The Texas Water Development Board’s Clean Water State Revolving Fund (CWSRF): What It Funds and Who Qualifies

What does the Clean Water State Revolving Fund pay for?

Planning, land, design and construction for projects that keep pollution out of Texas waters. The federal Clean Water Act authorizes the fund, and TWDB's CWSRF program page names wastewater, reuse and stormwater infrastructure as its core work.

TWDB's SFY 2027 CWSRF Intended Use Plan, effective October 1, 2026, lists eligible work, including:

• New or improved treatment plants, collection systems and reuse facilities
• Buying an existing wastewater plant, and land for an eligible project
• Stormwater and subsurface drainage projects
• Conservation, efficiency, energy and security work at publicly owned treatment works
• Nonpoint source and estuary projects
• Water meters as a conservation measure

Some work is out. The plan bars projects mainly meant to serve growth, treatment works owned by a private entity or a federal agency, and hazardous material cleanup. Drinking water plants, wells and water lines belong in the Drinking Water State Revolving Fund instead.

Who can borrow from the Texas CWSRF?

Public bodies that handle wastewater, plus a few others. The SFY 2027 plan lists:

• Cities, counties, districts, river authorities and other public bodies with authority to dispose of sewage or other waste
• Intermunicipal, interstate and state agencies
• Authorized Indian tribal organizations
• Water supply corporations designated as management agencies in the Texas Water Quality Management Plan
• Private entities, for nonpoint source or estuary projects only

A water supply corporation without that designation is not on the list for treatment works.

What is principal forgiveness, and who gets it?

Principal forgiveness is the part of the loan you never repay. It works like a grant, though TWDB does not classify it as one. Most of it goes to disadvantaged communities.

For SFY 2027, a community is disadvantaged when both tests hold:

• The service area's annual median household income is 75 percent or less of the state's.
• Its household cost factor is at least 1 percent for water or sewer only, or 2 percent for both.

The SFY 2027 options work like this:

• Disadvantaged communities get 70 percent of the CWSRF-funded cost forgiven.
• Disadvantaged systems that serve 10,000 or fewer people, or are rural, can add up to $1.5 million in forgiveness and $3 million at 0 percent.
• Very small systems, serving 1,000 or fewer people with income no higher than 150 percent of the state's, can get up to 100 percent forgiven, capped at $500,000.
• Very disadvantaged communities, with income below 50 percent of the state's, share a $1 million pool of extra forgiveness.
• Urgent need projects can get up to 100 percent forgiven, capped at $500,000, or $800,000 for a disadvantaged community.
• First-time service projects can add up to $200,000 for homes not yet on a public sewer system.
• Green projects can get up to 15 percent of categorical green costs forgiven when green parts are 30 percent or more of the project.

No project can receive more than $10 million in forgiveness from all options combined.

What interest rate and terms does a CWSRF loan carry?

A fixed rate below market, for up to 30 years. TWDB cuts the Municipal Market Data rate for your credit rating (Baa if unrated) by 40 percent for equivalency projects and 35 percent for others in SFY 2027. The term cannot run past the project's useful life.

Equivalency means full federal strings. Those projects follow every federal cross-cutter, including Build America, Buy America. TWDB assigns the tier by order of commitment, complexity and system size. All CWSRF money carries Davis-Bacon wages, a NEPA-type environmental review and American Iron and Steel rules.

A loan origination fee applies to the repayable part, not to forgiveness.

If you also sell drinking water and your real or apparent water loss meets or exceeds its threshold under TWDB's water loss rules, 31 TAC §358.13, part of the money must go to reducing it, unless TWDB waives that because you are already addressing it.

How do you get a project on the Intended Use Plan?

File a Project Information Form (PIF) by TWDB's annual deadline. TWDB's page says solicitation opens in December and closes in March. The SFY 2027 deadline was March 6, 2026.

You can file a PIF at any time. But the CWSRF program sheet (December 2025) says principal forgiveness is typically only available to PIFs filed by the deadline. The PIF asks for:

• A project description and a service area map
• A cost estimate, certified by a registered professional engineer if it tops $100,000
• A readiness checklist and milestone schedule
• The population you serve today
• Income data and worksheets, if you want disadvantaged status

How does TWDB rank CWSRF projects?

