reuse Projects

You reach Senate Bill 7 funding through the Texas Water Development Board (TWDB), not through SB 7 itself. A city, county, district or nonprofit water supply corporation applies to a TWDB program, and since 2025 water reuse qualifies for the state's new water supply money. The $2 billion in this title came from a webinar, not the law. The enacted dedication is up to $1 billion a year from 2027 to 2047.

What did Senate Bill 7 change for water reuse?

It made reuse eligible for the New Water Supply for Texas Fund and reserved at least half of the new dedicated money for that fund and SWIFT.

The enrolled text of Senate Bill 7 mostly took effect September 1, 2025. Three changes matter here:

• Water Code §15.153(b)(1) now lists water and wastewater reuse among the new water source projects the fund can finance, next to desalination, aquifer storage and recovery, and conveyance.
• Water Code §15.505(c), in force from September 1, 2027, sends not less than 50 percent of the dedicated money deposited before September 1, 2047 to that fund, the State Water Implementation Fund for Texas (SWIFT), or both.
• Water Code §15.504(c) now adds wastewater projects and grants to the portion of Texas Water Fund money the board directs to rural political subdivisions and cities under 150,000 people.

How much money is there, and when can you get it?

Up to $1 billion a year from state sales tax, with TWDB expecting the first of it in fall 2029.

Voters approved Proposition 4 on November 4, 2025, as TWDB's January 2026 funding briefing notes. It added Article VIII, Section 7-e to the Texas Constitution through House Joint Resolution 7: each fiscal year, the first $1 billion of sales and use tax revenue above $46.5 billion goes to the Texas Water Fund, from September 1, 2027 through August 31, 2047.

TWDB's Proposition 4 FAQ adds two limits: the money still needs a legislative appropriation, and a year with sales tax under $46.5 billion sends nothing. Its timeline puts the first funds in TWDB programs in fall 2029.

The older pot is spoken for. The 2023 Texas Water Fund appropriation set aside $250 million for the new supply fund, and TWDB's implementation table shows all of it committed as of September 30, 2026.

Who can apply for Senate Bill 7 money?

A political subdivision. Private owners take part only through one.

Water Code Chapter 15, which holds both the new supply fund and SWIFT, defines the term in §15.001(5): cities, counties, districts and authorities created under Article III, Section 52 or Article XVI, Section 59 of the Texas Constitution, other political subdivisions, and nonprofit water supply corporations under Chapter 67.

So a manufactured home community served by a nonprofit water supply corporation has a possible borrower, and a for-profit park owner does not. An industrial plant needs a public partner: TWDB's FAQ allows new supply fund partnerships under Government Code Chapter 2267, but the applicant is still a political subdivision.

How does a private developer get access through a MUD?

By creating a municipal utility district, a political subdivision that can borrow.

A MUD can be created under Article XVI, Section 59 (Water Code Chapter 54, §54.011) by a petition to TCEQ signed by a majority in value of the landowners (§54.014). Land inside a city or its extraterritorial jurisdiction needs the city's written consent (§54.016).

Formation has its own legal timeline, so start well before any TWDB deadline, and leave reimbursement terms to the district's attorney. Developers and builders usually bring in the civil engineer then, since the utility and reuse plan drives the district's bonds.

Which TWDB program fits a reuse project today?

Usually the Clean Water State Revolving Fund or SWIFT, until the Proposition 4 money is allocated.

The TWDB Clean Water State Revolving Fund page lists reuse and recycle facilities as eligible for cities, counties, districts and river authorities. Loans are below market, principal forgiveness is limited, and project information forms are due in a window that opens each December and closes in March.

The TWDB SWIFT program page covers reuse when the project is a recommended strategy, with a capital cost, in the adopted state water plan. SWIFT lends only through bonds the borrower issues, with no grants. Not in the plan? Ask your regional planning group to amend it.

New supply fund loans can run up to 30 years (§15.153(c)), and TWDB's board weighs the end users, the area's need, the water produced and the ability to repay (§15.154(b)).

What project costs can the funding cover?

Planning, design, acquisition and construction. Not operations and maintenance.

Both program pages list those phases, and Chapter 15 counts permitting work as part of a project (§15.001(6)). The new supply fund cannot pay operating or maintenance costs (§15.153(d)). A site feasibility study before you apply shows which costs belong in the request.

