Deadline for New Texas Water Project Grants is July 30

 This is the first in a series addressing Texas’ new $20 billion investment in water infrastructure projects, providing the latest updates on funding rules and availability.

Texas communities soon will be able to tap $20 billion to address water supply challenges brought on by population growth, drought, water overuse, aging water infrastructure, changes in climate patterns and other factors.

As the state’s population grows, a declining water supply must meet increasing demand. Voters in 2025 approved putting up to $1 billion of sales tax revenue annually over 20 years into the Texas Water Fund to support water, wastewater and flood infrastructure. Projects eligible for funding include repairing aging water pipes, identifying new water sources and educating the public about water conservation.

Because that funding won’t be available until 2029, the Texas Legislature also made $1.75 billion immediately available for water projects. Of those funds, about $1.038 billion will go toward grants for cities, water districts, counties, river authorities and other governmental entities to support water supply and infrastructure grants. The application window for these funds opened April 1, 2026 and runs through July 30. The remaining funds are reserved for specific water and supply projects and grants administered by the Texas Water Development Board.

Our team understands the complexity of accessing this type of funding, and we can work with your municipality and/or utility to navigate state financial assistance programs, including these new funds expected to be delivered no later than May 1, 2027. We can also help identify other funding sources for your next water infrastructure project.

How Can I Access the Money That’s Available Now?

House Bill 500 directs the Texas Water Development Board (TWDB) to distribute $1.75 billion by 2027.

  • For the $1.038 billion available for cities, water districts, counties, river authorities and other governmental entities as Water Supply and Infrastructure Grants (WSIG), the TWDB plans to accept applications through July 30, 2026, and make funding commitments in fall 2026. All grants are to be closed by May 1, 2027, and funded projects must be completed by Aug. 31, 2031. Our team is here to assist you in completing and submitting your funding application.
  • The TWDB is holding two webinars to provide more details about the WSIG implementation. We encourage you to register for one of these events:
    o April 23
    o May 13

When will the $20 Billion in Funding Become Available?

TWDB is drafting rules and procedures to distribute $20 billion over a 20-year period. The process calls for up to $1 billion to be sent annually to the Texas Water Fund starting in 2027 once state sales tax revenue exceeds $46.5 billion. The first funding awards are expected to be disbursed in fall 2029.

Why is Texas Making This Investment in Water?

The state water plan projected in 2022 that without a major investment in water infrastructure about a quarter of the Texas population would not have enough water during a major drought. And many communities could be headed for severe shortages of drinking and agricultural water in the next four years.

While Texas’ population is projected to increase to an estimated 51.5 million (more than 70%) by 2070, state studies predict the water supply, both ground and surface, will decrease by nearly 20%.
This critical scenario called for a historic investment in water infrastructure.

The $20 billion aims to support:

  • New water supply sources: includes desalination; reuse and water treatment generated during oil and gas operations; underground aquifer storage and recovery for future use; new reservoir construction with required permits and completed land acquisition (state water rights purchases are excluded)
  • Infrastructure projects: includes construction, upgrades and interconnecting system projects that transport or integrate new water sources into existing supply systems; using state surface water with valid permits; interconnecting systems for efficiency and sharing extra capacity
  • Conservation and efficiency: covers programs or infrastructure that reduce water consumption, upgrade aging infrastructure or add technologies for reducing leaks and inefficiencies
  • Education and awareness: covers campaigns or educational initiatives focused on increasing awareness of water issues, conservation practices and community responsibilities
  • Statewide strategic projects: includes interregional and regional infrastructure projects such as reservoirs, stormwater retention basins, groundwater recharge systems and water treatment facilities
  • Water rights transfers and marketing: covers programs through the Texas Water Bank, including facilitating and negotiating water rights transfers; maintaining registries of available rights and user needs; promoting water marketing and conservation via incentives; and establishing regional water banks

The funding is not available for transporting groundwater with low dissolved solids (less than 3,000 total dissolved solids) or projects without proper permitting and land acquisition. At least 50% of the money must support the New Water Supply Fund for Texas (NWSFT) and the State Water Implementation Fund for Texas (SWIFT) with the remaining 50% being left to the TWDB’s discretion.

How Freese and Nichols Can Help You with Water Funding

Our Freese and Nichols funding and government experts can help you find the best funding options for your water infrastructure projects.
Please connect with our team to:

  • Stay updated on the funding available through the TWDB financial assistance programs
  • Review and discuss documentation to submit with your Water and Infrastructure Grant application
  • Discuss timelines and strategies for strengthening your funding application
  • Get alerts about upcoming application deadlines

Over the past 30 years, our experts have helped our clients secure more than $8 billion in TWDB grants and loans. Our team can help with securing funding for your project and seeing it through to completion.

Connect with us to plan your next water infrastructure project. Contact Mark Evans at mark.evans@freese.com or your Freese and Nichols client representative to schedule a meeting.