Making the Most of the Economically Distressed Areas Program (EDAP) for Your Rural Water and Sewer System

What counts as an economically distressed area?

An area that meets three tests in the Texas Water Code: poor service, low income and an older subdivision. Texas Water Code Section 17.921 defines it as an area where all three are true:

1. Water or sewer service is inadequate to meet residents' minimal needs.
2. Financial resources are inadequate to provide service that meets those needs.
3. An established residential subdivision was there on June 1, 2005.

TWDB's 2024-2025 EDAP Intended Use Plan spells out each test. Service is inadequate when it does not exist, or when the community system, private wells or on-site systems do not meet TCEQ standards.

The money test is income: the service area's annual median household income must be no more than 75 percent of the statewide figure. The age test needs a recorded plat, or a clear pattern of lots and roads, plus at least one occupied home on June 1, 2005.

Who can apply for EDAP?

Cities, counties, water districts, nonprofit water supply corporations and other political subdivisions. But the local government has homework first.

The county, and the city if the project is inside its limits or extraterritorial jurisdiction, must adopt and enforce Model Subdivision Rules consistent with TWDB's rules (31 TAC Chapter 364) before funds are committed. TWDB's EDAP program page lists more requirements:

• A TCEQ authorized agent designation for regulating on-site sewage facilities
• A county map showing where each type of on-site system is appropriate
• A Certificate of Convenience and Necessity, held or applied for, if the Water Code requires one
• The ability to operate and maintain the finished system
• Water supply projects consistent with the state water plan
• Three years of Water Use Survey responses on file
• Water conservation and drought contingency plans for assistance over $500,000

What can EDAP pay for?

Planning, land, design and construction for residential water and sewer service. The 2024-2025 plan gives examples:

• First-time service: new connections, yard lines, septic or cluster systems, indoor plumbing and fixtures, and connection and permit fees
• Water improvements: treatment plants, wells, pump stations, transmission and distribution lines, and regionalization
• Wastewater improvements: treatment plants, collection lines, lift stations, septic tank decommissioning and regionalization
• Asset management planning for either system

The limits are strict. EDAP is residential only, so service to commercial, industrial, school, government, nonprofit and multifamily users must be paid from other sources. It cannot pay for future growth. It cannot upgrade or replace facilities built with earlier TWDB money, though adding new eligible connections to them is allowed.

Two more rules matter in design. Household connection costs are paid only for families within HUD's income limit: 80 percent of the county median family income for their family size. And under Section 17.933(f), TWDB can fund treatment works only if septic tanks are not feasible for the area.

How much of EDAP is grant, and how much is loan?

Up to half can be grant, and more with a public health nuisance determination. Section 17.933(b) caps the grant at 50 percent unless TWDB or the Department of State Health Services finds a nuisance dangerous to public health. The 2024-2025 plan capped any project at 70 percent grant.

Under that plan, the rest must be an EDAP loan. Counties, cities and districts issue bonds that TWDB buys; a water supply corporation may sign a loan agreement. Local cash cannot replace the loan unless TWDB finds debt is not feasible. The program page lists a 20-year maximum term.

When that plan was written, the state health department was not issuing nuisance determinations. You can ask TWDB for one, with a determination from a local sanitarian or public health official attached.

Senate Bill 7 (2025) raised the program-wide grant ceiling. Grants may now reach 90 percent of EDAP's bond authority plus interest, up from 70 percent. The Legislative Budget Board's February 2026 EDAP brief lists grants of up to 90 percent with a nuisance determination and 50 percent without. The next plan will set each project's share.

How does TWDB rank EDAP projects?

By points from a short list, with ties going to the lowest-income area. The 2024-2025 plan scored:

• First-time residential service: 15 points
• Resolving a public health nuisance, or a contaminant violation the applicant did not cause: 10 points
• Earlier TWDB funding for prior phases of the same project: 8 points
• Storage capacity or service pressure violations: 3 points

The process runs in steps. You file a short abridged application, TWDB ranks it, and projects within funding are invited to file a full application. After commitment, you have up to six months to close.

TWDB's EDAP program sheet (January 2025) also asks for clear documentation of what is inadequate about today's service. Full applications include audited financial statements for the prior fiscal year.

Is EDAP money available right now?

Not in a new round yet. As of October 2026, TWDB's EDAP page still lists the 2024-2025 plan as its latest.

The same brief says the 2026-27 budget pays debt service on existing EDAP bonds. TWDB did not request, or receive, money to issue new ones. It is near the limit of its remaining bond authority and will weigh future issues after reviewing capacity this biennium.

One new door is open. Senate Bill 7 added EDAP's account to the funds the Texas Water Fund can transfer money into. Until a round opens, a distressed area may also fit the disadvantaged options in the Clean Water State Revolving Fund or its drinking water twin.

Is your area ready for the next EDAP round?

A no on any of items 1 to 4 means the area is not eligible yet; a no on item 5 or 6 is work to finish before you apply.

1. Is the service area income 75 percent or less of the state median?
2. Was the subdivision established, with an occupied home, by June 1, 2005?
3. Is service missing, or does the system fail TCEQ standards?
4. Have the county and city adopted Model Subdivision Rules, and do they enforce them?
5. Do you have clear documentation of what is inadequate about today's service?
6. If you want more than 50 percent grant, do you have, or can you request, a nuisance determination?

Then ask your engineer and TWDB's regional team whether septic or centralized service fits the area, and which other programs could carry the project until EDAP reopens.

A note on limits: this is general education from public TWDB, state law and Legislative Budget Board sources, current as of October 2026. EDAP rules and grant shares are set in each new Intended Use Plan, so confirm with TWDB.

Frequently asked questions

Can EDAP fund water or sewer for a new subdivision?

No. The subdivision must have existed, with at least one occupied home, on June 1, 2005, and EDAP cannot pay for future growth.

Does EDAP pay for indoor plumbing?

Yes, as part of first-time service. The plan lists indoor plumbing facilities and fixtures, yard lines and connection fees. Household connection costs are paid only for income-eligible families.

I'm a county commissioner, and several older subdivisions in our county still rely on failing septic systems. What must the county have in place before EDAP will fund sewer service?

Model Subdivision Rules, adopted and enforced. The applicant also needs a TCEQ authorized agent designation for on-site systems, and the county must map where each on-site system type is appropriate. For a sewer plant, TWDB must find septic tanks are not feasible for the area.

I run a small nonprofit water supply corporation, and our system was built with a TWDB loan years ago. Can EDAP pay to replace that system now?

No. EDAP cannot upgrade or replace facilities paid for with earlier TWDB money, whatever the program. It can add new eligible connections to that system. Replacement work may fit the drinking water state revolving fund instead.

Related resources

• Using the Texas Drinking Water State Revolving Fund (DWSRF) for Your Rural Water System
• Rural Water Assistance Fund (RWAF): Eligibility and Status
• The USDA Water and Waste Disposal Loan and Grant Program in Texas: Who Qualifies and How It Works
• The Texas Water Development Fund (DFund) Loan Program: Who Can Borrow and When It Fits

Does your community need water or sewer service it cannot pay for alone?

Send us a map of the area, what residents use for water and sewer today, and any health or compliance notices. We will help you work out whether EDAP fits and what the engineering plan needs to show.

We specialize in:

• Funding applications and engineering reports
• Water and sewer utility design
• Water distribution system design
• Collection system and lift station design
• Construction administration

Modern Engineering Solutions, McKinney, Texas. Contact: (214) 833-6748 or mod-eng.com