What TCEQ approval does the reuse side need?

An authorization under 30 TAC Chapter 210. Funding does not replace it.

TCEQ's reclaimed water requirements page sets two types of municipal reclaimed water. Type I allows public contact, such as parks, lawns and athletic fields. Type II covers low-contact uses, including soil compaction, dust control and cooling tower makeup. Knowing when you need a Type I or Type II authorization sets the treatment level you design for.

Providing municipal reclaimed water to another party needs TCEQ's written approval on form TCEQ-20427. Industrial reclaimed water uses Subchapter E, the 210E authorization, on form TCEQ-20094: an authorization, not an exemption. Those end users are also your buyers.

How does a funded reuse project move from application to construction?

Application, ranking, a board commitment, closing, then construction under program rules.

SWIFT takes abridged applications up to twice a year and ranks them on population served, local contribution, ability to repay, readiness and other criteria. Invited projects file a full application within 30 days, pass environmental, engineering, financial and legal reviews, and close shortly after TWDB's own bond closing.

The Clean Water State Revolving Fund adds federal conditions, including an environmental review, Davis-Bacon wage rates and American Iron and Steel. Put them in the schedule from day one.

Is your reuse project ready to apply?

It is ready if every answer is yes. Each no is work to finish before the next window.

1. Is the applicant a political subdivision or nonprofit water supply corporation, or do you have a written agreement with one?
2. For SWIFT, is the project a recommended strategy in the regional water plan, or is an amendment under way?
3. Do you know each end user and its volume?
4. Has an engineer set the Chapter 210 path and the storage the demand needs?
5. Is the borrower's independent audit current, and is it registered in SAM?
6. Are its water use survey, water loss audit and conservation plan filings current?
7. Is the next application deadline on your calendar?

Items 5 and 6 are TWDB applicant tips from the January 2026 briefing, which also says to talk with TWDB staff early. Ask your engineer what you can design and permit now to rank as ready to proceed.

A note on limits: this is general education on Texas law and TWDB programs as of October 2026, not legal or financial advice. Amounts and rules change, so confirm with TWDB before you apply.

Frequently asked questions

Is there really $2 billion in Senate Bill 7 funding for reuse?

No. Neither SB 7 nor House Joint Resolution 7 sets aside $2 billion for reuse. The dedication is up to $1 billion a year, with at least half for the new supply fund and SWIFT, both open to reuse.

Does Senate Bill 7 offer grants for reuse projects?

Sometimes. TWDB's FAQ lists the new supply fund, the state revolving funds (as principal forgiveness) and the Rural Water Assistance Fund among programs that can grant. SWIFT cannot. Plan on a loan.

I'm developing a subdivision outside a Texas city and want to irrigate lots and common areas with treated effluent. Can I apply for Senate Bill 7 money myself?

No. A private developer is not a political subdivision. The usual route is a MUD, created by petition to TCEQ with city consent in its extraterritorial jurisdiction. The district applies, and the reuse still needs a Chapter 210 authorization.

I run a small nonprofit water supply corporation in Texas serving a manufactured home community, and we want to add reuse. Are we eligible?

Likely yes for the new supply fund and SWIFT. Chapter 15 counts your corporation as a political subdivision. SWIFT also needs the project in the state water plan and bonds you can issue.

I manage a Texas plant with its own wastewater treatment, and we want to sell treated water for dust control. Do we need a public partner?

For TWDB funding, yes. Selling it off-site needs TCEQ's written approval under Subchapter E; only Level I water used on your own site skips notice and approval.

Related resources

• Texas Governor Opens $22.5 Billion Water Fund For Wastewater Developers
• Chapter 210 Reclaimed Water: What Texas Developers Need to Know About Water Reuse
• Municipal Utility Districts in Houston Suburbs: When to Form One and When to Use a Developer-Owned Treatment Plant Instead
• Water Reuse for Austin Area Golf Courses and HOA Irrigation: How Chapter 210 Creates a Revenue Stream

Planning a reuse project around Senate Bill 7 funding?

MES designs Texas water reuse and wastewater systems and prepares the engineering a TWDB application and a Chapter 210 authorization need, from feasibility through plans and specifications.

Modern Engineering Solutions, McKinney, Texas, with offices in Golden, Colorado and San Jose, California. (214) 833-6748.

Talk with an engineer about your project