By points, highest first, with ties going to the smaller population. Treatment works projects earn points for:

• Enforcement actions by courts or regulators
• Protecting streams and groundwater
• Serving unserved areas or failing on-site systems
• Regionalization that eliminates systems
• Cutting sewer overflows and inflow and infiltration
• Reuse, conservation and innovative treatment

Extra points go to asset management plans, training, cybersecurity plans and disadvantaged status. Only projects TWDB invites, starting with its Initial Invited Projects List, may apply.

What happens after TWDB invites you to apply?

The clock starts, and it is short. You file an intent to apply, attend a pre-application meeting and apply by TWDB's deadline. A deficiency must be fixed within 14 days, or the forgiveness may move to another project.

A project offered forgiveness has four months to reach a commitment, or three for urgent need. Closing then follows within four months for forgiveness only, six months for forgiveness plus a loan, and twelve months for a loan alone.

A project not ready to build can be invited for planning, acquisition and design only.

Will the new Texas Water Fund money flow through the CWSRF?

It can. The Texas Water Fund is not a loan program. It moves money into other TWDB funds, including the state revolving funds, per TWDB's Proposition 4 FAQ.

Voters approved Proposition 4 on November 4, 2025, per TWDB's January 2026 funding briefing. It dedicates sales tax money to the fund, at least half for the New Water Supply for Texas Fund or SWIFT, with the first expected in fall 2029.

Our article on the new Texas water fund money covers the details.

Is your system ready for the next CWSRF round?

A no on item 1 or 2 means the project does not fit; any other no is work to finish before the PIF deadline.

1. Is your entity an eligible applicant for this kind of project?
2. Does the project fix a pollution, compliance or capacity problem, rather than mainly serve growth?
3. Do you have a defined scope and an engineer-certified cost estimate?
4. Do you have current income data if you want disadvantaged status?
5. Do you have a milestone schedule for planning, design and construction?
6. Are your latest financial audits ready?
7. Will you adopt water conservation and drought contingency plans if assistance tops $500,000?

Then ask your engineer and TWDB's regional team which forgiveness options fit and which phases are ready. A current capital improvement plan makes items 3 and 5 much easier.

A note on limits: this is general education from TWDB's public documents, current as of October 2026. Every rate, cap and deadline above is from the SFY 2027 plan and changes yearly, so confirm with TWDB.

Frequently asked questions

Is the Texas CWSRF a grant or a loan?

A loan. Part can be forgiven for qualifying projects. Zero percent money is limited to small or rural disadvantaged communities, urgent need projects and asset management plans.

Can a municipal utility district borrow from the CWSRF?

Yes. Districts are eligible applicants. But the plan bars projects mainly meant to serve growth, so a district cannot use it chiefly to build capacity for future lots.

I'm the city manager of a small Texas town, and our wastewater plant is under a state enforcement order. Can the CWSRF help, and how fast?

It can. Enforcement actions earn rating points, and disadvantaged towns of 10,000 or fewer can add forgiveness and 0 percent money. The normal path is the annual PIF deadline. Urgent need covers catastrophic events and imminent health issues, not plants that failed from age or poor maintenance.

I run a rural Texas water supply corporation, and our members want a sewer system. Can our corporation borrow from the CWSRF to build it?

Only if the Texas Water Quality Management Plan designates your corporation as a management agency, which makes it a municipality for treatment works. Without that, ask TWDB about the Texas Water Development Fund, which lends to water supply corporations for wastewater. EDAP is another option in qualifying low-income areas once a new round opens.

Related resources

• Making the Most of the Economically Distressed Areas Program (EDAP) for Your Rural Water and Sewer 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
• Texas Water Infrastructure Crisis: $134 Billion Funding Gap

Planning a wastewater or stormwater project around the CWSRF?

Send us the project you have in mind, your service area map and the population you serve. We will help you work out which funding options fit and what the PIF and cost estimate need to show.

We specialize in:

• Funding applications and engineering reports
• Wastewater treatment plant design and upgrades
• Collection system and lift station design
• Inflow and infiltration studies
• Capital improvement planning for small utilities
• Construction administration

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